Oil giant Shell Q3 sets steep climate targets as profit misses

Gasoline prices at the Royal Dutch Shell PLC gas station in San Francisco, California, USA, on Wednesday, July 7, 2021.

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LONDON – Oil giant Royal Dutch Shell reported weaker-than-expected third-quarter earnings on Thursday and announced that it had set itself a major carbon reduction target.

The Anglo-Dutch company posted a consistent revenue of 4.1 billion for the three months to the end of September. That compares with $ 955 million for the same period a year ago and $ 5.5 billion for the second quarter of 2021.

According to Refinitive, analysts had expected third-quarter consistent revenue to come in at around $ 6 billion.

Shell issued a note to investors earlier this month warning that Hurricane Ida in the Gulf of Mexico would likely have an overall negative impact on overall revenue of about $ 400 million.

The company said on Thursday that lower contributions from trading and optimization compared to the second quarter also affected third-quarter results. This was only partially offset by the global energy supply crisis that pushed up oil and gas prices.

“This quarter we created record cash flows, maintained capital discipline and announced our intention to distribute $ 7 billion to our shareholders from the sale of our Permian assets,” Shell CEO Ben Van Bourdain said in a statement.

Shell says it plans to reduce absolute emissions from its activities and the electricity it uses – sometimes referred to as scope 1 and 2 emissions – by half by the end of the decade compared to 2016 levels.

It promises to be a net-zero carbon emissions company by 2050.

In a landmark ruling earlier this year, a Dutch court ordered Shell to take more aggressive measures to reduce its carbon emissions. It ruled in May that Energy Major was responsible for its own carbon emissions and its suppliers, known as Scope 3 emissions, and that its emissions should be reduced by 45% by 2030.

On Wednesday, May 26, 2021, outside the Palace of Justice Courthouse in The Hague in the Netherlands, members of the environmental group Miludefence are celebrating the verdict in the Dutch environmental organization’s case against the Royal Dutch Shell plc.

Peter Boer | Bloomberg | Getty Images

The ruling was the first time in history that a company was legally obliged to align its policies with the 2015 Paris Agreement.

Shell is appealing the ruling, a move that has been sharply criticized by climate activists.

Shell shares fell 1.5% during morning trading in London. The oil and gas company said its stock price rose about 41% year-over-year, falling about 45% in 2020.

The amount of dividend declared for Shell shareholders for the quarter is 24 cents per share, unchanged from the previous quarter.

Net debt came in at $ 57.5 billion, reflecting a decline from $ 67 billion at the end of the second quarter. Shell said it was originally driven by free cash flow generation.

Focus COP26

Shell’s results come shortly before COP26, a climate summit that is considered one of the most important diplomatic meetings in the history of the world.

The UK will host UN-mediated talks in Glasgow, Scotland from 31 October to 12 November.

Politicians and business leaders are under tremendous pressure to meet the demands of the climate crisis by delivering on promises made as part of the Paris Agreement.

The world’s leading climate scientists have repeatedly warned that mankind must take drastic and urgent action to limit future temperature rises to the extent of survival. And the best weapon to deal with rising global temperatures is to reduce greenhouse gas emissions – fast.

The burning of fossil fuels, such as coal, oil and gas, is a major driver of climate emergency.

A return to the profits of oil and gas companies so far this year has coincided with efforts to reassure investors that they have achieved a much more stable position in 2020 after a brutal year by virtually every measure.

Analysts warn, however, that while energy companies may try to demand a clean bill of health, investors may have an “extraordinary level” of skepticism about the business model of fossil fuel companies in the long run.

Norwegian Energy Major Aquino recorded the strongest quarterly financial results in nine years on Wednesday as natural gas prices skyrocketed.

The UK-based BP will report its third-quarter earnings early next week.

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