- The Washington Times - Monday, April 19, 2004

LONDON (AP) — A top executive of the Royal Dutch/Shell Group of Cos. wrote in an e-mail that he was “sick and tired about lying” about the company’s inflated oil and gas reserves estimates, an investigation commissioned by Shell reported yesterday.

The investigation, whose findings Shell accepted in full, found that some bosses knew for almost two years that the company had publicly overstated the size of its reserves. The shaken oil giant also announced that its chief financial officer had stepped down, the latest in a string of high-level casualties since Shell’s announcement in January that its confirmed oil and gas holdings were much smaller than it had asserted.

The company said yesterday that it had now downgraded a total of 4.35 billion barrels, or about 22 percent of its reserves, from “proven” to less certain categories. That is 200 million barrels more than its previous estimate.

Shell said in January that it was downgrading 3.9 billion barrels, or about 20 percent of its total holdings. A March announcement brought the total downgraded to 4.15 billion barrels.

The disclosures caused an uproar among shareholders and led to a string of resignations. Reserves are an oil company’s most valuable asset, and any reclassification into less certain categories is a major concern for investors.



Shares in Shell Transport & Trading Co. fell 0.76 percent to $7.06 yesterday on the London Stock Exchange.

A summary of an outside investigation into managers’ conduct, made public by Shell, said executives in the exploration and production division had exaggerated the size of reserves and failed to act when it became clear that the estimates were unrealistic.

Walter van de Vijver complained about the estimates after he took over as chief of the division in June 2001, replacing Philip Watts, who had been promoted to Shell chairman, the summary said.

The report said Mr. van de Vijver notified Shell’s managing directors in February 2002 that the company’s reserve classification rules did not match those of the U.S. Securities and Exchange Commission and that Shell might have overestimated its reserves by 2.3 billion barrels.

“I am becoming sick and tired about lying about the extent of our reserves issues and the downward revisions that need to be done because of far too aggressive/optimistic bookings,” Mr. van de Vijver wrote in a November 2003 e-mail.

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