Bloomberg February 04, 2010, 03:40 AM EST
By Fred Pals
Feb. 4 (Bloomberg) — Royal Dutch Shell Plc, which vies with BP Plc as Europes biggest oil company, laid out plans for 1,000 extra job cuts and savings of $1 billion this year because of a challenging outlook for refining.
Earnings excluding one-time items and gains or losses from inventories fell 28 percent in the fourth quarter to $2.8 billion from the year-earlier period. They matched the $2.88 billion median estimate of 14 analysts surveyed by Bloomberg.
Chief Executive Officer Peter Voser, who has placed 15 percent of Shells refining capacity up for review, said he isnt betting on a quick recovery and the outlook for 2010 is uncertain. Oil prices had their biggest annual gain since 1999 last year, keeping refining margins under pressure as the recession weighed on fuel demand.
Refining is struggling a lot and it is worse than we had expected, Gudmund Halle Isfeldt, an Oslo-based analyst at DnB Nor Markets, said in a telephone interview.
Net income of $1.96 billion in the fourth quarter compared with a loss of $2.81 billion a year ago, The Hague-based Shell said in a statement today.
BP, which warned earlier this week that the recovery will be slow and gradual, posted net income of $4.3 billion in the final quarter of 2009. Exxon Mobil Corp., the largest U.S. company, posted a fifth straight drop in quarterly profit earlier this week to $6.05 billion.
Significant Overhang
Shell cut 5,000 jobs last year and reduced costs by $2 billion, of which $1 billion came from in the last quarter. There is a significant overhang of industry refining capacity and about 560,000 barrels a day of capacity is under review, the company said.
Downstream is facing some tough times, Voser said in the statement. Cost-focus is now embedded in our-day-to-day operations.
Voser is seeking to revive production growth with new projects in Qatar, Malaysia and Brazil after output fell for a seventh year in 2009.
Shells class-A shares fell 1.9 percent in London trading to 1,741 pence as of 8:20 a.m. local time. The stock is up 0.6 percent in the past year, compared with a 15 percent advance for London-based BP.
Swiss-born Voser, who inherited the industrys biggest spending program last year after taking over from Jeroen van der Veer as CEO, is no longer pinning his hopes on Nigeria, where Shells operations were plagued by militant attacks in recent years. Shell halted some flow stations in Nigeria earlier this week after sabotage caused a pipeline leak.
Lower Production
Production fell 3 percent to 3.152 million barrels of oil equivalent a day in 2009, from 3.248 million barrels a day in 2008. Fourth-quarter production fell 2.5 percent to 3.331 million barrels of oil equivalent a day.
Voser expects natural gas to make up more than half of Shells production by 2012. Gas must get much more on the agenda as its potential role is underestimated, Voser said in Davos last week.
Shell in December produced its first million barrels of oil from the Parque das Conchas project off the coast in Brazil. It also exceeded targets for the shipments of liquefied natural gas and crude oil from its Sakhalin-2 venture in Russias Far East.
Shell on Feb. 1 announced an ethanol venture with Cosan SA Industria & Comercio in Brazil. Shell will contribute assets including 2,740 service stations and as much as $1.93 billion to the 50-50 venture.
–With assistance by Eduard Gismatullin and Brian Swint in London. Editors: Stephen Cunningham, Will Kennedy.
To contact the reporter on this story: Fred Pals in Amsterdam at +31-20-589-8563 or [email protected]
To contact the editor responsible for this story: Will Kennedy at +44-20-7073-3603 or [email protected].
This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.
Royal Dutch Shell conspired directly with Hitler, financed the Nazi Party, was anti-Semitic and sold out its own Dutch Jewish employees to the Nazis. Shell had a close relationship with the Nazis during and after the reign of Sir Henri Deterding, an ardent Nazi, and the founder and decades long leader of the Royal Dutch Shell Group. His burial ceremony, which had all the trappings of a state funeral, was held at his private estate in Mecklenburg, Germany. The spectacle (photographs below) included a funeral procession led by a horse drawn funeral hearse with senior Nazis officials and senior Royal Dutch Shell directors in attendance, Nazi salutes at the graveside, swastika banners on display and wreaths and personal tributes from Adolf Hitler and Reichsmarschall, Hermann Goring. Deterding was an honored associate and supporter of Hitler and a personal friend of Goring.
Deterding was the guest of Hitler during a four day summit meeting at Berchtesgaden. Sir Henri and Hitler both had ambitions on Russian oil fields. Only an honored personal guest would be rewarded with a private four day meeting at Hitler’s mountain top retreat.
IN JULY 2007, MR BILL CAMPBELL (ABOVE, A RETIRED GROUP AUDITOR OF SHELL INTERNATIONAL SENT AN EMAIL TO EVERY UK MP AND MEMBER OF THE HOUSE OF LORDS: 
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A head-cut image of Alfred Donovan (now deceased) appears courtesy of The Wall Street Journal.
