FROM Stuff.co.nz, New Zealand
22 June 2006
By MARTA STEEMAN
Shell’s New Zealand oil and gas assets would shrink in value by more than $US100 million ($NZ162 million) if it did not take over the operator’s role at fields in which Shell held the majority share.
And if Shell did not take over that role, the potential “timely” sale of its New Zealand exploration assets could be hindered, a High Court judgment says.
Justice John Wild “decisively” ruled in favour of a Todd Petroleum Mining application for an injunction stopping Shell from taking over the operator’s role at New Zealand’s biggest gasfield, Maui.
The judgment reveals that Shell set out under “Project Zinfandel” to replace the 50:50 joint company Shell Todd Oil Services (STOS), which operates Maui and other fields, with a Shell operating company.
Todd opposed this and sought an injunction to stop a vote by STOS directors – half Shell and half Todd appointees, with Shell having a casting vote – to have STOS resign as operator of Maui.
The substantive case was heard in May after Todd gained an interim injunction last April.
STOS has been operating for more than 50 years and has about 400 staff. Shell had intended to transfer those employees to the Shell operator.
Shell owns 83.75 per cent of Maui, Todd 6.25 per cent and Austrian firm OMV 10 per cent. Shell owns 48 per cent of the new Pohokura gasfield and Todd and OMV 26 per cent each.
The judgment quoted Shell documents which said the transfer of the operator’s role from STOS to a Shell company would facilitate any future sale of Shell’s New Zealand assets.
Todd had too much control over STOS services, considering it had only small shareholdings in the gas and oilfields operated by STOS, according to Shell’s Project Zinfadel documents.
If asset sales were considered in the future, prospective buyers would discount the price of these to reflect the cost and complications of inheriting STOS as the fields’ operator.
Shell said the discount could be 10 per cent of the value of Shell’s New Zealand portfolio – a more than $US100 million discount.
Shell believed its operating the fields was “normalisation”, as the usual international practice was to have the largest shareholder in a mining permit be the operator.
The court upheld Todd’s argument that a vote to have STOS remove itself as operator of Maui was in breach of a heads of agreement that both companies operate the gasfield.
Justice Wild did not accept Shell’s argument that STOS was dysfunctional, as that was not indicated in the joint company’s performance. He said Todd’s conduct was not open to criticism but Shell’s was. The objective of Project Zinfadel – to replace STOS with a Shell operator – was in breach of the heads of agreement.
Shell had misled OMV and the court about the causes of slippage in the Pohokura development schedule.
The judgment said Shell wanted to bring in a new operating model for STOS, in line with its global practices. When Todd fought that, Shell had tried to replace STOS. Todd also fought big increases in costs charged to STOS by a Shell advisory company.
The judgment recorded bitter exchanges between the two companies in e-mails and meetings the past two years, their different approaches to business and the personality clash between Todd managing director Richard Tweedie and then Shell New Zealand chairman Paul Zealand.
Shell is considering whether to appeal.
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: 
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A head-cut image of Alfred Donovan (now deceased) appears courtesy of The Wall Street Journal.
