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Royal Dutch Shell’s Sakhalin Nightmare

By John Donovan

On Monday morning, 18 September, visitors to this website may have noticed three new items.  A photograph of President Putin of Russia on our homepage header, posing the question “Putin… Shell’s new boss?” plus two cartoon style features, both focused on Shell’s difficulties with Putin and the Sakhalin II project.

A guest on our busy “Live Chat” facility has raised questions about the timing of these innovations bearing in mind the related dramatic news which broke within a matter of hours.  We have all witnessed the actions by Russian authorities, described by UPI as a “virtual takeover of the Shell project” and in The Guardian newspaper, as the outbreak of “an economic cold war”.

We are surprised that anyone would suggest that our activities precipitated this global headline news story.  The comments and associated questions on “Live Chat” were more likely made on a tongue-in-cheek basis, but I will deal with them in case they were meant seriously.

I will respond to each question in the order raised…

Guest 2498: Sakhalin 2 descended into an international crisis within hours of publication of your rude but hilarious features yesterday morning – “Who is going to screw who?” and “a blunt message to Putin”. Did you have prior knowledge of what was about to happen?

The following response was made by Guest 7291: “The Sakhalin crisis has been brewing ever since the monster cost overrun was revealed. The current strategic move by an inevitably corrupt Russian regime (though not the tactics used) was therefore predictable. Nonetheless the timing of the “features” was spooky unless someone did receive a tip off.”

In fact we did not receive a specific tip-off.  The timing of our initiative was based on intelligence provided by Shell insiders over a period of time – information which recently grew more alarmist to the extent that led us to conclude the situation had reached boiling point. 

Guest 2498: Or is it possible that your provocative antics were brought to the attention of a certain “short arse” Russian VIP who mistakenly concluded that your site belongs to Royal Dutch Shell Plc? Did your antics provide the spark for the Sakhalin crisis?

Our analysis is that unfolding events had been planned and coordinated well in advance by the Russians and that our timing was fortuitous in that while we expected dramatic developments based on insider input received, we did not appreciate just how imminent those cataclysmic events were.

Guest 2498: Has Shell been in contact?

I assume this is a reference to an email sent by my father, Alfred Donovan, to Richard Wiseman, the General Counsel of Shell International Petroleum Company Limited on Monday am, before the outbreak of Sakhalin hostilities a few hours later.  (Copies were also sent to Jeroen van der Veer and Malcolm Brinded.)

http://royaldutchshellplc.com/2006/09/18/an-email-to-royal-dutch-shell-general-counsel-regarding-sakhalin-ii-crisis/

There has been no response. This could be because Wiseman is involved in the alleged bid for BG.  He heads Shell’s legal team for Mergers and Acquisitions.  We would have reacted favourably if Shell senior management had been seriously offended by the items in question. It is however good to know that management apparently retains a sense of humour despite current difficulties.

There has been a considerable amount of unfair anti-Russian rhetoric arising from these events (some from news publications which benefit from Shell advertising revenues).  In this connection, I would draw attention to the revealing comments made by one of the Shell insiders who has provided intelligence on Sakhalin II. There are two sides to the story.

(http://royaldutchshellplc.com/2006/09/18/catastrophic-news-for-royal-dutch-shell-plc-russia-calls-a-halt-to-sakhalin-ii/)

The other point which should be remembered is that Shell senior management acted deceitfully by withholding information about the doubling of Sakhalin II project costs from $10 to $20 billion – see http://royaldutchshellplc.com/2006/09/06/sakhalin-ii-the-russians-play-hard-ball-with-royal-dutch-shell/ They hid the truth at the time of agreeing a deal in principle with Gazprom.

According to our insider sources, the project costs are actually estimated to reach $26 billion.  Since their information has proven accurate in the light of recent events, this will also be a cause for concern to Putin if, by chance, the content of this website has been drawn to his attention (it has).

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