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Discrepancy in Shell’s Corrib Gas Project financial filings?

By: 
John Donovan - RoyalDutchShellPLC.com

I have received information from Maura Harrington, spokesperson for the Shell to Sea campaign in Ireland concerning questions arising from the filed Shell financial accounts (2015) relating to the controversial construction of the Corrib natural gas pipeline in Ireland.

Maura would like the information to be brought to the attention of Shell shareholders so that if others examine the information she has already downloaded from the Irish Companies Registration Office (CRO) and share her concern, questions can be raised at the forthcoming Royal Dutch Shell Plc AGM.

Royal Dutch Shell leads the Corrib Gas consortium. The other members are Statoil and Vermilion Energy Trust.

I am not an accountant, so I will publish the information and related documents without comment.

EMAIL RECEIVED FROM MAURA HARRINGTON OF SHELL TO SEA 22 JAN 2017

Dear John,

This email will be followed by three others – Statoil (Ireland) Accounts y/e 31/12/2015, Shell (Ireland) Accounts y/e 31/12/2015 and notice of resignation of Shell’s auditors, PWC.

If Statoil’s accounts are taken to give a true and fair view (which we think is the case) then it raises some reasonable questions over Shell’s accounts given that both sets of accounts cover the same period.

The following points for your consideration:

Statoil’s Directors signed their accounts on 08 August 2016

The Financial Statements were approved by the Board on 08 August 2016

Statoil auditors, KPMG, signed off on the accounts on 08 August 2016

Shell’s Directors signed their accounts on 24 June 2016

The Financial Statements were approved by the Board on 24 June 2016

Shell’s auditors, PWC, did not sign off on the accounts until 26 August 2016

Five days later, 31 August 2016, PWC resigned as auditors (I checked the CRO website last night and it would seem that CRO has not been informed of who Shell’s new auditors are which should, I think, be in place 21 days after previous auditors resigning).

 

Please see Note 24 at the end of Shell’s accounts (Events after the end of the Financial Year) which mentions ‘addition to impairment’.

The following in relation to impairment in both sets of accounts:

                                           STATOIL

                              2015                      2014

Impairment                   €165,260,347               €226,650,000

                                             SHELL

                              2015                      2014

Impairment                   €141,031,000                 NIL                  

Given that Statoil has a 35.5% share and Shell holds 45%, there is an apparent inconsistency here, unless the ‘addition’ referred to in Note 24 clarifies it – but that won’t happen until the next set of Shell accounts issues. This, conveniently or otherwise, will not happen before this year’s AGM of RDS plc.

Using Statoil’s and Shell’s percentage holdings in Corrib and simply dividing by .365 (Statoil) and dividing by .45 (Shell) using the above figures shows an alarming discrepancy/inconsistency in impairment of Corrib – a total of €1,073,725,000 (Statoil 2015 and 2014 accounts) versus a total of €313,402,000 (Shell 2015 accounts, NIL impairment value stated in their 2014 accounts). The only difference in auditors’ calculations would seem to be that KPMG (Statoil) use a 6.5% calculation while PWC (Shell) use 6% – which couldn’t effect an approx €0.7 Billion difference.

All the above is based on facts obtainable from the CRO – now comes interpretative stuff. I think it’s fair to say that any Shell shareholder or investor looking at the consolidated accounts for RDS plc from last year would see a NIL impairment attached to Corrib as NIL was stated in their 2014 accounts; similarly, this year’s consolidated accounts will show an impairment value of €141,031,000 (Note 24 essentially ‘kicking the can down the road’). Even allowing the grossing-up of that to €313,402,000 per Shell’s 45% share, it remains a far cry from the billion-plus (over two years) per Statoil’s accounts.

One has to wonder why it took two months (a considerable time in accounting/auditing) for PWC to sign off on the 2015 accounts and why did they resign just 5 days later???

All the best for now, Maura

EMAIL ENDS

STATOIL CORRIB ACCOUNTS

Shell Corrib Accounts Dec 2015

PWC Resignation Letter: 31 August 2016

Posted Date: 
23 January 2017