On $4.5B profit, Shell won't cut back on deepwater drilling

A Shell sign in Hampshire, England

TEXT OF STORY

Steve Chiotakis: Dutch oil giant Shell reported a $4.5 billion profit this morning. Shell is the largest oil firm in Europe, but it didn't used to be that way. BP was tops before, but the Gulf of Mexico oil disaster spooked investors away and ravaged BP's profits reports. How do Shell's financial books compare to BP's? From London, here's Marketplace's Stephen Beard.


Stephen Beard: Both companies specialize in deepwater drilling. Both have a major presence in the Gulf of Mexico. But there, the similiarity ends. While BP reported a $17 billion loss this week, Shell has just unveiled a $4.5 billion profit.

The company has benfited from the higher price of oil. Production is up and costs are down. And of course, most crucially, Shell has avoided any major disasters.

Neverthless, the company will pay some of the price for BP's debacle. Nick McGregor analyses the oil industry for stockbrokers Redmayne Bentley:

Nick MCGREGOR: Deepwater drilling globally is going to become a slower and more expensive process. Getting regulatory approval will take longer and once you've got it, it's going to be a more expensive business due to the much heightened safety requirements.

In today's profit report, however, Shell makes clear it won't be scaling back its deepwater operations. It says offshore gas and oil are vital for future supply.

In London, this is Stephen Beard for Marketplace.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

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