Posts from ‘October, 2011’

Mon Oct 3, 2011 6:39pm BST

* Shell funded clashing armed gangs – watchdog report

* Oil major denies it caused any human rights abuses

* Company is selling off Nigerian oil blocks

By Joe Brock

ABUJA, Oct 3 (Reuters) – An industry watchdog accused Royal Dutch Shell (RDSa.L) on Monday of funding armed gangs in Nigeria and said this had fuelled human rights abuses in Africa’s most populous nation.

The company, the biggest operator in the West African nation’s oil industry, denied the allegations.

Platform, a London-based non-government organisation monitoring the oil and gas industry, said in a 75-page report that the Anglo-Dutch major paid government forces who have attacked, tortured and killed Nigerians living in the creeks and swamplands of the Niger Delta.

“Basic company errors have exacerbated violent conflicts in which entire communities have been destroyed. Billions have been lost in revenues to the government and oil companies, sending shock waves through the global economy,” the report said.

“While primary responsibility for human rights violations falls on the Nigerian government and other perpetrators, Shell has played an active role in fuelling conflict and violence in a variety of forms,” Platform said.

It says Shell regularly assisted armed militants, in one case in 2010 transferring over $159,000 to a group credibly linked to militia violence. The report says Shell sided with clashing gangs, picking the more powerful group to help protect its oil infrastructure.

Shell denied the allegations, saying it respects human rights wherever it works but acknowledged that sometimes its actions caused tensions between communities in Nigeria.

The company said it would look into recommendations made in the Platform report.

“We have long acknowledged that the legitimate payments we make to contractors, as well as the social investments we make in the Niger Delta region, may cause friction in and between communities. We nevertheless work hard to ensure a fair and equitable distribution of the benefits of our presence,” Shell said in a statement in response to the report.

“In view of the high rate of criminal violence in the Niger Delta, the Federal Government, as majority owner of oil facilities, deploys Government Security Forces to protect people and assets. Suggestions in the report that SPDC (The Shell Petroleum Development Company) directs or controls military activities are therefore completely untrue.”

UN REPORT

The Niger Delta is a vast wetlands region in southern Nigeria where thousands of kilometres of waterways and creeks vein through communities where many live on less than $2 a day, despite the wealth beneath their feet.

Militant groups have carried out widespread attacks on oil infrastructure in recent years, at their peak in 2006 cutting out more than a third of the OPEC member’s oil production.

An amnesty in 2009 saw thousands of militants lay down their weapons and major sabotage strikes have been limited since, although community grievances still prompt unrest.

A United Nations paper earlier this year was critical of the widespread pollution Shell causes, and does not clear up in the Niger Delta.

Shell and other foreign oil firms operating in Africa’s largest oil and gas industry say the majority of oil spills are caused by sabotage or oil theft. Both the Nigerian government and Shell are investigating the U.N. oil spill evidence.

The company recently admitted liability for oil spills in the Ogoni region of the Niger Delta and faces damages which experts believe could run into hundreds of millions of dollars.

Shell has been operating in Nigeria longer than any other foreign oil company but it is in the process of selling four onshore oil blocks and has said it is not looking to expand its business in the country.

(Editing by James Jukwey)

SOURCE ARTICLE

By John Donovan

Monday, 3 October 2011

I have had Orange pay monthly and “pay as you go” phones for many years, but not for much longer.

I was awaken at 4.36am this morning by an incoming text message from Orange to my “pay as you go” phone notifying me of improvements to the phone, which would be implemented by turning it off and then back on.

I was of course less than overjoyed at being woken half way through the night, not for an emergency, as one would expect when receiving a call in the early hours, but by an unsolicited  piece of self-serving information by a mobile phone company. The phone lit up and there was an audible warning of an incoming message.

Not knowing what on earth has happened to prompt the incoming message at such an ungodly hour, I had to get up, turn on the light, find my reading glasses etc. The commotion woke up the dog and my 94 year old father.

Needless to say, it took me a long time to go back to sleep, particularly when I was so annoyed. The last time I received a call in the early hours it had been to inform me of the death of a close relative.

I have previously received unwelcome early morning promotional messages from Orange, but never as early as to day.

Under the circumstances, I would warn against anyone purchasing an Orange mobile phone unless you don’t mind have your nights sleep ruined by a company, which in my experience apparently has no regard for the health of its customers.

A load of unnecessary stress.

I do want to be able to receive overnight messages and calls in cases of emergency from people to whom I have entrusted my number, but not unsolicited, unwanted, self-serving messages from a mobile phone company, often promoting top ups and so called “Magic Numbers”.

I cannot think of any marketing initiative that will drive customers away as quickly. Whoever is responsible should be sacked.

I have no doubt that many other Orange customers have received these overnight messages. If you have done so and are annoyed as me, please get into contact. I might decide to set up an appropriate gripe website.

john@shellnews.net

Don’t worry Shell, you will remain the main focus of my attention.

Oil company rejects watchdog’s claims that its local contracts made it complicit in the killing of civilians

• David Smith
• The Guardian, Monday 3 October 2011

Militants of the Movement for the Emancipation of the Niger Delta travelling between camps. Photograph: Veronique de Viguerie/Getty Images

Shell has fuelled armed conflict in Nigeria by paying hundreds of thousands of dollars to feuding militant groups, according to an investigation by the oil industry watchdog Platform, and a coalition of non-government organisations.

The oil giant is implicated in a decade of human rights abuses in the Niger delta, the study says, claiming that its routine payments exacerbated local violence, in one case leading to the deaths of 60 people and the destruction of an entire town.

Platform’s investigation, which includes testimony from Shell’s own managers, also alleges that government forces hired by Shell perpetrated atrocities against local civilians, including unlawful killings and systematic torture.

Shell disputes the report, defending its human rights record and questioning the accuracy of the evidence, but has pledged to study the recommendations.

In Counting the Cost: Corporations and Human Rights in the Niger Delta, Platform says that it has seen testimony and contracts that implicate Shell in the regular awarding of lucrative contracts to militants. In one case last year, Shell is said to have transferred more than $159,000 (£102,000) to a group credibly linked to militia violence.

One gang member, Chukwu Azikwe, told Platform: “We were given money and that is the money we were using to buy ammunition, to buy this bullet, and every other thing to eat and to sustain the war.” He said his gang and its leader, SK Agala, had vandalised Shell pipelines. “They will pay ransom. Some of them in the management will bring out money, dole out money into this place, in cash.”

The gang became locked in competition witha rival group over access to oil money, with payments to one faction provoking a violent reaction from the other. “The [rival gang] will come and fight, some will die, just to enable them to also get [a] share. So the place now becomes a contest ground for warring factions. Who takes over the community has the attention of the company.”

Platform alleges that it was highly likely that Shell knew that thousands of dollars paid per month to militants in the town of Rumuekpe was used to sustain a bitter conflict. “Armed gangs waged pitched battles over access to oil money, which Shell distributed to whichever gang controlled access to its infrastructure.”

Rumuekpe is “the main artery of Shell’s eastern operations in Rivers state”, with aroundabout 100,000 barrels of oil flowing per day, approximately10% of Shell’s daily production in the country. Shell distributed “community development” funds and contracts via Friday Edu, a youth leader and Shell community liaison officer, the report said, an exclusive arrangement that magnified the risk of communal tension and conflict.

By 2005, Edu’s monopoly over the resources of the Shell Petroleum Development Company of Nigeria (SPDC) had sparked a leadership tussle with Agala’s group. The latter was reportedly forced out of the community and a number of people killed. Dozens of gang members and residents reportedly died in counter raids by Agala.

The inter-communal violence killed an estimated 60 people, including women and children, from 2005-08. Thousands more were displaced by fighting that left homes, schools and churches in ruins. Many still suffer severe malnutrition, poverty and homelessness.

Platform says the local conflict soon created regional instability. Displaced villagers were hunted down in the regional capital, Port Harcourt, and killed in their homes, schools and workplaces. Gangs active in Rumuekpe collaborated with prominent criminal networks in Rivers state and doubled as Movement for the Emancipation of the Niger Delta (Mend) militants.

Mend’s activity in Rumuekpe seriously disrupted Shell’s operations and sent shockwaves through world markets, the report notes, yet Shell paid little heed. One of the corporation’s managers was alarmingly candid: “One good thing about their crisis was that they never for one day stopped us from production.”

Platform interviewed Ex-gang members claimed Shell exacerbated the conflict by providing regular funding to both factions throughout.

In 2006, Shell is alleged to have awarded maintenance contracts relating to its oil wells, the Trans-Niger pipeline, its booster station and flowstation to Edu’s gang. But after Agala’s counter-raid left Rumuekpe “littered” with corpses, Shell apparently switched sides and started paying Agala. It paid whoever controlled access, even if they were known criminal gangs, Platform claims.

The allegations of ex-gang members were largely substantiated by the testimony of a Shell official, Platform claims. A manager confirmed that in 2006, one of the most violent years, Shell awarded six types of contract in Rumuekpe. Thousands of dollars flowed from Shell to the armed gangs each month.

The company eventually terminated some, though not all, of the contracts. But by then the violence had reached the Shell flowstation. A Shell manager, whose name has been withheld, is quoted as saying: “Somebody came in [to the flowstation] and cut off somebody’s hand. We had to vacate the place. We stopped the contract entirely.”

Other contracts to “maintain the pipeline right of way” continued throughout the entire conflict, as did one-off contracts created in response to specific threats, the report found.

Matthew Chizi, a local youth leader, said: “[Shell] were going to their job, doing their operation, servicing their manifold. They never cared that people were dying. They never did anything to call the crisis to order. Rather they were using military to intimidate the community.”

Platform’s report offers a damning assessment: “Shell was highly likely to be aware that it was helping to fuel the conflict in Rumuekpe, since company workers visited the community on a regular basis. Even if Shell was somehow unaware of the violence, media reports were publicly available.

“Members of the community reportedly wrote to Shell to request that the company stop awarding contracts to gang leaders such as Friday Edu. Through Shell’s routine practices and responses to threats, the company became complicit in the cycle of violence.”It adds: “The Rumuekpe crisis was entirely avoidable… Shell operated for decades without an MoU, polluted the community and distributed ‘community development’ funds through an individual who had lost the confidence of the community. Once conflict erupted, Shell paid the perpetrators of gross human rights abuses as long as they controlled access to oil infrastructure. The cumulative impact of Shell’s mistakes was devastating.”

Rumuekpe is just one of several case studies examined by the report which alleges, that in 2009 and 2010, security personnel guarding Shell facilities were responsible for extra-judicial killings and torture in Ogoniland. Platform calls on the corporation to break ties with government forces and other armed groups responsible for abuses, and to clean up environmental damage.

Rumuekpe is just one of several case studies examined by the report which alleges, that in 2009 and 2010, security personnel guarding Shell facilities were responsible for extra-judicial killings and torture in Ogoniland.

Shell insisted that it respected human rights and was committed to working with Nigeria to ensure that the country benefited from its natural resources. “We have long acknowledged that the legitimate payments we make to contractors, as well as the social investments we make in the Niger delta region may cause friction in and between communities,” a spokesman said. “We nevertheless work hard to ensure a fair and equitable distribution of the benefits of our presence.

“In view of the high rate of criminal violence in the Niger delta, the federal government, as majority owner of oil facilities, deploys government security forces to protect people and assets. Suggestions in the report that SPDC directs or controls military activities are therefore completely untrue.”

He added: “It is unfortunate that Platform has repeated several old cases, some of which are unsubstantiated and some proven inaccurate, because doing so obscures the good work which has been going on for many years. However, we will carefully examine its recommendations and look forward to continuing a constructive dialogue with the Nigerian government and other stakeholders to find solutions to these issues.”

GUARDIAN ARTICLE

RELATED

Shell ‘co-opting’ Nigerian militants: 21 May 2011

Nigerian activists allege Shell involved in Ogoniland assassinations: 23 February 2011

WikiLeaks: Cable reveals Shell funded Nigerian rebels ‘peace camp’: 26 January 2011

Shell’s Sinister Relationship with Nigerian Militants: 1 July 2009

Shell, Nigeria, Militant Attacks, and the Escalating Price of Oil: 18 June 2009

Correspondence 11 June 2008 with Royal Dutch Shell Company Secretary Michiel Brandjes: Acquisition of Arms and Ammunition in Nigeria: 11 June 2008

THE TRUTH ABOUT SHELL IN NIGERIA: 15 March 2008

Shell, Nigeria and the Record Price of Oil: 7 March 2008

Reuters report pipeline dynamited in Nigeria but were the culprits working for Shell?: 15 November 2007

Blogger News Network: Is Shell skulduggery in Nigeria pumping up global oil prices?: 18 July 2007

Financial Times: WORLD NEWS: Shell gives Nigerian work to militants’ companies: 27 April 2006

FULL TEXT OF GUARDIAN ARTICLE

Email from Sunny Ofehe, Founder of Hope for Niger Delta Campaign

From: Comrade Sunny Ofehe <sunnyofehe@yahoo.com>
Date: 1 October 2011 07:47:16 GMT+01:00
To: “john@shellnews.net” <john@shellnews.net>
Subject: Terror Trial in The Netherlands.
Reply-To: Comrade Sunny Ofehe <sunnyofehe@yahoo.com>

Dear John,

I have always been an avid follower of your good work online through the Shell website.

I am an environmental activist living here in The Netherlands. I am from the Niger Delta region of Nigeria where Shell has a huge presence with a history of environmental devastation of our people’s environment.

I have been campaigning against this for many years and testified at the Dutch Parliament against Shell in a Parliamentary hearing where Shell was summoned to defend their practice in the region.

When they could not establish a case against me, just last month they came up with a new charge: “conspiracy to commit terror act by blowing oil pipelines belonging to Shell in the Niger Delta.”

It is an interesting politically motivated case which I would like you to follow up. You can get more details on google search with my names. You will find my details below.

Many thanks and hope to hear from you soon.

Best regards,

Comrade Sunny Ofehe
Founder/President
Hope for Niger Delta Campaign, HNDC
The Netherlands
+31634351598
www.ofehe.com
www.sunnyofehe.com
www.nigerdeltacampaign.com

By John Donovan

The oil giant Royal Dutch Shell has a long history as a participant in what the Guardian has aptly described as “the murky world of corporate tax avoidance.”

In February 2009, the Guardian newspaper published an article under the headline: “Offshore – and out of reach to the Revenue“

Extracts

The Anglo-Dutch oil giant Shell, although it is still a British plc operating under UK company law, has shifted its trademarks to Switzerland and its main tax residence to the Netherlands.

Shell, meanwhile, has shifted ownership rights of its iconic scallop-shell roadside sign out of London to a third low-tax regime in Switzerland. It was part of a carefully planned merger of its UK and Dutch arms, which enabled the oil giant to keep many operations from the grip of the British tax authorities. For tax purposes, Royal Dutch Shell plc is now resident in the Netherlands. The company told us that the brand shift to the tax haven canton of Zug was not for tax avoidance, but for “entirely commercial” reasons. “There has been no impact on the Shell brand in the UK,” the company said. It added that there would now be “more effective and consistent management of the Shell trademarks”.

Another article on the same subject was published on the same day by the Guardian under the headline: “TAX GAP“

Extract

Ownership of the iconic scallop sign which appears on thousands of Shell petrol station forecourts has migrated to a Swiss tax haven.

The Anglo-Dutch oil giant which made $50bn (£35bn) in pre-tax profits in 2007, shifted its main tax-residence to the more benign climate of Holland after the merger of its twin UK and Netherlands arms in 2005.

Shell simultaneously moved the ownership of its immensely valuable brands. Legal ownership of the trademarks now belongs to a subsidiary set up in the low-tax canton of Zug, which is entitled to charge royalties for their use to other Shell companies.

The rights were shifted in February 2005 to Shell Brands International AG, a holding company registered in the former Alpine village of Baar, now part of a mini-conurbation joined to Zug itself.

The canton hosts about 18,000 companies, mostly foreign entities set up to take advantage of corporate tax rates as low as 8%, with personal tax for expatriate executives at a similarly enticing level.

This means that, legally speaking, Shell is now simultaneously a British public company, tax-resident in Amsterdam, whose brands are Swiss.

Shell says: “Shell Brands International paid Shell UK Ltd for certain trademarks. This payment was subject to corporation tax on capital gains in the UK. In the future, royalties are payable for the use of the trademark by UK companies”.

In fact, no tax was paid on the sale, because Shell was able to set it against other tax losses.

The Guardian also referred to Shell’s tax avoidance in its subsequent article: “Holding the UK’s major corporations to account“

Extracts

Our innovative online database helped shed light on the murky world of corporate tax avoidance

The series revealed the tax stratagems of many of Britain’s corporate household names. It documented brands shifted offshore by Diageo, Shell, and drug companies AstraZeneca and GlaxoSmithKline.

Royal Dutch Shell was also mentioned in an article published in January 2011 by “This is Money”, under the headline: “Revealed: Tax havens of the top 20 UK companies“

By Katarzyna Klimasinska – Oct 1, 2011 3:48 PM GMT+0100

The parking lot at the Millennium Alaskan Hotel in Anchorage was as jammed at 6:30 a.m. on a Thursday as the float-plane marina at neighboring Lake Spenard. About 170 oil executives, tribal entrepreneurs and state employees entered through a lobby adorned with stuffed polar bears and mounted moose heads.

The predawn visitors were there to hear Pete Slaiby, 53, the head of Alaska operations for Royal Dutch Shell Plc (RDSA), outline the company’s plans to drill in icy Arctic seas.

They came because Shell’s good fortune may also be their own. The offshore fields the company is seeking U.S. permission to develop may contain oil valued at as much as $2.4 trillion. Drilling would set off a cascade of revenue for contractors, 54,700 jobs across the U.S. and $176 billion in federal, state and local tax revenue through 2057, according to a study Shell commissioned from consulting company Northern Economics and the University of Alaska Anchorage.

“You’re looking at decades of economic impact,” Kara Moriarty, deputy director of the Alaska Oil and Gas Association, said in an interview. Production in the Beaufort and Chukchi seas “would be a tremendous boost,” she said.

Among the winners if the Obama administration gives the required permits to The Hague-based Shell: Owners of the Trans Alaska pipeline, including BP Plc (BP/) and Exxon Mobil Corp., which say they need more oil to keep it running; Statoil ASA (STL) and ConocoPhillips, which want to win approval to develop their own federal leases in the Arctic; and Noble Corp., which will supply a drilling vessel.

‘A Big Opportunity’

“This is a big opportunity,” Slaiby told the audience at the Sept. 8 meeting, showing them an animation of Shell’s spill- response plans over a breakfast of eggs and bacon.

Shell’s spending since winning Arctic leases in federal waters in 2005 is approaching $4 billion for drilling rights, engineering, government-ordered studies and research, according to the company. The Chukchi and Beaufort sea deposits may hold 25 billion barrels of oil, Shell says, citing government estimates, for a value of $2.4 trillion based on the average price of oil on the New York Mercantile Exchange this year.

Until now, the native village of Point Hope, which juts into the Chukchi Sea, and environmental groups staved off the company by contending in court and in comments to government agencies that drilling may disrupt a fragile land, putting at risk the animals that provide the Inupiats with whale blubber for fuel, pickled-flipper snacks and sealskin for the drums they beat in time to traditional dances.

White House Meetings

The delay may end soon. In August, the company won Interior Department approval for exploratory drilling in the Beaufort Sea near the North Slope towns of Deadhorse and Kaktovik. The Environmental Protection Agency issued air-quality permits on Sept. 19 for a ship Shell plans to use for drilling.

Slaiby said Shell executives met three times with White House officials, most recently on Sept. 20, to talk about Arctic drilling.

The company expects Interior Secretary Ken Salazar to uphold the Chukchi Sea lease sale by Oct. 3, and the Bureau of Ocean Energy Management, Regulation and Enforcement to give the go-ahead for the Chukchi exploration plan in December, Slaiby said at the hotel breakfast in Anchorage.

Shell says it must decide by the end of October whether to gamble that it will get all 35 permits needed and start lining up about 18 vessels and 1,200 workers to drill the first offshore wells in U.S. Arctic waters in July.

Alaska’s Republican Governor Sean Parnell has backed Shell’s plans partly as the best bet to restore the flow in the state’s largest oil pipeline to 1 million barrels a day within 10 years.

Trans Alaska Pipeline

Oil flowing through the 800-mile (1,287-kilometer) Trans Alaska Pipeline shrank to about 570,000 barrels a day this year from a record 2 million barrels in 1988, as output from onshore tracts fell. The pipeline’s owners, including BP, Exxon and ConocoPhillips (COP), say that less petroleum in the pipes allows ice to form, wax to build up and metal to corrode.

Shell, which said it expects Arctic offshore production to start after 2020, would use the pipeline to deliver its crude across the state to Valdez, the northernmost ice-free port in the U.S.

“Beaufort and Chukchi are critical for our long-term future,” Tom Barrett, president of Trans Alaska operator Alyeska Pipeline Service Co., said in an interview. Alyeska employs more than 800 workers, according to its website.

Shell said it also plans to build a connector, half the length of the Trans Alaska pipeline, across the North Slope to bring Chukchi oil to the existing line.

Tax Revenue

“It will be hugely expensive, it’s in the billions,” Slaiby said in an interview at his office in an Anchorage high- rise with a view of the Chugach Mountains, blue and shrouded in clouds.

Shell’s investments will bring $3.7 billion of tax revenue to the North Slope Borough, which borders both seas, according to the Northern Economics-University of Alaska analysis, which was released in February. Alaska’s state government would gain about $4.8 billion from property, corporate and income taxes through 2057, and the federal government would collect $161.3 billion.

U.S. approval for Shell to drill 10 Arctic offshore wells over the next two years may encourage more investment from Statoil of Stavanger, Norway, and Houston-based ConocoPhillips. Those companies also purchased Chukchi Sea leases and aren’t as far along in the process.

Statoil in Anchorage

“We’re following what’s happening with the other operators closely, and we hope that Shell is successful in drilling next year,” Lars Andreas Sunde, head of Statoil’s Anchorage office, said in an interview. “It will of course be a positive to the industry.”

Statoil opened its Anchorage office this year, as did Noble Corp. (NE), owner and manager of the Discoverer rig that Shell plans to use for the 2012 to 2013 drilling season. Shell rented the Discoverer in January to use in New Zealand this year at a rate of $155,000 a day, according to the website of Baar, Switzerland-based Noble.

Pledging to benefit local residents, Shell hired North Slope native corporations to write permit applications, engineer oil-spill response and containment and dispose of waste once exploration begins.

Waste-Management Contract

Among Shell’s Eskimo contractors is Tikigaq Corp., which provides financial support for the Inupiat villagers in Point Hope, the center of opposition to Shell’s plans.

Tikigaq’s waste-management contract with Shell, renewed every year since 2007, is more profitable than services sold to its main client, the U.S. Department of Defense, according to the corporation’s Chief Operating Officer Troy Izatt.

Because exploration hasn’t begun, Tikigaq has allotted only two workers to Shell, both based in Anchorage. One is a native of Point Hope.

“Tikigaq Corp. and its board of directors support the offshore development if it’s responsible,” Izatt said in an interview at his office, where a fur-trimmed wooden tribal mask hangs on the wall.“I always look forward to good news for Alaska, what helps all Alaskans, including natives.”

To contact the reporter on this story: Katarzyna Klimasinska in Anchorage, Alaska, at kklimasinska@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

SOURCE ARTICLE

Energy giant has $200 million in new anchor-handling vessel

By SIMONE SEBASTIAN, HOUSTON CHRONICLE

October 01, 2011, 8:43 AM EDT

By Ann Koh and Yee Kai Pin

Oct. 1 (Bloomberg) — Royal Dutch Shell Plc is in talks with customers about the supply of products as it halts all units at its largest oil refinery after the worst fire at the Singapore plant in 23 years.

Shell is in discussions with customers “to minimize any potential impact to them,” it said today on its website. While the fire was fully extinguished on the evening of Sept. 29, the company is continuing a “progressive shutdown” of refinery units as an added precaution as it investigates the accident, Peing Tajang, a company spokeswoman, said in a separate e-mail.

The fire at Pulau Bukom, an island 5.5 kilometers (3.4 miles) from Singapore’s financial center, broke out at 1:15 p.m. local time Sept. 28, Shell said. Local newspaper and television pictures showed flames rising from the plant amid reports of explosions and fire balls. Singapore is Asia’s largest oil- trading, refining and storage center, with local product supply dominated by Shell’s plant, which can process 500,000 barrels a day of crude, and facilities operated by Exxon Mobil Corp.

“These accidents don’t happen very often in Singapore,” said Crystal Yu, 29, the co-owner of a claypot rice restaurant about 100 meters from Pasir Panjang jetty, the embarkation point for ferries to the Shell refinery. “As residents in this area, we worry about the safety concerns of such an incident. We’re worried that a big explosion or oil leaks onto the surface of the water and catches fire.”

Force Majeure

Shell said yesterday the incident hasn’t prompted it to declare force majeure, a legal clause that exempts companies from fulfilling contracts, on fuel exports. Reuters news agency earlier reported that it had declared force majeure on shipments of distillate fuels, which include gasoil, diesel and jet fuel, from the Pulau Bukom refinery.

“We have not declared force majeure in Singapore on products,” Kim Blomley, a London-based Shell spokesman, said by telephone.

Eighty firefighters battled the blaze that broke out in a pump house and forced the evacuation of about 400 workers, Shell said. Two fire engines were badly damaged and 250 workers remained on the site. There were no fatalities.

Damage was contained to the vicinity of the pump house with other facilities and units unaffected, according to Shell’s statement today. Neighboring units in the vicinity of the fire were shut down as a safety precaution, Tajang said in an e- mailed reponse to questions.

Progressive Shutdown

“We then started a progressive shutdown on the rest of the refinery units with the exception of utilities as an added safety precaution,” she said. “This continues. Efforts are proceeding to further secure the site of the fire to allow investigations to commence safely and bring the situation back to normal.”

A diesel-producing hydrocracker at the 50-year-old refinery was closed, boosting regional fuel prices, almost 23 years to the day after a fire killed a worker at the site. Shell has operated in Singapore for about 120 years.

Gasoil, or diesel, rose to the highest in four weeks against Dubai crude, signaling increased processing profit. Gasoil swaps for October traded at $18.30 a barrel over the Asian benchmark crude today, the biggest premium since Sept. 1, according to data from PVM Oil Associates Ltd., a London-based broker. This crack spread was $16.22 before the unit was shut.

“The impact is significant but not dramatic,” David Wech, head of research at JBC Energy GmbH, a consultant in Vienna, said in an e-mail. “It will be a question of how long the plants are off. We expect a week at least.’

Buys Diesel, Gasoline

Shell is buying diesel and gasoline cargoes in Singapore’s spot market, according to a Bloomberg News survey of traders monitoring cargo transactions. It has so far purchased 100,000 barrels of 95-RON gasoline from BP Plc and 150,000 barrels of ultra-low-sulfur diesel from Hin Leong Trading Pte.

Gasoline and diesel fuel were burning at the facility, company spokeswoman Mavis Kuek said Sept. 28. One of Shell’s firefighters was injured and five others experienced heat exhaustion and ‘‘pulled muscle,” the company said.

“The incident occurs in an area between the processing facility, including the hydrocracker, and the product tank farm,” said van Koten. “One or more pipes opened up and the product inside fell and fed the fire.”

Shell’s Pulau Bukom facility also houses an 800,000 metric ton-a-year ethylene plant and a 155,000 ton-a-year butadiene- extraction unit, according to its website. The refinery, which includes a fluid catalytic cracker that makes gasoline, exports 90 percent of its products to Asia-Pacific.

A Malaysian contractor was killed in a fire at the plant on Sept. 29, 1988, National Library archives showed.

Shell also has production facilities on neighboring Jurong Island, where refineries belonging to Exxon Mobil and Singapore Refining Co., a joint venture between Chevron Corp. and Singapore Petroleum Co., are located. Exxon was ordered to stop work for a day at another Singapore refinery in March after a 34-year-old worker was killed during plant maintenance.

–With assistance from Nidaa Bakhsh and Mike Anderson in London. Editors: Raj Rajendran, John Buckley

To contact the reporters on this story: Ann Koh in Singapore at akoh15@bloomberg.net; Yee Kai Pin in Singapore at kyee13@bloomberg.net

To contact the editor responsible for this story: Paul Gordon at pgordon6@bloomberg.net

SOURCE ARTICLE

09/30/2011 12:43 PM

Royal Dutch Shell Oil may have gotten the Obama administration to approve the most aggressive Arctic drilling proposal in US history, but not without a challenge.

A coalition of native and conservation groups filed suit against the Bureau of Ocean Energy Management, Regulation, and Enforcement’s (BOEMRE) over its decision to allow offshore oil drilling in Arctic’s Beaufort Sea.

In granting the permit, BOEMRE said it “found no evidence that the proposed action would significantly affect the quality of the human environment.”

Yet, U.S. Coast Guard officials have repeatedly explained the resources to clean up an oil spill in the Arctic Ocean simply don’t exist. This summer, Commandant Admiral Robert Papp told Congress the federal government has “zero” spill response capability in the Arctic.”

The lawsuit filed against the Obama administration argues  Shell shouldn’t have been issued an oil drilling permit in the Arctic’s Beaufort Sea without having a credible cleanup plan in the event of an oil spill.

“The holes in Shell’s plan, notably the lack of a workable oil spill response plan, leave the fragile natural systems of the Arctic and the livelihoods of native communities at risk. Smarter transportation choices, not dangerous drilling plans, are what we should be pushing forward,” says Dan Ritzman, Sierra Club Alaska Program Director.

After a brief delay following BP’s mega-spill in the Gulf, the plaintiffs are aghast that the Obama administration is acting as if the nation’s worst environment catastrophe never happened.

“….Shame on the Obama administration for allowing politics to trump science by approving such an unrealistic plan to drill in the Beaufort Sea,” says Cindy Shogan, Executive Director, Alaska Wilderness League.

Shell still needs several other approvals and permits before drilling begins, which could be as early as the summer of 2012.

Earthjustice, initiated litigation in the Ninth Circuit Court of Appeals on behalf of the Native Village of Point Hope, Alaska Wilderness League, Center for Biological Diversity, Defenders of Wildlife, Greenpeace, National Audubon Society, Natural Resources Defense Council, Northern Alaska Environmental Center, Oceana, Pacific Environment, REDOIL, Sierra Club, and The Wilderness Society.

In contrast , as we reported earlier this week, after a very minor oil spill compared to BP’s Gulf spill, China’s response was much different. After ConocoPhillips spilled crude oil into Bohai Bay, oil companies have been put on notice that China is enacting tough “zero-risk” standards.

ConocoPhillips was forced to apologize and create two funds to clean up the oil and to compensate for damages.

The government ordered safety checks on all offshore oil activity by the end of this year, and approval of environmental impact plans for new wells has nearly stopped.  As a result of the stricter environmental standards, China estimates domestic crude oil production – which has been growing by about 7% a year – will drop by half this year, to 50 thousand barrels per day.

Shell’s Plan

Based on what happened in the Gulf spill – where 5 million gallons were released and where BP clearly didn’t have a clue for how to stop the gushing much less clean it up (oil still seeps onto beaches and into wetlands to this day), Earthjustice attorney Holly Harris calls Shell’s cleanup plan ”unrealistic, insulting and irresponsible.”

Last year, after months of unrelenting oil surging into the Gulf, BP and its partners recovered only 5% of the of the oil. The Exxon Valdez oil spill in 1989 fared only marginally better, recovering 8% of the hundreds of thousands of barrels spilled.

And there was even an oil spill in the Beaufort Sea 10 years ago, where mechanical cleanup in icy conditions was described as a “failure.” As was continuously pointed out during the Gulf spill, oil companies have not developed any new technology to clean up spills – they still rely on simple containment booms, toxic dispersants and oil burning.

A recent report to the Canadian government concludes cleanup would be impossible 44-84% of the time during the short summer drilling season and completely impossible the other 7-8 months of the year.

In addition to the usual problems handling a major spill, Alaska has huge ocean waves, gale force winds and widespread sea ice.

“Any oil company that wants to drill in the Arctic Ocean must demonstrate an ability to clean up oil spilled in these icy waters with proven technology,” says Cindy Shogan, Executive Director, Alaska Wilderness League. “Shell’s current oil spill plan is full of inadequacies and falsehoods.”

“Given the risk of a catastrophic oil spill, the Obama administration should not allow Shell to play Russian roulette with the future of polar bears, Pacific walrus and the entire Arctic ecosystem,” says Rebecca Noblin, Alaska Director for Center for Biological Diversity. “If polar bears, walrus and other imperiled species are going to survive in a rapidly-melting Arctic, we need to protect their critical habitat, not sacrifice it to oil companies.”

SOURCE ARTICLE