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Shell expects write-down of up to £3.4bn

Shell has said it will likely take post-tax charges between £2.6bn and £3.4bn after another tough quarter.

SHELL has said it will take charges of several billion dollars in its final quarter of the financial year, the latest write-down from the oil major.

The London and Amsterdam listed company said that it will likely take post-tax charges in aggregate between $3.5 billion and $4.5bn (£2.6bn to £3.4bn), after another tough quarter.

The expected charges come in part because of the costs of transforming its refinery portfolio, as well as onerous gas contracts and an impairment in the Gulf of Mexico.

It comes months after the company announced a $16.8bn (£12.7bn) write-down in its second quarter, as it revised its outlook for the price of oil.

In the fourth quarter, Shell's refineries are expected to have been utilised at between 72 per cent and 76 per cent of their capacity.

In an update, Shell added that it expects production from its upstream unit, which extracts oil and gas, to average between 2.28 and 2.35 million barrels of oil equivalent every day during the quarter.

This was impacted by hurricanes in the Gulf of Mexico, which hit production by between 60,000 and 70,000 barrels, and mild weather in Northern Europe in the first part of the quarter.

Adjusted upstream earning are now expected to show a loss unless the price of oil changes significantly, Shell said.

Its shares dropped by 3.3 per cent after the news. However, Shell was also facing a slump in the price of oil, down 3 per cent, because of worries over a new Covid-19 strain and closed borders.

Shares in European rivals Total and BP were also significantly down on Monday morning.

The price of Brent crude currently sits at $50.65 per barrel. It is far ahead of the sub-$19 level that a barrel of Brent fell to in April, but below the $60 mark where the commodity started this year.

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