Wide ranging experience is particularly important for enabling complex and large-scale projects, for example in gas.
A prime example of this - and of successful government-private co-operation - was the creation of the Dutch gas system following the discovery of the giant Groningen field.
Creating the infrastructure which now provides 40 percent of Dutch energy needs, as well as large exports to other European countries, was a massive task.
This had a huge multiplier effect on the rest of the Dutch economy - up to $8 for every one generated by the gas industry.
Groningen is now the center of a sophisticated operation for managing seasonal, weekly and daily demand fluctuations, and for maintaining Dutch capacity.
This flexibility will become even more important as the gas market is liberalized.
I mentioned my early exposure to Arabia - in the late 1960s as a member of a small team surveying the geology of the Oman mountains. It was a fascinating experience, in a country which had until then excluded almost all modern development.
The Sultanate has been transformed - another striking example of wisdom and foresight in harnessing natural resources to sound development, while preserving cultural heritage.
I am proud that Shell has contributed to this development, as a partner in Petroleum Development Oman. Unlocking the secrets of Oman's complex geology has tested our capabilities and PDO has long been a leader in applying our technology.
This allowed new gas reserves to identified as the basis for an LNG scheme which began delivering gas to Asian customers last year.
LNG markets are extremely competitive. I believe our unique experience of enabling such schemes was important for getting the project going - as well as the accumulated experience which allowed us to design the lowest cost greenfield LNG development.
Making connections count:
Let me turn back to e-Commerce. Much media attention focuses on the dichotomy between `old' and `new' economies. For many the `new' was characterized by the meteoric rise of start up dot.coms.
The demise of many to the harsh realities of competition has led some commentators to conclude that e-Commerce was a flash in the pan.
They are mistaken. The division between `old' and `new' is misleading. On the one hand there are those who develop and sell new information and communications technologies and services - for which demand is accelerating.
Then there are users. These include dot.coms, some of which may fulfill their promise - offering new things in new ways. But they all face the fundamental business challenge of maintaining a competitive advantage which others can't copy.
In reality, many are what Lou Gerstner - of IBM - called `fireflies before the storm'. He believes the real revolution will occur when existing businesses - with competitive strengths in knowledge, assets, products, customer relationships, brand and cultures of achievement - `seize the power of this global computing and communications infrastructure and use it to transform themselves.'
His expression touches on my earlier question. Is it really new? Managers have constantly sought better ways of handling and transmitting information. The typewriter tripled the rate at which it could be recorded.
The telegraph made possible distant real-time communications. Pinpointing turning points is difficult. Historians debate the use of `Industrial Revolution' for the period from the late 1700s - when steam engines had been around for nearly a century. But something special was clearly happening then.
So it is today with ICT. Companies have been investing in them for decades. We began using e-mail in Shell 20 years ago. But they were tools for businesses with other dynamics.
The real change is when they transform the way we do business. I think that is now happening, not just in a few tiny dot.coms but across industries.
It is, of course, a huge learning curve. Let me say something about the Shell approach - working with others to develop common structures and pursuing our own competitive strategies. I will mention only a few of our initiatives. Like others, we are:
testing many ideas in a process of `rational experimentation',
pursuing the `breakthrough strategies' which change the rules, and
working for `operational excellence' by transforming critical business processes.
Shell companies are active in many areas of e-Commerce. Let me focus on three - procurement, trading and serving customers.
The unique global spread of our operations gives us a particular interest in the potential of e-Procurement. We started by developing systems to enable Shell operating units to compare prices elsewhere.
This has been extended by the creation of Trade-Ranger as a global Internet market-place for energy and petrochemical industries - with a standardized catalogue and transaction processes.
The founding partners have combined annual procurement expenditures in excess of $125 billion. I am very pleased that Saudi Aramco is with us - through our Motiva joint venture - in this important initiative.
We expect e-Procurement to deliver substantial savings - from on-line bidding as well as greater transparency, better information, increased efficiency and standardization.
Another thrust involves the surplus material companies accumulate in changeable operations - in our case worth more than $150 million worldwide, costing us $30 million a year to maintain. We are now trading them internally and hope to extend this through Trade-Ranger.
Local agents may be concerned about the impact of e-Procurement. I believe the transparency - a key attribute of all e-Commerce - will help them demonstrate the value of their services. All businesses benefit from lower transaction costs.
Connected and liberalized energy markets offer new opportunities for trading. Many on-line exchanges emerge but few gain the liquidity to survive. With other major players we have founded Intercontinental Exchange to trade energy and precious metal derivatives.
It has traded over $20 billion in energy products since October. We are also involved in the HoustonStreet exchange for wet oil, as well as LevelSeas for shipping. On-line trading offers considerable savings.
One traditional sea-borne trade can require 1,000 transactions - e-mails, faxes, telephone calls, couriered documents.
And we have invested in Currenex - an on-line foreign currency exchange - both to make savings ourselves and develop new services for our customers.
This brings me to the key competitive battleground - understanding, serving and developing relations with customers through B2B and B2C channels.
Shell B2B initiatives include:
Shell SIMON to manage the inventories of chemicals customers,
Customer Lounge to give them customised service,
eCATS to let oil products customers get information, order products and monitor deliveries on-line, and
Simple Olefin Solutions for clearing European cracker products.
An important aspect of eCATS is two programmes - called Shell Ready and Customer Ready - to prepare internal processes and people to work in this way, and help our customers realize its benefits.
B2C developments include the very popular Shell Geostar offering a comprehensive travel-planning service for European motorists.
These initiatives are only the beginning of a journey. Real benefits will come from digitizing and linking business processes, across and beyond the organization.
In the way Dell Computers feeds on-line orders directly to its own and its suppliers' production schedules, eliminating static inventories.
As with procurement, we are digitizing the process for drilling and operating wells. Procurement requirements can then be digitally managed.
Our vision is to extend this to our whole upstream process -from exploration to abandonment - as well as in our other businesses.
The other major prize is extending relationship with our customers. The possibilities are immense. It is too early to know how they will develop.
They could involve new structures, as well as new types and combinations of products - such as the financial products Shell Capital is developing for motoring customers.
I referred the challenge of slowing demand in mature markets. Service stations must offer more than just fuel. Acting as local collection points for on-line shopping is one possibility, which we are trying in Singapore.
Pursuing all such opportunities depends on first-rate global ICT networks. We are currently spending $100 million to upgrade our Global Infrastructure.
One aspect of this will be a chain of centers to provide Shell users with immediate technical assistance round the clock. We are planning to locate one of these in Muscat.
Partner of choice:
Energy industries face vital challenges, and the Kingdom will have a central role in meeting them. At the same time it faces its own challenge of harnessing its natural resources to support the continuing development of its economy and society, for its growing population.
I believe that international energy companies, like Shell, can contribute much to this - investing capital and sharing the technological capabilities gained from diverse, worldwide experience, honed by relentless competitive pressures in changeful markets.
e-Commerce - which is transforming energy industries like all others - requires new responses and offers new opportunities. The very young Saudi population should be a distinct advantage when it comes to realizing its potential.
Shell has been serving the Kingdom since the 1930s. Our aspiration is be a trusted, valued partner - the partner of choice. We think our experience - particularly in gas - and keen appetite to continue extending that experience into new areas gives us something to offer.
Mark Moody-Stuart, Chairman of the Committee of Managing Directors (CMD) of the Royal Dutch/Shell Group of Companies and Chairman of The "Shell" Transport and Trading Company, plc. at the Jeddah Economic Forum, Kingdom of Saudi Arabia
Source:Shell.com
© 2001 Mena Report (www.menareport.com)
