Shell profits soar, but production slips

LONDON (AFP) - Royal Dutch Shell, the Anglo-Dutch oil giant, said yesterday its net profit surged by almost a fifth during the second quarter, driven by strong global demand for energy products.

Higher refining margins also helped to push Shell's net profit up by 18.0 percent to 8.667 billion dollars (6.319 billion euros) in the three months ended June 30, compared with 7.324 billion dollars in the same period of 2006.

Shell's results statement yesterday came as New York crude prices hit 77.24 dollar a barrel, the highest level since August 9, 2006, as keen global demand and tight supplies fuelled speculative buying, traders said.

Chief executive Jeroen van der Veer presented a positive outlook for Shell despite the company's lower production that stemmed partly from ongoing unrest in Nigeria -- Africa's biggest exporter of crude oil.

"Our investment plans are on track ... We continue to see competitive growth opportunities based on our technological strengths, by making disciplined capital choices, in an industry landscape of both higher energy prices and higher costs," van der Veer said.

Shell is the world's second largest energy company after US titan ExxonMobil, which Thursday revealed that its net profit had slipped by 1.0 percent to 10.26 billion dollars in the second quarter, owing to lower earnings from exploration.

Global energy companies are reaping the benefits of near record-high oil prices. However British oil giant BP has seen profits fall during the second quarter as supply disruptions at its US refineries have offset high income from the sale of crude.

Regarding Shell, the company said yesterday that net profit, excluding changes to the value of its energy inventories, jumped by 20 percent to 7.556 billion dollars in the second quarter. The figure included one-off gains of 660 million dollars, largely coming from asset disposals.

However, production fell by 2.0 percent over the same period to 3.178 million barrels of oil and gas per day.

Royal Dutch Shell said it expected oil and gas production in 2007 to average at the low-end of its guidance of 3.3-3.5 million barrels per day owing to reduced output from Nigeria.

"We have said we will bring production to 3.3-3.5 million (barrels per day) this year... and we expect (to achieve) close to the low-end of that range," van der Veer told reporters in a conference call.

Ongoing unrest in Nigeria has slashed Shell's crude output from the country.

Shell is the largest oil operator in Nigeria and a number of its key facilities remain shut owing to escalating security problems in the oil-rich Niger Delta.

On a daily basis, about 195,000 barrels of Shell's production remains off-line in Nigeria and the group is still not sure when it can restore the volumes.

The price of Shell's "A" shares closed down 1.63-percent at 1,937 pence on Thursday. London's FTSE 100 index, on which the group is listed, shed 3.15 percent to 6,251.20 points.