TotalEnergies, Shell post record profits, LNG business diverges

  • TotalEnergies posts record profit of $9.9 billion
  • Shell profit reaches $9.45 billion
  • Shell wants to increase the dividend

LONDON/PARIS, Oct 27 (Reuters) – Europe’s two largest energy companies, Shell (SHEL.L) and TotalEnergies (TTEF.PA) reported profits of more than $9 billion in the third quarter, despite the fact that the liquefied natural gas division (LNG) from Shell has been struggling to take advantage of high fuel prices.

The strong gains are likely to fuel calls in the UK and European Union for more windfall taxes on energy companies to help households cope with gas and electricity bills.

LNG prices have skyrocketed this year as Moscow gradually cut natural gas supplies to Europe, which was heavily dependent on Russian imports.

Western sanctions against Russia, a top world oil and gas producer, in response to its invasion of Ukraine in February helped push European gas prices to an all-time high in August.

They have fallen sharply in recent weeks as Europe has filled gas storage and temperatures have been unusually mild, but prices are still higher than a year ago.

World’s largest LNG trader Shell missed out on some of the benefit of price increases after a production slump following strikes at Australia’s Prelude site. It also said its trading was impacted by “material differences between paper and physical realizations in a volatile and contorted market.”

Total profit at its integrated gas division fell nearly 40% sequentially.

Total income of $9.5 billion was slightly below last quarter’s record. Shell nevertheless decided to increase its dividend by 15% as it prepares for Wael Sawan to take the helm from Ben van Beurden next year.

TotalEnergie’s LNG, Renewables and Power division reported record profit of $3.6 billion for the quarter, up $1.1 billion from the second quarter and more than double the year-ago figure, reflecting an increase in LNG Prices up 50% and a “strong” performance of its LNG trading department.

That came despite LNG sales volumes falling 10% from the quarter due to outages at its major facility in US Freeport and elsewhere. Overall, TotalEnergies posted a record quarterly profit of nearly $10 billion.

TotalEnergies has more than halved its leverage, or gearing, to 4%, underscoring its comparatively strong balance sheet. Gearing at Shell, which is on course for a record earnings year, edged up to 20.3%.

Despite their strong gains, shares of Shell and its European peers TotalEnergies and BP (BP.L) have significantly underperformed their larger U.S. peers Exxon Mobil and Chevron so far this year, whose business models are much more focused on fossil fuels than renewable energy are aligned.

While Shell and BP shares are up around 40%, Exxon is up 75% and Chevron is up over 50%.

Shares in Norway’s Equinor are also up 54%, spurred by soaring gas prices.

Spain’s Repsol (REP.MC) on Thursday reported a doubling of earnings to 1.48 billion euros ($1.49 billion).

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($1 = 0.9938 euros)

Additional reporting by Benjamin Mallet; Edited by Barbara Lewis

Our standards: The Thomson Reuters Trust Principles.

Shadia Nasralla

Thomson Reuters

Writes about the intersection of corporate oil and climate policy. Covered politics, economics, migration, nuclear diplomacy and business from Cairo, Vienna and elsewhere.


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