Oil giant Royal Dutch Shell has reported a 14 per cent rise in annual profits to $31.4 billion (€23.9bn), helped by record oil prices over the summer.
However, as the global downturn quickens, profits for the final three months of 2008 dropped 28 per cent compared with a year previously, from $6.7 billion to $4.8 billion, after oil prices dropped.
Royal Dutch Shell, Europe's largest oil company, plans to cut investment plans this year after oil prices fell from $147 a barrel from a record in July before falling below $50 by the year end.
Shell expects net capital investment in a range between $31 billion and $32 billion this year, The Hague-based company said today.
It invested $32 billion last year, "lower than previously planned, as divestment proceeds for the year exceeded prior expectations."
The company said in October it planned to spend as much as $36 billion on projects and acquisitions last year.
Shell is balancing "commitments to projects under construction and growth, with the more challenging economic landscape in 2009," it said today. Capital investment in the fourth quarter totalled $9.2 billion.
Oil companies are reining in capital spending and putting marginal projects on hold following the 54 per cent drop in crude last year, the first annual decline since 2001 and the biggest drop since futures trading started in 1983. A surge in the cost of rigs and other oil services has also delayed new drilling.
A decade ago oil, companies cut investments after the crude price fell as low as $10.72 a barrel on December 10th, 1998.
Bloomberg/Reuters