Institutional Shareowner: Shell Doubles Cost Projections of Sakhalin II, Project Critics Redouble Opposition
“Shell is doing a very poor job on both internal governance and managing their own affairs, and communicating to their stakeholders and shareholders…”:
Published July 21, 2005
Shell Doubles Cost Projections of Sakhalin II, Project Critics Redouble Opposition
by William Baue
The largest oil and gas project in the world meets resistance over concerns about its social and environmental impacts, as well as its economic sustainability.
Last year, Shell (ticker: RD) rocked the business world when it revised its proven oil reserves by 20 percent, later revealing that top executives had foreknowledge of mistakes in reserve statements. Last week, Shell again sent out shock waves when it revised cost projections twofold for its Sakhalin II project, upping estimations from $10 billion to “the order of $20 billion” while simultaneously announcing delays to the project timeline. Sakhalin II is an oil and gas extraction project taking place off of the east coast of Russia that is already producing oil. Liquefied natural gas (LNG) deliveries will begin in the summer of 2008, and drilling will continue through 2014.