The company, hit by a reserves scandal last year and by a cost overrun at its Sakhalin oil and liquefied gas project this summer, said its current cost of supply net profit, which strips out movements in fuel inventories, had risen by more than two-thirds to $7.369bn (£4.15bn). Stripping out $1.57bn from one-off items, mainly the sale of its gas distribution business Gasunie, CCS net profits totalled $5.8bn - well ahead of the City consensus.

The oil profits bonanza - BP announced profits of £3.6bn this week - has brought warnings of windfall taxes. Graham Tran, regional officer for offshore workers at the trade union Amicus, warned: "The chancellor's pre-budget [report] is due in the next month and he may take the opportunity to re-evaluate the tax regime offshore."

Royal Dutch Shell chief executive Jeroen van der Veer said the company had managed to lock in the benefits of higher oil prices, despite the impact of Hurricanes Katrina and Rita. "Our operational performance is paying off with good results ... The focused exploration strategy is working. Downstream performance, profitability and cash generation remain very satisfactory." Production from the Gulf of Mexico, which had been running at 450,000 barrels of oil equivalent a day before Katrina struck, is now back to 200,000. That figure should increase by 150,000 during the fourth quarter, 80,000 higher than forecast. The recovery in gulf production helped quell concerns that the company could miss overall production forecasts. "Despite the hurricanes, the production outlook for 2005 is around 3.5m barrels of oil equivalent per day," chief financial officer Peter Voser said.

The company has almost completed dismantling the Royal Dutch/Shell Transport and Trading structure, a process driven in part by investor anger over last year's revelations that it had overbooked its reserves. Yesterday Mr van der Veer said the unified structure was helping to deliver greater accountability and faster decision-making.

The company's plan to raise cash from disposals is running ahead of schedule and by the end of this year it expects to have returned some $5bn to shareholders through its share buyback programme. Its balance sheet strength has led to speculation that Royal Dutch Shell could be planning a big acquisition but yesterday Mr Van der Veer sought to play down expectations. Some small acquisitions might be attractive but "larger acquisitions ... at current multiples are hard to justify".