Shell is to cut a further 1,000 jobs. Photograph: Graham Turner

Royal Dutch Shell announced a further 1,000 job cuts today as the Anglo-Dutch firm admitted it had been slow to respond to the global slump.

The oil group, which has 100,000 staff worldwide, cut 5,000 posts last year and had already announced a further 1,000 job losses for this year.

Chief executive Peter Voser said the group would axe another 1,000 posts by the end of 2011 as he presented his strategic update for the firm.

“The company had become too complicated and slower to respond than we’d like. So we are sharpening up,” he said.

Shell gave no details on where the cuts would fall. It employs around 8,500 staff in the UK at sites including Aberdeen, London and the Stanlow refinery in Ellesmere Port, which is up for sale.

Voser said Shell was entering a “new period of growth” as he pledged to turn around years of underperformance and increase production 11% to 3.5m barrels a day by 2012.

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Lobbyists bid to turn RBS, BP and Shell annual meetings into green referendums

• Shell responds to last May’s shareholder revolt over pay

• Salaries frozen until 2011, with pledge on bonuses and targets

Zoe Wood
Tuesday 16 February 2010 10.36 GMT

Shell has frozen salaries after a row with shareholders. Photograph: Leon Neal/AFP/Getty Images

Royal Dutch Shell has today bowed to pressure from major investors by announcing a major overhaul of executive pay. It will freeze the salaries of top directors and set new limits on bonuses.

The oil group has been in talks with major shareholders since the embarrassing revolt at last May’s annual meeting when 60% voted against a pay deal that included discretionary bonuses for top directors who had failed to hit targets.

The chief executive, Peter Voser, and finance director Simon Henry will have their salaries frozen until January 2011. Their pay is already 20% less than their predecessors’. The company said the move demonstrated “appropriate restraint in the current economic environment”.

In a letter to shareholders setting out the changes, Hans Wijers, chairman of the remuneration committee, said the freeze aimed to “better align remuneration policy with shareholder interests and long-term strategy”.

Shell said it had conducted a “wholesale review” of pay since the May showdown and had drafted the proposals with the help of external consultants.

Wijers, who took over the post in September, said that while investors had accepted the “basic” structures were correct they had demanded change elsewhere.

Base salaries are frozen and new appointment salaries will be lower. In the letter Wijers promised there would be no review of salary, bonus, and share levels until 1 January 2011.

Accountability

The company also said directors would no longer be allowed to award management bonuses if they missed targets.

Furthermore, it is introducing a new “individual performance” element to payments. With the goal of increasing personal accountability for short-term results among senior managers they will be scored by Voser, affecting the payout.

The company will also demand executives own more shares, and keep them for longer, to better entwine their fortunes with the company. The previous shareholding guideline for the chief executive was two times salary but that will now rise to three.

“I believe that holding shares probably aligns executive interests with those of shareholders better than any long-term incentive plan,” said Wijers.

Shell has also ruled that executives must hold long-term incentive plan shares for two years after qualifying for them.

Wijers conceded that shareholders still had reservations, particularly over targets within the long-term incentive plan, but added: “In the absence of perfect metrics we will have to work with these new measures and adapt as necessary … However, I do believe these proposals will provide an improvement and sit within more broadly balanced structures.”

In the letter Wijers promised more transparency around executive pay in general, with the 2009 annual report to spell out remuneration of current as well as former directors. This would include the head of its gas business, Linda Cook, who quit with a controversial golden goodbye, and former chief executive Jeroen van der Veer, who also left last year.

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A lobby group that includes BP and Shell in its membership has launched a legal challenge against low-carbon legislation in California that in effect rules out the use of oil from Canadian tar sands. The action by the National Petrochemical & Refiners Association (NPRA) comes amid growing political, investor and consumer pressure on US oil companies not to participate in the carbon-intensive tar sands of Alberta.

Oil firm will sell 15% of refinery operations and slow down tar sands projects as fourth-quarter profits fall by 75%

• Shell paid $2.2bn for leases to drill for oil off Alaska
• Groups claim US government skimped on review of dangers

Nick Mathiason
guardian.co.uk, Sunday 24 January 2010 17.08 GMT

Shell could extract billions of barrels of oils from the US part of the Chukchi Sea if its controversial plans go ahead. Photograph: Leon Neal/AFP/Getty Images

Royal Dutch Shell’s controversial plans to drill for billions of barrels of oil in the Arctic’s environmentally sensitive frozen waters face a potentially damaging legal challenge.

An alliance of conservation and Alaskan indigenous groups has filed a legal claim to prevent Shell drilling for oil this year in the Arctic Ocean’s Chukchi Sea. Two years ago, Shell paid $2.1bn (£1.3bn) to the US government for 275 oil leases there.

The legal claim accuses the US’s minerals management service, part of the federal interior department, of waving through permission to allow Shell to drill wells on the basis of an “abbreviated and internal review” of the environmental dangers of exploration.

The US portion of the Chukchi Sea, which separates north-western Alaska from north-eastern Siberia, is believed to hold 15bn barrels of recoverable oil and 76tn cubic feet of recoverable natural gas, according to the interior department.

It is also home to endangered bowhead whales, threatened polar bears and rich and varied fish stock. There are further concerns that more drilling in the region will increase warming in the Arctic, which is heating up twice as fast as the rest of the world.

“Shell’s drilling brings with it the risk of large oil spills,” said Pamela Miller, Alaska programme director for the Northern Alaska Environmental Center. “Chronic spills are a fact of life from oil and gas operations on Alaska’s North Slope, where over 6,000 spills have occurred since 1996, and more than 400 of these took place at offshore oil fields. In the icy conditions of the Arctic Ocean, there is no way to effectively clean up spilled oil.”

Shell also needs air emission, oil discharge and marine mammal harassment permits before it can extract oil. Last year, the Anglo-Dutch oil group was forced to scale down oil drilling in the Beaufort Sea off Alaska amid concerns that oil spillages would cause devastation to marine life.

A Shell spokesman said: “The Chukchi Sea alone could be home to some of the most prolific undiscovered hydrocarbon basins in the US, and we believe those oil and natural gas reserves could play a major role in reducing our dependence on foreign sources of energy. Extensive scientific studies and technological advances demonstrate that we can operate in the Arctic in an environmentally responsible manner; it seems there are groups who are opposed to Arctic exploration, even though it can be done responsibly.”

Shell is one of the few companies to have been given permission to drill for Arctic oil. The region may be home to 30% of the planet’s undiscovered natural gas reserves and 13% of its undiscovered oil, according to recent findings by the US Geological Survey.

But the issue has become increasingly fraught for environmentalists and, in a further embarrassment to Shell, one of the world’s leading marine conservation scientists has resigned from the University of Alaska, claiming he lost state funding partly because of his criticism of Shell’s Alaskan activities.

Professor Rick Steiner, who is one of the most respected and outspoken academics on the oil industry’s environmental record, claims that the oil industry pays $300m to the University of Alaska – a sum which, he says, compromises its academic integrity. Steiner alleges the university was told by a state environmental funding agency that his stance on oil exploration was “a problem” which led to his grant being withdrawn.

A spokeswoman for the University of Alaska acknowledged that the grant was conditional on academics not being environmental advocates, but that the university offered to make up the the difference in Steiner’s pay “specifically because we value our faculty and the necessity of academic freedom and freedom of speech”.

“He was not forced to resign and there hasn’t been action taken ‘against him’ by the university because of his views on oil or anything else,” she added.

The oil industry provides about 40% of Alaska’s tax revenue and underpins the payment of an oil royalty to each Alaskan citizen. Shell did not comment on how much it contributes to the University of Alaska.

“Instead of moving forward with piecemeal and poorly analysed development that puts Arctic wildlife and subsistence cultures at risk, the Obama administration should take a time-out on all new Arctic oil exploration and development until we have a far better understanding of the science and potential impacts of development, particularly in the face of climate change,” said Nicole Whittington-Evans, acting regional director of The Wilderness Society’s Alaska office.

Shell insisted it was taking steps to improve its environmental impact. “Our goal is to meet or exceed air emissions requirements for operating in the Arctic,” the company said. “The use of ultra-low sulphur diesel fuel and the voluntary retro-fit of our drilling rig is part of that commitment. We are currently installing a $25m catalytic exhaust system to further curb air emissions. We combine operational experience, technological excellence, and long-standing dedication to sustainable development in meeting Arctic operations challenges.”

GUARDIAN ARTICLE

London: Shell has become embroiled in a major row with the World Bank and green energy companies after allegations that it is unfairly refusing to honour warranties on solar power systems sold to the developing world.

Shell gas flaring in the Niger Delta. The practice has proved controversial. Photograph: Pius Otomi Ekpei/AFP/Getty Images

Shell must face Friends of the Earth Nigeria claim in Netherlands

Shell disappointed at Hague court ruling on Oruma oil spill compensation case

Terry Macalister
guardian.co.uk, Wednesday 30 December 2009 22.00 GMT

A judge in the Netherlands has opened the door to a potential avalanche of legal cases against Shell over environmental degradation said to be caused by its oil operations in the Niger Delta.

The oil group expressed “disappointment” tonight that a court in The Hague had agreed to allow Friends of the Earth Netherlands and four local Nigerian farmers to bring a compensation case in its backyard for the first time.

Environmental campaigners insisted the case in the Netherlands was only being brought as a final resort and they declined to put a figure on the kind of damages stemming from the test case involving four farmers and alleged pollution at Oruma in Bayelsa state. But they said a variety of independent organisations in the past had estimated that the wider oil industry may be responsible for up to $20bn (£12.5bn) worth of damage as a result of pipeline spills and flaring of gas.

Geert Ritsema, a spokesman for the Dutch environmentalist group, said: “For years, these people have been trying to get Shell to clean up its mess and stop polluting their habitat. However, again and again they have come away empty-handed.

“That is why they are now trying to get justice in the Netherlands. The court decision is an initial victory for all Nigerians that have been fighting for years for a cleaner habitat and justice,” he added.

Friends of the Earth claims the oil spills are not accidents but represent a pattern of systematic pollution and contempt for the rights of the local population that had been going on for decades, something denied by the oil group.

Up until now compensation claims have been brought in Nigeria, but many have become bogged down in a congested court system.

Alai Efanga, one of the plaintiffs in the Oruma case, said: “Our village was pleased with the [initial] decision of the Dutch court. We hope that Shell will now quickly clean up the oil pollution so that we can resume growing food and fishing.”

The three other plaintiffs are all farmers and fishermen from the villages of Oruma, Goi and Ikot Ada Udo, all located in the oil-rich Niger Delta, which is one of Shell’s most important oil-producing areas. The substantive hearing of the first lawsuit is expected to be held in the spring of 2010 but Shell said it continued to believe that the case should not be heard in the Netherlands.

A Shell spokesman said: “It is with disappointment that we learned of the district court ruling. We believe there are good arguments on the basis of which the district court could have concluded that it lacks jurisdiction in respect of SPDC [Shell Petroleum Development Corporation] in these purely Nigerian matters.”

Friends of the Earth Netherlands said an important hurdle had been overcome paving the way for an appropriate court hearing. But oil industry sources said that Shell was being unfairly targeted, given that the oil spill had been caused in the first place by sabotage.

Last June, the oil group agreed to pay $15.5m in settlement of a legal action in which it was accused of having collaborated in the execution of the writer Ken Saro-Wiwa and eight other leaders of the Ogoni tribe of southern Nigeria.

The settlement, reached on the eve of the trial in a federal court in New York, was one of the largest payouts agreed by a multinational corporation charged with human rights violations.

Shell has also been under heavy fire from environmentalists over allegations of unnecessary flaring of gas from oil wells, something that is regarded as a prime source of global warming.

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