LONDON (AP) – Power producer Royal Dutch Shell warned on Tuesday that it will cut the value of its assets by $ 22 billion to adjust to plummeting oil and gas prices amid the COVID-19 pandemic.
Amid a health crisis hurting the long-term outlook for the global economy, the company said it continues to « adapt to ensure business remains resilient » in difficult times. Earlier this month, its competitor BP also cut the value of its own assets by as much as $ 17.5 billion.
The pandemic has hit the energy industry overall hard because it has severely limited business, travel and public life. For example, the commercial aviation sector sharply cut its need for fuel, as most aircraft are on the ground.
Oil and gas supply was particularly high when the outbreak began, creating a perfect storm for the industry. With full storage facilities, the price of oil in the United States fell below zero in April for the first time.
Shell predicted that prices for Brent crude, the international benchmark for oil, would be $ 50 a barrel in 2022, having previously forecast a price of $ 60 a barrel. On Tuesday, it was trading close to $ 41 a barrel.
The company’s shares fell 2.5% on the news.