The constant lowering of global oil prices over the last few years, which has been compounded by a slump in demand for oil and gas because of the novel coronavirus pandemic is has forced the Anglo-Dutch company, Royal Dutch Shell, to write down the value of its assets by as much as $22 billion. These trends have also pushed the oil and gas major to shift faster away from fossil fuel and towards clean energy business.

While downgrading its outlook for energy prices, Shell said in a statement that it expects Brent crude to cost $40 per barrel in 2021 and $50 per barrel in 2022. The company also forecast prices to rise to $60 per barrel in 2023.

The economic hit caused by the coronavirus pandemic, which has pushed most countries of the world into a spiral of recession and has caused a sharp drop in demand for energy globally, were reflected in its changes to price forecast for energy, the company said.

Lowest levels in decades were hit by Brent crude futures in April as it dropped below $20 per barrel. While the prices have staged a turnaround of sorts since then and have come back to trade over $41 per barrel, that level is still well below the price level that the prices were at the beginning of the current year.

The shifting market conditions have also forced Shell to potentially expect to take a hit of between $15 billion and $22 billion in the second quarter, the company said on Tuesday. It’s scheduled to report its financial results for the quarter on July 30.

It would continue to “adapt to ensure the business remains resilient,” the company said in a statement. For the first time since World War II, its dividend was cut for the first time by Shell in April in an effort to save on cash amid the pandemic related economic stress.

Plans to shift towards greener energy businesses by many of the industry’s biggest companies have been accelerated by them because of the pandemic and the huge slump in demand for oil and gas this year. Shell has announced its plans to achieve net zero carbon emissions from its own operations by 2050.

A day ago on Monday, British Petroleum (BP) agreed to sell off its entire petrochemicals business in a deal worth $5 billion as the oil and gas giant said that it would be utilizing the resources of the company in a better way in other areas with its efforts to achieve net zero emissions by 20205 or earlier. This oil major had also announced a write down of its assets earlier this month to the tune of as much as $17.5 billion for the second quarter.

While there has been some uptick in demand for crude oil with many countries slowly opening up economic activities that at were restricted to prevent the spread of the pandemic, there is a major threat to the forecast of a recovery because of the possibility of a resurgence of the virus.

(Adapted from CNN.com)