Shell increases earnings quarter-over-quarter to USD7.3 bn

Shell increases earnings quarter-over-quarter to USD7.3 bn

MRC -- Shell plc increased quarterly adjusted earnings to $7.3 bn in 4Q 2023 compared with $6.2 bn in 3Q 2023, reflecting robust operational performance, strong LNG trading and optimization results, said the company.

For full-year 2023, Shell realized a $28-bn annual profit, surpassing expectations due to robust LNG trading and enabling the oil giant to raise its dividend and continue share buybacks. The company's 2023 full year shareholder distributions reached $23 bn, in excess of 40% of cash flow from operations (CFFO) for 2023. However, the annual profit was down 30% from the prior year's record, impacted by lower chemicals and refining margins, along with a slowdown in fuel sales due to tepid global economic activity.

This comes after a remarkable 2022, driven by a spike in energy prices following Russia's invasion of Ukraine. In 4Q 2023, adjusted earnings for the upstream division reached $3.1 bn, an increase from the $2.2 bn reported in 3Q 2023, due to higher production volumes and favourable movements in non-cash deferred tax positions.

Shell's liquids production for 4Q 2023 amounted to 1.36 MMboe/d, up from 1.31 MMboe/d in 3Q 2023. Gas production during 4Q 2023 reached 2.95 Mcfd, compared with 2.56 Mcfd in 3Q 2023. The total production for the quarter stood at 1.87 MMboe/d, an increase from the 1.75 MMboe/d reported in the previous quarter. Integrated gas division's adjusted earnings in 4Q 2023 increased to $3.9 bn from $2.5 bn in the prior quarter, reflecting exceptional trading and optimization results combined with higher volumes.

Trading and optimization results were significantly higher compared with 3Q 2023 due to seasonality and a high number of optimization opportunities. Marketing division's adjusted earnings declined to $692 M from $720 M in 3Q 2023, impacted by lower volumes due to seasonality. Chemicals & products division reported adjusted earnings of $83 M, down sharply from $1.38 bn in the previous quarter. Lower refining margins in the 4Q 2023 reflected lower global product demand as well as lower utilization due to planned maintenance activities. Chemicals margins continue to be impacted by global oversupply as well as weak demand.

Trading and optimization were significantly lower than the previous quarter. Shell's renewables and energy solutions division reported adjusted earnings of $155 M, compared with an adjusted loss of $67 M in 3Q 2023. The improvement was mainly driven by higher trading and optimization results in Europe and the Americas due to volatility and seasonal effects. Total capital expenditure reached $24.4 bn in 2023 and is expected to be $22-25 bn in 2024. The group's spending on its renewables and energy solutions division dropped in 2023 by 23% from 2022 to $2.7 bn.

We remind, Shell will shut down its oil refinery in Wesseling, Germany by 2025 and convert the site to produce lubricant feedstock as part of its drive to reduce its carbon emissions. Shell said it will convert the site's hydrocracker unit into a production unit for Group III base oils, used mostly in engines, with capacity of about 300,000 metric tons a year, equivalent to about 9% of current EU demand and 40% of Germany’s demand for base oils.

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TotalEnergies to acquire SapuraOMV

TotalEnergies to acquire SapuraOMV

MRC -- TotalEnergies SE has agreed to acquire OMV Group's 50% interest in Malaysian independent gas producer and operator SapuraOMV Upstream Sdn (SapuraOMV) for USD903 mln, said the company.

SapuraOMV's main assets are its 40% operated interest in Block SK408 and 30% operated interest in Block SK310, both offshore Sarawak in Malaysia. In 2023, SapuraOMV's operated production (100%) was about 500 MMcfd of natural gas, feeding the 30 M tonne/y Bintulu LNG plant operated by Petroliam Nasional Berhad (Petronas), and 7000 b/d of condensate. On Block SK408, Jerun gas field is on track for startup in 2H 2024.

SapuraOMV also holds interests in other exploration licences in Malaysia, Australia, New Zealand, and Mexico, where a discovery was made in Apr 2023 on Block 30. Wintershall DEA operates Block 30 in partnership with SapuraOMV and Harbour Energy PLC (30% each). Located in the shallow waters of Cuenca Salina in Sureste basin, preliminary estimates are of 200-300 M boe in place. The transaction is subject to customary conditions and regulatory approvals. Closing is expected by end 1H 2024.

We remnd, TotalEnergies, a globally recognized energy corporation, recently announced a delay in the reboot of its mixed-feed ethylene cracker facility situated in Antwerp, Belgium. This facility, which boasts an annual production capacity of 580,000 metric tons, has had its restart schedule pushed to the second half of January, a move that signifies the intricate challenges inherent in such large-scale operations.

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BP faces profit decline amidst booming LNG and biogas sectors

BP faces profit decline amidst booming LNG and biogas sectors

MRC -- In 2023, bp's profits saw a significant decline, halving to $13.8 billion, primarily due to lower energy prices. However, the multinational energy group found some solace in the resilience of the gas sector, which helped support its overall business, said the company.

Despite the challenging economic environment, bp's LNG portfolio witnessed a notable increase, rising by 4 million tonnes per annum (Mtpa) to reach 23 Mtpa. Additionally, the supply and production volumes of biogas surged by 80% and 18% respectively. Moreover, the hydrogen pipeline expanded to 2.9 Mtpa, up from 1.8 Mtpa in 2022.

However, the gas sector faced its share of commercial pressures amidst the wider market challenges. The total adjusted EBITDA for gas and low-carbon energy stood at $14.76 billion in 2023, down from $21.07 billion in the previous year. In the fourth quarter of 2023 alone, the adjusted EBITDA for these sectors totaled $3.4 billion, a decrease from $4.5 billion year-on-year. Overall, the fourth-quarter profit amounted to $3 billion.

Despite the financial challenges, 2023 was marked by strong operational performance across bp's business segments. The company's strategic focus remains unchanged, transitioning from an International Oil Company (IOC) to an Integrated Energy Company (IEC), with a concentrated effort on enhancing the overall value proposition.

In the realm of hydrogen, bp's strategy for the decade involves prioritizing blue hydrogen and the decarbonization of its refineries. Simultaneously, the company is laying the groundwork for green hydrogen production towards the latter part of the decade.

On December 5th, bp announced a restructuring of the ownership and commercial framework of the Atlantic LNG joint venture, in collaboration with partners Shell and the National Gas Company of Trinidad & Tobago. This restructuring aims to provide the necessary certainty for sanctioning the next wave of upstream gas projects and securing long-term LNG equity offtake for shareholders, including bp.

Furthermore, in Senegal, the government approved bp's exit from the Cayar Offshore Profond production sharing contract, designating Kosmos Energy as the Operator of the Yakaar-Teranga gas resource.

In November, bp entered into a nine-year sales and purchase agreement (SPA) with State-owned Oman LNG to procure one million Mtpa of LNG starting in 2026. Additionally, production commenced at the Seagull oil field in the North Sea, with expected peak production of 50,000 barrels of oil equivalent (boe) gross per day.

Moreover, the Tangguh LNG facility in Papua Barat, Indonesia, saw the loading of the first LNG cargo produced by its new third liquefaction train in October.

BP's renewables pipeline also witnessed significant growth, reaching 58.3 gigawatts (GW), up from 37.2 GW in 2022. During the quarter, the company secured funding confirmation from the US Department of Energy for the MachH2 Hub hydrogen project in the US Midwest. Additionally, bp and Equinor signed an agreement to restructure their investments in their US offshore wind projects. Pending approvals, bp will assume full ownership of the Beacon projects, while Equinor will take control of the Empire projects. bp also expressed its intention to independently pursue future US offshore wind opportunities. Furthermore, bp expanded its presence in the energy market by acquiring GETEC Energie, a prominent independent supplier of energy to commercial and industrial customers in Germany.

Looking ahead, bp has budgeted capital expenditure of around $16 billion per year for 2024 and 2025, signaling its commitment to continued investment and growth initiatives.

We remind, Energy giants QatarEnergy and ExxonMobil are on track to commence LNG production at their Golden Pass LNG export terminal, situated on the US Gulf Coast near Sabine Pass, Texas, during the first half of 2025. QatarEnergy, a state-owned entity, holds a substantial 70 percent stake in the Golden Pass project, which boasts a capacity exceeding 18 million metric tons per annum (mtpa). Notably, QatarEnergy will offload 70 percent of the terminal's capacity. In parallel, ExxonMobil, a prominent US-based energy firm, possesses a 30 percent share in the venture.

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Eni plans bio-refinery construction at former oil plant site in Italy

Eni plans bio-refinery construction at former oil plant site in Italy

MRC -- Eni, the renowned oil giant based in Italy, has officially announced its strategic initiative to convert the longstanding Livorno refinery into a bio-refinery, marking a pivotal shift in its operational focus towards sustainable energy solutions, said Chemanalyst.

The Livorno refinery, located in northern Italy, has been an integral part of the region's industrial landscape since its inception in 1936. Boasting a substantial refining capacity of 105 kbbl (thousand barrels) per day, the refinery has traditionally emphasized the production of lubricant bases, fuel oil, gasoline, and specialty products. However, Eni's recent decision to transition towards a bio-refinery model signifies a significant departure from its historical operations and underscores a proactive commitment to environmental sustainability.

The pivotal decision to embark on the bio-refinery project was initially disclosed in October 2022 and is currently awaiting official authorizations subsequent to an environmental impact assessment application. This crucial step underscores Eni's dedication to ensuring compliance with regulatory requirements while laying the groundwork for a seamless transition towards sustainable energy production.

The ambitious bio-refinery project is set to encompass the construction of three innovative facilities dedicated to the production of hydrogenated biofuels (HVO). These facilities include a biogenic feedstock pre-treatment unit, a 500,000-tonnes-per-year Ecofining plant, and a specialized facility focused on hydrogen production from methane gas. The anticipated completion and commissioning of these state-of-the-art facilities are projected for 2026, signaling a tangible commitment to advancing sustainable energy solutions within the region.

Eni's strategic move towards establishing a bio-refinery aligns with the evolving legislative landscape in Italy, which mandates the integration of pure biofuels into the energy mix. Furthermore, this visionary initiative resonates with the targets outlined in the European Union's Renewable Energy Directive, which seeks to reduce emissions within the mobility sector by advocating for the increased adoption of biofuels. By proactively aligning with regulatory mandates and global sustainability targets, Eni is poised to play a pivotal role in driving the transition towards a low-carbon future.

In essence, Eni's decision to transform the historic Livorno refinery into a bio-refinery underscores its unwavering commitment to sustainability and environmental stewardship. By spearheading this transformative initiative, Eni positions itself as a key player in championing the adoption of sustainable energy solutions and driving the transition towards a low-carbon future, thereby setting new benchmarks for environmental responsibility within the industry.

Eni's visionary approach towards establishing a bio-refinery at the Livorno site heralds a new era of sustainable energy production in Italy. By leveraging innovative technologies and embracing a diversified portfolio of biogenic feedstocks, Eni is poised to make significant strides in advancing sustainable energy solutions and contributing to the global efforts aimed at curbing emissions and fostering environmental stewardship.

We remind, December 2023 saw a surprising turn in the Saudi Arabian Base Oil market. After a period of climbing prices in the previous month due to increased exports from Yanbu and Jeddah, coupled with inclining international costs, Group I Base Oil, a key ingredient in lubricants, took a sudden plunge. This expected drop was associated with Luberef, a key supplier of Saudi Arabia, trading their cargos at discounted prices to attract buyers, particularly from the UAE during this time frame. While the December discounts may have cleared inventories, the shipping issues leave a cloud of uncertainty over January's prices.

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Dow posts adjusted EBIT decline in 4Q 2023

Dow posts adjusted EBIT decline in 4Q 2023

MRC -- Dow's operating earnings before interest and tax (EBIT) fell by 7.0% year-on-year to $559 M in 4Q 2023 on 10% lower sales of $10.6 bn, said the company.

Volumes expanded by 2% year-on-year, while prices plummeted by 13%. For 1Q 2024, the company sees flat to higher sales compared to 4Q 2023 and a $70 M headwind to operating EBIT due to heavy maintenance schedule.

Demand for consumer durables is predicted to remain challenged.

We remind, Dow announced that for the fifth year it has been named to the JUST 100 list by JUST Capital and CNBC – placing 35th overall, up 20 spots in the ranking from last year, and securing the top spot for Customers in the Chemicals sector. This year marks the Company’s first time ranking in the top 50.

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