Oil majors face backlash as era of big profits returns

PARIS, France — Soaring energy prices have brought massive profits to oil majors -- along with fierce criticism from environmentalists and politicians at a time when consumers are left with rising bills.

US firm ExxonMobil, France's TotalEnergies, and UK giants Shell and BP announced in the past week 2021 profits totalling a whopping $66.7 billion.

It marked a huge turnaround from 2020, when they posted losses as the pandemic emerged, prompting lockdowns that brought the world economy to a grinding halt and caused crude prices to collapse.

But oil and gas prices rallied big time last year, surging to $70 per barrel after briefly sinking into negative territory in 2020.

The main international and US contracts rose to seven-year highs in January and now sit at around $90. Gas prices, meanwhile, hit records in Europe.

"Oil companies benefited from an extraordinary alignment of the planets," said Moez Ajmi, oil industry expert at EY consultancy.

In addition to higher energy prices, energy firms "cleaned up" their assets to only keep the most profitable ones, Ajmi said.

The companies also strengthened their cost-cutting policies which started in a previous price slump in 2014.

A gradual increase in output by OPEC and its allies has also helped.

ExxonMobil went from a $22.4 billion loss in 2020 to a $23 billion profit in 2021. 

Shell was $20.1 billion in the green last year after a $21.7 billion loss in 2020. 

TotalEnergies went from a historic $7.2 billion loss to a 15-year high profit of $16 billion.

BP's recovery was not as big, going from $20.3 billion in the red to $7.6 billion in the green.

Prices at the pump and utility bills, meanwhile, have gone up for consumers.

'Slap in the face'

BP said the result would allow it to accelerate "the greening" of the company.

But the performances at the companies triggered calls for a windfall tax on the profits of energy firms in the UK.

"These profits are a slap in the face to the millions of people dreading their next energy bill," Greenpeace UK's head of climate Kate Blagojevic said in a statement.

"BP and Shell are raking in billions from the gas price crisis while enjoying one of the most favourable tax regimes in the world for offshore drillers," she said.

"And these are the same companies responsible for pushing our world closer to catastrophic climate change."

Seeking to head off a political storm, the government of Prime Minister Boris Johnson announced last week a package of financial support after the state energy regulator lifted prices.

The opposition Labour Party said it was not enough.

Finance minister Rishi Sunak's "energy plans last week left families more worried than ever," tweeted Labour shadow minister Rachel Reeves after the oil companies published their results.

"It's time for Labour's plan for a one-off windfall tax on oil & gas producers to cut bills."

Sunak rejected the tax idea.

More profits

With a presidential election looming in France in April, Green candidate Yannick Jadot spoke out against profits made "on the back of French men and women" while "gas and petrol bills rise for the benefit of shareholders".

TotalEnergies CEO Patrick Pouyanne said that if the company paid more to governments, "it would be at the expense of investments, workers or shareholders".

But in apparent move to fend off criticism, TotalEnergies announced this week a discount at the pump in rural areas of France along with a 100-euro voucher for people struggling to pay their gas bills.

Oil majors, however, could be in for another banner year for their bottom lines as analysts forecast prices climbing to $100 per barrel.

"The health crisis appears to be ending, the economic recoveries in China, the United States and Europe don't appear to be flagging, supply continues to be limited due to a lack of oil investments in the past two years and environmental pressure," Ajmi said.

"So, yes, the profit rebound of the oil majors could continue in 2022."

Agence France-Presse

Shell ditches the Dutch, seeks move to London in overhaul

Royal Dutch Shell said on Monday it would scrap its dual share structure and move its head office to Britain from the Netherlands, pushed away by Dutch taxes and facing climate pressure in court as the energy giant shifts from oil and gas.

The company, which long faced questions from investors about its dual structure and had recently been hit by a Dutch court order over its climate targets, aims to drop "Royal Dutch" from its name - part of its identity since 1907 - to become Shell Plc.

The firm has been in a long-running tussle with the Dutch authorities over the country's 15 percent dividend withholding tax on some of its shares, making them less attractive for international investors. Shell introduced the two-class share structure in 2005 after a previous corporate overhaul.

The new single structure with all shares under British law means none of its shares would be under this tax. It would also allow Shell to strike swifter sale or acquisition deals.

In a further knock to its relations with the Netherlands, the biggest Dutch state pension fund ABP said last month it would drop Shell and all fossil fuels from its portfolio.

The Dutch government said on Monday it was "unpleasantly surprised" by Shell's plans to move to London from The Hague.

In a political long-shot, Dutch Economic Affairs Minister Stef Blok contacted the heads of political parties in parliament on Monday to gauge support for scrapping the dividend tax, broadcaster RTL reported.

The government was forced to withdraw the same plan in 2018 following widespread opposition to the move, which was seen by the public as a gift to foreign shareholders.

Shell's decision will, however, be seen as a vote of confidence in London after Britain's exit from the European Union triggered a shift in billions of euros in daily share trading from the UK capital to Amsterdam.

Shell's shares, which will still be traded in Amsterdam and New York under the plan, climbed more than 2% in London on Monday morning after the news.

"The current complex share structure is subject to constraints and may not be sustainable in the long term," Shell said, as it announced its plan to change the structure.

The dual structure means Shell now has primary listings in both London and Amsterdam, as well as two overarching legal headquarters despite operating as one economic group.

Such set-ups are expensive and complex, requiring the replication of board-level functions in two jurisdictions as well as being incorporated under two different legal regimes.

The change requires at least 75 percent of votes by shareholders at a general meeting to be held on Dec. 10, the company said.

"Among other benefits, the proposed changes will increase Shell's ability to buy back shares," Jefferies said in a research note.

Shell has said it would return $7 billion from selling U.S. assets to ConocoPhillips in addition to an ongoing share buyback program.

'MORE AGILE'

Monday's move follows a major overhaul Shell completed this summer as part of its strategy to shift away from oil and gas to renewables and low-carbon energy. The overhaul included thousands of job cuts around the world.

In May, a Dutch court ordered Shell to deepen its planned greenhouse gas emission cuts in order to align with the Paris climate deal which aims to limit global warming to 1.5 degrees Celsius. Shell has said it would appeal.

"If this decision will enable the company to be more agile in order to execute its transition to net zero, then it should be viewed positively," said Adam Matthews, chief responsible investment officer at Church of England Pensions Board, a Shell shareholder.

Matthews, who is leading talks with Shell on behalf of the investor group Climate Action 100+, said it should not remove Shell's responsibility to implement the Dutch court ruling.

Shell said the change would not change the impact of the court decision.

Shell is also battling calls made last month from activist investor Third Point for the firm to be broken up into multiple companies. Shell's top executives hit back, saying the firm's businesses worked better together.

Corporate giants are under growing pressure to simplify their structures with General Electric, Toshiba and Johnson & Johnson announcing plans last week to split into separate companies.

Dual listings, which are more expensive to maintain, are also falling out of favor.

Consumer products giant Unilever abandoned its dual Anglo-Dutch structure last year in favor of a single London-based entity. Miner BHP Group has also called time on such a structure.

If BHP and Shell complete their shifts to single share structures, Rio Tinto, Carnival and Investec will be the few remaining dual-listed companies on London's main market.

-reuters

INFERNO GROWING | Canada fire 'out of control,' could double in size

FORT MCMURRAY, Canada - A ferocious wildfire wreaking havoc in Canada could double in size Saturday, an official warned, cautioning the situation in the parched Alberta oil sands region was unpredictable and dangerous.

"This remains a big, out of control, dangerous fire," Public Safety Minister Ralph Goodale said of the raging inferno the size of London that forced the evacuation of the city of Fort McMurray.

Some 1,570 square kilometers (600 square miles) had been devastated since the blaze began almost a week ago and the fire had grown by an additional 50 percent in less than 24 hours, Goodale told a televised news conference.

"There is one prediction -- that if it continues to grow at the present pace, it could double today," he warned.

But "there would not appear to be imminent danger to another community."

The situation remains highly worrying regardless, Goodale indicated.

"It looks like the weather in and around Fort McMurray will still be, sadly, very conducive to serious burning conditions," he said.

"The situation remains unpredictable and dangerous."

Alberta's government crisis cell warned that fire conditions remained extreme in the province due to low humidity, high temperatures and gusty winds.

Still, in a glimmer of positive news, authorities have recorded no fatalities directly linked to the blaze so far, the minister said.

Shuttling to safety

In the latest harrowing chapter, police convoys shuttling cars south to safety through Fort McMurray -- now a ghost town -- resumed at dawn Saturday morning.

Making their way through thick, black smoke, the cars were filled with people trapped to the north of the city, having sought refuge there earlier in the week.

Police, wearing face masks, formed convoys of 25 cars, with kilometers (miles) of vehicles, smoke swirling around them, patiently awaiting their turn.

With elevated risk that something could go wrong, the convoys along Highway 63 were reduced in size compared to the previous day.

Those being evacuated -- for a second time, after first abandoning their homes -- had fled to an area north of the city where oil companies have lodging camps for workers.

But officials concluded they were no longer safe there because of shifting winds that raised the risk of them becoming trapped, and needed to move south to other evacuee staging grounds and eventually to Edmonton, 400 kilometers (250 miles) to the south.

Some 2,400 vehicles have so far been able to make it to safety.

Oil company Syncrude, one of several in the region, announced Saturday that it had shut down its facility 50 kilometers north of Fort McMurray due to smoke.

"In order to ensure the safety of our personnel and the integrity of our operations, we are taking all units offline in a safe and orderly manner," it said.

But "there is no imminent threat from fire."

Escape route

Security camera footage from the inside of one family's home underscored the speed at which the blaze could overcome any stragglers. Thick grey smoke filled the living room within 30 seconds, while flames quickly ate away a wall.

Among the first evacuees to reach Wandering River, a hamlet about 200 kilometers south of Fort McMurray, Margarita Carnicero said she had feared for her life on the journey to safety.

"It was a terrible experience," she told AFP, sitting in her dust-covered SUV alongside her teenage daughter Michelle. "I was afraid, but I tried not to show it (so as) not to frighten my daughter."

"With all of the smoke, the trip was hard on the lungs," said Greg Stengel, an oil company employee who also joined the convoy.

The government has declared a state of emergency in Alberta, a province the size of France that is home to one of the world's most prodigious oil industries.

Alberta has been left bone-dry after a period of unusually scant rainfall and unseasonably high temperatures.

Slashed oil output

More than 1,100 firefighters are battling 45 separate blazes across the province -- six of them totally out of control, including three in and around Fort McMurray.

Oil companies crucial to the region such as Suncor, Syncrude and Shell have pulled out non-essential employees, and analysts said the three have slashed output by a total of a million barrels a day.

The cuts amount to around a quarter of the country's entire production, and one-third of Alberta's, and mean a loss of tens of millions of dollars per day in income.

source: interaksyon.com

Shell lifts price freeze over flood-affected areas

MANILA, Philippines — Pilipinas Shell announced over the weekend that it is lifting the oil price freeze effective on Monday, August 20, in flood-stricken areas last week.

In a statement, the oil firm said the fuel price adjustments effective are as follows:

V-Power Nitro+ Gasoline and Racing: +P1.80
Kerosene:+P1.60
Diesel: +P1.50
Regular: +P1.70

Price movement effective only in: whole of NCR, Bulacan, Pampanga, Bataan, Zambales, and Rizal provinces. Sta.. Cruz and Pagsanjan in Laguna; Bacoor, Kawit and Rosario in Cavite.

source: interaksyon.com