The hard-hitting impacts of the COVID-19 pandemic on the global oil market has led to a loss of almost $20bn for Royal Dutch Shell last year.
Historic Financial Toll
A downturn in oil and gas market prices forced the oil company to write down its assets, resulting in a loss of $19.9bn. The numbers are more stark when compared with a profit of $15.3bn the year before.
Shell's adjusted financial result, excluding the massive downgrading of the value of its assets, dropped by over 80% for a year. These returns are the worst by the company in at least two decades.
Reduced demand for transport fuels occasioned by sweeping travel restrictions imposed in an effort to contain the spread of the virus hit oil companies really hard. The global oil price slumped to less than $20 a barrel, although it has since recovered to $56 a barrel.
Tough But Decisive Actions
Shell's chief executive, Ben van Beurden, revealed that the company took “tough but decisive actions” in order to survive "an extraordinary year". More than 9,000 workers lost their jobs last year, with over 300 of them from the UK. The company further cut down its dividend for the first time since 1945.
Nevertheless, van Beurden raised hopes for the company's future, stating that Shell emerged from the previous year "ready to accelerate our strategy and make the future of energy", and begin increasing its dividend again. Shell's shareholder payouts, which is dominated by the US dollar, will grow by 4% in the first quarter, van Beurden said.
However, Shell wil attempt to grow its dividend while contending against the backdrop of rising pressure to reduce its carbon emissions and reduce its net debt – which grew by $1.9bn to $75.4bn in the last quarter of 2020 – amid lower oil prices.