JAKARTA - Shell expects gas production in the first quarter to weaken, while the company's liquidity is under short-term pressure due to the impact of the conflict involving Iran. Anadolu Agency quoted Thursday, April 9 reported, stronger oil trading is expected to help hold back some of the pressure on the company's performance.
In its first quarter update ahead of its financial report on May 7, Shell said the sharp turmoil in the oil and gas market had triggered a major change in inventory value. As a result, the company's working capital during the quarter is estimated to be in the range of negative US$10 billion to negative US$15 billion.
The company explained that the pressure could reverse over time if commodity prices begin to ease. However, for now, the conflict in the Middle East is weighing on the company's short-term financial position.
Shell also lowered its integrated gas production guidance for the first quarter to 880,000 to 920,000 barrels of oil equivalent per day. In the previous quarter, the figure reached 948,000 barrels of oil equivalent per day. The company cited disruptions in the Middle East as the cause of the decline.
For the production of liquefied natural gas or LNG, conditions are expected to remain relatively stable according to previous guidelines. Additional volumes from Canada are said to help offset some of the impact from the Middle East region.
This update gives an early glimpse of how the conflict is beginning to affect the profit prospects of major oil and gas companies. Still according to the Anadolu report, as attacks and supply disruptions shook the market, Brent crude prices jumped to near US$120 per barrel during the quarter.
The price increase creates favorable conditions for the oil trading business. On the other hand, upstream operations and a number of positions in the company's balance sheet remain under pressure.
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