Sakhalin to hit Shell reserves accounting
Shell may be forced to cut oil reserves by a billion barrels after halving stake in Sakhlin joint venture with Russian government
Oil giant Shell is facing a a new accounting crisis as analysts predict that
the oil group will have to cut oil reserves on its books by a billion barrels
after the halving of its stake in the Sakhalin-2 joint venture.
Shell
was forced to cede its majority stake in the Russian project to state-owned
group Gazprom, the
Observer reports. The Kremlin pressed Shell into the move
and accused the group of environmental and cost mismanagement.
The move will see Shell’s stake in the project reduced from 55% to 27.5%, a
72.7% drop that analysts believe will knock Shell’s booked reserves by
approximately 1 billion barrels.
The issue of restating booked reserves is a sensitive one for Shell. Two
years ago the company was forced to reduce its booked reserves substantially
after the SEC judged that
what Shell had booked in its accounts did not meet the watchdog’s regulations.
Further reading:
Shell auditors and former FD face lawsuit
Boynton steps down as Shell CFO
Shell CFO’s position under threat