Shell to write off $5bn following exit from Russia

The company is winding down all its Russian operations, including a major LNG plant and oil trading activities

Shell had previously said the Russia write-downs would reach around $3.4bn. AFP

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Shell will write down up to $5 billion following its decision to exit Russia, higher than previously disclosed, while soaring oil and gas prices boosted trading activities in the first quarter, the company said on Thursday.

The post-tax impairments of between $4bn and $5bn in the first quarter will not impact the company's earnings, Shell said in an update before its earnings announcement on May 5.

It had previously said the Russia write-downs would reach about $3.4bn.

The start of 2022 marked one of the most turbulent periods in decades for the oil and gas industry as western companies including Shell rapidly pulled out of Russia, severing trading ties and winding down joint ventures following Moscow's military invasion in Ukraine.

Shell said it would exit all its Russian operations, including a major liquefied natural gas plant in the Sakhalin peninsula in the eastern flank of the country. It will also wind down oil trading activities.

Average benchmark oil prices soared past $100 a barrel in the quarter, their highest since 2014, while European gas prices hit a record high.

Shell, the world's largest LNG trader, said earnings from the segment were expected to be higher in the quarter from the previous three months. Earnings from oil trading are set to be "significantly higher" in the quarter.

Cashflow in the quarter would be negatively affected by "very significant" outflows of about $7bn as a result of changes in the value of oil and gas inventories.

Updated: April 07, 2022, 8:46 AM