Royal Dutch Shell PLC is writing down the worth of its property by as much as $22 billion due to decrease power costs attributable to the demand-sapping coronavirus pandemic.
The write-down follows one by BP PLC on a similar scale earlier this month. Decrease oil and fuel costs introduced on by the pandemic and uncertainty over the tempo of the transition to decrease carbon power have induced main oil firms to query the worth of their reserves.
The broad reassessment of asset values by two of the power sector’s largest firms is about greater than a response to the pandemic and its impression on oil and fuel costs, stated Luke Parker, vice chairman, company evaluation at consultancy Wooden Mackenzie. The actions sign that enormous quantities of oil and fuel are more likely to be left within the floor.
“It’s about elementary change hitting the whole oil-and-gas sector,” Mr. Parker stated. “Inside this write down, Shell is giving us a message about stranded property, identical to BP did a couple of weeks in the past.”