Higher production and sales in Asia helped Shell’s SHEL.L liquefied natural gas (LNG) business outshine TotalEnergies’ TTEF.PA in the third quarter, analysts and traders said, even as group profits at both were hit by a slump in oil refining.

Shell reported quarterly profits of $6 billion, beating forecasts by 12%, while TotalEnergies’ $4.1 billion profit slightly missed expectations. Both results were affected by 70% and 82% drops in profits from their oil refining and chemicals businesses, respectively, with the different performance of their LNG divisionsstanding out.

Shell’s third-quarter LNG sales rose 6.4% from a year earlier. TotalEnergies’ LNG sales fell 9.5% over the same period, partly due to an unplanned outage at its Ichthys LNG plant in western Australia.

The two companies are betting on growing demand for LNG in the coming decades and have invested heavily in new production and supply deals in the Gulf, the United States, Australia and elsewhere.

Shell is the world’s top LNG trader, accounting for nearly one in five cargoes traded last year. TotalEnergies, the third largest trader, had a market share of around 11% in 2023. Their trading divisions often contribute billions in annual profits.

The rivals differ in scale in different markets, particularly in fast-growing Asian economies, where Shell has a bigger presence, according to Jefferies analyst Giacomo Romeo. TotalEnergies is more heavily focused on Europe, he added.

Demand for natural gas surged in Asia over the summerdue to increasing demand from air conditioning, pushing benchmark Asian prices to trade at a premium to European prices from mid-June to the end of August.

“Total is less exposed to the LNG market East of Suez than Shell and benefited less from strong Asian demand for LNG for cooling during the summer,” Romeo said.
Total is hoping to change that. This year it signed six long-term LNG supply contracts through the 2030s with buyers in China, Singapore, India, South Korea and Turkey totalling 4.65 million metric tons, according to Reuters calculations.

Shell Chief Financial Officer Sinead Gorman told reporters that the LNG division benefited from “very good operational performance” and the sale of several LNG cargoes that were scheduled for delivery in the fourth quarter.
Source: Reuters (Reporting by Ron Bousso and America Hernandez; Editing by Mark Potter)