Shell's Great Natural Gas Earnings Had a Helping Hand From Oil
Comment of the Day

May 03 2019

Commentary by Eoin Treacy

Shell's Great Natural Gas Earnings Had a Helping Hand From Oil

This article by Kelly Gilblom and Dan Murtaugh for Bloomberg may be of interest to subscribers. Here is a section:

Shell is the world’s largest liquefied natural gas trader and sells most of the fuel on long-term contracts linked to oil prices. Some of those agreements are structured with a three-month lag, Chief Financial Officer Jessica Uhl told reporters on a conference call. That means that while global gas prices were tanking, Shell was still reaping benefits from a crude rally that sent Brent prices to the highest level in four years in early October.

“We have a business structured predominantly around long-term contracts, mostly oil linked,” Uhl said. “The price environment doesn’t have material impact on our business.” In addition, Shell also benefited from trading. The gas business was buoyed by a $234 million accounting gain in the value of its commodity derivatives. Shell’s rival, BP Plc, told investors on Tuesday that its strong trading earnings reflected shorting gas contracts.

Eoin Treacy's view

Natural gas is the big winner from the demise of coal. Not only is it now cheaper than coal, because of tighter emissions regulations and unconventional drilling, but it is also less polluting. That’s particularly important for Asia which has some of the most polluted cities in the world and where standards of living are increasing most rapidly which is creating demand for clearer solutions.

Click HERE to subscribe to Fuller Treacy Money Back to top