THE NEW YORK TIMES: Royal Dutch / Shell Seeks New Engineers: “The scandal cost the company almost $150 million in fines imposed by U.S. and British regulators and led to the sacking of three senior executives.” (ShellNews.net) 18 Jan 05
By THE ASSOCIATED PRESS
Published: January 18, 2005
LONDON (AP) -- The Royal Dutch/Shell Group of Cos. said Tuesday that it plans to hire more than 1,000 engineers to strengthen the unit at the center of last year's reserves crisis.
The Dutch-Anglo oil giant was forced to cut its proven oil reserves, its most precious asset, by nearly a quarter last year after vastly overestimating how many reserves it held.
The scandal cost the company almost $150 million in fines imposed by U.S. and British regulators and led to the sacking of three senior executives.
Analysts said that the recruitment drive for Shell's exploration and production arm appears to be aimed at regaining ground lost to rivals, who have stronger records on reserve replacement and production growth.
``This is what Shell needs to do. It has been underinvesting in the upstream division over the past 5 years,'' said Jason Kenney at ING Financial Markets.
Shell said that the recruitment drive was part of an annual review of the staff needed to conduct its business strategy and to replace normal attrition of staff.
``In addition, Shell EP (exploration and production) has significantly increased its planned capital expenditure and will require additional technical resources to execute our work plan over the next several years,'' it said in a statement.
The company is striving to close the gap on rivals such as BP PLC and Exxon Mobil Corp. by finding new reserves to replace the oil and gas it takes from the ground over the next four years.
A total of 170 experienced petroleum engineers are being sought by April on a contract or permanent basis. These staff are part of the team responsible for making sure oil and gas can be extracted from the ground.
The remaining staff will join the exploration and production unit in other roles. No details were provided on where they will be based.
Shares in Shell fell 0.3 percent to 449 pence ($8.39) on the London Stock Exchange. Royal Dutch shares rose 0.2 percent on the Euronext exchange to 42.77 euros ($55.78).
Analysts said that there was little movement because the recruitment drive would take time, adding that Shell may have difficulty enticing engineers from better-performing companies.
Analysts are also waiting to discover whether Shell will reclassify its reserves for the fifth time since last January when it announces its annual results on Feb. 3. The company warned in October that it may have to cut estimates by 900 million barrels more, having already reduced the total of its reserves by 23 percent, or 4.47 billion barrels.
Shell has announced a string of initiatives to improve accountability and performance after the reserves scandal, including plans to merge its British and Dutch holding companies after nearly 100 years of separate operations.