Shell has announced it is to commence with a $3bn (£2.3m) share buyback programme covering an aggregate contract term of approximately three months.

The oil and gas giant is aiming to reduce the issued share capital of the company, and stated that all shares repurchased as part of the programme will be cancelled.

Shell has announced the move on the same day it reported net profits of just over $5bn (£3.9bn) for the three months to the end of June. The figure represented a drop of more than 50% on the $11.5bn (£9.0bn) it achieved in Q2 last year, and was also significantly down on the $9.7bn (£7.6bn) sum the group took in the first quarter of this year.

Oil and gas prices escalated last year in the wake of Russia’s invasion of Ukraine although energy prices have experienced a sharp drop this year as fears of shortages have eased amid global economic challenges.

Shell intends to complete its buyback programme, subject to market conditions, before the company’s Q3 results announcement scheduled for November later in the year.

The group has entered into an arrangement with a single broker consisting of three irrevocable, non-discretionary contracts, to enable the purchase of ordinary shares on both London market exchanges and Netherlands exchanges for a period up to 27 October.

The aggregate maximum consideration for the purchase of ordinary shares under the London contracts is $1.5bn ( £1.17bn) and the maximum consideration for the purchase of ordinary shares under the Netherlands contract is also $1.5bn.

A statement from Shell said: “Purchases under the London contracts will be carried out in accordance with the company’s authority to repurchase shares on-market and will be effected within certain contractually agreed parameters.

“Purchases under the Netherlands contract will be carried out in accordance with the company’s authority to repurchase shares off-market pursuant to the off-market share buyback contract approved by its shareholders and the parameters set out therein.”

The maximum number of ordinary shares which may be purchased or committed to be purchased by the company under the programme, across all three contracts, is 692 million, which is the maximum number remaining.

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