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Shell will write down up to $5 billion following its decision to exit Russia, higher than previously disclosed, while soaring oil and gas prices boosted trading activities in the first quarter, the company said on Thursday.
The post-tax impairments of between $4bn and $5bn in the first quarter will not impact the company's earnings, Shell said in an update before its earnings announcement on May 5.
It had previously said the Russia write-downs would reach about $3.4bn.
The start of 2022 marked one of the most turbulent periods in decades for the oil and gas industry as western companies including Shell rapidly pulled out of Russia, severing trading ties and winding down joint ventures following Moscow's military invasion in Ukraine.
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Members of the Russian police force and Rosgvardia, the country’s domestic army, patrol Red Square, Moscow. AFP -
A Renault car showroom in St Petersburg. Reuters -
An Ikea store in Khimki, about 18 kilometres north-west of Moscow. Bloomberg -
Traditional Russian dolls, also known as matryoshki, sit in the window of a Swatch Group wristwatch shop at the GUM department store in Moscow. Bloomberg -
A Chanel concession occupies the middle of the lower floor of the GUM department store, on Red Square in the Russian capital. Bloomberg -
Food manufactured by Nestle sits on display inside the Detsky Mir children’s goods store on Vozdvizhenka St, Moscow. Bloomberg -
US chipmaker Intel Corp’s ‘smart building’ in Petah Tikva, near Tel Aviv, Israel. Intel announced on Tuesday that it was suspending operations in Russia. Reuters -
A woman walks past a closed H&M store in Moscow. Reuters -
An electronic billboard on RusHydro’s Institute Hydroproject building in Moscow displays a Samsung advert. Reuters -
Customers queue to enter Uniqlo in Moscow. In early March, the Japanese fashion brand said it would stop selling clothes in Russia, having earlier defended its decision to keep its stores in the country open. Reuters -
A Marks & Spencer store in the Afimall City mall at Moscow International Business Centre. Bloomberg -
An Apple store at the Aviapark shopping centre in Khoroshyovsky, Moscow, in 2020. Bloomberg -
A woman drinks coffee inside a Starbucks cafe in Khimki in 2007. Reuters -
An employee fills the tank of a car at a BP petrol station in Moscow in 2016. Reuters -
People eat at McDonald’s in central Moscow in 2016. Reuters -
An advert for US soft drink giant Pepsi sits above a sign for a McDonald's restaurant in Moscow. AFP -
Bottles of Coca-Cola are displayed at Colonial Liquors in Corte Madera, California. In early March, the soft drinks brand said it was withdrawing from the Russian market. AFP -
The Netflix building on Sunset Boulevard in Los Angeles, California. The streaming site has suspended its services in Russia. AFP -
TikTok’s UK office in London. The Chinese company has restricted uploads to its social media service in Russia to avoid falling foul of the country’s strict new online publishing rules. AFP
Shell said it would exit all its Russian operations, including a major liquefied natural gas plant in the Sakhalin peninsula in the eastern flank of the country. It will also wind down oil trading activities.
Average benchmark oil prices soared past $100 a barrel in the quarter, their highest since 2014, while European gas prices hit a record high.
Shell, the world's largest LNG trader, said earnings from the segment were expected to be higher in the quarter from the previous three months. Earnings from oil trading are set to be "significantly higher" in the quarter.
Cashflow in the quarter would be negatively affected by "very significant" outflows of about $7bn as a result of changes in the value of oil and gas inventories.
