The board members of Royal Dutch/Shell Group apparently are reviewing a report this week by the company’s audit committee that puts the blame for the oil and gas reserves revisions on former Chairman Sir Philip Watts and Walter van de Vijver, the former exploration and production chief.
The Wall Street Journal reported Monday that the parent companies have not signed off on the audit committee’s findings, and were going to be considering the report this week. The Journal reported that the audit committee does not recommend further changes to Shell’s top management team. Watts and van de Vijver resigned in early March following the reclassification of 20% of Shell’s proved reserves in January (see Daily GPI, March 4).
The draft report is said to be more than 200 pages, and “details how Shell officials made changes starting in the early 1990s that may have resulted in Shell managers and engineers feeling emboldened to inflate reserves without fear of consequence,” the Journal reported.
People familiar with the report said “Shell’s management determined that the oil giant was too conservative in claiming reserves compared with its peers,” and said “engineers and other managers appeared to have abused the relaxed internal rules to further their careers, and an effective internal auditing system wasn’t in place to curb the abuses.”
The report does not assign any blame to other “lower level” Shell managers, but “it does mention some other individuals by name,” the Journal reported. The company already has undertaken a reorganization of some of its personnel, along with additional training on reserves accounting (see Daily GPI, March 19).
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