Disquiet as Shell Goes Dutch

Daily Mail (London), October 29, 2004 | Go to article overview

Disquiet as Shell Goes Dutch


Byline: ALEX BRUMMER

VISITORS to the Willesden Jewish Cemetery in London can view the graves of some of the greatest names in British business.

Among them is the memorial to Lord Bearsted, whose vision led to the founding in 1897 of Shell Transport & Trading, the older partner in the Anglo-Dutch giant.

Now 107 years and countless billions of pounds of earnings later, Shell is to uproot itself from its London headquarters overlooking the Thames at Waterloo and decamp to The Hague. The new mantra is one Shell, one board, one chairman, one headquarters, one share quote and - one hopes - more than one barrel of oil.

But at the rate that Shell, under its Dutch leadership of Jeroen van der Veer, is downgrading the proven reserves he inherited from his predecessor, the luckless Sir Philip Watts, even that is not certain.

There can be no doubt that Shell's bureaucratic structure has been ripe for overhaul. All it has delivered is slow decision-making, accounting confusion, lost reserves and an arbitrage opportunity between two share quotes.

By bringing the quotes together and redistributing the shares on a proportional basis the two Shells are avoiding the need for an expensive and complex premium merger. Indeed, they have gone further than those other models of Anglo-Dutch capitalism, Unilever and Reed Elsevier.

What is less welcome is the apparent punishment being imposed on the admittedly smaller British arm of the business by moving the headquarters to The Hague.

Instead of hosting two oil majors, BP and Shell, Britain now finds it has one, with the top jobs in the reshaped Shell (see below) going to the Dutch.

The justification for such a move needs more explaining. The present trend is for overseas companies, possibly including Deutsche Bank, to move headquarters to London, not in the other direction.

London offers the deepest liquidity in its financial markets, the largest foreign exchange operations and access to the top investment banks. The Hague is a wonderful city, but it is not a top-line financial centre.

We are now beginning to see the full extent of the legacy at Shell of the Watts and - before that - the Sir Mark Moody-Stuart era.

Profits are fine, thanks to the oil price.

But with the latest downgrade Shell now has less proven reserves than any of the oil majors. …

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