On the back of soaring oil prices oil giant Royal Dutch Shell has reported a bumper annual profit of $25.36 billion (Rs112,091.2 crore) for 2006.

Shell's results were lifted by strong fourth-quarter current cost of supply profits, which rose 11 per cent to $6 billion. Shell said output during the final quarter reached 3.645 million barrels of oil equivalent a day, compared with 3.5 million a year ago.

The company said strong US operations and growth in deep water gas production off Nigeria helped generate earnings of almost close to $3 million an hour.

According to Jeroen van der Veer, chief executive, Shell, "We saw good operational and financial performance in Shell - our exploration strategy is paying off. Hydrocarbon production was underpinned by the production re-start from the Mars platform in the USA, growth in LNG and deep water Nigeria."

However with the decline in oil prices the company faces a tougher 2007.

Moreover, the company faces what it called "major security related concerns" in Nigeria's Delta oil producing region, where attacks on pipelines have disrupted production. Oil production in the troubled region was down 191,000 barrels on the previous year.

Shell also had to yield half its 54-per cent stake to state-owned Russian energy giant Gazprom under pressure from the government in December 2006 in the promising Sakhalin-2 oil and gas project.

The is also working to acquire a minority shareholding in Shell Canada.