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Shell reports steep drop in earnings

04 February, 2010

Royal Dutch Shell said today the sale of its Ellesmere Port refinery to Indian conglomerate Essar Energy was still under review after reporting a steep

drop in fourth quarter and full year earnings. Shell announced plans to offload 15% of its refinery capacity in Europe and the Americas, including the

Stanlow refinery in Cheshire, its last remaining refinery in the UK.

A Shell spokeswoman said: "Shell and Essar can confirm that negotiations for the possible sale and purchase of Shell’s three refineries at Stanlow in the UK, and Heide and Harburg in Germany continue.”

Shell first revealed it was considering selling the Stanlow refinery, which employs 900 staff, last August.

The oil company today reported that profits plummeted by 75% to £1.2bn in the final quarter of 2009, with Shell chief executive Peter Voser commenting that four previous years of increased profits had allowed the company "to eat too much and get fat". Full year earnings for 2009 showed a 70% drop to $9.8bn,

Shell also announced it would be cutting an extra 1,000 jobs worldwide on top of the 5,000 previously announced.

Voser added: “Our fourth quarter 2009 results were impacted by the weak global economy. Oil prices have increased compared to a year ago, but gas prices and refining margins have declined sharply, because of weaker demand and high industry inventory levels. We are not assuming that there will be a quick recovery, and the outlook for 2010 is uncertain.

"Our strategy is on track, although the near-term industry outlook does remain challenging. We are taking steps to improve our performance, to bridge the company, and our shareholders, into a period of significant growth in the coming years...

"...Downstream is facing some tough times. There is a significant overhang of industry refining capacity, exacerbated by the economic downturn. That’s why we have initiatives underway to refocus Shell’s Downstream footprint into fewer, more profitable markets with growth potential, through disposals and selective growth investment."

 

The announcement came after that of BP earlier this week which reported an increase in fourth quarter profits.