Shell Down Under: Prelude of Profits or Prelude to Disaster?

Posted by John Donovan: 19 April 2024

Well, folks, gather ’round for another riveting episode of “Shell’s Great Aussie Adventure,” where the profits are plummeting faster than a kangaroo on a trampoline! In the latest saga, our beloved oil behemoth, Shell, has taken yet another hefty blow on its floating Prelude LNG project in sunny north-west WA. But fear not, mates, because the real kicker? They still managed to ship a cool $4 billion back to their global parent! Talk about priorities, right?

So, what’s the down under drama all about this time? Brace yourselves for the shocking reveal: Shell’s Australian arm saw its profits slashed by a whopping $2 billion last year, thanks to a little thing called “writedowns.” Ah, yes, those pesky impairments on the Prelude project, coupled with a cheeky hit from waving goodbye to the Woodside Energy-led Browse gas venture. But hey, who needs profits when you’ve got character, am I right?

According to the newly-filed accounts for Shell Energy Holdings Australia, the Prelude impairment was triggered by a delightful cocktail of “regulatory changes and revised production estimates.” Translation? They miscalculated. Again. But hey, at least they’re consistent!

Let’s take a moment to appreciate the Prelude LNG project, shall we? An offshore extravaganza anchored by the world’s biggest gas processing vessel, costing a mere $19 billion to develop. Well, that’s what they say, anyway. But don’t let the price tag fool you – this baby has been nothing short of a five-year-long rollercoaster ride filled with teething problems, safety issues, and industrial disputes. Ah, the sweet smell of success!

But wait, there’s more! Shell generously wrote off billions of dollars from Prelude’s value back in 2020 when energy markets took a nosedive. And yet, here we are, still sailing the rocky seas of uncertainty aboard the good ship Prelude.

But fear not, dear readers, for amidst the chaos and writedowns, Shell’s Australian arm managed to nearly quadruple its dividends, showering its London-based parent with a whopping $2.7 billion. Because when the going gets tough, the tough send dividends, right?

So, what’s next for Shell Down Under? Will the Prelude project rise from the depths like a phoenix, or will it continue to be a cautionary tale of corporate hubris? Only time will tell. But one thing’s for sure – with Shell at the helm, it’s bound to be one hell of a ride!

SEE: Significant risk to the health and safety of persons at the Shell Prelude FLNG Facility

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