California Sues Oil Behemoths

The US state of California has sued five oil behemoths for their alleged role in downplaying the risk posed by fossil fuels while causing tens of billions of dollars in damage, The New York Times has reported. 

 

The lawsuit, filed on Friday in the superior court of San Francisco, targeted Exxon Mobil, Shell, BP, ConocoPhillips and Chevron. 

 

It is said to be the most significant lawsuit to put the spotlight on the fossil fuel industry and demand the creation of a fund to compensate for future damages caused by climate-related disasters. 

 

And it follows other cases brought by US cities, counties and states against fossil fuel interests over the impact of climate change, as well as alleged disinformation campaigns spanning decades. 

 

California’s attorney general Rob Bonta, who is leading the case, claimed in the 135-page document the oil giants intentionally downplayed the risks posed by fossil fuels to the public since the 1950s – despite knowing their products were likely to lead to significant global warming.

 

Since the current wave of environmental litigation against fossil fuel firms began in 2017, the industry has sought to avoid state trials on procedural grounds. But that effort received a major blow in May when the US Supreme Court declined to consider an appeal in two cases, meaning they could proceed. 

 

The legal complaint highlights the destruction unfolding in California from climate change, including record heat, wildfires and drought.

 

The lawsuits are modeled on successful cases against Big Tobacco as well as against the pharmaceutical industry over the proliferation of opioids.

 

No response by the oil majors to the California lawsuit was immediately available. 

 

Oil companies have said in response to other lawsuits that policies to address climate change should come from the federal executive branch and Congress, not via a patchwork of decisions in court cases across the United States.

Banks Finance Oil & Gas Firms

Banks are snubbing the climate pledges they made. 

In April, they indicated they understood that they have an important role in the transition away from fossil fuels, and many signed up to the United Nations-backed Net-Zero Banking Alliance, which requires they set targets to reduce carbon emissions.

However, activist group ShareAction said on Monday that their analysis showed that twenty-five of the said banks have provided $33 billion (£24 billion) in loans and other financing to 50 companies with large oil and gas expansion plans. The oil & gas companies include America’s ExxonMobil, which have tried to defy shareholder demands to cut emissions, state-owned oil company Saudi Aramco and London-listed Shell and BP who have made huge profits from energy price increases in recent months. 

More than half ($19 billion) of the financing since the net zero agreement came from four of alliance’s founders. They were London-headquartered HSBC and Barclays, France’s BNP Paribas and Germany’s Deutsche Bank. 

HSBC, Barclays and BNP Paribas also provided the most finance to these companies since 2016, at $59 billion, $48 billion and $46 billion respectively. 

The banks’ broken promises mean they are giving all of us the one-finger salute.

Oil Prices Recover

It seems that oil prices are on the road to recovery.

 

The signs are already there for all to see.

 

On November 30, 2016, the Organization of the Petroleum Exporting Countries and non-OPEC producers confounded doubters by agreeing to have their first production cut in eight years.

 

This move is expected to drain oil inventories by a cumulative 1.8 million barrels of oil per day, for a total global production cut of 2%.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

That is tellingly significant because oil prices immediately rebounded.

 

WTI crude and Brent crude rallied by some 10% that day itself.

Now, WTI Crude is trading at $53.02 while Brent Crude stands at $55.16 (as at today, 09:14:42, December 27, 2016. Refer webpage http://www.oil-price.net/).

 

Even American shale oil companies used this as an opportunity to hedge their oil price risk between 2017 and 2019 at above $50 a barrel.  

 

Another way of putting it is that producers are looking to lock in future cash flows and sales prices at above $50.

 

This also implies that the $50 level will be a buffer for oil prices moving forward.

 

According to Bloomberg, a record 580,000 crude option contracts traded on the New York Mercantile Exchange that day, while the number of puts, used by producers to guarantee a minimum price, hit the highest since 2012.

 

Even before that – at the 23rd World Energy Congress (October 09-13) in Istanbul, Turkey, Amin Nasser, the chief executive of Saudi Arabia’s state oil producer had predicted that by 2018, oil prices will have recovered and the market conditions will be right for Saudi Aramco to consider an IPO – said to be up to 5% of Aramco.

 

I understand that there are huge aspirations for this IPO, as it is an important component of diversifying the kingdom away from oil revenue.

 

That’s not all. The oil majors have started reinvesting.

 

Royal Dutch Shell went on to spend $53 billion on purchasing BG Group.

 

Then French oil major Total SA acquired oil and gas installations in east Africa for an undisclosed amount, covering assets belonging to Gulf Africa Petroleum (GAPCO) in Kenya, Uganda and Tanzania.

 

And BP Plc’s string of deals. Over the past month, BP had bought a stake in the supergiant Zohr gas field offshore Egypt and expanded their interest in Indonesia’s Tangguh natural-gas project. It has bought in to two exploration blocks in the North Sea and approved a $9 billion oil project in the Gulf of Mexico. 
 

This month itself, a near $1 billion investment in a vast natural gas field off the coast of Africa announced December 19 – the deal was with US-based Kosmos Energy Ltd. This followed a $2.2 billion all-share deal  two days earlier to take a 10% stake in a parcel of UAE oil fields.

 

All of the above promote confidence for the petroleum industry and this will surely boost prices. Motorists, of course, will suffer the pain of higher pump prices. Sigh.

 

This evening, I attended the TMIKL Toastmasters meeting at Bankers Club in the Amoda Building, Jalan Imbi, KL. I was given a speaking slot – and I presented a CC#6 Vocal Variety speech titled “Horror Movies”.

A good speech, in my opinion.

My Evaluator thought so too – but it would have been even better if I had incorporated horror sound effects, e.g. creepy noises or even bloodcurdling screams.

And I also took up evaluation duty. 

Oil Companies Continue to Take a Beating

Exxon Mobil Corp and Royal Dutch Shell Plc this week reported their lowest quarterly profits since 1999 and 2005, respectively. Chevron Corp’s third straight loss marked the longest slump in 27 years, and BP Plc lodged its lowest refining margins in six years.

 

Welcome to year two of a supply overhang and depressed crude prices – that is threatening to tip into yet another bear market, dashing hopes that a slump that began in mid-2014 would show signs of abating.

 

 

 

 

 

 

 

 

Pix by Hasriyasyah Sabudin @ http://www.nst.com.my/news/2016/07/161832/squash-nicol-and-joshna-make-sram-invitational-finals-contrasting-style

 

Nicol David checked into the finals of the SRAM Women's Invitational in Bukit Jalil in Kuala Lumpur after beating Egypt's Omneya Abdel Kawy 11-4, 11-4, 11-6 on Saturday.

 

Tomorrow, she will meet India’s Joshna Chinappa for the second time in this tournament – after the latter rallied from two games down to oust New Zealand's Joelle King 8-11, 5-11, 11-8, 11-4, 11-9.

 

David had defeated Chinappa in three games in the group stage on Thursday. The top seed, however, had to come from behind in each game to win 11-8, 11-8, 12-10 in 37 minutes and preserve her record of never having dropped a game against Chinappa in twelve meetings.

 

A day earlier, she needed just 24 minutes to win over England's Jenny Duncalf 11-4, 11-4, 11-4.

 

On Wednesday, Celtic emerged from a testing visit to Astana in Kazakhstan where they were largely second best with a commendable 1-1 draw.

 

Looking to reach the Champions League group stage for the first time since 2013 – they fell behind to a Yuri Logvinenko header in the nineteenth minute. But Leigh Griffiths found the equalizer when he rifled the ball past FC Astana’s goalkeeper in the seventy-eighth minute – thanks to Patrick Roberts who won possession near the byline and picked out Griffiths inside the penalty area.

 

Celtic must aim for a win in Glasgow next week to reach the Champions League play-off stage.

BP Admits Crimes

British oil company BP on Thursday announced it will pay $4.5 billion in fines and ther payments to the government, and plead guilty to 14 criminal charges resulting from the giant oil spill in the Gulf of Mexico two years ago. This sum includes $1.3 in criminal fines, breaking the record for criminal penalties in the country previously held by drug maker Pfizer, who was penalized to the tune of $1.2 billion in 2009 for marketing fraud related to pain medication.

The US Justice Department also filed criminal charges against three BP employees. Robert Kaluza and Donald Vidrine have been indicted with manslaughter for their involvement in the disaster that left 11 workers dead – alleging that they were negligent in supervising tests before the well blowout and explosion that destroyed the rig. Prosecutors also charged BP’s former vice president for exploration in the Gulf of Mexico, David Rainey, with obstruction of Congress and making false statements about the rate at which oil was spilling from the well.

The April 20, 2010 explosion at the Deepwater Horizon rig managed by BP not only caused eleven deaths but ravaged the Gulf shore by polluting it with 4.9 million barrels of crude oil in the worst spill ever to happen off of America and only brought under control after five months. [Up until that point, the 1989 Exxon Valdez spill was the most severe in US history, having resulted in a comparably meager 750,000 barrels polluting Prince William Sound, Alaska due to a tanker crash. In that case, Exxon settled with the US government for what would be only $1.8 billion by today’s standards].

BP is still subject to other claims, including billions of dollars in federal civil claims and claims for damages to natural resources. In particular, BP noted that the settlement does not resolve what is potentially the largest penalty related to the spill: fines under the Clean Water Act. The potential fine for the spill under the act is $1,100 to $4,300 a barrel spilled. That means the fine could be as much as $21 billion.

Even with these fines, the economic losses suffered by the locals can never be truly compensated, especially to the poor and working-class families whose homes, bodies, and lives were devastated because of BP’s criminal irresponsibility.

An Act of Brand Piracy

A major billboard for BP, the official fuel and gas provider of the Olympics, was vandalized in London as part of a protest against environmental practices of the British petroleum company.

UPI reports some environmental groups are encouraging acts of "brand piracy," including spreading black oil paint on major billboards promoting the company's Olympic sponsorship. The six-paneled billboard above sits on Cromwell Road, a major traffic route in central London.

Another billboard was tagged with the URL for f-ingthefuture, a website protesting BP's involvement with the Olympics. The name is a profane take on BP's "Fueling the Future" slogan.

"Organizers [sic] of the Olympics have decided to allow BP, one of the dirtiest companies on earth, the opportunity to rebrand itself as socially responsible and take an active role in proposing how society should approach climate change," the site's pointed critique begins.

BP is using the Games to try to rebuild its image after the disastrous Deepwater Horizon oil spill. It plans to heavily promote its new biofuels in various advertisements.

"The London 2012 sponsorship has enabled us to get involved in a hugely positive event and put lots of energy into that," Mike Sharrock, the company's partnership director, told Business Week.

The Olympic organizers should be careful when inviting companies to get involved in event sponsorship. We should not remain aloof to companies which put profits above everything else. Companies such as BP. Challenge. Protest. Resist.

Photo courtesy f-ingthefuture.org.uk

After a 3-month absence, I returned to attend the MIMKL Toastmasters meeting although I didn’t stay right to the end. I was the Toastmaster-of-the-Day and it was nice to see new faces at the meeting. I particularly enjoyed two speeches – one an Ice-Breaker and another, an Advanced speech. I shall award this meeting a 7.5 out of a 10.

As I have mentioned, I didn’t stay because there was a TLI Club Officers Training at Sunway University that saw the participation of club officers from Divisions B, C and E and including some from other Divisions as well.