Shell will take a hit of up to $1bn on one of its biggest energy transition projects, a stalled plant in Rotterdam that was intended to convert waste into jet fuel and biodiesel.
This week, the oil major paused work on the project amid a difficult market for biofuels. It estimates the move will cost $600mn to $1bn.
It said it expected non-cash impairments of $1.5bn to $2bn in the second quarter, including another writedown of between $600mn and $800mn on a chemicals plant in Singapore that it has agreed to sell to Glencore and Indonesia’s PT Chandra Asri Pacific.
The Rotterdam plant, which was given the green light in 2021, was already behind schedule because of technical difficulties. Originally slated to start production in April, Shell said earlier this year it would be operational “in the latter part of the decade”.
After pausing construction, Shell is now reviewing the economics of the project, as prices for biofuels in Europe come under pressure from oversupply, cheap imports from China, and lower than expected growth in demand.
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