Royal Dutch Shell reports huge losses as COVID-19 crisis hits oil demand
Royal Dutch Shell has posted losses of $21.7bn for 2020, and the oil giant has blamed the figures on the crash in demand due to the impact of the COVID-19 pandemic.
Earlier this week, Chevron, BP and Exxon posted similar losses – and have also felt the impact of the fall in demand for oil.
In September, Shell announced that up to 9,000 jobs would be lost across the world, as a result of the crisis – and a further 330 cuts from its UK operation in the North Sea were announced at the end of 2020.
Net debt at Shell was $75.4bn at the end of the fourth quarter 2020, compared with $73.5bn at the end of Q3 – and there could yet be a further negative impact as the world entered its third national lockdown across many nations.
Despite the losses, Royal Dutch Shell Chief Executive Officer, Ben van Beurden was positive about the future for the business.
He said: “2020 was an extraordinary year. We have taken tough but decisive actions and demonstrated highly resilient operational delivery while caring for our people, customers and communities. We are coming out of 2020 with a stronger balance sheet, ready to accelerate our strategy and make the future of energy. We are committed to our progressive dividend policy and expect to grow our US dollar dividend per share by around 4% as of the first quarter 2021.”
David Elmes, Professor of Practice and Head of the Global Energy Research Network at Warwick Business School, said: “This week’s huge losses by Shell, BP and Exxon reflect the challenges oil and gas companies face. They are skating on ever-thinning ice as the effects of climate change combine with other events like the covid-19 pandemic.
“A face-off between the world’s biggest oil and gas suppliers in 2015 caused prices to halve and they had barely recovered before Covid-19 caused a slump in demand. Worse still, that slump in demand as a result of the pandemic has become more prolonged than initially hoped.
“There will be some ongoing need for oil and gas as a fuel for a while yet. There will also be demand for the petrochemicals and other products made from them. But that can’t sustain the industry we’ve seen in the past as we look to address climate change. Some companies will need to change to survive.
“International oil and gas companies like Shell, BP & Exxon own less of the world’s resources than similar companies owned by governments in the countries where the oil and gas are found. They are getting squeezed and need a way out.
“Companies like BP and Shell know this and have plans in place, such as BP’s plan to become an integrated energy company. Shell is due to announce its plan later this month. The energy transition needed to address climate change is getting a significant push from Covid-19.”