Posts under ‘Daily Telegraph’

Daily Telegraph 18 January 2010

A coalition of institutional and private shareholders are calling on Royal Dutch Shell to provide transparency on risks associated with its controversial Canadian oil sands project.

The protesting shareholders, who hold a combined £156m stake in the oil company, will make their case to Shell’s management at its annual general meeting on May 18.

Environmentalists, such as this demonstrator at a protest in Dublin, have raised concerns about the energy intensive extraction.

Oil companies have come under pressure at Copenhagen to scale back investment in production from tar sands, as Royal Dutch Shell was branded the world’s second worst corporate lobbyist for its support of the industry.

…companies such as BP and Royal Dutch Shell, which have bailed out of some unproductive renewable energy sources, are directing most of their environmental attention towards next-generation biofuels designed to alleviate these problems. Shell, for example, is experimenting with cellulosic ethanol made from plant waste such as straw and wood chips and biodiesel made from algae, which can be grown in the sea. However, technologically advanced versions are unlikely to be widespread for another 10 years at least.

Daily Telegraph

Gas will be at the heart of Royal Dutch Shell’s production strategy ahead of oil as the world attempts to reduce carbon dioxide emissions, according to the energy group’s new chief executive, Peter Voser.

By Rowena Mason
Published: 8:17PM GMT 24 Nov 2009

Delivering an update on Shell’s two flagship gas projects in Qatar, which are costing the group $21bn (£12.6bn), Mr Voser admitted that one – a liquiefied natural gas (LNG) plant – would overrun by about 10 months.

However, he said construction was on track for Pearl, the other development, to start producing in 2011. It will be the world’s largest gas-to-liquids facility when completed, having spiralled in cost from $5bn to $19bn since 2003.

Both projects will lift Shell’s output by 10pc – or 350,000 barrels per day – and contribute $4bn per year in revenues. “Qatar is key to Shell’s revival,” one analyst from Deutsche Bank said.

Increased capital expenditure is part of a turnaround strategy implemented by Mr Voser that will also see Shell shed 5,000 jobs and ramp up production.

Despite Shell’s history as Europe’s largest oil company, Mr Voser made it clear that gas production would overtake oil production by 2012, as 1bn electric cars hit the world’s roads over the next few years. A few years ago, Shell’s production was split 60:40 in favour of oil.

The International Energy Agency has forecast a gas glut and depressed prices until 2015, but Mr Voser insisted the medium to long-term outlook for demand was strong.

“We are intensifying our gas production because clearly it is the fossil fuel that has the lowest carbon dioxide content,” he said. “We will be more than 50pc gas by 2012 and increasing afterwards.”

The company will add 1m barrels per day to capacity by the end of 2012 – a growth rate of 2pc. But Mr Voser said that while Shell was impressed by the Nigerian government’s efforts to ensure a ceasefire in the troubled Delta oil region, the company would no longer aim for growth in the area.

The chief executive said Alaska could be the “next big area” for oil producers, adding that Shell would deliver proposals to Russia for a major gas development in Yamal by next Spring and is still negotiating on the Kirkuk oil field with the Iraqi government.

He also emphasised the potential of carbon capture and storage technology as key to Shell’s strategy to mitigate emissions from fossil fuels.

Mr Voser ranked it as the most important issue to be discussed at the Copenhagen climate change summit next month, but warned that Europe and the UK are losing leadership in this area as a result of being slow to grant funding and subsidies.

He also admitted for the first time that Shell would accept a minimum price on carbon credits to incentivise investment in clean energy. He said it ought only to be used in the early years of a global system.

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SOURCE ARTICLE

The Sunday Telegraph

November 15, 2009

Ministry cannot account for where £1bn went in Saudi oil-for-jets affair

DAVID HENCKE

DETAILS OF a damning secret report into Britain’s biggest ever arms deal, which raises questions over how the Ministry of Defence spent more than £lbillion, can be disclosed for the first time by The Sunday Telegraph.

A National Audit Office (NAO) investigation into the controversial £20 billion al-Yamamah arms deal between Britain and Saudi Arabia found that:

• The MoD could not properly account for nearly £1billion of cash it paid to British Aerospace (now Bae Systems) at the time of the deal;
• Bae also “failed to account” for the £1billion;
• A£30.3 million management fee was paid to Bae even though there was no “legal or contractual obligation” to do so – a payment described by auditors as “irregular”.

Documents also outline how auditors demanded that the Govemment investigate Bae accounts to find out what had happened to the money, and reveal the fears that led to the report being kept secret for 17 years.

The deal, agreed in 1985, saw British Aerospace-built warplanes exported to Saudi Arabia in exchange for oil, which was sold on the open market by the British Government. The deal has long been at the centre of corruption allegations.

The disclosures are certain to raise new questions as to whether millions of pounds were paid in secret commissions to middlemen.

The revelations could not come at a worse time for Bae Systems, which is facing a Serious Fraud Office investigation over other arms deals.

The al-Yamamah deal involved a series of complex transactions. Saudi oil was given to the Government, which then sold it on the open market. The money raised was then used to buy Tornado fighter and ground attack air-craft and Hawk trainer jets
from Bae, which were then exported to Saudi Arabia.

While the NAO report is still secret, correspondence between the MoD and the NAO has been seen by The Sunday Telegraph.

An internal NAO memo, written by auditor J Parsons on July 12, 1991,reveals that “payments of £30.3 million (redacted) have been netted off in a suspense account.  This is contrary to the fundamental principle of gross accounting and as such is irregular.”

It added that “the department have not accounted in their suspense payments for nearly $ 1.5billion [£1billion] of receipts and payments.

“By any definition, failure to account for $1.5billion indicates a certain weakness in control.” In a draft letter, Sir John Bourn, the former auditor general, urges Michael Quinlan, the then permanent secretary at the MOD, to push Bae to account for the money it had been paid.

He demands that the ministry’s auditors go to the company and insist on seeing its accounts.

The letter to Mr Quinlan goes on: “A thorough investigation into the profitability of the sale would reveal whether substantial commissions have been paid. There are, of course, guidelines to cover such circumstances. We would need to see evidence that these have been followed.”

At the time, the NAO had no power to examine the accounts of a private company.

The documents reveal why the report was kept secret.

Under normal circumstances, the ministry’s accounts would have had to be published and qualified by Sir John, leading to a hearing by MPs on the Commons public accounts committee, then chaired by Sir Robert (now Lord) Sheldon.

Such a scenario provoked panic in Whitehall, since the Government had agreed with the Saudis to keep all the details of the deal secret and it could have led to the cancellation of the order for the jets.

By any definition, failure to account for $1.5billion indicates a  certain weakness

One letter from an auditor warns that it could “blow up”. Another says that the whole business was “a murky area”.

Whitehall invoked national security reasons to prevent public reporting of the accounts. Instead, a secret hearing attended by Lord Sheldon, his deputy Michael Shaw, Mr Quinlan and Sir John was held. In that way, the obligation to inform Parliament had been fulfilled, even though the report itself had not been made public.

The hearing must have raised concerns because it led to Sir John’s demand for an audit of Bae’s al-Yamamah accounts, though it is not clear whether this ever happened.

Information on the deal is to be published under Freedom of Information rules this week.

However, many documents are still being kept secret and the NAO has told the Information Commissioner that an entire file on the contract, dating between 1995 and 2002, has been destroyed.

ARTICLE ENDS (Link will be added when available)

RELATED ARTICLE

BAE Systems whistleblower accuses Shell & BP of money laundering Al-Yamamah proceeds

SHELL INVOLVEMENT IN SAUDI ARABIA / AL YAMAMAH BAE ARMS SCANDAL

Only three years ago, Shell, the world’s biggest oil company, was forced to give up control of the giant Sakhalin development, handing over half of its interest to Gazprom after a dispute over costs and the environment.

Daily Telegraph

Wednesday 14 October 2009

A “few thousand” employees at Royal Dutch Shell have been asked to submit applications for their own jobs, as BP predicts stable oil prices over the next few years.

Peter Voser, chief executive of Royal Dutch Shell, said the group was continuing with a review of its refineries business Photo: Bloomberg News

Peter Voser, the Anglo-Dutch group’s new chief executive, said at an oil conference in London that staff had been invited to reapply for their jobs, but he would not say how many positions would be lost.

Mr Voser also said the group was continuing with a review of its refineries business, although he said that the current climate for asset sales was “challenging.”

“We are moving forward on all of the other assets we have identified. We will divest for value,” he said.

At the same conference, Christof Ruhl, BP’s chief economist, said that he did not believe that oil prices would spike in the next two to three years. He argued that rising spare capacity and relatively low demand growth would create a glut of oil. “There will soon be 6m barrels per day (bpd) of spare production capacity,” Mr Ruhl said.

“In the good years, global demand was rising by 1.2m bpd each year, so even if the good years were to return tomorrow, it would still take more than three years to burn through that spare capacity and to create markets as tense as they were a year ago.”

The crude oil price hit an all time high of $147 in July last year, as worries persisted over supply meeting future demand.

However, the credit crisis caused demand to slump and the oil price collapsed to below $40 dollars a barrel early this year. In London, Brent crude for December delivery was up 48c at $72.51 in late trading.

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Neil Woodford, the star fund manager, believes BP and Royal Dutch Shell may be forced to cut their dividends next year and has sold all his stake in the companies.

Royal Dutch Shell has made a A$3bn (£1.5bn) approach for Australian coal-seam gas producer Arrow Energy.