October 25th, 2007:

Mark Milner, industrial editor
Friday October 26, 2007

Royal Dutch Shell yesterday blamed lower oil production, weaker refining margins and higher costs for a fall in third quarter profits.

The company said that earnings on a current cost of supply basis – which strips out changes in the value of fuel inventories – fell from $6.9bn to $6.4bn.

However the group’s performance beat analysts’ expectations, helped by higher earnings from insurance and income.

Chief executive, Jeroen van der Veer, described the results as “satisfactory” in the light of the weaker refining margins and said they were underpinned by the group’s operating performance. read more

October 26, 2007

Bet of the day:

Shell’s strong third-quarter results helped its share price to gain 13p to £20.59. Has the oil giant permanently shaken off the concerns about its reserves which led to a management reshuffle? BetsForTraders.com is offering odds of 4-1 that Shell’s share price will continue to rise and will be above £21.30 one week from today

http://business.timesonline.co.uk/tol/business/markets/article2734012.ece

October 26, 2007
James Rossiter: Tempus

Third-quarter figures out yesterday from Royal Dutch Shell saw the oil major stealing a march on its arch-rival BP. Third-quarter profits were down 8 per cent to $6.39 billion but, considering that the industry is suffering from a slump in production volumes and trading margins, the fall was less than the City had been expecting.

Shell’s profits fall compares with BP’s 27 per cent fall in underlying third-quarter profits revealed earlier this week, a result that Tony Hayward, BP’s new chief executive, admitted was “dreadful” as he revealed plans to cut 10 per cent of the company’s North Sea workforce, the core of the company’s legacy business before it expanded into the US, Russia and Nigeria. read more

By Julia Werdigier
Thursday, October 25, 2007  
 
LONDON: Ever since he took over the top job at BP in May, Tony Hayward has presented himself as a leader who can move the company beyond its somewhat troubled recent past.

Even though he was already part of the management team under which the British oil giant suffered a series of accidents at refineries, was investigated for allegedly favoring cost-cutting over safety and saw its shares lag behind those of competitors, many analysts think Hayward is up to the challenge to fix those problems. read more

By Fred Pals

Oct. 25 (Bloomberg) — Royal Dutch Shell Plc, Europe’s largest oil company by market value, said long-term fiscal stability is needed before it makes further investment decisions on its oil sands project in Canada.

A government-appointed panel last month recommended Alberta increase oil and natural-gas royalties and impose a new tax on tar- sands developments to boost government revenue by 20 percent, or about C$2 billion ($2.1 billion) annually. The report suggested the changes apply to all projects, without exemptions. read more

By Ladane Nasseri and Fred Pals

Oct. 25 (Bloomberg) — Royal Dutch Shell Plc, Europe’s largest oil company by market value, will take into account Iranian political issues when deciding whether to go ahead with a liquefied natural gas project in the Islamic Republic.

Shell will consider the “political dimension” in its investment decision, Chief Financial Officer Peter Voser said on a conference call today. The company is working on technical aspects of the project, he added. read more

By Dino Mahtani

Published: October 25 2007 21:00 | Last updated: October 25 2007 21:00

Shell’s drop in third-quarter profits follows a trend seen elsewhere in the global oil and gas industry.

In spite of record oil prices, the major multinationals are struggling to book growth in profits, taking hits in their refining divisions or facing industry-wide cost pressures and delays to important new oil and gas projects.

John S Herold, an oil and gas research firm, and industry advisory group Harrison Lovegrove recently estimated that spending by the 228 global oil and gas companies increased 45 per cent to $401bn in 2006 but they generated only a 2 per cent increase in reserve volumes to 263bn barrels of oil equivalent. read more

By Jeremy Grant in New York, Stephanie Kirchgaessner in Washington and Sheila McNulty in Houston

Published: October 25 2007 20:27 | Last updated: October 25 2007 20:38

BP on Thursday night sought to draw a line under two years of damage to its troubled North American operations by agreeing to pay fines totaling $373m (£182m) to US authorities to settle violations linked to a refinery explosion, oil pipeline leaks and fraud in energy trading.

The payments are part of a wide-ranging settlement with three federal agencies requiring BP to submit to years of government-appointed monitors of trading and environmental systems. read more

By Dino Mahtani in London
Published: October 25 2007 08:25 | Last updated: October 25 2007 19:23

Royal Dutch Shell, Europe’s biggest oil company, warned that the oil price was being driven by “speculation” and “has a political premium in it rather than actually some of the fundamental drivers”.

The comments by Peter Voser, chief financial officer, came after the group reported that third-quarter earnings, on a current cost of supply basis, fell 8 per cent to $6.39bn as a result of lower refining margins and sales volumes. read more

Thu Oct 25, 2007 9:31 PM BST
(Adds comments from Shell Oil president)

WASHINGTON, Oct 25 (Reuters) – Shell Oil Co.’s (RDSa.L: Quote, Profile , Research) U.S. refineries have all the oil they need to make gasoline and other refined products, the company’s president said on Thursday.

“We have very reliable supply contracts,” Shell Oil President John Hofmeister told reporters.

Separately, Hofmeister said high levels of refined product imports to U.S. shores are weighing down refinery margins. read more

Energy Strategy Commentary
Andrew McKillop
Senior Energy Strategist
October 2007

Increasing Signs of Peak Oil Supply Pressure

Through October to date (Week 43), with increasing media attention, oil prices continued to surge. Even the key phrase “Peak Oil” was to be heard, here and there, and usually denied through the regular and standard claims there is always more oil, somewhere, but it hasn’t yet been brought to market.

On September 29, the Wall Street Journal ran an article with a gung-ho optimistic tone, under the headline “How Economy Could Survive Oil At $100 a Barrel – Compared to 1980, U.S.Is More Able to Handle Once-Unthinkable Rise”. This article, almost inevitably, dismissed Peak Oil as a near-term reality. It focused the small role of energy in average US household spending (about 5.5% compared to 7% in 1980). It then gave a long list of other politically correct ways to explain high oil prices. These included the weakening US dollar against other moneys, consumer disinterest in energy saving compounded by automakers who go on building huge cars, fast-rising oil imports by China and India, resource nationalism in producer countries like Kazakhstan, Venezuela and Russia, and of course tensions and pressures in the Middle East wracked by wars in Afghanistan, Iraq, Palestine-Israel, Turkish threats to Kurdistan, Russian threats to Georgia, deepening crisis in Lebanon and growing unrest in Pakistan. read more

EXTRACT: The sanctions could affect hundreds of foreign companies by leaving them with the choice to end their dealing with Iran or face sanctions from the US.

By Toby Harnden in Washington
Last Updated: 5:43pm BST 25/10/2007

The United States has announced its harshest action against Iran since 1979 by instituting a raft of unilateral sanctions designed to cut international financial support to Teheran’s theocratic regime.

Condoleezza Rice, the US Secretary of State, and Henry Paulson, the US Treasury Secretary, said that the unprecedented steps, which include outlawing Iran’s Revolutionary Guard Corps, were a response to Teheran’s support of insurgents in Iraq and its refusal to abandon its uranium enrichment programme. read more

By TOBY STERLING – 2 hours ago

AMSTERDAM, Netherlands (AP) — Royal Dutch Shell PLC said Thursday that third-quarter net profit rose 16 percent despite a drop in production, but it warned that the underlying performance of its refining operations was weaker than it appeared.

Net profit at Europe’s largest oil company came to $6.92 billion, up from $5.94 billion, primarily due to a rise in the reported refining earnings. Sales rose to $90.7 billion in the quarter from $84.3 billion.

The company had net gains in the third quarter of $265 million from asset sales and a windfall from a tax change in Germany, versus charges of $77 million a year ago. read more

This Day (Lagos)
25 October 2007
Kunle Akogun
Lagos

Governor Timipre Sylva of Bayelsa State has stressed the need for Shell Petroleum Development Company (SPDC) to establish an operational office in the State.

The governor stated this shortly after securing the release of 7 hostages that were abducted from the Shell platform in Ekeremor Local Government Area of the State.
 
He pointed out that the oil company’s presence in the state would provide more employment opportunities as well as enhance socio-economic activities in Bayelsa, adding that the perceived absence of the company in the state is adversely affecting its economic growth. read more

Thu Oct 25, 2007 3:07 PM BST
(Adds background)

LONDON, Oct 25 (Reuters) – Royal Dutch Shell Plc (RDSa.L: Quote, Profile , Research) expects to hold net capital expenditure steady at around $22 billion to $23 billion per annum, excluding acquisitions, in coming years, despite investor fears rising industry costs would boost the figure.

“You can foresee that we are spending around those levels in the medium term,” Peter Voser told a conference call with reporters on Thursday.

Citigroup said last week that Shell may yet again disappoint investors with an increase in near-term capital expenditure plans to $24-$25 billion a year from the $22-23 billion which the company forecast for 2007. read more

Thu Oct 25, 2007 7:53 AM ET

By Alex Lawler

LONDON, Oct 25 (Reuters) – Royal Dutch Shell Plc’s Chief Financial Officer said on Thursday that oil prices at a record high are being driven by speculation and political tension, not a lack of supply.

The comments are the first from an executive of a Western oil company agreeing with the view of the OPEC exporters’ group that oil’s surge to a record peak largely reflects speculative trading, not supply shortages.

“The price seems to be driven by some speculation and also has a political premium in it, rather than actually some of the fundamental drivers,” Shell CFO Peter Voser said at a news conference. read more