Shell plc, the world’s No. 1 LNG trader, extended its prowess during the second quarter by making some big deals to secure more natural gas as demand continues to increase.
CEO Wael Sawan, who helmed a webcast to discuss quarterly performance, noted that a year ago, management committed to advancing three guiding principles regarding performance, discipline and simplification.
“Today, I hope you can see this track record developing and gathering momentum,” he said.
In the Integrated Gas business, which includes liquefied natural gas trading, Shell aimed to grow the portfolio “by increasing both our liquefaction and access to third-party volumes. And that is what we have done.”
The London-based major, he said, is extending its LNG prowess by advancing partnerships in place and by clinching new agreements.
In June, Shell inked an agreement with Temasek Holdings Ltd. subsidiary Carne Investments Pte. Ltd. to acquire Pavilion Energy Pte. Ltd. The Singapore company has a global LNG trading business with contracted supply volumes of about 6.5 million metric tons/year (mmty).
Last month, Shell also sanctioned the Manatee natural gas project, an undeveloped field in Trinidad and Tobago. The company in July also bought a 10% stake in Abu Dhabi National Oil Co.’s Ruwais LNG project. It includes two LNG liquefaction trains with total capacity of 9.6 mmty.
“At the same time, we're working hard to achieve first production from our large LNG joint venture project in Canada by the middle of next year,” Sawan said. LNG Canada, in Kitimat on the British Columbia coast, is close to commissioning its first train.
Operational performance also improved across the Integrated Gas business, the CEO said.
The Prelude LNG export project in Australia, for example, “significantly increased its controllable availability since its turnaround last year.” The massive natural gas-to-liquids (GTL) project in Qatar, Pearl GTL, also “continues to build on its impressive track record.”
The goal within the Upstream business, he noted, is to “ensure cash flow longevity. We said by 2025 that we would bring projects on line with a total peak production of more than 500,000 boe/d. And we are making good progress.”
In the United States, Shell also continued to expand its leading position in the Gulf of Mexico (GOM). The Vito and Ryberg platforms in the deepwater are online. In addition, Whale, another deepwater GOM facility, is set to begin commercial operations “around the end of this year,” Sawal said.
“These investments, along with others in the funnel, will help us maintain our liquids production at roughly 1.4 million boe/d until the end of the decade…”
By The Numbers
In the Integrated Gas segment, which includes LNG trading, natural gas available for sale dipped by 1% year/year to 4.89 Bcf/d. Liquefaction volumes decreased by 8% to 6.95 million tons (Mt). LNG sales volumes were off by 3% at 16.41 Mt.
Total gas and oil available for sale within the Integrated Gas business dipped by 1% to 980,000 boe/d. Liquids production available was flat at 137,000 b/d.
Realized global prices rose sequentially to $7.80/MMBtu from $7.60.
For the third quarter, Integrated Gas production is forecast at 920,000-980,000 boe/d. LNG liquefaction volumes were estimated to be 6.8-7.4 Mt. The production outlook “reflects higher scheduled maintenance across the portfolio,” according to Shell.
Within the Upstream business unit, natural gas production fell by 10% from a year ago to 2.82 Bcf/d. Liquids output also was down from 2Q2023 at 1.29 million b/d, with total output declining by 5% to 1.78 million boe/d.
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For the Upstream gas, Shell fetched a realized price of $6.10, slightly off from the first quarter price of $6.20. The realized liquids price averaged $77/bbl, versus $78.
Shell’s Renewables & Energy Solutions segment, which includes marketing, trading and optimizing power and pipeline gas, carbon credits and digitally enabled customer solutions, reported a 22% year/year decline in gas pipeline sales. Sales were 148 TWh. External power sales dipped 5% to 74 TWh.
Sawan said that the management team was “prepared to make tough decisions” within the alternative energy business. Against the “backdrop of disappointing market conditions,” Shell paused onsite construction at a biofuels project in Rotterdam, Germany. It now is seeking “to address project delivery and ensure future competitiveness.
Net profits rose year/year to $3.5 billion (55 cents/share) from $3.1 billion (46 cents). Cash flow declined to $13.5 billion from $15.1 billion. Free cash flow was also down at $10.2 billion from $12.1 billion. Integrated Gas earnings fell by 11% year/year to $2.45 billion. Cash flow was also down 11% to $4.18 billion.
Shell also has launched a $3.5 billion share buyback program for the next three months.
