ROYAL Dutch Shell finance chief Jessica Uhl has underlined how much money the oil giant is making in areas such as the North Sea as she welcomed the £16bn Transition Deal for the sector agreed by the UK Government.

Speaking after the Anglo-Dutch group posted a 13 per cent increase in first quarter underlying profits, to $3.2 billion (£2.3bn) from $2.9bn, Ms Uhl noted the key role played by the upstream oil and gas production operation in the group’s success.

The upstream business has benefited from the increase in crude prices that has accompanied the rollout of coronavirus vaccines around the world.

READ MORE: BP triples profits as coronavirus vaccines boost recovery hopes

Ms Uhl noted that Shell has decided to focus upstream activity on nine core areas, which include the North Sea. The company plans to use the cash generated by the upstream business to fund investment in growth markets and to support increased distributions to shareholders.

Ms Uhl said Shell was uniquely positioned to be able to create value for shareholders while supporting the drive to reduce carbon emissions, with operations which also span areas ranging from chemicals production to energy trading. Under the Powering Progress strategy which it unveiled in February, Shell plans to invest heavily in areas such as renewable energy and carbon capture and storage.

In the North Sea Transition Deal announced in March, the UK Government set out a framework for how to support the required change in energy systems and to help the oil and gas sector play an important part in the shift.

The deal followed calls for the Government to help the sector amid the huge challenges posed by the fallout from the coronavirus crisis but included no new official funding commitments. Firms will fund much of the £16bn investment involved.

READ MORE: North Sea Transition Deal angers campaigners

Asked about the deal, Ms Uhl told reporters: “We’re very pleased with what the UK Government is trying to achieve in being proactive in terms of shaping the transition for the sector and think through the various implications.”

Ms Uhl added: “Shell is looking forward to working with the UK Government, is pleased with what they are trying to do with this transition strategy, and to play our part going forward.”

HeraldScotland: Shell chief financial officer Jessica Uhl Picture: ShellShell chief financial officer Jessica Uhl Picture: Shell

The comments provide another indication that Shell bosses expect the company to remain active in the North Sea for some time. Shell chief executive Ben van Beurden said in February that the company has lots of “running room” in the area.

After selling off a range of mature assets amid the last downturn, Shell has focused investment on fields which it reckons have the most long term potential. These include developments West of Shetland such as Clair Ridge.

However, spending in the area is set to remain under pressure as Shell looks to maximise the profitability of the upstream division.

In January the company announced plans to shed about 330 North Sea jobs under a programme designed to help save cash and reshape it for the future.

The cuts will reduce total employee numbers in Shell’s North Sea business to around 1,000.

READ MORE: North Sea cash engine motoring as Shell cuts Aberdeen jobs

Ms Uhl reiterated that a key objective of Shell's directors is for the group to increase distributions to shareholders. The group expects to pay out up to 30 per cent of the cashflow generated from operations to shareholders after net debt is reduced to $65bn.

Ms Uhl confirmed that share buybacks would then be on the agenda without specifying a timescale.

Shell cut net debt by around $4bn in the first quarter, to $71.3bn.

In April last year, Shell announced the first cut in its dividend since the Second World War amid the slump in demand for oil and gas that followed the imposition of coronavirus lockdowns. It slashed the first quarter payment for 2020, to 16 cents per share from 47 cents in the preceding three months, to help save cash.

The company increased the quarterly dividend by 4% in October. It raised the dividend for the first quarter of this year by a further 4% as planned, to 17.35 cents per share.

READ MORE: Plans to develop billion barrel oil field off Shetland set to be revived

Shell generated $4.1bn cash from its upstream operations in the first quarter, up from $2bn in the preceding three months. Ms Uhl said the figures underlined the resilience and quality of the upstream portfolio.

Royal Dutch Shell A shares closed down 1%, 17.2p, at 1365p.

On Tuesday BP revealed it had tripled first quarter profits after feeling the benefit of increased oil prices and the start of production from the Vorlich field in the North Sea field.

BP made $2.6bn profit net of one-offs in the three months to March 31 on the measure followed by analysts compared with $0.8bn in the same period last year.