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Shell sees quarterly profits plummet 70% as low oil price bites

European oil majors Royal Dutch Shell and Total reported a sharp decline in profits in the second-quarter of 2016, as the low oil price continued to weigh on earnings.

Shell's second-quarter earnings on a current cost of supplies (CCS) basis attributable to shareholders (excluding identified items) was $1 billion, down from $3.8 billion in the same period last year, a 72 percent fall. CCS is a common accounting measure for commodity-reliant businesses. This was also below the $2.2 billion forecast by analysts.

'Significant challenge'

"Lower oil prices continue to be a significant challenge across the business, particularly in the upstream," Ben van Beurden, chief executive of Shell said in a statement.

It was the first quarterly earnings statement that included BG Group, which Shell bought for around $50 billion earlier this year. The company said that the integration process was going well.

"Integration of Shell and BG is making strong progress, and our operating performance continues to further improve," van Beurden said.

Total profit down 30%

Meanwhile, France's Total said second-quarter adjusted net income was down 30 percent year-on-year to $2.2 billion, but noted on a quarter-on-quarter basis, it actually rose.

"Although still volatile, the Brent price has recovered since the start of the year and averaged $46 per barrel in the second quarter of 2016. Total captured the benefit of this rebound, and adjusted net income rose to $2.2 billion in the second quarter of 2016, an increase of 33 percent compared to the first quarter 2016," Total Chief Executive Patrick Pouyanne, said in a statement.

Between late May and the middle of June, the price of Brent had risen above $50 per barrel, but has since come off to trade in the low $40s.

Second-quarter revenues for Total fell 17 percent year-on-year to $37.2 billion.

Total also said that it was ahead of schedule on its cost-cutting efforts and said it would surpass its $2.4 billion cost reduction target this year. It also added that capital expenditure for 2016 is expected to be between $18 billion and $19 billion.

Total said projects in Bolivia and Kazakhstan were expected to start in the second half of the year.