The impact of falling oil prices led to a haul of £3.35bn for the final quarter of 2008, against £7.7bn in the third quarter and off 28 per cent on the same period a year earlier.
Shell still reported profits of £22bn for 2008, up 14 per cent after oil prices peaked in the summer.
Chief executive Jeroen van der Veer described the fourth quarter performance as satisfactory given the impact on demand caused by the weaker economy.
He pledged to maintain investment at near to last year's level of £22.5bn in order to safeguard future profitability.
Mr van der Veer added: "Industry conditions remain challenging, and we are continuing the focus on capital and cost discipline in Shell."
Shell recently postponed some Canadian oil sand projects, as they required high oil prices to justify their development.
The price of oil recently fell below 40 US dollars a barrel as a result of global economic conditions.
Earnings in the company's exploration and production division were down 24 per cent to £2.6bn in the quarter, a performance which reflected the impact of hurricanes on its north American operation last summer.
Full-year oil and gas production was broadly in line with the previous year, the company added.
Today's results were towards the bottom end of City expectations, but Shell cheered investors by announcing an 11 per cent increase in its fourth quarter dividend.
Shares opened less than one per cent lower today. The company's London-listed `A' shares traded 0.39 per cent lower at 1,769p, against a 0.59 per cent fall in the DJ Stoxx European oil and gas sector index.
Alan Sinclair, oil and gas analyst at Seymour Pierce stockbrokers, said planned invest- ment for 2009 was higher than forecast, but, with costs set to come down, Shell was unlikely to be stretched by the new target.
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