Advertisements
18.5 C
London
Wednesday, June 3, 2020

Shell warns over hit of up to €730m after oil price crash

Must read

Reforms Needed After George Floyd’s Murder – #BlacklivesMatter

By Deborah Thomas The term 20/20 vision in optical test terms means a perfect vision. Millions use this term regularly and we are now in...

South Korea defends reopening of schools despite new surge in Covid-19 cases

South Korea’s government has defended its decision to reopen schools despite health risks posed by a resurgence in Covid-19 cases. The figure of 49 new...

Severe cyclone approaches India’s financial capital Mumbai

India’s western coast and financial capital Mumbai are braced for the first cyclone in a century as cases of coronavirus continue to surge. Police encouraged...

Nissan warns Sunderland plant ‘unsustainable’ without EU trade deal

Car giant Nissan has warned it will not be able to sustain operations at its Sunderland manufacturing plant if Brexit negotiations fail to establish...

Royal Dutch Shell has warned it expects to take a hit of up to $800m (€730m) in the first quarter as the coronavirus crisis and an oil price war have sent the cost of crude plummeting.

The oil giant said it expects “significant uncertainty” around oil prices and demand as the Covid-19 pandemic wreaks havoc on the world economy.

Shell said it is bracing for an impairment charge of between $400m (€364m) and $800m (€730m) in the first three months of 2020 as it lowered its oil price outlook.

The price of oil has crashed due to the pandemic and a price war between Russia and Saudi Arabia, with Brent crude falling to an 18-year low on Monday – closing at $22.76 (€20.74) a barrel.

Shell said: “As a result of Covid-19, we have seen and expect significant uncertainty with macroeconomic conditions with regards to prices and demand for oil, gas and related products.

“Furthermore, recent global developments and uncertainty in oil supply have caused further volatility in commodity markets.

“The impact of the dynamically evolving business environment on first-quarter results is being primarily reflected in March, with a relatively minor impact in the first two months.”

But shares in Shell rose 7% amid a wider bounce-back on the FTSE 100 Index amid hopes for a Covid-19 vaccine and after early signs the outbreak may be slowing in Britain.

Shell also gave assurances that its financial liquidity was “strong” and that is has secured another $12bn (€10.9bn) credit facility, on top of the $10bn (€9.1bn) at the end of last year.

Details of its first-quarter charge come a week after Shell announced plans to heavily cut operating costs and spending proposals to help mitigate the impact of the coronavirus outbreak and tumbling oil prices.

The company said it will reduce its operating costs by $3bn to $4bn (€2.73bn to €3.6bn) for the next 12 months.

It said it will also reduce its annual spending to a maximum of 20 billion dollars (€18.2bn) for 2020 from its previous expectations of $25bn (€22.7bn).

Shell said there will also be a material reduction in working capital as it said the actions are intended to “reinforce the financial strength and resilience” of the business.

Shares in the company have more than halved in the past two months as oil prices have continued to dive.

Full-year figures in January revealed a 36% drop in profits to $15.3bn (€13.9bn) for 2019 after a dismal performance in the final three months of the year.

Advertisements

- Advertisement -

More articles

This site uses Akismet to reduce spam. Learn how your comment data is processed.

- Advertisement -

Latest article

Reforms Needed After George Floyd’s Murder – #BlacklivesMatter

By Deborah Thomas The term 20/20 vision in optical test terms means a perfect vision. Millions use this term regularly and we are now in...

South Korea defends reopening of schools despite new surge in Covid-19 cases

South Korea’s government has defended its decision to reopen schools despite health risks posed by a resurgence in Covid-19 cases. The figure of 49 new...

Severe cyclone approaches India’s financial capital Mumbai

India’s western coast and financial capital Mumbai are braced for the first cyclone in a century as cases of coronavirus continue to surge. Police encouraged...

Nissan warns Sunderland plant ‘unsustainable’ without EU trade deal

Car giant Nissan has warned it will not be able to sustain operations at its Sunderland manufacturing plant if Brexit negotiations fail to establish...

Protests like Jadon Sancho’s ‘deserve applause not punishment’ – FIFA president

FIFA president Gianni Infantino believes the Bundesliga players who protested about the death of George Floyd on the pitch last weekend “deserve an applause...
%d bloggers like this: