Shell profits continue to gush

Gas price slide takes shine off profits at Shell

Anglo-Dutch oil giant Royal Dutch/Shell has seen its profits flow slow - but still made a profit of $7.4bn (£5.16bn) in the first half of 2001.

The results are formulated measuring stocks and reserves at current prices.

But the three months April, May and June saw net profit of $3.5bn, down 8% from the previous period and breaking a five-quarter run of successive records as gas and oil prices eased slightly.

Analysts had expected the company to make profits of $3.3-3.7bn.

Overall sales totalled $93.8bn for the half, up 3% on the previous year.

Looking ahead to the rest of the year, Shell said the outlook for its refining margins in both the US and Europe was uncertain.

"The threat of the continued global economic slowdown is countered by a likely seasonal demand increase in the coming months," it said.

Focus on gas

Gas in particular declined in price through the quarter, Shell said, with stocks increasing as demand waned and prices likely to stay relatively low for the rest of the year.

Chemicals were the weakest part of the business, with earnings falling 68% worldwide to $109m thanks to difficult trading conditions in the US in particular.

The threat of the continued global economic slowdown is countered by a likely seasonal demand increase in the coming months

Shell statement

Despite that, Shell chairman Philip Watts said the company would continue to focus on gas exploration, highlighting the company's role in Saudi Arabian gas development and in the Sakhalin project in the Far East.

"Gas is plainly the fuel of the future," he said. Gas production was up 11% in the half.

Exploration problems

But exploration and production was weaker than some had expected, with growth falling to 1% from 3% in the first quarter after an explosion on a Danish platform and dealys in the UK. The company had hoped to achieve growth of 5%.

Watts said it had been a "vintage quarter" for exploration. But he warned: "Looking forward, the rate of production growth is going to be a challenge."

Cost reductions continued, the group said, with overall costs cut relative to 1998 by $4.7bn in the year to June.