OIL GIANTS BP, Shell and Exxon will heighten fears that petrol prices are set to jump the £1-a-litre barrel barrier this week when they are all expected to admit that their production is failing to keep pace with surging global demand.

Their message will reinforce the recent stark warning from the International Energy Agency that there could be oil industry shortages stretching up to 2012 despite the vast sums now being spent on exploration and development.

For once the disappointing news on output could overshadow the level of profits the companies are earning even though Exxon, for example, is expected to announce second quarter earnings of approaching $11 billion (£5.5bn) which is the highest ever earned by a single company in such a short period.

Royal Dutch Shell is forecast to announce a profits increase from $6.3bn to around $6.8bn for the same three months on Thursday although BP is expected to disclose a slippage from $6.1bn to $5.1bn on Tuesday.

With the exception of BP, the increased profits are down to higher margins on sales rather than increased output.

Profits on US refining are likely to be particularly high, with margins believed to have increased fourfold over the past year to around $24 a barrel. This has been boosted by capacity shortages after BP's Texas City refinery disaster led to increased safety and maintenance work.

The oil companies are expected to blame various outside factors for the disappointing production levels, including falling output from the North Sea, terrorism in Nigeria and Iraq and political interference in Venezuela, as well as restrictions by the Organisation of the Petroleum Exporting Countries.

They aim to boost production in future years through a heavy investment programme with BP and Shell earmarking approaching $40bn for capital spending between them this year.

Large sums have also been set aside by the companies for investment in alternative energy sources, such as biofuels and windfarms.

But analyst Paul Hichens at Teather & Greenwood believes that the giant companies are now paying the price for the drive for efficiency - and profits - following the mega-mergers that swept the industry in the 1990s. These included the Exxon takeover of Mobil and BP's acquisition of Amoco.

"The drive for rationalisation removed whole tiers of production expertise and the oil companies did not really resume recruitment until around 2004," he said. "As a result the average age of all oil service managers is now around 54 while the average age of a North Sea diver is 49.

"The shortage of expertise places a limit on just what can be done and I fear that companies will have to run hard to stand still on the production front for some time to come."

BP's figures are expected to suffer from production slippages following asset disposals and problems in Alaska, while new chief executive Tony Hayward was unable to take full advantage of high refining margins because of maintenance safety work at Texas City and a major refinery in Indiana.

The figures will demonstrate the importance of the TNK-BP Russian joint venture to the company, accounting for around quarter of group profits and about one-sixth of reserves.

After being forced to sell off a promising Siberian prospect to the state-run Gazprom, directors believe they are unlikely to face any further serious sanctions as a result of the heightened tensions between Russia and the UK.

But it seems likely that BP's wealthy partners in Russia - billionaires Mikhail Fridman, Viktor Vekselberg and Len Blavatnik - could be "persuaded" to sell their controlling 52% interest to either Gazprom or fellow Russian energy company Rosneft which could lead to increased political interference.

Shell, which was forced to cede control of the vast Sakhalin gas project to Gazprom, has said that it aims to continuing investing in the country and has ambitious plans for a chain of petrol stations.

But industry experts believe that the political situation could deter Western investors from major new projects in the future.

Meantime, natural gas producer BG is expected to buck the general trend among the major resources companies by declaring a useful increase in its own production figures on Friday.

Brokers believe that that the group is doing particularly well from its stake in the Buzzard field in the North Sea, which came on-stream in January, together with increased output from the Atlantic and Cromarty fields. They estimate operating profits should have risen from £710m to around £732m in the latest quarter.