Shell has announced that its profits for the second quarter of the year have fallen by 56% compared with the same period last year. The $5.1bn (£3.96bn) profit announcement comes as oil prices continue to drop across the globe.
Shell reported earnings before interest, taxes, depreciation and amortisation of $14.4bn for the second quarter of 2023.
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The drop in profits for 2023 comes after 18 months of extreme profit growth for several energy giants including the UK-based Shell. Russia’s invasion of Ukraine in early 2022 had a significant impact on oil demand and prices over the period, resulting in higher profit for fossil fuel companies internationally.
In 2022, Shell announced profits of $39.9bn, the largest profits every recorded in the company’s 115-year history.
According to Shell, the largest decline in profits came from its liquified natural gas operations. Earnings in the group’s integrated gas division almost halved to $2.5bn in the second quarter from $4.9bn in the first quarter of the year.
“Shell delivered strong operational performance and cash flows in the second quarter, despite a lower commodity price environment,” said CEO Wael Sawan in a statement published on Thursday.
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By GlobalDataThe energy giant attributed lower prices and weaker trading profits to “seasonality and fewer optimisation opportunities”.
This is the second quarter’s results with Sawan as CEO, after he took over from Ben van Beurden at the start of 2023. He has promised shareholders that he will focus on performance in a bid to compete with US rivals.
Sawan has faced criticism for his profit-driven approach, with critics saying it has resulted in a reduced focus on renewable technologies. Despite policies that suggest otherwise, Shell says that it is committed to achieving net zero by 2050.
“As we deliver more value with less emissions, we will continue to prioritise share buybacks, given the value that our shares represent,” Sawan said on Thursday.
Other energy majors have also seen a drop in profits during the first quarter. French company TotalEnergies said that its adjusted net income dropped to $5bn (€4.55bn), down 49% compared with the same period last year.
Shell, like many of its rivals, used its record profits from the past 18 months to establish a share repurchasing scheme. The company distributed $26bn to shareholders in 2022, including $18bn in share buybacks, representing almost 10% of its market value.
