Royal Dutch Shell is writing down the value of its assets by as much as $22 billion as lower oil prices push the Anglo-Dutch company to accelerate a shift away from fossil fuels, CNN reports.
According to the report by CNN, the Roayl Ductch Shell has slashed its outlook for energy prices Tuesday, saying in a statement that it expects Brent crude to cost $40 per barrel in 2021 and $50 per barrel in 2022. Prices are forecast to rise to $60 per barrel in 2023.
The company said the changes to its price forecast reflect the economic trauma caused by the coronavirus pandemic, which has plunged countries around the world into recession and sharply reduced demand for energy.
Brent crude futures hit their lowest level in decades in April, falling below $20 per barrel. They have staged a comeback to trade above $41 per barrel, but that’s still well below where prices started the year.
The Royal Dutch Shell said Tuesday that it expects to take a charge of between $15 billion and $22 billion in the second quarter as a result of the shifting market conditions. It’s scheduled to report its financial results for the quarter on July 30.
The company said in a statement that it would continue to “adapt to ensure the business remains resilient.” Shell cut its dividend in April for the first time since World War II to conserve cash.
The huge slump in demand for oil and gas this year is pushing many of the industry’s biggest companies to accelerate a shift to cleaner fuels. Shell has committed to achieving net-zero carbon emissions from its own operations by 2050.