Shell to take up to £1.6bn hit after suspending construction of biofuels plant

The oil and gas giant said the writedown is also due to the sale of a refinery in Singapore.

Shell is suspending construction work on its biofuels plant in Rotterdam (Anna Gowthorpe/PA) (PA Wire)

Shell expects to take a hit of up to two billion US dollars (£1.6 billion) after it suspended construction work on one of Europe’s largest planned biofuels plants and sold a refinery in Singapore.

The oil and gas giant said it expects the decision to stop building work on the biofuels plant in the Netherlands, which it announced earlier this week, to cost up to one billion US dollars (£784 million).

Shell started work on its plant in Rotterdam in September 2021 and it was meant to begin producing sustainable aviation fuel and renewable diesel by 2025.

The site was due to produce 820,000 tonnes of biofuels per year when complete.

Meanwhile, the company said the move to sell its Bukom refinery in Singapore will cost between 600 million (£470.4 million) and 800 million US dollars (£627.2 million).

Shell said in May that it would sell the site to a joint venture between commodity trader Glencore plc and Indonesia’s PT Chandra Asri Pacific.

Both moves are part of chief executive Wael Sawan’s plans to focus on Shell’s most profitable businesses.

In a market update on Friday, the London-listed firm said integrated gas production is expected to be within market guidance of 940,000 to 980,000 barrels of oil equivalent per day (boe/d).

Its gas trading results are set to be lower in the second quarter than the first because of seasonal changes in the market, but still in line with last year’s annual performance. The division has driven strong profits for the company in recent years.

Upstream production is expected to be about 1.72 million to 1.82 million boe/d, also within its previously announced outlook.