LONDON, Jun 09, 2005 (Dow Jones Commodities News Select via Comtex)
Royal Dutch/Shell Group (RD, SC) Thursday published new internal rules on booking oil reserves that were revised to meet U.S. regulatory guidelines and help put behind it a scandal that unfolded last year.
The Anglo-Dutch oil major - which cut its estimate of reserves by over a third since last January,aims to address criticism of former accounting practices, such as booking reserves on projects in which investment plans hadn't been approved.
Under its new rules, Shell said that for a major field of 50 million barrels of oil equivalent or more, the final investment approval must be received before a project is booked in its reserves.
For smaller fields, Shell must also have evidence that similar projects have come to fruition.
It said all proved reserves must be monitored at every year-end, to make sure prior bookings are still valid. Documentation of changes at the reservoir level must be carried out each year.
The disclosure follows a $150 million settlement with both the Securities and Exchange Commission and the U.K.'s Financial Services Authority in July, following a string of restatements after the company allegedly boosted its numbers artificially.
The payments didn't imply a recognition of guilt but the company is still the target of related class-action lawsuits in the U.S.
Unlike other oil majors who recently sponsored a study criticizing the U.S. Securities and Exchange Commission's reserves-accounting standards as obsolete, Shell appears to consider the guidelines as pertinent.
"The SEC requirement of "reasonable certainty" represents the rationally high standard of evidence/confidence consistent with the meaning of the word 'Proved'", it said in the report. (C) 2005 FWN Select. All Rights Reserved
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