Royal Dutch/Shell withheld information about a big reduction in its oil and gas reserves in Nigeria for fear of damaging its business relationship with the government, the New York Times reported on Friday.
Shell cut its oil and gas reserves estimate for the second time this year on Thursday — a fresh blow to investor confidence after it first cut the reserves by 20 percent in January.
Citing internal company documents from late last year, the Times said Shell had concluded that 1.5 billion barrels, 60 percent of its Nigerian reserves, did not meet accounting standards for proven reserves.
A December 8 report prepared by Walter Van de Vijver, then head of exploration and production, recommended the revised Nigerian reserve remain "confidential in view of host country sensitivities," the Times reported.
Van de Vijver and then Chairman Philip Watts were both ousted after the January revelation of overstated reserves.
Shell's senior managers were told in December that 720 million barrels in Nigeria were non-compliant with guidelines established by the Securities and Exchange Commission, and another 814 million barrels were potentially non-compliant, the Times said.
Shell recorded 2.524 billion barrels of proven reserves in Nigeria at the end of 2002. But after reviews and tightening of company guidelines, only 990 million barrels fully complied with the rules, according to the December report.
"Shell has provided the Nigerian Authorities with an explanation of the Group recategorisation of some proved reserves and has confirmed to the government that it will have no impact on the reporting by Shell of its part of Nigeria's reserves," said a Shell spokesman in London.
"The Nigerian authorities presently appear to be satisfied with Shell's explanations," the spokesman added. Shell's January 9 recategorisation included 1.3 billion barrels from Nigeria, the spokesman said.
Revealing the extent of Shell's lowered reserves in Nigeria could affect the country's quota discussions with the Organisation of the Petroleum Exporting Countries (OPEC), the Times said, quoting the December report.
Nigeria wants a quota increase from OPEC as part of a plan to double its daily production in the next several years.
The Times quoted the report as saying the publication of too much information about Nigerian reserves could also jeopardize the company's negotiations with the country over $385 million in bonus payments.
Shell hopes to start production from Nigeria's huge Bonga field later this year, the second in a series of big offshore investments by the company which will help Nigeria lift its output capacity by 60 percent over the next six years.
Nigeria's OPEC quota currently stands at two million barrels per day, 7-8 percent of the 11-member group's total ceiling. Actual Nigerian output is already near 2.5 million barrels per day and rising towards four million by the end of this decade.
