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Musings about the OPL 245 Shell/ENI corruption scandal and the sinking confidence in Prelude

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I would have thought that Simon Henry’s position as CFO should now be untenable, in view of the apparent lack of effective financial governance in Nigeria while he was CFO. 

By John Donovan

A large number of press articles have appeared recently mentioning Ben van Beurden. 

Since these articles are presumably fed to the press by Shell’s PR team, and Shell is not a one-man company, I checked to see whether other Shell directors have appeared recently in press releases.

The results are somewhat curious. For example, searching for Matthias Bichsel on Google News shows that articles were published about him at least weekly until October last year, but the articles then stopped abruptly. References to Simon Henry seem to have dried up a few weeks ago – until mid-March there were articles on Henry on an almost daily basis, but recently there has been nothing. Harry Brekelmans seems to have had a low profile since his appointment, so it is harder to see whether any change has occurred. Andy Brown has almost as many press articles as Ben van Beurden. 

Ben van Beurden and Andy Brown were both appointed as directors after the OPL 245 bribery took place and would not have been involved in OPL 245 in their previous positions. Harry Brekelmans is also a recent arrival (he replaced Matthias Bichsel). Simon Henry was appointed finance director/CFO before the OPL 245 debacle. It will be interesting to see how long he remains in place. 

Shell have known about OPL 245 for years: Bichsel’s departure in 2014 probably coincided with the results of Shell’s internal inquiry – the Economist article “Safe sex in Nigeria” would have required a response. 

More information has apparently become available recently which reflects very badly on Shell’s financial governance. The police raids on Shell’s Central Offices and Adoke’s home in the Hague in mid-February did not occur without justification, and the involvement of agencies from both Italy and the Netherlands (and possibly others) suggest that OPL 245 was part of the reason. 

The leaks from Mossack Fonseca may have provided more information, possibly well before they were made public. The abrupt closure of Mossack’s Dutch subsidiary in the Hague in March is also curious…

Just a few idle thoughts. However, I would have thought that Simon Henry’s position as CFO should now be untenable, in view of the apparent lack of effective financial governance in Nigeria while he was CFO. 

Other notable departures from the board since 2011 include Peter Rees, Hugh Mitchell and Malcolm Brinded. As members of the Executive Committee, all should have had knowledge of the OPL 245 bribery payments. Jeroen vd Veer, Michiel Brandjes and Peter Voser have also moved on since 2011.

There are a couple of other things that occur to me, such as the predominance of Brits on the Executive Committee in 2011, and the limited number of Dutchmen. Some might categorise the factions as “Anglo-Saxons” and “Calvinists”.

Another thought is that Prelude has involved the expenditure of billions of dollars, and even before it is completed, BvB is suggesting that there are problems with the configuration of the process modules and the conditions under which it will be used (cyclones?). Anyone reading Bill Campbell’s statements on this site would have known this years ago. Why were these issues not addressed earlier? It is normal for unforeseen problems to be identified when a prototype is used for the first time, but since Prelude has not yet been used, the issues must be apparent from the design. 

Which member of the Executive Committee was pushing the FLNG concept in spite of the shortcomings in the design identified by Samsung and Technip?

Article ends

Screen Shot 2016-04-13 at 20.09.12Related comment made by Bill Campbell (right) retired HSE Group Auditor, Shell International.

The excitement and enthusiasm for FLNG seems, despite the impressive videos coming out of the Prelude dockyards, to have paled somewhat. In fairness, more due to oil economics I presume than perceptions of risk by Shell the builders of what was seen a few years ago as an industry game changer.

Certainly, from a risk viewpoint would expect Prelude mark two if it is ever developed will have two distinct differences from the current design. Namely, the Accommodation building will be at the prow upwind of any potential hydrocarbon leak on the vessel, and LNG will be exported via a flexible pipe at the stern of the vessel to a tanker 100 metres or so behind the FLNG vessel.

ENDS

The links below are to a series of articles, many triggered by a well-placed whistleblower directly involved in the pioneering Royal Dutch Shell Prelude project. Includes articles by Mr. Bill Campbell and another retired Shell guru with a track record of spotting potential pitfalls in major Shell projects.

ARTICLE: Voser wisely abandons an unstable ship: 28 December 2013

ARTICLE: Royal Dutch Shell Prelude to disaster?: 10 Jan 2014

ARTICLE: Shell Prelude FLNG: loss of containment of hydrocarbons almost inevitable: 21 Feb 2014

ARTICLE: What should frighten stiff Royal Dutch Shell shareholders: 15 March 2014

ARTICLE: Tales of the Unexpected and Royal Dutch Shell Prelude FLNG: 28 March 2014

ARTICLE: Prelude FLNG: A case of all your eggs in the one basket: 10 July 2014

ARTICLE: Prelude FLNG risks are on par with modern offshore oil and gas facilities say Shell – but are they?: 23 Sept 2014

ARTICLE: Royal Dutch Shell Prelude Project ‘A Step Too Far’: 25 Sept 2014

ARTICLE: SpaceShip Two: Shell Prelude another pioneering venture fraught with risk: 2 November 2014

ARTICLE: WA turns spotlight on FLNG safety: 11 November 2014

ARTICLE: Prelude a giant production and processing barge masquerading as a ship: 11 November 2014

ARTICLE: Sunday Times Article: Prelude a potential white elephant: 11 November 2014

ARTICLE: Damning Verdict on Shell’s Prelude FLNG Propaganda: 12 November 2014

ARTICLE: Combustible pioneering behemoths – the Hindenburg and Shell Prelude: 21 November 2014

ARTICLE: Key role of Shell lawyers in pioneering Shell Prelude FLNG: 05 December 2014

ARTICLE: The Future of Natural Gas: LNG vs. FLNG: 26 Feb 2015

ARTICLE: The Sydney Morning Herald: WA inquiry shines spotlight on floating LNG safety fears: 8 May 2015

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