Oil giant Shell rebounds into profit in third quarter

LONDON (AFP) – Anglo-Dutch oil titan Royal Dutch Shell yesterday logged third-quarter net profit of USD489 million (EUR415 million), rebounding after a vast coronavirus-driven loss in the prior three months.

Profit after tax for July-September was boosted by steadier oil prices and contrasted with a vast net loss of USD18.1 billion in the second quarter, when Shell was slammed by COVID-19.

Earlier this year, oil prices dropped off a cliff – and even briefly turned negative – as airlines grounded planes worldwide, businesses closed their doors and the world economy tanked into a downturn.

Crude futures also crashed on the back of a vicious price war between key producers Saudi Arabia and Russia. But in the third quarter, Shell was boosted by a modest recovery in global crude demand and the more stable oil market, having taken a colossal USD16.8-billion charge in April-June.

Crude oil currently stands at about USD40 per barrel, still below the roughly USD60 a barrel seen in the third quarter of last year, when the group posted a net profit of USD5.9 billion.

Despite higher prices, the oil market remains depressed by the coronavirus health emergency which has slammed economic growth and savaged the world’s appetite for oil.

A Shell logo outside a Shell petrol station in central London. PHOTO: AFP

That has in turn sparked thousands of job losses across the energy sector and beyond.

Shell has already announced that it is seeking to axe up to 9,000 jobs or more than 10 per cent of its global workforce in response to fallout from the deadly pandemic.

The company’s fierce rival BP, which posted a third-quarter net loss of USD450 million on Tuesday, is in the process of axing about 10,000 jobs or 15 per cent of its staff.

“Our decisive actions taken earlier in the year have solidified our operational and cash delivery,” said Shell Chief Executive Ben van Beurden, who oversees 80,000 staff across more than 70 countries.

“The strength of our performance gives us the confidence to lay out our strategic direction (and) resume dividend growth,” he added.

Shell added yesterday that it would increase its shareholder payout by about four per cent to 16.65 US cents for the third quarter, and annually thereafter.

The group said in September that it was aiming to generate annual savings of between USD2 billion and USD2.5 billion by also cutting back on refining capacity.

Although oil prices have rebounded to a steadier footing, the market has dived this week as traders fretted over the imposition of lockdowns in Europe to combat a second wave of COVID-19 infections.

Shell warned yesterday over the outlook for the fourth quarter amid mounting concern over the pandemic’s resurgence.

“As a result of COVID-19, there continues to be significant uncertainty in the macroeconomic conditions with an expected negative impact on demand for oil, gas and related products,” it warned.