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Jacobs hints at succession concerns within Shell

Financial Times: Jacobs hints at succession concerns within Shell

By Thomas Catan

Published: July 22 2005

Aad Jacobs, Royal Dutch Shell’s interim chairman, said the company was seeking a successor for him who was neither British nor Dutch to avoid upsetting the power balance within the oil major.

“The preference would be that the next chairman – my successor – would be non-British or non-Dutch,” Mr Jacobs said yesterday.

His comments contradicted earlier statements by Shell executives that nationality would not be a factor in the succession.

Mr Jacobs, who is due to retire in about 10 months’ time, said that candidates from the two countries would not be expressly excluded from the search.

However, the Anglo-Dutch group wanted to avoid giving staff the impression that it was becoming “too British” or “too Dutch” after having cajoled the two holding companies into unifying after 98 years – a process completed only this week.

“We want rest in this company, no upheavals any more, so if it is possible then our preference is that it is a continental European, or, at any rate, not coming from the Netherlands or UK,” Mr Jacobs said.

Heinrich von Pierer, chairman of Siemens, the German electronics group, has been mentioned as the leading candidate for the post. However, Shell has declined to comment on reports that he is set to take the job.

Mr Jacobs is due to hold a series of meetings in August and September with investors, who are still seeking reassurance following a tough couple of years for the world’s third-biggest energy company by market value.

The company encountered more problems than its rivals in finding enough resources to replace the oil and gas it has pumped, a situation that was compounded by it overstating its reserves by about a third.

The company had hoped that the unification of the British and Dutch holding companies would help to calm unhappy shareholders, who had long disliked the old dual-board system.

However, many are sceptical about Shell’s ability to boost its flagging oil production and find new reserves.

The situation was aggravated by last week’s announcement that Sakhalin-2, Shell’s flagship Russian gas project, is running months behind schedule and is presently $10bn (£5.7bn) over budget.

The shock announcement threw into question a key asset swap that Shell had signed with Gazprom just one week previously.

The state-controlled Russian gas monopoly had agreed to take a 25 per cent stake in Sakhalin-2 in return for giving Shell a 50 per cent stake in a giant Siberian gas field.

The difference in the value of the two assets was due to be settled through an unspecified package of cash and assets – presumably in Shell’s favour.

Since the announcement of the cost overruns, however, Gazprom has said that the value of the Sakhalin-2 stake had fallen and implied that it would seek better terms.

Yesterday, Mr Jacobs said the Sakhalin-2 gas project still remained extremely attractive but he admitted that the delay would complicate negotiations with Gazprom and its controlling shareholder, the Russian state.

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