Shell first quarter buoyed by chemicals

03 May 2007 10:58  [Source: ICIS news]

LONDON (ICIS news)--Shell’s first-quarter earnings were buoyed by stronger chemicals, gas and power and oil products earnings, the energy company reported on Thursday.

First-quarter chemicals earnings jumped to $527m (€388m) from $183m for the first quarter of last year, boosted by a full quarter of earnings from the Nanhai cracker complex in China.

The petrochemicals complex at Daya Bay in Guandong, in which Shell has a 50% stake, started up in the first quarter of 2006.

Group current cost of supply (CCS) earnings were 14% higher at $6.9bn and reported income up 6% at $7.3bn with higher gas and power, oil products and chemicals profits offset by lower returns from exploration and production (E&P).

E&P margins were hit by lower oil and gas prices, lost production and higher costs compared with the first quarter of 2006.

First-quarter 2007 chemicals earnings reflected improved margins and profits from its equity-accounted investments, Shell said. The gains were partly offset by lower trading earnings compared with the first quarter of 2006.

Sales volumes were down 6% at 5.57m tonnes.

Shell’s shares were trading up 1.8% at 1,802 pence on the London Stock Exchange at 08:11 GMT on Thursday.

“The decline [in chemicals sales volmes] mainly reflected a reduction in sales of lower margin products, including aromatics trading, as well as the marketing impact of planned turnaround activities in the Middle East,” Shell said in its first-quarter results statement.

Operating rates were 91%, roughly in line with the first quarter of 2006.

First-quarter 2007 chemicals earnings compared with earnings of $184m in the fourth quarter of 2006. Sales volumes in that quarter were 5.7m tonnes.

First-quarter chemicals earnings from the US of $11m compared with a reported loss of $34m in the first quarter of last year but a profit of $40m in the fourth quarter. Chemicals earnings from operations outside the US were higher compared with both quarters.

Shell said its chemicals earnings on a CCS basis were $480m compared with $139m in the first quarter of 2006 and $273m in the final quarter of the year.

($1 = €0.74)

By: Nigel Davis
+44 20 8652 3214

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