Shell lifts LNG output view to 7.8 million tonnes on price swings

Shell now expects output from its integrated gas division of between 610,000 and 650,000 barrels of oil equivalent per day (boed) for April to June, up from earlier guidance of 580,000 to 640,000 boed. That still sits below the 909,000 boed recorded in the first quarter. The company also lifted its liquefied natural gas (LNG) liquefaction forecast to between 7.4 million and 7.8 million metric tons, from 6.8 million to 7.4 million tons previously, Reuters reported.

The upgrade rests on trading gains rather than raw volume. Wide price swings across crude and gas have handed majors including Shell, BP, and TotalEnergies stronger trading books. Brent averaged around $97 a barrel in the second quarter against $78 in the first, while the Dutch front-month contract at the TTF hub, the European gas benchmark, averaged roughly €46 per megawatt-hour versus €40 the quarter before, per Bloomberg. Production at Shell's Pearl gas-to-liquids plant in Qatar has been suspended since March after an attack on Ras Laffan Industrial City damaged one of its two trains, with repairs expected to take about a year.

What this means for UK buyers

TTF sets the reference for UK wholesale gas, so a quarter averaging near €46/MWh tells you the forward curve has carried a risk premium through the summer. For your renewal calendar, that matters more than any single supplier's earnings. Fixed-price contracts signed into this backdrop lock in that premium; flexible arrangements leave you exposed to further Middle East headlines.

The chart below shows UK day-ahead gas over recent months, giving buyers the TTF-linked context behind the premium described here.

Watch these points as the picture develops:

• TTF front-month, currently anchored near €46/MWh
• Brent, averaging about $97 a barrel this quarter
• LNG send-out into North West Europe through the summer
• Timing of the Pearl GTL restart, roughly a year out
• Any escalation affecting the 20% of Shell output sourced from the Middle East

Citi raised its second-quarter earnings-per-share estimate for Shell by 13%, calling the update 'incrementally positive', and Shell shares rose 3.2% by 0825 GMT against a 0.3% gain in the wider European energy sector, the Financial Times noted. Platts reported that Shell expects a working-capital inflow of $1 billion to $6 billion this quarter, a sharp turn from the $11.2 billion outflow booked in the first, reflecting commodity price volatility.

The near-term question is supply security, not supplier profit. If tensions ease and LNG flows hold, the premium priced into the TTF curve should soften, and buyers holding off on fixing may see better terms into the autumn. If Qatari supply or the Strait of Hormuz comes back into focus, expect the front end to firm again.