News articles generated by royaldutchshellplc.com and its Shell insider sources in 2009

Below an extract from a Wall Street Journal article published today reporting on the profits of Gazprom and Sakhalin Energy, the company in which Shell was forced to surrender its majority stake.

THE WALL STREET JOURNAL

FEBRUARY 1, 2010

Foreign-Exchange Gains Boost Gazprom’s Net

By JACOB GRONHOLT-PEDERSEN

Sakhalin Energy, a Gazprom joint venture with Royal Dutch Shell PLC and Japan’s Mitsui Co. Ltd. and Mitsubishi Corp., posted earnings of 10.65 billion rubles in the third quarter. Sakhalin Energy opened Russia’s first plant for liquefied natural gas last February and shipped 5.5 million tons of LNG in its first year.

COMPLETE ARTICLE

Not many people think of the Netherlands as oil country, but a billion-barrel field lies under a nine-mile strip of grazing land along the Dutch-German border. When oil prices cratered in the 1990s, Royal Dutch Shell and ExxonMobil shut the Schoonebeek field down. Company executives reckoned that its thick, hard-to-extract crude wasn’t worth the trouble, even though only about 25% of Schoonebeek’s oil had been produced. The main evidence of the town’s petroleum past was an old-fashioned bobbing oil pump, known as a nodding donkey, which still stands in a parking lot near a bakery. Now higher prices and technological advances are spurring a new joint venture of Shell, Exxon, and the Dutch government to pump Schoonebeek’s reserves once more.

PETROLEUM ECONOMIST

A new book tells the story of the oil industry’s boom-bust cycle through the personalities of its main protagonists. It isn’t always a flattering portrait, writes Derek Brower

The book is especially strong on such juicy details, not least when it describes the machinations – rivalries, personality clashes and egos at work – during the mega-merger period of the late 1990s. Browne’s successor, Tony Hayward, is seen entertaining Gazprom boss Alexei Miller at a Chelsea football match in London. Shell’s former chief, Jeroen van der Veer, argues in German, without interpreters, with Russia’s then president Vladimir Putin about the Sakhalin Energy project at a private function in Holland. And so on.

The majors also have personalities. Exxon, a participant in the mega-mergers when it bought Mobil, is the brooding presence throughout. Shell was repeatedly bruised by run-ins with environmentalists and activists, and its bi-national schizophrenia left it flatfooted as Browne and BP seized the agenda.

Shell also handled its Russian investments badly, unintentionally antagonising the authorities, with humiliation on Sakhalin island the result. The Anglo-Dutch firm emerges from the narrative as a sluggish behemoth, crippled by internal rivalries between the Hague and London, undermined by its own constitution and eventually brought low by the reserves scandal. Phil Watts, the chairman at the time, who was eventually exonerated from wrong-doing in the affair, receives relatively sympathetic treatment in the book. Shell did wrong, acknowledges Bower, but other majors were booking reserves in a similar way and escaped censure or lobbied their way out of it.

But it’s not a book that leaves the reader feeling positive about the characters who dominate the world’s most important industry. “Oil men can play to any rules they are asked to play,” Bower quotes former Shell chairman John Jennings. “Oil breeds arrogance because it’s so powerful.”

THE ABOVE ARE EXTRACTS FROM DEREK BROWER’S REVIEW: FULL REVIEW

The implications go beyond Yukos. The European oil giants Royal Dutch Shell and BP and a number of private Russian companies have been compelled to renegotiate contracts or walk away from assets worth billions of dollars. A spokesman for Shell said the company would not comment on the decision.

The big international companies such as BP and ExxonMobil are struggling to find enough new oil to replace their exploited reserves year-on-year and Shell found itself on the end of a major fine for exaggerating its reserves report to the Securities & Exchange Commission in the US.

Royal Dutch Shell is hopeful that it will gain an equity stake in a giant Russian gas field that could supply all of the world’s needs for a decade. Peter Voser, Shell’s chief executive, said that talks with the Russian government about the Yamal project in the Siberian Arctic were progressing well.

LEAFLET BEING DISTRIBUTED AT SHELL CENTRE, LONDON, WEEK COMMENCING 26 OCTOBER 2009.

SEX, DRUGS & CORRUPTION SPONSORED BY SHELL

By John Donovan of royaldutchshellplc.com: October 2009

Shell senior management pretends that it stands resolutely behind the anti-corruption pledges in the Shell General Business Principles.

I have already revealed that the hypocrites at the top of Shell, including executive director Malcolm “TFA” Brinded and the rule bending Chief Ethics and Compliance Officer, Richard Wiseman, encourage and support corrupt practices. Wiseman’s behind the scenes support is directly at odds with an anti-corruption speech he delivered in June 2008 at the Asia Anti-Corruption Conference.

The stink of corruption associated with Shell is pervasive and impossible to contain. In the hard commercial world, Shell senior management is prepared to do whatever it takes to meet its objectives, whether it is turning a blind eye to corrupt practices in the UK, bribery and corruption in Russia (the Sakhalin2 project) or in Nigeria, where Shell has also paid militants carrying out attacks on Shell employees and property. It is unclear whether the murky payments, reported in the FT, were to stop or promote the attacks, which have driven up the price of oil.

We mentioned in a recent leaflet the criminal investigation currently in progress in Scotland involving Shell, Malcolm Brinded, the HSE and alleged corruption.

We now have the criminal investigation by the U.S. Justice Department into former U.S. Interior Secretary Gale Norton and the award of potentially highly lucrative oil shale leases to Shell Oil, which subsequently became her employer.

One moment Norton was the head of a U.S. government department negotiating multibillion-dollar agreements with Shell, the next (just months later) she was working for Shell Oil as General Counsel in the division dealing with oil shale. This was blatantly improper, undoubtedly against the public interest and probably illegal. It smells to high heaven.

In this connection, we are aware of speculation that we have supplied Shell internal documents and correspondence to the U.S. investigators. The speculation is understandable bearing in mind our international reputation as a purveyor of Shell confidential internal information. One example was our key role in the Sakhalin2 project resulting in Shell’s loss of its ownership stake and the forced resignation, in embarrassing circumstances, of the project director, General David Greer.

I have been writing about Gale Norton for over a year. Not just out of concern over her joining Shell in highly dubious circumstances, but also because of a corruption scandal involving her staff. This scandal had it all; bribes, drugs, sex and oil. Shell was a prime sponsor of the immoral and illegal activities, which also breached Shell’s claimed ethical code.

Further proof that Shell General Business Principles are a complete fraud.

The Minerals Management Service (MMS) of the U.S. Department of The Interior and the Office of Inspector General initiated an investigation in 2006 after receiving allegations from a confidential source that improprieties were occurring within the Royalty in Kind Program (RIK). The following extracts in italics, not necessarily in original order, are taken directly from the official report.

In e-mails we retrieved from computer hard drives and network servers, we found numerous indications that many of the events that RIK employees attended with industry officials were purely social. For instance, e-mail from Shell Pipeline Company representative to RIK employee Crystel Edler, regarding attending “tailgating festivities” at a Houston Texans game, stated, ”You’re invited have you and the girls meet at my place at 6am for bubble baths and final prep. Just kidding…”

The Shell Pipeline Company representative’s previous e-mail inviting people to the event was laden with sexual innuendo such as, “We’ve always provided the patrons with beer on demand, but the ever-depleting supplies have dwindled beer storage to dangerously low volumes on occasion…. Although it’s a given that the horsemen will indeed ‘bring the meat to the table.’

In 2004, Shell provided Leyshon with lodging and paid for her ski costs in Keystone, CO. She also admitted to having a “one-night stand” with a Shell employee. She stated that this employee did not prepare Shell’s RIK bids. Leyshon told investigators that she ”had a hit every once in a while in reference to her use of marijuana but noted that this never occurred at the MMS office.

When interviewed, Michael Faulise, Director of Marketing for Shell Exploration and Production Company (Shell E&P), stated that he had worked for Shell since 2000… When asked, Faulise stated that he was unable to recall Leyshon ever paying for any lodging or meals provided by Shell.

We interviewed a senior crude oil trader for Shell Oil Trading Company regarding his relationship with Stacy Leyshon pursuant to a DOJ proffer agreement. The senior trader said he had heard Leyshon and Edler referred to by other Shell employees as the “MMS Chicks” who often drank too much and conducted themselves in an unprofessional manner.

In addition, our investigation disclosed that in 2004, Greg Smith became concerned that an RIK employee might have released confidential pipeline transportation rates to Shell. Apparently, a company official from Poseidon Oil had called Smith to complain that Shell had learned of the confidential transportation rate that Poseidon had negotiated with RIK. We also discovered emails sent among RIK Staff where Edler admitted to talking to “Mike” (Faulise) about the Poseidon deal. On May 6, 2004, Smith sent an e-mail to several RIK marketers including Edler that stated, “I have heard the details of our agreement with Poseidon … including the actual rate we agreed to … was communicated to Shell. If true, this ran counter to our promise to Poseidon to keep this information confidential.”

Edler admitted that she had used cocaine “in the past,” most recently in 2005. However, she claimed that she never used cocaine during business hours and that she never used cocaine with any MMS employees or industry representatives.

We interviewed Mike Faulise, Barbara Layer, and Alan Raymond of Shell, who all confirmed that Edler was an RIK employee they dealt with on both a professional and social basis. Both Faulise and Layer remembered her attending the annual Shell outings. During Faulise’s interview, we showed him a February 2004 e-mail he wrote to Edler stating, “Nobody will say anything about you being here for the night. As far as I’m concerned, you were in a hotel.” Edler responded, “Mikey:..you are sooo wonderful You know how much I totally adore you.”

Shell managers used immoral tactics directed against employees of a U.S. government department to seek commercial advantage. This included obtaining confidential, commercially valuable information belonging to a third party. Déjà Vue All Over Again.

LEAFLET ENDS

RELATED PESN.com Article

Sex, Drugs, and Rockin’ Oil

Are we surprised to find out that the U.S. government employees who oversee offshore oil drilling turn out to be literally and figuratively ‘in bed’ with the oil industry?  A compilation of news stories about this scandal.

by Sterling D. Allan
Pure Energy Systems News

None of us in the renewable energy sector are surprised by the scandal that was announced Wednesday involving sex and drug favors to the U.S. Department of Interior personnel overseeing offshore oil drilling.

This embarrassing illustration of the cozy relationship between the Bush administration and the oil industry is now paraded before the world.  This unveiling of the wizard behind the curtain can be a positive thing for the quest to move toward renewable energy sources.

The day prior to the report’s release, President Bush had a private lunch with Interior Secretary Dirk Kempthorne, the man in charge of the agency at the heart of the scandal.  To be a fly on the wall during that meeting . . .

The allegations of scandalous behavior involve a dozen or so government employees in Denver and Washington.  Their task is to sell U.S. mineral rights to oil companies — contracts worth eight billion annually, providing one of the government’s biggest sources of revenue besides taxes.

According to the inspector general, they rigged contracts, and engaged in illegal moonlighting, drugs, sex and gift-taking from oil company representatives.

The report allegations include:

* An employee who attended a so-called “treasure hunt” in the desert with all expenses paid by an oil producer.

* A former supervisor who bought cocaine from a colleague, then boosted her performance award, had sex with subordinates and steered government contracts to an outside business where he also worked.

CBS News reported that “no one – from the oil companies to the workers allegedly involved – provided a response today other than to say they cooperated with the investigation, or appropriate action will be taken.”

Rise of the gripe site

Extracts from Prospect Magazine Article “Rise of the gripe site”: February 2007
By Derek Brower, senior correspondent Petroleum Economist

How two men and a website in Colchester humbled one of the oil industry giants

It is not the kind of place you would expect to find at the centre of a global energy war. John Donovan’s office is in a modest house in a suburb of Colchester. No electronic maps of Europe adorn his walls, as they do the walls of Gazprom’s Moscow control room. And nor are there any butlers bringing cups of tea and expensive biscuits, as you find at Shell’s head office on the Thames. There is just Donovan’s 89-year-old father, Alfred, in the room next door.

But it is the home of www.royaldutchshellplc.com. a website which can claim to have cost Shell billions of dollars-and helped Vladimir Putin score another victory over western energy interests. This is how.

At the end of December, the Kremlin’s politically driven campaign to win control of a liquefied natural gas project on Sakhalin Island came to its predictable climax. The deal signed in Moscow between Shell and Gazprom saw the Russian company take 50 per cent plus one share of Sakhalin Energy, the consortium developing the project.

It was an offer that Shell and its two Japanese partners on Sakhalin could not refuse. The project, on a remote island notorious for its harsh winters, is one of the largest ever attempted. Sakhalin Energy will produce 9.6m tonnes per year of liquefied natural gas and 180,000 barrels per day of oil when it comes on stream in 2008.

But Sakhalin ran into serious problems. The most important was its escalating costs. In the mid-1990s, when Shell signed the contract, the oil price was low and Russia was on its knees financially. Moscow needed the expertise Shell offered. But by the time Shell was announcing a doubling of costs on Sakhalin, President Putin was rather less respectful of foreign energy companies. The cost increase-which postponed, some said indefinitely, the moment when Russia would profit from the production of its own energy reserves-was too much for impatient officials in Moscow.

To get control of the project, the Kremlin … suddenly got green. It unleashed Rosprirodnadzor, the country’s environmental watchdog, on Sakhalin. The alleged environmental abuses of the project-including deforestation, disruption of marine life, and careless infrastructure across an earthquake-prone region-are so bad that they “threaten to make Exxon Valdez look small,” says one insider.

Oleg Mitvol-the deputy head of Rosprirodnadzor, who was entrusted with the job of bringing Sakhalin Energy to heel-had by last December accumulated sufficient evidence of Shell’s and its partners’ abuses to lay charges against the consortium amounting to $30bn. There were also threats that the licence to develop the project could be removed.

With the green gun at its head, Shell allowed Gazprom to take control of the project-giving Russia an immediate share of profits and oversight of costs.

Taking the role of the humiliated man seriously, Shell’s head Jeroen van der Veer thanked Putin for helping to resolve the conflict.

What most astonished Shell was the detailed inside knowledge Mitvol had accumulated about the company’s abuses. Some in the company suspected industrial espionage. But it was actually information that the Donovans of Colchester were passing to Mitvol. The two men had received detailed material about Shell’s ecological abuses on Sakhalin: a catalogue of corner-cutting, mismanagement and efforts to cover up damaging evidence.

They say they got this information from Shell insiders. Mitvol clearly trusted the material, and in December he admitted for the first time publicly that his deep throat on Sakhalin was John Donovan.

The Donovan website has become an open wound for Shell. The Anglo-Dutch giant has tried to shut it down on the grounds that it uses the company name. However, as www.royaldutchshellplc.com makes no money, this hasn’t worked.

“We wanted it to become a magnet for people who had a problem with the company,” Donovan told me when I visited him recently. It has. The Ogoni tribe of Nigeria uses the website to spread information about Shell’s activities in the Niger delta. And unhappy Shell insiders frequently post on the site’s live chat facility.

“I’ve also heard that Athabasca Sands in Canada has some serious cost problems developing,” wrote one anonymous contributor in December. “Anyone know if that is true or not? If so, Shell is really on the ropes, with Canada & Sakhalin over-budget, reserves shrinking & Nigeria production being lost by the day.”

The site had around 1.7m hits in November. Its role in Shell’s embarrassment on Sakhalin has raised its profile. Understandably, the company is worried about the information that leaks on to the website: Donovan says that it has taken out injunctions to stop at least one of its disgruntled geologists from posting on the site. He also says that his site and its whistleblowing insiders were well ahead of the pack on Shell’s reserves scandal of 2003-04, when the company inflated its oil and gas reserves by some 20 per cent.

The source of John Donovan’s grudge … centres on the accusation that Shell stole intellectual property belonging to him and his father. They had been in the garage business since the 1950s and began selling ideas for promotions to attract customers to petrol stations. A typical scheme would involve a tie-in to a popular film. Shell liked the ideas that Don Marketing, the Donovans’ company, sold to them, says Donovan, and sales increased by 30 per cent on the back of some of the campaigns.

Then, says Donovan, in the early 1990s, a new manager in Shell’s promotions division started stealing the ideas. The men complained to the company’s senior management but were ignored. Offended that a company with which they had worked for so long should treat them this way, the Donovans began their guerrilla war.

After various legal actions, Shell agreed to settle out of court, paying the Donovans a sum “in the thousands” as part of a “peace treaty” stipulating that neither party speak about the matter in future. The Donovans were disappointed by the sum-their claim had been for around £1m- but accepted “under duress.” That was in 1999. But, says Donovan, Shell later broke the “peace treaty” by making disparaging remarks about them.

So Donovan launched his website-which costs only around £1 a week to run. And thanks to the ecological problems on Sakhalin, Shell’s poor record for bringing projects on stream on time and on budget and the power of the web, the Donovan grudge against Shell came to a spectacular climax in December.

Donovan is not worried that his site became an instrument in the Russian government’s ambition to become an energy superpower.

“Shell is not the worst oil company in the world,” says Donovan, “but we feel they mistreated us very badly.” Shell could have settled with the two men for £1m in 1998. Instead, Shell settled with the Russian government in December, with $30bn in fines hanging over the company’s head.

Leaflet published in October 2009 by John Donovan of royaldutchshellplc.com

Only three years ago, Shell, the world’s biggest oil company, was forced to give up control of the giant Sakhalin development, handing over half of its interest to Gazprom after a dispute over costs and the environment.