Shell revises proved oil and gas reserves

Royal Dutch/Shell yesterday restated its proved oil and gas reserves at the end of 2002 for the fourth time this year.

The latest revision, reflecting a change in the accounting treatment of reserves in Canada, increased the total reduction from 4.35 billion barrels to 4.47 billion barrels. The Anglo-Dutch oil group said there would be no effect on its cashflow.

Shell announced the revision, along with other accounting changes, ahead of the scheduled publication of its annual report on Friday, two months later than normal. The annual report will now show proved reserves of 14.35 billion barrels at the end of 2003, equal to 10.2 years of production. Shell's reserve replacement ratio in 2003 was 63 per cent.

Asked if this was the final restatement of reserves, Mr Malcolm Brinded, head of exploration and production, said: "At the moment, we're not planning to make any further changes but I think we've learnt never to say never." Revisions and new accounting policies announced yesterday will reduce reported net income for 2003 by $203 million (€169.67 million) to $12.5 billion.

Mr Jeroen van der Veer, chairman of the committee of managing directors, said the accounts had received an unqualified audit opinion by KPMG for Royal Dutch and PwC for Shell Transport & Trading.

Shell said discussions were continuing with the Securities and Exchange Commission about its 20-F filing for 2003 and the revised one for 2002. It said it would report 2003 results entirely according to US Generally Accepted Accounting Principles (GAAP), rather than the previous mixture of that and Netherlands GAAP. It will move to International Financial Reporting Standards in 2005.