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TheMiamiHerald.com: Lawyer: Shell Exec Fought Estimate Errors

 

JILL LAWLESS

Associated Press

Posted on Tue, Apr. 20, 2004

 

LONDON - Former Shell exploration chief Walter van de Vijver was "outspoken and persistent" in attempts to correct mistakes in the oil giant's estimates of its reserves, his lawyer said Tuesday.

 

Attorney John M. Dowd said in a statement released in Washington, D.C., that Van de Vijver had ordered "detailed reviews" of reserves in Nigeria and Oman, where many of the disputed reserves were located.

 

Van de Vijver resigned from the Royal Dutch/Shell Group of Cos. last month after the company admitted to overestimating its confirmed oil and natural gas reserves by 20 percent.

 

The reserves fiasco has shaken trust in Shell and claimed three of its top executives - Van de Vijver, chairman Philip Watts and chief financial officer Judith Boynton, who resigned from that position on Monday.

 

An investigation, compiled by New York law firm Davis, Polk and Wardwell and made public Monday by Shell, found that some bosses knew for almost two years the company had publicly overestimated its reserves. It quoted a November 2003 e-mail in which Van de Vijver said he was "sick and tired about lying" about the size of the company's oil and gas reserves.

 

When legal advisers sent Van de Vijver a memo a month later saying Shell should disclose the problems, the report said he responded by e-mail: "This is absolute dynamite, not at all what I expected and needs to be destroyed."

 

In fact, Dowd said, nothing had been destroyed. He said it was "unfortunate that the Davis, Polk report ... did not include the context in which the e-mail was written and its true meaning."

 

He said the exchange was part of attempts by Van de Vijver to clarify data on the reserves and ensure "work progressed at maximum pace."

 

He said Van de Vijver had begun insisting in February 2002, less than eight months after taking over as head of Shell's exploration and production division, that the company might have overestimated its reserves.

 

The Davis, Polk report found inadequate oversight within Shell and recommended tightening it.

 

Shell said it accepted in full the findings of the investigation. It also is being investigated by the U.S. Securities and Exchange Commission, the U.S. Justice Department and European regulators.

 

On Monday,the company also released an internal audit of its reserves, saying it had now downgraded 4.85 billion barrels from "proven," or 700 million barrels more than its previous estimate.

 

Shell said its auditors had now reviewed 90 percent of oil and gas reserves and that any further revisions to the estimates would be small.

 

http://www.miami.com/mld/miamiherald/business/8474769.htm?1c


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