Following on its international acquisitions in steel and outsourcing in recent years, Essar is in talks with Shell to pay as much as $1 billion for three oil refineries in the U.K. and Germany, people close to the situation say. Last year, the company bought out the 50% stake that Shell, BP PLC and Chevron Corp. owned in a major refinery in Kenya.

“One of the principles underlying all of our work on the Web has been that we should be true to the spirit of New Shell. This means that we are seen to be open, listening, interested in the views of others…”: SHELL CENSOR – MARCH 1999

Shell Internet Censorship

By John Donovan

Printed below is a Shell internal email sent in March 1999. Shell was obliged to supply it to us in accordance with an application we made under the UK Data Protection Act. The “X’s” denote sections redacted (censored) by Shell, which includes the name of its author and apparently an extensive circulation list – 4 lines deep.

Although not mentioned in the still visible text, the author of the email was talking about the former “Tell Shell” Internet discussion forum once available on shell.com, until it was censored into oblivion.

Knowing of the involvement of Shell International General Counsel Richard Wiseman in the overt and covert censorship carried out on “Tell Shell” postings, we asked him if he was the author of the email. This was his reply yesterday, 22 February 2010:

Dear Mr Donovan,

I have no record or recollection of drafting or being involved in the drafting of the email you refer to.  Since you claim it was written more than 10 years ago, this is not surprising.  The style is not mine however and I do not believe that I am likely to have been the author.

As usual, I do not propose to comment otherwise on your draft and this should not be taken as acceptance of any of the assertions you make.

Regards
Richard Wiseman

Chief Ethics and Compliance Officer
Royal Dutch Shell plc
Shell Centre, London SE1 7NA

We accept what Mr Wiseman says. Of course, since Shell carried out the blanking out process on the email, it could reveal all of the censored information, but has not offered to do so, even though Royal Dutch Shell CEO Peter Voser and  Company Secretary Michiel Brandjes are fully aware of this article.

It is clear from the content that the author of the email was someone in control over the content of “Tell Shell”.

He or she claimed:

“One of the principles underlying all of our work on the Web has been that we should be true to the spirit of New Shell. This means that we are seen to be open, listening, interested in the views of others…”

Astonishingly, the author then goes on to try to provide a rationale behind the decision to remove 9 out of ten postings we made on “Tell Shell” and to say that if accused of censorship, Shell would argue that it had simply been trying to prevent us dominating discussions. The postings were also manipulated to make it less likely that forum users would visit our own website and be exposed to the full list of our allegations i.e. the truth.

Despite the claims of an open, censorship free discussion forum for lively debate, Shell did not want to entertain controversial postings. Hence the introduction of censorship on “Tell Shell”, providing an explanation on the forum whenever an unwelcome contribution was deleted.

Shell subsequently resorted to secret censorship, whereby postings vanished without trace or explanation. This underhand policy, involving Richard Wiseman, brought about what we described as: “The slow death of the Tell Shell Internet discussion forum”.  After the secret censorship was exposed, Shell “suspended” the forum, as it turned out, permanently.

Not content with censoring “Tell Shell”, Mr Wiseman also wanted us to censor our website. The following is from an email he sent to us on 11 November 2005:-

The extraordinary tolerance shown to your internet activities ought to demonstrate better than anything else the fact that we are uninterested in, and unmoved by, your current activities.  It is true that when your comments to “Tell Shell” overstep the bounds of honest comment and become vituperative or defamatory, we remove them.  In this context, I suggest that the image on

http://www.royaldutchshellplc.com/week44/vantheman3putinnovember2005.htm.

be removed as a matter of urgency.

Some extracts from our response to Mr Wiseman…

The implied threat in your email regarding the satirical comments directed at President Putin, betrays Shell’s real attitude to freedom of speech on the Internet.

Thank you for the official confirmation regarding Shell’s censorship of the “Tell Shell Forum”. Such suppression of free speech is directly at odds with statements made by Shell on the forum inviting feedback and lively open debate in “uncensored space”. Since we have never posted any bad language on Tell Shell, the censorship relates entirely to our criticism of Shell and our accurate account of past events, supported by documents in our possession.

Having admitted to Shell’s censorship policy on the Tell Shell Forum, your next comments imply that Shell has rights or influence over what is published on RoyalDutchShellplc.com. I would respectfully point out that although you can censor postings on your website, you cannot censor commentary posted on ours. You have not mentioned the censorship of postings by other contributors to Tell Shell offering constructive criticism, including former Shell employees (with one such posting deleted in an underhand manner). As far as I am aware, none of the postings critical of Shell contained any bad language.

EXTRACTS END

If you also read the information on the linked articles, it is clear that Richard Wiseman has been a driving force behind the machinations (trickery and censorship) over unwelcome critical postings on “Tell Shell”, which led to its demise and replacement by an unauthorized “Shell Blog”. I refer to the facility at royaldutchshellplc.com on which visitors can make positive or negative postings about Shell (or the Donovan’s), without being subjected to censorship.

In other words, people posting comments can rest assured that some self-serving lawyer is not controlling what is deemed sufficiently favorable to Shell to remain on display. Under the circumstances, perhaps Wiseman’s already lengthy job title should be expanded still further: Chief Censor, Ethics & Compliance Officer, Royal Dutch Shell Plc.

MAIN ARTICLE ENDS

RELATED INFORMATION

A posting made on our Shell Blog by former Shell executive Paddy Briggs was noted with disdain by a Shell employee in an internal email sent on 25 June 2007, who stated:

FYI, Paddy Briggs latest contribution – I think he should choose his friends more carefully…

In the absence of “Tell Shell” I think that this is possibly the best forum for those of us who care about Shell and have informed opinions about the company to share with others. The Donovans perfume (subsequently corrected!) a very useful function and, whilst I don’t always agree with them, I do admire them and certainly do not question their motives or their integrity.

(Since we know the above posting was made by Paddy Briggs, we have inserted his name where it was previously redacted. BTW, we have never met or even spoken to Paddy Briggs, who is now a Trustee of the Shell Contributory Pension Fund.)

A Shell internal email sent earlier the same day contained a more enlightened view about postings on our website. Its author said: “I support Mr Donovan’s right to free speech – even if it is anti-Shell.”

THE SHELL INTERNAL EMAIL SENT IN MARCH 1999

From:XXXXXXXXXXXXXXXXX

Sent: 23 March 1999 10:54

TO: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
(E-mail)
Subject: FW: DONVAN

XXXXXXXXXXXXXXXXXXXXXXXXXXXXX

One of the principles underlying all of our work on the Web has been that we should be true to the spirit of New Shell. This means that we are seen to be open, listening, interested in the views of others and providing information which helps people to make their own minds up, not just thrust our opinions at them.

This is why, for several years, we have included links to the websites of organisations critical of Shell and have only removed contributions to the Website discussion fora if they were either:

a) abusive of individuals, or:

b) contained libellous material, where we didn’t wish to become involved in the legal implications of being a publisher:

Beyond that, we have deliberately not censored contributions, because this would simply have handed ammunition to our critics.

Before we launched the new campaign, we agreed that we should apply the same guidelines to the new campaign-related discussion fora. It was recognised that they might become targets for our critics, but if we claim to be interested in dialogue, then we need to be seen to be engaged in it and our arguments need to be seen to stand up for themselves.

In respect of Don Marketing, the monitoring of the fora quickly picked up that he had posted ten contributions and we decided to reduce it to one. If we were challenged, our argument would be that we had not censored, but had simply stopped him dominating discussions to the irritation of other users.

His one remaining contribution will be located in the Human Rights section at
http://www shell com/campaign/jssue/stage/1.1850.2.00.html

At the moment, this particular contribution of his is simply a link to his Shell Shareholders site. However, I have asked XXXXX to include Donovan’s text from one of his other postings so that people can see the essence of his case without having to go and enter his website and get the full list of his allegations. This will be done later this morning.

Regards

xxxxxxxxxxxxxx

xxxxxxxxxxxxxxxxxxxxxxx

Shell International Limited, Shell Centre
London SE1 7NA, United Kingdom
Tel: xxxxxxxxxxxxxxxxxxxx
Email: xxxxxxxxxx

CIVILSOCIETY.CO.UK

Vibeka Mair | 22 Feb 2010

Campaigning charities FairPensions and WWF have joined a coalition which is lobbying oil giants BP and Royal Dutch Shell over their investments in environmentally controversial oil sands developments.

The coalition, which also includes Unison, Greenpeace and the Co-operative banking group, is asking pension scheme members to email their fund managers to push them to support shareholder resolutions against oil sand projects that are due to be voted on at BP and Shell’s annual general meetings this spring.

It follows the coalition’s successful effort in encouraging over 200 shareholders in BP and Shell to bring the resolution on oil sand projects to the AGMs. Investors sponsoring the resolution included faith groups and charitable foundations, according to a spokesman.

Joseph Rowntree Charitable Trust, which as of 10 February had £967,457 invested in BP ordinary shares and £206,879 in Royal Dutch Shell ordinary shares, has sponsored the resolution and plans to vote for the resolution on tar sand deposits.

A Joseph Rowntree spokeswoman said: ”Like other responsible shareholders we are concerned, for a number of reasons, that these investments could become not only unprofitable but also stranded assets.  We are therefore asking the companies to keep us informed.”

The size of tar sand deposits, combined with unusually high greenhouse gas emissions, means that they threaten to be a major contributor to climate change.

Investors and industry analysts increasingly raise concerns about the long-term profitability of tar sands, specifically pointing to very high operating costs, expected carbon price rises, oil price volatility, expected fluctuations in demand, regulation of greenhouse gas emissions, and the legal and reputational risks arising from environmental damage and human rights cases.

The Joseph Rowntree Trust last week sold its £1.9m stake in FTSE100 mining company Vedanta because the company had refused to act on its concerns about human rights and environmental abuses.

SOURCE ARTICLE

When the recession hit, the major companies streamlined, cut costs and became more efficient, giving them a shot at a profit comeback

By BRETT CLANTON
HOUSTON CHRONICLE

Feb. 21, 2010, 4:32PM

Big Oil has had a little less swagger in its step of late, humbled by a global recession that halted a multi-year run of soaring profits and exposed weaknesses that had been less acute when times were good.

International giants like Exxon Mobil and BP have suffered the effects of the economic downturn, which brought the first significant decrease in global energy demand in nearly three decades, created wild gyrations in oil and natural gas prices and wreaked particular havoc on the oil refining business.

But they responded in different ways. Some took a hard look at organizational structures and cut thousands of jobs. Others pared portfolios to pay debts and refocus on core businesses, while at least one took advantage of the depressed climate to boost spending and make a major acquisition, even as profits tumbled.

“The majors weathered the storm in 2009, but I would also say it made them more efficient, more focused,” said Gary Adams, vice chairman of Deloitte’s oil and gas practice in Houston.

The biggest international oil companies will likely continue to face tough conditions in oil refining this year, amid still-weak demand for gasoline and other fuels, rising crude prices and surplus plant capacity.

The natural gas business also remains challenging in the short term, as does the task of trying to lure back investors who recently have been more enamored of shares in smaller, faster-growing oil and gas firms.

Add broader concerns about the slow pace of economic recovery, the increasing difficulty in accessing new oil and gas resources and the possibility of new, costly regulations on the industry, and the outlook grows cloudier still.

Majors have advantage

Yet, the oil majors — with their diverse integrated business models, big balance sheets and cautious approach to investing — still may be among the best equipped in the industry to ride out what’s ahead.

“That’s partly why they’ve gotten to be as big as they are,” said Ken Medlock, a fellow in energy studies at Rice University’s Baker Institute.

Or, as Kenneth Cohen, Exxon Mobil’s vice president for public and government affairs, put it recently, “It’s really these times that our company and our business model are designed to handle.”

In recent years, rising oil and gas prices drove profits of the five biggest Western oil companies — Exxon Mobil, Royal Dutch Shell, BP, Chevron Corp. and ConocoPhillips — to new heights.

In 2008, when crude oil reached nearly $150 a barrel and retail gasoline topped $4 a gallon nationwide, the companies made a combined profit of $100 billion. That’s the second-highest on record from the group, exceeded only by the 2007 combined total of $123 billion. But the global economic crisis changed all that and in 2009 slashed the group’s combined haul to $61 billion.

In response, the majors have taken steps to cut costs and streamline operations.

• • Shell, under a sweeping reorganization launched in July by new CEO Peter Voser, cut 5,000 jobs last year, including hundreds in Houston, and aims to eliminate an additional 1,000 positions this year. It’s also reviewing 15 percent of its non-U.S. refining capacity for possible sale.

• • BP has shed 7,500 employees since late December 2007 under an ongoing turnaround program led by CEO Tony Hayward, who said this month the British oil giant still has a way to go in becoming more competitive.

• • ConocoPhillips, Houston’s largest public company, plans to sell $10 billion in assets over the next two years to help pay debts and improve financial flexibility. Separately, the company recently said it may consider closing refineries that can’t cover their costs.

• • Exxon Mobil, the biggest U.S. oil company, has shed global refining assets in recent years, and officials said it will continue to “optimize” its downstream portfolio, but it doesn’t see any need for a major restructuring.

• • Chevron Corp., after cutting expenses 15 percent in 2009, is planning a reorganization of its global refining business, which will result in an unspecified number of job losses. It has also cut its 2010 capital spending budget by 5 percent.

‘Becoming leaner’

Many of the moves were tied directly to the global collapse in refining, but the poor economic environment also gave some companies cover to take an ax to organizations that had grown too big or complex.

“A lot of this is eliminating redundancy, becoming leaner, and that’s important, particularly in an environment where costs are as high as they are,” Medlock said.

Recently, however, stabilizing global economic conditions and higher oil prices have helped stoke investment and are buoying hope of a recovery.

Spending on exploration and production, excluding acquisitions, is expected to rise by 7 percent to $326 billion in 2010 among more than 65 of the largest publicly traded oil and gas companies, according to a recent report by Norwalk, Conn.-based energy research firm IHS Herold. That compares with a 23 percent decline in upstream spending in 2009.

Also this year, majors likely will be on the hunt for acquisitions, particularly those that expand their holdings in North American natural gas shale plays, like Exxon Mobil’s recent deal to purchase Fort Worth’s XTO Energy for $41 billion.

“Unconventional gas is still where a lot of the action is going to be,” said Daniel Yergin, chairman of IHS Cambridge Energy Research Associates in Cambridge, Mass.

Not only are such deals a strategic bet the world will move toward cleaner fuels, they could help majors regain the attention of investors who have recently rewarded independent oil and gas producers for leading the way in shale and other unconventional gas plays.

In 2009, Standard & Poor’s Oil and Gas Exploration index — a basket of stocks that includes names such as Anadarko Petroleum, Apache Corp. Devon Energy and Southwestern Energy — grew 41 percent. By contrast, a Standard & Poor’s index that tracks the majors fell 4 percent.

But there is another possible explanation for the majors’ renewed interest in North American gas plays. With access increasingly limited to new oil and gas reserves around the globe, they’re simply running out of places to invest.

“All of the sudden, North America looks very attractive relative to other opportunities out there,” said Fadel Gheit, industry analyst with Oppenheimer & Co. in New York.

“It’s the devil you know versus the devil you don’t know,” Gheit said, “and they know this devil pretty well.”

brett.clanton@chron.com

SOURCE ARTICLE

Printed below is an article by Tony Allwright, a retired Irish Shell EP manager. It is published on his blog. It was brought to our attention by a Shell insider who shares the views expressed and believes the article deserves wider publication.

Organizational Dementia

By Tony Allwright

We are all familiar with elderly people sometimes being a bit forgetful.  This is no surprise, for just as the body gets weak over time, so can the brain.

What is surprising, however, is that organizations can likewise become forgetful and this can be very costly.  The memory of an organization is held in two ways: in its paper and electronic records and in the minds of its employees, however the latter are also relied upon to access the former.

Last week, Irish TV showed a programme about Shell’s travails, over many years, to bring gas ashore from an offshore field called Corrib, to treat it and to sell it to the Irish grid, supplying 60% of the nation’s industry and consumer demand.

Shell is spending nearly €2 billion developing Corrib.  With full planning permission and legal backing for every piece of work completed, this technologically complex project entails

	drilling several 3,000-metre wells in 350 metres of water depth,
	laying an 83 km subsea pipeline to shore plus a 9 km section onshore,
	and building a gas treatment terminal to clean the gas ready for consumption.

Ireland, with no indigenous energy resources other than a little hydro power, a puff of methane and some filthy peat, is situated at the very end of a huge 7,000 km long gas network stretching across Europe.  It begins in faraway Siberia within the de-facto empire that is Russia, notorious for cutting off exports in unpredictable hissy fits.  Considering this extreme vulnerability to disruption of energy supply to Ireland, you would think the strategic value of Corrib is obvious.

Yet for over five years, Shell has been fighting a rearguard action against a small number of local residents who maintain that Corrib represents a threat to their lives because the inland gas pipeline or the gas plant might – based on no scientific evidence – explode, and to the offshore pipeline for perceived damage to fish stocks.  The locals have been skilful in mobilising professional international objectors (to Shell, to oil and gas, to capitalism, to colonialism, to racism, to whatever) who periodically descend to join protests and gain media airtime.  Somewhat menacingly, they are also supported by Sinn Fein and other ex-paramilitary groups, which have had the effect of chilling the vast majority of local people who in fact strongly support the project.  Five local protestors were jailed in 2005 (for contempt of court), another last year (for assault) and several more jail sentences are pending, but this has been no deterrent to the protestors.

It’s a kind of asymmetric warfare, where a small gang of insurgents is successfully engaging the vast might of multinational Shell and the Irish State itself, and causing huge time and cost overruns.  Police overtime alone is costing €5m per year.

How ever did Shell get itself into this mess?  Through organizational dementia, that’s how.

Enterprise, an independent UK oil company, discovered Corrib in 1996, the first commercial discovery since 1973, after the exploration industry had spent over €2 billion in otherwise fruitless offshore exploration.  It launched the development project at the turn of the millennium, but had little experience in mounting such a difficult endeavour (offshore, deep water, bad weather, new country).  So it was with some relief, as far as Corrib was concerned, when Shell bought Enterprise in 2002 for £3½ billion in cash.  A project such as Corrib was right up Shell’s street.

The seeds of trouble had been sewn when Enterprise, in its naïveté, had made a basic mistake when it embarked upon Corrib.  But Shell had no excuse to make the same and more.

Nigeria

I worked for Shell in Nigeria, for a total of seven years in two different postings, the second as a senior manager, until just before the PR disaster that erupted in 1995 with execution of Ken Saro Wiwa.  I can state categorically that Shell as a corporation – both its Nigerian arm and its twin head offices in The Hague and London – never entertained any kind of conspiracy whatsoever to engineer the harassment, imprisonment or execution of Mr Saro Wiwa and his eight colleagues.  As the record shows, they were convicted and executed for murdering four Nigerian chiefs, not for anything connected to or demanded by Shell.  The Nigerian judicial process may have been flawed, but Shell had not hand or part in it.

It is of course true that over the years Shell, the country’s biggest company, made lots of mistakes which occasionally resulted in accidentals oil spills, injuries and even deaths.  But accidents they were, fully investigated and promptly rectified (and compensated) to the extent possible.  In the early days of attacks from enraged locals, Shell would sometimes call the Nigerian police for protection.  However when it became clear that this might result in disproportionate violence by the police (and/or army) it discontinued the practice, and merely closed down operations instead, at great cost in forgone oil.  On not a single occasion did Shell call in Nigeria’s security apparatus with the intention (much less instruction) of having demonstrators attacked.

Nevertheless, protestors – with a legitimate complaint that almost none of the vast tax money from Shell’s production (some 90% went in tax) was used to improve the lot of the local people – chose to vent their anger at Shell (safe) rather than the true culprits, the State and Federal Governments (deadly).

From this simple scenario, the PR disaster unfolded that engulfed Shell around the world, with the gross calumnies that Shell was causing wanton pollution and death in pursuit of profits, culminating in the execution of Mr Saro Wiwa and his colleagues.

On the day they were killed, I was a guest at a long-service dinner in the Hague hosted by Shell’s then Chairman, Cor Herkströter.  I vividly remember the extreme emotion of this otherwise expressionless Dutchman, and the deathly silence that befell the room, as he announced the horror that had happened a few hours earlier.  The earlier gaiety of the evening did not return.

Brent Spar

This PR disaster coincided with the other one in the North Sea when Shell announced it planned to sink an obsolete cylindrical floating platform, the Brent Spar, in the Atlantic Ocean.  Environmentalists and other angry people concluded that Brent Spar was a toxic, oil-laded monstrosity whose disposal in the North Sea (sic) would cause untold damage to marine life.  Clever media campaigns and distortions by Greenpeace and others captured the world’s TV screens and imagination.  Growing its own international legs, amplified by the Nigeria accusations, the story caused enormous damage to the Shell brand, eventually forcing a U-turn.  Yet the accusations were totally untrue, and even Greenpeace eventually acknowledged that the planned dumping posed no hazard to the environment.  Brent Spar had been meticulously cleansed of all oil and other pollutants, and was planned to be sunk in the Atlantic far beyond territorial waters and at 2,500 metres, a depth so enormous that virtually no marine life existed anyway.

In the end, Shell ran a public competition which resulted in disposal by slicing up the Spar to make a quay for a roll-on-roll-off ferry in Norway.  Due to the complete openness of this approach, there were no further demos.

The common lesson from both these catastrophes was that it is insufficient to be right – whether factually right, scientifically right, technologically right, environmentally right, logically right, legally right, morally right.  In fact “rightness” might as well have no meaning unless and until it is successfully communicated to the people who need, or want, to know about it.

	Shell worked hard to improve the lot of Nigerians (certainly during all the twenty year span during which I worked there).
	Shell came up with an elegant, environmentally-friendly and cost-effective solution for safely disposing of Brent Spar.
	Yet a great many people didn’t know any of this, didn’t believe it when/if they were told, and in the resulting knowledge-vacuum drew precisely the opposite, most malign conclusions.
	If you fail to convince people, especially the neighbours among whom you are working, of your bona-fides, they can cause all kinds of grief to your enterprise.

A further difficult lesson was that, for multinational giants like Shell, the world had – perfectly reasonably – moved on from “Trust me” to “Show me”.

Within Shell, this message was drummed relentlessly into everyone throughout the second half of the 1990s, especially among managers (such as I was) and other senior employees.  Every effort was made to put the new philosophy into practice. Never again would Shell propose big projects without clearing the way first with the locals.

Just one example was the accolades Shell won from all bodies of all persuasions for their sensitive development in 2001 of Malampaya gas field in very deep waters offshore Philippines, a $4½ billion project even more demanding than Corrib in almost every respect.  One such was the International Chamber of Commerce and the United Nations Environment Program naming Malampaya, at a World Summit on Sustainable Development in Johannesburg in 2002, as one of its “Ten Best Examples of Sustainable Development Partnerships in Action”.

Yet ignoring this philosophy has been the root of the problem with Corrib.

I believe that Enterprise started the rot by ignoring and not respecting the locals.  But for the above reasons, Shell had no excuse, when Shell bought their way in, for forgetting the horror stories of Brent Spar and Nigeria.  Shell simply didn’t bother to get the locals on board at a very early stage and to secure their support.

Why did the corporate memory apparently hit the Delete button?  It’s a good question.  It is doubtless associated with the large numbers of senior people who left the company (with juicy packages) at the beginning of the millennium as part of corporate restructuring, and took their expertise and experience with them.

For that elementary, inexcusable mistake made in Corrib, Shell shareholders are paying a ridiculous premium in terms of Corrib’s hugely increased cost and delayed revenue, not to mention badly damaged international credentials.

Rugby

There is an interesting parallel in recent Irish rugby, no less.

In 1872 Dublin built the world’s first international rugby venue in Lansdowne Road on which a stadium for 49,000 in due course emerged.  Largely for reasons of comfort and safety, the IRFU (Irish Rugby Football Union) launched a project in 2004 to tear it down and replace it with a much larger, modern stadium.

A landmark deal was reached, for the duration of the construction, to play big rugby and soccer matches at the huge, 88,000 person Gaelic Games stadium across the river.  (This stadium was heretofore closed to non-Irish games ever since police militaries, protected by the British Army, invaded the pitch during a match in 1920 and mowed down fourteen people including a team captain.  This was in retaliation for the earlier killing of fourteen British Agents by the IRA.)

Croke Park, the fourth largest stadium in Europe, has been filled to capacity for nearly every rugby and soccer match played there since 2007.

But, like Corrib, the Lansdowne Road redevelopment quickly ran into massive resistance from local residents who didn’t want the extra crowds, the loss of their views, the noise, the floodlights etc etc.  A compromise was eventually reached which entailed reducing the seating capacity to 50,000 and also the size of the pitch.

This compromise has ensured that the new stadium will be a €365 million white elephant, not to mention the delays and overruns entailed.  Thanks to Croke Park, we now know that, due to the downsizing, every single match will create at least 35,000 enraged and frustrated fans unable to get tickets.  How long will such anger be sustainable before something gives? Will they one day storm the bastions of the IRFU like some latter-day sans-culottes? Who knows.

Alternatively, the new stadium will stand empty while matches are switched to Croke Park.  Conversely, moreover, the less popular Gaelic games, which often fail to fill Croke Park, will be unable to use Lansdowne Road because the pitch is too small.

As I said, a white elephant.  And all because the IRFU failed – like Shell – to consult the local residents early enough, to respect their views, to explain the project, to cut lucrative deals with them, to do whatever was necessary to secure their support.

(It is said that the GAA – which had skilfully expanded Croke Park over many years – is a game for amateurs run by professionals, whereas rugby is a game for professionals run by the amateurs of the IRFU.)

By contrast, the management of rugby in the province of Munster also needed to upgrade and expand its Thomond Park stadium in Limerick, from 12,500 to 26,500.  But Munster Rugby first went to all the neighbours and flattered them to the high heavens. It then bought out a pile of nearby houses at inflated prices. Only when everyone was onboard and happy, did they give the go-ahead to build the new Thomond Park, the first step of which was to demolish all those houses to make room for a big enough stadium. It was delivered on time and within its paltry €40m budget.

Shell should get over its organizational dementia and learn (ie re-learn) from Munster Rugby. So should the IRFU.

February 21, 2010, 07:10 PM EST

By Eduard Gismatullin and Marianne Stigset

Feb. 22 (Bloomberg) — BP Plc and Royal Dutch Shell Plc may falter in their campaigns to save billions in oil and gas project costs as a resurgence in drilling and demand for engineers threaten to revive inflation in the industry.

Crude prices doubled in the past year, prompting producers to resume projects put on hold during the recession. Oil and gas industry spending will rise 11 percent this year to $439 billion, according to Barclays Capital.

“Oil price inflation and cost inflation are highly correlated, albeit with some delay,” said Paul Wheeler, a London-based managing director in the oil and gas group at investment bank Jefferies International Ltd. “The oil industry is always people constrained. It’s one of the biggest challenges: a lack of young engineers and geologists.”

BP Chief Executive Officer Tony Hayward said Europe’s largest oil company will try to cut costs further this year after saving $4 billion in 2009. Shell’s Peter Voser aims to trim expenses by $1 billion. The respite the economic crisis brought on costs may prove temporary as producers are forced to spend more to recover oil from deepwater reserves, tar sands and gas-bearing rocks.

While the major oil companies may face difficulty holding costs down, the beneficiaries of increased drilling will be oil services companies like Schlumberger Ltd., Baker Hughes Inc. and Petrofac Ltd., hired to work on production projects.

Investor Outlook

Investors prefer the outlook for service companies to oil producers. Shares of Schlumberger, which yesterday agreed to buy drilling lubricants provider Smith International Inc. for about $11.3 billion, have gained 82 percent in the last year. Petrofac has more than doubled. In the same period BP has gained 28 percent and Shell is up 11 percent.

“All the service sector is going to be busy again,” Ayman Asfari, CEO of Petrofac, the U.K.’s biggest oil contractor by market value, said in an interview in London. “All the majors now are realizing they cannot stop investing and they are all coming back.”

Aside from salaries, prices for raw materials such as steel, are the biggest contributor to project costs. World steel prices have recovered 19 percent since reaching a three- year low in May as the global economy returns to growth, according to a tracker index from Steel Business Briefing. That will push up the prices of piping and sheet metal needed to build rigs and processing plants.

‘Log Jam’

“Cost pressures on oil services are bottoming out and the next move is up,” Keith Morris, an analyst at London-based Evolution Securities Ltd., said in a note earlier this month. A “log-jam of projects postponed from 2009 will lead to a scramble for oil services. Spare capacity will get booked up, quickly leading to return of cost inflation.”

London-based BP will invest $20 billion this year, little changed from 2009, as it works on projects in Alaska, Trinidad & Tobago and the Gulf of Mexico. Shell, based in The Hague, expects to spend $28 billion this year and Paris-based Total plans $18 billion.

“We are definitely seeing costs recover slightly,” Total CEO Christophe de Margerie told reporters in London this month.

The trend toward deepwater drilling, liquefied natural gas plants and other high-technology projects is adding to pressure on contractor capacity, de Margerie said.

“The costs of developing assets today are significantly higher than they were five years ago and there is no way we are going back to those levels,” Petrofac’s Asfari said in London. “There is nothing you can do about the underlying costs, like human resources.”

Skilled Workers

In Australia, where San Ramon, California-based Chevron Corp.’s $40 billion Gorgon project is among more than a dozen LNG ventures under development, cost pressures are already starting to show in salaries for skilled workers. Woodside Petroleum Ltd. said in November the cost of its $12 billion Pluto project may surge as much as $1 billion, partly because of labor expenses.

Pressure on skilled oil industry professionals may increase in other parts of the world as projects get up to speed, recruitment consultants said.

“We’re still far away from the pre-financial crisis levels, but there has been an increase in demand for engineers,” said Geir Doelvik, managing director of Manpower Professional Engineering AS, an Oslo-based recruiter for the oil industry. “We haven’t seen salaries increase yet, but we’re going into wage negotiations, so we’ll see what happens then.”

Charges for hiring drilling rigs may rebound after more units were pressed into service in recent months. The number of rigs in use worldwide has risen 40 percent from May’s six- year low, according to data from Baker Hughes.

Talks with producers to cut prices “are behind us,” Andrew Gould, CEO of Schlumberger, the world’s largest oilfield-services provider, said in an interview in Oslo this month. “The danger is that if oil prices accelerate then in the supply industry, certain shortages will appear quite quickly.”

–With additional reporting by Brian Swint in London. Editors: Will Kennedy, Amanda Jordan.

To contact the reporter on this story: Eduard Gismatullin in London at +44-20-7673-2268 or egismatullin@bloomberg.net; Marianne Stigset in Oslo at +47-22-99-6109 or mstigset@bloomberg.net.

To contact the editor responsible for this story: Will Kennedy at +44-20-7073-3603 or wkennedy3@bloomberg.net.

BLOOMBERG/BUSINESS WEEK ARTICLE

Financial Times

Review by Ed Crooks

Published: February 22 2010 05:00 | Last updated: February 22 2010 05:00

Beyond Business: An Inspirational Memoir from a Visionary Leader
By John Browne
Weidenfeld & Nicolson £20, 336 pages
FT Bookshop price: £16

After the fall, the rehabilitation. That familiar arc in the lives of disgraced public figures is now being traced by Lord Browne, unceremoniously bundled out of BP after he was forced to resign as chief executive in May 2007, and now starting to rebuild his profile.

There is also a revelation, in the news that Browne twice talked to chief executives of Royal Dutch Shell about a possible merger, once in 1996 and again in 2004-05. That deal remains the dream of every investment banker in the oil business.

FULL FT ARTICLE (SUBSCRIPTION)

Financial Times

By Brian Groom, Business and Employment Editor

Published: February 21 2010 23:03

A two-tier market is emerging in executive pay in the UK’s largest listed companies, with those that have come strongly through the recession able to offer better remuneration than their rivals, according to new research.

Royal Dutch Shell, ranked ninth in 2007-08 with £11.4m, rose to third last year with £15.3m. But the company is now freezing executive directors’ salaries for a year as part of a new pay structure after an investors’ revolt.

FULL FT ARTICLE (SUBSCRIPTION)

“Risk Awareness has gone up; risk tolerance has gone down,” said Jon Unwin, vice president of safety, environment and sustainable development for Shell Upstream Americas’ deep-water unit. Today, Shell, Chevron and others talk about cutting offshore incidents to zero.

REUTERS

Aref Mohammed
BASRA, Iraq

Sat Feb 20, 2010 7:56am EST

BASRA, Iraq (Reuters) – Iraq has no further plans to use foreign firms to develop its oilfields beyond ones auctioned off last year, the country’s prime minister said on Saturday, ahead of a national election next month.

Analysts say that foreign companies may have accepted the tough terms in oilfield development contracts awarded in two rounds last year partly to secure an initial foothold in Iraq, with a view to possible access to other untapped reserves later.

Iraq has the world’s third-largest crude reserves and is the world’s 11th-biggest oil producer.

Prime Minister Nuri al-Maliki said Iraq should start thinking about developing its national oil firms and warned of “staying captive in the hands of foreign oil firms.”

“I told the oil minister during a cabinet meeting that we will never sign any more contracts with foreign oil companies,” Maliki told supporters at a rally in the southern oil hub of Basra, weeks before a parliamentary election on March 7.

“We will depend on our national companies in developing our oilfields,” Maliki said.

His nationalistic tone could discomfort oil firms such as BP Plc and Royal Dutch Shell, which are monitoring their likely reception in a country wracked by years of war and with little recent experience of working with foreign companies.

Baghdad has struck deals with international oil firms that could boost its output capacity to 12 million barrels per day (bpd) within seven years from about 2.5 million bpd now.

Oil Minister Hussain al-Shahristani said in December there were no plans for a third oil contract auction.

Maliki’s coalition is not expected to repeat its triumphant performance in last year’s local polls. Huge bombings have since chipped away at his claims to have improved security, and opponents have united to oust him.

Analysts expect the ten oil deals awarded in auctions last year will likely survive the change in Iraq’s government after the parliamentary vote next month, seen as a crucial test for Iraq as it tries to move away from years of war and sanctions.

Foreign capital and expertise is seen as essential if Iraq is to rebuild its battered economy and infrastructure.

The country’s oil installations and pipelines have suffered repeated bombings and sabotage, and many of its most qualified workers fled the country in the violent and chaotic aftermath of the 2003 U.S.-led invasion.

(Additional reporting by Ahmed Rasheed in Baghdad; Editing by Rania El Gamal)

SOURCE ARTICLE