00:00Pretty decent adjusted profit beat relative to the estimate, but still a drop from your numbers from the last quarter.
00:06Can you walk us through that dynamic?
00:08Of course. Thank you for having me.
00:11Overall, robust cash flows for us this quarter, pleased with the strong operational performance we have had.
00:17It's been quarter after quarter of just steady delivery, and that has really helped us continue to be able to distribute, indeed, as you said, three and a half billion dollars.
00:26That's 15 quarters in a row right now where we are delivering three or more billion dollars per quarter of buybacks, and that's key for us.
00:36I think more generally what you've seen in the second quarter is a weaker macro than the first quarter, but I was really pleased with how the team has sort of responded to that.
00:46We have been able to really improve the delivery on almost all of our businesses.
00:51The one that's challenged the most at the moment is our chemicals business, and there we continue to have important turnaround plans to be able to alleviate that.
00:58So, by and large, very much in line with what we had hoped for, and we continue transforming this company.
01:05Well, a key piece, an element of, I think, the last six months of this year has been trading volatility in the public markets and even in the private ones as well.
01:14Your company has been extremely exposed to the volatility, not just in the commodity market, but, of course, in the broader risk picture.
01:20Can you just walk us through your numbers when it comes to your trading division and specifically how they might compete with your peers?
01:26Overall, as you rightly said, a volatile quarter for trading.
01:31Our own results were good.
01:34I think a few things to sort of maybe disaggregate from that broader picture.
01:39Our product segment, which is the sale of oil products and low-carbon products, was strong.
01:45The gas and power trading was a bit softer.
01:47This is the seasonal reality.
01:50What we saw in our crude business was quite a lot of, call it, non-fundamentals-based volatility.
01:59What I mean by that is we saw the oil prices go up and down, but with very little impetus for supply-demand imbalances or changes in physical flows.
02:09This was really paper-based volatility.
02:12We are much more of a fundamentals-based trader, so we chose to be a bit more risk-off, more of a prudent risk management approach.
02:19And then maybe finally on the LNG side, again, it was a decent quarter for us.
02:26What you saw in LNG is lower volatility than, for example, the last three years post the Russian invasion of Ukraine.
02:34This really is the new normal.
02:35So the results that we showed this quarter, I think, is more in line with the new normal that we see going forward.
02:40Of course, absent further volatility driven by geopolitics or economics.
02:46So, by and large, a decent quarter from our trading colleagues.
02:52Well, good morning.
02:53It's Guy.
02:54Should I value Shell as an oil and gas company or as a trading company?
02:58How should the market perceive you?
03:00Because every quarter I look at your numbers and trading has such a big impact in terms of the market perception of what you're doing.
03:05Is that the correct interpretation?
03:09I would say we should be valued as an integrated energy company.
03:13At the heart of what we do, we don't trade spec trading on its own.
03:18As I just mentioned, we're much more of fundamentals-based trading.
03:21And what I mean by that is we take our equity-long position, so the flow of molecules, physical flows.
03:28We have the shipping, we have the arteries, such as the pipelines and the terminals and so on and so forth.
03:34And we underpin that with creating optimization opportunities to create value.
03:40And so what you find is we are much more resilient to the macro than maybe many others because we have that full integrated value chain.
03:47Yet we still have many of those upstream positions that can be lucrative when commodity prices are high, both on the LNG side and on the crude side.
03:56At the heart of where we are focused as we simplify the company is, of course, our LNG vector, which is a vector we deeply, deeply believe in.
04:04And one we think is going to continue to grow to the tune of around 60 percent between now and 2040.
04:10We continue to sustain our liquids production.
04:13And we do want to be the most customer-focused energy marketer and trader.
04:18Can I ask you, just go back to the chemicals business and why that is soft?
04:22I'm seeing it showing up in some of the PMI numbers around the world as well.
04:26You're seeing that element within some of the data globally as being soft.
04:31Is what you are seeing shell-specific or is it structural within the chemical space?
04:38It starts with the structural challenges.
04:41I mean, the trough that we have seen in chemicals margins has been one of the longest we have seen in a very, very long time.
04:47And that is partly driven by the significant supply that we are seeing continuing to come on stream, in particular out of Asia and China more specifically.
04:57And that is really sort of putting a damper on the overall margins.
05:03We are trying to focus on what we can control.
05:05And what we can control is, number one, portfolio high-grading.
05:09Just this quarter, we have sold our Singapore Energy and Chemicals Park, which is an important element of our destination portfolio we're trying to drive towards.
05:19And I would say, secondly, we continue to drive even further with some of the self-help measures, OPEX management, what we can do around inventories and the like.
05:27I would say what we have done is still not enough.
05:31We need to do better.
05:32And that's one of the areas we're very focused on.
05:34So we have specific interventions we're doing at the moment to improve even further.
05:39Well, just very briefly, in 30 seconds, you've put out a statement saying that you've no intention of buying BP.
05:45Is there anything that could change that could put that back on the radar?
05:50I think you've seen the statement indeed that we issued on June 26th.
05:53The focus we have at the moment is delivering our own strategy.
05:56We have said time and time again that what we are really keen on is to be able to create long-term shareholder value.
06:03And today, we continue to see the allocation of capital best directed towards buying back shell shares than anybody else.
06:10Our bar for acquisitions is high and continues to be.
06:13But we, of course, will look at the market for the right opportunities when they emerge.
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