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Shell’s suit: Shell chief upbeat about future

THE SUNDAY TELEGRAPH: Shell’s suit: Shell chief upbeat about future

Sunday 12 June 2005

Shell unveiled the ghastly concept of the “Trilemma Triangle” last week, a bit of pseudo-intellectual property developed by an internal team that does little else but generate socio-economic babble. In other words, the business is not yet quite back to basics.

That said, the ambition of Jeroen van der Veer – Shell’s chief executive, whom I saw last week – is more transparent. It is captured in four easy-to-understand words: “More Upstream, Profitable Downstream (MUPD)”.

He is in the process of disposing of up to $15bn (£8.3bn) of businesses that fall outside of this definition of what Shell should be about, while scouring the world for new stocks of oil or gas (it is trying to invest a mind-boggling $15bn every single year).

What’s more, for all my squeamishness, the pretentious Trilemma thingummy has served as a kind of security blanket for the company, allowing it to see the world as it is without becoming too anxious. What Shell has belatedly spotted is that the limits to globalisation have been reached, for the time being.

To elucidate. In the late 1990s, Shell – like many giant global companies – was convinced that the power of governments was in secular decline while global market forces were unstoppable. And then along came the accounting scandals of Enron and its ilk (err … such as Shell’s inflation of its reserves) and the brutal terrorist atrocities in the US and Spain.

So other powerful forces – the desire for economic and personal security, a suppressed yearning for national or local identity – were reawakened. These forces have tended to undermine the kind of trust between peoples and countries that would facilitate the spread of light-touch regulatory frameworks across national boundaries and which would in turn spur faster economic growth. Their most obvious recent manifestation were the “non” and “nee” of this month’s French and Dutch votes on the new European Union treaty.

One consequence is that, for as far out as any practical forecasting can go, Shell must continue to pretend to be British in Britain, Dutch in the Netherlands, French in France, American in the US and not-some-bloody-interloping foreigner in India (where it recently acquired a licence to set up 2,000 petrol stations, putting it ahead of other multinationals).

Anyway, there are only weeks to go before Shell and Royal Dutch finally become a single, enormous corporate entity – albeit one whose national identity is as fuzzy as the trilemma in the sense that it is Dutch for tax purposes and British for share trading. Does this historic reinvention coincide with the beginning of the end?

Van der Veer says not. “This is, most definitely, not a ‘sunset’ industry,” he says, poo-pooing increasingly modish predictions that commercially viable sources of oil, gas and other hydrocarbons will start to diminish pretty soon.

For a company prepared to exploit unconventional energy sources and show commitment and imagination to reduce CO2 emissions, the long-term prospects are good. Van der Veer’s actions indicate that Shell is at last out of denial about the way that it fell behind the competition in building reserves.

Shell is back in the game (with one qualification: as we show on Page 1 of the Money section, it is needlessly frittering goodwill by trampling on British-based personal investors in Royal Dutch, who face huge tax bills stemming from the merger).

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