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Shell makes nearly £1.6m profits every hour

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The company is benefiting from rising oil prices, which are currently around $103 a barrel

Terry Macalister: Thursday 3 February 2011 08.23 GMT

A Shell petrol station in London. The company is benefiting from higher oil prices. Photograph: Ben Stansall/AFP/Getty Images

Shell stoked up the heated debate about the high cost of fuel on the forecourt today after reporting it made profits of nearly £1.6m an hour over the last three months.

The oil group never gives details of its British forecourt sales but it confirmed today that global profits from all sides of the business rocketed to $5.7bn (£3.5bn) in the last three months compared of 2010 with $1.2bn a year ago.

Full year profits reached $18.6bn – almost double the figure for 2009 – and chief executive, Peter Voser, boasted “there is more to come from Shell.”

Shares in Royal Dutch Shell fell by 3% in early trading, though, as City analysts had expected profits to be even higher in the last quarter.

The company is benefiting from rising oil prices which have moved up again since Shell’s financial year ended. Brent crude is now trading at over $103 a barrel due to the crisis in Egypt and increased demand.

These rises combined with tax increases imposed by the coalition government have sent the price of pump diesel to record levels and triggered a storm of complaints from the motoring lobby.

Shell makes the vast bulk of its profits on the “upstream” side of the business — producing oil and gas — rather than the “downstream” refining and petrol sales. The company usually claims to be making very little out of pump sales pointing out that around 70% of the price is made up of government duties.

The next rise in fuel duty is planned to come into effect on 1 April but the prime minister, David Cameron, is under increasing pressure to shelve the rise. The government has promised to reconsider and has indicated it is likely to back down in the face of an organised lobby from the a grass roots “fair fuel” campaign back by the AA and Road Haulage Association.

The Shell figures were boosted by a higher-than-expected 5% increase in oil and natural gas production over the last year. This included a strong contribution from Nigeria, where attacks on the oil company’s facilities have been reduced.

The company is planning to inject up to $27bn in new projects over the next 12 months, which Voser said would bring more rewards for shareholders.

“We are making good progress against our targets and there is more to come from Shell,” he said. The strong results are in line with big profit increases by the US firms, ExxonMobil and Chevron.

BP reported a massive downturn in annual profits on Tuesday but the figures were distorted by the payouts resulting from the Gulf of Mexico.

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