FINANCIAL TIMES: Shell outlines strategy to restore its reputation: "Many investors blamed the reserves scandal on a lack of direct lines of responsibility, a criticism that led to the dismantling of the company's century-old, dual-board structure in October." (ShellNews.net) 19 Jan 05

By James Boxell in London and Ian Bickerton in Amsterdam

Royal Dutch/Shell is to introduce strict guidelines to boost accountability in its core exploration and production business, which was at the centre of a reserves overbooking scandal last year.

The new single lines of accountability within the division are part of a wider plan to lift the company's flagging production and restore its proved oil and gas reserves, which includes the recruitment of more than 1,000 engineers this year.

In an internal newsletter seen by the FT, Shell said it would prioritise 20 projects that offered the quickest way to replenish its reserves. It was forced to cut its proved reserves by almost a quarter last year and has warned that more cuts will be needed.

The company said "single point accountability" for each of the projects would be decided by January 26. It said such measures were "vital" to improving project delivery and that the "name and accountability of each project manager and decision executive [on projects costing more than $100m] will be unequivocally confirmed" by the end of this month.

At a recent meeting of the company's senior exploration and production executives to discuss the new measures, Malcolm Brinded, head of the division, said: "We simply cannot allow ambiguity as to who is accountable and we have to sort out any such issues now. This list is only the start."

Jeroen van der Veer, chief executive, recently told a meeting of the company's most senior managers that his head was "on the block" unless the reserves problem was fixed. He said the position of Mr Brinded was similarly at risk.

Many investors blamed the reserves scandal on a lack of direct lines of responsibility, a criticism that led to the dismantling of the company's century-old, dual-board structure in October.

Shell is believed to be planning an update on how it plans to replace its reserves at its February 3 annual earnings meeting. The company has promised to close the gap with rivals such as BP and ExxonMobil by finding new reserves equal to 100 per cent of the oil and gas it extracts for the next four years.

Mr Brinded was forced to admit in October that more proved reserve cuts would be needed after the completion of a new "well-by-well" audit. He is expected to provide a final figure for current reserves with the results statement, although one person close to the audit process said there was a slight chance that it might not be completed on time.

Additional reporting by Doug Cameron in Houston