SundayHerald.com: After week of shocks, you can’t be sure of Shell
On its website, Shell claims that its time-honoured slogan “You can be sure of Shell” – widely used in TV campaigns in the 1970s and 1980s – “is not just a memorable phrase but one that truly represents the reality of what the Shell brand stands for”.
But following a string of astonishing announcements from the Anglo-Dutch oil company, particularly those relating to its mysterious disappearing reserves, it seems there is very little you can be sure about Shell these days.
Last week’s shocks included Shell’s admission that its estimate of proven oil reserves had been trimmed back because of a shortfall in Norwegian fields, that the annual report and accounts would be delayed until a thorough appraisal of its reserves is complete, that the Dutch authorities have launched an insider dealing investigation, that the US Justice Department has joined the Securities and Exchange Commission in investigating the affair. Even our own Financial Services Authority has started to sniff around.
It seems the severity of the current crisis has been severely underestimated in the hallowed confines of the oil giant’s head offices on London’s South Bank and in Amsterdam. The pervading culture there is one of arrogance and complacency, which meant the company’s kneejerk response was to play it down – which only led outsiders and regulators to fear the worst.
Jeroen van der Veer, the new chairman, seems to have little appetite for heading off the situation or seeking to restore confidence in a company that once genuinely earned our respect.
As a Shell lifer, he was probably not the best choice to oversee the radical organisational and cultural overhaul Shell needs. Malcolm Brinded, new head of exploration and production (who earned his stripes overseeing Shell’s North Sea operations) would perhaps have been a better choice.
Having to delay the publication of the annual report and the shareholder meeting ought to come as a profound embarrassment for a company the size of Shell. But last week it was dismissed as if it were an administrative trifle.
There remains a disturbing lack of clarity over the Shell’s actual reserves. Was the over-statement under former chairman Sir Phil Watts nothing more than a cock up? If not, could any directors have been guilty of insider dealing? How could Shell, having already conducted an “exhaustive” reappraisal of its reserves under Watts, so soon be forced into another one? Van der Veer is unable to provide answers.
As for changes to the board structure, he could promise only that they would be ready for next year’s annual general meeting – yes, more than 12 months away. Sorry Jeroen, the markets are not going to let you wait that long.