Shell's £295-a-second profit

OIL giant Shell today unveiled full-year profits of £9.3bn, the largest ever made by a UK company. The bumper result reflects continued high oil prices as economies in China and Eastern Europe expand and drive demand for fuel.

But despite reporting its best-ever profits the group admitted that it is still some way adrift in its exploration and reserves plans.

The company has today cut 1.4bn barrels from its bank of proven oil and gas finds across the world, sparking further concern about its future growth prospects. In response, Shell shares had slipped 9¼p to 470¾p by midday.

Shell's fourth-quarter performance easily outstripped expectations, with earnings of $5.2bn (£3bn). When today's profits are spread over the year as a whole, Shell is now making £295 profit a second.

The good results, however, will not sweep away concern about the company's reserves problems. Chief executive Jeroen van der Veer admitted today that 2004 had been 'a year of extremes', a reference to Shell's regulatory problems after it admitted it had overbooked oil reserves ? effectively telling stock markets that it had better prospects than it really did.

Shell has been struggling to rebuild investors' confidence since the scandal emerged last year. The subsequent furore claimed several top management scalps and raised serious concerns about the company's ability to replace the oil it pumps with new finds.

The company admitted in October that it had audited 8bn barrels, more than half its total proven reserves, and that it might have to downgrade up to 900m. It cut 20% of its proven reserves, 4.47bn barrels, a year ago. That saw the departure of three senior executives, including chairman Sir Philip Watts.

Shell was later fined for stock market abuse by the Financial Services Authority in the UK and the US Securities and Exchange Commission, after admitting it lied to the City. Van der Veer has been forced by furious investors to scrap the company's century-old dual Anglo-Dutch twin-board structure to speed up decision-making in the boardroom.

The booming oil price means it is hard for producers not to rake in profits. On Monday, US rival Exxon Mobil unveiled profits of £13.4bn and ChevronTexaco recently said its fourth quarter profits had almost doubled to $3.44bn, against the same period in 2003. BP reports its figures next week ? and they're expected to show a similar jump.