Worst Shell oil spill into Niger Delta for years
COMMENT RECEIVED ON THIS REUTERS ARTICLE FROM A REGULAR CONTRIBUTOR:
Shell says the leak was the result of attempted theft…and the leak occurred seven or eight miles from the shore? I guess the oil thieves are now using submarines…..
Reuters report December 03, 2014
Thousands of Barrels of Shell Oil Spill Into Niger Delta
BONNY ISLAND, NIGERIA – Niger Delta fishermen are no strangers to seeing oil spill into their waters from leaky pipelines, but even they were shocked by the scale of the slick stretching for miles from a Shell facility across the swamps and into the ocean.
Some 3,800 barrels spilled recently, according to an investigation by Shell and government officials. It ranks as one of the worst in Nigeria for years, local environmental activists said.
A Shell spokesman said that some 1,200 barrels had been recovered as of Tuesday, and “recovery efforts are continuing” at the site on the Okolo Launch on Bonny Island.
Shell said the spill was caused by a failed crude theft. Nigeria, Africa’s top oil producer, loses tens of thousands of barrels per day to oil theft that often causes spills, although many are also caused by corroded pipelines.
Shell shut down its 28-inch pipeline carrying Bonny Light crude Nov. 22, but the origin of the spill was from the smaller 24-inch pipe, which was shut last year.
Crude washed up in pools in front of beach shacks in the affected site, coating the roots of palm trees and leaving a trail of dead sea life. In some areas, people scooped up the crude to fill drums and jerry cans.
“We saw dead fish, dead crabs. … This spill occurred seven, eight nautical miles from the shore … [so] the volume runs into thousands of barrels,” said Alagoa Morris, head of the Niger Delta Resource Center for Environmental Rights Action.
“We can’t go fishing anymore. It has destroyed our fishing equipment,” Bonny fisherman Boma Macaulay said, adding that it was the worst spill he had seen for at least five years.
Shell is under pressure to pay damages on other spills. Parliament said last month that it should pay nearly $4 billion for a spill at the offshore Bonga oilfield.
The Bodo community in Ogoniland is also suing for two massive spills in 2008 that devastated the area.
Shell said SPDC — a Shell-run joint venture majority-owned by the Nigerian government — deployed booms to contain the the latest spill.
A fisherman who has others working for him, Emmanuel Reuben, said his revenue had dropped sharply from an average of up to 50,000 naira ($280) a day to barely 5,000 naira a day because of the spill.
“That’s not even enough to fuel the boat I use for fishing,” he said.
Prospects of a Shell BP merger
FROM A REGULAR CONTRIBUTOR
Firstly, falls in oil price and resulting low stock prices tend to result in waves of takeovers.
Examples during the low price era of the late 1990s – early 2000s:
· Exxon took over Mobil
· Statoil took over Saga, Norsk Hydro
· Chevron took over Texaco, Unocal
· Total took over Fina and Elf
· BP took over Vastar, Amoco and Arco
· Statoil took over Saga, Norsk Hydro
· Chevron took over Texaco, Unocal
· Total took over Fina and Elf
· BP took over Vastar, Amoco and Arco
Shell is notably absent from this list – over the past ten years the gossip on the street has considered possible mergers involving Shell, BP and Total and even the demerger of Shell Oil, but the numbers apparently did not add up. Perhaps the fall in share prices over the past six months and a lack of exploration opportunities has once again made mergers more attractive than organic growth.
In many cases the mergers were little more than acts of desperation when a company had lost its way, often as a result of poor management. Texaco was weakened by the Getty law suit, Elf was embroiled in corruption scandals, Unocal was running out of money. Shell came close to being taken over as a result of the reserves scandal, while BP still has Macondo hanging over its head.
There are a few big unresolved cases still hanging over the industry – Shell’s involvement with ENI in the OPL 245 bribery investigation, and the EU investigation of oil price fixing to name just two. The big banks have felt the wrath of regulators over the past few years, and perhaps there are a few more skeletons about to emerge from the cupboards of the oil industry. The assumption that Shell and BP will merge is a simple proposition, but Shell has no experience of making a merger work and I doubt whether BP needs any more on its plate. There may be some other possible scenarios about to play out.
Shell/BP takeover rumors
Why Shell/BP takeover rumors are back
By CNBC’s Catherine Boyle
The evergreen rumor that Shell could be looking to buy BP returned to the market Tuesday — and sent share prices of both companies higher.
Ever since Lord Browne, BP’s former chief executive, confirmed in his 2010 memoir that cautious talks to this effect took place in 2004, the potential megamerger of the two London-listed oil giants has whetted appetites in the markets.
Yet BP and Shell declined to comment on the rumor, and industry sources were sceptical of the deal. Neither company appears to have retained new banking advisers, often a sign that a deal may be on its way.
So why is this rumor resurfacing now?
Low oil price
It’s hard to believe that Brent crude was trading at over $100 a barrel as recently as mid-September; now analysts seem to be competing for the gloomiest picture of when, and at what price, the trough in oil prices will come.
This uncertainty has hit oil majors’ share prices, as it means production remain high, even as the price it sells oil for falls. As such, the potential purchase of such a company could look more attractive.
Yet a bid would have to be based on a belief that the oil price will recover in the medium term, which requires quite a lot of confidence at the moment.
“It’s an unfriendly oil price that gets valuations where someone on a spreadsheet thinks: ‘I could do something’,” Kit Juckes, global head of foreign exchange strategy at Societe Generale, told CNBC.
BP underpriced?
Just a few weeks ago, equity analysts at Oppenheimer published research arguing that, with the falling oil price, and BP currently trading at the lowest price/earnings ratio (around 7 times earnings) of its peers in the oil sector, the company could become a takeover target.
The company’s market value has plunged, but it is still one of the biggest dividend payers in the FTSE 100, which could mean that an acquirer would have to pay a substantial sweetener to get shareholder support.
Analysts unconvinced
Several analysts contacted by CNBC were extremely cynical about the prospects of a deal, with one dismissing it as “just trader chat,” although they declined to be quoted on the record.
Their reaction can be summed up like this: Ultimately, why would Shell, which has been selling off assets in recent months under new chief executive Ben van Beurden, undertake a huge acquisition which would take years to complete, and have the main effect of increasing its exposure to a similar business model?
Monopoly concerns
There are also pretty clear business overlaps between both companies, in terms of geographies and business areas, which might concern European competition authorities.
Russian question
Russian question
Both companies have substantial Russian interests, including BP’s stake in Russian oil giant Rosneft, which has been hit by sanctions from the Western powers following the dispute in Ukraine. If you were running Shell in 2014/5, why would you expose your business to more Russian oil?
– By CNBC’s Catherine Boyle
– By CNBC’s Catherine Boyle
BP and Shell in the takeover spotlight
Shell has also been suffering its own share of setbacks recently. Its Alaskan Arctic operations have proved frustrating and it has given up on a natural gas project in Saudi Arabia. Meanwhile, a parliamentary committee in Nigeria is demanding it pay nearly $4bn in compensation for an oil spill in 2011.
The Independent: Oil companies BP and Shell in the takeover spotlight
Shares in Britain’s two oil champions – Shell and BP – have jumped as market rumours swept the City claiming the pair were planning a merger, highlighting jittery times for the industry at a time of five-year lows in the oil price.
Despite the fact the story was rubbished by City analysts, the speculation continued that Shell could buy its smaller rival in a deal that would be worth more than £200bn. BP’s share price jumped 5 per cent to 433.85p, valuing the company at £79bn. Shell shares rose 4 per cent to 2,292p, giving it a stock market value of £142bn.
Analysts pointed out that such a deal would be riddled with monopoly implications as the two both operate in many of the same locations around the world. “Investors in oil companies have taken a pounding on the low oil price. This will be some hedge funds talking up the shares to make a quick buck,” said one analyst, who asked not to be named.
“This will be a bunch of traders in a chatroom somewhere,” said another, referring to the private City internet chatrooms where traders discuss their investment ideas.
Low oil prices have historically triggered takeover activity as big companies seek cost savings and the power to keep a floor under the market price by controlling a greater share of the market.
BP’s takeover of Amoco in 1998 came at a time when oil was below $20 a barrel. That deal sparked a flurry of takeovers of other major players, with Exxon buying Mobil, Chevron taking over Texaco, and TotalFina snapping up Elf.
There had been talk of Shell taking out BP in the aftermath of the Gulf of Mexico oil spill disaster as BP’s share price collapsed. However, BP’s ongoing liabilities for tens of billions of dollars over that spill, and its continued difficulties in rebuilding its reputation and win projects in the US have been seen as a deterrent to bidders.
Shell has also been suffering its own share of setbacks recently. Its Alaskan Arctic operations have proved frustrating and it has given up on a natural gas project in Saudi Arabia.
Meanwhile, a parliamentary committee in Nigeria is demanding it pay nearly $4bn in compensation for an oil spill in 2011.
