Shell posts record profit on high energy prices and strong performance by trading division

Shell reported a profit of $9.13 billion in the first quarter, its highest so far, boosted by higher oil and gas prices, and the strong performance of its trading division.

The is despite the British company writing down $3.9bn after quitting its operations in Russia, where it plans to end all crude oil purchases except for two contracts with a “small, independent Russian producer” it did not name.

Shares rose by 3.06 per cent at 8.50pm UAE time, outperforming gains of 1.7 per cent recorded by an index of energy companies, after income beat its previous record set in 2008.

Shell joins industry rivals such as BP and TotalEnergies, which also recorded a sharp rise in profits driven by energy prices and strong trading. Norway’s Equinor, a major seller of gas in Europe, reported record earnings on Wednesday.

Britain’s Prime Minister Boris Johnson, who faces a political test in a round of local elections on Thursday, has rejected calls to tax these swelling profits to ease the pressure on household bills – with ministers arguing instead that energy companies need the money to invest in clean power sources.

Shell’s first-quarter adjusted earnings rose by 43 per cent from the previous quarter to $9.13bn, above an average analyst forecast provided by the company for a profit of $8.67bn. That compares with earnings of $3.13bn a year earlier.

Shell said its dividend payments and share repurchases stood at $5.4 billion in the quarter, part of its plan to buy back $8.5 billion shares in the first half of the year.

In the current environment, the company expects shareholder distributions to exceed 30 per cent of cash flow in the second half of the year.

It is also winding down oil and gas trading with Russia.

“The war in Ukraine is first and foremost a human tragedy, but it has also caused significant disruption to global energy markets and has shown that secure, reliable and affordable energy simply cannot be taken for granted,” Shell chief executive Ben van Beurden said.

“The impacts of this uncertainty, and the higher cost that comes with it, are being felt far and wide. We have been engaging with governments, our customers and suppliers to work through the challenging implications and provide support and solutions where we can.”

On Tuesday, BP reported a $20.4bn loss for the first quarter of the year after its move to pull out of Russia wiped out extra revenue from increasing fuel prices.

BP reported an underlying profit of $6.2bn, more than double what was earned in the same quarter in the previous year, beating analyst expectations of $4.43bn.

Shell plans to end all crude oil purchases in Russia except for two contracts with a ‘small, independent producer’