February 2 (United Press International) — Shell joined a growing list of major energy companies posting record profits on Thursday, boosted largely by its natural gas portfolio.
In its fourth-quarter earnings report, Shell said it was able to deliver strong results “in an ongoing uncertain economic environment”.
That uncertainty includes the direction of China’s economy, fears of a recession in the West and geopolitical risks stemming from the war in Ukraine.
The latter was the main driver of the prolonged run higher in commodity prices last year. Brent crude, the global oil price benchmark, topped $125 a barrel last year, but fell in the second half of the year as the market adjusted to the loss of Russian supply from Western sanctions.
So far, Brent crude has been trading in the $85 a barrel range for February.
Shell adjustment net income It was $9.8 billion in the fourth quarter, despite low commodity prices at the end of the year. Most of the growth came from its natural gas segment, which accounted for about 60% of total revenue during the period.
Gas demand was buoyant for much of last year, especially as European economies looked to break Russia’s grip on its energy sector. Before the war begins in February 2022, former Soviet republics such as Poland depend on Russia for almost all their natural gas.
The growing importance of natural gas not only helped Shell report a 50% jump in fourth-quarter revenue from a year earlier, but also shows that Shell has proven its relevance as a global energy provider.
Chief executive Wael Sawan said: “Our results for the fourth quarter and full year demonstrate the strength of Shell’s differentiated product portfolio and our ability to deliver vital energy to customers in a turbulent world.”
From a liquefied natural gas project in Algeria in the 1960s, Shell is now a global leader with its floating Prelude LNG facility, offshore Australia, the largest of its kind in the world.
Shell’s quarterly performance has been replicated across much of the energy sector, from energy services companies such as Halliburton to rivals like exxon mobil and BP. Exxon came under fire last year for emphasizing shareholder returns over new investments amid supply-side concerns.
The same goes for Shell’s favor with its investors. It announced a 15% dividend hike and a $4 billion share buyback program as it reported fourth-quarter earnings.
But it does plan to invest. The company on Thursday outlined capital spending plans for 2023 in the range of $23 billion to $27 billion.
Shell reported profits of about $9.5 billion in 2017 the third quatercompared with a profit of $4.2 billion in the same period in 2021.