Shell Experiences Substantial Surge in Gas Trading for the Fourth Quarter

Shell Plc, a company specializing in the exploration and refinement of petroleum products, has announced a significant uptick in earnings from gas trading for the fourth quarter. Concurrently, the company projects lower profits from buying and selling oil, chemicals, and crude oil refineries. The fossil fuel company stated that the former segment is expected to incur an adjusted earnings loss.

Despite declining oil and gas prices in the fourth quarter, reaching a five-month low in early December, the company anticipates an increase in gas trading.

Shell Forecasts Surge

The London-based company and other significant players in the gas trading sector achieved record earnings in 2022. They benefited from natural gas price spikes and overall market volatility in energy commodities.

However, trading performance took a downturn for supermajors in the second quarter of 2023. Profits fell compared to the previous year’s records. Now, Shell has said its earnings from gas trading would be significantly higher.

Shell attributes this positive trend to seasonal fluctuations in the gas market and increased production of the liquefied form of the fuel, playing a pivotal role in driving profits. 

Shell’s earnings met expectations in the previous quarter, contributing to a mixed results season for major oil companies. In response, the company has expedited its buyback initiatives, and CEO Wael Sawan has affirmed a commitment to enhancing shareholder returns. Shell is scheduled to release its fourth-quarter results on Feb. 1.

Production Adjustments and Challenges 

Shell’s gas trading division has become a significant revenue generator, especially with the increased volatility in gas prices resulting from Russia’s invasion of Ukraine. The company has adjusted its gas production range to 880,000 to 920,000 barrels per day, equivalent to oil, to adapt to market dynamics. Additionally, it has raised the lower end of liquefaction forecasts to 6.9 million tons from the previous 6.7 million.

In contrast, Shell anticipates a notable decline in trading and optimization within its chemicals and oil products division compared to the preceding quarter. The company has also narrowed its forecast range for upstream production volumes to 1.83 million to 1.93 million barrels per day.