Lloyds List: US legal reprieve for oil major Shell

Lloyds List: US legal reprieve for oil major Shell

When the scandal broke, Shell’s then chairman, Sir Philip Watts, was sacked and US shareholders were threatening to take legal action. There are three legal actions remaining and on one the oil major is waiting for a decision on a motion to dismiss the case. On the other two, Shell is in settlement discussions, said a spokesman.

Friday Jul 01, 2005

Martyn Wingrove

ROYAL Dutch/Shell Group has been saved from further US legal action after the Department of Justice dropped its investigation into the firm’s recategorisation of oil and gas reserves.

US attorney for the southern district of New York David Kelley has dropped his case and will not be taking any further actions against Shell, which slashed almost a quarter of its proved oil and gas resources last year.

‘The conclusion of this investigation is a most important step towards putting the matter of the reserves recategorisation behind us. We appreciate US attorney Kelley’s decision,’ said Jeroen van der Veer, Shell’s chief executive.

The Department of Justice started an investigation after the Anglo-Dutch oil major came clean on the overbooking of hydrocarbon resources in the first half of 2004.

When the scandal broke, Shell’s then chairman, Sir Philip Watts, was sacked and US shareholders were threatening to take legal action.

There are three legal actions remaining and on one the oil major is waiting for a decision on a motion to dismiss the case. On the other two, Shell is in settlement discussions, said a spokesman.

The Anglo-Dutch group was under investigation from other regulatory authorities. It paid the US Securities and Exchange Commission $120m on the conclusion of its investigation and has paid the UK’s Financial Services Authority GBP17m ($30m).

Last year, Shell recategorised 4.47bn barrels of oil equivalent of reserves for the end of 2002 and this year did the same for 1.37bn boe for its end-2003 booked resources.

This led to a reorganisation of management and the pledge to put its house in order, which has culminated in the unification of the two boards.

This week shareholders in Shell Transport ‘ Trading and Royal Dutch Petroleum approved the unification of the group into Royal Dutch Shell. This will come into effect on July 20.

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