You are in > manchester.com  > News > Shell profits soar on crude prices

Business

Shell profits soar on crude prices

27/07/2006

Oil giant Royal Dutch Shell has announced a 36 per cent rise in quarterly profits, amid soaring world crude oil prices.

The company said that its net profits, as measured by the current cost of supply, were $6.3 billion (£3.4 billion) for the second quarter of 2006.

Shell's strong performance follows steadily rising world oil prices, which have now reached the equivalent of $78 a barrel.

Analysts claim that the increasing price of crude has helped Shell to compensate for a fall in its production capacity.

The company's Gulf of Mexico platform was damaged by last year's hurricanes in the region, while Shell's production capacity in Nigeria continues to be affected by the country's current civil war.

Shell's production of oil and gas in the three months to June 30th fell almost eight per cent to an average of 3.253 million barrels of oil equivalent per day (boepd), compared with an average forecast of 3.315 million boepd.

But despite the drop in production, Shell's chief executive, Jeroen van der Veer, insisted that the company's soaring profits were not simply the result of rising oil prices.

"These results are underpinned by overall good operational performance and not simply high energy prices," he said

Mr Van der Veer added that Shell planned to open up some 20 billion barrels of oil equivalent resources by the end of the decade and was making "steady progress" on various projects, including "ambitious growth plans" for its upstream business and selective investment on downstream activities.

"We are making major investments, which are measured in the tens of billions, to create new energy capacity for our customers, and to create long-term value for our shareholders," the executive concluded.

Earlier this week, BP announced similarly above-expectation results when it posted profits of £3.29 billion for the second quarter, a rise of 23 per cent.

© Adfero Ltd