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The Times: Dating game

Feb 14th, 2006
by admin.

OILMEN know that this is a special time in the calendar: it is International Petroleum Week. Jeroen van der Veer, the chief executive of Royal Dutch Shell, did not wait for Valentine’s Day to send a billet-doux to Gordon Brown. In a speech at the opening morning of the industry get-together, he gave warning that if governments wanted to encourage investment, then their tax regimes should not provide any disincentives.
He had in mind the tax increases imposed on North Sea oil. Somewhat optimistically, he suggested that the Chancellor should commit to reversing the tax increase should the price of oil fall.
Mr van der Veer will probably have been disappointed if he hoped that this morning would bring flowers, chocolates and just such a commitment from the Treasury.
But Shell has already demonstrated that companies can react against inhospitable tax regimes. When the organisation melded its two component companies into one, it chose to have its main listing in the UK but its head office in Rotterdam. A less oppressive tax regime was one of the factors that influenced that decision.
Global companies are not rooted to one spot. Shell is about to establish a major research and development centre in Bangalore. The universities in India are turning out the talent that the company needs whereas in the West fewer students are pursuing science. In the United States, the number of university students studying petroleum engineering has fallen by more than 80 per cent since the early 1990s.
Yet it will be a very long time before demand for oil specialists disappears. Shell is already the largest marketer of biofuels in the world, but Mr Van der Veer believes that there is plenty of oil still to be found. Getting at it is just harder, and more expensive.

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