Shell reports war boost as oil starts to slide

<a href=www.dailytelegraph.co.uk>dailytelegraph.co.ukBy Malcolm Moore (Filed: 03/05/2003)

Shell became the latest oil company to benefit from the high oil prices caused by the war in Iraq, as it posted record results for the first three months of the year.

The oil major announced adjusted current cost of supplies earnings of $3.9 billion (£2.5 billion) for the first quarter. The total strips out the $1.3 billion Shell received for its stake in Ruhrgas, and adjusts the figures for the changing value of Shell's inventories.

"This is an exceptional income for us at a very strong oil price environment," a spokesman said. "Obviously that may or may not change. I don't have a crystal ball but what is important for us is how we take our business forward."

The high price of oil, which peaked at over $34 a barrel in London in March, also helped BP earn a record $4.27 billion in the first quarter, while ExxonMobil made a record first quarter net profit of $7.04 billion.

But yesterday, the price of Brent crude for June delivery stood at $23.58. This change in conditions makes it is unlikely for strong results to continue next quarter. As one analyst at Goldman Sachs commented: "Nice results, shame about the outlook." Analysts said that since the price peaked in March, the oil sector has underperformed the market by 11pc.

Shell offset problems with production in Nigeria and Venezuela by reporting not only a large increase in earnings in exploration and production, but also a 118pc improvement in its natural gas earnings and a 139pc rise in its oil products income.