Shell to spend €1.5bn on North Sea exploration

Oil giant Shell today pledged to invest an extra $150m (€124m) in the division at the centre of its reserves crisis earlier this year.

Shell said it now planned to spend $1.8bn (€1.5bn) on exploration and production in the North Sea, including building a pipeline to transfer gas from Norway to the UK.

But the news came as reports said Shell was facing a legal claim for $1.5bn (€1.2bn) compensation for alleged environmental damage in Nigeria. The resolution is said to relate to a petition by members of the Ijaw tribe of Bayelsa state.

A company spokesman said Shell was still awaiting a copy of the resolution passed by the Nigerian senate and declined to comment further.

Today’s cash injection in Europe comes at a time when Shell is struggling to boost output and replace the 4.7 billion barrels of oil and gas reserves wiped from its books earlier this year.

Fines totalling £82.7m (€123m) were confirmed against the group yesterday following investigations by financial watchdogs in the US and UK into the reserves crisis.

Shell was found by the Financial Services Authority (FSA) and Securities and Exchange Commission (SEC) to have committed market abuse and breached listing rules by misleading the market over the extent of its reserves. It neither admits or denies the findings.

Profits from global exploration and production fell 3% between April and June, leading analysts to criticise the company for a lack of boldness in searching for new discoveries.

However, a Shell spokesman said the North Sea remained a strategic heartland.

“We have invested around £8 billion in technology, manpower and infrastructure in the past 10 years,” he said. “We are not going to walk away from that investment.”

One of the fields likely to receive a chunk of the additional investment is Ormen Lange in Norway, which was among oilfields subject to the reserves downgrades.

Shell announced in April that it would spend up to $15bn (€12.4bn) this year on capital projects.