News and information on Royal Dutch Shell Plc.
BP PLC’s $7 billion deal with Devon Energy Corp should help dispel some of the misgivings that have weighed on the British oil major’s stock in recent years—particularly doubts about its ability to keep pumping more and more oil.
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By Phil Craig
Of FINANCIAL NEWS
UK politicians today backed a shareholder revolt against oil giants BP and Shell, giving a substantial boost to demands that the companies assess the risks associated with their controversial investments in Canada’s tar sands.
A cross-party group of MPs has today published an Early Day Motion, a means by which politicians can raise an issue in parliament, calling on the parliamentary pension fund to vote in favour of shareholder resolutions requiring the oil giants to report on their tar sands projects.
Liberal Democrat MP Simon Hughes, the shadow secretary of state for energy and climate change, said: “Tar sands are a very risky investment ??? financially, environmentally and socially. The resolutions ask BP and Shell to report to their investors on how they are managing these risks.
“Government should lead by example and be a responsible investor; for this reason it is essential that the MPs’ pension fund supports these resolutions.”
Tar sands, also known as oil sands, have attracted substantial attention from campaign groups. Canada’s tar sands are one of the largest proven sources of oil in the world after Saudi Arabia’s reserves, but converting tar sands into a usable form of oil produces many more greenhouse gases than extracting oil by other means.
So far six MPs have backed the motion ??? the maximum allowed before a motion is tabled. They include members of the Labour, Conservative and Liberal Democrat parties. Other MPs are now free to back the proposal.
The involvement of the parliamentary pension scheme would add substantial weight to the revolt, which is organised by FairPensions, a campaigning organisation focused on encouraging ethical investment practices. A spokesman for FairPensions said that some sovereign wealth funds are also interested in supporting the resolutions, but declined to name which funds are considering the proposals.
The coalition already includes the Co-operative Asset Management, the Unison Staff Pension Scheme, Rathbone Greenbank, CCLA Asset Management and other fund managers, foundations and faith groups that declined to be identified.
BP and Shell have confirmed that the resolutions are valid, and will be discussed at their annual general meetings, in April and May respectively.
A spokesman for BP said that the company is in discussions with shareholders about the issue. Shell declined to comment for this article.
MUMBAI — India’s Essar Oil Ltd. Wednesday said it is still in talks with Royal Dutch Shell PLC to buy three refineries in Europe, dismissing a local media report that the two companies had put the negotiations on the back burner.
“Shell and Essar can confirm that they are still in negotiations around the possible sale and purchase of Shell’s three refineries at Stanlow in the U.K., and Heide and Harburg in Germany,” Essar spokesman Manish Kedia told Dow Jones Newswires.
Earlier Wednesday, the NDTV Profit television channel said that the talks were on the back burner as Essar Group, the parent of Essar Oil, is planning to raise $2.5 billion to $3 billion by listing a unit on the London Stock Exchange.
The report said exclusive talks between the companies ended in January and Essar may need the permission of its new institutional shareholders to proceed with the deal talks.
“We will not comment on the detail of negotiations, including timelines,” Essar said in an emailed statement.
Shell didn’t immediately respond to an emailed query.
Write to Eric Yep at eric.yep@dowjones.com
MARCH 8, 2010
These days, giant oil companies find themselves trying to balance two big pressures on their business. Governments are trying to slash carbon emissions—but the world’s thirst for oil is growing by leaps and bounds. Peter Voser, chief executive officer of Royal Dutch Shell PLC, is navigating the situation by joining a business-backed effort to push for global-warming laws, and making sure Shell has a strong exposure to natural gas and alternative fuels.
Mr. Voser sat down with The Wall Street Journal’s Alan Murray and Kimberley Strassel to talk about the future of climate-change legislation, the company’s push beyond oil, the prospects for electric vehicles and more.
Here are edited excerpts of their discussion.
Chief Executive of Royal Dutch Shell, Peter Voser talks about what kind of a future oil based energy can have in an environmentally conscious world.
ALAN MURRAY: I’d like to start by asking you about U.S. CAP [the U.S. Climate Action Partnership], the business effort to push for global-warming legislation. You are the last oil company there. Many of the other majors never joined to begin with. BP joined and then pulled out because it didn’t like the direction that it was going in. Why is Shell alone among the oil companies in continuing to push for this?
PETER VOSER: We have a belief that we need a market-based energy legislation in this country. And by the way, in all the other countries as well. We feel that we can do more by being inside U.S. CAP together with the other stakeholders represented there in order to actually achieve the right outcome.
KIMBERLEY STRASSEL: What kind of bill could you want or expect that would actually be good for your industry?
MR. VOSER: What we want is energy legislation that drives supply security in this country, which drives the country to lower fuel emissions, which generates new jobs but also preserves old jobs.
To then go further down, we are a keen proponent of market-based energy legislation. We will quite clearly look out for natural-gas developments, which we see as a long-term source of energy that has a lot of positives.
And in general, I think our industry is facing an interesting challenge that the demand in the world will double, but we have to provide that energy at a much lower cost to the environment. This will drive technology developments, innovation developments, etc., and that’s normally where our industry has always been in a leading position. And that’s what we want to see in the legislation so that we have certainty on the carbon price, certainty on, let’s say, legislation that will stay for a while so that we can operate.
MS. STRASSEL: What odds do you give passage of a cap-and-trade bill this year?
MR. VOSER: I’m still hopeful that we get something passed. I know the timing will be longer than what we expected maybe 12 months ago, but we will do our part in order to make sure that we get something that the industry and the country can take forward. But I think we are in for a longer period before we get something.
MR. MURRAY: We talk about Shell as an oil company, but you’re very close to becoming a predominantly natural-gas company, aren’t you?
MR. VOSER: That’s absolutely correct. Shell started quite a while back, actually, to put a lot of emphasis on gas. And by 2012, we will have more gas production world-wide than we have oil.
So this has been a journey of 20, 30 years that we have used our technology and innovation in order to drive the gas development on a world-wide basis because, let’s face it, it has 50%, 70% less CO2 than coal, for example, and that’s exactly where we see the long-term benefit.
MR. MURRAY: And in your view, is that the big answer to our environmental problems for the next 50-plus years?
MR. VOSER: I don’t think there is one answer.
On a global perspective, the energy demand will double—this is pretty much proved now—by 2050. So we will need most of the energy forms that we know today.
MR. MURRAY: What percentage of your capital spending goes to renewable energy sources, roughly?
MR. VOSER: It is not the capital intensity that drives renewable energies and alternative energies. It’s what you spend in technologies and in innovation. Roughly 25% of our budget at this stage goes into what we call alternative energies from an R&D point of view.
MR. MURRAY: And of the 25% of your R&D budget that you spend on renewables, what in that portfolio do you personally think is the most promising?
MR. VOSER: We are focusing a lot on biofuels at this stage. We just announced a few weeks ago a big joint venture in Brazil where we are bringing our first- and second-generation biofuels technologies together with Cosan, a sugar ethanol producer there, in order to speed up the second-generation capabilities because we need to speed up that process. So biofuels is one.
We are in wind. We have gone out of solar. We tried both silicon and thin-film solar, but we can’t see that as being something that we can scale up globally and get the economies of scale. So we leave that. It’s a technology that will be developed, no doubt, but we leave that to a smaller, medium-sized players.
MR. MURRAY: For your oil business, transportation is obviously a key to the future. How long do you think it will take for electric cars to become a significant part of the vehicle fleet?
MR. VOSER: We think between now and 2050 we will go from one billion cars to two billion cars world-wide. So it’s quite a growth there. We think by 2050 that roughly 40% of those two billion cars will be electric cars.
But there is a but to this. Which means in the meantime we will need all [types of environmentally friendly cars]. So we will need low-carbon-fuels cars, more-efficient engines. We will need the hybrids. There will be more electrical cars coming in. There will be fuel cells, there will be hydrogen. So I think there will be room and space to develop all of them.
MS. STRASSEL: You talked about how you wanted legislation here in the U.S. to help with the certainty. But as a global company you already operate in regions that do have climate restrictions. How has that affected your business?
MR. VOSER: I would like to have a market-based system that actually works on the global environment. Because the world, the trade flow today, is a global trade flow, so you cannot cut between frontiers, boundaries, countries, etc.
So while I think it is OK to start country or regionally, we need governments working together, and that’s where I think Copenhagen would have been a good way to achieve a global agreement. We didn’t get it. I’m not too disappointed because I think this is a journey. We will need more time.
The politicians or the governments also have to learn to bring some reality into the discussion from time to time. So we get biofuels legislation, for example, and two years later they change because they realize technically it’s not possible. I think that’s where governments, companies, NGOs can work together to set the right frames.
MS. STRASSEL: Some people say instead of all the negotiations and the offsets and the carbon trading, just put a carbon tax, in particular a gas tax, and see where that goes.
MR. VOSER: I would say you need a market-based system where you can actually give the right incentives for those industries that are affected to make sure that they can lower the CO2 over time and they can lower the costs to achieve that over time. You need an incentive there, and I just struggle to see that a tax is an incentive.
See the complete Environment Report.
MARCH 7, 2010, 9:01 P.M. ET
BEIJING (Dow Jones)–PetroChina Co (PTR) has just launched a bid with Royal Dutch Shell PLC (RDSA) for Australian energy producer Arrow Energy (AOE.AU), Jiang Jiemin, chairman of PetroChina confirmed Monday.
The joint bid was in its early stages and there was no timetable for the process, he said.
He declined to give details, such as the percentage share of PetroChina and Shell.
Jiang was speaking on the sidelines of China’s National People’s Congress, the nation’s annual legislative session, which ends March 14.
-Wan Xu contributed to this article; Dow Jones Newswires; 8610-84007799; wan.xu@dowjones.com
March 4, 2010, 12:55 PM ET
By Jim Carlton and Neal Lipschultz
Despite recent defections of two other oil majors, Royal Dutch Shell PLC has opted to stay in an influential lobbying group that has focused on shaping climate-change legislation, Chief Executive Officer Peter Voser said.
Mr. Voser, speaking Thursday at the Wall Street Journal’s ECO:nomics conference in Santa Barbara, Calif., was asked why Shell remained in the three-year-old U.S. Climate Action Partnership (USCAP) after two of its peers, BP PLC and ConocoPhillips, pulled out last month. The partnership is a broad business-environmental coalition that had been instrumental in building support in Washington for capping emissions of greenhouse gases, and the defections came amid growing debate over climate change.
“We feel we can actually do more being inside USCAP to achieve the right outcome,” Mr. Voser said.
But Mr. Voser agreed with a growing number of skeptics who don’t believe a climate change bill will be passed on Capital Hill this year. Asked how much money he would put betting on such an outcome, the CEO smiled wanly and said: “I think I can spend my money somewhere else.” Earlier at the conference, Michael Morris, chairman, president and CEO of utility giant American Electric Power, had pegged the chances of a climate bill’s passage in 2010 as “less than 50%.”
“The timing will be longer than we expected, but we will do our part” in influencing the bill, Mr. Voser said. He added Shell favors a market-based system of controlling carbon emissions, and that “I would like to have a marketplace that works on a global scale.” Mr. Voser said he believed eventually there would be carbon legislation in the U.S. and many other parts of the world, despite the failure of the Copenhagen climate talks to achieve a consensus.
“I think this is a journey,” Mr. Voser said. “We need more time.”
When asked about the theory of “peak” oil in the world and whether that theory was now dead, Mr. Voser said “I think what is dead is cheap oil.”
You need more technology, innovation and will find oil further away from markets, Mr. Voser said. More will be spent to get oil and consumers will pay, both for oil and gas.
Mr. Voser also said oil price volatility is here to stay. More money is flowing into commodities and there are more players in the market.
Shell, meanwhile, has been moving to become more of a natural gas supplier and continues to invest in alternative energies like biofuels, he said. With global energy demand expected to double by 2050, Mr. Voser said the world will need many sources of fuel, including oil. He predicted electricity would be needed to power 40% of the world’s automobile fleet by 2050, when he predicted it would double to two billion vehicles from one billion.
SANTA BARBARA, Calif., March 4 (Reuters) – Royal Dutch Shell Plc (RDSa.L) expects electricity-powered vehicles to account for as much as 40 percent of the worldwide car market by 2050, Chief Executive Peter Voser said on Thursday.
Voser, speaking at The Wall Street Journal’s ECO:nomics conference in Santa Barbara, said technological improvements and increases in the cost of producing gasoline will give a boost to vehicles that run on alternative power.
“We think between now and 2050, we will go from 1 billion cars to 2 billion cars worldwide,” he said. “We think by 2050, roughly 40 percent of those 2 billion cars will be electric.”
In the next 40 years, the market needs low-carbon fuels, more efficient engines and hybrid vehicles, Voser said.
“I think there will be room and space to develop all of them,” he added.
Gasoline demand in developed countries like the United States has started to decline, partly as vehicles running on alternative fuels have entered the market. Companies such as Shell and BP (BP.L) are spending more money on those newer technologies, including for next-generation biofuels.
Automakers such as Ford Motor Co (F.N) and Nissan Motor Co Ltd (7201.T) are racing to launch electric cars, betting these will be the environmentally friendly transportation of the future. Small players like Tesla Motors already sell electric vehicles.
Voser said Shell was investing 25 percent of its research and development budget into renewables, including wind power and biofuels.
Shell has bet big on ethanol by striking a deal with Brazil’s Cosan (CSAN3.SA) to create a $21 billion a year ethanol joint venture.
The 50-50 joint venture, with almost 4,500 filling stations nationwide, will better position Cosan and Shell to compete with the two top players in the market, state oil giant Petrobras (PETR4.SA) and Ipiranga, a unit of Brazil’s Grupo Ultra (UGPA4.SA).
(Reporting by Poornima Gupta. Editing by Robert MacMillan)
March 3, 2010, 4:39 PM GMT
Getty Images: A Shell refinery in California.
It is a reflection of just how far big oil companies have moved from the wildcat frontier operations of yore that nowadays, when they want to impress the market, they bang on about cost cutting and rationalization.
BP’s strategy update Tuesday was the latest example. It sought to wow analysts by promising to boost annual profits by $3 billion within three years through sexy measures such as, “better planning and execution, improved contractor management,” and so on. BP certainly didn’t knock anyone’s socks off with its promise of annual output growth of 1% to 2% and the announcement of a modest deal giving it access to Texas shale-gas reserves discovered by someone else. [See our coverage here.]
BP’s rival Royal Dutch Shell is likely to offer a similarly workmanlike strategy update on March 16, focusing on how its internal restructuring will improve its bottom line. Shell’s output growth in the coming years largely depends on the success of complex, high-tech ventures like Pearl — a vast chemical plant that will convert natural gas to diesel fuel in the Qatari desert.
Contrast the performance of the top two U.K.-listed oil companies with the next three on the list.
BG Group expects to increase its oil and gas output by a whopping 167% to 1.6 million barrels equivalent a day by 2020 on the back of spectacular exploration success offshore Brazil. Tullow Oil is developing major new oil resources in virgin territory offshore West Africa and in Uganda, doubling its share price in two years. Cairn Energy will almost quadruple its production this year following the startup of its big oil discovery in India and is gearing up for a major frontier exploration campaign offshore Greenland.
These companies did not have some secret ability to divine the location of oil, they have simply taken more risks on exploration in unproven areas than their larger cousins.
According to Bernstein Research analyst Neil McMahon:
“The single biggest failing over the past decade…has been the abandonment of exploration, the essence of what has made these companies so successful over the course of their history.”
Believing they could profit from mastery of political risk by operating in countries like Russia, or engineering risk at projects like Pearl, major oil companies have walked away from the geological risk of pure exploration, McMahon said, adding:
“The phrase ‘elephant hunting,’ which in the past was associated with the exploration and discovery of fields with a billion or more barrels of reserves, has been replaced with ‘big cat herding,’ which itself could easily be replaced with ‘fluffy bunny corralling’.”
They exacerbated the problem by laying off swathes of experienced staff during the last round of cost cutting during the industry downturn of the late 1990s and early 2000s. When the oil price rebounded forcefully after 2003 they were left playing catchup and found themselves shut out of many of the basins yielding the biggest new discoveries today.
BP and Shell can be found today making big exploration pushes at the margins of established oil regions — deep water Gulf of Mexico for the former, offshore Alaska’s North Slope for the latter. BP found a “giant” new oil field in the Gulf last year, but it had to drill the world’s deepest oil well to get there. Finding and producing oil in the Arctic circle will also be tough and expensive.
If they want to recapture their past glories, BP and Shell need to get out there and start rolling their exploration dice again.
WSJ BLOG ARTICLE (SUBSCRIPTION)
LONDON—BP PLC on Tuesday said it is pushing through the biggest shake-up of its oil-production business since it acquired Amoco 12 years ago, as it seeks to increase annual profits by more than $3 billion over the next two to three years.
Click to continue reading “BP Looks to Boost Refining Profits”
FEBRUARY 28, 2010, 11:46 P.M. ET
WELLINGTON (Dow Jones)–Infratil said Monday it expects a consortium it leads to complete the purchase Shell New Zealand’s downstream assets on March 31.
The consortium, which includes the New Zealand Superannuation Fund, still has to obtain a number of third-party consents and approvals, but these are in the final stages of being negotiated and secured, it said in its monthly operational report.
“Documentation of the planned acquisition of Shell New Zealand’s sales and distribution business is at an advanced stage,” it said.
The Infratil-led consortium entered into exclusive talks with Shell in November 2009.
Lucy Craymer, Dow Jones Newswires; 64-4-471-5990; lucy.craymer@dowjones.com
: THE ARTICLE "Donovan email to Gavin White, Shell International Limited: 10 March 2010" has been updated with a self-explanatory email reply received on 11 March from Richard Wiseman, Chief Ethics & Compliance Officer, Royal Dutch Shell Plc.
: The Forbes article implies that by stopping sales of gasoline to Iran, Shell is complying with US sanctions. Shell's investments in the upstream sector in Iran are not mentioned, even though these are of far greater significance for both Shell and the Iranians.
: Amnesty International has been an informed and courageous critic of Human Rights abuses around the world for many decades and they are certainly not adverse to criticising governments in Nigeria, Burma, Zimbabwe and all around the world. The point about international companies like Shell is that they have a choice. They are not obliged to operate anywhere if they find that the local conditions are in conflict with their principles. Amnesty’s recent criticisms of Shell have certainly been strong and I am aware that in Shell there is a feeling that they have been unfair and to some extent uninformed. So a dialogue between Amnesty and Shell is very much to be welcomed. Amnesty is a highly respected organisation – indeed a former top executive of Shell, Sir Geoffrey Chandler, was a senior officer of Amnesty in his post Shell years.
: Same old, same old. Amnesty International and their human rights again go for the soft underbelly of the international companies rather than the real problem in Nigeia which is their corrupt Government. Good on Shell for attending and agrreing to being questioned. BUT, surprise, surprise nobody from the Nigerian Government (perhaps they didn't get enough of a bribe to appear or perhaps Amnesty knew they would get nowhere with them). Pollution in the Niger Delta remains a problem, albeit that conditions are slowly improving. Living conditions, infrastructure and most other normal day-to-day things should be the responsibility of the corrupt Government not international oil companies. These evil governments such as Nigeria, Zimbabwe and Burma need to be bought down by the UN so that their people might have a better chance of a reasonable life.
: Very polite correspondence between Wiseman and the Donovans. I estimate Wiseman's hourly internal tariff at around 500 U$ per hour (his salary plus support plus extensive overheads). Over the years Shell must have spent a fortune discussing the Donovans, putting the most expensive lawyers on the case, and developing policy how to battle them. It becomes Churchillian: 'we will fight them on the web, and in the courtrooms, and in their own offices and on the streets. But we wil NEVER surrender. With unlimited funds this maybe so, but it is wasting shareholders money and it solves nothing. I do not see the Donovans give up anytime soon. So perhaps a new paradigm needs to be developed? Any ordinary man or woman at the coalface would solve this problem within minutes and for less money than what is being burned now. But the Shell kings are no ordinary people, they live in cloud cuckoo land. I will keep following with great interest how all this develops, it is even better than the daily Dilbert!!!
: W.E. Pratt knew it already a hundred years ago when he said "Oil is found in the minds of men" But he was one of the founders of the Standard Oil company, whereas the people who try to make us believe that IBM can come to the rescue of Shell appear to be only good at getting rid of their most experienced minds.
: Oh dear, regarding this collaboration between Shell & IBM - it does not appear to have started off very well if I read the press announcement. I refer to the following: "Shell can reduce the educated guesswork and extract natural resources with more certainty and efficiency, thereby optimizing the recovery of oil and gas". Shell used to employ geoscience & petroleum engineering expertise. Is reserve estimation and production forecasting now in the hands of "educated guess workers"? That ought to really worry shareholders. The fundamental lack of understanding of the business gets even better with comments on geophysics: "For example, geophysicists must examine time-lapse seismic data from subsurface rock formations; reservoir engineers receive well and laboratory data, and geophysicists receive information - sound waves - covering wide spaces between the wells". Errr - what's the difference between the two geophysical activities quoted? Is this some IBM person speaking who has just bought a book "E&P for beginners", or is it the level of understanding within Shell now much of the real technical experience and expertise has been cleared out?
: Agree completely with Guest1. IBM once bought (and subsequently sold at a huge loss) a company called Tigress, and had plans for integrated Corporate Data Bases based on POSC. Unfortunately Schlumberger and Landmark know that part of the business rather better than IBM ever will. If Shell can't find oil with the help of Schlumberger and Landmark, what hope do they have with IBM?
: What a load of nonsense in the Forbes article. Shell and IBM to team up etc. We HAD all the expertise but that was removed by the HR and FN idiots that run Shell now. What does IBM know about oil and gasfields? This surely looks like another project, doomed to fail, whereby IBM is going to suck a lot of money out of Shell. Presumably Brinded bought a lot of stock in IBM. RDS appears more and more like an overweight blob, unable to move, being sucked out by the service industry and governments and waiting to die. The sooner someone takes over RDS, splits it up and gets on with the business, the better. The fact they accept all the abuse by the Donovans and are unable and unwilling to defend themselves speaks volumes. If RDS cannot even handle two old codgers with a website, how will they handle real competition???? John and Alfred, perhaps you have to increase the pressure and speed up the demise of RDS.
: A number of people both inside and outside Shell seem to share your view. A commonly held view inside Shell is that while decisions often turn out with hindsight to have been wrong, a far greater problem for Shell is their inability to make timely decisions when required.
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