Why Shell CEO lied to investors about Russia seizing the Sakhalin-2 mega project

By John Donovan of RoyalDutchShellPlc.com

Like many other Shell shareholders, I was surprised at a categorical reply given by Royal Dutch Shell CEO Jeroen van der Veer at the Shell AGM last month in relation to the Gazprom takeover of the Sakhalin-2 mega project in Russia.

Van der Veer claimed with a straight face during the AGM Q & A session that the relative pittance Shell received was a fair price, when that was manifestly a false statement.

He said this despite the fact that the oil industry media has been unanimous in reaching the conclusion that Shell received a fire sale price from Gazprom. Shell has written down its reserves by 400,000 barrels equivalent as a result of the “Gazprom transaction”, as it is described in Shell’s accounts. That loss alone amounts to an income loss of $52 BILLION dollars calculated at a price of $130 per barrel.

Now we know why he lied. According to the Russian news agency, RIA Novosti, Van der Veer signed a protocol earlier today for the instigation of a working group for Shell’s participation with Gazprom in another major project. It involves building a liquefied gas plant in Northwest Siberia. The LNG plant located on the Yamal Peninsula will process the resources of the South Tambeiskoye field. According to the RIA Novosti report, “Gazprom holds licenses to develop 26 Yamal fields (with total reserves exceeding 10 trillion cubic meters)”.

The question therefore arises of whether it is ethical and proper for a CEO to be economical with the truth at an AGM merely because a prize is in prospect?

I should declare an interest bearing in mind that the notorious so called “Kremlin attack dog”, Oleg Mitvol, has gone on record as correctly stating that I supplied the Shell insider evidence used to prise Shell out of it ownership stake of the Sakhalin-2 project (that’s another story).

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