MercoPress. South Atlantic News Agency

Record-breaking profits for Shell

One of the world's oil giants Royal Dutch Shell reported the highest profit in UK corporate history. The rapid rise in oil prices boosted Shell's surplus to 22.9 billion US dollars, almost 30% on last year when it set a UK record with profits of 17.59 billion US dollars.

The results follow a year in which the cost of crude jumped from below 45 US dollars a barrel to hit a new record above 70 US dollars.

The bulk of Shell's profits come from its "upstream" business - getting oil and gas out of the ground. This division has been boosted by the spiraling cost of crude oil, which rose sharply last summer on tensions in oil-producing countries and a particularly bad hurricane season in the Gulf of Mexico.

But the storms also disrupted Shell's production, shutting refineries temporarily and forcing it to spend significant sums on repairs. Analysts believe output in 2005 was about 3.5 million barrels of oil a day, the bottom end of the target laid out by Shell.

As well as the annual figure, Shell also unveiled a fourth quarter net profit of 5.395 billion US dollars.

"Our good performance in the fourth quarter 2005 gives us a solid platform to build on in 2006," said chief executive Jeroen van der Veer. "We delivered record cash and earnings. Success in exploration and gaining access to new resources continues".

He said production expectations for the year had been met, despite the impact of the hurricanes. The firm said that efforts to get its damaged Mars platform in the Gulf of Mexico back into operation should be concluded in the middle of 2006.

Mr van der Veer added that the company would buy back shares totalling 5 billion during the coming year. "We focus on delivery now and building the future".

Shell said its reserve-replacement ratio, the capacity to replace pumped oil with new oil, was 70 to 80%. Firms aim for a rate of more than 100% to keep their asset base solid. In 2004 Shell's reserve-replacement ratio was less than 50%, leading to criticism from investors.

In December, Shell cut its plans for North Sea exploration and is now focusing on other parts of the world; in the fourth quarter it said 20 successful exploration wells were drilled in Australia, Brazil, Brunei, Egypt, Germany, Malaysia, Netherlands, Nigeria, Oman, UK and USA. And in November it started pumping oil from a huge new field off the Nigerian coast

Mr Van der Veer also anticipated Shell would invest strongly in new energy technologies.