Shell ‘to outspend BP on two fronts’

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Speaking at the oil giant's annual strategy update, outgoing chief executive Jeroen van der Veer said Shell will commit to growing the divi this year and will out-invest BP by a margin of three to two.

"Dividends are an important statement of confidence in the future, and Shell is the only company in the sector to have already announced dividend growth plans for 2009," he added.

Van der Veer said first-quarter dividends will rise 5% year on year and payouts will top $10 billion (£7.1 billion) for the year.The statement is a thinly veiled barb aimed at BP, whose chief executive Tony Hayward has committed only to retaining the dividend rather than growing it.

Van der Veer said Shell's spending in 2009 will be between $31 billion and $32 billion, about $10 billion more than BP.

He warned that Shell is preparing for another year of depressed oil prices.

"These are testing times in the oil and gas industry," he said. "We don't have a crystal ball on oil prices so we are planning on the basis that the downturn could last more than a year"

Richard Griffith, analyst at Evolution said: "The key message is that in spite of market volatility, it can continue to grow its dividend even in a downturn. Yielding 7.3% and having just confirmed dividends are sustainable, Shell has kicked the dividend-cut debate into the long grass."

The company today confirmed it remains at the centre of a probe by the Securities and Exchange Commission and Department of Justice in the US into whether it and other oil firms are guilty of breaking the US Foreign Corrupt Practices Act concerning the bribing of Customs officials in Nigeria. Shell previously had a run-in with the SEC about overstatement of reserves.

It is targeting investment in new oil and gas fields capable of producing a million barrels of oil a day to boost production by between 2% and 3% in the next decade.

"The challenge in upstream is to produce new barrels to offset natural field decline and to create new growth," said van der Veer.