© Reuters. FILE PHOTO: A logo of Royal Dutch Shell is seen at Gastech, the world’s biggest expo for the gas industry, in Chiba, Japan, April 4, 2017. REUTERS/Toru HanaiBy Ron Bousso
LONDON (Reuters) -Shell said on Thursday its third-quarter profits would be pressured by a sharp drop in refining margins and “significantly” weaker earnings from trading.
The British energy giant reported two consecutive quarters of record profits in the first half of the year amid soaring oil and gas prices, and stellar earnings from its trading operations, the world’s biggest.
But in the third quarter, indicative refining margins dropped to $15 a barrel compared with $28 a barrel in the previous three months, Shell (LON:) said in an update ahead of its results on Oct. 27, amid growing concerns over a global economic slowdown.
And indicative margins for chemicals dropped to negative $27 per tonne versus a positive $86 in the second quarter amid a slump in demand for plastics.
The drop in refining margins will have a negative impact of between $1 and $1.4 billion on the segment’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), Shell said.
Shell’s third quarter liquefied natural gas (LNG) and gas trading results are expected to be “significantly lower” due to lower seasonal demand as well as “substantial differences between paper and physical realisation in a volatile and dislocated market.”
