Royal Dutch Shell's third quarter profits are down 72 percent on last year's, at 3 billion dollars.

The Dutch-based oil company says the sharp drop is caused by the weakness of the global economy. The demand for oil is low, which leads to a fall in oil prices.

Shell says it sees indications of an increase in demand, but the prospects remain insecure, and a quick recovery is not to be expected.

The company is reorganising as part of a cost-cutting drive. Worldwide, 5000 jobs will be cut, which is about ten percent of Shell's entire workforce. This will also affect Shell personnel in the Netherlands.

"Our third quarter results were affected by the weak global economy," said  Shell Chief Executive Peter Voser in a results statement, adding that 5,000  jobs will be axed by the end of 2009 in a cost-cutting programme announced earlier this year.

"We see some indications that energy demand and pricing are improving but  the outlook remains very uncertain and we are not expecting a quick recovery," he said.

"Our strategy remains on track, although the near-term industry outlook remains challenging."

The company said that oil and gas production was flat at 2.93 million barrels of oil equivalent per day. Revenues tumbled 43 percent to 75.01 billion dollars.

Sharp fall
The oil sector reaped massive profits early last year as oil prices  rocketed to record heights before falling sharply by the end of 2008 as the global economic slump ravaged demand.

In recent weeks, they have soared to one-year highs around 82 dollars on hopes the economy will recovery steadily but the market remains volatile.

Earlier this week, Shell's rival BP reported that its third-quarter net  profit sank 34 percent to 5.34 billion dollars, also hit by lower oil prices amid the downturn.

Shell has sought to implement a major cost-cutting programme as it fights back against the downturn.

"We continue to focus on improving our competitive cost position," Mr Voser said.

"The Transition 2009 programme ... is progressing well and will be completed by the end of 2009. Some 5,000 employees are leaving Shell as a result of these changes. This represents a ten percent reduction in employees in the redesigned divisions."

He added: "We have reduced operating costs by some 1.0 billion dollars in the first nine months of 2009 compared with the same period in 2008."

(Sources: RNW and AFP)