Photo by Felix Clay / Greenpeace
It’s not often that you meet a life size polar bear on your way into work but that is what greeted staff at Cairn Energy in Edinburgh this morning. The Scottish oil and explorer is being targeted by Greenpeace as part of an ongoing campaign to stop the company from exploring in the waters of the Arctic off Greenland.
Several activists – along with the bear – blockaded the entrance to Cairn’s office. Earlier in the day, Geenpeace along with other environment organisations WWF and Friends of the Earth wrote to Sir Bill Gammell, Cairn’s CEO, demanding he publishes the company’s emergency response plan to any incident or accident in the Arctic. Activists from the group scaled one of the rigs Cairn was using last year in Greenland and managed to stop work there for a bit.
As questions about hydraulic fracturing – fracking as it is known in the industry – continue to build, the oil and gas industry is finding investors asking for more transparency as to how companies are going to face the growing risks to production.
France has banned fracking, and US federal regulators are investigating the safety of the process.
But the real risk to the industry at this point is how some US states and cities have taken the issue into their own hands: Pittsburgh has banned such drilling, and the New York State Assembly approved a temporary moratorium. There are other efforts under way in pockets across the US to further control or bar the process.
Hungary is taking no chances with control of Mol (MOL:BUD), the national oil company. After announcing a €2.88bn deal to buy back a controversial 21.2 per cent stake from Surgutneftgaz, the secretive Russian energy group, Budapest is proposing to up its stake further, to up to 24 per cent.
The fact that the cash-strapped government, which emerged from an IMF rescue only last year, is spending big money on increasing national control over Mol highlights how sensitive Hungary is over Russian influence in the energy sector. Most other central European states are no different. Oil sector investors in the region ignore politics at their peril.
The additional shares are coming from the semi- private pension funds that the government is nationalising, taking control of their €10bn portfolios, including a 2-2.4 per cent stake in Mol. Peter Szijjarto, the government spokesman, said on television late on Tuesday that the state would also retain these shares taking its stake to up to 24 per cent.
We all knew that the collapse of BP’s deal with Rosneft to drill in the Arctic was more damaging for BP than it was for its Russian prospective partners.
For BP, the deal represented the chance not only to tap the significant Arctic resources for which Rosneft holds licenses, but also a chance to diversify away from the Gulf of Mexico, and to show the world it can still drill safely in difficult places, even after last year’s spill.
But Rosneft, while preferring the technical skills BP had to offer, still has plenty of options on the table. Big oil companies are lining up to take BP’s place and exploit the Arctic’s resources themselves. And none of them bring the baggage of existing Russian partners who could get in the way.
Controversy about importing fuel from Canada’s vast oil sands has been swirling for some time. It is an issue environmentalists seized on with great hope when President Barack Obama came into office, given his pledges to work to reduce the country’s carbon footprint and the fact that oil from tar sands, as environmentalists refer to it, has a higher carbon intensity than that from traditional crude.
But the weakness in the US economy, high unemployment and rising petrol prices have combined to give the oil industry the edge. Indeed, even back in 2009, the Obama administration approved a pipeline to carry oil-sands fuel from Canada into the US, saying its action was designed to send “a positive economic signal in a difficult economic period”. The Keystone pipeline also was approved.