Playing Shell games with the…

Playing Shell games with the wealth of nations


From a CPA website



Royal Dutch/Shell’s troubling restatements of oil reserves around the world transcend business.
The case shows how accounting affects the lives of nations and people.


Take the case of the Royal Dutch/Shell Group, the global oil and gas company. Back in January the company rocked the world markets in oil, currency, and securities when it disclosed that it had overstated its oil and gas reserves by 20 percent, or about 4 billion barrels of crude. The news threw into doubt the accounting methods and integrity used by every other oil and gas company, the world over. The markets are still reeling.



But now it appears that Shell may have been intentionally overstating its reserves for fear of its relationship with, and the stability of, the government of Nigeria, according to the New York Times.


Shell handles about half of Nigeria’s supply. Company officials were reportedly acutely aware that if they sharply lowered their estimates for Nigeria’s reserves, the country could suffer, and, of course, so would Shell’s relationship with the government. Shell is now cutting its payroll in Nigeria by a third, something that may spark protests in the streets.