Not a great week for oil companies, after Royal Dutch Shell followed up BP’s less-than-impressive figures on Tuesday with disappointing second-quarter results of its own.
The oil company said earnings had slipped to $4.6bn (£3bn) from $5.7bn a year ago, pushed down by oil theft and disruptions to its supply in Nigeria. Higher operating expenses and an increase in the number of wells it was forced to write off added to its woes, as did the impact of a weak Australian Dollar.
But the company insists it wants to increase its output to four million barrels of oil a year by 2017, from 3.3 million now.
It makes for interesting reading, considering BP attributed part of its problems to ongoing costs related to the 2010 Gulf of Mexico disaster. Shell’s results suggest the oil industry as a whole has had a tough few months.
It’s also worth noting the conflicting strategies the two companies have adopted to deal with their problems. BP’s results also showed that, in the aftermath of the disaster, it had begun a $38bn asset sell-off programme, turning itself into a leaner, meaner oil-making machine.
Shell, on the other hand, is ‘rich with new investment opportunities’, and is ‘investing in new capacity worldwide… in the next 18 months we expect to see five major project start-ups, which should add over $4bn to ‘our 2015 cash flowl’ [sic], as chief executive Peter Vosser probably didn’t quite put it.
It’s the oil equivalent of Gordon Brown’s ‘invest your way out’ vs David Cameron’s ‘austerity is king’. Although in those cases, neither strategy seems to work.
Still: it's a new beginning for Shell. New boss Ben van Beurden takes over from Vosser in January. Perhaps he can be the one to make the oil flowl freely.