ROYAL Dutch Shell chief executive Ben van Beurden has hailed the progress the company has made in improving performance in the North Sea but indicated more job cuts are in prospect in the area.

Mr van Beurden said the actions the company has taken in response to the crude price slump, which have included cutting around 1,000 jobs in the North Sea, have provided a model for how to boost returns from mature assets.

Announcing that second quarter profits fell 72 per cent to $1 billion (£0.8bn) from $3.8bn Shell said lower oil prices continue to be a significant challenge across the business.

“The vigour with which we have managed to improve the underlying performance in the UK is also a pathfinder for other aspects of change,” said Mr van Beurden.

However, asked if there could be more job cuts in the North Sea the Dutch executive said conditions in the area remain very tough.

He added: “At this point in time we have no new announcements to make but as we continue to focus on cost take out and efficiency you will probably continue to see that we find ways and means to reduce operating costs.”

With staff costs accounting for 40 per cent of operating expenses, the efficiency drive will have obvious implications for job numbers.

Mr van Beurden said most of Shell’s North Sea portfolio is operating profitably.

However, his comments will do nothing to dampen speculation that Shell could withdraw from much of the North Sea under plans to raise $30bn from disposals to cut debt and help support dividend payments.

Mr van Beurden said Shell will take a strategic view of the North Sea portfolio. But the company has made clear it has little enthusiasm for operating mature fields. It wants to focus investment on the big fields it is developing off Shetland, which will produce high margin barrels for years to come.

Shell increased its exposure to mature North Sea fields through the £35bn takeover of BG.

The company said it still has some way to go to implement plans to realise the $4.5bn synergies from the enlarged business, under which the company is closing BG’s North Sea head office in Aberdeen.

Mr van Beurden said Shell had been ensuring it treated the people affected by its redundancy programmes in Scotland with respect.

However, he noted that morale in the area is variable and people are feeling under pressure.

Mr van Beurden hoped Wood Group would be able to find a speedy resolution to the dispute under which around 200 people working on Shell platforms staged a strike against plans to cut pay and allowances on Tuesday. Production has not been affected so far.

While the short term outlook for oil and gas prices is unclear, Mr van Beurden said he still believed the oil market will return to balance in the second half of the year.

Prices have been depressed by a global overhang of excess stock but should increase given growing global demand for energy.

He said the prediction that the oil price will reach $60 per barrel by the end of the decade remained “eminently sensible”.

Shell expects to be able to generate double digit returns by the end of the decade at that price.

The company does not expect the vote for the UK to leave the European Union to impact on demand for energy.

Asked about the prospect that the Scottish Government may call a second independence referendum following the Brexit vote, Mr van Beurden said it was not his position to comment on such political questions.

Last month Shell said it wanted Scotland to remain part of the UK.

Shell’s upstream division lost $1.3bn in the second quarter net of one offs, compared with $0.5bn in the same period last year.

The refining and marketing arm made $1.8bn profit, against a record $2.9bn last time.

The company held the second quarter dividend at 47 cents per share.

Analysts at Barclays said 2016 will be a transition year as Shell incorporates BG but the group appear to be heading in the right direction.

Royal Dutch Shell A shares closed down 59p at 1984.5p.