Repsol slashes proven oil reserves by 25%

Shares in Repsol YPF were suspended on Thursday as the Spanish oil and gas group revealed it would have to revise down proven reserves equivalent to 25 per cent of its total.

More than half of the revisions relate to Bolivia, where the company said it would make a downward adjustment of 658m barrels of oil equivalent (BOE) of gas and oil. It mainly blamed reforms to the country’s hydrocarbons law under new socialist president Evo Morales, which it said would affect investment and production.

However, rumours that Repsol had overstated its Bolivian reserves, constantly denied, have been swirling around the Spanish stock market for more than a year.

The company said: “In Bolivia, the introduction of the new hydrocarbon law has rendered future production at certain fields and several development projects no longer commercially viable.”

In neighbouring Argentina, 509m barrels are affected, Repsol said.

The downgrade by Spain’s largest oil and gas group prompted speculation that other group with operations in South America including BG, Group, BP and Total of France.

The revelation from Repsol comes 2 years after Shell was forced to downgrade its proven reserves by 20 per cent. Other oil group have also been forced to downgrade their reserves.

The company a year ago revealed that a customary three-year review of its assets had forced it to revise down by 4.1 per cent, to 4.93bn barrels of oil equivalent, its proven global reserves, mainly because of adjustments in Trinidad and Tobago, and in Argentina. Antonio Brufau, chief executive since a boardroom coup in late 2004, told analysts then that the Argentine revisions were “mainly technical” and stemmed from under-performance of some gas reservoirs.

Respol said it expected to book a write-down of “less than €50m” related to the revision of reserves.