Daily Express (UK): Shell reflects ups and downs of the oil trade: “At the start of the year, Shell was forced to reduce its proven oil reserves an incredible four times and agreed to pay more than £80million in penalties to settle inquiries by the regulators. Perhaps the most embarrassing episode came when Shell sold its stake in a 50/50 joint venture in an Indian oilfield to its partner Cairn Energy for a mere £4million — the field proved to have enough oil in it to increase Cairn's share price by 300 per cent and propel it into FTSE100.” (ShellNews.net)

THE INVESTMENT STRATEGIST

HILARY COOK, director of investment strategy at Barclays Stockbrokers, shares her knowledge. She welcomes comments at www.stockbrokers.bardays.co.uk

WITH BP generating profits of £16,000 per minute, it is no wonder oil is

referred to as black gold, and it would be easy to believe the energy sector was a cyclical sweet pot.

However, the oil price is only part of the picture and we believe it is driven by potentially short-lived factors. Prices have been squeezed higher as

demand increases from the booming global economy while the supply side of the equation has been disrupted by concerns about an escalation of fighting around the oilfields in Nigeria and by the hurricanes in the Gulf of Mexico.

In our view, the recent price volatility masks many challenges the sector faces. As oil fields mature, production growth has slowed and capital expenditure has risen, while the sector has become dependent on development opportunities in more volatile parts of the world.

After what has been a tough year, beleaguered Shell shareholders finally got some good news this week.

At the start of the year, Shell was forced to reduce its proven oil reserves an incredible four times and agreed to pay more than £80million in penalties to settle inquiries by the regulators.

Perhaps the most embarrassing episode came when Shell sold its stake in a 50/50 joint venture in an Indian oilfield to its partner Cairn Energy for a mere £4million — the field proved to have enough oil in it to increase Cairn's share price by 300 per cent and propel it into FTSE100.

Shell hopes to draw a line under this by uniting its parent companies in the UK and Netherlands. The intention is the new structure will increase transparency and offer a more defined single strategy for the group.