Shell’s problems in Argentina and Malaysia.

18 Jun

Originally posted at my blog spin.off , while working on the book.

Last March, Radio Netherlands called me to comment Shell’s most recent PR problems. This also resulted in an article on their website: Oil giant goes on drilling despite bad press, by Pieternel Gruppen, 23 March 2005.

Despite massive attempts to change the way in which it is perceived, Anglo-Dutch oil giant Shell is facing familiar problems once again. Having pumped money and effort into trying to shake off a negative image, the company is again attracting bad press. Following a rise in petrol prices, Shell is now the subject of a boycott in Argentina, and is meanwhile entangled in a border conflict between Asian neighbours Malaysia and Indonesia.

It was back in 1995 when Shell announced a major change in corporate policy, promising to focus greater attention on areas such as the environment and human rights. Socially-responsible entrepreneurship and transparency were the new watchwords. One of the factors behind the changes was the well-publicised controversy surrounding the Brent Spar oil platform.

Change of heart
Shell planned to scrap the Brent Spar, and the cheapest option was to sink it in the ocean, rather than dismantle it on dry land. The company was completely taken by surprise by the storm of protest that blew up over the plan. Environmental organisation Greenpeace launched a major campaign, which ultimately resulted in a change of heart by the petrol giant. Eveline Lubbers, an investigative journalist who follows public relations strategies of large multinationals, believes the company learned a lot from that experience:

“They’ve now got very good risk-assessment departments. They were the first company to begin using scenarios in their planning, as in: if we do this, what will happen then? They also involve all kinds of people from outside the company to learn from them, too.”

Stoking up conflict
These procedures, however, do not necessarily mean that Shell will choose the ‘popular’ option. Eveline Lubbers cites Shell’s oil-drilling activities in part of the Sulawesi Sea, and says the company made a conscious decision in that particular case. As she points out, it’s well aware of the slumbering dispute between Indonesia and Malaysia, which both lay claim to this stretch of sea and have made commitments to various oil companies.

“It’s not hard to work out that drilling for oil in that region is going to stoke up the political conflict. So, as a company, you have to weigh things up: what’s more important to us? The prospect of being back in the focus of publicity again, or getting down to drilling? They opted for the latter.”

In Argentina, too, Shell appears to have given the profit-goal priority over its reputation. However, Eveline Lubbers thinks the company didn’t expect such a strong public protest – in the form of a boycott.

Get drilling
She believes the company is now concentrating on something else rather than its image, and has an explanation as to why:

“Of course, they’ve incurred an enormous amount of criticism in connection with the incorrect estimates of the company’s reserves. That caused them a lot of damage, both economically and internally. I think those reserves are now the priority. They just have to get drilling again, to get the reserves up to the right level.”

As for the image problems in Argentina and South-East Asia, Ms Lubbers thinks it’s unlikely that the negative publicity will cause Shell much long-term harm. Looking back on previous events, it appears that the only real damage to the company has been caused – as in the case of the Brent Spar – by protests which had a good campaign and strong organisations behind them.

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