Shell profits ease at year-end

Oil prices were falling in 2001

Falling oil and gas prices have led to a profit drop at Anglo-Dutch oil giant Royal Dutch/Shell.

Adjusted net profit for the last three months of the year was almost halved at $1.9bn (£1.4bn), down from $3.6bn a year ago and compared with analysts' expectations of $1.9bn-$2.3bn.

Although the profits were at the bottom end of analysts' forecasts, Shell still earned more than almost any other big company last year.

In an attempt to reassure investors amid falling oil prices, Shell last December announced a cost cut of $1bn for 2002-03 and raised the benchmark oil price it uses from $14 to $16 a barrel.

"The business environment is likely to remain challenging in 2002 but we have the competitive edge to deliver both value growth and strong returns, even under these conditions," said Philip Watts, chairman of the committee of managing directors.

But analysts were unimpressed by the figures. "The results are worse than people expected", said Brian McBeth from Commerzbank.

Failing to stabilise prices

Oil companies say that cartel Opec, by extracting oil beyond quotas, failed to stabilise prices in the second half of 2001.

Opec, along with non-cartel oil exporters, cut production quotas starting from January.

But Opec pointed out recently that it doesn't expect further cuts, and may even raise production, if the US economy rebounds later in the year.

In London, Shell shares closed 3 pence lower at 481p.