Shell to Hire 1000 Engineers

The Financial Times ^ | January 17th, 2005 | By Ian Bickerton in Amsterdam and James Boxell in London

[Red Sea Swimmer]

Shell to hire 1000 engineers to lift credibility

Royal Dutch/Shell is planning to hire more than 1,000 engineers for its core exploration and production business in a bid to restore the credibility of its oil and gas reserves accounting.

The Anglo-Dutch energy group was forced to cut its proved oil reserves by almost a quarter last year and hopes the ambitious recruitment drive will help it catch up with rivals - whose records on reserve replacement and production growth have left it trailing.

The move, disclosed in an internal newsletter, also appears to support the view of some people close to the company who believe technical shortcomings played a part in the scandal, as well as management failings.

Two people who knew of the plan said it was a big undertaking for Shell and pointed to the extent of its staff shortage.

Analysts and other oil companies warned it would be difficult for the company to find so many experienced engineers. The average age of exploration and production workers has risen to 48 after years of younger graduates choosing not to enter the industry, according to analysts at Bernstein Investment Research and Management.

One person with long experience of the company said: "They simply are not around in the market so [Shell] will have to get them from other companies - and who is going to leave Exxon for Shell?"

Not all of the new recruits will be petroleum engineers, who are responsible for making sure oil and gas can be extracted economically from the ground. But Shell plans to hire 170 experienced petroleum engineers by April on a contract or permanent basis.

The recruitment drive is one of a series of moves designed to improve accountability and performance within the division.

Shell is said to be preparing a statement on reserves replacement for its February 3 annual earnings meeting. One person familiar with the plan described the task as "a challenge".

Shell has promised to close the gap with rivals such as Exxon- Mobil and BP by finding new reserves equal to 100 per cent of the reserves it pulls from the ground on average for each of the next four years.

It had said it would replace between 60 and 80 per cent of reserves last year but this was called into question in October when it said it would be forced to cut reserves yet again after undertaking another review.

Malcolm Brinded, head of exploration and production, is expected to provide a final figure for its current reserves with the results statement. Jeroen van der Veer, chief executive, has said that his head was "on the block" over the reserves issue.

Shell said the new hirings reflected a combination of its usual recruitment policies and its planned increase in capital spending in the next few years.

Additional reporting by Doug Cameron in Houston.

[Red Sea Swimmer]

This is a good sign for the world's economy.

[Servant of the 9]

Sounds to me like they are hiring Reservoir Engineers to reanalyze their fields and bump the numbers up and possibly improve their recovery systems.

If they were really planning to try finding more oil, they would be hiring Geologists and Geophysicists, not Engineers.

So9

[sailor4321]

Or, they could be planning to make some acquisitions...