Shell: Production Declines in Q1, Middle East Conflict Impacts Qatar
Shell has released an update on its outlook for the first quarter of 2026. The company expects a decline in production in both Upstream and Integrated Gas, with the Middle East conflict particularly affecting Qatari volumes.
Shell anticipates an upstream production ranging from 1.760 to 1.860 million barrels of oil equivalent per day in the first quarter of 2026, down from 1.892 million in the previous quarter. This decline includes reduced production following the integration of the Adura joint venture. In Integrated Gas, expected production is set between 880 and 920 thousand barrels of oil equivalent per day. LNG liquefaction volumes are projected between 7.6 and 8.0 million tonnes, supported by the ramp-up of LNG Canada, offset by weather constraints in Australia and shutdowns in Qatar.
Refining and Chemical Margins, and Marketing Volumes
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The indicative refining margin is expected to rise to 17 dollars per barrel, up from 14 dollars in the fourth quarter of 2025. The chemical margin stands at 139 dollars per ton, compared to 140 dollars previously. In Marketing, sales volumes are expected between 2.550 and 2.650 million barrels per day, down from 2.701 million in the previous quarter. In Chemicals and Products, trading and optimization activities are expected to be significantly higher than in the fourth quarter. At the group level, working capital movements are expected to be between -15 and -10 billion dollars, due to exceptional price volatility of raw materials on inventories and trade receivables.
Uncertainties and Financial Impacts
Shell notes that these outlooks are subject to increased uncertainty due to the situation in the Middle East. In Upstream, the tax burden is expected to be between 1.6 and 2.4 billion dollars, related to portfolio developments in Nigeria and the United Kingdom. The group also anticipates a non-monetary impact of 3 to 4 billion dollars on net debt, linked to the rise in variable components of long-term maritime leasing contracts. The complete results for the first quarter will be published on May 7, 2026.
« Our cash capital expenditure for the full year 2026 is expected to be $23-$25 billion. »
Risks mentioned
Middle East conflict impact on Qatari volumes, reducing total oil and gas production by 17% year-on-year for nine months
European biogas asset impairment of $2,098 million (identified items in nine months 2026) reflecting revised market expectations
Identified items totalling $1,201 million net loss for nine months 2026, including impairments and fair value movements on derivatives
Opportunities identified
ARC Resources acquisition adds approximately 370 kboe/d immediately upon completion on September 2, 2026
LNG Canada Phase 2 investment decision taken with expected commercial operations in early 2030s, expanding capacity to 28 mtpa
Multiple strategic divestments generating proceeds ($3.5 billion in nine months 2026) to support capital discipline and debt management
Outlook / guidance
Management commentary: Our cash capital expenditure for the full year 2026 is expected to be $23-$25 billion
The information presented in this article is provided for informational purposes only and does not constitute an investment recommendation, an incentive to buy or sell a financial asset, or investment advice. Readers are invited to conduct their own research before making any decision.
Investments in the stock market involve risks, including the risk of capital loss. Past performance of an asset or market is no guarantee of future results. Any investment decision should be made taking into account your personal financial situation, objectives and risk tolerance.
