MOSCOW (MRC) -- Shell expects its chemicals division to post a loss for the first three months of 2023, the oil and gas major said on Thursday, amid potential higher tax and depreciation costs, lower utilisation rates and slower than expected ramp-up of its Pennsylvania petrochemicals complex, said the company.
Pre-tax depreciation costs are expected to be USD800m-1bn compared to USD800m during the fourth quarter of 2022, while tax charges for the division are expected to be USD100m-600m for the period compared to zero in the prior quarter.
Realised chemicals margins are expected to be below USD100/tonne despite the indicative margin for the first quarter standing at USD140/tonne, a substantial increase on the USD37/tonne generated in the fourth quarter and USD27/tonne loss during the third quarter 2022.
The disparity between indicative and realised chemicals margins is due to lower utilisation as a result of slower than projected capacity ramp-ups at the firm’s newly-completed Pennsylvania complex.
Refining margins are expected to be USD15/bbl compared to USD19/bbl during the fourth quarter of 2022, while utilisation levels are expected to 70-74% compared to 75% during the preceding three months.
We remind, CNOOC and Shell Petrochemicals Company Ltd (CSPC), a joint venture established by China National Offshore Oil Corp (CNOOC) and Royal Dutch Shell, signed a framework agreement worth USD5.6-bn with China’s Huizhou city government to expand its ethylene project in the city. CSPC is expected to add 1.5 million tons per annum ethylene production capacity on top of its existed 2.2 million tons in Huizhou, according to a statement issued by CNOOC on Sunday night.