Shell Braced for Further Downgrades in Oil and Gas Reserves

BP and Norsk Hydro, the Norwegian oil and gas company, are coming under increasing pressure to defend their booking of proven reserves

Published: 24-Mar-2004

Investors in Shell expect more damaging downgrades in the energy giant's oil and gas reserves within the next few weeks.

Only 40 percent of the company's reserves have been audited after last month's unexpected 20 percent downgrade in proven reserves, equivalent to 4 billion barrels. The downgrade led to the departure of group chairman Sir Philip Watts.

The City fears more cuts are in the pipeline as the true extent of Shell's reserve overstatement becomes clear. Shell, under investigation by the US Securities & Exchange Commission (SEC), reduced its proven reserves at Norway's Ormen Lange by 160 million barrels last week. It was its second downgrade of total reserves in a month.

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