Shell profits fall; layoffs coming

LONDON — Royal Dutch Shell said Thursday that its profit fell sharply in the second quarter as a strong performance in marketing and refining failed to offset the brunt of lower oil and gas prices.

The oil giant also said it would cut its capital investment and eliminate 6,500 jobs as the drop in oil and gas prices squeezes its vast global exploration and production operations.

The company, based in The Hague, Netherlands, said earnings adjusted for inventory changes and excluding one-time items were $3.8 billion, compared with $6.1 billion in the same period in 2014.

Ben van Beurden, the company’s chief executive, justified Shell’s plans for exploratory drilling in Arctic waters off Alaska this summer, despite strong opposition from environmental groups, citing the potential to increase company reserves greatly. He told reporters here the oil field “has the potential to be multiple times larger than the largest prospects in the U.S. Gulf of Mexico, so it’s huge.”

Van Beurden said if Shell did find oil and an acceptable way to develop it, production would not begin until 2030 because of the complexities of Arctic operations.

The company earned $1 billion in the quarter from oil and gas exploration and production, compared with $4.7 billion a year earlier. Its average revenue from a barrel of oil was 48 percent lower for the quarter than a year earlier, while those from natural gas, an important earner for Shell, fell by 31 percent.

Shell executives indicated they were preparing for what could be a long period of low oil prices.