Shell sees higher Q4 upstream output despite Groningen gas field closure

Shell sees the potential for higher upstream production in the fourth quarter of 2023 despite the planned closure of the Groningen gas field in the Netherlands.

Reporting sharply lower year-on-year adjusted earnings for the third quarter of 2023, Shell said it expects its upstream segment production to average between 1.75 million - 1.95 million boe/d, compared to the 1.75 million boe/d in the third quarter of the year.

The giant Groningen gas field -- previously a source of highly flexible gas production for Europe -- has now been shut down due to the risk of tremors and earthquakes.

Shell said it also expects production from its LNG-focused upstream assets -- which it calls Integrated Gas -- to be between 870,000-930,000 boe/d in Q4 compared to 900,000 boe/d in Q3. It sees its Q4 LNG liquefaction volumes between 6.7 million -7.3 million mt, from 6.9 million mt in Q3.

Europe's biggest energy major reported total Q3 oil and gas production of 2.71 million boe/d, down slightly from 2.77 million boe/d a year ago and 2.73 million boe/d in the third quarter. It reported Q3 adjusted earnings of $6.22 billion, up 23% from the previous quarter but down from $9.45 billion in the year-ago period when oil and gas prices surged in the wake of Russia's invasion of Ukraine.

"Shell delivered another quarter of strong operational and financial performance, capturing opportunities in volatile commodity markets. We continue to simplify our portfolio while delivering more value with less emissions," CEO Wael Sawan said in a statement.

In its downstream business, Shell said its global indicative refining margin jumped to $16/b from $9/b in the previous quarter, driven by lower global product supply combined with higher demand. Looking ahead, Shell said it expects its Q4 refinery utilization to be 75% - 83%, lower than 84% in Q3 due to planned maintenance activities in North America.

Shell also accelerated the pace of share buybacks in the third-quarter, adding it would repurchase $3.5 billion of shares over the next three months, an increase from $3 billion in the prior period.