The Guardian (UK): New account rules cost Shell $5bn: “Shell has been forced to cut $4.9bn (£2.6bn) from its retained earnings for 2004 as a result of adopting new reporting standards.”: “Meanwhile, the scale of investment needed to pursue Shell's plan to export gas from Iran was outlined for the first time yesterday.” (ShellNews.net) 23 Nov 04

Terry Macalister

Tuesday November 23, 2004

Shell has been forced to cut $4.9bn (£2.6bn) from its retained earnings for 2004 as a result of adopting new reporting standards.

The figure for net assets will also decrease by $4.7bn to $71.5bn due to pension changes after adopting International Financial Reporting Standards (IFRS).

The Anglo-Dutch oil group - which has had a torrid year after downgrading its reserves by more than 20% in January - insisted that its underlying financial position remained untouched by the moves.

"This is a technical accounting adjustment and has no impact on company strategy or cashflow," said a spokesman.

He admitted that the debt figure would rise by $200m and the 2004 annual figure for net income would fall by $100m when the results were reported under IFRS, as opposed to the American and Dutch Generally Accepted Accounting Principles which are used now.

Shell is one of a handful of companies, including pharmaceutical group AstraZeneca, which have moved to detail the impact of IFRS ahead of a January 1 2005 start-date set by the EU.

BP said last night that it would explain the impact of the changes next March and report its first quarter results in April under the new format. BP is already reporting its pensions position according to IFRS terms.

The City remained relatively relaxed about the changes at Shell. The share price fell 2p to 439.5p.

Fadel Gheit, an analyst with Oppenheimer & Co brokerage in New York, shrugged off the reporting changes : "It's nothing. It's just rearranging the seats in the room and will have no real impact whatsoever."

Bruce Evers, at Investec Securities in London, was similarly underwhelmed: "This is just a housekeeping exercise [by Shell]."

Meanwhile, the scale of investment needed to pursue Shell's plan to export gas from Iran was outlined for the first time yesterday.

Its partner, Repsol, revealed that the liquefied natural gas (LNG) project would require total spending of $4bn. Much of this would be split between the Spanish oil group and Shell, although a smaller share would be paid by the National Iranian Oil Company.

Shell would have to pay at least $1bn on the exploration and production side alone but would also have a 25% stake in an LNG terminal. Gas should be ready to export by late 2009 or early 2010 and could end up in Britain.

http://www.guardian.co.uk/business/story/0,3604,1357330,00.html