Shell chief 'told of reserves shortfall in 2002'

The heat was intensifying under the former chairman of Shell yesterday following reports that Sir Philip Watts was warned that oil reserves were being overbooked two years before the company publicly disclosed the fact.

According to a report in the Wall Street Journal, memos circulated in early 2002 to senior Shell directors including Sir Philip cautioned that the Anglo-Dutch company's reserves booking methods appeared to be inconsistent with guidelines laid down by the US Securities and Exchange Commission.

The memos, said to have been written by managers within Shell's exploration and production division, warned that the company's proven reserves might need to be cut by about one billion barrels.

Shell fired Sir Philip and Walter van de Vivjer, its current head of exploration and production, last week after the board "lost confidence" in them. The company said the sacking of the two directors had stemmed directly from the "facts and circumstances" of Shell's disclosure in January that it had cut its proven reserves by 20 per cent or 3.9 billion barrels.

The group's audit committee is now conducting an investigation into the reserves downgrade, due to be completed in the next few weeks, and Shell has pledged to make its findings public.

When the reserves downgrade was announced on 9 January, Shell said it had stemmed from a number of in-depth reserves studies and then a group-wide review undertaken in the fourth quarter of last year.

In a subsequent letter to staff a week later, Sir Philip said information about the reserves downgrade had been released "at the earliest possible time after the recategorised reserves had been quantified with some certainty".

However, yesterday's press report said there had been a "trail of communications" about the need to reclassify reserves dating back to early 2002.

In a conference call last Friday, Shell's new chairman, Jeroen van der Veer, declined say whether Sir Philip and Mr van de Vivjer had acted improperly or illegally. In response to repeated questioning, he would say only that the board had lost confidence in the two.

The overbooking of reserves took place over a six-year period between 1996 and 2002. For most of that time, Sir Philip was head of exploration and production for Shell. He became chairman in 2001.

Shell refused to comment on the claims that Sir Philip and other senior directors had been warned about the overbooking of reserves as long ago as early 2002. "We are not privy to the work of the group audit committee review and it would be inappropriate for us to comment or speculate," a spokesman said.

However, other sources said it was unlikely that the extent of the problem would have been covered up for two years. It was also pointed out that the memos would have been widely circulated among the directors and senior management of Shell, and not just sent to Sir Philip.

PROMOTED VIDEO
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Life and Style
tech
Arts and Entertainment
'Molecular Man +1+1+1' by Jonathan Borofsky at Yorkshire Sculpture park
tv
News
Glamour magazine hosts a yoga class with Yogalosophy author Mandy Ingber on June 10, 2013 in New York City.
newsFather Padraig O'Baoill said the exercise was 'unsavoury' in a weekly parish newsletter
Extras
indybest
News
people'She is unstoppable', says Jean Paul Gaultier at Paris show
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

2 x Risk Analysts Required - SAS - Banking

competitive: Progressive Recruitment: A world leading banking organisation are...

Brady Business Analyst - Syseca - (EBIS / EDIS) - London

£500 - £1000 per day: Harrington Starr: Harrington Starr are urgently recruiti...

Systems Accountant

£75000 - £100000 per annum: Cameron Kennedy Recruitment: We urgently require f...

Investment Banking Sales Manager

£40000 - £50000 per annum + competitive package: Orgtel: Investment Banking Sa...

Day In a Page

The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice
Hollywood targets Asian audiences as US films enjoy record-breaking run at Chinese box office

Hollywood targets Asian audiences

The world's second biggest movie market is fast becoming the Hollywood studios' most crucial
Grindr founder Joel Simkhai: 'I've found love on my dating app - and my mum keeps trying to hook me up!'

Grindr founder Joel Simkhai: 'I've found love on my dating app'

Five years on from its launch and Grindr is the world's most popular dating app for gay men. Its founder Joel Simkhai answers his critics, describes his isolation as a child
Autocorrect has its uses but it can go rogue with embarrassing results - so is it time to ditch it?

Is it time to ditch autocorrect?

Matthew J X Malady persuaded friends to message manually instead, but failed to factor in fat fingers and drunk texting
10 best girls' summer dresses

Frock chick: 10 best girls' summer dresses

Get them ready for the holidays with these cool and pretty options 
Westminster’s dark secret: Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together

Westminster’s dark secret

Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together
A History of the First World War in 100 Moments: Dulce et decorum est - a life cut short for a poet whose work achieved immortality

A History of the First World War in 100 Moments

Dulce et decorum est: a life cut short for a poet whose work achieved immortality
Google tells popular music website to censor album cover art in 'sexually explicit content' ban

Naked censorship?

The strange case of Google, the music website and the nudity take-down requests
Howzat! 8 best cricket bats

Howzat! 8 best cricket bats

As England take on India at Trent Bridge, here is our pick of the high-performing bats to help you up your run-count this summer 
Brazil vs Germany World Cup 2014 comment: David Luiz falls from leader figure to symbol of national humiliation

David Luiz falls from leader figure to symbol of national humiliation

Captain appears to give up as shocking 7-1 World Cup semi-final defeat threatens ramifications in Brazil