Shell’s production in Nigeria will fall by around 35,000 barrels per day in the second half of the year due to “sabotage incidents” and scheduled repairs, the company said on Thursday.
The company said in London while reporting a 72 per cent fall in its quarterly profit that its earnings could be impacted if the situation deteriorated.
Besides, Royal Dutch Shell blamed weak oil prices and costs related to its 54 dollars billion takeover of BG Group.
Chief Executive Ben van Beurden was quoted as saying: “Lower oil prices continue to be a significant challenge across the business, particularly in the upstream (sector).”
van Beurden had said in June he wanted Shell to be the best oil company for investor returns.
Shell’s Chief Financial Officer Simon Henry said at current oil prices of 43-43.50 dollars a barrel, the company would not be making enough money unless it raised cash from asset disposals.
“In the next six to 12 months the biggest driver of the gearing level will be the divestments and the oil price,” he said.
Shell is undergoing a 30-billion dollar asset divestment programme and expects to sell 6-8 dollars billion this year.
“It has completed or is near completion on 3 billion dollars so far and in discussions to sell 17 more assets,” Henry said.
Due to the result, Shell’s London-listed “A” shares had their worst day in two months and were down 2.7 per cent, compared with a 0.7 pe rcent fall in the oil and gas companies index.
Despite its poor performance, Shell left its main capital investment and disposal targets as well as its prized dividend unchanged.
The oil major is also on track to meet its drastically reduced annual capital investment programme of 29 billion dollars.
Shell said it would delay a final investment decision for its Lake Charles Liquefied Natural Gas (LNG) project in the United States.
It was previously planned for this year.
This follows Shell’s decision in February to push back an investment decision on its Canadian LNG project.
Shell’s BG takeover has added huge costs in the short term but the second-quarter performance shows its impact on Shell’s portfolio.
Analysts had expected a better performance at the upstream division, which lost 1.3 billion dollars compared with a 469 million dollars deficit last year.
Shell also spent more than expected on corporate expenses, with some $250 million going on redundancy and restructuring charges following the BG deal.
The oil major is laying-off some 12,500 workers over 2015-16.
Shell rivals BP and Statoil also reported worse-than-expected second-quarter results this week mainly because analysts’ expectations on cost reductions had been too optimistic.
