Posts from ‘March, 2011’
Beleaguered BP could make a tempting target for Royal Dutch Shell
Two years on from the biggest shareholder revolt on pay the London market has seen and things are getting back to normal at Royal Dutch Shell.
Shell had its moment back in 2004 with its reserves scandal but from 2005 embarked on a reconstruction involving a big increase in investment. Photo: GETTY IMAGES
By Damian Reece, Head of Business 6:10AM GMT 16 Mar 2011
Peter Voser, the chief executive, earned £4.8m in 2010, four times as much as his rival Bob Dudley at BP.
But then the companies’ fortunes could not have been more different over the past couple of years. BP workers were killed yet again after a fatal safety lapse and the company’s Macondo well created a fissure in the earth’s surface that spewed pollution into the Gulf of Mexico.
BP’s shares have underperformed the All Share by 60pc as a result while Shell has lagged by 22pc, although it has outperformed its oil peers by 9pc. BP has underperformed the same group by 30pc. Shell’s total market capitalisation across its two classes of share is £132bn and BP £86bn – a gap I doubt Dudley will close in his time as chief executive and it will be beyond his successor too.
Only a self inflicted disaster by Shell will change that. Shell had its moment back in 2004 with its reserves scandal but from 2005 embarked on a reconstruction involving a big increase in investment. Those projects are beginning to flow through now but Voser is keeping his foot firmly on the floor with $1bn in cost savings by the end of next year and $100bn of investment over the next three years to secure growth through to 2020.
These are ambitious plans but the company is enjoying huge cash flow benefits from strong crude prices so can afford it and such re-investment should be encouraged. Political upheaval in the Middle East and the constant threat of natural disaster, as we’ve seen in Japan, make it all the more urgent to secure energy supplies.
Shell has also ducked more of the political controversy that BP seems incapable of avoiding so has created a perception of being a less risky business than its rival. Shell, like all oil majors, looked at acquiring BP last year and as the valuation gap between the two becomes more pronounced, BP looks increasingly like a tasty feast should Voser, or one of his peers, ever wish to divert fire power from buying oil wells to buying oil companies.
Water board torture for Shell Oil Co
The Associated Press March 15, 2011, 10:10PM ET
Water board orders Shell to clean up neighborhood
LOS ANGELES
A California water board has ordered Shell Oil Co. to clean up a Carson neighborhood built on top of an oil storage facility that could hold up to 140 million gallons of crude oil.
The Los Angeles Regional Water Quality Control Board required the company to come up with plans to clean up the site that the board will review. The soil contains dangerous levels of cancer-causing benzene, naphthalene and benzopyrene.
“The order requires Shell to clean the site to the most stringent standards for residential use in order to protect public health,” Samuel Unger, the board’s executive officer, said of the move Friday.
Shell Oil spokeswoman Alison Chassin said the company was still reviewing the board’s decision, but the developer who purchased the property from Shell in 1965 took on the responsibility of the cleanup at the time. That developer was Richard Barclay, who died in 1992.
“Shell has not made a determination on whether they’re going to appeal or not,” Chassin said. “We really are committed to the health and safety of the community.”
The oil company operated the storage facility from the 1920s to the 1960s, when it sold the property to Barclay, a principal of the development company Barclay-Hollander-Curci Inc. Eventually a neighborhood of 285 homes called the Carousel Tract was build atop the contaminated site.
It wasn’t until decades later in 2009 that residents in the tight-knit community found out they were living atop the old facility. The Department of Toxic Substances Control stumbled on the contamination while investigating another site.
“It was the most frightening thing I’ve ever had thrown at me,” said Barbara Post, president of the neighborhood association. “People were getting sick and stuff, but being we didn’t know that was down there, we didn’t have a clue.”
Post said she is pleased with the board’s decision but doesn’t believe Shell can properly do the cleanup under each home unless it purchases the entire neighborhood.
Thomas V. Girardi, attorney for the homeowners living in the Carousel neighborhood, said Shell had committed “despicable conduct.”
Girardi said the neighborhood was filled with young families who had purchased homes worth as much as $500,000 before the contamination was discovered. The toxic material began migrating to the surface and residents started to notice oil oozing out of their grout and elsewhere, he said.
“Our experts have said it would be massively difficult to clean up this mess,” he said. “It wouldn’t have been before they built on it because they could have dug down and gotten out all the contaminated soil.”
Joint Statement by Shell Stanlow refinery parties
Joint Statement from Shell, Essar and the Employee Representatives from the consultation meeting held 14th March 2011
Shell and Essar management have today formally met for the second time to consult with the employee representatives for Stanlow refinery and the associated marketing businesses.
This has included sessions with both non-unionised and unionised representatives on general terms and conditions (as outlined at the first meeting) plus a joint session on pensions.
In response to concerns raised on pensions, Essar recognised the value that Stanlow employees attach to the pension provision and have revised their defined benefit pension proposals. These now provide for the replication of the Shell pension benefits in the Essar pension plan, so that existing staff will retain their current pension benefits.
Essar also confirmed that the terms and conditions package offered to employees including employee benefits will remain unchanged for a minimum period of 2 years.
Shell said that as a result of the significantly improved pension proposal, the discretionary 4 months transition bonus proposal would now be taken off the table, and reviewed by Shell.
Unite and the non union representatives made a joint response. They welcome the commitment to the final salary pension scheme that provides mirror image benefits to the Shell schemes with no detriment to the existing members of the pension scheme. However, both groups have requested that Shell/Essar continue to provide a final salary pension scheme for all employees, including new starters. They have also requested that consideration is given to the following:–
- A 50/50 split on the pension trustee board with an independent chair. Essar confirmed their willingness to provide a 50/50 split and that one of the trustees would be independent;
- Ill health benefit protection for deferred pensioners. Essar agreed to discuss this point with Shell and revert
- That the status quo of pension provision at Shell Stanlow remains as is, without the introduction of a defined contribution scheme. Essar agreed in response to remove the defined contribution proposal as an option for existing employees but that it would be retained for new starters.
It is the intention of the Unionised group to hold a general meeting on Tuesday 22nd March at 6pm in the canteen to give feedback on these proposals.
Essar and Shell also confirmed that they would formally respond on all other key questions and points of feedback raised at the sessions. This will be done as soon as possible to enable the employee representatives to provide full feedback to their constituents.
In the meantime, individual questions can be raised either through the employee representatives, or via the Q&A facility on the Strategic Review website.
Shell ready to ship extra gas to Japan in wake of tsunami
*SHELL DEALING WITH THE DEVIL AGAIN:
Voser insisted the North African dictatorship was ‘still under development and is evolving into democratic structures over time’. And despite saying Libya was ‘rather small for Shell’, he refused to profess any discomfort at the firm’s cosy relationship with Gaddafi, based on a £ 375m exploration deal signed in 2005 with the blessing of former Prime Minister Tony Blair
Fuelling a growth support
By Rob Davies
Last updated at 3:35 AM on 16th March 2011
Shell boss Peter Voser said the oil supermajor stood ready to ship extra gas to tsunami-hit Japan but has refused to distance the company from the regime of Libyan tyrant Colonel Gaddafi.
Speaking as he showed off an ambitious $100bn ( £ 62.2bn) growth plan, the Swiss chief executive said Shell had diverted boatloads of liquefied natural gas (LNG) to Japan, to address the power shortfall caused by its nuclear crisis.
But he offered no firm stance on Libya, saying Shell would ‘see things unfolding … and then we’ll take a decision’ on how to proceed.
Voser insisted the North African dictatorship was ‘still under development and is evolving into democratic structures over time’.
And despite saying Libya was ‘rather small for Shell’, he refused to profess any discomfort at the firm’s cosy relationship with Gaddafi, based on a £ 375m exploration deal signed in 2005 with the blessing of former Prime Minister Tony Blair.
Voser was speaking as Shell’s annual report revealed that his annual pay and bonus package rose by 60 per cent last year - up from £2.8m to £4.6m. The inflated reward came as Shell beat pro-duction targets, nearly doubled pre-tax profit to £11.5bn and cut costs by £2.5bn over two years, albeit at the cost of some 7,000 jobs.
Investors revolted against directors’ pay two years ago.
But Voser can silence any fresh disgruntlement if the company makes strides towards a new production goal of 3.7m barrels of oil equivalent per day (boepd) by 2014, a rise of 12 per cent on current output.
The expansion drive will see Shell (down 19p to 2101p) invest £62bn over the next four years, around 80 per cent of it on exploration and production.
*heading added by John Donovan
Shell’s Voser given pay rise of 62 per cent
By Sarah Arnott
Wednesday, 16 March 2011
Peter Voser, the chief executive of Shell, saw his earnings rocket by 62 per cent to $7.3m (£4.5m) last year.
The increase reflected his first full year in the top job, but the majority of it came from bonus payments after the oil giant beat its targets for cash flow, project delivery and gas production and safety, Shell’s annual report said.
Shell shock at pay deals
Peter Voser, Shell’s chief executive, was last year awarded a bonus of €3.75m – exactly the same amount that so infuriated investors in 2009
Julia Finch: Tuesday 15 March 2011 20.54 GMT
Shell chief executive Peter Voser’s pay for 2010 totalled €5.4m. Photograph: Guido Benschop/AFP/Getty Images
Less than two years ago, nearly 60% of Shell shareholders voted down the oil group’s plans to award millions of pounds of shares to executives, even though performance targets had been missed that should have reduced the payouts to zero. The chairman of the group’s remuneration committee was forced to step down and, as it tried to rebuild bridges with angry shareholders, the company froze salaries last year.
Obviously, to borrow the words of Barclays‘ Bob Diamond, the time for remorse is over. The annual report sent to shareholders shows that Peter Voser, Shell’s chief executive, was last year awarded a bonus of €3.75m – exactly the same amount that so infuriated investors in 2009. Together with his salary and other perks, Voser’s pay totalled €5.4m – and he received another boost with a €740,000 payout from a deferred bonus scheme and a £1.4m share option payout.
The new bonuses relate to a year when Shell’s profits doubled to $18.6bn, but that increase was largely on the back of higher oil prices, and the results were still below City expectations.
Cleanup ordered at Carson neighborhood Shell Oil polluted
1:08 p.m. | Molly Peterson | KPCC
State water regulators have ordered Shell Oil to clean up and monitor pollution in soil under the Carousel neighborhood of Carson.
Testing found benzene and hydrocarbons – chemicals known to cause cancer – four years ago.
The neighborhood sits where Shell maintained crude oil in reservoirs for decades.
The Los Angeles Regional Water Quality Control Board says Shell must make a plan to clean soil under some of the nearly 300 homes to a depth of 10 feet.
Shell also has to investigate how far the pollution has spread, and monitor pollution levels in soil and air. Water regulators have emphasized that they’re moving quickly; they say they’re seeking public input every step of the way.
Remediation efforts could force temporary relocation of people in the Carousel neighborhood as early as this summer.
But some who have signed up to sue Shell over the pollution have raised questions about the extent of the cleanup – and about how far the pollution has already spread.
Now the company must turn in a cleanup plan within two months. Water board representatives say no current plans prevent deeper cleanups if they’re needed in the future.
Pay Bonanza for Shell Fat Cats
In the money: chief executive Peter Voser
Big bonuses back at Shell as it declares 12% output jump
Lucy Tobin
15 Mar 2011
Just two years after Shell faced one of the biggest rebellions ever seen over pay at a FTSE 100 company, the oil major today rewarded chief executive Peter Voser with a 19% increase in his pay packet.
Last year, the oil giant froze its executive pay-outs in response to investors in 2009 voting down its plans to award millions of pounds of shares to bosses despite missing performance targets.
Today, however, in its annual report, Shell said that last year Voser was rewarded with a 19% jump in remuneration, with his €1.5 million (£1.3 million) salary being supplemented with a €3.75 million bonus. That took his total pay to €5.25 million, up from €4.4 million the previous year.
Shell’s remuneration committee also raised Voser’s basic salary up to €1.55 million this year.
Malcolm Brinded, head of upstream at Shell, pocketed a pay deal worth €3.5 million last year, up by a third from €2.6 million the previous year.
The pay bonanza came after Shell missed expectations for its profit last year, despite soaring Brent crude prices helping it rake in almost £1.6 million an hour in the last three months of last year, and post an underlying profit of $18.6 billion (£11.61 billion) for 2010, up from $9.8 billion a year earlier.
Today it set out ambitious growth plans – including significantly hiking its production target for oil over the next three years – and set aside more than $100 billion for investment in the period.
Despite fears Japan‘s earthquake will hit demand for oil, driving the price of London Brent down from recent highs to $109.90 a barrel, Voser expects prices to keep rising.
“Energy demand is growing so fast over the next few decades, we will always be struggling to keep supply actually growing,” he said.
“I look beyond the Middle East, and for that matter Japan, to the developments across the world, with a very strong rise in population and average living standards which normally demands more energy.”
Shell said plans to produce 12% more oil by 2014 than it did last year – one of the highest growth rates in the industry. It reckons it will produce 3.7 million barrels of oil equivalent per day in 2014, and Voser said that he expects crude prices to remain on an upward trend.
One year into a three-year push to boost its performance, where Shell has sold a raft of refining assets, Voser added: “We have made good progress in 2010. Our profitability is improving and we are on track for our growth targets.”
Shares fell 30.5p to 2089.5p.
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