Oil giant Shell rebounds into profit in third quarter

LONDON: Anglo-Dutch oil titan Royal Dutch Shell on Thursday logged third quarter net profit of $489 million (€415 million), rebounding after a vast coronavirus-driven loss in the prior three months.

Profit after tax for July-September was boosted by steadier oil prices and contrasted with a vast net loss of $18.1 billion in the second quarter, when Shell was slammed by Covid-19.

Earlier this year, oil prices dropped off a cliff — and even briefly turned negative — as airlines grounded planes worldwide, businesses closed their doors and the world economy tanked into a downturn.

Crude futures also crashed on the back of a vicious price war between key producers.

But in the third quarter, Shell was boosted by a modest recovery in global crude demand and the more stable oil market, having taken a colossal $16.8-billion charge in April-June.

Crude oil currently stands at just under $40 per barrel, still below the roughly $60 a barrel seen in the third quarter of last year, when the group posted a net profit of $5.9 billion.

Despite higher prices, the oil market remains depressed by the coronavirus health emergency which has slammed economic growth and savaged the world’s appetite for oil.

That has in turn sparked thousands of job losses across the energy sector and beyond.

Shell has already announced that it is seeking to axe up to 9,000 jobs or more than 10 percent of its global workforce in response to fallout from the deadly pandemic.

The company’s fierce rival BP, which posted a third quarter net loss of $450 million on Tuesday, is in the process of axing about 10,000 jobs or 15 percent of its staff.

“Our decisive actions taken earlier in the year have solidified our operational and cash delivery,” said Shell CEO Ben van Beurden, who oversees 80,000 staff across more than 70 countries.

“The strength of our performance gives us the confidence to lay out our strategic direction (and) resume dividend growth,” he added.

Shell added Thursday that it would increase its shareholder payout by about 4 percent to 16.65 US cents for the third quarter, and annually thereafter.

The group had stated in September that it was aiming to generate annual savings of between $2 billion and $2.5 billion via a massive restructuring drive. Although oil prices have rebounded to a steadier footing, the market has dived this week as traders fretted over the imposition of lockdowns in Europe to combat a second wave of COVID-19 infections.

World oil prices sank Thursday by another 5.0 percent on fears that new coronavirus lockdowns in Europe would further dent demand for crude.

Shell, meanwhile, warned over the outlook for the fourth quarter amid mounting concern over the pandemic’s resurgence.

“As a result of Covid-19, there continues to be significant uncertainty in the macroeconomic conditions with an expected negative impact on demand for oil, gas and related products,” it said.

“Furthermore, global developments and uncertainty in oil supply have caused volatility in 2020 in commodity markets.”