Shell has announced it will reverse up to $4.5bn in write-downs taken on the value of its oil and gas assets after raising its energy prices outlook following Russia’s invasion of Ukraine and subsequent disruption to fossil fuel trading across the world.
In an update ahead of its second quarter results on July 28, the energy giant revealed its refining margins almost tripled over the three-month period.
Margins had risen to $28.04 a barrel from $10.23 in the first three months of the year, and $4.17 a year earlier.
This would hike earnings by between $800m and $1.2bn, the oil major said.
Shell has been boosted this year by recovering global demand from the pandemic, a lack of refining capacity and lower fuel exports from Russia.
Meanwhile, earnings from oil and refined products trading were expected to be strong in the quarter but lower than the first quarter of 2022.
However, it has raised it expectations on assumed oil prices, increasing its forecasts for 2023 Brent crude prices to $80 per barrel.
Shell also expected its cash flow in the second quarter to be hit by an outflow of about $6bn, and that “prevailing volatility” in the market would hit continue to hamper cash flows.
Earlier this year, Shell posted a record quarterly profit of over $9 billion in the first quarter, with energy giants revelling in rising oil and gas prices.
This prompted the Government to bring in a 25 per cent further tax on North Sea oil and gas operators, with the aim of raising £5bn to partially fund a £15bn support package for households.
Shell shares were up 3.51 per cent this afternoon following today’s announcement.