Shell Plc anticipates a significant decrease in earnings from natural gas trading in the second quarter of this year, primarily due to seasonal shifts in the market. The company also expects a decline in oil and gas production compared to the previous quarter, as a result of field maintenance. Additionally, Shell's chemicals business is projected to incur a loss. These updates were provided ahead of the full results announcement later this month.

Last year, Shell experienced record-level profits, driven by extreme swings in European natural gas prices. The gas trading unit accounted for approximately a quarter of the company's overall profitability. While Shell delivered its best-ever first quarter this year, the subsequent months presented less favorable conditions.

In early trading in London, Shell shares showed a slight decline. The company stated that earnings from the gas trading unit are expected to be significantly lower than the strong first quarter, attributing this to seasonality and fewer optimization opportunities. The division's performance has returned to average levels seen in 2021 and 2022.

Biraj Borkhataria, an analyst at RBC Europe Ltd., commented that the weaker trading outcome was anticipated after the exceptional results in recent quarters. He described the statement as neutral, with most operational indicators aligning with market expectations.

Exxon Mobil Corp., Shell's U.S. counterpart, also announced a reduction in second-quarter earnings of about $4 billion compared to the first three months of the year. This decrease is attributed to lower natural gas prices and oil-refining margins. Exxon Mobil is striving to develop its trading business to compete with European majors like Shell.

In addition to the trading outlook, Shell disclosed £2.4 billion of write-downs for the second quarter. The write-downs were mainly influenced by a 1% increase in the discount rate used for impairment testing.

The complete performance and profitability results for the quarter will be unveiled by Shell in three weeks' time. The company also provided a preliminary estimate of an adjusted corporate loss between $600 million and $800 million for the quarter. The upstream business, encompassing crude oil and natural gas exploration and production, is expected to generate adjusted earnings ranging from $2.5 billion to $2.8 billion. Shell anticipates lower trading performance in the chemicals and products business compared to the beginning of the year.

Notable, Shell's CEO, Wael Sawan, recently cautioned against abrupt reductions in oil and gas production, describing such actions as "dangerous and irresponsible." He emphasized the ongoing need for oil and gas as the transition to renewable energy is not progressing rapidly enough to replace traditional energy sources.