Financial Times: SEC pulls out of energy forum
By Carola Hoyos
Mar 27, 2004
The Securities and Exchange Commission has decided to pull out of the only annual forum at which its two energy engineers traditionally elaborate on regulations covering the booking of oil and natural gas reserves.
The SEC has cancelled the engineers' appearance at an annual conference organised by the Society of Petroleum Evaluation Engineers. The SEC was uncomfortable running detailed hypothetical scenarios, fearing that the engineers would come too close to making pronouncements about real situations.
It will continue dispensing advice to oil companies that seek its guidance individually, people close to the regulator said. The SEC in general makes clear to all companies with share listings in the US that it is available for the resolution of individual problems.
The decision to pull out of the forum, made late last year, has frustrated many engineers in the industry, who described the conference as the best way to better understand the SEC's ambiguous rules.
Uncertainty over reserves has sent the industry reeling, with many of the sector's shares suffering after four companies admitted in the past three months to having misinterpreted the SEC's rules.
Royal Dutch/Shell, Europe's second-largest energy group, on January 9 announced it had erroneously booked 3.9bn barrels of oil and gas with the SEC from 1996-2002. El Paso, the largest US pipeline company, Canada's Nexen and Forest Oil, the US independent, all announced cuts in proved reserves they had booked.
Shell last week cut a further 250m barrels from its books because the company felt it had relied too heavily on modern technology for the data. This revealed deep divisions in the way different big oil companies interpret SEC rules.
* Sir Philip Watts, who was ousted as chairman of Royal Dutch/Shell more than three weeks ago, is expected to face questions about the company's human rights record in Nigeria in a deposition next month, writes Joanna Chung.
Sir Philip, who left the company following the reserves downgrade, was the head of Nigerian operations in the early 1990s. The depositions, or legal statements, that are taken before any trial takes place stem from a lawsuit launched against Shell in September 2002.
Sir Mark Moody-Stuart and Cor Herkstroter, two other former chairmen, and Precious Omuku, external affairs director of Shell Petroleum Development Company of Nigeria, are also expected be questioned.
The suit is seeking unspecified damages on behalf of about 50,000 Ogonis who live in Nigeria's oil-rich delta region. It says Shell had "engaged in militarised commerce in a conspiracy with the former military government of Nigeria".
Shell has rejected the allegations repeatedly.
Yesterday, Shell said: "The allegations made in the complaints are false and without merit. If and when it comes to trial, we are confident that the court will find this to be the case."
The development came as Shell and several directors face class-action lawsuits arising from the reserves downgrade.