Shell, the British energy major, has released its third-quarter trading results, showcasing impressive gains in various segments. The company attributed these gains to higher refining margins, realized oil prices, liquefied natural gas (LNG) trading, and increased upstream production. Although integrated gas volumes experienced a decline, the overall performance aligned with Shell’s earlier projections.
Integrated Gas Highlights
- 3Q Production: Shell achieved a production rate of 900 thousand barrels of oil equivalent per day (kboe/d) in the third quarter.
- LNG Liquefaction Volumes: The company reported 6.9 million metric tons of LNG liquefaction volumes in Q3.
- Maintenance Impact: LNG liquefaction volumes saw a 4% decrease primarily due to scheduled maintenance activities at Prelude, Shell’s offshore platform.
- Year-to-Date Growth: Compared to the first nine months of 2022, total oil and gas production increased by 3%. This growth resulted from reduced maintenance at Pearl GTL in Qatar and the ramp-up of new fields in Oman and Canada. However, it was partially offset by the derecognition of Sakhalin volumes in Russia and production-sharing contract effects at Pearl GTL.
- Upcoming Outlook: For the fourth quarter, integrated gas production is expected to range between 870-930 thousand boe/d. Additionally, LNG liquefaction volumes are projected to reach approximately 6.7-7.3 million tons. The outlook factors in ongoing maintenance at Prelude and lower anticipated liquefaction volumes from Egypt.
Upstream Performance
Shell achieved a total production rate of 1,753 kboe/d in the third quarter across all upstream activities. This underscores the company’s robust performance in extracting oil and gas resources.
Shell’s strong performance in Q3 demonstrates its ability to navigate market challenges and capitalize on favorable conditions. The company remains optimistic about its future prospects, leveraging its expertise and production capabilities to drive continued growth.
Higher Adjusted Earnings in 3Q 2023
The adjusted earnings for the third quarter of 2023 have shown an increase, primarily due to higher oil prices and production volumes. Notably, the production has recorded a significant surge, with exceptional performance in the Deep Water sector.
Upstream Production Outlook for 4Q
Looking ahead to the fourth quarter, the anticipated upstream production is expected to range between 1,750 and 1,950 thousand boe/d. It is essential to consider that this projection considers the closure of the Groningen gas field located in the Netherlands.
Chemicals & Products Analysis
In terms of refinery utilization, the third quarter witnessed an 84% utilization rate. However, for the fourth quarter of 2023, the outlook predicts a range of 75% to 83% utilization.
Similarly, the third quarter’s utilization rate for chemicals manufacturing plants was 70%. Looking at the upcoming quarter, the outlook suggests that utilization will be within a range of 62% to 70%.
Refining Margins Surge
During the third quarter of 2023, refining margins experienced a notable upsurge. This rise was primarily driven by a decrease in global product supply coupled with increased demand. Conversely, chemicals margins faced challenges due to weak demand. Despite this, trading and optimization margins were higher in comparison to the second quarter of 2023.
Focus on Renewables & Energy Solutions
In contrast to the second quarter of 2023, adjusted earnings in this sector have declined. The main factors contributing to this decline are lower margins due to seasonal impacts, particularly prevalent in Europe, and decreased trading and optimization results.