Royal Dutch/Shell Group’s overstatement of its proven reserves of oil and natural gas by 20 percent may be enough to prompt an inquiry by the U.S. Securities and Exchange Commission, an SEC spokesman said.

"We bring actions against parties for misrepresenting facts with the SEC, that’s one of the things people get in trouble for with us," John Heine, a spokesman for the SEC in Washington, said in an interview on Tuesday. "I can’t opine if a 20 percent restatement is bad enough or not" to warrant an SEC inquiry.

On Friday, Shell lowered its proven reserves as of the end of 2002 by 3.9 billion barrels, or 20 percent, worth $120 billion today as crude oil. Proven oil and gas reserves are a measure of an oil company’s value and growth potential.

The Wall Street Journal reported on Wednesday that the SEC might look into the overstatement, citing Commissioner Roel Campos.

"The Shell matter seems significant, I am sure our enforcement staff will look into it," Campos told the newspaper. He said it was hard to see how Shell "could miss so badly."

Shell has "been in contact with the SEC on this matter," said Simon Buerk, a spokesman for the company in London. He declined to comment further.

Heine of the SEC said he could not recall a case where an oil company faced charges for overstating proven reserves. The SEC does not allow companies to include reserves from projects where there is "reasonable doubt of uncertainty" because of geology, economic factors or where drilling has not started.

The SEC requires signed sales contracts, approved authorizations for expenditures, environmental permits and other documents in "developing frontier areas," according to "Clarification of Oil and Gas Reserve Definitions and Requirements," which the SEC published in July 2000 on its Web site.

Shell said its revision was partly connected to an 11 billion Australian dollar, or $8.6 billion, Australian project called Gorgon. Shell had recognized reserves from the project since 1997, before the venture’s partners ChevronTexaco and Exxon Mobil made the final decision to proceed. ChevronTexaco, operator of the project, has not yet recognized it as proven reserves.

"Either in financial statements or narratives if you make false statements or misleading statements that are material, that’s a problem," the SEC’s Heine said. "We go in all the time for that."

Analysts question BP figures

Shell’s 20 percent cut in its proven oil reserves raises "legitimate questions" about resources at BP, the largest European oil company, Deutsche Bank said in a research note, Bloomberg reported from London.

BP in 2000 to 2002 added new discoveries to its reserves at an average rate of 211 percent a year, more than replacing supplies pumped from the ground, the note said. That is almost double the rate BP achieved over a 10-year period, and came as the company aimed to increase production by at least 5.5 percent a year, higher than Shell’s target then.

"Given that those production-growth targets have now been invalidated, we believe that it is legitimate to challenge BP on the quality of its reserves bookings across this period," two Deutsche Bank analysts, J.J. Traynor and Caroline Cook, said in the note. "How much has already been booked from BP’s new core areas, and what time frames have been assumed?"

A BP spokesman, Ronnie Chappell said the company stands by its reserve estimates. BP is not planning any revisions, he said, repeating comments the company made after Shell’s announcement on Friday.

"We’re confident in the reserves that we booked and confident of the method and process we used to book them," Chappell said.