In view of the recent shattering news from the jinxed Kashagan project…
…it is interesting to reflect back on the situation as it was in 2007, reported in this Reuters article by Tom Bergin.
It seems that not much has changed.
It also explains why Royal Dutch Shell ended up issuing a profits warning and launching a fire sale of assets, following a succession of disastrous projects mired by incompetence.
4 Sept 2007
(Reuters) – A Royal Dutch Shell Plc (RDSa.L) executive working on Kashagan, a project under pressure from the Kazakh government for being overbudget and behind schedule, has quit, company sources told an unofficial company Web site.
John Donovan, who runs a Web site critical of Shell and acts as a conduit for whistleblowers at the company, said Shell insiders had told him that John Stubbs, a senior project manager on Kashagan, had left the Anglo-Dutch oil major.
Stubbs previously worked for Shell in Nigeria, where he had a leading role in the $3.6 billion Bonga oil and gas project, and the North Sea, where he was project director on the 876 million-pound ($1.8 billion) Shearwater gas development, which Shell said was up to 10 percent below budget.
A Shell employee told Donovan by email that Stubbs was one of an “elite band of great project management heroes” who had recently left Shell, leaving the company with a lack of talent to deliver on the big projects it is relying on for growth.
Shell said it was unable to confirm his departure.
The start of production at Kashagan has been delayed until the second half of 2010 from an initial 2005 target. Its cost has escalated from $57 billion to $136 billion, according to the Kazakh energy ministry.
The Kashagan consortium, led by Italy’s ENI SpA (ENI.MI), has blamed industry inflation and complex geology for the cost overruns, but Kazakhstan accuses them of mismanagement and is pressing for compensation.