Oil giant Shell is expected to pay out more than $700m in fines and compensation to settle the reserves fiasco that has dogged the company for the last few years.

The figure was revealed by Shell after it offered to settle damages claims of $352m with European investors and hoped to find a similar solution with a smaller number of US shareholders at a cost of $96m.

Shell’s head of legal services, Beat Hess, said the $352m offer had been made to shareholders who bought stock between April 1999 and March 2004. It is still subject to approval by the Amsterdam court of appeals.

In addition, Mr Hess said the company “intends to offer the same proportional settlement to investors in the United States, provided the US court overseeing the case approves.” Shell said it would “request” that the US securities and exchange commission (SEC) pay US shareholders out of the $120m fine that the company paid the SEC in 2005 to resolve the Wall Street watchdog’s inquiry into the scandal.

The $700m cost is peanuts to Shell, whose 2006 earnings were $25.4 billion. The bigger problem for the company is that it has found it easier to make profits on the back of soaring world oil prices than find sizeable new reserves.

But Shell’s lack of new reserves will come back to haunt it.