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AFP: Shell to slash oil reserve figures for 2007: report

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Anglo-Dutch oil giant Shell is to cut its reserve figures for 2007

LONDON (AFP) — Anglo-Dutch oil giant Shell is to cut its reserve figures for 2007, taking about 1.3 billion barrels off its books or the equivalent of nearly one year’s production, The Observer said Sunday.

The weekly newspaper said the company would announce the writedown of at least 200 million barrels off the estimates for its operations in Nigeria while another 1.1 billion barrels would be lost from Russia.

The revision of its booked proven reserves will be outlined when Shell chief executive Jeroen van der Veer sets out the company’s annual strategy presentation on Monday, it added, without citing sources.

Van der Veer would also explain that production growth will be “zero or near zero” until 2010, the newspaper said.

Shell was hit with record fines and forced to pay compensation in 2004 after misstating its reserve figures for 2002 by 20 percent, prompting a share price slump, the departure of key executives and a company reorganisation.

The newspaper said they had been forced to act this time round because rebels had sabotaged facilities in Nigeria and its joint venture with the government had stalled for lack of investment and rising taxes.

Losses in Russia result from Shell’s sale of part of its stake in the Sakhalin 2 venture to the state-owned gas giant Gazprom. Further reserve cuts would come in production-sharing agreements in Asia and Africa, it added.

In all, the weekly said Shell’s reserve replacement ratio — the number of barrels produced compared with new barrels to replace them — is expected to fall to about 80 percent.

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1 Comment on “AFP: Shell to slash oil reserve figures for 2007: report”

  1. #1 Iain Percival
    on Mar 17th, 2008 at 00:55

    Firstly, let me declare myself (again). I am a retired senior Shell petroleum engineer therefore no longer on payroll but also not in thrall of semi or uninformed media commentators who rejoice every time they read their “by line”. The accuracy or relevance of the report is of minor importance.
    The arcane reporting rules of the SEC oblige Shell (and others) to report proved volumes in a particular manner. However, this figure does not have a one to one correspondence with how much more or less the company can produce. As I have written earlier on this site, companies plan for and ultimately produce from the reserve “expected”. This includes production from oil sands and other unconventional resource not recognised from the 1970’s mind set SEC rules.
    The IOCs such as Shell are required now more than ever at $100 a barrel for their expertise, technology and freedom from misplaced nationalist agendas. Continually knocking Shell achieves nothing except for the prospect of becoming beholden to Venezuela, Russia, Bolivia, Sudan etc for our energy future.

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