Insider Insights: Lawsuit Reveals Shell’s U.S. Crude Trading Rakes in $1 Billion Annually

(CTN News) – Financial details of Shell’s expansive oil and gas trading business are closely guarded secrets within the company.

However, documents unveiled in a lawsuit filed by a former employee have shed light on the considerable success of its U.S. crude trading operations, revealing an annual earning of approximately $1 billion.

Testimony from a former head of Shell’s U.S. crude trading division, presented in a Texas state court, provided a rare glimpse into the substantial profits generated by its trading activities, along with the substantial bonuses awarded to traders.

Shell’s Financial Insights from John Dimech

John Dimech, who served as a manager in Shell’s crude oil trading group in Houston for 11 years, stated in a deposition that the crude trading unit typically yielded between $950 million to $1 billion annually.

These earnings constitute approximately 13% to 15% of Shell’s overall U.S. pre-tax profits in recent years, based on calculations derived from company filings.

For instance, Shell’s 2022 tax contribution report outlined a pre-tax profit exceeding $7 billion in the U.S., while the figure for 2021 stood at around $6.36 billion.

Despite these revelations, company has declined to comment on the matter. The British oil giant has traditionally refrained from disclosing the financial performance of its oil and gas trading desk, which is recognized as the world’s largest.

This lack of transparency has raised concerns among some investors, given the potential for substantial profits as well as the inherent volatility and occasional losses associated with the business.

Trading Operations and Compensation Structure

Traders within Shell’s operations capitalize on fluctuations in global supply and demand for oil and gas to secure profits through buying and selling.

Their compensation often includes significant bonuses based on performance, which can surpass even the annual bonuses of high-ranking executives.

For example, CEO Wael Sawan’s annual bonus was reported at 2.7 million pounds ($3.4 million) in the latest annual report.

In a recent court filing in Houston, company refuted a breach of contract claim by former trading manager Eva-Maria Frohn, who sought $15 million, including a $6 million bonus for 2021.

Frohn had received a bonus exceeding $5 million in 2020 for her previous year’s work. She argued that a job transfer offered to her would not be as lucrative as her current position, rendering her redundant, while Shell maintained that her rejection of the job transfer constituted resignation.

Following a jury verdict last Tuesday, which favored Shell, Frohn’s entire claim against the company was nullified, as reported by the law firm representing company. Frohn’s attorney did not respond to requests for comment on the matter.