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A £2.2bn Indian summer for rugby international who struck black gold

The Independent: Bill Gammell: A £2.2bn Indian summer for rugby international who struck black gold

“And Cairn’s success will be all the more satisfying because it came at the expense of the oil giant Shell, which sold it the Rajasthan field for the paltry sum of £4m.

By Saeed Shah

11 August 2004

As a tall, rangy winger who won five caps for Scotland at rugby union, Bill Gammell had achieved more by the age of 25 than most people manage in a lifetime. But sport was only the beginning of the adventure for the Edinburgh-born son of a financier. And yesterday came confirmation that the 51-year-old has struck gold again.

Or, more specifically, black gold. Cairn Energy, the company he set up in Edinburgh after his sporting career was ended by injury, announced its fourth major discovery of oil in Rajasthan, India. Cairn is now worth £2.2bn and stands on the brink of being admitted to the FTSE 100 index of Britain’s leading companies. Mr Gammell’s own share in the company is worth £14m.

And Cairn’s success will be all the more satisfying because it came at the expense of the oil giant Shell, which sold it the Rajasthan field for the paltry sum of £4m.

The find will also be toasted in the White House and in Downing Street. For Mr Gammell has been a friend since childhood of both George Bush and Tony Blair. It is even said that when Mr Bush first came to office, the President and Mr Blair both called Mr Gammell to get the low-down on each other.

Mr Bush’s first words to Mr Blair are said to have been: “I believe you know my old friend Bill Gammell.” Mr Bush had attended his wedding in Glasgow in 1983.

Indeed, Mr Gammell’s family had a significant hand in creating the oil fortune enjoyed by the Bush family when Mr Gammell’s father invested in Bush senior’s early oil ventures in the 1950s.

That saw a close relationship develop between the Bush family and the Gammells. When Bush junior was sent to the Gammell farm in Perthshire at the age of 13 for a summer holiday, six-year-old Bill Gammell took him up as a playmate.

By coincidence when Mr Gammell went to Fettes, the Scottish public school, one of his classmates was Tony Blair. They starred together in debating competitions. In 1997, the newly elected Mr Blair made the journey to Edinburgh to open Cairn’s new offices on the city’s Lothian Road – along with the then premier of Bangladesh, Sheikh Hasina (Cairn also has interests in Bangladesh).

Mr Gammell is proud to say: “I learned a lot about the oil business from George W Bush.”

The pair became firm friends when they met up again in 1980. Mr Gammell, while a student at Stirling University, spent his vacations in Texas, working with the future president on drilling projects. After his rugby career ended he followed his father into the oil business and founded Cairn some 20 years ago. An early promotional video for Cairn features an endorsement from George Bush, who introduced himself as “president of Bush Exploration Company”.

When Mr Bush made his state visit to the UK, Mr Gammell, the US President and Mr Blair were united at a Buckingham Palace reception.

Cairn Energy’s stock market value has quadrupled since it revealed in January that its Rajasthan field contained a major oil prospect. Subsequently, the company has kept investors delighted with a series of other finds in its 5,000 square kilometre concession in the Rajasthan desert, of which yesterday’s was the latest.

City analysts are now suggesting that the company could ultimately discover one billion barrels of recoverable oil under the desert.

Mark Redway, of the stockbroker Canaccord Capital, said: “This is now in a bracket unheard of for an independent [oil company]. It still has a whole bunch of prospects to drill.”

Cairn gambled on a hunch that the thousands of acres of sand it held licences for hide a truly spectacular oil reserve. The company’s finance director, Kevin Hart, said that Cairn spent $100m drilling 15 wells in the desert that came up with nothing. Then, it decided to drill 60km north of anything it had explored so far and that turned out to be its first big find, Mangala.

“We were prepared to take more pain than Shell. We had a lot of staying power.”

It is Shell which is feeling the pain now. Its fortunes have gone into reverse after the company admitted that its oil reserves were a fifth less than it had previously claimed.

Gallingly, nearly three quarters of Cairn’s £2.2bn stock market value is attributed to the assets it picked up so cheaply from Shell.

Mr Hart said that Mr Gammell is “at his happiest when drilling exploration wells. He’s a real oil man.”

Mr Gammell no longer plays sport but he is on the board of the Scottish Institute of Sport and is still fond of rugby analogies. Earlier this year, he explained his success in India with: “You have to pick up the ball and run with it.”

He now has his sights on an even more unlikely prospect. The company is beginning exploration in Nepal. Mr Gammell is looking forward to a new triumph.

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