Royal Dutch Shell group, the second largest oil company globally by market value, has once again reported record annual profits as the current market situation ensures that procuring, refining and selling oil products remains a lucrative business.

According to the BBC, Shell has reported annual profits of GBP12.94 billion for 2006, which represents yet another record year. The company’s strong showing was underpinned by a healthy performance in the US and the fruition of an ambitious exploration policy, which in 2006 yielded new gas from reserves off Nigeria.

Full-year output was down 1.3% at 3.47 million barrels of oil equivalent a day, largely due to problems in Nigeria, which has shut in fields. However, Shell said output during the final quarter reached 3.645 million boepd, compared with 3.5 million a year ago.

Despite the reassurance of the record results, Shell has warned that refining margins will be tighter in 2007. Meanwhile, having lost control of its Sakhalin gas project, Shell faces reduced income from the Russian venture.