Shell sets 2030 emissions target, sees debt fall in 3Q

Shell today set a shorter-term absolute emission-reduction target for its operations. The company also said its debt fell sharply in the third quarter as cash flow hit an all-time high, but its profit was crimped by US Gulf production outages and the effects of derivative hedging in its integrated gas division.

The firm said it wants by 2030 to halve the absolute emissions from its operations, known as Scope 1 and 2, compared with 2016 levels on a net basis, "through a combination of measures including portfolio activity, efficiency gains, reducing flaring and CCUS".

Shell was one of the first oil companies to set a goal of becoming a net-zero emissions business by 2050, but until now it did not have shorter-term absolute emissions-reduction targets, having only set carbon intensity goals. But it has been under pressure to do more. Activist investors want companies like Shell to set shorter-term targets for absolute emissions, as they argue that carbon intensity goals still leave room for increased hydrocarbon production. And a Dutch court in May ordered Shell to cut its worldwide net carbon emissions, including those from its customers, by 45pc by the end of 2030 compared with 2019 levels.

Shell's European peer BP said last year it is targeting a cut to operational emissions of about a third by 2030, and that it plans to slash its oil and gas output by 40pc this decade. Shell has not set any hydrocarbon reduction goals.

Shell said its operating cash flow increased to $16.03bn in July-September from $12.62bn in the previous three months, thanks to higher oil and gas prices. The firm's net debt fell by $8.2bn in the quarter to $57.49bn at the end of September.

Excluding inventory effects, the company made a loss of $988mn in the third quarter, compared with a profit of $177mn a year earlier. The loss mostly stemmed from non-cash charges of $5.2bn due to the fair value accounting of commodity derivatives, almost entirely in its integrated gas division. Shell's adjusted profit, which exclude one-offs and include supply adjustments, was $4.13bn, up from $955.0mn a year earlier.

Oil and gas output averaged 3.068mn b/d of oil equivalent (boe/d) in the third quarter, compared with 3.081mn boe/d a year earlier and 3.254mn boe/d in the second quarter of 2021. Quarter-on-quarter production was down mainly because of the effects of Hurricane Ida and "unfavourable seasonal effects", Shell said.

It sees oil and gas output in the 3.04mn-3.33mn boe/d range in the final three months of the year.

Refinery runs averaged 1.629mn b/d in July-September, down from 1.972mn b/d a year earlier and from 1.833mn b/d in the second quarter of 2021. Utilisation fell to 71pc from 76pc in the second quarter because of higher levels of planned maintenance and the effect of Hurricane Ida. The company sees its fourth-quarter refinery utilisation in the 68-76pc range.

Shell sees its full-year cash capital expenditure (capex) at around $20bn, compared with the previous guidance of $19bn-22bn. It completed half of the $2bn of share buybacks it planned for the second half of the year, and confirmed that it will distribute an additional $7bn next year arising from the sale of assets in the Permian basin.

By Konstantin Rozhnov