Shell makes record profits as Ukraine war shakes energy markets

First-quarter earnings almost three times higher than the same period last year

Shell reported its highest ever quarterly profits as it capitalised on the volatility in global energy markets following Russia's invasion of Ukraine.

Adjusted earnings at Europe’s largest oil company rose to $9.1 billion (€8.6 billion) in the first three months of the year, almost three times the $3.2 billion it recorded a year earlier. That beat average analyst estimates of $8.7 billion and was up from $6.4 billion in the final three months of 2021.

The results complete a set of bumper first-quarter earnings for the world’s biggest energy companies, which have provoked renewed calls from UK politicians for a windfall tax on oil and gas profits. BP reported underlying profits of $6.2 billion, its highest since 2008, while Norway’s state-controlled Equinor recorded its highest ever quarterly pre-tax earnings of $18 billion.


Shell chief executive Ben van Beurden pushed back on the suggestion the oil and industry was just profiting from the conflict.


“It’s not just a war profit as some people would like to point out,” van Beurden said. “It is very much also the performance of the company, which has significantly strengthened in the run-up and also during the pandemic.”

Shell shares rose more than 3 per cent in early trading on Thursday.

The group’s profits were driven by its oil production and integrated gas divisions, which generated $4.1 billion and $3.5 billion in adjusted earnings respectively, and by a strong performance from its traders.

Shell is the world’s largest trader of liquefied natural gas and a big trader of oil. Prices for LNG, in particular, have soared as European efforts to reduce dependence on piped gas from Russia have increased competition for cargoes of the fuel. Shell produced 8mn tonnes of LNG in the first quarter and sold 18.3mn tonnes, it said.

Shell had been able to redirect some of its cargoes of LNG to Europe to meet surging demand, chief financial officer Sinead Gorman said, resulting in trading and optimisation earnings that were similar to the previous quarter for gas and “significantly higher” for oil products.


Surging profits helped Shell reduce net debt to $48.5 billion from $52.6 billion at the end of last year but its spending plans remained unchanged at $23 billion-$27 billion for 2022.

The UK-headquartered supermajor said it had completed $4 billion of the $8.5 billion in share buybacks announced for the first half of the year and expected shareholder distributions for the second half of 2022 to be in excess of 30 per cent of cash flow from operations. Cash flow from operations for the first quarter was $14.8 billion.

Shell had less exposure to Russia than European rivals BP and Total. Before the war, Russia was expected to contribute 5 per cent of Shell's total oil and gas production in 2022, compared with 16 per cent for Total and 28 per cent for BP, according to investment bank Jefferies.

Nevertheless, it has a complicated set of business positions to unwind as it exits the country, including a 27.5 per cent stake in the Sakhalin-2 liquefied natural gas project with Gazprom, two other joint ventures with the state-owned company, a retail network, a lubricants business and a stake in the now shelved Nordstream 2 project.

Despite the lack of potential buyers given Russia’s growing isolation, van Beurden insisted Shell was making “good progress” in its efforts to sell its Russian assets. “It is a commercial process, it is not abandonment,” he said.

The planned exits resulted in post-tax charges of $3.9 billion in the first quarter, the company said.


As with BP, Shell does not disclose how much of its earnings were generated in the UK but the UK-headquartered supermajor has said it expects to invest £20 billion-£25 billion into the UK energy system over the next decade.

The majority of that investment is intended for low and zero-carbon projects and, although a windfall tax on oil and gas profits might not stop it, van Beurden stressed that investment on that scale required “a stable and predictable financial outlook”.

“We have a very strong commitment to investing in the UK because we see first of all the government in the UK being very supportive for the sort of investments that we would like to make,” he said.

A key priority for Shell is the Jackdaw North Sea gasfield which, if approved for development by the UK government, could begin production by 2025 and produce enough energy to heat 1.4mn homes. – Copyright The Financial Times Limited 2022