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The Wall Street Journal: Nigeria Backtracks,Says Shell Downgrade Was 1.3 Bln Bbls



April 2, 2004 9:43 a.m.


LONDON -- Nigeria's de facto oil minister, Edmund Daukoru, Friday said he misspoke Thursday by saying Royal Dutch/Shell Group (RD, SC) had downgraded 1.9 billion barrels of its Nigerian oil and gas reserves, more than the company had indicated earlier.


"It was 1.3 (billion)," he told Dow Jones Newswires by telephone.


Shell also reaffirmed Friday that Nigeria made up 1.3 billion barrels of a 3.9 billion barrel downgrade in its proven reserves, announced in January.


Daukoru told reporters in Vienna on Thursday that Shell had downgraded 1.9 billion barrels of its Nigerian reserves, but Friday conceded this was mistaken.


His statement Thursday prompted a brief selloff in Shell 's shares, which have been battered for months by two cuts in the company's reserves.


The downgrades, by which Shell slashed its proved reserves by 21%, led to the ousting of two top executives and prompted the launch of an investigation by the U.S. Securities and Exchange Commission, inquiries by the U.K. and Dutch financial regulators and a raft of lawsuits in the U.S.


Separately,Daukuro also said a dispute between Shell and the government over the repayment of tax credits related to boosting reserves in the 1990s has been settled.


"The discussions were resolved just before Christmas. I don't know if they actually paid or not." he said. He wouldn't be drawn on the amount of the payments, reported to be more than $300 million.


A spokesman for Shell in London declined to confirm the issue had been settled, saying only the company remains "engaged with the relevant authorities."


The issue involves the Nigerian government's demand that Shell return tax credits it received in exchange for adding oil and natural gas reserves to its operations in Nigeria.


Shell is one of the biggest foreign oil companies operating in Nigeria. Through its joint ventures it produces around 40% of the country's two-million barrel a day output.


Nigeria set up the tax-break scheme, called Reserve Addition Bonuses, in the early 1990s in an attempt to use fiscal measures to stimulate Nigeria's oil business.

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