Shell profits plunge by 75 per cent

City A.M. Reporter
ROYAL Dutch Shell posted a 75 percent fall in fourth-quarter profits to $1.18bn (£72m) as falling output and depressed refining and natural gas businesses took their toll.

Oil prices recovered in the quarter but gas prices were much lower than in the same period a year earlier, while refining margins collapsed to their lowest level in almost 15 years.

Europe's second largest oil company by market value said it made a $1.76bn loss in its refining unit.

Company chief executive Peter Voser said he was considering the sale or closure of 15 percent of Shell's refining portfolio.

A further 1,000 jobs – on top of 5,000 already announced – will also be axed as a result of declining profits.

Commenting on how the company had spent too much when profitS were soaring he said: "When you eat too much, you get a bit fat."

He added: "We simply must do better.

"Cost focus is now embedded in our day-to-day operations. We are not assuming there will be a quick recovery, and the outlook for 2010 is uncertain."

He said a further $1bn would be cut from costs this year on top of $2bn last year.

Oil and gas production fell 2.4 per cent to 3.3m barrels of oil equivalent per day in the quarter compared to the same period last year. Full year output was down 3 percent, company figures showed.

Shell's results compare with a 23 percent drop in fourth-quarter net income at the largest western oil company by market value, Exxon Mobil, and a 37 per cent drop at the second-largest U.S. oil company, Chevron.

However, UK rival BP managed to report a 33 per cent rise in profits in the quarter thanks to its low reliance on refining and natural gas.