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Shell’s $2 Billion “Oops!” Moment: How Not to Run an Oil Empire

Posted  by John Donovan: 9 July 2024

In the latest edition of “What the F***, Shell?”, our favourite oil behemoth is bracing for a second-quarter faceplant of up to $2 billion in impairments. Yes, that’s billion with a “B.” This colossal write-down is primarily due to Shell’s decision to hit the snooze button on a major biofuels project in Rotterdam and additional blunders in Singapore.

Dutch Disaster:

Let’s start with the Rotterdam fiasco. Shell had big dreams of producing 820,000 tonnes of “sustainable aviation fuel” and “renewable diesel” from waste. Sounds green and shiny, right? But instead of following through, Shell decided to put the project on ice, without bothering to mention when—or if—it might thaw. This brilliant move alone is costing them between $0.6 and $1 billion. Way to go, team!

Singapore Slip-Up:

Meanwhile, on the other side of the planet, Shell’s Singapore operations are contributing another $0.6 to $0.8 billion to this financial black hole. Apparently, juggling hydrocarbon prices and strategic adjustments isn’t Shell’s strong suit. But hey, what’s a few hundred million here and there?

Performance? What Performance?

Shell has already warned that their gas sector performance for Q2 2024 will be as underwhelming as it was in Q2 2023, and even worse than Q1 2024. Why? Because of “seasonality.” Ah, the trusty old excuse for poor performance.

Backpedaling on Climate Goals:

In a plot twist no one finds surprising, Shell and BP have decided that those pesky climate targets can take a backseat. Instead, they’re doubling down on oil and gas to rake in profits. Environmentalists are, of course, fuming, but when has Shell ever let a little thing like planetary survival get in the way of making money?

Future Outlook: Spoiler Alert—It’s Bleak

The suspension of major projects like Rotterdam highlights the ongoing dumpster fire that is Shell’s strategic planning. As they navigate the tricky balance between making quick cash and pretending to care about the environment, analysts and investors will be watching closely. Spoiler alert: Don’t hold your breath for anything revolutionary.

So, here’s to Shell—continuing to set the gold standard for corporate irresponsibility.

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