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Last Updated: Wednesday, 3 March, 2004, 17:08 GMT
Shell chairman is forced to quit
Philip Watts
Sir Philip Watts has been under severe pressure
Royal Dutch/Shell chairman Sir Philip Watts has bowed to shareholder pressure and resigned, after the firm slashed the estimate of its oil reserves.

Sir Philip originally refused to step down over the affair, saying he would focus on fixing problems Shell faced.

Now he is leaving the firm, to be replaced by Jeroen van der Veer, boss of the company's Dutch arm.

Shell shares skidded on 9 January after the company revealed that its oil reserves had been overstated by 20%.

That news knocked more than $15bn off its stock market valuation, and meant the group's available oil and gas reserves had shrunk from 13 years' worth to less than 11.

Bad feeling

Shares soared on the news
Source: Comstock

Following news of Sir Philip's resignation, shares in Shell rose, closing 2% higher at 383.5 pence.

But some share traders were wary of reading too much into the recovery.

"There was a lot of bad feeling about Shell's management," said one share trader. "I'm just surprised the resignation has taken so long.

"The initial bounce in the share price is not surprising but it may not last."

A spokeswoman for Shell said Sir Philip's decision to leave the company was reached "by mutual consent", but she refused to comment on whether his departure was connected to the reserves debacle.

Shareholders were particularly critical of Sir Philip because he was exploration and production boss at the time most of the reserves in question were booked.

In their eyes, he compounded his poor management by failing to announce the reserves downgrade himself or make himself available to investors immediately afterwards.

'No choice'

"I think he has done the honourable thing post the reserves debacle," said Bruce Evers, oil analyst at Investec bank.

New Shell boss Jeroen van der Veer
Age 56
Mechanical engineer and economist by training
Seen as a safe pair of hands
Keen golfer (16 handicap)
"I think he was under so much pressure that he had no choice. Arguably, it might bring the unification of the board that much closer."

Florian Van Laar, fund manager at Eureffect, said: "This is great news because Watts was the man who was behind the reserves warning.

"[New chairman] Van der Veer has a good name and standing and this means Shell is trying to clean the slate and start afresh."

The BBC's John Moylan
"The new man at the top...must now begin the task of restoring investor confidence"

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