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The Sunday Times: RISE AND FALL OF AN OIL BARON

 

"YOU could walk past him in a lobby and never notice him," said one former Shell worker - such was the impression left by Sir Philip Watts, the former chairman.

 

Dull and brutally frank, the geophysicist who spent his entire career at Shell lacked the charm and charisma of most global business leaders.

 

A decade before the current oil-reserves dispute, Watts was Shell's man in Nigeria, as managing director of the Shell Petroleum Development Corporation. Shell has extracted an estimated $30 billion (Ï17 billion) of oil from Nigeria, but at a huge environmental cost to the region of Ogoni.

 

When Ken Saro-Wiwa started a popular protest movement, the oil company was alarmed at the threat of disruption to its operations. Activists accuse Shell's local management of colluding with Nigeria's military dictatorship, which cracked down hard on the Ogoni. One series of raids on Ogoni villages in August 1993 left 750 people dead and 30,000 homeless.

 

Saro-Wiwa was eventually arrested and hanged. Amid the international outcry that followed, Shell formed a crisis group to repair its tattered image. Once again, this was led by Watts.

 

Shell is still being pursued for its role in the alleged human-rights abuses in Nigeria. Berger & Montague, an American law firm, is seeking damages for the Ogoni people that could run into billions of dollars.

 

Carey D'Avino, a Berger & Montague lawyer who interviewed Watts two weeks ago, said he saw clear parallels between Watts's handling of the Nigerian crisis and his unflinching determination (as set out in the Davis Polk report) to "leave no stone" unturned to maximise the level of proven reserves Shell was able to report.

 

Shell's Nigerian oilfields were one of the biggest sources of the overstated reserves. The Davis Polk report states that by early 2000 it was clear to Shell's exploration and production arm - then headed by Watts - that the Nigerian reserves "could not be produced as originally projected or within its current licence periods".

 

Nigeria was not the only place where the truth got further and further away from the internal spin.

 

Leaked company documents show that the Yibal field in Oman began to decline in 1997, yet once again, Watts's over-arching optimism kicked in.

 

In 2000, when he was head of exploration and production, he made an upbeat statement citing new technology called horizontal drilling that would ensure the company would be able to "extract more from such mature fields".

 

The internal memos indicated that proven oil- reserves figures for Oman were mistakenly increased that year as a result.

 

Watts's strategy of meeting his targets worked well, and he was made chairman a year later.

 

But he is now out on his own and vilified in the Davis Polk report as a liar. His lack of charm can only come back to haunt him.

 

 


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