Shell to take up to $5 billion impairment over Russia operations


Shell PLC on Thursday warned that it will book post-tax impairments of $4 billion to $5 billion in the first quarter related to its activities in Russia.

The oil-and-gas major said pretax depreciation will be $1.2 billion-$1.4 billion for the integrated gas division, $2.8 billion-$3.1 billion for upstream, $700 million-$900 million for oil products, and $250 million-$300 million for the chemicals business.

The company decided to exit its operations in Russia in early March in response to the invasion of Ukraine. It followed a similar move by peer BP PLC.

Shell SHEL, -1.85% SHEL, +0.71% said these impairment charges are expected to be identified, and therefore won’t impact adjusted earnings. The results will be published on May 5.

The FTSE 100 energy group also forecast integrated gas production of 860,000-910,000 oil-equivalent barrels a day and liquefied natural gas volumes of 7.7 million-8.3 million metric tons for the first quarter.

Trading and optimization profits are expected to increase compared with the fourth quarter. Production from the upstream business is expected to be between 1.90 million and 2.05 million oil-equivalent barrels a day.

As for oil products, marketing results are expected to be in line with the previous quarter, whereas refining and trading results will be significantly higher, Shell said. The indicative refining margin rose 56% on quarter to $10.23 a barrel, and refinery utilization is also better, it said. Sales volumes are seen at between 1.5 and 2.3 million barrels a day for products, and at between 2.2 and 2.6 million for marketing.

In chemicals, margins are expected to be in line with the fourth quarter, with better manufacturing-plant utilization and sales volumes of between 3.1 million and 3.6 million tons.

Write to Jaime Llinares Taboada at; @JaimeLlinaresT

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