Shell reported a significant decline in earnings for the fourth quarter of 2024, largely driven by lower liquefied natural gas (LNG) volumes and sales. The company posted earnings of $3.7 billion, a sharp drop from $6 billion in the third quarter, as its LNG liquefaction volumes fell to 7.1 million tonnes and sales dropped to 15.5 million tonnes. The reduction in volumes and sales was anticipated, with Shell having previously warned of a weaker LNG outlook.

Despite the weaker performance in the fourth quarter, Shell’s CEO, Wael Sawan, noted that the company’s cash delivery remained strong, with a free cash flow generation of $40 billion for the year, higher than in 2023. This robust cash flow performance came amid a lower price environment, reflecting Shell's disciplined approach to capital expenditure. The company reported total cash capital expenditure of $21.1 billion in 2024, with a significant portion directed toward LNG, gas, and power marketing, which accounted for roughly a quarter of the total expenditure.

Shell's full-year earnings for 2024 stood at $24 billion, down from $28 billion the previous year. The company’s upstream operations showed resilience, but the decline in LNG sales volumes and ongoing fluctuations in commodity prices weighed on overall profitability. Shell’s spending on oil and oil products remained a substantial part of its capital outlay, amounting to $11.5 billion, significantly outpacing the $2.4 billion allocated for low-carbon solutions. This investment imbalance is expected to attract scrutiny from environmental advocates, especially as the company continues to face pressure to transition to cleaner energy sources.

In its Integrated Gas segment, adjusted earnings fell from $2.9 billion in Q3 to $2.2 billion in Q4. However, Shell remained focused on strategic growth opportunities, acquiring Pavilion and entering the Ruwais LNG project in Abu Dhabi. The company also took final investment decisions on several key projects, including the Manatee development in Trinidad & Tobago, ensuring its continued presence in the global LNG market despite current challenges.

Looking forward, Shell's LNG outlook remains uncertain, with tight supply and geopolitical risks continuing to cloud the market. However, the company secured a new long-term agreement with QatarEnergy to supply LNG to China, which is expected to help stabilize its position in the global market. Analysts forecast that LNG prices could stabilize in 2025, but market fluctuations, driven by seasonal demand and geopolitical disruptions, are still expected.

Shell continues to push forward with its renewable energy projects, such as the Holland Hydrogen 1 project in the Netherlands, but faces persistent challenges in making green hydrogen more cost competitive. The company’s focus on reducing costs and expanding its low-carbon energy portfolio remains central to its long-term strategy.

As Shell navigates these complexities, its ability to balance traditional energy investments with its transition to cleaner energy will be key to its future performance.