The Independent On Sunday: Business View: Shell's real location problem is finding more black stuff: “The misreporting of reserves scandal showed all the worst Shell traits - secrecy, haughtiness, inertia.”: “So what's the hurry? Was it because Shell had to admit that it had uncovered another 900 million barrels of doubtful crude in its reserves and was likely to uncover 600 million more?” (ShellNews.net)

Jason Nissé

31 October 2004

Unifying the two Shells is so long overdue you can hardly believe it hasn't happened

Shell is changing. Historically it was awful at news management. Distant and arrogant, it felt that anything it said should be taken by the market and treated like solid gold. But the beast has evolved. The misreporting of reserves scandal showed all the worst Shell traits - secrecy, haughtiness, inertia. However, losing three senior executives and a great deal of face can be a real eye-opener. So Thursday's announcement showed the new Shell.

But not in the way most people think. Unifying the two Shells into one company is so long overdue that you can hardly believe it has not happened. What it created is a company headquartered in The Hague but incorporated in Britain. This is not some Anglo-Dutch fix. This is solid pragmatism. The tax regime is better in Holland. The investment community is in London. If it were the other way round Shell might pay more tax and would not be in both the FTSE 100 and Eurotop indices. So far so good.

However, the real change at Shell is indicated by the timing of the announcement. Shell had been telling everyone that the review of its structure would not be complete until December. It maintained that a week ago when we spoke to them. Then, yahoo, it's suddenly ready.

So what's the hurry? Was it because Shell had to admit that it had uncovered another 900 million barrels of doubtful crude in its reserves and was likely to uncover 600 million more? The old Shell would have tried to sneak out an announcement like that. Or worse, would have tried to cover it up. Not the new Shell. The new Shell makes a bigger and bolder announcement to distract everyone's attention. But it has not really worked. Because whether it is based in London, The Hague or Timbuktu, Shell has to face up to the fact that it is pumping a lot more oil than it is finding. Unless it starts reversing this trend, it will be a much smaller company than it used to be. And no one will care where it was based because it will be gobbled up by someone else.

http://news.independent.co.uk/business/comment/story.jsp?story=577801