By John Donovan

Updated 18 July 2010

Why all the talk of an American predator devouring a fatally wounded BP?

Royal Dutch Shell and BP have a shared corporate culture that makes for a perfect fit.

For many decades Shell and BP traded as a single entity in the UK under the name of Shell-Mex & BP Limited.

Both have made extravagant claims in multimillion dollar global greenwash advertising campaigns about their lofty business ethics and undying commitment to the environment.

Both companies in reality have flouted environmental laws and regulations and as a consequence, inflicted terrible pollution that has ruined the lives of ordinary people e.g. Shell’s notorious track record in Nigeria and BP’s in the USA.

Both give a higher priority to production and profits than the safety of their workers. Shell’s “TFA” safety culture on North Sea platforms speaks for itself, as does BP’s in the Texas City explosion and the current disaster in the Gulf of Mexico.

Both companies were closely involved in Hakluyt, the commercial espionage firm in London which both companies used to target perceived enemies, such as NGO’s. Undercover operations were mounted on an international basis. BP and Royal Dutch Shell titled directors were also directors and major shareholders in Hakluyt. Sir Peter Holmes and Sir William Purves were the ultimate spymasters at Hakluyt. Sunday Times: MI6 ‘firm’ spied on green groups: 17 June 2001

Both companies were also jointly involved (up to their necks) in the Al Yamamah oil for arms scandal.

Both are implicated in the Libya oil deals scandal associated with the release of the Lockerbie bomber. Tony Blair in his then capacity as UK PM, wrote a letter to Libyan dictator Gaddafi which had been drafted by Shell.

The BP/Royal Dutch Shell joint venture company, British Pipeline Agency, has just been fined £780,000 (over $1 million USD) for its involvement in the “blast at Buncefield five years ago – Europe’s largest ever fire outside a war zone. It caused £1bn of damage, injured 43 people and forced 2,000 residents to be evacuated from their homes near the site in Hertfordshire.” (Information from Daily Telegraph article 16 July 2010

Despite the incompetence and gaffs, combined with disregard of ethical norms, some senior management figures in these companies have been rewarded by titles and untold riches e.g. Lord Browne of BP and the disgraced former Chairman of Royal Dutch Shell, the reserves fraudster, Sir Philip Watts. How long before Tony Hayward is knighted (or will it be a beheading).

Both companies “cull” thousands of experienced staff whenever there is an economic downturn, then end up having to hire high priced contractors to replace them when the economy revives.

Both companies have had some major problems with the Russians.

As can be seen, they already have so much in common. As I said, a perfect fit.

Comment by Wilt Staph 12 July 2010

Very good article. Not a lot to be added but you might also note the bias towards excessive top management remuneration and the malignant effect that has on transparency. Also the fact that both companies have useless and grossly over-rewarded non-executive directors. Note too that neither has a clue about, nor much interest in, their marketing segments (BP under Browne marginally better but Hayward wouldn’t know a customer if one landed on him from a great height). Shell and BP both once offered investors high yields and “safe” stocks. Ask institutional investors whether that applies any more?

Daily Telegraph

Total, the French energy giant, and four other companies must pay £9m in fines for safety violations that led to an oil depot explosion measuring 2.4 on the Richter scale.

By James Chapman and Nabila Ramdani
Last updated at 10:25 PM on 16th July 2010 Comments (203)

DAILY MAIL FRONT PAGE LEAD STORY SATURDAY 17 JULY 2010

EXTRACT: 2004: Prime Minister Tony Blair makes the first government visit to Libya since 1943. He offers the Colonel the ‘hand of friendship’. Big trade deals followed involving BP, Shell and BG Group.

Sunday, July 18, 2010

The Deepwater Horizon oil spill has been with us nearly three months, and the news just isn’t getting better. Even when there’s hope of a cleanup, an accident sends us back nearly to square one. The American public is incensed, the finger-pointing refuses to end, the U.S.-British “special relationship” is straining, an offshore moratorium is declared but overruled, and even as the blown-out gulf well was sealed Thursday, anxiety lingered about whether the cap would hold. It’s a mess in every sense of the word.

But this could be far worse. Imagine if BP were a state-owned oil company. Instead of reasoning with an incompetent chief executive, we’d be reasoning with a protectionist prime minister. Regarding BP, this is a thought experiment. But there are plenty of state-owned companies drilling in U.S. waters and abroad. The next oil spill could be more than just an economic and environmental crisis. It could be a diplomatic one.

As it is, the BP spill has caused tension between the United States and Britain. President Obama has been accused by British media and officials of xenophobia, waging a campaign of hate, and general “Brit-bashing.” British Prime Minister David Cameron, meanwhile, has been criticized for not taking a stronger stance in favor of BP. At a time when some are saying the “special relationship” is over, a tiff over BP isn’t exactly what the friendship needs.

Humor me and picture what would happen if BP were owned by the British government. We would be facing a situation in which a foreign government would be directly responsible for the ever-worsening spill on our domestic shores. The United States and Britain have had arguments before, and the nationalistic vitriol coming from both sides would be 10 times worse as issues of blame, recovery costs, national pride, domestic security, and economic competition are endlessly debated between leaders, economists, and cable pundits.

That’s still the rosy scenario, because at least Britain is an ally. There are plenty of countries that are not, and they happen to own their oil companies — Venezuela, China, Iran, and Russia being among the biggest. These petroleum-rich countries are placing more importance on their nationalized oil companies as a way to ensure a steady supply to guard against growing domestic demand and changing market conditions.

The oil industry is dominated by state-owned companies. Multinationals might have more name recognition with the public — ExxonMobil, Royal Dutch Shell, BP, Chevron — but they have full access to 6 percent of worldwide oil reserves. Eighty-eight percent of reserves are held by national oil companies, which also represent the majority of worldwide production. (It’s unknown the percentage of oil that state-owned companies get from outside their countries’ shores.) Companies such as Aramco, Petrobras, Sinopec and Pemex aren’t household names, but they will be as oil becomes scarcer and they can throw around their weight even more due to their dominance of existing oil reserves.

We’re already seeing potential hotspots, and the United States isn’t the only country that should be worried. Chevron and Rosneft (owned by the Russian government) will begin drilling in the Shatsky Ridge of the Black Sea at the end of 2011. The Black Sea is bordered by Russia, Georgia, Turkey, Bulgaria, Romania and Ukraine — countries that, to put it lightly, don’t always get along. Any substantial accident would be seen as a Russian oil company contaminating its oft-slighted neighbors. Cue the international crisis.

More potential trouble could happen in the South China Sea, where China-owned CNOOC continues to expand its operations. As many as 10 countries surround the South China Sea, and its importance as a major shipping zone and an area of ecological diversity cannot be overstated. It is already a geopolitical hotspot, and any disaster caused by a state-owned company might unravel any diplomatic progress being made.

Even the Gulf of Mexico might see trouble again. Brazil’s Petrobras drills in the gulf, and has been ramping up its operations in the area for several years. Brazil has relatively good relations with its neighbors in the Americas, but a Deepwater Horizon-style disaster could significantly change the political dynamics of the region.

It doesn’t have to be a blown offshore platform that changes everything. Accidents can happen at any point in the supply chain. A recent death at the Port Arthur, Tex., refinery (owned by Shell and Aramco) highlights the potential for more tension. A substantially destructive accident at any step of the oil extraction, refining or transportation process could stain relations as well.

If we can be sure of one thing in the aftermath of the BP spill, it’s that it won’t be the last. Countries have not used the BP oil spill to stop offshore development: Deepwater production is anticipated to increase by two-thirds within five years, and state-owned oil companies in general are poised to continue their strong growth.

Strides in renewable energy aren’t happening quickly enough to substantially reduce global demand of oil. That oil isn’t plentiful enough to be extracted as easily anymore, meaning companies are using more and more potentially dangerous methods to get at it. As BP has shown, danger can only be averted for so long.

Thompson-Westra is a research assistant at the Center for Strategic and International Studies in Washington. CSIS does not take specific policy positions, and the views expressed are the author’s own.

SOURCE ARTICLE

A Quebec court has extended an injunction on Royal Dutch Shell Plc’s plans to close its Montreal refinery in a partial victory for the plant’s union as it tries to save about 500 jobs.

The Montreal Gazette

The Shell refinery in Montreal East is slated to become a fuel-storage facility, resulting in the loss of about 500 jobs.
Photograph by: Marcos Townsend, Montreal Gazette

July 16 (Bloomberg) — OAO Gazprom and Royal Dutch Shell Plc’s Sakhalin-2 venture in Russia posted an unexpected profit last year after oil and liquefied natural gas shipments beat targets to offset losses from a delay in the project.

The partners had estimated a loss because a delay in the start of LNG output forced them to compensate customers for contracted volumes, two people familiar with the results said, declining to be identified in line with company policy. The Yuzhno-Sakhalinsk, Sakhalin Island-based venture doesn’t report financial results. Sakhalin is off Russia’s far eastern coast.

Sakhalin Energy loaded the first commercial LNG cargo in March 2009, a delay from a planned start in the second half of 2008. A total of 81 cargoes of LNG and 59 cargoes of oil were loaded, beating targets for the year by more than 47 percent and 11 percent, respectively.

The LNG plant has allowed Russia, the holder of the world’s biggest gas reserves, to break into Asia Pacific markets and 65 percent of the volume contracted for Japan. LNG is gas cooled to a liquid for transportation by ship.

Capex, Expenses

Sales reached $3.6 billion last year and the venture cut operating expenses to $1.56 billion and capital expenditure to $846 million from a planned $2 billion and $1.14 billion, respectively, according to the presentation.

Gazprom, the majority shareholder, declined to comment on the presentation as did Ivan Chernyakhovsky, a spokesman at Sakhalin Energy. Vera Surzhenko, a Shell spokeswoman in Russia, confirmed the venture posted a profit before interest and after taxes last year. She declined to provide figures or comment on the presentation.

The venture reached operational profitability last year, Shell Chief Executive Officer Peter Voser said in an interview with newspaper Vedomosti published yesterday.

The Sakhalin-2 partners had $21.3 billion in capital expenditure from 2001 through 2009, while total costs exceeded $24 billion, according to the presentation.

In 2005, Shell, then majority owner, said the second phase of the project, which involved year-round crude output and production of LNG, would cost $20 billion, double an original estimate. The announcement stirred controversy with the Russian government, which will share royalties only after the investment is recouped. The dispute on costs and environmental damage led the Hague-based company to agree to cede control of the project to state-run Gazprom in 2006.

Russia in 2007 approved a second stage of investment for Sakhalin-2, allowing the spending of $19.4 billion until 2014. That level refers to costs which under production sharing agreement can be recovered.

Gazprom controls Sakhalin Energy and Shell owns 27.5 percent. Mitsui & Co. holds 12.5 percent and Mitsubishi Corp. 10 percent.

–Editor: Jonas Bergman, Stephen Cunningham

To contact the reporter on this story: Anna Shiryaevskaya in Moscow at ashiryaevska@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

SOURCE ARTICLE

THE NEW YORK TIMES

July 15, 2010, 5:31 pm

Apache Corp. may agree to pay $10 billion to $11 billion in cash next week for some of BP’s Alaskan assets, according to people familiar with the deal. Exxon Mobil Corp., Royal Dutch Shell Plc and Tullow Oil Plc have also said they may be interested in buying some of BP’s properties. Laws prohibiting fraudulent transfers could allow victims to sue a buyer to recover money deemed essential to pay claims, and successor liability could leave a purchaser with BP’s obligations, if BP files for bankruptcy.

BBC NEWS

15 July 2010 Last updated at 21:11

BP says it has temporarily stopped oil flowing into the Gulf of Mexico from its leaking well.

It is the first time the flow has stopped since an explosion on the Deepwater Horizon rig on 20 April.

The well has been sealed with a cap as part of a test of its integrity that could last up to 48 hours.

BP executive Kent Wells said the oil had been stopped at 1425 local time (1925 GMT) and he was “excited” by the progress.

“It is very good to see no oil go into the Gulf of Mexico,” said Mr Wells.

But BP is stressing that even if no oil escapes for 48 hours, that will not mean the flow of oil and gas has been stopped permanently.

The pressure testing is necessary to check the strength of the well. If the pressure within the cap on top is low, that could indicate oil is leaking out further down the well.

The US government’s incident commander, Adm Thad Allen, said even if it was successful, the well would be reopened and oil capture by ships on the surface would restart while a seismic test was done.

“We can go back then and put the system under pressure again. Once we are convinced we can certainly consider shutting in the well, that is always possible and we would certainly look to do that.”

But he emphasised that the option of shutting in the well – closing all the valves and stopping the flow – was a “side benefit” of the new capping stack.

The priority had always been to increase the amount of oil being captured and piped to the surface, he said.

Whatever happens will be a temporary solution, ahead of a relief well being used to permanently killing the original well with mud and cement.

Work on both of the relief wells is currently suspended because of the integrity test. One of the relief wells is within four or five feet horizontally and 100ft vertically of intersecting.

The pressure test was twice delayed before starting on Thursday, once while additional checks were put in place to allay fears it could make the leak worse, and on Wednesday by a leaking piece of equipment.

Meanwhile, BP continues to face political pressure in the US.

A Congressional committee has agreed measures that would ban the firm from new offshore drilling for seven years.

And in a separate move, Secretary of State Hillary Clinton has said she will look into a request by four senators to investigate allegations that BP lobbied for the release of Lockerbie bomber Abdelbaset al-Megrahi while attempting to finalise an oil deal with Libya.

The 1988 bombing of Pan Am flight 103 killed 270 people – most of them were American.

Megrahi, who has terminal prostate cancer, was freed by Scottish Justice Secretary Kenny MacAskill on compassionate grounds in August 2009 after serving eight years.

In a statement on Thursday, BP admitted it had expressed concern to the UK government about the slow progress of a prisoner transfer agreement between the two countries.

But the firm said it had taken no part in discussions on the decision to free Megrahi.

And the UK ambassador to Washington, Sir Nigel Sheinwald, said: “Claims in the press that Megrahi was released because of an oil deal involving BP, and that the medical evidence used by the Scottish Executive supporting his release was paid for by the Libyan government, are not true.”

Steps in the test 

1. The middle ram valve regulating the oil flow on top of the cap is closed
2. The kill valve is closed off
3. The choke is closed, beginning the test
4. BP and government experts will assess progress every six hours
5. But if low pressure is detected they will open the well up instantly
6. Other precautions include extra monitoring, such as by remote vehicles on the seabed

BBC NEWS ARTICLE