British energy major Shell has announced that its expects to report up to $2bn (£1.56bn) in impairments in its upcoming Q2 earnings.
These impairments are associated with a delayed biofuels plant in the Netherlands and a chemicals facility in Singapore.
Shell CEO Wael Sawan, who has been in his role since January last year, has committed to a "ruthless" approach in enhancing the company's performance and increasing returns for investors.
This strategy has involved job cuts, asset sales and a revised approach to reducing carbon emissions.
This week, the company announced a halt to the construction of a biofuels plant in Rotterdam as it reassesses the project's direction.
This decision is expected to lead to a non-cash post-tax impairment of between $600m and $1bn, Shell said in its Q2 2024 update note.
The Rotterdam biofuels facility, which had its final investment decision announced in September 2021, is expected to have an annual capacity of 820,000 tonnes and produce sustainable aviation fuel and renewable diesel from waste.
Initially set to start production in 2025, the biofuels plant's operational commencement is now delayed until the end of the decade.
Announcing the pause, Shell downstream, renewables and energy solutions director Huibert Vigeveno said: “We are committed to our target of achieving net-zero emissions by 2050, with low-carbon fuels as a key part of Shell’s strategy to help us and our customers profitably decarbonise.”
Furthermore, Shell is preparing for an additional write-down of $600m–800m related to the Singapore chemicals and products facility, which is in the process of being sold to a joint venture between Glencore and Indonesia's PT Chandra Asri Pacific.
The Energy and Chemicals Park Singapore, which includes the Pulau Bukom and Jurong Island sites, features a refinery with a capacity of 237,000 barrels per day and an ethylene cracker with an annual production capability of 1.1 million tonnes.
Shell also forecasts that gas trading results for Q2 will be lower due to seasonal market fluctuations.
