News: Analysis & Commentary: CRISIS MANAGEMENT
THE LATEST SHELL SHOCK
This is one year executives at Royal Dutch/Shell Group would like to forget. In April, the $140 billion oil giant announced a major management shakeup after earnings from its two largest divisions slipped badly. In June, activists forced Shell to back down on plans to dump its defunct Brent Spar drilling rig at sea. Now, the company is in the line of fire again, this time from activists who want Shell to get out of Nigeria following the Nov. 10 execution of nine dissidents after what neutral observers called a sham trial.
At Shell's London headquarters, unnerved officials are working furiously to keep the latest crisis from spinning out of control. Nigeria accounts for 14% of Shell's crude-oil production and some $130 million in operating earnings. In major capitals around the world, Shell officials are using all of their back-channel contacts to dissuade ministers from organizing a trade embargo or oil boycott. So far, most countries appear to be taking less punitive measures, such as recalling ambassadors or canceling weapons sales or aid. Shell also has met with stock analysts, assuring them that the Nigerian operation's future is secure. So far, so good: Shell Transport & Trading PLC shares closed 3% higher, at $12, on Nov. 15 in London.
But legions of human-rights activists, environmentalists, and consumer groups are meeting in Europe and the U.S. to discuss what actions they can take to press Shell to exit Nigeria. "There is a bigger coalition forming around boycotting Shell than I have ever seen around any other issue," says Greenpeace International spokesman Stephen M. Kretzmann.
The Brent Spar case showed that Shell has an Achilles' heel: If consumer boycotts of retail outlets spread, profits are hurt and the company finds it hard to resist pressure. Moreover, Shell is finding it difficult to claim the moral high ground in Nigeria. The company admits to causing some environmental damage, and it concedes that oil money rarely makes it back to needy communities.
WEAK VOICE. In the current crisis, while Shell sought clemency for the now-executed dissidents, it did so at the last minute and only by sending one letter from Chairman Cornelius A.J. Herkstruter. Says a spokesman: "Shell is a private company. It hasn't been elected by anyone. By what authority would we interfere in the government of Nigeria?"
For now, Shell argues that its departure would harm the 4,800 Nigerians it employs and weaken an already depressed economy. But it remains to be seen if millions of customers will let Shell turn away from Nigeria's political and economic problems.By Heidi Dawley and Paula Dwyer in London