$39b in profits driven by high cost of oil
The Daily Telegraph, Today Online 2 Feb 08;
LONDON — Royal Dutch Shell has been forced onto the defensive after its announcement of record profits of US$27.6 billion ($39 billion) sparked calls for a windfall tax and complaints about soaring pump prices.
The world's second largest non-government oil company received a barrage of complaints that its earnings were "obscene".
The annual profits, which were up 9 per cent, are a record for a European listed company and were driven by last year's soaring oil price, which averaged US$90 ($128) a barrel for the last three months of last year.
The company's chief executive, Mr Jeroen van der Veer, said the figures were "satisfactory", but the Unite union and the Automobile Association (AA) said the government should skim off some of the profits.
Unite joint general secretary Tony Woodley called the profits "obscene", adding: "Greedy oil companies should be asked to contribute for the common good." The AA said some of the windfall profits should be used to improve conditions for motorists.
Mr Van der Veer said UK Treasury taxes account for well over 50 per cent of the price of petrol at the pump, and that the vast bulk of the Anglo-Dutch company's profits were made outside Britain. Most of its earnings come from exploration and production, not from UK petrol sales.
The chief executive said big profits were needed to match big investment plans. "Additional taxation means you can invest less. The money has to come from somewhere and over time it will impact production."
"I think that you should not only look at the profits size, but at the size of the companies and the huge investment tasks we have to do for the future of our companies," he said.
One billion barrels of resources were added last year, down from more than 2 billion in 2006, said Shell.
