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Sky-high crude price propels Shell to within touching distance of BP

London Evening Standard: Sky-high crude price propels Shell to within touching distance of BP

Thursday 28 July 2005

By Jim Armitage

Shell’s profits surged by more than a third in the first half of the year, thanks to record oil prices.

With crude currently hovering around $60 a barrel, the company enjoyed profits of $10.2 billion (GBP5.8 billion) — up 39 percent on the same period last year. Shell is not alone in enjoying a big boost to earnings on the back of rampant oil prices. BP said earlier this week it made GBP6 billion in its half-year.

Shell is attempting to win back investor confidence following the scandal last year when it was found to have been grossly exaggerating the amount of oil it had in reserves, waiting to be pumped out of the ground. Today it stressed it would be spending $1.8 billion a year for the next two years in its hunt for new reserves.

But investors remain rattled about huge cost overruns at its flagship gas exploration project in Russia. Sakhalin II could end up costing double the expected $10 billion.

“We have to say there are certain large projects which don’t go well at all,” said chief executive Jeroen van der Veer. He denied the blundered project was of lasting damage to the group’s reputation.

“We build many gas plants on time, on schedule,” he added.

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