Shell hit by refining costs, Nigeria 'sabotage'

A winter landscape image of a section of the Shell oil refrinery at Scotford Alberta.
Robert McGouey | All Canada Photos | Getty Images
A winter landscape image of a section of the Shell oil refrinery at Scotford Alberta.

Royal Dutch Shell's third-quarter profits undershot analysts' forecasts on Thursday as a weak refining environment and production losses due to disruption in Nigeria weighed on its performance.

Third-quarter earnings excluding identified items and on a current cost of supply basis came in at $4.5 billion compared with a forecast range of between $4.9 and $5.1 billion and down from $6.6 billion a year ago.

Chief Executive Peter Voser, who steps down from the western world's number three oil company at the end of the year, said actions taken during the quarter "underline our commitment to shareholder returns", echoing an industry theme for the quarter as the sector underperforms the broader market.

World number one Exxon Mobil reports results later on Thursday.

(Watch: Shell: natural gas key to future energy needs)

The big drop in Shell profits was led by the significantly weaker industry refining conditions, that have been widely flagged by the company and others in the industry.

Rising costs in both production and finding operations in the main oil and gas division were also a major factor in the weaker results, along with production volume impacts from maintenance and asset replacement activities.

The fall also reflected the impact of pipeline outages in Nigeria, much of which Shell puts down to sabotage and theft, and lower dividends from a liquefied natural gas venture.

(Read more: Ouch! Exxon posts big miss; Shell takes massive shale charge)

The Nigeria outage cost Shell 65,000 barrels a day worth of production. Total oil and gas output for the quarter was 2.931 million barrels of oil equivalent, down 2 percent on third quarter 2012 figures.

On the upside, Shell benefited from higher contributions from chemicals and increased underlying upstream production volumes, led by integrated gas.

Voser surprised investors by announcing an early retirement from his role earlier this year. He will be replaced by Ben van Beurden in January.

Follow us on Twitter: @CNBCWorld

Contact Europe News


    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Europe Video

  • Fed hike? Expect volatility in bonds

    How are the bond markets impacted by a possible rate hike from the U.S. Federal Reserve. Darren Ruane, head of fixed interest at Investec Wealth & Investment Limited, believes that future volatility is likely.

  • Hedge funds eye biggest risks

    What are the biggest risks to hedge funds at the moment? CNBC's Karen Tso talks to some corporate hedge fund leaders about what they think are the current risks.

  • iMatchative: The hedge fund disruptor?

    iMatchative is changing the way institutional investors pair with hedge funds. Sam Hocking, CEO of iMatchative, talks about who the company is appealing to.