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The Times: Shell rakes in profits from Canadian oil sands unit

July 27, 2007
Carl Mortished, International Business Editor

The world’s dirtiest oil is producing the highest profit per barrel for Royal Dutch Shell, which yesterday said it would begin to report the earnings of its controversial Canadian oil sands operations as a separate business unit.

Shell showed a clean pair of heels to its competitors yesterday, revealing a profits surge from refining which helped to boost the oil group’s earnings from $6.3 billion to $7.5 billion in the second quarter. In contrast, BP this week reported a 1 per cent fall in profits to $6 billion owing to its weak US refining business, while ExxonMobil, attributed a slippage in profits to $10.2 billion to weaker natural gas profits.

The huge profit margin from bitumen mined from tar sands in northern Alberta has persuaded Shell to make more financial disclosure in future about the Canadian operation, which is criticised by environmentalists for its carbon emissions.

According to Shell’s 2006 accounts, oil sands contributed $651 million in profits out of a total of $12 billion for the upstream business of producing crude oil. However, the synthetic crude made from dirty bitumen generates a posttax profit of $21.75 per barrel, compared with Shell’s average profit per barrel of crude of just $12.41.

The burgeoning profitability is pushing Shell to place oil sands on display and Jeroen van der Veer, chief executive, said the business would be shifted from the exploration unit to the downstream, refining unit, in recognition that oil sands are a mining and refining operation.

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article2148631.ece

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