Category Archives: oil
Shell safety boat sinks kayak while detaining others on Broadhaven Bay: Almost immediately after entering the bay the kayakers progress was obstructed by six Shell security and safety boats. The security boats, staffed with IRMS, Shell’s security personnel, then proceeded to grab hold of kayakers and their kayaks and detain them against their will. On some occasions kayakers were dragged by the security boats through the water, sometimes for up to 15 minutes. In a departure from previous years when Shell carried out work in Broadhaven Bay, no Gardaí were present at the scene
Issued by Rossport Solidarity Camp
Yesterday, the 16th June Shell began the operation to lay an umbilical from landfall at Glengad to the Corrib Gas field. At 5pm, six kayakers from Rossport Solidarity Camp entered the waters of Broadhaven Bay, in order to protest against the imposition of the Corrib Gas project on the local community. The protest marks the beginning of two weeks of action against the project.
Almost immediately after entering the bay the kayakers progress was obstructed by six Shell security and safety boats. The security boats, staffed with IRMS, Shell’s security personnel, then proceeded to grab hold of kayakers and their kayaks and detain them against their will. On some occasions kayakers were dragged by the security boats through the water, sometimes for up to 15 minutes. In a departure from previous years when Shell carried out work in Broadhaven Bay, no Gardaí were present at the scene.
At no time during the day was any legal authority cited for the detention of the kayakers besides a “request” by security that the kayakers leave the area. As one kayaker attempted to paddle out to the middle of Broadhaven bay, his hard-shelled kayak was rammed by the Shell safety boat; the Macbel operated by Belcross Enterprises, causing the kayak to capsize. The kayak then filled with water and sank after a short time. The kayaker then swam towards shore until he was picked up by a fellow kayaker. IRMS also temporarily seized paddles and a kayak from the group.
Rossport Solidarity Camp spokesperson Con Coughlan stated “We have seen Shell law operating on Broadhaven bay before however usually the Gardaí were present to implement Shell’s bidding. This year Shell have been allowed to bypass even any pretense that they are operating within the law and are detaining peaceful protesters in public places for as long a they deem fit”.
Con Coughlan continued “In March this year the UN Special Rapporteur on Human Rights Defenders called on the Irish government to promptly and impartially investigate all allegations and reports of intimidation, harassment and surveillance of Corrib campaigners. She also expressed concerns about the lawfulness of certain actions by the private security firm employed by Shell . The government has ignored the UN report and are allowing IRMS to continue to unlawfully detain peaceful protesters.”
For verification and comment
Con Coughlan 0851141170
There appear to be “remarkable similarities” between fish deformities found downstream from Alberta’s oilsands and those observed after the Exxon Valdez oil spill in Alaska and after Florida’s Deepwater Horizon disaster, says a renowned ecologist.
David Schindler of the University of Alberta has written an open letter to two federal cabinet ministers pointing out the recent research findings from scientists as far afield as the Gulf of Mexico.
“Given the parallels in the cases from various locations, it seems likely that some chemical or suite of chemicals in crude oil is causing the malformations,” Schindler wrote.
He’s proposing that Canada take the lead in researching the issue by isolating the various chemical compounds and introducing them to fish stocks in a controlled setting.
And Schindler says the federal Experimental Lakes Area – which has been shut down by Ottawa for a savings of about $2 million annually – is the ideal natural laboratory for the work.
In a letter Wednesday to Fisheries Minister Keith Ash-field and Environment Minister Peter Kent – copied to a number of U.S. scientists and some news media – Schindler praised the monitoring work of government scientists in the Athabasca River.
But he said such monitoring can’t possibly determine which chemicals may be affecting aquatic life due to the “complex chemical soup” found downstream from industrial oilsands development.
What’s required, the scientist said, “would be whole ecosystem experiments where small amounts of selected chemicals are applied to whole lakes, and the effects determined on several key species in the food chain.”
It’s tailor-made for the federal Experimental Lakes Area in northwestern Ontario, a remote region of 58 pristine lakes that have been used since 1968 for groundbreaking freshwater studies on everything from nutrient-loading and mercury exposure to acid rain.
The Harper government announced last year it was closing the world-renowned facility as a cost-saving measure – although insiders say the operating cost of the facility is only $600,000 annually, of which a third comes back in user fees.
Fully funded independent researchers have been refused access to the site to continue their research this summer, although Ottawa is in negotiations with the province of Ontario and other parties to transfer management.
Linking the closure of the Experimental Lakes Area – a cause celebre among Canada’s scientific research community and environmentalists – with oilsands pollution is a potentially toxic political mix for the government.
Activists have already claimed climate-change research at the ELA is the real reason the Conservatives closed the facility.
A spokeswoman for Ashfield did not directly address Schindler’s proposal when reached for comment, but said in an email “the government continues to actively work toward establishing a new operator for the ELA site so that research there can continue.”
Erin Filliter added that “freshwater science continues to be conducted across Canada at multiple facilities which more than adequately meets the needs of government research.”
Similarly, Rob Taylor at Environment Canada said by email that “Minister Kent is very engaged in the environmental monitoring of the oilsands region.” “The Canada-Alberta joint scientific monitoring program has been put in place to study any impact on air quality, water quality and biodiversity,” said Taylor.
Safe sex in Nigeria By John Donovan
Tom Mayne of Global Witness, an NGO, has followed the case closely; he believes things were structured this way so that Shell and ENI could obscure their deal with Malabu by inserting a layer between them. Mr Agaev, Malabu’s former fixer, lends weight to this interpretation. It was, he says, structured to be a “safe-sex transaction”, with the government acting as a “condom” between the buyers and seller.
Court documents shed light on the manoeuvrings of Shell and ENI to win a huge Nigerian oil block and on the dilemmas of their industry
DEALS for oilfields can be as opaque as the stuff that is pumped from them. But when partners fall out and go to court, light is sometimes shed on the bargaining process—and what it exposes is not always pretty. That is certainly true in the tangled case of OPL245, a massive Nigerian offshore block with as much as 9 billion barrels of oil—enough to keep all of Africa supplied for seven years.
After years of legal tussles, in 2011 Shell, in partnership with ENI of Italy, paid a total of $1.3 billion for the block. The Nigerian government acted as a conduit for directing most of that money to the block’s original owner, a shadowy local company called Malabu Oil and Gas. Two middlemen hired by Malabu, one Nigerian, one Azerbaijani, then sued the firm separately in London—in the High Court and in an arbitration tribunal, respectively—claiming unpaid fees for brokering the deal.
The resulting testimony and filings make fascinating reading for anyone interested in the uses and abuses of anonymous shell companies, the dilemmas that oil firms face when operating in ill-governed countries and the tactics they feel compelled to employ to obfuscate their dealings with corrupt bigwigs. They also demonstrate the importance of the efforts the G8 countries will pledge to make, at their summit next week, to put a stop to hidden company ownership and to make energy and mining companies disclose more about the payments they make to win concessions. On June 12th the European Parliament voted to make EU-based resources companies disclose all payments of at least €100,000 ($130,000) on any project.
The saga of block OPL245 began in 1998 when Nigeria’s then petroleum minister, Dan Etete, awarded it to Malabu, which had been established just days before and had no employees or assets. The price was a “signature bonus” of $20m (of which Malabu only ever paid $2m).
The firm intended to bring in Shell as a 40% partner, but in 1999 a new government took power and two years later it cried foul and cancelled the deal. The block was put out to bid and Shell won the right to operate it, in a production-sharing contract with the national petroleum company, subject to payment of an enlarged signature bonus of $210m. Shell did not immediately pay this, for reasons it declines to explain, but began spending heavily on exploration in the block.
Malabu then sued the government. After much legal wrangling, they reached a deal in 2006 that reinstated the firm as the block’s owner. This caught Shell unawares, even though it had conducted extensive due diligence and had a keen understanding of the Nigerian operating climate thanks to its long and often bumpy history in the country. It responded by launching various legal actions, including taking the government to the World Bank’s International Centre for the Settlement of Investment Disputes.
Malabu ploughed on, hiring Ednan Agaev, a former Soviet diplomat, to find other investors. Rosneft of Russia and Total of France, among others, showed interest but were put off by Malabu’s disputes with Shell and the government. Things moved forward again when Emeka Obi, a Nigerian subcontracted by Mr Agaev, brought in ENI (which already owned a nearby oil block). After further toing and froing—and no end of meetings in swanky European hotels—ENI and Shell agreed in 2011 to pay $1.3 billion for the block. Malabu gave up its rights to OPL245 and Shell dropped its legal actions (see timeline).
The deal was apparently split into two transactions. Shell and ENI paid $1.3 billion to the Nigerian government. Then, once Malabu had signed away its rights to the block, the government clipped off its $210m unpaid signature bonus and transferred just under $1.1 billion to Malabu.
Tom Mayne of Global Witness, an NGO, has followed the case closely; he believes things were structured this way so that Shell and ENI could obscure their deal with Malabu by inserting a layer between them. Mr Agaev, Malabu’s former fixer, lends weight to this interpretation. It was, he says, structured to be a “safe-sex transaction”, with the government acting as a “condom” between the buyers and seller.
It is not hard to see why the oil giants would want to avoid being seen to be dealing directly with Malabu, a shell company with tainted provenance. Its ultimate beneficial owner is widely believed to be Mr Etete, the very minister who had awarded it the block while serving under Sani Abacha, the late, staggeringly corrupt dictator.
In 2007 Mr Etete was found guilty of money-laundering by a French court. His conviction was upheld in 2009. The trial centred on bribes he had allegedly demanded from foreign investors while in government. He used these to buy, among other things, a French mansion and about €1m-worth of Art Deco furniture, according to French court documents.
Then in 2011 Mr Obi, one of the middlemen in the final deal with Shell and ENI, took his claim for unpaid fees to the High Court in London, calling on Mr Etete to give testimony. For unclear reasons, he agreed to do so—but the hearings had to be moved briefly to Paris so that Mr Etete could give evidence, because he had been barred from Britain for failing to disclose his French conviction on entering the country.
Mr Etete claims he has never been more than a consultant to Malabu. If so, he is unusually hands-on. He was the company’s main negotiator and its representative in the High Court, where he admitted to being the sole signatory on its bank accounts. Indeed, there is no evidence of anyone else making decisions for Malabu.
When asked in court about others purportedly linked to the company and its record-keeping, Malabu’s company secretary, Rasky Gbinigie (who describes Mr Etete as a “family friend”), insisted that he had lost the firm’s copy of the register of shareholders and all minutes of meetings, that there was no written correspondence between him, the directors and the shareholders, and that he had no documents to verify who put up the company’s original share capital.
A not-so-secret alias
Last year Nigeria’s Economic and Financial Crimes Commission (EFCC) looked into Malabu after Mohammed Abacha, a son of the former dictator, complained that he had been a founding shareholder but had been illegally cut out. In an interim report later in the year, the commission said that one Kweku Amafegha “stood in” as a nominee director for Mr Etete. In the High Court’s hearing in Paris Mr Etete admitted that he had himself used the surname Amafegha to open accounts in the past. It was, he said, an alias that “I have always used when I go out for secret missions internationally.”
In the same hearing Mr Etete said of OPL245: “I put my blood, I put my life into this oil block”—quite a commitment for a mere consultant. Yet, when asked directly if he was its owner through Malabu, he denied it. When presented with transcripts of a recording in which he supposedly claimed that “It is my block”, he dismissed the transcripts as inaccurate.
Shell and ENI did not respond to The Economist’s questions about whom they believed to be the beneficial owner of Malabu. Whether or not they suspected it to be Mr Etete, their dealings with him were extensive. He met ENI executives repeatedly. High Court testimony indicated that Shell officials had met him as recently as December 2009, after his money-laundering conviction was upheld. In an e-mail that came out in court, a Shell man talked of having had lunch and “lots of iced champagne” with Mr Etete, who had requested figures from Shell on what it was willing to pay Malabu for the block.
ENI says it considered cutting a deal with Malabu directly, until it emerged that the firm might not have full ownership of the oil block because of “existing disputes”, including with Mr Abacha. Mr Obi testified that Shell broke off direct talks with Mr Etete for the same reason, and because he was “an impossible person to deal with”.
But the oil giants were clearly reluctant to throw in the towel. Shell was loth to walk away from a block in which it had already invested tens if not hundreds of millions of dollars. (The company will not say how much.) ENI was attracted by the size of the block, the prospect of accompanying tax holidays and a waiver of the usual requirement that production revenues be shared with the national oil company.
Shell and ENI reject the suggestion that their joint purchase was a thinly disguised transaction with a dodgy brass-plate company. Shell says it made payments to the Nigerian government only and that it has acted at all times in accordance with Nigerian law. It previously said it had “not acted in any way that is outside normal global industry practice”. ENI says its payments to the government “were made in a transparent manner through an escrow arrangement with a major international bank”. That bank was JPMorgan Chase. A Lebanese bank had earlier declined to handle the payments, it emerged in court.
The companies’ claim that they bought the block from the state, not Malabu, is disingenuous, says Mr Mayne of Global Witness. It is also contradicted by Nigeria’s attorney-general, Mohammed Bello Adoke, who told a parliamentary committee last July that the companies “agreed to pay Malabu”, with the government acting as an “obligor” and “facilitator.”
The attorney-general was unusually active in helping the deal along. He held meetings with Shell, ENI and Malabu, helped to structure the final agreement and even advised on payments to middlemen, according to Mr Obi. In Nigeria it is highly unusual for an attorney-general to be so involved in a big oil deal. The lead is typically taken by the petroleum ministry, which in this case was said to be livid at being sidelined—particularly when Mr Adoke requested that it extend the deadline it had given Malabu to pay its long-owed signature bonus. Mr Adoke, it was suggested in the High Court, had been lawyer to none other than Mr Etete before serving in government. (Mr Adoke could not be reached for comment.)
Where did the money go?
The attorney-general has rejected as “without basis” claims in the Nigerian press that much of the money the government paid to Malabu in the 2011 deal was “round-tripped” back to bank accounts controlled by public officials. But where that money did end up is shrouded in mystery. Of the $1.1 billion, $800m was paid in two tranches into Malabu accounts. This was then transferred to five Nigerian companies that appear to be shells. One of these, Rocky Top Resources, received $336.5m, some of which seems to have been passed on to unknown “various persons”, according to the EFCC’s report. Some $60m went to an account controlled by Mr Etete, who has said that he received $250m in total for his role in the deal. He said in court that “Malabu shareholders decided to spend their money the way they deemed fit” and that he is investing on their behalf.
Among the listed owners of three of the recipient companies is Abubakar Aliyu, who is reported to have close business ties to a senior politician, Diepreiye Alamiesegha, the former governor of Bayelsa state. Mr Alamiesegha’s skills in escapology would impress Houdini. Detained in Britain on money-laundering charges in 2005, he jumped bail. After returning to Nigeria, he was sentenced in 2007 to two years for each of six corruption-related charges, though he served only a few hours in prison. In March 2013 he received a controversial pardon from Goodluck Jonathan, Nigeria’s president. Local press reports have made unsubstantiated allegations linking both the president and Mr Alamiesegha to the Malabu deal.
The EFCC’s report states: “Investigations conducted so far reveal a cloudy scene associated with fraudulent dealings. A prima facie case of conspiracy, breach of trust, theft anmd [sic] money laundering can be established against some real and artificial persons.” Officially, the EFCC’s investigation is still open, but a source familiar with it says that its sleuths have been discouraged by higher-ups from moving forward. However, other countries’ fraudbusters have taken an interest. At least one of the parties involved in the oil-block sale has been contacted by America’s Department of Justice.
As for the legal actions brought in London against Malabu by the middlemen, the High Court is expected to rule soon on Mr Obi’s claim for $200m. Mr Agaev’s separate arbitration case, in which he sought payment of a $65.5m “success fee”, was recently settled behind closed doors.
Shell and ENI now each own half of an attractive oil block. To get it, however, they have had to strike a deal that brings with it reputational and legal risks. They might conceivably face action under their home countries’ anti-corruption laws, if enforcers reject their claim to have dealt only with the Nigerian government, not Malabu. Shell “would obviously have preferred to secure OPL245 without going within a million miles of Malabu and Etete,” says someone who was involved in the negotiations.
The saga is a striking example of an ethical dilemma that is growing more acute for international oil companies. They are desperate to replace their shrinking reserves with new finds, but many of the most attractive fields are in unstable or poorly governed places. Worse, the industry has to contend with increased resource nationalism in oil-producing countries, making it harder for outsiders to secure reserves, and with greater competition from state-owned firms in Asia, Latin America and the Middle East, which may not have to operate to the same ethical standards.
As a result, firms that refuse to touch any deal with the slightest whiff of impropriety risk eventually going out of business, says Peter Hughes, an energy consultant and former BP executive. They may feel that the best they can do, short of walking away, is to put as much distance as possible between them and the source of the bad smell, as Shell and ENI apparently tried to do with their two-part transaction.
How arm’s-length is arm’s-length enough? That depends on the company’s “threshold of ambiguity”, says Cory Harvey of Control Risks, which helps companies to manage political and reputational risk. This will vary from company to company and will be perceived differently by management, regulators and NGOs. Ms Harvey has seen oil-industry clients walk away from deals because of concerns about the reputation of, or lack of reliable information on, a seller or local partner. But energy transactions in difficult places can be “spectacularly complex”, she says, making it hard to gauge the acceptable level of risk. Nigeria is “arguably the most complex environment of all”.
Mr Hughes argues that when foreign companies turn a blind eye to questionable aspects of a deal, it can sometimes benefit developing countries with natural resources. The publicly traded oil majors are, on balance, a force for good, raising overall standards of behaviour by trying to operate as cleanly as possible in most circumstances, he says; better that than leaving the field to less scrupulous operators. Ethically speaking, the industry “has to be viewed in relative, not absolutist, terms,” he argues. Mr Hughes points out that Shell periodically talks of scaling back its Nigerian operations, which he believes to be “part of a political-risk management strategy” to exert pressure on the government to act more cleanly and predictably.
Global Witness prefers to see the OPL245 affair as “a lesson in corruption” that demonstrates how important it is for rich-world governments to press on with transparency initiatives, on two fronts. The first front concerns payments to governments. In the past year America and the EU have begun to require resources firms listed there, and large unlisted firms in the EU, to report, project-by-project, their payments to governments. Had this been in force at the time, it would have picked up the $1.3 billion transaction with Nigeria. This would have prompted public scrutiny of the deal and the subsequent money flows through Malabu, which in the end came to light only because the two middlemen decided to sue.
Shell says it favours greater transparency, if applied globally. It opposes the existing project-by-project initiatives because they omit companies not listed in America or Europe, thereby handing them a competitive advantage.
The second front for improving transparency concerns the use of murky corporate vehicles. Hopes are growing that the G8, which meets next week with Britain’s David Cameron in the chair, will take steps towards ending the use of anonymous shell companies. Had corporate registries been collecting, and making publicly available, information on beneficial owners back in 1998, the identity of Malabu’s owners might have been clear from the start. And it would have been much more difficult to move the proceeds of the sale to Shell and ENI into the corporate equivalent of a black hole, seemingly out of the reach even of Nigeria’s anti-corruption commission.
Expect to see more big names from the oil industry, such as Shell, ExxonMobil and Statoil, moving into the British shale sector now that one of their competitors – Centrica – has taken the plunge. The international companies have always taken a keen interest in the UK fracking scene, despite endless statements from their chief executives that there are better prospects in China and elsewhere.
There is some speculation this weekend that the reason Centrica paid a fairly toppy price for the stake in the Bowland Shale licence from Cuadrilla Resources was because it faced competition from Shell and others.
It is not so much the geological uncertainty that made big oil hesitate in the past, but the fear of reputational damage. And as one of the industry players told the Observer: “That all changes now because Centrica has elected to become the lightning rod for the industry.”
Indeed it will. Green groups opposed to fracking because of the chemicals used and because they believe more gas use means more carbon emissions have already condemned Centrica. A couple of small earthquakes in the Blackpool region that helped to trigger an 18-month drilling moratorium have heightened public concerns. Fracking remains banned in France, Bulgaria and some other countries.
In fact it was always likely that the British Gas parent group would be first out of the blocks, not least because it has the largest retail supply business in this country.
Equally, if anyone is going to have the inside track on what government is thinking about the future taxation structure planned for a shale gas regime, it is going to be homegrown Sam Laidlaw, chief executive of Centrica, rather than say Peter Voser, the boss of Shell, who spends much more time in The Hague than London.
Laidlaw is constantly in and out of Whitehall. Until recently he was part of David Cameron’s Business Advisory Group, while Centrica, as one of the UK’s few, and by far the biggest, British-owned power suppliers, stands most to gain from changes in UK energy policy.
Was British Gas pushed by ministers to front UK shale? Certainly Centrica had privately expressed reservations about the flack it might take if it got involved at an early stage. Ministers were keen to give credibility to a sector populated by small firms, even if some have big backers behind the scenes, such as IGas’s connections with the partly state-owned China National Offshore Oil Corporation.
But it seems more likely that Laidlaw, who as recently as January had expressed the view that UK shale was no “game changer”, just changed his mind and decided it was worth having first-mover advantage.
He had no doubt spent much time talking to John Browne, whose chief executiveship at BP was characterised by being first off the blocks (into Russia, mega-mergers with Amoco etc) and just happens to be a director of Cuadrilla and the UK government’s lead non-executive board member.
So Centrica is to spend £100m helping Cuadrilla with an exploration programme which restarts in earnest next year with a new, fourth, well. A further £60m is promised if the exploration turns into production.
But the size and scale of the shale sector in Britain remains unclear. The British Geological Survey is shortly expected to come up with some encouraging new reserve estimates. Equally, the Treasury will confirm the level of tax breaks available before the parliamentary recess next month.
But the issue that will decide whether Britain can replicate the enormous success of the shale frackers in America, where prices have dropped like a stone, is whether the gas can be made to flow from the rocks easily and in large quantities. That will only be known once more wells are drilled, but Centrica is clearly optimistic.
Deflation could be the way forward
Hard though it is to believe, historically Britain has been as prone to bouts of deflation as it has to inflation. Not in the past half-century, of course, but in the three centuries or so since the Bank of England was founded in 1694, there have been as many years when prices have fallen as there have when they have risen.
Indeed, until quite recently deflation was the natural order of things. Competition resulted in downward pressure on prices and it was only during wars that inflation moved upwards. The price level in the UK was lower at the outbreak of the first world war than it was when the guns fell silent after the battle of Waterloo.
Dhaval Joshi, an investment strategist at BCA Research, says we are on the cusp of returning to this sort of environment. The age of inflation, he says, has also been the age of credit growth, with a strong correlation between the annual increase in the cost of living and the annual increase in debt.
But debt is likely to rise far more slowly in the future than it has in the past, argues Joshi. Why so? Because debt levels are already uncomfortably high; the collateral against which the debt is secured is impaired; and there has been a widespread backlash against debt that was sparked off by the financial crisis.
As a result, the only way the age of inflation could be extended into the future is if central banks decide that it is a lesser evil than deflation. In the short term, that is certainly the case, which explains why central banks have been pumping credit into their economies through quantitative easing.
But will central banks really be comfortable with the next stage on from QE, helicopter drops of money into economies?
Joshi says that ultimately policymakers will prefer modest falls in the price level to the risk of runaway inflation, and that deflation will become the new normal.
Cosy chair awaits Tucker
Paul Tucker’s decision to quit his job at the Bank of England was not unexpected. He has been at the bank for more than 30 years, risen to deputy governor and had been regarded as the nailed-on certainty to take over from Sir Mervyn King. Missing out on the top job meant he was always likely to walk.
He now plans what Threadneedle Street describes as a sojourn in “US academia”.
But it is unlikely that Tucker, an expert in the way that banks work, will disappear into a black hole of research and quiet contemplation. He will without doubt be top of many headhunters’ lists when they cast around for candidates to chair UK banks in the coming years. And it just so happens a couple of jobs might just come along to suit his timing: Sir Win Bischoff has already made it clear that he won’t be hanging around at Lloyds Banking Group beyond next May. And if that is a tad too, soon then there will be a berth at Royal Bank of Scotland as soon as it has bedded down a new chief executive.
Tucker will be back.
RAGE AGAINST THE BORING MACHINE
Come to act in solidarity with the campaign in Mayo against Shell’s Corrib Gas Project. For over 12 years, the local community have been resisting Shell’s plans to force through a high pressure raw gas pipeline and inland refinery. Local people have gone through all possible channels to fight the project.
Let down by the Government; many have been beaten, imprisoned and feel under siege by the security and police. However people continue to protest in order to protect their families, livelihoods and resources. Currently Shell are attempting to tunnel under an EU ‘protected’ estuary with their tunnel boring machine but they are experiencing major construction problems. If they are having difficulties without protests, imagine how much havoc a little more disruption will cause. Rossport is the frontline of the resistance to ‘Extreme Energy’ extraction in Ireland.
Hot on the heels of the anti-G8 protests, we warmly invite old and new faces to come join us for a week of action against Shell’s disastrous project.
If you are new to taking action don’t worry – all kinds of skills and roles are needed during the week of action and you will be able to play a role that you are comfortable with. If you know the area and have ideas for action – get prepared and come with an affinity group if possible.
History of the campaign – The story so far
The campaign against Shell’s inland refinery and high-pressure pipeline, the ‘Corrib gas project’ near Rossport in Co Mayo has been long and extraordinary. It began in the year 2000 when a plan was announced to build an inland gas refinery and a 9km ultra-high pressure raw gas pipeline through several villages. In 2005 the imprisonment of five local men who became known as ‘the Rossport Five’ brought the campaign to national and international attention. Residents launched a national campaign called Shell to Sea in early 2005, demanding that the gas be processed offshore away from communities. Local residents and their allies continue to oppose the threat to local health and safety as well as highlighting human rights concerns, environmental damage and economic injustice. Over the 13 years of resistance so far, tactics have ranged from High Court actions, planning objections and lobbying politicians to grassroots campaigning, civil disobedience and direct action. Through a combination of these tactics the community and their supporters have delayed Shell’s project for 10 years to date and more than tripled the cost of the project to over €3 billion. Over the past eight years thousands of people have come to the area to lend their support – for days, weeks and years. Rossport Solidarity Camp was set up in 2005 and since then has hosted people from around Ireland and the world seeking to learn about and support the struggle. This week of action is hosted by Rossport Solidarity Camp.
For a good timeline of the campaign see this previous Rossport Indymedia Feature.
In January 2013, Shell began a 5km-long tunnel through Sruwaddacon estuary, a Special Area of Conservation which they plan to use for their onshore raw gas pipeline. Shell now says the project will be completed in 2015. At the time of writing, Shell are experiencing very serious difficulties in attempting to tunnel through the subsoil underlying the estuary. Shell have also begun laying the other sections of the onshore pipeline and are also building a valve station at Glengad. The project still has no community consent, and has only got this far because Gardaí and private security are occupying the area. Local experience of this occupation can be viewed here.
The tunnel boring machine, insultingly named Fionnuala (an Irish mythological legend) and painted in the Co. Mayo colours, has faced problems since its arrival in July 2012 which was met with stiff resistance [ 1 | 2 ].
Shell’s dodgy construction headache is not limited to the pipeline. Just last week, a Shell worker accidentally cut one of the gas pipes on the refinery. The refinery was completed back in 2010 and has just been left to rust due to all the other delays. Shell are currently having to replace all the water pipes on site due to corrosion.
Protests are still ongoing but the focus is on the week of action in June.
Week of action Friday 21st to Sunday 30th of June
Whether you have been always meaning to visit or have been a regular over the years, this week is the time to come.
Programme for the Week:
The events planned include:
* Update on the Shell Corrib Gas Project
* Talk by local community members the campaign and current situation.
* Legal Workshop – practical information about laws, dealing with the Gardaí, Courts.
* Action planning meetings.
* Actions to disrupt Corrib Gas Project, including disrupting Shell truck movements which are necessary for tunnelling.
* Solidarity events with the local community.
* Discussion on maintaining solidarity in the future.
Check here for the full programme.
* Get you & your mates ready to come over in June
* Put on a film night/talk/fundraiser for Rossport
* Help spread the word: put up posters online, in your city and everywhere else.
* We need help building the camp from 1st June. No experience or skills necessary, all welcome.
* Come for the action camp 21st-30th June. Bring your tent, sleeping bag, waterproofs & wellies.
Travelling to Mayo:
The best way is to get a rail & sail from Britain to Dublin/Belfast/Ballina. This is a walk on fare that you can get from any train station in the UK & includes the ferry. See nationalrail.co.uk. It costs about £35 to Dublin, £52 to Ballina (single) but varies depending on times you’re travelling. Or you can just go to Dublin/Belfast & then hitch or get a Bus Eireann. Bikes can go on trains & buses in Ireland but you are meant to pay about 10 euros. The camp is about 35 miles from Ballina. There is one bus a day at 5.15pm from Dunnes Stores in Ballina. They will usually drop you off at camp. It’s a minibus called McGraths & costs about 10 euros. Hitching is really easy – check here for directions.
The camp is run by everyone mucking in. We ask 25 euros a week donation towards food & running costs. No-one will be turned away however because of lack of funds. There are rotas for cooking & washing up & various site maintenance jobs. Meetings are run by consensus & actions are planned by everyone who wants to be involved. There is always loads to do taking direct action against Shell, maintaining & building things for the camp, legal work, painting banners, gardening, cooking, writing articles, meeting local activists etc. People of all ages, skills, interests and abilities are invited to get involved in this inspiring community led campaign. The camp has a no illegal drugs policy at all times & no alcohol except for friday & saturday night. The camp also has a safe space policy. Please read our website for more information.
Because of the G8 in nearby Fermanagh, it is possible that the UK police or Irish Gardai will stop you at the ferry port. Be prepared to face questions on where you are heading -there’s no law against going on holiday in Ireland!
For legal information about rossport read the legal page of our website.
Rossport Solidarity Camp
We have a word for the conscious slaughter of a racial or ethnic group: genocide. And one for the conscious destruction of aspects of the environment: ecocide. But we don’t have a word for the conscious act of destroying the planet we live on, the world as humanity had known it until, historically speaking, late last night. A possibility might be “terracide” from the Latin word for earth. It has the right ring, given its similarity to the commonplace danger word of our era: terrorist.
The truth is, whatever we call them, it’s time to talk bluntly about the terrarists of our world. Yes, I know, 9/11 was horrific. Almost 3,000 dead, massive towers down, apocalyptic scenes. And yes, when it comes to terror attacks, the Boston Marathon bombings weren’t pretty either. But in both cases, those who committed the acts paid for or will pay for their crimes.
In the case of the terrarists — and here I’m referring in particular to the men who run what may be the most profitable corporations on the planet, giant energy companies like ExxonMobil, Chevron, ConocoPhillips, BP, and Shell — you’re the one who’s going to pay, especially your children and grandchildren. You can take one thing for granted: not a single terrarist will ever go to jail, and yet they certainly knew what they were doing.
It wasn’t that complicated. In recent years, the companies they run have been extracting fossil fuels from the Earth in ever more frenetic and ingenious ways. The burning of those fossil fuels, in turn, has put record amounts of carbon dioxide (CO2) into the atmosphere. Only this month, the CO2 level reached 400 parts per million for the first time in human history. A consensus of scientists has long concluded that the process was warming the world and that, if the average planetary temperature rose more than two degrees Celsius, all sorts of dangers could ensue, including seas rising high enough to inundate coastal cities, increasingly intense heat waves, droughts, floods, ever more extreme storm systems, and so on.
How to make staggering amounts of money and do in the planet
None of this was exactly a mystery. It’s in the scientific literature. NASA scientist James Hansen first publicized the reality of global warming to Congress in 1988. It took a while — thanks in part to the terrarists — but the news of what was happening increasingly made it into the mainstream. Anybody could learn about it.
Those who run the giant energy corporations knew perfectly well what was going on and could, of course, have read about it in the papers like the rest of us. And what did they do? They put their money into funding think tanks, politicians, foundations, and activists intent on emphasizing “doubts” about the science (since it couldn’t actually be refuted); they and their allies energetically promoted what came to be known as climate denialism. Then they sent their agents and lobbyists and money into the political system to ensure that their plundering ways would not be interfered with. And in the meantime, they redoubled their efforts to get ever tougher and sometimes “dirtier” energy out of the ground in ever tougher and dirtier ways.
The peak oil people hadn’t been wrong when they suggested years ago that we would soon hit a limit in oil production from which decline would follow. The problem was that they were focused on traditional or “conventional” liquid oil reserves obtained from large reservoirs in easy-to-reach locations on land or near to shore. Since then, the big energy companies have invested a remarkable amount of time, money, and (if I can use that word) energy in the development of techniques that would allow them to recover previously unrecoverable reserves (sometimes by processes that themselves burn striking amounts of fossil fuels): fracking, deep-water drilling, and tar-sands production, among others.
They also began to go after huge deposits of what energy expert Michael Klare calls “extreme” or “tough” energy — oil and natural gas that can only be acquired through the application of extreme force or that requires extensive chemical treatment to be usable as a fuel. In many cases, moreover, the supplies being acquired like heavy oil and tar sands are more carbon-rich than other fuels and emit more greenhouse gases when consumed. These companies have even begun using climate change itself — in the form of a melting Arctic — to exploit enormous and previously unreachable energy supplies. With the imprimatur of the Obama administration, Royal Dutch Shell, for example, has been preparing to test out possible drilling techniques in the treacherous waters off Alaska.
Call it irony, if you will, or call it a nightmare, but Big Oil evidently has no qualms about making its next set of profits directly off melting the planet. Its top executives continue to plan their futures (and so ours), knowing that their extremely profitable acts are destroying the very habitat, the very temperature range that for so long made life comfortable for humanity.
Their prior knowledge of the damage they are doing is what should make this a criminal activity. And there are corporate precedents for this, even if on a smaller scale. The lead industry, the asbestos industry, and the tobacco companies all knew the dangers of their products, made efforts to suppress the information or instill doubt about it even as they promoted the glories of what they made, and went right on producing and selling while others suffered and died.
And here’s another similarity: with all three industries, the negative results conveniently arrived years, sometimes decades, after exposure and so were hard to connect to it. Each of these industries knew that the relationship existed. Each used that time-disconnect as protection. One difference: if you were a tobacco, lead, or asbestos exec, you might be able to ensure that your children and grandchildren weren’t exposed to your product. In the long run, that’s not a choice when it comes to fossil fuels and CO2, as we all live on the same planet (though it’s also true that the well-off in the temperate zones are unlikely to be the first to suffer).
If Osama bin Laden’s 9/11 plane hijackings or the Tsarnaev brothers’ homemade bombs constitute terror attacks, why shouldn’t what the energy companies are doing fall into a similar category (even if on a scale that leaves those events in the dust)? And if so, then where is the national security state when we really need it? Shouldn’t its job be to safeguard us from terrarists and terracide as well as terrorists and their destructive plots?
The alternatives that weren’t
It didn’t have to be this way.
On July 15, 1979, at a time when gas lines, sometimes blocks long, were a disturbing fixture of American life, President Jimmy Carter spoke directly to the American people on television for 32 minutes, calling for a concerted effort to end the country’s oil dependence on the Middle East. “To give us energy security,” he announced,
“I am asking for the most massive peacetime commitment of funds and resources in our nation’s history to develop America’s own alternative sources of fuel — from coal, from oil shale, from plant products for gasohol, from unconventional gas, from the sun… Just as a similar synthetic rubber corporation helped us win World War II, so will we mobilize American determination and ability to win the energy war. Moreover, I will soon submit legislation to Congress calling for the creation of this nation’s first solar bank, which will help us achieve the crucial goal of 20% of our energy coming from solar power by the year 2000.”
It’s true that, at a time when the science of climate change was in its infancy, Carter wouldn’t have known about the possibility of an overheating world, and his vision of “alternative energy” wasn’t exactly a fossil-fuel-free one. Even then, shades of today or possibly tomorrow, he was talking about having “more oil in our shale alone than several Saudi Arabias.” Still, it was a remarkably forward-looking speech.
Had we invested massively in alternative energy R&D back then, who knows where we might be today? Instead, the media dubbed it the “malaise speech,” though the president never actually used that word, speaking instead of an American “crisis of confidence.” While the initial public reaction seemed positive, it didn’t last long. In the end, the president’s energy proposals were essentially laughed out of the room and ignored for decades.
As a symbolic gesture, Carter had 32 solar panels installed on the White House. (“A generation from now, this solar heater can either be a curiosity, a museum piece, an example of a road not taken, or it can be a small part of one of the greatest and most exciting adventures ever undertaken by the American people: harnessing the power of the sun to enrich our lives as we move away from our crippling dependence on foreign oil.”) As it turned out, “a road not taken” was the accurate description. On entering the Oval Office in 1981, Ronald Reagan caught the mood of the era perfectly. One of his first acts was to order the removal of those panels and none were reinstalled for three decades, until Barack Obama was president.
Carter would, in fact, make his mark on U.S. energy policy, just not quite in the way he had imagined. Six months later, on January 23, 1980, in his last State of the Union Address, he would proclaim what came to be known as the Carter Doctrine: “Let our position be absolutely clear,” he said. “An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force.”
No one would laugh him out of the room for that. Instead, the Pentagon would fatefully begin organizing itself to protect U.S. (and oil) interests in the Persian Gulf on a new scale and America’s oil wars would follow soon enough. Not long after that address, it would start building up a Rapid Deployment Force in the Gulf that would in the end become U.S. Central Command. More than three decades later, ironies abound: thanks in part to those oil wars, whole swaths of the energy-rich Middle East are in crisis, if not chaos, while the big energy companies have put time and money into a staggeringly fossil-fuel version of Carter’s “alternative” North America. They’ve focused on shale oil, and on shale gas as well, and with new production methods, they are reputedly on the brink of turning the United States into a “new Saudi Arabia.”
If true, this would be the worst, not the best, of news. In a world where what used to pass for good news increasingly guarantees a nightmarish future, energy “independence” of this sort means the extraction of ever more extreme energy, ever more carbon dioxide heading skyward, and ever more planetary damage in our collective future. This was not the only path available to us, or even to Big Oil.
With their staggering profits, they could have decided anywhere along the line that the future they were ensuring was beyond dangerous. They could themselves have led the way with massive investments in genuine alternative energies (solar, wind, tidal, geothermal, algal, and who knows what else), instead of the exceedingly small-scale ones they made, often for publicity purposes. They could have backed a widespread effort to search for other ways that might, in the decades to come, have offered something close to the energy levels fossil fuels now give us. They could have worked to keep the extreme-energy reserves that turn out to be surprisingly commonplace deep in the Earth.
And we might have had a different world (from which, by the way, they would undoubtedly have profited handsomely). Instead, what we’ve got is the equivalent of a tobacco company situation, but on a planetary scale. To complete the analogy, imagine for a moment that they were planning to produce even more prodigious quantities not of fossil fuels but of cigarettes, knowing what damage they would do to our health. Then imagine that, without exception, everyone on Earth was forced to smoke several packs of them a day.
If that isn’t a terrorist — or terrarist — attack of an almost unimaginable sort, what is? If the oil execs aren’t terrarists, then who is? And if that doesn’t make the big energy companies criminal enterprises, then how would you define that term?
To destroy our planet with malice aforethought, with only the most immediate profits on the brain, with only your own comfort and wellbeing (and those of your shareholders) in mind: Isn’t that the ultimate crime? Isn’t that terracide?
[Note: Thanks go to my colleague and friend Nick Turse for coming up with the word “terracide.”]
Copy of correspondence between John Donovan and Michael Crothers Managing Director SEPIL / Venture Manager Corrib at Shell Exploration and Production Ireland which makes good reading.
What a tenacious man Donovan is I hope he keeps it up
At that point, when you send a letter in your name knowing that it designed to deceive, you have lost your integrity and join previous Shell senior executives, such as Jeroen van der Veer, who also gave in to the dark side of Shell. Bill Campbell, the retired HSE Group Auditor of Shell International has confirmed that the same internal investigation smokescreen was used in respect of the Brent Bravo deaths scandal.
From: John Donovan <firstname.lastname@example.org>
Subject: OSSL DEBACLE
Date: 10 June 2013 09:32:04 GMT+01:00
Cc: email@example.com, firstname.lastname@example.org, “email@example.com COMPANY” <firstname.lastname@example.org>
Dear Mr Crothers
As you will recall, the subject of the correspondence was OSSL, the company formally employed as a “Mr Fixit” by Shell E&P Ireland Limited.
Clare Daly kindly contacted you on my behalf.
I passed a copy of your response on to the owners of OSSL because I knew they would be interested in what you have been saying behind their backs.
Basically you have fallen back on the same cover-up formula previously used in other Shell scandals – the allegations have been fully investigated on an independent basis internally by Shell and no evidence found to support them – in this case allegations that Shell has corrupted the Irish Police Force by plying hundreds of officers with free booze.
This cover-up formula is a disreputable devious device. Shell employees investigate allegations against Shell management and amazingly clear Shell management of any wrongdoing. No independent party involved in the investigation and no genuinely independent oversight. How likely is it that any Shell employee would imperial their career at Shell by telling Shell management something it does not wish to hear?
There is no outright lie and no outright denial, but instead a statement that an independent internal investigation found no evidence to support the allegations. This whitewashing process allows a scandal to be covered up. To me, that degree of machination almost seems worse than an outright lie. The end result is a letter issued in your name, but no doubt drafted by sleazy lawyers that completely deceives the recipient into believing that Shell is innocent, when in fact Shell is guilty.
At that point, when you send a letter in your name knowing that it designed to deceive, you have lost your integrity and join previous Shell senior executives, such as Jeroen van der Veer, who also gave in to the dark side of Shell.
Bill Campbell, the retired HSE Group Auditor of Shell International has confirmed that the same internal investigation smokescreen was used in respect of the Brent Bravo deaths scandal.
I recall another example when Shell carried out an internal investigation of threats made against my family. Shell naturally cleared itself of any wrongdoing on that occasion, only to be subsequently caught red-handed in an undercover operation targeting my family and me. My lawyers cornered Shell UK into a written admission at director level.
Hence my total lack of faith in any internal investigation carried out by Shell. It is nothing but a smoke and mirrors device to cover-up the truth. An absolute charade in which key witnesses/parties have no involvement and are not even approached.
You appear to be another victim of Shell’s corruption of the integrity of senior people within the company. When you first became aware of how OSSL had been disgracefully used to carry out underhand and probably criminal activities on behalf of Shell, not just corrupting the police, you appeared to be genuinely sympathetic.
You met personally with the owners of OSSL. You gave them a letter of endorsement.
You were the good cop, while others issued threats against OSSL on Shell’s behalf.
At 12.26 on 22 May 2012, OSSL sent you an email. It mentioned your alleged admittance that Shell had shut down OSSL abruptly, without notice and immorally. It detailed a threat OSSL had allegedly received from a party acting for Shell in relation to the supply of large amounts of alcohol to the Irish Police Force and related falsification of invoices.
22 Minutes later you personally sent a reply.
“I did not say that “Shell shut down your company immorally”. I was careful to say that I personally felt some moral obligation to try to find a way to find a settlement, hence the without prejudice offer that was made.”
Significantly, you did not take issue with or make any denial in respect of the statements about the threat to OSSL, the large amounts of alcohol showered on the Irish Police, nor on the related disguised invoices.
Why, because you and the party to which you were sending your reply – OSSL – knew they were true.
Your letter of 28 May 2013 also contains detailed disapproving and possibly defamatory comments about OSSL and its vigorous campaign seeking redress from Shell. I have been pleased to assist OSSL in that regard.
I believe that most independent people reading the content of your letter dated 28 May 2013 would conclude that OSSL has been demanding money on false grounds and in the process, has engaged in wide-scale distasteful harassment.
In fact, it is your letter that is disgrace because it is designed to convey a false impression that Shell is innocent of these serious charges, when the reverse is the case, and you know it.
What we have is a two page letter designed to deceive the reader, when, if Shell was honest and had been falsely accused, an unambiguous rebuttal could have been made in a single short paragraph.
The allegations against Shell are completely false. OSSL has not distributed any alcohol to the Garda on our behalf. Shell has not made any threats directly or indirectly against OSSL. No invoices has been falsified on Shell’s instructions.
Sadly, you are now part of the cover-up of Shell’s large-scale corruption of the Irish Police Force.
I wonder where your auditors would stand on the matter of proper books of account on which they are legally obliged to express an opinion; were the auditors made aware of OSSL’s allegations of non-payment for the supply of goods and services and falsification of related invoices and in particular, where there is an allegation of tax fraud and corrupt inducement of the law enforcement arm of the state, did your auditors consider their reporting obligations in relation to such matters?
You make reference in your letter to ‘excessive tax withholding’ – what was the nature of the tax withheld?
Let me repeat without any protective legal preamble: Shell EP Ireland has engaged in widespread corruption of the Irish Police in relation to the controversial Corrib Gas Project, which is billions over budget and hopelessly delayed.
You have fallen far in accusing OSSL of activities tantamount to blackmail, harassment and lies, bearing in mind what you have not disclosed to Clare Daly about the current situation.
I was sympathetic to your predicament and made it plain in published articles that you had inherited a toxic mess. Unfortunately you have allowed yourself to become drawn into the mire.
I intend to publish this email tomorrow under the headline – “The integrity of Shell EP Ireland CEO Michael Crothers” – subject to any legal intervention by Shell.
I will happily publish on an unedited basis any comment you may wish to make.
One thing I know you will not provide is an outright denial along the lines suggested above.
Why not, for the sake of your own conscience, stop this cover-up dead in its tracks before it is too late?
There are too many people involved to keep the lid on this huge scandal that will likely rock the foundations of the Irish establishment.
ONLY AN AUTOMATED RESPONSE RECEIVED THUS FAR FROM MR CROTHERS – NOTHING FURTHER AS OF POSTING AT 2PM UK TIME ON 11 JUNE 2013. MR CROTHERS/SHELL WILL SURELY TAKE LEGAL ACTION UNLESS SHELL ACCEPTS, AS IT APPEARS TO DO, THAT WHAT I HAVE STATED ON THIS MATTER IS FACT.
Own Our Oil is an Irish group of citizens with no political affiliation, who are deeply concerned that deals cut between previous Irish governments and oil and gas exploration companies are depriving people of Ireland of what is rightfully theirs.
Our mission is to change the terms relating to licensing and oversight of Ireland’s offshore and onshore oil & gas. We need (your help) to act now and we need you to be the driving force to bring about change urgently.
From time to time we like to highlight events from the long often-dark history of Royal Dutch Shell.
From time to time we like to highlight events from the long often-dark history of Royal Dutch Shell.
We have previously published evidence that Shell conspired directly with Hitler, financed the Nazi Party, was anti-Semitic and sold out its own Dutch Jewish employees to the Nazis.
This article reveals how Shell collaborated in the Nazi annexation of Austria and Czechoslovakia in the run up years to World War 2.
Royal Dutch Shell and its long-term leader, Sir Henri Deterding, who became an ardent Nazi, had a close relationship with Adolf Hitler and his henchmen. Deterding was the subject of gushing praise by Hitler.
Rhenania-Ossag was the operating company for the Royal Dutch Shell Group in Nazi Germany. Shell was seeking an oil monopoly in the German market.
As one of the two biggest German oil companies and the main lube oil manufacturer, Rhenania-Ossag was an industry leader in Nazi Germany. Many of its workers and directors were Nazis.
The Nazi regime did not take control of Rhenania-Ossag until January 1940.
Following Hitler’s annexation of Austria on 12 March 1938 and the Nazi occupation of Czechoslovakia in March 1939, Royal Dutch Shell Group managing directors sanctioned Rhenania-Ossag taking over the Shell operating companies in those countries. This meant that a company dominated by the Nazis gained control over Shell companies in Austria and Czechoslovakia.
This clearly fell in with the Nazis plans, or otherwise it would not have been permitted.
This all took place before the outbreak of World War2 and while Royal Dutch Shell was still in control of all subsidiary companies, including Rhenania-Ossag.
Most of the above information comes directly from Volume 2 of “A History of Royal Dutch Shell” (page 78) and the remainder from Wikipedia.
We have already noted the Nazi government’s appointment of a Verwalterfor Rhenania-Ossag in January 1940; the Bataafsche Verwalter subsequently assumed formal control over the companies in countries under German occupation or in the German sphere of influence, such as Hungary.
Of the Group’s companies under Nazi control only Astra, Rhenania-Ossag, and Nafta Italiana continued operating at their former levels. As we have already seen, Astra was drawn into the German war effort. As one of the two biggest German oil companies and the main lube oil manufacturer, Rhenania-Ossag was an industry leader in the country. Following Hitler’s annexation of Austria and Czechoslovakia, Group managing directors sanctioned Rhenania-Ossag taking over the Shell companies in those countries.142 With the rupture of overseas supplies, Rhenania-Ossag turnover plummeted, but the company formed part of the official oil cartel and thus had a share in the processing and distribution of any oil coming in, which assured a steady, if meagre, flow of revenues. In December 1940 the Verwalter activated the hidden financial reserves built up during the 1930’s to raise the company’s capital from 75 million to 120 million Reichsmarks. A year later Rhenania-Ossag floated a bond loan of RM 60 million to payoff an old loan from Bataafsche and finance some new installations.143 Meanwhile, the relationship between parent company and subsidiary had to some extent been reversed by the appointment of Rhenania-Ossag’s research director as Verwalter over Bataafsche’s Amsterdam laboratory, to ensure that it would contribute to the German war effort.
Astra was the operating company of Royal Dutch Shell in Romania.
Nafta Italiana was the operating company of Royal Dutch Shell in Italy.
Austria was annexed into the German Third Reich on 12 March 1938.
Following the Anschluss of Nazi Germany and Austria, in March 1938, the conquest of Czechoslovakia became Hitler’s next ambition. The incorporation of the Sudetenland into Nazi Germany left the rest of Czechoslovakia weak and it became powerless to resist subsequent occupation. On 16 March 1939, the German Wehrmacht moved into the remainder of Czechoslovakia.
Staff meeting of the Shell oil factory in Hamburg Curio-Haus, 8 April 1935.
March of Rhenania-Ossag employees on 1 May 1938 (on the accompanying sign says: “Operating-cell Rhenania Ossag”)
The European Commission raided the offices of Shell, BP and Norway’s Statoil as part of an investigation into suspected attempts to manipulate global oil prices spanning more than a decade.
None of the companies have been accused of wrongdoing, but the controversy has brought back memories of the Libor rate-rigging scandal that rocked the financial world last year.
A review ordered by the British government last year in the wake of the Libor revelations cited “clear” parallels between the work of the oil-price-reporting agencies and Libor.
“[T]hey are both widely used benchmarks that are compiled by private organizations and that are subject to minimal regulation and oversight by regulatory authorities,” the review, led by former financial regulator Martin Wheatley, said in August . “To that extent they are also likely to be vulnerable to similar issues with regards to the motivation and opportunity for manipulation and distortion.”
In a report issued in October, the International Organization of Securities Commissions — an association of regulators — said the ability “to selectively report data on a voluntary basis creates an opportunity for manipulating the commodity market data” submitted to Platts and its competitors.
Responding to questions from IOSCO last year, French oil giant Total said the price-reporting agencies, or PRAs, sometimes “do not assure an accurate representation of the market and consequently deform the real price levels paid at every level of the price chain, including by the consumer.” But Total called Platts and its competitors “generally… conscientious and professional.”
“Even small distortions of assessed prices may have a huge impact on the prices of crude oil, refined oil products and biofuels purchases and sales, potentially harming final consumers,” the European Commission said this week.
USA Today notes:
The Commission … said, however, that its probe covers a wide range of oil products — crude oil, biofuels, and refined oil products, which include gasoline, heating oil, petrochemicals and others.
The EU said it has concerns that some companies may have tried to manipulate the pricing process by colluding to report distorted prices and by preventing other companies from submitting their own prices.
Unlike oil futures, which set prices for contracts, the data used in the MOC process is based on the physical sale and purchase of actual shipments of oil and oil products.
According to Statoil, the EU investigation stretches back to 2002, which is when Platts launched its MOC price system in Europe. The suspicion is that some companies may have provided inaccurate information to Platts to affect the oil products’ pricing, presumably for financial gain.
Fox points out:
At issue is whether there was collusion to distort prices of crude, refined oil products and ethanol traded during Platts’ market-on-close (MOC) system – a daily half-hour “window” in which it sets prices.
But the European Commission also is examining whether companies were prevented from taking part in the price assessment process.
The Guardian writes:
The commission said the alleged price collusion, which may have been going on since 2002, could have had a “huge impact” on the price of petrol at the pumps “potentially harming final consumers”.
Lord Oakeshott, former Liberal Democrat Treasury spokesman, said the alleged rigging of oil prices was “as serious as rigging Libor” – which led to banks being fined hundreds of millions of pounds.
He demanded to know why the UK authorities had not taken action earlier and said he would ask questions of the British regulator in Parliament. “Why have we had to wait for Brussels to find out if British oil giants are ripping off British consumers?” he said. “The price of energy ripples right through our economy and really matters to every business and families.”
Shadow energy and climate change secretary Caroline Flint said: “These are very concerning reports, which if true, suggest shocking behaviour in the oil market that should be dealt with strongly.
“When the allegations of price fixing in the gas market were made, Labour warned that opaque over-the-counter deals and relying on price reporting agencies left the market vulnerable to abuse.
“These latest allegations of price fixing in the oil market raise very similar questions. Consumers need to know that the prices they pay for their energy or petrol are fair, transparent and not being manipulated by traders.”
Shadow financial secretary to the Treasury Chris Leslie said: “If oil price fixing has taken place it would be a shocking scandal for our financial markets.
The Telegraph reports:
“97 per cent of all we eat, drink, wear or build has spent some time in a diesel lorry,” said a spokesman for FairFuel UK, the lobbyists. “If it is proved, they have been gambling with the very oxygen of our economy.”
Platts – to determine the benchmark price – examines just trades in the final 30 minutes of the trading day. A group of half a dozen analysts gather round a trading screen and decide on the final price. As with much that goes on in the City, it is a surprisingly old-fashioned method, reliant on gentlemanly conduct. Critics say it leaves the market open to abuse, and the price can suddenly spike or fall in the final minutes of the day.
Their influence is extensive. Total, the French oil giant, estimated last year that 75 to 80 percent of crude oil and refined product transactions were linked to the prices published by such agencies.
The Observer writes that manipulation of the oil markets has long been an open secret:
Robert Campbell, a former price reporter at another PRA, Argus – he is now a staffer at Thomson Reuters, which also competes with Platts and others on providing energy news and data – said this a few days ago in a little-noticed commentary: “The vulnerability of physical crude price assessments to manipulation is an open secret within the oil industry. The surprise is that it took regulators so long to open a formal probe.”
Reuters points out that the probe may be expanding to the U.S.:
In Washington, the chairman of the Senate energy committee asked the Justice Department to investigate whether alleged price manipulation has boosted fuel prices for U.S. consumers.
“Efforts to manipulate the European oil indices, if proven, may have already impacted U.S. consumers and businesses, because of the interrelationships among world oil markets and hedging practices,” Sen. Ron Wyden (D-Ore.), chairman of the Senate Energy and Natural Resources Committee, wrote in a letter to Attorney General Eric H. Holder Jr.
Wyden also asked Justice to investigate whether oil market manipulation was taking place in the United States.
Not only are petroleum products a multi-trillion dollar market on their own, but manipulation of petroleum prices would effect virtually every market in the world.
For example, the Cato Institute notes how many industries use oil:
U.S. industries use petroleum to produce the synthetic fiber used in textile mills making carpeting and fabric from polyester and nylon. U.S. tire plants use petroleum to make synthetic rubber. Other U.S. industries use petroleum to produce plastic, drugs, detergent, deodorant, fertilizer, pesticides, paint, eyeglasses, heart valves, crayons, bubble gum and Vaseline.
The India Times explains that:
The price variation in crude oil impacts the sentiments and hence the volatility in stock markets all over the world. The rise in crude oil prices is not good for the global economy. Price rise in crude oil virtually impacts industries and businesses across the board. Higher crude oil prices mean higher energy prices, which can cause a ripple effect on virtually all business aspects that are dependent on energy (directly or indirectly).
The Federal Reserve Bank of San Francisco points out:
When gasoline prices increase, a larger share of households’ budgets is likely to be spent on it, which leaves less to spend on other goods and services. The same goes for businesses whose goods must be shipped from place to place or that use fuel as a major input (such as the airline industry). Higher oil prices tend to make production more expensive for businesses, just as they make it more expensive for households to do the things they normally do.
Oil price increases are generally thought to increase inflation and reduce economic growth.
Oil prices indirectly affect costs such as transportation, manufacturing, and heating. The increase in these costs can in turn affect the prices of a variety of goods and services, as producers may pass production costs on to consumers.
Oil price increases can also stifle the growth of the economy through their effect on the supply and demand for goods other than oil. Increases in oil prices can depress the supply of other goods because they increase the costs of producing them. In economics terminology, high oil prices can shift up the supply curve for the goods and services for which oil is an input.
High oil prices also can reduce demand for other goods because they reduce wealth, as well as induce uncertainty about the future (Sill 2007). One way to analyze the effects of higher oil prices is to think about the higher prices as a tax on consumers (Fernald and Trehan 2005).
The Post Carbon Institute notes (via OilPrice.com) that high oil prices raise food prices as well:
The connection between food and oil is systemic, and the prices of both food and fuel have risen and fallen more or less in tandem in recent years (figure 1). Modern agriculture uses oil products to fuel farm machinery, to transport other inputs to the farm, and to transport farm output to the ultimate consumer. Oil is often also used as input in agricultural chemicals. Oil price increases therefore put pressure on all these aspects of commercial food systems
Figure 1: Evolution of food and fuel prices, 2000 to 2009
Sources: US Energy Information Administration and FAO.
Economists Nouriel Roubini and Setser note that all recessions after 1973 were associated with oil shocks.
Interest Rates Are Manipulated
Unless you live under a rock, you know about the Libor scandal.
For those just now emerging from a coma, here’s a recap:
The big banks have conspired for years to rig interest rates … upon which $800 trillion in assets are pegged
This was the largest insider trading scandal ever … and the largest financial scam in world history
Local governments got ripped off bigtime by the Libor manipulation
Libor is still being manipulated
Derivatives Are Manipulated
The big banks have long manipulated derivatives … a $1,200 Trillion Dollar market.
Indeed, many trillions of dollars of derivatives are being manipulated in the exact same same way that interest rates are fixed: through gamed self-reporting.
Gold and Silver Are Manipulated
The Guardian and Telegraph report that gold and silver prices are “fixed” in the same way as interest rates and derivatives – in daily conference calls by the powers-that-be.
Everything Can Be Manipulated through High-Frequency Trading
Traders with high-tech computers can manipulate stocks, bonds, options, currencies and commodities. And see this.
Manipulating Numerous Markets In Myriad Ways
The big banks and other giants manipulate numerous markets in myriad ways, for example:
Engaging in mafia-style big-rigging fraud against local governments. See this, this and this
Shaving money off of virtually every pension transaction they handled over the course of decades, stealing collectively billions of dollars from pensions worldwide. Details here, here, here, here, here, here, here, here, here, here, here and here
Charging “storage fees” to store gold bullion … without even buying or storing any gold . And raiding allocated gold accounts
Committing massive and pervasive fraud both when they initiated mortgage loans and when they foreclosed on them (and see this)
Pledging the same mortgage multiple times to different buyers. See this, this, this, this and this. This would be like selling your car, and collecting money from 10 different buyers for the same car
Cheating homeowners by gaming laws meant to protect people from unfair foreclosure
Pushing investments which they knew were terrible, and then betting against the same investments to make money for themselves. See this, this, this, this and this
Engaging in unlawful “frontrunning” to manipulate markets. See this, this, this, this, this and this
Engaging in unlawful “Wash Trades” to manipulate asset prices. See this, this and this
Otherwise manipulating markets. And see this
Participating in various Ponzi schemes. See this, this and this
Charging veterans unlawful mortgage fees
Cooking their books (and see this)
Bribing and bullying ratings agencies to inflate ratings on their risky investments
Farmer Willie Corduff is just one of the Irish taxpayers that have to pick up Statoils bill on the Coribb-project.
The cost overrun is mainly due to poor handling of local residents’ protests. Locals complain of lack of dialogue with the oil companies, little information, and fear of getting a pipeline almost under their houses.
The intense protests have delayed the project and made it more expensive.
Paradoxically enough, though, it is the Irish themselves who must foot the bill for the extra due the country’s legislation. Losses for companies are tax-deductible.
Ireland’s favourable tax policy means Statoil’s losses could actually be very small. Losses, capital costs, and exploration costs can be written off against future income in their entirety, while the tax rate is only 25 per cent.
Irish tax havens
Ireland has long been known to have very favourable tax rules for companies. Both the IMF (International Monetary Fund) and organisation Tax Justice Network defines the country as a tax haven – a term often associated with palm-treed islands in distant waters.
Standard corporation tax in Ireland is 12.5 per cent, which has successfully tempted Internet giant Google to establish its European headquarters in the country. Apple has also received criticism for using the Irish’ tax regime to evade taxes. Apple top Tim Cook had to answer to the US Congress regarding the practice last week.
Norway pays nothing
Statoil’s multi-billion kroner loss falls to the Irish to pay in its entirety, while Norwegian taxpayers remain unencumbered. It would have been different had the project been in Norway.
Companies can write off about 78 per cent of their losses here. This rate may be reduced if the government succeeds in getting its planned tax changes through.
In return, the Norwegian government receives 78 per cent of the hydrocarbon industry’s profits.
“There’s no doubt the tax system is attractive for oil companies. It must be this way, however, to draw companies here. Very few significant discoveries have been made in this country and the outlook for revenues is uncertain. In many ways, Ireland is where Norway was before the Ekofisk discovery in the ‘60s,” says Fergus Cahill, head of the Irish Offshore Operators’ Association.
The oil companies decided
Many among the Irish population are sceptical to the favourable tax regime for oil companies. Padraigh Cambell is a former rig worker and has been a spokesperson union Siptu. He knows Irish history oil well.
“What taxation authorities drew up in the ‘80s was based on what the oil companies said. They dictated the terms; 25 per cent tax and 100 per cent depreciation. All expenses 25 years back in time can be written off, as well as gifts, sponsorships, everything! Politicians said that this would be good for Ireland, but now the situation is that the supply business happens from Scotland, for example. So the oil-related costs can then be written off in Ireland. We want the Norwegian model. We want jobs for Irish ports, Irish companies, and Irish workers,” says Mr Campbell.
The controversial gas pipeline from the Corrib field comes ashore near the town of Rossport, northwest Ireland. Several residents in the town neither believe Ireland will benefit from the Corrib field because depreciation rules are so favourable, nor that the country will not get tax revenues.
“People in Norway will benefit from the project through Statoil. We’re not going to profit from it because of the Irish tax rules,” says farmer Willie Corduff.
Fergus Cahill in the Irish Offshore Operators’ Association disagrees.
“I know this is a popular argument among some opponents of the hydrocarbon industry in Ireland. Calculations by the authorities show that tax revenues from commercial fields will be substantial – even in relation to the present system,” Mr Cahill says.
Modified in 2007
The Irish government has announced a review of the tax system in the autumn. However, there is nothing to suggest that this will result in the country approaching the tax system as it presently is in Norway.
“I struggle to understand how anyone can expect we’ll have a Norwegian tax system without having Norway’s amounts of commercial discoveries,” newspaper The Irish Times reported Ireland’s Energy Minister Pat Rabbitte saying at a hearing earlier in May.
The system was also changed in 2007. Authorities then introduced a surplus tax of up to 15 per cent that could bring the total tax rate up to 40 per cent, depending on the project’s profitability. The change was not retroactive, and has no significance for the Corrib project Statoil is involved in.
Statoil’s annual report on its 2011 operations in Ireland shows total national losses of EUR 1.3 billion (almost NOK 10 billion), but that this can be written off against future taxable income.
In 1997, Statoil also recorded an approximately EUR 159 million (NOK 1.2 billion) loss in the Connemara area of Ireland, when it was determined that the field was not commercial. Irish rules are designed so that losses and expenses can be written off against taxes for 25 years after they are incurred. This means that Statoil can also write off the Connemara loss against tax on future profits from Coribb field.
The corresponding limit in Norway is ten years.
Head of Information Bård Glad Pedersen at Statoil does not wish to comment directly on how the favourable tax terms have or have not influenced their decision to continue their operations in Ireland, but writes in an e-mail that:
“It is common that costs and losses can be offset against future income. The tax system in Ireland does not differ significantly from taxation in the other countries in this area. We make investment decisions on a commercial basis, and the framework conditions are included as a factor in these reviews.”
Shell, operator of Coribb field, has the following comment:
“All companies in Ireland can write off investment costs against profits, and the partners in Coribb field are no exception. Oil and gas companies must, however, pay 25 per cent tax instead of 12.5 like other companies in the country. Ireland also receives tax revenue from the hundreds of people who are employed in connection with the project,” Shell Ireland press officer Fiona McGuinness writes in an email.