OIL giant Royal Dutch Shell announced a 49% surge in first quarter profits as the company joined rival BP in benefiting from higher oil prices.
The Anglo-Dutch group reported earnings of £3.2bn for the first three months of the year – a day after BP posted a figure of £3.6bn.
Chief executive Peter Voser said rising energy prices and an improved operational performance meant Shell’s profits were sharply higher compared with the final quarter of 2009.
Shell’s performance has lagged behind BP as it has been forced to ramp up spending to secure new sources of oil and gas at a time when refining margins are under pressure due to a global glut and economic weakness.
The company cut 5,000 jobs last year and will axe another 1,000 posts in 2010 to make it more competitive.
Analysts believe the firm has suffered for “taking its foot off the pedal” in exploration in the late 1990s.
Mr Voser claimed the recent turnaround was largely driven by Shell’s own actions.
He said: “The priorities are for a more competitive performance, for growth and for sharper delivery of strategy. There is more to come from Shell.”
Mr Voser said there were mixed signals for the near-term outlook.
“So far in 2010, oil prices have remained firm and demand for petrochemicals has increased, but refining margins, oil products demand and spot gas prices all remain under pressure,” he said.
“Although there are signs of an improving economic outlook, we are not relying on it.
“We are continuing with our focus on cash flow growth, underpinned by new project start-ups and lower costs.”
Shell’s operational improvement included a 6% rise in production volumes as it benefited from new projects in Russia and Brazil.
Earnings from so-called “upstream” operations more than doubled to £2.9bn.
Analysts said the results were comfortably ahead of forecasts.
Shell shares rose by 47.5p to 1969.5p on the London stock exchange yesterday while rival BP added 15p to close at 625p.
