Shell sticks by Watts but will reform board

The oil giant Shell is to embark on boardroom reforms following the outcry over its chairman Sir Philip Watts, but it has decided for now to resist shareholder demands for his head.

Senior sources at the Anglo-Dutch oil major said that the management succession at Shell would follow the normal course, but they conceded that changes would need to be made to the company's corporate governance arrangements.

Sir Philip is under pressure to resign before Shell's annual results presentation in two weeks' time after he failed to attend an investor briefing at which the company dropped the bombshell that it had overbooked reserves by a quarter.

There was further embarrassment earlier this week when it emerged that an exploration block in India which Shell sold for £4m had been discovered to contain at least $500m (£271m) worth of oil.

Sir Philip is not due to step down until June next year when he reaches the compulsory retirement age of 60. Sources said there were no plans at this stage to alter that, although there is widespread expectation that Sir Philip's replacement will be named sooner rather than later. It is not clear how extensive the corporate governance changes will be although the dual board structure was said to be "sacrosanct".