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Sakhalin Energy CEO To Head Embattled Shell Africa Unit

THE WALL STREET JOURNAL

JUNE 19, 2009, 10:53 A.M. ET

LONDON (Dow Jones)–Sakhalin Energy’s chief executive, Ian Craig, is to head Royal Dutch Shell PLC’s (RDSB.LN) embattled Africa unit, with the incumbent moving to the firm’s Australian business, according to an email Friday, as the oil major’s corporate shakeup continues.

In comments sent to Dow Jones Newswires via the Shell press office, Ann Pickard, Shell’s current vice president for exploration and production in Africa, said: “Major changes take place in Shell’s leadership, and after four exciting years running our upstream business in Africa, I will look after our gas and oil production in Australia.”

“My successor, Ian Craig, is the absolutely best choice I could think of to continue moving the challenging and important business in Africa forward,” Pickard added.

The statement confirms a news item published earlier Friday by Dow Jones Newswires.

No detailed timeframe has been disclosed, but a Sakhalin Energy spokesman previously said there are “still months to go before Ian moves on.”

As head of Sakhalin Energy, Craig presided over Shell’s single largest and most challenging oil and gas project before OAO Gazprom (GAZP.LN) took control in 2007.

Now he will be tasked with solving the problems of Shell’s Nigerian operation, the bulk of Shell’s Africa business and now its most problematic unit.

Years of attacks by militants and government underfunding have hindered the Nigerian’s operation potential. In the first quarter of this year, Shell lost 90,000 barrels of its share of Nigerian production from unrest and oil theft.

The move is part of a wide-ranging revamp initiated by incoming chief executive Peter Voser, before formally taking over from Jeroen van der Veer July 1.

The corporate restructuring may have already contributed to at least one high-profile departure. Linda Cook, the head of Shell’s gas business, once seen as a contender for the chief executive job, resigned abruptly late May. The move came just before a merger of the gas unit with the exploration and production business was announced.

Shell appointed Craig, a former Enterprise Oil executive, at the helm of Sakhalin Energy in 2004, before the company unveiled delays and a doubling of the Russian venture’s project costs to $20 billion. The initial budget had been designed prior to Craig’s arrival and he has said the changes were tied to insufficient and overly optimistic planning by previous managers.

The problems were seized upon by Russia, with Gazprom ultimately taking control of the project with Shell as a minority partner and Craig remaining chief executive.

As for Pickard, the Australian appointment will also be rich in prospects, as Shell has already said it was open to consolidation opportunities in this market.

Pickard said in the statement: “I indeed look forward to taking on these challenges, and my target is to develop Shell’s business in Australia further.”

-By Benoit Faucon, Dow Jones Newswires; +44-20-7842-9266; [email protected]

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