Shell has warned investors of an impending impairment charge of up to $2bn in its next quarterly results, due to issues with a major biofuel project in Rotterdam and the sale of a Singapore refinery. The company expects a non-cash writedown of $600m to $1bn for the troubled biofuel project and $600m to $800m for the refinery. Construction on the biofuel plant has been temporarily halted due to technical difficulties, delaying its expected completion until 2025. This pause will allow Shell to reevaluate the project and maintain capital discipline.
The announcement has caused Shell’s share price to dip slightly on the stock market. The company’s focus on low-carbon fuels is a key part of its efforts to provide sustainable products to customers. This setback in the development of sustainable aviation fuel is concerning, as it is crucial for airlines to reduce their carbon emissions in line with global climate targets. BP has also scaled back its plans for new sustainable aviation fuel projects, reflecting a broader trend of oil companies simplifying their portfolios for focus on value and returns.
The news highlights the challenges in transitioning to sustainable energy sources and the complexities involved in the development of biofuels. Despite setbacks, companies like Shell and BP are continuing to invest in alternative fuels to meet environmental goals and offer more sustainable options to consumers.
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