GO
Loading...

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

  • CNBC NEWSLETTERS

    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

  • IMF discusses role in Egypt

    Masood Ahmed, director of Middle East and Central Asia at the IMF, says that the IMF has two roles to play with Egypt, one of which is to provide dialogue and the other is to provide financial support.

  • IMF: Egypt has 'a long way to go'

    Masood Ahmed, director of Middle East and Central Asia at the IMF, says that Egypt has made a lot of improvements regarding energy subsidies and broader reforms, but still has "a long way to go."

  • Is Greece spiralling out of control?

    Peter Rosenstreich, chief FX analyst at Swissquote Bank, says the negotiations between creditors and Greece may not end well.