Nigeria oil theft hits Shell profits

ABUJA – Royal Dutch Shell highlighted the impact of oil theft and supply disruption in Nigeria today as it posted a “clearly disappointing” 20% drop in profits.

The oil giant also blamed higher costs, exploration charges and exchange rates for the decline in underlying earnings to 4.6 billion US dollars (£3 billion) in the quarter to June 30, from 5.7 billion US dollars (£3.8 billion) a year earlier.

It said the challenges in Nigeria, where oil theft and disruption to gas supplies is causing widespread environmental damage, could cost the country’s government 12 billion US dollars (£7.9 billion) in lost revenues per year.

Chief executive Peter Voser said: “We will play our part, but these are problems Shell cannot solve alone.”

SHELL NIGERIAShares fell 4% as Mr Voser added: “These results were undermined by a number of factors – but they were clearly disappointing for Shell.”

He has been chief executive of Royal Dutch Shell since July 2009 but is leaving at the end of this year in order to spend more time with his family. He will be replaced by downstream director Ben van Beurden.

The outgoing chief executive said Shell was entering a period of substantial portfolio change as it sells assets and invests in new capacity with greater potential. It has five major start-ups due in the next 18 months that should add more than 4 billion US dollars (£2.6 billion) to its 2015 cash flow.

Shell has been present in Nigeria since 1936, but in recent years production has been blighted by militant attacks, including in the western Niger Delta.

It recently announced the potential exit from interests it holds in some onshore leases in the eastern part of the Niger Delta.

The deteriorating operating environment in Nigeria had an impact on production volumes, cutting the equivalent of 100 thousand barrels of oil in the second quarter. Across the business, production was 3,062,000 barrels, down 1% on a year earlier.

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