AMSTERDAM, Netherlands (AP) -- Royal Dutch Shell said Tuesday its capital spending would rise almost 27 percent in 2006 to around $19 billion (euro15.9 billion), spending most of it on exploration and production of oil and natural gas.
About $15 billion will go toward exploration and production, or upstream activities, while the remainder will be spent on oil refining and the marketing of fuels, or downstream.
The extra spending is partially a reflection of the industry's rising costs.
The extra investment was made possible in part by rising oil prices, up almost 30 percent on average in the third quarter. Shell's third quarter profit leapt 68 percent to $9.03 billion from a year earlier, while sales were up 8 percent to $76.4 billion. The increase came despite disruptions in production as a result of the hurricanes in the Gulf of Mexico.
Although the company's profits are growing, its reputation suffered a blow after it was forced to restate the size of its oil reserves in 2004.
Shell's shares rose 1.1 percent higher at euro26.84 ($32.01) in Amsterdam Tuesday.
Shell said $10 billion-$11 billion of the upstream spending is for new projects around the world, including Russia and Canada, and that the other $4 billion-$5 billion would go toward existing projects.
Rabo Securities analyst Richard Brakenhoff called the increase ''spectacular,'' though he noted some of it is due to rising costs at the Sakhalin project.
A recent study by Lehman Brothers estimated that worldwide investment in oil in 2006 will increase by around 15 percent.