Shell Lowers Q2 Natural Gas Production Forecast as Middle East Conflict Disrupts Supply Chain
Source: Global Market Broadcast
Shell Group released its Q2 2024 performance preview update on the 7th. According to the report, due to attacks triggered by the ongoing Middle East conflict, Shell’s total integrated natural gas production for the second quarter is expected to drop sharply by around 30% compared to the first quarter.
According to the latest forward guidance, Shell has slightly raised its estimated average daily integrated natural gas output for April to June this year to a range of 610,000 to 650,000 barrels of oil equivalent. The previous estimate was 580,000 to 640,000 barrels of oil equivalent. Despite the improved lower bound, this figure is still far below the actual average of 909,000 barrels of oil equivalent per day achieved in the first quarter.
The main reason for the significant reduction in output points to geopolitical conflict in the Middle East. The report confirms that in mid-March this year, the Pearl gas-to-liquids (GTL) facility located in the Ras Laffan Industrial City in Qatar was attacked and damaged, resulting in a complete shutdown of the plant. The “Pearl” facility reportedly has two production lines that can process up to 1.6 billion cubic feet of wellhead natural gas per day and convert it into 140,000 barrels of light oil. Shell previously stated that the attack severely damaged one of the production lines, and repairs are expected to take about a year.
From an asset allocation perspective, Shell is highly dependent on Middle Eastern energy. Data show that approximately 20% of the group’s global oil and natural gas production (equivalent to about 550,000 barrels of oil equivalent per day) originates from the Middle East, with about 10% directly linked to Qatar.
In terms of refining and chemical business, Shell stated that its Chemicals and Products division, including its large oil trading operations, performed solidly in Q2, with trading results expected to be in line with the strong performance of the first quarter.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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