Shell has revealed the severe impact of hurricane Ida on the company’s production of oil and chemicals in a Q3 trading update.
In a statement, Shell said adjusted earnings from oil products are expected to drop by between $50m and $100m as a result of the storm. Adjusted earnings from chemical production are likely to fall by $100m with a further $200m to $300m expected to hit Shell’s upstream revenue.
“Hurricane Ida in the US Gulf of Mexico had an impact on our operations and is expected to have an aggregate adverse impact of around $400 million on Adjusted Earnings and CFFO in the third quarter 2021,” the company said in a statement.
Working capital for the quarter is also expected to be impacted by soaring gas and electricity prices worldwide which will raise production costs.
Although Shell is one of the world’s largest natural gas suppliers accounting for about 20 per cent of global demand its sales have fallen in recent months as a result of production problems.
Shell said it is expecting liquefaction volumes, which produce natural gas, to be between 7 and 7.5m tonnes in Q3, the lowest level since 2016, as a result of “feedgas constraints and additional maintenance.”
With hurricane Ida continuing to put many of Shell’s offshore oil rigs out of action utilisation is expected to be between 70 per cent and 74 per cent, lower in Q3 compared to Q2 2021.