OIL giant Shell said full production from its rigs in the Gulf of Mexico may not be restored until next year because of damage caused by Hurricane Katrina.

Shell said the next three months should see output back at 60 per cent of levels before the hurricane struck.

But the Anglo-Dutch group confirmed it was continuing to assess a string of sites in the Gulf, including its Mars rig which pumped around 147,000 barrels of oil a day last year.

Shell said: "Production from these facilities may not be feasible during the fourth quarter, depending on options available for recovery."

Hurricane Katrina shut down 90 per cent of the Gulf's oil output and refineries run by Shell (pictured) and other international companies.

The storm led to the evacuation of more than 700 offshore platforms and rigs and came when producers were struggling to cope with demand.

The Gulf normally produces 1.5 million barrels of crude oil a day, or about a quarter of the United States' domestic output.

Oil prices surged to record highs above 70 US dollars a barrel in the wake of the destructive path blazed by the hurricane, while prices at petrol pumps also rose.

To cover some of the lost production and take the steam off oil prices, the White House ordered the release of part of US national inventories. The International Energy Agency also agreed to release 60 million barrels of oil and refined products from its own stocks.

Shell said today that oil was now flowing and output was being ramped up at all its assets in western areas of the Gulf of Mexico that were shut by Hurricane Katrina.

Daily production from all its Gulf platforms now stands at 160,000 barrels of oil - a third of the 450,000 barrels averaged last year.

"Significant efforts continue as we make a comprehensive assessment of our hurricane-impacted assets as well as of pipelines and other facilities that transport and receive our production," Shell said.

In addition to its Gulf platforms, Shell operates seven refineries in the United States with an overall throughput of about 1 million barrels a day.

The hurricane forced Shell to shut down two sites that represent about 27% of its total refining capacity in the US.

Repairs have now taken place and full production is expected to be restored to its Motiva Convent refinery in Louisiana by the end of next week, while output could be restarted at the nearby Motiva Norco refinery by the middle of next week.

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