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Shell has issued an update to its fourth-quarter 2025 outlook, signalling softer earnings across several business lines as tax-related adjustments, weaker trading conditions, and lower downstream margins weigh on results. Final results are scheduled for release on February 5, 2026.
While production across Shell’s core upstream and integrated gas portfolios remains broadly stable, the company expects group-level adjusted earnings and cash flow to come under pressure compared with earlier quarters.
In Integrated Gas, Shell expects production of between 930,000 and 970,000 barrels of oil equivalent per day (kboe/d) in Q4, broadly flat with the third quarter. LNG liquefaction volumes are forecast at 7.5 to 7.9 million tonnes, supported by steady asset performance. Trading and optimisation in the segment is expected to be in line with Q3.
Upstream production is projected at 1.84 to 1.94 million boe/d, reflecting the incorporation of the Adura joint venture in the UK. Operating expenses and depreciation are expected to remain within historical ranges, while the upstream tax charge is forecast to decline modestly from Q3 levels.
Shell’s Marketing business is expected to see seasonally lower sales volumes of 2.65 to 2.75 million barrels per day, down from 2.82 million barrels per day in Q3. Marketing adjusted earnings are expected to fall below Q4 2024 levels, primarily due to a non-cash deferred tax adjustment linked to a joint venture.
The Chemicals and Products segment is expected to be the weakest performer. Shell said chemicals adjusted earnings will post a “significant loss,” driven largely by another deferred tax adjustment in a joint venture. Segment earnings are expected to be below break-even for the quarter.
Refining margins are forecast to rise to an indicative $14 per barrel, up from $12 per barrel in Q3, but chemicals margins are expected to fall to $140 per tonne from $160 per tonne. Trading and optimisation in Chemicals and Products is expected to be significantly lower than in the prior quarter.
Following the completion of a Canadian oil sands asset swap, Shell expects oil sands production of around 20,000 boe/d in Q4, alongside a reduction in Chemicals and Products adjusted earnings offset by lower non-controlling interests at the group level.
Adjusted earnings in Renewables and Energy Solutions are expected to range from a loss of $200 million to a gain of $200 million, underscoring continued volatility in Shell’s lower-carbon portfolio. Corporate adjusted earnings are forecast at a loss of $400 million to $600 million.
On cash flow, Shell said cash flow from operations excluding working capital will include an estimated $1.5 billion outflow related to the timing of payments for German emissions certificates under the BEHG scheme. Working capital movements are expected to include the typical $1.2 billion payment of German mineral oil taxes, with overall working capital expected to range between a $3 billion outflow and a $1 billion inflow.
Shell also highlighted that the quarterly tax charge across segments includes an annual non-cash reassessment of deferred tax assets, with the combined deferred tax impact on joint ventures in Marketing and Chemicals estimated at around $300 million.
The update underscores the uneven earnings environment facing global oil majors as refining and chemicals cycles weaken and trading conditions normalize after strong volatility-driven gains in prior periods. While Shell continues to benefit from scale in LNG and upstream production, downstream and chemicals profitability remains exposed to margin compression and accounting volatility.
Consensus estimates for Shell’s fourth-quarter results, compiled by Vara Research, are due to be published on January 28, 2026.
By Charles Kennedy for Oilprice.com
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