On Tuesday, Royal Dutch Shell said, it will be writing down $22 billion from the value of its assets after sharply lowering its oil and gas price outlook in the wake of the coronavirus pandemic.

The development comes in the wake of the Anglo-Dutch company reviewing its operations after Ben van Beurden, its CEO, laid out plans in April to trim its greenhouse gas emissions to net zero by 2050.

With a market value of $126.5 billion, Shell is scheduled to report its second-quarter results on July 30. In an update ahead of announcing its Q2 results, Shell said it will take an aggregate post-tax impairment charge in the range of $15 to $22 billion in this quarter.

Shell, the world’s biggest fuel retailer expects a 40% drop in fuel sales during the second quarter from a year earlier to 4 million barrels per day (bpd); this is because of a sharp drop in consumption because of coronavirus-related travel restrictions.

Oil and gas production upstream is expected to average 2.35 million bpd in the second quarter, down from 2.71 million bpd in the previous quarter.

Incidentally, Shell’s writedown mirrors the move of BP, its rival, which also decided to write down $17.5 billion off the value of its assets as it prepares to shift to low-carbon energy.

Shell also reduced its expected average benchmark Brent crude oil price for 2020 to $35 a barrel, down from $60.

For 2021 and 2022, it cut its forecast to $40 and $50 a barrel, respectively, down from $60.

For its long term outlook, Shell has however maintained its $60 a barrel price tag. Previously it had not disclosed its long-term value.

Shell has also cut its long-term refining profit margin outlook by 30%.

Its long-term natural gas price was set at $3 per million British Thermal Units.

BP cut its long-term Brent forecast to $55 a barrel from a previous $70.

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