Shell warns of losses in renewables after halting work on biofuels plant / Image source: Adobe
  • Renewables seen in loss for Q2
  • Work stopped at Rotterdam site
  • Big provisions due in 1H results

Oil major Shell (SHEL) presented an updated second-quarter outlook which contained few changes to its production forecasts but signalled its renewables unit would make a considerable loss.

The shares, which have outperformed the FTSE 100 index with a gain year-to-date of 12.6%, traded sideways at £28.92 as investors focused instead on the outcome of the general election.


In terms of its ‘upstream’ division, the group maintained its forecast of producing between 1.7 million and 1.8 million barrels of oil equivalent per day, a small increase on the same quarter a year ago, while production of natural gas is seen reaching the equivalent of between 940,000 and 980,000, a small decrease on last year.

The marketing division is expected to sell between 2.7 million and 3.1 million of oil equivalent per day, while the corporate division is expected to notch up a loss of between $500 million and $700 million compared with a $654 million loss last year.

The big outlier is the renewables and energy solutions business, which is seen swinging to an adjusted loss of up to $500 million instead of the previously-forecast $200 million profit and a profit of $100 million a year ago 


Earlier this week, the firm announced it would stop construction work on a new biofuel plant in Rotterdam ‘to address project delivery and ensure future competitiveness given current market conditions’.

Contractors at the 820,000 tonnes per year plant, set to be one of the biggest in Europe, will reduce slowly so as to minimise disruption and keep costs down, although the firm expects to take a charge of up to $1 billion for halting work.

‘Temporarily pausing on-site construction now will allow us to assess the most commercial way forward for the project,’ said Huibert Vigeveno, Shell’s director downstream, renewables and energy solutions.

Vigeveno insisted Shell was committed to its target of achieving net-zero emissions by 2050 ‘with low-carbon fuels a key part of our strategy to help us and our customers profitably decarbonise’ and said the company would ‘continue to use shareholder capital in a measured and disciplined way, delivering more value with less emissions’.

The firm said it would also take a provision of between $600 million and $800 million for the sale of its Bukom refinery in Singapore as part of new chief executive Wael Sawan’s push to streamline the company and focus on its most profitable businesses.


Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account. AJ Bell logo

Issue Date: 05 Jul 2024