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ShellNews.net: The Sakhalin II controversy continues

By John Donovan

The following postings have been made on our “Live Chat Forum” in response to our article: – ShellNews.net: The inside story of Shell’s Sakhalin II debacle

Guest 1622: Shame on you Donovans! You really should check out your facts and sources before you publish such diatribe as your article that you foolishly purport to be label the insider story on Sakhalin. You have no clue what you are talking about which only serves to further worsen the already sad stature of this very pathetic and misguided website

Guest 1761: Unfortunately the article reads as one long rant. It would be nice to read a more objective article. I’m also very surprised that Rosprirodnadzor would trust information they got on the internet.

As to checking facts and sources, we checked with other Shell insiders and also took the trouble to go directly to Shell with an unusual invitation which included an offer to published, unedited, any comments Shell wished to make. We have been making such offers for a decade. This was the first time Shell had ever accepted. Shell lawyers had the draft article for three days. 

If Shell E & P General Counsel, Keith Ruddock, had categorically stated in his eventual response that any specific allegation or stated fact in the article was untrue, we would have removed it unless we had absolutely cast iron evidence proving otherwise.  Perhaps it is just a coincidence that guest 1622 takes the same line as Mr Ruddock in making a sweeping condemnation of the information in the article without actually providing any examples of alleged inaccuracy.  It is the easiest thing in the world to make a sweeping statement without providing a single iota of evidence in support. 

What is not in dispute is that: –

1. Sakhalin II costs doubled to an admitted $20 billion, thereby ruining Shell’s reputation for competent project management.

2. Shell management did not disclose this material fact at the time of agreeing a swap deal in principle with Gazprom. The shocking news emerged in a deluge of negative publicity days after the agreement, thereby giving the Russians genuine grounds to retaliate.

3. Sakhalin Energy has admitted being in breach of environmental regulations and offered a remedial plan turned down by Rosprirodnadzor.

4. Items 1, 2 and 3 above provide irrefutable proof of the incompetence and mendacity of Shell management.

So the overall situation is clear. What we do not have is a detailed official explanation of what went so disastrously wrong. 

As a shareholder in Royal Dutch Shell Plc, I therefore demand an independent inquiry to establish the facts about the Sakhalin II debacle. It could deal with the allegations of deceit, cover-up, corruption, and the massive environmental damage alleged by Rosprirodnadzor.

With regards to the evidence we supplied to Oleg Mitvol, he wrote to Sakhalin Energy and no denial of authenticity was made.  We had already checked and established that it was genuine. Authenticity was also independently verified by a number of news organisations, including Dow Jones Company and The Moscow Times.

Unlike the late Tell Shell Forum, all postings remain on display. There is no censorship of contributions about Shell, the “Donovans” or any related matters.  We genuinely welcome open and lively debate.

1 Comment on “ShellNews.net: The Sakhalin II controversy continues”

  1. #1 Tim Newman
    on Jan 7th, 2007 at 10:11

    What is not in dispute is that: –

    Sakhalin II costs doubled to an admitted $20 billion, thereby ruining Shell’s reputation for competent project management.

    I put it to you that whereas the first part of the above sentence is not in dispute, the second part can hardly be claimed to be beyond dispute. Cast a poll across the industry tomorrow of which oil and gas OPCO enjoys the best reputation for competent project management and it’d be a fair bet Shell would be very close to the top. Despite the cost overruns and the other difficulties with the Sakhalin II project, it is not true to say that Shell’s reputation for competent project management is in ruins across the oil and gas industry.

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