Oil giant Royal Dutch Shell said on Tuesday it will write down the value of its assets by up to $22 billion in the second quarter, after revising down its long-term outlook for oil and gas prices.
It comes after the energy company announced in mid-April an ambition to reduce greenhouse gas emissions to net zero by 2050.
Shell said in a statement to investors that it had reviewed a significant portion of its business given the impact of the coronavirus pandemic and the “ongoing challenging commodity price environment.”
It said it would take aggregate post-tax impairment charges in the range of $15 billion to $22 billion in the second quarter.
This included a write-down of between $8 billion-$9 billion in its integrated gas unit, a $4 billion-$6 billion write-down in upstream assets, and a $3 billion-$7 billion write-down in oil products across its refining portfolio.
Earlier this month, U.K.-based energy giant BP also said it would incur non-cash impairment charges and write-offs in the second quarter, estimated to be in an aggregate range of $13 billion to $17.5 billion after tax.
Shell said it expected international benchmark Brent crude prices to average $35 a barrel in 2020, down from a previous forecast of $60.
The firm also lowered its Brent price forecast to $40 in 2021 and $50 in 2022, having previously said it expected prices to average $60 for each respective year.