Royal Dutch Shell said on Jan. 29 it lost $2.81 billion in the final quarter of 2008 as plunging oil prices slashed the value of inventories. The loss compared with a net profit of $8.47 billion during the fourth quarter of 2007 when crude prices were far higher, Europe's largest oil company said.
"During the fourth quarter 2008 worldwide oil and gas related commodity marker prices declined significantly," Shell said. "As a consequence, net working capital decreased by some $15 billion during the fourth quarter 2008, mainly due to the lower valued inventory in oil products" held by the group.
Shell's earnings were battered badly in the three months, with oil prices slumping to near five-year lows below $33 a barrel as the global economic slowdown curbed demand for energy. The sharp drop in prices came after oil struck historic highs above $147 in July as the markets focused on simmering geopolitical tensions in major crude exporters Iran and Nigeria.
Shell said that fourth quarter earnings were also hit by lower production volumes in the U.S and higher exploration costs.
For the year, net profit dropped 16% to $26.28 billion even as revenue jumped 29% to $458 billion. In the fourth quarter alone, however, sales fell by almost a quarter to $81 billion.
Copyright Agence France-Presse, 2009