Tag Archives: lng

Royal Dutch Shell profiting from Sultan’s absolute rule in Oman

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Unrest has reached Oman, the usually “sedate” and “tranquil” Sultanate on the southeastern corner of the Arabian Peninsula. Inspired by uprisings in Tunisia, Egypt, Libya and Bahrain, Omani youth took to the streets to challenge government corruption, cronyism, unemployment and a lack of democracy. Protests spread across the desert country, with police firing bullets and teargas from helicopters, killing at least six demonstrators. Sultan Qaboos exercises absolute power over his kingdom, as he has for forty years since he deposed his father.

Political parties are banned, as is collective bargaining. Omani subjects can’t hold a public meeting without the government’s approval, or express criticism of the sultan in any form or medium. Publication of books is limited and the government restricts their importation and distribution.

This all adds up to a profitable business environment for Shell. The company was the first to drill in Oman in 1956 and exported its initial tanker load of 543,000 barrels of crude in 1967, only three years before Qaboos ibn Said overthrew his father Said ibn Taimur.

Today, Shell still dominates the oil scene in the sultanate. Although other companies including BP are extracting gas, 80% of Omani crude is extracted by PDO – Petroleum Development Oman. Royal Dutch Shell is the primary foreign shareholderin this joint venture, controlling a 34% stake alongside the government’s 60% holding. Shell staff fill key positions, including Managing Director Raoul Restucci and Exploration Director Martin Stäuble. The company takes around 200,000 barrels of crude per day – 5% of its global production – from a relatively risk free and highly profitably operation. Shell also played a key role in establishing, constructing and running Oman’s two LNG (liquefied natural gas) plants – Oman LNG and Qalhat LNG – near the coastal town of Sur that has seen repeated demonstrations.

Having worked closely with Sultan Qaboos’ regime for the past forty years, Shell has developed an ongoing symbiotic relationship with the despot. John Malcolm, the Managing Director of PDO and Shell most senior representative in the country until 2010, demonstrated his allegiance to the crown in an obsequious introduction to the company’s 2007annual report:
“I would like to give special thanks to Your Majesty for your unflagging support and wise guidance to PDO over the years. Looking forward, our challenge as a Company is to work hand-in-hand with Your Majesty’s Government to secure our capability to produce oil and gas for the next 40 years. [...]

As we move towards an ever more complex and challenging future, we know that we can count on Your Majesty’s continuing support and guidance. For our part, we reaffirm our commitment to securing the future of the Sultanate of Oman under the wise leadership of Your Majesty.”

Shell’s close partnership with the Omani government is part and parcel of Britain’s foreign energy policy towards the region. The Sultan long always been an anglophile, having attended school in Kent, trained as a British officer at Sandhurst and served in the British Army in Germany in 1960. Today, sports pavilions bear his name at both Sandhurst and the RAF officers’ college, Cranwell. But the military relationship went much deeper than educating a young Qaboos.

Back in 2001, Ken Silverstein described in Salon how “the British have played an extraordinary role in Oman ever since the coup. For more than a decade afterward, British officers commanded all branches of Oman’s armed forces and hundreds more were “on loan” to the sultanate. No one was more influential in Oman than Timothy Landon, an officer in the British Special Air Services who was a classmate of the sultan’s at Sandhurst, the British military academy. He counseled the sultan on the coup, helped put down a leftist insurrection soon afterward, and later served as the rough equivalent of Oman’s national security adviser.”

This military support is not a thing of the past. The foreign office boasts in an article titled “The UK & Oman: our relationship”, that “The UK has a very strong defence and security relationship with Oman. Nearly 100 British military personnel are on loan to the Omani Armed Forces – the second largest such group anywhere in the world.”

Such military support is integrated with British government efforts to boost the interests of “our companies”. Only last Saturday, as protests were beginning to sweep the country, Lord Stephen Green, UK trade and investment minister,accompanied a a high-profile British business delegation including oil corporation representatives to Muscat.

What do Omanis really think of the Sultan? Media reports claim that most of Qaboos’ subjects only have praise for the Sultan, reserving criticism for his ministers. But only weeks before Mubarak’s fall, analysts failed to detect how broad and deep opposition to his rule ran. And in the days prior to the Day of Rage in Libya, most reporting claimed that Gaddafi held the allegiance of most Libyans and that a widespread uprising was impossible. With Shell and the FCO both favouring stability and their long, “unique” relationship with the regime, they’re banking on the country remaining “sedate” and “tranquil”.

Resistance to LNG across the Pacific Rim

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The Oregon (US) based community campaign against the LNG Palomar gas pipeline has been building solidarity connections and investigating impacts of LNG projects elsewhere in the world. In their own words,


“In the Pacific Northwest, NW Natural Gas claims that the Palomar pipeline and Bradwood Liquefied Natural Gas (LNG) terminal will bring “clean” fuel to the United States. But the truth is the real impacts of LNG importation are enormous, and extend far beyond the Pacific Northwest. LNG threatens to harm Oregon’s economy and environment, but the impacts of LNG are huge even before the fuel reaches Oregon’s shores. Far from being “clean”, the environmental and social impacts of the full LNG supply chain show LNG is a dirty, costly fuel. This series highlights the global impacts of LNG, which strongly resemble the global impacts of oil production.”

 

 

The first two articles highlighted local impacts of gas extraction and liquefaction operations along the Pacific Rim, on Sakhalin Island in Russia and the Peruvian Amazon.

The Sakhalin article highlighted the impacts of Shell’s pipeline construction on local salmon runs, also a major concern in Oregon. Sakhalin’s fisheries are absolutely critical for the local economy of Sakhalin Island. THe picture shows the destruction of salmon runs.

The following article on Camisea in Peru demonstrated the impacts LNG will have on human rights abuses and Amazon destruction.

When a violent police crackdown on non-violent indigenous rights activists in Peru left around 100 people dead, the human rights abuses of government-backed corporate ventures in the Amazon exploded into the concsiousness of the international community. Many factors – most notably implementation of the US-Peru Free Trade Agreement – contributed to the impasse which prompted 30,000 indigenous Peruvians to take non-violent direct action against seizure of their traditional lands for private profit. Yet when Peruvian police fired on protesters outside the city of Bagua, it was in some ways the predictable result of an economic model which has long shunted human rights and environmental concerns to the side while paving the way for industrial projects like LNG.

Read more…

14 Welsh harbour pilots could disrupt 25% of petrol & diesel imports

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According to the FT, industrial action by 14 harbour pilots at Milford Haven later this week could seriously disrupt supplies of oil and gas to the UK. The port includes Exxon’s RBS-financed South Hook LNG Terminal which imports gas from Qatar.

The story highlights yet again the importance of projects like Workers Climate Action.

Port strike risks oil and gas disruption

By Jonathan Guthrie

Published: February 16 2010 02:00 | Last updated: February 16 2010 02:00

The Milford Haven Port Authority is expected to seek a legal injunction today to avert the strike over pensions and will also hold last-ditch talks with the Unite union.

About 25 per cent of the UK’s petrol and diesel is supplied from Milford Haven in west Wales, one of the largest natural deep water anchorages in the world, according to the MHPA.

The port also handles a growing amount of liquefied natural gas, seen as a key energy source by the government. South Hook, one of two LNG terminals at Milford Haven, handled 7 per cent of the UK’s gas supply during the recent cold snap.

The MHPA said it had received formal notification from Unite that workers including harbour pilots would withdraw their labour on Thursday and Friday, after which they would work to rule. The pilots are understood to receive salaries of up to six figures a year for the demanding and dangerous job of clambering aboard huge vessels and bringing them safely into port. Without them, oil, petrol and LNG tankers would be unable to unload, the port said.

The dispute has been triggered by the decision of the MHPA to reduce the pension benefits accrued by its staff. The authority argues that its final salary scheme is burdened with a large and growing pension deficit. Unite was not in a position to comment on the dispute yesterday afternoon.

A strike may not raise energy prices significantly. Energy companies store large quantities of oil and gas for processing and to even out peaks and troughs in supply and demand.

Australia’s worst oil spill in same week as government approves mega-Gorgon gas project

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Thai oil company PTT and the Australian government are struggling to deal with an enormous oil spill of the north coast in the Timor Sea. The leak, which started on August 21st, has created a spill stretching over 70 miles by 25 miles. Yet during the same week, Canberra granted environmental approval to Chevron & Shell’s $42 billion LNG project – one of the world’s largest.

Reports seem to show that the Australian government repeatedly downplayed the scale & threat of the Timor spill, with the Australian Green Party claiming the oil is far closer to the coast than previously reported. The West Atlas oil rig, operated by Thai state oil company PTT, is thought to be leaking about 470,000 litres of oil a day since an accident caused the rig’s evacuation on August 21. Plugging the leak will take at least another week (when a back-up rig should arrive from Singapore to drill another hole), but could take another five.

The Kimberley coast is described by Tourism Australia as “one of the world’s last true wilderness areas” while the spill could be on the scale of Exxon Valdez in Alaska.

But this didn’t cause Australian Environment Minister Peter Garrett to think twice before providing Chevron, Shell and Exxon with environmental approval to develop their goliath Gorgon LNG project off Australia’s North-West coast. He did say that the “key focus” had been on “whether Gorgon’s expansion could manage the potential effect on the flatback turtle”. (Oil companies like to focus in on how they will protect certain rare species – BP emphasised how it would take care of the turtles in Sangachal and Ceyhan as part of its BTC project as well).

The project will super-cool 15 million tonnes of gas every year from the Gorgon gas fields, liquefying it so that it can be transported to Chinese, Japanese and US markets. In total the fields hold 40 trillion cubic feet of gas.

Shell owns 25% of the project, so will receive 3.75 million tonnes of gas each year. The company already agreed to sell more than half of this - 2 million tonnes a year to Chinese state company Petrochina every year for 20 years. Kathleen Eisbrenner, Executive Vice President of Shell Global LNG, signed the 20-year contract in November 2008 in Beijing.


Kathleen Eisbrenner, Executive VP of Shell Global LNG