Shell set to double refining margin as global fuel prices surge

Shell announced that its indicative refining margin is projected to reach $42 per barrel, almost double the $24 recorded in the prior quarter, reflecting the sharp rise in global fuel prices. Diesel in Britain broke the 200p-per-litre barrier and oil prices have stayed above three digits, fueling the margin expansion. Operational constraints at the Rheinland refinery, caused by low Rhine River water levels, reduced utilisation to between 93% and 97%, but the margin gain is expected to outweigh the volume dip.

The stronger margin will help balance softer performance in the chemicals division and meet roughly $2.5 billion in anticipated German emissions-certificate payments. In addition, Shell reported higher gas production following its $16.4 billion purchase of Canadian shale producer ARC Resources, lifting its integrated gas production forecast to 740,000-780,000 barrels of oil equivalent per day.