ExxonMobil

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This article is about Exxon Mobil Corp.. For subsidiaries, see Exxon and Mobil.
Exxon Mobil Corp.
Type Public
Traded as NYSEXOM
Dow Jones Industrial Average Component
S&P 500 Component
Industry Oil and gas
Predecessors Exxon
Mobil
Founded November 30, 1999
Headquarters Irving, Texas, United States
Area served Worldwide
Key people Rex W. Tillerson
(Chairman and CEO)[1]
Products Fuels, lubricants, petrochemicals
Revenue Decrease US$ 420.836 billion (2013)[2]
Operating income Decrease US$ 40.301 billion (2013)[2]
Net income Decrease US$ 32.580 billion (2013)[2]
Total assets Increase US$ 346.808 billion (2013)[2]
Total equity Increase US$ 174.003 billion (2013)[2]
Employees 75,000 (Dec 2013)[2]
Subsidiaries Aera Energy, Esso, Esso Australia,Exxon, Exxon Neftegas, Imperial Oil(69,6%), Mobil, Mobil Producing Nigeria, SeaRiver Maritime, Superior Oil Co., Vacuum Oil Co., XTO Energy
Website ExxonMobil.com

Exxon Mobil Corp., or ExxonMobil, is an American multinational oil and gas corporation headquartered inIrving, Texas, United States. It is a direct descendant of John D. Rockefeller‘s Standard Oil company,[3] and was formed on November 30, 1999, by the merger of Exxon and Mobil (formerly Standard Oil of New Jersey and Standard Oil of New York). It is affiliated with Imperial Oil which operates in Canada.

The world’s 5th largest company by revenue, ExxonMobil is also the second largest publicly traded company by market capitalization.[4][5] The company was ranked No. 5 globally in Forbes Global 2000 list in 2013.[6]ExxonMobil’s reserves were 25.2 billion BOE (barrels of oil equivalent) at the end of 2013 and the 2007 rates of production were expected to last more than 14 years.[7] With 37 oil refineries in 21 countries constituting a combined daily refining capacity of 6.3 million barrels (1,000,000 m3), ExxonMobil is the largest refiner in the world,[8][9] a title that was also associated with Standard Oil since its incorporation in 1870.[10]

ExxonMobil is the largest of the world’s supermajors[11] with daily production of 3.921 million BOE. In 2008, this was approximately 3 percent of world production, which is less than several of the largest state-owned petroleum companies.[12] When ranked by oil and gas reserves, it is 14th in the world—with less than 1 percent of the total.[13][14]

ExxonMobil has been subject to numerous criticisms, including the lack of speed during its cleanup efforts after the 1989 Exxon Valdez oil spill in Alaska, widely considered to be one of the world’s worst oil spills in terms of damage to the environment. ExxonMobil has drawn criticism for funding organizations that are skeptical of the scientific opinion that global warming is caused by the burning of fossil fuels. Questions have been raised about the legality of the company’s foreign business practices. Critics note that ExxonMobil increasingly drills in terrains leased by dictatorships.[15] The company has also been the target of accusations of improperly dealing with human rights issues, influence on American foreign policy, and its impact on the future of nations.[15]

Organization

ExxonMobil markets products around the world under the brands of Exxon, Mobil, and Esso. It also owns hundreds of smaller subsidiaries such as Imperial Oil Limited (69.6 percent ownership) in Canada, and SeaRiver Maritime, a petroleum shipping company.

The upstream division dominates the company’s cashflow, accounting for approximately 70 percent of revenue. The company employs over 82,000 people worldwide, as indicated in ExxonMobil’s 2006 Corporate Citizen Report, with approximately 4,000 employees in its Fairfax downstream headquarters and 27,000 people in its Houston upstream headquarters.

ExxonMobil is organized functionally into a number of global operating divisions. These divisions are grouped into three categories for reference purposes, though the company also has several ancillary divisions, such as Coal & Minerals, which are stand alone.

Chart of the major energy companies dubbed “Big Oil”, sorted by latest published revenue

History

ExxonMobil Building, ExxonMobil offices in Downtown Houston

Exxon Mobil Corp. was formed in 1999 by the merger of two major oil companies, Exxon and Mobil. Both Exxon and Mobil were descendants of the John D. Rockefeller corporation, Standard Oil which was established in 1870. The reputation of Standard Oil in the public eye suffered badly after publication of Ida M. Tarbell‘s classic exposé The History of the Standard Oil Co. in 1904, leading to a growing outcry for the government to take action against the company.

By 1911, with public outcry at a climax, the Supreme Court of the United States ruled that Standard Oil must be dissolved and split into 34 companies. Two of these companies were Jersey Standard (“Standard Oil Co. of New Jersey”), which eventually became Exxon, and Socony (“Standard Oil Co. of New York”), which eventually became Mobil.[16]

In the same year, the nation’s kerosene output was eclipsed for the first time by gasoline. The growing automotive market inspired the product trademark Mobiloil, registered by Socony in 1920.

Over the next few decades, both companies grew significantly. Jersey Standard, led by Walter C. Teagle, became the largest oil producer in the world. It acquired a 50 percent share in Humble Oil & Refining Co., a Texas oil producer. Socony purchased a 45 percent interest in Magnolia Petroleum Co., a major refiner, marketer and pipeline transporter. In 1931, Socony merged with Vacuum Oil Co., an industry pioneer dating back to 1866 and a growing Standard Oil spin-off in its own right.

In the Asia-Pacific region, Jersey Standard had oil production and refineries in Indonesia but no marketing network. Socony-Vacuum had Asian marketing outlets supplied remotely from California. In 1933, Jersey Standard and Socony-Vacuum merged their interests in the region into a 50–50 joint venture. Standard-Vacuum Oil Co., or “Stanvac,” operated in 50 countries, from East Africa to New Zealand, before it was dissolved in 1962.

Mobil Chemical Co. was established in 1950. As of 1999, its principal products included basic olefins and aromatics, ethylene glycol and polyethylene. The company produced synthetic lubricant base stocks as well as lubricant additives, propylene packaging films and catalysts. Exxon Chemical Co. (first named Enjay Chemicals) became a worldwide organization in 1965 and in 1999 was a major producer and marketer of olefins, aromatics, polyethylene and polypropylene along with speciality lines such as elastomers, plasticizers, solvents, process fluids, oxo alcohols and adhesive resins. The company was an industry leader in metallocene catalyst technology to make unique polymers with improved performance.

In 1955, Socony-Vacuum became Socony Mobil Oil Co. and, in 1966, simply Mobil Oil Corp. A decade later, the newly incorporated Mobil Corp. absorbed Mobil Oil as a wholly owned subsidiary. Jersey Standard changed its name to Exxon Corp. in 1972 and established Exxon as a trademark throughout the United States. In other parts of the world, Exxon and its affiliated companies continued to use its Esso trademark.

On March 24, 1989, the Exxon Valdez oil tanker struck Bligh Reef in Prince William Sound, Alaska and spilled more than 11 million US gallons (42,000 m3) of crude oil. The Exxon Valdez oil spill was the second largest in U.S. history, and in the aftermath of the Exxon Valdez incident, the U.S. Congress passed the Oil Pollution Act of 1990. An initial award of $5 billion USD punitive was reduced to $507.5 million by the US Supreme Court in June 2008, and distributions of this award have commenced.

In 1998, Exxon and Mobil signed a US$73.7 billion definitive agreement to merge and form a new company called Exxon Mobil Corp., the largest company on the planet. After shareholder and regulatory approvals, the merger was completed on November 30, 1999. The merger of Exxon and Mobil was unique in American history because it reunited the two largest companies of John D. Rockefeller‘s Standard Oil trust, Standard Oil Co. of New Jersey/Exxon and Standard Oil Co. of New York/Mobil, which had been forcibly separated by government order nearly a century earlier. This reunion resulted in the largest merger in US corporate history.

In 2000, ExxonMobil sold a refinery in Benicia, California and 340 Exxon-branded stations to Valero Energy Corp., as part of an FTC-mandated divestiture of California assets. ExxonMobil continues to supply petroleum products to over 700 Mobil-branded retail outlets in California.

In 2005, ExxonMobil’s stock price surged in parallel with rising oil prices, surpassing General Electric as the largest corporation in the world in terms of market capitalization. At the end of 2005, it reported record profits of US $36 billion in annual income, up 42 percent from the previous year (the overall annual income was an all-time record for annual income by any business, and included $10 billion in the third quarter alone, also an all-time record income for a single quarter by any business). The company and the American Petroleum Institute (the oil and chemical industry’s lobbying organization) put these profits in context by comparing oil industry profits to those of other large industries such as pharmaceuticals and banking.[17][18]

On June 12, 2008, ExxonMobil announced that it was transitioning out of the direct-served retail market, citing the increasing difficulty of running gas stations under rising crude oil costs. The multi-year process will gradually phase the corporation out of the direct-served retail market, and will affect 820 company-owned stations and approximately 1,400 other stations operated by dealers distributing across the United States. The sale has not resulted in the disappearance of Exxon andMobil branded stations; the new owners will continue to sell Exxon and Mobil-branded gasoline and license the appropriate names from ExxonMobil, who will in turn be compensated for use of the brands.[19]

In 2010, ExxonMobil bought XTO Energy, the company focused on development and production of unconventional resources.[20]

In terms of potential future developments, many gas and oil companies are considering the economic and environmental benefits of Floating Liquefied Natural Gas(FLNG). This is an innovative technology designed to enable the development of offshore gas resources that would otherwise remain untapped, because environmental or economic factors make it unviable to develop them via a land-based LNG operation. ExxonMobil is waiting for an appropriate project to launch its FLNG development,[21] and the only FLNG facility currently in development is being built by Shell,[22] due for completion in around 2017.[23]

In 2012, ExxonMobil confirmed a deal for production and exploration activities in the Kurdistan region of Iraq.[24]

In 2013, Exxon’s CEO Rex Tillerson was quoted “Exxon is starting work with Russia’s OAO Rosneft in assessing what could be massive reserves of shale oil in Western Siberia”, “There is huge shale potential in shale rocks in West Siberia…we just don’t know what the quality is”.[25]

In November 2013, Exxon agreed to sell its majority stakes in a Hong Kong-based utility and power storage firm, Castle Peak Co Ltd, for a total of $3.4 billion, toCLP Holdings.[26]

On September 18 2014, LINN Energy LLC and ExxonMobil Corp. announced a “non-monetary” asset swap deal. LINN will receive ExxonMobil’s interest in its “Hill Property.” It consists of 500 net acres in the South Belridge oil field in the San Joaquin Valley in California. Currently, the asset is producing ~3,400 barrels of oil equivalent per day. The assets “proved reserves” are estimated to be 27 million barrels of oil equivalent. In exchange LINN will give ExxonMobil ~17,000 net acres in the Midland Basin in Texas,spread over Martin, Howard, Midland, and Andrews counties. The assets are a mix of production and acreage. They’re estimated to hold proved reserves of ~19 million barrels of oil equivalent.[27]

On October 9 2014, the World Bank’s international arbitration court awarded Exxon Mobil Corporation $1.6 billion in the case the company had brought against the Venezuelan government. Exxon Mobil alleged that the Venezuelan government illegally expropriated its Venezuelan assets in 2007 and paid unfair compensation.[28]

Merger

Pre-deal events

Exxon-Mobil pre-merger scope (1997 data)

On June 16, 1998, Mr. Lee R. Raymond, Exxon’s CEO, met with Mr. Lucio A. Noto, Mobil’s CEO, at Mobil’s headquarters in Fairfax, Virginia. At the meeting, Mr. Raymond and Mr. Noto had preliminary discussions about the possibility of a combination of the two companies. Later management continued discussions and permanently informed the Boards.[29]

On August 11, 1998, The British Petroleum Co. PLC and Amoco Corp. announced the terms of their merger agreement. Shortly thereafter, Mr. Raymond and Mr. Noto resumed their discussions taking into account this new pricing benchmark. In mid-August 1998, the management of Mobil asked Goldman Sachs to undertake an analysis of strategic alternatives available to Mobil. On September 14, Goldman Sachs presented to the Mobil Board its analyses regarding the various possible transactions, including a possible merger with Exxon.[29]

At a meeting on October 19, 1998 at Exxon’s headquarters attended by Messrs. Raymond, Matthews, Noto and Gillespie, the parties reviewed the possible relative ownership ranges and expanded the discussions to include such issues as the representation of current Mobil directors on the board of the combined company.[29]

During November 1998, Exxon and Mobil exchanged due diligence request lists and representatives and their advisors participated in a video conference and numerous telephone calls and meetings to conduct reciprocal legal, business, accounting and financial due diligence. A reciprocal confidentiality agreement was entered into on November 12.[29]

On November 26, 1998, Mr. Noto and Mr. Raymond spoke by telephone to discuss reports that had appeared in the media about a possible transaction between Exxon and Mobil. On November 27, prior to the opening of NYSE trading, Exxon and Mobil issued a joint statement confirming that the two companies were in discussions of a possible business combination.[29]

Over the course of the weekend of November 27, 1998, Exxon and Mobil representatives and outside counsel continued discussions towards resolving open issues. On the evening of November 30, Messrs. Raymond and Noto reached agreement in principle, subject to Board approval, on the exchange ratio and the resulting exercise price in the stock option agreement.[29]

Following the approval of their Boards, Exxon and Mobil officially signed an agreement and plan of merger on December 1, 1998. Shareholders of both Exxon and Mobil approved the merger in May 1999. In September 29 of that year the European Commission granted antitrust approval. In November 30, 1999, the historic merger was completed. Mobil became a wholly owned subsidiary of Exxon. The combined company changed its name to Exxon Mobil Corp.[29]

Exxon-Mobil pre-merger events[29][30]

Date Event Description Type
06/16/98 CEOs’ meeting Preliminary discussions about the possibility of the merger Private
08/11/98 BP-Amoco merger Companies announced the terms of their merger agreement Public
08/15/98 Mobil hires Goldman Sachs Mobil asked Goldman Sachs to undertake an analysis of strategic alternatives available to Mobil. Merger with Exxon presented as one of the main options Private
10/19/98 CEOs’ meeting Parties reviewed the possible relative ownership ranges and expanded the discussions to include such issues as the representation of current Mobil directors on the board of the combined company Private
Nov. 1998 Due diligence Exchanged due diligence request lists and representatives. Conducted reciprocal legal, business, accounting and financial due diligence Private
11/26/98 CEOs’ phone discussion CEOs spoke by telephone to discuss reports in the media about a possible transaction between Exxon and Mobil Private
11/27/98 Joint statement Exxon and Mobil issued a joint statement confirming that the two companies were in discussions of a possible merger Public
12/01/98 Official merger agreement Following the approval of their Boards, Exxon and Mobil officially signed an agreement and plan of merger Public
04/19/99 FTC approval of BP-Amoco merger and Shell-Texaco merger FTC granted approvals for two large oil industry mergers BP-Amoco and Shell-Texaco with divestitures and other relief to preserve competition Public
05/27/99 Shareholders’ approval Shareholders of both Exxon and Mobil approved the merger. More than 99 percent of the shares in Exxon were voted in favor of the deal, as were 98.2 percent of Mobil shares Public
09/29/99 EU Commission approval European Commission granted an antitrust approval with requirement of divestitures and breakup of BP Amoco/Mobil joint venture Public
11/30/99 FTC approval and merger completion FTC accepted an antitrust settlement with large retail divestiture. Merger completed. Mobil became a wholly owned subsidiary of Exxon Public

Mobil cumulative abnormal return (11/16/1998 – 12/14/1998)

Exxon cumulative abnormal return (11/16/1998 – 12/14/1998)

The event analysis is very limited because there was no bidding process. The only important public information was merger announcement (December 1, 1998). 10-day cumulative abnormal return (CAR) before this date was +14 percent for Mobil and +0.4 percent for Exxon. The main spike in share prices appeared during November 25 – 30 and negative returns were on the announcement day, i.e. rumors in the media influenced the pricing. Total 20-day CAR (10 days before plus 10 days after the announcement) amounted +19.5 percent for Mobil and +1.07 percent for Exxon.

Market was very positive on Exxon and Mobil on April 19 and 21, 1999 when FTC approved other two big oil mergers – BP-Amoco and Shell-Texaco. 3-day CAR reached 5.3 percent for Exxon and 6.8 percent for Mobil. Market also positively reacted on EU Commission approval: 3-day CAR was +2.2 percent for Mobil and +2.4 percent for Exxon. All these signaled that market positively assessed the merger as economically sound and value creating.

Regulators approval[edit]

On September 29, 1999 EU Commission granted its approval of the merger with requirement of vast divestitures and breakup of the European refining and marketing joint venture of BP Amoco and Mobil. Mobil wanted to maintain its relationship with BP Amoco, but EC officials feared that the recent rash of mega mergers could kill off downstream competition in member countries. Mobil was also ordered to sell its share in a large chain of gasoline stations (Aral).[31]Exxon and Mobil sold part of their lubricant base oil manufacturing capacity.

BP Amoco bought Mobil’s 30 percent interest in their R&M JV for $1.65 billion, about the value of the assets that Mobil contributed when the deal was established. Mobil also got around $1.08 billion for its interest in Aral.[32]

The US FTC announced on November 30, 1999 that it accepted a proposed settlement of charges that Exxon Corp’s acquisition of Mobil Corp would violate federal antitrust laws. The settlement required the largest retail divestiture in Commission history – the sale or assignment of approximately 2,431 Exxon and Mobil gas stations in the Northeast and Mid-Atlantic (1,740), California (360), Texas (319) and Guam (12). In addition, an Exxon refinery in California; terminals; a pipeline and other assets were also subject for sale.[33]

ExxonMobil ratios comparison

Ratios overview[edit]

Exxon and Mobil return on assets, 1983–1999

Exxon had better return on assets (6.75 percent) and return on equity (14.57 percent) ratios (Mobil’s were 3.95 percent and 9.01 percent correspondingly). This situation represented Exxon’s better efficiency at using investment funds (shareholder’s equity) to generate earnings growth. Exxon was more stable and effective in using its assets, while Mobil was more volatile and risky. During 1983–1999 Exxon was superior with the exception of 1989, when tanker Exxon Valdez disaster happened and cut profits of the company.

Companies had equal gross margin (38.7 percent vs. 38.52 percent), but Exxon had higher gross operating margin (7.9 percent) and profit margin (5.4 percent) ratios than Mobil (6.56 percent and 3.18 percent correspondingly) which means that Exxon was better in cost-cutting and controlling its expenses. But in some cases low operating expenses can damage long-term profitability and competitiveness of the company.

Liquidity ratios show that both companies were financially stable, but Exxon was in a better situation than Mobil. The Exxon’scurrent and quick ratios (0.57 and 0.91 correspondingly) were higher than the Mobil’s (0.48 and 0.67 correspondingly) and merged company had significantly improved these results. Ratio of net current assets as a percent of total assets (i.e.working capital to total assets) was distorted after the merger (1.48) probably due to large divestitures that followed the deal.

Solvency status of companies also looked good. Though Exxon again showed its financial supremacy with much higherinterest coverage ratio (93.41 compared to Mobil’s 7.78) Generally speaking the better interest coverage ratio means less risk but also might be bad for future performance because of the failure of the management to use additional funds for development. Debt to equity ratio was safe and stable in both companies.

Combined company showed even superior results after the merger, which proved the correlation between positive market reaction on the announcement event and success of the merger.

Deal structure[edit]

Under the merger agreement, an Exxon subsidiary would merge into Mobil so that Mobil becomes a wholly owned subsidiary of ExxonMobil. As a result, Exxon would hold 100 percent of Mobil’s issued and outstanding voting securities. Holders of Mobil common stock would receive 1.32015 shares of Exxon common stock for each share of Mobil common stock.[29]

ExxonMobil deal structure

5 days before the announcement Exxon shares price was $72 and 2,431 million shares outstanding ($175 billion market value) compared with $75.25 a share and 779.8 million shares outstanding for Mobil ($58.7 billion market value). With the exchange ratio 1.32015, Exxon paid 1,029.4 million of its shares for Mobil or $74.1 billion. This was a $15.4 billion (26.2 percent) premium over Mobil’s market value or $94.9 a share. After the price run-up Exxon shareholders would own approximately 70 percent of the combined ExxonMobil entity, while Mobil shareholders would own approximately 30 percent. The merger qualified as a tax-free reorganization in the US, and that it was accounted for on a “pooling of interests” basis.[29]

In addition, the merger agreement provided for payment of termination fees of $1.5 billion. Exxon and Mobil also entered into an option agreement that granted Exxon the option to purchase up to 136.5 million shares (14.9 percent) of Mobil common stock at a STRIKE PRICE of $95.96. Exxon could exercise the option after the occurrence of an event, entitling Exxon to receive the termination fee payable by Mobil.[29]

The termination fee and option were intended to make it more likely that the merger would be completed on the agreed terms and to discourage proposals for alternative business combinations. Among other effects, the option could prevent an alternative business combination with Mobil from being accounted for as a “pooling of interests”. Although companies introduced protection against hostile takeover, they didn’t use any collar to protect shareholders. J.P. Morgan & Co. andDavis Polk & Wardwell advised Exxon, and Goldman Sachs & Co. and Skadden, Arps, Meagher & Flom advised Mobil.[29]

Valuation[edit]

J.P. Morgan performed traditional P/E analysis. Such analysis indicated that Mobil had been trading at an 8 percent to 15 percent discount to Exxon. J.P. Morgan’s analysis indicated that if Mobil were to be valued at price to earnings multiples comparable to those of Exxon, there would be an enhancement of value to its shareholders of approximately $11 billion.[29]

Goldman Sachs also reviewed and compared ratios and public market multiples relating to Mobil to following six publicly traded companies:[29]

  • British Petroleum Co. PLC,
  • Chevron Corp.,
  • Exxon,
  • Royal Dutch Petroleum Co.,
  • Shell Transport & Trading Co. PLC,
  • Texaco Inc.

P/E multiple for these firms ranged 19.3–23.8. The analysis showed that Mobil was undervalued 5 to 16 percent, relative to comparables with fair price $79–$89 a share. It’s needed to notice that comparables analysis couldn’t capture the synergy effect, value creation and differences. Simple DCF analysis of Mobil as a standalone company gives range of intrinsic value of $59.8–$79.5 billion or $76.7–102 per share depending on cash flow growth rate.[29]

DCF analysis, based on the estimated pre-tax synergies of $2.8 billion expected to result from the merger, suggested a potential value creation in the short term of approximately $22–25 billion. J.P. Morgan’s review suggested that over the long term, the potential for value creation from these elements could be as much as $47–57 billion. So Mobil intrinsic value for this deal was $95–$118.8 a share depending on growth rate.[29]

Summary of ExxonMobil merger valuation

Since Exxon’s market capitalization was significantly larger than Mobil’s, Exxon’s shareholders would have enjoyed a greater proportion of the value creation if no premium were paid by Exxon in the merger. By offering a premium to Mobil’s shareholders, this potential value creation was instead shared in approximately equal proportions between the companies’ shareholders and such sharing was deemed to be a reasonable allocation of value creation. J.P. Morgan’s analysis showed that for transactions involving smaller companies with a relative market capitalization comparable to that of Mobil pre-announcement, a premium of 15 percent to 25 percent matched market precedent. In comparison, BP paid 35 percent premium for Amoco.

10 days before the completion of the merger, Exxon market value was $184.5 billion ($76 a share) and Mobil – $77.1 billion ($98.5 a share). Pro forma market value of merged company was $261.6 billion. Right after the merger was completed, the share price of combined Exxon-Mobil was $80.56 with 3,461.5 million shares outstanding, which gave $278.8 billion market value or $17.2 billion of additional value created. This figure would be even higher if we consider pre-announcement pro forma combined market value of $233.7 billion. In this case created value reaches $45.1 billion.[29]

Synergy[edit]

The motivations for the Exxon-Mobil merger reflected the industry forces. Companies needed a secure presence in the regions with high potential for oil/gas discoveries and stronger position to make large investments. The benefits of the merger fell broadly in two categories: near-term operating synergies and capital productivity improvements.[29]

Near-term operating synergies. $2.8 billion in annual pre-tax benefits from operating synergies (increases in production, sales and efficiency, decreases in unit costs and combining complementary operations). Management expected to realize the full benefits by the third year after the merger. During the first two years, the benefits should have been partly offset by one-time costs at $2 billion for business integration. The firms also planned to eliminate about 9,000 jobs. A year later, pre-tax annual savings were re-assessed and increased to $3.8 billion.[34]

Capital productivity improvements. Management also believed the combined company could use its capital more profitably than either company on its own. These improvements were realized due to efficiencies of scale, cost savings, and sharing of best management practices. The businesses and assets of Exxon and Mobil were highly complementary in key areas. In the exploration and production area, for example, Mobil’s and Exxon’s respective strengths in West Africa, the Caspian region, Russia, South America, and North America lined up well, with minimal overlap. The firms also had a presence in natural gas, with combined sales of about 14 bcfd. And Mobil contributed its LNG assets and experience to the venture.[29]

There were technology synergies as well. In upstream, Exxon and Mobil owned proprietary technologies in the areas of: deepwater and arctic operations, heavy oil, gas-to-liquids processing, LNG, and high-strength steel. In downstream, their proprietary technology focused on refining and chemical catalysts. Exxon’s lube base stocks production fitted well with Mobil’s leadership in lubes marketing.[29] Generally, the Exxon-Mobil deal was a move by the dominant partner to increase its asset base by 30 percent while raising capital productivity.

Corporate affairs

The current Chairman of the Board and CEO of Exxon Mobil Corp. is Rex W. Tillerson. Tillerson assumed the top position on January 1, 2006, on the retirement of long-time chairman and CEO, Lee Raymond.

Board of directors[edit]

As of June 24, 2014, the current ExxonMobil board members are:[35]

Joint ventures and other strategic alliances[edit]

  • Infineum is a joint venture between ExxonMobil and Royal Dutch Shell for manufacturing and marketing lubricant and fuel additives.
  • ExxonMobil Yūgen Kaisha holds a 50.02 percent stake in TonenGeneral Sekiyu K.K., but in January 2012 TonenGeneral Sekiyu KK agreed to acquire 99 percent of ExxonMobil Yūgen Kaisha for 302 billion yen ($3.9 billion). It is the biggest divesture for Exxon since the 1999 deal with Mobil Corp. and Exxon stake in TonenGeneral decline to 22 percent from 50 percent, but the Japanese refiner will retain exclusive rights to use its brands.[37][38]

Production

ExxonMobil is the largest non-government owned company in the energy industry and produces about 3 percent of the world’s oil and about 2 percent of the world’s energy.[citation needed]

ExxonMobil, like other oil companies, is struggling to find new sources of oil. According to Wall Street Journal it replaces only 95 percent by volume of the oil it pumps. This stands in contrast to natural gas, where it replaces 158 percent by volume through purchases or finds.[39]

ExxonMobil is a signatory participant of the Voluntary Principles on Security and Human Rights.

Revenue and profits

In 2005, ExxonMobil surpassed Wal-Mart as the world’s largest publicly held corporation when measured by revenue, although Wal-Mart remained the largest by number of employees.[40] ExxonMobil’s $340 billion revenues in 2005 were a 25.5 percent increase over their 2004 revenues.

In 2006, Wal-Mart recaptured the lead with revenues of $348.7 billion against ExxonMobil’s $335.1. ExxonMobil continued to lead the world in both profits ($39.5 billion in 2006) and market value ($460.43 billion).[41]

In 2007, ExxonMobil had a record net income of $40.61 billion on $404.552 billion of revenue, an increase largely due to escalating oil prices as their actual BOE production decreased by 1 percent, in part due to expropriation of their Venezuelan assets by the Chávez government.[42]

As of July 1, 2010, ExxonMobil occupied eight out of 10 slots for Largest Corporate Quarterly Earnings of All Time. Furthermore, it occupies 5 out of 10 slots onLargest Corporate Annual Earnings.[43][44]

Financial data

Financial Data in USD millions[45]
Year-end 2005 2006 2007 2008 2009 2010
Total revenue 358 955 365 467 390 328 459 579 301 586 383 221
Net income 36 130 39 500 40 610 45 220 19 280 30 460
Total assets 208 335 219 015 242 082 228 052 233 323
Total debt 7 991 8 347 9 566 9 425 9 605

Environmental record

ExxonMobil has been a contributor to environmental causes (the company donated $6.6 million to environmental and social groups in 2007, amounting to approximately 0.016% of net income for that year).[46] Its environmental record has been a target of critics from outside organizations such as the environmental lobby group Greenpeace as well as some institutional investors who disagree with its stance on global warming.[47] The Political Economy Research Institute ranks ExxonMobil sixth among corporations emitting airborne pollutants in the United States. The ranking is based on the quantity (15.5 million pounds in 2005) and toxicity of the emissions.[48] In 2005, ExxonMobil had committed less than 1 percent of their profits towards researching alternative energy,[49] less than other leading oil companies.[50]

Exxon Valdez oil spill[edit]

The March 24, 1989, Exxon Valdez oil spill resulted in the discharge of approximately 11 million US gallons (42,000 m3) of oil into Prince William Sound,[51] oiling 1,300 miles (2,100 km) of the remote Alaskan coastline. The Valdez spill is 36th worst oil spill in history in terms of sheer volume.

The State of Alaska’s Exxon Valdez Oil Spill Trustee Council stated that the spill “is widely considered the number one spill worldwide in terms of damage to the environment”.[51] Carcasses were found of over 35,000 birds and 1,000 sea otters. Because carcasses typically sink to the seafloor, it’s estimated the death toll may be 250,000 seabirds, 2,800 sea otters, 300 harbor seals, 250 bald eagles, and up to 22 killer whales. Billions of salmon and herring eggs were also killed.[52]

Oil remains on or under more than half the sound’s beaches, according to a 2001 federal survey. The government-created Exxon Valdez Oil Spill Trustee Council concluded that the oil disappears at less than 4 percent per year, adding that the oil will “take decades and possibly centuries to disappear entirely”. Of the 27 species monitored by the Council, 17 have not recovered. While the salmon population has rebounded, and the killer whales are recovering, the herring population and fishing industry have not.[53][54][55]

Exxon was widely criticized for its slow response to cleaning up the disaster. John Devens, the Mayor of Valdez, has said his community felt betrayed by Exxon’s inadequate response to the crisis.[56] Exxon later removed the name “Exxon” from its tanker shipping subsidiary, which it renamed “SeaRiver Maritime.” The renamed subsidiary, though wholly Exxon-controlled, has a separate corporate charter and board of directors, and the former Exxon Valdez is now the SeaRiver Mediterranean. The renamed tanker is legally owned by a small, stand-alone company, which would have minimal ability to pay out on claims in the event of a further accident.[57]

After a trial, a jury ordered Exxon to pay $5 billion in punitive damages, though an appeals court reduced that amount by half. Exxon appealed further, and on June 25, 2008, the United States Supreme Court lowered the amount to $500 million.[58]

In 2009, Exxon still uses more single-hull tankers than the rest of the largest ten oil companies combined, including the Valdez’s sister ship, the SeaRiver Long Beach.[59]

Exxon’s Brooklyn oil spill[edit]

Main article: Greenpoint oil spill

New York Attorney General Andrew Cuomo announced on July 17, 2007 that he had filed suit against the Exxon Mobil Corp. and ExxonMobil Refining and Supply Co. to force cleanup of the oil spill at Greenpoint, Brooklyn, and to restore Newtown Creek.[60]

A study of the spill released by the US Environmental Protection Agency in September 2007 reported[61] that the spill consists of 17 to 30 million US gallons (64,000 to 114,000 m3) of petroleum products from the mid-19th century to the mid-20th century.[62] The largest portion of these operations were by ExxonMobil or its predecessors. By comparison, the Exxon Valdez oil spill was approximately 11 million US gallons (42,000 m3).[51] The study reported that in the early 20th centuryStandard Oil of New York operated a major refinery in the area where the spill is located. The refinery produced fuel oils, gasoline, kerosene and solvents. Napthaand gas oil, secondary products, were also stored in the refinery area. Standard Oil of New York later became Mobil, a predecessor to Exxon/Mobil.[63]

Baton Rouge Refinery Benzene Leak[edit]

On June 14, 2012, a bleeder plug on a tank in the Baton Rouge Refinery failed and began leaking naphtha, a substance that is composed of many chemicals including benzene.[64] ExxonMobil originally reported to the Louisiana Department of Environmental Quality(LDEQ) that 1,364 pounds of material had been leaked.

On June 18, Baton Rouge refinery representatives told the LDEQ that ExxonMobil’s chemical team determined that the June 14 spill was actually a level 2 incident classification which means that a significant response to the leak was required.[65] On the day of the spill the refinery did not report that their estimate of spilled materials was significantly different from what was originally reported to the department. Because the spill estimate and the actual amount of chemicals spilled varied drastically, the LDEQ launched an in-depth investigation on June 16 to determine the actual amounts of chemicals spilled as well as to find out what information the refinery knew and when they knew it.[66] On June 20, ExxonMobil sent an official notification to the LDEQ saying that the leak had actually released 28,688 pounds of benzene, 10,882 pounds of toluene, 1,100 pounds of cyclohexane, 1,564 pounds of hexane and 12,605 pounds of additional volatile organic compound.[65][66] After the spill, people living in neighboring communities reported adverse health impacts such as severe headaches and respiratory difficulties.[67][67]

ExxonMobil refinery in Baton Rouge

Baton Rouge Refinery pipeline oil spill[edit]

In April 2012, a crude oil pipeline, from the Exxon Corp Baton Rouge Refinery, burst and spilled at least 1,900 barrels of oil (80,000 gallons) in the rivers of Point Coupee Parish, Louisiana, shutting down the Exxon Corp Baton Refinery for a few days. Regulators opened an investigation in response to the pipeline oil spill. Local Louisiana residents were not informed until days after the Exxon pipeline oil spill.[68]

Yellowstone River oil spill[edit]

Map of the Yellowstone River watershed

The July 2011 Yellowstone River oil spill was an oil spill from an ExxonMobil pipeline running from Silver Tip to Billings, Montana, which ruptured about 10 miles west of Billings on July 1, 2011, at about 11:30 pm[69] The resulting spill leaked an estimated 750 to 1,000 barrels of oil into the Yellowstone River for about 30 minutes before it was shut down.[70]

As a precaution against a possible explosion, officials in Laurel, Montana evacuated about 140 people on Saturday (July 2) just after midnight, then allowed them to return at 4 am[69]

A spokesman for ExxonMobil said that the oil is within 10 miles of the spill site. However, Montana Governor Brian Schweitzerdisputed the accuracy of that figure.[71] The governor pledged that “The parties responsible will restore the Yellowstone River.”[70]

Mayflower oil spill[edit]

On March 29, 2013, an ExxonMobil pipeline carrying Canadian Wabasca Heavy crude ruptured in Mayflower, Arkansas, releasing at least 12,000 barrels of oil and forcing the evacuation of 22 homes.[72] The Environmental Protection Agency has classified the leak as a major spill.[73] Local officials performing disaster relief requested that the FAA impose a no-fly zone, with relief efforts headed by an aviation advisor for ExxonMobil being exempt. After it was imposed it was amended to allow aerial news crews to fly over the area.[74]

Sakhalin-I in the Russian Far East[edit]

Main article: Sakhalin-I

Scientists and environmental groups voice concern that the Sakhalin-I oil and gas project in the Russian Far East, operated by an ExxonMobil subsidiary, Exxon Neftegas Limited (ENL),[75] threatens the critically endangered western gray whale population.[76][77][78] In February, 2009, independent scientists, convened by the International Union for the Conservation of Nature issued an urgent call for a “…moratorium on all industrial activities, both maritime and terrestrial, that have the potential to disturb gray whales in summer and autumn on and near their main feeding areas” following a sharp decline in observed whales in the main feeding area in 2008, adjacent to ENL’s project area.[79] The scientists also criticized ENL’s unwillingness to cooperate with the scientific panel process, which “certainly impedes the cause of western gray whale conservation.”[80]

Funding of global warming skepticism[edit]

ExxonMobil has been accused of paying to fuel skepticism about and denial of anthropogenic global warming (i.e. the rise in the average temperature of Earth’s atmosphere and oceans since the late 19th century and its projected continuation due to the greenhouse effect, caused primarily by increased levels of carbon dioxide released in the burning of coal and petroleum-based fuels).[81][82]

ExxonMobil has drawn criticism from scientists, science organizations and the environmental lobby for funding organizations critical of the Kyoto Protocol and seeking to undermine public opinion about the scientific conclusion that global warming is caused by the burning of fossil fuels. According to Mother Jones Magazine, the company channeled at least $8,678,450 between the years 2000-2003[83] to forty different organizations that have employed disinformation campaigns including “skeptic propaganda masquerading as journalism” to influence opinion of the public and of political leaders about global warming[84] and that the company was a member of one of the first such groups, the Global Climate Coalition, founded in 1989.[84] According to The Guardian, ExxonMobil has funded, among other groups, the Competitive Enterprise Institute, George C. Marshall Institute, Heartland Institute, Congress on Racial Equality, TechCentralStation.com, and International Policy Network.[85][86] ExxonMobil’s support for these organizations has drawn criticism from the Royal Society, the academy of sciences of the United Kingdom.[87] The Union of Concerned Scientists released a report in 2007 accusing ExxonMobil of spending $16 million, between 1998 and 2005, towards 43 advocacy organizations which dispute the impact of global warming.[88] The report argued that ExxonMobil used disinformation tactics similar to those used by thetobacco industry in its denials of the link between lung cancer and smoking, saying that the company used “many of the same organizations and personnel to cloud the scientific understanding of climate change and delay action on the issue.”[88] These charges are consistent with a purported 1998 internal ExxonMobil strategy memo, posted by the environmental group Environmental Defense, stating

Victory will be achieved when

  • Average citizens [and the media] ‘understand’ (recognize) uncertainties in climate science; recognition of uncertainties becomes part of the ‘conventional wisdom’ …[citation needed]
  • Industry senior leadership understands uncertainties in climate science, making them stronger ambassadors to those who shape climate policy[citation needed]
  • Those promoting the Kyoto treaty on the basis of extant science appear out of touch with reality.[89]

ExxonMobil has been reported as having plans to invest up to US$100m over a ten-year period in Stanford University‘s Global Climate and Energy Project.[90]

A survey carried out by the UK’s Royal Society found that in 2005 ExxonMobil distributed $2.9m to 39 groups that the society said “misrepresented the science of climate change by outright denial of the evidence”.[91]

In August 2006, the Wall Street Journal revealed that a YouTube video lampooning Al Gore, titled Al Gore’s Penguin Army, appeared to be astroturfing by DCI Group, a Washington PR firm with ties to ExxonMobil.[92][93]

In January 2007, the company appeared to change its position, when vice president for public affairs Kenneth Cohen said “we know enough now—or, society knows enough now—that the risk is serious and action should be taken.” Cohen stated that, as of 2006, ExxonMobil had ceased funding of the Competitive Enterprise Institute and “‘five or six’ similar groups”.[94] While the company did not publicly state which the other similar groups were, a May 2007 report by Greenpeace does list the five groups “at the heart of the climate change denial industry” it stopped funding as well as a list of 41 similar groups which are still receiving ExxonMobil funds.[95]

On February 13, 2007, ExxonMobil CEO Rex W. Tillerson acknowledged that the planet was warming while carbon dioxide levels were increasing, but in the same speech gave an unqualified defense of the oil industry and predicted that hydrocarbons would dominate the world’s transportation as energy demand grows by an expected 40 percent by 2030. Tillerson stated that there is no significant alternative to oil in coming decades, and that ExxonMobil would continue to make petroleum and natural gas its primary products,[96] saying: “I’m no expert on biofuels. I don’t know much about farming and I don’t know much about moonshine. … There is really nothing ExxonMobil can bring to that whole biofuels issue. We don’t see a direct role for ourselves with today’s technology.”[97] However, recently ExxonMobil has announced that it will plan on spending up to 600 million dollars within the next 10 years to fund biofuels that come from algae. On July 14, 2010 ExxonMobil announced that, a year after teaming with Synthetic Genomics, Inc., they had opened a greenhouse to research algae as a possible biofuel.[98]

On July 1, 2009, The Guardian newspaper revealed that ExxonMobil has continued to fund organizations including the National Center for Policy Analysis (NCPA) along with the Heritage Foundation, despite a public pledge to cut support of lobby groups who deny climate change.[99]

In April 2014, ExxonMobil released a report publicly acknowledging climate change risk for the first time. ExxonMobil predicts that a rising global population, increasing living standards and increasing energy access will result in lower greenhouse gas emissions.[100]

Criticism

Environment[edit]

The Exxon Valdez oil spill in Prince William Sound, Alaska, on March 24, 1989, was a watershed moment for environmental critics of the oil industry.

Foreign business practices[edit]

Investigative reporting by Forbes Magazine raised questions about ExxonMobil’s dealings with the leaders of oil-rich nations. ExxonMobil controls concessions covering 11 million acres (45,000 km2) off the coast of Angola that hold an estimated 7.5 billion barrels (1.19×109 m3) of crude.[101]

In 2003, the Office of Foreign Assets Control reported that ExxonMobil engaged in illegal trade with Sudan and it, along with dozens of other companies, settled with the United States government for $50,000.[102]

In March 2003, James Giffen of the Mercator Corp. was indicted, accused of bribing President Nursultan Nazarbayev of Kazakhstan with $78 million to help ExxonMobil win a 25 percent share of the Tengiz oilfield, the third largest in the world. On April 2, 2003, former-Mobil executive J. Bryan Williams was indicted on tax charges relating to this same transaction. The case is the largest under the Foreign Corrupt Practices Act.[103] This series of events is depicted in the film Syriana.

In a U.S. Department of Justice release dated September 18, 2003, the United States Attorney for the Southern District of New York announced that J. Bryan Williams, a former senior executive of Mobil Oil Corp., had been sentenced to three years and ten months in prison on charges of evading income taxes on more than $7 million in unreported income, “including a $2 million kickback he received in connection with Mobil’s oil business in Kazakhstan.” According to documents filed with the court, Williams’ unreported income included millions of dollars in kickbacks from governments, persons, and other entities with whom Williams conducted business while employed by Mobil. In addition to his sentence, Williams must pay a fine of $25,000 and more than $3.5 million in restitution to the IRS, in addition to penalties and interest.[104]

Human rights[edit]

ExxonMobil is the target of human rights activists for actions taken by the corporation in the Indonesian territory of Aceh. In June 2001, a lawsuit against ExxonMobil was filed in the Federal District Court of the District of Columbia under the Alien Tort Claims Act. The suit alleges that the ExxonMobil knowingly assisted human rights violations, including torture, murder and rape, by employing and providing material support to Indonesian military forces, who committed the alleged offenses during civil unrest in Aceh. Human rights complaints involving Exxon’s (Exxon and Mobil had not yet merged) relationship with the Indonesian military first arose in 1992; the company denies these accusations and filed a motion to dismiss the suit, which was denied in 2008 by a federal judge,[105] but then dismissed in August 2009 by a different federal judge.[106] The dismissal is currently under appeal.

LGBT[edit]

When Exxon Corp. merged with Mobil Corp. in 1999, the newly merged company ended enrollment in Mobil Corp.’s domestic partner benefits for same-sex partners of employees, and it rescinded formal prohibitions against discrimination based on sexual orientation by removing it from the company’s Equal Employment Opportunity policy.[107] The Human Rights Campaign, an LGBT lobbying group and political action committee, gave ExxonMobil a score of “-25”, the first and only negative score, in its Corporate Equality Index, a scorecard that rated 1000 companies on several criteria including diversity training that covers gender identity issues, transgender-inclusive medical coverage including surgical procedures, and “positively engaging the external LGBT community.”[108] On May 26, 2010, ExxonMobil shareholders voted down LGBT benefits for its employees – only 22 percent of shareholders voted yes for the issue.[109]

Investigative book: Private Empire: ExxonMobil and American Power[edit]

A July 2012 review of Steve Coll‘s book, Private Empire: ExxonMobil and American Power, in The Daily Telegraph says that he thinks that ExxonMobil has “grown into one of the planet’s most hated corporations, able to determine American foreign policy and the fate of entire nations”.[15] In terms of its environmental record, ExxonMobil increasingly drills in terrains leased to them by dictatorships, such as those in Chad and Equatorial Guinea.[15] Steve Coll describes Lee Raymond, the corporation’s chief executive until 2005, as “notoriously skeptical about climate change and disliked government interference at any level”.[15]

Headquarters

ExxonMobil’s headquarters are located in Irving, Texas.[110] As of January 2010, the company is conducting an internal study regarding possible consolidation of facilities to the northern Houston suburb of Spring, at the intersection of Interstate 45 and the Hardy Toll Road. Architectural documents obtained by the Houston Chronicle outline an elaborate corporate campus, including twenty office buildings totaling 3,000,000 square feet (280,000 m2), a wellness center, laboratory, and multiple parking garages.[111] Alan Jeffers, a spokesperson for the company, did not say whether the consolidation study includes the Irving headquarters, but definitely includes the Fairfax headquarters. Chris Wallace, the chief executive of the Greater Irving-Las Colinas Chamber of Commerce, said that he believed that it does include the headquarters.[112] In October 2010, the company stated that it would not move its headquarters to Greater Houston.[113]

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Royal Dutch Shell

From Wikipedia, the free encyclopedia
Royal Dutch Shell plc
Type Public limited company
Traded as LSERDSA, RDSB
EuronextRDSA, RDSB
NYSERDS.A, RDS.B
Industry Oil and gas
Founded 1907
Headquarters The Hague, Netherlands
(Headquarters)
Shell Centre,
London, United Kingdom
(Registered office)
Area served Worldwide
Key people Ben van Beurden (CEO)
Jorma Ollila (Chairman)
Products Petroleum, natural gas, and other petrochemicals
Revenue Decrease US$ 451.235 billion (2013)[1]
Operating income Decrease US$ 26.870 billion (2013)[1]
Profit Decrease US$ 16.371 billion (2013)[1]
Total assets Decrease US$ 357.512 billion (2013)[1]
Total equity Decrease US$ 180.047 billion (2013)[1]
Employees 92,000 (2014)[1]
Subsidiaries
Website Shell.com

Royal Dutch Shell plc (LSERDSA, RDSB), commonly known as Shell, is an AngloDutch multinational oil andgas company headquartered in the Netherlands and incorporated in the United Kingdom.[2] Created by the merger of Royal Dutch Petroleum and UK-based Shell Transport & Trading, it is the second largest company in the world, in terms of revenue,[1] and one of the six oil and gas “supermajors“.

Shell is also one of the world’s most valuable companies.[3] As of January, 2013 the largest shareholder is Capital Research Global Investors with 9.85% ahead of BlackRock in second with 6.89%.[4] Shell topped the 2013 Fortune Global 500 list of the world’s largest companies.[5] Royal Dutch Shell revenue was equal to 84% of the Netherlands’s $555.8 billion GDP at the time.[6]

Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration andproduction, refining, distribution and marketing, petrochemicals, power generation and trading. It has minor renewable energy activities in the form of biofuels[7] and wind.[8] It has operations in over 90 countries, produces around 3.1 million barrels of oil equivalent per day and has 44,000 service stations worldwide.[9] Shell Oil Company, its subsidiary in the United States, is one of its largest businesses.[10]

Shell has a primary listing on the London Stock Exchange and is a constituent of the FTSE 100 Index. As of 6 July 2012, it was the largest company on the FTSE, with a market capitalisation of £140.9 billion.[11] It has secondary listings on Euronext Amsterdam and the New York Stock Exchange.

History

Origins

Royal Dutch Petroleum dock in theDutch East Indies (now Indonesia)

The Royal Dutch Shell Group was created in February 1907 through the amalgamation of two rival companies: Royal Dutch Petroleum Company and the “Shell” Transport and Trading Company Ltd of the United Kingdom. It was a move largely driven by the need to compete globally with Standard Oil.[12] Royal Dutch Petroleum Company was a Dutch company founded in 1890 to develop an oilfield in Sumatra.[13] For various reasons, the new firm operated as a dual-listed company, whereby the merging companies maintained their legal existence, but operated as a single-unit partnership for business purposes. The terms of the merger gave 60 percent ownership of the new group to the Dutch arm and 40 percent to the British.[14]

The “Shell” Transport and Trading Company (the quotation marks were part of the legal name) was a British company, founded in 1897 by Marcus Samuel, 1st Viscount Bearsted, and his brother Samuel Samuel.[15] Their father had owned an antique company in Houndsditch, London,[16] which expanded in 1833 to import and sell sea-shells, after which the company “Shell” took its name.[13][17]

National patriotic sensibilities would not permit a full-scale merger or takeover of either of the two companies.[14] The Dutch company, Koninklijke Nederlandsche Petroleum Maatschappij, was in charge at The Hague of production and manufacture.[18] A British company was formed, called the Anglo-Saxon Petroleum Company, based in London, to direct the transport and storage of the products.[18]

20th century

During the First World War, Shell was the main supplier of fuel to the British Expeditionary Force.[19] It was also the sole supplier of aviation fuel and supplied 80 percent of the British Army’s TNT.[19] It also volunteered all of its shipping to the British Admiralty.[19]

The German invasion of Romania in 1916 saw 17 percent of the group’s worldwide production destroyed.[19]

In 1919, Shell took control of the Mexican Eagle Petroleum Company and in 1921 formed Shell-Mex Limited which marketed products under the “Shell” and “Eagle” brands in the United Kingdom. In 1929, Shell Chemicals was founded.[19] By the end of the 1920s, Shell was the world’s leading oil company, producing 11 percent of the world’s crude oil supply and owning 10 percent of its tanker tonnage.[19]

Shell Mex House was completed in 1931, and was the head office for Shell’s marketing activity worldwide.[19] In 1932, partly in response to the difficult economic conditions of the times, Shell-Mex merged its UK marketing operations with those of British Petroleum to create Shell-Mex and BP,[20] a company that traded until the brands separated in 1975. Royal Dutch Company ranked 79th among United States corporations in the value of World War II military production contracts.[21]

The 1930s saw Shell’s Mexican assets seized by the local government.[19] After the invasion of the Netherlands by Germany in 1940, the head office of the Dutch companies was moved to Curacao.[19]

Around 1952, Shell was the first company to purchase and use a computer in the Netherlands.[22] The computer, a Ferranti Mark 1*, was assembled and used at the Shell laboratory in Amsterdam. In 1970 Shell acquired the mining company Billiton, which it subsequently sold in 1994 and now forms part of BHP Billiton.[23]

21st century[edit]

In November 2004, following a period of turmoil caused by the revelation that Shell had been overstating its oil reserves, it was announced that the Shell Group would move to a single capital structure, creating a new parent company to be named Royal Dutch Shell plc, with its primary listing on the London Stock Exchange, a secondary listing on the Amsterdam Stock Exchange, its headquarters and tax residency in The Hague, Netherlands and its registered office in London. The unification was completed on 20 July 2005 and the original owners delisted their companies from the respective exchanges. On 20 July 2005, the Shell Transport & Trading Company plc was delisted from the LSE,[24] where as, Royal Dutch Petroleum Company from NYSE on 18 November 2005.[25] The shares of the company were issued at a 60/40 advantage for the shareholders of Royal Dutch in line with the original ownership of the Shell Group.[26]

During the 2009 Iraqi oil services contracts tender, a consortium led by Shell (45%) and which included Petronas (30%) was awarded a production contract for the “Majnoon field” in the south of Iraq, which contains an estimated 12.6 billion barrels (2.00×109 m3) of oil.[27][28] The “West Qurna 1 field” production contract was awarded to a consortium led by ExxonMobil (60%) and included Shell (15%).[29]

In February 2010 Shell and Cosan formed a 50:50 joint-venture, Raízen, comprising all of Cosan’s Brazilian ethanol, energy generation, fuel distribution and sugar activities, and all of Shell’s Brazilian retail fuel and aviation distribution businesses.[30] In March 2010, Shell announced the sale of some of its assets, including its liquid petroleum gas (LPG) business, to meet the cost of a planned $28bn capital spending programme. Shell invited buyers to submit indicative bids, due by 22 March, with a plan to raise $2–3bn from the sale.[31] In June 2010, Royal Dutch Shell agreed to acquire all the business of East Resources for a cash consideration of $4.7 billion. The transaction included East Resources’ tight gas fields.[32]

Over the course of 2013, the corporation began the sale of its US shale gas assets and cancelled a US$20 billion gas project that was to be constructed in the US state of Louisiana. A new CEO Ben van Beurden was appointed in January 2014, prior to the announcement that the corporation’s overall performance in 2013 was 38 per cent lower than 2012—the value of Shell’s shares fell by 3 per cent as a result.[33] Following the sale of the majority of its Australian assets in February 2014, the corporation plans to sell a further US$15 billion worth of assets in the period leading up to 2015, with deals announced in Australia, Brazil and Italy.[34]

Corporate affairs

Management

On 4 August 2005, the board of directors announced the appointment of Jorma Ollila, chairman and CEO of Nokia at the time, to succeed Aad Jacobs as the company’s non-executive chairman on 1 June 2006. Ollila is the first Shell chairman to be neither Dutch nor British. Other non-executive directors include Maarten van den Bergh, Wim Kok, Nina Henderson, Lord Kerr, Adelbert van Roxe, and Christine Morin-Postel.

Currently Ben van Beurden is CEO of Shell. On 10 July 2013, Shell announced the appointment of van Beurden, the previous director of its refining and marketing operations, as the corporation’s new CEO, a transition that became effective on 3 January 2014.[33]

His Predecessor was Peter Voser who became CEO of Shell on 1 July 2009.[35] Voser, who is Swiss, was the first non-Dutch, non-British CEO of the company.

Following a career at the corporation, in locations such as Australia and Africa, Ann Pickard was appointed as the executive vice president of the Arctic at Royal Dutch Shell, a role that was publicized in an interview with McKinsey & Company in June 2014.[36]

The name Shell is linked to The “Shell” Transport and Trading Company.[37] In 1833, the founder’s father, Marcus Samuel, founded an import business to sellseashells to London collectors. When collecting seashell specimens in the Caspian Sea area in 1892, the younger Samuel realised there was potential in exportinglamp oil from the region and commissioned the world’s first purpose-built oil tanker, the Murex (Latin for a type of snail shell), to enter this market; by 1907 the company had a fleet. Although for several decades the company had a refinery at Shell Haven on the Thames, there is no evidence of this having provided the name.

The Shell logo is one of the most familiar commercial symbols in the world. This logo is known as the “pecten” after the sea shell Pecten maximus (the giantscallop), on which its design is based. The yellow and red colours used are thought[38] to relate to the colours of the flag of Spain, as Shell built early service stations in California, previously a Spanish colony. The current revision of the logo was designed by Raymond Loewy in 1971.[39]

The slash was removed from the name “Royal Dutch/Shell” in 2005, concurrent with moves to merge the two legally separate companies (Royal Dutch and Shell) to the single legal entity which exists today.[40]

Logo evolution

Shell Formula One sponsorship[edit]

A Shell-sponsored Ferrari F60Formula One motor racing car

Shell has been involved with Formula One for many years, particularly with Scuderia Ferrari who the company have worked with for over fifty years. Shell was also the title sponsor for the Belgian Grand Prix in the 2013 season.

Operations

Business groupings

Upstream activities currently generate around two-thirds of Shell’s revenues

Shell is currently organised into four major business groupings:

  • Upstream International – manages the Upstream business outside the Americas. It searches for and recovers crude oil and natural gas, liquefies and transports gas, and operates the upstream and midstream infrastructure necessary to deliver oil and gas to the market. Its activities are organised primarily within geographic units, although there are some activities that are managed across the business or provided through support units.
  • Upstream Americas – manages the Upstream business in North and South America. It searches for and recovers crude oil and natural gas, transports gas and operates the upstream and midstream infrastructure necessary to deliver oil and gas to market. Upstream Americas also extracts bitumen from oil sands that is converted into synthetic crude oil. It comprises operations organised into business-wide managed activities and supporting activities.
  • Downstream – manages Shell’s manufacturing, distribution and marketing activities for oil products and chemicals. Manufacturing and supply includes refinery, supply and shipping of crude oil.
  • Projects & technology – manages the delivery of Shell’s major projects and drives the research and innovation to create technology solutions. It provides technical services and technology capability covering both Upstream and Downstream activities. It is also responsible for providing functional leadership across Shell in the areas of health, safety and environment, and contracting and procurement.

Oil and gas activities[edit]

Former Shell oil depot inKowloon, Hong Kong

Shell’s primary business is the management of a vertically integrated oil company. The development of technical and commercial expertise in all stages of this vertical integration, from the initial search for oil (exploration) through its harvesting (production), transportation, refining and finally trading and marketing established the core competencies on which the company was founded. Similar competencies were required for natural gas, which has become one of the most important businesses in which Shell is involved, and which contributes a significant proportion of the company’s profits. While the vertically integrated business model provided significant economies of scale and barriers to entry, each business now seeks to be a self-supporting unit without subsidies from other parts of the company.

Traditionally, Shell was a heavily decentralised business worldwide (especially in the downstream) with companies in over 100 countries, each of which operated with a high degree of independence. The upstream tended to be far more centralised with much of the technical and financial direction coming from the central offices in The Hague. Nevertheless, there were very large “exploration and production” companies in a few major oil and gas production centres such as the United Kingdom (Shell Expro, a Joint Venture with Exxon), Nigeria, Brunei, and Oman.

Downstream operations, which now also includes the chemicals business, generates a third of Shell’s profits worldwide and is known for its global network of more than 40,000 petrol stations and its 47 oil refineries. The downstream business, which in some countries also included oil refining, generally included a retail petrol station network, lubricants manufacture and marketing, industrial fuel and lubricants sales and a host of other product/market sectors such as LPG and bitumen. The practice in Shell was that these businesses were essentially local and that they were best managed by local “operating companies” – often with middle and senior management reinforced by expatriates. In the 1990s, this paradigm began to change, and the independence of operating companies around the world was gradually reduced. Today, virtually all of Shell’s operations in various businesses are much more directly managed from London and The Hague. The autonomy of “operating companies” has been largely removed, as more “global businesses” have been created.

Africa

Shell began drilling for oil in Africa during the 1950s. Shell began production in Nigeria in 1958.[41] Shell operates in the upstream oil sector in Algeria, Cameroon, Egypt, Gabon where is the giant Rabi-Kounga oil field, Ghana, Libya, Morocco, Nigeria, South Africa and Tunisia; and in the downstream sector in 16 other countries.[42]

In Nigeria, Shell told US diplomats that it had placed staff in all the main ministries of the government.[43]

In April 2010, Shell announced its intention to divest from downstream business of all African countries except South Africa and Egypt to Vitol and “Helios”.[44] In several countries such as Tunisia, protests and strikes broke out. Shell denied rumours of the sellout.[45] Shell continues however upstream activities/extracting crude oil in the oil-rich Niger Delta as well as downstream/commercial activities in South Africa. In June 2013, the company announced a strategic review of its operations in Nigeria, hinting that assets could be divested. In August 2014, the company disclosed it was in the process of finalizing the sale of its interests in four Nigerian oil fields.[46]

Asia

Malaysia

Shell first entered Malaysia, Miri in 1910[47] in an oil well drilling project.

Malaysia’s first oil well was discovered by Shell on Canada Hill in Miri, Sarawak in 1910. Shell’s Miri No. 1 was spudded on 10 August that year, and began producing 83 barrels per day in December. Today, the oil well, fondly known as the Grand Old Lady, is a state monument.

After the discovery of oil in Miri, Shell built Malaysia’s first oil refinery in 1914. In the same year, Shell laid a submarine pipeline in Miri, a breakthrough in the technology of transporting crude to tankers at that time.

In Malaysia, 2012, Shell refining capacity is 109,000 b/d. In the Port Dickson refinery, Shell invested MYR 800 million to upgrade the diesel processing plant.

In 2012, Shell have 900 retail outlets and planning to open 30 more in the future.

Philippines[edit]

Shell oil depot (Poro Point, San Fernando, La Union).

Royal Dutch Shell operates in the Philippines under its subsidiary, Pilipinas Shell Petroleum Corporation. Its headquarters is in Makati City and it has facilities in the Pandacan oil depot and other key locations.[48]

On January 2010, the Bureau of Customs claimed 7.34 billion pesos worth of unpaid excise taxes against Pilipinas Shell for importing Catalytic cracked gasoline (CCG) and light catalytic cracked gasoline (LCCG) stating that those imports are bound for tariff charges.[49]

Pilipinas Shell denied the claim stating that those imports are raw materials for making their products. The company later emphasised that they are considering closing their local oil refinery if the case continues. Pilipinas Shell informed the public that they will exhaust all necessary steps to meet the demand for fuel.

Singapore[edit]

Shell has a strong presence in Singapore, indeed Singapore is the main centre for Shell’s petrochemical operations in Asia Pacific region. Shell Eastern Petroleum limited (SEPL) have their refinery located in Singapore’s Pulau Bukom island. They also operate as Shell Chemicals Seraya in Jurong Island.

Europe[edit]

Ireland[edit]

Shell first started trading in Ireland in 1902.[50] Shell E&P Ireland (SEPIL) (previously Enterprise Energy Ireland) is an Irish exploration and production subsidiary of Royal Dutch Shell. Its headquarters are on Leeson Street in Dublin. It was acquired in May 2002.[51] Its main project is the Corrib gas project, a large gas field off the northwest coast, for which Shell has encountered controversy and protests in relation to the onshore pipeline and licence terms.

In 2005 Shell disposed of its entire retail and commercial fuels business in Ireland to Topaz Energy Group. This included depots, company-owned petrol stations and supply agreements stations throughout the island of Ireland.[52] The retail outlets were re-branded as Topaz in 2008/9.[53]

Nordic countries[edit]

On 27 August 2007, Royal Dutch Shell and Reitan Group, the owner of the 7-Eleven brand in Scandinavia, announced an agreement to re-brand some 269 service stations across Norway, Sweden, Finland and Denmark, subject to obtaining regulatory approvals under the different competition laws in each country.[54] On April 2010 Shell announced that the corporation is in process of trying to find a potential buyer for all of its operations in Finland and is doing similar market research concerning Swedish operations.[55][56] On October 2010 Shell’s gas stations and the heavy vehicle fuel supply networks in Finland and Sweden, along with a refinery located in Gothenburg, Sweden were sold to St1, a Finnish energy company, more precisely to its major shareholding parent company Keele Oy.[57] Shell branded gas stations will be rebranded within maximum of five years from the acquisition and the number of gas stations is likely to be reduced. Until then the stations will operate under Shell brand licence.

United Kingdom[edit]

Shell has interests in more than 50 fields, 30 offshore installations, 30 subsea installations, 2 Floating production storage and offloading vessels, 3 onshore gas plants and a marine terminal based In the UK sector of the North Sea. The company’s ventures there account for 12% of the country’s oil and gas supply. Shell has 6,500 employees in the UK, however in August 2014 it announced it was laying off 250 of them, mainly in Aberdeen.[58]

North America[edit]

Main articles: Shell Oil Company and Shell Canada

Through most of Shell’s history, its business in the United States, Shell Oil Company was substantially independent with its stock (“Shell Oil”) being traded on the NYSE and with little direct involvement from the group’s central offices in the running of the American business. Such practice also changed in the 1990s when Shell first bought out the shares in Shell Oil that it did not own and then took a more hands-on approach. In Canada, also previously very independent, Shell has completed its purchase of the shares in Shell Canada that it did not own, to apply the new global business model.

Oceania[edit]

Australia[edit]

Shell petrol station in Wagga Wagga, New South Wales

Main article: Shell Australia

In Australia, Wesfarmers-owned retailer Coles Group purchased the rights to 584 Shell Australia-owned service stations, which formed the seven Shell Multi Site Franchisees (MSFs), in 2003 for A$100 million (approximately US$93.1 million)—the financial terms of the property lease and other components of the deal were not disclosed. Described at the time by Ian McKenzie, General Manager External Affairs of Shell Oceania, as an “alliance,” the arrangement meant that Shell retained ownership of the network and leased the sites to Coles under a long-term property lease. Shell’s rival Woolworths Limitedsubsequently announced a partnership with Caltex in August 2003, adding 160 sites to its discount fuel business.[59]

As part of the deal with the Coles Group, the service stations were co-branded Coles Express and Shell, with the former managing the convenience stores, while Shell assumed responsibility of the fuel infrastructure. Service station staff became Coles Express employees and the Coles Group sets pump prices, while Shell supplies all fuel products.[59]

On May 20, 2011, Royal Dutch Shell’s final investment decision for the world’s first floating liquefied natural gas (FLNG) facility was finalized following the discovery of the remote offshore Prelude field—located off Australia’s northwestern coast and estimated to contain about 3 trillion cubic feet of natural gas equivalent reserves—in 2007. FLNG technology is based on liquefied natural gas (LNG) developments that were pioneered in the mid-20th century and facilitates the exploitation of untapped natural gas reserves located in remote areas, often too small to extract any other way.[60][61]

The floating vessel to be used for the Prelude field, also known as “Prelude,” is promoted as the longest floating structure in the world and will take in the equivalent of 110,000 barrels of oil per day in natural gas—at a location 200 km (125 miles) off the coast of Western Australia—and cool it into liquefied natural gas for transport and sale in Asia. The Prelude is scheduled to start producing LNG in 2016—analysts estimated the total cost of construction at more than US$12 billion.[60][61][62]

Following the decision by the Royal Dutch Shell fuel corporation to close its Geelong, Australia refinery in April 2013, a third consecutive annual loss was recorded for Shell’s Australian refining and fuel marketing assets. Revealed in June 2013, the writedown is worth A$203 million, and was preceded by a A$638m writedown in 2012 and a A$407m writedown in 2011, after the closure of the Clyde refinery in Sydney, Australia.[63]

In February 2014, Shell sold its Australian refinery and petrol stations for US$2.6 billion (A$2.9 billion) to Vitol, a Geneva-based company.[64] Vitol stated that the Geelong refinery will remain open, as the company plans to expand further into the Australian market. At the time of the sale, Royal Dutch Shell was expected to continue investment into the Australian market, with projects that involve Chevron Corp., Woodside Petroleum and Prelude.[34]

Shell sold 9.5% of its 23.1% stake in Woodside Petroleum in June 2014 and advised that it had reached an agreement for Woodside to buy back 9.5% of its shares at a later stage. Shell became a major shareholder in Woodside after a 2001 takeover attempt was blocked by then federal Treasurer Peter Costello and the corporation has been open about its intention to sell its stake in Woodside as part of its target to shed assets. At a general body meeting, held on August 1, 2014, 72 percent of shareholders voted to approve the buy-back, short of the 75 percent vote that was required for approval. A statement from Shell read: “Royal Dutch Shell acknowledges the outcome of Woodside Petroleum Limited’s shareholders’ negative vote on the selective buy-back proposal. Shell is reviewing its options in relation to its remaining 13.6 percent holding.”[65]

New Zealand[edit]

Shell has had a long-time presence in New Zealand, and partly owns the Maui and Kapuni natural gas fields. In 2011 it completed the sale of its petrol retail division to Infratil and the New Zealand Superannuation Fund, which rebranded the stations as Z Energy. Shell still operates in New Zealand via gas and condensate exploration and infrastructure.

Other activities[edit]

Over the years Shell has occasionally sought to diversify away from its core oil, gas and chemicals businesses. These diversifications have included nuclear power(a short-lived and costly joint venture with Gulf Oil in the USA); coal (Shell Coal was for a time a significant player in mining and marketing); metals (Shell acquired the Dutch metals-mining company Billiton in 1970) and electricity generation (a joint venture with Bechtel called Intergen). None of these ventures was seen as successful and all have now been divested.[citation needed]

In the early 2000s Shell moved into alternative energy and there is now an embryonic “Renewables” business that has made investments in solar power, wind power, hydrogen, and forestry. The forestry business went the way of nuclear, coal, metals and electricity generation, and was disposed of in 2003. In 2006 Shell paid SolarWorld to take over its entire solar business[66] and in 2008, the company withdrew from the London Array which has become the world’s largest offshore wind farm.[67]

Shell also is involved in large-scale hydrogen projects. HydrogenForecast.com describes Shell’s approach thus far as consisting of “baby steps”, but with an underlying message of “extreme optimism”.[68]

Shell holds 50% of Raízen, a joint venture with Brazilian sugarcane producer Cosan which is the third-largest Brazil-based energy company by revenues and a major producer of ethanol.[69]

Current projects[edit]

Arctic[edit]

Following the purchase of an offshore lease in 2005, Shell initiated its US$4.5 billion Arctic drilling program in 2006, after the corporation purchased the “Kulluk” oil rig and leased the Noble Discoverer drillship.[70][71] At inception, the project was led by Pete Slaiby, a Shell executive who had previously worked in the North Sea.[72]However, after the purchase of a second offshore lease in 2008, Shell only commenced drilling work in 2012, due to the refurbishment of rigs, permit delays from the relevant authorities and lawsuits.[73][74][75] The plans to drill in the Arctic led to protests from environmental groups, particularly Greenpeace; furthermore, analysts in the energy field, as well as related industries, also expressed skepticism due to perceptions that drilling in the region is “too dangerous because of harsh conditions and remote locations”.[75][76]

Further problems hampered the Arctic project after the commencement of drilling in 2012, as Shell dealt with a series of issues that involved air permits, Coast Guard certification of a marine vessel and severe damage to essential oil-spill equipment. Additionally, difficult weather conditions resulted in the delay of drilling during mid-2012 and the already dire situation was exacerbated by the “Kulluk” incident at the end of the year. Royal Dutch Shell had invested nearly US$5 billion by this stage of the project.[72][75]

As the Kulluk oil rig was being towed to the American state of Washington to be serviced in preparation for the 2013 drilling season, a winter storm on December 27, 2012 caused the towing crews, as well as the rescue service, to lose control of the situation. As of January 1, 2013, the Kulluk was grounded off the coast Sitkalidak Island, near the eastern end of Kodiak Island. Following the accident, a Fortune magazine contacted Larry McKinney, the executive director at the Harte Research Institute for Gulf of Mexico Studies at Texas A&M, and he explained that ““A two-month delay in the Arctic is not a two-month delay … A two-month delay could wipe out the entire drilling season.”[72]

It was unclear if Shell would recommence drilling in mid-2013, following the “Kulluk” incident and, in February 2013, the corporation stated that it would “pause” its closely watched drilling project off the Alaskan coast in 2013, and will instead prepare for future exploration.[77] In January 2014, the corporation announced the extension of the suspension of its drilling program in the Arctic, with chief executive van Beurden explaining that the project is “under review” due to both market and internal issues.[78]

A June 2014 interview with Pickard indicated that, following a forensic analysis of the problems encountered in 2012, Royal Dutch Shell will continue with the project and Pickard stated that she perceives the future of the corporation activity in the Arctic region as a long-term “marathon”.[36] Pickard stated that the forensic “look back” revealed “there was an on/off switch” and further explained:

In other words, don’t spend the money unless you’re sure you’re going to have the legal environment to go forward. Don’t spend the money unless you’re sure you’re going to have the permit. No, I can’t tell you that I’m going to have that permit until June, but we need to plan like we’re going to have that permit in June. And so probably the biggest lesson is to make sure we could smooth out the on/off switches wherever we could and take control of our own destiny.[36]

Based upon the interview with Pickard, Shell is approaching the project as an investment that will reap energy resources with a lifespan of around 30 years.[36]

Controversies[edit]

Former Shell Research and Technology Centre,Amsterdam

Shell has been criticised for its businesses in Africa, notably in relation to protests of the Ogoni in 1995.[79]

In the 1990s, protesters criticised the company’s environmental record, particularly the possible pollution caused by the proposed disposal of the Brent Spar platform into the North Sea. Despite support from the UK government, Shell reversed the decision under public pressure but maintained that sinking the platform would have been environmentally better.[80] Shell subsequently published an unequivocal commitment to sustainable development, supported by executive speeches reinforcing this commitment.[81]

2004 overstatement of oil reserves[edit]

In 2004 Shell overstated its oil reserves, resulting in loss of confidence in the group, a £17 million fine by the Financial Services Authority and the departure of the chairman Philip Watts. A lawsuit resulted in the payment of $450 million to non-American shareholders in 2007.[82][83][84]

Corporate communications[edit]

Shell Centre building in London, UK

Shell’s advertising regarding its renewable energy business has been described as a greenwash by some environmental lobbies,[85]though its renewable energy activities have been praised by other commentators.[86]

In August 2008, the British Advertising Standards Authority (ASA) ruled that Shell had misled the public in an advertisement when it claimed that a $10 billion oil sands project in Alberta, Canada was a “sustainable energy source”.[87]

Environmental pollution[edit]

The presence of companies like Shell in the Niger-Delta has led to extreme environmental issues in the Niger Delta. Many pipelines in the Niger-Delta owned by Shell are old and corroded. This has resulted in many oil spills in this area that have degraded the environment, killing off vegetation and fish. Shell has acknowledged its responsibility for keeping the pipelines new but has also denied responsibility for environmental causes.[88] This has led to mass protests from the Niger-Delta inhabitants and Amnesty International against Shell and Friends of the Earth Netherlands. It has also led to action plans to boycott Shell by environmental groups, and human rights groups.[89]

In January 2013, a Dutch court rejected four out of five allegations brought against the firm over oil pollution in the Niger Delta but found a subsidiary guilty of one case of pollution, ordering compensation to be paid to a Nigerian farmer.[90]

On 15 January 1999, off the Argentinian town of Magdalena, Buenos Aires, the Shell tanker Estrella Pampeana collided with a German freighter, emptying its contents into the lake, polluting the environment, drinkable water, plants and animals. Over a decade after the spill, a referendum held in Magdalena determined the acceptance of a US$9.5 million compensatory payout from Shell.[91] Shell denied responsibility for the spill, but an Argentine court ruled in 2002 that the corporation was responsible.[92]

In 2013, Royal Dutch Shell PLC reported CO2 emissions of 81 million metric tonnes. [93]

Health and safety[edit]

A number of incidents over the years led to criticism of Shell’s health and safety record, including repeated warnings by the UK Health and Safety Executive about the poor state of the company’s North Sea platforms.[94]

Human rights[edit]

Vigil at the Shell Centre, London, on the 17th Anniversary of Ken Saro-Wiwa and the Ogoni 9.

In the beginning of 1996, several human rights groups brought cases to hold Shell accountable for alleged human rights violations in Nigeria, including summary execution, crimes against humanity, torture, inhumane treatment and arbitrary arrest and detention. In particular, Shell stood accused of ­collaborating in the execution of Ken Saro-Wiwa and eight other leaders of the Ogoni tribe of southern Nigeria, who were hanged in 1995 by Nigeria’s then military rulers.[95] The lawsuits were brought against Royal Dutch Shell and Brian Anderson, the head of its Nigerian operation.[96] In 2009, Shell agreed to pay $15.5m in a legal settlement.[95] Shell has not accepted any liability over the allegations against it.[97]

In 2009, Shell was the subject of an Amnesty International report into the deterioration of human rights as a consequence of Shell’s activities in the Niger Delta. In particular, Amnesty criticised the continuation of gas flaring and Shell’s slow response to oil spills.[98]

In 2010, a leaked cable revealed that Shell claims to have inserted staff into all the main ministries of the Nigerian government and know “everything that was being done in those ministries”, according to Shell’s top executive in Nigeria. The same executive also boasted that the Nigerian government had forgotten about the extent of Shell’s infiltration.[43] Documents released in 2009 (but not used in the court case) reveal that Shell regularly made payments to the Nigerian military in order to prevent protests.[99]

Royal Dutch shell license blocks in Nigeria

Arctic project[edit]

In 2010 Greenpeace activists painted “No Arctic Drilling” with spilled BP oil on the side of a ship in the Gulf that was en route to explore for Arctic oil for Shell. At the protest, Phil Radford of Greenpeace called for “President Obama [to] ban all offshore oil drilling and call for an end to the use of oil in our cars by 2030.”[76]

On 16 March 2012, 52 Greenpeace activists from five different countries boarded Fennica and Nordica, multipurposeicebreakers chartered to support Shell’s drilling rigs near Alaska.[100] Around the same time period, a reporter for Fortunemagazine spoke with Edward Itta, an Inupiat Eskimo leader and the former mayor of the North Slope Borough, who expressed that he was conflicted about Shell’s plans in the Arctic, as he was very concerned that an oil spill could destroy the Inupiat Eskimo’s hunting-and-fishing culture, but his borough also received major tax revenue from oil and gas production; additionally, further revenue from energy activity was considered crucial to the future of the living standard in Itta’s community. In terms of safety, Itta identified the Arctic National Wildlife Refuge (ANWR), a precious area for a large number of environmentalists, as a preferred option, explaining: “You can clean up oil so much easier onshore … The risks are not even comparable.”[72]

In July 2012, Greenpeace activists shut down 53 Shell petrol stations in Edinburgh and London in a protest against the company’s plans to drill for oil in the Arctic. Greenpeace’s “Save the Arctic” campaign aims to prevent oil drilling and industrial fishing in the Arctic by declaring the uninhabited area around the North Pole a global sanctuary.[101]

Concerns increased after the Kulluk oil rig ran aground near Kodiak Island in December 2012.[102] An anonymous energy analyst, who worked for a money manager with strong ties to Shell, stated after the accident:

I didn’t expect to see so many things go wrong in their first year, but it shows you how hard it is to do what they want to do. In this business, the name of the game is “time to first cash flow,” and if you can’t get first cash flow for at least 10 years, then it’s going to be awfully hard to earn a decent return on the project.[72]

In response, Shell filed lawsuits to seek injunctions from possible protests, and Benjamin Jealous of the NAACP and Radford argued that the legal action was “trampling American’s rights.”[103] According to Greenpeace, Shell lodged a request with Google to ban video footage of a Greenpeace protest action that occurred at the Shell-sponsored Formula One (F1) Belgian Grand Prix on August 25, 2013, in which “SaveTheArctic.org” banners appear at the winners’ podium ceremony. In the video, the banners rise up automatically—activists controlled their appearance with the use of four radio car antennas—revealing the website URL, alongside an image that consists of half of a polar bear’s head and half of the Shell logo. As of April 5, 2014, the video is available on the “greenpeaceupdate” YouTube channel and has received just over 300,000 views.[104][105]

The company notes that “no one has yet fully determined how to clean up an oil spill in pack ice or broken ice”.[106] Royal Dutch Shell then announced a “pause” in the timeline of the project in early 2013[77] and, in January 2014, the corporation announced the extension of the suspension of its drilling program in the Arctic. A June 2014 interview with the corporation’s new executive vice president of the Arctic indicated that Royal Dutch Shell will continue with its activity in the region.[36][78]

Chevron Corporation

From Wikipedia, the free encyclopedia
For similarly named companies, see Chevron.
Chevron Corporation
Type Public
Traded as NYSECVX
Dow Jones Industrial Average Component
S&P 500 Component
Industry Oil and gas
Predecessors Standard Oil of California
Gulf Oil[1]
Founded 1879 as Pacific Coast Oil Company
1984 as Chevron Corporation
Headquarters San Ramon, California, U.S.
Area served Worldwide
Key people John S. Watson (Chairman & CEO)
Products Petroleum, natural gas and otherpetrochemicals, See Chevron products
Revenue Decrease US$ 220.264 billion (2013)[2]
Operating income Decrease US$ 28.486 billion (2013)[2]
Net income Decrease US$ 21.423 billion (2013)[2]
Total assets Increase US$ 253.753 billion (2013)[2]
Total equity Increase US$ 149.113 billion (2013)[2]
Employees 64,600 (Dec 2013)[2]
Website Chevron.com

Chart of the major energycompanies dubbed “Big Oil” sorted by latest published revenue

Chevron Corporation (NYSECVX) is an American multinational energy corporation. One of the successor companies of Standard Oil, it is headquartered in San Ramon, California, and active in more than 180 countries. Chevron is engaged in every aspect of the oil, gas, and geothermal energy industries, including exploration andproduction; refining, marketing and transport; chemicals manufacturing and sales; and power generation. Chevron is one of the world’s largest oil companies; as of 2013, it ranked third in the Fortune Global 500-2014 list of the world’s largest companies.[3]

Chevron’s downstream operations manufacture and sell products such as fuels, lubricants, additives and petrochemicals. The company’s most significant areas of operations are the west coast of North America, the U.S. Gulf Coast, Southeast Asia, South Korea, Australia and South Africa. In 2010, Chevron sold an average 3.1 million barrels per day (490×103 m3/d) of refined products like gasoline, diesel and jet fuel.

Chevron’s alternative energy operations include geothermal, solar, wind, biofuel, fuel cells, and hydrogen. In 2011–2013, the company plans to spend at least $2 billion on research and acquisition of renewable power ventures. Chevron has claimed to be the world’s largest producer of geothermal energy. In October 2011, Chevron launched a 29-MW thermal solar-to-steam facility in the Coalinga Field to produce the steam forenhanced oil recovery. The project is the largest of its kind in the world.

History

Predecessors

A Chevron stations branded as “Standard” in Las Vegas, Nevada

One of Chevron’s early predecessors, Star Oil, discovered oil at the Pico Canyonnorth of Los Angeles in 1876. The 25 barrels of oil per day well marked the discovery of the Newhall field, and is considered by geophysicist Marius Vassiliou, as the beginning of the modern oil industry in California.[4] Energy analyst Antonia Juhaszhas said that while Star Oil’s founders were influential in establishing an oil industry in California, Union Matolle Company discovered oil in the state eleven years prior.[5] In September 1879, Charles N. Felton, Lloyd Tevis, George Loomis and others created the Pacific Coast Oil Company, which acquired the assets of Star Oil[4] with $1 million in funding.[6] Pacific Coast Oil became the largest oil interest in California,[6] by time it was acquired by Standard Oil for $761,000 in 1900.[4]Pacific Coast operated independently and retained its name until 1906, when it was merged with a Standard Oil subsidiary and it became Standard Oil Company (California) or California Standard.[7][8]

Another predecessor, Texas Fuel Company, was founded in Beaumont, Texas in 1901 by “Buckskin Joe” as an oil equipment vendor. The founder’s nickname came from being harsh and aggressive.[5] Texas Fuel worked closely with Chevron. In 1936 it formed a joint venture called Caltex with Chevron to drill and produce oil in Saudi Arabia.[9] According to energy analyst and activist shareholder[10][11][12] Antonia Juhasz, The Texas Fuel Company and Chevron were often referred to as the “terrible twins” for their cutthroat business practices.[13] The Texas Fuel Company was renamed as the Texas Company and later Texaco.[8][13]

Formation of the Chevron name[edit]

In 1911, Standard Oil Co. (California) was severed from its parent corporation, Standard Oil, as a result of the federal government’s successful lawsuit against Standard Oil under the Sherman Antitrust Act. It went on to become part of the “Seven Sisters“, which dominated the world oil industry in the early 20th century.[14]In 1926, the company changed its name to Standard Oil Co. of California (SOCAL). By the terms of the breakup of Standard Oil, Standard of California could use the Standard name only within its original geographic area of the Pacific coast states, plus Nevada and Arizona; outside that area, it had to use another name. The Chevron name came into use for some of its retail products in the 1930s. The name Calso was also used from 1946 to 1955 in states outside its native West Coast territory.[15][16][17][better source needed]

Standard Oil Company of California ranked 75th among United States corporations in the value of World War II military production contracts.[18]

In 1933, Saudi Arabia granted SoCal a concession to find oil, which led to the discovery of oil in 1938. In 1948, SoCal discovered the world’s largest oil field (Ghawar) in Saudi Arabia.[19] SoCal’s subsidiary, California-Arabian Standard Oil Company, grew over the years and became the Arabian American Oil Company (ARAMCO) in 1944. In 1973, the Saudi government began buying into ARAMCO. By 1980, the company was entirely owned by the Saudis, and in 1988, its name was changed to Saudi Arabian Oil Company (Saudi Aramco).[citation needed]

Standard Oil of California and Gulf Oil merged in 1984, which was the largest merger in history at that time. To comply with U.S. antitrust law, SoCal divested many of Gulf’s operating subsidiaries, and sold some Gulf stations and a refinery in the eastern United States. (The refinery is currently owned by Sunoco.) Among the assets sold off were Gulf’s retail outlets in Gulf’s home market of Pittsburgh, where Chevron lacks a retail presence but does retain a regional headquarters there as of 2013, partially for Marcellus Shale-related drilling.[20] The same year, SoCal also took the opportunity to change its legal name to Chevron Corporation, since it had already been using the well-known “Chevron” retail brand name for decades. Chevron would sell the Gulf Oil trademarks for the entire U.S. to Cumberland Farms, the parent company of Gulf Oil LP, in 2010 after Cumberland Farms had a license to the Gulf trademark in the Northeastern United States since 1986.[21]

In 1996 Chevron transferred its natural gas gathering, operating and marketing operation to NGC Corporation (later Dynegy) in exchange for a roughly 25% equity stake in NGC.[22] In a merger completed February 1, 2000, Illinova Corp. became a wholly owned subsidiary of Dynegy Inc. and Chevron’s stake increased up to 28%.[23] However, in May 2007 Chevron sold its stake in the company for approximately $985 million, resulting in a gain of $680 million.[24][25]

Merger with Texaco and post-merger[edit]

On October 15, 2000, Chevron announced acquisition of Texaco in a deal valued at $45 billion, creating the second-largest oil company in the United States and the world’s fourth-largest publicly traded oil company with a combined market value of approximately $95 billion.[26][27][28][29] The merged company was namedChevronTexaco. On May 9, 2005, ChevronTexaco announced it would drop the Texaco moniker and return to the Chevron name. Texaco remained as a brand under the Chevron Corporation.[30]

On October 10, 2001, Texaco purchased General Motors‘ share in GM Ovonics, which in 2003, was restructured into Cobasys, a 50/50 joint venture between Chevron and Energy Conversion Devices Ovonics. In 2009, both Chevron and Energy Conservation Devices sold their stakes in Cobasys to SB LiMotive Co.[citation needed]

The typical Chevron gas station design that was used until 2006.

In 2005, Chevron purchased Unocal Corporation for $18.4 billion, increasing the company’s petroleum and natural gas reserves by about 15%.[31][32][33][34] Because of Unocal’s large South East Asian geothermal operations, Chevron became a large producer of geothermal energy.[35]

Chevron and the Los Alamos National Laboratory started a cooperation in 2006 to improve the recovery of hydrocarbons from oil shale by developing a shale oil extraction process named Chevron CRUSH.[36] In 2006, the United States Department of the Interior issued a research, development and demonstration lease for Chevron’s demonstration oil shale project on public lands in Colorado’s Piceance Basin.[37] In February 2012, Chevron notified the Bureau of Land Management and the Department of Reclamation, Mining and Safety that it intends to divest this lease.[38]

In July 2011, Chevron ended retail operations in the Mid-Atlantic United States, removing the Chevron and Texaco names from 1,100 stations.[39] In 2011, Chevron acquired Pennsylvania based Atlas Energy Inc. for $3.2 billion in cash and an additional $1.1 billion in existing debt owed by Atlas.[40][41][42] Three months later, Chevron acquired drilling and development rights for another 228,000 acres in the Marcellus Shale from Chief Oil & Gas LLC and Tug Hill, Inc.[43]

In September 2013, Total S.A and its joint venture partner agreed to buy Chevron’s retail distribution business in Pakistan for an undisclosed amount.[44]

In October 2014, Chevron announced that it would sell a 30 percent holding in its Canadian oil shale holdings to Kuwait’s state-owned oil company Kuwait Oil Company for a fee of $1.5 billion.[45]

Operations[edit]

Chevron employs approximately 62,000 people (of which approximately 31,000 are employed in U.S. operations).

Upstream[edit]

Chevron’s oil and gas exploration and production operations are primarily in the US, Australia, Nigeria, Angola, Kazakhstan, and the Gulf of Mexico. As of December 31, 2010, the company had 10.545 billion barrels (1.6765 billion cubic metres) of oil-equivalent net proved reserves. Daily production in 2010 was 2.763 million barrels per day (439.3 thousand cubic metres per day).

In the United States, the company operates approximately 11,000 oil and natural gas wells in hundreds of fields occupying 4,000,000 acres (16,000 km2) across thePermian Basin, located in West Texas and southeastern New Mexico. In 2010, Chevron was the fourth largest producer in the region.[46] In February 2011, Chevron celebrated the production of its 5 billionth barrel of Permian Basin oil.[47] The Gulf of Mexico is where the company’s deepest offshore drilling takes place at Tahiti and Blind Faith. It also explores and drills the Marcellus Shale formation under several North Eastern US states.

Chevron’s largest single resource project is the $43 billion Gorgon Gas Project in Australia. It also produces natural gas from West Australia. The $43 billion project was started in 2010 and was expected to be brought online in 2014.[48] The project includes construction of a 15 million tonne per annum liquefied natural gas planton Barrow Island, and a domestic gas plant with the capacity to provide 300 terajoules per day to supply gas to Western Australia.[49] It also develops theWheatstone liquefied natural gas development in Western Australia. The foundation phase of the project is estimated to cost $29 billion; it will consist of two LNG processing trains with a combined capacity of 8.9 million tons per annum, a domestic gas plant and associated offshore infrastructure.[50] In August 2014 a significant gas-condensate discovery at the Lasseter-1 exploration well in WA-274-P in Western Australia, in which Chevron has a 50% interest was announced.[51]

In the onshore and near-offshore regions of the Niger Delta, Chevron operates under a joint venture with the Nigerian National Petroleum Corporation, operating and holding a 40% interest in 13 concessions in the region. In addition, Chevron operates the Escravos Gas Plant and the Escravos gas-to-liquids plant.[52]

Chevron has interests in four concessions in Angola, including offshore two concessions in Cabinda province, the Tombua–Landana development and the Mafumeira Norte project, operated by the company. It is also a leading partner in Angola LNG plant.[53][54]

In Kazakhstan, Chevron participate the Tengiz and Karachaganak projects.[55] In 2010, Chevron became the largest private shareholder in the Caspian Pipeline Consortium pipeline, which transports oil from the Caspian Sea to the Black Sea.[56]

As of 2013, the Rosebank oil and gas field west of Shetland was being evaluated by Chevron and its partners. Chevron drilled its discovery well there in 2004. Production is expected in 2015 if a decision is made to produce from the field. The geology and weather conditions are challenging.[57]

Downstream[edit]

Chevron’s downstream operations manufacture and sell products such as fuels, lubricants, additives and petrochemicals. The company’s most significant areas of operations are the west coast of North America, the U.S. Gulf Coast, Southeast Asia, South Korea, Australia and South Africa. In 2010, Chevron sold in average 3.1 million barrels per day (490×103 m3/d)of refined products like gasoline, diesel and jet fuel.[58] The company operates approximately 19,550 retail sites in 84 countries. The company also has interests in 13 power generating assets in the United States and Asia and has gas stations in Western Canada.[citation needed]Chevron is the owner of the Standard Oil trademark in 16 states in the western and southeastern U.S. To maintain ownership of the mark, the company owns and operates one Standard-branded Chevron station in each state of the area.[59] Additionally, Chevron owns the trademark rights to Texaco and Caltex fuel and lubricant products.[citation needed]

In 2010, Chevron processed 1.9 million barrels per day (300×103 m3/d) of crude oil.[58] It owns and operates five active refineries in the United States, one in Cape Town, South Africa, and one in Burnaby, British Columbia. Chevron is the non-operating partner in seven joint venture refineries, located in Australia,[60] Pakistan,[61]Singapore, Thailand, South Korea, and New Zealand.[62] Chevron’s United States refineries are located in Gulf and Western states. Chevron also owns an asphalt refinery in Perth Amboy, New Jersey; however, since early 2008 that refinery has primarily operated as a terminal.[63]

Chevron’s chemicals business includes 50% ownership in the Chevron Phillips Chemical Company, which manufactures petrochemicals, and the Chevron Oronite Company, which develops, manufactures and sells fuel and lubricant additives.[citation needed]

Chevron Shipping Company, a wholly owned subsidiary, provides the maritime transport operations, marine consulting services and marine risk management services for Chevron Corporation.[citation needed] Chevron ships historically had names beginning with “Chevron”, such as Chevron Washington and Chevron South America, or were named after former or serving directors of the company. Samuel Ginn, William E. Crain, Kenneth Derr, Richard Matzke and most notablyCondoleezza Rice were among those honored, but the ship named after Rice was subsequently renamed as Altair Voyager.[64]

Alternative energy[edit]

Chevron’s 500kW Solarminephotovoltaic solar project in Fellows, California

The Chevron’s alternative energy operations include geothermal, solar, wind, biofuel, fuel cells, and hydrogen. In 2011–2013, the company plans to spend at least $2 billion on research and acquisition of renewable power ventures.[65]

Chevron has claimed to be the world’s largest producer of geothermal energy.[35] The company’s geothermal operations are primarily located in Southeast Asia, where 1,273 MW of power generation facilities are installed.[66][not in citation given][67][not in citation given][68][not in citation given]

Chevron operates geothermal wells in Indonesia providing power to Jakarta and the surrounding area, and plans to potentially open a 200 MW geothermal facility in South Sumatra. In the Philippines, Chevron also operates geothermal wells at Tiwi field in Albay province, the Makiling-Banahaw field in Laguna and Quezon provinces.[69]

In 2007, Chevron and the United States Department of Energy‘s National Renewable Energy Laboratory (NREL) started collaboration to develop and produce algae fuel, which could be converted into transportation fuels, such as jet fuel.[70] In 2008, Chevron and Weyerhaeuser created Catchlight Energy LLC, which researches the conversion of cellulose-based biomass into biofuels.[71] In 2013, the Catchlight plan was downsized due to competition with fossil fuel projects for funds.[72]

Between 2006 and 2011, Chevron contributed up to $12 million to a strategic research alliance with the Georgia Institute of Technology to develop cellulosic biofuels and to create a process to convert biomass like wood or switchgrass into fuels. Additionally, Chevron holds a 22% stake in Galveston Bay Biodiesel LP, which produces up to 110 million US gallons (420,000 m3) of renewable biodiesel fuel a year.[73][74]

In 2010, the Chevron announced a 740 kW photovoltaic demonstration project in Bakersfield, California, called Project Brightfield, for exploring possibilities to usesolar power for powering Chevron’s facilities. It consists of technologies from seven companies, which Chevron is evaluating for large-scale use.[75][76] In Fellows, California, Chevron has invested in the 500 kW Solarmine photovoltaic solar project, which supplies daytime power to the Midway-Sunset Oil Field.[77] In Questa, Chevron has built a 1 MW concentrated photovoltaic plant that comprises 173 solar arrays, which use Fresnel lenses.[78][79] In October 2011, Chevron launched a 29-MW thermal solar-to-steam facility in the Coalinga Field to produce the steam for enhanced oil recovery. The project is the largest of its kind in the world.[80]

Corporate affairs[edit]

Finance[edit]

For the fiscal year 2011, Chevron reported earnings of US$26.9 billion, with an annual revenue of US$257.3 billion, an increase of 23.3% over the previous fiscal cycle. Chevron’s shares traded at over $105 per share, and its market capitalization was valued at over US$240 billion.[81]

Headquarters[edit]

Chevron tower in Houston

Chevron’s corporate headquarters are located in a 92-acre campus in San Ramon, California. The company moved there from its earlier headquarters at 555 Market Street in San Francisco, California, where it was located since its inception in 1879.[82] Chevron also operates from office towers in Houston, Texas, where it leased the 1500 Louisiana Street and 1400 Smith Street from former Texas energy giant Enron. Chevron is also planning a new office tower in downtown Houston next to its existing properties at 1600 Louisiana Street.[83] The building will stand 50-stories and 832 feet. Upon completion, it’ll be the fourth tallest building in Houston and the first 50-story building constructed there in nearly 30 years.

Political contributions[edit]

Since January 2011 Chevron has contributed almost $15 million on Washington lobbying. On October 7, 2012 Chevron donated $2.5 million to the Republican Congressional Leadership Fund super PAC that is closely tied to House SpeakerJohn Boehner.[84]

Board of directors[edit]

Condoleezza Rice is a former member of the board of directors, and also headed Chevron’s committee on public policy until she resigned on January 15, 2001, to become National Security Advisor to President George W. Bush.

On September 30, 2009, John Watson, age 52, was elected Chairman of the Board and CEO, effective at the December 31, 2009 retirement of David J. O’Reilly.

Controversies[edit]

Environmental damage in Ecuador[edit]

Main article: Lago Agrio oil field

Oil pollution in Lago Agrio, November 2007

Texaco and Gulf Oil began operating in the Oriente region of Ecuador in 1964 as a consortium.[85] Texaco operated theLago Agrio oil field from 1972 to 1993 and the Ecuador state oil company continued to operate the same oil fields after Texaco left. In 1993 Texaco was found responsible for dumping billions of gallons of toxic waste and they spent $40m cleaning up the area during the 1990s. In 1998 the Ecuadorean government signed an agreement with Texaco accepting the clean-up as complete and absolving Texaco of any further responsibility. In 1998 an Ecuadorean scientific team took water and soil samples after Texaco left and found petroleum hydrocarbons at unsafe levels in almost half. The clean up was called “a sham” by critics.[86]

In 2003, a class action lawsuit against Chevron was filed in Ecuadorian court for $28 billion by indigenous residents, who accused Texaco of making residents ill and damaging forests and rivers by discharging 18 billion US gallons (68,000,000 m3) of formation water into the Amazon rainforest without any environmental remediation.[87][88][89][90][91][92]Chevron claimed that the 1998 agreements with the Ecuadorian Government exempted the company from any liabilities.[93][93][94][95]

In 2011, Ecuadorian residents were awarded $8.6 billion, based on claims of loss of crops and farm animals as well as increased local cancer rates.[86][96][97] The plaintiffs said this would not be enough to make up for the damage caused by the oil company.[98] The award was later revised to $19 billion on appeals, which was then appealed again to the Ecuadorean National Court of Justice.[99] The action is considered the first time that indigenous people have successfully sued amultinational corporation in the country where the pollution took place.[86][96][98]

Chevron described the lawsuit as an “extortion scheme” and refused to pay the fine.[86]

In November 2013, the international arbitration tribunal issued a partial award in favour of Chevron and its subsidiary, Texaco Petroleum Company. The tribunal has found Chevron is not liable for environmental claims in Ecuador.[100]

In March 2014, a United States district court judge ruled that the Ecuadorian plaintiff’s lead attorney, Steven Donziger, had used “corrupt means,” including “coercion, bribery, money laundering and other misconduct,” to obtain the 2011 court verdict in Ecuador. The judge did not rule on the underlying issue of environmental damages. While the US ruling does not affect the decision of the court in Ecuador, it has blocked efforts to collect damages from Chevron in US courts. Donziger promised to appeal.[101][102]

Pollution in Richmond, California[edit]

Chevron’s activities at its century-old Richmond refinery have been the subject of ongoing controversy. The project generated over 11 million pounds of toxic materials and caused more than 304 accidents.[103] The Richmond refinery paid $540,000 in 1998 for illegally bypassing waste water treatments and failing to notify the public about toxic releases.[104] Overall, Chevron is listed as potentially liable for 95 Superfund sites, with funds set aside by the EPA for clean-up.[105]

Oil spills in Angola[edit]

Chevron’s operations in Africa have also been criticized as environmentally unsound.[106] In 2002, Angola became the first country in Africa ever to levy a fine on a major multinational corporation operating within its borders, when it demanded $2 million in compensation for oil spills allegedly caused by Chevron.[107]

Violation of the Clean Air Act in the USA[edit]

On October 16, 2003, Chevron U.S.A. settled a charge under the Clean Air Act, which reduced harmful air emissions by about 10,000 tons a year.[108] In San Francisco, Chevron was filed by a consent decree to spend almost $275 million to install and utilize innovative technology to reduce nitrogen and sulfur dioxide emissions at its refineries.[109] In 2000, after violating the Clean Air Act at an offline loading terminal in El Segundo, California, Chevron paid, a $6 million penalty as well as $1 million for environmental improvement projects.[110] Chevron also had implemented programs that minimized production of hazardous gases, upgraded leak detection and repair procedure, reduced emissions from sulfur recovery plants, and adopted strategies to ensure the proper handling of harmful benzene wastes at refineries.[108] Chevron also spent about $500,000 to install leakless valves and double-sealed pumps at its El Segundo refinery, which could prevent significant emissions of air contaminants.[110]

Defenders of Chevron’s environmental record point to recent changes in the corporation, particularly its pledge in 2004 to combat global warming.[111]

NiMH battery technology for automobiles[edit]

Chevron was accused to be limiting access to large NiMH batteries through its stake in Cobasys corporation and control of patent licenses in order to remove a competitor to gasoline. This culminated in a lawsuit against Panasonic and Toyota over production of the EV-95 battery used in the RAV4 EV.[112][113] Chevron’s influence over Cobasys extends beyond a strict 50/50 joint venture as it held a 19.99% interest in ECD Ovonics.[114] In her book, Plug-in Hybrids: The Cars that Will Recharge America, published in February 2007, Sherry Boschert argues that large-format NiMH batteries are commercially viable but that Cobasys refuses to sell the batteries or license the technology to small companies or individuals. Boschert argues that Cobasys accepts only very large orders for the batteries. Major automakers showed little interest in placing large orders for large-format NiMH batteries. However, Toyota complained about the difficulty in getting smaller orders of large format NiMH batteries to service the existing 825 RAV-4EVs. Because no other companies were willing to place large orders, Cobasys was not manufacturing or licensing large format NiMH battery technology for automobiles. Boschert concludes that “it’s possible that Cobasys (Chevron) is squelching all access to large NiMH batteries through its control of patent licenses in order to remove a competitor to gasoline. Or it’s possible that Cobasys simply wants the market for itself and is waiting for a major automaker to start producing plug-in hybrids or electric vehicles.”[115] In an interview with The Economist, the ECD Ovonics founder Stan Ovshinsky subscribed to the former view. “I think we at ECD we made a mistake of having a joint venture with an oil company, frankly speaking. And I think it’s not a good idea to go into business with somebody whose strategies would put you out of business, rather than building the business.”[116]

In addition, Chevron maintained the right to seize all of Cobasys’ intellectual property rights if ECD Ovonics does not fulfill its contractual obligations.[117] On September 10, 2007, Chevron filed a legal claim that ECD Ovonics has not fulfilled its obligations. ECD Ovonics disputes this claim.[118]

In October 2007, International Acquisitions Services and Innovative Transportation Systems filed suit against Cobasys and its parents for refusing to fill an order for large-format NiMH batteries to be used in the electric Innovan.[119] In August 2008, Mercedes-Benz U.S. International filed suit against Cobasys, on the ground Cobasys did not tender the batteries it agreed to build for Mercedes-Benz’s planned hybrid SUV.[120]

Niger Delta shootings[edit]

On May 28, 1998, activists staged a demonstration and took several individuals hostage on a company oil platform in the Niger Delta, Nigeria. Nigerian police and soldiers were allegedly flown in with Chevron helicopters.[121] Soldiers shot at the activists and subsequently two activists (Jola Ogungbeje and Aroleka Irowaninu) died from their wounds.[121] In 2007 U.S. District Judge Susan Illston, allowed a lawsuit brought by victims and victims’ families against Chevron to proceed, saying that there may be evidence that Chevron had hired, supervised, and/or provided transportation to Nigerian military forces known for their “general history of committing abuses.”[122] In December 2008, a federal jury cleared Chevron of all charges brought against them in the case. Chevron had claimed that the military intervention was necessary to protect the lives of its workers and considers the jury’s decision vindication for the accusations of wrongdoing.[123]

UN sanctions[edit]

US Embassy Cable BAGHDAD 000791 relates to company negotiations re investment in Iran in contravention of UN sanctions.[124] This document was intended to have been kept secret until 2029.[125]

2012 fire at Richmond, California refinery[edit]

On August 6, 2012, a large fire erupted at a Chevron refinery in Richmond, California.[126][127] Flames were seen issuing from at least two of the refinery’s towers. Contra Costa Health Services responded by notifying residents shelter in place. BART shut down local service.[128] The shelter-in-place order was lifted at 11:15 PM.[127] Initial reports estimated that 11,000 people sought treatment at area hospitals,[129] and later reports placed the number above 15,000 people.[130]

On April 15, 2013, the US Chemical Safety Board released their preliminary report citing Chevron for a chronic failure to replace aging equipment and called for an overhaul of regulatory oversight of the industry to prevent such accidents from happening again.[131][132][133][134] In July 2013, the company pleaded no contest to six charges in connection with the fire, and agreed to pay $2 million in fines and restitution.[135] Around the same time the settlement was announced, the Richmond city council voted to file suit against Chevron. The reasons for the suit included “a continuation of years of neglect, lax oversight and corporate indifference to necessary safety inspection and repairs.”[130]

Oil spill off the coast of Rio de Janeiro[edit]

Further information: Energy in Brazil

On November 8, 2011, Chevron came under fire by Brazilian authorities for its role in the spill of crude oil off of the southeastern coast of Brazil.[136] The Brazilian regulators said 416,400 liters of oil leaked over the course of two weeks from undersea rock near the well in the Frade oil project 370 km off the Brazilian coast.[137]Prosecutors in Brazil are demanding $10.6bn in the subsequent lawsuit. The National Petroleum Agency (ANP) suspended Chevron’s activities in Brazil until it has identified the cause of an oil spill off the coast of Rio de Janeiro.[138]

KS Endeavor explosion[edit]

The KS Endeavor jackup rig exploded on January 16, 2012 while drilling an exploration well for Chevron in the Funiwa field in Nigeria. The explosion resulted in the death of two of the 154 workers on board and a fire that burned for 46 days before the well was sealed on June 18. According to a Reuters news report, workers on the KS Endeavor were ignored by Chevron when they requested evacuation due to concerns of increasing smoke billowing from the drilling borehole. A senior worker said the blowout was triggered by a massive build-up of pressure. A witness said that rig engineers advised Chevron to stop drilling and evacuate staff but Chevron told them to continue with drilling. Expecting an explosion, the rig manager, one of the two that later died, kept the lifeboats at hand and ready for use. A witness reported: “This is the reason so many of us survived because we were all aware that it was going to happen, but just didn’t know when.” In an email response to Reuters, Chevron said it did not receive requests to evacuate the rig and that staff on board had the right to call a halt to work if they believed conditions were unsafe.[139][140]

Destruction of natural forest in Bangladesh[edit]

On June 26, 2008, a fire in Lawachara National Park (a natural forest; a major national park, rare of its kind in the region, and crucial to maintain the biodiversity of Bangladesh’s flora & fauna) had broken out as Chevron Corp. carried out a 3D seismic survey that was to be six-months long. The company had violated the conditions of the government’s environment clearance certificate by not informing the ministry about the cracks that had occurred in nearby residents’ properties due to explosions caused by their activities.[141]

Polish gas exploration[edit]

Chevron has experienced mass protests aimed at the company by local communities in Southern Poland when they started gas exploration in the region. Their complaint is that Chevron didn’t provide all of the documents required for gas exploration in Poland, and that the company has not promised to share a percentage of the revenues with the local landholders. The landholders of the region view Chevron’s presence in the region negatively since they may be forced to sell their properties at a low cost if gas is discovered in the region. As well, potential environmental disasters are a concern for local farmers. Another of the residents’ primary concern is water pollution from the chemicals used in fracking. In response to some of the protests Chevron has sued some of the protesters from Żurawlów for disrupting their operations.[142]

According to gas and oil expert Andrzej Szczesniak, one of the main reasons for the protest is the difference between Polish and American law. In the USA property owners typically receive 15-20% from the income of gas exploration. In Poland, the discovery of gas on private property usually results in a forced sale of the property, with the owner receiving only the prior value of the land and no percentage of the gas revenue. This is the result of outdated, Communist Era laws that are still on the books and which are often exploited by municipal governments if they can get a ‘kick back’ from a larger company.[143][144]

Romanian gas exploration[edit]

In October 2013, Chevron suspended its drilling plans in Pungești, Vaslui County, where villagers had been opposing shale gas exploration due to fears of ground water contamination. Thousands more protested throughout Romania, and in December protests became violent when Chevron announced plans to resume exploration. Following the incident, Chevron said it was again suspending activities in the area.[145][146][147]

Argentina agreement, repression of environmentalists, workers and Native Americans[edit]

After the 2012 decision of the Argentine government to regain control of the biggest oil company of the country, YPF, the search for foreign investors for exploitation of unconventional oil started. Finally in 2013, YPF and Chevron signed an agreement for the Vaca Muerta oil field, the world’s second-largest shale gas deposit . In August 2013, the Congress of Neuquén province voted on the agreement. A massive peaceful protest of between 5,000 [148] and 10,000 [149] workers, students and other Native Americans was severely repressed by the government and finally the bill was approved. Plastic and traditional bullets were fired.[150][151]

Gulf Oil

From Wikipedia, the free encyclopedia
For the marketer of Gulf-branded gasoline in the United States, see Gulf Oil LP.
Gulf Oil Corporation
Former type Public (until 1985)
Industry Petroleum
Fate Merged with Standard Oil of California in 1985,
subsidiary of Cumberland Farms since 1993
Founded 1901
Defunct 1984
Headquarters Gulf Tower,
Pittsburgh
Products Fuels, lubricants, greases, marine Lubricants,
Website Gulf Oil
Gulf Oil Corporate Website
Gulf Oil Canada

Gulf Oil was a major global oil company from the 1900s to the 1980s. The eighth-largest American manufacturing company in 1941 and the ninth-largest in 1979, Gulf Oil was one of the so-called Seven Sisters oil companies. Prior to its merger with Standard Oil of California, Gulf was one of the chief instruments of the legendary Mellon family fortune; both Gulf and Mellon Financial had their headquarters in Pittsburgh, Pennsylvania.

Gulf’s former headquarters, originally referred to as “the Gulf Building” (now the Gulf Tower office condos), is an art-deco skyscraper. The tallest building in Pittsburgh until 1970, when it was eclipsed by the U.S. Steel Tower, it is capped by a step pyramid structure several stories high. Until the late 1970s, the entire top was illuminated, changing color with changes in barometric pressure to provide a weather indicator that could be seen for many miles.

Gulf Oil Corporation (GOC) ceased to exist as an independent company in 1985, when it merged with Standard Oil of California (SOCAL), with both re-branding as Chevron in the USA. Gulf Canada, Gulf’s main Canadian subsidiary, was sold the same year with retail outlets to Ultramar and Petro Canada and what became Gulf Canada Resources toOlympia & York.[1][2]

However, the Gulf brand name and a number of the constituent business divisions of GOC survived. Gulf has experienced a significant revival since 1990, emerging as a flexible network of allied business interests based on partnerships, franchises and agencies.

Gulf, in its present incarnation, is a “new economy” business. It employs very few people directly and its assets are mainly in the form of intellectual property: brands, product specifications and scientific expertise. The rights to the brand in the United States are owned by Gulf Oil Limited Partnership (GOLC), which is a wholly owned subsidiary ofCumberland Farms and operates over 2,100 service stations and several petroleum terminals; it is headquartered inFramingham, Massachusetts. The corporate vehicle at the center of the Gulf network outside the USA, Spain & Portugal is Gulf Oil International, a company owned by the Hinduja Group. The company’s focus is primarily in the provision of downstream products and services to a mass market through joint ventures, strategic alliances, licensing agreements, and distribution arrangements.[3] Gulf Oil International has its head office in the City of Westminster, London.[4]

History

1901 to 1982

Gulf filling station in Jasper, Tennessee. Photo taken in 1939

The business that became Gulf Oil started in 1901 with the discovery of oil at Spindletop near Beaumont, Texas. A group of investors came together to promote the development of a modern refinery at nearby Port Arthur to process the oil. The largest investor was William Larimer Mellon of the Pittsburgh Mellon banking family. Other investors included many of Mellon’s Pennsylvania clients as well as some Texas wildcatters. Mellon Bank and Gulf Oil remained closely associated thereafter. The Gulf Oil Corporation itself was formed in 1907 through the amalgamation of a number of oil businesses, principally the J.M. Guffey Petroleum and Gulf Refining companies of Texas.[5] The name of the company refers to the Gulf of Mexico where Beaumont lies.[6]

Output from Spindletop peaked at around 100,000 barrels per day (16,000 m3/d) just after it was discovered and then started to decline.[7] Later discoveries made 1927 the peak year of Spindletop production,[8] but Spindletop’s early decline forced Gulf to seek alternative sources of supply to sustain its substantial investment in refining capacity. This was achieved by constructing the 400-mile (640-km) Glenn Pool pipeline connecting oilfields in Oklahoma with Gulf’s refinery at Port Arthur. The pipeline opened in September 1907. Gulf later built a network of pipelines and refineries in the eastern and southern United States, requiring heavy capital investment. Thus, Gulf Oil provided Mellon Bank with a secure vehicle for investing in the oil sector.[9]

Early Gulf logo ca. 1920

Gulf promoted the concept of branded product sales by selling gasoline in containers and from pumps marked with a distinctive orange disc logo. A customer buying Gulf-branded gasoline could be assured of its quality and consistent standard.[10] (In the early 20th century, non branded gasoline in the United States was often contaminated or of unreliable quality).

Later Gulf logo ca. 1960

Gulf Oil grew steadily in the inter-war years, with its activities mainly confined to the United States. The company was characterized by its vertically integrated business activities, and was active across the whole spectrum of the oil industry: exploration, production, transport, refining and marketing. It also involved itself in associated industries such as petrochemicals and automobile component manufacturing. It introduced significant commercial and technical innovations, including the first drive-in service station (1913), complimentary road maps, drilling over water at Ferry Lake, and the catalytic cracking refining process (Gulf installed the world’s first commercial catalytic cracking unit at its Port Arthur, Texas, refinery complex in 1951). Gulf also established the model for the integrated, international “oil major,” which refers to one of a group of very large companies that assumed influential and sensitive positions in the countries in which they operated.

In Colombia, Gulf purchased the Barco oil concession in 1926.[11] The government of Colombia revoked the concession the same year, but after much negotiation Gulf won it back in 1931. However, during a period of over-capacity, Gulf was more interested in holding the reserve than developing it.[12] In 1936 Gulf sold Barco to the Texas Corporation, now Texaco.[13]

Gulf had extensive exploration and production operations in the Gulf of Mexico, Canada, and Kuwait. The company played a major role in the early development of oil production in Kuwait, and through the 1950s and ’60s apparently enjoyed a “special relationship” with the Kuwaiti government.[14] This special relationship attracted unfavourable attention since it was associated with “political contributions” (see below) and support for anti-democratic politics, as evidenced by papers taken from the body of a Gulf executive killed in the crash of a TWA aircraft at Cairo in 1950.[15]

In 1934, the Kuwait Oil Company (KOC) was formed as a joint venture by BP and Gulf. Both BP and Gulf held equal shares in the venture.[16] KOC pioneered the exploration for oil in Kuwait during the late 1930s. Oil was discovered at Burgan in 1938 but it was not until 1946 that the first crude oil was shipped. Oil production started from Rawdhatain in 1955 and Minagish in 1959. KOC started gas production in 1964. It was the cheap oil and gas being shipped from Kuwait that formed the economic basis for Gulf’s diverse petroleum sector operations in Europe, the Mediterranean, Africa, and the Indian subcontinent. These last operations were coordinated by Gulf Oil Company, Eastern Hemisphere Ltd (GOCEH) from their offices at 2 Portman Street in London W1.

Gulf expanded on a worldwide basis from the end of the Second World War. The company leveraged its international drilling experience to other areas of the world, and by mid-1943 had established a presence in the oil fields of Venezuela as Mene Grande Oil Company.[17] Much of the company’s retail sales expansion was through the acquisition of privately owned chains of filling stations in various countries, allowing Gulf outlets to sell product (sometimes through ‘matching’ arrangements) from the oil that it was “lifting” in Canada, the Gulf of Mexico, Kuwait, and Venezuela. Some of these acquisitions were to prove less than resilient in the face of economic and political developments from the 1970s on. Gulf invested heavily in product technology and developed many speciality products, particularly for application in the maritime and aviation engineering sectors. It was particularly noted for its range of lubricants and greases.[18]

Gulf Oil reached the peak of its development around 1970. In that year, the company processed 1.3 million barrels (210,000 m3) of crude daily, held assets worth $6.5 billion ($39.47 billion today), employed 58,000 employees worldwide, and was owned by 163,000 shareholders.[19] In addition to its petroleum marketing interests, Gulf was a major producer of petrochemicals, plastics, and agricultural chemicals. Through its subsidiary, Gulf General Atomic Inc., it was also active in the nuclear energy sector.[20] Gulf abandoned its involvement in the nuclear sector after a failed deal to build atomic power plants in Romania in the mid-1970s.

In 1974, the Kuwait National Assembly took a 60 percent stake in the equity of KOC with the remaining 40 percent divided equally between BP and Gulf. The Kuwaitis took over the rest of the equity in 1975, giving them full ownership of KOC. This meant that Gulf (EH) had to start supplying its downstream operations in Europe with crude bought on the world market at commercial prices.[21] The whole GOC(EH) edifice now became highly marginal in an economic sense. Many of the marketing companies that Gulf had established in Europe were never truly viable on a stand-alone basis.

Gulf was at the forefront of various projects in the late 1960s intended to adjust the world oil industry to developments of the time including closure of the Suez Canal after the 1967 war. In particular, Gulf undertook the construction of deep water terminals at Bantry Bay in Ireland and Okinawa in Japan capable of handling Ultra Large Crude Carrier (ULCC) vessels serving the European and Asian markets respectively. In 1968, the Universe Ireland was added to Gulf’s tanker fleet. At 312,000 long tons deadweight (DWT), this was the largest vessel in the world and incapable of berthing at most normal ports.[22]

Gulf also participated in a partnership with other majors, including Texaco, to build the Pembroke Catalytic Cracker refinery at Milford Haven and the associated Mainline Pipelines fuel distribution network. The eventual reopening of the Suez canal and upgrading of the older European oil terminals (Europoort and Marchwood) meant that the financial return from these projects was not all that had been hoped for. The Bantry terminal was devastated by the explosion of a Total tanker, the Betelgeuse, in January 1979 (Whiddy Island Disaster) and it was never fully reopened. The Irish government took over ownership of the terminal in 1986 and held its strategic oil reserve there.[23]

In the 1970s, Gulf participated in the development of new oilfields in the UK North Sea and in Cabinda, although these were high-cost operations that never compensated for the loss of Gulf’s interest in Kuwait. A mercenary army had to be raised to protect the oil installations in Cabinda during the Angolan civil war.[24]The Angolan connection was another “special relationship” that attracted comment. In the late 1970s, Gulf was effectively funding a Soviet bloc regime in Africa while the US government was attempting to overthrow that regime by supporting the UNITA rebels led by Jonas Savimbi.

In 1975, several senior Gulf executives, including Chairman Bob Dorsey, were implicated in the making of illegal “political contributions” and were forced to step down from their positions.[25] This loss of senior personnel at a critical time in Gulf’s fortunes may have had a bearing on the events that followed.[26][27][28][29]

Gulf’s operations worldwide were struggling financially in the recession of the early 1980s, so Gulf’s management devised the “Big Jobber” strategic realignment in 1981 (along with a program of selective divestments) to maintain viability. The Big Jobber strategy recognized that the day of the integrated, multi-national oil major might be over, since it involved concentrating on those parts of the supply chain where Gulf had a competitive advantage.

Marketing and promotions[edit]

In the late 1930s, Gulf’s aviation manager, Maj. Alford J. Williams, had the Grumman Aircraft Engineering Corporation construct two modified biplanes, cleaned-up versions of the Grumman F3F Navy fighter, for promotional use by the company. Wearing Gulf Oil company colors and logos, the Grumman G-22 “Gulfhawk II”, registered NR1050, was delivered in December 1936, and in 1938 Maj. Williams flew it on a tour of Europe. A second scavenger pump and five drain lines were added to the engine installation that allowed the aircraft to be flown inverted for up to thirty minutes. This aircraft is now preserved in the National Air and Space Museum in Washington, D.C. A second airplane, the Grumman G-32 “Gulfhawk III”, registered NC1051, was delivered on 6 May 1938. Impressed by the Army Air Force in November 1942 for use as a VIP transport and designated a UC-103, it crashed in the southern Florida Everglades in early 1943.[30]

Gulf Oil was the primary sponsor for NBC News special events coverage in the 1960s, notably for coverage of the U.S. space program. The company used the connection to its advantage by offering giveaway or promotional items at its stations, including sticker sheets of space mission logos, a paper punch-out lunar module model kit, and a book titled “We Came In Peace,” containing pictures of the Apollo 11 moon landing. Gulf was also a major sponsor of Walt Disney’s Wonderful World of Color, which also aired on NBC. Disney magazines and activity books were often given away with a gas fill-up. Gulf was also noted for its “Tourgide” road maps.

One particularly memorable Gulf advertisement carried by NBC during their coverage of the Apollo missions showed aerial and onboard views of the Universe Ireland with Tommy Makem and the Clancy Brothers singing “Bringin’ Home the Oil” – a tribute to the opening of Gulf’s operations in Bantry Bay.[31]

Gulf Oil sponsored Porsche 917K, 1970

Gulf Oil was most synonymous for its association with auto racing, as it famously sponsored the John Wyer Automotive team in the 1960s and early ’70s. The signature light blue and orange color scheme associated with its Ford GT40 and Porsche 917 is one of the most famous corporate racing colors and has been replicated by other racing teams sponsored by Gulf. Much of its popularity is attributed to the fact that in the 1971 film Le Mans, Steve McQueen‘s character, Michael Delaney, drives for the Gulf team. As a result of McQueen’s increasing popularity following his death and the increasing popularity of the Heuer Monaco which he wore in the film, TAG Heuer released a limited edition of the watch with the Gulf logo and trademark color scheme.[32] In the same era, Gulf Oil also sponsored Team McLaren during the Bruce McLaren days, which used a papaya orange color scheme with Gulf blue for lettering.

From 1963 to 1980, Gulf Oil had a formal agreement with Holiday Inn, the world’s largest lodging chain, for which HOLIDAY INNS in the U.S. and Canada would accept Gulf credit cards for food and lodging. In return, Gulf placed service stations on the premises of many Holiday Inn properties along major U.S. highways to provide one-stop availability for gasoline, auto service, food and lodging. Many older Holiday Inns still have those original Gulf stations on their properties, some in operation and some closed, but few operate today as Gulf stations.

Gulf No-Nox gasoline was promoted with a bucking horse leaving an imprint of two horseshoes. Several promotions centered around the two horseshoes. In 1966 bright orange 3-D plastic self-adhesive horseshoes for your bumper were given away. Another popular giveaway was during the 1968 election season, gold horseshoe lapel pins featuring either a Democratic donkey or a Republican elephant.

Demise[edit]

By 1980, Gulf exhibited many of the characteristics of a giant corporation that had lost its way. It had a huge but poorly performing asset portfolio, associated with a depressed share price. The STOCK MARKET value of Gulf started to drop below the break-up value of its assets. Such a situation was bound to attract the interest of corporate raiders, although a corporation in the top 100 of the Fortune 500 was in the early 1980s thought immune to takeover risk.[citation needed]

Its undoing as an independent company began in 1982 when T. Boone Pickens,[33] an Amarillo, Texas oilman and corporate raider (or greenmailer), and owner ofMesa Petroleum, made an offer for the comparatively larger (but still considered “non-major” oil company) Cities Service Company (more generally known by the name Citgo) from Tulsa, Oklahoma, which was then trading in the low 20s. Pickens first privately offered $45 a share for a friendly takeover and then later made a $50 a share public offer when Cities’ CEO rejected the friendly offer.[34] Gulf forestalled Mesa’s takeover attempt by offering $63 a share in a friendly offer which Cities (by then trading at $37) accepted.[35] Cities then bought out Pickens for $55 a share. Once Pickens was gone, Gulf reneged on its buyout offer, supposedly over a dispute regarding accuracy of Cities Services’ reserves, and the stock price of Cities plunged, triggering stockholder lawsuits as well as distrust for Gulf’s management on Wall Street and among financing investment banks who bet big in assisting Gulf to defeat Mesa only to be left broke when Gulf backed out.[citation needed] Cities Services was ultimately sold to Occidental Petroleum, and the retail operations were resold to Southland Corporation, the operators of 7-Eleven stores.[36] Gulf’s termination of the Cities Service acquisition resulted in more than 15 years of shareholder litigation against Gulf (and later Chevron).[37]

With declining margins in the industry and left without Citgo’s reserves, Mesa and its investor partners kept hunting for a takeover target, only to discover while fighting Gulf for Citgo how increasingly top-heavy its portfolio and declining reserves were undervaluing its overall assets. They subtly but quickly acquired 4.9 percent of Gulf Oil’s stock by early fall 1983, just shy of having to declare themselves and their intent at 5 percent to the SEC. In the ten days allowed to prepare the SEC filing, Mesa and its investor partners accelerated buying to 11 percent of the company’s stock, larger than the founding Mellon family’s share, by October 1983. Gulf responded to Mesa’s interest by calling a shareholders’ meeting for late November 1983 and subsequently engaged in a proxy war on changing the corporation’s by-laws to minimize arbitrage. Pickens made loud criticisms of the existing Gulf management and offered an alternative business plan intended to release shareholder value through a royalty trust that management argued would “slim down” Gulf’s market share. Pickens had acquired the reputation of being a corporate raider whose skill lay in MAKING PROFITS out of bidding for companies but without actually acquiring them. During the early 1980s alone, he made failed bids for Cities Services, General American Oil, Gulf, Phillips Petroleum and Unocal. The process of making such bids would promote a frenzy of asset divestiture and debt reduction in the target companies. This is a standard defensive tactic calculated to boost the current share price,[citation needed] although possibly at the expense of long-term strategic advantage. The target shares would rise sharply in price, at which point Pickens would dispose of his interest at a substantial profit.[38]

Gulf management and directors took the view that the Mesa bid represented an undervaluation of the Gulf business as a long-term going concern and that it was not in the interest of Gulf shareholders. James Lee, Gulf’s CEO and Chairman, even claimed during the November 1983 shareholders meeting to address the Mesa ownership that Pickens’ royalty trust idea was nothing more than a “get-rich-quick scheme” that would undermine the corporation’s profit potential in the coming decades. Gulf, therefore, sought to resist Pickens by various means, including refiling as a Delaware corporation, voiding the ability of shareholders to cumulatively vote (fearing that Pickens would use his shares to gain control of the board) and listening to offers from Ashland Oil (which would double Gulf’s price from its pre-Mesa level), General Electric (two years before it would shock the financial world by taking over the media company NBC/RKO) and finally Chevron to act as itswhite knight in late 1984. Gulf divested many of its worldwide operating subsidiaries and then merged with Chevron by the spring of 1985. The Mesa group of investors was reported to have made a profit of $760 million ($1,666.5 million today) when it assigned its Gulf shares to Chevron. Pickens has claimed that after realizing a more than doubling of stock appreciation for Gulf shareholders (as well as its management that fought him at every turn), Mesa’s shares were the last to be paid out by Chevron.

The forced merger of Gulf and Chevron was a controversy that was widely debated, with the U.S. Senate considering legislation to freeze oil industry mergers for a year—before the Reagan administration made it known it opposed government intervention in the matter and would veto any bill. However, Pickens and Lee (Gulf’s CEO) were summoned to testify before the Senate months before the merger was hammered out and the matter was referred to the Federal Trade Commission(FTC). The FTC only approved the deal subject to strict conditions.[39] Never before had a “small operator” successfully taken apart a Fortune 500 corporation, or in Gulf’s case a “Fortune 10” corporation. The merger sent even deeper shock waves through the long-time exclusive “Seven Sisters” club of major integrated oil companies that defined themselves as elevated from the “non-major independents”.[citation needed] A board member[who?] of Exxon even admitted in the mid-1980s that “mostly all we talk about in board meetings anymore is T. Boone Pickens”. Chevron, to settle with the government antitrust requirements, sold some Gulf stations and a refinery in the eastern United States to British Petroleum (BP) and Cumberland Farms in 1985 as well as some of the international operations.

The effect on the Pittsburgh area was severe as close to 900 PhD and research jobs and 600 headquarters (accounting, law, clerical) jobs were transferred to California or cut, a payroll of $54 million ($122.6 million today) and corporate charity to 50 Western Pennsylvania organizations worth $2 million/year ($4.5 million/year today).[40] These losses were mitigated some with the donation of Gulf Labs in suburban north Pittsburgh to the University of Pittsburgh to be used as a research business incubator along with $5 million ($11 million today) in maintenance and seed money. The “Gulf Labs” research complex consisted of 55 multi-story buildings with 800,000 square feet (74,000 m2) on 85 acres (340,000 m2) and including several chemical labs, petroleum production and refining areas and even a nuclear laboratory complete with reactor in 1985 and employed close to 2,000 engineers and scientists operating with a $100 million budget ($227 million today) from Gulf/Chevron. After its donation, it was renamed the University of Pittsburgh Applied Research Center or U-PARC and opened to small technology, computer and engineering firms as well as graduate level research.

Aftermath[edit]

BP, Chevron, Cumberland Farms and other companies that acquired former Gulf operations continued to use the Gulf name through the early 1990s. This causedconsumer confusion in the US retail market as the parent companies would not accept each other’s credit cards. All former Gulf stations franchised by BP and Chevron in the United States have since been converted to those names. Gulf Oil Limited Partnership (GOLP), based in Framingham, Massachusetts, has bought a license for North American rights to the Gulf brand from Chevron. Chevron still owned the Gulf brand, but was making almost no direct use of it. In January 2010, GOLP bought the entire brand from Chevron and began a nationwide expansion campaign. GOLP operates a distribution network reaching from Maine to Ohio. Most Gulf-branded filling stations in North America are owned by Cumberland Farms of Framingham, which owns a two-thirds interest in GOLP.[41] In addition there are some independently owned franchises still operating under the Gulf brand within North America, such as the American Refining Group, which is licensed by Chevron to blend and distribute Gulf-branded lubricants.[42]

Gulf Oil International (GOI): [1] owns the rights to the Gulf brand outside the United States, Spain & Portugal. It is owned by the Hinduja Group.[43] GOI trades mainly in lubricants, oils, and greases. GOI is also involved in franchising the Gulf brand to operators in the petroleum and automotive sectors; Gulf-branded filling stations can be found in several countries including the UK, Belgium, Germany, Ireland, the Slovak & Czech Republics, the Netherlands, Jordan, Finland and Turkey. GOI has direct and indirect interests in a number of businesses that use the Gulf brand under license.

The Canadian exploration and production arm of Gulf Oil continued as an independent oil company (Gulf Canada Resources) until its acquisition by Conoco in 2002.[44]

Most Gulf downstream operations in Europe were sold to the Kuwait Petroleum Corporation in early 1983. The associated Gulf filling stations were converted to trade under the Q8 brand by 1988.[45] However, attempts to sell Gulf Oil (Great Britain) to KPC failed because of irrevocable GOC guarantees given earlier in regard to bonds issued to finance the construction of refinery facilities in the UK. GO(GB) was taken over by Chevron and its stations continued to use the Gulf brand name and insignia until 1997 when the network was sold to Shell, although by this stage a fairly large proportion of Gulf stations were supplied by jobbers rather than Gulf Oil (GB). Gulf completely withdrew from the UK in 1997.[46] This represented the end of the last major “downstream” use of the Gulf brand by Chevron.

Revival[edit]

GOI and GOLP continue to sell Gulf-branded lubricants worldwide through a network of official licensed companies, joint ventures and wholly owned subsidiary companies. Many of these official Gulf distributors carry out local marketing and sponsorship which help to raise the profile of the brand. Of these wholly owned subsidiaries Gulf Oil Corporation India has raised the market profile of the Gulf brand in the Middle East. GOCL have emerged as one of leading lubricants brands in India and run many marketing sponsorships targeted at the ever-growing youth sector in the country.

GOI licenses the Gulf brand and logo in the UK to the Bayford group, one of the largest independent fuel distributors. Starting in 2001, a new Gulf network of independent stations is slowly reappearing across the UK. At present, many of these stations are notable for offering genuine leaded four-star petrol, for which Bayford has a special dispensation[47] to sell. At the same time, Gulf Lubricants (UK) Ltd was set up to market Gulf products (mostly manufactured by the Gulf Netherlands operation) in the UK. This return by Gulf to the UK after a four-year absence used the slogan “The Return of the Legend.”[48] The post-2001 Gulf presence in the UK is a wholly network-based operation. It involves almost no direct Gulf investment in fixed assets, corporate infrastructure, or manufacturing capability. This is a complete contrast to the pre-1997 presence.

In January 2010, after using the name since 1986, GOLP acquired all right, title and interest in the Gulf brand name in the United States and announced plans to expand the use of the Gulf brand beyond its parent company’s Northeastern United States base. Its promotions have included sponsorship of major sporting events in the area with advertisements for Gulf in New York City, Boston, Philadelphia, and Pittsburgh. To take one case as an illustrative example of the Gulf revival, afterTexaco‘s 2001 merger with Chevron, many former Texaco stations in Pittsburgh switched to Gulf since Chevron does not service the Greater Pittsburgh area. As a result, the Texaco brand name disappeared from the area in June 2004 when the nonexclusive rights agreement with Shell expired, with Shell itself expanding in the area by means other than Texaco but, on June, 2006 Chevron gave exclusive rights to the Texaco brand name in the U.S. and sold some BP gas stations in the southeast which were Gulf gas stations. In New England, former Exxon stations have been rebranded as Gulf, in accordance with the consent decree that allowed the merger of Exxon and Mobil. Many of the former Exxon stations feature a rectangular logo that fit into the existing sign standards used by Exxon. Gulf refers to the look as its “sunrise” imaging.

The Gulf logo is still used around the world by a large number of business interests. It is a widely recognized brand and many independent operators are willing to pay for the franchise rights to use it. GOI make use of this brand power by coordinating their marketing activities to focus on the sponsorship of Le Mans race teams (with the current team being Aston Martin Racing team)[49] This sponsorship is used across the world by Gulf distributors, alongside local activity demonstrating the GOI company ethos of “your local global brand”. In 2009, the clothing store chain Old Navy began selling T-shirts bearing the old Gulf logo, along with the former logos of Standard Oil and Chevron.

Between 1980 and 2000, Gulf moved from being a monolithic, vertically integrated multinational corporation to being more of a network of allied business interests. This has given the entire Gulf enterprise a high degree of strategic and operational flexibility. It is a move that reflects fundamental change in the economics of international business.

Alliances represent yet another shift in the organization of economic transactions from organizational hierarchies to networks; from mass to flexible production; from large, vertically integrated organizations to disintegration and horizontal networks of economic units; from “Fordist” to “post-Fordist” companies.[50]

Case studies in current use of the Gulf brand[edit]

Independent filling stations in the UK[edit]

Gulf service station on the A697 (Morpeth to Coldstream road), Northumberland – February 2006

In 1970, there were nearly 25,000 filling stations in the UK, of which 10,000 were ‘independents’ (typically, privately owned and supplied by a major or jobber while using a brand under license). By the end of 1999, the number of filling stations had dropped to 13,700 and to 9,700 at the end of 2005.[51]In recent years, filling stations have been closing at a rate of 50 per month. Many of the smaller and independent stations have succumbed to competition from out-of-town supermarkets that undercut local enterprises through sheer volume of sales and shared overheads.[52]

The Gulf brand in the UK is licensed by GOI to the Bayford group which specializes in operating service stations on minor trunk roads in rural areas. Bayford supplies about 185 Gulf-branded filling stations in the UK, all of which are independently owned. The Gulf filling stations provide outlets for Gulf-branded oils and lubricants.

The illustration shows a typical Bayford/Gulf filling station in the UK, still associated with a service garage, restaurant and retailing facilities. It is in an isolated location, five miles (8 km) south of Wooler in the Cheviot Hills, catering to both local residents and passing tourist traffic. It is not vulnerable to competition from supermarkets and provides something of a local community center.

Pennsylvania Turnpike[edit]

For decades, Gulf operated filling stations on the Pennsylvania Turnpike toll highway system alongside the Howard Johnson’s restaurants at the Turnpike’s travel plazas (which correspond to European motorway service areas). This began in 1950 with the opening of the Philadelphia Extension, and Gulf added more filling stations as the system was extended. The Standard Oil Company of Pennsylvania (now part of Exxon) had exclusive rights to provide filling station services on the sections of the system that opened prior to 1950, principally the Irwin-to-Carlisle section.

In the 1980s, Sunoco was awarded the franchise to operate the filling stations at the Sideling Hill and now-closed Hempfield travel plazas. This led to a bidding war among three of Pennsylvania‘s most recognizable gasoline brands each time a travel plaza franchise came up for renewal.

Gulf had the opportunity to become the exclusive provider of filling stations at travel plazas along the Pennsylvania Turnpike after Exxon withdrew from the Turnpike in 1990. Cumberland Farms (owner of the Gulf brand in the northeast U.S.) was awarded a new contract with the Pennsylvania Turnpike Commission, but the contract was sold to Sunoco two years later as part of the company’s bankruptcy proceedings. In June 1992, all of the former Gulf filling stations on the Turnpike (as with the Exxon ones before it) converted to Sunoco. All of the travel plazas continue to sell Sunoco fuel today.

Gulf products[edit]

Most filling stations in Europe sell three types of fuel: unleaded, LRP, and diesel. Although these products lack any real brand differentiation, this has not always been the case. Until well into the 1970s, Gulf (in common with other oil companies) sold distinctive brands of petrol/gasoline including subregular Gulftane, Good Gulf regular, Gulf No-Nox premium, and Gulf Super Unleaded (aka Gulfcrest). Gulf petrol was sold using the slogans “Good Gulf Gasoline,” and “Gulf — the Gas with Guts.” Gulf service stations often supplied customers with pens and key rings bearing these slogans. For a few years, beginning in 1966, Gulf stations in the U.S. gave away orange plastic “Extra Kick Horseshoes” to customers who filled their tanks with Gulf’s No-Nox premium gasoline (the novelty items were commonly mounted on bumpers).

GOI still produces and sells a wide range of branded oil based products including lubricants and greases of all kinds.[53] These include products for a variety of applications ranging from metal working oils to refrigeration oils. Car engine oils include the Gulf Formula, Gulf MAX, and Gulf TEC ranges. Heavy duty diesel engine lubricants include the Gulf Supreme and Gulf Superfleet ranges.

In the Summer of 2013, Gulf Oil licensed the “Gulf” name for racing fuels in a return to the American racing scene for the 2014 competition season <http://www.gulfracingfuels.com>. The fuels will be announced at the Performance Racing Industry Show in Indianapolis, Indiana in December 2013.

[54] [55]

CEOs[edit]

  • S.A. Swensrud 1953?[56]
  • Robert Rawls Dorsey 1969?-January 14, 1976 (resigned with 3 years on his contract)[57][58][59]
  • Jerry McAfee January 14, 1976 – December 1, 1981[60][61]
  • James E. Lee December 1, 1981 – 1985

Anglo-Persian Oil Company (BP)

From Wikipedia, the free encyclopedia
This article is about the energy company. For other uses, see BP (disambiguation).
BP plc
Type Public limited company
Traded as LSEBP
FWBBPE
NYSEBP
Industry Oil and gas
Predecessors Anglo-Persian Oil Company
Castrol
Standard Oil of Ohio
ARCO
Amoco
Founded 1908 (as Anglo-Persian Oil Company)
1935 (as Anglo-Iranian Oil Company)
1954 (as British Petroleum)
1998 (as BP Amoco plc)
2001 (as BP plc)
Headquarters London, England
Area served Worldwide
Key people Carl-Henric Svanberg(Chairman)
Bob Dudley (CEO)
Brian Gilvary (CFO)
Products Petroleum
Natural gas
Motor fuels
Aviation fuels
Petrochemicals
Production output 3.2 Mbbl/d (510×103 m3/d) ofoil equivalent (2013)[1]
Services Service stations
Revenue Increase US$ 396.217 billion (2013)[2]
Operating income Increase US$ 31.769 billion (2013)[2]
Profit Increase US$ 23.758 billion (2013)[2]
Total assets Increase US$ 305.690 billion (2013)[3]
Total equity Increase US$ 130.407 billion (2013)[3]
Employees 83,900[4]
Website www.bp.com

BP plc,[5][6] sometimes referred to by its former name British Petroleum, is a British multinational oil and gascompany headquartered in London, England. It is the sixth-largest energy company by market capitalization,[7] thefifth-largest company in the world measured by 2012 revenues, and the sixth-largest oil and gas company measured by 2012 production.[8][9] It is one of the six oil and gas “supermajors“.[10] BP is vertically integrated and operates in all areas of the oil and gas industry, including exploration and production, refining, distribution and marketing,petrochemicals, power generation and trading. It also has renewable energy activities in biofuels and wind power.

As of December 2013, BP has operations in approximately 80 countries,[4] produces around 3.2 million barrels per day (510,000 m3/d) of oil equivalent,[1] has total proved reserves of 17.9 billion barrels (2.85×109 m3) of oil equivalent,[11] and has around 17,800 service stations.[12][13] Its largest division is BP America in the United States. In Russia BP owns a 19.75% stake in Rosneft, the world’s largest publicly traded oil and gas company by hydrocarbon reserves and production. BP has a primary listing on the London Stock Exchange and is a constituent of the FTSE 100 Index; it had a market capitalisation of £85.2 billion as of April 2013, the fourth-largest of any company listed on the exchange.[14] It has secondary listings on the Frankfurt Stock Exchange and the New York Stock Exchange.

BP’s origins date back to the founding of the Anglo-Persian Oil Company in 1908, established as a subsidiary ofBurmah Oil Company to exploit oil discoveries in Iran. In 1935, it became the Anglo-Iranian Oil Company and in 1954British Petroleum.[15][16] In 1959, the company expanded beyond the Middle East to Alaska and in 1965 it was the first company to strike oil in the North Sea. British Petroleum acquired majority control of Standard Oil of Ohio in 1978. Formerly majority state-owned, the British government privatised the company in stages between 1979 and 1987. British Petroleum merged with Amoco in 1998, becoming BP Amoco plc, and acquired ARCO and Burmah Castrol in 2000, becoming BP plc in 2001. From 2003 to 2013, BP was a partner in the TNK-BP joint venture in Russia.

BP has been directly involved in several major environmental and safety incidents. Among them were the 2005 Texas City Refinery explosion, which caused the death of 15 workers and resulted in a record-setting OSHA fine; Britain’s largest oil spill, the wreck of Torrey Canyon; and the 2006 Prudhoe Bay oil spill, the largest oil spill on Alaska’s North Slope, which resulted in a US$25 million civil penalty, the largest per-barrel penalty at that time for an oil spill.[17]

The 2010 Deepwater Horizon oil spill, the largest accidental release of oil into marine waters in history, resulted in severe environmental, health and economic consequences,[18] and serious legal and public relations repercussions for BP. One-point-eight million gallons of Corexit oil dispersant were used in the cleanup response, becoming the largest application of such chemicals in US history.[19] The company plead guilty to 11 counts of felony manslaughter, two misdemeanors, and one felony count of lying to Congress, and agreed to pay more than $4.5 billion in fines and penalties, the largest criminal resolution in US history.[20][21][22]

Legal proceedings are continuing, with proceedings set to commence in January 2015[23] to determine payouts and fines under the Clean Water Act and the Natural Resources Damage Assessment.[24][25][26][27] In September 2014, the judge ruled in the first phase of the case that BP was “reckless” and committed “gross negligence,” in a “worst case” ruling that could cost BP $18 billion in additional penalties above the $28 billion already expended on the spill by that time. BP is appealing the ruling, which raised concerns about BP’s future.[28][29]

History

1909 to 1954

A BP Motor Spirit advertisement from 1922

In May 1908 a group of British geologists discovered a large amount of oil at Masjid-i-Suleiman in Iran. It was the first commercially significant find of oil in the Middle East. The Shah of Iran granted a concession to William Knox D’Arcy to enable the British to drill for Iran’s oil.[30][31] On 14 April 1909, the Anglo-Persian Oil Company (APOC) was incorporated as a subsidiary of Burmah Oil Company. Some of the shares were sold to the public.[32] The first chairman and minority shareholder of the company became Lord Strathcona.[31]

Immediately after establishing the company, construction of the Abadan Refinery and the pipeline from Masjid to Abadan started. The refinery was commissioned in 1912.[31] In 1913, the British Government acquired a controlling interest (50.0025%) in the company and at the suggestion of Winston Churchill, the British navy switched from coal to oil.[31][33][34] The Royal Navy, which projected British power all over the world, came to be run 100% on oil from Iran.[35] In 1915, APOC established its shipping subsidiary the British Tanker Company and in 1916 it acquired the British Petroleum Company which was a marketing arm of the German Europäische Petroleum Union in Britain.[31] In 1919, the company became a shale-oilproducer by establishing a subsidiary named Scottish Oils which merged remaining Scottish oil-shale industries.[36][37][38][39]

After World War I, APOC started marketing its products in Continental Europe and acquired stakes in the local marketing companies in several European countries. Refineries were built in Llandarcy in Wales (the first refinery in the United Kingdom) and Grangemouth in Scotland. It also acquired the controlling stake in the Courchelettes refinery in France and formed with the Government of Australia a partnership named Commonwealth Oil Refineries, which built the Australian’s first refinery inLaverton, Victoria.[31] In 1923, Burmah employed Winston Churchill as a paid consultant to lobby the British government to allow APOC have exclusive rights to Persian oil resources, which were subsequently granted by the Iranian monarchy.[40]

APOC and the Armenian businessman Calouste Gulbenkian were the driving forces behind the creation of Turkish Petroleum Company (TPC) in 1912 to explore oil in Mesopotamia (now Iraq); and by 1914, APOC held 50% of TPC shares.[41] In 1925, TPC received concession in the Mesopotamian oil resources from the Iraqi government under British mandate. TPC finally struck oil in Iraq on 14 October 1927. By 1928, the APOC’s shareholding in TPC, which by now was named Iraq Petroleum Company (IPC), was reduced to 23.75%; as the result of the changing geopolitics post Ottoman empire break-up, and the Red Line Agreement.[42] Relations were generally cordial between the pro-west Hashemite Monarchy (1932–58) in Iraq and IPC, in spite of disputes centered around Iraq’s wish for greater involvement and more royalties. During the 1928–68 time period, IPC monopolised oil exploration inside the Red Line; excluding Saudi Arabia and Bahrain.[43][44]

In 1932, APOC and Royal Dutch Shell formed the joint marketing company in the United Kingdom named Shell-Mex and BP.[34] In 1934, APOC and Gulf Oil founded the Kuwait Oil Company as an equally owned partnership. The oil concession rights were awarded to the company on 23 December 1934 and the company started drilling operations in 1936.[45][46] In 1935, Rezā Shāh requested the international community to refer to Persia as ‘Iran‘, which was reflected in the name change of APOC to the Anglo-Iranian Oil Company (AIOC).[30] In 1937, AIOC and Royal Dutch Shell formed the Shell/D’Arcy Exploration Partners partnership to explore for oil in Nigeria. The partnership was equally owned but operated by Shell. It was later replaced by Shell-D’Arcy Petroleum Development Company and Shell-BP Petroleum Development Company (now Shell Petroleum Development Company).[47]

Following World War II, nationalistic sentiments were on the rise in the Middle East; most notable being Iranian nationalism, and Arab Nationalism. In Iran, the AIOC and the pro-western Iranian government led by Prime Minister Ali Razmara resisted nationalist calls to revise AIOC’s concession terms in Iran’s favour. In March 1951, Razmara was assassinated and Mohammed Mossadeq, a nationalist, was elected as the new prime minister by the Majlis of Iran (parliament).[48] In April 1951, the Iranian government nationalised the Iranian oil industry by unanimous vote, and the National Iranian Oil Company (NIOC) was formed, displacing the AIOC.[49][50] The AIOC withdrew its management from Iran, and Britain organized an effective worldwide embargo of Iranian oil. The British government, which owned the AIOC, contested the nationalisation at the International Court of Justice at The Hague, but its complaint was dismissed.[51]

Prime Minister Churchill asked President Eisenhower for help in overthrowing Mossadeq. The anti-Mossadeq plan was orchestrated under the code-name ‘Operation Ajax‘ by CIA, and ‘Operation Boot’ by SIS (MI6). The CIA and the British helped stage a coup in August 1953, the 1953 Iranian coup d’état, which established pro-Western general Fazlollah Zahedi as the new PM, and greatly strengthened the political power of Shah Mohammad Reza Pahlavi. The AIOC was able to return to Iran.

1954 to 1979[edit]

In 1954, the AIOC became the British Petroleum Company. After the 1953 Iranian coup d’état, Iranian Oil Participants Ltd (IOP), a holding company, was founded in October 1954 in London to bring Iranian oil back to the international market.[52][53] British Petroleum was a founding member of this company with 40% stake.[48][52]IOP operated and managed oil facilities in Iran on behalf of NIOC.[52][53] Similar to the Saudi-Aramco “50/50” agreement of 1950,[54] the consortium agreed to share profits on a 50–50 basis with Iran, “but not to open its books to Iranian auditors or to allow Iranians onto its board of directors.”[55]

In 1953 British Petroleum entered the Canadian market through the purchase of a minority stake in Calgary-based Triad Oil Company, and expanded further to Alaska in 1959, resulting discovery of oil at Prudhoe Bay in 1969.[34][56] In 1956, its subsidiary D’Arcy Exploration Co. (Africa) Ltd. has been granted four oil concessions in Libya.[57] In 1962, Scottish Oils ceased oil-shale operations.[39] In 1965, it was the first company to strike oil in the North Sea.[58] The Canadian holding company of British Petroleum was renamed BP Canada in 1969; and in 1971, it acquired 97.8% stake of Supertest Petroleum. Subsequently, Supertest was renamed to BP Canada, and other Canadian interests of British Petroleum were amalgamated to the new company.[citation needed]

By the 1960s, British Petroleum had developed a reputation for taking on the riskiest ventures. It earned the company massive profits; it also earned them the worst safety record in the industry.[35] In 1967, the giant oil tanker Torrey Canyon foundered off the English coast. Over 100 tonnes of crude oil were spilled into the Atlantic and onto the beaches of Cornwall and Brittany, causing Britain’s worst-ever oil spill.[59] The ship was owned by the Bahamas-based Barracuda Tanker Corporation and was flying the flag of Liberia, a well-known flag of convenience, but was being chartered by British Petroleum.[59] The ship was bombed by RAF jet bombers in an effort to break up the ship and burn off the leaking oil, but this failed to destroy the oil slick.[60]

The company’s oil assets were nationalised in Libya in 1971, in Kuwait in 1975, and in Nigeria in 1979.[46][50][61] In Iraq, IPC ceased its operations after it was nationalised by the Ba’athist Iraqi government in June 1972 although legally Iraq Petroleum Company still remains extant,[62] and one of its associated companies —Abu Dhabi Petroleum Company (ADPC), formerly Petroleum Development (Trucial Coast) Ltd — also continues with the original shareholding intact.[63][64]

The intensified power struggle between oil companies and host governments in Middle East, along with the oil price shocks that followed the 1973 oil crisis meant British Petroleum lost most of its direct access to crude oil supplies produced in countries that belonged to the Organization of Petroleum Exporting Countries (OPEC), and prompted it to diversify its operations beyond the heavily Middle East dependent oil production. In 1976, BP and Shell de-merged their marketing operations in the United Kingdom by dividing Shell-Mex and BP. In 1978 the company acquired a controlling interest in Standard Oil of Ohio (Sohio).[65][66]

In Iran, British Petroleum continued to operate until the Islamic Revolution in 1979. The new regime of Ayatollah Khomeini confiscated all of the company’s assets in Iran without compensation, bringing to an end its 70-year presence in Iran.[35]

In 1970–1980s BP diversified into coal, minerals and nutrition businesses which all were divested later.[34]

1979 to 2000[edit]

The final version of the BP shield logo, introduced in 1989 and used until 2002; the shield logo was originally designed by AR Saunders in 1920

The British Government sold 80 million shares of BP at $7.58 in 1979 as part of Thatcher-era privatisation. This sale represented slightly more than 5% of BP’s total shares and reduced the government’s ownership of the company to 46%.[67][68] After the worldwide STOCK MARKET crash on 19 October 1987, Prime Minister Margaret Thatcher initiated the sale of an additional GBP7.5 billion ($12.2 billion) of BP shares at 333 pence, representing the government’s remaining 31% stake in the company.[67][69][70] In November 1987 the Kuwait Investment Office purchased a 10.06% interest in BP, becoming the largest institutional shareholder.[71] The following May, the KIO purchased additional shares, bringing their ownership to 21.6%.[72] This raised concerns within BP that operations in the United States, BP’s primary country of operations, would suffer. In October 1988, the British Department of Trade and Industry required the KIO to reduce its shares to 9.6% within 12 months.[73]

Peter Walters was the company chairman from 1981 to 1990.[74] During his period as chairman he reduced company’s refining capacity in Europe.[74] In 1982, the downstream assets of BP Canada were sold to Petro Canada. In 1984, Standard Oil of California was renamed to Chevron Corporation; and it bought Gulf Oil—the largest merger in history at that time.[75]To settle the anti-trust regulation, Chevron divested many of Gulf’s operating subsidiaries, and sold some Gulf stations and a refinery in the eastern United States to British Petroleum and Cumberland Farms in 1985.[76] In 1987, British Petroleum negotiated the acquisition of Britoil[77] and the remaining publicly traded shares of Standard Oil of Ohio.[65][66] At the same year it was listed on the Tokyo Stock Exchange where its share were traded until delisting in 2008.[78]

Walters was replaced by Robert Horton in 1989. Horton carried out a major corporate down-sizing exercise removing various tiers of management at the Head Office.[79] In 1992, British Petroleum sold off its 57% stake in BP Canada (upstream operations), which was renamed as Talisman Energy.[80] John Browne, who had joined BP in 1966 and rose through the ranks to join the board as managing director in 1991, was appointed group chief executive in 1995.[81]

British Petroleum entered into Russian market in 1990 and opened its first service station in Moscow in 1996. In 1997, it acquired 10% stake in Russian oil company Sidanco, which later became a part of TNK-BP.[82]

2000 to 2010[edit]

Under John Browne, British Petroleum acquired other oil companies, transforming BP into the third largest oil company in the world. British Petroleum merged withAmoco (formerly Standard Oil of Indiana) in December 1998, becoming BP Amoco plc.[83][84] Most Amoco stations in the United States were converted to BP’s brand and corporate identity. In 2000, BP Amoco acquired Arco (Atlantic Richfield Co.) and Burmah Castrol.[85][86][87][88] As part of the merger’s brand awareness, the company helped the Tate Modern gallery of British Art launch RePresenting Britain 1500–2000.[89] In 2001, in response to negative press on British Petroleum’s poor safety standards, the company adopted a green sunburst logo and rebranded itself as BP (“Beyond Petroleum”) plc.[84]

Steven Koonin, BP’s then-Chief Scientist, speaking in the company boardroom in 2005 (top right of picture)

In the beginning of the 2000s, BP became the leading partner (and later operator) of the Baku–Tbilisi–Ceyhan pipelineproject which opened a new oil transportation route from the Caspian region.[90] On 1 September 2003, BP and a group of Russian billionaires, known as AAR (AlfaAccessRenova), announced the creation of a strategic partnership to jointly hold their oil assets in Russia and Ukraine. As a result, TNK-ВР was created.[91]

In 2004, BP’s olefins and derivatives business was moved into a separate entity which was sold to Ineos in 2005.[92][93] In 2007, BP sold its corporate-owned convenience stores, typically known as “BP Connect”, to local franchisees and jobbers.[94]

On 23 March 2005, 15 workers were killed and more than 170 injured in the Texas City Refinery explosion. To save money, major upgrades to the 1934 refinery had been postponed.[95] Browne pledged to prevent another catastrophe. Three months later, ‘Thunder Horse PDQ‘, BP’s giant new production platform in the Gulf of Mexico, nearly sank during a hurricane. In their rush to finish the $1 billion platform, workers had installed a valve backwards, allowing the ballast tanks to flood. Inspections revealed other shoddy work. Repairs costing hundreds of millions would keep Thunder Horse out of commission for three years.[95]

Lord Browne resigned from BP on 1 May 2007. The new chief executive became head of exploration and production Tony Hayward.[96] In 2009, Hayward shifted emphasis from Lord Browne’s focus on alternative energy, announcing that safety would henceforth be the company’s “number one priority”.[97]

In 2009, BP obtained a production contract during the 2009/2010 Iraqi oil services contracts tender to develop the Rumaila field with joint venture partner CNPC, which contain an estimated 17 billion barrels (2.7×109 m3) of oil, accounting for 12% of Iraq’s oil reserves estimated at 143.1 billion barrels (22.75×109 m3).[98][99]In June 2010, the BP/CNPC consortium took over development of the field,[100][101] which was the epicentre of the 1990 Gulf war.[102][103]

2010 to present[edit]

President Barack Obama meeting with BP executives at the White House in June 2010 to discuss the oil spill in the Gulf of Mexico

On 1 October 2010, Bob Dudley replaced Tony Hayward as the company’s CEO after the Deepwater Horizon oil spill.[104]After the oil spill BP announced a divestment program to sell about $38 billion worth of non-core assets by 2013 to compensate its liabilities related to the accident.[105][106] In July 2010, it sold its natural gas activities in Alberta and British Columbia, Canada, to Apache Corporation.[107] It sold its stake in the Petroperijá and Boquerón fields in Venezuela and in the Lan Tay and Lan Do fields, the Nam Con Son pipeline and terminal, and the Phu My 3 power plant in Vietnam to TNK-BP,[108][109] forecourts and supply businesses in Namibia, Botswana, Zambia, Tanzania and Malawi to Puma Energy,[110] theWytch Farm onshore oilfield in Dorset and a package of North Sea gas assets to Perenco,[111] natural-gas liquids business in Canada to Plains All American Pipeline LP,[112] natural gas assets in Kansas to Linn Energy,[113] Carson Refinery in Southern California to Tesoro, Sunray and Hemphill gas processing plants in Texas, together with their associated gas gathering system, to Eagle Rock Energy Partners,[114][115][116][117] the Texas City Refinery and associated assets to Marathon Petroleum,[118][119] the Gulf of Mexico located Marlin, Dorado, King, Horn Mountain, and Holstein fields as also its stake in non-operated Diana Hoover and Ram Powell fields to Plains Exploration & Production,[105] non-operating stake in theDraugen oil field to Norske Shell,[120] and the UK’s liquefied petroleum gas distribution business to DCC.[121]

On 15 January 2011, Rosneft and BP announced a deal to jointly develop East-Prinovozemelsky field on the Russian arctic shelf.[122] However, the deal was blocked by BP’s co-shareholders in TNK-BP due to a dispute over Russian exploration rights between the two companies, and was nullified.[123] In October 2012, Rosneft reached separate agreements with BP and AAR to acquire TNK-BP, with each deal subject to regulatory approval; the price for BP’s shares was $12.3 billion in cash and 18.5% of Rosneft’s stock.[124] The deal was completed on 21 March 2013.[125][126]

In February 2011, BP formed a partnership with Reliance Industries, taking a 30% stake in a new Indian joint-venture for an initial payment of $7.2 billion.[127] In September 2012, BP sold its subsidiary BP Chemicals (Malaysia) Sdn. Bhd., an operator of the Kuantan purified terephthalic acid (PTA) plant in Malaysia, to Reliance Industries for $230 million.[128]

In 2011–2013, BP cut down its alternative energy business. The company announced its departure from the solar energy market in December 2011 by closing its solar power business, BP Solar.[129][130] In 2012, BP shut down the BP Biofuels Highlands project which was developed since 2008 to make cellulosic ethanol from emerging energy crops like switchgrass and from biomass.[131][132][133]

By 2013, BP had fallen from the second largest oil company to the fourth after selling off assets to cover Deepwater Horizon oil spill-related payouts.[134]

In June 2014, BP agreed to a deal worth around $20 billion to supply CNOOC with liquefied natural gas.[135]

Operations[edit]

BP’s world headquarters in St. James’s, City of Westminster, London

BP has operations in around 80 countries worldwide[136] with the global headquarters in England, located in the St James’s area of London.[137] As of November 2013, the company had a total of 83,900 employees.[4] BP operations are organized into two main business segments, Upstream and Downstream.[138]

Since 1951, BP publishes its annual Statistical Review of World Energy, which is considered an energy industry benchmark.[139]

Operations by location[edit]

United Kingdom and Ireland[edit]

The BP chemicals plant in Salt End, United Kingdom

As of 2011 the company employs more than 15,000 people in the UK and Ireland, or about 20% of its total workforce.[140][141] BP has a major corporate campus in Sunbury-on-Thames which is home to around 4,500 employees and over 40 business units.[142] Its North Sea operations are headquartered in Aberdeen, Scotland, where it employs around 3,000 people.[143] BP’s trading functions are based at 20 Canada Square in Canary Wharf, London, where around 2,200 employees are based.[142] BP has three major research and development centres in the UK.[144]

BP operates more than 40 offshore oil and gas fields, four onshore terminals and a pipeline network that transports around 50 percent of the oil and gas produced in the UK, according to the company.[145][146] As of 2011, BP had produced 5 billion barrels (790×106 m3) of oil and gas equivalent in the North Sea[147] and as of 2012 its level of production was about 200,000 barrels per day (32,000 m3/d),[148][149] BP has invested more than £35 billion in the North Sea since the 1960s, and in 2012 announced its plans to invest another £10 billion until 2017. The company announced that it is focusing its investment in the UK North Sea into four development projects including the Clair, Devenick, Schiehallion and Loyal, and Kinnoull oilfields.[150] BP is the operator of the Clair oilfield, which has been appraised as the largest hydrocarbon resource in the UK.[148]

In Saltend near Hull, BP operates a petrochemicals plant that produces acetic acid and acetic anhydride used in the production of pharmaceuticals, textiles and other chemical products.[149][151] At the same location, the company operates a biofuel technology demonstration plant in partnership with DuPont, which uses feedstocks such as wheat to produce biobutanol.[152] In 2007 BP formed a joint venture called Vivergo with AB Sugar and DuPont to build a biofuel plant near Hull to convert wheat into ethanol; the remaining plant matter is sold as animal feed.[153] The plant went online in December 2012.[154]

Retail sites operated by BP in the UK include over 1,100 service stations.[155] Its flagship retail brand is BP Connect, a chain of service stations combined with a convenience store, a café called the “Wild Bean Cafe”,[156][157] and in many stations, a M&S Simply Food shop.[158]

United States[edit]

The headquarters of BP America inWestlake Park, Houston

The Thunder Horse PDQ semi-submersible oil platform in the Thunder Horse Oil Field

The US operations comprise nearly one-third of BP’s worldwide business interests,[159] and the US is the country with the greatest concentration of its employees and investments.[160][161] As of April 2014, per the company website BP employs approximately 20,000 people in the US.[162][163][164]

BP’s major subsidiary in the United States is BP America, Inc. based in Houston, Texas, which is the parent company for the BP’s operations in the United States.[165] BP Exploration & Production Inc., a 1996 established Houston-based subsidiary, is dealing with oil exploration and production, including Gulf of Mexico activities.[166] BP Corporation North America, Inc., provides petroleum refining services as also transportation fuel, heat and light energy, and petrochemical products.[167] BP Products North America, Inc., a 1954 established Houston-based subsidiary, is engaged in the exploration, development, production, refining, and marketing of oil and natural gas.[168] BP America Production Company, a New Mexico-based subsidiary, engages in oil and gas exploration and development.[169] BP Energy Company, a Houston-based subsidiary, is a provider of natural gas, power, and risk management services to the industrial and utility sectors and a retail electric provider in Texas.[170] In March 2014, it was reported that BP was to move its US onshore oil and gas asset management to a new subsidiary, in an effort to better compete with the smaller companies that dominate the US shale gas industry.[171]

BP is the second largest producer of oil and gas and the largest leaseholder in the deepwater Gulf of Mexico.[163] The company produces roughly 10% of its global output in the region, over 189,000 barrels per day (30,000 m3/d) of oil equivalent.[172] Of the seven largest drilling platforms in the Gulf, four are operated by BP.[173] As of 2012 BP has oil and gas production in the Gulf from fields including Atlantis, Mad Dog, Na Kika, and Thunder Horse. The company also holds stakes in fields operated by other companies, including the Mars, Ursa, and Great White fields. BP is the leaseholder of Mississippi Canyon Block 252 (Macondo Prospect) and the operator of the Macondo well, the site of the Deepwater Horizon explosion and oil spill.[174][175] In December 2011, BP acquired 11 newly available leases for resource exploration rights to areas of federal waters in the Gulf and in June 2012 it acquired 40 further leases in the central region of the Gulf.[159][176] In March 2014, the EPA’s ban barring BP from bidding on new leases in the Gulf, imposed following the Macondo spill, was lifted. BP won 24 bids at auction for leases in the region totalling $41.6 million.[163]

As of 2012, the company operated about two-thirds of all Alaska North Slope production.[177] It operates 13 oil fields, four pipelines, and owns a stake in six additional fields in the North Slope.[178][179] BP is the largest partner with just under 50% ownership stake in the 800-mile (1,300 km) long Trans-Alaska Pipeline System.[180]

In 2013 BP produced more than 1,539 million cubic feet per day (43.6 million cubic metres per day) of natural gas.[181] The company is the country’s sixth largest natural gas producer with a total of 21,000 wells.[182] Its US Lower 48 onshore division has shale positions in the Woodford, Oklahoma, Fayetteville, Arkansas, Haynesville, Texas, Eagle Ford, Texas and Utica, Ohio shales.[183][184][185] It has unconventional gas (shale gas or tight gas) stakes also in Colorado, New Mexico and Wyoming, primarily in the San Juan Basin.[186][187][188]

BP operates Whiting Refinery in Indiana and Cherry Point Refinery in Washington, and has a stake in the Husky Energy-operated Toledo Refinery in Ohio.[189][190][191][192] Since the early 2000s, the company has been focusing its refining business on processing refined products from oil sands and shales.[190][193]There are several thousand  retail sites in the US operating under a BP brand including BP, ARCO and Ampm.[13] On the US West Coast, BP primarily operates service stations under the ARCO brand.[194][195]

The company owns three petrochemical plants in the US, which produce approximately four million tons of petrochemicals each year.[196] Its petrochemical plant in Texas City, located on the same site as the formerly owned Texas City Refinery, produces industrial chemicals including propylene and styrene.[197] BP’s Decatur, Alabama and Cooper River, South Carolina petrochemical plants both produce PTA, which is used in the production of synthetic fibre for clothing, packaging andoptical films.[196][198][199] The Decatur plant also produces paraxylene and naphthalene dicarboxlate.[200]

The company’s alternative energy operations based in the US include 16  wind farms.[201][202]

Other locations[edit]

Africa[edit]

In Egypt, BP produces approximately 15% of the country’s total oil production and 40% of its domestic gas.[203] The company also has offshore gas developments in the East Nile Delta Mediterranean, and in the West Nile Delta,[204] where the company has a joint investment of US$9 billion with RWE to develop two offshore gas fields.[205][206]

BP is active in offshore oil development in Angola, where it holds an interest in a total of nine oil exploration and production blocks covering more than 30,000 square kilometres (12,000 sq mi). This includes four blocks it acquired in December 2011 and an additional block that is operated by Brazilian national oil company,Petrobras, in which it holds a 40% stake.[207]

Asia[edit]

BP has a stake in exploration of two blocks of offshore deepwater assets in the South China Sea.[208][209]

In India, BP owns a 30% share of oil and gas assets operated by Reliance Industries, including exploration and production rights in more than 20 offshore oil and gas blocks, representing an investment of more than US$7 billion into oil and gas exploration in the country.[210]

BP has major liquefied natural gas activities in Indonesia, where it operates the Tangguh LNG project, which began production in 2009 and has a capacity of 7.6 million tonnes of liquid natural gas per year.[211] Also in that country, the company has invested in the exploration and development of coalbed methane.[212]

BP operates in Iraq as part of the joint venture Rumaila Operating Organization in the Rumaila oil field, the world’s fourth largest oilfield, where it produced over 1 million barrels per day (160×103 m3/d) of oil equivalent in 2011.[213][214]

Australia[edit]

A BP “Road Train” in the Australian Outback

In Australia, BP operates two out of the country’s five[215] refineries: Kwinana in Western Australia, which can process up to 146,000 barrels (23,200 m3) of crude oil per day and is the country’s largest refinery, and the Bulwer Island refinery inQueensland, which can process up to 102,000 barrels (16,200 m3) of crude per day.[216][217]

Caucasus and the Caspian region[edit]

BP operates the two largest oil and gas production projects in the Azerbaijan’s sector of the Caspian Sea, the Azeri–Chirag–Guneshli offshore oil fields, which supplies 80% of the country’s oil production, and the Shah Deniz gas field. It also and develops the Shafag-Asiman complex of offshore geological structures.[218][219][220] In addition, it operates the Azerbaijan’s major export pipelines through Georgia such as Baku–Tbilisi–Ceyhan, Baku–Supsa and South Caucasus pipelines.[221]

Europe (ex. United Kingdom and Ireland)[edit]

A GDH (subsidiary of BP) oil depot, Frontigan, Hérault, France.

BP’s refining operations in continental Europe include Europe’s second-largest oil refinery, located in Rotterdam, the Netherlands, which can process up to 377,000 barrels (59,900 m3) of crude oil per day.[222]

In addition to its offshore operations in the British zone of North Sea, BP has interests in the Norwegian section of the sea. As of March 2013, BP holds a 19.75% stake in Russia’s state-controlled oil company Rosneft.[126]

In September 2014, BP announced it would acquire the Scandinavian aviation fuel business Statoil Fuel & Retail for an undisclosed amount.[223]

North America (ex. United States)[edit]

BP’s Canadian operations are headquartered in Calgary and the company operates primarily in Alberta, the Northwest Territories, and Nova Scotia. It purchases crude oil for the company’s refineries in the United States and has oil sands holdings in Alberta and four offshore blocks inNova Scotia.[224][225][226] The company’s Canadian oil sands leases include joint ventures with Husky Energy in the Sunrise Energy Project (50%),[227] and Devon Energy in Pike,[228] and a partnership with Value Creation Inc. in the development of the Terre de Grace oil sands lease. The BP’s investment in the Sunrise Project is £1.6 billion and it is expected to start production in 2014.[229]

BP is the largest oil and gas producer in Trinidad and Tobago, where it holds more than 1,350 square kilometres (520 sq mi) of offshore assets and is the largest shareholder in Atlantic LNG, one of the largest LNG plants in Western Hemisphere.[230]

South America[edit]

In Brazil, BP holds stakes in offshore oil and gas exploration in the Barreirinhas, Ceará and Campos basins, in addition to onshore processing facilities.[231] BP also operates biofuel production facilities in Brazil, including three cane sugar mills for ethanol production.[232][233]

Main business segments[edit]

Oil and natural gas[edit]

BP Upstream’s activities include exploring for new oil and natural gas resources, developing access to such resources, and producing, transporting, storing and processing oil and natural gas.[234][235] Upstream is responsible for the operation of BP’s wells, pipelines, offshore platforms and processing facilities. The activities in this area of operations take place in 30 countries worldwide, including Angola, Azerbaijan, Brazil, Canada, Egypt, India, Iraq, Norway, Russia, Trinidad and Tobago, the United Kingdom, and the United States.[236] In addition to the conventional oil exploration and production, BP has a stake in the three oil sands projects in Canada.[107]

Oil refining and marketing[edit]

An Aral service station in Weiterstadt, Germany

BP Downstream’s activities include the refining, marketing, manufacturing, transportation, trading and supply of crude oil, petrochemicals and petroleum products.[234] Downstream is responsible for BP’s fuels, lubricants and petrochemical businesses and has major operations located in Europe, North America and Asia.[237] As of November 2013, BP owned or held a share in 14 refineries worldwide, of which seven were located in Europe and three were in the US.[238]

As of 2013 BP owned or had a share in 17 petrochemical manufacturing plants worldwide.[239] The company’s petrochemicals plants produce products including PTA, paraxylene, and acetic acid. Its petrochemicals, lubricants, fuels and related services are marketed in over 70 countries.[240]

Air BP is the aviation division of BP, providing aviation fuel, lubricants & services. It has operations in over 50 countries worldwide. BP Shipping provides the logistics to move BP’s oil and gas cargoes to market, as well as marine structural assurance.[241] It manages a large fleet of vessels most of which are held on long-term operating leases. BP Shipping’s chartering teams based in London, Singapore, and Chicago also charter third party vessels on both time charter and voyage charter basis. The BP-managed fleet consists of Very Large Crude Carriers (VLCCs), one North Sea shuttle tanker, medium size crude and product carriers, liquefied natural gas (LNG) carriers,liquefied petroleum gas (LPG) carriers, and coasters. All of these ships are double-hulled.[242]

BP markets petroleum products in approximately 80 countries worldwide.[4] It has around 17,800 service stations, which are primarily operated under the BP brand.[13] BP Connect is BP’s flagship retail format,[155] although in the US it is gradually being transitioned to the ampm format.[195] In Germany and Luxembourg, BP operates service stations under the Aral brand, having acquired the majority of Veba Öl AG in 2001 and subsequently rebranded its existing stations in Germany to the Aral name.[243] On the US West Coast, in the states of California, Oregon, Washington, Nevada, Idaho, Arizona, and Utah, BP primarily operates service stations under the ARCO brand.[244] In Australia BP operates a number of BP Travel Centres, large-scale destination sites located which, in addition to the usual facilities in a BP Connect site, also feature food-retail tenants such as McDonald’s, KFC and Nando’s and facilities for long-haul truck drivers.[245]

Castrol is BP’s main brand for industrial and automotive lubricants and is applied to a large range of BP oils, greases and similar products for most lubricationapplications.[246]

Alternative and low carbon energy[edit]

A BP photovoltaic (PV) module that is composed of multiple PV cells. Two or more interconnected PV modules create an array.

BP Solar, a former subsidiary of BP, was a manufacturer and installer of photovoltaic solar cells headquartered in Madrid,Spain, with production facilities in India and the People’s Republic of China.[247][248] Operating since 1981 when BP acquired initially 50% of Lucas Energy Systems to become Lucas BP Solar Systems,[249] the company became wholly owned by BP in the mid-1980s. In 1999 it increased its stake in the American Solarex plant to 100%, but by 2010 it was closing down the factory at Frederick, Maryland.[250] BP Solar was closed on 21 December 2011.[130]

BP established an alternative and low carbon energy business in 2005, with plans to invest $8 billion over a 10-year period into renewable energy sources including solar, wind, and biofuels, and non-renewable sources including natural gas andhydrogen power. According to the company, it spent a total of $8.3 billion in these projects through completion in 2013.[251][252][253][254] As of 2012, the BP Alternative Energy business employed 5,000 people.[252][255] The division is housed within the firm’s “other businesses and corporate” unit, and the company does not break out its financial details.[251]

In the United States, BP has built or purchased 16 wind farms with total gross capacity of around 2,600 megawatts and another 2,000 MW under development. These wind farms include the Cedar Creek Wind Farm, Titan Wind Project, Sherbino Wind Farm, Golden Hills Wind Project, and Fowler Ridge Wind Farm.[201][202][256] In April 2013, BP put its wind energy unit up for sale, to shift its focus more to its main oil and gas businesses.[201][202][257] However, the sale plan was cancelled in July 2013.[258]

In Brazil, BP owns two ethanol producers—Companhia Nacional de Açúcar e Álcool andTropical BioEnergia—with three ethanol mills.[259][260] In England, it has a stake in the bioethanol producer Vivergo and together with DuPont has abiobutanol demonstration plant.[152][261] BP has invested in an agricultural biotechnology company Chromatin, a company developing crops that can grow on marginal land and that are optimized to be used as feedstock for biofuel,[262] and Vedrezyne, which produces petrochemicals in yeast.[263][264]

The relatively small size of BP’s alternative energy operations has led to allegations of greenwashing by Greenpeace,[265] Mother Jones[266] and oil and energy analyst Antonia Juhasz,[267] among others.[268] Juhasz notes BP’s investment in green technologies peaked at 4% of its exploratory budget prior to cutbacks.[269]BP’s 2008 budget included $20 billion in fossil fuel investment and $1.5 billion in all alternative forms of energy.[270] The Australian publication The Monthly reported in August 2010 that BP’s renewable capacity sold annually was “minuscule”, less than 1000 megawatts of wind and solar energy worldwide.[271]

Corporate affairs[edit]

BP is the fifth-largest energy company by market capitalization,[7] fifth-largest company in the world measured by 2012 revenues, and the sixth largest oil and gas company measured by 2012 production.[8][9]

In 2013, the company’s revenue was US$396.217 billion, operating income was $31.769 billion and net income was $23.758 billion.[2] As of 2013, 83,900 people employed by the company worldwide.[4]

The chairman of the BP board of directors is Carl-Henric Svanberg and the chief executive officer is Robert Dudley.[272]

Board of directors[edit]

As of November 2014:[273]

Stock[edit]

BP stock value (open, high, low and close prices) on the New York Stock Exchange in 2000–2012

BP stock is composed of original BP shares as well as shares acquired through mergers with Amoco in 1998 and the Atlantic Richfield Company (ARCO) in 2000.[274][275] The company’s shares are primarily traded on the London Stock Exchange, but also listed on the Frankfurt Stock Exchange in Germany. In the United States shares are traded in US$ on the New York Stock Exchange in the form of American depository shares (ADS). One ADS represents six ordinary shares.[276]

Following the United States Federal Trade Commission‘s approval of the BP-Amoco merger in 1998, Amoco’s stock was removed from Standard & Poor’s 500 and was merged with BP shares on the London Stock Exchange.[274] The merger with Amoco resulted in a 40% increase in share price by April 1999.[277] However, shares fell nearly 25% by early 2000, when the Federal Trade Commission expressed opposition to BP-Amoco’s acquisition of ARCO.[278] The acquisition was ultimately approved in April 2000 increasing stock value 57 cents over the previous year.[275]

After the Texas City Refinery explosion in 2005, stock prices again fell. By January 2007, the explosion, coupled with a pipeline spill in Alaska and production delays in the Gulf of Mexico, left BP’s stock down 4.5% from its position prior to the Texas City explosion.[279] However by April 2007, stocks had rebounded 13% erasing the 8.3% loss from 2006.[280] Declining oil prices and concerns over oil sustainability also caused shares to fall in value in late 2008.[281]

The Deepwater Horizon oil spill in April 2010 initiated a sharp decline in share prices, and BP’s shares lost roughly 50% of their value in 50 days.[282] BP’s shares reached a low of $26.97 per share on 25 June 2010 totalling a $100 billion loss in market value[283] before beginning to climb again. Shares reached a post-spill high of $49.50 in early 2011[284] and as of April 2012 shares remain down approximately 30% from pre-spill levels.[285]

On 22 March 2013, BP announced an $8 billion share repurchase which will be implemented during 12–18 months.[286][287][288] As of April 2013, $300 million was used, with a minimal impact to the share price. The buyback decision followed closure of the TNK-BP deal and it has to offset the dilution to earnings per share following the loss of dividends from TNK-BP.[288] According to the company the buyback would provide shareholders near-term benefits from the reshaping of the company’s Russian business.[286] The buyback is also seen as a way to invest excess cash from the TNK-BP deal.[288]

As of 2012, 38% of BP shares were held by American investors, 36% by British investors, and 14% by the rest of Europe with the remaining shares held by investors from other countries.[289] Major institutional shareholders include BlackRock Investment Management (UK) Ltd. (5.39% as of 19 February 2013), Legal & General Investment Management Ltd. (3.82% as of 19 February 2013), and Capital Research & Management Co. (Global Investors) (2.33% as of 19 February 2013).[290]

Branding and public relations[edit]

In the first quarter of 2001 the company adopted the marketing name of BP, and replaced its “Green Shield” logo with the “Helios” symbol, a green and yellow sunflower logo named after the Greek sun god and designed to represent energy in its many forms. BP introduced a new corporate slogan – “Beyond Petroleum” along with a $200M advertising and marketing campaign.[291][292] According to the company, the new slogan represented their focus on meeting the growing demand for fossil fuels, manufacturing and delivering more advanced products, and to enable transitioning to a lower carbon footprint.[293]

By 2008, BP’s branding campaign had succeeded with the culmination of a 2007 Effie Award from by the American Marketing Association, and consumers had the impression that BP was one of the greenest petroleum companies in the world.[294] BP was criticised by environmentalists and marketing experts, who stated that the company’s alternative energy activities were only a fraction of the company’s business at the time.[295] According to Democracy Now, BP’s marketing campaign amounted to a deceptive greenwashing public-relations spin campaign given that BP’s 2008 budget included more than $20 billion for fossil fuel investment and less than $1.5 billion for all alternative forms of energy.[269][270] Oil and energy analyst Antonia Juhasz notes BP’s investment in green technologies peaked at 4% of its exploratory budget prior to cutbacks, including the discontinuation of BP Solar and the closure of its alternative energy headquarters in London.[269][296] According to Juhasz, “four percent…hardly qualifies the company to be Beyond Petroleum”, citing BP’s “aggressive modes of production, whether it’s the tar sands [or] offshore”.[297]

BP attained a negative public image from the series of industrial accidents that occurred through the 2000s, and its public image was severely damaged after the Deepwater Horizon explosion and Gulf Oil spill. In the immediate aftermath of the spill, BP initially downplayed the severity of the incident, and made many of the same PR errors that Exxon had made after the Exxon Valdez disaster.[298][299] CEO Tony Hayward was criticised for his statements and had committed several gaffes, including stating that he “wanted his life back.”[300] Some in the media commended BP for some of its social media efforts, such as the use of Twitter and Facebook as well as a section of the company’s website where it communicated its efforts to clean up the spill.[301][302][303]

BP began a re-branding campaign in late 2010, and decided to focus its brand on the idea of “bringing brilliant minds together with technology at a massive scale to meet the world’s energy needs”, and focus its messaging on telling stories about people.[304] In February 2012 BP North America launched a $500 million branding campaign to rebuild its brand.[305]

The company’s advertising budget was about $5 million per week during the four-month spill in the Gulf of Mexico, totaling nearly $100 million.[306][307]

In May 2012, BP tasked a press office staff member to openly join discussions on the Wikipedia article’s talk page and suggest content to be posted by other editors.[308] Controversy emerged in 2013 over the amount of content from BP that had entered this article.[309][310] Wikipedia co-founder Jimmy Wales stated that, by identifying himself as a BP staff member, the contributor in question had complied with site policy regarding conflicts of interest.[309]

Environmental record[edit]

Position on global warming[edit]

In 1997 BP became the first multinational outside the reinsurance industry to publicly support the scientific consensus on climate change, which Eileen Caussen, President of the Pew Center on Global Climate Change described as a transformative moment on the issue.[311] Prior to 1997, BP was a member of the Global Climate Coalition an industry organisation established to promote global warming scepticism but withdrew in 1997, saying “the time to consider the policy dimensions of climate change is not when the link between greenhouse gases and climate change is conclusively proven, but when the possibility cannot be discounted and is taken seriously by the society of which we are part. We in BP have reached that point.”.[312][313] In March 2002, Lord John Browne, the group chief executive of BP, declared in a speech that global warming was real and that urgent action was needed.[314]

Hazardous substance dumping 1993–1995[edit]

In September 1999, one of BP’s US subsidiaries, BP Exploration Alaska (BPXA), pleaded guilty to criminal charges stemming from its illegally dumping of hazardous wastes on the Alaska North Slope, paying fines and penalties totaling $22 million. BP paid the maximum $500,000 in criminal fines, $6.5 million in civil penalties, and established a $15 million environmental management system at all of BP facilities in the US and Gulf of Mexico that are engaged in oil exploration, drilling or production. The charges stemmed from the 1993 to 1995 dumping of hazardous wastes on Endicott Island, Alaska by BP’s contractor Doyon Drilling. The firm illegally discharged waste oil, paint thinner and other toxic and hazardous substances by injecting them down the outer rim, or annuli, of the oil wells. BPXA failed to report the illegal injections when it learned of the conduct, in violation of the Comprehensive Environmental Response, Compensation and Liability Act.[315]

Air pollution violations[edit]

In 2000 BP Amoco acquired ARCO, a Los Angeles-based oil group.[85] In 2003 California’s South Coast Air Quality Management District (AQMD) filed a complaint against BP/ARCO, seeking $319 million in penalties for thousands of air pollution violations over an 8-year period.[316] In January 2005, the agency filed a second suit against BP based on violations between August 2002 and October 2004. The suit alleged that BP illegally released air pollutants by failing to adequately inspect, maintain, repair and properly operate thousands of pieces of equipment across the refinery as required by AQMD regulations. It was alleged that in some cases the violations were due to negligence, while in others the violations were knowingly and willfully committed by refinery officials.[317] In 2005 a settlement was reached under which BP agreed to pay $25 million in cash penalties and $6 million in past emissions fees, while spending $20 million on environmental improvements at the refinery and $30 million on community programs focused on asthma diagnosis and treatment.[318]

In 2013, a total of 474 Galveston County residents living near the BP Texas City Refinery filed a $1 billion lawsuit against BP, accusing the company of “intentionally misleading the public about the seriousness” of a two-week release of toxic fumes which began on 10 November 2011. “BP reportedly released Sulfur Dioxide, Methyl Carpaptan, Dimethyl Disulfide and other toxic chemicals into the atmosphere” reads the report. The lawsuit further claims Galveston county has the worst air quality in the United States due to BP’s violations of air pollution laws. BP had no comment and said it would address the suit in the court system.[319][320][321][322][323]

Colombian farmland damages claim[edit]

In 2006, a group of Colombian farmers reached a multimillion dollar out-of-court settlement with BP for alleged environmental damage caused by the Ocensa pipeline.[324] An agreed statement said: “The Colombian farmers group are pleased to say that after a mediation process which took place in Bogotá in June 2006 at the joint initiative of the parties, an amicable settlement of the dispute in relation to the Ocensa pipeline has been reached, with no admissions of liability.” The company was accused of benefiting from a regime of terror carried out by Colombian government paramilitaries to protect the 450-mile (720 km) Ocensa pipeline; BP said throughout that it has acted responsibly and that landowners were fairly compensated.[325]

In 2009, another group of 95 Colombian farmers filed a suit against BP, saying the company’s Ocensa pipeline caused landslides and damage to soil and groundwater, affecting crops, livestock, and contaminating water supplies, making fish ponds unsustainable. Most of the land traversed by the pipeline was owned by peasant farmers who were illiterate and unable to read the environmental impact assessment conducted by BP prior to construction, which acknowledged significant and widespread risks of damage to the land.[326]

Canadian oil sands[edit]

In Canada, BP is involved in the extraction of oil sands, also known as tar sands or bituminous sands. The company uses in-situ drilling technologies such as Steam Assisted Gravity Drainage to extract the bitumen.[225][327][328] Members of US and Canadian oil companies say that using recycled groundwater makes in situ drilling an environmentally friendlier option when compared with oil sands mining.[329]

Members of Canada’s First Nations have criticized BP’s involvement in the Canadian project for the impacts tar sands extraction has on the environment.[330] NASA scientist James Hansen said that the exploitation of Canadian tar sands would mean “game over for the climate”.[331][332] In 2010, activist shareholders asked BP for a full investigation of the project, but were defeated.[333] In 2013 shareholders criticized the project for being carbon-intensive.[334]

Health and safety violations[edit]

Citing conditions similar to those that resulted in the 2005 Texas City Refinery explosion, on 25 April 2006, the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) fined BP more than $2.4 million for unsafe operations at the company’s Oregon, Ohio refinery. An OSHA inspection resulted in 32 per-instance willful citations including locating people in vulnerable buildings among the processing units, failing to correct de-pressurization deficiencies and deficiencies with gas monitors, and failing to prevent the use of non-approved electrical equipment in locations in which hazardous concentrations of flammable gases or vapors may exist. BP was further fined for neglecting to develop shutdown procedures and designate responsibilities and to establish a system to promptly address and resolve recommendations made after an incident when a large feed pump failed three years prior to 2006. Penalties were also issued for five serious violations, including failure to develop operating procedures for a unit that removes sulfur compound; failure to ensure that operating procedures reflect current operating practice in the Isocracker Unit; failure to resolve process hazard analysis recommendations; failure to resolve process safety management compliance audit items in a timely manner; and failure to periodically inspect pressure piping systems.[335][336]

In 2008 BP and several other major oil refiners agreed to pay $422 million to settle a class-action lawsuit stemming from water contamination tied to the gasoline additive MTBE, a chemical that was once a key gasoline ingredient. Leaked from storage tanks, MTBE has been found in several water systems across the United States. The plaintiffs maintain that the industry knew about the environmental dangers but that they used it instead of other possible alternatives because it was less expensive. The companies will also be required to pay 70 percent of cleanup costs for any wells newly affected at any time over the next 30 years.[337][338]

BP has one of the worst safety records of any major oil company that operates in the United States. Between 2007 and 2010, BP refineries in Ohio and Texas accounted for 97 percent of “egregious, willful” violations handed out by the U.S. Occupational Safety and Health Administration (OSHA). BP had 760 “egregious, willful” violations during that period, while Sunoco and Conoco-Phillips each had eight, Citgo two and Exxon had one.[339] The deputy assistant secretary of labour at OSHA, said “The only thing you can conclude is that BP has a serious, systemic safety problem in their company.”[340]

A report in ProPublica, published in the Washington Post in 2010, found that over a decade of internal investigations of BP’s Alaska operations during the 2000s warned senior BP managers that the company repeatedly disregarded safety and environmental rules and risked a serious accident if it did not change its ways. ProPublica found that “Taken together, these documents portray a company that systemically ignored its own safety policies across its North American operations — from Alaska to the Gulf of Mexico to California and Texas. Executives were not held accountable for the failures, and some were promoted despite them.”[341]

The Project On Government Oversight, an independent non-profit organization in the United States which investigates and seeks to expose corruption and other misconduct, lists BP as number one on their listing of the 100 worst corporations based on instances of misconduct.[342]

1965 Sea Gem offshore oil rig disaster[edit]

Main article: Sea Gem

In December 1965, Britain’s first oil rig, Sea Gem, capsized when two of the legs collapsed during an operation to move it to a new location. The oil rig had been hastily converted in an effort to quickly start drilling operations after the North Sea was opened for exploration. Thirteen crew members were killed. No hydrocarbons were released in the accident.[343][344]

Texas City Refinery explosion[edit]

Fire-extinguishing operations after the Texas City refinery explosion

In March 2005, the Texas City Refinery, one of the largest refineries owned then by BP, exploded causing 15 deaths, injuring 180 people and forcing thousands of nearby residents to remain sheltered in their homes.[345] A 20-foot (6.1 m) column filled with hydrocarbon overflowed to form a vapour cloud, which ignited. The explosion caused all the casualties and substantial damage to the rest of the plant.[346] The incident came as the culmination of a series of less serious accidents at the refinery, and the engineering problems were not addressed by the management. Maintenance and safety at the plant had been cut as a cost-saving measure, the responsibility ultimately resting with executives in London.[347]

The fallout from the accident clouded BP’s corporate image because of the mismanagement at the plant. There had been several investigations of the disaster, the most recent being that from the US Chemical Safety and Hazard Investigation Board[348] which “offered a scathing assessment of the company.” OSHA found “organizational and safety deficiencies at all levels of the BP Corporation” and said management failures could be traced from Texas to London.[345] The company pleaded guilty to a felony violation of the Clean Air Act, was fined $50 million, the largest ever assessed under the Clean Air Act, and sentenced to three years probation.[349]

On 30 October 2009, the US Occupational Safety and Health Administration (OSHA) fined BP an additional $87 million, the largest fine in OSHA history, for failing to correct safety hazards documented in the 2005 explosion. Inspectors found 270 safety violations that had been previously cited but not fixed and 439 new violations. BP appealed the fine.[345][350] In July 2012, the company agreed to pay $13 million to settle the new violations. At that time OSHA found “no imminent dangers” at the Texas plant. Thirty violations remained under discussion.[351] In March 2012, US Department of Justice officials said the company had met all of its obligations and subsequently ended the probationary period.[352] In November 2011, BP agreed to pay the state of Texas $50 million for violating state emissions standards at its Texas City refinery during and after the 2005 explosion at the refinery. The state Attorney General said BP was responsible for 72 separate pollutant emissions that have been occurring every few months since March 2005. It was the largest fine ever imposed under the Texas Clean Air Act.[353][354]

Prudhoe Bay[edit]

Main article: Prudhoe Bay oil spill

Aerial view of Prudhoe Bay

In March 2006, corrosion of a BP Exploration Alaska (BPXA) oil transit pipeline in Prudhoe Bay transporting oil to the Trans-Alaska Pipeline led to a five-day leak and the largest oil spill on Alaska’s North Slope.[17] According to the Alaska Department of Environmental Conservation (ADEC), a total of 212,252 US gallons (5,053.6 bbl; 803.46 m3) of oil was spilled, covering 2 acres (0.81 ha) of the North Slope.[355] BP admitted that cost cutting measures had resulted in a lapse in monitoring and maintenance of the pipeline and the consequent leak. At the moment of the leak, pipeline inspection gauges (known as “pigs”) had not been run through the pipeline since 1998.[356][357][358][359] BP completed the clean-up of the spill by May 2006, including removal of contaminated gravel and vegetation, which was replaced with new material from the Arctic tundra.[355][360]

Following the spill, the company was ordered by regulators to inspect the 35 kilometres (22 mi) of pipelines in Prudhoe Bay using “smart pigs”.[361] In late July 2006, the “smart pigs” monitoring the pipelines found 16 places where corrosion had THINNED pipeline walls. A BP crew sent to inspect the pipe in early August discovered a leak and small spill,[361][362] following which, BP announced that the eastern portion of the Alaskan field would be shut down for repairs on the pipeline,[362][363] with approval from the Department of Transportation. The shutdown resulted in a reduction of 200,000 barrels per day (32,000 m3/d) until work began to bring the eastern field to full production on 2 October 2006.[364] In total, 23 barrels (3.7 m3) of oil were spilled and 176 barrels (28.0 m3) were “contained and recovered”, according to ADEC. The spill was cleaned up and there was no impact upon wildlife.[365]

After the shutdown, BP pledged to replace 26 kilometres (16 mi) of its Alaskan oil transit pipelines[366][367] and the company completed work on the 16 miles (26 km) of new pipeline by the end of 2008.[368] In November 2007, BP Exploration, Alaska pled guilty to negligent discharge of oil, a misdemeanor under the federal Clean Water Act and was fined US$20 million.[369] There was no charge brought for the smaller spill in August 2006 due to BP’s quick response and clean-up.[356] On 16 October 2007, ADEC officials reported a “toxic spill” from a BP pipeline in Prudhoe Bay comprising 2,000 US gallons (7,600 l; 1,700 imp gal) of primarily methanol (methyl alcohol) mixed with crude oil and water, which spilled onto a gravel pad and frozen tundra pond.[370]

In the settlement of a civil suit, in July 2011 investigators from the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration determined that the 2006 spills were a result of BPXA’s failure to properly inspect and maintain the pipeline to prevent corrosion. The government issued a Corrective Action Order to BP XA that addressed the pipeline’s risks and ordered pipeline repair or replacement. The U.S. Environmental Protection Agency had investigated the extent of the oil spills and oversaw BPXA’s cleanup. When BP XA did not fully comply with the terms of the corrective action, a complaint was filed in March 2009 alleging violations of the Clean Water Act, the Clean Air Act and the Pipeline Safety Act. In July 2011, the U.S. District Court for the District of Alaska entered a consent decree between the United States and BPXA resolving the government’s claims. Under the consent decree, BPXA paid a $25 million civil penalty, the largest per-barrel penalty at that time for an oil spill, and agreed to take measures to significantly improve inspection and maintenance of its pipeline infrastructure on the North Slope to reduce the threat of additional oil spills.[371][372]

2008 Caspian Sea gas leak and blowout[edit]

On 17 September 2008, a gas leak was discovered and one gas-injection well blown out in the area of the Central Azeri platform at the Azeri oilfield, a part of theAzeri–Chirag–Guneshli (ACG) project, in the Azerbaijan sector of Caspian Sea.[373][374][375] The platform was shut down and the staff was evacuated.[373][374] As the Western Azeri Platform was being powered by a cable from the Central Azeri Platform, it was also shut down.[376] Production at the Western Azeri Platform resumed on 9 October 2008 and at the Central Azeri Platform in December 2008.[377][378] According to leaked US Embassy cables, BP had been “exceptionally circumspect in disseminating information” and showed that BP thought the cause for the blowout was a bad cement job. The cables further said that some of BP’s ACG partners complained that the company was so secretive that it was withholding information even from them.[375][379][380]

2010 Texas City Chemical leak[edit]

BP has admitted that malfunctioning equipment lead to the release of over 530,000 pounds (240,000 kg) of chemicals into the air of Texas City and surrounding areas from 6 April to 16 May 2010. The leak included 17,000 pounds (7,700 kg) of benzene, 37,000 pounds (17,000 kg) of nitrogen oxides, and 186,000 pounds (84,000 kg) of carbon monoxide.[381][382] In June 2012, over 50,000 Texas City residents joined a class-action suit against BP, alleging they became sick in 2010 as a result of the 41-day emissions release from the refinery. Texas has also sued BP over the release of emissions. BP says the release harmed no one.[383]

In October 2013, a jury found that BP was negligent in the case, but due to the lack of substantial evidence linking illness to the emissions, decided the company would be absolved of any wrongdoing.[384][385]

Deepwater Horizon explosion and oil spill[edit]

Q4000-Discoverer-Enterprise.jpg This article is part of a series about the
Deepwater Horizon oil spill

Anchor handling tugs combat the fire on the Deepwater Horizon while theUnited States Coast Guard searches for missing crew

External video
Frontline: The Spill (54:25),Frontline on PBS[386]

The Deepwater Horizon oil spill has had a significant impact on the Gulf of Mexico economy and ecosystem, as well as a continuing financial, legal, and public relations burden for BP, whose conduct was found to be “reckless” in a court ruling in September 2014. BP had expended $28 billion because of the spill by September 2014 and faced $18 billion in additional penalties, which, The New York Times reported, “casts a cloud over BP’s future.”[29][28] On 20 April 2010, the semi-submersible exploratory offshore drilling rig Deepwater Horizon located in the Macondo Prospect in the Gulf of Mexico exploded after a blowout, killing 11 people, injuring 16 others. After burning for two days, the rig sank and caused the largest accidental marine oil spill in the history of the petroleum industry, estimated to be between 8% and 31% larger in volume than the earlier Ixtoc I oil spill.[18][387] Before the well was capped on 15 July 2010, an estimated 4.9 million barrels (210 million US gal; 780,000 m3) of oil was leaked with plus or minus 10% uncertainty.[388] 810,000 barrels (34 million US gal; 129,000 m3) of oil was collected or burned while 4.1 million barrels (170 million US gal; 650,000 m3) entered the Gulf waters.[389][390][391] 1.8 million US gallons (6,800 m3) of Corexit dispersant was applied.[392][393]

The spill had a strong economic impact on the Gulf Coast‘s economy sectors such as fishing and tourism.[394] According to NOAA, Gulf fisheries were recovering in 2011,[395] but in late 2012 local fishermen reported that crab, shrimp, and oyster fishing operations had not yet recovered from the oil spill and many feared that the Gulf seafood industry will never recover.[396] In late 2011 and May 2012, press reports indicated a rebound in tourism, aided by BP advertising dollars and concurrent with a nationwide rise in hotel occupancy rates. However, it was not clear if states most affected by the oil spill would still lag behind others as tourism improves nationally.[397][398] A 2013 study in the Journal of Travel Research found that the hotel industry weathered the spill better than the vacation rental industry, and that the overall impact was complex and difficult to determine.[399]

Environmental impact[edit]

Striped dolphins (Stenella coeruleoalba) observed in emulsified oil on 29 April 2010

Heavy oiling of Bay Jimmy, Plaquemines Parish; 15 September 2010

Oil spills are known to cause both immediate and long-term harm to human health and ecosystems.[371] Research into the impacts of this spill is ongoing.[400] Studies in 2013 suggested that as much as one-third of the released oil remains in the gulf. Further research suggested that the oil on the bottom of the seafloor was not degrading.[401] Oil in affected coastal areas increased erosion due to the death of mangrove trees and marsh grass.[402][403][404] Researchers say the oil and dispersant mixture, including PAHs, permeated the food chain through zooplankton.[405][406][407]In 2013 it was reported that dolphins and other marine life continued to die in record numbers with infant dolphins dying at six times the normal rate,[408] and half thedolphins examined in a December 2013 study were seriously ill or dying. BP said the report was “inconclusive as to any causation associated with the spill.”[409][410]

In October 2013, Al Jazeera reported that the gulf ecosystem was “in crisis”, citing a decline in seafood catches, as well as deformities and lesions found in fish.[411] In Louisiana, 4.6 million pounds of oily material was removed from the beaches in 2013, over double the amount collected in 2012. Oil cleanup crews worked four days a week on 55 miles of Louisiana shoreline throughout 2013.[412] Oil continued to be found as far from the Macondo site as the Florida panhandle, where scientists said the oil and dispersant mixture is embedded in the sand.[413][414][415] Researchers looking at sediment, seawater, biota, and seafood found toxic compounds in high concentrations that they said was due to the added oil and dispersants.[416] Although Gulf fisheries recovered in 2011,[395] a 2014 study of the effects of the oil spill on bluefin tuna by researchers at Stanford University and the National Oceanic and Atmospheric Administration, published in the journal Science, found that toxins released by the oil spill sent fish into cardiac arrest. The study found that even very low concentrations of crude oil can slow the pace of fish heartbeats. BP disputed the study, which was conducted as part of the federal Natural Resource Damage Assessment process required by the Oil Pollution Act.[417][418] The study also found that oil already broken down by wave action and chemical dispersants was more toxic than fresh oil.[419] Another peer-reviewed study, released in March 2014 and conducted by 17 scientists from the United States and Australia and published in Proceedings of the National Academy of Sciences, found that tuna and amberjack that were exposed to oil from the spill developed deformities of the heart and other organs. BP responded that the concentrations of oil in the study were a level rarely seen in the Gulf, but The New York Times reported that the BP statement was contradicted by the study.[420]

In February 2014, a study from University of South Florida researchers showed the possibility that subsurface oil particles from Deepwater Horizon had traveled underwater as far south as Sanibel, Florida and reached the West Florida Shelf.[421] Computer models showed the possibility of subsurface currents delivering oil to the surface in an upwelling off the Florida Shelf. Fish along the way were found to have diseased livers from filtering hydrocarbons chemically similar to oil from Deepwater Horizon, causing them immune system problems. The team concluded: “the transport of subsurface hydrocarbons…is both plausible and consistent with the observed distribution of fish lesions, fish liver chemistry and other chemical and ecological evidence.”[422] A BP spokesman disagreed with the conclusion, saying that water and sediment samples taken during the spill had not detected Deepwater Horizon oil on the Florida Shelf.

Oil particles buried in gulf sediment could remain there for 100 years.[421][422]

Effects on human health[edit]

Research discussed at a 2013 conference included preliminary results of an ongoing study being done by the National Institute for Environmental Health Sciencesindicating that oil spill cleanup workers carry biomarkers of chemicals contained in the spilled oil and the dispersants used.[423] A separate study is following the health issues of women and children affected by the spill. Several studies found that a “significant percentage” of Gulf residents reported mental health problems such as anxiety, depression and PTSD.[423] According to a Columbia university study investigating the health effects among children living less than 10 miles from the coast, more than a third of the parents report physical or mental health symptoms among their children.[423]

Australia’s “60 Minutes” reported that people living along the gulf coast were becoming sick from the mixture of Corexit and oil.[424] Susan Shaw, of the Deepwater Horizon oil spill Strategic Sciences Working Group, says “BP told the public that Corexit was ‘as harmless as Dawn dishwashing liquid’…But BP and the EPA clearly knew about the toxicity of the Corexit long before this spill.” According to Shaw, BP’s own safety sheet on Corexit says that there are “high and immediate human health hazards”.[425] Cleanup workers were not provided safety equipment by the company, and the safety manuals were “rarely if ever” followed, or distributed to workers, according to a Newsweek investigation. The safety manuals read: “Avoid breathing vapor” and “Wear suitable protective clothing.”[426][427] Oil clean up workers reported that they were not allowed to use respirators, and that their jobs were threatened if they did.[428][429][430]

A peer-reviewed study published in The American Journal of Medicine reported significantly altered blood profiles of individuals exposed to the spilled oil and dispersants that put them at increased risk of developing liver cancer, leukemia and other disorders.[431] BP disputed its methodology and said other studies supported its position that dispersants did not create a danger to health.[432]

In 2014, a study was published in Proceedings of the National Academy of Sciences which found heart deformities in fish exposed to oil from the spill. The researchers said that their results probably apply to humans as well as fish.[420]

Criminal prosecutions[edit]

On 11 March 2011, the US Department of Justice formed the “Deepwater Horizon Task Force” to consolidate several federal agencies’ investigations into possible criminal charges stemming the explosion and spill.[433] On 14 November 2012, the DOJ announced that BP and the DOJ had reached a $4 billion settlement of all federal criminal charges related to the explosion and spill, the largest of its kind in US history. Under the settlement, BP agreed to plead guilty to 11 felony counts of manslaughter, two misdemeanors, and a felony count of lying to Congress and agreed to four years of government monitoring of its safety practices and ethics. BP also paid $525 million to settle civil charges by the Securities and Exchange Commission that it misled investors about the flow rate of oil from the well.[21][434] As part of the announcement of the settlement, BP said it was increasing its reserve for a trust fund to pay costs and claims related to the spill to about $42 billion.[21]On the same day, the US government filed criminal charges against three BP employees; two site managers were charged with manslaughter and negligence, and one former vice president with obstruction.[21]

Near the end of November 2012, the U.S. Government temporarily banned BP from bidding any new federal contracts, citing the company’s “lack of business integrity.” [435] As of February 2013, criminal and civil settlements and payments to the trust fund had cost the company $42.2 billion.[436] BP sued to have the 2012 ban lifted, and in March 2014 BP and the U.S. Environmental Protection Agency reached an agreement to lift the ban. BP’s ability to bid for leases is conditional on it meeting new ethical and corporate governance standards, as well as complying with safety procedures, a code of conduct for officers, and showing “zero tolerance” for retaliation against whistleblowers among its employees and contractors. Environmental and consumer groups attacked the lifting of the ban as unwarranted.Public Citizen said it “lets a corporate felon and repeat offender off the hook for its crimes against people and the environment.”[437]

Justice Department suit[edit]

On 15 December 2010, The US Department of Justice filed a civil and criminal suit against BP and other defendants for violations under the Clean Water Act in the U.S. District Court for the Eastern District of Louisiana.[438][439]:70 The case was consolidated with about 200 others, including those brought by state governments, individuals, and companies under Multi-District Litigation docket MDL No. 2179, before U.S. District Judge Carl Barbier.[440][441] The Justice Department contends that BP committed gross negligence and willful misconduct, which BP contests, and is seeking the stiffest penalties possible.[442] The case was carefully watched, because a ruling of gross negligence would result in a four-fold increase in Clean Water Act penalties, which would cause the penalties to reach approximately $17.6 billion, and would increase damages in the other suits as well.[25][26][27] Any fines from gross negligence would hit BP’s bottom line very hard, because they would not be tax-deductible.[443] The company paid no federal income tax to the U.S. government in 2010 because of deductions related to the spill.[444]

The consolidated trial’s first phase began on 25 February 2013, to determine the liability of BP, Transocean, Halliburton, and other companies, and to determine whether the companies acted with gross negligence and willful misconduct.[24][445][446] The second phase began on 30 September 2013, and focused on the how much oil spilled into the gulf and who was responsible for stopping it.[447] The third phase, set to begin in January 2015, will focus on all other liability that occurred in the process of oil spill cleanup and containment issues, including the use of dispersants.[448][449] Test jury trials will follow to determine actual damage amounts.[450][450][451]

On September 4, 2014, Judge Barbier ruled in the first phase of the case that BP had committed gross negligence. He rejected BP’s assertion that other parties were equally responsible for the oil spill, and ruled that “its employees took risks that led to the largest environmental disaster in U.S. history.” Barbier found that BP was “reckless,” while the other two defendants, Transocean Ltd. and Halliburton Co., were negligent, and bore less responsibility for the spill. He apportioned fault at 67 percent for BP, 30 percent for Transocean and 3 percent for Halliburton. The ruling means that BP, which had already spent more than $28 billion on cleanup costs and damage claims, may be liable for another $18 billion in damages, four times the Clean Water Act maximum penalties and many times more than the $3.5 billion BP had already allotted. Barbier ruled that BP had acted with “conscious disregard of known risks.” BP strongly disagreed with the ruling and filed an immediate appeal.[29] [28]

Civil proceedings and claims settlement[edit]

In June 2010, after a meeting in the White House between President Obama and BP executives, the president announced that BP would pay $20 billion into a trust fund, that will be used to compensate victims of the oil spill. The fund would not supersede individual or state’s rights for future claims. BP also set aside $100 million to compensate oil workers who lost their jobs because of the spill.[452][453] The fund, known as the Gulf Coast Claims Facility (GCCF), was administered by attorneyKenneth Feinberg until it was succeeded by a court supervised settlement program in June 2012.[454] In January 2014, a panel of the U.S. Fifth Circuit Court of Appeals rejected an effort by BP to curb payment of what it described as “fictitious” and “absurd” claims to the settlement fund for businesses and persons affected by the oil spill. BP said administration of the settlement fund was marred by the fact that people without actual damages could file a claim. The court ruled that BP hadn’t explained “how this court or the district court should identify or even discern the existence of ‘claimants that have suffered no cognizable injury.'” [455]

On 2 March 2012, BP and businesses and residents affected by the spill reached a settlement of roughly 100,000 suits claiming economic losses. BP originally projected that its settlement costs would be $7.8 billion. As of late October 2013 it had boosted this estimate to $9.2 billion, and said it could be “significantly higher.”[455][456]

Political influence[edit]

Release of Lockerbie bomber[edit]

BP lobbied the British government to conclude a prisoner-transfer agreement which the Libyan government had wanted to secure the release of Abdelbaset al-Megrahi, the only person convicted for the 1988 Lockerbie bombing over Scotland, which killed 270 people. BP stated that it pressed for the conclusion of prisoner transfer agreement amid fears that delays would damage its “commercial interests” and disrupt its £900 million offshore drilling operations in the region, but it said that it had not been involved in negotiations concerning the release of Megrahi.[457][458]

Political contributions and lobbying[edit]

According to the Center for Responsive Politics, BP was the United States’ 136th-largest donor to political campaigns, having contributed more than US$6.6 million since 1989, 70% and 29% of which went to Republican and Democratic recipients, respectively.[459]

In February 2002, BP’s then-chief executive, Lord Browne of Madingley, renounced the practice of corporate campaign contributions, saying: “That’s why we’ve decided, as a global policy, that from now on we will make no political contributions from corporate funds anywhere in the world.”[460] When the Washington Post reported in June 2010 that BP North America “donated at least $4.8 million in corporate contributions in the past seven years to political groups, partisan organizations and campaigns engaged in federal and state elections”, mostly to oppose ballot measures in two states aiming to raise taxes on the oil industry, the company said that the commitment had only applied to contributions to individual candidates.[461]

During the 2008 US election cycle, BP employees contributed to various candidates, with Barack Obama receiving the largest amount of money,[462] broadly in line with contributions from Shell and Chevron, but significantly less than those of Exxon Mobil.[463]

In 2009 BP spent nearly $16 million lobbying the US Congress.[464] In 2011, BP spent a total of $8,430,000 on lobbying and hired 47 lobbyists.[465]

Market manipulation investigations and sanctions[edit]

The US Justice Department and the Commodity Futures Trading Commission filed charges against BP Products North America Inc. (subsidiary of BP plc) and several BP traders, alleging they conspired to raise the price of propane by seeking to corner the propane market in 2004.[466][467][468] In 2006, one former trader pleaded guilty.[467] In 2007, BP paid $303 million in restitution and fines as part of an agreement to defer prosecution.[469] BP was charged with cornering and manipulating the price of TET propane in 2003 and 2004. BP paid a $125 million civil monetary penalty to the CFTC, established a compliance and ethics program, and installed a monitor to oversee BP’s trading activities in the commodities markets. BP also paid $53 million BP into a restitution fund for victims, a $100 million criminal penalty, plus $25 million into a consumer fraud fund, as well as other payments.[470] Also in 2007, four other former traders were charged. These charges were dismissed by a US District Court in 2009 on the grounds that the transactions were exempt under the Commodities Exchange Act because they didn’t occur in a marketplace but were negotiated contracts among sophisticated companies. The dismissal was upheld by the Court of Appeals for the 5th Circuit in 2011.[468]

In November 2010, US regulators FERC and CFTC began an investigation of BP for allegedly manipulating the gas market. The investigation relates to trading activity that occurred in October and November 2008.[471][472] At that time, CFTC Enforcement staff provided BP with a notice of intent to recommend charges of attempted market manipulation in violation of the Commodity Exchange Act. BP denied that it engaged in “any inappropriate or unlawful activity.” In July 2011, the FERC staff issued a “Notice of Alleged Violations” saying it had preliminarily determined that several BP entities fraudulently traded physical natural gas in the Houston Ship Channel and Katy markets and trading points to increase the value of their financial swing spread positions.[473]

BP’s London offices, along with those of Royal Dutch Shell and Statoil, were raided in May 2013 by regulators from the European Commission, beginning an investigation into allegations the companies reported distorted prices to the price reporting agency Platts, in order to “manipulate the published prices” for several oil and biofuel products. The EC is probing allegations the companies colluded to rig prices for more than a decade.[474][475][476][477][478][479]

See also[edit]

The Secret of the Seven Sisters

all 4 video of the secret of the seven sister are there in the link below

http://revelar777.blogspot.com/search/label/oil

On August 28, 1928, in the Scottish highlands, began the secret story of oil.

Three men had an appointment at Achnacarry Castle – a Dutchman, an American and an Englishman.

The Dutchman was Henry Deterding, a man nicknamed the Napoleon of Oil, having exploited a find in Sumatra. He joined forces with a rich ship owner and painted Shell salesman and together the two men founded Royal Dutch Shell.

The American was Walter C. Teagle and he represents the Standard Oil Company, founded by John D. Rockefeller at the age of 31 – the future Exxon. Oil wells, transport, refining and distribution of oil – everything is controlled by Standard oil.

The Englishman, Sir John Cadman, was the director of the Anglo-Persian oil Company, soon to become BP. On the initiative of a young Winston Churchill, the British government had taken a stake in BP and the Royal Navy switched its fuel from coal to oil. With fuel-hungry ships, planes and tanks, oil became “the blood of every battle”.

The new automobile industry was developing fast, and the Ford T was selling by the million. The world was thirsty for oil, and companies were waging a merciless contest but the competition was making the market unstable.

That August night, the three men decided to stop fighting and to start sharing out the world’s oil. Their vision was that production zones, transport costs, sales prices – everything would be agreed and shared. And so began a great cartel, whose purpose was to dominate the world, by controlling its oil.

Four others soon joined them, and they came to be known as the Seven Sisters – the biggest oil companies in the world.

In the first episode, we travel across the Middle East, through both time and space.

We waged the Iran-Iraq war and I say we waged it, because one country had to be used to destroy the other. As they already benefit from the oil bonanza, and they’re building up financal reserves, from time to time they have to be bled.”– Xavier Houzel, an oil trader

Throughout the region’s modern history, since the discovery of oil, the Seven Sisters have sought to control the balance of power.

They have supported monarchies in Iran and Saudi Arabia, opposed the creation of OPEC, profiting from the Iran-Iraq war, leading to the ultimate destruction of Saddam Hussein and Iraq.

The Seven Sisters were always present, and almost always came out on top.

Since that notorious meeting at Achnacarry Castle on August 28, 1928, they have never ceased to plot, to plan and to scheme.

At the end of the 1960s, the Seven Sisters, the major oil companies, controlled 85 percent of the world’s oil reserves. Today, they control just 10 percent.

New hunting grounds are therefore required, and the Sisters have turned their gaze towards Africa. With peak oil, wars in the Middle East, and the rise in crude prices, Africa is the oil companies’ new battleground.

“Everybody thought there could be oil in Sudan but nobody knew anything. It was revealed through exploration by the American company Chevron, towards the end of the 70s. And that was the beginning of the second civil war, which went on until 2002. It lasted for 19 years and cost a million and a half lives and the oil business was at the heart of it.– Gerard Prunier, a historian

But the real story, the secret story of oil, begins far from Africa.

In their bid to dominate Africa, the Sisters installed a king in Libya, a dictator in Gabon, fought the nationalisation of oil resources in Algeria, and through corruption, war and assassinations, brought Nigeria to its knees.

Oil may be flowing into the holds of huge tankers, but in Lagos, petrol shortages are chronic.

The country’s four refineries are obsolete and the continent’s main oil exporter is forced to import refined petrol – a paradox that reaps fortunes for a handful of oil companies.

Encouraged by the companies, corruption has become a system of government – some $50bn are estimated to have ‘disappeared’ out of the $350bn received since independence.

But new players have now joined the great oil game.

China, with its growing appetite for energy, has found new friends in Sudan, and the Chinese builders have moved in. Sudan’s President Omar al-Bashir is proud of his co-operation with China – a dam on the Nile, roads, and stadiums.

In order to export 500,000 barrels of oil a day from the oil fields in the South – China financed and built the Heglig pipeline connected to Port Sudan – now South Sudan’s precious oil is shipped through North Sudan to Chinese ports.

In a bid to secure oil supplies out of Libya, the US, the UK and the Seven Sisters made peace with the once shunned Colonel Muammar Gaddafi, until he was killed during the Libyan uprising of 2011, but the flow of Libyan oil remains uninterrupted.

In need of funds for rebuilding, Libya is now back to pumping more than a million barrels of oil per day. And the Sisters are happy to oblige.

In the Caucasus, the US and Russia are vying for control of the region. The great oil game is in full swing. Whoever controls the Caucasus and its roads, controls the transport of oil from the Caspian Sea.

Tbilisi, Erevan and Baku – the three capitals of the Caucasus. The oil from Baku in Azerbaijan is a strategic priority
for all the major companies.

From the fortunes of the Nobel family to the Russian revolution, to World War II, oil from the Caucasus and the Caspian has played a central role. Lenin fixated on conquering the Azeri capital Baku for its oil, as did Stalin and Hitler.

On his birthday in 1941, Adolf Hitler received a chocolate and cream birthday cake, representing a map. He chose the slice with Baku on it.

On June 22nd 1941, the armies of the Third Reich invaded Russia. The crucial battle of Stalingrad was the key to the road to the Caucasus and Baku’s oil, and would decide the outcome of the war.

Stalin told his troops: “Fighting for one’s oil is fighting for one’s freedom.”

After World War II, President Nikita Krushchev would build the Soviet empire and its Red Army with revenues from the USSR’s new-found oil reserves.

Decades later, oil would bring that empire to its knees, when Saudi Arabia and the US would conspire to open up the oil taps, flood the markets, and bring the price of oil down to $13 per barrel. Russian oligarchs would take up the oil mantle, only to be put in their place by their president, Vladimir Putin, who knows that oil is power.

The US and Putin‘s Russia would prop up despots, and exploit regional conflicts to maintain a grip on the oil fields of the Caucusus and the Caspian.

But they would not have counted on the rise of a new, strong and hungry China, with an almost limitless appetite for oil and energy. Today, the US, Russia and China contest the control of the former USSR’s fossil fuel reserves, and the supply routes. A three-handed match, with the world as spectators, between three ferocious beasts – The American eagle, the Russian bear, and the Chinese dragon.

Peak oil – the point in time at which the highest rate of oil extraction has been reached, and after which world production will start decline. Many geologists and the International Energy Agency say the world’s crude oil output reached its peak in 2006.

But while there may be less oil coming out of the ground, the demand for it is definitely on the rise.

The final episode of this series explores what happens when oil becomes more and more inaccessible, while at the same time, new powers like China and India try to fulfill their growing energy needs.

And countries like Iran, while suffering international sanctions, have welcomed these new oil buyers, who put business ahead of lectures on human rights and nuclear ambitions.

At the same time, oil-producing countries have had enough with the Seven Sisters controlling their oil assets. Nationalisation of oil reserves around the world has ushered in a new generation of oil companies all vying for a slice of the oil pie.

These are the new Seven Sisters.

Saudi Arabia’s Saudi Aramco, the largest and most sophisticated oil company in the world;

Russia’s Gazprom, a company that Russia’s President Vladimir Putin wrested away from the oligarchs;

The China National Petroleum Corporation (CNPC), which, along with its subsidiary, Petrochina, is the world’s secnd largest company in terms of market value;

The National Iranian Oil Company, which has a monopoly on exploration, extraction, transportation and exportation of crude oil in Iran – OPEC’s second largest oil producer after Saudi Arabia;

Venezuela’s PDVSA, a company the late president Hugo Chavez dismantled and rebuilt into his country’s economic engine and part of his diplomatic arsenal;

Brazil’s Petrobras, a leader in deep water oil production, that pumps out 2 million barrels of crude oil a day;

Malaysia’s Petronas – Asia’s most profitable company in 2012.

Mainly state-owned, the new Seven Sisters control a third of the world’s oil and gas production, and more than a third of the world’s reserves. The old Seven Sisters, by comparison, produce a tenth of the world’s oil, and control only three percent of the reserves.

The balance has shifted.