Shell says politics, speculation, driving oil prices

Royal Dutch Shell, Europe’s biggest oil company, warned that record high oil prices were being driven by speculation and political tension, not a lack of supply. The comments by Peter Voser, chief financial officer, came as the group reported that third-quarter earnings, on a current cost of supply basis, had fallen 8% to US$6.39 billion as a result of lower refining margins and sales volumes. But record high oil prices meant that profit attributable to shareholders rose 16% to US$6.916 billion. Jeroen van der Veer, Shell’s chief executive, said: “Given the weaker industry refining margins we have seen in the quarter, these are satisfactory results.” Shell expects to revive production from complex operations including a gas-to-liquids plant in Qatar and from its Canadian oil sands projects. The company said in September that it would spend US$7 billion with Saudi Arabia to expand refinery capacity in what would be the biggest U.S. refinery expansion in three decades. The expansion is coming at a time when refinery margins are expected to shrink. (October 26, 2007)