Shell Announces Potential $2 Billion Impairment on Asian Facilities

Shell plc will take a $2 billion writedown on its Singapore and Rotterdam plants due to the decline in chemical prices. The company, active in crude oil refining and renewable energy production, operates a global network of over 47,000 service stations, with significant sales in Europe, Asia, the United States, and beyond. Shell's diverse portfolio includes refining, petrochemical production, and electricity generation from renewable sources.

Shell plc (SHEL.L), a global energy giant, has announced a significant writedown on its Singapore and Rotterdam plants. The company, which operates a diverse portfolio of businesses including crude oil refining, renewable energy production, and petrochemical manufacturing, is set to incur a pre-tax impairment charge of approximately $2 billion [1].

The writedown is mainly attributed to the decline in chemical prices, which has impacted Shell's assets in Singapore and Rotterdam. Shell had previously announced a strategic review of its Singapore refining and chemicals hub, which includes a 237,000 barrels per day (bpd) refinery and a one million metric ton per year (tpy) ethylene plant [1][2]. The company is now looking to sell these assets to a joint venture formed by Indonesia's Chandra Asri and Glencore [2].

Despite the impairment charge, Shell's fourth-quarter results are expected to show higher gas trading and upstream production compared to the previous quarter [1]. The company's chemicals & products division, however, is anticipated to post an adjusted earnings loss for the period [1].

Shell's decision to sell its assets in Singapore and focus on its most profitable ventures is part of its plan to lower its overall carbon footprint. The buyers of these assets, including the refinery and ethylene plant on Bukom Island and a mono-ethylene glycol producing plant on Jurong Island, will gain access to one of the world's leading oil refining and trading centers [2].

References:

[1] Reuters. Shell flags quarterly impairment charges up to $4.5 bln. January 8, 2024. https://www.reuters.com/markets/commodities/shell-flags-quarterly-impairment-charges-up-45-bln-2024-01-08/

[2] Finance.yahoo.com. Shell sells off Singapore refinery, petrochemical assets to joint venture. January 8, 2024. https://finance.yahoo.com/news/shell-shel-sell-off-singapore-165600769.html