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Shell is looking to bail on its energy retail business across multiple countries amid “tough market conditions,” the company said on Thursday.
The tough market conditions likely refer to higher wholesale prices across Europe that have plagued many retailers, as well as price-capping measures instituted by governments to keep consumers from having to pay exorbitant energy bills.
Shell said on Thursday that it had commenced a review of its retail business in Britain, Norway, and Germany and that the process could take months.
Of the three businesses, Shell’s retail operations in the UK, Shell Energy Retail, is the biggest, boasting 1.4 million customers.
But while it has pegged its European retail arms to stand before the firing squad, Shell’s 2022 annual profit is expected to come in at more than $30 billion, Reuters said, as high oil and gas prices have helped the business improve its overall performance.
Shell sunk $1.5 billion in cash and credit into its British energy retail business last year in order to help with volatile prices and the tough market conditions in the retail segment as natural gas supplies ran short. While Shell managed to survive the last couple of years, other British retailers such as Bulb declared bankruptcy after multiple British power suppliers failed to hedge their future costs back when the getting was good. The cost to taxpayers—billions.
Shell Energy Retail booked losses in 2020 and 2021, “principally driven by market conditions. In particular, the unprecedented rise in energy prices in the latter part of 2021 adversely impacted the financial performance, including increased costs as a result of supplier failures in the market and the inability to pass on higher energy costs,” Shell said in its results filing last year.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.