London (Reuters) – Shell (LON:RDSa) said on Thursday that it would reverse up to $4.5 billion in writedowns on oil and gas assets. This comes after the Russian invasion of Ukraine caused Shell to raise its energy price outlook.
In an update before the release of its second-quarter earnings on July 28, Shell said that its refining margins almost tripled during the period. This was because the global economy was starting to recover from the pandemic, there wasn’t enough refining capacity, and Russia exported less fuel.
Shell said that it expected earnings from oil trading to be high in the quarter but lower than in the first quarter of 2022.
Shell’s indicative refining margin went up in the second quarter, from $10.23 per barrel in the first quarter to $28.04 per barrel in the second quarter. A year earlier, it was $4.17 per barrel.
During the quarter, oil and gas prices stayed high, with Brent crude averaging about $114 per barrel.
“In the second quarter of 2022, Shell has changed its mid-term and long-term oil and gas commodity prices to reflect the current macroeconomic environment and updated demand and supply fundamentals in the energy market,” the company said.
Shell raised the price it thought Brent would be worth in 2023 from $60 a barrel to $80 a barrel. This was done in its 2021 annual report. The Brent price was raised from $60 to $70 per barrel for 2024 and 2025. The long-term price was $65, while the short-term price was $63.
Shell said that its $8.5 billion programme to buy back shares was finished in the second quarter.
Due to high field maintenance, Shell’s oil and gas production was expected to be up to 2.93 million barrels of oil equivalent per day. This would be the lowest it has been in at least seven years.
