End of Russian business leads to billion-euro write-downs at Shell

Shell's announcement on March 8 that it was pulling out of its oil and gas business in Russia has led to write-downs of billions of euros at the energy company. Shell said in an updated outlook for the first quarter of 2022 that the withdrawal from the Russian market will impact the company's balance sheet by up to $5 billion. These are impairment charges that Shell says will have no impact on adjusted earnings.

According to the report, the Integrated Gas division will be affected by pre-tax impairment charges of $1.2 billion and $1.4 billion, while the Upstream division will incur $2.8 billion to $3.1 billion. The service station and refinery business will be impacted by $700 million to $900 million, split equally between the two businesses. The chemicals business is affected by $250 million to $300 million.  

This will be offset by higher revenues in the oil and gas business due to the increased energy price level. As a result, Shell expects higher trading and earnings in both the gas business compared with the fourth quarter of 2021 and the downstream segment. It said refinery utilization in the first three months of 2022 was between 70 and 74 percent, higher than in the fourth quarter. And Shell's indicative refining margin also improved from $6.55 per barrel in the fourth quarter to $10.23 per barrel in the first quarter of 2022.