Shell sees no end to its pain after a dive of 70%

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Second-quarter profits crashed from $7.9 billion (£4.8 billion) last year to just $2.34 billion this year as the recession dragged down oil prices.

The result was far worse than the 53% fall in profits to $3.14 billion reported by BP two days ago.

Shell chief executive Peter Voser said: "Our second-quarter results were affected by the weak global economy.

"Energy demand is weak. There is excess capacity in the market and industry costs remain high.

"Conditions are likely to remain challenging for some time and we are not banking on a quick recovery."

Profits for the first half were down 64% to $5.64 billion.

However, the Anglo-Dutch firm proposed a quarterly dividend of 42 cents a share putting it on target for a bumper payout of $10.5 billion to investors this year. The oil price peaked at $147 a barrel last summer but sank to below $35 a barrel early this year. It was up 23 cents to $66.76 in London today.

"The industry outlook remains a challenging one, despite the rally in oil prices in recent months," said Voser.

Shell said it will continue to cut costs having saved $700 million in the first half of 2009. It has cut 20% of senior management jobs and warned "substantial further staff reductions are likely".