Shell chairman 'forced' to step down

Philip Watts was forced to stand down as chairman of oil giant Shell after a “loss of confidence” in his leadership, it emerged today.

Board members of the Anglo-Dutch group decided the position of the 58-year-old chairman was untenable following the shock announcement in January of a major shortfall in the level of Shell’s oil and gas reserves.

Jeroen van der Veer – promoted to chairman in the wake of the boardroom shake-up on Wednesday – said Watts had to resign because directors “lost confidence” in him and “losing confidence is in connection with the whole reserves issue.”

An internal investigation into the reserves downgrade had decided that a change of leadership was required to restore the company’s battered reputation.

He said: “Shell’s reputation has been dented – not only our external reputation with the public and shareholders but it has been a real shock to our personnel.”

Mr van de Veer said the conclusions of the six-member audit committee would be known in the coming weeks or months.

Watts left the company on Wednesday along with Walter van de Vijver, the chief executive of Shell’s exploration and production business.

Their departure surprised investors as Watts had last month pledged to ride out the storm over Shell’s announcement in January that it had overbooked its reserves by 20%, or around 3.9 billion barrels.

Mr van der Veer said the group was striving to put the whole issue of the reserves downgrade behind it and was in touch with shareholders about how to proceed.

Investors had criticised Watts for failing to deal personally with the issue and Mr van de Veer accepted Shell had made “a lot of communications mistakes”.

The group had entered a “listening phase” with shareholders that would continue at least until the group’s annual general meetings next month, he said.

However, he dismissed claims of a rift between the twin boards of the group in the Netherlands and London, saying there was “very good co-operation” between members.

Mr van de Veer said it was too early to comment on how much money Watts was likely to receive for loss of contract.

Watts joined the group as a seismologist in 1969 before moving up the ranks to become chief executive of exploration and production in 1997. He was appointed chairman of Shell Transport in 2001.

Last month he unveiled the company’s best ever annual figures with a 27% rise in adjusted profits for 2003.