Shell warns of possible $500 million hit from Hurricane Ida
By Kathi on Oct 08, 2021 | 05:38 AM IST
Oil giant Royal Dutch
Shell warned Thursday that it will take an earnings hit of up to $500
million as a result of the disruptions caused by Hurricane Ida, which hit the
Gulf of Mexico in late August.
In an update to shareholders, the company said the
hurricane, which prompted oil companies operating in the Gulf of Mexico to shut
down operations and evacuate workers for a few days, has reduced oil production
by around 90,000 barrels a day.
It said the total impact to earnings will be between $350
million and $500 million.
Shell said the main hit from Ida, estimated at between $200
million and $300 million, has been felt in the upstream division, which
essentially is the oil production part of the business.
However, it said there were also sizeable effects in
Shell's chemicals and oil products divisions, worth $100 million and $50
million-$100 million, respectively.
Shell has said most of its operations in the Gulf of Mexico
are running as normal.
The update, which comes ahead of third-quarter results on
Oct. 28, was brushed aside in stock markets. Shell's share price was up 0.7% on
Thursday.
Oil companies, like Shell, are benefitting from a huge
spike in oil prices over recent weeks as the recovery from the coronavirus
pandemic drives up demand. Brent crude, the international standard, is trading
above $80 a barrel, around double the price seen a year ago.
Shell said that over the full year, every $10 increase in
the cost of Brent crude adds around $3 billion to upstream annual earnings and
$1.1 billion to integrated gas earnings, all other factors notwithstanding.