Royal Dutch/Shell yesterday paid $151 million in fines to draw a line under its disputes with the US Securities and Exchange Commission and the UK's Financial Services Authority.

But the world's third-largest energy group revealed the extent of the operational challenges it still faces by admitting that its production was declining and that it was unable to find sufficient new sources of oil and natural gas to replace old fields.

In January, Shell revealed that it had wrongly booked 20 per cent of its reserves with the SEC. It still faces a criminal probe by the US Department of Justice, an investigation by Dutch regulators and several class-action lawsuits.

The company will pay the FSA £17 million - a record fine for the 4-year-old body - and the SEC $120 million. Shell agreed to spend another $5 million on developing an internal compliance programme.

The Anglo-Dutch group had been accused of having breached fraud, internal control and reporting provisions.