The Wall Street Journal: Marathon CEO: New Regulations On Oil Reserves Not Needed: “Cazalot said he's concerned scrutiny of the issue in light of the Royal Dutch/Shell Group scandal could result in unnecessary regulation.”
By JOHN M. BIERS
Of DOW JONES NEWSWIRES
Posted 24 July 04
HOUSTON -- The government shouldn't impose new regulations on petroleum companies' reporting of oil and gas reserves, because inflation of those closely watched numbers isn't a widespread problem, Marathon Oil Co. (MRO) Chief Executive Clarence Cazalot Jr. said Thursday night.
Cazalot said he's concerned scrutiny of the issue in light of the Royal Dutch/Shell Group (RD,SC) scandal could result in unnecessary regulation. A congressional committee explored the issue Wednesday in Washington, and the Securities and Exchange Commission is considering whether outside auditors should have to review companies' reserve estimates.
"A lot of people want to solve a problem that is not as widespread as some people would have you believe," said Cazalot, noting that Marathon and most other oil companies haven't had Shell 's problems.
In a brief but wide-ranging interview with reporters on the sidelines of a reception at the Houston Petroleum Club, Cazalot said Russia's recent moves to raise dues on oil producers disproportionately affects smaller producers and should be changed.
"The overall terms need to be improved," Cazalot said.
Marathon last year spent $280 million on Khanty Mansiysk Oil Corp., which had estimated proved and probable reserves of 250 million barrels in western Siberia as of May 2003.
Cazalot declined to comment on reports this week quoting officials from OAO Rosneft (RNT.YY), who said a proposed venture between the companies was no longer under discussion. Overall, "Russia is too large a resource opportunity for the industry to not participate," he said.
Cazalot said a Senate probe questioning payments by Marathon and other oil companies to Equatorial Guinea is complete. He reiterated the company's view that Marathon has complied with the law. The Senate report said the payments "may have contributed to corrupt practices" in the small African country.
-By John M. Biers, Dow Jones Newswires; 713-547-9214; john.biers@dowjones.com