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MARK AUSTIN THOMAS: The European oil giant Shell has just announced record annual profits. The company made over $25 billion in 2006. It’s the biggest profit ever by a company listed on the London Stock Exchange. But as Stephen Beard reports, analysts are suggesting a difficult year may lie ahead.

STEPHEN BEARD: Shell benefited hugely from the sharp rise in the price of energy in 2006. That was the reason that profits for the year shot up by 21 percent.

But analysts say the company has no chance of doing anything like as well in 2007.

For one thing the price of oil and natural gas has subsided since last summer. And for another, Shell will have more trouble finding and exploiting new reserves.

Late last year it was pressured into selling half its stake in a giant Russian natural gas project.

Jim Washer of Petroleum Intelligence Weekly, says Shell is facing an industry-wide problem.

JIM WASHER: It’s very difficult these days to find meaningful amount of oil and gas in areas that are fully open to foreign investment where the cost of development is relatively low.

Shell is pinning a lot of hopes of future growth on oil from the Canadian tar sands. But says Washer, winning that oil will be both difficult and expensive.

In London, this is Stephen Beard for Marketplace.