The Observer: Pressure grows on Shell chairman to quit
Sunday January 11, 2004
Shell chairman Sir Phil Watts was responsible for signing off the erroneously booked oil and gas assets over a four-year period which led to last week's
20 per cent cut in its proven reserves of 19.5 billion barrels.
The news, which led to a rout of the Anglo-Dutch group's shares and a warning from credit rating agency Standard and Poors, will increase the already intense pressure on Watts to resign.
A company spokesman said he still expected Watts to present Shell's fourth quarter results at a meeting scheduled for 5 February.
But furious City figures questioned whether Watts could remain in his post after last week's announcement - downgrading proven reserves of oil and gas by 3.9bn barrels - which many said was unprecedented for a company of Shell's size. Shell added that it may have to downgrade reserves stated in previous years' accounts, increasing the difficulties for the company. However a spokesman was unable to say what impact this would have on Shell's finances.
One analyst said: 'He has to go - I just can't see how he can stay after this. But Shell is Shell, and he could just sit tight.'
Another said: 'He has a big problem. It is clear from a number of senior fund managers that they think this is a disaster. And the fact Watts did not take part in the conference call on Friday [explaining the announcement] does not look good at all.'
A company spokesman said Watts did not take the call because the company was in closed season ahead of the 5 February announcement, and therefore it would not be appropriate. But he confirmed that, as head of Shell's Exploration and Production division between 1997 and 2001, he would have signed off the majority of downgraded reserves. 'As head of the E&P executive team, he will have signed them off.'
However, he added that such reserves were booked in good faith, and that there was no reason to believe that there had been misconduct at a senior level.
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