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Attack on BP’s oil sands assessment
News Articles | Financial Times | Ed Crooks | March 28, 2010
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Dissident BP shareholders have attacked the global oil company’s justification for possible investments in Canada’s controversial oil sands by arguing it is based on projections that entail catastrophic consequences for the climate.
About 150 investors say the company’s assessment of the outlook for the oil sands shows it has not properly considered the risks involved and have called for BP to commission an in-depth report.
BP is one of the few large international oil companies not to have oil sands production, but it is looking at investing in a $2.4bn (€1.8bn) project – a 50/50 joint venture with Husky Energy of Canada – and plans to make a decision by the end of the year.
Investors including Co-operative Financial Services and the pension fund of Unison, the UK public sector workers union, have put forward a resolution for BP’s annual meeting calling for a report on the financial, environmental and reputational risks of the oil sands projects for investors.
BP responded by saying the production will be needed to meet global demand, which it projects to rise about 40 per cent between 2007 and 2030, with fossil fuels still satisfying as much as 80 per cent of total demand.
However, this is based on the “business as usual” forecast put out by the International Energy Agency, the Paris-based watchdog backed by the leading developed economies.
The IEA has warned that allowing energy demand to rise in that way would have “dire consequences” for greenhouse gas emissions and global warming. The BP investors, advised by Fair Pensions, a consultancy, wrote to BP last week asking it to say whether it saw this scenario as the most likely outcome.
Lauren Compere of Boston Common Asset Management, also backing the resolution, said BP had not made an effort to discuss the issue with its North American investors: “We are still concerned that BP is not examining its oil sands strategy against a range of scenarios.”
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