The Sun newspaper alleges Shell boss Jeroen van der Veer secretly met Lord Browne of BP once a year to discuss oil prices. Perfectly matched pair to engage in some jiggery-pokery.
By John Donovan
The Sun newspaper alleges Shell boss Jeroen van der Veer secretly met Lord Browne of BP once a year to discuss oil prices.
Under the website headline “Shell and BP in secret meetings about oil”, the Sun is publishing an article on Sunday alleging that Jeroen van der Veer, Peter Vosers predecessor as Chief Executive of Royal Dutch Shell Plc, secretly met his BP counter-part, Lord Browne, once a year to discuss oil prices.
(Headline in Sun Newspaper article: “I NEED WORD IN YOUR SHELL-LIKE ABOUT OIL”)
Lord Browne subsequently resigned after becoming involved in a scandal.
Jeroen van der Veer was a participant in the cover-up of the Shell reserves fraud and the Brent Bravo scandal.
Perfectly matched pair to engage in some jiggery-pokery.
We can safely assume that the talks also covered the possibility of a Shell BP merger.
RELATED: Price fixing is in the Shell DNA
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- Oil giants probed over suspected price rigging 14 May 2013
- Petrol price ‘rigged for a decade’ 14 May 2013
- SFO ‘urgently reviewing’ oil price inquiry 16 May 2013
- Oil manipulation ‘could have hit food’ as well as petrol 17 May 2013
European anti-trust investigators searched the offices of price agency Platts and at least one major oil company for a third day on Thursday, hunting for evidence of possible price manipulation on oil markets, witnesses said.
Authorities raided the London bureau of Platts in Canary Wharf and the offices of Statoil, Royal Dutch Shell and BP on Tuesday in the biggest trading probe since the Libor scandal.
(Read More: EU Raids Offices of Big Oil Firms Amid Pricing Probe)
At issue is whether there was collusion to distort prices of crude, refined oil products and ethanol traded during the Platts market-on-close (MOC) system – a daily half-hour “window” in which it sets prices.
With attention focused on the role of Platts in setting oil price benchmarks, the publisher – a unit of McGraw-Hill – is in lockdown during the European Commission’s inspection, say sources familiar with the company.
A team of inspectors is gathering evidence from laptops, the witnesses said.
“We are all in the dark about it. The investigators will likely be here all week,” said one member of Platts staff. “We have all been told explicitly not to speak to anyone about it.”
Platts continues to operate business as normal, traders said.
As investigators raided the office, reporters were told by Platts management to cooperate. Editorial director Dan Tanz stood up to say it was the “price of being relevant”.
A spokeswoman for Platts did not immediately respond to a request for comment.
Britain’s Serious Fraud Office said it had not yet decided whether to “accept this matter as a criminal investigation”.
“Subject to discussions with other agencies, it is likely that the SFO could be the appropriate authority to investigate allegations of price fixing,” the SFO said in a statement.
The European Commission also is examining whether companies were prevented from taking part in the price assessment process.
A Hungarian ethanol producer on Wednesday was the first company to identify itself as having complained to the European Commission about a Platts procedure that vets companies before they are permitted to participate in its price setting mechanism.
Pannonia Ethanol said it approached Platts last spring to gain access to contribute to the market-on-close window.
It said Platts refused to give the company access, citing “editorial discretion”.
Platts said its established procedure was to vet new participants and had followed the process with Pannonia Ethanol.
Commission inspectors are also continuing their search at the offices of Norwegian Statoil.
“As far as I know, the inspectors are still at our office,” said Statoil spokesman Jannik Lindbaek. “When they came they said that they would spend some days.”
BP and Shell said they were still cooperating with the European authorities.
London is home to some of the biggest trading desks in the oil business. Following the Libor scandal, in which banks have admitted trying to manipulate interest rates, Britain approved legislation making a criminal offence of false or misleading statements in relation to the setting of financial benchmarks.
Britain would be unable to use that law to act against any oil companies found guilty of price manipulation because the law does not include energy benchmarks and punishment would not be doled out retrospectively, the prime minister’s office said on Thursday.
That leaves the European Commission, which can impose large fines, as the most likely source of any sanctions.
Thomson Reuters, parent of Reuters news, competes with Platts in providing news and information to the oil market.
By Maher Chmaytelli and Nayla Razzouk: May 16, 2013
Royal Dutch Shell Plc (RDSA) will start producing crude at Iraq’s Majnoon oil field as early as next month and plans to increase energy investments in Saudi Arabia, its regional vice president said.
Output from Majnoon, one of Iraq’s largest oil fields, will start “around mid-year” and increase to 175,000 barrels a day by the end of 2013, Mounir Bouaziz said in an e-mailed response to questions. In Saudi Arabia, Shell is holding talks with officials on a project to develop natural gas from the kingdom’s Kidan field in the Rub al-Khali, or Empty Quarter, he said.
“Our discussions with our joint venture partner cannot contractually be disclosed, but I can reiterate that Shell is committed to the kingdom and we are keen to grow our investments both upstream and downstream,” he said.
Saudi Arabia is the world’s biggest oil exporter. Iraq, which holds the world’s fifth-largest crude reserves, overtook Iran last year to become the top producer, after Saudi Arabia, in the Organization of Petroleum Exporting Countries.
Shell has faced “teething problems” at Majnoon, mainly due to the unexpected quantities of unexploded munitions at the field, customs-related delays of imported equipment and slow processing of entry visas, Bouaziz said. “However, what is encouraging is that we do see real improvements in these administrative processes.”
Shell is lead operator of Majnoon, with a 45 percent share, while Malaysia’s Petroliam Nasional Bhd, known as Petronas, has a 30 percent stake and Iraq’s government holds the remainder. The field straddling the southern provinces of Basra and Maysan contains estimated reserves of 12 billion barrels of crude and 9.5 trillion cubic feet of gas.
Shell is in “exploratory discussions” with the Iraqi government about the target for oil output at Majnoon, Bouaziz said. Iraq agreed in January with Lukoil OAO (LKOH) to cut targeted production at the West Qurna-2 field, where Lukoil is the operator. The government is also in talks with Exxon Mobil Corp. (XOM) and Eni SpA (ENI) to reduce targeted output at West Qurna-1 and Zubair, respectively.
Whether the discussions result in a reduced plateau, “it is important that the government keeps up with its efforts to provide an enabling environment for the oil and gas investments,” he said.
Shell and its partner Mitsubishi Corp. (8058) started operations on May 1 at a $17 billion joint venture for salvaging gas from fields in southern Iraq. The venture, Basrah Gas Co., is now capturing 400 million cubic feet a day of so-called associated gas, which occurs together with crude, Bouaziz said. Iraq estimates that it’s losing millions of dollars by flaring off some 700 million cubic feet of gas because it lacks facilities to store and sell the fuel.
Basrah Gas will start within 18 months exporting liquefied petroleum gas, which is used for cooking and heating homes, he said. Iraq currently imports 500 metric tons to 1,000 tons of LPG a day, while it flares 4,000 tons daily, Bouaziz said.
The venture may eventually produce liquified natural gas.
“Considering the amount of gas that will be produced in Iraq, it is very likely that the Basrah Gas Co. LNG project will be needed,” he said. A final decision would be up to state-owned South Gas Co., the venture’s majority shareholder, Bouaziz said.
To contact the reporters on this story: Maher Chmaytelli in Dubai at email@example.com; Nayla Razzouk in Dubai at firstname.lastname@example.org
To contact the editor responsible for this story: Stephen Voss at email@example.com
EXAMPLES OF UK TABLOID COVERAGE OF ALLEGED PRICE FIXING AT THE PUMP
UK fraud authorities are “urgently reviewing” whether to launch an investigation into companies that may have rigged the oil market and driven up petrol costs for millions of drivers.
By Rowena Mason and Christopher Hope: 7:06PM BST 16 May 2013
The Serious Fraud Office said it is considering an inquiry, after European Commission officials raided the London offices of BP and Shell. The companies, along with a Norwegian oil giant, Statoil, are suspected of having “colluded in reporting distorted prices to manipulate the published prices for a number of oil and biofuel products”.
It comes the day after David Cameron said he wanted to see prosecutions with the “full force of the law” if the allegations are proven.
Ministers are under pressure for British authorities to launch their own investigation as there are fears that motorists could have been duped into paying thousands of pounds too much for petrol over the past decade.
MPs have demanded to know why the European Commission has launched an inquiry, while the UK’s own Office of Fair Trading pronounced the petrol market to be “working well” earlier this year. The OFT also said it found no “credible” evidence of any oil price manipulation.
Robert Halfon, an MP and petrol price campaigner, today asked the SFO to consider whether it had scope to mount a British inquiry in parallel to the European one.
“The Prime Minister has said through his spokesman and the Energy and Climate Change Secretary has confirmed in Parliament that the Government expects the firms involved to comply with the investigation and if found guilty, they should face the full force of the law,” he wrote to the SFO head David Green.
“Action by the European Commission may be helpful, but it is no subsitute for domestic action by Britain’s authorities. Does the Serious Fraud Office have scope to investigate allegations of market abuse and price-fixing by oil companies?”
Tonight, an SFO spokesman confirmed its officials are considering whether they should get involved.
“Subject to discussions with other agencies as to the potential offences involved, it is likely that the SFO could be the appropriate authority to investigate allegations of price-fixing,” a spokesman said.
“We are urgently reviewing the matter and would expect to announce any decision to accept the case for criminal investigation if and when such a decision is made.”
Oil executives could be investigated under the same powers the SFO used to probe bankers over the pricing of Libor – a key interest rate used as a benchmark to calculate mortgage payments. The authorities have arrested at least three people in connection with that scandal.
The Prime Minister has also said he will urgently look at “extending criminal offences” to make it easier to bring prosecutions against anyone who has manipulated the energy market.
His comments raised the prospect that any companies who are found to have manipulated household gas or electricity prices could also face criminal prosecution.
However, his spokesman today admitted that any change in the law would be forward-looking, and would not be able to hold account any executives caught up in historic fixing of the oil price.
The Prime Minister’s spokesman said: “Following the Libor scandal, the Government legislated to create a new criminal offence and a manipulation of all types of benchmarks.
“This law was done in such a way that other benchmarks could be included, and that would be a change in secondary legislation. Other offences including energy market manipulation could be added in if necessary.”
Any companies proved to have fixed the oil price could also face heavy financial penalties. Mr Cameron’s spokesman said the European Commission “can impose a fine of 10 per cent of the overall turnover of the company”.
The European Commission has emphasised that its investigations are in a “preliminary” stage and no anti-competitive practice has been proven.
BP, Shell and Statoil have said they are co-operating with the authorities but cannot comment further while the European Commission inquiry is active.
- Oil execs caught price-fixing will escape prosecution: 16 May 2013
- Cameron threat to prosecute oil bosses:15 May 2013
- Oil-price fixing and the price of petrol: 15 May 2013
- Is slick trading pushing up oil prices?: 15 May 2013
By Guy Chazan: May 15, 2013
Big Oil is braced for a big backlash, as the industry faces what could be its own Libor moment.
“…the allegations sparked a political firestorm…
Royal Dutch Shell Plc (RDSA) may export U.S. natural gas in liquid form, convert it into chemicals or build a gas-to-liquids plant to produce fuel, said the company’s country chairman for Dubai and the northern emirates.
Shell is considering the possibilities, and “it is too soon to say which of these options will go ahead or the precise timings,” Mounir Bouaziz said in an e-mail.
Shell as well as other international oil companies such as Exxon Mobil Corp and BP Plc (BP/) seek to profit from US gas reserves, which rose 70 percent in the 10 years ended 2011 amid a surge in output from shale. A rise in domestic production contributed to a 64 percent drop in prices in the past five years.
Shell and Kinder Morgan Inc. announced their intention to form a company to export liquefied natural gas from a site in Georgia, joining more than 20 other companies seeking to export the fuel. A US-based gas-to-liquids plant may convert the fuel into jet fuel, diesel and naphtha. Shell built and operates the world’s biggest GTL plant in Qatar.
Shell is currently exploring for oil and gas in Turkey through four ventures, including one to explore deep water off the Black Sea coast, Bouaziz said. The company is also involved in projects to extract oil from shale rock in Turkey, he said.
To contact the editor responsible for this story: Will Kennedy at firstname.lastname@example.org
Oil price fixers should face prison, says Cameron: ‘Rigging’ might have cost every household £2,000
Oil giants Shell and BP accused of fixing prices for more than a decade. PM said allegations ‘hugely concerning’ and threatens to prosecute bosses. Experts believe scandal could have cost consumers thousands at the pump
By Rob Davies and Jason Groves: PUBLISHED: 23:36, 15 May 2013 | UPDATED: 07:42, 16 May 2013
Oil traders at Shell and BP should face prison if it is proved they conspired to fix prices, David Cameron said last night.
The Prime Minister made no attempt to disguise his anger as both of Britain’s oil giants were named among several firms accused of fixing prices for more than a decade.
He said the allegations were ‘hugely concerning’ and that anyone held responsible would face ‘major consequences’ if the claims were proved true.
In a statement to Parliament, Ed Davey, Secretary of State for energy, said firms found guilty of price-fixing would ‘feel the full force of the law’ and could face ‘heavy fines’.
He told MPs: ‘If it turns out to be the case that hard-pressed consumers have been hit in the pocket by manipulation of the markets, the full force of the law should be down upon them.’
Experts suggested that price-fixing could have cost every UK household £2,000 by driving up prices at petrol pumps.
Law firm Stevens & Bolton based its figure on data for household budgets stretching back to 2002, when the price-fixing is alleged to have begun.
In January 2002, motorists paid an average of 75.3p per litre, compared to 133.35p per litre so far this month.
Gustaf Duhs, head of competition law at the firm, said it was ‘reasonable’ to assume that cartels push up prices by 20 per cent.
He also predicted that oil firms found guilty of collusion to fix prices could face huge legal bills. ‘It wouldn’t be unrealistic to say that there could be hundreds of millions on the line,’ said Mr Duhs.
Speaking in New York, Mr Cameron said: ‘There is obviously the full force of the law available… so let’s let the investigators do their work. If this has been happening it is very, very serious and major consequences will follow.’
Mr Cameron initially said suspects could be prosecuted under a new offence brought in this year after the Libor interest rate scandal, which carries a maximum seven-year jail term.
But Downing Street later issued an embarrassing clarification that the offence does not cover the oil industry and cannot be imposed retrospectively.
Mr Cameron said he would reserve judgment on the role of the Office of Fair Trading (OFT), which has been accused of being asleep at the wheel.
‘The OFT is involved in this investigation but we have to get to the bottom of what happened first before I think we can pass judgment on the way regulators have worked in the UK,’ he said.
But Conservative MP Robert Halfon, a long-time campaigner against high fuel prices, lambasted the OFT over its inquiry this year into oil markets. It concluded that ‘competition is working well’ and said fuel price rises were due to ‘increases in tax and the cost of crude oil’.
‘What really happened was the OFT carried out a limp-wristed, lettuce-like inquiry when they should have done a full 18-month inquiry into what has been going on,’ said Mr Halfon.
He called for windfall taxes on companies proved to have been involved in price-fixing, to help pay for a cut in fuel duty.
15 May 2013 Last updated at 13:54
David Cameron is extremely concerned by claims of price fixing by major oil companies, Downing Street has said.
The prime minister’s spokesman said it was “deeply worrying” if prices have been driven up for consumers.
Oil giants including BP and Shell are facing claims they have been fixing prices for more than a decade.
It follows a raid on the offices of BP, Royal Dutch Shell, and Norway’s Statoil by European anti-trust regulators.
The companies said they were co-operating with investigators.
In a Commons statement, Energy Secretary Ed Davey said the Office of Fair Trading (OFT) was working with European Commission investigators but stressed their inquiries were at a very early stage and urged MPs not to “jump the gun”.
But he promised the “full force of the law” would be brought down on the companies if the allegations were found to be true.
“This government is deeply concerned by any allegation that prices for consumers could have been artificially or unnecessarily driven up,” the Lib Dem cabinet minister told MPs.
“The UK government and regulators will provide any assistance necessary to the European investigators and we expect the companies concerned to fully comply with these investigations.”
He also defended the Office of Fair trading which found no evidence of price fixing when it carried out its own investigation into the petrol market last year.
Tory MP Robert Halfon, who has been campaigning for cuts to fuel duty and greater transparency, attacked the OFT’s inquiry as “limp-wristed and lettuce-like”.
Despite calls for a full probe into petrol pricing, amid claims of price fixing by a whistleblower, the regulator had failed to spot any of the allegations now being investigated by the EU, said Mr Halfon.
He called on the government to change the law so that people could be jailed “for fixing oil prices” and for any cash recovered in fines, if the companies are found guilty, to be returned to motorists.
Caroline Flint, responding for Labour, said the allegations “if true” were an example of “shocking behaviour in the oil market which should be dealt with strongly”.
She called on the OFT to re-open its investigation into the petrol market.
Mr Davey said the OFT was an “independent body, a strong body”, which has powers to determine its own investigations and the government could not interfere.
He rejected accusations of complacency from some MPs, saying the government had tightened up competition laws.
European Commission officials said its investigators made the “unannounced inspections” on Tuesday amid concerns that “the companies may have colluded in reporting distorted prices”.
It did not name the firms, and emphasised that the raids did not mean the companies were guilty of any charges.
But BP, Shell, and Statoil, and also the oil pricing agency Platts, confirmed that they were working with the authorities in their inquiries.
In a statement the European Commission said: “Even small distortions of assessed prices may have a huge impact on the prices of crude oil, refined oil products and biofuels purchases and sales, potentially harming final consumers,’”
As part of the investigation, the Commission said it was examining whether the companies may have prevented others from participating in the pricing process “with a view to distorting published prices”.
It added: “Any such behaviour, if established, may amount to violations of European antitrust rules that prohibit cartels and restrictive business practices and abuses of a dominant market position.”
SELECTION OF SHELL RELATED ARTICLE LINKS KINDLY SUPPLIED BY A REGULAR CONTRIBUTOR
IEA forecasts US to account for a third of new oil supplies: Financial Times-The outlook will influence businesses as diverse as major oil companies, including ExxonMobil and Royal Dutch Shell, big commodities traders …
Gas finds in east Mediterranean may change strategic balance: BBC News-”This will tremendously reduce our oil invoice and the cost of energy … They include giants such as ExxonMobil, Shell, Chevron and Total.
“You Were Robbed”: NBC4 I-Team Exposes New “Tricks and Tactics …: NBC Southern California-So what does Jiffy Lube, owned by Shell Oil, have to say about the alleged fraud uncovered by the I-Team at some of its stores? NBC4 offered …
Oil production to double by 2022: ERCB:Fort McMurray Today-Alberta’s Energy Resources Conservation Board is expecting oil production … specifically Suncor Energy, Syncrude Canada, CNRL and Shell.
Money Laundering and Art: Ever a New Twist: The Nonprofit Quarterly-… with some of the $78 million that the authorities say Mr. Rivkin got from defrauding oil companies like Shell, Exxon, and Mobil. Mr. Rivkin, who …
PD Editorial: Truth on the half shell in oyster debate: Santa Rosa Press Democrat-It also calls for opening up the Arctic National Wildlife Refuge in Alaska for gas and oil development and more offshore drilling.
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Statoil Raided by Competition Authorities in Oil Price Probe: Bloomberg-Shell, Europe’s biggest oil company, confirmed that Shell companies are “currently assisting” the European Commission in an inquiry into …
With Royal Dutch Shell, price fixing is not a matter of conjecture, but normal operating procedure. Its in the company DNA. Shell has a disgraceful history of price fixing/cartel activity stretching back over a century, including a cartel operated with its Nazi partner, I.G. Farben, found guilty of war crimes. Shell’s history of market manipulation, stretches back almost to its inception, including cartel participation, price fixing, fictitious trades, monopoly, securities fraud etc. Shell was a founding member of the “Seven Sisters“, the first global oil cartel.
By John Donovan
The news media is giving huge coverage of the EU investigation into alleged price-rigging by oil companies, including Shell and BP.
It remains to be seen whether Shell is guilty on this occasion.
Is Shell capable of such skulduggery? The answer is yes.
With Royal Dutch Shell, price fixing is not a matter of conjecture, but normal operating procedure. Its in the company DNA. Shell has a disgraceful history of price fixing/cartel activity stretching back over a century, including a cartel operated with its Nazi partner, I.G. Farben, found guilty of war crimes.
Winston Churchill attacked Shell for secret oil price rigging. Even if not well founded at that time, Churchill’s instinct was bang on.
Shell’s history of market manipulation, stretches back almost to its inception, including cartel participation, price fixing, fictitious trades, monopoly, securities fraud etc. Shell was a founding member of the “Seven Sisters“, the first global oil cartel.
The Royal Dutch Shell Group was built on price-fixing.
Some more recent examples.
May 20 (Bloomberg) — Cooper Tire & Rubber Co., the second- largest U.S. tiremaker, and 25 other companies sued Unipetrol AS, units of Royal Dutch Shell Plc, Bayer AG, and as many as 20 others over an alleged rubber cartel in Europe.
Unipetrol and units of Shell, Dow Chemical Co., Eni SpA and Trade-Stomil Sp were fined a total of 519 million euros ($813 million) in a 2006 European Union antitrust case over material used to make tires and shoes. The companies are appealing.
Reuters: EU fines “paraffin mafia” wax makers’ cartel: 1 October 2008
The Times: ‘Paraffin mafia’ comes unstuck after €676m fines: 2 October 2008
Financial Times: Brussels fines paraffin wax cartel: 2 October 2008
The Wall Street Journal: Wax Price-Fixing Is Alleged: 2 October 2008
ChannelNewsAsia: Greece fines BP, Shell for price-fixing: 26 November 2008
Bloomberg: Chevron, Total, Exxon, Shell Fined on Air France Fuel: price fixing cartel: 4 Dec 2008 (Exxon Mobil Corp., Royal Dutch Shell PLC, Chevron fined 41.1 million euros ($52 million) by the French antitrust authority for fixing the price of fuel for certain Air France-KLM Group flights.)
Shell, Dow lose court challenge to EU antitrust fine: 13 July 2011: Reuters
…the Court upheld the 160.88 million euro fine on the Royal Dutch Shell group.
Shell settles South Africa cartel case: 21 February 2012