Shell cuts its valuation $22 billion as it battles the impacts of the coronavirus on the oil industry

• Oil major Shell says it is writing down the value of its assets by up to $22 billion as it adjusts to oil's historic crash in recent months.
• Shell said it expects oil prices to level at $50 a barrel in 2022, versus an initial prediction of $60 a barrel.
• Earlier this month, oil major BP slashed its valution by almost $18 billion.
• Oil prices tumbled in March due to a price-war between Saudi Arabia and Russia, and fell further thanks to a lack of demand due to COVID-19.

Oil major Shell will slash up to $22 billion of the value of its assets as the company copes with falling oil prices.

In a second quarter update, the oil major said on Tuesday: "Shell is announcing today a revised long-term commodity price and margin outlook, which is expected to result in non-cash impairments in the second quarter results."

Shell said aggregate post-tax impairment charges in the range of $15 to $22 billion are expected in the second quarter.

This is the breakdown of the write-downs Shell expects:

• Integrated Gas: $8-9 billion.
• Upstream: $4-$6 billion
• Oil Products: $3-$7 billion across the refining portfolio.

Earlier this month, oil major BP slashed its valuation by almost $18 billion as it adjusts to oil's pandemic era new normal.

BP said its transformed price outlook is based on the likelihood of a global transition toward carbon-efficient fuels leading to a "Paris-consistent world" — referencing the Paris climate agreement — and the ongoing impact of the pandemic.

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Shell said it now expects oil prices to level at $50 a barrel in 2022, versus an initial estimate of $60 a barrel.

The company said it will take until 2023 for long-term oil prices to level at $60 a barrel, and gas to trade at $3.

Brent oil, the international benchmark is currently trading at around $41 per barrel.

Oil prices tumbled in March when Saudi Arabia kicked off a price-war with Russia, and fell further due to lower demand during the pandemic.

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US oil West Texas Intermediate even briefly turned negative in April due to lack of storage space, particularly at a key hub in Cushing, Oklahoma.

Prices have recovered since OPEC production cuts have taken place, but both benchmarks are still well below their historical levels.