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The Sunday Earnings gusher for Shell

By Mandi Zonneveldt
May 12, 2007 12:00am

GLOBAL oil giant Shell earned more than $1.7 billion from its Australian operations last year, but the company’s chairman has failed to guarantee the future of its refineries here.

Shell Australia chairman Russell Caplan said yesterday the company was competing with large refineries in Asia and could consider importing its products rather than producing petrol, jet fuel and diesel in Australia.

“Our refineries in this country are very small by world scale,” he said.

“The total refining capacity is equal to the size of just one of these Asian refineries.

“When it comes time for a major investment, hundreds of millions of dollars, then there’s a decision to be made – do you invest it in an old, small, sub-scale local refinery or do you invest it in a big modern refinery in India or Singapore or somewhere and import?”

Shell has refineries in Sydney and Geelong in Victoria.

Mr Caplan declined to comment on when the fate of Shell’s Australian refineries would be decided, but said it would not be within the next 12 months.

“It’s an issue that is constantly under review,” he said. “I wouldn’t think that there was any competitor in Australia today that wasn’t considering this issue.”

Shell earned $398 million from its Australian refining and marketing operations on a current cost of supply basis in 2006, up 33 per cent on 2005.

Current cost of supply strips out the impact of oil price movements and is seen as a better measure of the underlying business.

Refiners worldwide have enjoyed higher margins over the past few years due to capacity constraints, but Mr Caplan warned margins could come down.

“There’s a lot of refining capacity now under construction and the second that that’s on stream then the margins will reduce, unless there’s some huge increase in demand . . . and I don’t see that,” he said.

Shell is no longer a fuel retailer, having formed an alliance with supermarket giant Coles.

Mr Caplan said the company was happy with the joint venture.

The majority of Shell’s earnings in 2006 came from its oil and gas producing assets, and the company is increasingly shifting its focus in Australia upstream.

Shell earned $1.3 billion from its upstream operations last year – a 38 per cent increase on 2005 – with strong sales of liquefied natural gas (LNG) from the North-West Shelf lifting the bottom line.

Shell is one of the six participants in the North- West Shelf joint venture. It also owns about 34 per cent of Woodside Petroleum, which operates the project.


I have boycotted Shel for the last decade ever since the horrific execution of activists in Nigeris. Shell’s operations in Nigeria were disgusting. I will probably boycott them for the rest of my life. Oil companies should be held to account for human rights abuses.
Posted by: Dan of Australia 3:31pm May 12, 2007

Sumitted for publication…

Dan has a point. Shell has also been guilty of causing hellish pollution in Nigeria for decades, engaging in corruption with successive Nigerian regimes to plunder billions in oil revenues, while leaving the local population to live in abject poverty. The following link is to a leaked Shell confidential internal report in which Shell admits that its operations in the Niger Delta have fuelled corruption and violence.

For more information on the host of controversies relating to Shell go to…

Posted by John Donovan, co-owner of the website: and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

2 Comments on “The Sunday Earnings gusher for Shell”

  1. #1 Royal Dutch Shell
    on May 14th, 2007 at 04:46

    Shell worked in close association with successive corrupt and brutal Nigerian regimes and bears a considerable responsibility for the poverty and pollution in the Niger Delta. Please read Shell’s own report.

  2. #2 J Thomas
    on May 13th, 2007 at 13:18

    …leaving the local population to live in abject poverty…

    Oh I’m sorry. I didn’t realise that Shell was actually the government of Nigeria, and therefore responsible for the economic and social welfare policies of that country.

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