Shell Group increases its spending in Europe

Oct 17, 2004 02:00 AM

Shell announced a $ 150 mm increase in the amount of money it will spend in 2004 on exploration and production in Europe, bringing the total to $ 1.8 bn. In addition to Italy, Ireland, Germany and Austria, Shell's European region includes the North Sea, which is made up of Britain, Denmark, The Netherlands and Norway. Despite recent concerns in the oil industry of declining production in the North Sea, Shell said it remains a strategic heartland for the company.
"We have invested around £ 8 bn ($ 14.3 bn) in technology, manpower and infrastructure in the past 10 years," said Tom Botts, Shell's CEO of European exploration and production. "We are not going to walk away from that investment."

One of the fields likely to receive part of the additional investment is Ormen Lange in Norway, which was among the fields subject to last year's controversial reserves downgrades by the company.
"Through our investments, Shell will ensure our exploration and production business in the European offshore can grow," Botts said.

The oil giant and the US Securities and Exchange Commission has announced a $ 125 mm settlement resolving an inquiry into the overstatement of Shell's oil and gas reserves. As part of the SEC deal, Shell agreed to pay a $ 120 mm fine. The world's third-largest publicly traded oil company also agreed to spend $ 5 mm on an internal compliance program. Shell neither admitted to nor denied wrongdoing but did agree to refrain from future violations of SEC laws.
The alleged role of individuals in the scandal remains under investigation by the SEC, and Shell also faces a separate probe by the US Justice Department. In addition, the Anglo-Dutch company agreed to pay £ 17 mm ($ 30 mm) to settle related allegations by Britain's Financial Services Authority.

Shell's leaders apologized to shareholders this spring for failures in governance that led the company to overstate its proven oil and natural gas reserves by 4.47 bn barrels, or about 23 %, for 1997-2002.
Shell has acknowledged the overstatement of reserves and "inappropriate" accounting in other business areas resulted in profits being inflated by $ 432 mm.

Source: Associated Press
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