AMSTERDAM (AP) — Royal Dutch Shell PLC, Europe's largest oil company, says third quarter earnings fell due to a weaker refining market and higher exploration and production expenses. Output fell due to shutdowns of facilities for maintenance, notably in Nigeria, where Shell has suffered from attacks on pipelines.
The company reported earnings on a current cost of supplies basis — which strips out the impact of fluctuations of oil prices between when it is produced and when it is sold — of $4.25 billion (3.10 billion euros), compared with $6.15 billion in the same quarter a year ago.
Net profit, which does not strip out those fluctuations, fell to $4.68 billion from $7.16 billion.
"We are facing headwinds from weak industry refining margins, and the security situation in Nigeria, which continue to erode the near term outlook," said outgoing CEO Peter Voser. But he said the company's performance will improve in 2014 as investment costs decline and capacity returns online.
Shares in the company were down 3.6 percent at 24.54 euros at the open.
Production, meanwhile, fell by 2 percent to 2.93 million barrels per day, causing the division's earnings to fall 29 percent to $3.46 billion.
"The deteriorated operating environment in Nigeria impacted production volumes by some 65,000 barrels of oil per day," the company said. Excluding that, and the effect of divestments, output would have risen 1 percent, the company said, as new production in Qatar and from shale gas in the U.S. added more than enough to offset declines in older fields.
Downstream earnings, which include the company's refining and chemicals businesses, fell 43 percent to $892 million.
"Refining margins reflected significantly weaker refining industry conditions in all regions due to structural global overcapacity and weak demand," Shell said.
Voser is stepping down at the end of the year, to be replaced by Ben van Beurden.
Shell's consolidated revenue was $117 billion, from $112 billion in the same period a year ago.