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| Shell plans production expansion as profits rise | |
| (about 3 hours later) | |
| Royal Dutch Shell has said it will launch a major investment drive in an effort to boost falling production. | |
| The oil giant said it would spend $30bn (£19.4bn) on new oil and gas projects this year, compared with $24bn in 2011. | |
| The announcement came as Shell reported a rise in profits even as production fell, thanks to higher oil prices. | |
| For the final three months of 2011 net income was $6.5bn, up from $5.7bn a year earlier. | |
| For the full year, net income was up more than 50% to $28.6bn. | |
| Despite improved profits, the company said it had been hit by falling refining margins across the industry. | Despite improved profits, the company said it had been hit by falling refining margins across the industry. |
| Oil prices during the quarter were more than 20% higher than a year earlier. | Oil prices during the quarter were more than 20% higher than a year earlier. |
| However that was partially offset by a loss of $278m on its downstream operations, which includes its refining and petrol stations businesses. | However that was partially offset by a loss of $278m on its downstream operations, which includes its refining and petrol stations businesses. |
| "Our fourth quarter results were impacted by a sharp downturn in industry refining margins and North American natural gas prices," said Shell chief executive Peter Voser. | "Our fourth quarter results were impacted by a sharp downturn in industry refining margins and North American natural gas prices," said Shell chief executive Peter Voser. |
| "The global economy and energy markets are likely to see continued high volatility. Despite the near-term uncertainties, Shell's focus remains on through-cycle investment for sustainable growth." | "The global economy and energy markets are likely to see continued high volatility. Despite the near-term uncertainties, Shell's focus remains on through-cycle investment for sustainable growth." |
| Production increase | |
| Shell's latest strategic plan is targeting $30bn of new investment this year. | |
| The company is trying to increase oil and gas production which, aside from a 5% rise in 2010, has fallen every year since 2002. | The company is trying to increase oil and gas production which, aside from a 5% rise in 2010, has fallen every year since 2002. |
| It said 80% of the new investment would be focused on upstream operations, designed to increase oil and gas production, especially from unconventional sources such as oil and gas shale. | It said 80% of the new investment would be focused on upstream operations, designed to increase oil and gas production, especially from unconventional sources such as oil and gas shale. |
| Shell will also increasing spending on exploration for new oil reserves - in places such as the Arctic - by 35% to $5bn. | |
| Production from Shell's oil and gas fields in 2011 fell 3% compared with the previous year. | Production from Shell's oil and gas fields in 2011 fell 3% compared with the previous year. |
| However the company warned that that the economy remained "highly volatile" with "political uncertainties, combined with challenges in debt markets adding to price and cost volatility". | However the company warned that that the economy remained "highly volatile" with "political uncertainties, combined with challenges in debt markets adding to price and cost volatility". |