Shell writes off NAM shares over Groningen gas extraction reduction
In its bookkeeping, Shell is reducing the value of its interest in NAM to zero in response to the Dutch government deciding to completely stop gas extraction in Groningen in the coming years, RTL Nieuws reports.
Dutch petroleum company NAM is responsible for gas extraction in Groningen. NAM is owned half by Shell and half by ExxonMobil. Depreciating its shares in NAM is costing Shell 244 million dollars, according to RTL.
The Dutch government concluded that safety in Groningen can only be guaranteed if the cause of the gas extraction earthquakes in the province is completely removed. The government therefore plans to reduce gas extraction in the province to 12 billion cubic meters by 2022 at the latest. From October 2022 gas extraction will be reduced to 7.5 billion cubic meters "and possibly considerably less". And after that it will gradually be reduced to zero.
According to RTL Nieuws, Shell made a profit of 5.4 billion dollars in the first quarter of this year, based on estimated inventory costs and excluding exceptional items. That is an increase of 41 percent compared to the first three months of 2017.