OIL giant Royal Dutch/Shell has announced plans to invest £8 billion a year over the next two years to boost its reserves and production, as it tries to move on from the reserves scandal that rocked the company earlier this year

The world’s third-largest oil firm also said it planned to dispose of £5.6bn to £6.7bn of non-core businesses over the three years and would look at “focused acquisitions” to create value.

“We are focused on improving our competitive position, strong cash generation and total shareholder returns,” chairman Jeroen van der Veer said in the group’s strategy statement.

“Replacing our reserves is a priority to support future growth,” van der Veer added.

Shell shocked investors in January by slashing its proven oil and gas reserves by 20 per cent. Subsequent smaller reserves cuts further dented investor confidence.

The scandal caused the ousting of chairman Philip Watts, oil and gas chief Walter van de Vijver and chief financial officer Judy Boynton. It has led to £84 million in regulatory fines and also cost Shell its “AAA” top-grade credit rating.

In a bid to win back the trust of investors the firm’s new management said at a presentation in London that it will focus on replacing reserves and developing production in its oil and gas business. The company gave no update on a review of the future corporate structure of the group, which could see its Dutch and British holding companies merged.

The group is currently made up of Royal Dutch, which controls 60 per cent, and Shell Transport and Trading, the UK side controlling the remaining 40 per cent. These two companies have separate stock exchange listings in Amsterdam and London.

Shell said it expected its proved reserve replacement ratio to average at least 100 percent in the period up to 2008. Of the planned annual £8bn of investment, some £6.4bn will be spent on exploration and production, Shell said.

The group also said in its statement that it would look to extend its leadership in the liquefied natural gas sector. Shell said that it had received an approach concerning its global liquid petroleum gas distribution and marketing business. Meanwhile, Shell also said today that talks with the Libyan government on striking energy deals in that country were going well.

“Discussions in Libya are going well. We saw the Libyan prime minister and the head of the national oil company last week,” Shell managing director Malcolm Brinded said. Western companies have flocked to do deals in Libya after the British and United States governments re-established diplomatic ties with the African country. In March, Shell said it was close to signing a £112 million natural gas project in Libya.

Mr Brinded also said that Shell has no objection in principle to the Kazakh government’s wish to buy a stake in a project to develop the country’s giant Kashagan oilfield. “We don’t see any objection but it has to be done on appropriate commercial terms,” he said.

“We have to be sure and they have to be confident that they can support the project as an investment partner,” he said during Shell’s strategy presentation.

According to Shell estimates, ultimate recovery from Kashagan, discovered in 2000 and to be exploited until 2041, is estimated to be up to 13 billion barrels of oil.