Note 21 - Leases

Shell has lease contracts in Integrated Gas and Upstream, principally for floating production storage and offloading units, subsea equipment, drilling and ancillary equipment, service vessels, LNG vessels and land and buildings; in Marketing, principally for land and retail sites; in Chemicals and Products, principally for plant pipeline and machinery, tankers and storage capacity; in Renewables and Energy Solutions, principally for power generation assets, storage capacity and land; and in Corporate, principally for land and buildings. Shell’s obligations under its leases are secured on the leased assets.

Right-of-use assets

Right-of-use assets are included in property, plant and equipment for the following amounts:

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2023

$ million

Exploration and production

Manufacturing, supply and distribution

Exploration and evaluation

Production

Other [D]

Total

Cost

At January 1

—

14,675

16,463

9,899

41,037

Additions

—

790

2,442

1,308

4,540

Sales, retirements and other movements [A]

—

(116)

(1,040)

(1,127)

Reclassifications [B]

—

(2,779)

527

2,252

—

Currency translation differences

—

(268)

(217)

At December 31

—

12,597

19,485

12,151

44,233

Depreciation, depletion and amortisation, including impairments

At January 1

—

8,275

6,695

2,950

17,920

Charge for the year [C]

—

1,382

2,428

998

4,808

Sales, retirements and other movements [A]

—

(303)

(1,149)

(1,042)

(2,494)

Reclassifications [B]

—

(2,217)

2,154

—

Currency translation differences

—

(101)

(80)

At December 31

—

7,146

8,049

4,959

20,154

Carrying amount at December 31

—

5,451

11,436

7,192

24,079

[A]	Includes the reclassification of right-of-use assets to assets held for sale. (See Note 18).
[B]	Reclassification from Production to Manufacturing, supply and distribution and Other.
[C]	Includes impairment losses ($72 million) and reversals ($2 million). (See Note 12).
[D]	Other mainly includes lease contracts for retail sites, land and buildings in Marketing, Renewables and Energy Solutions and Corporate.

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2022

$ million

Exploration and production

Manufacturing, supply and distribution

Exploration and evaluation

Production

Other [C]

Total

Cost

At January 1

14,322

15,748

8,031

38,106

Additions

—

1,088

2,305

2,111

5,504

Sales, retirements and other movements [A]

(5)

(569)

(1,530)

319

(1,785)

Currency translation differences

—

(166)

(60)

(562)

(788)

At December 31

—

14,675

16,463

9,899

41,037

Depreciation, depletion and amortisation, including impairments

At January 1

—

7,935

5,946

2,273

16,154

Charge for the year [B]

—

1,182

2,223

797

4,202

Sales, retirements and other movements [A]

—

(751)

(1,444)

(2,172)

Currency translation differences

—

(91)

(30)

(143)

(264)

At December 31

—

8,275

6,695

2,950

17,920

Carrying amount at December 31

—

6,400

9,768

6,949

23,117

[A]	Includes the reclassification of right-of-use assets to assets held for sale. (See Note 18).
[B]	Includes impairment losses ($160 million) and reversals ($206 million). (See Note 12).
[C]	Other mainly includes lease contracts for retail sites, land and buildings in Marketing, Renewables and Energy Solutions and Corporate.

Lease arrangements

Shell also has certain lease contracts of items with lease terms of 12 months or less. For these lease contracts, Shell applies the short-term lease recognition exemption. Lease expenses not included in the measurement of lease liability are:

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Lease expenses not included in the measurement of lease liability
		$ million
	2023	2022
Expense relating to short-term leases	495	552
Expense relating to variable lease payments	1,415	1,251

The total cash outflow in respect of leases representing repayment of principal and payment of interest in 2023 was $7,512 million (2022: $6,280 million), recognised in the Consolidated Statement of Cash Flows within Cash flows from financing activities.

The future lease payments under lease contracts and the carrying amounts at December 31, by payment date are as follows:

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2023

$ million

Contractual lease payments

Interest

Lease liabilities

Less than 1 year

6,182

1,539

4,643

Between 1 and 5 years

16,105

4,443

11,662

5 years and later

16,794

5,390

11,404

Total

39,081 ^[A]

11,372

27,709

[A]

Future cash outflows in respect of leases may differ from lease liabilities recognised due to future decisions that may be taken by Shell in respect of the use of leased assets. These decisions may result in variable lease payments being made. In addition, Shell may reconsider whether it will exercise extension options or termination options, which are not reflected in the lease liabilities. There is no exposure to these potential additional payments in excess of the recognised lease liabilities until these decisions have been taken by Shell.

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2022
			$ million
	Contractual lease payments	Interest	Lease liabilities
Less than 1 year	5,914	1,533	4,381
Between 1 and 5 years	15,624	4,655	10,969
5 years and later	17,935	5,642	12,293
Total	39,473	11,830	27,643

Note 21 - Leases

Right-of-use assets

Lease arrangements

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