BLOOMBERG: U.K.'s Brown Calls for Oil Producers to Reveal Reserves, Output: “…Shell reduced its estimate of 2003 reserves by 9.8 percent and said its holdings may not rise until next year. Because of the lost reserves, first disclosed in January 2004, Shell paid $151.5 million in U.S. and U.K. fines and dismissed three executives. The U.S. Justice Department is conducting a criminal probe.” (ShellNews.net) Posted 7 Feb 05

(Bloomberg) -- U.K. Chancellor of the Exchequer Gordon Brown will demand that oil-producing nations and companies lift the secrecy surrounding output and reserves, aiming to curb volatility in prices.

Brown will urge fellow finance ministers from the Group of Seven industrial nations, meeting in London today, to draw up worldwide standards for accounting for reserves. He also wants producing nations to publish exact figures on supply.

The measures are designed to give traders better information on supply, replacing the estimates now made by consultants who track oil tankers because producing nations such as Saudi Arabia withhold the data. Threats to supply in Iraq, Russia and Nigeria sent New York crude to a record $55.67 a barrel last year.

Oil-producing countries need to ``take action,'' a spokesman from the Treasury said, speaking on condition of anonymity, citing government policy.

The proposals, if enacted, also would force companies such as BP Plc and the Royal Dutch/Shell Group, Europe's two biggest oil companies, to publish data about their reserves on an internationally agreed basis. Currently, companies follow their own guidelines on disclosing how much oil they have yet to tap.

More Art Than Science

For the oil industry, estimating reserves is more art than science. Companies hire consultants such as DeGolyer & MacNaughton and Ryder Scott Co. to assess how much oil is in the ground based on how much wells are currently producing and the results of seismic surveys that map underground rock formations.

Brown's proposal would require the world's biggest oil- producing nations to give more detail than they've made available before on their national oil companies, budgets and government spending plans, the Treasury official said.

Treasury officials said the data is necessary to ensure producers can keep up with oil demand at ``reasonable prices.'' Brown wants producing countries to reduce ``barriers to investment.'' State-run oil companies such as Aramco in Saudi Arabia and Petroleos de Venezuela SA in Venezuela dominate the industry in some countries.

Brown will call on the International Energy Agency to coordinate discussions between companies and standard-setting bodies with expertise in measuring reserves, the Treasury official said.

Earlier this week, Shell reduced its estimate of 2003 reserves by 9.8 percent and said its holdings may not rise until next year. Because of the lost reserves, first disclosed in January 2004, Shell paid $151.5 million in U.S. and U.K. fines and dismissed three executives. The U.S. Justice Department is conducting a criminal probe.

Last year, Brown pressed the Organization of Petroleum Exporting Countries to take action that would reduce oil prices, saying the cost of fuel is creating upward pressure on inflation.

To contact the reporters on this story:

Gonzalo Vina in London at gvina@bloomberg.net;

Reed V. Landberg in London at landberg@bloomberg.net.

To contact the editor responsible for this story:

Chris Kirkham at ckirkham@bloomberg.net;

Heather Harris at hharris@bloomberg.net.

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