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Forbes: Shell to Spend More on North Sea Venture

Forbes: Shell to Spend More on North Sea Venture

Shell has acknowledged that the overstatement of reserves and “inappropriate” accounting in other business areas resulted in profits being inflated by US$432 million.

Associated Press

08.25.2004,

Royal Dutch/Shell Group announced Wednesday that it would spend US$1.8 billion on exploration and production in the North Sea, including building a pipeline to transfer gas from Norway to Britain.

Shell said the North Sea remained a strategic heartland.

“We have invested around 8 billion pounds (US$14.3 billion) in technology, manpower and infrastructure in the past 10 years,” he said. “We are not going to walk away from that investment.”

One of the fields likely to receive part of the additional investment is Ormen Lange in Norway, which was among oil fields subject to last year’s controversial reserves downgrades by the company.

Earlier this week, the oil giant and the U.S. Securities and Exchange Commission announced a formal settlement of an SEC inquiry into the overstatement of Shell’s oil and gas reserves.

The alleged role of individuals in the scandal remains under investigation by the SEC, and Shell also faces a separate probe by the U.S. Justice Department.

In the SEC deal, Shell agreed to pay a US$120 million fine. The world’s third-largest publicly traded oil company also agreed to spend US$5 million on an internal compliance program. Royal Dutch/Shell neither admitted to nor denied wrongdoing in the settlement but did agree to refrain from future violations of SEC laws.

In addition, the Anglo-Dutch company agreed to pay 17 million pounds (US$30 million) to settle related allegations by Britain’s Financial Services Authority.

Shell’s leaders apologized to shareholders this spring for failures in governance that led the company to overstate its proven oil and natural gas reserves by 4.47 billion barrels, or about 23 percent, for 1997-2002. Shell has acknowledged that the overstatement of reserves and “inappropriate” accounting in other business areas resulted in profits being inflated by US$432 million.

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