Shell not alone in false reserves claims - Nigeria
April 21, 2004
By Reuters
Abuja - All foreign operators in Nigeria, not just Royal Dutch/ Shell, consistently exaggerated their reserves estimates during the 1990s to benefit from government incentives to find more oil, the country's oil industry watchdog said this week.
The government waged lengthy arguments with the operators over their claims and generally paid out less than half the amount the companies originally claimed, said Macaulay Ofurhie, the head of the department of petroleum resources.
"That was a common factor in the whole industry, not just Shell," Ofurhie said on the sidelines of an industry conference in the Nigerian capital. "They needed the tax offsets and the more the better."
Other major oil companies in Nigeria during the 1990s when the country operated the so-called reserves addition bonus were Italy's ENI, France's Total, US-based ChevronTexaco and ExxonMobil.
Every year these companies presented the government with evidence of extra proven and probable reserves for which they claimed tax concessions.
"We did an independent assessment, so it was not the figure they gave that we took. I don't think we accepted 50 percent of what they gave us," Ofurhie said.
Even after the government beat them down, the companies earned hundreds of millions of dollars in tax offsets while the scheme was in effect for nine years until 1999.
Shell has cut its proven reserves by 22 percent in a series of shocking announcements this year, much of it in Nigeria.
The news has sent the company's stock tumbling and claimed a third senior management scalp on Monday in chief financial officer Judy Boynton.
Shell has said 1.3 billion barrels of the total cut of more than 4 billion barrels was in Nigeria, where it is the largest foreign operator.
Other major oil companies have said they were confident in their reserves figures.
Ofurhie said Shell's downgrade would probably not affect Nigeria's estimate of its own oil reserves of 32 billion barrels, but the government was talking to Shell to be sure this was the case.
Ofurhie assumed that Shell's downgrade concerned reserves originally booked as proven but were in fact probable, which would not affect Nigeria because its reserves estimate lumped the two categories together.
"We did an independent assessment on our own of the reserves every year and that's why we are not too worried, but we are going back to discuss with them what happened," he said.
"We want to be sure that we are not giving them undue advantage," Ofurhie said.
If it turned out that some of Shell's Nigerian downgrade took previously proven or probable reserves into the possible category, then the country could be due compensation, he added.
|
|
