The Scotsman: Watchdog probes Shell over oil reserves downgrade
Posted 27 April 04
THE Financial Services Authority is formally investigating oil giant Shell following the shock downgrade of its reserves earlier this year.
The City watchdog said it had been conducting inquiries into the matter for some weeks, including gathering and analysing documentary evidence. It said it had been in "close contact" with the relevant overseas regulators and that Shell had been notified of the investigation.
A spokesman for Shell said: "We are continuing to co-operate with the FSA."
An independent report severely censured Shell chairman Sir Philip Watts and head of exploration and production Walter van de Vijver for appearing to know reserves did not meet market rules as far back as 2001.
Documents disclosed in the report showed clashes between the men as concerns mounted that oil and gas stocks had been aggressively overbooked during Sir Philip’s time as head of exploration and production.
On one occasion, Mr van de Vijver is reported to have e-mailed: "I am becoming sick and tired about lying about the extent of our reserves issues."
Shell’s 20 per cent downgrade of its reserves cost the jobs of Sir Philip and Mr van de Vijver. Following the downgrades, Shell’s reserves for 2002 are now 4.35 billion barrels lower than previously thought.