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Daily Telegraph: Shell ‘knew of reserves problems last October’

Daily Telegraph: Shell ‘knew of reserves problems last October’

“The news is at odds with comments by Lord Oxburgh of Liverpool”

By Christopher Hope (Filed: 03/07/2004)

Fresh evidence emerged yesterday that directors at Shell knew as far back as October that there were problems with the company’s oil and gas reserves.

The Anglo-Dutch oil and gas giant is battling to restore its credibility after revealing earlier this year that it had exaggerated its “proven” oil and gas reserves by 23pc or 4.47 billion barrels.

A report in the Wall Street Journal claimed that Shell’s six-strong audit committee – comprising non-executives from Shell’s Dutch and British parent company – was briefed about some of the problems in October. The newspaper said it had seen a document which said that 1.04 billion barrels of oil and gas were potentially not compliant with rules set by the United States’ Securities and Exchange Commission.

Two months later, Shell announced that it had overstated its levels of “proven” oil and gas by 20pc, or 3.9 billion barrels. This figure was later revised three times.

The news is at odds with comments by Lord Oxburgh of Liverpool, Shell’s UK chairman, at Shell’s annual meeting on Monday. He said Shell’s non-executive directors only found out about the problems in early January.

Lord Oxburgh’s comments also jarred with remarks from its Dutch chairman Aad Jacobs at Shell’s Dutch annual meeting. Mr Jacobs admitted that he was told there was an unspecific problem with reserves in November last year.

A Shell spokesman said that the company does not comment on “leaked” documents. Shell’s shares were down .25 at 400.75p.

Meanwhile, BP held out hope of bumper half-year figures this month when it said second-quarter production was set to rise 17pc against a year ago, largely as a result of a Russian joint venture with TNK. BP said production was likely to be 3.95 billion barrels per day. BP’s shares closed down 4 at 481p.

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