Shell's profits boosted by refining unit Royal Dutch Shell, Europe's largest oil company by production, reported adjusted profit of $5.6bn in the fourth quarter, 15 per cent up on a year ago, buoyed by a much stronger performance in its refining division. Profits on a clean current cost of supplies basis, which strips out changes in the value of oil inventories, and excluding identified items, stood at $5.6bn, compared with $4.8bn a year ago. Shell announced a fourth quarter dividend of $0.43 a share, an increase of 2.4 per cent on a year ago. It said the first quarter 2013 dividend is expected to be declared at $0.45 a share, an increase of 4.7 per cent year on year. Peter Voser, Shell's chief executive, said: "With the first year of our 2012-15 growth targets completed, Shell is on track for plans we set out in early 2012, despite headwinds last year." But the company reported a disappointing reserves replacement ratio for 2012 of just 44 per cent, meaning it failed to fully replace the oil and gas it produced last year with new reserves. In a strategy update to investors, Mr Voser confirmed Shell's growth agenda, which aims to deliver $175-$200bn of total cash flow from operations for 2012-2015 and a net capital spending programme of $120-$130bn. Shell said start-ups in its upstream division would add some $15bn of cash flow in 2015, in a $100 a barrel oil price environment. It said oil and gas production would average around 4m barrels of oil equivalent in 2017-18, compared to 3.3m boe/d in 2012. The company said it was earmarking $33bn of net capital investment for 2013, with $4bn of total spending going towards future opportunities such as onshore Nigeria, Kazakhstan, Iraq, the Arctic and heavy oil. It said spending on exploration would increase from $6.4bn to $7bn. There was a dip in earnings at Shell's key exploration and production division, which the company blamed on increased operating expenses, higher depreciation and higher exploration expenses. Production was 3.4m barrels of oil equivalent a day, 3 per cent higher than a year ago, as Shell's massive Pearl gas-to-liquids plant in Qatar and the Pluto liquefied natural gas project in Australia ramped up output. Oil production was flat but gas output increased 7 per cent. Sales of LNG stood at 5.49m tonnes, a 13 per cent increase on a year ago. Shell benefited from a much better performance in its refining and marketing division. Adjusted profit in the downstream business was $1.2bn, compared with a loss of $278m a year ago. Shell said earnings were buoyed by higher refining margins and improved operating performance, as well as increased contributions from marketing and trading. Net capital investment for the quarter was $10.9bn, bringing the total for 2012 to $29.8bn. Cash flow from operations, excluding movements in working capital, was $8.9bn in the fourth quarter.