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Upstream and Downstream – always oil and water

PADDY BRIGGS

RETIRED ROYAL DUTCH SHELL EXECUTIVE, PADDY BRIGGS

When I retired I was presented with a small silver Shell emblem which I still wear with pride from time to time. It once stood for excellence in marketing and was one of the world’s most familiar brand symbols. Now it’s a bit of a collectors item symbolising a world that has long gone…

By Paddy Briggs

Most of my 37 year Shell career was spent in the “Downstream” but from time to time I had contact with the Upstream operations and in my final assignment in the Middle East I was very close to Upstream issues. Both Shell’s exploration and production activities (the Upstream) and their refining and marketing business (the Downstream) had the Shell emblem (the “Pecten”) flying over them – but that was about the only thing they had in common!

EP is a top down business. The experts in The Hague, mostly products of the best geology and technology Universities, built unrivalled expertise in the tasks of finding and exploiting hydrocarbon assets. They were also pretty good at building the necessary alliances with partners that virtually all upstream operations require. Their world was the world of oil reservoirs, horizontal drilling, fracking and all the other thousand and one technologies and techniques that made the business work. read more

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net, shell2004.com, shellshareholders.org, don-marketing.com and cybergriping.com are all owned by John Donovan. There is also a Wikipedia article: royaldutchshellplc.com

The rise in the price of heating oil – an insider’s view

You know that slightly vulgar Q&A ?

Question: “Why do dogs lick their balls?”

Answer: “Because they can”.

Its pretty much a metaphor for the corporate world for much of the  time:

Q:  “Why do bankers pay themselves large bonuses?”

A: “Because they can.”

– and so on.

It is the “Because they can” imperative which helps us understand why heating oil costs have gone up by 50%  or more in recent times (see graph):

oil costs

 

Oil is often the only choice for many in rural areas without connections to the Natural Gas grid. It is usually Kerosene and sometimes Gas Oil – both middle distillates from the refining process. Because the rates of duty applicable to heating oil (as compared to road fuel) are minor there should usually be a close correlation between the ex-refinery cost of the oil and the crude oil price. In August (the low point on the graph) heating oil cost  domestic customers 40p a litre. Today it is as much as 70p a litre – a rise of up to 75% . Over that same period the price of crude oil  has gone from $76 a barrel to $86 a barrel – a rise of only 13%. British consumers pay for their heating oil in Sterling so we have to allow for the change in the £/$ exchange rate when making comparisons. In Sterling terms the price of crude oil per barrel has gone from £48.5 to £54.8 – still only a rise of 13%. read more

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Flood closes Shell Centre

The London Central Office of Royal Dutch Shell has been closed as a result of there being a major flood in the basement during the night of 15th November 2010. Heating, air conditioning and water supplies are all affected. The flood caused the building to be closed today and it will remain closed tomorrow. Current expectations are that Shell Centre will reopen on Thursday 18th – but this has yet to be confirmed. null

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net, shell2004.com, shellshareholders.org, don-marketing.com and cybergriping.com are all owned by John Donovan. There is also a Wikipedia article: royaldutchshellplc.com

Local heroes take on Shell in County Mayo – “The Pipe” – a review


Risteard Ó Domhnaill’s documentary film about the Corrib Natural Gas project in County Mayo Ireland, The Pipe, has been quite a long time in the making – but the wait has been worthwhile. This is a moving, unsentimental and compelling story well told and, particularly, well edited (by Nigel O’Regan) of how ordinary people in a remote community fought with a multinational company, Shell, to protect their community and their livelihoods. The public release of The Pipe is timely in the light of BP’s Deepwater Horizon disaster in the Gulf of Mexico because, as with BP, the evidence is clear that Shell’s initial handling of Corrib showed a comprehensive failure to match the rhetoric of their public statements with the reality of their actions. BP’s “green” positioning was shown to be a chimera as the world greatest environmental disaster unfolded in all of its horror – and Shell’s stated commitment to Sustainable Development has been shown in The Pipe to be no less of a veneer. read more

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net, shell2004.com, shellshareholders.org, don-marketing.com and cybergriping.com are all owned by John Donovan. There is also a Wikipedia article: royaldutchshellplc.com

BP, Arts sponsorship – and the fat cats…

Paddy Briggs’ letter, published in “The Guardian” 28th June 2010

It is understandable that, as you report, many artists and green groups are protesting against arts institutions receiving sponsorship from BP – but it is important to describe what such corporate charitable donations are – and what they are not. They are not in any way ever a meaningful contributor in a company’s overall obligations to its stakeholders. The amounts are collectively too small and the selection of recipients is far too random for the largesse to be anything than incidental in the context of a big company’s finances.null read more

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net, shell2004.com, shellshareholders.org, don-marketing.com and cybergriping.com are all owned by John Donovan. There is also a Wikipedia article: royaldutchshellplc.com

A review of “Corporate Social Responsibility” in the light of Deepwater Horizon

Please visit this link

for an article by Paddy Briggs about Corporate Social Responsibility in the light of BP’s Deepwater Horizon disaster.

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net, shell2004.com, shellshareholders.org, don-marketing.com and cybergriping.com are all owned by John Donovan. There is also a Wikipedia article: royaldutchshellplc.com

Obama is not being anti-British over BP

The British media and commentariat is working itself into a frenzy over President Obama’s attack on BP. The Mayor of London, the patrician Boris Johnson, has said ‘I do think there’s something slightly worrying about the anti-British rhetoric that seems to be permeating from America … when you consider the huge exposure of British pension funds to BP it starts to become a matter of national concern if a great British company is being continually beaten up on the airwaves.” Much of the press comment has been in the same vein – but it is nearly all uninformed, xenophobic and self-righteous. read more

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net, shell2004.com, shellshareholders.org, don-marketing.com and cybergriping.com are all owned by John Donovan. There is also a Wikipedia article: royaldutchshellplc.com

The limitations of rational man…

One of the problems with having spent most of my career in the oil industry is that it was a far too rational world – or liked to think that it was. There were lots of engineers, geologists and accountants to explain to you that managing was about input-process-output. In other words you came to proper business judgments by making sure that you had the right resources (the inputs); handling them properly (the process) and doing the right thing with the products of all this effort (the outputs). Business was a machine and the better designed and oiled and maintained that machine was the better you would do. But my world, the world of brand management, was less certain – much less actually. In promoting a brand you are only partly appealing to rational man – you are also appealing to emotional man and emotional woman. As David Ogilvy once memorably said “The consumer is not a fool – she is your wife”.
To read more follow the link read more

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net, shell2004.com, shellshareholders.org, don-marketing.com and cybergriping.com are all owned by John Donovan. There is also a Wikipedia article: royaldutchshellplc.com

The writing is on the wall for Shell’s downstream business

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The days when it was beneficial for an oil company to be vertically integrated with business all the way from the well head to the petrol pump are long since gone. Shell’s decision to move out of refining in the United Kingdom is logical and almost certainly the precursor of a complete withdrawal from the “downstream”.

In the past the “Seven Sisters” secured an almost monopolistic control of the production, transportation, refining, distribution and marketing of oil. This gave them incremental margins all the way along the supply chain and meant that they developed competencies at every step along the way. Although the production of crude oil involved wholly different skills and disciplines to, say, the marketing of automotive fuels and lubricants through petrol stations Shell and the rest were quite comfortable with the creation and management of organisations that had all of these competencies. Indeed when I joined Shell in the mid 1960s those of us in marketing did not see ourselves in any way as the poor relations in the Shell Group. But over the years this began to change. read more

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net, shell2004.com, shellshareholders.org, don-marketing.com and cybergriping.com are all owned by John Donovan. There is also a Wikipedia article: royaldutchshellplc.com

Shell’s “Web Communications”

Message to Simon Saville – Communication is a two-way process

I only recognised a handful of names in the list of the 300 Shell appointments leaked on this website. One of them was the chap announced as ” VP Web Communications” my old colleague Simon Saville. Now if my memory serves me right Simon once took over from me in a Shell International communications job – in the mid 1990s I think.

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Good that he is prospering still! I wonder if Simon remembers that in my handover I waffled on about how communications is a two-way process. Sure it’s about having nice stories and statements and announcements in the media – but it is also about having mechanisms whereby stakeholders can respond to these things. read more

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net, shell2004.com, shellshareholders.org, don-marketing.com and cybergriping.com are all owned by John Donovan. There is also a Wikipedia article: royaldutchshellplc.com

On a Swiss roll…

Here’s the story. You are a Swiss accountant with a proven record of ruthlessness and synthetic business acumen. You are comfortable with numbers – that’s what you do – but you know little about the minutiae of the oil business. How can you be – you are not an “oil man” you are a “dollars man”. By guile, good fortune and the Peter Principle you find yourself at the helm of one of the world’s biggest oil and gas companies. You know that you will struggle with the difficult things – like creating an organisation that finds, develops, transports, refines and markets hydrocarbons. You know nothing at all about the oil and gas chain from exploration to consumption. You’ve never really worked in it – other than seeing spreadsheets which show you how much it costs. But you are now in charge. So what you do is retreat to the familiar world of numbers. That world where there is certainty – where something that costs “$100m” is only supportable if an adequate ROACE is assured. And where, even though future earnings are always, by definition, unpredictable you find a way of getting bogus certainty where there is none. By appointing more accountants and listening to them.null read more

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net, shell2004.com, shellshareholders.org, don-marketing.com and cybergriping.com are all owned by John Donovan. There is also a Wikipedia article: royaldutchshellplc.com

Job should go – but so should the rest of Shell’s motley crew

A year ago I called for the departure of Sir Peter Job as a non-executive director of Shell.

It has taken a full year for the media at large to realise just how unfit this man is to oversee the remuneration of Shell’s top executives. But whilst the buck undoubtedly stops on Job’s well-padded shoulders the remainder of the non-executive directors cannot escape responsibility for the debacle that is shareholders rejection of the remuneration proposals for Shell’s high-priced (very high priced!) help. Let’s name and shame them. Jorma Ollila sits at the top as non-executive Chairman. Why didn’t he call for an end to the excesses of the past and instruct Job to take public opinion in these difficult times into account? read more

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net, shell2004.com, shellshareholders.org, don-marketing.com and cybergriping.com are all owned by John Donovan. There is also a Wikipedia article: royaldutchshellplc.com

The origins of Shell’s communications failures

I have posted on YouTube (follow link below) a video which students of Shell’s descent to a position where their management is now held in derision and contempt not just by activists but also by the business world and by the community at large will I hope find useful. It dates back to 1996/7 when the degree of internal confusion about the company’s role in the world was visible to all of us in the company – wherever we were working.

This video (which I think is self-explanatory) is not a parody – it is for real. Essentially what it reveals is that those at the top had no understanding of reputation management and that they felt that a series of slick public claims about Shell’s raison d’être could wipe away the stains of years of selfish neglect. Remember this is now well over ten years ago – and since then things have got immeasurably worse. read more

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net, shell2004.com, shellshareholders.org, don-marketing.com and cybergriping.com are all owned by John Donovan. There is also a Wikipedia article: royaldutchshellplc.com

The current Shell leadership – “mediocrity is the best they can achieve”

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The recent “Financial Times” report about Shell has received publicity here and elsewhere but it deserves further wide circulation so I have posted an extract below.

I was in touch with a former very senior Shell man (now retired) this week and he told me (I quote):

“It is scandalous that the [Shell] ‘Leadership’ voted themselves such huge salaries and bonuses. As XXX put it, they pay themselves something like an order of magnitude more than the directors of 10 to 15 years ago. I would mind less if they were a little more than mediocre, but … mediocrity is the best they can achieve.” read more

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Risk and reward? In Shell there is no link…

I mentioned a short while ago in an article featured on this website and elsewhere that the remuneration ratio between a mid level executive like me in Shell when I was last employed by the oil giant seven or so years ago was 10:1. The top man in Shell was paid ten times what I as a middle ranking employee was paid. I never had a problem with this. Today that ratio has risen to an astonishing 50:1 – the greedy Executive Board of Royal Dutch Shell pay themselves rewards that bare no comparison with what their predecessors of less than ten years ago were paid. Obscene? Of course. And a root cause of Shell’s current dysfunctionality and troubles as well – the evidence would suggest so. read more

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net, shell2004.com, shellshareholders.org, don-marketing.com and cybergriping.com are all owned by John Donovan. There is also a Wikipedia article: royaldutchshellplc.com

The scandal of the grotesque rewards that accrue to failed executives

Enron, Lehman Brothers, Royal Bank of Scotland…Royal Dutch Shell – what have these corporations got in common? Quite a lot actually but what I was thinking of in particular is that they all have issued glossy and self-promoting documents extolling their “Corporate Social Responsibility” (CSR) – and all of them have been brought to their knees by the grotesquely dysfunctional actions of their most senior executives.

I have written before about the illusionary myth that is CSR and I suppose that the one good thing that might come out of the global financial crisis is that none us will ever again trust the disingenuous garbage that corporations choose to throw at us from time to time. The idea that, say, a tobacco giant like BAT can be socially responsible is absurd but they still peddle this nonsense even though they surely can’t expect us to believe it. Do they really believe it themselves? – I doubt it. read more

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net, shell2004.com, shellshareholders.org, don-marketing.com and cybergriping.com are all owned by John Donovan. There is also a Wikipedia article: royaldutchshellplc.com
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