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msn: Shell ‘to slash reserve figures’

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pa.press.net – 17.03.2008 01:38

Oil giant Royal Dutch Shell is set to slash its 2007 reserves figures by more than half, it has been reported.

The company will mark down its reserves by 1.3 billion barrels – around one year’s production – according to the Observer newspaper.

Chief executive Jeroen van der Veer is also expected to say that production growth will be near zero until 2010 in a strategy update on Monday, the report says.

Shell was at the centre of the biggest crisis in its history in 2004 when it overstated its reserves by a fifth, shaking confidence in the firm and sparking lawsuits which the oil major has settled at a cost of more than £200 million.

Mr van der Veer is expected to cite problems in Russia and Nigeria as the reason for the reserves downgrade, the report says.

The Anglo-Dutch company’s stake in the vast Sakhalin-2 gas field has been diluted from 55% to 27.5% after Russian giant Gazprom bought control of the project in April last year. This is expected to wipe 1.1 billion off reserves.

Meanwhile Shell’s production facilities in Nigeria have come under heavy attack from rebels in the oil-rich Niger Delta region. The company is said to have lowered its reserves estimates by around 200 million barrels as a result.

The company’s reserves replacement ratio is expected to have fallen to around 80% last year – meaning Shell only found enough oil and gas to replace 80% of what it produced – according to the newspaper.

The reserves issue comes just weeks after Shell reported annual profits of 27.6 billion US dollars (£13.6bn) for 2007 – a record for a UK company which sparked calls for a windfall tax on the profits.

A spokesman for Shell refused to comment ahead of Monday’s update.

http://news.uk.msn.com/Article.aspx?cp-documentid=7825344

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