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Shell's sales cut in half, profits shrink

EUROPE'S largest oil company, Royal Dutch Shell PLC, reported a first-quarter net profit of US$3.49 billion yesterday, down 62 percent, as oil prices fell sharply amid the global economic downturn. The net profit figure compares with US$9.08 billion in the same period a year ago. Sales fell 49 percent to US$58.2 billion.

The company's results are dominated by its production arm, which reported a 67-percent fall in earnings to US$1.7 billion. Both oil production and sales prices fell.

Shell said it pumped 3.32 million barrels of oil and equivalents per day, a 3.5-percent fall, due to quota restrictions by the Organization of Petroleum Exporting Countries and attacks on its facilities in Nigeria.

Shell's average selling price per barrel in the quarter was US$42.16, down from US$90.72 a year ago.

After seven years of declining production volumes, Shell has been investing heavily in new production and has promised an average yearly increase of at least 3 percent through to 2012.

It plans US$31 billion in investments this year, compared with US$20 billion by close rival BP Plc.

Shell said new fields that had begun production in the quarter include a large gas project on Russia's Sakhalin Island that is expected to eventually deliver 395,000 barrels per day.

Shell's second largest business, refining, earned US$1.40 billion, down from US$2.37 billion a year ago.


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