Royal Dutch Shell today unveiled a 5 per cent increase in second-quarter profits to $7.9 billion (£3.9 billion), missing forecasts as the oil giant revealed that it had suffered a steep plunge in earnings from its chemicals division.

Earnings fell from a $494 million gain in the second quarter last year to a $142 million loss this year.

Shell said "clean" second quarter profits, a figure which includes an accounting adjustment reflecting commodity price changes during the period, rose 24 per cent to $8.6 billion.

Shell also said it was suffering from weak performance in its refining and marketing division.

Oil and gas production, including oil sands, also fell to 3.126 million barrels per day from 3.178 million.

The bulk of profits were derived from Shell’s exploration and production division, which posted a $5.9 billion profit up from $3.1 billion last year, boosted by soaring oil prices, which ended the quarter close to a record $147 per barrel.

Jeroen van der Veer, Shell’s chief executive, said the results were “competitive”

“Shell is making substantial, targeted investments to grow the company for shareholders and help ensure that energy markets remain well supplied. Spending is increasing on new acreage and selective acquisitions as we refresh the portfolio with new options for future growth.”

Earlier this week, BP announced record second-quarter profits of $9.46 billion.

The bulk of gains were derived from BP's exploration and production division, which benefited from higher oil and gas prices during the period. Oil averaged more than $120 a barrel during the quarter, nearly twice the level of 2007.

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