Shell to slash oil reserve figures for 2007

Shell to slash oil reserve figures for 2007

Anglo-Dutch oil giant Shell is to cut its reserve figures for 2007, taking about 1.3 billion barrels off its books or the equivalent of nearly one year’s production, The Observer said Sunday.

The weekly newspaper said the company would announce the writedown of at least 200 million barrels off the estimates for its operations in Nigeria while another 1.1 billion barrels would be lost from Russia.

The revision of its booked proven reserves will be outlined when Shell chief executive Jeroen van der Veer sets out the company’s annual strategy presentation on Monday, it added, without citing sources.

Van der Veer would also explain that production growth will be “zero or near zero” until 2010, the newspaper said.

Shell was hit with record fines and forced to pay compensation in 2004 after misstating its reserve figures for 2002 by 20 percent, prompting a share price slump, the departure of key executives and a company reorganisation.

The newspaper said they had been forced to act this time round because rebels had sabotaged facilities in Nigeria and its joint venture with the government had stalled for lack of investment and rising taxes.

Losses in Russia result from Shell’s sale of part of its stake in the Sakhalin 2 venture to the state-owned gas giant Gazprom. Further reserve cuts would come in production-sharing agreements in Asia and Africa, it added.

In all, the weekly said Shell’s reserve replacement ratio — the number of barrels produced compared with new barrels to replace them — is expected to fall to about 80 percent.

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