Platform | ukwatch.net

Bankrolling coal: not just the oil and gas bank

eddie — Thu, 06 Nov 2008 18:07:06 +0000

As national controversy grows over proposals for a set of seven coal-fired power stations, UK banks are fuelling the global coal boom – the ‘roll to coal’.

PLATFORM’s recent report, Cashing in on Coal, finds Barclays and HSBC trailing behind the UK leader in fossil fuel investments, RBS-Natwest. The report estimates that in the last two years, RBS was responsible for $15.93 billion of financing of companies involved in extracting or burning coal – compared to Barclays’ $5.79 billion and HSBC’s $10.10 billion – from Germany to India, from Portugal to Australia.

Financing coal mines and power plants in today’s carbon-constrained world can never be sustainable practice. However, RBS is involved in financing many of the most controversial companies involved in rapid coal expansion, some of which are engaged in practices with particularly harmful social and environmental consequences. The bank participated in two mega loans totalling $70 billion to German power-giant E.ON – either side of the company’s announcement of plans to build 17 new coal and gas power plants across Europe. E.ON has generated a great deal of controversy over its plans to build a new coal-fired power station at Kingsnorth in Kent – the first in 30 years in Britain. Its critics have included NASA scientist Dr James Hansen, a large cross section of NGOs ranging from the RSPB to the Women’s Institute and more than 2,000 direct action campaigners who took part in August’s Camp for Climate Action.

Elsewhere, RBS took part in providing $800 million of credit to Arch Coal, the US’ second largest coal producer. Arch Coal has been heavily involved in mountain-top removal mining (MTR) – a practice of blasting off the tops of mountains with powerful explosives, then dumping the mountain-tops into nearby valleys. Rather than remove the coal from the mountain, MTR involves removing the mountain from the coal. More than one million acres of biologically diverse hardwood forests in Appalachia, eastern USA, have already been decimated. For local communities, MTR means the loss of thousands of jobs, growing poverty and increased health risks from toxic coal sludge.

While providing billions to companies like E.ON and Arch Coal, RBS claims to be addressing the environmental and climate impacts of its operations. It is particularly proud of two recent events it hosted: its 2008 Annual Economic Lecture titled “Towards a low carbon economy” and the UK Low Carbon Economy Summit co-organised with the Department for Business, Enterprise and Regulatory Reform that took place at the Tate Modern in London.

In the event’s opening speech, RBS Chairman Sir Tom McKillop laid out his company’s position: “As a leading banking partner of the energy sector for many decades, RBS recognises its responsibility in addressing these challenges.” The statement would be commendable, were it true. While proudly advertising RBS’ $3.5 billion of support to renewables over two years, McKillop did not deem it relevant to mention the total volume of support for fossil fuel companies – and RBS has consistently refused to take any responsibility for that lending. Financing of coal companies alone was around five times that of renewables. As this double-speak becomes harder to sustain, McKillop is rapidly undermining RBS’ credibility in addressing climate change.

The government, alongside coal-burners like E.ON and RBS, argue that a supposed ‘energy gap’ in 12 years time justifies the expansion of fossil fuel infrastructure and deflect propositions for co-ordinated action on climate change. However, the recent Poyry Report by twelve of Europe’s top scientists lays out paths to a stable UK energy future that combines targets for reduced usage and increased efficiency of power, alongside stepped-up renewable energy programs. There is a clear need to find a path forward that ends our dependency on fossil fuels, as there is little point in keeping the lights on if the house is flooded.

RBS has positioned itself to take the credit for organising green conferences and lending to renewables. At the same time it is planning to keep providing the financial fuel that drives the global coal boom, locking us into decades of carbon emissions and pushing us perilously closer to the two degree tipping point of runaway climate change.

Bankrolling Coal

Ellie Keen — Sun, 05 Oct 2008 12:49:58 +0000

Not just the Oil & Gas Bank

As national controversy grows over proposals for a set of seven coal-fired power stations, UK banks are fuelling the global coal boom – the ‘roll to coal’.

Read “Cashing in on Coal“

Out of Sight, Out of Mind

Ellie Keen — Tue, 03 Jun 2008 10:57:50 +0000

As climate change increasingly becomes a defining political theme for the 21st Century, coal, oil and gas companies have not suffered the existential crisis that might have been expected. Instead, they are betting on a technological solution to the problem, in the form of carbon capture and storage. But, ask Gabriele von Goerne and David Santillo, how safe is the technology?

To avoid dangerous anthropogenic climate change, which would place millions of people and the natural systems on which they depend at risk, global greenhouse gas emissions need to be reduced by at least 80% by the middle of this century. This, and more, can be achieved by a combination of greater energy efficiencies, phasing out the use of coal and switching from fossil fuels to renewable energies. But this vision of the future is not one that fossil fuel companies can accept. Led by the coal industry, those companies are insisting that carbon capture and storage (CCS) can square the circle between everincreasing sales of their products and a major decrease in greenhouse gas emissions.

The stakes could not be higher. If at any point in the future the technology failed, resulting in either gradual or sudden leakage of stored carbon dioxide (CO2), the world could be faced with substantial, unexpected greenhouse gas emissions about which little or nothing could be done, as well as the potential for severe direct impacts on ecosystems in the vicinity of such leaks. Given that the storage would have to remain intact for many centuries, an extremely high level of confidence in the system's integrity would be necessary before proceeding with CCS.

Storage science shortfall

CCS technology is still very much in development. Its principle sounds simple – CO2 that would usually be emitted to the atmosphere is captured at the power plant, transported and injected into deep geological formations where, according to theory, it is stored safely for a long period of time. But in reality, the process turns out to be highly complex, not least because the scale of both sources and storage formations are so vast, and knowledge and experience so limited.

Scenarios indicate that a single 1000MW coal-fired power plant, producing 8.6 million tons of CO2 per year for 30 years, could generate an underground CO2 plume which, within a further 20-50 years, could extend over an area of between 200 and 360 km2, depending on the type and thickness of the storage formation1. Continuous injection of CO2 will also cause formation pressures to rise over large areas, not only in the plume area but well beyond.

Simulations indicate that after 30 years of injection, a pressure increase of 1 bar could extend over an area of about 2500 km2,2 which will modify the local mechanical stress field and could cause deformation of the surrounding geological formation itself. This would make it far more likely that the cap rock could be compromised, particularly where there are any existing weaknesses, such as faults or fracture zones, providing pathways for CO2, and, in the case of saline aquifers, metalladen brines to escape to the biosphere.

Cap rock integrity is therefore an essential key for storing CO2 safely in geological formations. However, largescale injection of CO2 will induce a range of strongly coupled physical and chemical processes, including multiphase fluid flow, changes in effective stress and solute transport, and even chemical reactions between fluids and minerals in the geological formation. The more impurities present in the CO2 stream, the more complex and unpredictable the system inevitably becomes.

To date, most risk assessments and models assume that only pure CO2 will be stored. In reality, this is very unlikely to be the case. Less-pure CO2 waste streams, also containing other substances like SOx, NOx, hydrogen sulphide or even mercury, are significantly cheaper to generate (albeit with the possibility of higher transport costs), requiring less technological investment and energy to separate from a flue gas, coal gasification process, etc3. This economic incentive makes it likely that some companies will choose to store mixed gases.

Keeping carbon captured

Yet these mixtures and impurities could have a major impact on storage integrity. Mineral trapping of CO2 in a storage formation is hampered by hydrogen sulphide (H2S), for example. Although it has been suggested by some that large amounts of co-injected H2S should not prove problematic, interaction with the rock formation cannot be ruled out. Moreover, if conditions in a geological formation allow sulfur to be oxidized, or if CO2 was to be costored with SO2, very different patterns of pH distribution and mineral alteration would be expected compared to those arising from CO2 injection alone. Mineral alteration can lead to significant changes in porosity, and hence permeability, which could modify the fluid flow4. SO2 is much more corrosive in the presence of water than CO2 , such that the mobilization of metals in groundwater and overlying soils or sediments may be higher, leading to a greater risk of trace metal contamination in the surrounding environment5.

Even if only pure CO2 was injected, it could still induce dissolution of minerals, especially iron-bearing oxides, that could mobilize toxic trace metals6 and ultimately create pathways through the sealing rock for CO2, displaced brines and other associated substances7. Although current geophysical techniques allow broad identification and characterisation of fractures in a rock formation, relatively fine (open or sealed) fractures may remain undetected at the time of injection, representing possible pathways for CO2 sometime in the future.

A much more obvious and, perhaps, immediate pathway for leakage are the wells themselves, whether those used for injection or others in the vicinity which have, at some point, connected with the formation. The potential for leakage of CO2 through existing and abandoned wells is particularly relevant in regions that have been intensively explored and exploited for hydrocarbon reserves, such as in the North Sea. Although well completion and abandonment practices have evolved considerably over time, even wells drilled and abandoned by today's standards are unlikely to be entirely resistant to the corrosive effects of CO2 that comes in contact with water.

In short, the risks and uncertainties surrounding CCS are significant, manifold and complex. Despite assurances from industry and government, leakage of CO2 from storage reservoirs cannot be ruled out. Although the IPCC regards the risks to be low, it is vital to remember that problems may occur long after injection has ended, well beyond the timeframes over which the efficacy and safety of CCS has so far been demonstrated. The big question decisionmakers need to ask themselves is not just whether they want to take the risk, but whether it is responsible and sustainable for them to pass the burden of a continued reliance on fossil fuels to future generations.

The choice is real – CCS is not unavoidable – if only they put their efforts and money into renewable energies and energy efficiencies, the real solutions to climate change.

Dr Gabriela von Goerne is a geologist working with the Climate & Energy Unit of Greenpeace’s office in Hamburg, Germany. Dr David Santillo is a marine biologist and environmental chemist working with the Greenpeace Research Laboratories, based at the University of Exeter in the UK

1 Benson S., Hoversten M., Gasperikova E., Haines M. (2004): Monitoring protocols and life-cycle costs for geologic storage of carbon dioxide. Proceedings of the 7th International Conference on Greenhouse Gas Control technologies, Vancouver, Canada

2 Pruess K., Xu T., Apps J., Garcia J. (2003): Numerical modeling of aquifer disposal of CO2. SPE Journal, 49-60

3 Andersson K., Johnsson F., Strömberg L. (2003): An 865 Mwe lignite-fired power plant with CO2 capture – a technical feasibility study. VGB Conference “Power Plants in Competition – Technology, Operation and Environment”, Cologne.

4 Xu T., Apps J., Pruess K., Yamamoto H. (2007): Numerical modeling of injection and mineral trapping of CO2 with H2S and SO2 in a sandstone formation. Chemical Geology xx (2007) xxx-xxx

5 IPCC (2005): Special report on Carbon dioxide capture and storage. p250

6 Schütt T., Wigand M., Spangenberg E. (2005): Geophysical and geochemical effects of supercritical CO2 on sandstones. In: Carbon dioxide capture for storage in deep geologic formations (Eds.: D.C.Thomas, S.M. Benson) Vol.2, Chapter 7, 767-786

7 Kharaka Y., Cole D., Hovorka S., Gunter W., Knauss K., Freifeld B. (2006): Gas-water-rock interactions in Frio Formation following CO2 injection: Implications for the storage of greenhouse gases in sedimentary basins. Geology, Vol.34, 577-580

Burning Capital - Exit Strategy II

eddie — Mon, 12 May 2008 20:49:10 +0000

Back to Black

John Browne is not the first head of BP to leave under a cloud. After Robert Horton, chairman & CEO from 1990-92, was ‘encouraged’ to leave his post, the corporate initiative with which he was identified – ‘Project 1990’ – was swiftly brought to a halt. David Simon, his successor, set about re-focusing BP on the core activity of extracting oil & gas. It is clear that a similar kind of shift has been taking place since the fall of Browne in May 2007.

In July 2005, timed to coincide with the G8 Summit in Gleneagles, BP relaunched its ‘Beyond Petroleum’ strapline and unveiled plans for the world’s first carbon capture and hydrogen power station at nearby Peterhead. It was a brilliantly executed PR campaign and arguably the high-water mark of Browne’s ‘green strategy’. But last May, 22 days after Browne’s resignation, BP announced that due to government subsidy not being forthcoming, the project was shelved. Whilst the effectiveness and safety of CCS are far from certain (see article on page 3), Hayward’s dropping of the project sent a clear message of where he wanted to position the company.

The same month, Hayward employed the consulting firms Baines and McKinsey to review the company’s structure. On 10th October he announced an outline of the resulting shake-up, including the break up of one of its three divisions: Gas, Power & Renewables. Most of its assets will be merged into the remaining divisions of Exploration & Production and Refining & Marketing. What is left will be downgraded from a division to a small business unit – BP Alternative Energy. This constitutes a significant shift of emphasis away from renewables.

Then in December BP announced that it was purchasing 50% of Canada’s Sunrise tar sands field from Husky Energy. In contrast, Browne had been sceptical about tar sands. In 1999 he oversaw the sale of BP interests in Alberta and in 2004 he publicly declared that there were ‘tons of opportunities’ beyond the sector. Now, simultaneous with the Climate Conference in Bali, BP press released its acquisition.

Such a contrast to the announcement of the Peterhead Carbon Capture project during the G8 two years previously. No clearer indication could be given of the change of direction under Tony Hayward.

Accounting for Emissions

The company assessed its “operational emissions” for 2006 to be 64.4 million tonnes of CO2 equivalent, excluding TNK-BP (effectively BP’s Russian arm, responsible for 1/3 of BP’s production). Leaving aside this qualification, the company’s operational emissions have been falling over recent years. However these constitute only a fraction of the company’s total emissions – a mere six percent.

In Spring 2005, Nick Robins, working at Henderson Global Investors in Broadgate, noticed that the total emissions reported in BP’s 2004 Sustainability Report made the company to be responsible for 5.6% of global greenhouse gas emissions: more than twice the 2.5% share of the UK, with 62 million citizens.

A year later, Nick noticed that BP had shifted the goalposts. By changing its methodology to count oil within one sector of the company (mostly refining), rather than counting the emissions from all products it sold (whether crude oil, aviation fuel, diesel etc), BP had cut its emissions to less than half.

BP no longer publishes its full emissions under the original methodology. Yet PLATFORM has calculated the company’s full annual emissions since 1997 by analyzing its production and refining & marketing data. These show that production has risen steadily over the past decade, with a slight decline since 2005 (mainly due to the high oil price) – and the company’s CO2 emissions have risen in parallel with this.

On the morning of May 19th 1997, in a lecture theatre at Stanford University, California, John Browne addressed an audience with his ‘Climate Change Speech’. In the hour that followed Browne broke ranks with his peers in the global oil industry, recognising that human activity was altering the global climate and accepting the need to take precautionary action.

Browne said “Nobody can do everything at once. Companies work by prioritising what they do. They take the easiest steps first, and then they move onto tackle the more difficult and complex problems[…]. Over time we can move towards the elimination of emissions from our own operations and a substantial reduction in the emissions which come from the use of our products”. With these words, a frisson ran through the oil industry. Browne, as BP’s bold new leader, was charting a distinctive course.

But, in Browne’s ten years at the helm after Stanford, he never moved beyond the ‘easiest step’. Instead, BP’s product emissions continued to rise. Meanwhile, renewable energy peaked at 3% of the company’s capital investment. Now, Hayward is seeking to reverse even the tiny steps Browne took.

A Change in the Political Climate

The political landscape of climate change shifted in 2007.

Between February and November, the Intergovernmental Panel on Climate Change published four reports, declaring that if temperatures went two degrees above pre-industrial levels the effects would be “irreversible and catastrophic”. In March the EU agreed to a 20% cut in CO2 emissions by 2020. In June the G8 summit draft communiqué stated that ‘beyond a temperature increase of two degrees, risks from climate change will be largely unmanageable’. In June and September the White House indicated that it was engaging in the issue. In December at Bali it was agreed to achieve a new Kyoto by 2009.

There is a growing consensus that we have to avoid exceeding 2 degrees of warming. In order to do so we need to stabilise CO2 emissions by 2015 – in less than 100 months – and thereafter reduce them radically.

Gordon Brown has talked of setting a target of 80% CO2 cuts by 2050, the Tories and Liberal Democrats likewise. US Presidential favourites, Hilary Clinton and Barack Obama, have also called for an 80% target. These all require effectively the same thing – a fossil fuel phase out over the next generation.

In these demands for striking global CO2 cuts, the direction of travel is clear – the cuts should fall heaviest on the countries of the global Global North. At Bali, the EU, Japan, Canada and Russia talked of cuts of between 20 and 45% by 2020.

For BP this poses a particular challenge. For example, if there are moves to dramatically reduce fuel consumption in Europe and the USA it will hit the company hard. 84% of the refined products it sold in 2006 were in Europe and the USA. However, the company can adapt to such challenges. It is already directing capital to enable an expansion in the Indian and Chinese retail markets.

Similarly BP has been striving to apply technology to the challenges – by developing internal and external emissions trading systems, or carbon capture and storage projects. But the fate of Peterhead power station, illustrates that these are peripheral ventures at the mercy of financial and political pressures.

This challenge goes to the heart of BP’s core activity – the extraction of oil & gas. These are challenges to which it is far harder for the company to adapt.

2007 might be remembered as the year in which the company had to consider the threat of carbon pricing. The Stern Report concluded that the social cost of a tonne of carbon dioxide was $85. In December 07 the UK Climate Change Minister, Phil Woolas, made it clear that the government is to factor in the ‘shadow price of carbon’ for all infrastructure decisions.

If the logic of this is carried through, BP’s combined operational and product emissions in 2007 constitute a massive liability to the company. If this were set against the profit for 2007 then the company’s profitability would be severely hit, and with it the share price.

The question stands, how long is it before public pressure, driven by the rising impacts of climate change, shifts this theoretical carbon cost into an actual carbon cost? How long until the company is hit by the economic impact of climate change?

A change in the weather and a change of direction

Back in May 1997, John Browne recognised the relationship between BP’s oil & gas production and global CO2 emissions. In the intervening 10 years the company has produced 12.7 billion tonnes of carbon dioxide equivalent. Over the past decade BP’s oil & gas output has been rising most years and in the coming decade it is the company’s intention that it should grow further over the coming decade… – causing its produce emissions to rise in parallel. CO2 emissions will also grow. Especially with the development of projects such as Sunrise.

But yet this growth runs in direct contradiction to the demands of the Intergovernmental Panel on Climate Change and rising public opinion. At the very least the contradiction between the company and public opinion threatens to erode BP’s ‘social license to operate’ in key countries such as the UK, Germany and the US. An erosion of acquiescence that may lead to the demand that BP carries the cost of the carbon it sells.

What is to be done? How can BP adapt to this coming climate impact?

In the past 12 months decisions were made in BP to finance new developments in Russia, Indonesia and Norway, and to purchase exploration licenses in Colombia and the USA. And with the opportunity afforded by the $100 barrel oil price, the decision was made to purchase tar sands in Canada. We do not know exactly how much carbon these actions will bring to the world’s atmosphere, but we do know that the decisions were made by approximately 20 people.

How would it have been if those who made the decisions in the past 12 months had had at the forefront of their minds the carbon limits recommended by the Intergovernmental Panel on Climate Change? What if they had committed themselves to stabilising global CO2 emissions in less than 100 months and then to reducing emissions radically?

How might the company’s year 2007 have been different? What meetings might have taken place to plan the decarbonising of the company? What new investments in non-fossil fuel energy? Would Tony Hayward’s announcement of bringing onstream the Shah Deniz, Rosa, Dalia, Greater Plutonio, Mango and Atlantis fields in 2007 have come to be seen as marking a high-water point in BP’s oil and gas production history?

RBS - Financing Atrocity

eddie — Mon, 05 May 2008 16:25:10 +0000

The Royal Bank of Scotland’s uncritical support for oil is contributing to major human rights abuses, underwriting repressive regimes and fuelling conflict.

Following Steven Spielberg’s withdrawal from the opening ceremonies of the Beijing Olympics, pressure has increased on other celebrities (and athletes) to follow suit. But whilst China is the popular whipping boy for the human rights disaster in Darfur, behind the scenes Britain’s second largest bank is helping prop up the Sudanese regime.

Royal Bank of Scotland doesn’t only sponsor rugby. PLATFORM research has uncovered a recent RBS loan to an oil corporation working with and supporting the Sudanese regime. This follows a trend of RBS funding fossil fuel extraction in some of the world’s most repressive and war-torn countries, including Burma, the DRC and Equatorial Guinea. In October 2007, RBS underwrote loans of $1 billion for Lundin Petroleum, together with BNP Paribas and HBOS. The Sudan Divestment Task Force (SDTF) classifies Lundin in its Top 5 “Highest Offenders”, for its direct support for the Sudanese government during the continued ethnic cleansing in Darfur.

Working with the military

Lundin is exploring for oil in Block 5B in south Sudan, together with Sudapet, the Sudanese national oil company, which is part of the regime. This is one of Lundin’s major strategic growth areas, and will probably be where much of RBS’ financing goes: 4 out of the 13 exploration wells Lundin will drill in 2008 are in Sudan. Its Sudanese assets are estimated at a potential 500 million barrels – 42% of the 1200 million potential barrels to be targeted in 2008.

Due diligence by RBS should have thrown up concerns as to Lundin’s suitability, based on its past record. Southern Sudan has been one of Lundin’s core sites of operation since 1997 – including during the destructive civil war. Human Rights Watch and Christian Aid asserted that, if not complicit, the company enabled Sudanese military operations against local civilians, including the clearing of villages and widespread rape.

While exploring and extracting oil from Block 5A (neighbouring its current operations in Block 5B), Lundin cooperated and worked with the Sudanese government and military. Lundin’s construction of a bridge and road allowed year-round access by Baggara militias to attack local villagers, apparently leading to enormous human rights abuses and significant depopulation around Lundin’s operations.

Currently the ceasefire in the south continues to hold shakily, yet Lundin’s clear support for the Sudanese government and lack of commitment to human rights gives little hope.

Beyond Sudan, AllAfrica.com reported on 14 February that Lundin approached the government in Somaliland, Somalia’s northern breakaway region, seeking exploration rights. Lundin is currently also investing in what it terms “high risk, high reward frontier exploration” in the Ogaden region of Ethiopia, a Somali-inhabited region suffering under the army’s current crackdown on separatist rebels.

Lundin Petroleum is not an exception; the self-styled “Oil and Gas Bank” has repeatedly underwritten the operations of oil and gas corporations working in conflict zones or highly repressive countries. The RBS oil & gas team cofinanced an $850 million financing facility for Tullow Oil, which is working with the state oil company of Equatorial Guinea to pump 44,000 barrels of oil per day from the offshore Ceiba field.

President Mbasogo maintains absolute control of Equatorial Guinea, claims to have received 97% in the most recent elections and has been criticised for extreme human rights abuses by Amnesty International.

Tullow Oil is also pursuing an “aggressive exploration programme” in the North Kivu region on the border of the Democratic Republic of Congo and Uganda. 400,000 civilians fled their homes in North Kivu during 2007 to escape fighting between government soldiers, local militia and Tutsi insurgents. The conflict in the DRC is widely seen as fuelled by attempts to control natural resource extraction.

Financing occupation

RBS finances numerous oil corporations contributing to human rights abuses globally. However, in some situations, the bank finances the problem project directly. In late 2007, the RBS Oil & Gas Team participated in an $884 million project financing BP’s controversial Tangguh LNG (liquefied natural gas) project in West Papua, occupied by Indonesia since 1963. Amnesty International has estimated that 100,000 West Papuans – one sixth of the population – have been killed by the Indonesian military.

Despite BP’s human rights assessments, local residents have raised issues around disempowerment, environmental degradation, social degeneration and a failure to fully compensate. Local NGOs LP3BH and Perdu have warned of increased militarization in the region and a failure in recognition of customary rights.

More insidiously, the Tangguh LNG project plays a key role in asserting and institutionalising Indonesia’s occupation of West Papua. Repression is still rife.

Peaceful protests involving the Papuan flag have led to 15 year prison sentences. In 2004, US Senators wrote that “a military campaign in the Central Highlands has led to an inestimable number of civilian deaths and significant population displacement” and “government security forces are operating with impunity”.

Papuan NGOs reported in autumn 2007 that military “sweep operations” in the highlands were causing displacement and starvation. The Indonesian government’s restrictions on international media and humanitarian organisations makes assessing the reality in West Papua very difficult.

RBS assets also appear to be supporting the Burmese junta. With control over 8.25% and a seat for its CEO Fred Goodwin on the board, RBS is the most significant private shareholder on Bank of China, key backer of Chinese oil companies propping up the military regime in Burma. Petrochina and Sinopec have been criticised heavily for co-operating closely with the Burmese military rulers. Both named Bank of China as their principal banker and continue to borrow and repay loans of hundreds of millions of dollars.

In September 2007, Sinopec began drilling an onshore well in a joint venture with the Burmese regime’s Myanmar Oil & Gas Enterprise. The launch ceremony on September 26 coincided with the first day of the dictatorship’s brutal crackdown on civilian dissent and was attended by military officials and Sinopec executives. Oil & gas ventures in Burma have been repeatedly condemned by human rights organisations as propping up the regime. Sales of natural gas, such as those to Petrochina, account for the single largest source of revenue to the military government.

Whether through its assets, by financing specific projects or through corporate loans to oil & gas corporations, RBS’ lending is contributing to major human rights violations across the planet. Whether this is through a wilful refusal to recognise human rights as a relevant concern or merely repeated failures at due diligence remains unclear.

Demise of Teflon John

eddie — Tue, 12 Sep 2006 14:26:21 +0000

As speculation intensifies about who will lead BP after boss John Browne’s retirement in two years time (see notes from Gog and Magog), with it comes the question of Browne’s legacy in the company.

Browne’s leadership has been defined by his branding BP as a progressive oil company, concerned about climate change, investing in environmental and safety improvements and going ‘beyond petroleum’.

What is most surprising about this spin is how long it lasted. Sufficient repetition of these largely unfounded claims gave the company’s reputation a ‘Teflon coating’, to which no bad news would stick. Time and again, activists, trade unionists and communities would point to evidence of brutal or irresponsible practice, only to be disbelieved, because “BP’s not like that”.

Now, finally, the Teflon is peeling away, after a string of high-profile failures in the USA. Last year’s explosion at the company’s Texas City refinery, in which fifteen workers tragically lost their lives (Carbon Web issue 3) was followed by recent documentation of systemic safety flaws at BP’s Toledo refinery. An inspection by the Occupational Safety and Health Administration proposed a $2.4 million fine finding 39 violations, many of them echoing problems at Texas City.

BP is also facing a grand jury investigation over its March Alaska oil spill, the state’s sixth largest ever spill (Carbon Web issue 4). The incident was caused by pipeline corrosion, combined with the failure of BP’s leak detection systems. As Carbon Web goes to press, BP has announced the closure of its Prudhoe Bay oilfield, the largest field in North America, because of further corrosion fears.

Now civil rights activist Jesse Jackson has launched a campaign accusing the company of ‘profiteering and racial discrimination.’ Since June, Jackson’s Rainbow Push Coalition has been picketing BP/ARCO stations across the US. “BP has the largest share of the African American market, yet its pattern of discrimination amounts to a virtual lock out of African American businesses and consumers. They want our business but don’t want to do business with us,” said one member of Jackson’s coalition.

Meanwhile, BP faces a lawsuit brought by the US Commodity Futures Trading Commission, accusing BP of “unlawfully attempting to manipulate and manipulating” the price of propane gas. Dennis Abbott, a former BP energy trader, pleaded guilty to federal charges of conspiracy to manipulate prices and could face up to five years in prison.

So where does all this leave Browne and BP? With the Teflon flaking away, the stories highlighting the gap between BP’s image and reality will continue to increase. For example, it is well-documented that BP has cut corners on safety on the newly-opened Baku-Tbilisi-Ceyhan pipeline, making leaks almost an inevitability, although the company will likely blame them on sabotage.

In the run-up to Browne’s departure, his personal reputation will decline with that of BP. Depending how far this goes, his successor may try to distance the company from the thirteen-year Browne era, whose real legacy may be seen as maximising financial returns whilst papering over increasingly profound environmental and social impacts.

This article is from the Carbon Web Newsletter Issue 5, August 2006.