* Fourth quarter profit misses expectations at $1.8 bn
* To add 1 mln barrels per day of production by 2018
* Shell gearing down to 28 pct following divestments
* 2017 capital spending at $25 bln
* Renewable energy spending capped at below $1 bln (Recasts, adds details, CFO, CEO, investor quotes, updatesshares)
By Karolin Schaps and Ron Bousso
LONDON, Feb 2 (Reuters) - Royal Dutch Shell isclose to selling assets totalling $5 billion to cut debtfollowing its acquisition of BG Group, the oil major said onThursday as it reported its lowest full-year earnings in morethan a decade.
Dealmaking in the oil and gas sector has been muted for morethan two years due to collapsing oil prices, but as crude pricesrecover buyers and sellers are starting to agree on price tags.
For Shell, disposals of $3 billion in the fourth quarterhelped shave $4.5 billion off its net debt and increase cashflowby 8 percent in the last three months of the year, Europe'slargest oil and gas company said.
And although Shell's fourth-quarter profit was lower thanexpected at $1.8 billion due to tax impairments and full-yearearnings dropped, it still made more money than rival ExxonMobil in the second half of the year.
"Others are talking about getting back to growth; we'reactually doing it now," Shell's Chief Financial Officer SimonHenry, who leaves next month after seven years in the job, said.
Some of that growth will come from $10 billion of newprojects coming on stream by 2018, adding more than 1 millionbarrels of oil equivalent per day.
Shares in Shell traded 2 percent higher at 1213 GMT, whilethe industry index was down 0.1 percent.
Henry said the company was making "significant progress" onanother $5 billion of asset disposals, after two divestmentsworth $4.7 billion this week, including a large part of itsNorth Sea portfolio sold to private-equity backed Chrysaor.
Shell is close to selling its operations in Gabon.
Shell's 2016 capital spending total of $26.9 billion, lowerthan expected. It stuck to plans to reduce it further in 2017 toaround $25 billion. This is at the lower end of the $25-$30billion range set to run until 2020.
"Management and employees seem to have genuinely changed theway they run the business and appear committed to betteremploying the capital they manage," said Rohan Murphy, energyanalyst at Allianz Global Investors, which holds stock in Shellequivalent to just under 0.5 percent of the company.
Shell's debt to equity ratio fell to 28 percent, down from ahigh of 29.2 percent in the third quarter due to the cost of its$54 billion BG acquisition last year.
Henry, who said he did not plan to take up a new executiverole after leaving Shell, said the company would first removescrip payments on its dividend before considering any increasesin shareholder payouts.
The BG acquisition boosted Shell's reserve replacement ratioto 208 percent in 2016, meaning it more than doubled itsreserves. That compares with a ratio of minus 20 percent in2015.
GREENER INVESTMENTS
Under pressure from shareholders to increase green energyinvestments, Shell has started to ramp up spending on renewableenergy projects, including winning a tender to build an offshorewind farm in the Netherlands.
Chief executive Ben van Beurden said he was keen for Shellto play a "material role" in the renewable energy sector butthat spending on its new energies division would be capped atbelow $1 billion, around four percent of its annual spendingbudget.
"As we learn we will see how we can ramp that up," he toldjournalists. (Editing by David Goodman and Alexander Smith)
