Shell expects to take a hit up of up to $22 billion (£18 billion) on the value of its assets due to falling oil and gas prices and decarbonisation of the world economy.
The energy giant announced to day it had reviewed the outlook for commodity prices and future profits margins amid a Covid-19 climate in which demand for hydrocarbons has slumped.
It said it had factored in post-tax impairment charges of $15 to $22 billion during the second quarter of this year.
Those comprise a write-down on integrated gas of $8-9 billion, primarily in Australia; $4-6 billion upstream, largely in Brazil and North America shale;$3-7 billion on oil products across its refining portfolio. It said impairments added up to $20-27 billion pre-tax.
The company said it had revised down its expectations of Brent crude and Henry Hub gas prices for each of the next three years and had revised down average long-term refining margins by around 30% from its previous assumption.
The company also expects to see its borrowing increase by 3%.
The move comes after rival BP wrote down its global assets by £14 billion due to a similar review of prospects for the oil & gas industry.
Royal Dutch Shell said: "The Refining asset valuation updates reflect Shell’s strategy to reshape and focus its refining portfolio to support the decarbonization of its energy product mix, leveraging assets and value chains in key markets.
"The Upstream and Integrated Gas asset valuation updates, including of related exploration and evaluation assets, are largely driven by the change in long-term prices with some impacts due to a changed view on the development attractiveness.
"A revision in the decommissioning and restoration provision discount rate assumption from 3% to 1.75%, reflecting a lower interest rate environment, has impacted the asset values tested for impairment."
