London — Royal Dutch Shell plans to slash the value of its oil and gas assets by up to $22 billion after the coronavirus crisis hit demand for fuel and weakened the outlook for energy prices, the Anglo-Dutch energy company said on Tuesday.
The writedown announcement came after Shell cut its forecast for energy prices into 2023 on expectations that sales will only recover slowly after the pandemic, adding to the company’s already bleak longer-term outlook for fossil fuel demand.
Shell’s move follows similar steps by other major energy companies such as BP, which plans to cut the value of its assets by up to $17.5 billion following the hit to fuel sales from global travel restrictions to prevent the virus spreading.
Shell, which has a market value of $126.5 billion, said in an update ahead of second-quarter results due on July 30 that it would take an aggregate post-tax charge of $15 billion to $22 billion because of the writedowns.
The charges relate to large liquefied natural gas (LNG)operations in Australia, including the Prelude floating LNG facility, the world’s biggest, as well as oil and gas production assets in Brazil and U.S. shale basins.
Shell’s shares traded in London were down 3.7% by 1350 GMT.