The arrival of Shell’s first new manned vessel in the UK for 30 years is delayed, the supermajor’s chief executive confirmed today.
Wael Sawan expects a floating production storage and offloading (FPSO) vessel to leave Norway for the UK North Sea Penguins field in 2024, rather than 2023 as originally thought.
First oil from Penguins – about 150 miles north-east of Shetland – could flow next year.
The FPSO is currently in Aibel’s yard in Haugesund after her maiden voyage from China earlier this year.
Mr Sawan said: “Because of Covid, there were some challenges completing some of the key works required for the facility.”
Shell profits cut by half as oil and gas prices cool
A redevelopment of a former tie-back field to the Brent Charlie hub, Penguins will comprise eight wells tied back to the new-build FPSO. First production was originally expected last year.
Meanwhile, Shell is the latest oil and gas producer to post weaker results after the heady heights of 2022. The energy giant made pre-tax profits of £15.2 billion during the first half of 2023, roughly half the £28.5bn it racked up in the same period last year.
Revenue for the latest period came in at £125bn, compared to £142bn in 2022.
They’re partying like there’s no tomorrow and ordinary people around the world are being forced to pick up the tab.”
Maja Darlington, Greenpeace UK
Shell’s pre-tax profits for Q2 alone were £4.13bn – a sharp decline from a year earlier, when the company posted takings of £20.17bn.
A sustained drop in oil and gas prices means several companies, including TotalEnergies and Equinor, have posted diminished year-on-year takings this week.
Mr Sawan confirmed a 15% increase in the company dividend, making good on a pledge made during Shell’s capital markets day earlier this year.
And there will be further rounds of share buybacks, with £2.3bn-worth to be completed by the third quarter of this year as the group’s board tries to improve the company’s standing in the eyes of investors.
Senior figures at the company have repeatedly claimed Shell stocks are undervalued, given its size, activities and portfolio.
Shell has also lowered its global capital expenditure outlook for 2023, another of the pledges from its capital markets day. It now plans to spend between £17.7bn and £20bn this year.
Mr Sawan said: “Shell delivered strong operational performance and cash flows in the second quarter, despite a lower commodity price environment.”
Shares in the company fell sharply after the results announcement, but have since recovered most of the lost ground.
Stuart Lamont, investment manager in the Aberdeen office of wealth manager RBC Brewin Dolphin, said: “Lower oil and gas prices have hit Shell’s revenues and profitability. The company had previously set the scene with downgrades in its earnings estimates to reflect a more normalised trading environment, but it has still missed expectations with today’s results.
“The share buyback programme and increased dividend are good news for shareholders but will, inevitably, come with questions attached in the current environment.”
Pierce a highlight
Shell’s operational highlights for the second quarter include a restart on the Pierce field in the UK North Sea in April. It followed a major redevelopment of the aging asset, about 165 miles east of Aberdeen, to allow it to produce gas. For years the field has produced only oil.
Pierce is a joint arrangement between Shell (92.52%) and Ithaca Energy (7.48%).
Climate activists target Shell HQ
Shell’s position amongst the oil and gas elite makes it a frequent focus for environmental groups.
Climate campaigners today erected a giant spoof advertising billboard outside the group’s London headquarters.
Greenpeace UK campaigner Maja Darlington said: “While millions attempt to rebuild their lives after months of extreme weather wreaked havoc from Rhodes to Rajasthan, Shell is upping oil and gas production, slashing investment in renewables and posting billions of dollars in profits.
“They’re partying like there’s no tomorrow and ordinary people around the world are being forced to pick up the tab.”
