* Cashflow boosted by higher deposits from gas, power buyers
* Hurricane Ida outages to dent earnings by $400 mln
* LNG liquefaction volumes drop to lowest since 2016
* Fuel sales recover to highest since Q1 2020
(Adds detail, graphics)
By Ron Bousso
LONDON, Oct 7 (Reuters) - Royal Dutch Shell warned
on Thursday of a $400 million hit to third-quarter earnings from
the damage caused by August's Hurricane Ida.
However, in an update ahead of quarterly results this month,
the oil major also flagged a boost to cashflows from soaring
natural gas and electricity prices.
Gas and power prices have been surging as tight gas supplies
have collided with strong demand in economies recovering from
the COVID-19 pandemic. <LNG-AS>
Shell is the world's top seller of liquefied natural gas
(LNG), accounting for about 20% of global demand, though its
sales have declined in recent months because of production
problems.
The company said third-quarter cashflow at its LNG division
"is expected to be significantly impacted by large variation
margin inflows on the back of the prevailing gas and electricity
price environment".
Shell will be holding more cash from buyers as deposits in
the face of the large fluctuations in gas prices. The cash will
eventually flow back out as prices cool.
Liquefaction in the quarter is expected to be between 7 and
7.5 million tonnes, the lowest since 2016, "reflecting feedgas
constraints and additional maintenance", Shell said.
LNG earnings will, however, receive a boost from stronger
trading results, it added.
Shell's upstream oil and gas production fell in the quarter
to between 2.025 and 2.1 million barrels of oil equivalent per
day (boed) owing to a prolonged outage of about 90,000 boed at
some of its offshore fields in the Gulf of Mexico after
Hurricane Ida.
Shell, the world's largest fuel retailer, said sales volumes
were expected to be between 4.3 and 5.3 million barrels per day,
the highest since the first quarter of 2020 but still well below
pre-pandemic levels.
Refinery utilization rates will be impacted by outages due
to Hurricane Ida.
In the second quarter, Shell boosted its dividend by 38% for
a second consecutive quarter and launched a $2 billion share
buyback programme following the sharp rise in oil and gas
prices.
(Reporting by Ron Bousso
Editing by David Goodman and Mark Potter)
