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Scotland On Sunday: BP and Shell facing huge problems in remote locations: Alaska and Sakhalin Island in Russia

BP and Shell are both currently facing huge practical and reputation problems on major projects in remote locations: BP in Alaska and Shell in Sakhalin Island in Russia.

Apparently the naive Chief Executive of Royal Dutch Shell Plc, Mr Jeroen van der Veer, did not realise the signal he was sending out when he rolled over in submission earlier this year after President Hugo Chavez tightened his grip on Venezuela’s energy resources. Chavez followed through on his threats to punish international companies that resisted government control of the nation’s oil fields. Van der Veer threw in the corporate towel without putting up even a token defence.

Russians are renowned for their chess playing skills. Recognising that Shell management is weak (Venezuela) and inept (the reserves scandal), the Kremlin is now ruthlessly exploiting Shell blunders concerning escalating project costs and pipeline installation for the Sakhalin II project in Russia, to manoeuvre (strong arm) its nationalised energy company, Gazprom, into the lead partner position.

We can only stand back and watch in awe the game being played out masterfully by the Russian government as control slips from Shell’s grasp.

By John Donovan

http://business.scotsman.com/markets.cfm?id=1335522006#new

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