Shell reports 33% rise in profit

Royal Dutch Shell, Europe’s largest oil company, reported a 33 percent increase in second-quarter profit Thursday, helped by a higher oil price even as production declined.

Like smaller rival BP earlier this week, Shell profited from an oil price that almost doubled in the second quarter from the year earlier but a 13 percent drop from a record on July 11 raised some concern among investors about whether oil companies can keep up the pace of earnings growth.

BP said earlier a higher oil price started to affect consumer demand for its gasoline, which declined as much as 10 percent in the United States and Europe.

Shell’s profit rose to $11.56 billion from $8.67 billion in the same period last year. BP reported a 28 percent increase in profit earlier this week and Italian oil company Eni said Thursday profit in the second quarter rose 52 percent, citing a higher oil price.

Shell’s shares have fallen 12.5 percent this year. That compares with a 14.7 percent drop of BP’s stock and a 9.9 percent decline for Exxon Mobil, the world’s biggest energy company.

Oil companies are under pressure to find new reserves as their traditional fields age and they face increasing competition from state-run oil companies in Russia and the Middle East. Shell is also looking to make up for production lost in recent incidents in Nigeria, where militants attacked an offshore production vessel in June, and in Russia, where it had to sell its share in the Sakhalin Island oil and natural gas project to state-controlled energy company OAO Gazprom last year.

Oil and gas production fell to 3,126 thousand barrels of oil equivalent per day from 3,178 thousand barrels.

Shell chief executive Jeroen van der Veer pledged to continue investing to fuel growth. “Shell is making substantial, targeted investments to grow the company for shareholders and help ensure that energy markets remain well supplied,” van der Veer said in a statement Thursday.

The company agreed two weeks ago to spend about $5.9 billion to buy Canada’s Duvernay Oil Corporation to increase its gas production from tough rock formations and is in talks with Iraq about some service contracts.

IHT |  Julia Werdigier | Thursday,  July 31, 2008