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Oil theft in Niger Delta: Shell's profits plunge

By The Rainbow
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Energy giant Royal Dutch Shell on Thursday announced plunging quarterly profits, with outgoing chief executive Peter Voser blaming the 'disappointing' results on a shale asset write-down and unrest in Nigeria.

Net profits slumped 57 percent in the second quarter compared with the equivalent period a year earlier, the Anglo-Dutch group said in an earnings statement.

Profit after tax dived to $1.737 billion (1.308 billion euros) in the three months to June 30 compared with $4.1 billion in the second quarter of 2012.

Shell said it was hit by a net charge of $1.84 billion, including impairments of $2.0 billion, 'predominantly related to liquids-rich shales properties in North America' following new exploration information.

It is a blow for Shell, coming as North America is experiencing a boom in both oil and gas production extracted from shale rock.

Voser noted: 'Higher costs, exploration charges, adverse currency exchange rate effects and challenges in Nigeria have hit our bottom line.

'These results were undermined by a number of factors - but they were clearly disappointing for Shell.'

Voser added that oil theft and disruptions to gas supplies in major crude producer Nigeria were causing widespread environmental damage and could cost the Nigerian government $12 billion in lost annual revenue.

'We will play our part, but these are problems Shell cannot solve alone,' Voser said in the earnings statement.

Thieves are known to tap pipelines to syphon crude for sale on the lucrative black market, while such illegal activity can lead to explosions, fires and oil pollution.

The International Energy Agency last month said that such theft was one factor in a fall of output by the Organization of Peteroleum Exporting Countries (OPEC) of which Nigeria is a member.

Shell on Thursday added that its current cost of supplies (CCS), a profit figure that excludes gains or losses from energy inventories, slumped 60 percent to $2.39 billion in the second quarter.

Excluding one-off charges, the CCS profit was $4.6 billion, down 20 percent and below average expectations of $5.9 billion according to a poll by Dow Jones Newswires.

Royal Dutch Shell 'A' shares were showing a loss of 4.1 percent at 2,145 pence in afternoon deals on London's benchmark FTSE 100 index, which was up 0.80 percent at 6,674.32 points.

Shell last month announced that company insider Ben van Beurden would become group chief executive on January 1.

The company had already revealed in May that Shell veteran Voser would retire in 2014 to spend more time with his family.