Shell has been forced to ditch its target of producing 4 million barrels of oil a day by 2009, because of a series of setbacks on key projects.
The bad news on production took the gloss off the $25.4bn (£12.9bn) of profits the company produced in 2006 - which smashed the record for a British company and was up 12 per cent on the previous year.
A number of Shell's key projects have been dogged by difficulties in the past 12 months, including being forced to cede control of the Russian Sakhalin Island project to Gazprom and the current impasse with militants in Nigeria's Niger Delta where production has ceased.
This has forced Shell to draw back from its ambitious targets, and yesterday its chief executive, Jeroen van der Veer, admitted that production growth would be up only "modestly" to the end of the decade.
Analysts are now taking an increasingly dim view of the company's growth prospects despite the turnaround in its fortunes following the disastrous reserves accounting scandal of 2004 when Shell was forced to cut proven reserves by more than a third.
They fretted about the long term, saying they believed the company's production targets were now "unattainable".
Teather & Greenwood said in a note: "For the remainder of the decade, the group is now looking at only modest production growth.
"Although the group has reported a better than expected set of earnings, and the reserve replacement ratio shows a distinct improvement on previous years, we believe that the group will struggle to match the growth of other integrated [oil companies]."
Mr Van der Veer said that Shell should be able to report a reserve replacement ratio of 150 per cent for last year, including extraction from oil sands in Canada, meaning it had found more oil than it extracted.
However, Iran was another dark cloud on the horizon with the US set to scrutinise a deal of up to $10bn that Shell and Spain's Repsol have signed to develop part of the country's huge South Pars gas field. The US authorities have warned that it could trigger sanctions under the Iran-Libya Sanctions Act, requiring penalties to be slapped on foreign companies that invest more than $20m a year in the Islamic republic's energy sector.
Mr Van der Veer said: "At the moment, it is all in the preparatory stage. Before we make a final investment decision, when we commit the big money, we will take into account all aspects including political considerations.
"Our policy was and is that we keep governments informed. Iran will be a very important energy exporter."
The company also came under fire from Friends of the Earth, which called on Shell to use its profits to "clean up the damage caused to the environment and communities".
Asked if Shell was taking on too many risks given its problems in Russia, Nigeria and potentially Iran, the company insisted that its risk profile was well "spread" around the world. Between $22bn and $23bn will be spent on new projects next year. The total dividend for 2006 will be €1, up from €0.92 in 2005. However, next quarter, it will be paid in dollars when shareholders were told to expect $0.36, up 6.5 per cent in euros. The company's B shares finished up 45p at £17.51.Reuse content