Shell’s second quarter profit has been cut in half by a fall in oil prices, softening demand and a fall in US gas prices, but CEO Peter Voser remains committed to the company’s $32 billion capex programme.
In June, Voser had warned that oil demand was “clearly softening.”
Income attributable to shareholders fell to $4.06 billion, down from $8.71 billion in the previous quarter and from $8.66 billion for the same period last year.
Upstream revenues were $4.05 billion, down 23% from $6.25 billion in Q1 2012 and $5.42 billion in Q2 2011.
Cash flow from operating activities for the second quarter 2012 was $13.3 billion, compared with $10.0 billion in the same quarter last year. Excluding movements in working capital, cash flow from operating activities in the second quarter 2012 was $9.5 billion, compared with $12.3 billion in the same quarter last year.
Upstream, the company’s only upstream operational highlight for the quarter was first oil at the Harweel Enhanced Oil Recovery project for PDO. Shell expects the project to produce some 40,000 boe/d at peak production.
In downstream, Shell and Qatar Petroleum have entered the Front End Engineering and Design phase for a world-scale petrochemicals project (Shell share 20%) in Ras Laffan Industrial City. The scope under consideration includes a plant of up to 1.5 mtpa mono-ethylene glycol and 0.3 mtpa of linear alpha olefins.
“We are moving forward in volatile times, acknowledged Voser. “Our profits have fallen with energy prices, but our growth strategy is delivering to the bottom line.
Shell’s second quarter 2012 earnings declined from year-ago levels, with weaker oil and North American gas prices offsetting the benefit of increased upstream volumes and improved refining margins. Our profits pay for Shell’s dividends and substantial investments in new projects, to ensure affordable and reliable energy supplies for our customers, adding value for our shareholders.”
Voser emphasises the company’s slew of upstream investment, and continuing improvements in operational efficiency and costs management.
“Our industry continues to see significant energy price volatility as a result of economic and political developments,” Voser said. “Shell is implementing a long-term, consistent strategy against this volatile backdrop. Our plans for organic capital investment of around $32 billion in 2012 and medium-term financial and production growth are on track.”
