Energy giant Shell’s profits nosedived in 2023, tumbling from a record high of $42.3 billion to just $19.4 billion, marking a 54% decline, reflecting a sharp drop in oil and gas prices, which had surged after Russia’s invasion of Ukraine but have since cooled down.
The company attributed the decline in its 2023 income to “lower realised oil and gas prices, lower volumes, and lower refining margins,” compounded by impairment and other accounting charges amounting to $7.5 billion. Shell’s revenue also fell by nearly a fifth to $316.6 billion.
Despite the downturn, Shell announced it would be returning $3.5 billion to shareholders and increasing its fourth-quarter dividend. Shell’s CEO, Wael Sawan, emphasised the company’s commitment to simplification and value delivery with reduced emissions for the coming year.
The announcement sparked criticism from environmentalists, with Greenpeace activists staging a protest outside Shell’s London headquarters. Greenpeace campaigner Maja Darlington accused Shell of making “obscene profits” from fossil fuels amidst a cost-of-living crisis and climate change impacts.
Sawan, who previously led Shell’s renewable energy division, indicated a forthcoming update in March on the company’s strategy for transitioning to cleaner fuels. He assured that Shell’s goal to achieve net zero carbon emissions by 2050 is still on course, even as the energy sector continues to leverage high oil and gas prices. These prices have been recently influenced by concerns over the Israel-Hamas conflict potentially escalating in the Middle East.
Despite the quarterly and yearly profit declines, Shell’s share price rose by 2.41 percent to £25.06 on London’s FTSE 100 index, which saw an overall slight decrease. The fourth quarter alone saw a 93 percent tumble in net profit to $474 million, largely due to impairments, especially concerning chemical assets in Singapore.
Nonetheless, Shell’s net profit excluding exceptional items fell nearly a third to $28.3 billion last year, surpassing market expectations.
Industry experts, such as Richard Hunter, head of markets at trading firm Interactive Investor, pointed to fluctuating oil prices as the primary factor behind Shell’s reduced earnings, the AFP reported.
Hunter also highlighted the ongoing debate over the environmental impact of the fossil fuel industry and the growing ethical concerns among investors regarding the sector.
