MOSCOW (MRC) -- Royal Dutch Shell reported an 80% slump in adjusted earnings for the third quarter of 2020 to USD955 million, as it continues to suffer from lower prices and output as global demand suffered from the COVID-19 pandemic, reported S&P Global.
The result, however, was well above consensus estimates of a USD42 million adjusted profit for the period.
During the third quarter, Shell saw a 14% slide in year-on-year upstream production volumes of 2.2 million boe/d reflecting OPEC+ curtailments, lower gas demand and hurricanes in US Gulf of Mexico.
It's integrated, LNG-linked gas assets produced 844,000 boe/d in the quarter, down 12% on the year after higher maintenance and lower well performance, partly offset by the transfer in the first quarter 2020 of the Rashpetco operations in Egypt from the upstream segment. It said its LNG liquefaction volumes decreased mainly as a result of more maintenance activities in Australia.
Combined, Shell's total third-quarter production was 3.08 million boe/d down 14% on the year.
Looking ahead, Shell said it expects its upstream production to average 2.3 million - 2.5 million boe/d and its LNG-related gas production to average 830,000 - 870,000 boe/d. LNG liquefaction volumes are expected to be approximately 7.9 million - 8.5 million mt.
"As a result of COVID-19, there continues to be significant uncertainty in the macroeconomic conditions with an expected negative impact on demand for oil, gas and related products. Furthermore, global developments and uncertainty in oil supply have caused volatility in 2020 in commodity markets," Shell said.
Downstream, Shell saw its earnings bounce back from a loss in the previous quarter, helped by strong marketing margins and favorable deferred tax movements.
Oil product segment earnings were USD2.09 billion, down 14% on the year, reflecting weaker refining margins and lower sales volumes due the COVID-19 pandemic.
Refinery utilization was 65% compared with 78% in the third quarter 2019, mainly due to lower demand and economic optimization of the plants.
Crude throughputs in the quarter slipped 22% on the year to 1.97 million b/d while oil product sales were 30% lower at 4.74 million b/d.
As MRC informed before, Royal Dutch Shell plc. said earlier this month that its petrochemical complex of several billion dollars in Western Pennsylvania is about 70% complete and in the process to enter service in the early 2020s. The plant’s costs are estimated to be USD6-USD10 billion, where ethane will be transformed into plastic feedstock. The facility is equipped to produce 1.5 million metric tons per year (mmty) of ethylene and 1.6 mmty of polyethylene (PE), two important constituents of plastics.
Ethylene and propylene are feedstocks for producing PE and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,496,500 tonnes in the first eight months of 2020, up by 5% year on year. Shipments of all ethylene polymers increased, except for linear low desnity polyethylene (LLDPE). At the same time, PP shipments to the Russian market reached 767,2900 tonnes in the eight months of 2020 (calculated using the formula - production minus exports plus imports - and not counting producers' inventories as of 1 January, 2020). Supply increased exclusively of PP random copolymer.
Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.