Kashagan AKA “Cash All Gone”
Forgot the initial cost estimate, probably around $8-10 billion. Now 10+ years too late and ballooned to $50 billion. Most normal companies would have gone bust long ago.
Shell inherited some beauties from the boys of the roaring 90s. I hope someone will write a book one day on this era.
Reserve crisis, Pearl, Sakhalin, Kashagan, Alaska, tarsands, and I must have forgotten a few. Repeated over-promise and under-delivery. All many billions over budget, extreme overruns in startup, loss in AAA status, removal of operational and technical expertise. I find the silence on Prelude ominous. Probably goes the same way as the others.
Don’t forget that in the early 90s we were by very far the biggest private operator of oil and gas in the world. About as big as the next three or four together! We were earning the money for the other majors! We were very conservative, hardly borrowed money, had the best finance systems and were technically superior to the (all) others. That had a small price, in the eyes of MBAs we had too many people per barrel produced etc. and there were some minor inefficiencies in the R&D. Not very strong top down management, operating companies reinvented the wheel often. But people felt safe; it was possible to make mistakes and learn from them.
Then came Herkstroter and his bankers and MBAs and we were told to go for shareholder value, borrow more and trim down on technical staff. The rest is history.
We had AAA rating and could fix any problem. We did not waste billions like the ones mentioned above by simply stupid behaviour caused by not daring to speak up.
Glad I have worked in the good old days!