The broadcast by Channel 4 at 9PM yesterday that so outrageously lampooned Shell’s CEO should serve as a warning to us all. The board of Royal Dutch Shell included.
It is in the very nature of successful business folk that they have a very great ability to overcome challenges and difficulties. This is a defining part of their make-up for every human being has to a greater or lesser extent challenges thrown at them by life and it is the ability and capability of that individual to overcome and prosper from same that causes them to become a success.
I can say without fear of contradiction that all the main board of Royal Dutch Shell along with a very large number of the company’s employees possess this ability.
Whilst facing and overcoming obstacles is a Good Thing, there can come a point where it is necessary to face facts and embark on a radical change of direction which they may well consider to be “giving up”. This is something that the instinct of such a successful person as Shell’s CEO will rebel at. He would not have risen to the position he now holds had he have been one who “throws in the towel.” But there can come a time when “throwing in the towel” is PRECISELY the RIGHT thing to do!
Sadly, I have come to the conclusion that Royal Dutch Shell have reached this point.
So, what should “throwing in the towel” mean for Royal Dutch Shell?
THIS:
The directors Royal Dutch Shell should realise and accept that a form of mob madness has broken out across Western Europe and to a slightly lesser extent, the USA.
The directors Royal Dutch Shell should realise and accept that a company the size of Shell requires a level of co-operation and understanding on the part of the authorities in the markets and countries which it operates. It is clear that this no longer exists to the levels necessary in the democracies of Western Europe today.
This requires a radical change of direction for Royal Dutch Shell!
The BG strongly suggests that the directors Royal Dutch Shell should contact the directors of BHP, formerly known as BHP Billiton (the trading entity of BHP Group Limited and BHP Group plc, an Anglo-Australian multinational mining, metals and petroleum dual-listed public company head-quartered in Melbourne, Victoria, Australia) with a view to discussing a merger to form a new company listed on the Australian Securities Exchange located in Sydney, New South Wales and for this new company NOT to be listed outside Australia. The new company should have as it’s headquarters, the present head quarters of BHP in Melbourne, Victoria.
Why?
A merger would enable the petroleum division of BHP to be merged with the much larger operations of Shell thus producing significant cost synergies. The biggest reason however is political. You see, Australia because of the nature of it’s economy is fundamentally going to resist the suicidal green campaigners more effectively and robustly than elsewhere.
I suggest the new company should be called “Australian Energy & Minerals” (AEM).
Today’s Market Capitalisation of Shell stands at £138,693 million with BHP standing at £100,673 million. These figures are constantly changing with the stock price.
This means that the new company would have a Market Capitalisation approaching £250 billion or a quarter of a trillion GBPs!
What this would mean for the Australian economy and the political establishment is that Australian Energy & Minerals would be the largest company in Australia and have a significant influence in political circles.
For us shareholders there would be disruption and inconvenience as many people in the EU, UK and USA would find that trading their shares would not be as easy and as quick and would cost a little more than previously. I however would be happy with this state of affairs if it made the company better able to face future events.
As for the European and UK and US competition authorities, such a merger would unlikely be stopped – even though the politicians in the EU, UK and US would want to do so! This is because the criteria is market competition and the only issue is the size of the new company’s market share in the petroleum sector. Since BHP’s size in this sector is small (when compared to the oil majors) this would not be a hurdle.
The other benefit of the merger would be the increased spread of risk across different industrial sectors.
What however would really appeal to many however is the distress felt by the politicians in the EU, UK and to a lesser extent the USA of the merger! This because the economies of the Netherlands and the UK would be significantly effected.
The politicians pursing their suicidal green agenda must be shown that their actions have consequences!