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Shell to write off assets worth up to $22 bn due to Covid-19

Shell assets

Oil giant Royal Dutch Shell revealed that it will write off assets worth up to $22 billion as the coronavirus pandemic has severely impacted its business, the media reported.

According to Shell, the collapse in oil demand as a result of the coronavirus pandemic will drag on global oil prices down for at least three more years.

As a result, it will wipe out billions from the value of its fossil fuel reserves and casting doubt on whether new discoveries will be developed.

Shell further revealed that it expects  a 40 percent drop in sales in the second quarter of 2020 from a year earlier to about 4 million barrels per day (bpd), although that is more than its earlier prediction of a drop to 3.5 million bpd.

Shell, which has a market value of $126.5 billion, has also cut its oil price forecasts and would probably need to take a post-tax impairment charge of between $15 to $22 billion on its global oil and gas assets spanning Australia, Brazil and North America.

Recently, Shell agreed to buy renewable gas, known as biomethane, from Denmark’s Nature Energy.

Earlier in April, Shell laid out the oil and gas sector’s most extensive strategy yet to reduce greenhouse gas emissions to net-zero by 2050.

Jonathan McCloy, head of gas at Shell Energy Europe told the media, “Biomethane has an important role to play in the energy transition. This purchase is an important part of our work to provide a range of lower-carbon energy choices for our customers across Europe.”

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