Oh, and if that mea culpa (my fault) question is too difficult, perhaps someone might like to answer this: “Was Shell right when it said in 2000 that Africa wasn’t the best place for Woodside?”
Last week, when Australia’s leading independent petroleum producer announced its planned departure from adventures in Algeria, Kenya and Mauritania, the official spin was on the opportunities available in liquefied natural gas developments closer to home.
Forgive The Slug for being a little old, and perhaps mixing up what someone else said in an earlier conversation, but he’s sure that’s precisely what people like Peter Duncan said in 2000.
Duncan, for anyone not around seven years ago, was chairman of Shell Australia when it launched its first (failed) takeover bid for Woodside.
He lost because of a sterling defence mounted by Woodside staffers who successfully argued Shell would “sequence” its LNG projects around the world to suit its corporate requirements rather than Australia’s requirements.
The word sequence was the killer for Shell, and it still stings inside the troubled Anglo-Dutch oil giant.
But lost in the sequence debate was another aspect of Shell’s proposition that it would be a better manager of Woodside, and its treasure-trove of undeveloped gas assets around northern Australia.
Shell reckoned Woodside was stretching itself too far by operating in places as far afield as Africa and the Gulf of Mexico.
“We’re better in those remote locations,” was the message from Shell HQ.
“Rubbish,” was Woodside’s retort. “The world is our oyster”.
Well, guess what? Shell was right. Woodside’s opportunities are better closer to home (and probably always were), and the great African adventure has been an expensive flop.
If there is a third shoe to drop it might be an admission that the Gulf of Mexico has also been a step too far.
Time will tell whether Woodside makes a total break from its globe-trotting but it wouldn’t surprise The Slug if this happens – for a reason other than what’s been outlined so far.
The retreat from Africa, as well as facilitating capital reallocation to projects with the potential to deliver a bigger bang for Woodside’s buck, is also about people.
Quite simply, Woodside lacks the skills and depth to operate on three continents. It is, no matter what its supporters say, a mid-sized company with a record littered with frequent design troubles and installation failures.
Piling disasters on North Rankin and Goodwyn are legendary, as are cost blow-outs on the Northern Endeavour.
It is issues like these, and the potential for their repetition, which keeps Woodside chief executive, Don Voelte, awake at night and, despite criticism of The Don for the tough way he has been shaking up Woodside’s executive suite, he has every reason to be worried.
LNG demand in Asia, Woodside’s backyard, is booming. Sales to the United States beckon. Voelte knows this, and he knows he has the best gas, and an environmentally approved mainland processing centre.
The boom, for Woodside, is in Australia.
Shell knew it seven years ago, but The Slug reckons hell will freeze over before Woodside admits it.
