From Europe and the United States to Asia and the Middle East, major oil firms are making record profits because of the soaring crude prices that infuriate motorists.
British giant BP, Anglo-Dutch group Royal Dutch/Shell, Norwegian industrial conglomerate Norsk Hydro, US majors Exxon-Mobil and Texaco and the Australian Broken Hill Proprietary Co. Ltd. (BHP) have all reported huge rises in earnings in past weeks.
The Indonesian government even said it planned to use windfall profits of 11 trillion rupiah (1.3 billion dollars) from high prices to cover parts of its deficit.
In the nine months to September, Royal Dutch/Shell's net profit almost doubled from the same period in 1999 to 9.532 billion dollars (11.07 billion euros).
"These are exceptional results driven by an exceptional oil price," Shell chairman Mark Moody-Stuart said. "But these high prices have meant exceptionally difficult retail markets both for our customers and for ourselves," he admitted.
High retail prices have unleashed furious protests across Europe, not least in Britain, where hauliers, union leaders and some politicians have complained that the "obscene" profits proved that big oil was cashing in at the consumer's expense.
But the companies, which have also seen the price of their stock soar, have insisted that they make little mark-up from petrol stations, the so-called 'downstream' part of the business, and analysts largely agree.
"They are not making profits from petrol stations, they are making it from the upstream side on exploration and production because crude prices are so high," said a London-based oil analyst who preferred to remain anonymous.
Profits have nonetheless hit record levels, as the crude price soared to 10-year highs and persisted above $30 a barrel for much of the third quarter.
Norsk Hydro said the high oil prices helped boost profits by 250 percent to 9.1 billion kroner (1.1 billion euros, $978.5 million).
Spanish oil company Repsol-YPF said profits soared more than 200 percent to 1.772 billion euros. Australian giant BHP improved profits by 34 percent to 715 million Australian dollars ($378 million ) in the three months to September.
The Russian oil company Yukos made 37.2 billion rubles ($1.3 billion dollars, 1.5 billion euros) in the first six months of the year -- more than in the whole of 1999.
Kuwait Petroleum Corp. and its subsidiaries posted profits of 2.29 billion dollars in the last fiscal year to June 30.
Much of the income is being carefully ploughed into exploration, analysts said, though some companies are buying back their own shares to shore up their financial position.
"They are putting some back into production but are also buying back shares," said the London-based analyst, who works for a major investment bank.
"The attractive areas at the moment are the deep water areas, where the technology can exploit bigger fields," said another London expert on oil companies. "So the focus is on west Africa off-shore, the Gulf of Mexico, and in the Middle East which is opening up a bit."
Though the downstream business is less profitable than upstream, oil companies are keen to make each sector of the business cover its costs.
"Their problem is that they are making losses in selling gasoline in some markets," said the analyst. "They want to stop making losses but there is a political problem there."
The head of Britain's Petrol Retailers Association, Ray Holloway, said the government should slap "windfall" taxes on the companies, and added that big oil could be "more generous in the way they treat petrol retailers who buy their product."
"But none of them want to be the good guys, they are just interested in being the rich guys," Holloway said.
Haulier Mark Francis, 33, who runs a business in Rhyl, north Wales, said there was nothing essentially wrong with companies making profits because it showed they were doing their job.
"But the governments of the world should tax very high net profit makers, then they would not have to tax the consumer so heavily," he added.—AFP.
©--Agence France Presse.
© 2000 Mena Report (www.menareport.com)