* Shell to increase spending to average of $30 bln after 2020
* Shell expects to distribute $125 bln between 2021-25 (Updates with details)
By Ron Bousso
LONDON, June 4 (Reuters) - Royal Dutch Shell on Tuesday outlined plans to increase spending and dividends after 2020 in a show of confidence by the energy company despite an uncertain outlook for oil and gas prices.
In a strategy update, the Anglo-Dutch company said it was on track to deliver its previous commitments to increase cash generation and carry out one of the world's largest share buyback programmes of $25 billion by the end of next year.
Shell, the world's second-largest listed oil and gas company after Exxon Mobil, underwent deep cost cuts following the 2016 acquisition of smaller rival BG Group for $53 billion and the collapse of oil prices in late 2014.
Despite a slow and bumpy recovery in oil prices, it reported the largest profit among its peers last year and vastly increased its revenue from previous years.
"It is the success of our strategy and strength of our delivery today that gives us confidence for the future," Shell Chief Executive Officer Ben van Beurden said in a statement.
Shell said its free cash flow - cash available to pay for dividends and share buybacks - is set to rise to around $35 billion per year by 2025 at a Brent crude oil price of $60 per barrel.
That compares with $28-33 billion in free cash flow it expects to deliver by the end of next year.
It said the cash delivery "creates the potential to distribute $125 billion or more to shareholders" in the form of dividends and share buybacks between 2021 and 2025.
That compares with distributions of around $90 billion between 2016 and 2020.
It expects to increase its dividend payouts to shareholders once it completes a $25 billion share buyback by the end of 2020 it had promised following the BG acquisition.
Shell, the world's biggest dividend payer at $16 billion a year, last increased its quarterly dividend in the first quarter of 2014 to $0.47 per share.
Reporting by Ron Bousso; editing by Jason Neely and Louise Heavens