Court filings reveal Shell's lucrative US crude trading earns it $1bn annually

Shell's secretive oil and gas trading operations have come under scrutiny as court documents unveiled financial details, indicating the company's US crude trading division's annual earnings of approximately $1 billion.

A testimony from a former head of Shell's US crude trading division, disclosed during a lawsuit in a Texas state court, provided insights into the profits generated by the trading arm and the bonuses awarded to traders.

John Dimech, a former manager in Shell's crude oil trading group, revealed that the division consistently rakes in profits ranging from $950 million to $1 billion annually, accounting for a significant portion of Shell's overall US pre-tax profits.

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According to calculations based on company filings, Shell's US pre-tax profits in recent years amounted to just over $7 billion in 2022 and approximately $6.36 billion in 2021.

The revelation of the contribution made by the crude trading unit highlights the implications of Shell's trading business within its broader operations.

Despite the financial prowess of its trading desk, Shell remains secretive regarding the performance of its oil and gas trading segment, raising concerns among investors who seek greater transparency regarding the company's financial activities.

While the trading business can yield profits, it also carries inherent risks and volatility, occasionally resulting in losses.

Traders within Shell's trading division capitalise on fluctuations in global supply and demand dynamics, engaging in buying and selling oil and gas to exploit market opportunities.

These traders are often incentivised with lucrative bonuses based on their performance, which can surpass even the annual bonuses awarded to top executives.

For instance, CEO Wael Sawan's annual bonus amounted to £2.7 million ($3.4 million) last year, according to the company's latest annual report.

The court filing also brought out a legal dispute involving former trading manager Eva-Maria Frohn, who sought $15 million, including a $6 million bonus for the year 2021.

Frohn alleged that a job transfer she was offered would not be as financially rewarding as her current position, leading her to reject the offer.

However, Shell argued that her refusal amounted to a resignation, leading to a breach of contract claim.

Following a favourable verdict rendered by the jury, Frohn's claim against Shell was nullified, according to the law firm representing the company.

Frohn's attorney declined to comment on the outcome of the case.

(With inputs from Reuters)