28 October 2010 10:56 [Source: ICIS news]
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LONDON (ICIS)--Shell’s chemicals CCS (current cost of supplies) earnings soared 86% year on year during the third quarter to $315m (€230m) on the back of a rise in sales volumes and margins, the oil major said on Thursday.
“Chemicals CCS earnings compared to the third quarter 2009 reflected improved realised chemicals margins, higher chemicals sales volumes and lower operating costs,” the company said.
Sales volumes at its chemicals segment grew 13% year on year to 5.33m tonnes, helped by the start-up of its petrochemicals complex in ?xml:namespace>
Shell said that during the three months to September, its chemicals manufacturing plant availability increased to 96% from 95% in the same period last year.
The company’s overall downstream operations recorded a 75% year-on-year decline in CCS earnings to $325m from $1.29bn during the same quarter last year.
Shell said downstream earnings included charges of $1.13bn, reflecting asset impairments of $873m, related to the estimated fair value accounting of commodity derivatives and provisions. Any increase in value of the inventory over cost for commodities traded through the forward markets is not recognised in income until the sale of the commodity occurs in subsequent periods.
Earnings for the third quarter 2009 included a net gain of $536m.
After cost adjustments, earnings stood at $264m, down 83% from the same period last year, Shell said.
For the nine-month period to September, downstream CCS earnings were up 26% to $2.54bn.
Shell reported a net profit of $3.46bn in the third quarter, up 7% from the same period last year, with the nine-month figure jumping 26% to $13.3bn.
As part of the company’s strategy of driving down costs and improving capital efficiency, Shell would continue with rationalising some operations.
“We expect some $7bn-8bn of asset sales in the 2010-2011 timeframe, including exits from non-core refining and marketing positions in Europe and Africa, and rationalisation of our tight gas portfolio in North America, following recent acquisitions there,” said Shell president Peter Voser.($1 = €0.73)
Additional reporting by Pearl Bantillo
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