Royal Dutch Shell has blamed a slowdown in the global economy for a sharp fall in profits, which came in more than a $1bn lower than analysts were expecting.
Shell’s profits were down a quarter to $3.5bn (£2.9bn) in the three months to the end of June, well below City forecasts of almost $5bn. It was the biggest profits miss since the oil price crash in 2016.
The Anglo-Dutch company pumped more oil and gas than in the year before but blamed the “challenging” global macroeconomic environment for its poor quarterly performance.
The US-China trade war has put the brakes on Asia’s economic growth, which, in turn, has contributed to weaker global gas markets and has dampened profits made by refineries.
Falling gas prices come as a blow to Shell, which has invested heavily in shifting the balance of its portfolio away from oil in recent years.
Shell owns one of the biggest new gas export projects, which began operations in Australia this year to supply the Asia market.
The price of imported gas in Asia has plummeted to 10-year lows because demand has been unable to keep pace with new supply coming into the market.
The market price for gas is already 40% lower than it was last year and analysts say it could keep falling.
Ben van Beurden, the chief executive of Shell, said the US-China trade war was having “a very real depressing effect” on the global economy but added that Shell’s strength was “the ability to see the macro headwinds and respond appropriately”.
He said the company vows to increase spending and that dividends from 2020 would remain intact.
But Biraj Borkhataria, of RBC Capital Markets, said the “pretty weak set of numbers across the board” may lead analysts to rethink their full-year forecasts.
Shell’s quarterly results come amid growing criticism of oil companies’ failure to play a role in tackling the climate crisis.
Van Beurden said he welcomed protest that helped move society towards doing more to cut emissions because it could not be undertaken by Shell alone. “It will require unprecedented collaboration,” he said.
He believes Shell must to do more to reach the company’s goal of “zero harm to people and zero harm to the environment”.
The company was forced to put aside $237m in legal charges after a petrochemical refinery in California contaminated local groundwater.
Van Beurden announced, “with deep sadness”, that two Shell employees had died during a routine mandatory test at one of its projects in the Gulf of Mexico. The news followed four other fatalities this year, which included ones at a site in Nigeria and the US, he said. “It shows how much further we all need to go. We can do better and will do better,” he added.
