Reserves are an oil company's most valuable asset and a critical indicator of its long-term financial prospects. Any reduction in their estimated size is a concern for investors. The SEC's current reporting rules for oil and natural gas reserves were adopted more than 25 years ago, and the proposed changes are intended to reflect technological changes in how oil companies determine their proven reserves.

The proposed changes will be opened to a 60-day public comment period and could be formally adopted some time afterward.

The SEC move comes at a time when global energy prices are spiking, gasoline in the United States is over $4 a gallon, and regulators are scrutinizing the role of speculators in world oil markets.

"The more that precise, firsthand information from oil and gas companies is available to investors and the marketplace, the less ... the marketplace is forced to rely solely upon information provided by speculators," the SEC said in a news release.

The proposed changes would:

--Allow companies to use new technologies to determine proven oil and gas reserves provided the technologies have been shown to lead to reliable assessments.

--Allow resources such as oil sands -- now considered to be mining reserves -- to be classified as oil and gas reserves.

--Require companies to certify the independence of petroleum auditors that audit their assessments of reserves.

In August 2004, the SEC fined Royal Dutch/Shell Group $120 million -- one of the largest penalties against a company in an accounting case -- in connection with the overstatement of oil and gas reserves. The Anglo-Dutch oil giant's disclosure that year of reserve inflation stunned shareholders and the oil industry, and led to the dismissal of several top executives.

The company neither admitted nor denied wrongdoing in agreeing to pay the civil fine. Copyright 2008 Associated Press. All rights reserved. This material may not be