Posts from ‘October, 2009’

The Sunday Times

November 1, 2009

The era of the oil industry mega merger is over, according to the chief executive of BP.

Tony Hayward said that there is “no industrial logic at all” to the type of big-ticket takeovers that transformed the industry a decade ago. The industry will be defined instead by partnerships between the big companies and the new generation of state-owned rivals and governments of resource-rich countries.

“We need access to new resources and we need access to new customers. Combining with another oil giant gives us neither,” he said in an interview with The Sunday Times.

The industry is grappling with the decline in the West’s oil demand and the crash in the price from last year’s historic highs. Oil companies have launched cost-cutting programmes and speculation has increased that the industry is poised for consolidations like those that combined BP and Amoco, Exxon and Mobil, and Chevron and Texaco.

Hayward said the time for such deals had passed. “There is no industrial logic for it at all. If you put ourselves and Shell together you don’t add to the resource base,” he said.

Instead, he is repositioning the company to take advantage of new markets in the east. BP has begun talks with Petrochina and Sinopec on the possibility of building a $7 billion (£4.2 billion) refinery in China, which would be one of the few for a large western oil group.

“We have been pretty public about building our position in China. The thing that we are missing is a refinery and we are talking with the Chinese about opportunities to work with them to build one,” he said.

“We would end up with less than a 50% share in it and it’s got to be made in three or four years.”

BP has also partnered with China National Petroleum Company in Iraq. On Tuesday they will sign the first big oilfield development contract there since the industry was nationalised in the 1970s. The Rumaila field accounts for half of Iraq’s production.

Hayward said he was “very, very confident” that BP could maintain the dividend payment as he continues to squeeze costs and slim down operations.

He believes the long price of oil per barrel will hover between $60 and $90. BP is also centralising its exploration and production business in Houston.

• BP fined $87m for Texas safety lapses

• Big shot of the week: Tony Hayward of BP

• Deficiencies at all levels of BP caused refinery disaster, says US regulator

SUNDAY TIMES ARTICLE

LONDON (Dow Jones)–The Norwegian Petroleum Directorate Friday said a new well drilled at Ormen Lange indicates the gas field’s resources could be lower than previously hoped.

BP was dealt a bitter blow last night when American regulators fined the oil group a record $87 million (£53 million) for more than 700 safety violations at the Texas refinery where an explosion killed 15 people and injured 170 in 2005.

HOUSTON, Oct 30 (Reuters) – Motiva Enterprises (RDSa.L) expects to finish the 325,000 barrel per day expansion of its 285,000 bpd refinery in Port Arthur, Texas, in the first quarter of 2012, CEO Robert Pease said Friday.

“We are seeing this through to completion,” Pease told a refining conference. “If you haven’t planned on a 325,000-barrel expansion in refining capacity, then pencil this in for the first quarter of 2012.”

(Reporting by Erwin Seba; Editing by Walter Bagley)

Reuters Article

“A broader reorganization is now underway, and we expect a 10% headcount reduction in the redesigned divisions and functions, mostly in management and non-operational positions,” Simon Henry, Shell’s chief financial officer, said during a conference call yesterday. Henry said he cannot rule out further staff cuts in other divisions of the company.

Daily Mirror

By Clinton Manning 30/10/2009

Oil giant Shell is slashing 5,000 jobs after profits plunged 73%.

Uk staff are among those facing the chop as new boss Peter Voser imposes savage cuts.

Voser, just 121 days into the job, has already sacked 150 managers.

Now 15,000 staff in oil fields and head offices are being forced to reapply for their jobs, with rejects getting the boot by the end of the year.

Profits fell to £1.83-billion between July and September as it suffered from falling oil prices and the world recession.

But that didn’t stop BP announcing profits of £3bn earlier this week.

Richard Hunter of stockbrokers Hargreaves Lansdown said: “Shell had a mountain to climb after BP’s stellar performance, but these numbers leave it some way short of the summit.”

SOURCE ARTICLE

From a Shell Insider

Email sent today to all Shell Stanlow Refinery employees from Frank Willsdon (right), General Manager: Stanlow, UK

Subject: Stanlow Strategic Review Announcement

Dear colleagues,

Further to the townhall meeting and team briefings held earlier today, I can confirm that we are in negotiations with Essar for the potential sale of Stanlow, Heide and Harburg refineries. For the time being Shell will not be holding discussions with any third party other than Essar, although this does not guarantee a sale and it is too early for Shell to confirm a deal or comment on timescales.

Given this latest development in the strategic review, we are now going to establish a UK staff consultation forum in readiness for consultation.    The Consultation Forum is being established for employees who may be affected by the potential sale of the Stanlow refinery and associated local marketing businesses – this includes some employees who are only partially impacted and may not be included in any transfer.  Electoral Reform Services (ERS) will be administering the process of nomination and election of the forum representatives on our behalf and will be contacting you in the coming days.  Those employees covered by the Collective Bargaining agreement in Stanlow will not be required to elect representatives as they will be nominated from within the current Shop Stewards committee and will not therefore receive the email from ERS.

As previously stated, the review of Stanlow is to determine the best long-term ownership options for the Stanlow Refinery and associated local marketing businesses. Shell has an obligation to ensure best value is being achieved with all its assets and this involves talking with third parties from time to time. This is part of normal Shell portfolio activities and is consistent with Downstream’s strategy to concentrate our refining footprint.

We will endeavour to minimise this period of uncertainty. Continuing to deliver strong business results will position the refinery and associated local marketing businesses in the best possible situation, whatever decision is made.  As ever, safety remains the top priority.

You have my commitment to continue to update you on progress. If you have any questions regarding the review please address these to any of the Leadership Team or to me directly.  Additionally, the strategic review website remains an ongoing source of information with factsheets, Q&As and the opportunity to post new questions to be answered.

Regards,
Frank Willsdon

RELATED ARTICLES

Shell Stanlow workers offered for sale like slaves in public auction: 24 August 2009

Stanlow Refinery Workers Ready to Fight Shell: 10 Sept 2009

Shell: Talking To Essar About Sale Of German, UK Refineries: 30 OCTOBER 2009

LONDON (Dow Jones)–Royal Dutch Shell PLC (RDSB.LN) is in talks with Essar Group and no other company about its plans to sell two refineries in Germany and one in the U.K., a company spokesman said Friday.

The sale includes some local marketing operations, but not Shell’s retail operations, the spokesman said. No price or time frame for a potential sale has been agreed, he added.

Shell plans to sell the Heide and Harburg refineries in Germany and the Stanlow plant in the U.K. as part of its restructuring program aimed at increasing profitability and efficiency.

Company Web site: http://www.shell.com

-By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317; james.herron@dowjones.com

Shell says India’s Essar in talks to buy refineries Reuters 30 October 2009

About 20 civilians and two gardaí were hurt in the incident. The GSOC decision was referred to the Garda Commissioner last July. An ombudsman spokesman said yesterday it had not had notification on the outcome.

WASHINGTON — Staff at the Securities and Exchange Commission Friday issued new guidance on how the agency interprets oil and natural gas companies’ reserves accounting rules. The guidance, sought by industry for years, allows companies such as Royal Dutch Shell, ConocoPhillips and Chesapeake Energy Corp. to officially book major reserves that previously haven’t been permitted by the SEC.

As part of the plan, 15,000 Shell employees have to re-apply for a smaller pool of jobs, leaving many in limbo until selections are made.