Houston Chronicle: Royal Dutch-Shell fuels doubts

June 29, 2004,

THE HAGUE, NETHERLANDS - For the first time since it became engulfed in an oil reserve scandal, the Royal Dutch-Shell Group of Companies on Monday tried to contain the fury of shareholders at its annual meeting, but the company may have made things worse after an executive raised doubts about when he was first informed of the reserve discrepancy.

Shareholders demanding to know how the company could have overbooked about 4.5 billion barrels of oil and gas reserves and also when company officials first knew about it appeared surprised when Aad Jacobs, supervisory board chairman of the Royal Dutch Petroleum Co., said he was told of "an issue with reserves" last November. Shell's overstatement of its reserve estimates did not become public knowledge until early January.

Jacobs said he was having lunch last November with Walter van de Vijver, then head of exploration and production, when a problem with reserves was mentioned. Jacobs said he advised van de Vijver to "go talk to your colleagues and the chairman," referring to Philip B. Watts, then chairman of Royal Dutch-Shell. Watts and van de Vijver resigned earlier this year.

During the shareholders' meeting in the Netherlands on Monday, Jacobs said he first learned in early January that Shell was making the first of what were eventually four revisions of its proven reserves.

The Shell Transport & Trading Co., the other half of Royal Dutch-Shell, held a simultaneous shareholders meeting in London. A Shell Transport spokesman said that the phrase "an issue with reserves" could have referred to just about anything because oil and gas companies routinely struggle with reserves.

Shell's reserve scandal is the subject of several regulatory investigations in both the United States and Europe.

http://www.chron.com/cs/CDA/ssistory.mpl/business/energy/2652429