Shell’s 2nd quarter profits drop by 13%

Royal Dutch Shell posted a 13% drop in profits in the second quarter due to weaker oil and gas prices; the company’s earnings on a current cost of supply basis amounted to US$5.7 billion in the second quarter, from US$6.6 billion a year ago. The company’s upstream arm, which drills for oil and gas in several areas from Qatar to Canada, saw a 4% rise in production to 3.1 million barrels per day (bpd); however, the price of oil and gas also fell during the same period. The company’s Chief Executive, Peter Voser, commented on the company’s second quarter performance: “We are moving forward in volatile times. Our profits have fallen with energy prices, but our growth strategy is delivering to the bottom line.” Voser also explained that in the wake of the shutdown of the Coryton site in Essex, more European oil refineries will also have to close down. The Coryton refinery is the largest independent oil refinery in the U.K., and a Shell-backed consortium has bought it, and will convert the facility into a fuel import terminal. Voser said the closures are necessary: “We are still at over-capacity and some of these refineries will have to get out of the system.” Summarizing Shell’s plans, Voser said, “Our industry continues to see significant energy price volatility as a result of economic and political developments. Shell is implementing a long-term, consistent strategy against this volatile backdrop. Our plans for organic capital investment of around US$32 billion in 2012 and medium-term financial and production growth are on track.” (July 26, 2012)