Thursday, Apr 15, 2004
Key oil reserves of Royal Dutch/ Shell were queried by the Nigerian government months before its questionable practices thrust the energy giant into crisis.
One set of documents prepared by Shell in April 2001 and submitted to Nigerian authorities forecast production rises of as much as 70 per cent by 2003. Another set prepared between 2001 and 2003 showed increases in reserves booked with the government largely based on data reviews, rather than new exploration or wells. The 2001 production forecasts proved to be severely optimistic. The Financial Times has seen all the documents.
As much as a third of 3.9bn barrels wrongly booked with the US Securities and Exchange Commission were in Nigeria. That mistake forced the departure of two executives and prompted investigations by the SEC, the US department of justice and European regulators. The SEC has stricter guidelines on booking reserves as proved than the Nigerian government has.
Jonathan Bearman, managing director of Clearwater, a consulting firm that does business intelligence work in Nigeria, told the FT: "Concerns had been growing among Nigerian oil officials for some time. There were quite big claims made about total reserves and Shell accounted for a large part of that."
He said concerns were raised in mid-2003 after the Nigerian government's annual independent audit of its partnerships with Shell and other oil producers. Issues raised included Shell's aggressive production growth estimates and the number of reserves the company was booking with the government, going back as far as five years. Shell was made aware of these issues, Mr Bearman said.
The Nigerian government has remained quiet on the issue. Analysts say that maintaining a big reserve base may help it secure a higher production quota with the Organisation of Petroleum Exporting Countries, the oil cartel. Lex, Page 20
By CAROLA HOYOS and MICHAEL PEEL
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