Royal Dutch/Shell Group’s third quarter profit fell for the first time in more than two years, dropping 17% on lower energy prices and lower demand for chemicals. Net income, excluding one-time charges, fell to $2.69 billion from $3.25 billion for the third quarter of 2000. Shell hasn’t had a quarterly decline in profit since the first quarter of 1999 and the company said the outlook remains weak because of the economic slowdown, especially in the United States.

Wall Street had estimated the major to earn between $2.6 billion and $3.07 billion for the quarter, and results were better than leading major Exxon Mobil Corp., which last month reported a 23% decline in the third quarter (see Daily GPI, Oct.24).

The most profitable division, oil and gas, was down 24% from a year ago to stand at $1.78 billion. However, Shell noted that while profit was down, production actually rose 5%, with a 21% improvement in gas volumes and a 3% decline in oil. Natural gas production growth was pushed up by Shell’s purchase of Fletcher Challenge Energy Ltd. of New Zealand (see Daily GPI, March 7). Oil production was 2.2 million bbl/d in the third quarter, down 3% from a year earlier following declines from fields in the United States, the United Kingdom and Gabon.

Shell’s chemicals division took the biggest hit in the third quarter, falling by 87% to $28 million. Shell Transport, which represents about 40% of the entire group, fell about 3.1%. However, Shell’s return on capital deployed, which measures the efficiency of its energy business, was up 20.8% for the year through Sept. 30, a hike compared with 16.6% for the same period of 2000. Overall, quarterly sales of its fuels were down 16% from a year earlier to stand at $32.7 billion.

“The figures are very encouraging in the light of current trading conditions and the continued uncertainty in the world economy,” said Chairman Phil Watts in a written statement.

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