The Multinational Monitor

NOVEMBER 1981 - VOLUME 2 - NUMBER 11


G L O B A L   N E W S W A T C H

Shell Balks at Australian Ownership Requirement

A subsidiary of the Royal Dutch Shell company on September 17 rejected a request by the Australian government to sell 25% of its stock to Australian investors. The government of Australia accepted the decision.

Shell Australia Limited was asked by the Australian government on August 12 to float a quarter of its stock after Australian treasurer John Howard granted the company permission to take a minority stake in two large coal deposits in the country.

Howard's move to increase Australian control of Shell was heralded as "a significant toughening of the government's foreign investment policy," according to an article in the Sydney Morning Herald on September 18.

Standard Australian government policy for oil, gas, and mineral projects is to require 50% Australian equity and at least 50% Australian representation on the controlling board. These regulations, however, are often waived, with the conservative government claiming that the projects couldn't get off the ground if the foreign companies had to share equity. (See MM, March, 1981.)

In this instance with Shell, the government backed down, issuing a joint statement with the company agreeing that "in current circumstances, the timing is not commercially opportune for the introduction of Australian equity into its [Shell's] overall Australian operation."

Shell's sole concession was to agree that "participation will be augmented in relation to future projects," the statement said.

Australia's biggest oil supplier, Shell also is involved in a number of lucrative resource operations in the country, including drilling for natural gas, mining coal, and producing chemicals.

- Jay Egenes


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