We must accept we’re going to depend on fossil fuels, and clean up as best we can, Shell chief tells greens
Terry Macalister
Friday August 31, 2007
In a week dominated by headlines about boardroom greed, the name of the chief executive at the company that on some measurements is Britain’s biggest has been noticeable by its absence.
Jeroen van der Veer, the head of Shell, earned £2.9m in 2006, pretty much average for FTSE-100 firms and almost a quarter of what was paid to his former business rival, Lord Browne at BP.
The relatively modest salary suits the slightly downbeat Dutchman, who is a mile away in style from the garrulous and glitzy Browne, who enjoyed a flat in Venice, celebrity friends and such close relations with the government that his company was dubbed Blair Petroleum.
At a meeting with the 60-year-old Shell boss, the differences immediately stand out: there is no stylish new shirt or contrasting tie such as Browne liked to sport – just a barely ironed shirt with frayed cuffs and a well-worn tie.
Van der Veer, a cost-conscious Calvinist who cycles to work at weekends “because petrol is expensive”, is unwilling to discuss pay in any detail, saying only that he is focused on what he can do for the company, not on pay. But he is prepared to comment on another controversial topic – the treatment of Browne by the British tabloids when he left BP this year, having lied in court in an attempt to keep his private life under wraps.
The Shell man says he was not so much shocked as surprised by the British tabloid stories that highlighted Browne’s sexuality. “I hope people in our country are more tolerant regarding these aspects,” he says. “This is not a big issue in the Netherlands. When they come with partners of the same sex to parties, it’s fine.”
Does he think the former BP boss will be remembered for the scandal or for the considerable industrial legacy he created at the oil group? “I think the man has made a remarkable career in the oil industry. He did many good things for that company and I hope that he will be remembered for that,” says the Shell chief executive.
Critics have suggested Browne perhaps made it worse for himself by adopting such a high profile in business and political circles. “Some people do not want a high profile but whether this is the right approach or not is a company or a personal issue,” says Van der Veer. “This is for BP to answer.”
Spotlight
The Shell boss, straight-talking but clearly uncomfortable with journalists, has not been forced to deal with the media spotlight on his own personal life, but he does know what it is like to be a senior member of a company being put to the media sword over its business practices.
Shell was subjected to ferocious criticism after it misreported its reserves by 25% in filings to the US regulator, the Securities and Exchange Commission. His predecessor, Sir Phil Watts, lost his job in the ensuing row.
Van der Veer can remember the stormy press conference when the announcement of the mistake was made and the overly negative questioning he believes he received. “I can even remember where you sat,” he says, rather pointedly.
He also makes clear he was hurt by the coverage of another fiasco – when a Shell consultant, Bill Campbell, blew the whistle on safety breaches in the North Sea.
“What really gets me irritated is if people on television broadcast programmes that are deliberately spun in a negative way as though our employees are some kind of villains. Our staff are a hell of a lot greener than the average person when it comes to being careful with the environment,” he says.
Big oil companies are never going to be loved, but the Shell boss argues that they bring the kind of financial muscle and technical expertise needed in a world of mega-projects such as the £10bn Russian liquefied natural gas project, Sakhalin-2.
His view is that business leaders have to stand up and be counted. “You have got to communicate from your heart. I don’t need spin advisers. I simply tell things how I think they are,” he says, in the presence of his ever-watchful chief media adviser.
But green groups are suspicious of the Shell message, as they made clear when the oil company sponsored a recent conference on climate change. They do not like the fact that it talks about renewable energy yet continues investing increasingly heavily in carbon-intensive schemes such as oil sands in Canada.
Van der Veer is unrepentant. He argues that the public has been misled that wind and wave can provide more energy than is realistic and says the world must accept it is going to be dependent on carbon-based fuels, but must find ways of dealing with greenhouse emissions. Carbon sequestration in old offshore oil fields perfectly fits this model, is his argument.
Meanwhile, with “easy oil” running out, it is necessary to concentrate on “unconventional” fossil fuels such as tar sands and gas-to-liquids while still proceeding with potential new sources such as biofuels, thin-film solar technology and hydrogen.
“Ultimately it is up to the government to determine the energy mix, whether to go for nuclear or not and when the politicians have decided what they want then we work with that,” he says. “The Canadian government supports oil sands so we are developing them.”
What is less clear is the direction the British government is taking at a time when North Sea oil is running out. A huge asset sale by Shell and its partner ExxonMobil has led some to question the commitment of the companies to the UK more generally.
“We are not really pulling back,” he says. “But I think you will see a trend whereby more specialised operators come in to optimise the oil that is left towards the end of a field’s life.”
Raid
As for the overall future of the North Sea, he remains optimistic, saying the sector will remain “pretty big” as long as governments play their part by providing the right fiscal incentives.
But does the new prime minister, who as chancellor raided the industry for windfall taxes, look like the best guardian of the North Sea? “At least Gordon Brown knows how much he can take out of it,” says Van der Veer with a flicker of a smile.
Understanding national leaders has become increasingly important to an oil boss in a world where “resource nationalism” is on the increase from Venezuela to Russia – and this week in Kazakhstan, where Shell’s Kashagan project, operated by its partner ENI of Italy, has been stopped amid a blizzard of government criticism.
Shell is getting used to this. It has been forced to hand over operation of its controversial Sakhalin-2 liquefied natural gas project and has come in for continuing criticism from the WWF and Friends of the Earth.
Van der Veer vehemently disputes their claims over Shell’s Sakhalin record, pointing to monitoring of the project by the European Bank for Reconstruction and Development.
“We got a lot of positive feedback from the EBRD about the huge progress made on all kinds of environmental issues. I visit the project quite often and see all kinds of people there. It’s like building a new city under very difficult circumstances and I just don’t believe the things that people say about it.
“If everyone worked to the standards that we do at Sakhalin the world would be a better place.”
As for the Russian government, the Shell boss says it was understandable that the Kremlin was going to get nervous when costs began to soar from $10bn to $20bn. But he insists even at the higher cost the gas is coming out of the ground at around $5 a barrel, compared with $25 in the North Sea.
Although many of the cost overruns resulted from changes demanded by the Russians or green groups, Van der Veer accepts blame for the increases: “We started on too low a budget.”
And he refuses to be fazed by the Kremlin muscling in on the project and demanding state-owned Gazprom be given a stake, saying it is only part of the resource nationalism seen from Russia to Venezuela and Bolivia. “If you know the whole history of the oil industry you will see that when prices are high national governments tend to act.”
But even in this unusually expansive mood, there is one area where comment is not forthcoming: a potential merger with BP. He is even more unwilling to discuss it than he is executive pay.
There were feelers put out by BP 12 months ago and although BP’s new boss, Tony Hayward, has been adamant nothing is going on, there have been endless reports that merger discussions have taken place.
“I made very clear at the time of the original reports we believe in our current [internal growth] strategy,” he says.
And with that, the straight talking is over.
Career
1971 Joined Shell and worked in manufacturing and marketing in the Netherlands, Curaçao and the UK
1984 Returned to Shell Nederland as manager of corporate planning, and then of Pernis refinery in Rotterdam
1992 Appointed a managing director of Shell Nederland
1995 Moved to the United States as president and chief executive of the Shell Chemical Company
1997 Appointed a group managing director. Oversaw worldwide restructuring of the chemicals business
2004 Took over as chairman of committee of managing directors of Royal Dutch/Shell
2005 Became chief executive
Family
Married to Mariette. Three daughters
http://business.guardian.co.uk/story/0,,2159465,00.html
This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.
Royal Dutch Shell conspired directly with Hitler, financed the Nazi Party, was anti-Semitic and sold out its own Dutch Jewish employees to the Nazis. Shell had a close relationship with the Nazis during and after the reign of Sir Henri Deterding, an ardent Nazi, and the founder and decades long leader of the Royal Dutch Shell Group. His burial ceremony, which had all the trappings of a state funeral, was held at his private estate in Mecklenburg, Germany. The spectacle (photographs below) included a funeral procession led by a horse drawn funeral hearse with senior Nazis officials and senior Royal Dutch Shell directors in attendance, Nazi salutes at the graveside, swastika banners on display and wreaths and personal tributes from Adolf Hitler and Reichsmarschall, Hermann Goring. Deterding was an honored associate and supporter of Hitler and a personal friend of Goring.
Deterding was the guest of Hitler during a four day summit meeting at Berchtesgaden. Sir Henri and Hitler both had ambitions on Russian oil fields. Only an honored personal guest would be rewarded with a private four day meeting at Hitler’s mountain top retreat.
IN JULY 2007, MR BILL CAMPBELL (ABOVE, A RETIRED GROUP AUDITOR OF SHELL INTERNATIONAL SENT AN EMAIL TO EVERY UK MP AND MEMBER OF THE HOUSE OF LORDS: 
MORE DETAILS:
A head-cut image of Alfred Donovan (now deceased) appears courtesy of The Wall Street Journal.
Shell’s spin doctors will be very pleased with this bland and unrevealing puff piece. Let’s first correct the inaccuracies. Jeroen van der Veer was not paid £2.9m in 2006 as the article states. In fact his total compensation according to the Shell annual report was £5.2m in that year and this report also reveals that special arrangements have been made by Shell to ensure that when he retires in 2008 Mr van der Veer will be entitled to an annual pension well into seven figures. Terry McAllister should have done his homework better. At the Shell AGM this year there were pointed questions from the floor about how much Jeroen and the other high priced help pay themselves. Elsewhere in Friday’s Guardian the subject of Directors’ p[ay was discussed – but not only did McAllister not press the Shell CEO on this issue he even suggested that his pay was below par – a “relatively modest salary”. What nonsense!
Why did McAllister not press van der Veer on the many Health and Safety issues that have recently been prominent in the public domain? Or about the disgrace of Corrib? Why did he not ask Jeroen about his (Jeroen’s) personal involvement in the reserves debacle – remember that he was on the Committee of Managing Directors throughout the time that this scandal was unfolding.
On Sakhalin why did Terry McAllister not ask about the management failures on site – revealed by the David Greer “resignation”? Or about the fact that the real reason for Shell’s humiliation was that they drove far too hard a bargain in the first place when Russia was weak (and richly rewarded the executives who got this unsustainable deal at the time)? And why did he not question the Shell CEO on the succession at Shell – a subject of great interest in the energy world? Will Shell bring in someone from outside for the first time to run the company when van der Veer retires next year – or will it be one of the current team who benefits from Buggins turn?
What about the Downstream? Nowhere in this long article is there any acknowledgment that Shell is one of the world’s biggest branded retailers with the largest network of petrol stations in the world? You wouldn’t know from the article that Shell was even in this business – although in the UK Shell’s share is much reduced. An insider told me recently that Shell Retail is now no. 4 in UK – behind Esso, BP and Tesco. The “Select” convenience store brand has almost gone. Why? My source told me that in Europe “capricious managers are indulging themselves with Strategy Reviews and other intellectual excitements – which is not what Retail is about”. And that “our shops are a disgrace and that the overall appearance of the sites is awful – bulbs out; Prime Sign pricing units not maintained; and frequently dirty”. Most Guardian readers are motorists and not even to acknowledge that Shell is in the petrol retailing business by asking van der Veer about it was a bad omission.
The only real “revelation” in the article was the seemingly trivial one that Mr. van der Veer says that he cycles to work at weekends “because petrol is expensive” – a remark as offensive as it is absurd. As a former Shell employee for 37 years, and one who is now active in the Shell pensioner interest in the UK, I take great exception to this remark – even if it was meant to be ironic. The average pension for the 30,000 Shell pensioners in the UK is around £14,000 per annum – a decent enough amount but no more than they worked for and are entitled to. At the lower end of the scale there are many Shell pensioners making do on pensions of a few hundred pounds a month. For these poorer pensioners the price of petrol really does matter – and for the many of them that are also infirm cycling at weekends may not be an option either! If your potential pension is around seventy times the average I suppose that it might be difficult to get your mind around poverty – even if for some that poverty is genteel. But you would hope that a “cost-conscious Calvinist” might try – or that a more skilled interviewer would see that this is a matter on which to press him.