Shell Forecasts Decreased LNG Output in First Quarter

Shell, the oil supermajor, expects a sharp decline in its liquefied natural gas trading business in the first quarter of 2024, following a strong performance in the fourth quarter of the previous year.

Additionally, it informed shareholders on Friday of its anticipation for oil trading results to surpass those of the last quarter of 2023 by a considerable margin.

The leading oil and gas trader globally announced that its LNG volumes for the first three months of 2024 are projected to range between 7.2 million and 7.6 million metric tons, as opposed to 7.1 million tons in the preceding quarter.

The company expects production in its integrated gas division to range between 960,000 to 1 million barrels of oil equivalents per day in the first three months of 2024, compared to the previous guidance of 930,000 to 990,000 boepd.

However, it cautioned that trading results for the segment are anticipated to be ‘significantly lower’ than the fourth quarter.

Shell also stated that indicative refining margins are expected to be $12 a barrel, up from $10 in the fourth quarter, while indicative chemicals margins are projected to increase to $151 per tonne from $125 per tonne.

Additionally, the FTSE 100 company mentioned it would incur approximately $600 million in exploration well write-offs, primarily related to projects in Albania.

In 2023, Shell reported profits of £22.4 billion, representing a decline of over 30 percent from the previous year due to the slump in oil and gas prices from exceptionally high levels.

Despite this, the earnings were the second-highest in the company’s 116-year history and surpassed analysts’ forecasts of £21.2 billion.

The London-based company also distributed £18.2 billion to shareholders and revealed intentions to execute an additional £2.8 billion in share buybacks during the first quarter.

Fundamentally, oil prices follow a cyclical pattern, characterized by fluctuations that are normal,” stated Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown. However, the path of the price has been notably volatile in recent years, and it remains uncertain when this volatility will stabilize over the long term.

On Friday morning, Shell shares were up by 0.3 percent at £27.72 and have nearly tripled since the start of October 2020.

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