By Arathy Somasekhar and Ron Bousso
HOUSTON (Reuters) – The financial details of Shell’s vast oil and gas trading operations are among the company’s best-kept secrets. Documents from a lawsuit filed by a former employee, however, reveal that the U.S. crude trade regularly brings in about $1 billion each year.
Testimony from a former head of Shell’s U.S. crude trading division filed in a Texas state court offered a rare glimpse into the huge profits from its trading operations and the multimillion-dollar bonuses awarded to traders.
John Dimech, who was director of Shell’s crude oil trading group in Houston for 11 years, said in a deposition last year that the crude oil trading unit typically earned between $950 million and $1 billion per year.
That represents between 13% and 15% of Shell’s overall U.S. pretax profits in recent years, according to calculations based on company filings.
Shell’s 2022 tax contribution report details pre-tax profit of just over $7 billion in the US that year, while its 2021 pre-tax profit was around $6.36 billion of dollars.
A Shell spokesperson declined to comment.
The British oil major does not disclose the financial performance of its oil and gas trading desk, the largest in the world, although the lack of information worries some investors. The business can generate considerable profits, but can be volatile and even record losses.
Traders make money buying and selling oil and gas using supply-demand spreads around the world to secure their profits. Their pay often includes the promise of large bonuses based on their performance, which can be higher than CEO Wael Sawan’s annual bonus, which stood at 2.7 million pounds ($3.4 million) last year , according to the latest annual report.
In the Houston court filing, Shell denied a breach of contract claim filed by former sales manager Eva-Maria Frohn, who sought $15 million, including $6 million for the 2021 bonus. She received a bonus of more than $5 million in 2020 for his work the previous year.
Frohn claimed that a job transfer offered to her would not be as lucrative as the job she held, making her redundant, while Shell argued that her refusal of employment amounted to a resignation.
A jury returned a verdict in favor of Shell last Tuesday, overturning Frohn’s entire complaint against Shell, according to the law firm that represented the company.
Frohn’s attorney did not respond to a request for comment.
($1 = 0.8005 pounds)
(Reporting by Arathy Somasekhar in Houston and Ron Bousso in London; editing by Marguerita Choy)
