Shell capped a record first quarter for the oil majors by announcing a doubling of earnings Friday as war in Iraq, turmoil in Nigeria and strikes in Venezuela provoked a surge in prices.
The three biggest oil groups -- ExxonMobil, Shell and BP -- earned almost US$16 billion in the first three months of this year when political unrest, military action and a cold winter in North America pushed prices to the ceiling.
Shell's net income was up 136% at US$5.3 billion, boosted by the US$1.3 billion sale of its stake in German gas company Ruhrgas, while its adjusted earnings -- its preferred measure -- rose 96% to US$3.9 billion.
Phil Watts, chairman, sounded a cautionary note by conceding that this happened in an "exceptional" quarter. He warned that the high margins were likely to be unsustainable in the months ahead.
Shell's record earnings came a day after Exxon, the world's largest oil group, reported the biggest quarterly corporate profits in history at US$7 billion and three days after BP announced its own record of US$3.7 billion.
Shell took some gloss from its figures by saying return on capital employed, the industry's benchmark, was 18.3%, against 20% at BP and 30% at Exxon.
The Anglo-Dutch group's earnings were propelled by a rise in profits at its exploration and production unit from US$1.45 billion a year ago to US$2.8 billion, on the back of higher prices.
Output of oil and gas rose to its highest levels in 10 years, up 6% to 4.2 million barrels a day, partly due to the contribution of Enterprise Oil, bought a year ago. Shell expects average output this year to be 4.1 million barrels a day.
The group said prices for the second quarter would depend on the level of OPEC oil available, the impact of the cartel's recent decision to cut output, lower seasonal demand and, not least, the return of Iraqi exports to the market.
OPEC is reducing production by 2 million barrels a day from June 1 and is holding out the prospect of further cuts to prevent over-supply and a collapse in prices.
Shell said oil refining margins were considerably higher than a year ago, with demand bolstered by the cold winter, high US natural gas prices and the extended shutdown of Japan's nuclear power plants.
"Margin outlook for the remainder of 2003 is uncertain and much will depend on the pace of global economic recovery and Opec output policy in response to the expected return of Iraqi crude exports to the market," it said.
Watts added: "In uncertain economic times, the diversity of our businesses and our geographic spread are strengths."