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Oil giant\u00a0Royal Dutch Shell\u00a0said on Tuesday it will write down the value of its assets by up to $22 billion in the second quarter, after revising down its long-term outlook for oil and gas prices.<\/p>\n
It comes after the energy company announced in mid-April an ambition to reduce greenhouse gas emissions to net zero by 2050.<\/p>\n
Shell said in a statement to investors that it had reviewed a significant portion of its business given the impact of the coronavirus pandemic and the \u201congoing challenging commodity price environment.\u201d<\/p>\n
It said it would take aggregate post-tax impairment charges in the range of $15 billion to $22 billion in the second quarter.<\/p>\n
This included a write-down of between $8 billion-$9 billion in its integrated gas unit, a $4 billion-$6 billion write-down in upstream\u00a0assets, and a $3 billion-$7 billion write-down in oil products across\u00a0its refining portfolio.<\/p>\n
Shares of the Anglo-Dutch company were over 2.4% lower during early morning deals.<\/p>\n
Earlier this month, U.K.-based energy giant\u00a0BP\u00a0also said it would incur non-cash impairment charges and write-offs in the second quarter, estimated to be in an aggregate range of $13 billion to $17.5 billion after tax.<\/p>\n
Shell said it expected international benchmark\u00a0Brent crude\u00a0prices to average $35 a barrel in 2020, down from a previous forecast of $60.<\/p>\n
The firm also lowered its Brent price forecast to $40 in 2021 and $50 in 2022, having previously said it expected prices to average $60 for each respective year.<\/p>\n
Brent crude futures traded at $41.39 on Tuesday morning, down around 0.7%, while\u00a0U.S. West Texas Intermediate\u00a0futures stood at $39.35, more than 0.8% lower.<\/p>\n
The energy giant also said it believes Henry Hub gas prices will average $1.75 per million British thermal units in 2020, before rising to $2.5 over 2021 and 2022, and $2.75 in 2023.<\/p>\n
Henry Hub is a natural gas pipeline located in Louisiana and serves as the official delivery location for futures contracts on the New York Mercantile Exchange.<\/p>\n<\/div>\n
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