Shell chiefs quit over oil reserve miscalculation

4 March 2004

AMSTERDAM —F ollowing Royal Dutch/Shell’s reduction of its oil reserve estimates by 20 percent earlier this year, Sir Philip Watts, the chief executive of the energy firm, has resigned and will be replaced by Dutchman Jeroen van der Veer.

The 58-year-old Sir Philip, who was due to take retire in 2005, refused to resign last month. But continued criticism from institutional investors and a resignation request from the supervisory board led to his departure on Wednesday, public news service NOS reported.

Van der Veer, 56, was previously deputy chief executive of the multinational and since 2000 has been the boss of Koninklijke Olie, the Dutch arm of the joint Anglo-Dutch company. He has a contract until June 2008.

The Dutchman has worked with Shell since 1971 and was responsible for the company’s chemical division. He is a backer of a durable energy sources and British national, Malcolm Brinded, will be his second-in-command.

Besides Sir Philip, the director of the Exploration and Production division, Walter van der Vijver, has also resigned at the request of the supervisory board. Despite the fact the reserve estimates were made by his department, Van der Vijver had also initially refused to resign.

Sir Philip, a British national, was the chief of the exploration and production division before he was appointed company chief in 2001. Outsiders had previously considered Van der Vijver as the likely replacement for Sir Philip, news agency ANP reported.

Shell announced unexpectedly in January that it was reducing its oil reserve estimates by 20 percent because they were not as guaranteed as previously thought. Van der Vijver, a Dutchman, had said he would personally solve the problem.

Shell share price has suffered heavily as a result of the affair, knocking EUR 15 billion off its stock market valuation. The revision of its oil reserves means Shell now has 11 rather than 13 years of acknowledged reserves.

The company said the change in leadership was a decision taken with “mutual consent”, but no decision has been made about departure bonuses. That is a matter for the board of commissioners, a company spokesman said.

Subject: Dutch news