Oil theft: Shell recants, says it lost $250m not $700m

Mutiu Sunmonu, Shell MD08 August 2013, Lagos – Shell Nigeria, Wednesday, denied claims that its parent company, Royal Dutch Shell, lost $700 million (N112 billion) in second quarter 2013, due to crude theft and other sundry issues in Nigeria, saying that the actual amount lost to operational difficulties in Nigeria is $250 million (N40 billion).

The statement by Shell spokesperson, Mr. Precious Okolobo said, “We wish to correct some wrongful interpretation of aspects of Shell Group earnings in second quarter, Q2, earnings as announced on August 1, 2013, by our CEO, Peter Voser.

“It was disclosed that Q2 CCS (current cost of supplies) earnings excluding identified items were reduced by around $700 million. Of the amount, $250 million was due to operational challenges in Nigeria including crude oil theft and blockade of Nigeria LNG.

“The rest of the figure, $450 million was caused by the impact of the weakening Australian dollar on a deferred tax liability.

“At no time did Peter Voser refer to Nigerian production outages costing it $700 million in the second quarter, as some media organisations have wrongly reported.”

Shell in its second quarter financial statement, recently released, had stated that rising costs, oil theft in Nigeria and weak U.S. shale liquids production have hurt its profits, in addition to upward pressure on spending and to uncertainty on output growth.

Peter Voser, outgoing chief executive of Shell, said this led to its abandoning its target to deliver four million barrels a day of production by 2017.

Voser called the company’s second quarter result, published, yesterday, disappointing, adding, however, that a financial target to achieve $175 billion to $200 billion of cash flow from operations for the period 2012 to 2015 was intact.

He said, “Higher costs, exploration charges, adverse currency exchange rate effects and challenges in Nigeria have hit our bottom line. These results were undermined by a number of factors – but they were clearly disappointing for Shell.” Adjusted second quarter net earnings on a current cost of supply (CCS) basis came in at $4.6 billion, down from $5.7 billion a year ago and below analysts’ expectations of around last year’s figures.

– Michael Eboh, Vanguard

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