Shell's write-down of Australian assets not a surprise

“It’s no surprise to see Shell writing down the value of its assets, in line with the new post-pandemic energy demand outlook. In fact, we’ve revised the value of oil and gas assets in Asia Pacific by US$200 billion as a result of a lower oil price outlook.

“Shell's write-down of QCLNG can be linked to the BG acquisition. A deal that is looking increasingly challenged by lower price assumptions. It is notable that Shell’s write-down included both QGC and Brazilian upstream assets.

"Prelude, on the other hand, suffered from cost overruns and schedule delays. It is now offline and the leading backfill project, Crux, has been delayed. This, and likely also its high CO2 content, has led to a write-down.

“The write-down comes soon after BP carried out a similar exercise and reflects how the energy transition is impacting corporate strategy at the world’s largest oil and gas companies. The European super majors are setting out on a path towards more sustainable and resilient businesses, better equipped for a future of lower fossil fuel demand. This may be a signal that divestments could be on the cards, for some of Shell's non-operated positions, adding to the recently announced Eni and Chevron packages that are expected to hit the market."