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Last Updated: Friday, 19 March, 2004, 06:27 GMT
Shell postpones its annual report
Shell station
The oil reserve downgrade is Shell's second in as many months
Energy giant Shell has delayed its annual report, due on Friday, until later in the year.

The Anglo-Dutch firm also dealt a new blow to investor confidence with a second downgrade of its oil reserves.

Shell sliced 250 million barrels off 2002 reserves, and another 220 million from the figure for 2003.

The news, which hit its shares hard in Thursday trading, follows after the shock announcement in January that it had over-booked 2003 stocks by 20%.

That revelation - equal to 3.9 billion barrels - cost its two top executives their jobs.

Shell's shares closed down 11 pence or 3% on Thursday at 361p.

Dutch probe

The lastest downgrade mean Shell has now cut its reserves for 2003 by 4.12 billion barrels.

To be 20% wrong is very embarrassing. To be more than 20% wrong - wrong a second time - I think is looking pretty careless
BBC Business Editor Jeff Randall

The company also revealed it was facing an investigation by the Dutch Autoriteit Financiele Markten financial regulatory body for potential insider trading.

Shell is already facing an investigation from the US Securities and Exchange Commission.

The announcement was a public relations disaster, according to BBC Business Editor Jeff Randall.

"To be 20% wrong is very embarrassing," Mr Randall said. "To be more than 20% wrong - wrong a second time - I think is looking pretty careless."

Careless might be an understatement, he added.

"This situation is moving from the box marked 'incompetence' to the box marked 'scandal'," he said.

Shareholder pressure

The reserves controversy has already claimed the scalps of former chairman Sir Philip Watts and the chief executive of Shell's exploration and production business, Walter van de Vijver.

Sir Philip was himself a former head of the exploration business.

An internal investigation launched by Shell in the wake of January's reserves downgrade is due to finish in the coming weeks.

Separately, Shell said its annual shareholders meeting would be postponed to June from April, but added that the publication of its first-quarter results - scheduled for April 29 - would go ahead as planned.

The company is under intense pressure from investors to explain why it has been forced to cut its proven reserves.

Shell's shares have fallen some 10% since the first announcement in January.

The BBC's Julia Caesar
"Shareholders will be expecting much more than an apology"

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