British energy giant Shell has said it plans to report up to $2bn (£1.56bn) in impairments in its upcoming second-quarter results.
These write-downs are linked to the late construction of a biofuel plant in the Netherlands and a chemicals plant in Singapore.
Shell CEO Wael Sawan, who took office last January, has pledged to take a “ruthless” approach to improving the company’s performance and boosting returns for investors.
This strategy involved job cuts, asset sales and a revised approach to reducing carbon emissions.
This week, the company announced that it was halting construction of a biofuel plant in Rotterdam while it reassesses the direction of the project.
The move is expected to result in a non-cash after-tax impairment charge of between $600 million and $1 billion, Shell said in its second-quarter 2024 update note.
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By GlobalData
The Rotterdam biofuel plant, whose final investment decision was announced in September 2021, is expected to have an annual capacity of 820,000 tonnes and produce sustainable aviation fuel and renewable diesel from waste.
Initially scheduled to start production in 2025, the operational commissioning of the biofuel plant has now been postponed until the end of the decade.
Announcing the pause, Huibert Vigeveno, Shell’s Director of Downstream, Renewables and Energy Solutions, said: “We are committed to achieving our goal of net zero emissions by 2050, with low-carbon fuels being a key part of Shell’s strategy to help us and our customers decarbonise profitably.”
In addition, Shell is bracing for an additional $600 million to $800 million writedown related to its Singapore chemicals and products plant, which is being sold to a joint venture between Glencore and Indonesia’s PT Chandra Asri Pacific.
The Singapore Energy and Chemical Park, which includes the Pulau Bukom and Jurong Island sites, comprises a refinery with a capacity of 237,000 barrels per day and an ethylene cracker with an annual production capacity of 1.1 million tonnes.
Shell also expects second-quarter gas trading results to be lower due to seasonal market fluctuations.
