Shell profit soars up to £410 per second

ROYAL Dutch Shell, the Anglo-Dutch energy giant, today told the City that it had made another record profit - equivalent to £410 per second and the highest profit reported by a UK firm.

Higher oil prices in the early part of its latest trading year helped push profits to 12.94 billion, which was one per cent higher than its previous year.

Also helping was a strong performance at its US operations and growth in deep water gas production off Nigeria. But Shell noted that it was still dealing with what it described as "major security-related concerns" in Nigeria as militant attacks hamper production and warned that overall production growth over the next three years would be at best "modest".

The figures included a better-than-expected performance over the final quarter of the year when it recorded an 11 per cent climb in income to 3.06bn.

But with oil prices having eased by around a third since rocketing to a record of near-$77 last summer, analysts are expecting a much tougher year ahead for the firm. In particular, Europe's second-biggest oil company is under pressure to step up its exploration programme to find replacement supply sources.

Chief Executive Jeroen van der Veer said: "In 2006, we saw good operational and financial performance in Shell."

While fourth quarter income was higher that the year before it was still lower than the 3.53bn reported in the previous three months, as oil prices tailed off amid milder weather and growing stockpiles.

Today's results mean Shell generated profits of almost 1.5 million an hour. With increased focus on production, Shell said fourth quarter output was up 4.1 per cent to 3.645 million barrels of oil equivalent a day, compared with 3.5m a year ago and despite the impact of unusually low seasonal gas demand in northern Europe.

However, output over the full year dipped one per cent to an 3.47m barrels a day. Production from Shell's Nigerian operations was 191,000 barrels down on a year ago, due to militant violence and security concerns.

The company's long-term production worries have also been compounded by the loss of half of its interest in the Sakhalin-2 gas project to Russia's Gazprom.

In 2007, the figure is likely to be between 3.3m-3.5m barrels of oil equivalent a day.

Shell said its future production efforts would see it look to invest in large stakes in major integrated projects, funded by the sale of assets. Net capital spending is expected to rise slightly compared with last year to between 11.2bn-11.7bn.

Mr van der Veer said: "We recognised some time ago that our industry was witnessing important changes. Today, I am pleased with our response. We look for competitive returns and take a long-term, global approach.

• BP today agreed the sale of its last refinery in the UK. The sales of the Coryton site in Essex for 714.6m to Swiss firm Petroplus Holdings comes just over a year after BP offloaded its refinery at Grangemouth.