Shell benefits from energy crisis as soaring gas prices lift profits

Shell expects a significant boost in profits in its natural gas division, thanks to soaring prices, when it reports its latest results next month, as the oil and gas company said investors would benefit from the continuation “at pace” of its $7bn share buyback scheme this year.

Shell, the world’s largest producer and trader of liquified natural gas, expects trading results at its integrated gas business in the fourth quarter to be “significantly higher” year on year as the rocketing price of gas outweighs a drop in production volume because of unplanned maintenance works.

Wholesale gas prices continue to break records, with energy suppliers warning of a “national crisis” that has already led to 27 suppliers going bust, and the prospect of bills increasing by more than 50% in April to about £2,000 a year.

Shell, which will report its fourth-quarter results on 3 February, said it intends to pick up the pace of its $7bn (£5.1bn) share buyback scheme, which is being funded using the proceeds of the $9.5bn sale of its US Permian Basin shale oil assets to ConocoPhillips at the start of December.

The company has already returned $1.5bn to investors and said on Friday the remaining $5.5bn “will be distributed in the form of share buybacks at pace”. The remaining $2.5bn from the sale is being used to strengthen Shell’s balance sheet.

While Shell is benefiting from the energy crisis, last week the business secretary, Kwasi Kwarteng, held emergency meetings with the bosses of the UK’s biggest energy suppliers, who are pushing for the government to intervene to alleviate the impact of soaring prices.

Potential interventions being lobbied for include a windfall tax on major oil and gas companies such as Shell, as well as extending fuel grants, moving green levies from consumers’ bills into taxation and axing the 5% VAT on bills imposed when the UK was part of the EU.

Later this month, Shell will move its headquarters from the Netherlands to the UK and scrap its dual share structure, after shareholders voted to back a proposal to simplify the Anglo-Dutch company’s operation.