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Houston Chronicle: Shell Board Defeats Draft Resolution

Shell Board Defeats Draft Resolution

By FIA CURLEY Associated Press Writer © 2006 The Associated Press

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THE HAGUE, Netherlands — The directors of Royal Dutch Shell board soundly defeated a proposal Tuesday from an environmental group of shareholders to tighten oversight on ecologically risky ventures and enforce closer cooperation with local communities.

After a discussion at Shell's annual general meeting that grew heated at times, the proposal was defeated by 93 percent of the vote representing more than three billion shares.

The board had unanimously recommended a “nay” vote, saying the company complies with standards set by local governments wherever it has projects, and routinely undertakes extensive environmental and social impact studies before it begins work.

An investor in London who identified his organization as London Rising Tide, accused the company of “brainwashing” shareholders.

“I have no respect for the committee. I have no respect for the lies and propaganda,” he said by video linkup, his image broadcast on a large screen in the auditorium in The Hague.

The defeated resolution singled out projects in Ireland, the Niger Delta and the Russian island of Sakhalin where backers said Shell projects were causing damage to communities and wildlife.

Shell countered that in each case the projects were in line with regulations and were bringing benefits to the communities through revenues, infrastructure improvements and the replacement of imported energy with local production.

CEO Jeroen van der Veer told shareholders that the Sakhalin II project remains a “good investment” despite higher costs.

Shell, which owns a 55 percent stake in the project, said last year that costs would be twice the initially budgeted US$10 billion. The project has also drawn strong environmental protests who fear harm to whales.

Van der Veer said the project, a consortium to locate and produce oil and gas on Sakhalin Island and immediately offshore is now 70 percent completed. He reiterated that he sees initial gas deliveries from the project in 2008.

Shell shares closed 0.4 percent higher at euro26.17 (US$33.70) in Amsterdam.

Van der Veer said permits for oil exploration and exploitation “are given by governments who should weigh all the pros and cons,” and should not be in the hands of local communities.

The fiercest area of contention was in Nigeria, where the environmentalists charged that the company's program was impeded by “lack of transparency, and perceived environmental and human rights abuse.”

Shell said the Niger Delta is particularly difficult. “Challenges include extreme poverty, disagreements over allocation of oil revenues among various authorities and the presence of armed criminal gangs.”

Kidnappings and sabotage by militants in the delta have caused huge cutbacks in production by Shell and other global companies, and Shell's board showed some impatience with its critics.

“The proposed requirement for additional local agreements does not recognize the problems of identifying who actually represents the community where there are conflicting demands within and between communities,” it said in a written response.

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