AMSTERDAM: Royal Dutch Shell Plc, which vies with BP Plc as Europe’s biggest oil company, posted a profit in the fourth quarter after a slump in oil prices led to a loss in the year-earlier period.
 
Net income of $1.96 billion compared with a loss of $2.81 billion a year ago, The Hague-based Shell said in a statement today. Excluding one time items and gains or losses from inventories, earnings met analyst estimates.
 
Chief Executive Officer Peter Voser is cutting thousands of jobs and streamlining Shell’s operations in an attempt to catch up with BP in terms of output. Oil prices had their biggest annual gain since 1999 last year after plunging 54% in 2008, keeping refining margins under pressure as the recession weighed on fuel demand.
 
“Refining margins have hit multiyear lows during this quarter,” Alexandre Weinberg, a Brussels-based analyst at Petercam SA, said before the earnings were released. “Until now, new management has been bolder in taking critical decisions than the previous team and we therefore believe that tackling the refining issue is high on their agenda.”
 
BP posted net income of $4.3 billion in the latest quarter. Exxon Mobil Corp., the largest US company, posted a fifth straight drop in quarterly profit earlier this week to $6.05 billion.
 
Shell’s earnings excluding one-time items and gains or losses from inventories were $2.8 billion. That compared with the $2.88 billion median estimate of 14 analysts surveyed by Bloomberg.
 
Share performance

Shell’s class A shares are up 2.5% in the past year, compared with an 15% advance for London based BP.
 
Swiss-born Voser, who inherited the industry’s biggest spending program last year after taking over from Jeroen van der Veer as CEO, is seeking to revive production growth and reduce Shell’s exposure to refining. About 15% of Shell’s refining capacity has been placed under review.
 
Global refining margins, or profits from turning crude into fuels, slid 71% in the fourth quarter from a year earlier, according to BP data.
 
Voser’s priority is to revive production growth with new projects in Qatar and Malaysia after output fell below 3 million barrels of oil equivalent a day.
 
The CEO has already admitted that he’s no longer pinning his hopes on Nigeria, where Shell’s operations were plagued by militant attacks in recent years. Shell halted some flow stations in Nigeria earlier this week after sabotage caused a pipeline leak.
 
Gas production

He expects natural gas to make up more than half of Shell’s production by 2012. Gas must get “much more on the agenda as its potential role is underestimated,” Voser said in Davos last week.
 
Shell in December produced its first million barrels of oil from the Parque das Conchas project off the coast in Brazil. It also exceeded targets for the shipments of liquefied natural gas and crude oil from its Sakhalin-2 venture in Russia’s Far East.
 
Shell on February 1 announced an ethanol venture with Cosan SA Industria & Comercio in Brazil. Shell will contribute assets including 2,740 service stations and as much as $1.93 billion to the 50-50 venture.