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Shell CEO Peter Voser threatens more job cuts

THE SCOTSMAN

Published Date: 01 February 2010

Profile: Peter Voser, Shell chief executive

By KRISTY DORSEY

DESCRIBED as a “safe pair of hands” and a great strategic thinker, Peter Voser will have to call upon all of his tactical skills this week when he unveils Shell’s results for the final quarter and full year of 2009.

Presenting those financial details, due out on Thursday, will prove one of the biggest tests in Voser’s early tenure as the head of one of the world’s biggest oil companies. The Swiss-born chief executive can expect comprehensive questioning about Shell’s prospects for growth, as investors and analysts look for clues as to when the company might reverse its seven-year decline in oil and gas output.

Voser, however, is seasoned in handling tricky situations. Though he has been with Shell for most of his career since graduating from Zurich’s University of Applied Sciences in 1982, he did spend two-and-a-half years as chief financial officer at industrial conglomerate ABB. He joined the Swiss-Swedish multinational during a period of crisis in 2002, when ABB’s share price was plunging on falling demand for its drilling products and the threat of asbestos-related lawsuits in the United States.

Voser was credited with helping to turn around the fortunes of ABB. By the time he left to re-join Shell in 2004, ABB was on the road to turning in its first full-year profit since its near-bankruptcy two years earlier.

His return to the oil and gas sector immediately threw up further challenges, as Shell was in the midst of an executive re-vamp in the wake of the scandal sparked by revelations that it had over-stated its proven oil and gas reserves by some 25 per cent. Voser replaced former Shell chief financial officer Judy Boynton – who had pipped Voser to that post before he left for ABB – after Boynton was forced to step down because of lax internal controls within Shell.

Though Voser was Shell’s chief financial auditor from 1997 to 1999, his remit did not include oversight of the company’s reserves. Thus untouched by the scandal, Voser joined the company’s committee of managing directors – effectively its executive board – and set about helping chief executive Jeroen van der Veer implement the radical changes demanded of Shell by investors and analysts.

“He has the outside experience that investors were demanding,” one analyst was quoted as saying at that time.

“But after 20 years at Shell, he would also have developed a spy network of friends and acquaintances throughout the company, so he will have a clear idea of exactly what is going on most of the time.”

The 51-year-old – who once played professional football for second division Swiss club FC Wettingen – was viewed as a central part of the management team that helped get Shell back on an even keel while also unravelling its complex dual-company structure. Despite this, as well as his role as the “public face” of Shell, Voser claims he initially had no interest when the board of directors began looking for van der Veer’s successor in early 2008.

However, Voser was persuaded to at least talk over the possibilities, and those discussions eventually led him to take up the post of chief executive at the start of July last year. He immediately set about paring back what he described as Shell’s “too complex” operations, merging units and cutting 5,000 jobs globally.

The resulting cost savings are expected to benefit Shell, which earlier this month lost its spot as Europe’s largest oil and gas company by market capitalisation to rival BP. Shell’s stock took a further battering amid market chatter that the group was guiding analysts to reduce their forecasts on the fourth-quarter earnings.

Shell had been expected to report current cost of supply net income of between $3.3 billion (£2.1bn) and $4.3bn for the final quarter of 2009. However, analysts at both Royal Bank of Scotland and Merrill Lynch have now cut their predictions to $2.9bn, citing a likely weakness in refining and fuel retail margins.

Voser’s public statements have done little to dispel analysts’ misgivings. In a television interview from Switzerland last week, he said Shell would be prepared to cut further jobs to keep costs under control until global demand for energy rebounds from its current slump.

“I’m a little bit more cautious on the recovery,” declared Voser. “We still see some effects from the stimulus package into 2010, some of the consumption-driven demand is not coming back, so I’m rather more pessimistic for the first half of the year than I am maybe for the whole year or the second half.”

The burning questions, however, will centre around what Voser intends to do to revive Shell’s production output, which has fallen to less than three million barrels of oil equivalent per day. The company is pinning much of its hopes on two huge construction sites in Qatar: the Qatargas 4 liquefied natural gas project, and the Pearl gas-to-liquid project.

Qatargas 4 and Pearl are expected to eventually churn out about 10 per cent of Shell’s current daily production. However, Qatargas 4 has been delayed, while Pearl is not expected to reach full capacity until 2011 at the earliest.

Across the board, Shell is reaching the peak of an investment cycle in a range of projects currently under construction. When completed, these will add another one million barrels of oil per day, but most will not come on stream until 2011 or thereafter.

In the meantime, there seems little likelihood Shell will look for a boost through takeovers, as Voser has said acquisitions are generally not the most cost-effective way to acquire new reserves.

For Voser, it will be a matter of putting forward a credible tale of “jam tomorrow” when he presents Shell’s results on Thursday. It remains to be seen whether investors will bite.

BACKGROUND

BORN on 29 August, 1958, in the Aargau canton of Switzerland, Peter Voser graduated in business administration from the University of Applied Sciences in Zurich in 1982.

He joined the Royal Dutch/Shell group of companies later that year, holding a variety of posts while working in Switzerland, the UK, Argentina and Chile.

He left Shell in March 2002 to become chief financial officer of industrial conglomerate ABB, but returned in 2004 to be chief financial officer.

Voser, who is married with three children, became Shell’s chief executive on 1 July, 2009.

As a younger man, he played professional football for second division Swiss club FC Wettingen.

He is due to unveil Shell’s annual results on Thursday.

SOURCE ARTICLE

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