Energy giant Shell expects ‘significantly lower’ trading in gas business

Nevertheless, it stressed that the performance from the gas operation would be in line with trading from the second quarter of 2022 and 2021.

It came as the company also reported 3 billion dollars (£2.4bn) of writedowns for the second quarter of this year, largely due to a 1 per cent increase in the discount rate used for impairment testing.

The update comes three weeks before the oil major will reveal its full performance and profitability for the quarter.

On Friday, it also told shareholders in the short update that it expects an adjusted corporate loss of between 600 million dollars and 800 million dollars for the quarter.

The group’s upstream business – which includes exploration and production of crude oil and natural gas – is on track to deliver adjusted earnings of between 2.5 billion dollars and 2.8 billion dollars.

Shell said it expects the trading performance of its chemicals and products business to also be lower in the latest quarter, compared to the start of the year.

It comes a day after the firm’s boss warned that slashing oil and gas production now would be “dangerous and irresponsible” and could see energy bills rocket higher again.

Chief executive Wael Sawan told the BBC the world still “desperately needs oil and gas” because the switch to renewable energy is not happening fast enough to replace it.

He cautioned that energy bills could be sent soaring back towards last year’s highs if production is cut amid increasing demand from China and if we see another cold winter across Europe.

Mr Sawan told the BBC: “What would be dangerous and irresponsible is cutting oil and gas production so that the cost of living, as we saw last year, starts to shoot up again.”

He also did not rule out moving Shell’s UK headquarters and stock market listing to the US in the long term.

While he said a relocation for the FTSE 100 listed giant was “not a priority for the next three years”, the comments add to fears that the London stock market is becoming less attractive to multinational companies after tech group ARM Holdings recently announced plans to move its primary listing to the US. Shell recently sparked widespread criticism after announcing a move to stop reducing the amount of oil it produces until 2030. Green campaigners slammed the group’s move as “utterly destructive” after it dropped its plan to reduce oil production by between 1 to 2 per cent each year of this decade.

A spokesman for Shell added: “Shell has already reduced its liquids production by 21 per cent since 2019, and once we hit the stable production level we recently outlined, it will have fallen by 26 per cent.

“That represents a greater reduction than the initial 1-2 per cent per year cuts we set out in 2021 would have achieved by 2030.”