The Times: New Shell chief knew of problems in 2002
By Carl Mortished and Jenny Davey
April 21, 2004
JEROEN van der Veer, the newly appointed chairman of Shell’s committee of managing directors (CMD), was made aware of serious problems in the reporting of Shell’s oil and gas reserves as early as 2002.
A note sent in February of that year to the CMD, Shell’s top executive body, by Walter van de Vijver, the head of exploration who was sacked in March, reveals his specific concern that as much as 2.3 billion barrels of oil and gas may have been “no longer fully aligned with SEC rules”.
Further notes, which emerge from the report to the Group Audit Committee on Shell’s misreporting of more than four billion barrels of oil and reserves, and which provide evidence of Mr Van de Vijver’s anxieties, indicate that both Mr Van der Veer and Malcolm Brinded, current head of exploration, were privy to concerns about reserves.
The February 11 note raises questions concerning recent statements made by Mr Van der Veer that he was not aware of the scale of the reserves problem. The note, which expresses concern that Shell may not be aligned with SEC rules, refers to “some 1,000 million barrels of legacy reserves bookings (e.g Gorgon, Ormen Lange, Angola and Waddenzee)”.
However, at a press briefing on March 18 he said: “It was only until very recently that we came up with figures as large as 20 per cent.”
In response to another question regarding his knowledge of the problem Mr Van der Veer said: “The fact that let us say we are low in reserves replacement, yes, that was known, but the incorrect bookings of the 20 per cent of our oil reserves was unknown.”
And on Monday Mr Van der Veer reiterated his position: “The key line is that I did not appreciate the severity and the magnitude of the issue.” The total quantity of reserves referred to in Mr Van de Vijver’s note was 2.3 billion barrels, compared with the 3.9 billion, or 20 per cent, removed from the proven category in Shell’s dramatic January 9 announcement.
Mr Brinded joined the CMD in July 2002 and would not have been privy to the February note regarding alignment with SEC guidelines but he would have had access to the further note in September where Mr Van de Vijver raised concerns about reserve replacement and lean organic development.
In the note, Mr Van de Vijver then suggests “the market can only be ‘fooled’ ” if Shell’s credibility is high and positive trends could be shown on “key indicators”. Shell would make no further comment yesterday.
Meanwhile, some of Britain’s top companies yesterday moved to support executives who also sat on the Anglo-Dutch company’s CMD during the time when the company overstated its oil reserves.
A spokesman for Lloyds TSB insisted yesterday that there was “no issue” surrounding Maarten van de Bergh, the bank’s current chairman, who was a member of Shell’s CMD between 1997 and 1999.
Anglo American, the global mining company, also threw its weight behind its chairman, Sir Mark Moody-Stuart, who sat on Shell’s CMD between 1997 and 2000. The company said that Sir Mark’s position was not in question following the blow-up of the Shell controversy.
The sentiments were echoed at Rio Tinto, whose chairman, Paul Skinner, was a former Shell group managing director. A spokesman for the company said: “There are no moves afoot to change anything at Rio.”
He, like the other chairmen, was not named in Monday’s report.