Daily Express (UK): Shell quits London HQ to go Dutch: But managers' credibility was further eroded yesterday by the revelation they had been premature by saying last month reserves were all accounted for. Malcolm Brinded, British head of exploration and production who will stay on the combined board, said Shell might have to write off a further 900 million barrels or 11 per cent of the reserves it has audited. Half the total reserves have yet to be checked. (ShellNews.net)
By Robert Undsay
Associate City Editor
Posted 30 Oct 04
SHRINKING: Van der Veer's announcement was overshadowed by gaps In Shell's reserves audit
ANGLO-DUTCH oil group Shell swept aside 100 years of history yesterday by announcing it was moving its UK headquarters to Holland.
The switch, in which 200 of 9,000 UK jobs will be transferred from London to The Hague, is an attempt to bolster Shell's credibility after it had to write off 20 per cent of its reserves this spring which triggered a criminal investigation.
It also completes the full merger of a joint venture between Shell and Royal Dutch, formed in 1907.
The much-criticised dual management structure, with separate Dutch and British boards, will be scrapped in favour of one board in The Hague with a Dutch chief executive, Jeroen van der Veer, and a Dutch chairman.
The separate listing of the two companies in Holland and London will be ended, with one company Royal Dutch Shell having its primary listing in London.
"This is not a takeover, it is the merger of two companies which are being taken over by a new one," said van der Veer. "We are neither British nor Dutch but we recognise we have roots in both countries. Royal Dutch Shell will be a global company."
The move was cautiously welcomed by shareholder group the Association of British Insurers and analysts who had expected a merger of the boards but not of the two companies.
But managers' credibility was further eroded yesterday by the revelation they had been premature by saying last month reserves were all accounted for. Malcolm Brindred, British head of exploration and production who will stay on the combined board, said Shell might have to write off a further 900 million barrels or 11 per cent of the reserves it has audited. Half the total reserves have yet to be checked.
This would mean his promise he would find replacements for 100 per cent of the reserves during the next five years would be "stretched", he added.
Meanwhile, net income in the third quarter more than doubled to $5.4billion (£2.95billion) on the back of the soaring oil price.
After stripping out the current cost of supplies Shell made nearly £1.1 million an hour more than rival BP which clocked up just below £1 million an hour.
Shell's London shares gained ll.75%p to 435%p because the merger means investment funds that track the FTSE 100 will have to buy bigger stakes.