Shell profits soar on high crude prices

OIL major Royal Dutch Shell, yesterday announced a 49 per cent rise in profits on the back of higher oil prices and growth in production.

Europe’s largest oil producer said earnings on a current cost of supply basis, were $4.9bn (£3.2bn) for the first three months of the year, up from $3.3bn in the equivalent period of 2009.

Higher oil prices were the biggest driver of the gain, but cost reductions and a six per cent rise in output helped too, said chief executive Peter Voser. Global oil prices averaged $76 during the period, up from just over $41 a year ago.

“Aided by a rising oil price, restructuring measures have gained traction, costs are being cut, while production in Russia and Brazil is being ramped up,” said Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers.

But Voser was cautious about the oil price and his company’s outlook for the rest of the year.

He said: “So far in 2010, oil prices have remained firm, and demand for petrochemicals has increased, but refining margins, oil products demand and spot gas prices all remain under pressure.”

Voser added: “Although there are signs of an improving economic outlook, we are not relying on it.”

The results also reflect an aggressive re-structuring at Shell, which began after Voser’s appointment last July.

The chief executive has already cut 5,000 jobs and will remove another 1,000 in 2010 and reduce overall costs by an extra $1bn this year.

BP reported profits of $5.6bn for the first quarter on Tuesday, but it is being hit by mounting costs following an oil spill in the Gulf of Mexico.