IrelandOnline: Shell 'no comment' on executive resignations
07/03/2004 - 14:11:08
Oil giant Shell today stayed silent on claims that more of its executives could resign following its revelation of a major shortfall in its oil and gas reserves.
The group declined to comment on reports that other directors could follow chairman Sir Philip Watts in leaving the group after it said last week that it had overbooked its reserves by 20%, or about 3.9 billion barrels.
The group has launched an internal investigation into the affair, which also sparked the departure last week of Walter van de Vijver, the chief executive of Shell’s exploration and production business.
A spokeswoman said the findings of the investigation were due out in the next few weeks, but declined to comment further.
“I don’t think there will be any announcements in the near future,” she added.
The Anglo-Dutch group said last week that its board members had decided the position of 58-year-old Sir Philip was untenable following the shock announcement in January about the reserves downgrade.
Jeroen van der Veer – promoted to chairman in the wake of the boardroom shake-up on Wednesday – said Sir Philip had to resign because directors had “lost confidence” in him and “losing confidence is in connection with the whole reserves issue”.
Investors had criticised Sir Philip for failing to deal personally with the issue and Mr van de Veer accepted Shell had made “a lot of communications mistakes”.
One report today said a breakdown in management control may have caused the shortfall.
Another report claimed that the prospect of huge bonuses encouraged Shell executives to inflate the level of oil reserves in Nigeria.
The Nigerian Government offered tax breaks to companies that declared they had uncovered oil reserves, the report claimed.
This flattered results from the Nigerian operation – called the Shell Petroleum Development Company – and led to bigger rewards for local executives, the report said.
The Shell spokeswoman denied that individuals stood to benefit from overstating reserves.
“It doesn’t work like that,” she said.
Shell had been hoping that the management shake-up would help it draw a line under the affair.
Mr van der Veer said last week that a change of leadership had been required to restore the company’s battered image.
“Shell’s reputation has been dented – not only our external reputation with the public and shareholders, but it has been a real shock to our personnel,” he said.