Posts from ‘December, 2010’

By Ilya Arkhipov and Stephen Bierman – Dec 29, 2010 5:18 PM GMT

OAO Gazprom, Russia’s gas export monopoly, and Royal Dutch Shell Plc may build a third train to produce liquefied natural gas at their $22 billion Sakhalin-2 venture by 2015, the regional governor said.

The two companies may alternatively build a new LNG plant, Alexander Khoroshavin, the governor of the Sakhalin region, told Russian Prime Minister Vladimir Putin in a meeting today, according to Khoroshavin’s press service. A third train at the Sakhalin-2 project may boost capacity by 5 million metric tons, he said.

Gazprom spokesman Sergei Kupriyanov said he had no information about such talks to increase Sakhalin capacity. Shell spokesman Maxim Shoob declined to comment.

The two companies will discuss assets swaps next year, possibly giving Shell a stake in Gazprom’s nearby Sakhalin-3 project, Khoroshavin said. Gazprom said Nov. 30 that it had agreed with Shell to expand work in Russia. Sakhalin-3 project is currently in the exploration phase.

Gazprom agreed to take control of the Sakhalin-2 venture, which includes Japan’s Mitsubishi Corp. and Mitsui & Co., in 2006. The LNG plant, which begun last year, has a capacity of 9.6 million tons a year. LNG is gas cooled to a liquid for transportation by ship.

To contact the reporter on this story: Stephen Bierman in Moscow sbierman1@bloomberg.net.

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net.

SOURCE ARTICLE

By Alfred and John Donovan

Our outspoken friend, the former employee of Shell Oil USA, has raised the question of why Shell has not sued us for libel. Extracts from an article we published in February 2006 are informative on the subject. Since then, Shell was legally obliged to supply us with internal documents including one indicating that Shell decided long ago that it will never take legal action against us. Perhaps this is over concern about what Shell describes as “internal laundry” being aired in open court.

As will be seen, the attitude of Shell to free speech is unclear and seems to depend on whether they can sue in a country such as Malaysia, which has a corrupt judiciary.

With regard to its comments about Ken Saro-Wiwa, in June of this year Shell settled for $15.5 million a claim in the USA courts accusing the company of involvement in his murder.

THE HYPE & SPIN

THE RIGHTS OF NOBEL LAUREATE *KEN SARO-WIWA TO FREELY HOLD AND AIR HIS VIEWS (ABOUT SHELL):

EXTRACTS FROM Shell.com website:

THE RIGHTS OF ALFRED DONOVAN TO EXPRESS HIS OPINIONS (ABOUT SHELL)

FROM SHELL INTERNATIONAL PETROLEUM COMPANY LIMITED LEGAL SUBMISSION TO THE WORLD INTELLECTUAL PROPERTY ORGANISATION REGARDING THE WEBSITE OF ALFRED DONOVAN: 18 MAY 2005

THE REALITY i.e. WHAT SHELL MANAGEMENT DOES AS OPPOSED TO WHAT IT SAYS

COMMENTS FROM A FORMER EMPLOYEE OF SHELL OIL USA

Read your comments about Shell not suing Bill Campbell for libel. Obviously, they have not done so because they could not win. Truth is not libel.

One might ask why RD Shell has not sued you for libel. You have accused them publicly of all manner of nefarious undertaking. As I recall, you recently even accused them of engaging in espionage against a sovereign government and military ally of the United Kingdom, the United States. Yet not a word out of RD Shell management. Why? Obviously, this particular allegation must probably be true as well. In the US that is a crime that has no statute of limitations and carries with it a life sentence, without possibility of parole, by the way, when the object of such endeavors are nuclear weapons design secrets.

And now all the Wiki-leaks disclosures about RD Shell’s ‘shadow government’ in Nigeria that Shell management is furiously trying to deny. Who could they sue for libel on this disclosure? Their own VP, Ms. Ann Pickard? The US State Dept.? Or the fellow who broke the story?

I bet Ms. Pickard’s career is now ‘toast’, however. Loose lips ….. One wonders how much that ‘blunder’ is going to cost Shell. That depends upon how effective their ‘shadow government’ is, I suppose.

All of this ‘truth’ this must be very frustrating for RD Shell management and their army of glorified, blood sucking ambulance chasers.

By John Donovan

Printed below are extracts from an email I sent on 9 August 2006 to the then CEO of Royal Dutch Shell Plc., Mr Jeroen van der Veer.

It concerned very serious published allegations against Shell management by the former HSE Group Auditor of Shell International, Mr Bill Campbell. His allegations related to the Brent Bravo explosion in which two Shell employees lost their lives as a consequence of alleged criminal negligence. It was an investigation led by Bill Campbell that revealed the notorious “Touch Fu** All” safety culture for Shell North Sea production platforms, endorsed by Shell management.

Mr Campbell has also alleged a cover-up involving senior executive directors of Royal Dutch Shell.

No reply or acknowledgment was received in response to the email. Shell did contact Mr Campbell’s solicitors in the hope of ending his contact with us. That maneuver was unsuccessful.

We understand that following a long investigation by the Grampion Police, a decision by the Scottish legal authorities on launching a prosecution is imminent.

THE EMAIL

Dear Mr Van der Veer

As a long term Shell shareholder I am extremely concerned by the serious allegations made by the former Shell International Group Auditor, Mr Bill Campbell, concerning alleged falsification of records in relation to the Shell Brent scandal.

We really cannot have a distinguished former high level Shell official being allowed to make such accusations without Shell taking action against him for defamation if, as Shell claims, they are untrue.

This is not a case of some outsider ignorant of the facts making wild accusations. The charges in this case are being made by a person of high reputation and considerable expertise following his authorised investigation as Group Auditor into the Brent safety regime.

Since a number of “accidental” deaths have occurred on Brent Bravo, two of which resulted in a record breaking £900,000 fine imposed on Shell, the allegation of falsification of records could result in criminal charges if true.

Mr Campbell is on record as claiming that he has personally met with you to discuss these matters. If this is correct, then you must be fully briefed on the issues and the allegations he has publicly made. They have been repeated in various mass media sources and in trade publications including, for example, UpstreamOnline.

Mr Campbell says that ESDV leak-off tests were purposely falsified, not once but many times. He further alleges that the inaction of the relevant Asset Manager, the General Manager, the Oil Director and the Shell Expro Managing Director in 1999 (Malcolm Brinded), contributed in some part to the unlawful killing of two persons on Brent Bravo in September 2003.

My father and I have published some outspoken articles about Shell ourselves but nothing as serious as the charges levelled against Shell management by your own former Group Auditor.  And as you are aware, we have a special dispensation from Shell International Petroleum Company to say what we like about Shell.

Surely Shell is not going to allow Mr Campbell to continue repeating these devastating allegations? If they are unfounded, why have you not already instituted libel proceedings? If they are true, why have you not sacked Malcolm Brinded? Why has he not done the honourable thing and resigned?

If you do not take action, people will naturally assume that Shell management is unwilling to do so because Mr Campbell is speaking the truth and can prove it.

If anyone says anything untrue about Shell, it is your duty Mr Van der Veer to take action to protect the reputation of the Shell brand. However, you have my sympathy to some degree because Shell management blunders and misdeeds have been so wide-ranging that people who wish to criticise have an almost unlimited supply of ammunition.

Conclusion: the fact that Shell has not obtained an injunction to prevent Mr Campbell making his allegations speaks volumes.  He is plainly a man of great courage speaking the truth.

Yours sincerely
John Donovan

I am Antonio L. Buensuceso Jr. an immigrant from the Philippines and residing at 12901 Francine Ter, Poway, Ca  92064 and an avid follower of your ROYAL DUTCH SHELL PLC.COM website.

In fact, I am posting your column in my blog: shelltabangaorefinerylife.blogspot.com…

…for the simple reason that as I see it we stand on the SAME ground against SHELL, who since 1978 upon the start of my employment in PILIPINAS SHELL PETROLEUM CORPORATION,  Shell Refinery, Tabangao, Batangas City, PHILIPPINES until February 2002 when the company booted me out of the refinery, I have been crusading against a MANAGEMENT SCAM victimizing helpless employees like me.

This is how the SCAM works.

SHELL management concocted a PERFECT ATTENDANCE PROGRAM and called this PERFECT ATTENDANCE AWARD SYSTEM.

At the beginning of the year the supervisors under the direction of SHELL management instructs their respective operators, mechanics and other rank and file employees to become PERFECT ATTENDANCE AWARDEES to the end of the year.

But how does one become an awardee?

Being part of our benefit package we got through our collective bargaining agreement, we have fifteen (15)  days vacation leaves, fifteen (15) days sick leaves and five (5) days personal/emergency leaves annually. In order to become a PERFECT ATTENDANCE AWARDEE an employee can only avail of his fifteen (15) days of vacation leaves and leave behind his fifteen (15) days of sick leave  and five (5) days personal/emergency leaves.

If the employee happened to consume even a day of his sick leave or personal/emergency he will no longer be entitled to become a PERFECT ATTENDANCE AWARDEE.

Now, at the end of the year those sick leaves and personal/emergency leaves of awardees shall be forfeited in favor of SHELL.These fifteen days sick leaves and five days personal/emergency leaves shall all be collected by greedy SHELL and gives back a gift, just worth one-half day work; in my case : one G.E. flat iron during one Christmas party occasion. WHY not give a gift commensurate to at least to the 20 day work?

Actually, if the employee consumed all the fifteen days sick leave and five days emergency leaves, these 20 day leaves will cost SHELL  50 days worth of work. Look when the employee avail of these 20 days leaves, he got  20 days. then another will work in his  place and will be paid  overtime  1.5 x 20 days and got 30 days.

Therefore, 20 days for the employee who was on leave plus 30 days for the employee who is working overtime for the employee who is on leave is equal to 50 days. So why just give a half day worth of gift?  This is a real SCAM , a scandalous extortion racket.

SHELL management forced employees into submission to this SCAM by warning non-conforming employees that they will not be promoted or will be transferred to other work assignment which the employee will find to be a difficult or ridiculous one. And we find ourselves in these predicament since I joined SHELL. Every year I asked for MANAGEMENT to give  sanity to the PERFECT ATTENDANCE AWARD SYSTEM but they never did. They kept doing this SCAM over again.

On year 2000, January  I made a vow that I will not cut my hair to remind SHELL management that there is a constant plea for SANITY in the PERFECT ATTENDANCE AWARD SYSTEM. But before my hair could grow any longer  SHELL management opted to terminate my employment in the guise of redundancy on February 2003. A case of illegal termination of employment I filed against SHELL and is now pending in the SUPREME COURT OF THE PHILIPPINES.

I am by myself and lawyers practically advise me to quit because SHELL is my opponent ….I can have all the winning arguments in law but SHELL has the remarkable influence on the judges making the decision.

Nevertheless, nothing will ever diminish my will to fight for a cause I believe is right.

Sincerely,

Antonio L. Buensuceso Jr.

antoniobuensuceso@gmail.com

COMMENT FROM A FORMER EMPLOYEE OF SHELL OIL USA

I read the posting from that fellow from the Philippines, and so I looked up this definition of ‘Tyranny’ by John Locke in his Second Treatise, Chapter 18:

Where law ends, tyranny begins …..

…… tyranny is the exercise of power beyond right ….. making use of the power …. not for the good of those who are under it, but for …. private, separate advantage.

It would seem that RD Shell management should do some reading. Shell management’s lack of regard for ‘the law’ when it suits their purposes is legendary. Nigeria is the present day classic example.

I presume those ‘gentlemen’ know who John Locke was. In the US we do. He was the intellectual ‘godfather’ for the US Constitution.

Comment by a former employee of Shell Oil USA

I read your re-posting of RD Shell’s 2007 advert for a ‘corruption czar’ or whatever they were going to call this person. Interesting. It gave me a good chuckle.

This advert is a public (albeit very quiet) admission by RD Shell management that they know they have a very widespread corporate problem with: internal corruption, bribery, fraud, money laundering, ‘accounting irregularities’, extortion, industrial espionage, conspiracy, and all sort and manner of unsavory and illegal conduct.

Where was the follow-up management house cleaning that should have accompanied these ‘cleansing efforts’?? Or did management take this as an opportunity to blame ‘staff’ and engage in large scale removal of those that wouldn’t ‘play ball’ with management??

Does anyone in RD Shell management have a credible answer to those questions, perchance, that they want to share with their staff, the public, and their shareholders, and perhaps law enforcement officials??

Extracts from an article we published in January 2007. It is evident from the recent news of Shell being mired in endemic corruption in Nigeria, that the anti-corruption campaign was just another illusion conjured up by the Shell propaganda ministry to fool disillusioned investors in the wake of the reserves fraud. Organised crime investigations should have started at the very top of the company. The fact that Richard Wiseman, the senior official in charge of Shell ethics and compliance makes anti-corruption speeches, but behind the scenes has a track record of supporting corrupt practices by Shell executives, tells you all you need to know.

By Alfred Donovan

Shell International is currently seeking applicants for two Investigation Case Managers. Each will be in control of a team of up to six individuals who will tackle 100 plus investigations every year inside the Royal Dutch Shell Group. The fact that up to a dozen investigators are needed indicates the considerable volume of bribery, corruption and other illegal activity going on.

My son John Donovan and I may well apply for the Case Manager appointments since we have a track record of confronting and investigating dishonest activities by Shell managers who were protected by senior management godfathers such as Malcolm Brinded, the discredited CEO of Shell E & P. Brinded turned a blind eye to irrefutable documentary evidence of a conspiracy by Shell managers to deceive and cheat participants in a Shell tender process. As Managing Director of Shell Expro, he was implicated in the Brent Bravo scandal which cost two Shell employees their lives.

We are extremely grateful to the Shell insider who brought this advert to our attention.

Advertised by Shell International on www.shell.com

Investigations Case Manager (x2) Job ID: E8021

Location: Den Haag (The Hague), Netherlands

Shell Central Finance (CF) provides a range of professional services, advice and products to Shell companies on a global basis. This support encompasses everything from management and financial accounting, consultancy and business controls through to Mergers & Acquisitions, insurance and treasury operations.

The importance of compliance in today’s climate means that our Internal Audit department is integral to our success. As well as carrying out audits for our businesses and functions, it helps to streamline our operations, engineer business processes and facilitate more open communication.

The successful candidate for this role will provide specialist advice, awareness training, information and expert investigative resources to all Group companies worldwide on practices which conflict with Shell Group Business Principles. These include fraud, contract corruption (illegal information brokering), bribery, money-laundering and organised crime.

Responsibilities:

As one of our Investigations Case Managers, you’ll identify and advise on the implementation of improved controls, the coordination and governance of Business Integrity across the Group, and maintain a cross-business integrity network. You’ll undertake the role of Regional Case Manager on behalf of the Ethics and Compliance Office, including regular contact and briefings with Business Compliance Officers.

Taking responsibility for assessing integrity issues that are forwarded to the department, identifying the appropriate resources, managing the assigned investigation teams, and reporting to the Business on conclusion, you’ll be required to manage 100+ investigations every year.

Depending on the size and complexity of the investigation, you’ll brief and manage investigation teams of up to six people. These teams are made up of individuals from different Shell companies, external suppliers and external counsel.

You also have the following additional responsibilities:

• Acting as Group Subject Matter expert and advisor on investigations, and taking responsibility for the protection and risk assessment of Whistle-blowers while considering the physical, psychological and legal risks involved

• Developing materials and organising and delivering an Investigation Skills course to 24+ international staff a year

• Providing awareness presentations to audiences ranging from 10-70 staff

• Coordinating the activities of nominated Business Integrity representatives around the Group to maintain a cohesive network and approach to the management of Business Integrity

• Facilitating the sharing of relevant information

• Taking accountability for the advice, expertise and work product provided by Business Integrity Department re investigation activities

• Taking accountability for compliance to internal and external legal policies during internal investigations.

Your principal accountabilities will be as follows:

• Providing regular communication and investigative briefings to senior managers within Shell on highly sensitive business issues. This involves investigating entities, collating and analysing data, writing reports, presenting findings and proposing pragmatic and robust business solutions

• Taking accountability for the management of integrity related investigations as required by Shell Internal Audit, managers in the Group businesses, as a result of Whistle-blowing submissions

• Providing Subject Matter Expert advice to different parts of the business upon request

• Ensuring confidentiality in relation to sensitive data with potential Group impact on a daily basis

You’ll also have a number of key challenges, including:

• Prioritising the demand for BID Services with the added difficulties of balancing the requirements of international/cross border/cross time zone cases

• Managing investigations staff and resources in difficult environments and countries
• Understanding the different business areas and having the ability to rapidly assimilate facts and knowledge of commercial practices in a constantly changing business

Requirements:

With highly effective communication and interviewing skills, and the ability to communicate well with senior management, you’ll be an expert operator of specialist investigation software.

With first-class prioritisation skills, you’ll be effective at influencing without authority, and be passionate upholding moral and ethical behaviour within the company.

You’ll have excellent presentation, training and facilitation skills, and capable of providing expert assistance to those investigations that are particularly sensitive to the Group. With specialist knowledge and experience of crime, illegal activities, the management of Whistle-blowers and Contracting & Procurement irregularities, you’ll have the ability to transfer specialist knowledge into useful business input.

Capable of assessing trends of fraudulent crime and its impact on Shell around the world, you’ll have expert knowledge of Shell policies relevant to Business Principles and the investigation of breaches including Shell disciplinary procedures.

With excellent knowledge of current legislation concerning corporate investigations and external reporting requirements, you should also have good diplomatic skills and awareness of Diversity and Inclusiveness issues.

Application Deadline: Wednesday, February 07, 2007

FROM THE NEW YORK TIMES: A version of this article appeared in print on December 26, 2010, on page A1 of the New York edition.

By John Donovan

This U.S. diplomatic cable, classified as “secret”, reports on a briefing given to the American Ambassador to Nigeria, Robin R. Sander, in February 2009  by Shell Executive VP, Ann Pickard, now Country Chairman of Shell Australia.

During a discussion of the high level of corruption in Nigeria, Pickard gave as an example, a bribery demand by Nigerian Attorney General Aondoakaa that he would sign a document only if paid $2 million immediately, and another $18 million the next day.

She also cited examples of demands for millions of dollars in bribes by Chief Economic Advisor Yakubu and the First Lady Turai Yar’Adua, to lift oil.

Shell has recently been fined by the U.S. Securities & Exchange Commission for its role in corruption in Nigeria and paid what some might describe as a $10 million bribe to the Nigerian government to settle corruption charges.

*ROYAL DUTCH SHELL NIGERIAN CORRUPTION SCANDAL
*SHELL PAYS $10 MILLION CORRUPTION FINE TO NIGERIANS

The latest revelations comes on top of a claim by Pickard that Shell had infiltrated agents into every Nigerian ministry affecting its operations in Nigeria.

Viewing cable 09ABUJA259, C) NIGERIA: SHELL BRIEFS AMBASSADOR ON OIL GAS ISSUES

Reference ID: 09ABUJA259 Created: 2009-02-10 16:04 Released: 2010-12-08 21:09 Classification: SECRET//NOFORN Origin: Embassy Abuja

VZCZCXRO7442
OO RUEHPA
DE RUEHUJA #0259/01 0411610
ZNY SSSSS ZZH
O 101610Z FEB 09
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5253
INFO RUEHZK/ECOWAS COLLECTIVE
RUEHOS/AMCONSUL LAGOS 0802
RHEBAAA/DEPT OF ENERGY WASHDC

S E C R E T SECTION 01 OF 03 ABUJA 000259

NOFORN
SIPDIS

STATE PASS USTR FOR AGAMA
USDOE FOR GEORGE PERSON AND CHAYLOCK

E.O. 12958: DECL: 10/02/2028
TAGS: EPET ENRG ELAB PINR ECON SENV PGOV NI
SUBJECT: (C) NIGERIA: SHELL BRIEFS AMBASSADOR ON OIL GAS ISSUES,
COMMENTS ON PRESIDENT’S HEALTH AND HIGH-LEVEL CORRUPTION

REF: ABUJA 203

Classified By: Ambassador Robin R. Sanders for reasons 1.4. (b & d).

¶1. (S/NF) SUMMARY: Shell’s regional executive vice president for Africa Ann Pickard and government relations representative Peter Francis met with the Ambassador on January 27 in Abuja and provided an update on problems in the oil and gas sector. Pickard said that things were going from bad to worse, especially the security situation. She said that Nigeria now had one of the highest negative ratings for maritime operations, creating problems for Shell in hiring oil tankers to load, as tanker operators will work only under highly selective conditions. Last year there were about 80 piracy attacks on land and water combined. This year already 15 have been tallied, which includes 3 for Shell and 3 for Exxon. On corruption, Pickard said that Nigerian entities control the lifting of many oil cargoes and there are some “very interesting” people lifting oil. Oil buyers would pay NNPC GMD Yar’Adua, Chief Economic Advisor Yakubu and the First Lady Turai Yar’Adua large bribes to lift oil. Pickard also reported an instance of the Attorney General Aondoakaa allegedly soliciting a $20 million bribe to sign a document. The International Oil Companies (IOC) are quite concerned about the “very flawed” new petroleum sector energy bill. The IOCs will be asking U.S., Dutch, and U.K. COMs to convey points on the bill to GON policymakers. Pickard agreed that the President’s health is a guessing game. She said that in her recent meetings with Yar’Auda he seems alert, though very drawn in the face, thin, and frail. Her information is that the President was not in danger of dying soon, but also was unlikely to ever fully recover from his ailments. (Note: see septel on oil/energy sector issues for the Ambassador’s meeting with the new Minister of Petroleum Resources. End Note). END SUMMARY.

¶2. (C) Shell’s regional executive vice president for Africa Ann Pickard and government relations representative Peter Francis met with the Ambassador on January 27, 2009 in Abuja and provided an update on problems in the oil and gas sector. Pickard reported that Shell’s meeting with Minister of Petroleum Resources Dr. Rilwanu Lukman scheduled for earlier that day had been cancelled; the third week in a row where key appointments had fallen through, with the excuse of being summoned to the Presidential Villa. (Note: Emboffs have observed that meetings with ministers and senior staff are indeed often cancelled with the explanation that they have been summoned to the Presidential Villa, even when the President is out of town. End note). Econ Counselor and Econoff (notetaker) also attended the discussion.

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FROM BAD TO WORSE
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¶3. (C) The Ambassador took the opportunity to share with Pickard that the Mission was in the midst of completing its Strategic Plan and asked Pickard where she thought Nigeria was headed. Pickard said that things were going from bad to worse, especially in terms of security. She said that Nigeria now had the highest negative rating for maritime security, creating problems for Shell in hiring oil tankers to load; tankers will work only under highly selective conditions. She also noted that late on the evening of Saturday January 17, Nigerian militants attacked and boarded two vessels at a Shell crude oil loading platform in Bonny and took eight crew members hostage. Standard procedure on the tanker was followed: the ship went into immediate lock down; there were no injuries or fatalities from the boarding. The eight Nigerian crew members who were taken hostage were later released. The pirates who went through the sections of the boat to which they were able to gain access, smashing and stealing computers, electronics, and personal items of the crew members. The second vessel was a tug boat towing a supply vessel from Bonny to Calabar. Last year there were about 80 incidents of piracy; this year already 15 had been tallied, which includes 3 for Shell and 3 for Exxon. GON officials have told Shell to “hire more security.” The price of doing business in the oil and gas sector in Nigeria continues to climb she concluded. [Note: The International Maritime Bureau (IMB), a division of the International Chamber of Commerce - www icc-ccs org - reports that the waters off the Gulf of Guinea (Nigeria) remain the second worst, with 40 incidents in 2008 to the Horn of Africa (Somalia) with 42 recorded incidents. The IMB notes that in 2009 the Horn of Africa will be more intense as Spring comes due to the large number of foreign warships in the region on active patrol to ensure the safety and security of vessels. The same increased security is not expected for Nigeria in 2009. End Note]

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SHELL BELIEVES COUP UNLIKELY; CORRUPTION WORSENING
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ABUJA 00000259 002 OF 003

¶4. (S/NF) The Ambassador asked what Shell’s thoughts were on any potential for a coup. Pickard answered that there is little intellectual capital to plan and execute a coup and Shell sees little potential for one. Pickard then went on to say that corruption in the oil sector was worsening by the day. The Ambassador asked for a few examples. Pickard said that Nigerian entities control the lifting of many oil cargoes and there are some “very interesting” people lifting oil (People, she said that were not even in the industry). As an example she said that oil buyers would pay Nigerian National Petroleum Corporation (NNPC) General Managing Director Yar’Adua, (Note: not related to President Yar’Adua. End Note) Chief Economic Advisor Yakubu, and the First Lady Turai Yar’Adua large bribes, millions of dollars per tanker, to lift oil. The IOCs control the liquefied petroleum gas (LPG) cargos, so GON actors do not have the same opportunity for illicit gain. Pickard also said a former associate of hers (protect) had told her he had been present when Attorney General Aondoakaa had told a visitor that he would sign a document only if the visitor paid $2 million immediately and another $18 million the next day.

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VERY BAD BILL
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¶5. (C) Pickard reported that Shell, Exxon-Mobil and Chevron all have big license review disputes with the GON. Shell has taken its dispute to court and the court is supporting Shell’s position. According to her, Shell is stepping back for the moment, however, to see how the other two majors negotiation fair, but is not taking its case out of court yet. The IOCs are quite concerned about the “very flawed” new petroleum sector energy bill. The bill is silent on what fiscal regimes would be applied. Shell says that the bill could reduce the corporation’s overall value in Nigeria. GON discussions around the bill have mentioned the possibility of moving to five-year licenses and prohibiting exploring both oil and gas from the same source, which would contradict how oil and gas extraction works in practice. The bill is silent on joint ventures; it just states that NNPC will be incorporated. Pickard said the bill was “likely to sail through.” The IOCs will be asking U.S., Dutch and U.K. COMs to convey points on the bill to GON policymakers. (Note: Pickard mentioned that the IOCs will not share company information directly; they will hire consultants, like McKinsey, to produce common themes so the messages from the IOCs to be shared with the relevant Ambassadors are clear and consistent. End note). Pickard lamented that the expected cycle of petroleum is at least five years for the first oil to flow, another 10 years of production to begin to break even. These numbers change when oil is $40 per barrel instead of $100 per barrel. Hence, a five year license would not be an incentive for investment and development.

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GAS ISSUES
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¶6. (C) The Ambassador said that the Mission was looking at performance measures for the economy, i.e. the linkage between the country’s electricity output and gross domestic product (GDP). The Ambassador shared that the Mission feels strongly that gas for feedstock is the key to Nigeria’s power production, which is only about 2,800 average megawatts for a country of 140 million people. Pickard agreed and added that the U.S. got it wrong on its domestic natural gas policies, which it took over 20 years to sort out. So it is not surprising that Nigeria has it wrong at this point. She said there is not adequate infrastructure for gas. Gathering plants and pipelines to carry the product to the power plants still have to be financed and built. The Nigeria Independent Power Projects (NIPP) were located where there is no gas and no infrastructure. In addition, the international oil companies were coerced into building a power plant each, something they have no expertise in, and they are scrambling to deliver gas to these plants.

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YAR’AUDA VACATION IS PERHAPS SOMETHING ELSE
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¶7. (S/NF) Pickard agreed that the President’s health is a guessing game. She said that in her recent meetings with Yar’Auda he seems alert but drawn in the face and frail. She reported that a Julius Berger (protect) contact says that the President was not in danger of dying soon but has serious ailments from which he will never fully recover. Pickard shared that Berger provides transportation including planes for the President and has reportedly flown in doctors and technicians to attend the President (reftel). She said, for instance, that her Berger contact confided that they flew the President from Germany to Saudi in September 2008. Additionally, the Berger contact thought the President would not return to the Villa

ABUJA 00000259 003 OF 003

offices, as they were moving the President’s personal things out of the Villa. (Note: What we think this means is that Yar’Adua is spending most of his time in the presidential residence and not in the Villa offices. End Note).

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HOPES THAT OIL NATIONALISM CAN BE TEMPERED
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¶8. (C) The Ambassador asked how comfortable Shell was with the new appointment of Dr. Rilwanu Lukman as Minister of Petroleum Resources,
and the appointment of Mohammad Sanusi Barkindo as the new NNPC GMD. Pickard sees the nationalism card cooling with the removal of former NNPC GMD Yar’Adua, given that new Minister of Petroleum Lukman is more “pragmatic” and will hold sway over deputy Minister Ajumogobia.
(Note: Ajumogobia’s technical assistant told EconOff in a meeting on January 14, 2009 that the State Minister was focusing on Gas, since before the mass cabinet change he was State Minster of Petroleum, with a separate State Minster for Gas.) End Note. She said she was also okay with NNPC chief Barkindo. She has worked with Barkindo several times over the past few decades, especially when they were both working climate change. She said Barkindo led Nigeria’s technical delegation to climate change negotiations that produced the United Nations Framework Convention on Climate Change (UNFCCC)and the Kyoto protocol to UNFCCC during while he served on its Bureau at various times. She indicated that although his undergraduate studies were in political science, he obtained his MBA from Southeastern University in Washington DC and did postgraduate work in petroleum economics and management at Oxford University. Although she also said terms like nationalistic and Chavez she however said that she thought he could be steered in the right direction on the petroleum sector.

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COMMENT
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¶9. (C) Although Pickard clearly seems frustrated with the way things are going in the maritime security, oil sector legislation, and corruption which affects Shell’s bottom line, it was useful to hear that she has hopes for the new Petroleum Minister and NNPC chief. Septel on the Ambassador’s meeting with new Petroleum Minister Lukman will address many of these same issues.

¶10. (U) This cable was coordinated with Consulate Lagos.

SANDERS

SOURCE CABLE