European energy giant Shell plc reported positive quarterly results and looks to add around 8.6 million tonnes per annum (mtpa) of net liquefaction capacity to its portfolio through four projects spanning three continents beyond 2025.
The London-based company reported adjusted earnings of $5.1 billion in the second quarter 2023, down 56% compared to $11.5 billion in second quarter 2022. The supermajor attributed the decline to “lower oil and gas prices and refining margins, lower volumes and lower LNG trading and optimization results,” on Jul. 27 in its second quarter 2023 financial reports.
“Shell remains our top pick in integrated oil,” Wells Fargo said Jul. 27 in a research report. “Shell’s increased focus on capital discipline (“value over volume”), global gas footprint and cash return initiatives all support our positive outlook.”
Shell said it expects additional liquefaction capacity to come online in the near-term from projects under construction in North America, Africa and the Middle East.
In Canada, the LNG Canada T1-T2 project in which Shell has a 40% share will add gross liquefaction capacity of 14 mtpa. Other partners in the project include: Petronas (25%), PetroChina (15%), Mitsubishi Corp. (15%) and KOGAS (5%). Production is expected to begin by mid-decade, according to LNG Canada’s website. Details on Shell’s website reveal there’s potential to expand the project to include up to four processing units in the future.
In Nigeria, the NLNG T7 project in which Shell has a 25.6% share will add gross liquefaction capacity of 7.6 mtpa. Other partners in the project include: Nigerian National Petroleum Corp., or NNPC, (49%), TotalEnergies (15%) and Eni SpA (10.4%). Production is expected in 2024.
In Qatar, the North Field East (NFE) expansion project joint venture (JV) between Shell and QatarEnergy will add gross liquefaction capacity of 8 mtpa. Shell has a 25% share in a JV company that will own 25% of the NFE project, with first production expected in 2026.
Also in Qatar, the North Field South (NFS) expansion project JV between Shell and QatarEnergy will add gross liquefaction capacity of 6 mtpa. Shell has a 25% share in a JV company owning 37.5% of the NFS project, with first production expected in 2026.
At other Shell LNG projects, the company’s Prelude “floating LNG facility in Australia delivered its highest quarterly production since starting up in 2018,” company CEO Wael Sawan said during a webcast with analysts discussing quarterly results.
Sawan added that Shell expects “to undertake considerable planned maintenance activities including the Prelude and Trinidad and Tobago integrated gas assets in the coming months.”
“We view Shell's business as broadly on par with higher-rated peers, such as U.S. majors Exxon Mobil Corp. and Chevron Corp.,” S&P Global Ratings said Jul. 31 in a research report. “This is thanks to Shell's leading LNG business, substantial hydrocarbon production and significant contribution from typically counter-cyclical activities.”
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