Royal Dutch Shell said on Tuesday it would write off assets worth up to $22 billion after the coronavirus crisis knocked oil and gas demand and weakened the energy price outlook.

The Anglo-Dutch company has already been preparing a major overhaul after CEO Ben van Beurden laid out plans in April to reduce Shell’s greenhouse gas emissions to net zero by 2050.

Global travel restrictions to prevent the virus spreading affected more than 4 billion people at one point, taking cars off the roads and grounding planes, driving down fuel demand.

Shell, the world’s largest fuel retailer, said it expected a 40% drop in sales in the second quarter from a year earlier to about 4 million barrels per day (bpd), although that is more than its earlier prediction of a drop to 3.5 million bpd.

In its update before second-quarter results on July 30, Shell said upstream oil and gas production was expected to average 2.35 million bpd in the three months to June, down from 2.71 million bpd in the first quarter.

Shell, which has a market value of $126.5 billion, said it would take an aggregate post-tax impairment charge of $15 billion to $22 billion in the second quarter. Its shares were down 2%. Credit Suisse analyst Thomas Adolff said the second quarter would be the toughest for many companies and Shell had sent a “wake up call.”

Shell’s move follows BP’s decision to wipe off up to $17.5 billion from its assets, as it responds to the coronavirus crisis and shifts to low-carbon energy.

Shell responded to the epidemic by cutting its dividend for the first time since World War Two and cutting spending in 2020 to a maximum of $20 billion from $25 billion. It aims to announce its restructuring plan by the end of 2020.

Reuters