The Scotsman: Pressure builds up on Shell
Sat 20 Mar 2004
SHELL yesterday refused to say what proportion of its Nigerian proven oil and gas reserves had been overstated as the repercussions from its second cut in overall forecasts this week continued to swirl around the troubled oil giant.
It came as the New York Times claimed it had seen an internal Shell document from last December that allegedly showed it had concluded that 1.5 billion barrels, or 60 per cent of its Nigerian reserves, did not meet accounting standards for "proven reserves".
The report said this had been kept secret because Shell did not want to damage its relationship with the Nigerian government, which is negotiating with the Organisation of Petroleum Exporting Countries to increase its permitted oil and gas "quotas".
A Shell spokesman said yesterday: "We have said 1.3 billion barrels of the 4.15 billion barrels [that had been erroneously booked with the US Securities and Exchanges Commission] related to Nigeria. But we have never given that other number [what proportion the 1.3 billion represents of overall Nigerian reserves], and will not disclose it."
On the suggestion in the NYT article that Shell had covered up the true Nigerian shortfall in order not to undermine talks between the Nigerian government and OPEC, the spokesman said: "It is speculating about what the Nigerian government wants. It would not be appropriate for us to comment." Analysts have said that if Nigeria doubles its daily oil and gas production, as it is believed to want to do, it would increase export revenues - 90 per cent of which are oil - by billions of dollars.
Shell also put out a formal statement yesterday saying: "Shell has provided the Nigerian authorities with an explanation of the group recategorisation of some proved reserves and has confirmed to the government that it will have no impact on the reporting by Shell of its part of Nigeria’s reserves in line with the national standard.
"The Nigerian authorities presently appear to be satisfied with Shell’s explanations."
The Nigerian national standard was established in 1991, and requires reporting of hydrocarbon volumes for both proved reserves and for those recoverable volumes outside the proved reserves category.
The allegedly internal report seen by the NYT, dated 8 December, 2003, and prepared for Shell executives by the since-sacked head of exploration and production, Walter van de Vijver, recommended that the revised Nigerian reserves remain "confidential in view of host country sensitivities".
The latest controversy caps a miserable week for Shell, which cut its proven reserves forecasts by another 250 million barrels, this time related to operations in north west Europe - primarily Norway - and Australia.
The earlier 3.9 billion barrels’ cut - 20 per cent of Shell’s estimated proven reserves - related mainly to Nigeria and Australia.