http://Stingflation.com ... Global crisis energy Exxon ...
Sudden Wealth Curse
Russian President Vladimir Putin, center, and the Netherland's Prime Minister Jan Peter Balkenende, left, enter a hall for a signing of documents ceremony in the Moscow Kremlin, Tuesday, Nov. 6, 2007, with Dutch gas company Nederlandse Gasunie NV President Marcel Kramer, right, in the background. Russian and Dutch officials signed an agreement Tuesday to include Dutch gas giant Nederlandse Gasunie NV in the Baltic Sea pipeline designed to bypass several European countries and ship Russian gas directly to Germany.
Shell's 'green' reputation -and well earned compared to partner in arrogance, Exxon- after years of critical stature is again endangered, but now from the inside: co-operating with ExxonMobil in the world's largest public-private partnership with the Dutch government, it clearly represents the earth's aftermath of globalization, P3-disaster and bad governance leading into despair and decomposition of earlier insight by destroying overview necessary to lead the world, develop human life and make responsible behavior a natural way of sharing goods and services on a predictable and sustainable scale.
Exxon, Shell and Enron compared:
Exxon's global impact on crime, climate change and world stability:
| Shell: cracked or shattered? |
20th June 2004
The business scandal that rocked Shell earlier this year is still creating tremors. Here Ian Jones and Michael Pollitt, two CBR researchers who have written and edited several working papers and books on business ethics and corporate governance, assess the impacts of Shell shock.
Shell admitted in January this year that it had overstated its proven reserves of crude oil by 20 per cent. This was followed by an internal report showing that Shell executives had hidden the company's oil and gas shortfalls as far back as 2001. As a result, Shell is now under investigation by the US Securities and Exchange Commission, the US Department of Justice and the UK's Financial Services Authority. And investor confidence has been dented.
What is surprising to us is not the scale of the scandal, but the fact that it should have happened to Shell. The company has, after all, been here before. After two major crises in the mid-1990s, it instituted a thorough review of its corporate governance structures that should have helped it avoid the current scandal. So what has gone wrong?
Root and branch reform
At a CBR conference in Cambridge in December 2001, the former Chairman of Shell, Sir Mark Moody-Stuart, gave an admirably candid talk. Under his leadership, he said, Shell had performed a root and branch reform of its approach to external issues - including the environment, political engagement and human rights - after the public outcries over the disposal of the Brent Spar oil platform and the execution of Ken Saro-Wiwa.
However, Shell appears not to have taken full account of two fundamental and related shifts in its business environment that have taken place since 2001. Firstly, the US Securities and Exchange Commission has been steadily increasing its requirement for information on proven oil and gas reserves (paralleled by Britain's Statement of Recommended Practice). Secondly, businesses' accountability to shareholders for policy and accuracy of reporting has increased enormously since the Enron and WorldCom disasters.
What has further compounded Shell's error, in the eyes of some shareholders, is the fact that the company treated the downgrading of the reserves as a technical matter, and reported it to shareholders through its head of exploration and production, Walter van de Vijver. Shareholders felt that the then chairman, Sir Philip Watts, should either have announced the downgrading of the reserves himself, or made himself available to shareholders immediately afterwards.
An ethical issue
Shell gave the appearance of not having learned the lessons from previous occasions when they ignored external events. Senior executives involved did not seem to recognise that accurate reporting is an ethical issue, as much as it is a legal or technical one, and hence that Shell's own principles (outlined by Sir Mark) - of 'consultation', 'telling it as it is', 'looking people in the eye' and 'developing a management system to track the issue' - applied.
There also appears to have been a failure at board level. The hallmark professionalism of Shell, with its emphasis on team-working, bringing in expert advice and analytical problem-solving, did not seem to operate at board level. It is very surprising that one of the most significant long-term strategic factors - the reserves on which the company could call for its future business, and the policy for increasing these reserves - was not fully discussed by the board.
Shell is not another Enron. In fact, the contrast between the two companies could not be stronger. There was no exceptional greed (!!) that was driving policy-making in Shell. It was more that there was, as the internal report shows, a lack of transparency about the reporting of reserves. Iraq=Exxon+Shell+gov.nl=G a s u n i e !
'Trust is like a mirror...'
Management guru Charles Handy (who, ironically, began his career with Shell) has a phrase: 'Trust is like a mirror. Once it is shattered, it becomes useless.'
Is trust in Shell shattered or just cracked? Our research would indicate that the company's professional response to previous crises helped build its reputation. Shell is now embarked on 'an accelerated review of its corporate governance and structure', and though we have every confidence that it will do an excellent job in this, it will be some time before it can regain the confidence of shareholders, employees and government.
The latest CBR publication by Ian Jones and Michael Pollitt is CBR Working Paper 285, "Multinationals in Developing Communities".
This article first appeared in the Summer 2004 issue of the CBR Newsletter, Top Floor.
Mehdi Shahbazi Dead:Shell & Exxon Price Protestor Pays The Ultimate Personal Price ...
Sad to say, another one of the good guys has gone.
Just another no account whistle-blower bites the dust, eh?
Just one extra entirely expendable victim of a big-oil war, eh?
May this old Iranian born American, Mr Mehdi Shahbazi rest in perfect peace - since he's certainly earned it.
Gas-station owner dies after fast against oil giants
Liver failure claims the life of Mehdi Shahbazi
By Sharon Noguchi -- Mercury News
Mehdi Shahbazi was a man who championed the consumer and listened to his own counsel as he waged a years-long battle against Exxon Oil and then Shell Oil.
The conflicts cost him his eight service stations - from Salinas to San Jose - his home, his health and his life.
Shahbazi, 65, died Wednesday at Stanford Hospital due to a fast of more than four months to protest the power of oil companies - and as gas prices approach record highs in California.
At his former Marina station - where two years ago he posted a sign that read "Consumers' pain is Big Oil's unearned profit!" - customers have erected a memorial of flowers, cards and signs proclaiming love and appreciation.
Until a court decision last month that gave Shell legal control over his final station, Shahbazi was positive he would prevail, said his nephew, Kaz Ajir of Marina.
But the news devastated him, and his health dramatically declined.
Shell cornered by SEC & Exxon:
xxell: Shell pushed overboard by Gazprom in Sakhalin-2 Complex, savoured by the SEC after the reserves scandal, so Exxon's crimes of cheap oil strategy and monopoly could go undetected and Sakhalin-1, Exxon/Neftegaz proceed.
SEC lawyer who headed Enron investigation named Enforcement Division chief
The Securities and Exchange Commission lawyer who headed the agency's investigation into Enron Corporation has been named to head its enforcement division. Here is the SEC's press release on the appointment.
Linda Chatman Thomsen, 50, will be the first woman to hold the top enforcement position at the SEC. She has been the enforcement group's deputy director since 2002 and succeeds Stephen M. Cutler, who ran the enforcement division for several years before resigning last month.
Royal Dutch Shell, Europe's largest oil company, is asking US regulators to ease rules to allow the company to book oil and gas reserves from unconventional sources such as its Canadian tar sands operations.
Under US Securities and Exchange Commission rules, oil companies are only allowed to book reserves from oil and gas finds that are considered readily available or from "conventional" sources. These do not include tar sands, also known as oil sands, which would normally be classified as a mining operation.
The company is expected to announce a set of figures showing barely positive reserve growth when it lists its reserve replacement guidelines next month, and is keen to boost its figures by adding in unconventional sources of oil and gas.
Shell said yesterday that it had sent a letter to the SEC in response to an SEC-led consultation asking for proposals to revise reserve disclosure requirements.
Despite Shell's record profits for 2007, shareholders remain concerned whether the company's long-term strategy of turning to technologically advanced and unconventional projects such as tar sands and gas-to-liquids projects, will pay off.
Shell's shareholders have become sensitive to its reserve replacement guidelines following a reserves booking scandal that rocked it in 2004. The scandal prompted the sacking of three senior executives, regulatory probes and lawsuits, as well as $150m in fines.
Shell's reserves figures are set to suffer because of the effects of stripping out potential reserves from its Sakhalin-2 joint venture, in which it was forced into signing away a majority stake to Russia's Gazprom.
Many oil companies are struggling to book strong reserve replacement rates and are keen to revise SEC rules. Earlier this year, Shell said that it had found about 1bn barrels of oil equivalent to add to its resource base last year, although that figure is different from the definition of proved reserves accepted by the SEC.
Separately, Shell is set to complete the sale of its share in two offshore oil licences in Nigeria to a Nigerian company, which has seen off a rival bid by CNOOC, China's biggest offshore producer.
Oando's bid, if successful, would make it the first Nigerian company to secure producing assets from a multinational operating in Africa's biggest oil producing country.
Sources close to the deal said that Oando had secured a $200m facility from Merrill Lynch to help it finance the deal, and was looking to find a further $400m of nonrecourse financing to be secured by the oil-producing assets themselves.
Copyright The Financial Times Limited 2008