Annual profits at Royal Dutch Shell have fallen to $27bn (£17bn), from $28.6bn in 2011.
Profits for the last three months of the year rose to $7.3bn, against $6.5bn, but Shell was hit by generally weaker oil and gas prices during 2012.
Peter Voser, chief executive of Europe’s biggest oil company, said 2012 was a year of “headwinds”.
But he added that Shell was “delivering a strategy that others can’t easily repeat”.
The Anglo-Dutch company pledged to push ahead with plans to deliver more oil and gas despite an uncertain outlook for some parts of the world economy.
Shell raised output during the year, with the company selling more gas than oil for the first time. The company is investing more in liquefied natural gas projects in Asia, and increased production at its huge Pearl gas-to-liquids plant in Qatar.