Shell receives emissions payments of $1.3 billion amid ‘significantly lower’ profits

Shell has warned of a cash flow hit of $1.3 billion for the fourth quarter of 2024 due to emissions certificate payments.

Europe’s largest energy company said the payments related to biofuel programs in the United States and Germany’s Fuel Emissions Trading Act.

It came as the oil major told shareholders that profits would be “significantly lower” in the fourth quarter due to the expiration of hedging contracts.

Shell’s total gas production during the final three months of last year will also likely be lower due to maintenance at a plant in Qatar.

The firm expects its integrated gas segment to have produced between 880,000 and 920,000 barrels of oil equivalent per day during the period, compared with 941,000 Boe/d in the third quarter.

It said production was affected by “scheduled maintenance” at its Pearl Gas to Liquids plant, the world’s largest GTL facility, which Shell manages with QatarEnergy.

Shell also lowered its fourth-quarter liquefied natural gas production forecast to between 6.8 million and 7.2 million metric tons following a drop in cargoes and feed gas, having previously anticipated between 6.9 million and 7.5 million tons.

Meanwhile, the FTSE 100 group said oil refining margins remained at around $5.5 (£4.41) a barrel after falling significantly last year.

Brent crude futures ended 2024 down about 3 percent at $74.64 a barrel, their second straight year of decline.

Oil prices were hit by a weak Chinese economy, slower demand growth and rising supply from the United States and OPEC+ countries.

Prices have fallen significantly since early 2022, when the easing of Covid-19 restrictions and Russia’s large-scale invasion of Ukraine provided a huge windfall for the fossil fuel sector.

However, the companies have continued to post impressive results while providing shareholders with extraordinary returns.

In its third-quarter results, Shell reported adjusted profits of $6 billion for the three months ending in September thanks to strong demand for LNG.

Under its chief executive, Wael Sawan, the company canceled plans to reduce oil production and said it will not launch any new offshore wind projects.

Mark Crouch, market analyst at investment platform eToro, said this latest move “raises questions about the long-term viability of wind farms as a practical investment for company shareholders.”

He added: “Sawan’s relentless focus on pursuing projects that create value for investors appears to prioritize short-term returns over longer-term renewable energy commitments.”

shell actions They fell 1.4 percent to 2,581.5 pence on Wednesday morning, although they remain above their pre-pandemic levels.