Shell has reported an " excellent" first quarter with a strong financial performance across its businesses.

The oil giant, which reported the biggest annual profits in UK corporate history in February, said its income had risen by 42 per cent to £3.5 billion in the period.

Production for the quarter was at the higher end of expectations and exploration drilling results had been

encouraging. The company said its plans to merge its Dutch and UK parent companies into one after nearly 100 years of separate operations remained on schedule.

Chief executive Jeroen van der Veer said: "The first quarter was an excellent start of the year for Shell."

The income figure meant Shell made profits of about £1.6 million an hour during the quarter. On Tuesday, BP said it made record first quarter profits equating to £1.3 million an hour.

Shell said earnings in its upstream division, which covers exploration and production before refining, increased despite lower production due to soaring oil prices.

The group produced 3.8 million barrels of oil equivalent per day in the quarter, compared with 4.1 million at the same time a year ago.

It said it saw strong earnings in its downstream oil products and chemicals division and a 15 per cent rise in volume growth in its liquid natural gas operations.

The group said it was declaring its first quarterly dividend, which was equivalent to more than £1.05 billion subject to exchange rates.

Shell made capital investment of £1.7 billion in the period, up from £1.6 billion beforehand.

Paul Watters, head of roads and transport policy at the AA Motoring Trust, said: "These Shell figures will add to the pain of motorists who are already suffering from high petrol pump prices.

"It's not just Shell who do well out of this. It's the Government as well, as they get the duty from petrol."

However a Shell spokeswoman said the company made a loss on petrol sales in the UK in the first quarter due to the higher cost of buying crude oil on the open market, but refused to give figures.

"People are paying an awful lot for fuel in the UK, but fuel prices before taxes in this country are among the lowest in Europe and also the world," she said.

Shell, which has operations in 146 countries and employs 10,000 people in the UK out of a global workforce of 110,000, produces only about three per cent of the world's crude.

Its operations in the UK consist mainly of its refinery at Stanlow in Cheshire, its petrol retail activities and exploration in the North Sea. It refines crude for the UK at Stanlow before shipping it out to petrol forecourts around the country.

Exploration and production earnings lifted nine per cent to £1.55 billion, which Shell said

mainly reflected higher realised prices for its crude partly offset by lower volumes and higher costs including exploration and depreciation. Hydrocarbon, or crude oil production, was two per cent lower than in the same quarter last year while gas and power segment earnings were £250.2 million against £274.3 million last time.

Record LNG volumes and higher LNG prices contributed to a 17 per cent rise in earnings in the division excluding the impact of divestments.