The Times: Shell cuts reserves for fourth time

Posted 25 May 04

Shell has, for the fourth time this year, downgraded its estimate of its proven oil reserves, citing the need to comply with North American accounting practice.

The Anglo-Dutch company said that stocks equivalent to 103 million barrels of oil would be reclassified to lower grades. The move reflected the book-keeping treatment of royalties paid in Canada, Shell said.

The revision takes to 4.47 billion barrels of oil the level of reserves which have been removed from Shell's 2002 register of readily accessible stocks. The revisions - representing more than 20 per cent of Shell's reserves – have prompted a string of investigations from authorities including the Securities and Exchange Commission and the threat of lawsuits from disgruntled US investors.

Shell in March forced out its chairman, Sir Philip Watts, its oil and gas chief, Walter van de Vijver, and, last month, ousted its financial officer, Judy Boynton. It has emerged that all three former executives had been aware of the reserves issue for some time.  

This morning's announcement comes four days ahead of the publication of Shell's annual report and a month before its shareholders' meeting, which promises a stor

"Jeroen van der Veer, the Shell chairman, said: "I am pleased that on Friday we will be publishing our annual reports and accounts as previously announced."

Shell shares stood 0.5p higher at 392.5p in afternoon trade.