4 SEGMENT INFORMATION
Shell is engaged in the principal aspects of the oil and gas industry in more than 70 countries and reports its business through four segments. Segmental reporting was changed with effect from 2016, in line with a change in the way Shell’s businesses are managed. Since 2016, Shell reports its business through the segments Integrated Gas (previously part of Upstream), Upstream, Downstream and Corporate. Comparative information was reclassified.
Integrated Gas is engaged in the liquefaction and transportation of gas and the conversion of natural gas to liquids to provide fuels and other products, as well as projects with an integrated activity – from producing to commercialising gas. Upstream combines the operating segments Upstream, which is engaged in the exploration for and extraction of crude oil, natural gas and natural gas liquids, and the marketing and transportation of oil and gas, and Oil Sands, which is engaged in the extraction of bitumen from mined oil sands and conversion into synthetic crude oil. These operating segments have similar economic characteristics because their earnings are significantly dependent on crude oil and natural gas prices and production volumes, and because their projects generally require significant investment, are complex and generate revenue for many years. Downstream is engaged in oil products and chemicals manufacturing and marketing activities. Corporate represents the key support functions, comprising Shell’s holdings and treasury organisation, its self-insurance activities and its headquarters and central functions. Integrated within the Integrated Gas, Upstream and Downstream segments are Shell’s trading activities, technical services and technology capability, and functions such as safety and environment. Sales between segments are based on prices generally equivalent to commercially available prices.
Segment earnings are presented on a current cost of supplies basis (CCS earnings), which is the earnings measure used by the Chief Executive Officer for the purposes of making decisions about allocating resources and assessing performance. 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.
Information by segment on a current cost of supplies basis is as follows:
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2017 |
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$ million |
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Integrated Gas |
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Upstream |
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Downstream |
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Corporate |
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Total |
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CCS earnings |
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5,078 |
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1,551 |
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8,258 |
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(2,416 |
) |
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12,471 |
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Revenue |
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Third party |
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32,674 |
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7,723 |
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264,731 |
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51 |
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305,179 |
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Inter-segment |
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3,978 |
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32,469 |
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4,248 |
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— |
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Share of profit/(loss) of joint ventures and associates |
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1,714 |
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623 |
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1,956 |
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(129 |
) |
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4,164 |
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Interest and other income |
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|
687 |
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1,188 |
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154 |
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|
437 |
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2,466 |
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Depreciation, depletion and amortisation charge, of which: |
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4,965 |
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17,303 |
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3,877 |
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78 |
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26,223 |
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Impairment losses |
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302 |
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4,118 |
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|
385 |
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— |
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4,805 |
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Impairment reversals |
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10 |
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|
605 |
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— |
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— |
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|
615 |
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Interest expense |
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248 |
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|
744 |
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109 |
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2,941 |
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4,042 |
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Taxation charge/(credit) |
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790 |
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2,409 |
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1,783 |
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(636 |
) |
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4,346 |
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2016 |
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$ million |
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Integrated Gas |
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Upstream |
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Downstream |
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Corporate |
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Total |
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CCS earnings |
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2,529 |
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(3,674 |
) |
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6,588 |
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(1,751 |
) |
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3,692 |
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Revenue |
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Third party |
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25,282 |
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6,412 |
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201,823 |
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74 |
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233,591 |
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Inter-segment |
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3,908 |
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26,524 |
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1,727 |
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— |
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Share of profit/(loss) of joint ventures and associates |
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1,116 |
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222 |
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2,244 |
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(182 |
) |
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3,400 |
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Interest and other income |
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|
765 |
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|
839 |
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|
851 |
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|
442 |
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2,897 |
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Depreciation, depletion and amortisation charge, of which: |
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4,509 |
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16,779 |
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3,681 |
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24 |
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24,993 |
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Impairment losses |
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72 |
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1,274 |
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|
588 |
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6 |
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1,940 |
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Impairment reversals |
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— |
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— |
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38 |
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— |
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38 |
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Interest expense |
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247 |
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|
852 |
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91 |
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2,013 |
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3,203 |
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Taxation charge/(credit) |
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1,254 |
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(938 |
) |
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1,008 |
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(839 |
) |
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485 |
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2015 |
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$ million |
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Integrated Gas |
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Upstream |
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Downstream |
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Corporate |
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Total |
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CCS earnings |
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3,170 |
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(8,833 |
) |
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10,243 |
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(425 |
) |
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4,155 |
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Revenue |
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Third party |
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21,741 |
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6,739 |
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236,384 |
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96 |
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264,960 |
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Inter-segment |
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4,248 |
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26,824 |
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1,362 |
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— |
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Share of profit/(loss) of joint ventures and associates |
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1,471 |
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|
491 |
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2,215 |
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(327 |
) |
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3,850 |
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Interest and other income |
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537 |
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1,819 |
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1,156 |
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|
157 |
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3,669 |
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Depreciation, depletion and amortisation charge, of which: |
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2,597 |
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20,404 |
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3,667 |
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46 |
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26,714 |
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Impairment losses |
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210 |
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8,536 |
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556 |
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27 |
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9,329 |
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Impairment reversals |
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— |
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— |
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3 |
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— |
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3 |
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Interest expense |
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106 |
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|
775 |
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51 |
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|
956 |
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1,888 |
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Taxation charge/(credit) |
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|
937 |
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(927 |
) |
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1,639 |
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(1,156 |
) |
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493 |
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Reconciliation of CCS earnings to income for the period |
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$ million |
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2017 |
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2016 |
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2015 |
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CCS earnings |
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12,471 |
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3,692 |
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4,155 |
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Current cost of supplies adjustment: |
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Purchases |
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1,252 |
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1,284 |
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(2,278 |
) |
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Taxation |
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(349 |
) |
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(344 |
) |
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|
646 |
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Share of profit of joint ventures and associates |
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61 |
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|
145 |
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(323 |
) |
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|
964 |
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1,085 |
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(1,955 |
) |
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Income for the period |
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13,435 |
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4,777 |
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2,200 |
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Information by geographical area is as follows:
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2017 |
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$ million |
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Europe |
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Asia, Oceania, Africa |
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USA |
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Other Americas |
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Total |
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Third-party revenue, by origin |
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100,609 |
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114,683 |
[A] |
66,854 |
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23,033 |
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305,179 |
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Intangible assets, property, plant and equipment, joint ventures and associates at December 31 |
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43,020 |
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122,345 |
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54,294 |
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58,828 |
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278,487 |
[A] includes $62,046 million that originated from Singapore.
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2016 |
|
$ million |
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Europe |
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Asia, Oceania, Africa |
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USA |
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Other Americas |
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Total |
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Third-party revenue, by origin |
|
81,573 |
|
87,635 |
[A][B] |
44,615 |
[B] |
19,768 |
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233,591 |
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Intangible assets, property, plant and equipment, joint ventures and associates at December 31 |
|
43,901 |
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121,618 |
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60,430 |
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67,371 |
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293,320 |
[A] includes $42,533 million that originated from Singapore.
[B] As revised, following reassessment of geographical allocation resulting in an increase of $4,532 million in Asia, Oceania, Africa and a corresponding decrease in USA.
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2015 |
|
$ million |
||||||||
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|
Europe |
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Asia, Oceania, Africa |
|
USA |
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Other Americas |
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Total |
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Third-party revenue, by origin |
|
95,223 |
|
95,892 |
[A] |
50,666 |
|
23,179 |
|
264,960 |
|
Intangible assets, property, plant and equipment, joint ventures and associates at December 31 |
|
33,439 |
|
104,949 |
|
51,269 |
|
29,614 |
|
219,271 |
[A] includes $46,551 million that originated from Singapore.