Shell suffers political and economic upheavals

By MARTIN FLANAGAN
Published on 27/07/2012 00:00

OIL prices will continue to fall in the second half of this year due to the macro-economic downturn and “unprecedented” geopolitical events, Shell’s boss Peter Voser forecast yesterday.

It came as the British-Dutch oil major revealed that underlying profits fell 13 per cent to $5.7 billion (£3.7bn) in the second quarter of 2012 from $6.6bn in the same quarter of 2011.

Voser said Shell had managed to increase its output by 4 per cent to 3.1 million barrels a day, but this had been outweighed by the fall in global energy prices in the period.

There had also been about $500m of costs associated with maintenance and shutdowns in the group’s US Gulf and Australian liquefied natural gas operations.

Voser said the industry had been hit by “unprecedented geopolitical events like the eurozone crisis and the Arab spring”.

He added that given the
accompanying macro-economic downturn “you will clearly see a lower oil price compared to the past 18 months. I see the price softer in the second half”.

However, the chief executive said Shell disregarded current prices when assessing global projects on a “ten, 20, 30 year view”.

The company repeated that its capital expenditure for 2012 would total $32bn, including $8.1bn in the quarter it was
reporting.

Voser said he did not expect Shell’s ambitious well plans in the Alaskan region to be affected whichever party won the US presidential election in November. “Gas will be a key component of any energy policy in the US,” he added.

Shell’s exploration and production profits fell to $4.5bn from $5.4bn, while “downstream” profits from activities such as refining and marketing edged up $200m to $1.3bn.

The group paid out $2.8bn to shareholders in Q2 compared with $2.6bn a year before.

Shell’s shares closed down 57p at 2,208p.