Tag Archives: Business

Shell Oil on an image makeover bid to press for offshore drilling

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Shell Oil, the Houston-based petro-major has launched a new PR exercise to overcome oil industry’s avaricious image. But under this grab, a political agenda pitching for off shore oil exploration glints with a smile. On Thursday, John Hofmeister president of Shell Oil hosted a party for people from various walks of life in a renowned hotel ballroom of Richmond fortified with the open bar and a buffet table laden with stuffed mushrooms and melt-in-your-mouth beef carvings. The event is seen as an image makeover by the oil giant that was profoundly criticized for hiking its oil prices post-Hurricane Katrina in 2005. Behind this goodwill gesture, there was a hidden agenda. The presence of industry bigwigs, press reporters, socialites along side supportive state politicians and environmentalists were shocked to notice the conversion of the party in to a launch pad furthering the interests of the oil industry. Hofmeister, while welcoming his guests said, “We know for a fact the favorability rating of oil companies today ranges from 10% to 15% favorable. … It’s hard to go much lower. Of 21 major industries, we’re (ranked) 21. That’s not where we want to be.” Before the get-together, Hofmeister in a media interview admitted the need to change the image of his organization after the Katrina furry. After a long deliberation, he choose to implement a stratagem that the United Kingdom unit of multinational Royal Dutch Shell had opted, over new ad campaign or offering consumers special discounts. Even Burson-Marsteller, the Vcirginia based PR agency was hired to make the arrangements. At the venue, Hofmeister deftly handled the most pointed questions, constantly foretelling an image of even-tempered sensibleness. He spoke on need for higher auto fuel economy standards, need for action on climate change and potential of alternative energy sources such as hydrogen. But, his thrust for tapping offshore oil reservoirs and lifting of ban Congressional on it since the Santa Barbara oil spill 25 years ago is criticized by many as persuading public support for controversial proposal by the Interior Department last month for opening a region 50 miles off Virginia’s southern coast to oil drilling. Expressing his agenda in a candid ambience, he said, “The winds of change are upon us. Anyone that doesn’t recognize it is missing the point. The American people have had enough of such extraordinary dependence upon foreign imports. They’ve had enough of not feeling they are included in the debate over alternatives. … There is enormous worry and fear about future supplies, reliable supplies.” Soaring oil prices above $60 a barrel, companies like Shell has stumbled on more cash than cachet in last couple of months. With a huge profit of nearly $7 billion in just three months, the company is well positioned to boost its community relation. But there is a marked tension between Hofmeister’s projections and environmental concerns at a time when gas prices are soaring in the US and environmental hitches like climate change and Alaska oil spill demands new thinking and incremental technological progress. Image Via: USA Today

U.S. gasoline price increases, surge to all time high

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U.S. gasoline prices raised to a record $3.10 a gallon topes all time high $3.07 a gallon in September 2005 after Hurricane Katrina disrupted refinery operations and oil production along the Gulf Coast. The price increased for regular unleaded gasoline 5 cents over the last week and is up 16 cents from a year ago. Stiff increase in gasoline prices are reducing consumer spending, which accounts for about two-thirds of U.S. economic growth. Consumers also fears that gasoline prices can cross the $4 level, but Energy Information Administration (EIA) insures that prices will hang on near $3 a gallon for most of the summer. Oil industries are going through the tough period as rising militant activities including kidnapping, extorting and blowing pipeline on Nigeria’s oil delta, which threat laborer to stop drilling oil in the delta. Largest oil driller of oil in South American region Venezuela also walks out from IMF and WB, and nationalizes its all oil companies, in which American companies were major stockholders, set US on back foot. To get out from the critical condition EIA, urge OPEC to increase oil production this summer, heads of the EIA, Guy Caruso said We do think there will be a need for more OPEC oil The prices hit to all time high on the eve when the US first man ordered government to look for other energy sources to curtail U.S. gasoline consumption. President Bush said Our dependence on oil creates a risk for our economy, because a supply disruption anywhere in the world could drive up American gas prices to even more painful levels President Bush ordered several agencies to finish the work by 2008 that he wants to make lowered the gas emission by the end of his tenure. Nevertheless, market analyst do not agree with the president and quoted that, it is not as easy as president think, it will take time, even after ten year down the line from today, US will lessen its dependency on gasoline only 20 percent. Image: greenpeace Via: CNN

US regulators to slap penalty on BP for Alaska oil leak, BP admits budget a factor

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BP America President Robert Malone has finally acknowledged on Wednesday that budget pressures made life difficult for company workers trying to safely operate BP’s pipelines in Alaska’s giant Prudhoe Bay. However, Malone has stopped short of conceding that cost cutting was to hold directly responsible for the company’s failure to notice the corrosion that caused two pipelines to leak, forcing the company to close down a segment of the nation’s largest oil field and sending crude prices soaring. US lawmakers vehemently condemned BP for withholding corrosion documents about its troubled Alaska oilfield and for not forcing the man who led its corrosion program to co-operate with government investigators. The US Department of Transportation has revealed that a safety regulator is highly expected to fine BP for operating defective pipelines at its Prudhoe Bay field in Alaska. The announcement came as a House of Representatives committee investigating the area’s worst oil spill reported that it had unearthed a ‘mountain’ of evidence that cost-cutting was responsible for undermining the safety of the pipelines. According to reports a penalty could be pronounced in coming months and would be for a ‘small number of probable violations, which carry the maximum fine of $100,000 per day per violation, informed Stacy Gerard, acting assistant administrator of the transportation department’s pipeline and hazardous materials safety administration. The House committee that carried out inquiry into the Alaska spills, which forced a partial shutdown of Prudhoe Bay oil production last summer, has divulged a half dozen e-mails and other documents that explain that anticorrosion programs repeatedly were targeted for cost-cutting, including on the lines that eventually failed. The corrosion caused a leakage and spill on a feeder line in March 2006 followed by another leak in August at a second line. After the second occurrence, the firm shut down the damaged lines, resulting in Prudhoe Bay production being reduced by half. BP is now spending $250 million to replace 16 miles of questionable pipes. Representative Bart Stupak, Democrat of Michigan, chairman of the Energy and Commerce investigations subcommittee went on to say, ‘BP field managers were being asked to choose between saving money and critical maintenance.’ An e-mail read that budgetary constraints would force the end of a program to inject corrosion inhibitor directly into the pipeline system. An October 2001 e-mail called for preventing the function of a pipe corrosion inhibitor since there was not money for a full year’s supply of the chemical. The e-mail, calling for ending use of the inhibitor ‘as soon as possible’ said, ‘We are under huge budget pressure for the last quarter of the year and therefore we have to take some rather disagreeable measures’. Image Read

PetroChina suffers Sudan heat as Fidelity divests shares

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Fidelity Investments Inc. has reduced its stake significantly in PetroChina Co., China’s largest oil producer, by more than 90 percent of American depositary receipts in the middle of calls for the mutual-fund giant to divest from companies linked to Sudan. The divestment came after China comes under increasing criticism for its role in Sudan, where militias fighting in the Darfur region have killed hundreds of thousands in what some political analysts are calling genocide. Human-rights groups are repeatedly say Beijing, which is the biggest foreign investor in Sudanese oil, is not doing enough to stop the fighting. PetroChina, Asia’s biggest oil producer, announced on Wednesday that investors have the freedom to decide whether to hold the stock, after Fidelity Investments cut its stake amid pressure to sell out because of the firm’s relations to Sudan. PetroChina’s president, Jiang Jiemin, told reporters at the company’s annual general meeting in Beijing, ‘Whether to sell or buy our shares is the choice of individual investors’. Fidelity, the world’s biggest mutual-fund company, sold at least 38 percent of the 1.1 billion Hong Kong-listed PetroChina shares held as of December, revealed a regulatory filing on Tuesday. In the meanwhile, energy analysts have argued that Fidelity’s stake cut will not affect PetroChina’s share price in the long term as the company has really good development prospects given oil discoveries and stable production growth. Political issues like Sudan that have affected shareholders’ preferences for a long time are not the main factor. Fidelity in the US has a considerable stake in Petrochina whose parent CNPC is a substantial investor in Sudan’s oil fields. CNPC has joined hands with the Sudanese government to control an oil field in Southern Darfur. However, pressure groups argue that Khartoum uses the majority of its oil revenues to finance spending on arms and militia. Fidelity refused to say whether it has cut its holdings in response to pressure from human rights groups. A spokesman said that the company’s individual fund managers make their own investment decisions. For the past two decades, human-rights groups have mounted extreme pressure on university endowments and public-pension funds to divest their holdings in politically sensitive regions, such as South Africa during apartheid. In recent times, activists have also started to pressure mutual funds over the same kinds of investments, as well as on other issues, such as global warming and gay marriage, citing reasons that the funds should respond to the wishes of investors who put billions of dollars a year under their control. Filings with the SEC also show Fidelity has sold many shares in another Chinese oil firm, Sinopec that has attracted similar criticism. However, as a matter of fact, Securities filings have showed that other big investors in PetroChina include funds of Franklin Templeton Investments and Warren Buffett’s Berkshire Hathaway Inc., and show no recent sales of PetroChina holdings as big as Fidelity’s. In addition to it, other Boston based firm, Wellington Management, has been a big holder in Sinopec but a recent filings show it has cut its stake significantly. The Darfur coalition has targeted China since it considers Beijing’s financial support for Khartoum, combined with its position as a permanent member of the UN Security Council, have been essential in mitigate international pressure over the Darfur issue. Despite of some instances of aggressive defense by Beijing and its state enterprises of the country’s soaring investments in Africa, Chinese interests are in fact working hard behind the scenes to combat the negative perception in the West about their activities on the continent. Image Image 2 Read

Mounting Gas prices leaving customers in a lurch

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Increasing oil prices are forcing consumers to lose the weight of their pockets. Two consumer groups unveiled that in 2006 U.S. families paid $1,000 more on average for gasoline than in 2001, as higher oil prices ate up a hefty portion of the income. The average U.S. household paid $2,277 for gasoline in 2006, up 78% from 2001. Rising gas prices are biting a big piece from the household budget, hard hit consumers are low-income consumers. Increasing oil prices are causing for a significant financial hardship. All sorts of businesses are being affected as Wal-Mart executives this week said higher gasoline prices were hurting sales at the nation’s largest retailer. Big automobiles companies were forced to lock their factories and to reduce their workforce. Swelling oil prices are increasing the energy bills and became a matter of concern for government as it leads to the mounting inflation. In the last eighteen to nineteen months gas prices saw a stiff rise. The nationwide average price of a gallon of regular gasoline was $3.103 Wednesday, up more than a penny from Tuesday and nearly 25 cents higher than a month ago. The price set a record, not adjusted for inflation, for the fourth consecutive day. The inflation-adjusted all-time high was set in March 1981 at $3.223. The whole world is in a worry to tackle the problem, but the crux is that no one forgets to pass the buck. Oil industry representatives said the higher gasoline prices were a result of elevated crude-oil costs set on world markets, strong demand, a decline in imports, environmental mandates for specialty gasoline blends and necessary refinery maintenance. But the problem is more political rather than the any other issue Mighty America blames for recent stiff rises in the gas for Iran’s resolute nature, Nigeria’s fiasco, Chavez for Venezuela and Russian monopoly over majority of natural sources, but America has forgotten that after his intervention in Iraq in 2003 have proven the foundation stone for the rising. Which might have arose the insecurity among the Arab nations. Image: smh Via: wzzm13

Gas price sets new record

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The average price of self-serve regular gasoline has hit a record high of $3.18 per gallon. According to the nationwide survey that was released on May 20 the increase is 11 cents over the past two weeks. Similarly the mid-grade gasoline costing $3.29, and premium cost $3.40 per gallon. During the survey 7,000 gas stations were surveyed all over the country and it was found that the new figure is the highest cost of gas. Just two weeks back it was $3.07 and only $3.03 on Aug. 11, 2006. The latest price has also left the previous inflation-adjusted record of $3.15 per gallon in March 1981 behind. All over the nation the lowest average price for regular fuel is $2.87 in Charleston, S.C., whereas the highest is in Chicago at $3.59 a gallon. In California the regular grade gasoline dropped 2 cents and is available at $3.41. Image Source: msnbc

BP could lose control of Siberian gas reserves

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BP PLC, the BP Russian unit can lose its license to drill in Eastern Siberia’s largest known natural-gas field, if oil western giant will fail to get over their contractual target. TNK-BP will be inspecting on May 23 on its production at the Kovytka field, where it has a contractual target. Rusia Petroleum, a unit that is 62 percent owned by TNK-BP, produced 1.5 billion cubic meters from the field last year compared with a target of 9 billion cubic meters. This case is not as it only seems, but it is more than its appearance. Russian government has already declared to wrestle back nations control over its natural resources from Western-owned and this inspection could be a part of government’s plan to thwart western companies. It is expected that TNK-BP will lose its license as Russian energy authorities has announced earlier this year that TNK-BP was in breach of its license to operate the huge Kovykta gas field in Siberia. Kovykta field is a one of the biggest oil reservoir, if BP loses it, than is will be a big blow for the company. The loss of such a key gas field will put its share price under pressure. TNK-BP is the second-largest privately owned oil company in Russia, and much of its market value is based on Kovytka. Energy analysts have estimated the value of the field’s gas at $18 billion and the cost of its development, and the pipeline to China, at $15 billion. Kovytka is estimated to hold two trillion cubic meters, or 71 trillion cubic feet, of gas, or enough for Russia to meet 25 years of planned exports. The row is strikingly similar to that experienced by Shell over the $20bn Sakhalin 2-gas project, which at the time was Russia’s largest direct foreign investment. Russia has already shown his will that nation wants to build up Gazprom and Rosneft, the state-controlled gas and oil companies, to compete with international energy companies like BP, Royal Dutch Shell and Exxon Mobil. In a nutshell this whole drama is to tighten nations grasp on its oil reservoir. Image: kir Via: Bloomberg

US senators summon BP for reducing its capacity

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US senators have shown their indignation on oil giant BP and have asked them to clear their basis to reduced capacity of refineries, drilling at their half capacity in the peak US summer season. Senator Pete Domenici, member of the Senate Energy Committee, ordered BP America CEO, Bob Malone to explain the causes of reducing its Texas city based and Whiting, Indiana refineries reduction capacity, as these are among the top drillers in the nation and country needs them to fully functioned in the effective manner. Senator Pete said Texas City and Whiting, Indiana, are two of the five largest refineries in the United States, and the American people rely upon the [petrol] from these facilities US market is facing a rising prices blow, which has become a matter of concerned for not only among the consumers but for the government also. Oil prices has climbed up to the record mark $3.22 a gallon this week, which is directly hampering the US market. Rising prices has cut the pocket of consumers as survey says that U.S. families paid $1,000 more on average for gasoline than in 2001 and causing to increasing inflation rate. US concerned for its existing refineries as they are facing maintenance problem, most of its refineries are aging. Rejuvenation is necessary as US did not built any refinery for more than 30 years. Majority of oil drillers has reduced its supply by 15 percent. On the allegation, BP cleared its issue and say that maintenance cause to defer its production, but senators are seems in a mood to make US driller to make more competitive. Senators also threatened that congress will break up the mergers of the 1990 if companies find non-competitive. Image: d.yimg Via: telegraph

No link between politics and energy: Russia

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After falling to clear Russian regulators worries, western oil giant Shell has lost its license to drill oil in Russian oil field. US and its supportive European nation impeached Russia to use its oil reserve as an economic and political pressure weapon. Critic nations charged that Russian regulatory authority are using double standard for the foreign refineries. Russia rules out all allegations about the discrimination against the foreign firms in its pursuit of its energy needs. Russia asset that regulatory is treating both Russian and foreign firms exactly the same. President Putin level all allegations based on the hypocrisy, as he assets that nation did not link its energy policy with political cooperation with its partners. Russia is a major oil exporter to European Union; its oil fulfills most of European energy needs. Russia asserts that country is firm on its integrity to provide oil for its neighbours. Russian president Vladimir Putin said Our position is open, absolutely transparent and market-based for all our partners, regardless of current political relations, in our economic relations, we intend to depoliticize all our contacts. But what is still more important is that we, through agreement with the European Union, are switching to equal price formation principles within the country Recently Russian regulators forced Shell to sale its stake in the Sakhalin-2 project to Gazprom. In the latest development, BP threaten to lost its license for the Kovytka gas field – operated under a joint venture with Russian oil driller. With the regulators arbitrary attitude, ExxonMobil, the world’s largest oil firm, demand that Russia should clear its attitude to foreign investment. Company impeached that country has illegibly canceled their license to drill oil in country and added that regulators has no rights to leave foreign companies in a limbo. Image: Kir Via: BBC

BP loosing control over Kovykta oil field

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British oil driller BP is on the verge to lose its license for the Kovykta gas field when a Siberian court declined to hear its arguments. The Russian government is getting back all stakes in state’s hand to get monopoly over its oil reserve. The Russian government has already thwart Royal Dutch Shell aimed to spread in the Russia as authority force Dutch oil giant to sell its controlling stake in energy development in the Russian Far East, the Sakhalin II project. Russian government has drafted a policy to empower state owned refinery Gazprom to compete with the western oil giants, by acquiring all its oil reserve. Russia is set to take states oil under its control, which not only targeted BP and Shell, but all outsider refineries. BP is drilling oil in Russian field with Russian joint venture, TNK-BP. Russian regulators impeached TNK-BP to drill less than signed amount of oil. Authority said that under the terms of the license, Kovykta should have been producing nine billion cubic meters of gas per year by 2006, but TNK-BP produce less than 2.5 billion cubic meters. On the charges, TNK-BP defends itself and claims that company cannot produce any more because the local region does not require additional supplies and government has denied company an export license. About the legal battle, TNK-BP seems confident as it claiming that company has legal merit of the case and hopeful to defend all avenues. Kovykta is one of the largest known Russian oil field where BP has build its largest natural gas project aimed to earn a billion from the fast-growing gas markets in China as Kovykta oil field is largest oil seller to the china. The field is also among the largest natural gas deposits in the world, holding the equivalent of three times the annual demand of the United States. US and European nations are defending against the Russian policy to frustrate its refineries and deem this decision illegal. US has raised voice against increasing Russian monopoly over the Asian market and impeached it to threaten European nation with its access on the oil. Image: artnotoil Via: guardian