The collapse in the oil price, the recession in Asia and a downturn in the chemicals market were all to blame.

Shell has been forced to embark on a major restructuring.

Chairman Mark Moody-Stuart said: "There are significant underperforming areas which need to be fixed or eliminated."

It recently announced the closure of its UK headquarters which could effect thousands of employees.

The company announced net earnings of $841m, far gloomier than analyst forecasts.

The figures were down from $1.9bn last year, and below the $1.1bn to $1.5bn that analysts had predicted.

Shares fall

Shares in Shell fell 21.5p. or 0.6%, to 354.5p after the results were released.

The company warned that the "disappointing" third quarter results, coupled with expectations of continuing low oil prices and slack economic growth "lend urgency to ongoing efforts to restructuring the group".

Gloomy outlook

Shell said the outlook for the fourth quarter for the division is of "further deterioration in trading conditions, especially outside the Asia-Pacific region."

This week the other major UK oil company, BP, also revealed that it has been hit by weak oil prices.

BP is merging with the US oil company Amoco to form a giant rival to Shell and Exxon.