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* Oil trading helps offset collapse in fuel demand
* Trading accounted for 43% of oil products earnings
(Updates with analyst)
By Ron Bousso
LONDON, March 12 (Reuters) - Royal Dutch Shell's
2020 earnings from trading crude oil and refined products
doubled from the previous year to $2.6 billion, helping to
offset a sharp drop in fuel demand due to the coronavirus
pandemic.
Shell's oil trading operations, known internally as Trading
& Supply, accounted for 43% of the Oil Products division's total
earnings of $5.995 billion in 2020. Trading earnings totalled
$1.3 billion in 2019, Shell's annual report, which was released
on Thursday, said.
The unusually high contribution from trading helped Shell to
weather one of the toughest years in the industry's history,
when energy consumption collapsed during the pandemic.
Shell, the world's largest energy trader, experienced a 28%
drop in oil sales last year to 4.71 million barrels per day on
average, the annual report said.
Its 2020 profit dropped to its lowest in at least two
decades.
Shell's oil trading figures do not include natural gas,
liquefied natural gas, power and renewables. Shell is the
world's largest liquefied natural gas trader.
Rival BP's trading arm made nearly $4 billion in 2020
on oil and gas trading, a copy of an internal BP presentation
seen by Reuters showed, almost equalling the company's 2019
record trading profit.
Companies can make large profits even during times of lower
demand for commodities by storing products such as oil on shore
or at sea. Shell's vast refining, trading and retail operations
also allow it to take advantage of short-lived changes in supply
and demand around the world.
The strong trading results for BP and Shell show that there
is real value creation which will transfer over into renewable
power as the companies shift away from oil and gas, Bernstein
analyst Oswald Clint said in a note.
(Reporting by Ron Bousso; editing by Jason Neely, Kirsten
Donovan and Jane Merriman)
