The Strategist

Shell reports first loss since 2005

02/05/2021 - 02:52

Shell reported an annual loss of almost $22bn, the first loss since 2005, when the company was formed by merger.

Billy Hicks
Billy Hicks
Anglo-Dutch oil and gas concern Royal Dutch Shell has reported a net loss of $21.68bn for 2020, while the company closed 2019 with a profit of $15.8bn. This is the company's first annual loss since 2005, when Royal Dutch and Shell Transport merged, CNBC noted.

In addition, Shell's 2020 profit, adjusted for inventory replacement costs, fell 71% to $4.8bn, compared to $16.5bn in 2019. As the Financial Times notes, analysts in the oil market are watching this particular figure particularly closely. At the end of 2020, the group's adjusted profit is at its lowest level since the company was founded in 2005, writes FT.

The income of Shell and other oil and gas companies in 2020 affected by the pandemic and the sharp decline in demand for oil, as well as lower commodity prices, explains FT. 

Earlier BP reported on the net loss for the first time in 10 years. At the end of 2020, the company recorded a loss adjusted for the cost of reserve replacement of $5.7 billion. In 2019, BP reported a profit of $10 billion. BP's net loss for the full year was $20.3 billion against a profit of $4 billion in 2019.

Analysts at The Wall Street Journal claim that 2020 was one of the worst years for oil companies. According to their calculations, oil and gas companies in North America and Europe in the first three quarters of 2020 were forced to write off assets by about $145 billion. This is the highest figure for nine months since 2010, writes WSJ.