Shell triple move to stem damage

SCANDAL-HIT Shell is to bring forward an unprecedented review of its corporate structure after making a further cut to its oil and gas reserves and demoting its finance chief today in a desperate bid to draw a line under the worst crisis in the Anglo-Dutch giant's history.

Publishing the eagerly-awaited results of an internal review into its overbooking of energy reserves, the crisis-ridden group said it fully accepted the results of the investigation and would ensure 'prompt action on its recommendations'.

A total of 4.85bn barrels of 'proved' oil and gas have been recategorised, almost a billion more than detailed in the shock warning in January that led to the resignation of chairman Sir Philip Watts and his exploration chief Walter van de Vijver.

Restated financial statements have wiped an average of $100m (£56m) a year from Shell's earnings between 2000 and 2003. Judy Boynton has 'stepped aside' from her position as group financial officer to be replaced by Tim Morrison. But Boynton, widely expected to be the third scalp in the Shell crisis, will controversially remain an employee of the group.

Crucially, in a pre-emptive sop to furious shareholders, the group is 'accelerating' the review of corporate governance promised by new chairman Jeroen van der Veer a month ago. He said Shell would first consider scrapping its unpopular dual-listed Anglo-Dutch structure at next year's annual general meeting.

Van der Veer said: 'The report to the group audit committee and the reserves recategorisation review draw a line under the uncertainties that have surrounded the status of our reserves since 9 January. The controls we now have in place will be rigorously enforced and will be subject to far greater levels of scrutiny within Shell.

'Despite the difficulties of recent months, Shell is a sound and profitable business. We are making the changes to our reserves practices to ensure that that remains the case.'

Analysts, who have seen Shell's market value plummet by £2bn since January's warning, today marked the shares up 2 1/4p to 395p ahead of official dealing.

Today's publication of the audit committee report follows an intense review by Shell's main board - its committee of managing directors - over the weekend.

Lord Oxburgh, appointed non-executive chairman of Shell's UK arm in the wake of Watts' departure last month, admitted 'serious issues' have been raised about reserves reporting practices and 'certain of our senior executives were made aware of these and failed to act appropriately'.

But he added that the boardroom blood-letting was now likely to stop. 'We wanted to find out what was going wrong and we wanted then to make sure we put things right. I think we now have a team in which we have total confidence and with which we can go forward,' he said.