Shell’s Write-Down Linked to Rotterdam and Singapore Plants
Energy giant Shell has revealed a massive impairment charge of up to $2 billion, citing weak demand and a decline in trading performance in its core gas division. The write-down is primarily linked to the firm’s Rotterdam and Singapore plants, which have been sources of disappointment for the company.
Biofuels Plant Construction Halted
Shell had been constructing a biofuels plant in Rotterdam, with initial forecasts expecting it to become operational by 2025. However, the company has now decided to pause construction due to weak demand. The project was part of Shell’s push to finance more sustainable energy projects. “Temporarily pausing on-site construction now will allow us to assess the most commercial way forward for the project,” said Huibert Vigeveno, Shell’s Downstream, Renewables and Energy Solutions Director.
European Biofuel Projects Falter
European biofuel projects have been facing challenges due to rising US supplies and dampened demand at home. The softening of Sweden’s biofuel mandate last year has also contributed to the decline. This trend is not unique to Shell, as many oil and gas companies are rethinking their climate targets due to the global rise in fuel prices.
Shell’s Rivals Take Similar Approach
Shell’s rival BP has also halted new offshore wind projects, a move that distances its new CEO from his predecessor, who had sought to invest more in renewables. Despite expert warnings that Europe is likely to miss its climate objectives set for 2030, Shell and other oil companies are prioritizing profitability over sustainability.
Second-Quarter Trading Expected to Decline
In addition to the impairment charge, Shell expects its second-quarter trading and optimization results in its main gas division to remain stable on the year, with quarter-to-quarter performance predicted to slide. The company is also expected to record an impairment of $600 to $800 million on its Singaporean refinery and chemicals assets, which it is divesting to a joint venture company.
SOURCE: Ref Image from Reuters
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