Shell trades its way to Q1 profit beat

Shell's Upstream segment includes exploration and extraction of crude oil, natural gas and natural gas liquids. It also markets and transports oil and gas, and operates the infrastructure necessary to deliver them to the market, said the company.

Segment earnings, compared with 4Q 2022, mainly reflected lower prices (decrease of $188 M), timing of liftings (decrease of USD305 M), and favourable tax movements in 4Q 2022 (decrease of $543 M), partly offset by lower operating expenses (decrease of USD286 M), lower exploration expenses and well writeoffs (decrease of $148 M) and lower depreciation (decrease of USD105 M).

1Q 2023 segment earnings also included charges of USD111 M relating to impairments, and deferred tax charges of USD132 M due to amendments to IAS 12, partly offset by gains of USD73 M due to the fair value accounting of commodity derivatives, gains of USD70 M from disposal of assets, and gains of USD48 M related to the impact of the strengthening Brazilian real on a deferred tax position.

These gains and losses are part of identified items, and compare with 4Q 2022 which included charges of $1385 M relating to the EU solidarity contribution and USD441 M relating to the UK energy profits levy, partly offset by favourable movements of USD304 M due to the fair value accounting of commodity derivatives.

Adjusted earnings and adjusted EBITDA were driven by the same factors as the segment earnings and adjusted for identified items. Cash flow from operating activities for the quarter was primarily driven by adjusted EBITDA, partly offset by tax payments of USD2019 M, the timing impact of dividends from joint ventures and associates of $514 M, and working capital outflows of USD475 M.

Total production, compared with 4Q 2022, increased mainly due to lower scheduled maintenance and lower unscheduled deferment, partly offset by divestments. Segment earnings stood at USD2779 M, USD1380 M, and USD3095 M for 1Q 2023, 4Q 2022, and 1Q 2022, respectively, a change of +101%.

Adjusted earnings stood at USD2801 M, USD3061 M, and USD3450 M for 1Q 2023, 4Q 2022, and 1Q 2022, respectively, a change of -9%. Adjusted EBITDA stood at USD8837 M, USD9418 M, and USD8977 M for 1Q 2023, 4Q 2022, and 1Q 2022, respectively, a change of -6%.

We remind, Shell has awarded the Serikandi Kent Energy Solutions joint venture a five-year commissioning and start-up services contract for its activities in Brunei Darussalam. Details and the value of this long-term contract – the first win for Serikandi Kent Energy Solutions - were kept under wraps although Joe McCormick, Kent’s executive vice president for Asia Pacific, said the JV would be building up its local resources in tandem with the BSP work.

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Indian state-owned oil refiner Hindustan Petroleum Corporation Ltd (HPCL) said it posted its biggest quarterly profit in nine years, helped by a fall in crude prices and higher refinery margins, said Hydrocarbonprocessing.

Net profit for the fourth quarter ended March 31 jumped about 80% to 32.23 B rupees (USD394.1 MM) from 17.95 B rupees a year earlier, according to a stock exchange filing.

Sale of products grew nearly 8.6% to 1.14 T rupees, with domestic sales rising to 10.92 MMt from 10.26 MMt a year earlier.

Indian refiners' crude oil processing stayed near all-time highs in March, catering to solid seasonal demand as fuel consumption jumped to a record high, driven by robust economic activity in the world's third-largest oil consumer. The Mumbai-based company also said that its average gross refining margin - profit from making refined products from one barrel of oil - was USD14.01/bbl for the quarter, compared to USD12.44.bbl a year ago.

In March, oil prices slumped to their lowest in more than a year, a positive for refining companies that import crude oil as their raw material.

Brent crude prices have fallen nearly 49% from a peak last year, helping lift oil companies' marketing margins. HPCL in its statement said that energy transition initiatives will be consolidated under a new company, adding that it will also explore carving out its lubricants business.

The company is the first among its state-run peers, including refiner Indian Oil Corp and oil marketing company Bharat Petroleum Corp, to report quarterly results.

We remind, GAIL (India) Ltd, the country's top gas supplier, plans to build a USD4.89-B ethane cracker near its liquefied natural gas (LNG) import plant in Western India, two sources with direct knowledge of the matter said, as it seeks to meet an expected surge in demand. Indian companies are boosting their petrochemical production capacity as the expanding economy boosts the need for goods ranging from plastics to paints and adhesives. A cracker produces ethylene, required for products such as plastics.

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Global commodities trader Trafigura has raised its stake in Italian refiner Saras to 12.46% from 5.23%, the companies said on Friday, strengthening Trafigura's foothold over Mediterranean oil flows, said Hydrocarbonprocessing.

The move comes a week after Russia's Lukoil concluded the sale of its large Sicilian refinery, ISAB, to an Israeli-backed company in turn supported by Trafigura for oil supplies.

Saras, controlled by the Moratti family, operates the 300,000-barrel-per-day Sarroch refinery in Sardinia, one of the biggest plants in the region.

"This reflects our view of the strategic value of this asset, which is one of Europe’s largest and most efficient oil refineries, and our position as a commercial supplier and offtaker from the operation," Trafigura said in a statement.

Geneva-based Trafigura first bought shares in Saras via Urion Holdings in 2020 when the refining sector was clobbered by the impact of the COVID-19 pandemic.

Trafigura has only a small presence in refining operations, preferring more flexible long-term crude supply or fuel offtake agreements. It has an exclusive deal with Prax to supply Britain's Lindsey refinery and operates a small refinery via its subsidiary Puma Energy in Papua New Guinea.

Earlier this year, Trafigura completed the sale its indirect minority stake an Indian refiner, Nayara, that is part-owned by Russia's Rosneft.

We remind, Germany plans to adjust its Energy Security Act to allow a quick sale of Russian energy group Rosneft's stake in the Schwedt refinery without the need for prior nationalization, a draft law showed. Under the planned adjustment to the law, the condition of prior nationalization of assets put under government trusteeship could be withdrawn if the sale of the assets is needed to ensure that Germany's energy sector remains functional, the draft law.

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The board of directors of Phillips 66 has declared a quarterly dividend of USD1.05 per share on Phillips 66 common stock, said Polymerupdate.

The dividend is payable on June 1, 2023, to shareholders of record as of the close of business on May 22, 2023.

We remind, Phillips 66 beat Wall Street's estimate for first-quarter profit due to elevated margins on sustained fuel demand amid tight crude supplies. The company's shares rose 1.3% to USD95.98 in morning trade. Profits from turning crude oil into gasoline, diesel and jet fuel surged as supplies remained tight due to pandemic-era closure of facilities and a recovery in demand. Margins were also supported by Russia's invasion of Ukraine last year that further tightened supplies. Realized margins soared 91% to USD20.72 per barrel in the first quarter from a year earlier, Phillips 66 said.

Phillips 66 manufactures, transports and markets products that drive the global economy. The diversified energy company’s portfolio includes Midstream, Chemicals, Refining, and Marketing and Specialties businesses. Headquartered in Houston, Phillips 66 has employees around the globe who are committed to safely and reliably providing energy and improving lives while pursuing a lower-carbon future.

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Axens has been selected to supply the technologies for the acid gas removal unit (HySWEETTM) and the sulfur recovery unit (SmartSulf) of the Albright sour gas processing plant to be constructed by CSV Midstream Solutions Corp. in Alberta, Canada, said Hydrocarbonengineering.

For the acid gas removal unit, Axens licensed the HySWEET technology in order to process 152 million ft3/d of natural gas. HySWEET is a hybrid process for simultaneous removal of mercaptans and acid gases from natural gas, developed by TotalEnergies and commercialised by Axens.

For the sulfur recovery unit, Axens licensed the SmartSulf technology to handle the acid gas from the HySWEET in order to remove 370 tpd of sulfur and achieve a sulfur recovery of 99.5+%. Axens' scope of work includes the supply of the process design packages, the supply of the specific equipment for the SmartSulf unit as well as full services from plant personnel training to unit start-up.

Both units are now under process design phase and commissioning is expected for the end of 2024.

“CSV thoroughly evaluated a number of processing technology options prior to selecting the HySWEET and SmartSulf processes for our Albright sour gas processing plant. Throughout the evaluation, Axens and TotalEnergies were exceptionally cooperative and transparent, providing CSV with the confidence that the technologies were the right choice for our facility. Further to that, the benefit of working with one process licensor for both technologies provides significant synergies that allow for a streamlined project execution. The HySWEET technology’s ability to minimise hydrocarbon co-absorption will bring operational benefits to our sulfur recovery unit, while the SmartSulf unit will provide best-in-class sulfur recovery metrics with a smaller footprint and reduced CAPEX and OPEX”, says Dan Cote, CSV’s Director, Projects.

“We are proud of having been selected by CSV Midstream Solutions for this project. The specific Axens’ process scheme combining a HySWEET unit followed by a SmartSulf unit provides a very competitive solution in terms of simplicity, CAPEX and OPEX as well as emissions mitigation for the Albright sour gas processing plant. We are confident that this is the start of a great collaboration between CSV, TotalEnergies and Axens” says Jacques Rault, Axens’ Executive VP Technology & Technical Support.

“This commercial success crowns the development of the HySWEET technology. This solvent relies on a hybrid formulation developed by TotalEnergies R&D to simultaneously remove H2S, CO2 and organic sulfur species such as mercaptans while reducing the carbon footprint of the gas treatment. It illustrates TotalEnergies' expertise and commitment to finding technical solutions that reduce the environmental impact of gas as an energy of transition” says Marie-Noelle Semeria, TotalEnergies's Chief Technology Officer.

We remind, Axens has acquired stakes in the BioTJet project, the aim of which is to build and operate the largest European Sustainable Aviation Fuel (SAF) production unit using the Fischer-Tropsch process, relying on the BioTfueL technology. This unit will be built in France and will be started up by 2027.

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