LONDON (AFP) - Royal Dutch Shell's net profit collapsed 71 per cent in the second quarter on the back of ultra-low oil prices, the British energy giant said Thursday.

Net profits sank to US$1.175 billion (S$1.59 billion) in the three months to June, compared with US$3.986 billion in the same part of 2015, Shell announced in a results statement.

Profit on a current cost-of-supplies (CCS) basis - which strips out changes to the value of its oil and gas inventories - slid 72 per cent to US$1.045 billion in the reporting period.

"Downstream and integrated gas businesses contributed strongly to the results, alongside Shell's self-help programme," said chief executive Ben van Beurden.

"However, lower oil prices continue to be a significant challenge across the business, particularly in the upstream."

The downstream business includes refining, marketing and distribution, while upstream comprises exploration and production. The slump in oil prices has pushed energy groups worldwide to slash spending and jobs, and sell off assets.

"We are managing the company through the down-cycle by reducing costs, by delivering on lower and more predictable investment levels, executing our asset sales plans and starting up profitable new projects," added Mr van Beurden.

"At the same time, integration of Shell and BG is making strong progress, and our operating performance continues to further improve." The company completed in February a £47-billion (S$83 billion) takeover of BG Group, in a deal aimed at strengthening Shell's position in the liquefied natural gas (LNG) market.

"Our investment plans and portfolio actions are focused firmly on reshaping Shell into a world-class investment case through stronger, sustained and growing free cash flow per share," said Mr van Beurden.