ThisisLondon.com: Shell 'warned in 2000' on reserves
Steve Hawkes, Evening Standard
1 April 2004
TOP executives at scandal-struck Shell were warned it might be overstating its lucrative oil and gas reserves nearly four years ago, it was claimed today.
Shell planners told senior managers in an internal report dated June 2000 that estimates for oil production at several projects were 'very optimistic' and that they ran the risk of 'over-promising'.
The fresh claims will be yet another blow for new chairman Jeroen van der Veer, who is already battling suggestions that he knew about the reserves issue in early 2002.
Shell stunned the City three months ago by revealing it was having to wipe 3.9bn barrels from its 'proven' oil and gas reserves - 20% of its total. Some were booked as long ago as 1997.
The debacle cost former chairman Sir Philip Watts his job, led to a formal investigation by the US Securities and Exchange Commission and has fuelled a series of shareholder class actions in the US.
The June presentation, revealed by the Wall Street Journal, highlights a series of potential problems. But only months later Watts said Shell's upstream arm was 'delivering on its promises'. Watts led Shell's exploration business from 1997 to 2001.
A Shell spokesman refused to comment, reiterating that it would be able to do so only when its audit committee completes its own review of the reserves debacle.
The group's shares were unchanged at 355 1/2p. Bruce Evers, oil analyst at Investec, said: 'There is just so much bad news around Shell, the market is almost immune to it now.'