Europe's second largest oil company by market value added it would continue to shift the focus of its downstream business to Asia, where rising fuel demand could ensure better profits.
Shell [image-nocss] also affirmed its targets to grow oil and gas production, the main driver for oil companies' earnings, by 2% to 3% over 2009-2012, but analysts said investors' near term focus would remain on the downstream.
"The strong growth story remains overshadowed by Shell's refining exposure," Alexandre Weinberg, oil analyst at Petercam said.
Excess refining capacity, due to lower fuel demand caused by the global recession, and new refinery startups in the Middle East and Asia, have hit crude processing margins and profits at all the oil majors.
The largest western oil company by market value, ExxonMobil, had a 23% drop in fourth-quarter net income while the second-largest U.S. oil company, Chevron, had a 37% drop; however, Shell's especially large refinery portfolio and the poor quality of some of its assets has seen it hit worse than its rivals, Reuters said.
"The stage should be set for Shell to begin a period of stronger relative performance based on delivery of restructuring benefits," Mark Bloomfield, oil analyst at Citigroup, told the news agency; however, Gordon Gray at Collins Stewart said he had reduced his 2010 earnings per share forecast by 6% to reflect "persistent downstream weakness."
Excluding a charge of $1.6 billion related to one-off items, Shell's "clean" net profit was $2.77 billion, short of an average forecast of $2.87 billion from a Reuters poll of10 analysts.
The collapse in refining margins and weaker retail profits caused a $1.76 billion loss in the downstream unit. Sharply lower gas prices meant upstream profits also fell, despite a recovery in oil prices.
Gas accounts for around 47% of Shell's production, compared with around 36% at larger rival BP Plc.
London-based BP managed to report a 33% rise in profits in the quarter compared to the same period in 2008 because of its relatively low reliance on natural gas and a smaller and better quality refining portfolio.
Shell, which on Monday announced a preliminary deal with Brazil's Cosan to form a joint venture worth almost $10 billion, has steadily increased its planned scaleback in refining in the past year.
In July it said it may close or sell 8% of its 3.87 million barrels-per-day refining capacity.
In September, Shell upped the figure to 15%.
Voser said on Thursday he was still reviewing the future of 15% of the portfolio, but since he said this excluded the Montreal refinery thath Shell said last month it planned to convert into a fuel terminal, the latest target is equivalent to an 18% reduction on the original basis.
Shell said oil and gas production fell 2.4% in the quarter compared to the same period last year, to 3.3 million barrels of oil equivalent per day.
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