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Shell earned $2.4 billion from LNG trading in the fourth quarter amid strong demand for the fuel ahead of the winter, with LNG trades contributing to almost a third of its Q4 adjusted earnings, Reuters reported on Friday, quoting sources close to the UK-based supermajor.
The LNG trading profit for the final quarter of 2023 was among the highest quarterly earnings from LNG in company history, two of Reuters’ sources said.
Early this month, Shell reported consensus-beating adjusted earnings of $7.3 billion for the fourth quarter, well ahead of estimates of $6.4 billion, thanks to strong LNG trading and optimization results.
The supermajor, however, did not disclose the exact contribution of LNG trading to its earnings and a company spokesperson declined to comment for Reuters on the LNG trading profit.
During the fourth quarter of 2023, ahead of peak winter in the northern hemisphere, there were a lot of arbitrage opportunities between the Atlantic Basin and Asia, which benefited Shell’s performance in LNG trading, chief executive Wael Sawan said on the earnings call in early February.
Shell believes in the long-term demand growth in LNG and will continue to look at LNG and LNG trading as one of the pillars of its business.
Last week, Shell published its annual LNG outlook, in which the supermajor expects global LNG demand to surge by 50% by 2040, driven by higher demand from Asia, with coal-to-gas switching in China and a boost in LNG consumption to fuel economic growth in South and Southeast Asia.
In the long term, the global LNG market is set to continue growing into the 2040s, largely driven by China’s industrial decarbonization and strengthening demand in other Asian countries, Shell said in its Shell LNG Outlook 2024.
Despite the fact that demand for natural gas has peaked in some regions, global gas demand is expected to peak after 2040, according to Shell. The company’s view on demand peak is more than 10 years further out in time compared to the most recent estimates by the International Energy Agency, which sees global natural gas demand growth slowing down this decade compared to the decade to 2021 and peaking by 2030.
