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Posts from ‘December, 2014’

Shell BP Mega Merger: Fact, or extremely well informed conjecture?

It was this article, followed by the oil price crash, which led to the growing speculation about a Shell BP Mega Merger.

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By a confidential contributor.

Shell BP Mega Merger: Fact, or extremely well informed conjecture?

…its a typical dark, smoke-filled room where two teams of senior people – top echelon, Board level types, not the operational guys who run organizations these days – are discussing a thorny problem. The structure of the industry is changing: the mega-mergers of the 1990s, which brought BP to scale, saw ExxonMobil become the world’s biggest company and made Chevron and Texaco join hands are almost forgotten and a new world order has emerged. The state oil companies from the resurgent Russian and nascent Chinese super-powers now sit at the head of the negotiating table and the rules of the game are changing. Some of the world’s oldest and largest IOCs are no longer big enough to compete and its time, according to the bankers and consultants, for a ‘game changer’. Unless there a bold move is made, the under-funded pension pots and comfy Board appointments – not to mention more than one Royal family investment portfolio – are all at considerable risk. People are worried.

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Real chance BP and Shell will merge

Screen Shot 2014-10-28 at 12.29.57Extracts from an article by David Taylor published by The Motley Fool on New Years Eve 2014 under the headline:

“Is It Safe To Stick With BP plc And Royal Dutch Shell plc, Or Should I Get Out?”

Royal Dutch Shell has five undeveloped projects in total (Carmon Creek, Bosi, Gato Do Mato, Bonga, Yucatan and Athabasca). They all require an oil price of at least US$95 per barrel to break-even. So yes, it’s not looking good on that front. Morgan Stanley says the price of oil could fall to as low as US$43 per barrel; …if the price falls further, there’s a real chance BP and Shell will merge, creating a potentially exciting investment opportunity.

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Former Shell exec Mark Carne in firing line again

The Guardian newspaper has published an article about the rail travel fiasco in the UK at Christmas.

Network Rail bosses could face grilling over Christmas chaos

Extract

Senior executives at Network Rail are likely to be summoned to Westminster to explain the engineering overruns that caused chaos for Christmas travellers over the weekend.

Mark Carne (above right), the chief executive of Network Rail, is once again in the firing line. He has been on holiday over the Christmas period leaving the rail travelling public to suffer from his incompetence, for which he is to receive a bonus of up to £135,000.

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CEO Ben van Beurden finally endorses Shell Business Principles

Screen Shot 2014-12-05 at 14.22.12By John Donovan

After our long campaign for Ben van Beurden, the Chief Executive Officer of Royal Dutch Shell Plc, to sign Shell’s statement of General Business Principles, he has at last got round to doing so.

I do not know what the reluctance was about, or why it took a year of cajoling on our part, in a succession of articles, for him to finally sign on the dotted line endorsing the document.

The long delay raises questions about the priorities of RDS senior management and their commitment to upholding the claimed principles and values. 

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The Fate of BP

Screen Shot 2014-10-28 at 12.29.57…if prices remain in the region of $60 per barrel, then the current scenario would be retained for a longer period of time, exposing it to takeover bids. Also, if Royal Dutch does indeed takeover BP, it could work out well for both companies.

Extracts from an article published by GuruFocus.com on 30 Dec 2014 under the headline:

British Petroleum Is A Buying Opportunity To Explore With “Sudden Dips” 

British Petroleum remains a buy, despite being a size lower than some of its competitors mentioned above. Its market capital of £74.6 billion ($116.5 billion) is dwarfed in terms of Royal Dutch Shells £208 billion ($323.85 billion), which might put it at risk considering the strategic issues at hand. With the uncertainly looming over the entire industry, experts feel that the company might be unsafe as a medium term investment, but there are clues to express otherwise.

According to sources like Forbes and IB-Times, Royal Dutch could be in the race to bid for some of the British oil major’s assets, which might sweep ion a new wave of optimism, putting in a position of a being a “buy” company. But since no confirmation has yet come through, there isn’t a credible source of attributing optimism for a price rise for BP shares on an immediate basis.

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Shell Plans To Boost Ethanol Production In Brazil

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How Royal Dutch Shell Intends To Boost Ethanol Production In Brazil

Bidness Etc looks at the progress Shell is making in the joint-venture with with Cosan Limited to boost ethanol production in Brazil over the next ten years

By: MICHEAL KAUFMAN
Published: Dec 30, 2014 at 7:19 am EST

The joint-venture between Royal Dutch Shell plc (ADR) (NYSE:RDS.A) and Cosan Limited(USA) (NYSE:CZZ), called Raizen, plans to spend nearly $1 billion on building ethanol production facilities to increase its biofuel output by 50%, according to the Financial Times (FT).

Cosan Limited intends to build eight ethanol plants over the next ten years, for an estimated cost of $930 million (2.5 billion reais). The plants will produce cellulosic ethanol fuel using sugarcane waste as its primary raw material, the most efficient source of biofuel. The first of eight plants was completed last week, and has an annual capacity of 40 million liters. After the completion of all plants, the company expects biofuel output to increase 50%.

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Tie-Up Between BP and Royal Dutch Shell In 2015?

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By: MICHEAL KAUFMAN
Published: Dec 29, 2014 at 2:17 pm EST

Ashley Armstrong, the Telegraph’s merger and acquisition columnist, hinted at the possibilityof a merger between London-based BP plc (NYSE:BP) and Netherlands-based Royal Dutch Shell plc (ADR) (NYSE:RDS.A) in a piece over the weekend.

M&A activity during 2014 reached the $3.5 trillion mark, the highest since the 2008 financial downturn. Ms. Armstrong expects more huge deals next year.

She thinks that the decline in commodity prices will act as a catalyst for M&A between mining and natural resources companies. Since this year’s peak in late June, crude oil prices have fallen 45% and are on track to record the biggest decline since the financial crisis. The slump in crude oil prices to $60 per barrel will negatively impact the profitability of some energy companies at the very least, and bring into question the business models of some businesses at worst.

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Oil Price Bust Foreseen: Is Jesse Colombo a bone fide time traveler?

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“Time travel has captured the public imagination for much of the past century, but little has been done to actually search for time travelers. Here, three implementations of Internet searches for time travelers are described, all seeking a prescient mention of information not previously available.”

Perhaps Shell or BP may decide to hire Mr. Colombo and ask him about the timing of a mega merger, bearing in mind that he seems to know more about the oil industry than them? 

By John Donovan

A few days ago I published an article about Jesse Colombo, the economic analyst who correctly and uniquely, predicted the oil prices bust, which has an impact on every individual and country on the planet.

The collapse in oil prices might not be as highly ranked as the 9/11 terror attack in terms of an historic event, but it is of world-changing significance.

I found the Jesse Colombo article from June 2014 containing his prescient prediction published on the Forbes.com website.

This was in the course of carrying out some research into why the predictions of one of the worlds biggest oil companies, Royal Dutch Shell, has been so wildly inaccurate in regard to oil issues, such as when peak oil will occur. Shell has a “scenarios” team tasked with peering into the future with the objective of coming up with accurate forecasts. I wonder if they have foreseen their own future, which might be short as far as Shell is concerned?

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Senior Sources See Merit In Shell BP Mega Merger

Screen Shot 2014-10-28 at 12.29.57“…the tumbling commodities price has meant that takeover chatter has spread to even the fantasy realms of BP and Shell. Once considered unthinkable, senior sources are now saying that there is merit in doing the colossal deal…”; “Companies will not be able to continue with business as usual and must either cut back on expensive exploration plans or cut their dividends, or both…” 

Major article by Ashley Armstrong published on page 5 of The Sunday Telegraph Business Section on 28 December 2014 under the headline:

“PIECES ON THE BOARD”

Extracts

One huge driver of dealmaking next year is expected to be the slump in commodity prices and with mining and natural resources companies accounting for 20pc of all London-listed companies a wave of merger mania can be expected in the City.

Oil prices that have slumped by 40pc since June to around $60 a barrel mean that “some resource companies are now uneconomical at best and at worse have unfeasible business models,” one dealmaker said.

“Companies will not be able to continue with business as usual and must either cut back on expensive exploration plans or cut their dividends, or both,” said Neil Passmore, chief executive at Hannam & Partners.

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Oil executives predict wave of mergers: players to divide into predators and prey?

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“Executives predict a wave of mergers not seen since 1998, the last time the oil price suffered a precipitous and sustained fall.”

Extracts from a Danny Fortson article published on the front page and page 6 of The Sunday Times Business Section on 28 December 2014 under the headline:

“Oil explorers left high and dry by crude crisis”

How times change. Three years on, Afren, like many of its rivals, is on the ropes thanks to the halving of the oil price from its July high of $114 a barrel to $61. The drop has unleashed chaos in the markets as once-swashbuckling explorers find themselves buckling under debts they took on when the market was booming and with investors, already nursing heavy losses, who are unwilling to bail them out.

Executives predict a wave of mergers not seen since 1998, the last time the oil price suffered a precipitous and sustained fall. 

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Rail chaos at Finsbury Park: Trusting ex Shell executives to run a railway network?

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(THE ABOVE SCREENSHOT IS FROM AN ARTICLE IN THE INDEPENDENT PUBLISHED SUNDAY 28 DEC 2014)

Screen Shot 2014-08-28 at 13.22.02ARTICLE BY BILL CAMPBELL, RETIRED HSE GROUP AUDITOR, SHELL INTERNATIONAL

Could you really trust ex Shell executives to run a railway network?

In the usual manner *TFA Malcolm the Tank Engine arranged for his apprentice Marc Carne to take over as CEO of Network Rail, but like his disciples Bjorn Berget, Chris Finlayson, Gregory P Hill, dear Marc is a follower, not a leader, how otherwise would TFA Brinded have recruited them as his obedient servants in the first place.

Outside the protected arena of Shell, and in the public domain, we sense their true worth.

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Oil majors’ finances strained by price slump

Screen Shot 2014-02-18 at 18.34.00Sunday Telegraph newspaper article by Ben Marlow: Oil majors’ finances strained by price slump

The sudden fall in the price of crude oil, from $120 to just $60 a barrel in six months, is the biggest economic shock of 2014 and the fall out is expected to be profound and long-lasting, especially for the oil majors. 

THE FINANCES of Britain’s three biggest oil majors are looking more stretched amid the sudden fall in the oil price, ratings agency Standard & Poor’s has warned.

S&P said the dramatic deterioration in the oil price outlook had prompted the agency to take a number of “rating actions” on European oil and gas majors including Shell, BP, and BG Group.

S&P outlined three key concerns around a group of the industry’s biggest European producers: Shell, Total, BP, Eni and BG Group.

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Jesse Colombo, the economic analyst who predicted the oil prices bust 

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FULL CREDIT TO THE EXPERT WHO CORRECTLY PREDICTED THE OIL PRICE CRASH

Screen Shot 2014-12-22 at 21.08.35By John Donovan

In June of this year Forbes.com published an extensive prescient article by Jesse Colombo, an economic analyst, under the headline:

“9 Reasons Why Oil Prices May Be Headed For A Bust”

His prediction made 6 months ago:

“There are a growing number of reasons, however, why crude oil prices are likely to finally experience a bust in the not-too-distant future.”

Jesse Colombo correctly predicted an event of huge significance. Ask Putin or Shell’s Ben van Beurden.

Some further extracts from his brilliant article, which deserves reading in full.

While extreme aggregate trading positions can persist for quite a while, as is the case in the crude oil market for the past few years, they are still a reliable indication that a powerful market reversal is likely to occur when the proper catalyst eventually appears and sends speculators heading for the exits. So far, no bearish catalyst has presented itself in the crude oil market, but the other points that I’ve listed in this piece may combine to form a perfect storm that finally causes the oil market to crack.

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Merry Christmas from Royal Dutch Shell Plc .com

Screen Shot 2015-12-24 at 20.17.26I would like to wish all of the contributors and visitors to this website, a Merry Christmas and a Happy New Year

From John Donovan

Shell and the National Gallery: welcome to a Moral Maze

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Spotted this article on the website of the former Royal Dutch Shell executive, Paddy Briggs. 

By Paddy Briggs

I went to the superb exhibition “Rembrandt: The Late Works” at the National Gallery yesterday. The exhibition is sponsored by Shell – quite strongly as it happens. There are a couple of prominent Shell promotional displays and the Shell emblem is visible all over, though not within the actual gallery where the works are to be seen. This suggests that the Shell sponsorship was financially quite large, even that the event, in straightened times for the Arts, might not have gone ahead without it.

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Shell’s future in the Arctic looks doubtful

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By: MICHEAL KAUFMAN
Published: Dec 23, 2014 at 12:38 pm EST

There is a large question mark on whether Royal Dutch Shell (ADR) (NYSE:RDS.A) will continue a new round of drilling in the Chukchi Sea and the Beufort Sea in the Arctic or not. The company earlier filed a lawsuit against a group of environmentalists to avoid any legal challenges in the future. The lawsuit sparked criticism from authorities and posed several problems for the Dutch oil giant.

Shell acquired the leases in 2008, after receiving approval from the Bureau of Ocean Energy Management (BOEM). But a lawsuit was filed blaming BOEM for taking arbitrary estimates which were not reliable. BOEM as a result revised its assessment and issued a supplementary environmental statement, which revealed that around 4.4 billion barrels of crude oil could be pumped compared to the previous estimate of one billion barrels.

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Idemitsu Showa Shell merger talks could trigger more consolidation

Screen Shot 2014-12-22 at 21.10.24Reuters article published Tuesday 23 December 2014 under the headline: Japanese refining merger talks could spur more consolidation

It seems that the forecast wave of mergers in the oil industry arising from the collapse in oil prices has kicked off in Japan. Also fits in with Shell’s fire sale strategy. 

Extracts

Consolidation looks to have kicked off with Japan’s No. 2 refiner Idemitsu seeking to buy No. 5 Showa Shell in a 500 billion yen ($4.2 billion) deal that would bring them close to industry leader JX Holdings.

The combined company would have annual sales of about 8 trillion yen, making it the second biggest after the leader JX Holdings and control about 30 percent of Japan’s gasoline market. JX has 33 percent of Japan’s oil market.

Consolidation is further supported by the crash in oil, which has seen prices almost halve since June, resulting in falling stock prices for energy firms and reduced asset values, offering opportunities to cash rich investors.

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U.S. litigation arising from secrecy issues surrounding groundbreaking IP technology coveted by Shell

Screen Shot 2014-12-23 at 00.28.33Alleged industrial espionage by Shell Oil Company: A senior individual in the U.S. intelligence community was authorised by U.S. Dept. of Defense government attorneys to confirm to me that an investigation directed at Shell USA had been initiated by the US Department of the Navy, Naval Criminal Investigative Service (NCIS).

By John Donovan

In 2010, I published an article revealing that four years earlier, U.S. authorities had launched an investigation into alleged industrial espionage by Shell Oil Company.

When I approached the then Chief Ethics & Compliance Officer of Royal Dutch Shell Plc, Mr. Richard Wiseman, about the story, this was his initial response on 29 June 2010:

I have no comment to make on this. You should not take this as an indication of our accepting or denying the allegations.

and later the same day:

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Oil price rout hits credit rating of Royal Dutch Shell Plc

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Standard & Poor’s warned today that the six-month collapse in oil prices has undermined the credit ratings of Royal Dutch Shell, BP and Total.

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Tumbling crude prices will lay waste to countries and companies alike

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Screen Shot 2014-12-22 at 09.22.26By John Donovan

The oil industry is leaving 2014 on a low note as far as oil prices are concerned. 

A financial earthquake has hit ExxonMobil, Royal Dutch Shell, BP, Chevron, Conocophillips and Total. 

The Sunday Times devoted a whole page article by Danny Fortson to the turmoil resulting from the collapse in the price of crude oil.

According to his article on page 5 of the Business Section of The Sunday Times published on 21 Dec 2014:

“Tumbling crude prices will lay waste to countries and companies alike”

…and tens of thousands of British jobs are at risk. 

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Petition over Allseas Nazi named ship, the Peter Schelte

Screen Shot 2014-12-21 at 19.48.04By John Donovan

I have just started a petition on change.org asking Edward Heerema, the owner of Allseas Group SA, to change the name of his new ship currently named in honour of his Nazi war criminal father, shown right in his Waffen SS uniform. 

If you share my disgust, you can support the petition here

I have also brought this matter to the attention of the Simon Wiesenthal Organisation. 

FROM CHANGE.ORG

Petitioning Edward Heerema, founder of Allseas Group SA

This petition will be delivered to: Edward Heerema, founder of Allseas Group SA

Out of respect to the victims of the Nazi war crimes, please change the name of your gigantic new ship, the Pieter Schelte, named after your father, a former officer in the murderous Waffen SS and diehard member of the Nazi party.

Please change the name of your new ship, the Pieter Schelte, at 1,253 feet long and 384 feet wide, said to be the largest ship in the world in area.

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Big Oil’s $3 Billion Homage to Nazi War Criminal

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The biggest vessel in the world, the Pieter Schelte (above) has been built by Daewoo in South Korea. Swiss company Allseas commissioned the building of the huge $1.7bn ship. Both the legs and main structure of a rig can be moved simultaneously (shown in illustration)

Article by Eamonn Fingleton published by Forbes.com: 20 December 2014

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Big Oil’s $3 Billion Homage to Nazi War Criminal

Ships don’t come bigger than the Pieter Schelte. They don’t come more controversial either. Built in Korea at a cost of nearly $3 billion, the gargantuan new ship is now sailing towards the Netherlands, where it will soon enter service in the European offshore oil industry.

A huge catamaran, it weighs 932,000 tons, a world record, and nearly 18 times the Titanic. It will lift offshore oil rigs weighing up to 48,000 tons, again a world record. So much for the technicalities – but there is, ahem, a slight political problem: the ship’s name.

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Shell may exit Japan

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Screen Shot 2014-06-23 at 11.37.41According to a report in the Nikkei business daily Royal Dutch Shell will likely exit the oil-refining and sales business in Japan.

Japan’s second-largest oil distributor Idemitsu Kosan is planning to acquire its smaller rival Shell Sekiyu in a deal worth an estimated $4.18 billion.

Idemitsu and Shell are expected to sign a basic agreement as early as February, with the tender offer to be launched pending regulatory approval.

Idemitsu and Showa Shell have a total of six refineries under their wings.

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Shell drilling company guilty of environmental and maritime crimes in Alaska’s Arctic

Screen Shot 2014-12-19 at 15.36.47ANCHORAGE, Alaska — Dec 19, 2014, 3:28 PM ET: By DAN JOLING Associated Press

A drilling company has pleaded guilty to committing environmental and maritime crimes in Alaska’s Arctic.

Bernie G. Wolford Jr., president of Noble Drilling U.S. LLC, appeared in federal court in Anchorage on Friday after reaching an agreement with prosecutors earlier this month.

Wolford said the $8.2 million fine and $4 million in community service payments would be paid Friday. He declined to comment further after the hearing.

Noble operated the drill ship Noble Discoverer and the drill unit Kulluk in support of Royal Dutch Shell PLC’s offshore drilling efforts in 2012.

According to the agreement, Noble Drilling’s violations included keeping false records or failing to record details surrounding its handling of oil on the vessels. The company also failed to notify the U.S. Coast Guard of hazardous conditions aboard the Noble Discoverer.

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Why Shell Is Facing Problems In The Arctic

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By: MICHEAL KAUFMAN
Published: Dec 19, 2014 at 11:21 am EST

Royal Dutch Shell Plc. (ADR) (NYSE:RDS.A) is uncertain over its plans to drill in the US Arctic. The final decision regarding the company is expected to come in March, 2015. During this time the company is likely to consider various factors before taking a decision.

How crude oil prices have moved in the last six months seems will be a factor in any decision taken by management. Oil exploration and production (E&P) activities have fallen globally because of the dip in prices.

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Shell may abandon Arctic drilling indefinitely

Screen Shot 2014-12-19 at 15.36.47By John Donovan

Royal Dutch Shell is expected to announce by March if it will go forward with plans to drill for oil in Arctic waters offshore Alaska in 2015, a decision which may have more to do with the outcome of court cases and U.S. government reviews than global market fundamentals.

Shell’s decision is widely seen as a potential turning point for the company’s long-range Arctic plans, with billions already spent and rival companies putting their own Arctic drilling plans on hold; if Shell does not pursue drilling off north Alaska in 2015, it may abandon the region indefinitely.

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Shell – leveraging the climate debate

Screen Shot 2014-10-30 at 09.22.43Four of these experts were from Shell, a prominent member of history’s top 90 polluters. Shell was also paying the costs. Its logo was everywhere, cuddling alongside National Geographic’s. The event was hijacked by Shell…

Extracts from an article by Assaad W. Razzouk published by The Ecologist

The annual UN Climate Talks ended on Sunday in Lima, Peru. In case you were wondering, nothing happened.

In Lima, Shell’s top climate advisor was comfortable enough to admit that Shell enjoys its relationship with the notorious American Legislative Exchange Council (ALEC), a shadowy shop specialised in aggressive efforts to counteract emissions reductions and regulations.

This is the same ALEC which, in the words of Google executive chairman Eric Schmidt, is “literally lying” about climate science.

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Why Shell Is Selling Its Norwegian Downstream Business

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Screen Shot 2014-06-23 at 11.37.41Royal Dutch Shell has decided to sell off of its Norwegian downstream business to Finland’s ST1 in order to improve profitability and achieve its divestment targets

By: MICHEAL KAUFMAN
Published: Dec 18, 2014 at 5:21 pm EST

Royal Dutch Shell plc. (ADR) (NYSE:RDS.A) has decided to sell its Norwegian downstream business comprising commercial fuels, retail and logistics businesses. The company is planning to sell the stake to ST1, a fuel company in Finland. No further details have been disclosed so far.

A Retail Brand License Agreement is also expected to be part of the deal. This particular agreement would make sure that the Shell brand remains highly visible in the Norwegian market through a distributor. The deal is yet to be approved by regulatory authorities and is expected to be confirmed next year. Shell will also run its Norwegian aviation business in a 50-50 joint venture with with ST1, which already operates Shell pumps in Sweden and in Finland.

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PETER VOSER JOINS ANOTHER SCANDAL RIDDEN COMPANY 

By John Donovan

A posting today on our Shell Blog…Screen Shot 2014-12-18 at 17.05.41

When Peter Voser’s departure as CEO was announced, it was explained that Peter wanted time for his family, hobbies and to give back to society. Today it was announced that he’s being proposed as Chairman of ABB (his previous employer) and he also took a directorship at a Singaporean Sovereign Invetsment house some months ago. This makes his departure story look suspicious. Maybe the board was aware that he overpaid for unconventional acreage in the USA and that his China adventures were quickly going nowhere but down. Is it time for the RDS board to be a bit more forthcoming with its justification?

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Shell agrees sale of downstream businesses in Norway

Screen Shot 2014-06-23 at 11.37.41Shell has signed an agreement with ST1 for the sale of its retail, commercial fuels and supply and distribution logistics businesses in Norway. In addition, Shell’s aviation business in Norway will become a 50-50 joint venture with ST1.

The sale is subject to regulatory approval and is expected to be completed in 2015.

The transaction includes a Retail Brand Licence Agreement which will ensure that Shell’s brand remains highly visible in Norway and that high-quality Shell fuels and lubricants products, and the euroShell loyalty card scheme, will continue to be available to customers in the country.

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5 YEARS BEFORE OIL RETURNS TO $100 PER BARREL?

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Screen Shot 2014-02-18 at 18.34.00By John Donovan

The Trefis Team has published an extensive, highly informative article under the headline:

“Where Are Oil Prices Headed In The Long Run?”

It takes many factors into account before forecasting that annual average crude oil prices are likely to continue to decline in the short to medium term and bottom out by 2017, to reach $100 per barrel again by 2020.

This expert analysis will not be well received by Big Oil, its employees or Putin.

FULL ARTICLE

We can expect to see many more news reports like this one:

Chevron Withdraws From A Multi-Billion Dollar Project In Ukraine

US energy giant Chevron has informed Ukraine about its decision to pull out of a $10 billion shale gas exploration project. This comes as a big blow to the already war-torn economy of the country. The withdrawal of the project came a few months after Royal Dutch Shell also withdrew from a multi-billion dollar exploration project in the country.

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Royal Dutch Shell Plc Plunge

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Screen Shot 2014-12-17 at 16.52.18The FTSE 100 has been dipping perilously in the past few weeks, giving up 722 points (10.5%) from its recent high of 6,905 on 4 September to Monday’s close of 6,183 — and if it can lose that much in three months it could certainly drop to 6,000 or lower by the end of December. Often such runs can be put down to individual sectors, and the big safe companies are there to offer some support and prevent a meltdown. But the crucial driver right now is oil. Brent crude crashed through the $60 per barrel level this week to reach its lowest since 2009, and as I write today it’s trading at a fraction under $59! Shell shares slumped by 17% between 21 November and close on 15 December. 

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Will 2015 Be The Year Of The Mega-Merger?

By John Donovan

Rupert Hargreaves of The Motley Fool raises the prospect in an article published today of potential mega-mergers in 2015, including a merger between Royal Dutch Shell and BP.

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He covers much of the same well-trodden ground in relation to Shell BP as in a flurry of recent articles by excited journalists, before concluding that a merger is unlikely, but not beyond the bounds of possibility.

Extract

Overall, then, there could be too many risks, uncertainties and hurdles to jump over for a deal between Shell and BP to go ahead. That being said, if the price is right, I’m sure Shell’s management would figure out a way to make the deal work so I wouldn’t rule out a deal completely.

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How could Shell have got it so wrong on oil? 

Screen Shot 2014-10-30 at 09.22.43In October of this year, just 9 weeks ago, when oil was at over $90 a barrel, Shell CEO Ben van Beurden expressed his confidence that oil would return to what he described as “very robust” pricing. He said that the oil price had been remarkably stable and that in the short term, Shell has a trading strategy to inoculate itself from the swings and “maybe even make money out of it.”

In view of the immediate subsequent slump in the oil price and the anticipated disastrous impact on Shell, he may now wish he had been less confident about the prospect of actually making money out of a downward swing. 

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Many predicting oil prices as low as $40 per barrel

Screen Shot 2014-10-30 at 09.22.43With the oil market appearing set to endure worsening fundamentals over the next few years at least, shareholders could see dividends at Shell come under severe pressure once again.

FROM AN ARTICLE BY ROYSTON WILD PUBLISHED BY THE MOTLEY FOOL ON MON 15 DEC 2014

Headline: Is Royal Dutch Shell Plc Really Robust Enough To Yield 5.4% In 2015?

Extracts

News of a sinking oil price and subsequent dip in investor appetite for the world’s major oil plays like Royal Dutch Shell has dominated the newsflow in recent months.

Concerns over rampant oversupply have pushed crude prices to a string of multi-year lows in recent months, and Brent collapsed to its cheapest since the summer of 2009 at the end of last week around $62.50 per barrel.

Many across the investment community are predicting that prices could even fall as low as $40 per barrel, as abundant supply from the US, combined with subdued demand caused by worsening economic conditions in China and Europe, weighs on prices.

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Oil price to dip to $50 or even lower?

Screen Shot 2014-12-14 at 16.54.27By John Donovan

Recognising the seismic significance of the continuing collapse in the price of oil, The Sunday Times devoted several articles to the subject last weekend.

It has done the same again this weekend, with coverage in the main newspaper and in the Business Section.

Oil price slump puts explorers up for grabs

Predators circle…

Extracts from above linked article by Danny Fortson

THE plunging oil price has unleashed chaos on the london market, with some listed oil explorers trading for less than their cash reserves and others eyeing takeovers at levels that were unthinkable just a few months ago. Since hitting nearly $115 a barrel this summer, the price of oil has plummeted 45%. Brent crude closed on Friday at $61.5. The fall is likely to lead to a flurry of collapses and long-coveted deals amid predictions that the swoon will continue into 2016 and could see the oil price dip to $50 or even lower.

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Talk of Shell BP tie-up to create £200bn world leader

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After a solid 10 hours locked in secret briefings at the Langham Hotel in London this week, 100 of BP’s top investors emerged into the crisp winter evening air to the grim news that oil prices had sunk to a new five-year low.

From an article in The Sunday Telegraph 14 December 2014 by Andrew Critchlow

UK oil giants fight for control in a current of falling prices

Investors in BP and Royal Dutch Shell – Britain’s biggest international oil companies – now find themselves caught in the crossfire of a much bigger game

After a solid 10 hours locked in secret briefings at the Langham Hotel in London this week, 100 of BP’s top investors emerged into the crisp winter evening air to the grim news that oil prices had sunk to a new five-year low.

Given the challenges facing big oil producers, the mood at the briefing, led by BP’s upstream chief executive Lamar McKay, was described as being “serious” by those present. However, the thought of US crude crashing below $60 (£38) per barrel, a baseline level that most oil majors use to stress test the profitability of their future projects, will have pushed sentiment to a new low.

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Oil keeps getting cheaper and cheaper

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FROM THE WASHINGTON POST ARTICLE BY CHRIS MOONEY PUBLISHED 12 Dec 2014

The basic reason oil keeps getting cheaper and cheaper

It may well take some time for supply and demand to respond to the price rout…

Extracts

Oil prices continued their slump even lower today, with West Texas Intermediate crude — a U.S. benchmark — now well below $60 per barrel. This is part of a momentous decline of over $40 per barrel since late June.

One catalyst today is the International Energy Agency’s release of its latest Oil Market Report, which lowered the agency’s forecast for global oil demand growth in 2015 by 230,000 barrels per day.

The report could not be more plain that the fundamental cause of the sharp oil price decline — whose knock-on effects include markedly lower gas prices in the U.S., and soon, perhaps, lower airfares — is an imbalance between supply and demand.

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Evil repercussions of Kiobel v. Royal Dutch Petroleum U.S. Supreme Court Decision

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Screen Shot 2014-10-30 at 09.22.43Plaintiff Esther Kiobel (L) joins a protest against Royal Dutch Shell Petroleum in front of the U.S. Supreme Court in Washington October 1, 2012. REUTERS/Gary Cameron

By John Donovan

Yesterday, Reuters published an article about the legal repercussions in the USA from the landmark decision in 2013 by the U.S. Supreme Court in the famed Kiobel v. Royal Dutch Petroleum co case.

Access is provided here to the 35 page judgement issued by the Supreme Court of the United States on April 17, 2013

Esther Kiobel is a regular visitor to this website and says that her husband Barinem Kiobel was executed by the Nigerian regime with the backing of Shell, which she has correctly described as an evil corporation.

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Oil prices continued their collapse on Friday

Screen Shot 2014-12-13 at 09.19.40Oil prices continued their collapse on Friday… The new rout began Friday morning… Gas prices will continue to be in a free fall as long as crude oil is searching for a bottom,” the AAA motor club reported on Friday.

From an article published by The New York Times on page B1 of the New York edition dated 13 December 2014

Oil Prices Fall Again, and Stocks Follow Suit

Extracts

Oil prices continued their collapse on Friday as evidence mounted that the frenzy of American oil production would continue well into 2015 even while growth in global demand was declining.

The global benchmark for crude approached $60 a barrel — down more than 3 percent on the day and roughly 45 percent since the summer. And the American benchmark continued its free fall as well, to below $58 a barrel, down around 4 percent. A day earlier, it sagged below $60 a barrel in the United States for the first time since 2009.

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Leaked BP CEO Internal Memo

Screen Shot 2014-12-04 at 20.54.03It’s completed about $43 billion of asset sales since the 2010 oil spill in the Gulf of Mexico. The offshore disaster has cost London-based BP more than $28 billion in clean-up costs and damages, and the company is still fighting legal battles on multiple fronts.

BLOOMBERG NEWS ARTICLE

BP Chief Says Company Must Slim Down to Match Rivals on Costs

Dec 12, 2014 11:07 AM GMT

BP Plc (BP/), dealing with the lowest crude prices in five years, must cut jobs because costs are higher than at the oil company’s global competitors, the chief executive officer told staff this week.

“In many parts of BP, we have higher costs and larger teams than other companies operating at a similar scale,” Chief Executive Officer Bob Dudley said in an internal memo to staff obtained by Bloomberg. Programs are “well underway in many areas to streamline our work and refocus our activities.”

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Why Is Shell Divesting Stake In China Lubricants Business

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By: MICHEAL KAUFMAN
Published: Dec 12, 2014 at 10:05 am EST

Royal Dutch Shell plc (ADR) (NYSE:RDS.A) has announced plans to sell off stake in the Tongyi oil lubricants joint venture. The company holds a 75% stake in the lubricant firm, while the remaining 25% stake is held by Huo Zhenxiang, the founder of the joint venture. Shell has hired services of China’ investment bank China International Capital Corp to aid in the sale of its 75% stake in Tongyi, which comprises of oil lubricants for motorcycles, cars, and other vehicles.

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US oil price below $60 a barrel

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From a Financial Times article published 11 December 2014 @10.49pm:

US crude closed below $60 a barrel

US crude closed below $60 a barrel for the first time in five and a half years… The declines came on top of falls of more than $2 on Wednesday after the Opec producers’ cartel said demand for the group’s crude in 2015 would be the lowest in a decade and below current levels.

FULL ARTICLE

From a Motley Fool Article published Friday 12 December 2014

THE OIL PRICE CRASH

If 2014 is remembered for anything, economically, it will be the oil price crash. In July, Brent Crude traded at $115, and that seemed perfectly rational. Today, it has plunged to $64. The share prices of BP and Royal Dutch Shell have duly crashed as well. As global, vertically-integrated businesses, the UK-listed oil giants aren’t a pure play on the oil price, but they can’t escape unscathed in times like these.

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WILL BP BE ABLE TO SURVIVE?

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By: MICHEAL KAUFMAN
Published: Dec 11, 2014 at 4:50 pm EST

The operating cashflow for BP plc (ADR) (NYSE:BP) is expected to grow 5.3% between 2014 and 2017. BP is slightly above Royal Dutch Shell plc’s (ADR) (NYSE:RDS.A) growth rate of 4.1%.There have been several factors that have contributed to low expected growth for the future operating cash flow.

Oil price has dipped 40% since June, with the West Texas Intermediate trading at $61.24 per barrel and the Brent crude trading at $64.56. The falling oil price has led to a decline in the cash flows for oil giants globally. BP has been adversely impacted due to the huge amounts it has paid in fines and settlements. The Californian lawsuit against the company along with the Gulf of Mexico 2010 settlement charges has clearly dampened the company’s liquidity position.

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EXXONMOBIL TAKE ON GLOBAL ENERGY OUTLOOK

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By: MICHEAL KAUFMAN
Published: Dec 10, 2014 at 10:02 am EST

Exxon Mobil Corporation(NYSE:XOM) revealed its annual energy outlook yesterday and maintained its stance despite the fact that crude price has declined 40% since its peak in late-June. This has resulted in energy companies slashing down their capital spending plans and slowing down growth in production. Furthermore, countries that have heavily relied on revenue generated by exporting crude oil have also come under immense pressure due to significant decline in proceeds generated from the exports.

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Shell’s spectacular belly flop into the Arctic Ocean

Screen Shot 2014-10-31 at 17.18.55Even more troubling than Shell’s “Arctic-ready” armada problems is Shell’s spectacular failure of good judgment. To avoid an Alaska tax bill, company managers ordered its secondary drill rig towed south through the winter storm-lashed Gulf of Alaska despite the tug master’s prescient warning that: “the length of tow, at this time of the year, in this location, with our current routing, guarantees an ass-kicking.” The tug master was right.

Extracts from a letter dated 11 Dec 2014 by Kim Elton, who served four years as senior adviser to former US Interior Secretary, Ken Salazar. 

Here are some lowlights from Shell’s pratfall-ridden 2012 effort to drill exploration wells: A Coast Guard inspection of Shell’s 47-year-old primary drilling ship found 23 “deficiencies” (including engine problems) days before it was set to sail for the Arctic; that rig nearly beached dragging anchor in a calm Aleutian port en route to the Arctic; Shell’s required spill response barge initially flunked minimum seaworthiness tests after it was rescued from a barge boneyard in Southern California; Shell’s spill containment dome was “crushed like a beer can” in placid Puget Sound sea trials, never making it to the Arctic; the lead drilling rig finally punched its first drill bit into the Arctic Ocean floor in mid-September and, the next day, an ice floe the size of Manhattan forced it off; that same rig then suffered an explosion and fire leaving the Arctic; it later was detained by the Coast Guard in Alaska for major safety, propulsion and pollution “discrepancies” (CBS reported when Coast Guard criminal investigators arrived, the crew had been provided with lawyers and declined to be interviewed); Shell’s secondary drilling rig had 19 deficiencies in electrical and maintenance systems discovered when it arrived back in Dutch Harbor from the Arctic; and Shell incurred more than $1 million in fines for air-quality violations in the Arctic.

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BP to axe 1,000 jobs amid warning of oil price plunge to $40

Screen Shot 2014-12-04 at 20.54.03Oil giant BP has said it will rack up costs of at least $1 billion (£637 million) over the next year as it embarks on a corporate shake-up which could cull more than 1,000 jobs. It comes as an Iranian official in the Opec oil cartel said crude prices could plunge as low as $40 a barrel in the near future…

Article by Russell Lynch published by The Independent Wed 10 Dec 2014: BP unveils $1bn restructuring amid plunging oil prices

Extracts

Oil giant BP has said it will rack up costs of at least $1 billion (£637 million) over the next year as it embarks on a corporate shake-up which could cull more than 1,000 jobs.

The FTSE 100 giant has accelerated its plans to strip costs out of the business in response to a dramatic plunge in crude prices since June. It is understood that BP, which has 84,000 staff worldwide and 15,000 in the UK, could shed more than 1000 staff by the end of the process.

It comes as an Iranian official in the Opec oil cartel said crude prices could plunge as low as $40 a barrel in the near future if divisions among the producers widened.

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Church of England threatens to sever investments in Shell and BP

Screen Shot 2014-10-28 at 11.51.59The Church of England has warned it could withdraw its investments from BP and Shell unless the oil giants take greater action to tackle climate change.

Article by Tom Bawden published by The Independent Wed 10 Dec 2014: Church of England threatens to cease BP and Shell investments over climate concerns

The Church of England has warned it could withdraw its investments from BP and Shell unless the oil giants take greater action to tackle climate change.

In a significant boost to the growing “divestment” campaign that has spread from the US. the Church has become the first mainstream religious organisation in the UK to raise the prospect of severing ties with fossil fuel companies because of global warming.

The Church, which has tens of millions of pounds invested in both BP and Shell, says it’s targeting the two companies because they have the biggest carbon footprints in the UK.

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Why The US Supreme Court Rejected BP Appeal

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By: MICHEAL KAUFMAN
Published: Dec 9, 2014 at 4:11 pm EST

BP plc (ADR) (NYSE:BP) was involved in America’s largest oil spill in the Gulf of Mexico in 2010, resulting in the death of 11 rig workers along with long-lasting damage to the wildlife and its habitat, and local businesses; a total of 4.9 million barrels of oil were spilled. Five US states were affected as a result including Florida, Texas, Alabama, Mississippi, and Louisiana.

Following investigations, US district judge Carl Barbier deemed the oil company grossly negligent and imposed fines amounting $4.25 billion related to environmental losses, excluding reimbursement to individuals impacted by the catastrophe. BP has already paid $2.3 billion, and has appealed against the judge’s ruling, claiming that the company was being unfairly charged higher. The UK-based energy company has also criticized the claims office; it said some businesses that were not able to prove financial losses from the disaster have collected large amounts in payments.

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Opec is finished – the oil crash will continue

Screen Shot 2014-02-18 at 18.34.00The Opec oil cartel no longer exists in any meaningful sense and crude prices will slump to $50 a barrel over the coming months as market forces shake out the weakest producers, Bank of America has warned. The major oil companies will have to cut back on projects with a break-even cost below $80 for Brent crude.

Extracts from an article by Ambrose Evans-Pritchard published by The Telegraph 8:01PM GMT 09 Dec 2014

The Opec oil cartel no longer exists in any meaningful sense and crude prices will slump to $50 a barrel over the coming months as market forces shake out the weakest producers, Bank of America has warned.

Revolutionary changes sweeping the world’s energy industry will drive down the price of liquefied natural gas (LNG), creating a “multi-year” glut and a much cheaper source of gas for Europe.

Francisco Blanch, the bank’s commodity chief, said Opec is “effectively dissolved” after it failed to stabilize prices at its last meeting. “The consequences are profound and long-lasting,“ he said.

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