By Sheila McNulty in Houston: Published: October 31 2006 02:00 | Last updated: October 31 2006 02:00

BP knew it had “significant safety problems” at its Texas City refinery and 34 other locations around the world well before last year’s deadly explosion at the Texas plant, US investigators said in a damning report yesterday.

The US Chemical Safety Board also said cost-cutting helped compromise safety at the Texas refinery, BP’s biggest, where a March 2005 blast killed 15 and injured 500 people in the worst US industrial accident in more than a decade.

“The CSB’s investigation shows that BP’s global management was aware of problems with maintenance, spending and infrastructure well before March 2005,” said Carolyn Merritt, CSB chairwoman. She said BP did make some safety improvements, though it focused on improving procedural compliance and reducing occupational injury rates, “while catastrophic safety risks remained”.

“Unsafe and antiquated equipment designs were left in place, and unacceptable deficiencies in preventative maintenance were tolerated,” she said.

Ms Merritt said stringent budget cuts throughout BP caused a progressive deterioration of safety at the Texas City refinery. “At an ageing facility like Texas City, it is not responsible to cut budgets related to safety and maintenance without thoroughly examining the impact on the risk of a catastrophic accident.”

The CSB said a 2004 internal audit of 35 BP business units, including Texas City, found significant common gaps, including a lack of leadership competence, pointing to “systematic underlying issues”, widespread tolerance of non-compliance with basic safety rules, and poor implementation and monitoring of safety management systems and processes.

The board’s report comes a week before the first civil trial to arise from the explosion and is likely to lead the UK company to step up negotiations to settle the case, as it has in most of the 1,000 or so others that have followed the blast. The CSB report is likely be used by the federal grand jury investigating whether to bring criminal charges against BP and its executives for the Texas explosion.

Ronnie Chappell, BP spokesman, said: “BP agrees with CSB that the March 23 2005 explosion and fire was a preventable tragedy. However, we do not understand the basis for some of the comments made by the CSB.”

Mr Chappell said the BP Texas City fatal accident investigation team did not identify previous budget decisions or lack of expenditure as a critical factor, or immediate cause of the accident. Indeed, he said, maintenance spending had increased40 per cent over the previous five years and was higher than the industry average per barrel of throughput.

BP has been under heightened congressional and regulatory scrutiny by regulators, Congress and the US Department of Justice following the Texas explosion and subsequent closure of half the company’s BP’s Alaskan oilfield due to severe corrosion.

Copyright The Financial Times Limited 2006

8.40am Wednesday November 1, 2006
 
Oil fell below US$58 a barrel on Tuesday, deepening sharp losses from the previous session on easing tensions in Nigeria, ample US fuel stocks and lingering doubts over Opec output cuts.
 
US light crude fell 78 cents to US$57.58 a barrel by 1812 GMT, after trading down to US$57.05 earlier, the lowest level since Oct. 20. The drop followed losses of US$2.39, nearly 4 per cent, on Monday. Brent crude traded 83 cents lower to US$57.85.
 
Traders waited to see if Opec producers will adhere to an agreement to cut 1.2 million barrels per day from Wednesday.
 
“The dominant speculative sentiment remains overwhelmingly bearish,” Barclays Capital said. “Those on the short side who are expecting global economic weakness … and weak Opec cohesion are unlikely to change those core views in a hurry.”
 
Saudi Arabia, the world’s largest oil exporter, and the United Arab Emirates have told customers of supply cuts, but other Opec members such as Kuwait and Libya have yet to do so.
 
But Nigeria, which was the first to instigate the voluntary cuts, was expected to raise oil exports in December. Easing tensions in the Opec nation also added to bearish sentiment.
 
Western oil companies in Nigeria were free to resume production of 62,000 bpd at four oil pumping stations after striking a deal with protesters late on Monday. Villagers invaded the stations last Wednesday demanding contracts from the operators, Royal Dutch Shell and Chevron .
 
But as one problem subsided, another dispute was brewing.
 
Nigerian unions threatened to shut all oil fields operated by Italian oil company Agip, which produces 200,000 bpd in the country, unless it paid staff a security bonus. Attacks have cut Nigerian output by 500,000 bpd since February.
 
Analysts also attributed oil’s decline to slowing US economic growth and swelling fuel stocks.
 
“The US macro picture is the big elephant in the room, and left to grow could single-handedly sink many of the commodity bull markets that are still in place,” Man Financial said.
 
Oil’s 26 per cent slide since mid-July’s peak of US$78.40 has prompted funds to shift their money into other commodities in search of better returns. Gold prices hit a seven-week high and zinc in London touched a record on Monday.
 
US crude supplies were expected to have risen 2.6 million barrels last week, analysts said in a preliminary Reuters poll ahead of Wednesday’s inventory data.
 
Domestic distillate stocks, which include heating oil, were seen falling 1.3 million barrels, while petrol fell 1 million barrels.
 
- REUTERS

Vanguard (Lagos)
NEWS
October 31, 2006
Posted to the web October 31, 2006

By Hector Igbikiowubo With Agency Report

THE Niger Delta has been impacted by 1.5 million tons of crude oil spill over the last 50 years threatening rare species including primate fish, turtles, bird and damaging crops while destroying the livelihood of many of the 20 million people living there and fuelling the upsurge in violence.

Experts have also listed the Niger Delta among the five most polluted spots on the face of the earth with dire consequences for the health of inhabitants of the area.

This was disclosed by a panel of independent experts who travelled to the increasingly tense and lawless region.

The experts who were representatives of World Wildlife Foundation (WW) UK, the World Conservation Union and representatives from the Federal Capital Territory, Abuja and the Nigeria Conservation Foundation drew the conclusion in a report they compiled.

They pointed out that far from benefitting local people, rural communities have bore the brunt of the environmental and social costs of development.

The Delta is home to 7,000sq km of the continent’s remaining 9,000sq km of mangrove and scientists believe some 60 per cent of West Africa’s fish stocks breed in the rivers and swamps along the coast.

In Oloibori, the first oil village where drilling began in 1958, youth unemployment is now running at 50 per cent.

The cost of the leaking crude, much of it from outdated equipment and pipes, is estimated to be costing Nigeria $10m (£5.3m) a day.

The report concluded that the impact of oil and gas drilling was a “significant contributor to the current violence, sabotage of pipelines/installations and instability in the region.”

Villagers protesting against oil production in the region weekend, stormed and seized three Shell oil platforms, forcing the closure of each pumping station. This week, four Scottish oil workers returned to Britain after being seized from an Exxon Mobil compound by local gunmen seeking a £21m ransom.

And earlier this year, 17 people were killed when local militants stormed a Royal Dutch Shell facility, prompting the oil giant to pull out hundreds of workers and close down wells.

Shell is one of the biggest players in the region and one of the most heavily criticised. Its role came under the international spotlight following the execution of the playwright turned minority rights activist Ken Saro-Wiwa in 1995 by the then military dictatorship. Last year the company, which boasted profits of $22.94bn (£13.12bn), extracted 900,000 barrels of crude oil a day from its activities in the Niger Delta.

Environmentalists accuse the company of failing to meet promises to replace ageing pipes and swamp flowlines that, it is claimed, are steadily leaking oil into the once pristine waters of the delta. Shell estimates that 95 per cent of discharges over the past five years have been caused by sabotage.

But a spokeswoman for the company insisted that the oil giant was meeting its commitments and continuously monitoring equipment, although continuing violence meant it could not meet all its targets.

“We have a programme in place to replace flowlines and pipelines in swamp areas and on land and we continue to make good progress.

“Unfortunately, we have little or no access to some land areas, such as Ogoni, and therefore are unable so far to complete the programme of replacement in such areas,” she said.

The authors found sites at Kidaro Creek and Rivers State where oil products had been buried. Old drilling equipment in other areas, officially thought to have been cleared up, was discovered to be still leaching oil into the environment.

The report accused the oil companies of “double standards” by using technologies not in line with more advanced practices carried out elsewhere in the world.

It called for international action to implement an immediate rescue plan, backed by the oil and gas industries which have exploited the region for up to half a century

Copyright © 2006 Vanguard. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). 

20:14 | 31/ 10/ 2006 

MOSCOW, October 31 (RIA Novosti) - The head of Russia’s Audit Chamber and the British ambassador to Russia held talks Tuesday to discuss Sakhalin II, a huge oil and gas project in Russia’s Far East led by British-Dutch oil major Shell.

The multibillion-dollar Sakhalin II project has been accused of inflicting large-scale damage to the ecosystem on Sakhalin, including illegal deforestation, the dumping of toxic waste, and soil erosion.

The Audit Chamber’s press service said that Sergei Stepashin had informed Anthony Brenton about the chamber’s inspections of the project.

The production-sharing agreement behind the Sakhalin II, which allows the project operator, Shell-controlled Sakhalin Energy, to comfortably recoup all its expenses before sharing any profits with the state, is hugely unpopular with Russia’s government.

The operator’s decision last year to double the project’s cost put off the date by which the government will receive its profit share.

Stepashin “informed the British diplomat of the results of Audit Chamber checks, which showed that the main problem is in the increase of planned expenses by 2010 to $22.2 billion as compared to $12.04 billion. He also said that this problem has no political aspect,” the Audit Chamber’s statement said.

At the talks, Stepashin also highlighted the environmental impact of the project, which has been the focus of attention of Russia’s environmental watchdog and Natural Resources Ministry.

Natural Resources Minister Yury Trutnev said last week that Sakhalin II could be suspended in some sections, and urged the project operator to submit plans to fix environmental violations.

Stepashin and Brenton agreed that the sides must cooperate to resolve contentious issues arising from the project’s production-sharing agreement, signed in 1994 when the oil price was much lower and Russia lacked the resources to engage in oil and gas projects of such a scale.

EXTRACT: UR’s board of trustees investment committee agreed earlier this month “to prohibit direct investments in companies identified as supporting the Sudanese government’s activities in Darfur,” according to its new policy. The policy comes with a list of 28 firms, such as Siemens AG, Royal Dutch Shell and Sudan Telecom, that UR no longer will invest in as part of the policy.

THE ARTICLE

University, citing Darfur, to steer clear of firms working there

Matthew Daneman
Staff writer

(October 31, 2006) — University of Rochester will no longer invest in companies that support the Sudanese government’s activities in the Darfur region.

With that step, UR joins a peppering of higher education institutions and state pension funds across the nation that have taken similar steps to divest from and ban any future investments in Sudan while internal civil war there continues.

The goal is “to try to bring whatever pressure we can on a situation that has been labeled uniformly as genocide,” said G. Robert Witmer Jr., chairman of UR’s board of trustees. “Anyone who sees what is occurring there has to be appalled.”

UR’s board of trustees investment committee agreed earlier this month “to prohibit direct investments in companies identified as supporting the Sudanese government’s activities in Darfur,” according to its new policy. The policy comes with a list of 28 firms, such as Siemens AG, Royal Dutch Shell and Sudan Telecom, that UR no longer will invest in as part of the policy.

UR has not had to shed any of its investments because of the new policy, Witmer said. “The university holds no direct investment in companies doing business in the Sudan, to our knowledge,” he said.

Higher education saw a similar divestment movement in the 1980s, as many schools got rid of their holdings of businesses operating in South Africa during apartheid. UR divested from South Africa in 1987.

According to the Washington-based Genocide Intervention Network’s Sudan Divestment Task Force, more than three dozen colleges and universities nationwide, from Harvard University to the University of Wisconsin system, have either enacted Sudan divestment policies or are considering them.

UR is apparently the only Rochester-area institution to have done so thus far.

Cornell University in August announced that its endowment assets would not be invested in any oil companies operating in Sudan and in obligations of the Sudanese government.

“It is the best way to stand up for the people of Darfur by refusing to invest in such companies that, in effect, provide the financial backing to the instigators of genocide,” Cornell President David Skorton said in a statement.

The United Nations estimates that at least 200,000 people have been killed and 2 million made homeless by fighting between government troops, government-backed militias and rebel forces. And the United States has labeled the Sudanese government-backed killings in the Darfur region “genocide.”

MDANEMAN@DemocratandChronicle.com

EXTRACT: Another project, Sakhalin-2, which is headed by Royal Dutch Shell, has run into ecological controversies that caused the Russian Natural Resources Ministry to suspend its environmental operating license in September… Russian Natural Resources Minister Yury Trutnev said on Sunday that an environmental probe of the Sakhalin-1 project has been delayed, while the ministry deals with the allegations of massive ecological violations on Sakhalin-2.

THE ARTICLE

Fred Weir
Moscow, October 31, 2006
 
India will permit Russian companies take stakes in Indian refineries in exchange for greater opportunities to invest in Russia’s oil and gas sector, Indian Petroleum Minister Murli Deora told his counterpart in Moscow on October 30.

“We’ve invited the Russian government to let Russian companies participate in downstream  projects in India,” Deora said after meeting with Industry and Energy Minister Viktor Khristenko.

He added that possibilities were being explored to inject Russian expertise and finance into the proposed Iran-Pakistan-India gas pipeline project as well.

India hopes for greater cooperation with Russia’s two state-owned gas and oil giants, Gazprom and Rosneft, he said.

One idea, which Deora said that India is proposing, is to create an Indian-Russian joint venture to explore and develop Russian oil and gas resources, along the same lines as a deal signed last week between Rosneft and China’s CNPC.

Under that deal, Rosneft will hold 51 per cent of the new company, called Vostok Energy, while CNPC will have a 49 per cent stake.

Specifically, India wants to get involved in the giant Sakhalin-3 oilfield, on Russia’s Pacific coast, which has yet to be offered to foreign partners.

India’s ONGC Videsh Ltd. already holds a 20 per cent stake, worth $ 2.2 billion, in the  huge Sakhalin-1 project, which began shipping oil in mid-October.

Another project, Sakhalin-2, which is headed by Royal Dutch Shell, has run into ecological controversies that caused the Russian Natural Resources Ministry to suspend its environmental operating license in September, but Deora insisted no such difficulties are facing Sakhalin-1.

Russian Natural Resources Minister Yury Trutnev said on Sunday that an environmental probe of the Sakhalin-1 project has been delayed, while the ministry deals with the allegations of massive ecological violations on Sakhalin-2.

“I don’t think we can work on two such large projects at the same time,” Trutnev  said.

Deora said he had not heard anything about any allegations of environmental problems on Sakhalin Island, and “can’t comment on something I’m unsure of”.

He added that he’s invited Khristenko to come to India in early December to join Prime  Minister Manmohan Singh for a special ceremony when the first oil tanker carrying oil from Sakhalin-1 arrives at the Indian terminal of Mangalore.

Deora was slated to meet chiefs of Gazprom and Rosneft in Moscow on October 31.