The Herald (Scotland): Chastened Shell sets out latest guidelines on oil reserves
BEN GRIFFITHS June 10 2005
OIL and gas giant Shell yesterday moved to ensure it is in line with complex rules regarding the classification of reserves as the company battles to put an overbooking scandal behind it.
In a technical report intended to manage how proved reserves are handled within the group, Shell outlined how some disclosures which are required by the US Securities & Exchange Commission have changed to comply with regulations.
In the introductory section of the text, the world’s third-biggest oil company said: “Shell’s historical practices related to proved reserves calculations have been updated to reflect a clearly different approach to determining SEC compliant reserves.”
Shell added that it was difficult to provide an exhaustive list of changes to the rules as so much had changed, primarily on proved reserves.
The group was investigated and fined £66m by the SEC following its shock reserves downgrades last year. The report forms part of Shell’s renewed effort to be more transparent and accountable to investors.
Jeroen van der Veer, Shell’s chief executive, has previously expressed his frustration at the complexity of regulations regarding reserves booking set by the SEC. He warned these could result in partners on the same project booking entirely different reserve estimates.
Shell stunned world financial markets in January 2004 when it slashed proven oil and gas reserves, or oil still in the ground, by 20%, the equivalent of 3.9 billion barrels. Further, smaller disclosures followed along with the revelation that the group’s former management had known about the vast overbooking and lied to cover it up.
The company will poll shareholders at its annual meeting later this month over plans to scrap its 100-year-old dual board system in favour of a unified structure.