The Times: Watts to take Shell reserves rap

By Rhys Blakely 

April 12, 2004 

The audit committee charged with investigating how Shell overstated its proven reserves by more than 20 per cent has placed most of the blame on the oil giant’s ex-chairman and a former exploration and production chief, it was claimed today.

Philip Watts, Shell’s former chairman, and Walter van de Vijver, a former exploration and production chief, were ousted last month after sustained investor pressure. 

The Wall Street Journal said that a draft report prepared by the audit group did not recommend changes to the structure of the Anglo-Dutch company.

A Shell spokesman said he could not comment on the draft report’s details but said that the final report’s conclusions would be made public.

The shock decision to reduce the group’s proven reserves led to billions of dollars being wiped of Shell’s market value.

The Securities and Exchange Commission, the American financial regulator, meanwhile, has launched an investigation into the revision of reserves amid allegations that senior Shell figures were aware as long ago as 2002 that reporting systems did not adhere to SEC guidelines.

Some industry observers have pointed out that the SEC’s guidelines are 25 years old and have failed to keep pace with modern oil and gas exploration methods.