There is very little chance, however, that yesterday’s revelations will put an end to the chaos that has reigned at Shell in recent months. From the start, the reserving issue, while important, was little more than a window through which investors and analysts, regulators and employees could see, in all its awful glory, the way one of the UK’s leading companies was managed. Or mismanaged.

After all, no one is ever going to be able to come up with a cast-iron system for defining, to any degree of accuracy, what the reserves of any oil company are at present or are likely to be at any point in the future. There will always be a degree of guesswork in interpreting the findings of scientific investigation. Adopting appropriately conservative assumptions is wise, but at the same time wrong impressions might be built by adopting policies that are too conservative. The key is to hedge any statements about reserves, or any other unknowables, with appropriate caveats.

Bigger issues remain far from resolution. Granted, three of the key protagonists in this sorry tale have been written out of the story as far as Shell’s day-to-day management is concerned. Notably the two men — Sir Philip Watts and Walter van der Vijver — on either side of the scandalous “lying” allegations laid by Mr Van der Vijver, are gone. But the assertion that certain senior managers might have wilfully misled colleagues and the market will carve an indelible mark on the reputation of the once-revered company.

Deep, and perfectly legitimate, concerns will centre on the nature of the culture prevailing within the organisation. Other Shell executives who remain with the company may be able to prove that they were outside the loop of controversy that has opened. But many will wonder whether the argument that apparently raged so hotly between Sir Philip and Mr Van der Vijver manifested itself in other ways that impeded, and will still impede, the development of the company in the coming months and years.

Concerns that civil or even criminal actions will be pursued will remain. They cast a pall over Shell that yesterday’s events do not clear.

Shell needs to do four things to set itself back on course. So far it has gone a long way to settling the reserves issue — although that may be the least important of the four things and it could yet come back to haunt the group. It has gone some way, but not even halfway, towards one of the three remaining issues. It needs to sort out its Anglo-Dutch structure. Welcome noises were made yesterday about accelerating the review of corporate governance. But firm action is required to clarify the command and control functions.

Shell also needs an injection of fresh executive blood at the highest level. It will probably be insufficient, moreover, to expect that the appointment of a permanent new finance director from outside Shell will be enough to satisfy on this front.

Most importantly of all, Shell has to find oil. If it was finding oil at respectable rates over the past five years, it is probable that the reserving issues would never have emerged. Sadly, however, there is little evidence that Shell has the capacity to find the all-important black stuff.

Tracking down another rail review

ALISTAIR DARLING’S decision to review the structure of the rail industry in January looked like a cosmetic exercise. Mr Darling ruled out the renationalisation that the unions and backbench Labour MPs desire. He also ruled out bringing track and trains back under a single body and appeared to tell the newly created not-for-dividend group Network Rail that it would get off lightly.

But three months down the line and the talk is that this review will do a lot more than just tinker around the edges. Officials at the Department of Transport have been told to prepare legislation to bring forward in the Queen’s Speech in November, signalling the seriousness of Mr Darling’s intent. Richard Bowker, chairman of the Strategic Rail Authority, certainly thinks there should be more to this review than met the eye in January. It seems that the existence of his organisation may be in doubt and he has come out with proposals that would lead to the second major overhaul for the beleaguered industry in three years.

Mr Bowker’s proposals bring some simplifications, and anything that makes the operation of the rail network less cumbersome must be welcome. They seek to create a super “Railways Agency” that specifies train and track performance and keeps a watch on spending. He also suggests that a “super supplier” is created by merging the franchising responsibilities of the SRA with Network Rail’s track operating function. The inference in Mr Bowker’s proposals is that train operating companies, such as NationalExpress and FirstGroup, will have a reduced role. They may object to being relegated to little more than hired contractors, but there is merit in that if there is reason to believe it will lead to improved service, lower costs and enhance levels of accountability.

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