Smaller earnings from big oil as Shell reports an unexpectedly sharp 70 percent drop in profits. As with BP, weak oil prices are to blame - and higher charges resulting from the Anglo-Dutch group buying BG. Laura Frykberg reports.
Big oil's revenues are looking smaller and smaller. After BP's 45 per cent drop in quarterly earnings, Shell is now reporting a 70 per cent dive. Low oil prices, poor refining profits, and the cost of a billion-dollar acquisition are being blamed. (SOUNDBITE) (English) CHIEF ECONOMIST, WORLD FIRST JEREMY COOK SAYING: "The RND the investment spending isn't quite bringing around the returns that they had been looking for. The movement with the gas operations is something we have to keep a very close eye upon. But they are just another major company dealing in a market which is very, very tricky at the moment and they are likely to see lower margins moving forward." Shell has severely suffered from the global oil glut. In May it said 12,000 jobs will go by the end of the year. And billions of dollars worth of assets will be sold. Oil has seen a small resurgence, but there are signs prices could hit the bottom of the barrel again. (SOUNDBITE) (English) CHIEF ECONOMIST, WORLD FIRST JEREMY COOK SAYING: "One in nine barrels of gasoline are used in the United States and the driving season that we have seen there has been quite weak. And as we move into the Autumn that demand is likely to remain quite weak as well. So there's a lot of working against higher prices at the moment " Two oil companies are bucking the trend though. France's Total posted an increase in quarterly profits - it says it's hit cost saving targets earlier than hoped. Spain's Repsol also reported a rise in profits - on a stronger performance in its upstream operations.