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The dramatic consequences of plunging oil prices

Screen Shot 2015-01-16 at 09.03.51“Brent futures are set to fall to as low as $31 a barrel by the end of the first quarter from about $48 now.”; “People know these prices are unsustainable,” he said, and they will lead to large-scale layoffs and cuts in maintenance spending, which will eventually sharply reduce overall output. BP’s announcement of layoffs was just the start…; “Just a few months ago, analysts predicted the price would bottom out at $70 a barrel, and then $60. Now it’s at $46, and many have given up trying to guess when the bottom will come.”

From an article by Will Kennedy and Firat Kayakiran published on 16 January 2015 by BloombergBusinessweek under the headline:

“Big Oil Companies Get Serious With Cost Cuts on Worst Slump Since 1986”

Major oil companies are awaking from their slumber and facing up to the magnitude of the crash in crude prices.

From Royal Dutch Shell Plc (RDSA) canceling a $6.5 billion project in Qatar to Schlumberger Ltd. firing about 9,000 people and Statoil ASA (STL) giving up exploration in Greenland, the oil industry this week concluded that the slump is no blip. 

And there’s certainly more unwinding to come. For most of this month, crude oil has traded below $50 a barrel, a level few predicted even two months ago when OPEC signaled it wouldn’t cut production to defend prices. If the market stays this depressed, global spending on exploration and production could fall more than 30 percent this year, the biggest drop since 1986, according to forecasts from Cowen & Co. read more

Shell, Total Lead Energy Shares Lower – $45 a barrel

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From an article by Alan Soughley published by BloombergBusinessweek 13 Jan 2015 under the headline: 

“European Stocks Decline; Shell, Total Lead Energy Shares Lower”

Extracts

Royal Dutch Shell Plc and Total SA led energy-related companies lower…

A gauge of energy stocks slid 1 percent today, for the worst performance of the 19 industry groups on the Stoxx 600. Oil extended losses to trade below $45 a barrel amid speculation that U.S. crude stockpiles will increase, exacerbating a global supply glut that’s driven prices to the lowest in more than 5 1/2 years.

FULL ARTICLE

Screen Shot 2015-01-13 at 09.23.28From an article by Clifford Krauss published by The New York Times (NY edition) 13 Jan 2015 under the headline:

“Oil Prices Fall to Lowest Since 2009”

Extracts

HOUSTON — Oil prices took another sharp turn downward on Monday to levels not seen since the depths of the 2009 recession. Several international banks predicted even lower prices later this year because of an oversupplied global crude market. read more

Market Collapse: 5 percent of Shell’s capital invested in money-losing projects?

Screen Shot 2015-01-06 at 11.59.38From an article by Joe Carroll and Tara Patel published 6 Jan 2015 by BloombergBusinessweek under the headline:

“Oilfield Writedowns Loom as Market Collapse Guts Drilling Values” 

Shell, Europe’s largest energy producer, may have as much as 5 percent of its capital tied up in money-losing projects.

Extracts

Tumbling crude prices will trigger a flood of oilfield writedowns starting this month after industry returns slumped to a 16-year low, calling into question half a decade of exploration.

With crude prices down more than 50 percent from their 2014 peak, fields as far-flung as Kazakhstan and Australia are no longer worth pumping, said a team of Citigroup Inc. (C:US) analysts led by Alastair Syme. Companies on the hook for risky, high-cost projects that don’t make sense in a $50-a-barrel market include international titans such as Royal Dutch Shell Plc and small wildcatters like Sanchez Energy Corp. read more

Shell hypocrisy on climate issues

Screen Shot 2014-10-31 at 17.18.55“I didn’t know Shell was sponsoring this conference when I agreed to do it, but I’m glad for the chance to say in public that Shell is among the most irresponsible companies on earth. When they write the history of our time, the fact that Shell executives watched the Arctic melt and then led the rush to go drill for oil in that thawing north will provide the iconic example of the shortsighted greed that marks the richest people on our planet.”

FROM A REGULAR CONTRIBUTOR

A Bloomberg  Businessweek article by Ben Elgin has identified the blatant and self-serving hypocrisy by Royal Dutch Shell regarding climate change. Shell says one thing for public and media consumption, while quietly doing the exact opposite.

Extracts

Shell, on paper, may be one of the most progressive oil giants on climate issues. Last month, it joined a group of businesses calling on European leaders to target a 40-percent cut in greenhouse gas emissions by 2030. And in April, Shell signed the Trillion Tonne Communique, which urges governments worldwide to significantly cut carbon emissions in order to limit global warming to 2 degrees Celsius above pre-industrial levels. read more

Earthquakes shake NAM, the Shell/Exxon joint venture 

Screen Shot 2014-10-01 at 20.37.24Earthquakes linked to extraction in the area have led to a public backlash and a new production plan for the field will be presented by July 1, 2016. The venture has set aside 100 million euros for claims and has paid out about 50 million euros so far.

Extracts from a BloombergBusinessweek article

The Slochteren field is operated by the Nederlandse Aardolie Maatschappij BV, or NAM, the Dutch gas-production venture of Royal Dutch Shell Plc and ExxonMobil Corp.

Earthquakes linked to extraction in the area have led to a public backlash and a new production plan for the field will be presented by July 1, 2016.

The venture has set aside 100 million euros for claims and has paid out about 50 million euros so far.

The government will also need to spend about 1.2 billion euros to compensate for houses and buildings damaged by temblors in the area of the field. read more

Royal Dutch Shell News Thursday 11 Sept 2014

Screen Shot 2014-09-11 at 00.56.29By John Donovan

The US and EU are ready to impose new sanctions on Russia arising from events in Ukraine. See extract from a fuelfix.com article published under the headline: “Sanctions threaten Putin’s oil deals with Exxon Mobil, Shell”

Other vulnerable international operators include Royal Dutch Shell, the world’s second-largest energy company by market value. Multiple investments by The Hague-based company in Russia include ventures to use advanced reservoir-management techniques to revive and increase crude output from Soviet-era fields and to explore some of the nation’s vast, untapped shale formations. “We are continuing to review the latest sanctions to assess the potential impacts on our business, and engaging with the respective authorities to gain further clarity,” Kayla Macke, a Shell spokeswoman, said in an e-mail. “We are taking action to ensure we comply with all applicable sanctions or related measures. We’re keeping the situation under close review.” read more

Royal Dutch Shell Shareholders Beware

Screen Shot 2014-09-06 at 21.06.55The news that BP may be fined up to $18bn for the oil spill in the Gulf-of-Mexico as a result of a ruling by a US federal court that BP acted with “conscious disregard of known risks” and that BP’s “conduct was reckless,” may have very serious implications for other oil companies.

By John Donovan

The news that BP may be fined up to $18bn for the oil spill in the Gulf-of-Mexico as a result of a ruling by a US federal court that BP acted with “conscious disregard of known risks” and that BP’s “conduct was reckless,” may have very serious implications for other oil companies.

Extract from a New York Times article:

The ruling stands as a milestone in environmental law given that this was the biggest offshore oil spill in American history, legal experts said, and serves as a warning for the oil companies that continue to drill in the deep waters of the Gulf of Mexico, where high pressures and temperatures in the wells test the most modern drilling technologies. read more

Royal Dutch Shell Plc News Roundup Sat 4 Sept 2014

Screen Shot 2014-09-06 at 15.28.04Royal Dutch Shell Plc CEO Ben van Beurden says he can’t deny returns are too low

By John Donovan

Mixed fortunes for Shell in the last few days. 

Ben van Beurden says he can’t deny returns are too low

Royal Dutch Shell CEO Ben van Beurden has admitted to the Wall Street Journal that he cannot deny that investor returns are too low. He has also reportedly stated: “We don’t have a [production] volume or capital-employed target. What I want to show is that we can grow free cash flow.”

Shell ending JV with Saudi Aramco for Kidan Gas project

According to Oil and Gas Insight, Royal Dutch Shell is ending its joint venture (JV) with Saudi Aramco for the Kidan gas development project in the Empty Quarter. This continues a string of disappointments following the opening of Saudi Arabia’s upstream to foreign participation in a bid to boost domestic gas exploration and production. Now, with Shell’s looming exit, Aramco’s ambitious efforts to draw foreign players into development of the Kingdom’s gas reserves seem set to fail. read more

Woodside Chairman Defends $2.7 Billion Buyback Deal With Shell

Screen Shot 2014-02-10 at 16.29.29Extracts from a BloombergBusinessweek article by James Paton and Rebecca Keenan published 23 July 2014

Woodside Petroleum Ltd. (WPL), Australia’s second-largest oil and gas producer, defended a plan to buyback about $2.7 billion of stock from Royal Dutch Shell Plc (RDSA) amid concern investors may reject the deal.

Woodside’s buyback is part of last month’s $5 billion deal in which Shell, Europe’s largest oil company, will trim its 23 percent stake in the Australian company. It’s possible that Woodside investors voting on the transaction Aug. 1 will block the buyback, according to Macquarie Group Ltd. read more

Death of 193 Dutch Strains Russian Relations for Shell, Heineken

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At one point the largest foreign investor in Russia, Shell declined to comment on whether its business would be affected after the downing of the plane. The company lost four employees in the incident, it said yesterday.

BloombergBusinessweek article by Celeste Perri, Maud van Gaal and Fred Pals published 22 July 2014

For centuries, the fortunes of the Netherlands, the wind-swept country carved out of North Sea wetlands, have relied on preserving the peace with its global trading partners. Last week’s downing of an airliner carrying 193 Dutch nationals is testing one of its most important relationships, involving companies from Royal Dutch Shell Plc (RDSA) to Heineken NV. (HEIA)

The Netherlands was Russia’s third-biggest trading partner last year, data compiled by Bloomberg show. The Dutch, home to the busiest container port in Europe and the region’s biggest energy company, send dairy products, meat and machinery to Russia, which the U.S. says is complicit in the attack. read more

A Horrified Netherlands May Rethink Its Economic Ties With Russia

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Screen Shot 2014-02-10 at 16.29.29Extract from a BloombergBusinessweek article by Carol Matlack published 21 July 2014

The Netherlands, a nation of traders, generally doesn’t like to let politics interfere with business. The death of 193 Dutch nationals in the Malaysia Airlines  jet crash could change that.

Major Dutch companies with business interests in Russia also are drawing fire for their relations with President Vladimir Putin. “In April of this year, when the crisis over Crimea was at its height, [Royal Dutch Shell Chief Executive Officer] Ben van Beurden made a point of visiting Putin and saying that no matter the political situation, Shell and Russia had great plans for the future…” read more

Shell Says Wins U.K. Court Ruling in Nigerian Oil Spills Case

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BloombergBusinessweek article by Jeremy Hodge published Friday 20 June 2014

A Royal Dutch Shell Plc (RDSA) subsidiary said it won a preliminary ruling in a U.K. court against thousands of Nigerians who say their land, rivers and wetlands were spoiled by two oil spills in the Niger River delta in 2008.

Judge Robert Akenhead ruled today that a Nigerian law, the Oil Pipelines Act, is adequate for compensating for spills, limiting the scope of the U.K. litigation to an assessment of actual damages caused, the company said in a statement today.

The lawsuit against Shell’s Nigerian subsidiary was filed by residents of the coastal Bodo community in 2012 after two spills on the Bomu-Bonny Pipeline in 2008, Shell said. read more

Ukraine Crisis Forces Shell to Halt Shale Wells in Restive East

Screen Shot 2014-02-10 at 16.29.29Extract from a Bloomberg/Businessweek article by Ladka Bauerova and Will Kennedy published 3 June 2014

Royal Dutch Shell Plc (RDSA) has halted drilling for shale gas in eastern Ukraine to protect its personnel from clashes between pro-Russian separatists and the Ukrainian army. Shell is taking a “time-out” on exploration work after drilling two wells since the Hague-based explorer signed a production-sharing agreement last year, Chief Financial Officer Simon Henry said in an interview with Bloomberg TV in London.  “We obviously need to assess the future security situation as it develops because the safety of our own people is our first priority,” Henry said. “There’s no pulling out, but we take a time out on the actual drilling activity on the ground.” read more

Woodside Scraps $2.6 Billion Israeli Gas Deal as Talks Fail

Extract from a BloombergBusinessweek article by James Paton published 20 May 2014

Woodside Petroleum Ltd. (WPL), Australia’s second-biggest oil and gas producer, scrapped an agreement to buy a quarter of Israel’s largest natural gas field for as much as $2.6 billion after talks to complete the deal collapsed.

FULL ARTICLE

Shell Considers Martinez Refinery Cutback Amid Shale-Oil Boom

Screen Shot 2014-02-10 at 16.29.29Extracts from a BloombergBusinessweek article by Lynn Doan published 19 May 2014 under the headline: “Shell Considers Permanent Coker Shutdown Amid Shale-Oil Boom”

Royal Dutch Shell Plc (RDSA), Europe’s biggest oil company, is considering retiring one of two coking units at its only refinery in California as the company seeks to run lighter crude at the plant. Shell is considering the shutdown as hydraulic fracturing and horizontal drilling unleash record volumes of light oil from shale formations… “The reality is that we are looking at each individual refinery and making economic decisions as to what is the most optimal feedstock,” John Abbott, downstream director for The Hague-based Shell, said in an interview… read more

International outcry as Brunei introduces sharia law and takes country back to the dark ages

Screen Shot 2014-05-02 at 00.27.28Royal Dutch Shell, an Anglo-Dutch multinational, runs two major operations in Brunei as a joint venture with the Brunei government. A spokesman, Jonathan French, said the company would not comment on the possible impact on its employees.

Extracts from an article by Andrew Buncombe published 30 April 2014 by The Independent

The Sultan of Brunei, an absolute monarch who pays for a garrison of British troops to be stationed is his oil rich nation, will on Thursday dismiss the concerns of human rights campaigners and start imposing sharia law. Many of the laws, which include the dismemberment of limbs and stoning to death, will apply to both Muslims and non-Muslims.

Royal Dutch Shell, an Anglo-Dutch multinational, runs two major operations in Brunei as a joint venture with the Brunei government. A spokesman, Jonathan French, said the company would not comment on the possible impact on its employees. read more

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