Shell Flags $2.5 Billion German Emissions Outflow in Q3 Update Note

Shell plc published its third-quarter 2026 update note on 7 October 2026, setting out segment production, sales-volume and margin outlooks for the quarter and flagging an approximately $2.5 billion cash outflow tied to German emissions certificates. The update comes ahead of Shell’s third-quarter 2026 results, which the company has scheduled for publication on 29 October 2026.

The quarterly update note states that it “gives an overview of our current expectations for the third quarter,” and that the outlooks presented may vary from actual third-quarter 2026 results and are subject to the finalisation of those results. Unless otherwise indicated, all outlook statements exclude identified items. Shell said the company-compiled consensus, managed by Vara Research, is expected to be published on 21 October 2026.

Integrated Gas and Upstream

Shell expects Integrated Gas production of 740 to 780 thousand barrels of oil equivalent per day (kboe/d) in the third quarter, according to the note, compared with 631 kboe/d in the second quarter of 2026. LNG liquefaction volumes are guided at 7.2 to 7.6 million tonnes, against 7.7 million tonnes in the second quarter. Underlying operating expenses are expected at $1.3 billion to $1.5 billion, pre-tax depreciation at $1.1 billion to $1.5 billion and the taxation charge at $0.6 billion to $0.9 billion; the corresponding second-quarter figures were $1.1 billion, $1.2 billion and $0.8 billion. Trading & Optimisation is expected to be in line with the second quarter, and the outlook includes the acquisition of ARC Resources (ARX.TO ), which completed on 2 September 2026.

For Upstream, Shell guides third-quarter production of 1,735 to 1,835 kboe/d, compared with 1,824 kboe/d in the second quarter. Underlying opex is expected at $2.1 billion to $2.5 billion, pre-tax depreciation at $2.2 billion to $2.8 billion and the taxation charge at $2.5 billion to $3.3 billion, against second-quarter figures of $2.2 billion, $2.5 billion and $2.8 billion respectively. Third-quarter exploration well write-offs are expected to be approximately $0.3 billion.

Marketing, Chemicals and Group Cash Flow

Marketing sales volumes are expected at 2,550 to 2,650 thousand barrels per day (kb/d), versus 2,570 kb/d in the second quarter, and Shell expects Marketing adjusted earnings to be lower than in the second quarter. Underlying opex is guided at $2.3 billion to $2.7 billion, pre-tax depreciation at $0.5 billion to $0.7 billion and the taxation charge at $0.2 billion to $0.5 billion; the second-quarter figures were $2.5 billion, $0.6 billion and $0.4 billion.

In Chemicals and Products, the indicative refining margin outlook is $42 per barrel, compared with $24 per barrel in the second quarter, while the indicative chemicals margin outlook is $208 per tonne, against $270 per tonne. Refinery utilisation is expected at 93% to 97%, versus 102% in the second quarter, with the note stating that low Rhine water levels are impacting utilisation at the Rheinland refinery. Chemicals utilisation is guided at 81% to 85%, versus 83%. Underlying opex is expected at $1.7 billion to $2.1 billion, pre-tax depreciation at $1.1 billion to $1.3 billion and the taxation charge at $1.0 billion to $1.5 billion, compared with $1.9 billion, $1.1 billion and $0.6 billion in the second quarter. Trading & Optimisation for the segment is expected to be in line with the second quarter.

Shell expects Renewables and Energy Solutions adjusted earnings of $0.0 billion to $0.4 billion, compared with $0.1 billion in the second quarter. Corporate adjusted earnings are expected between negative $0.8 billion and negative $0.6 billion, against negative $0.6 billion in the second quarter.

At group level, the note puts tax paid at $3.1 billion to $3.9 billion, versus $2.9 billion in the second quarter. Movements in Financial Derivative Instruments are guided between $0 and $5 billion, against negative $0.4 billion, and working capital movements between negative $4 billion and positive $1 billion, against positive $3.4 billion. Cash flow from operating activities excluding working capital is expected to include an approximately $2.5 billion outflow related to the timing of payments of emissions certificates under the German Brennstoffemissionshandelsgesetz (Fuel Emissions Trading Act), which the note states have historically been paid in the fourth quarter of each calendar year. The measure also includes a $0.8 billion joint-venture dividend inflow, offset by a $0.8 billion outflow through working capital because the funds were previously held in deposit by the corporate segment, leaving a net impact on cash flow from operating activities of zero.

Non-cash post-tax impairments of biogas assets in Marketing are expected to be largely offset by an impairment reversal in Integrated Gas, with both reported as identified items. Net debt will be impacted by the ARC acquisition cash consideration and assumption of debt, as well as by an increase in the variable components of long-term shipping leases in the current macro environment, the note states.

An appendix to the note compares the updated outlooks with the third-quarter 2026 QPR outlook. The updated Integrated Gas production range of 740 to 780 kboe/d compares with a QPR outlook of 570 to 630 kboe/d, a range the note states excluded volumes from ARC Resources and Qatar. The updated LNG liquefaction outlook of 7.2 to 7.6 million tonnes compares with 7.1 to 7.7 million tonnes. Elsewhere, the updated Upstream production outlook of 1,735 to 1,835 kboe/d compares with 1,680 to 1,880 kboe/d; Marketing sales volumes of 2,550 to 2,650 kb/d with 2,550 to 2,750 kb/d; refinery utilisation of 93% to 97% with 93% to 101%; and chemicals utilisation of 81% to 85% with 78% to 86%.

The appendix also lists second-quarter 2026 group reference figures: income attributable to Shell plc shareholders of $10.8 billion, adjusted earnings of $9.8 billion, operating expenses of $8.7 billion and underlying operating expenses of $8.4 billion. The note defines underlying operating expenses as production and manufacturing expenses, selling, distribution and administrative expenses, and research and development expenses, with the effects of identified items removed. It defines Adjusted Earnings as a measure that removes the effects of oil price changes on inventory carrying amounts and the effects of identified items, and that excludes earnings attributable to non-controlling interest. Net debt is defined as the sum of current and non-current debt, less cash and cash equivalents, adjusted for the fair value of derivative financial instruments used to hedge foreign-exchange and interest-rate risks relating to debt, and associated collateral balances. The note adds that Shell’s Quarterly Databook contains guidance on the Indicative Refining Margin, the Indicative Chemicals Margin and full-year price and margin sensitivities.