Oil giant highlights impact of crude price volatility

ROYAL Dutch Shell has underlined the impact of oil price movements on its profitability amid continued volatility in the market.

In an update on trading the oil and gas giant said the amount of cash it generates from operations annually will vary by $6 billion for every $10 per barrel movement in the price of Brent crude.

The update follows a period during which the Brent crude price has fluctuated within a $30/bbl band.

While the price has increased in response to political tensions in the Middle East concerns about the outlook for the global economy have weighed on sentiment.

The boom in production in US shale areas has offset efforts by exporters led by Saudi Arabia to curb production to support prices.

Crude price volatility has created complications in the North Sea as the industry emerges from the downturn triggered by the sharp fall in the oil price since 2014.

However, a range of firms have approved North Sea developments in recent months, including Shell.

Yesterday private equity-backed Neptune Energy said work on the development of the Seagull field off Scotland has been progressing at pace. The project was approved in March.

Neptune is developing Seagull with BP, whose chief executive Bob Dudley is reported to be preparing to retire after 10 years in charge.

Brent reached a four year high of $85/bbl in October but fell to $53/bbl in January. Brent crude sold for around $61/bbl yesterday.

The trading update was the first issued by Shell in addition to its quarterly results announcements.

Chief financial officer Jessica Uhl said Shell issued the update in response to feedback from investors.

“This is a further step in Shell’s ongoing journey to enhance disclosures and increase transparency,” said Ms Uhl.

Shell said third quarter production is expected to be between 2.6 million and 2.65m barrels of oil equivalent per day.

The company made no mention of its North Sea business in the update.

Source: heraldscotland.com