What Oil Crisis? Shell Posts Record $9.1B Profit for Q1 2022

Despite a global oil crisis, multinational oil company Shell posted record profits of $9.1 billion during the first quarter. Europe’s largest energy company said high oil and natural gas prices amid tight supplies helped profits reach record levels.

RELATED: Shell Makes ‘Difficult Decision’ To Buy Discounted Russian Oil

Shell Posts Record Profits Amid Global Oil Crisis

On Thursday, Shell reported that it earned its biggest-ever quarterly profit for the first quarter of 2022. The $9.1 billion profit it made reflected today’s high prices due to the oil crisis.

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Fossil fuels spiked earlier this year when the Ukraine war exacerbated already tight oil supplies. 

As a result of high demand, the energy giant posted adjusted earnings of $9.1 billion for the January-to-March period. This is nearly triple what the company earned exactly a year ago.

Shell also said it would increase the pace of share buybacks in the second quarter from $4 billion to $4.5 billion. It will also raise dividends by 4% to 25 cents per share.

Shell Capitalized on Oil Crisis

Beyond high energy prices, Shell also handled the pandemic well enough to earn hefty profits despite the current oil crisis. It took advantage of the price volatility in the markets to earn trading profits.

It also slashed costs pertaining to operations during the pandemic.  When prices and sales volumes rose, it made a bigger profit. In fact, Shell made a killing from the shortages in diesel and other refined products.

The company’s refining and chemicals units earned $1.2 billion for the quarter. This is a whopping 50% increase from the previous year. 

Meanwhile, Shell CEO  Ben van Beurden seemingly suggested that the world still needs a strong oil and gas presence. Despite increased pressure to tackle climate change, the Ukraine war showed that fossil fuels remain the way to go.

The war shows that “secure, reliable and affordable energy simply cannot be taken for granted,” he said. 

Withdrawal From Russia

In addition, the oil and gas giant also announced its plans to gradually withdraw from Russian activities. The company said that it will take a $4.2 billion pre-tax write-off on its Russian businesses.

This includes $1.1 billion on the loans related to the shuttered Nord Stream 2 pipeline. The writeoff also includes a $1.6 investment in a liquified natural gas facility in Sakhalin island.     

In addition, Van Beurden also confirmed that Shell is also closing up on its Russia crude oil purchases. In fact, Shell can end the majority of its current contracts with Russia by end of the year.

If legally compelled, van Beurden said Shell will suspend two live Russian contracts that run until 2023. 

Shell’s Russian Oil Purchases

Meanwhile, reporters asked van Buerden if Shell continues to participate in back-channel purchases of Russian oil. Watchdog agencies said that many countries try to circumvent dealing with Russia by blending their oil with crude from other countries. The mixture creates a fuel blend that sellers can claim as non-Russian. 

Van Beurden said that it remains impossible to determine the origins of refined products like diesel or gasoline. With the current oil crisis affecting many Western economies, don’t expect countries to suddenly become picky.

Besides, Shell does not have the means to determine the origins of refined petroleum products. Under Western sanctions, once oil gets substantially treated it “loses its origin”.  Therefore, diesel fuel made with Russian oil but produced by an Indian refinery is Indian. 

Watch the Reuters news video reporting that Shell posts record quarterly profit:

What do you think of companies like Shell recording record profits amid an oil crisis?

• Good for them. Supplying a need at the price dictated by the market is capitalism at work.
• This smells like opportunism at work. With everybody else dropping Russia, Shell has yet to suspend its current contracts.
• Shell proves once again that there is great profit and opportunity in war.
• There’s no oil crisis. The ongoing shortage of oil is not a supply problem but a geopolitical one.

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What do you think of Shell recording its biggest quarterly profit amid a global oil crisis? Do you think this is a result of fiscal prudence? Or, is this pure profiteering in the face of an energy crunch?

Tell us what you think. Share your thoughts in the comments section below.

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