COLLAPSING chemicals earnings, the petrol price war and a strengthening pound knocked £100 million sterling off Royal Dutch Shell's second quarter profits, the Anglo Dutch oil giant said yesterday.

But the company, which is in the throes of a huge restructuring programme, insisted there was "no cause for serious concern".

Between April and June, Shell's net income fell 8 per cent, to £1.18 billion sterling. Taking the first half of the year as a whole, however, earnings rose by 15 per cent, to £2.9 billion sterling.

In the latest set of bad results from the industry, Shell's chemicals income collapsed by 54 per cent in the second quarter, to £184 million sterling.

The chairman, Mr John Jennings, admitted that chemicals were "struggling" and that profits from the core chemicals businesses had risen only slightly in recent months.

The impact of the industry wide crisis in chemicals earnings would have been worse had it not been for the unexpected rise in oil prices.

Shell's targets are based on a price of $15 (£10) for a barrel of Brent Crude, but the severe winter in the Northern hemisphere and low US stocks of oil briefly pushed prices through the $20 barrier.

In the second quarter of the year, Shell's oil sold for an average of $19.50. As a result, earnings from oil exploration and production jumped by 44 per cent, to $670 billion. The petrol price war in Britain continued to take its toll on refining businesses.

Esso started the price war earlier this year with its campaign to match the lowest price of petrol in a local area. Shell joined competitors in predicting a further industry rationalisation, including more closures of smaller garages. Mr Jennings said the supermarket petrol outlets had "had a spectacular run".