Oil & Gas

British energy giant Shell has significantly reduced its gas production outlook for the first quarter of the year, citing unplanned maintenance and adverse weather, particularly cyclones in Australia. The company now forecasts integrated gas production between 910,000 and 950,000 barrels of oil equivalent per day, down from a previous range of 930,000 to 990,000 barrels. This adjustment reflects operational challenges but still marks a slight increase from the 905,000 barrels produced in Q4 of last year. On the financial front, Shell’s share price fell 4.7% on the London Stock Exchange, signaling investor concerns over the revised estimates.

In line with reduced gas output, Shell has also lowered its LNG production forecast, now expecting between 6.4 million and 6.8 million metric tons, compared to the earlier projection of 6.6 million to 7.2 million metric tons. Upstream production, which includes natural gas and crude oil extraction, is forecasted to range between 1.79 million and 1.89 million oil-equivalent barrels per day. This remains within the previous range but points to a more cautious stance as Shell navigates weather-related and technical disruptions. The company is set to release its official Q1 results on May 2, which will provide a clearer picture of the financial impact.

Industry analysts have responded with mixed views. Russ Mould, investment director at AJ Bell, noted that Shell’s underperformance in gas production may disappoint shareholders, especially given the company’s traditionally strong position in the gas sector. Under CEO Wael Sawan, Shell has focused on cost-cutting, reducing debt, and selective green investments. “Shell has done better at keeping pace with its US peers than BP, but setbacks like this highlight the ongoing pressure to deliver,” Mould emphasized.

Despite the current headwinds, Shell remains committed to expanding its oil and gas business, shifting away from aggressive renewable energy investments. In March, the company laid out a strategy aimed at boosting shareholder returns while cutting costs. CEO Wael Sawan stated, “We want to become the world’s leading integrated gas and LNG business… while delivering more for our shareholders.” The approach aligns with broader trends, as even rival BP has pulled back on renewables in favor of traditional energy — a move influenced by activist investors demanding higher returns.