Shell and TotalEnergies, the two largest energy companies in Europe have reported a profit of over US$9 billion in the third quarter, though Shell’s liquefied natural gas (LNG) division struggled to capture the benefits of high fuel prices.

Meanwhile, the strong earnings are likely to intensify calls in Britain and the European Union for further windfall taxes on energy companies to help households cope with gas and power bills.

LNG prices have soared this year as Moscow progressively cut piped natural gas supplies to Europe, which heavily depended on Russian imports.

Western sanctions on Russia, which is among the world’s leading oil and gas producers, in response to its invasion of Ukraine in February, drove European gas prices to an all-time high in August. However, prices have fallen heavily in recent weeks as Europe filled gas storage, and temperatures have been unusually mild, but prices are still higher than a year ago.

The world’s biggest LNG trader, Shell, missed some of the benefits of the price rise after a fall in production following strikes at Australia’s Prelude site. It also said that its trading was hit by “substantial differences between paper and physical realizations in a volatile and dislocated market”.

Its headline profit in its integrated gas unit was down almost 40% on the previous quarter. Overall, a profit of US$9.5 billion made in the third quarter is slightly below last quarter’s record. Shell still decided to increase its dividend by 15% as it prepares for Wael Sawan to take the helm from Ben van Beurden next year.

Volatile Energy Markets and the Ongoing Need for Action to Tackle Climate Change

Shell CEO, Ben van Beurden, noted that with volatile energy markets and the ongoing need for action to tackle climate change, 2022 continues to present huge challenges for consumers, governments, and companies alike.

“Consequently, we are using our financial strength to invest in secure energy supplies which the world needs today, taking real, bold steps to cut carbon emissions, and transforming our company for a low-carbon energy future. And, crucially, our Powering Progress strategy is delivering strong results for our shareholders on the back of years of portfolio high grading, combined with robust operational performance.”
Ben van Beurden

In the renewables space, it is progressing with the acquisition of Spring Energy Group, one of India’s leading renewable power platforms, and signed a 10-year renewable energy supply agreement with Air Liquide to provide 52GWh of solar energy per year to power industrial and medical gas production operations in Italy.

Shell Nederland and Shell Overseas Investments recently took the final investment decision to build Holland Hydrogen I, which will be Europe’s largest renewable hydrogen plant once operational in 2025. Shell has also been selected by QatarEnergy as a partner in the North Field East expansion project in Qatar, which is billed as the single largest project in the history of the LNG industry.

BG International, an affiliate of Shell UK, recently took the final investment decision to develop the Jackdaw gas field in the UK North Sea, following regulatory approval earlier this year and the UK government granting a permit last month. Peak production from the field is estimated at 40,000 barrels of oil equivalent per day.