Shell slows refining, takes up to $800 million hitChristian Fernsby ▼ | March 31, 2020
Royal Dutch Shell slowed refining output and will write down up to $800 million in the first quarter of 2020 after a dramatic drop in oil demand due to the coronavirus.
Oil Royal Dutch Shell
The Anglo-Dutch company lowered its oil and gas price outlook for 2020, resulting in a post-tax impairment charge in the range of $400 million-$800 million, it said.
Shell said this month it would lower spending by $5 billion to $20 billion or less and suspend its vast $25 billion share buyback plan in an effort to weather the downturn.
Shell’s first quarter oil production was expected to fall by 4.5% versus the fourth quarter of 2019, while liquefied natural gas (LNG) volumes were set to decline by 2.3%.
Shell, which sells products produced by its refineries and other suppliers, gave a wide range for oil products sales volumes of 6 million to 7 million barrels per day (bpd) for the first quarter of 2020.
Shell slowed down its refining output in the first three months of the year due to weaker demand for fuels.
Refinery utilization is expected to be between 80% to 84%, while 93% to 96% of its refining capacity is available. Refining profit margins were also expected to be lower, Shell said.
The company said its cash liquidity remained strong after getting a new $12 billion revolving credit facility commitment, lifting its available liquidity from $30 billion to $40 billion. ■