Shell puts rival in the shade

Higher oil prices and a boost to production levels meant the Anglo-Dutch firm increased earnings in the final three months of the year by almost 400 per cent to 5.7bn US dollars (3.5bn).

The figures come two days after BP revealed its first annual loss in nearly two decades of 4.9bn US dollars (3bn) after counting the cost of the Deepwater Horizon explosion.

Despite the jump in headline profits, Shell's trading performance for the fourth quarter was well below forecasts in the City.

Stripping out one-off items, fourth quarter earnings of 4.1bn US dollars (2.5bn) contrasted with the market's anticipated result of around 4.7bn US dollars (2.9bn).

Analysts said the company's downstream division, which covers the refining of crude oil and the sale of products, produced a weaker-than-expected recovery from the poor performance the previous year. Shell said refining margins remained weak and its marketing business suffered as a result of pressure caused by rising oil prices.

The company has responded to the difficult conditions through a restructuring and by refocusing its efforts on emerging growth markets. In contrast to BP, which stopped paying dividends in the wake of the Gulf of Mexico disaster, Shell said it declared dividends of 10.2bn US dollars (6.3bn) in 2010.

Chief executive Peter Voser said: "We are making good progress against our targets, and there is more to come from Shell."