News and information on Royal Dutch Shell Plc.
Relieved: The current rapid drop in oil prices is not simply a matter of market forces at work. Remember the last time oil prices tanked and banks in the US got themselves into trouble ? At that time Merrill Lynch owned more oil future than any other entity. Bank of America now owns Merrill Lynch.The world's trading and banking houses are clearly dumping high priced long term contracts in an effort to cut their losses. There is more to the price of crude than simply supply and demand. The traders have panicked an so the price of crude has 'tanked'. We have seen this before. Next time they will drive the price higher than markets forces warrant.
Earclosetotheground: When Peter Voser's departure as CEO was announced, it was explained that Peter wanted time for his family, hobbies and to give back to society. Today it was announced that he's being proposed as Chairman of ABB (his previous employer) and he also took a directorship at a Singaporean Sovereign Invetsment house some months ago. This makes his departure story look suspicious. Maybe the board was aware that he overpaid for unconventional acreage in the USA and that his China adventures were quickly going nowhere but down. Is it time for the RDS board to be a bit more forthcoming with its justification?
Zik Gbemre: NOW THAT MR. MUTIU SUNMONU IS GOING ON RETIREMENT, WHO TAKES OVER AS SHELL NIGERIA MD/COUNTRY CHAIR? As the current Country Chair/Managing Director of the Royal Dutch Oil Company based in Nigeria, Mr. Mutiu Sunmonu, bows out of office soonest, the question of who takes over the mantle of leadership becomes very expedient to put into consideration and find answers to. Indeed, Mr. Mutiu Sunmonu won the hearts of many with several qualities, notably; he was and still is painstaking, accessible (open doors), erudite, accommodating, slow to anger, humble, detribalized, tested and trusted, an ambassador devoid of mediocrity, megalomania and above all intelligent. These facts and attributes were also recognized by the Federal Government of Nigeria which was quickly followed by the prestigious award of the National title/Honour - CON (Commander of The Order of The Niger), by the President of Nigeria Dr. Goodluck Ebele Jonathan, two months back. It is therefore crucial to state here that no Nigerian Oil Chief has ever received such a National Honour award. The ‘oil Executive’ Mr. Sunmonu, is also known to have received tens of titles (many he had refused) from several host communities where Shell Nigeria operates. In these host communities, choruses of praises are still opened and rained on him even in the face of oil exploration challenges. This unprecedented development in the history of oil exploration and production, particularly in the Niger delta, should not be left unabated if the status quo must be retained and maintained without a paradox. Hence, it is “Who The Cap Fits” that should only be considered to take over from Mr. Sunmonu, so as to continue with the good legacy he will be leaving behind, and not some ‘desk-top’ or ‘sycophant’ individuals that do not have what it takes to deliver. In other words, the next Managing Director/Country Chair of Shell Petroleum Development Company Nigeria Limited (SPDC) has to be someone that first, has a vast experience in Gas Production, especially now that the whole world is aiming for cleaner sources of energy; which gas production offers. The next Shell (SPDC) MD/Country Chair should also be someone that was an Asset Manager and has gathered that level of expertise, just like Mr. Mutiu Sunmonu who was once the Asset Manager in Southern Swamp operations (Area C) Western Division in Delta and Bayelsa States, Shell Nigeria. Let us reiterate here that it is not a question of one being a Vice President or a Director (through ‘who-know-man’) in Shell Nigeria that qualifies one to become the next MD/Country Chair, but it is about one having the vast requisite technical experiences and ‘character’ to adequately handle the demands of that office. He should be someone that has competence on the job. The next MD/Country Chair of Shell (SPDC) has to be someone that is ‘firm’ and has proven his or herself to be a ‘dependable’ and ‘reliable’ Executive not just for Shell as a whole but also for the locals of the host communities in Shell operation areas of Nigeria. He should be someone that is not an Edo State trabalist or any ethnic trabalist for that matter. The next Shell Nigeria MD/Country Chair has to be someone that has an ‘independent’ mind yet ‘humble’, and can use his/her discretion and wisdom to address host communities issues affecting locals before they go out of proportion, as well as issues bothering junior Shell staffs too, just like Mr. Sunmonu is known to have done. That is, the next Shell Nigeria MD/Country Chair has to be someone that will not look down on host communities’ stakeholders as well as Shell junior staffs. Otherwise, host community issues will often snowball into unanticipated crises while junior Shell staffs that do not have a voice, will suffer greatly, particularly those that have served the company greatly for years but yet, are sent out through the back door without nothing, over flimsy excuses on health grounds that are no fault of theirs. We know exactly what we are saying based on recent happenings, so this is no exaggeration. There are people who pretend to be good but in actual fact, they are not; the relevant authorities in Shell Hague should consider these facts in appointing the next MD/Country Chair of Shell (SPDC). If possible, those considered to be eligible for the position of MD/Country Chair of Shell Nigeria, should be made to come out and contest for the position through ‘rigorous tests’, both written and oral tests on the technical knowledge of the oil and gas operations of Shell Nigeria. It is now unavoidable to prevent the oil rich communities and indeed the Nigeria people from weeping if the sad error of replacement is executed by misguided judgments on the part of the Royal Dutch Management, sequel to our earlier write ups on this issue. Many Nigerians are currently waiting with anxiety as to who would take over and continue the good works of Mr. Mutiu Sunmonu, CON. Relevant authorities and Shell Management in The Shell Hague, should therefore be very thorough before naming the next Shell (SPDC) MD/Country Chair. A greater portion of the future of the Nigerian Oil and Gas Industry rests on that decision. Zik Gbemre, JP National Coordinator We Mobilize Others to Fight for Individual Causes as if Those Were Our Causes
earclosetotheground: London Lad: we agree that buying BP now is writing an open check. Until its legal liabilities are established (and possibly confirmed by a higher court), a buyer has no idea how to assess the future cash commitments related to Gulf spill. The difference with the BG situation is that a more creative Shell Board would have considered what BG did itself later on: namely floating off the downstream gas business and its retail charging and collection business. In other words, it was arisk that could be managed> Macondo is not (at this point). As a result, Shell lost a great opportunity.
Outsider: Relieved: My point entirely. If unconventional (ie Bakken/Eagle Ford....) wells need to be worked over after 1-2 years of production (at a cost similar to the drilling of a new well) we will see a rebalancing of supply and demand within a couple of years - it will not be economical to maintain production and the wells will be shut in or abandoned. Wells that have already been drilled are "sunk costs" and will be produced for as long as possible, as is always the case. The difference with unconventionals is that "as long as possible" means 1-2 years rather than 10-20 years as was the case with conventionals.
Relieved: Outsider: North Dakota just celebrated the production of 1 billion barrels of oil from the Bakken shale. Two thirds of that production came in the last 3 years. These wells pay off very quickly at $100 a barrel but production declines very rapidly as well. The same holds true for the Eagle Ford shale in Texas. With drilling stalled in these two areas production will decline quickly,as will the 'new' shale oil supply of US produced oil. This could take a couple of million barrels out of US and world daily production. Oil prices won't rebound overnight, but they will rebound and go higher unless other sources of energy expand or new technologies for energy production mature and expand. Without new drilling and new supplies coming online oil production world wide will decline. Low prices expand demand. Eventually, there is a collision between supply and demand, and it won't take long to occur. We have seen it before.
Outsider: Relieved: I agree that the price of oil in cyclical, but the production decline of unconventional wells is much faster than the decline of conventional wells. I would expect a year or two before there is a marked decline in unconventional production sufficient to balance overall supply and demand.
Relieved: Oil prices have relatively long term (relative to other commodities) price swings. In general the highs (or lows) come and go about every seven years (roughly). This swing time is related to the lag time necessary to bring on new production, and for current productions levels to decline enough to stimulate higher prices and increased drilling and production. Exxon is probably generally correct in their assessment of where oil prices are headed over the long term. As production now declines because of low prices for crude, it won't be long before prices start an upswing. Whether BP can last another couple of years at current or lower prices for crude is another matter.
Rangefinder: The most obvious rival source for large-scale hydrogen is nuclear power generation not unreliable wind and solar. This was proposed in a paper presented at a nuclear forum some 20 years ago on the hydrogen economy. Hydrogen from nuclear = no/low CO2 emissions- unlike natural gas or other fossils
Relieved: Given the recent US Supreme Court ruling against BP in its efforts to limit damage claims it would appear that their balance sheet just took another hit. How much of a hit is a matter of speculation at this point in time, but it won't be chicken feed.