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BBC News: Higher production costs hit Shell

Shell’s results beat its European rival BP

Thursday, 25 October 2007, 06:50 GMT 07:50 UK 

Lower oil production and rising costs hurt Royal Dutch Shell’s business in its third quarter.

Shell’s earnings – measured by current cost of supply – fell 8% from a year earlier to $6.4bn (£3.1bn), down from $6.9bn.

Despite the loss, the results still beat analysts’ downbeat forecasts of $5.6bn, helped by the oil price setting a series of record highs recently.

Earlier this week, UK rival BP saw third-quarter profits slump 45%.

Shell said crude oil production in its third quarter period was down 9% compared to a year ago, partly as a result of the firm selling its majority stake in the Sakhalin-2 oil and gas project to Russia’s Gazprom earlier this year.

Higher production costs also ate into Shell’s earnings.

It said these were industry-wide problems, and given the weaker refining margins, Shell chief executive Jeroen van der Veer called the results “satisfactory”.

He added: “We continue to rejuvenate our portfolio with sustained investment in new legacy assets, and through disposals. The execution of our strategy is on track.”

http://news.bbc.co.uk/1/hi/business/7061214.stm 

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