Daily Mail: Watts is on to a winner despite Russian setback: “SHELL'S remarkable share price rise since last year's reserves scandal has given ousted chairman Sir Philip Watts a £3m gain in the value of his share options.”: “The oil giant is making so much from sky-high energy prices that its shares shrugged off the shock news that costs of its Sakhalin-2 gas project in Russia have doubled in two years to $20bn(£11.4bn). This hits the terms of Shell's agreement with Russian gas giant Gazprom last week to swap 25pc of Sakhalin for half of a Gazprom field in Siberia.”: Sunday 17 July 2005
By Brian O'Connor
SHELL'S remarkable share price rise since last year's reserves scandal has given ousted chairman Sir Philip Watts a £3m gain in the value of his share options.
The oil giant is making so much from sky-high energy prices that its shares shrugged off the shock news that costs of its Sakhalin-2 gas project in Russia have doubled in two years to $20bn(£11.4bn).
This hits the terms of Shell's agreement with Russian gas giant Gazprom last week to swap 25pc of Sakhalin for half of a Gazprom field in Siberia.
Chief executive Jeroen van der Veer had to phone the Russians yesterday to explain the change in what they were getting.
Shell blamed the huge overrun on 'things taking longer than anticipated'. Taking an onshore pipeline across a river was fraught with problems. Rising steel costs hit virtually every piece of equipment bought. Icy cold and the breeding grounds of the rare gray whale were other problems.
Shell's ability to manage such 'elephant' projects is crucial since it has several. But van der Veer cited the $4.3bn Nanhai chemicals plant in China, built on time and on budget.
Exploration director Malcolm Brinded called the Sakhalin overrun 'clearly disappointing'. But though it pushes costs to $5-$6 per barrel of oil, this is far below current prices. The shares ended 4V4p up at 549p.
This is a rise of more than 50pc from the 360p seen after Watts quit last year. He surrendered a chunk of his share awards, but kept options on 2.8m shares at prices ranging from 363p to 552p. His declared shareholding brings his total interest to £3.5m. Directors and staff have gained £340m since last year on the 180m shares held in their share plans.
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