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Shell accused of ‘moral bankruptcy’

Feb 2nd, 2012
by John Donovan.
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Shell has been accused of “moral bankruptcy” by unions after unveiling a 54% rise in full-year profits less than a month after shutting its final salary pension scheme to new employees in Britain.

The oil company reported global annual earnings of $28.6bn (£18bn) – more than £2m an hour – while paying out $10.5bn to shareholders during 2011 and promising to raise dividend levels further in the coming months.

Peter Voser, Shell’s chief executive, said “there is more [good profit] to come” as he outlined a new programme of increased global investment as well as cuts that he said would provide even better returns for investors.

“We have worked hard to generate a strong pipeline of investment opportunities for Shell … All of this is supported by efficiency gains from our continuous improvement programmes,” Voser said.

But Europe’s largest oil group was attacked for displaying “predatory capitalism” by Len McCluskey, leader of the Unite union. “Shell reminds us of the moral bankruptcy of the corporate elite. The company is needlessly closing its final salary scheme while posting colossal profits,” he said. “Rather than provide security to its future staff and still make a profit, it has chosen greed. Shell is not alone: Unilever is needlessly slashing its employees’ pension benefits when there is no financial reason for doing so.”

Shell, which has also upset staff by unveiling plans to shut its major research and development centre at Stanlow in Cheshire after disposing of its refinery there, said it was surprised by the attack.

A spokesman pointed out that most government and private pension schemes paid in Britain were supported by Shell, which provides 12% of all dividends from the FTSE 100 index of leading firms.

The Anglo-Dutch group is riding high on the back of surging oil prices – which were more than $30 per barrel higher last year than in 2010 – and booming demand for gas, but says it is making most of its money outside Britain and makes barely 1p per litre out of petrol sales.

Voser pointed out that two thirds of the UK pump price went straight to the government as tax. He blamed near record prices for forecourt diesel on global crude market conditions and said Shell’s UK retail operations continued to come under “very heavy competitive pressures”.

Shell would continue to invest in the North Sea in oil projects such as those it has west of Shetland, but said there was a need for the right “tax structures to keep the oil and gas industry alive here”.

The company was doing “our bit for balancing the books” of the Treasury through paying a heavy tax burden, it said, while denying that its recent sale of the Stanlow refinery to an Indian group had any impact on the wider refining and distribution problems that have recently hit the south-east of England.

Shares in Shell rose 11% last year while arch-rivals such as BP saw no growth at all but on Thursday the Anglo-Dutch group’s stock market valuation fell slightly as the City was disappointed by the financial performance in the last quarter of the year.

Shell reported three-monthly earnings of $6.5bn, which was up on the same period last year but down quite heavily on the third quarter.

Total oil and gas production in the fourth quarter was lower, at 3.3m barrels of oil equivalent per day compared with 3.49m barrels a year ago. Shell said it would increase annual production to 3.7m barrels by 2014, helped by a $100bn investment plan which started in 2010.

The company said it would put much of its drilling efforts into the US and it now claims to have become the biggest driller – but not producer – in the deepwater Gulf of Mexico where BP used to reign supreme. Since the government moratorium on drilling in the Gulf, imposed following BP’s Deepwater Horizon spill, was lifted, Shell has obtained permission to drill five wells during 2012.

The company said it was treading carefully, meanwhile, in the Middle East in the wake of the Arab spring, but hopes to reveal soon how its exploration programme has been going in Saudi Arabia and when it plans to get back to similar work in Libya.

Shale hopes

Shell is hoping to turn the “shale gas revolution” sweeping north America into an export earner but also expects to see the controversial new energy source taking off in Europe once an “emotional” debate dies down.

The Anglo Dutch oil company is looking at possible plans to ship surplus quantities of the fuel, as liquefied natural gas or “gas-to-liquid” processed fuel, from the US.

Natural gas prices in north America have fallen to a 10-year low due to the discovery that gas can be extracted from shale rock using a technique known as hydraulic fracturing or “fracking”. It uses an assortment of chemicals to release gas with tiny explosions and has upset environmentalists and some politicians.

Peter Voser, chief executive of Shell, said $6bn would be spent worldwide on different kinds of shale gas operation, half of this in the US. The heavily populated nature of Europe versus the US made it more difficult to “frack” this side of the Atlantic, Voser conceded, but he said governments should “not take fast and emotional decisions” to restrict shale extraction. Shell expects Poland and even Germany to proceed with shale gas exploitation but it is also looking at operations in Ukraine and China.

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Pensions anger as even profitable firms cut benefits

Jan 22nd, 2012
by John Donovan.
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The Observer, Sunday 22 January 2012

When even successful companies such as Shell and Unilever are taking an axe to staff retirement packages, is the outlook bleak for everyone?

Unilever, the maker of everything from Pot Noodles to Dove soap, has infuriated its staff by cutting pension payouts – despite being highly profitable. Shell, another household name, has followed suit with plans to cut retirement incomes.

Unilever suffered a wave of strikes which started last week and will continue for the next five days. Much of the anger among employees at its factories and research units is focused on the company’s £6bn operating profit and the pay, bonus and pension top-ups awarded to chief executive Paul Polman. He pocketed £2.8m last year, of which £1.7m was a performance-related bonus. His pension was increased by a company donation of £352,000, according to the 2011 annual report.

For staff, it is a typical them-and-us story of sky-high rewards for directors while shopfloor workers are bullied into accepting reduced standards of living. The changes to pension scheme rules are the flashpoint. However, a closer look at the changes makes it harder to characterise as a poor deal.

In 2008, Unilever made its first move to save costs, but refused to push new staff into the default arrangements adoped by other companies, which rely on stock market investments and put all the risk of generating a retirement income on to the employee. The board said new joiners would receive a pension based on their career-average earnings. It thus maintained the scheme, and effectively guaranteed a maximum cut of only 20% to pension payouts, while rivals were devising schemes for new staff that would mean losses of 60% at least.

Last year Unilever told staff that the costs of providing a pension had soared following a rise in life expectancy, poor investment returns and the threat from more costly regulations. It meant all staff, not just new joiners, needed to move to the new career-average scheme.

Unions are well aware of the rising costs of pension provision. Average life expectancy is 80, up from 72 in the 1970s, according to professor David Leon of the London School of Hygiene and Tropical Medicine’s epidemiology unit. He says it is likely to carry on rising as more people stop smoking and eat healthily, though increasing obesity and diabetes could reverse the effect. According to the Office for National Statistics, between 2004-06 and 2008-10 average life expectancy for women rose by a year to 82.3, while for men it rose by 1.2 years to 78.2.

Poor investment returns are the other side of the equation, after a decade of low interest rates and underperforming stock markets. The index of Britain’s top 100 companies declined 5.5% last year. In fact, growth in most schemes over the past 10 years has been simply a result of employee and employer contributions. Investment gains, such as they are, have struggled to keep pace with inflation.

Firms also face extra regulatory costs because of European Union plans to categorise occupational pension schemes as insurance vehicles. This will mean they must boost their funding position, something they can only do at their own expense.

Unions also know that the biggest losers from the shift away from final-salary benefits are middle managers on higher pay. Those at the top have risen through the ranks to a much higher salary than the one they started on. A career-average scheme takes into account income levels during the early years of a career and can drag down the total.

Then there is the question of Polman’s pension contribution from the company, which amounts to a third of his £1m base salary. It seems a high figure until pension analysts point out that most employees over 50 in a final-salary scheme will enjoy a pension contribution of at least a third of their salary.

One of the main unions in the Unilever battle, Usdaw, supports Tesco’s career-average scheme. And the deal it signed meant all staff foregoing their existing final-salary benefits. Unilever will protect all previous commitments.

Shell, on the other hand, is representative of most FTSE 100 firms. It plans to direct new employees into a stock market-related scheme while retaining a final-salary option for existing employees. This is the traditional solution of finance directors, who have disliked the unlimited liability and rising costs of final-salary pension schemes since the mid-1990s.

The banks were the first to ditch their final-salary commitments. In the stock market crash of 2003, almost all the 7,000 remaining firms with final-salary schemes shut them, though, like Shell, only to new members. This created a two-tier workforce inside many companies, something which unions felt obliged to ignore.

Some workplaces took a stand against the shift to retaining final-salary benefits for existing workers and stock-market plans for new staff but, outside the public sector, these campaigns fizzled out.

The UK now has an ageing group of about 2 million employees working towards retirement with their final-salary benefits intact. Another 16-18 million have some of their working life covered by a final-salary scheme.

But the bulk of contributions for 20 million workers with a pension are in the new stock-market schemes that account for 88% of all current contributions, according to pension advisers Towers Watson.

Final-salary schemes usually guarantee to provide a retirement income after 40 years’ service worth two-thirds of a worker’s final pay cheque. With a stock market-invested pension it is a very different picture. For many people it has meant getting back little more than was put in, despite the stock market having more than doubled its value in 20 years. The result is a pension worth no more than a fifth of final salary.

Fund managers, who are often blamed for siphoning off much of the investment gain in pension schemes to pay their commissions and fees, are unlikely to make much progress in the next few years of recession and lacklustre growth across the developed world. This will only lead to smaller payouts from the new breed of cheaper scheme. In this environment, strikes against businesses such as Unilever that continue to offer generous guarantees could become harder to justify.

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RELATED:  5 Jan 2012: Union attacks Shell as it closes final-salary pension scheme in Britain

Heart of darkness at Royal Dutch Shell

Jan 21st, 2012
by John Donovan.
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The “Rossport Five” were jailed at the specific request of the company, which had obtained compulsory purchase orders for the land in question – the first time in Irish history that such an order was granted to a private company. The five will remain in jail until they undertake not to obstruct the company. (SHELL)

The company stinks worldwide…

By John Donovan

This article focuses on an informative parliamentary debate about the Corrib Gas controversy held in the Houses of the Oireachtas, the national parliament of Ireland, on 6 October 2005. It does not appear to have been reported in any detail at the time.

Some very forthright comments were expressed about Shell.

The debate was held after the release from prison of the Rossport Five, activist landowners jailed at the specific behest of Shell. The activists held legitimate concerns on behalf of their families about health, safety, and environmental implications of the Shell led Corrib Gas Project.

Extracts from a related Guardian article: Shell meets its match in the Rossport Five

Suddenly, the issue became one of the biggest news stories of the year and, as the Irish Examiner called it, “a major public relations disaster for the Shell corporation”. The “Rossport Five” were jailed at the specific request of the company, which had obtained compulsory purchase orders for the land in question – the first time in Irish history that such an order was granted to a private company. The five will remain in jail until they undertake not to obstruct the company.

“Shell officials misjudged the situation if they thought to intimidate others by making an example of these men,” the Irish Times said. Indeed, July has seen huge rallies in support of the men in Co Mayo and in Dublin, the picketing of Shell garages nationwide, and round-the-clock blockades of the refinery construction site.

Some of the exchanges in the parliamentary debate were even more damaging to Shell and proved to be prophetic in mentioning Shell’s use of security forces against protestors in Nigeria. No doubt wondering whether such intimidatory tactics by the multinational might be imported into Ireland.

The following extracts are from the official record:

Brief extracts from opening statement by Minister of State at the Department of Communications, Marine and Natural Resources (Mr. Gallagher) Information on Pat the Cope Gallagher Zoom on Pat the Cope Gallagher

It was a source of great regret to me that five Rossport men were committed to prison as a result of their opposition to the proposed pipeline.

The safety review of the on-shore, up-stream gas pipeline is now under way. It will be thorough and comprehensive and will be carried out by independent, internationally recognised experts.

Mr. Finucane: Information on Michael Finucane Zoom on Michael Finucane

I welcome the Minister of State’s statement which outlines the latest developments in regard to the Corrib onshore pipeline. Although it is quite a distance from Rossport, a public meeting on the issue was recently held in Newcastle West in County Limerick. The families of the Rossport men were represented and Dr. Mark Garavan, spokesman for the Shell to Sea campaign, spoke at length. It was an informative session and indicated how this issue has resonated with the public in that it seems a manifestation of the small man taking on a major multinational. Speakers at the meeting drew our attention to the unfavourable publicity for Shell some years ago in regard to its activities in the Ogoni region of Nigeria. It is ironic that the same company is involved in this controversy in which five people were imprisoned as a result of their stance on the proposed onshore pipeline. The action they took was a consequence of their genuine concerns.

Mr. Kenneally: Information on Brendan Kenneally Zoom on Brendan Kenneally

I welcome the Minister of State to the House and the opportunity to speak on this issue. When we look back on the imprisonment on those who have become known as the Rossport five we will view the matter with regret. It should not be necessary for five citizens of the State to go to prison for 94 days to vindicate what they perceive to be their rights. Regardless of the sequence of events and the legal niceties responsible for their three month stay in an Irish prison, it should not have happened here in this enlightened third millennium.

We can talk about principles and principled stands all day and discuss the relative claims for the safety of the installation and the power of multinational companies but who would favour a gas pipeline pumping unknown quantities of explosive material at unknown explosive pressure not much more than 100 yards from people’s homes? This was not just a blind protest on the part of disgruntled residents. Their arguments were logical. I cannot confirm that they were correct but they did raise reasonable doubts about safety and the appropriateness of the industry being there at all, such as the inadequacy of the soil through which the pipeline will run and several other arguments worth investigating.

I have evidence of a quantified risk assessment carried out on Shell’s behalf in Australia approximately five years ago in which there was a fundamental flaw in the design which was missed in the quantified risk assessment. Had the Government authorities in Australia not spotted the fundamental flaw an offshore rig would have been constructed and had an entirely predictable and [264]likely event happened hundreds of people could have been killed. A quantified risk assessment is done on the data supplied by the client, in this case by Shell, and it is not independent. If there is to be a safety review, it is desperately important that the first brief of the company must be to know whether this is inherently safe or whether there are margins of uncertainty because it is a unique project.

Mr. Norris: Information on David P.B. Norris Zoom on David P.B. Norris

I listened to Senator Mansergh’s contribution with great interest and in response to his last comment I would say that Shell really needs to revise its entire ethos and modus operandi. The company stinks worldwide, but we were not sufficiently aware of this fact and we have let them away with potential murder in this country. If, as Senator Mansergh also said, international business will look at what is happening here, then let them look. Let them see that Irish people and the Government have standards. It seems extraordinary that five decent, respectable people in the community were sent to jail at the instigation of Shell Oil. These men did not have to go to jail but they were pushed into that position by the company. It also seems extraordinary that they were jailed while trying to defend their own homes, welfare and possibly even their lives, which should be a constitutional imperative.

Should we feel secure because Shell is involved? I do not think so. If we look at the company’s track record internationally, we can see it is good at spin. It bought into things like National Geographic and it sponsors environmental programmes on television, while simultaneously destroying the environment in places such as Nigeria. Its modus operandi although subtly changed from Nigeria is in essence precisely the same and reveals a complete contempt for local people as long as it can get the Government on its side and its PR merchants in with the spin.

Let us consider the record in Nigeria. Shell Oil was complicit in the fact that the Nigerian Government hanged nine environmentalists for protesting peacefully in 1995. The tribunal that convicted the men was a joint effort between Shell and the Nigerian Government. These people protested because of the enormous amounts of oil spillage in their territory against which they were totally unprotected. Between 1976 and 1991 some 2,976 oil spills occurred in the Niger delta. A World Bank investigation found that the levels of hydrocarbon pollution in Ogoniland were more than 60 times the US limits. This was confirmed in 1997 by a Project Underground survey which found petroleum hydrocarbons in one Ogoni village’s water source at 360 times the limit set for the European Community. This is the respect for the environment that Shell Oil has in Nigeria.

Let us consider how Shell copes with this situation. In Nigeria as in Ireland there is a rebellious local population. Shell uses the local existing institutions to hand. In Ireland there is a complacent Government and requirements are placed on judges to make certain decisions. I do not criticise the Judiciary in that it is working with what it has. Shell contributes to the military funding in the areas where it needs to suppress the people. Shell has admitted that it has paid directly for visits to two villages in Ogoniland. These visits were as a result of a peaceful demonstration by the local inhabitants. It has also admitted purchasing weapons for the local police force which guards its facilities. Many people believe that Shell’s [268]involvement in the military aspect is much greater.

Bearing in mind that the police are partly funded by Shell Oil, a classified memorandum from a police leader in this area described his plans for “psychological tactics of displacement-wasting”. This is what Shell is doing in the west of Ireland; it is displacing the people. The memorandum further stated: “Shell operations are still impossible unless ruthless military operations are undertaken.” It is prepared to be ruthless militarily and it is prepared to be ruthless in its involvement in the courts. Let us consider what it did in the trial of Ken Saro-Wiwa. We now know that two significant witnesses in that case were suborned by Shell with offers of money and employment in the Shell group.

I am not just some left-wing crank talking about this matter. The United Nations Special Rapporteur’s report on Nigeria published in 1998 accused both Nigeria and Shell of abusing human rights and failing to protect the environment. It condemned Shell for a “well armed security force which is intermittently employed against protestors”. This is what we are dealing with. This is the heart of darkness.

Mr. Kitt:

We should listen again to what people are saying. I hope that Shell will explain some of the issues which it is not explaining. Senator Norris made an important point regarding Shell’s involvement in Nigeria. In 1985 I was a member of the Joint Committee on Foreign Affairs. We intended to visit Nigeria with a Trócaire delegation to visit the Ogoni region, but the Nigerian Government prevented us from going there, or even into Nigeria, because of our wish to go to the Ogoni region. There was no support from Shell, which I found very disappointing. While one cannot blame Shell for all the problems in the Ogoni region, the company has a case to answer with regard to environmental matters. That is one of the reasons the people in Rossport were so concerned that the pipe was coming through their area, very close to houses. They were worried about health, safety and environmental issues and knew that Shell did not have a very good track record in those areas.

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Shell to shut its main UK research base and transfer its work overseas

Jan 15th, 2012
by John Donovan.
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Hundreds of scientists to be relocated as oil multinational aims to shift most research and development work to Germany by 2014…

Shell staff told the Guardian privately that they were “seething”…

Terry Macalister: guardian.co.uk, Sunday 15 January 2012 15.12 GMT

Shell, led by Peter Voser, is to close its technology centre in Thornton, Cheshire. Photograph: Guido Benschop/AFP/Getty Images

Shell is to shut its main UK research and development base and transfer the work overseas in a bitter blow to Britain’s knowledge economy.

Hundreds of senior scientists working at the centre at Thornton in Cheshire will be scattered to other offices in a move that follows the sale of the nearby Stanlow refinery and is seen by some as a more general retreat by Shell from the UK.

Shell Technology Centre Thornton has been the base for developing biofuels and more traditional fuels for customers that include the Ferrari Formula One racing team.

Only 18 months ago the R&D base launched two new FuelSave products using the former England cricketer Andrew Flintoff to lead the marketing effort.

But the facility, where almost 300 scientists work, is to shut completely in 2014 with Shell concentrating its R&D efforts in Germany and other overseas centres.

A spokesman for Shell, which made £11.4bn in its last full financial year, said some of the positions would “migrate” to Shell’s UK headquarters in London. Other staff could work in Manchester, he added.

“This relocation of employees within the UK follows the decision … to move the site’s laboratory activities, largely to Hamburg but also to other sites globally, as part of a global review of our technology footprint,” he said.

Shell staff told the Guardian privately that they were “seething” that the oil firm had been gradually cutting staffing at Thornton after closing R&D bases at Sittingbourne in Kent and Egham in Surrey. They said it reflected a general reduction in the importance of UK operations at the Anglo-Dutch group since the last British chief executive, Phil Watts, left in 2004 after a row with the US securities and exchange commission over the way the company had been booking its oil reserves in its accounts.

Shell, now led by a Swiss man, Peter Voser, announced the sale of Stanlow – its last UK refinery and the country’s second largest – to Essar Energy of India in 2010.

And last week Shell, which is looking at ways to reduce its costs, said it planned to close its pension scheme to new entrants next year in order to “reflect market trends in the UK”. Existing members of the fund will be unaffected.

After last spring’s budget, Shell said it might sell some of its North Sea oilfields because of tax changes but its nearest rival, BP, has also faced accusations it is investing less and less in its home market. Shell, which is expected to unveil fourth-quarter profits of about $5bn (£3.25bn) on 2 February, said it hoped the Thornton site could still continue to pioneer R&D.

A spokesman said: “We will work with interested parties to explore options for re-use of the site and facilities and we hope that science, technology and research can continue to be part of its future.”

Meanwhile, Shell’s hopes of drilling exploratory wells in Arctic waters received a boost last week with the affirmation that its federal air permits for the Chukchi Sea were properly granted. The US environmental protection agency’s appeals board rejected Alaska native and conservation groups’ challenges to the granting of air permits.

Shell Alaska’s spokesman Curtis Smith announced that the decision meant Shell, for the first time, had usable air permits that would allow its drill ship, the Noble Discoverer, to work in the outer continental shelf off Alaska’s north-west coast this year.

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Hostile website domain names

Jan 13th, 2012
by John Donovan.
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Shell in their sights …. Royal Dutch Shell online critics John and Alfred Donovan outside the Shell Centre in London October 2009. Photograph: Graham Turner for Guardian newspaper article

By John Donovan

An article published in the Financial Times on 12 January 2012 reported that the Blackstone Group has been using a brand protection firm MarkMonitor to quietly register “hostile web domain names in an attempt to head off online criticism…”

The domain names registered predictably include blackstonesucks.com.

MarkMonitor declined to comment or deny that Blackstone is a client, but claimed that “defensive registration” is very common with major brands.

According to MarkMonitor: “Every business needs to protect their brand online. Powerful brands are valuable assets that are particularly vulnerable in the digital world.”

The concern is over what a related article has described as “brand-bashers“.

The website hereisthecity said in another related article: “Firms that are at the center of any form of controversy or, face possible public ire, often protect themselves in this way.”

A Reuters article on the same subject contains a quote from Blackstone spokesman, Peter Rose who claims: “This is a routine defensive move to protect ourselves. Any company that is in the public eye will take similar measures.“

Unfortunately for Royal Dutch Shell, when it tried in 2005 to register the top level domain name for the merged company – Royal Dutch Shell Plc as a defensive measure – it found that its most prominent long-term online critics had beaten them to the .com registration.

In June 2006, Shell appointed a digital agency with experience in turning around corporate reputations. The headline is self-explanatory: “Shell seeks agency for online makeover“. The brief issued by Shell web communications division in The Hague, included online branding.

Despite Shell’s best efforts, Royaldutchshellplc.com has become the effective “gripe” site in the world and has genuinely cost Shell billions of dollars. Sounds like a wild claim, but it is a provable fact.

Shell unsuccessfully attempted to seize the domain name.

Our subsequent activities have been so damaging to Shell that it set up a global operation spying on our website and its own employees. This was an unsuccessful effort to stop Shell insider information from being leaked to us.

There have been numerous media articles relating to our website. A search for “royaldutchshellplc.com” on ft.com reveals a list of articles, the majority based on information about Shell leaked to us and passed to the FT.

Some articles on this subject

Blackstone turns hostile on website names

Top Firm Takes Action Against ‘Suckers’

Some related articles about our online activities…

Prospect Magazine: “Rise of the Gripe Site“

The Guardian: “92-year-old’s website leaves oil giant Shell-shocked“


CLICK ON IMAGE TO ENLARGE

PDF VERSION OF GUARDIAN ARTICLE

The Sunday Times: “Two men and a website mount vendetta against Shell”


Shell must pay $1bn to deal with Niger Delta oil spills, Amnesty urges

Nov 11th, 2011
by John Donovan.
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Rights group says oil giant’s 2008 spills have wrecked livelihoods of 69,000 people and will take 30 years to clean up

Shell’s oil spills in the Niger Delta (pictured) mean the region needs the world’s largest clean-up, says the United Nations Environment Programme. Photograph: AP

Royal Dutch Shell’s failure to mop up two oil spills in the Niger Delta has caused huge suffering to locals whose fisheries and farmland were poisoned, and the firm and its partners must pay $1bn to start cleaning up the region, Amnesty International said on Thursday.

A spokesman for Shell said the company and its partners had already acknowledged the two oil spills and started cleaning up, adding it had been hampered by oil theft, which was responsible for most spills in the Delta.

The report by the human rights group to mark the 16th anniversary of the execution of environmental activist Ken Saro-Wiwa by Nigerian authorities said the two spills in 2008 in Bodo, Ogoniland, had wrecked the livelihoods of 69,000 people.

“The prolonged failure of the Shell Petroleum Development Company of Nigeria to clean up the oil that was spilled, continues to have catastrophic consequences,” it said.

The SPDC is a Shell-run joint venture between the Nigerian National Petroleum Corporation, which holds 55%, Shell, which holds 30%, EPNL 10% and Agip, with 5%.

Amnesty said the community’s UK lawyers suggested the spill had leaked 4,000 barrels a day for 10 weeks, which would make it bigger than the 1989 Exxon Valdez spill in Alaska.

“Those who used to rely on fishing for a living have lost their incomes and livelihoods. Farmers say their harvests are smaller than before. Overall, people in Bodo are now much less able to grow their own food or catch fish,” the report said.

Shell agreed in August that a Nigerian community affected by the spill can claim compensation in a British court setting a precedent for such claims.

The Amnesty report urged implementation of a United Nations Environment Programme report in August that was critical of both Shell and the Nigerian government for contributing to 50 years of pollution in Ogoniland, a region in the labyrinthine creeks, swamps and rivers of the oil-rich Niger Delta.

The Unep said the region needs the world’s largest ever oil clean-up, costing an initial $1bn and taking 30 years – proposing that each of the partners of the SPDC pay its share, based on their stake in the operator.

Amnesty urged SPDC to set up a $1bn clean up fund, citing Bodo as an example of a place needing urgent attention.

“Bodo is a disaster … that, due to Shell’s inaction, continues to this day. It is time this multi-billion dollar company owns up, cleans up and pays up,” Aster van Kregten, Amnesty International‘s Nigeria researcher said in a statement.

Shell stopped pumping oil from most of Ogoniland after a campaign led by Saro-Wiwa, a writer and activist, but it continues to be the dominant player in the Niger Delta.

“SPDC has publicly acknowledged that two oil spills that affected the Bodo community in 2008 were caused by operational issues,” Shell spokesman Precious Okolobo said, adding Shell estimated the total size of the spill to be 4,000 barrels.

“The reality is that our efforts to undertake cleanup in Bodo have been hampered by the repeated impact of sabotage and bunkering spills,” he added.

Oil is often spilled during sabotage attacks on facilities and bunkering – tapping pipelines to steal crude. Okolobo said 150,000 barrels of oil are stolen each day in the Delta.

“If Amnesty really wanted to make a difference … it would join with us in calling for more action to address this criminal activity, which is responsible for the majority of spills.”

But Amnesty said even if some spills were caused by theft, “this does not justify a failure to clean up after an oil spill – all oil companies are required to do so, regardless of cause.”

SOURCE ARTICLE

Shell and SSE join forces for UK’s first carbon-capture project

Nov 10th, 2011
by John Donovan.
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Firms announce CCS plans for Peterhead power station following collapse of £1bn proposals for Longannet

Shell and SSE hope to bring carbon-capture to Peterhead despite the cancellation of plans at Longannet (above). Photograph: Murdo Macleod

Two major energy companies have combined forces to bolster the case to build the UK’s first carbon-capture project at Peterhead power station near Aberdeen.

The power company SSE and Shell, the fuel producer, announced their alliance after the collapse of £1bn proposals to fit carbon-capture and storage (CCS) plant to Longannet coal-fired power station, one of Europe’s largest coal-powered stations, last month.

Ministers have insisted they are still committed to funding a pilot project but the collapse of the ScottishPower scheme at Longannet has damaged confidence that the UK will build carbon-capture plant.

A decision on another major CCS project, at a new coal-fired station at Hunterston in Ayrshire is now expected to be delayed for at least a year after receiving a record number of objections.

Councillors in North Ayrshire are anticipated to vote against the project, forcing the Scottish government to order a lengthy public inquiry.

The Peterhead gas-fired power station is owned by SSE and was one of the first to be mooted for carbon-capture. A small pilot project there by BP to make hydrogen and pump the CO2 into North Sea seabed was scrapped because of lack of government support.

It is one of several British schemes in the running for European funding, including the Ayrshire Power project at Hunterston.

Shell and SSE said they would accelerate their planning and designs for Peterhead, to retrofit CCS equipment to one of its three 385MW combined gas cycle turbines. The CO2 would then be piped to Shell’s Goldeneye gas field in the North Sea.

Ian Marchant, the chief executive of SSE, said: “If long-term targets for reducing emissions are to be met, CCS technology must be applied as widely as possible.

“We therefore welcomed the UK government’s decision to include gas-fired generation plant in its CCS demonstration programme.

“However, the development of a commercial-scale CCS demonstration project presents significant challenges and will require appropriate levels of support from both the EU and UK government.”

The Peterhead alliance was welcomed, if cautiously, by WWF Scotland, the Scottish Labour party and Friends of the Earth Scotland.

Alex Salmond, the first minister of Scotland, said this could be “game changing” technology. “CCS technology could transform carbon-reduction efforts across the world, particularly in fast-growing economies. As such, it has the potential to become a significant export industry for these islands, and for Scotland in particular.” he said.

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Shell is another country: they do things differently there

Oct 28th, 2011
by John Donovan.
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The oil giant handles budgets and projects of a size that would daunt nation states. The difference is that it need answer to no one … and it’s running a huge surplus

Posted by Thursday 27 October 2011 13.08 BST The Guardian

Shell: ‘ticking like a Swiss watch’. Photograph: Leon Neal/AFP/Getty Images

What European leader would not want to swap places with Shell boss Peter Voser? He has just doubled the company’s profits in the third quarter, amassed $30bn (£18.7bn) of cash over the last nine months and is now buying back shares at the rate of $800m every three months for want to anything better to do with the money.

Voser has the advantage of having everything to gain from higher energy prices. The social and political fallout from rising fuel poverty and mutinous motorists rarely touches the parallel universe that is Shell Centre in London.

Are there any Shell-shaped worries, then? Well, one of them – in a wider world of growing unemployment, of course – is concern about wage inflation. Shell frets that there is so much activity in the energy sector that it is having to fork out more and more to secure project managers and petroleum engineers.

Voser also has the advantage over the likes of embattled Greek premier George Papandreou in that he can switch spending from one country to another. Unsurprisingly, Shell has not much confidence in Europe: only 15% of
the company’s investment is located this part of the world with 85% elsewhere – increasingly in high-growth Asia.

And how to deal with any worsening financial crisis in the eurozone? Well, the company has just sold its last UK refinery – Stanlow in Cheshire – and says it expects to further reduce its overall investment in Europe as time goes on. The bulk of Shell’s $30bn per annum capital expenditure is going elsewhere – in North America, the Middle East and Asia Pacific.

Also, unlike European political leaders, Voser does not have to worry about global warming or meeting carbon targets. Some of the company’s cash is being pumped into dirty tar sands production in Canada – which is pleasing the Ottawa government if not making any new friends in the environmental movement.

But Shell is also bulking up an already world-leading position in the cleaner gas
market, particularly the liquefied natural gas sector.

And even oil companies do have to make some tough decisions. The cost
of investing in a big scheme – say the Pearl gas-to-liquids project in Qatar, for example – is more than the final bill for building the Channel Tunnel singlehanded. It is unlikely Voser would get away with letting the costs for that scheme double to £10bn, as happened with the rail link.

One oil analyst described Shell as “ticking like a Swiss watch”. That might be true. But it also relies on $100-a-barrel oil prices – and if the sovereign debt crisis triggered a double-dip recession, we might hear the company squawking like a cuckoo clock.

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North Sea oil spill risk ‘unacceptably high’, claims European commission

Oct 27th, 2011
by John Donovan.
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Commission says new laws needed to prevent another Deepwater Horizon, as Shell and Exxon reveal massive profits

Shell made $7.2bn in profits in the third quarter. Photograph: Royal Dutch Shell/EPA

The European commission has warned that the likelihood of a Deepwater Horizon-type accident in the North Sea remains “unacceptably high” as it outlined new laws to counter the danger.

The moves have angered the UK government and offshore oil industry while threatening to put a brake on some of the huge profits declared by big North Sea operators Shell and ExxonMobil.

Brussels officials defended their plans to in effect seize overall control of North Sea regulation from the British authorities.

“We need to prevent accidents like Deepwater Horizon in the Gulf of Mexico from happening,” said energy commissioner Günther Oettinger. “Securing best industry practices in all our offshore operations is an undisputable must. Today’s proposal is a crucial step forward towards safer offshore activities to the benefit of our citizens and our environment.”

In Britain the Department of Energy and Climate Change said it was “very concerned” the moves could undermine its already strong safety regime. The Oil & Gas UK industry association said it opposed the proposals.

Malcolm Webb, chief executive of the association, said: “Relinquishing regulatory control to the EU, which has no established competence in this matter and where only three out of the 27 member states have an offshore oil and gas industry of real scale, risks undermining safety and environmental performance here in the UK.”

Among those hit by the proposed new licensing, inspection and liability rules would be Shell and ExxonMobil, two of the world’s biggest oil companies, which often work together in the North Sea.

Shell reported it had doubled its third-quarter profits to more than $7bn (£4.4bn) and triggered a major share buyback programme after being helped by an increase in production from the tar sands of Canada as well as its North Sea fields.

Exxon raised net income in the three-month period by more than 40% to $10.3bn over 12 months ago, even though its production fell by its heaviest level for three years. The company reported sales of $125bn – or nearly $1.4bn a day.

The two oil groups – the largest in Europe and the US respectively – are collectively pumping nearly $70bn a year into new projects, including some in highly sensitive areas such as the Arctic.

Expansion of a controversial Canadian plant at Athabasca, Alberta, meant Shell and its partners were able to produce 255,000 barrels a day of tar-sands oil, in a development that will raise its own carbon dioxide contribution from the sector to more than 3.7m tonnes a year.

Shell plans further increases in output from the tar sands in a project set to run for 40 years, despite mounting opposition from environmentalists. The company’s share of tar sands production has been raised to 153,000 barrels so far – meaning it now accounts for around 5% of total corporate output.

Simon Henry, Shell’s financial director, said the carbon impact would be diluted in future by Shell pressing ahead with a carbon capture and storage (CCS) project backed by both regional and national governments.

He described as a “disappointment” the company’s involvement in another CCS prototype scheme – at Longannet in Scotland – which has been shelved.

Shell saw overall oil and gas output for the third quarter, excluding divestments, rise by 2% over the same period last year with the help of both tar sands and a gas-to-liquids scheme – which converts natural gas to synthetic liquid fuels – in the Gulf state of Qatar.This helped to raise quarterly profits from $3.5bn to $7.2bn on a current-cost-of-supply basis – the main way the company measures its earnings – while cash flow from the first nine months reached $30bn.

Shell spent $800m buying back its own shares and Henry admitted that looking after its $20bn pile of cash in today’s turbulent financial climate was a worry. “We are pretty careful where that is on a daily basis,” he said.

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New research reveals Shell paid militants who destroyed Nigerian towns

Oct 21st, 2011
by John Donovan.
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PLATFORMLondon.org

Monday 3 October 2011

Shell fuelled human rights abuses in Nigeria by paying huge contracts to armed militants, according to a new report published today by Platform and a coalition of NGOs and featured in The Guardian. [1]

Counting the Cost implicates Shell in cases of serious violence in Nigeria’s oil-rich Niger Delta region from 2000 to 2010.[2] The report uncovers how Shell’s routine payments to armed militants exacerbated conflicts, in one case leading to the destruction of Rumuekpe town where it is estimated that at least 60 people were killed.[3]

According to Platform’s report, Shell continues to rely on Nigerian government forces who have perpetrated systematic human rights abuses against local residents, including unlawful killings, torture and cruel, inhumane and degrading treatment. The report is available to download here.

Key findings include:

Platform has heard testimony and seen contracts that implicate Shell in regularly assisting armed militants with lucrative payments. In one case in 2010, Shell is alleged to have transferred over $159,000 to a group credibly linked to militia violence. [4]

Shell admits that from 2006 onwards, the company paid thousands of dollars every month to armed militants in the town of Rumuekpe, in the full knowledge that the money was used to sustain three years of conflict. [5]

A company manager exposes structural problems with Shell’s ‘community development’ programme, claiming that “the money is not going into the rightful hands,” and that poor community engagement caused Shell to shut down a third of its oil production in August 2011 after 12 oil spills in the Adibawa area. [6]

NGOs from the UK, Netherlands and Nigeria are demanding that Shell put an end to over five decades of social and environmental devastation and break its close ties with government forces and other armed groups responsible for abuses. Platform’s report also condemns the Nigerian government for failing to protect the rights of its citizens and urges President Goodluck Jonathan to find political solutions to the Delta crisis instead of military responses.

Ben Amunwa from Platform said: “This research sheds new light on Shell’s active role in human rights abuses during a decade of terrible violence in the Niger Delta. Shell claims it has nothing to do with the crisis, but the company is involved in widespread abuses and militarisation. While Shell cites ‘security issues’ as a convenient excuse for its appalling environmental record, it has also failed to take the necessary steps to resolve conflicts. In many cases, Shell’s activities have created insecurity.”

Nnimmo Bassey of Friends of the Earth International said: “Shell’s obligations are clear: it must clean up after decades of devastating oil spills, end the illegal practice of gas flaring and compensate the victims of human rights abuses in Nigeria. It is unacceptable that Shell continues to deny responsibility, while pushing communities deeper into poverty and fuelling destructive conflicts.”

“Shell’s divisive practices have led to daily human rights violations in the Niger Delta,” said Geert Ritsema from Friends of the Earth Netherlands. “Many of the victims have no access to justice and cannot afford to take the oil giant to court. Lawsuits in Nigeria can take decades to resolve and the remedies are often inadequate. Yet Shell must be held accountable for its environmental destruction and complicity in human rights abuses in Nigeria, and home governments like the UK and the Netherlands must ensure that remedies are available and accessible to the victims.”

Platform’s report follows months of controversy for Shell, in which:

• The UN issued a damning report on the ecological impact of oil spills in Ogoni, many of which are from Shell’s facilities. The UN Environment Programme found that Shell had operated in Nigeria below international standards and the company had certified heavily contaminated sites as “clean”.[7]

• Shell admitted liability for two massive oil spills in the Ogoni community of Bodo in 2008 to 2009 after a lawsuit filed in London. The company now faces a compensation payout estimated at $410 million and could be forced to clean up the damage.

• Court hearings in The Hague where a lawsuit by Friends of Earth and four Nigerian victims of Shell oil spills is ongoing.

CONTACT:

UK – Ben Amunwa, (Platform): ben@platformlondon.org, +44 (0)7891 454 714, +44(0)207 403 3738.

Nigeria – Nnimmo Bassey (Chair Friends of the Earth International): nnimmo@eraction.org, +2348037274395.

NL – Geert Ritsema, Milieudefensie / Friends of the Earth Netherlands, geert.ritsema@milieudefensie.nl, +31 (0)20 5507 391.

Notes:

[1] Platform is a UK charity that campaigns for social and ecological justice. The coalition backing the report includes: Centre for Environment, Human Rights and Development (CEHRD), Friends of the Earth Netherlands/Milieudefensie, Environmental Rights Action/Friends of the Earth Nigeria, Social Action, Spinwatch, Stakeholder Democracy Network and Platform.

[2] Counting the Cost focuses on eight cases of human rights abuse in the ‘eastern division’ of Shell’s operations in Nigeria. Platform believes these cases are part of a wider pattern of violence that is being fuelled by routine oil company activities.

[3] Rumuekpe in Rivers State was destroyed by inter-communal conflict between 2005 to 2008. For details on Shell’s active role in the conflict, see pages 28 to 36 and Appendix 1 in the report.

[4] See the case of Joinkrama 4, at pages 36 to 43 in the report.

[5] See pages 28 to 36 in the report.

[6] See pages 42 to 43 in the report.

[7] See UNEP, Environmental Assessment of Ogoniland, (2011): p12.

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