How do oil companies make a profit

Austerity course at oil companies

Shell is the first major oil company to increase profits again. The British rival BP, on the other hand, fared weaker.

London. In the oil industry, more and more large corporations are presenting the success of their austerity measures. Shell and BP confirmed this trend on Tuesday: They recently earned more than experts expected. However, the fall in oil prices is still affecting many companies. As the first major provider in a long time, the British-Dutch Shell even managed to make more profit again in the third quarter of 2016 than a year ago. The profit increased by 18 percent to 2.8 billion dollars, while experts had only forecast 1.7 billion. Nevertheless, the dividend should be maintained.

British rival BP, on the other hand, fared weaker. The result collapsed by about half to $ 933 million. However, experts had forecast an even greater decline. On the London Stock Exchange, BP shares lost almost two percent of their value. Shell papers, on the other hand, were in demand and rose by more than three percent.

The US companies Exxon and Chevron, as well as the French Total, recently earned more than expected thanks to savings. Compared to the same quarter of the previous year, net profits fell here by between a quarter and over a third. It is still too early to give the all-clear, said Shell boss Ben van Beurden: "The lower prices remain a great challenge for the entire industry, and the outlook is uncertain." Shell and BP want to cut back their investments.

Corporations cut investments

A barrel (159 liters) of Brent North Sea oil currently costs $ 49, less than half of what was paid in mid-2014. In the wake of the drop in prices, many corporations have massively cut their investments. Shell plans to spend only $ 25 billion next year, which is at the lower end of the range mentioned so far.

BP plans to reduce the previous amount by another billion dollars this year.

In order to stabilize the price, the Organization of the Petroleum Exporting Countries (OPEC) agreed in principle to limit production at the end of September. However, concrete proposals have not yet been made. In addition, the most important producing countries outside of the often divided cartel have not yet made any commitments to the OPEC countries. (Reuters)

("Die Presse", print edition, November 2nd, 2016)