Shell reports $831m Q4 loss in chemicals on inventory impact

29 January 2009 08:54  [Source: ICIS news]

Shell reports $831m Q4 chemicals lossLONDON (ICIS news)--Royal Dutch Shell has reported a fourth-quarter loss of $831m (€631.6m) in its chemicals segment due to a significant inventory impact, compared with earnings of $501 million for the same period in 2007, the company said on Thursday.

Shell said the $831m loss in its chemicals segment for the 2008 quarter reflected “net realised inventory effects due to declining commodity prices”.

Chemicals volumes were down 20% year on year, as reduced global demand for chemicals products pushed capacity utilisation down to 67% from 86% in the fourth quarter of 2007.

Fourth-quarter chemicals results on a current cost of supply basis were a loss of $19m, compared with $348m in the fourth quarter of 2007.

Earnings at this level included a charge of $22m, compared with a net charge of $46m in the same quarter in 2007.

Shell said sales volumes were lower in the quarter, and it booked lower income from equity-accounted ventures and higher operating costs that were offset partially by higher margins and trading contributions.

West European naphtha margins were $1,357/tonne in the quarter, compared with $279/tonne in the fourth quarter of 2007, according to available industry data. US ethane margin cracker margins were at $547/tonne, compared with $334/tonne year on year.

The cracker industry margins did not, however, represent actual Shell margins for the period, Shell said.

Shell plunged to a $2.81bn loss for the fourth quarter at group level, compared with a profit of $8.47bn in the same period of the previous year, as it accounted for the inventory impact in chemicals and oil products.

Fourth-quarter 2008 CCS earnings were down 28% as pressure built on demand for oil and gas due to the weaker global economy.

“Industry conditions remain challenging, and we are continuing the focus on capital and cost discipline,” said CEO Jeroen van der Veer.

($1 = €0.76)

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By: Nigel Davis
+44 20 8652 3214



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