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Los Angeles Times: Shell Increases 2004 Spending in Europe

Los Angeles Times: Shell Increases 2004 Spending in Europe

“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.”

By Associated Press

25 August 04

LONDON — Royal Dutch/Shell Group on Wednesday announced a $150 million increase in the amount of money it will spend in 2004 on exploration and production in Europe, bringing the total to $1.8 billion.

In addition to Italy, Ireland, Germany and Austria, Shell’s European region includes the North Sea, which is made up of Britain, Denmark, Netherlands and Norway. Despite recent concerns in the oil industry of declining production in the North Sea, Shell said it remains a strategic heartland for the company.

“We have invested around 8 billion pounds ($14.3 billion) in technology, manpower and infrastructure in the past 10 years,” said Tom Botts, Shell’s chief executive officer of European exploration and production. “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 the fields subject to last year’s controversial reserves downgrades by the company.

“Through our investments, Shell will ensure our exploration and production business in the European offshore can grow,” Botts said.

Earlier this week, the oil giant and the U.S. Securities and Exchange Commission announced a $125 million settlement resolving an inquiry into the overstatement of Shell’s oil and gas reserves.

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

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 addition, the Anglo-Dutch company agreed to pay 17 million pounds ($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 $432 million.

In trading Wednesday afternoon, U.S. traded shares of the two key stakeholders of Royal Dutch/ Shell Group moved higher. Shares of Royal Dutch Petroleum Co. were up 24 cents at $49.92 on the New York Stock Exchange, while shares of Shell Transport & Trading Co. were up 11 cents at $43.13.

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