Royal Dutch Shell profits hit by oil price volatility

  • 31 January 2013
  • From the section Business
Media captionShell chief executive Peter Voser: "We are well on track to achieve our targets"

Annual profits at Royal Dutch Shell have fallen to $27bn (£17bn), from $28.6bn in 2011.

Profits for the last three months of the year rose to $7.3bn, against $6.5bn, but Shell was hit by generally weaker oil and gas prices during 2012.

Peter Voser, chief executive of Europe's biggest oil company, said 2012 was a year of "headwinds".

But he added that Shell was "delivering a strategy that others can't easily repeat".

The fourth-quarter profit figure was boosted by a turnaround at Shell's refining arm. This reported a profit of $1.2bn compared with a loss of $278m in the same period a year earlier.

However, profits at Shell's upstream business - which covers exploration and production - fell to $4.4bn from $5.1bn.

Capital constraints

The Anglo-Dutch company pledged to push ahead with plans to deliver more oil and gas, despite an uncertain outlook for some parts of the world economy.

Shell raised output during the year, with the company selling more gas than oil for the first time. The company is investing more in liquefied natural gas projects in Asia and increased production at its huge Pearl gas-to-liquids plant in Qatar.

The firm is planning to increase its output to four million barrels of oil and gas equivalent by 2017-18, up from current levels of about 3.3 million.

Mr Voser was also upbeat about future prospects, saying: "We are more constrained by limits on capital [funding] than by limits on opportunities."

However, shares in Shell fell more than 1% after the release of the results, with the profit figures coming in lower than analysts' expectations.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said there were some "positives" in the statement.

"Refining margins improved in the last quarter, the company's increased investment is part of a long-term strategy and the accompanying management comments were upbeat on future prospects.

"However, the overall profit number was shy of expectations, costs are on an upward trend within the industry and the weakness of the gas price has impacted on Shell."

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