LONDON (Reuters) – Shell will write down up to $5 billion following its decision to exit Russia, more than previously announced, as soaring oil and gas prices boosted business activity in the first quarter, the company announced Thursday.
After-tax writedowns of between $4 billion and $5 billion in the first quarter will not impact the company’s earnings, Shell said in an update ahead of its May 5 earnings announcement.
He had previously said Russia’s writedowns would reach about $3.4 billion.
The start of 2022 marked one of the most turbulent times in decades for the oil and gas industry, with Western companies including Shell rapidly pulling out of Russia, severing trade ties and ending joint ventures after the invasion of Ukraine by Moscow.
Shell said it would exit all of its Russian operations, including a major liquefied natural gas plant on the Sakhalin Peninsula on the country’s eastern flank. This will also put an end to oil trading activities.
Benchmark oil prices climbed to an average of more than $100 a barrel in the quarter, their highest level since 2014, while gas prices in Europe hit a record high.
Shell, the world’s largest liquefied natural gas trader, said LNG trading profits are expected to be higher in the quarter compared to the previous three months. Profits from oil trading are expected to be “significantly higher” in the quarter.
Cash flow for the quarter would be negatively impacted by “very large” outflows of around $7 billion due to changes in the value of oil and gas inventories. -Reuter