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Shell Reports $8.3 Billion Pension Deficit, Plans Payments

By Guy Collins

March 18 (Bloomberg) — Royal Dutch Shell Plc reported an $8.3 billion pension plan deficit for 2008 and expects to make “significant” cash contributions to pensions in addition to the regular annual contribution of between $1 billion and $2 billion.

The amount of additional payments is currently estimated to be in the range of $5 billion to $6 billion, Europe’s biggest oil company by market value said in a filing to the U.S. Securities and Exchange Commission.

Shell, based in The Hague, said yesterday its reserve replacement ratio, including oil sands, fell to 95 percent in 2008 from 124 percent the previous year, excluding acquisitions, divestments and year-end price effects. The company pledged to pay $10 billion in dividends this year, even as it funds the biggest spending program among its peers to revive output growth.

The company said the amount of payments to the pension funds will depend on agreements to be made with local regulators or trustees, and the timing is still to be agreed.

In 2009 the lower pension asset values will result in an estimated non-cash pretax pension charge of $1.9 billion compared with a pretax pension income of $800 million in 2008.

To contact the reporter on this story: Guy Collins in London on[email protected]

Last Updated: March 18, 2009 02:46 EDT 

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