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Shell Postpones Its Annual Report

The latest downgrade mean Shell has now cut its reserves for 2003 by 4.12 billion barrels.

The company also revealed it was facing an investigation by the Dutch Autoriteit Financiele Markten financial regulatory body for potential insider trading.

Shell is already facing an investigation from the US Securities and Exchange Commission.

"To be 20% wrong is very embarrassing. To be more than 20% wrong - wrong a second time - I think is looking pretty careless," said BBC Business Editor Jeff Randall.

Careless might be an understatement, he added.

"This situation is moving from the box marked 'incompetence' to the box marked 'scandal'," he said.
Friday, 19 March, 2004, 06:27 GMT

Shell postpones its annual report

The oil reserve downgrade is Shell's second in as many months

Energy giant Shell has delayed its annual report, due on Friday, until later in the year.

The Anglo-Dutch firm also dealt a new blow to investor confidence with a second downgrade of its oil reserves.

Shell sliced 250 million barrels off 2002 reserves, and another 220 million from the figure for 2003.

The news, which hit its shares hard in Thursday trading, follows after the shock announcement in January that it had over-booked 2003 stocks by 20%.

That revelation - equal to 3.9 billion barrels - cost its two top executives their jobs.

Shell's shares closed down 11 pence or 3% on Thursday at 361p.

Dutch probe

The latest downgrade mean Shell has now cut its reserves for 2003 by 4.12 billion barrels.

The company also revealed it was facing an investigation by the Dutch Autoriteit Financiele Markten financial regulatory body for potential insider trading.

Shell is already facing an investigation from the US Securities and Exchange Commission.

The announcement was a public relations disaster, according to BBC Business Editor Jeff Randall.

"To be 20% wrong is very embarrassing," Mr Randall said. "To be more than 20% wrong - wrong a second time - I think is looking pretty careless."

Careless might be an understatement, he added.

"This situation is moving from the box marked 'incompetence' to the box marked 'scandal'," he said.

Shareholder pressure

The reserves controversy has already claimed the scalps of former chairman Sir Philip Watts and the chief executive of Shell's exploration and production business, Walter van de Vijver.

Sir Philip was himself a former head of the exploration business.

An internal investigation launched by Shell in the wake of January's reserves downgrade is due to finish in the coming weeks.

Separately, Shell said its annual shareholders meeting would be postponed to June from April, but added that the publication of its first-quarter results - scheduled for April 29 - would go ahead as planned.

The company is under intense pressure from investors to explain why it has been forced to cut its proven reserves.

Shell's shares have fallen some 10% since the first announcement in January.

homepage: homepage: http://news.bbc.co.uk/1/hi/business/3523646.stm

What a scandal 19.Mar.2004 12:33

JR

I heard about this a month or so ago as I was doing some research on Microsoft. Shell's announcement coincided with Microsoft becoming increasingly involved with the oil and gas industry, in regard to products and services to help those companies better gauge oil and gas reserves, etc...

When I say coincided, I mean that on the same day Shell announced a 20% reduction of estimated reserves, a major US oil company signed up with a Microsoft subsidiary company called Project Group to work together on oilfield solutions, and such. Halliburton signed with this company shortly after the war started.

That may mean nothing, really. I don't think Shell would cut its estimates of reserves just to help out Microsoft with its business ventures, if it meant so much trouble for Shell. They may have been persuaded by Microsoft to increase the cut though, but who knows.

You can't really call this a scandal if everyone is involved, including the SEC. Who's supposed to be watching the SEC?