LONDON, Feb 5: Anglo-Dutch oil major Royal Dutch/Shell reported a 33 per cent fall in fourth quarter profits on Thursday hit by restructuring costs and weak chemicals revenues, taking the gloss off a sharp rise in annual earnings.

The group also issued an apology of sorts for a bungled announcement last month that it was slashing its estimated proved oil and gas reserves by 20 per cent, a move which sent its share price tumbling.

Profit on an estimated current cost of supplies basis and excluding special items fell to $1.86 billion in the three months to December, down one-third from the same period of 2002 and well below analyst expectations.

The group's bottom line was hit by losses at its chemicals division, restructuring costs and the write-off of exploration properties, rights and concessions in Ireland and Brazil, the group said in a statement.

But for 2003 as a whole, profit by the same measure surged by 27 per cent to $11.70 billion, boosted by high oil prices.

The price of a barrel of Brent North Sea crude oil averaged $28.85 in 2003 compared with $25.05 in 2002, Shell said.

"The crude price outlook for 2004 remains uncertain," it added.

"Supply and demand will be influenced by the developments in the key oil producing countries, the pace of Iraqi crude export recovery and by the state of the global economy (the US and Chinese economies in particular)."

In a separate announcement, Shell also tried to soothe investor anger over a shock announcement on January 9 that it had re-categorised 3.9 billion barrels of oil and gas from its proved reserves to unproved.

"Although it does not fundamentally affect the volumes in place, we acknowledge and understand the concerns and disquiet the announcement of January 9 caused in the market," the statement said.

The reserve announcement sparked an investor backlash, with some fund managers reportedly calling for the scalp of Shell chairman Philip Watts.

But Watts said he was staying put.

"No, I won't resign because I'm determined to fix the situation on the reserves and pursue the strategic changes we've started," Watts told reporters on a conference call on Thursday.

The re-categorization and changes related to technical definitions resulted in an increased after tax depreciation charge in the fourth quarter of $86 million, Shell said.

But the move has had a "minimal impact" on the group's five-year unit development costs, it added.-AFP