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Shell profits collapse on weak refining, natgas

LONDON (Reuters) – Royal Dutch Shell Plc posted a 75 percent fall in fourth-quarter profits to $1.18 billion, as the oil major was punished for falling output and its strong position in the depressed refining and natural gas businesses.

Oil prices recovered in the quarter but gas prices were much lower than in the same period a year earlier, while refining margins collapsed to their lowest level in almost 15 years.

Europe’s second largest oil company by market value said it made a $1.76 billion loss in its refining unit and Chief Executive Peter Voser said he was mulling the sale or closure of 15 percent of Shell’s refining portfolio, even after saying it planned to close its Montreal facility last month. “These results confirmed the very negative trends affecting the downstream business,” Colin Smith, oil analyst at ICAP, said.

Excluding one-off items, which amounted to a charge of $1.6 billion, the result was $2.77 billion, short of an average forecast of $2.87 billion from a Reuters poll of 10 analysts.

Oil and gas production fell 2.4 percent to 3.3 million barrels of oil equivalent per day in the quarter compared to the same period last year. Full year output was down 3 percent.

Shell’s results compare with a 23 percent drop in fourth-quarter net income at the largest western oil company by market value, Exxon Mobil, and a 37 percent drop at the second-largest U.S. oil company, Chevron.

However, UK rival BP managed to report a 33 percent rise in profits in the quarter thanks to its low reliance on refining and natural gas.

Finnish refiner Neste Oil lagged consensus with Q4 sales of 2.5 billion euros compared with 2.66 billion in a Reuters poll while Europe’s largest independent refiner Petroplus beat forecasts but swung to a clean net loss of $150 million in the fourth quarter.

(Reporting by Tom Bergin; Editing by Victoria Bryan, Mike Nesbit)

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