Profits in a second supermajor oil and gas company have fallen off sharply, as North Sea based Royal Dutch Shell revealed a 58 percent drop in first-quarter “cost of current supplies” earnings, down to $3.3 billion.

The unaudited result revealed what chief exec Jeroen van der Veer and many others refer to as the “challenging upstream and downstream business environment”.

Company cash flwo from operations $7.6 billion, or less than half of that seen a year ago. Net capital investment was $6.9 billion — down $1 billion year-on-year — and looks on course to undershoot a $32 billion spend for 2009 by $4 billion.

Group oil production was up 120,00 barrels a day year on year, while sales of liquefied natural gas were hit by 13 percent less production, the price of unrest in Nigeria. Though steady, the lost production from Nigeria eclipsed first flows of gas from the Russian Far East’s Sakhalin project.

Also taking a toll was the 67-percent fall to $1.7 billion in gains made by Shell’s exploration and production unit, hit by oil sands (earnings down $200 million to $42 million) and the general combination of slumping commodity prices and higher costs.

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