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ShellNews.net: Malcolm Brinded in a spin

Email to Royal Dutch Shell Plc Company Secretary, Michiel Brandjes: 23 July 2007

Dear Mr Brandjes

We have today received information from a trusted Shell insider source which relates to the integrity of Shell management and to Mr Malcolm Brinded in particular.  We intend to publish this information tomorrow. We will publish unedited any comments Shell or Mr Brinded wish to make. If you need more time on this matter you only have to ask. If Shell does not dispute the accuracy of what is stated below, then there is no need to comment.

Best regards
John Donovan

Email response from Michiel Brandjes: 24 July 2007

Dear Mr. Donovan,
 
I have referred your message to Mr Ruddock, general counsel exploration and production.

Best Regards,
Michiel Brandjes
Company Secretary and General Counsel Corporate
Royal Dutch Shell plc
Registered office: Shell Centre London SE1 7NA UK
Place of registration and number: England 4366849
Correspondence address: PO Box 162, 2501 AN  The Hague,
The Netherlands

Email recieved from Keith Ruddock, Shell Exploration & Production General Counsel: 24 July 2007

Dear Mr Donovan,
 
I write to remind you that, as explained previously on a number of occasions, the lack of a rebuttal from, or comment by, Shell does not in any way constitute an acceptance on Shell’s part of the accuracy of any of the points made by you (and including, in this instance, by the individual who has been in communication with you), whether now or in the future, and whether on this or on any other matter, and we continue to reserve our position accordingly in respect of those matters.
 
Yours sincerely
 
Keith Ruddock
 
Keith Ruddock
General Counsel Exploration and Production
Shell International B.V.
The Hague, The Netherlands – Trade Register no. 27155369
Address: c/o Kessler Park 1, 2288 GS Rijswijk, The Netherlands

THE INSIDER INFORMATION

23 July 200

Dear Sirs

You frequently point out the spin created by Malcolm Brinded. This is not something of the last few years but hails back from his early days in Shell. Recently Dutch employees received a nice book with the history on RDS, written by a bunch of academics from the University of Utrecht. It reads well but is rather pedestrian and lacks any analysis on why things have gone the way they did. They do reflect the views that the top management may want to project to the outside world.

But I did some investigation and like to share something with you. On page 229 of volume 3 Brinded is quoted.  He ‘remembers’ the advantageous effects of the LNG plant on reducing the flaring in Brunei. ‘I have lived for 5 years from 1975 in Brunei with a view on installations. The first year you could not see the evening sky, there was too much light from the flaring. You could drive on the beach without light. Etc etc’. I checked with someone who has worked there in that period. The real fact is that all gas offshore was not flared but vented. Only some small volumes on land from the Seria field were flared. So the eye could not see what was happening and what the eye does not see is not there!! Often lightning struck a ventpipe and lit the gas. It was standard procedure to shut down the flare until it extinguished and then resume production and vent all the gas again. In the late 70s there was a very tall Dutch fellow in Production Engineering who worked out that BSP was venting over 100 mln cuft of gas every day. At first nobody believed him and declared him crazy. But he was stubborn and after a year it all got confirmed. And this coincided with the scare that BSP might not have sufficient reserves to fill the LNG plant for the next 20 yrs! That alone was the reason why measures were being taken to collect the gas and pump it to LNG. The gasprice was kept artificially low in order to maximise the profits further down the chain, and it was not a coincident that these profits where at those positions in the chain where the tax was lowest.

So Brinded has turned spin into a second nature and the writers (presumably academics who never leave their library) were lapping it up when they got the opportunity to talk to the head honchos.

I read further. On page 237 of volume 3 there are some nice statements which demonstrate the poor judgement and lack of feeling with the real world from the boys at the top. Dijkgraaf (coordinator Natural Gas in 1997) thought Enron was a dangerous competitor. By now he probably knows better, the people at the coalface knew already that Enron was cheating , although not to the full extent. But on the same page there is another spin story: the acquisition of Tejas Gas. The books states it was an ‘unfortunate investment’ in 1997 that went wrong from the beginning. Phil Carroll (the then CEO of Shell Oil) is quoted that ‘we encourage people to take more risk and learn from errors. Not every investment can be successful’. This is a blatant lie. I know from first hand that Carroll was under strict instructions to ensure that at his boardmeetings either Moody-Stuart or Herkstroter had to be present. And SIPM was always dead against a deal to acquire Tejas Gas. So, Carrol waited until both these gentlemen were on leave or otherwise engaged and had a quick boardmeeting with his cronies and pushed through the acquisition of Tejas Gas. Herkstroter and Moody-Stuart nearly blew a fuse and the result was that 9 months later Carroll was quietly removed from Shell. Presumably he or his family have made a nice packet out of the deal, but I have no information on that.  Some journalist should do some checking on all this since Tom Botts (the cowboy that is in charge of EP Europe) and Linda Cook were both important in the economic and financial organisations of Shell Oil at that time and most likely have engineered the acquisition of Tejas Gas. And the saying goes ‘once a crook, always a crook’.

Shell soon sold the stuff and wrote off $1.6 billion of the original $2.9 billion within 3 yrs. These figures are also stated on page 237….. But not the background or analysis.

Perhaps you see fit to publish this information and I trust you understand why I need to remain anonymous.

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