OIL group Shell has been given a total of £82.7m in fines for violating market rules by lowering its reserves.

It must pay a record £17m to the Financial Services Authority -four times more than the heaviest penalty previously imposed by the regulator.

The Anglo-Dutch group has also agreed a $120m (£65.7m) settlement with the Securities and Exchange Commission (SEC) in the US.

The news overshadowed a seven per cent increase in profits to $4bn (£2.19bn) in the second quarter, which were driven by the highest oil prices for 20 years.

The results also showed a decline in earnings from exploration and production -the division at the centre of the debacle in which Shell downgrade its reserves four times earlier this year.

An investigation by the SEC, which was launched in January after Shell said its reserves were 20 per cent lower than previously thought, found the company violated reporting, record-keeping and anti-trust rules.

In addition, Shell has agreed to spend $5m (£2.7m) on developing a "comprehensive internal compliance programme".

Shell said that agreeing to pay the fines imposed by the SEC and FSA did not mean it admitted the findings entirely.

Chairman Jeroen van der Veer said: "I see it as a hopeful step in dealing with the reserves issue."

If approved, the proposed settlements mean Shell will face no further penalties from the SEC or the FSA.

Investors were braced for further potential penalties as Shell is still being investigated by three other authorities, including regulators in the Netherlands, and is facing a series of class actions in the US.