Matthew Bigg and Jeremy Pelofsky: Thu May 20, 2010 7.36pm EDT

(Reuters) – The U.S. government Thursday accused energy giant BP of falling short in the information it has provided about the Gulf of Mexico oil spill, in a clear sign of Washington’s growing frustration with BP’s handling of the spiraling environmental disaster.

“In responding to this oil spill, it is critical that all actions be conducted in a transparent manner, with all data and information related to the spill readily available to the United States government and the American people,” Homeland Security Secretary Janet Napolitano and Environmental Protection Agency Administrator Lisa Jackson said in a letter.

The officials said in a letter to BP CEO Tony Hayward that despite claims by BP that it was striving to keep the public and the government informed, “those efforts, to date, have fallen short in both their scope and effectiveness.”

The statement followed allegations earlier in the day that BP had engaged in a “cover-up” about the extent of the damage and the amount of crude flowing unchecked from its ruptured well in the Gulf of Mexico.

TV images of oil sloshing into Louisiana’s marshes has underscored the gravity of the situation and raised public concern and anger about the unfolding catastrophe, keeping it high up on the political agenda in Washington.

BP shares closed up one percent Thursday but the markets have raked around $30 billion from its value in the month since the rig explosion, which killed 11 workers and sparked the disaster-in-the-making.

BP said Thursday it was siphoning 5,000 barrels (210,000 gallons/795,000 liters) per day of oil from the gusher, from 3,000 barrels a day previously.

“The oil plume escaping from the riser pipe has visibly declined today,” BP spokesman Mark Proegler said after the company announced that a mile-long tube was tapping into the larger of two leaks from the well.

However, live video feed of the leak, provided by BP, showed a black plume of crude oil still billowing out into the deep waters.

BP has been estimating the leak was flowing at a rate of 5,000 barrels per day, but scientists and the government have questioned that figure.

SKEPTICAL

Scientists analyzing video of the oil gushing from the seabed have pegged the spill’s volume at about 70,000 barrels (2.9 million gallons/11 million liters) per day.

“It’s just not working,” U.S. Senator Barbara Boxer, who heads the Senate Environment and Public Works Committee, told CNN as she watched the BP video. The California Democrat denounced a “cover-up” of the real size of the oil spill.

U.S. Representative Edward Markey, who requested the footage, was also unimpressed.

“BP has stonewalled on releasing the video for 23 days. … If you look at the video you can see plumes of oil spilling into the Gulf far in excess of 5,000 barrels per day,” he told reporters in Washington.

Proegler and other BP spokesmen made clear the increased containment, while an advance, was not siphoning all the escaping oil. “We’re not claiming that we stopped it — although that is our final objective. We’re saying that this is what we’re capturing now,” he said.

The U.S. government, grappling with a potentially huge environmental and economic disaster, also said Thursday it would not rely only on data provided by BP, but would make its own checks on the magnitude of the leak.

In other developments, the U.S. Environmental Protection Agency ordered BP to identify safer dispersants within 24 hours that can be used to contain the spill.

The EPA Thursday directed BP to begin using this safer dispersant within 72 hours. If BP can not identify an available alternative dispersant, the company must provide EPA and the Coast Guard with the reasons they believe no other dispersant meets required standards.

The use of dispersants, including those manufactured by Nalco Holding Co., at such high rates and at such deep levels has set off alarm bells with some environmentalists, who worry the chemicals may have a lasting negative impact.

‘BP’S MESS’

Sheets of heavy oil came ashore in Louisiana’s wetlands on Wednesday for the first time since the rig exploded a month ago. The marshes are nurseries for shrimp, oysters, crabs and fish that make Louisiana the top commercial seafood producer in the continental United States. Fishing is now banned in a large part of the Gulf waters because of the spill.

In Pass-a-Loutre, Louisiana, thick sheets of gooey brown oil swamped islands of marsh grass at the southern tip of a Mississippi River channel Thursday.

“To see the extent to which it is oiled and the depth into the island is stunning,” said Maura Wood of the National Wildlife Federation’s Coastal Louisiana Restoration Project.

The oil pollution covers only a fragment of the vast network of waterways, channels and islands that make up the Delta region, but environmentalists fear it is just the start.

“It’s going to take a long time for us to recover from BP’s mess,” boat captain Richard Blink said.

(Additional reporting by Anna Driver in Houston, Richard Cowan, Jeff Mason, Tabassum Zakaria,Vicki Allen in Washington, Tom Bergin in London and Tom Brown and Pascal Fletcher in Miami; Writing by Ed Stoddard and Jane Sutton; editing by Todd Eastham)

REUTERS ARTICLE

A view of a Shell oil both at the 11th international oil, gas and petrochemical exhibition in Tehran April 20, 2006. Credit: Reuters/Raheb Homavandi

(Reuters) – Royal Dutch Shell and other oil companies are taking less Iranian crude because of poor economics and the difficulty of making financial transactions with Tehran, industry sources said on Thursday.

The lower sales coincide with a build-up of Iranian crude in storage and a draft U.N. resolution to expand sanctions against the Islamic Republic — the world’s fifth largest oil exporter — over its nuclear work.

Sources said that the economics of Iranian crude have been undermined by the republic’s aggressive policy in setting monthly official selling prices for its customers. They have to pay in euros, which this week hit a four-year low against the dollar.

For several years, oil companies have been reducing their exposure to Iranian crude, particularly following sanctions designed to prevent banks backing Iranian transactions introduced in 2007.

“The Iranians have been quite ambitious in the way they have been setting their official selling prices especially with the difficulty experienced by most companies from a financial point of view just to transact with them,” said a source with a major oil company which buys Iranian crude.

“The combination of the two is making most of the players in the market reduce their positions with the Iranians.”

Iran on Wednesday dismissed the draft U.N. resolution to expand sanctions as lacking legitimacy. Historically, Tehran has found ways around sanctions aimed at hampering its oil trade and has said any sanction targeting its oil trade would be “ineffective.”

PRACTICALITIES

Another industry source said the practicalities of buying Iranian crude were challenging.

“We have to do the transaction in euros,” he said on condition of anonymity. “And we have to use a non-U.S. bank.”

Shell declined to comment on its trading strategy.

The two other European majors BP and Total, who also buy crude from Iran, also declined to comment.

The sources did not provide precise details of how much Iranian crude they are buying. As of 2008, Shell was the second-biggest European customer taking 100,000 barrels per day (bpd) while BP was among the smallest, buying 25,000 bpd.

For a factbox on Iran’s crude export and fuel import customers, please click on.

The United States does not purchase Iranian crude.

A source with a European oil refiner said his company was also buying less crude from Iran, reducing daily volume to as little as 20,000 bpd from as much as 80,000 bpd in 2008.

“It is not economical at all. They don’t follow reasonable pricing,” said the source, who asked not to be identified.

Weaker demand for Iranian crude has led to a build up of stocks held on very large crude carriers (VLCCs) and other tankers at sea to the highest since 2008.

“Current estimates indicate the country has 21 of its 29 VLCCs on storage as crude output rose in April, but threat of sanctions and poor sales terms has left much of it unsold,” leading shipbroker SSY said in a report this week.

(Additional reporting by Chris Baldwin; Writing by Alex Lawler; Editing by Keiron Henderson)

REUTERS ARTICLE

BP’s Endicott oil and gas facility at the edge of the Beaufort Sea. Shell Oil wants to drill dozens of miles offshore in federal waters.

THE NEW YORK TIMES

A version of this article appeared in print on May 20, 2010, on page A18 of the New York edition

By WILLIAM YARDLEY

A proposal to drill for oil in the Arctic Ocean as early as this summer received initial permits from the Minerals Management Service office in Alaska at the same time federal auditors were questioning the office about its environmental review process.

AN EMAIL TO BILL O’REILLY AT FOX NEWS

Hello Bill

In March 2007, I sent you an email on the subject of Shell’s treachery in Iran.

Two years later, as a result of Shell internal documents obtained from the oil giant under UK freedom of information laws, I discovered that my email to you had sent Shell media and its lawyers into a frenzy.

HOW SHELL PLANNED TO DECEIVE BILL O’REILLY OF FOX NEWS

Today, The Wall Street Journal published an article - “Oil Trade With Iran Thrives, Discreetly“.

Apparently American drivers are unknowingly purchasing Shell gasoline refined from crude oil covertly sourced from the fanatical Iranian regime responsible for supplying  the roadside bombs killing US and UK soldiers.

You may wish to investigate?

Regards

John Donovan

“One tanker industry executive speculated that Shell might want to disguise its Iranian purchases so as not to suggest that the gasoline it sells in the U.S. is refined from Iranian oil, which would violate U.S. law.”

THE WALL STREET JOURNAL

By STEVE STECKLOW, SPENCER SWARTZ and MARGARET COKER

FUJAIRAH, United Arab Emirates—An oil tanker named Front Page, chartered by Royal Dutch Shell PLC, left this port on March 17 and reported it was going to another U.A.E. port, then on to Saudi Arabia, ship-tracking data show.

But the tracking information reveals that Front Page also made an unreported stop—to the coast of Iran. There it loaded Iranian oil, according to records obtained by oil traders and shipping sources.

The incident, some oil-industry experts say, is an example of how some companies these days are hiding their business dealings with Iran, even when they are perfectly legal because they aren’t subject to any sanctions.

Another oil tanker that stopped in Iran in March, which oil traders say was chartered by Total SA of France, turned off its tracking transponder throughout the visit, according to ship-tracking data.

Spokesmen for Shell and Total declined to comment.

None of the current sanctions proposals in the United Nations or the U.S.—including the latest ones agreed to this week by the U.S., Russia and China—would target Iran’s oil-export business, which generates about half of its government revenues. Doing so, experts say, likely would drive up the commodity’s price world-wide and result in higher gasoline prices in the U.S., of as much as $1 more a gallon, even though the U.S. doesn’t import any Iranian oil.

U.S. officials also fear that targeting Iranian crude could wreak havoc on the recession-ravaged economies of allies like Japan, which last year imported about 421,000 barrels of Iranian crude a day, just behind China and India.

As a result, companies like Shell and BP PLC continue to do a brisk business buying Iranian oil products. BP declined to comment

“Everyone buys from the Iranians—governments, states, other companies,” says Mark Ware, a spokesman for Vitol Group, an energy-trading company that continues to deal in Iranian crude and is one of the few companies willing to talk about it. “It’s not subject to any legislation.”

Still, given all the controversy over Iran’s nuclear program, many companies decline to discuss their Iranian oil purchases.

Companies like Shell and BP have said they have stopped selling gasoline to Iran. But they rarely mention that they continue to buy crude or other Iranian oil products, which generally is a much larger and more lucrative business than gasoline deliveries.

Iran only imports about 100,000 barrels of gasoline a day. The country currently exports about 2 million barrels of oil a day—down from about 2.6 million in 2008.

“It’s something they [companies] just don’t want to advertise because of the stigma,” says Lucian Pugliaresi, president of Energy Policy Research Foundation, Inc., an industry and government-funded research organization in Washington.

One tanker industry executive speculated that Shell might want to disguise its Iranian purchases so as not to suggest that the gasoline it sells in the U.S. is refined from Iranian oil, which would violate U.S. law.

Shell is one of the biggest oil-product sellers in the U.S. According to its 2009 annual report, Shell sold 1.33 million barrels a day of gasoline, diesel and other fuel products there. There is no evidence that any of Shell’s U.S. products are sourced from Iran.

The information involving the Shell and Total-chartered tankers was obtained from ship-tracking data supplied by IHS Fairplay, a British provider of maritime information to the global shipping industry, and other records.

Given the proprietary and secretive nature of the business, it remains unclear how often oil companies try to conceal their trips to Iran, and whether they do it in part because of safety considerations.

The United Nation’s International Maritime Organization says a ship’s tracking transponder “should always be in operation” unless it would jeopardize a vessel’s safety, such as in waters frequented by pirates.

According to records at the port of Fujairah in the U.A.E., which services about 80 tankers a day, Front Page arrived on March 16 and left the next day. Like all large ships, the tanker is required under an international convention to operate electronic equipment known as an Automatic Identification System that broadcasts information about its location, destination and other data. According to the regulations, the destination is “to be manually entered at the start of the voyage and kept up to date as necessary.”

Data from the ship’s AIS equipment picked up by satellites show the tanker listed its next destination as Jebel Dhanna, another U.A.E. port. It arrived there on March 18 and spent the night.

For the next four days, it continued to report its destination as Jebel Dhanna. But on March 19, it left the port, crossed the Persian Gulf and, on March 20, anchored off the Iranian coast near Asalouyeh, the site of an oil-and-gas development zone, according to its position coordinates. The tanker remained there for the next two days.

According to records obtained by oil traders and shipping sources, Front Page loaded an unknown quantity of an Iranian oil product called South Pars condensate, or light crude, which can be refined into gasoline.

The vessel reported that the water line of its hull dropped three meters by the time it left on March 22, further evidence that it took on cargo.

As it left the coast of Iran, AIS data show Front Page changed its destination to Ras Tanurah, a major oil port in Saudi Arabia. It arrived there on March 23.

An official with Frontline Ltd., a Bermuda-based company that charters the tanker to Shell, declined to comment.

In the case of the Total-chartered vessel, an Iranian-owned tanker named Saveh, AIS data show it reported its destination as Kharg Island, an Iranian oil-export terminal, on Feb. 28. But the satellites stopped picking up signals from the ship from the afternoon of March 1 to the morning of March 3.

According to records obtained by oil traders and shipping sources, on March 2, during the AIS blackout, Saveh loaded 100,000 metric tons of Iranian light crude oil and 34,000 metric tons of Iranian heavy crude oil.

An official with National Iranian Tanker Co., which owns Saveh and charters it to international companies, said, “It’s a profitable and legal business.”

Write to Steve Stecklow at steve.stecklow@wsj.com, Spencer Swartz atspencer.swartz@dowjones.com and Margaret Coker at margaret.coker@wsj.com

WSJ ARTICLE

“The biggest deficit contribution was made by oil group Royal Dutch Shell, which handed £2.7bn to its pension scheme.”

ROADSIDE RETAIL

The maintenance of a good corporate reputation in today’s febrile multimedia age is no easy task – not least because the needs of a company’s various stakeholders are all too often contradictory. Investors may seek cost efficiencies which boost earnings and dividends whilst employees seek job security. The need to boost the resource base, especially for oil and gas companies, will often conflict with the needs of local communities and environmentalists. And in some industries, like tobacco, the very nature of the business activity itself can be hard to defend and virtually incapable of being painted in a positive light. So does that mean that there are no firm guidelines that can be established to help companies manage their reputation – is it all too difficult? This article will argue that the reverse is the case – so long as companies understand that brand management and reputation management are the same thing – and so long as they have an imperative to integrate what they say with what they do – and then tell the truth. And as long as they have the confidence not to have their reputation management decisions taken by lawyers!

Let’s start with the key premise that there is really no difference between a company’s corporate brand and its reputation. This is not semantics – the need to understand this principle is an essential condition before we can go on to put a reputation management plan together. But first lets clarify what we mean by corporate identity or brand. In a company like Unilever the corporate brand is the company name and it is the multitude of product brands that comprise the consumer offer. Lipton and Lux and Persil stand alone as distinctive brands and although there is some measure of endorsement from the Unilever parent brand this is not crucial to the product brands’ success. When Unilever experienced some problems with the reformulation of their Persil brand back in the 1990s it did little harm to their corporate brand or to their business performance. It was a costly error – but it was confined to one product line – albeit an important one.

Contrast this with the now largely forgotten furore over Formula Shell back in the 1980s. Formula Shell was launched as being the “first new petrol for fifteen years” and the advertising made extravagant performance claims. However within months of the launch it emerged that in certain vehicles and in certain circumstances the additives in Formula Shell could actually damage a car’s engine. In this case there was no possibility of distancing the brand of the corporation from the product brand – they were the same. The revelation that Shell, a company previously believed to be highly technologically advanced, could make such an error damaged Shell’s reputation – and not just in respect of product formulations.

In the petroleum sector most companies, and all the multinationals, manage what Wally Olins calls a “Monolithic” brand structure – essentially their corporate identity runs as an identifier through the whole of their vertically integrated business from wellhead to the petrol station. There are some exceptions to this (BP has kept the brand integrity of its Castrol lubricants subsidiary for example) but in the main the monolithic structure prevails. The implications for the company in respect of brand and reputation management are both positive and negative – and need to be understood. On the plus side is the endorsement that the corporate name can give to new products and new ventures. Shell’s latest differentiated petrol product Shell V-Power is very definitely a Shell endorsed sub-brand for example – just as Formula Shell once was. On the other hand Shell’s overtly corporately branded and largely unsuccessful moves into some renewable energy areas such as “Shell Forestry” and “Shell Solar” were ill advised – at least with hindsight. There was never a satisfactory corporate fit for Shell to be in these businesses and the internal will to make them work never existed. These failures damaged Shell’s overall reputation and credibility – something that might not have happened had a less Shell-branded option been pursued. The other real risk for monolithically branded corporations is of course the collateral damage that can be done when one part of the business fails or under-performs – or is perceived to have done so. In Ireland Shell’s difficulties with its large Exploration and Production project Corrib in County Mayo led to protests from the local community and from environmental activists – including on the wholly separately managed and unconnected Shell-branded petrol station business. This brings us to BP’s brand challenge in the light of the Deepwater Horizon rig disaster.

The Deepwater Horizon tragedy, in which a dozen workers lost their lives and which is causing major environmental damage, will no doubt become a reputation management case study in years to come. If ever there was a case of the need to manage perceptions this is one. The facts of the case will no doubt eventually emerge after the investigative enquiries are completed. But few would disagree that the public perception is one of corporate failure both in respect of the fact that the accident happened at all and in respect of the unedifying initial blame shifting between the various parties involved: BP – the commissioner of the rig, Transocean, its owner and operator and Halliburton who provided, on a sub-contracting basis, some of the rig-based services. It is also necessary in this case, as in so many others, to point the finger at the legal elephant traps that lie in the way of open and truthful disclosure. If BP had acknowledged right from the start what most observers, including the US President, believed – that they, BP, were ultimately responsible for the disaster and its consequences – then the legal penalties could have been punitive. They may still be of course but there is little doubt that as in so many of such cases in modern times the dead hand of the lawyers can be seen to have played a disproportionately strong part. To BP’s credit, current communications at the time of writing this article regarding Deepwater Horizon seem straightforward and truthful.

After Shell’s scandalous failure to disclose the truth about their hydrocarbon reserves back in 2004 there is no doubt that virtually no moves are made, and certainly no significant public statements are issued, by the company without the lawyers being central to the process. If you look at Shell’s most recent Annual Reports, for example, you will see a document full to the brim with obfuscating legalese – the contrast with the far more open and self-confident Reports of ten or fifteen years ago is marked.

So for a monolithic brand like Shell or BP there is no escaping the fact that problems in one part of the business can damage brand approval in other substantially unconnected parts of the company. Look, for example, at this report from the Daily Mail last year when BP’s profits fell. The illustration is of a customer in a petrol station – but in truth BP’s retail business had virtually no impact on the profit fall. The problem is that Roadside Retail, for the oil companies with downstream businesses like Shell or BP, is the most visible manifestation of their monolithic corporate brand. And the media will always illustrate stories about almost anything to do with the company with images from a branded petrol station.

In Roadside Retail it is not just the monolithic oil majors who operate in a brand environment in which their Corporate Identity is synonymous with their retailing brand. The same applies to the ever more important hypermarket and supermarket operators – but in these cases the coalescence of brand and reputation is nearly always a benefit. Although on the face of it for Tesco to run a network of petrol stations, previously the preserve of the oil companies, may have initially seemed curious in fact there was an inescapable and consumer-driven logic to the move. The Tesco corporate brand conferred a high degree of respectability – their reputation as a professional company was high. And their retail brand (synonymous, of course, with the corporate brand) was almost unchallenged in their sector. So for Tesco to offer fuels and lubricants on forecourts was credible not because they were an oil company but because they were a multiproduct retailer. Of course they had to understand the special mechanics of running petrol stations – but that was not a problem. And the corporate brand conferred reasons to believe and reasons to prefer from the start.

One of the reasons that reputation management has proved difficult for so many huge corporations is that it is all too often seen as being the same thing as lobbying and PR – especially in the United States. PR is often perceived as being at best just providing a positive gloss on reality, whilst ignoring harder truths, whilst at worst it can be characterised as systematic lying. I would argue that in the same way consumers see through false brand promises stakeholders soon see through mendacious PR and misguided attempts to built reputations through selective and slanted corporate advertising. To build a positive reputation companies must above all do the right things in the right way. Where health and safety is concerned there is no alternative but always to go the extra mile and if a project becomes marginal as a result they must have the courage to walk away. If good behaviour on HSE (etc.) is inculcated into corporate behaviour throughout the company then risks will be reduced substantially. And if the operational risks are reduced then potential damage to corporate reputation is reduced as well. Finally it is essential that reputation management plans, especially when it comes to corporate communications and other stakeholder engagement, tell the truth. The challenge is not to present the company in a positive light and to ignore the negatives. It is to present the company in a positive light because there is a positive story to tell – that it’s not just PR hype but that you really can say that everywhere it operates the company “walks the talk”.

Paddy Briggs

May 2010

© Minale Tattersfield

SOURCE ARTICLE

May 19, 2010

China’s biggest energy company has agreed to take a stake in Royal Dutch Shell’s oil and gas unit in Syria in a deal estimated to be worth $1.5 billion (£1 billion).

China National Petroleum Corporation (CNPC) has acquired a 35 per cent interest in Syria Shell Petroleum Development.

Shell has been eager to foster closer links with China, the world’s second-biggest oil consumer after America, and to team up in exploring and producing in the Middle East.

Shell signed a 30-year deal with CNPC on Sunday for joint gas exploration and production in Qatar.

A statement on Shell’s website said: “The agreement strengthens the partnership between Shell and CNPC. Both parties will look to continue growing and investing in attractive opportunities in Syria’s upstream industry.”

The stake could be worth about $1.5 billion if CNPC gets a third of Shell’s 23,000 barrel-a-day output over 20 years, said Gordon Kwan, head of energy research at Mirae Asset Securities.

“This is not a lot of oil and gas for a company like CNPC, which is producing about 2.5 million barrels a day,” Mr Kwan said. “It’s a chance to further develop co-operation with Shell in ventures overseas and to also increase its presence in Syria and the Middle East.”

Chinese companies spent a record $32 billion on mining and energy acquisitions last year, securing oilfields, coal and metal mines in Africa, Asia and Australia to meet demand in the world’s fastest-growing major economy.

TIMES ARTICLE