Shell struck by low oil prices

London - British energy group Royal Dutch Shell said on Wednesday that first-quarter net profit plunged 62% to $3.488bn as oil prices slumped in an economic downturn.

"First quarter 2009 performance was affected by the weaker global economy, with a challenging upstream and downstream business environment," chief executive Jeroen van der Veer said in a results statement.

The figure excludes changes in the value of oil held in stock, a key measure for the industry, and compared to net profit totalling $9.083bn in the first quarter of 2008.

The price of crude oil, which is traded in London and New York, has tumbled from last July's record highs of more than $147 per barrel as the sharp global downturn has slashed worldwide energy demand.

On a "current cost of supplies" basis, which adjusts for changes in the value of oil held in stock, Shell reported earnings of $3.297bn, down 58% from the same quarter last year.

Total oil and gas production fell 4.0% to 3.396 million barrels in the three months to the end of March, as output was hit by security concerns in Nigeria.

Group revenues nosedived 49% to $58.22bn in the reporting period, from $114.30bn previously, Shell said.

"Industry conditions remain challenging, and our focus is on capital discipline and costs," added van der Veer.

"We are taking a prudent approach to this downturn, focused on sustaining a strong position in the energy landscape."

On Tuesday, rival group BP had posted a 62% slide in first-quarter net profits to $2.387bn as it also took a beating from lower oil prices.

US energy giants Chevron and ExxonMobil are both expected to reveal falling profits later this week.

- AFP