Shell lifts gas outlook for second quarter of 2026 as LNG production increases
Shell has raised its second quarter gas production and LNG output guidance for 2026, indicating stronger-than-expected trade performance despite disruptions caused by the Middle East crisis.
In its latest quarterly update published on Tuesday, the energy major said production from its Integrated Gas business is now expected to reach between 610,000 and 650,000 barrels of oil equivalent per day (boed) during the April-to-June period. This is up from previous guidance of 580,000 to 640,000 boed. Shell’s output was 909,000 boed in Q1 2026.
The revised outlook comes after Shell continues to manage the aftermath of reduced volumes from Qatar following the regional conflict. Shell's forecast is in line with its LNG Outlook 2026 report, which found that global LNG demand would rise by 65% to nearly 700 million tonnes a year by 2050.
Increasing production
The company also increased its forecast for LNG liquefaction volumes to between 7.4 million and 7.8 million tonnes, compared with earlier guidance of 6.8 million to 7.4 million tonnes, reflecting stronger operational performance across its LNG portfolio.
Shell said trading results within its Integrated Gas division are expected to be “significantly higher” than in the first quarter, highlighting how increased volatility across global energy markets has boosted returns from its trading business.
Meanwhile, trading in its Chemicals and Products division is expected to remain in line with the previous quarter’s performance.
Citi raised its second-quarter earnings-per-share forecast for the company by 13%, citing stronger trading performance alongside resilient chemicals and fuels marketing operations.
Shell shares rose more than 3% following the update, outperforming the broader European energy sector.
Commodity prices also provided a supportive backdrop during the quarter.
Brent crude averaged around $97 per barrel during the period, compared with $78 in the first quarter, while Europe’s benchmark Dutch TTF natural gas contract averaged about €46 per megawatt-hour, up from approximately €40 per MWh in the previous quarter.
Shell expects improvements in the second quarter, forecasting a working capital inflow between $1 billion and 6 billion following an $11.2 billion outflow in the first quarter, reflecting extreme commodity price volatility.
Market challenges remain
The company also forecast higher indicative refining margins of over $20 per barrel and chemicals margins of around $240 per tonne, but noted that actual margins are projected to be lower due to continued market disruptions.
Despite the improved outlook, Shell continues to face operational issues in the region.
Production at its Pearl gas-to-liquids facility in Qatar remains partially offline after an attack on Ras Laffan Industrial City damaged one of the plant’s two processing trains earlier this year. The company has previously said repairs could take around a year.
While geopolitical tensions continue to create operational risks, the Middle East remains a strategically important region for Shell, accounting for around 550,000 boed, or 20% of its global oil and gas production. Of this, 10% is linked to Qatar.
The company has been among major energy firms like bp and TotalEnergies that have benefitted from sharp swings in crude oil and natural gas prices after the conflict involving Iran disrupted regional energy markets.
Shell’s full outlook is expected to be published on 30 July.
