Note 8 - Segment information

General information

Shell is an international energy company engaged in the principal aspects of the energy and petrochemicals industries and reports its business through segments. With effect from January 1, 2022, the reporting segments are aligned with Shell’s Powering Progress strategy. The Renewables and Energy Solutions business is now reported separately from Integrated Gas. Shales assets in Canada are now reported as part of the Integrated Gas segment instead of the Upstream segment. The Oil Products and Chemicals segments are reorganised into two segments – Marketing, and Chemicals and Products. Prior period comparatives have been revised to conform with current year presentation. The reporting segment changes have no impact at a Group level.

The Integrated Gas segment includes liquefied natural gas (LNG), conversion of natural gas into gas-to-liquids (GTL) fuels and other products. The segment includes natural gas and liquids exploration and extraction, and the operation of the upstream and midstream infrastructure necessary to deliver gas and liquids to market as well as the marketing, trading and optimisation of LNG, including LNG as a fuel for heavy-duty vehicles.

The Upstream segment includes exploration and extraction of crude oil, natural gas and natural gas liquids. It also markets and transports oil and gas, and operates the infrastructure necessary to deliver them to the market.

The Marketing segment comprises the Mobility, Lubricants, and Sectors & Decarbonisation businesses. The Mobility business operates Shell’s retail network including electric vehicle charging services. The Lubricants business produces, markets and sells lubricants for road transport, and machinery used in manufacturing, mining, power generation, agriculture and construction. The Sectors & Decarbonisation business sells fuels, speciality products and services including low-carbon energy solutions to a broad range of commercial customers including the aviation, marine, commercial road transport and agricultural sectors.

The Chemicals and Products segment includes chemicals manufacturing plants with their own marketing network, and refineries which turn crude oil and other feedstocks into a range of oil products which are moved and marketed around the world for domestic, industrial and transport use. The segment also includes the pipeline business, trading of crude oil, oil products and petrochemicals, and oil sands activities (the extraction of bitumen from mined oil sands and its conversion into synthetic crude oil).

The Renewables and Energy Solutions segment includes Shell’s Integrated Power activities, comprising electricity generation, marketing and trading of power and pipeline gas, and digitally enabled customer solutions. The segment also includes production and supply of decarbonised hydrogen, development of commercial carbon capture and storage hubs, as well as trading of carbon credits and investment in nature-based projects that avoid or reduce carbon.

The Corporate segment covers the non-operating activities supporting Shell, comprising Shell’s holdings and treasury organisation, its self-insurance activities and its headquarters and central functions. All finance expense and income and related taxes are included in Corporate segment earnings rather than in the earnings of business segments.

Basis of segmental reporting

Sales between segments are based on prices generally equivalent to commercially available prices. Third-party revenue and non-current assets information by geographical area are based on the country of operation of the Group subsidiaries that report this information. Separate disclosure is provided for the UK as this is the Company’s country of domicile.

Segment earnings are presented on a current cost of supplies basis (CCS earnings). On this basis, the purchase price of volumes sold during the period is based on the current cost of supplies during the same period after making allowance for the tax effect. CCS earnings therefore exclude the effect of changes in the oil price on inventory carrying amounts. CCS earnings attributable to Shell plc shareholders is the earnings measure used by the Chief Executive Officer for the purposes of making decisions about allocating resources and assessing performance.

Finance expense and income related to core financing activities, as well as related taxes, are included in the Corporate segment earnings rather than in the earnings of the business segments.

Information by segment on a current cost of supplies basis is as follows:

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2022

$ million

Integrated Gas

Upstream

Marketing

Chemicals and Products

Renewables and Energy Solutions

Corporate

Total

Revenue:

Third-party

54,751

8,352

120,638

144,342

53,190

381,314 ^[A]

Inter-segment

18,412

52,285

606

2,684

6,791

–

80,778

Share of profit/(loss) of joint ventures and associates (CCS basis)

1,219

2,111

237

374

(7)

(4)

3,930

Interest and other income, of which:

(714)

726

(104)

244

706

915

Interest income

–

(2)

959

1,046

Net gains on sale and revaluation of non-current assets and businesses

101

437

(186)

282

–

642

Other

(858) ^[B]

267

(62)

(253)

(773)

Third-party and inter-segment purchases (CCS basis)

37,785

10,666

108,012

127,521

57,024

(28)

340,980

Production and manufacturing expenses

4,907

9,676

810

7,583

2,520

25,518

Selling, distribution and administrative expenses

218

233

7,351

3,592

972

517

12,883

Research and development expenses

112

456

222

187

–

1,075

Exploration expenses

240

1,472

–

1,712

Depreciation, depletion and amortisation charge, of which:

2,211

10,334

1,900

3,289

777

18,529

Impairment losses

115

950

480

356

412

–

2,313^[C]

Impairment reversals

(3,449)

(2,504)

(151)

(73)

–

(6,177) ^[D]

Interest expense

345

2,682

3,181

Taxation charge/(credit) (CCS basis)

5,899

14,070

903

935

(303)

(7)

21,497

CCS earnings

22,212

16,222

2,133

4,515

(1,059)

(2,461)

41,562

[A]	Includes $11,708 million of revenue from sources other than from contracts with customers, which mainly comprises the impact of fair value accounting of commodity derivatives. This amount includes both the reversal of prior losses of $9,815 million related to sales contracts and prior gains of $7,201 million related to purchase contracts that were previously recognised and where physical settlement has taken place during 2022.
[B]	Includes the full write-down of the Nord Stream 2 loan amounting to $1,126 million. (See Note 6).
[C]	Impairment losses comprise Property, plant and equipment ($1,799 million, see Note 12), Goodwill ($361 million) and Other intangible assets ($153 million).
[D]	Impairment reversals fully comprise Property, plant and equipment. (See Note 12).

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2021

$ million

Integrated Gas [A]

Upstream [A]

Marketing [A]

Chemicals and Products [A]

Renewables and Energy Solutions [A]

Corporate

Total

Revenue:

Third-party

29,922

9,182

83,494

116,448

22,415

261,504 ^[B]

Inter-segment

8,072

35,789

254

1,890

4,675

–

50,680

Share of profit/(loss) of joint ventures and associates (CCS basis)

1,933

632

385

989

(27)

3,913

Interest and other income, of which:

1,596

4,592

278

200

353

7,056

Interest income

–

431

511

Net gains on sale and revaluation of non-current assets and businesses

1,610

4,130

285

(24)

(6)

–

5,995

Other

(14)

425

(10)

202

(78)

550

Third-party and inter-segment purchases (CCS basis)

20,188

9,094

70,745

103,294

26,048

(5)

229,364

Production and manufacturing expenses

4,194

9,797

950

6,815

2,098

(32)

23,822

Selling, distribution and administrative expenses

231

186

6,384

3,375

596

556

11,328

Research and development expenses

101

339

167

157

–

815

Exploration expenses

122

1,301

–

1,423

Depreciation, depletion and amortisation charge, of which:

5,908

13,485

1,700

5,485

326

26,921

Impairment losses

723

920

129

2,248

–

4,065 ^[C]

Impairment reversals

(204)

(9)

(1)

–

(214) ^[D]

Interest expense

333

–

3,132

3,607

Taxation charge/(credit) (CCS basis)

2,648

6,057

903

(210)

(342)

(665)

8,391

CCS earnings

8,060

9,603

3,535

404

(1,514)

(2,606)

17,482

[A]	Revised to conform with reporting segment changes applicable from 2022.
[B]	Includes $126 million of revenue from sources other than from contracts with customers, which mainly comprises the impact of fair value accounting of commodity derivatives. This amount includes both the reversal of prior losses of $4,824 million related to sales contracts and prior gains of $4,892 million related to purchase contracts that were previously recognised and where physical settlement had taken place during 2021.
[C]	Impairment losses mainly comprise Property, plant and equipment ($3,894 million, see Note 12) and Goodwill ($167 million).
[D]	Impairment reversals fully comprise Property, plant and equipment. (See Note 12).

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2020

$ million

Integrated Gas [A]

Upstream [A]

Marketing [A]

Chemicals and Products [A]

Renewables and Energy Solutions [A]

Corporate

Total

Revenue:

Third-party

20,865

6,743

55,845

84,657

12,382

180,543 ^[B]

Inter-segment

4,357

21,020

152

1,056

1,597

–

28,182

Share of profit/(loss) of joint ventures and associates (CCS basis)

612

(7)

491

1,064

(50)

(268)

1,842

Interest and other income, of which:

212

541

143

(236)

(197)

406

869

Interest income

–

589

679

Net gains on sale and revaluation of non-current assets and businesses

212

117

(129)

286

Other

–

431

(132)

(210)

(207)

(96)

Third-party and inter-segment purchases (CCS basis)

10,961

4,471

43,856

71,490

12,129

142,916

Production and manufacturing expenses

4,957

10,195

779

6,952

1,091

24,001

Selling, distribution and administrative expenses

(31)

5,380

3,391

606

475

9,881

Research and development expenses

486

147

171

–

907

Exploration expenses

616

1,131

–

1,747

Depreciation, depletion and amortisation charge, of which:

19,314

21,079

1,499

10,096

424

52,444

Impairment losses

13,464

7,274

6,492

180

27,463 ^[C]

Interest expense

369

3,580

4,089

Taxation (credit)/charge (CCS basis)

(2,794)

(103)

846

(1,754)

(61)

(982)

(4,848)

CCS earnings

(7,230)

(9,300)

4,081

(3,821)

(479)

(2,952)

(19,701)

[A]	Revised to conform with reporting segment changes applicable from 2022.
[B]	Includes $10,008 million of revenue from sources other than from contracts with customers, which mainly comprises the impact of fair value accounting of commodity derivatives. This amount includes both the reversal of prior gains of $1,136 million related to sales contracts and prior losses of $539 million related to purchase contracts that were previously recognised and where physical settlement had taken place during 2020.
[C]	Impairment losses comprise Property, plant and equipment ($26,676 million, see Note 12), Goodwill ($276 million) and Other intangible assets ($511 million).

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Reconciliation of CCS earnings to income for the period
			$ million
	2022	2021	2020
Income/(loss) attributable to Shell plc shareholders	42,309	20,101	(21,680)
Income attributable to non-controlling interest	565	529	146
Income/(loss) for the period	42,874	20,630	(21,534)
Current cost of supplies adjustment:
Purchases	(1,714)	(3,772)	2,359
Taxation	444	808	(585)
Share of profit of joint ventures and associates	(42)	(184)	59
Current cost of supplies adjustment	(1,312)	(3,148)	1,833
Of which:
Attributable to Shell plc shareholders	(1,196)	(3,029)	1,759
Attributable to non-controlling interest	(116)	(119)	74
CCS earnings	41,562	17,482	(19,701)
Of which:
CCS earnings attributable to Shell plc shareholders	41,113	17,072	(19,921)
CCS earnings attributable to non-controlling interest	449	410	220

Information by geographical area is as follows:

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2022

$ million

Europe

Asia, Oceania, Africa

USA

Other Americas

Total

Third-party revenue, by origin

135,975 ^[A]

126,643

87,085

31,611

381,314

Goodwill, other intangible assets, property, plant and equipment, joint ventures and associates at December 31

40,161 ^[B]

97,019

59,233

51,794

248,207

[A]	Includes $50,236 million that originated from the UK.
[B]	Includes $20,772 million located in the UK.

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2021

$ million

Europe

Asia, Oceania, Africa

USA

Other Americas

Total

Third-party revenue, by origin

78,549 ^[A]

87,070

73,647

22,238

261,504

Goodwill, other intangible assets, property, plant and equipment, joint ventures and associates at December 31

38,881 ^[B]

97,278

58,286

48,595

243,040

[A]	Includes $21,846 million that originated from the UK.
[B]	Includes $21,974 million located in the UK.

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2020

$ million

Europe

Asia, Oceania, Africa

USA

Other Americas

Total

Third-party revenue, by origin

50,138 ^[A]

65,139

50,856

14,410

180,543

Goodwill, other intangible assets, property, plant and equipment, joint ventures and associates at December 31

38,785 ^[B]

103,191

62,976

49,909

254,861

[A]	Includes $12,958 million that originated from the UK.
[B]	Includes $23,302 million located in the UK.

Note 8 - Segment information

General information

Basis of segmental reporting

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