Russia Exit Costs Shell $5 Billion

British oil and gas major Shell needs to write off between $4-5 billion due to its exit from Russia. In a Q1 update Shell expects to be hit by a total write-off of around $5 billion on its Russian assets. The main reason is that Shellexpects not to be able to sell its assets at market prices, due to the Russian invasion of the Ukraine. At the end of February 2022 Shell indicated that the total value of its Russian assets was around $3 billion. At present, the total costs could be $1-2 billion higher due to outstanding loans and credit-losses.

The total write-off has put a damper on Q1 financials, which will be reported on May 5. The British oil major’s main assets in Russia are a 27.5% stake in the Sakhalin project, producing oil and gas, and its vast stake in the blocked Nord Stream 2 offshore gas pipeline connecting Russia and Germany offshore Baltic. Other assets include a 50% stake in a Siberian oil producing field, Salim Petroleum (a JV with Gazprom Neft).

Even in a very volatile high crude oil price market, the Russian hit on Shell’s finances will hurt. $4-5 billion is around 80% of the total profit the company reported in Q4 2021, or around 25% of FY2021 profits. Stock markets have already reacted negatively, as shown in the share price of Shell.

The sale of Russian assets constrained

No indications have yet been given to whom Shell expects to sell its assets. At present, possible interested parties will be only Russian entities or possibly Chinese or Indian parties. The interest of Arab investors or companies is still not very high. The last days Abu Dhabi’s second-largest sovereign wealth fund Mubadala already reported to put its investments in Russia on hold. Others will most probably follow this move, even the Saudi sovereign wealth fund PIF and others have become wary. Qatar already has joined the Western anti-Russia alliance even more.

European majors struggling

Shell’s competitors, such as ENI, Total, BP and others, are all struggling with a Russian exit too. BP holds 19.75% stake in the largest Russian oil company Rosneft.  French oil major TotalEnergies has stakes in Arctic LNG 2, Yamal LNG (which is already operational), and a 19.4% stake in Novatek. Italian oil major Eni is relatively small in Russia, with 50% stake in the Blue Stream natural gas pipeline to Turkey. A potential hit however can be expected if EU energy sanctions would be there, as Eni’s key operational exposure is due to its contract with Gazprom, the latter supplies 22.47 billion cubic meters of gas.

Operational cash flow under pressure

Shell also has already indicated that it will be facing some other financial headwinds, mainly caused by operational cashflow issues in Q1. The latter are linked to higher costs of oil and gas, which have a negative impact on storage. Shell already stated that it is facing margin-effects on derivates, changes in volumes etc. In its Q1 update Shell indicated a total crude oil production volume of 2 million bpd, while natural gas also contributed around 900,000 boepb (oil equivalent).

In its Q1 report in May, Shell will also be reporting on its renewable energy group. For the first time ever Shell has not put these figures in the Integrated Gas Division. Renewables are expected to show profits of between $100-600 million. The extreme wide margin of profits however still shows some volatility options here.

Top 4 Things Traders Have to Know Today

What is happening with Meta, Paypal and Spotify?

Spotify didn’t actually issue annual guidance, which seems to have exacerbated worries about potential subscriber growth potential. All three were down by double-digits in after hours trading at one point last night.

Competition is clearly much more fierce as larger players are starting to dial it in and use the latest technology to gain better traction i.e. Visa, Mastercard, etc. I also read reports this week that Apple is diving deeper into the payment and banking space and will soon be able to offer all kinds of options via the smartphone.

In simple terms, I wonder if PayPal executives could see they had a “growth” problem and that’s why they took a look at Pinterest a few months back. I heard rumors yesterday perhaps they might be looking at Robinhood.

At the moment the stock market just doesn’t seem real forgiving to those who swing and miss. On a somewhat positive note, Facebook disclosed they purchased back +$20 billion of their own stock in the last quarter.

Bulls are hoping for solid results from Amazon and Snap today to help prevent sentiment in the tech sector from creating more fallout. I’m not holding my breath!

Data to watch

Results are also due from Activision Blizzard, Biogen, Carlyle Group, Check Point, Cigna, Clorox, ConocoPhillips, Deckers Outdoors, Eli Lilly, Estee Lauder, Ford, Hanesbrands, Hershey, Honeywell, Ingredion, Merck, Pinterest, Quest Diagnostics, Royal Dutch Shell, SnapOn, Wynn Resorts, and Xylem.

On the economic data front, Factory Orders, the ISM Non-Manufacturing Index, and Productivity and Costs are due today. Productivity and Costs has become a more closely watched report as worries about climbing wages have grown. In the third quarter, productivity fell -5.2% (the most since 1960) and labor costs rose +9.6%.

Obviously, weakening productivity and rising costs is a bad combo for corporate profits so reversing this trend is a high priority. It may be tough to find much relief in the near-term with the labor market expected to remain extremely tight.

The shortage of workers has also been exacerbated by the latest Covid wave. ADP’s private payrolls report yesterday showed a decline of -301,000 jobs for January versus the estimate for a +200,000 gain, the first reported net job less since December 2020 according ADP.

Covid issue

Most analysts blame last month’s Covid surge for the decline and expect it is just temporary. The official January Employment Report on Friday is expected to show a gain of around +150,000 jobs, though the government has warned that the data won’t be reliable due to Covid-related reporting problems. Hopefully we’ll soon stop hearing that excuse as the Omicron Covid wave does seem to be burning itself out in the U.S. Case numbers across the country are about half of what they were in mid-January.

Hospitalizations have finally started to come down, too, which experts say is a more reliable measure. I hate to mention it but health officials are currently monitoring a mutated strain of Omicron known as “BA.2″… when does it end?

The standoff between Ukraine and Russia

Also still on the radar is the standoff between Russia and Ukraine. The U.S. is now readying to send more than +3,000 troops to bases in Eastern Europe as new satellite images appeared to show an even further increase in Russian troop buildup on Ukraine’s borders. Whether or not war is a realistic threat or not, the climbing tensions continue to stoke the flames in the energy markets.

Brent crude futures are trading near $90 as OPEC struggles to meet production targets and global physical supplies continue to tighten. The 19 OPEC+ countries with quotas underperformed their production targets by -832,000 b/d in December. Russia is currently the top OPEC+ producer, so any disruption to those supplies runs the risk of shooting oil prices even higher. Take note the front-end of the natural gas market is up over +50% in the first month of the new year. It’s certainly going to be a wild ride in 2022!

 

Brace Yourself For Another Wild Month In Stock Markets

For the year, the Dow is down -6%, the S&P 500 is down just over -9%, and the Nasdaq has lost -14.7%. The previous record-holder is January 2009, an ugly moment for the economy, when the stock market fell -8.6%. In addition, the VIX – aka the CBOE Volatility Index – has actually dropped back to around 31 after topping 37 earlier this week, its highest point since November 2020.

Keep in mind, the index isn’t registering anywhere close to levels reached during other periods of “extreme” volatility. For example, the index, which is measured between zero and 100, hit its highest point of almost 83 during the financial crisis in 2008. Its most extreme point during the pandemic was around 66 in March 2020. So, by comparison, this week’s volatility has been rather mild.

Federal Reserve

Some insiders equate the wild swings in stock prices to investors, particularly “big money,” trying to establish a new baseline for stock valuations minus the Fed’s easy money policies that have driven a massive amount of cash into markets since the pandemic began in 2020.

At its height, the Fed was pumping as much as +$120 billion per month into the system via its asset purchase program, ballooning its balance sheet to now nearly $9 trillion.

At the same time, the Fed has held its benchmark rate at near-zero and, before that, hadn’t even attempted to raise rates since 2018, and then only briefly. The last full-cycle of rate hikes was 2015. What’s more, investors haven’t really had to factor for inflation since the early 90s and it hasn’t been this high since the 80s.

Bottom line, whatever the new “normal” ends up looking like, it will be dramatically different from the pre-pandemic investing landscape. I’ve heard several large stock traders saying it seems to be the return of Alpha instead of the race to levered Beta. I hear others on Wall Street referencing it to a bit of league recreational youth baseball team where everybody now gets an award simply for participation, but then kids run into a rude awakening when performance really starts to matter.

It feels like we are there in the stock market; every business that was coming into the market was simply being rewarded with participation points, now people are starting to keep a real scorebook and counting the strikeouts and runs scored.

Economy still roars

The good news is that the U.S. economy continues to roar. Historically, a combination of moderate inflation and moderate interest rates has led to some of the biggest boom times for U.S. Last week, the Commerce Department said Q4 Gross Domestic Product (GDP) grew at an annualized rate of +6.9%, stronger than Q3’s +2.3% and well above Wall Street expectations of around +5.7% growth.

Consumer spending climbed at a +3.3% annual pace led by a +4.7% increase in services spending. But the real stand out was private investment which rocketed +32% higher, boosted by a surge in business inventories as companies stocked up to meet higher customer demand. Rising inventories, in fact, contributed nearly +5% to Q4 GDP growth.

On the one hand, the inventory build is positive because it indicates an easing of supply chain dislocations that should in turn help with inflation pressures. On the other hand, many economists note that the big boost from retailer and wholesaler restocking is not likely to be repeated.

Companies will also likely start to unwind at least some of that inventory in the quarters ahead, which could drag overall 2022 GDP, especially if consumer spending also drops off. And investors are more closely tracking consumer behavior as inflation continues to rise.

With consumer spending accounting for about 70% of the U.S. economy, any signs that belts are tightening or moods are getting overly pessimistic will likely set off some alarm bells.

Data to watch

Turning to next week, it will be another busy one for both key economic data as well as earnings. The main economic data highlight will be the January Employment Situation on Friday. Other key data includes ISM Manufacturing, Construction Spending, and the JOLTS report on Tuesday; ADP’s private payrolls report on Wednesday; Productivity & Costs, Factory Orders, and the ISM Non-Manufacturing Index on Thursday.

Earnings wise, results are due from NXP Semiconductor and Trane on Monday; Advanced Micro Devices, Alphabet, Amgen, Chubb, Electronic Arts, Exxon, General Motors, Gilead Sciences, Match Group, PayPal, Sirius XM, Starbucks, and UPS on Tuesday; AbbVie, Aflac, Allstate, Boston Scientific, CNH, Corteva, D.R. Horton, Ferrari, Humana, Johnson Controls, Meta (Facebook), MetLife, Novartis, Novo Nordisk, Qualcomm, Siemens, Thermo Fisher, TMobile, and Waste Management on Wednesday; Activision Blizzard, Amazon, Biogen, Carlyle Group, Check Point, Cigna, Clorox, ConocoPhillips, Deckers Outdoors, Eli Lilly, Estee Lauder, Ford, Hanesbrands, Hershey, Honeywell, Ingredion, Merck, Pinterest, Quest Diagnostics, Royal Dutch Shell, Snap, SnapOn, Wynn Resorts, and Xylem on Thursday; and BristolMyersSquibb, CBOE, Phillips 66, Regeneron, and Sanofi on Friday.

Bottom line, brace for another huge week of extreme volatility.

D-Day Royal Dutch Shell?

Officially the discussions today are about a plan to get rid of the company‘s dual share structure. Since November, the plan to restructure the shares and move to London have been known, but the outcome is officially not yet clear. Proponents of the RDS plans have been arguing that a simplification of the share structure is needed, to strengthen the company’s competitiveness, while also making dividend payments and share buybacks easier.

For the Netherlands, and a major part of the Royal Dutch Shell watchers, the decision is still a thing hard to grasp, as a major name in global oil and gas is not only lost, as Royal Dutch Shell (RDS) will become Shell, but it also clearly ends a strong link with one of its founding countries, the Netherlands. The plans still need to be approved by at least 75% of shareholders, but this seems already to be available. A possible move to London is expected in early 2022, ending the “Royal Dutch” link of the company for good.

There are several underlying reasons for the “unexpected” move by RDS, but most are arguing that a Dutch court decision in May 2021 has pushed the company to move. The Dutch court, in a remarkable and still disputed ruling, has ordered RDS to cut its carbon emissions by 45% by 2030, partly based on a mix of environmental and human rights issues.

Even that RDS has been very politically correct in its rebuttal of the court ruling, as it is appealing already, it is clear that the threat of being forced by a Dutch court, or continuing NGO legal cases in the Netherlands, to cut emissions worldwide by 45% (2030) for not only its own operations, but also for all parties in its total value chain, including consumers, is a bridge too far.

Operating globally in oil and gas, upstream-downstream, is not really feasible if you are also forced to quell or decrease emissions of others at the same time. Shell has however still said the last weeks that a move to London will not affect its environmental policies, but this still needs to be seen. The company however has become extremely engaged in setting up major global renewable energy projects (offshore wind, solar) but also in the line of biofuels or low-carbon developments. These projects have however not at all moved the sentiments of the anti-Shell front and activists.

Not only environmental or climate change issues are forcing the company to reconsider its future or company structure. Analysts have been stating that overall taxation also has been a major driver behind the dramatic move. At present, due to its Dutch HQ and taxes, dividends on its “A” shares are hit by a 15% Dutch withholding tax. For the “B” shares payments are distributed through a “Dividend Access Mechanism” that sees them streamed through a trust registered on the Channel Island Jersey to avoid the Dutch tax.

By now moving all into a single-share structure, while having Great Britain as its tax home, tax issues are much easier and clearer, as Great Britain doesn’t put dividend withholding tax. These changes are important for shareholders, as RDS is planning to payout around $7 billion in proceeds from the sale of gas assets in the U.S. to ConocoPhillips.

Already the move to move the “A” (euros) and “B” (GBP) into one structure is expected to bring shareholders around $2 billion in not-to-pay dividend taxes. Insiders also have stated that most institutional investors and funds have agreed already to the move and share structure changes.

There are still some clouds on the horizon however. Even that a proposal by the Dutch Greens to put in place an ‘exit-tax’ has not been approved, a move from the Netherlands to the UK will not be cheap. Shareholders fear that there could be a retrospective assessment of RDS current profit taxes in the Netherlands. Some indicate that RDS could be hit by a possible $10 billion tax addition the coming months.

For the Netherlands as a whole, the current move is not a positive one at all. The RDS move to London is the second major Dutch international giant that has left, after Unilever made the same move. The still very strong investment environment in the Netherlands is under pressure, as other giants maybe considering a listing or set up in the country are now going to scratch themselves behind the ears. It is not a good sign for Dutch investment climate at all.

At the same time, which some NGOs and activists don’t understand it seems, the RDS move will have an effect on the company’s willingness to invest in the energy transition of the Netherlands. Until now, RDS was Dutch, with all its ups and downs. A full-scale Shell position in London will not only diminish the Dutch feeling, but also its needs to invest in offshore wind or target a full-scale energy transition. The idea that a majority of shareholders will enforce the Dutch court ruling seems to be an idee fix.

The overwhelming majority of institutionals at present is not going to force a dramatic change for sure. Current oil and gas prices, and possible higher margins in the future, are too good to be thrown away. The Anglo-Saxon business and investment views are going to be leading, not the Dutch Calvinistic Do-Good sentiments.

Shell Says Break-Up of Group Would Not Work In Real Life

Hedge fund Third Point, which has built a large stake in Shell, on Wednesday called for the oil major to split into multiple companies to improve its performance.

The push was the latest broadside against global oil and gas giants, who have faced calls from governments and climate-conscious investors to shift to renewable energy while still meeting current high levels of fossil fuel demand.

Shell, along with other European oil majors, has set targets to slowly move away from oil production while investing in non-fossil energy sources like solar and wind power.

Billionaire Daniel Loeb, who runs Third Point, said on Wednesday that the company is being pushed in “too many different directions,” and that it should consider separating its legacy energy production from renewables and liquefied natural gas (LNG) businesses, a notion company officials rejected.

“If you were to split that into component pieces, I think that can sound really interesting from a financial perspective,” finance chief Jessica Uhl told reporters on Thursday.

“But in terms of real solutions, I think that breaks down and our ability to integrate and bring these different pieces of the puzzle together will be how we uniquely make a difference in the energy transition.”

Shell Chief Executive Ben van Beurden told reporters that Shell’s strategy is coherent and well understood by a majority of its shareholders.

Loeb did not respond to a request for comment Thursday.

Over the past two years, Shell shares have posted a total return of negative 16%, according to Refinitiv Eikon data. Those returns lag U.S. majors Exxon Mobil Corp and Chevron Corp, though over a longer period, Shell and other European companies have outperformed their U.S. counterparts, who have focused less on emissions reduction and renewable investments.

“If nothing else, the move by Third Point signals that Shell has not convinced the investment community that there is value in keeping all of these businesses in-house,” said Andrew Logan, senior director of oil and gas at Ceres, a nonprofit organization that works with institutional investors and companies.

Shell reported third-quarter profit of $4.13 billion on Thursday, below analyst forecasts. Shares fell 3.2% on Thursday.

Loeb, in his letter on Wednesday, said Shell would benefit from a different structure that would let it cut costs and invest more aggressively in decarbonization.

However, Iain Pyle, investment director at UK-based Abrdn, one of Shell’s top 10 largest shareholders according to Refinitiv Eikon data, said while breaking the company into faster- and slower-growing pieces has a certain “spreadsheet logic” to it, he would probably not support Loeb’s campaign.

“There are few companies out there where I would imagine the divisions are as kind of interlocked and interwoven as they are at Shell,” Pyle said. “The upstream feeds the trading business feeds the refinery, feeds the chemicals plant, feeds the retail arm, and breaking it apart is quite tough.”

(GRAPHIC: Shell returns over time: https://tmsnrt.rs/3EoIGwb)

Shell set itself a tougher emissions-cutting targets for its direct emissions, aiming to halve them by 2030 in absolute terms rather than just cutting intensity-based emissions, which leaves open the possibility of an overall increase.

Shell’s direct emissions are dwarfed by the emissions caused by the combustion of its products through its customers, known as Scope 3.

The company has pledged to become a net-zero emissions company by 2050, but is under pressure to make faster progress, with a Dutch court ordering it in May to cut all of its emissions – including Scope 3 – by 45% by 2030.

Shell is appealing the court ruling, with van Beurden saying earlier this year that “a court ordering one energy company to reduce its emissions – and the emissions of its customers – is not the answer” to reducing global emissions.

Coal and natural gas demand has already reached new peaks, surpassing pre-pandemic levels, with oil not far behind. Gas and power prices surged this autumn as tight gas supplies have collided with strong demand in economies recovering from the COVID-19 pandemic.

Shell’s cash flow from operations in the quarter rose by around 54% on the year to $16 billion, which in turn helped it to reduce net debt to $57.5 billion, compared with $65.7 billion in the previous quarter.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Shadia Nasralla; additional reporting by Svea Herbst Bayliss and Simon Jessop; Editing by David Gaffen, Jason Neely, Mark Potter, Barbara Lewis, Christina Fincher and Marguerita Choy)

U.S. House Democrats Grill Big Oil in Climate Deception Probe

It was the first time executives of the top oil majors – ExxonMobil, Shell Oil, BP America and Chevron – and the heads of the American Petroleum Institute (API) and Chamber of Commerce answered questions about climate change in Congress under oath.

Democratic Representative Ro Khanna said at the House of Representatives Committee on Oversight and Reform hearing that oil companies have started to improve their talking points around climate change. But Khanna said their support of lobbying groups that either deny climate science or work to kill major climate policies contradicts their statements.

“I don’t believe that you purposely want to be out there spreading climate misinformation but you’re out there funding these groups,” Khanna said.

Appearing before the panel were CEOs Darren Woods of ExxonMobil, Gretchen Watkins of Shell Oil, David Lawler of BP America and Mike Wirth of Chevron. They all testified virtually.

Khanna asked them if any would commit to an independent audit to verify that none of their funds were going to groups that deny climate science, or whether they would commit to pulling their memberships from API even if the oil lobby group continues to lobby against policies such as electric vehicle credits and methane fees. None of the executives said yes.

Committee Democrats said the hearing opens a year of investigations into whether Big Oil has deceived Americans about its role in climate change.

The hearing came as President Joe Biden heads to Scotland for U.N. climate talks and as Congress haggles over climate provisions in major social spending and infrastructure legislation.

Environmental groups and their congressional allies hope the probe evokes the Big Tobacco hearings of the 1990s when tobacco industry executives were grilled about their knowledge of the addictive properties of their products, which began a shift in public opinion about that industry.

Democrats also said youth people will have to deal with the effects of climate change, driven by emissions from fossil fuels.

“One thing that often gets lost in these conversations is some of us have to actually live in the future that you all are setting on fire for us,” Representative Alexandria Ocasio-Cortez, 32, told the executives, all older than 50.

The United Nations this summer released a report saying that unless immediate, rapid and large-scale action is taken to reduce emissions, the average global temperature is likely to reach or cross the 1.5-degree Celsius (2.7 degrees F) warming threshold within 20 years.

Oil executives and trade group officials at the hearing used the platform to try to distance themselves from previous efforts to dismiss climate science, saying their policies evolved as the science became more clear.

Exxon’s Woods said his company “responded accordingly” when the “scientific community’s understanding of climate change developed” and maintained that he believes oil and gas will still be needed to meet growing global energy demand.

Woods and Chevron’s Wirth played up oil and gas as essential for operation of hospitals, schools and offices.

BP America’s Lawler and Shell’s Watkins talked about their recognition that climate change was a problem in the 1990s and about their current efforts to adapt their business models to add more renewable energy and lower emissions.

‘PARTISAN THEATER’

Representative James Comer, the panel’s top Republican, did not mention climate change in his opening remarks and said the panel should be addressing inflation and high energy prices he linked to Biden administration policies.

“The purpose of this hearing is clear: to deliver partisan theater for prime-time news,” Comer said.

The lone Republican witness, Neal Crabtree, a welder who lost his job after Biden canceled the Keystone XL oil pipeline, said his main crisis was not climate change but paying for his mortgage and food for his family.

The Democratic-led committee criticized the companies’ scant support for the Paris climate agreement. It released an analysis that found from 2015, when the pact was agreed, to 2021, Exxon reported in its lobbying disclosures only one instance of lobbying on the Paris Agreement, and none on any of the 28 bills related to the pact.

“That means that only 0.06% of Exxon’s 1,543 total instances of legislative lobbying since 2015 has been devoted to the Paris Agreement or related legislation,” the analysis said.

Woods emphasized Exxon’s investments in carbon capture, a technology to capture emissions for burial underground or to pump them into aging oilfields to squeeze out more crude.

The energy executives also said that more time is needed for a transition to cleaner energy.

(Reporting by Valerie Volcovici and Timothy Gardner; Editing by David Gregorio and Mark Porter)

Strong Buy for The Carmakers Across the Globe

Apple still stay below the up trendline, which is not really encouraging to any purchases.

British American Tobacco tests the lower line of the symmetric triangle pattern.

Royal Dutch Shell rises, thanks to the higher oil prices.

Rolls-Royce calmly rests on an important, horizontal support.

BMW aims higher with a very strong buy signal.

Porsche, on the other hand, is waiting for a proper signal. Breakout of the dynamic resistance will give us a buy signal and a break out of the horizontal support will give us a signal to sell.

Ferrari is above the horizontal support and upper line of the wedge, which is really optimistic.

Bayer tests the neckline of the iH&S formation but from the top!

Siemens continues the drop after the false bullish breakout and the breakout of the major up trendline.

Allianz stays above major supports with a very promising buy signal.

For a look at all of today’s economic events, check out our economic calendar.

India’s Reliance Swoops on Solar Capacity as Part of Net Zero Goal

Through its unit Reliance New Energy Solar Ltd (RNESL), Reliance is buying Norwegian-headquartered solar panel maker REC Solar Holdings for $771 million from China National Bluestar (Group) Co Ltd and an up to 40% stake in India’s Sterling and Wilson Solar.

Reliance in June said it would invest $10.1 billion in clean energy over three years.

Owned by Asia’s richest man, Mukesh Ambani, the company plans to build solar capacity of at least 100 gigawatts (GW) by 2030, accounting for over a fifth of India’s target of installing 450 GW by the end of this decade.

India relies on coal for more than 70% of its generation and only 4% is produced through solar power.

Ambani said in a statement on Sunday, Reliance was ready to set up “a global scale integrated photovoltaic giga factory” with initial annual capacity of 4 GW, eventually rising to 10 GW.

He said buying REC Solar would help Reliance to expand in Australia, Europe, the United States and also elsewhere in Asia and that it was seeking to make India a hub for the manufacture of the lowest cost, highest efficiency solar panels.

All fossil fuel companies are under pressure from investors and campaigners to reduce emissions to limit global warming and oil majors including Royal Dutch Shell Plc and BP Plc have set goals to become net zero-carbon firms by 2050.

The statements on Sunday said RNESL’s 40% stake in Sterling and Wilson Solar Ltd will be made through investment, secondary purchase and an open offer. Reliance did not disclose the full value of that deal but has agreed to acquire new share and promoter’s stake in Sterling and Wilson at 375 rupees each.

In August, RNSEL said it would invest $50 million in U.S. energy storage company Ambri Inc.

For a look at all of today’s economic events, check out our economic calendar.

(Additional reporting by Sethuraman N.R, by William Mallard; editing by Jan Harvey and Barbara Lewis)

European Stocks Rally as Energy Prices Cool

The pan-European STOXX 600 index rose 1.1% in broad-based buying to reverse weekly losses, with miners, automakers and utilities in the lead.

Oil prices dropped for a second session, while European gas futures also fell back from record highs. [O/R]

There was also some relief on the U.S. debt ceiling front after U.S. Senate Republican Leader Mitch McConnell announced plans to extend the borrowing limit into December.

French luxury goods maker Hermes jumped 3.1% after HSBC upgraded the stock to “hold”, while peers LVMH, Richemont and Kering all rose more than 2%.

Royal Dutch Shell inched up 0.4% after saying that soaring natural gas and electricity prices around the world will provide a significant boost to its cashflow in the third quarter.

Swiss construction chemicals maker Sika rose 2.0% after it said it could overcome rising raw material costs and supply chain restrictions to increase its sales and profit margins this year.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Subhranshu Sahu)

BP Says Nearly a Third of Its UK Fuel Stations Running on Empty

Lines of vehicles formed at petrol stations for a third day running as motorists waited, some for hours, to fill up with fuel after oil firms reported a lack of drivers was causing transport problems from refineries to forecourts.

Some operators have had to ration supplies and others to close gas stations.

“With the intense demand seen over the past two days, we estimate that around 30% of sites in this network do not currently have either of the main grades of fuel,” BP, which operates 1,200 sites in Britain, said in statement.

“We are working to resupply as rapidly as possible.”

The fuel panic comes as Britain faces several crises: an international gas price surge that is forcing energy firms out of business, a related shortage of carbon dioxide that threatens to derail meat production, and a shortage of truck drivers that is playing havoc with retailers and leaving some shelves bare.

Anglo-Dutch oil group Shell said that it had also seen increased demand for fuel.

In response business minister Kwasi Kwarteng said he was suspending competition laws to allow firms to share information and coordinate their response.

“This step will allow government to work constructively with fuel producers, suppliers, hauliers and retailers to ensure that disruption is minimised as far as possible,” the business department said in a statement.

Transport minister Grant Shapps had earlier appealed for calm, saying the shortages were purely caused by panic buying, and that the situation would eventually resolve itself because fuel could not be stockpiled.

“There’s plenty of fuel, there’s no shortage of the fuel within the country,” Shapps told Sky News.

“So the most important thing is actually that people carry on as they normally would and fill up their cars when they normally would, then you won’t have queues and you won’t have shortages at the pump either.”

After meeting Kwarteng, industry figures including representatives from Shell and Exxon Mobil Corp said in a joint statement issued by the business department that they had been reassured, and stressed there was no national fuel shortage.

‘MANUFACTURED SITUATION’

Earlier, Shapps said the shortage of truck drivers was down to COVID-19 disrupting the qualification process, preventing new labour from entering the market.

Others pinned the blame on Brexit and poor working conditions forcing out foreign drivers.

The government on Sunday announced a plan to issue temporary visas for 5,000 foreign truck drivers.

But business leaders have warned the government’s plan is a short-term fix and will not solve an acute labour shortage that risks major disruption beyond fuel deliveries, including for retailers in the run-up to Christmas.

Shapps called the panic over fuel a “manufactured situation” and blamed it on a hauliers’ association.

“They’re desperate to have more European drivers undercutting British salaries,” he said.

An Opinium poll published in the Observer newspaper on Sunday said that 67% of voters believe the government has handled the crisis badly. A majority of 68% said that Brexit was partly to blame.

Opposition Labour Party leader Keir Starmer, speaking at his party’s annual conference in southern England, said ministers had failed to plan for labour shortages following the 2016 Brexit vote and called for a bigger temporary visa scheme.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by William James and Elizabeth Piper; Editing by Angus MacSwan, Emelia Sithole-Matarise and Diane Craft)

U.S. Oil Refiners Use Iraqi, Canadian Crudes to Replace Storm Losses – Traders

Royal Dutch Shell, the largest producer in the U.S. Gulf of Mexico, this week said damage to an offshore transfer facility will limit Mars sour crude supplies into early next year. The Mars sour grade of U.S. oil is used heavily by U.S. Gulf refiners and companies in South Korea and China, two top destinations for U.S. crude exports.

The United States now generally exports more than 3 million barrels of oil per day, most from the U.S. Gulf Coast. With overall fuel demand rebounding to pre-pandemic levels, refiners will need to make up for the Mars shut-ins.

The loss of up to 250,000 barrels per day (bpd) has some U.S. refiners seeking replacements for fourth-quarter delivery, especially Iraq’s Basrah crude, traders said. Others received supplies of sour crude from U.S. storehouses.

Basrah crude has come to the fore during past disruptions. In 2019, when U.S. sanctions on Venezuela cut off heavy crude grades to Gulf refiners, Iraq rapidly boosted cargoes. Canadian heavy-oil suppliers also benefited.

EMERGENCY SUPPLIES

Exxon Mobil and Placid Refining Co have received oil from the U.S. Strategic Petroleum Reserve (SPR), addressing immediate needs for sour crude.

“Refiners that needed to specifically replace Mars barrels requested sour crude from the SPR. Many others are buying extra cargoes of Basrah for October delivery, whose prices were very convenient as sour crudes in general are under pressure,” a U.S. Gulf crude trader said.

Earlier this month, Mars crude traded as high as a $1.50 premium over WTI but on Wednedsay it was offered at a $2.25-per-barrel discount to the U.S. benchmark, returning to pre-storm levels. Most of the nine U.S. refineries that halted output during Ida have returned to production.

Refiner Marathon Petroleum bought Basrah for October loading, one trader said. Refiners able to process and blend heavier crudes also have shown interest in Canadian and Latin American grades, traders added. Marathon declined to comment.

U.S. Energy Information Administration preliminary data through Tuesday showed imports from Mexico and Brazil rising after the storms.

CUSHIONING EXPORTS

Of the up to 250,000 bpd of lost Mars crude production, about 80,000 bpd typically are sent to Asian refineries, according to cargo tracking firm Vortexa.

South Korea has accounted for about two-thirds of Mars exports this year, said Kpler oil analyst Matt Smith. China’s Unipec and South Korea Energy boosted Mars purchases ahead of the storm to take advantage of favorable prices.

Unipec recently bought 200,000 tonnes of Russia’s Urals crude for October delivery amid a broader weakness in price differentials.

South Korea’s second largest refiner, GS Caltex Corp, had a Mars cargo canceled that had been set to arrive in late November, and the company has not yet looked for replacement crude, according to traders.

Unipec’s parent, Sinopec, and GS Caltex did not reply to after-hours requests for comment.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Arathy S Nair in Bengaluru, Marianna Parraga in Houston and Florence Tan in Singapore; Editing by David Gregorio)

Equity Index Giant MSCI to give 10,000 Firms Global Warming Ratings

The firm, which runs the widely-tracked $60 trillion All Country World Index, is launching Implied Temperature Rise scores, which estimate whether a firm’s activities and plans are consistent with keeping global warming below 2 degrees Celsius.

“The idea is to get companies to change their strategies,” said MSCI’s head of ESG and Climate, Remy Briand, who estimates nearly 60% of firms still don’t disclose even the most basic environmental data.

MSCI’s new approach converts the current and projected greenhouse gas emissions, taking into consideration emissions reduction targets, of each company to an estimated rise in global temperature.

Projections are calculated by comparing those projected emissions with the global carbon budget that remains if the planet is to keep temperature rise this century below 2°C.

Briand laid out examples using two oil giants, Exxon Mobil and Royal Dutch Shell.

Exxon, which has been under heavy scrutiny  for its approach to climate change, produces a 4C rise score – a scenario that scientists warn would lead to unprecedented heatwaves, severe droughts, and a major rise in sea levels and mass flooding.

Shell produces an implied 2C rise, having set targets to cut the carbon intensity of its products by at least 6% by 2023, by 20% by 2030, by 45% by 2035 and by 100% by 2050.

“The message is to make the commitment more public,” Briand said.

His assumption is that because MSCI’s indexes and data are used by most of the world’s big investors, companies will need to have low implied temperature rise scores to encourage those money managers to park their cash in them.

There are currently no standardised rules around what the big global firms have to disclose about their emissions. Many also make misleading claims that they are on course to hit net zero targets, Briand said, by leaving out large chunks of their business when they make their own projections.

Briand said leaders going to the UN’s COP26 climate change conference in Scotland later this year should pledge to fix those kinds of problems.

“A wish would be to get net-zero commitments across the board for all companies,” he said. “If that happens, if it becomes compulsory across many countries, there will an acceleration in companies’ strategies”.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Marc Jones, Editing by Rosalba O’Brien)

Energy Stocks Help Steady FTSE 100 After Worst Week Since Mid-August

By Devik Jain

The blue-chip index climbed 0.6%, after sliding 1.5% last week on concerns of a stalling domestic economic recovery.

Oil majors BP and Royal Dutch Shell each rose nearly 2%, tracking crude prices, while banks were 1.9% higher. [O/R]

The domestically focused mid-cap FTSE 250 index advanced 0.2%.

Investor focus is now on data releases in Britain and the United States later this week, including jobs and keenly watched inflation and retail sales, for clues on monetary policy actions ahead of central bank meetings next week.

“There appears to be a build up in anxiety that the continued rise in inflationary pressure may well be much more persistent than central bankers would have us believe,” Michael Hewson, chief market analyst at CMC Markets UK, said.

“In July both UK and U.S. consumer prices saw a pause as some base effects dropped out of the headline numbers, and while there is some expectation that this might continue in August, this appears to be more of a hope than anything else.”

Last week, a Reuters poll forecast that the Bank of England will raise borrowing costs by end-2022, earlier than previously thought, and it could come even sooner.

Among individual stock moves, Associated British Foods fell 2.4% after fourth-quarter sales at its Primark fashion business were lower than expected.

Recruiter SThree rose 3.8% after forecasting annual earnings “significantly above” estimates.

Transport company FirstGroup jumped 3.2% after saying its First bus passenger volumes reached 65% of pre-pandemic levels on average in recent weeks.

Martin Sorrell’s S4 Capital fell 3.8% despite the advertising group lifting its annual gross profit guidance, driven by strong demand from global tech platforms.

(Reporting by Devik Jain and Amal S in Bengaluru; Editing by Shounak Dasgupta and Alexander Smith)

Over 80% of Oil Output in Gulf of Mexico Still Offline a Week After Ida

Energy companies have been struggling to resume production after Ida damaged platforms and caused onshore power outages. About 1.5 million barrels per day of oil production, or 84%, remains shut, while another 1.8 billion cubic feet per day of natural gas output, or 81%, was offline, the Bureau of Safety and Environmental Enforcement said.

A total of 99 oil and gas production platforms remain evacuated, down from the 288 originally evacuated.

“The entire region is still struggling with resupply,” said Tony Odak, chief operating officer of Stone Oil Distributor, which supplies fuel to the offshore industry. “The refiners are coming back up slowly, but there is so much infrastructure that needs to be brought back online and inspected as well.”

Five refineries in Louisiana remained shut on Monday, accounting for about 1 million barrels-per-day of refinery capacity, or about 6% of the total U.S. operable refining capacity, the Department of Energy said.

All three refineries in the Baton Rouge area and one near New Orleans have begun to restart, accounting for 1.3 million bpd of refining capacity, DOE said. However, the refiners will not produce at full rates for several days.

Operations remain limited at the Louisiana Offshore Oil Port (LOOP) marine terminal, and repairs are under way, DOE said.

Royal Dutch Shell Plc, the largest U.S. Gulf Coast producer, on Sunday began redeploying staff to its Enchilada and Salsa platforms.

The region is still struggling with power outages, after Ida knocked out power to more than 1 million people last week. As of Monday morning, there were still about 573,000 outages due to Ida, including 568,000 customer outages remaining in Louisiana, DOE said.

The U.S. Coast Guard said on Monday it was investigating nearly 350 reports of oil spills in and along the U.S. Gulf of Mexico in the wake of the storm.

The lower Mississippi River and New Orleans ports were reopened to traffic and cargo operations, allowing the resumption of grain, metal and energy shipments.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Stephanie Kelly in New York; Additional reporting by Liz Hampton in Denver; Editing by Sandra Maler and Matthew Lewis)

U.S. Offshore Oil Output Lags as Louisiana Refiners Restart After Ida

Energy companies have been coping with damaged platforms and onshore power outages and logistical issues, slowing efforts to restart production. Some 88% of crude oil output and 83% of natural gas production remained suspended. Climate change is fueling deadly and disastrous weather across the globe, including stronger and more damaging hurricanes.

About 1.6 million barrels of crude oil remained offline, with only about 100,000 barrels added since Saturday. Another 1.8 billion cubic feet per day of natural gas output also was shut-in, the regulator said.

A total of 104 oil and gas platforms and five rigs remain evacuated on Sunday, down from the 288 originally evacuated.

Royal Dutch Shell Plc, the largest U.S. Gulf Coast producer, on Saturday was evaluating damage to its West Delta-143 offshore platform, which transfers about 200,000 barrels of oil and gas per day from three offshore oil fields.

The lower Mississippi River and New Orleans ports were reopened to traffic and cargo operations, the Coast Guard said on Saturday, allowing the resumption of grain, metal and energy shipments.

REFINERIES RESTARTING

Four oil refineries in Louisiana have initiated restart processes after Hurricane Ida knocked out most of the state’s oil processing. Five others have yet to resume operations, the U.S. Department of Energy said on Sunday.

Three oil refineries in the Baton Rouge area and one near New Orleans have begun to restart units, the DOE said, without naming the facilities. The four account for 1.3 million barrels per day of U.S. refinery capacity.

Utilities have restored electric power to seven of the impacted refineries since Friday, the DOE said.

Placid Port’s Allen refinery, across the River from Baton Rouge, and Delek’s refinery, at Krotz Springs, have started to resume activity during the weekend, according to industry sources. Both companies did not reply to requests for comments over the past several days.

Marathon Petroleum Corp on Friday said its 578,000 barrel-per-day (bpd) Garyville, Louisiana, refinery, the state’s largest, was in the initial stages of restarting. cut?

Exxon Mobil Corp’s had also resumed operations at its 520,000-bpd Baton Rouge refinery.

Full restoration of normal refinery output will take two to three weeks for refineries in the region, an analyst estimated.

The five refineries still shut in Louisiana account for about 1.0 million barrels per day, or approximately 6% of total U.S. operable refining capacity, the DOE said.

The restart timelines in New Orleans may take longer due to flooding and ongoing power supply issues, the DOE said. Utility provider Entergy Corp on Saturday said some of the refinery locations may be without power until Sept. 29.

Elsewhere in the Gulf of Mexico, a private dive team on Sunday was attempting to locate the source of a suspected oil spill spotted in the Bay Marchand area, the U.S. Coast Guard said.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sabrina Valle; additional reporting by Erwin Seba; Editing by Lisa Shumaker)

 

The Hottest Stocks On The Market Right Now

Stocks are back at all-time highs so the party goes on!

AMD bounces off the 38,2%  Fibonacci and aims higher again.

Autodesk climbs up after a short break inside of the flag.

Activision Blizzard is still below crucial horizontal resistance.

Equinix escapes from the symmetric triangle to the upside.

3M does the same but to the downside.

Same with British American Tobacco.

T-Mobile patiently waits for the buy signal inside of the wedge pattern.

Same for Royal Dutch Shell, but in this case, we’re in the triangle/rectangle.

Rolls-Royce climbs higher after the breakout of the crucial horizontal resistance.

For a look at all of today’s economic events, check out our economic calendar.

Fifty Shades of Green: EU Sustainable Fund Rules Muddy the Waters

A Reuters analysis of funds marketed to retail investors increasingly hungry for anything green shows asset managers are adopting a wide range of strategies to justify the sustainable label since the EU brought in disclosure rules in March.

The EU’s Sustainable Finance Disclosure Regulation (SFDR) is an attempt to deliver transparency for investors focussed on environmental, social and governance (ESG) issues but fund managers say the definition of sustainability is too vague and has created confusion about what makes the cut.

Take the Allianz Global Water fund.

It actively invests in companies that improve the supply, management and quality of water and is marketed as falling under Article 8 of the SFDR, which means it is a fund that promotes “among other characteristics, environmental or social characteristics, or a combination of those characteristics”.

Now take one of Legal & General Investment Management’s (LGIM) Article 8 exchange-traded funds (ETF).

The L&G UK Equity UCITS ETF tracks the Solactive Core United Kingdom Large & Mid Cap Index, which excludes coal miners and firms that make weapons such as cluster bombs or have breached U.N. principles on corporate values.

Its top 10 holdings are the same as for L&G funds tracking the FTSE 100 index that don’t carry the Article 8 label and include oil giants BP and Royal Dutch Shell, miner Rio Tinto and British American Tobacco.

L&G said the fund was considered Article 8 because it promotes sustainability characteristics by applying LGIM’s Future World Protection List and this was a “binding element” of the investment process.

“The lens we should use is what is right. It’s not just about what is legally required because it seems not very much is legally required,” said Eric Christian Pedersen, head of responsible investments at Nordea Asset Management.

GREEN RUSH

The new EU rules have sparked a rush by investment firms to badge products as sustainable as they seek to grab a share of the booming market in sustainable mutual funds that hit a record $2.3 trillion in the second quarter.

From March 10, the rules automatically placed all investment funds into a coverall Article 6 category. Managers could then upgrade them to Article 8, or Article 9 which is for products with an explicit sustainable investment objective.

The investment industry has dubbed Article 8 funds “light green” and Article 9 “dark green”, though the EU regulations do not use those terms.

A European Commission spokesperson said its rules were designed to ensure funds were transparent about the sustainability of products so investors could make choices, and was not a labelling scheme.

Reuters asked 20 of the biggest fund houses for a list of products they market as Article 8 or 9.

An analysis of the funds of the 14 firms that replied shows some Article 8 products have limited claims to sustainability, such as those tracking conventional stock and bond indexes, investing in fossil fuels or buying debt from countries with weak ESG standards such as Saudi Arabia and Nigeria.

Some claims hinge on funds excluding securities they would not have bought anyway, based on the index being tracked.

For some in the industry this represents so-called greenwashing, where the benefits of a business or asset are exaggerated to attract environmentally aware investors.

Hortense Bioy, director of sustainability research at Morningstar, said Article 8 funds ranged from climate-themed green to “very, very light green”, excluding just a few firms.

“Managers need to ask if they are even relevant,” she said. “That is the key message: investors shouldn’t expect anything from Article 8.”

INDEX TRACKERS

Industry experts say none of the asset managers is breaking any rules. Managers determine themselves which article to apply and Brussels does not check whether claims are justified.

The Reuters analysis shows some managers are more likely to brand funds as sustainable than others.

Two of Europe’s biggest firms, Alliance Bernstein and AXA Investment Management, classify nine in every 10 euros of assets they manage under the scope of SFDR as Article 8 or 9, according to data they supplied to Reuters.

Others such as Pictet Asset Management and Allianz Global Investors place a little over half of their relevant assets in those categories, their data showed.

Morningstar data published in July shows a third of the assets falling under SFDR are now billed as Article 8 or 9, with Article 6 products disappearing from recommendation lists sent by investment advisers to retail investors.

Many Article 8 funds have clear sustainability criteria, such as strategies that invest in businesses with the lowest carbon impact in their sectors, or Allianz’s water-focused fund.

For others, that’s not always the case. Candriam’s Cleome Index Europe Equities is another Article 8 product. It tracks the MSCI Europe index but excludes companies that don’t comply with the U.N. principles.

Critics say such exclusions are very limited.

When asked for an example, Candriam did not point to any company expelled from the U.N. list that is also part of MSCI Europe. The Candriam fund’s top 10 holdings replicate the index.

A Candriam spokesperson said it also applies exclusions on companies materially involved in controversial weapons, tobacco and thermal coal, and the Cleome equity fund uses proprietary ESG analysis relative to the benchmark, justifying Article 8.

Morningstar analysis shows one in four Article 8 funds has exposure to companies involved in controversial weapons and one in five to tobacco. A third of Article 8 and 9 funds have more than a 5% exposure to fossil fuel firms.

‘NASTY’ ESG?

Demand for funds with a sustainable label is soaring.

“There is a clear commercial opportunity,” said Eric Borremans, head of ESG at Switzerland’s Pictet Asset Management, which classes 57% of its assets as Article 8 or 9.

Borremans said Pictet had no index-tracking Article 8 funds but planned to apply the label to some after incorporating more exclusions.

U.S. investment giant BlackRock told Reuters it expected to exceed a target of putting 70% of its new, or rebranded, products this year under Articles 8 or 9.

Some funds use ESG thresholds to justify sustainable labels.

JPMorgan Asset Management says 51% of the securities in its Article 8 range must carry an ESG score in the top 80%. These are scores fund firms or third-party providers give companies based on ESG metrics such as carbon usage, governance or human rights in supply chains.

Critics say such thresholds are too weak.

“You have funds saying most of our holdings are not nasty and therefore I’m ESG,” said Pedersen at Nordea, which requires 100% of its Article 8 holdings be above a minimum ESG score.

The JPMorgan threshold, for example, also means 49% of companies in its funds could rank in the bottom 20% for ESG goals, although the funds exclude sectors such as tobacco, controversial weapons and coal miners.

JPMorgan Asset Management did not respond to questions about ESG scores. A spokesperson said the firm remained “focused on a thoughtful and thorough approach to the implementation of SFDR”.

Pictet’s Borremans said funds interpreting the rules loosely now can get away with it, but strategies sailing close to the wind will eventually be exposed.

By next year, the EU will flesh out its taxonomy — a list of environmentally sustainable economic activities — and from July 2022 funds must detail how they meet sustainability criteria based on the EU’s Regulatory Technical Standards (RTS) that will clarify disclosure requirements.

“It could hurt the reputation of an asset manager to offer financial products as falling under Article 8 and 9 or as taxonomy aligned if this cannot subsequently be backed when the RTS enters into application,” the European Commission spokesperson said in emailed comments.

Amundi’s head of cross-border product, Florian Schneider, said SFDR rules made clear products with minimal exclusions were Article 8.

“The danger is everyone blindly assuming all Article 8 funds offer the same level of ESG integration when there are very different shades of green.”

For a look at all of today’s economic events, check out our economic calendar.

($1 = 0.7274 pounds)

(Additional reporting by Simon Jessop; Editing by Sujata Rao, Alexander Smith and David Clarke)

Acquittal of Eni and Shell in Nigeria Case Faces Legal Challenge

In March, a Milan court acquitted the two companies and defendants in the oil industry’s biggest corruption case involving the $1.3 billion acquisition of a Nigerian oilfield a decade ago.

The Nigerian government said at the time it was surprised and disappointed by the verdict and would consider lodging an appeal.

The case revolved around a deal in which Eni and Shell acquired the OPL 245 offshore oilfield in 2011 to settle a long-standing dispute over ownership.

Prosecutors alleged that just under $1.1 billion of that amount was siphoned off to politicians and middlemen.

The court in Milan said there was no case to answer and acquitted the companies and all other defendants.

“We have always maintained that the 2011 settlement was legal. We will review the appeal that has been filed,” a Shell spokesperson said.

Eni said it acknowledged the appeal by the prosecutors and Nigerian government. “Waiting to read the reasons for the appeal; Eni confirms its total extraneousness to the contested facts,” a spokesperson said.

Last month, two prosecutors in the case were placed under official investigation by magistrates for allegedly not filing documents that would have supported Eni’s position. Italy’s justice ministry ordered an inquiry into the conduct of the pair.

(Reporting by Emilio Parodi; Additional reporting by Ron Bousso and Stephen Jewkes; Editing by Agnieszka Flak and Mike Harrison)

Shell’s Profit Soars as It Boosts Dividend and Launches Buybacks

The Anglo-Dutch company saw a surge in cash generation, driven by higher commodity prices and a recovery in global energy demand from the pandemic slump, which also helped it to cut debt. “We are stepping up our shareholder distributions today, increasing dividends and starting share buybacks, while we continue to invest for the future of energy,” Shell Chief Executive Ben van Beurden said in a statement.

Adjusted earnings rose to $5.53 billion, the highest since the fourth quarter of 2018, exceeding an average analyst forecast provided by the company for a $5.07 billion profit.

That compares with earnings of $2.9 billion a year earlier.

Shell increased its dividend for a second consecutive quarter by 38% to 24 cents, a year after it cut its dividend for the first time since the 1940s in response to the collapse in energy demand caused by the pandemic.

The company also launched a $2 billion share buyback programme that it aims to complete by the end of the year.

Free cashflow, a metric of the company’s performance following deep cost cuts last year, rose in the quarter to $9.7 billion, its highest since the first quarter of 2020.

(Reporting by Ron Bousso; Editing by Edmund Blair and Barbara Lewis)

Shell Greenlights Gulf of Mexico ‘Whale’ Oilfield Project

By Ron Bousso

The Whale development, operated by Shell which owns 60% of the project, alongside Chevron with 40%, is expected to reach peak production of around 100,000 barrels of oil equivalent per day (boed), Shell said in a statement.

Whale, which was discovered in 2017, holds a recoverable resource of 490 million barrels of oil equivalent and is scheduled to begin production in 2024.

In May, a court in The Hague ordered Shell to accelerate its energy transition plans and reduce greenhouse gas emissions by 45% by 2030, significantly faster than its current plan. Such cuts would mean shrinking its oil and gas business.

Shell said it will seek ways to accelerate its energy transition strategy and deepen carbon emission cuts, although it plans to appeal against the landmark ruling.

The deep-water Whale project will use a similar platform to an existing nearby Shell field, Vito, which is expected to reduce the development time and costs, Wael Sawan, Shell’s head of oil and gas production, or uptream, said in a statement.

Shell said on Monday that its “energy transition plan includes increasing investment in lower carbon energy solutions, while continuing to pursue the most energy-efficient and highest-return upstream investments.”

Shell said it anticipates Whale will deliver an internal rate of return of over 25%, significantly higher than the sector’s average of 10% to 15%.

(Reporting by Ron Bousso; Editing by Edmund Blair and Barbara Lewis)