Shell braces for ‘lower forever’ oil as profits soar

Royal Dutch Shell is gearing up for a world of “lower forever” oil prices, its chief executive Ben van Beurden said yesterday, after the company’s profits tripled in the second quarter.The oil and gas industry has struggled with three years of weak prices while also facing the prospect of oil demand plateauing by the end of the next decade.But Europe’s largest energy company was able to boost its profits more than expected, increase cash flow to $12.2bn and reduce debt thanks to asset sales and as big savings introduced since the oil price collapse kicked in.Net income attributable to shareholders in the second quarter, based on a current cost of supplies and excluding exceptional items, rose 245 % to $3.6bn, topping a company-provided analyst consensus of $3.15bn.The rise in profits was driven mostly by refining and chemicals.First-half cash flow rose seven fold to $20.8bn from a year earlier.Shell expects a 240,000 barrel-per-day year-on-year fall in third-quarter production due to divestments in Malaysia and Australia and the separation of its Motiva asset in the United States.Shell said its debt stood at $78bn.Its debt to equity ratio fell for a second consecutive quarter to 25.3 % from a peak of 29.2 % in the third quarter of 2016 that followed its $54bn acquisition of BG Group.