Main content | back to top
View from the top
Jeroen van der Veer retires as Shell Chief Executive on June 30 after nearly five years in the role. He joined Shell 38 years ago. Here he talks about life at the top of one of the world’s biggest companies.
Jeroen van der Veer (right) takes the bicycle tour round Pernis refinery
Q As general manager at Pernis for three years from 1992 you led a huge programme to renovate Europe’s largest refinery. Was that your big career breakthrough?
A I think so. In the run-up to this mammoth project, our permits had expired. I really had to work extremely hard, internally and externally, to reach an acceptable agreement on this with the politicians and environmentalists. And all the time I had a very uneasy management constantly looking over my shoulders. They told me to make sure I got the permits and only then would they take the investment decision. It was quite an achievement to get all the permits awarded again, including the one allowing new plants to be built at Pernis costing what was then 3.5 billion guilders, and to complete the project safely, within budget and on time. At the same time we went through a downsizing of staff. Many said, “You cannot be successful in building and downsizing at the same time.” But we managed and I’m still proud of what we achieved. We were building in the middle of a running refinery, which is incredibly difficult.
Q You speak very fondly of your time at Pernis. You’ve had three stints there – it gave you your first job as a distillation technologist in 1971, and in 1986 you became refinery manager there for four years. How does working at Pernis rank as an experience in your career?
A All jobs have their charms, but running Pernis was a job I think I could have done forever. I felt very committed to the people. I also have great respect for them. I think I’m a team worker by nature. I prefer to think things over by myself, but afterwards I prefer working in a team.
Q The reserves crisis at Shell in 2004 led to your promotion to Chairman of the Committee of Managing Directors of what was then the Royal Dutch/Shell Group. How did it feel to be thrust into such a demanding role?
A I’d been with the company for 33 years, and I wanted to do all I could to get it back where it belonged. I felt a sense of duty, yes, but stemming from a strong inner motivation. I thought Shell was and is a good company. But at that time certain issues had to be urgently addressed. Our company hadn’t got enough new projects on board – projects like Pearl GTL in Qatar hadn’t materialised yet. We had to refocus on the business. And there were weaknesses in the culture and structure. The structure, a Group with two parent companies, had worked well in the past but wasn’t good enough to compete in the future. I soon realised the culture had to change, but also that a different structure was essential.
Q Your first speech to Shell’s top echelon in Houston in May 2004 had a major impact internally and is part of company folklore. What was behind it?
A It was an attacking text. I wrote it in less than an hour and afterwards made hardly any changes; I had a very strong picture of what needed to be done. You have a tremendous inner strength at such a moment. We worked very hard with a small top level group, in perfect harmony; we shifted mountains of work. We came up with things that the company still benefits from. Once a year you say at such a meeting, “This is what I want to achieve. This is our position now, A, and we have to get to B. How? That’s what I’m about to explain.” I said I saw the managers who were there as “gifted amateurs”. I was really angry, because in response to that reserves crisis everyone was just making sure their own part of the business was squeaky clean. They didn’t realise there were more problems than just the reserves. For instance, there was also a huge inertia in the system.
Q Can you explain what you mean by inertia ?
A The inertia was a result of the strong culture at Shell. Which is also an advantage, by the way, because once things are up and running, they run very well. We’ve always had a lot of delegation, and we have long tolerated people contradicting their own bosses. Being critical during the thought process is good but debate cannot continue endlessly and people must loyally execute decisions once they have taken them.
Q You have always said, “If you’re spending money for the company, do so as if it was your own money.” As the boss of Pernis didn’t you have a worn-out carpet for years?
A My thriftiness isn’t over the top. If you’re my guest at home, you’ll be served fine wines. But I believe you must be even more careful, if possible, with the company’s money than with your own money. I sometimes went on at great length about this, because people were reluctant to listen. That’s when I amplified a simple act to set an example. One element of leadership is creating informal stories. That works very well. The worn-out carpet was a deliberate example to create a story. As a leader, you’re always a role model. If I set the wrong example, nobody will listen to what I say, let alone act accordingly.
Q As Chief Executive of Shell you’ve been in a high-profile position for a long time. What have you learned about dealing with the media?
A It’s up to the top-ranking person in a company to communicate through the media. They’re not necessarily out to get you, but they appreciate this if there’s a news story, and they know that negative news sells better than positive news. You mustn’t take too personally what they write or say. In 2004 we had a whole string of stories, all over the media, which were harmful to the company’s reputation. It’s incredibly difficult not to make strong counter-attacks, but you know this would create even more news. And if you don’t respond, the public thinks, “They’re not responding, so it must be true.” I hope there’ll never be a crisis like that again, but that part of it, maintaining strong communication, is what would have to be done again. Also spontaneously, off the cuff, no pre-written speeches, no matter what your lawyers tell you.
Q People who know your travel schedule wonder: how do you stand it ?
A I sometimes wonder myself. Just having four or five hours of sleep for one night is no problem, two nights in succession starts wearing you out. Jogging helps me tremendously. I always have my jogging shoes with me. Almost every travel day starts with a jog, sometimes late at night as well. Not necessarily a long one, a quarter of an hour is enough.
Q And how do you relax in the evening when you’re at home?
A I rarely am, and when you’re at home you have to work anyway.
Q How have you found the workload in the top job?
A It’s enormous. You’re constantly making choices to reduce the pressure, but especially now since the economic crisis hit, the pace has increased. Everyone says so, including my counterparts outside Shell. Now you’re constantly fighting for deals. Frequent meetings with governments, ministers, heads of state oil companies, all at very short notice. Often you just get a few days’ respite and hup, you’re back on the plane, usually at night because then you can get down to work straightaway. Then you’re working hard in the plane, including all the things you’ve had to cancel unexpectedly, leaving limited time to sleep. It does have one small advantage: when you have lack of sleep, there is no jet lag. No, I won’t miss the workload.
Q The negotiations with Gazprom and the then Russian President Vladimir Putin over Sakhalin II** must have been a difficult time. How do you see it now?
A That was enormous in terms of complexity; it was more difficult than playing chess. And the Russians are good at chess. The Russians had a point, they were rightly dissatisfied that the budget turned out far higher than we’d initially said. There was no easy solution that was satisfactory for all parties, given the initial positions. You also had to deal with partners, contractors, holders of gas off-take contracts, and the international legal system also played a role. And we had to safeguard our company’s interests. The whole procedure started in the summer of 2005 and by Christmas 2006 it was settled. I worked intensively on this for one and half years in a small team here at the top. You spend almost all your spare time on brainwork. I knew the file from A to Z and then again from Z to A. I could work out in my head what the consequences were of each proposal, even at the negotiating table. I had a comprehensive calculation model in my head. I always calculate everything through; it’s called “quantitative economic brainwork”.
Sakhalin II, one of the world's largest integrated oil and gas projects
Q Do you carry scars?
A No, I think our relationship with Gazprom is good, really good even. The way the project has been completed is a really successful picture. We’ve now won a Russian environmental award and the local community gave us Best Company recognition. There’s no end to it. The start-up was incredibly good, the best in the entire history of the international liquefied natural gas business. Now the success stories are starting to come in. Right from the first day I said the Russians are a capable people and they have huge oil and gas reserves. I’ve often been asked why we’re still investing in Russia. Well, if we get the opportunity, with Russian partners, we’ll certainly continue. All conversations with the then President and now Prime Minister Putin were to the point, open, attentive, business-like. People made up all kinds of stories that weren’t true.
Q After you retire from Shell on June 30 you will become a member of the Board. How do you see your role?
A I’ll be sitting at the corner of the table, as I call it, from July 1. I’m mainly on the Board in the role of institutional memory, and helping people to understand the complexity within which a company like Shell has to work. I won’t be there to curb the Executive Directors’ freedom of action if they want to embark on a different course of action. It’s officially stipulated that at least one of the non-executives on the Board must have oil and gas expertise. I’d find it hard to understand if someone from a rival company or an academic were to be offered this position.
Q Shell recently said it did not plan to invest in new wind and solar projects. Why is that, and how do you see the transition to a new energy future where alternative energy plays a bigger role?
A It will happen; alternative energy will come. Just not as fast as some people hope. There are always developments. You only have to go back 50 years. Then natural gas was very small, now it’s very big. But as an energy company if you can only take steps that are very expensive and don’t help much, as is now the case, you can make better use of your money by designing the technology that can help you far more later on. The big choice is: do we do expensive things now that will hardly have any effect on the carbon dioxide problem, or should we invest that money in the development of second-generation biofuels, for instance? It’s often suggested by the public and politicians that Shell has a moral obligation to put its money into everything on which a “sustainable” or “alternative” label can be stuck. We’re not a government. We’re entrepreneurs. You can put a billion pounds in the [UK’s] London Array wind farm project, but if we don’t earn what we can on oil and gas projects, even at low oil prices – even though I’m sure that oil will be in demand – what must I do as a company?
Q You give technical answers, but where’s your passion for the energy transition?
A Well, I fully recognise that’s what many people are thinking. But we don’t look at renewable energy as a kind of Sunday donation in the collection box because we’ve lived in sin the rest of the week. The essence of the message is that we’re good in oil and gas; people still want these products, we can produce them responsibly. It really isn’t wrong to be in oil and gas, and so we don’t need to push any redeeming storylines.
*Jeroen van der Veer spoke to Piet de Wit
**In December 2006 Shell and partners Mitsui and Mitsubishi each agreed to sell to Gazprom 50% of their interests in Sakhalin Energy, operators of the Sakhalin II integrated oil and gas project. Gazprom became the majority shareholder, with Shell retaining a 27.5% stake, and Mitsui and Mitsubishi holding 12.5% and 10% stakes respectively.
