Shell earns US$1 billion a year from US crude trading, court filing shows

Financial details of Shell’s vast oil and gas trading business are some of the company’s closest-held secrets. Documents in a lawsuit filed by a former employee, however, revealed its U.S. crude trading regularly earns around US$1 billion every year. Testimony by a former head of Shell’s U.S. crude trading division filed in a Texas state court has offered a rare look at the huge profits of its trading operations and the multi-million dollar bonuses bestowed on traders.

John Dimech, who was a manager in Shell’s crude oil trading group in Houston for 11 years, said in a deposition last year that the crude trading unit typically made between US$950 million to US$1 billion a year. That is between 13% and 15% of Shell’s overall U.S. pre-tax profits in recent years, according to calculations based on company filings. Shell’s 2022 tax contribution report detailed a pre-tax profit of just over $7 billion total in the U.S. that year, while its 2021 pretax profit stood at about US$6.36 billion. A Shell spokesperson declined to comment.

The British oil major does not disclose the financial performance of its oil and gas trading desk, the world’s largest, although the lack of information worries some investors. The business can generate bumper profits, but can be volatile and even post losses. Traders make money by buying and selling oil and gas using gaps in supply and demand around the world to lock in profits. Their pay often includes promises of large bonuses based on their performance, that can be more than CEO Wael Sawan’s annual bonus, which was 2.7 million pounds (US$3.4 million) last year, according to the latest annual report.

In the Houston court filing, Shell denied a breach of contract claim by former trading manager Eva-Maria Frohn, who sought US$15 million, including US$6 million for 2021’s bonus. She received a more than US$5 million bonus in 2020 for her work the previous year. Frohn claimed that a job transfer she was offered would not be as lucrative as the job she held, making her redundant, while Shell maintained that her job rejection amounted to a resignation.