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THE WALL STREET JOURNAL ASIA: Shell’s reserves remain steady; CEO salary grows

March 18, 2008

LONDON — Royal Dutch Shell PLC said its net reserves at the end of last year were stable, easing fears that the company risked a repeat of its oil-reserves crisis of 2004.

The Anglo-Dutch oil firm said in its annual strategy update that it had net reserves at the end of last year of 11.9 billion barrels of oil equivalent, unchanged from a year earlier. Shell’s announcement comes after it delayed its disclosure by six weeks.

Resources under construction could yield an additional one million barrels of oil equivalent a day, Shell said.

Shell said it expects to boost capacity of its oil sands by 60,000 barrels a day, an increase of more than 60%. The company predicts more than seven million metric tons a year of new liquefied-natural-gas capacity, up 50%.

NCB analyst Peter Hutton described the announcement as “very positive,” though he estimated that reserves replacement in Shell’s core group exploration and production companies, which excludes minority stakes, was just 26%, largely due to the loss of control last year in the Sakhalin II project in Russia. Mr. Hutton said the forecast to add a million barrels a day of oil and gas output will come at a cost. “It will be very punitive for cash flow,” he said.

Separately, Shell said Chief Executive Jeroen van der Veer received €6.5 million ($10.2 million) in salary, bonuses and other benefits in 2007, up 19% from 2006. Mr. van der Veer’s 2007 pay included a €2.89 million bonus, up from €2.04 million in 2006.

The company said it will ask its shareholders to vote at the annual meeting for an increase of long-term share awards to the CEO. For this year, the level of the conditional performance awards has been increased to 2.5 times base salary. Shell is proposing the awards reach four times base salary.

Shell shares shed 1.9% to £16.83 in London.

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