Shell reported a near 6% fall in profit before interest and tax in 2003 to $815 million, partly because of $30 million in one-off costs, largely from implementing the fuel discount offer with Coles. However, the company remains positive about an increased return from the venture in the next year.

“The underlying growth in profitability associated with the successful start up of the Coles Myer Alliance and strengthening refinery margins was masked by a combination of one-off credits in 2002 and accounting write offs in 2003. Refining margins increased due to the growth in Asian fuel demand, which has reduced the extent of surplus fuel production,” said Shell chairman Tim Warren.

“Our alliance with Coles Myer continues to exceed our expectations and we expect to see the full benefits in our 2004 results.

“Capital expenditure in the Oil Products business totalled $178 million in 2003. Most of this was associated with investments in our Clyde (NSW) and Geelong (VIC) refineries to produce cleaner fuels, and was complemented by expenditure to improve their environmental performance.”

Since it started rolling out the discount fuel offer with Coles, volumes at the nearly 600 Shell branded retail outlets have risen by 30%.

Shell's move to upgrade its Clyde refinery in Sydney and its Geelong refinery in Victoria comes amid speculation that ExxonMobil will baulk at upgrading its Altona refinery in Melbourne, forcing its closure. The company’s Port Stanvac refinery in Adelaide was shutdown last year.