Too hot to handle? Shell’s Gaza gas field sale hits problems

Shell's logo can be seen in this file photo. (Reuters)
Updated 11 January 2018
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Too hot to handle? Shell’s Gaza gas field sale hits problems

LONDON: It may prove to be Royal Dutch Shell’s hardest sell. The Anglo-Dutch group is struggling to find a buyer for its gas field off the Gaza Strip, even among energy companies long used to dealing with projects fraught with political and security risks.
At least one European company has shown interest in the undeveloped Gaza Marine field following a reconciliation deal in October between the two rival Palestinian factions, a source involved in the talks said.
But the firm’s discussions over the field, located about 30 km (20 miles) off the Gaza coast, have ground to a halt since tensions in the wider region have taken a fresh turn for the worse, the source told Reuters.
“Until the political situation is resolved I really can’t see anything happening here,” he said.
Gaza Marine has long been seen as a golden opportunity for the cash-strapped Palestinian Authority to join the Mediterranean gas bonanza, providing a major source of income to reduce its reliance on foreign aid.
Shell became the field’s main shareholder and operator when it acquired BG Group in 2016 for $54 billion. Since announcing the BG purchase the previous year, Shell has sold around $25 billion in assets to reduce its debt, and hopes to reach $30 billion by the year-end.
According to two industry sources, Shell is currently in talks with the Palestinian Investment Fund (PIF) to find a buyer for the energy giant’s 55 percent stake in Gaza Marine.
Both Shell and PIF, which is running the sale process and itself holds a minority stake, declined to comment.
Plans to develop the field — estimated to hold over 1 trillion cubic feet (tcf) of natural gas, the equivalent of Spain’s consumption in 2016 — were put off several times over the past decade. The delays were due to internal Palestinian rivalry and conflict with Israel, as well as economic reasons, industry sources and former BG employees told Reuters.
Then the mainstream Fatah party of Palestinian President Mahmoud Abbas signed the reconciliation deal with Hamas, an Islamist movement which seized control in Gaza a decade earlier.
This allowed the internationally-recognized Palestinian government to take office in Gaza, and PIF chairman Mohammad Mustafa said after the deal that efforts were underway to revive the Gaza Marine project as soon as possible.
TRUMP
However, a flaring of violence on the occupied West Bank since US President Donald Trump recognized Jerusalem as Israel’s capital last month has highlighted the risks involving the project, the source involved in the talks said.
Gaza Marine, discovered at the end of the last century, lies between two rapidly expanding gas hubs in Egypt and Israel, both of which have attracted huge investments in recent years.
The development of Gaza Marine, though relatively small compared with the giant Eni-operated Zohr field in Egypt or Noble Energy’s Leviathan field in Israel, is estimated to cost around $1 billion.
Gas from the field would run power stations in Gaza and the West Bank town of Jenin, and could even be delivered to neighboring Jordan. “It is a field with a lot of potential if we could unlock its value,” one source said.
Attempts to develop the field were put on hold repeatedly after Hamas, which Western countries and Israel have designated as a terrorist group, took control over the Gaza Strip in 2007.
Israel then put an economic blockade on Gaza, raising questions about the financing of the project and the sharing of future profits among the Palestinians. This made any progress with the development impossible, according to a former senior BG employee.
Israel has, however, said in the past it supports the field’s development.
“Gaza Marine has not only an economic dimension, it also has a strategic dimension and diplomatic considerations,” Maj. Gen. Yoav Mordechai, the top Israeli army liaison officer with the Palestinians, told Reuters.
“But its operation is a question of the geopolitical situation. Certainly not with Hamas there. Certainly not in the absence of diplomatic arrangements. Because it is a dramatic energy source,” Mordechai said.
Shell is unlikely to go ahead with the development of the field in the foreseeable future, according to several sources. The company is also weighing the future of its large gas facilities in neighboring Egypt, which it likewise acquired from BG.


Energy giants spent $1bn on climate lobbying, PR since Paris: watchdog

Updated 23 March 2019
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Energy giants spent $1bn on climate lobbying, PR since Paris: watchdog

  • Firms under pressure to explain how greener laws will hit business models

PARIS: The five largest publicly listed oil and gas majors have spent $1 billion since the 2015 Paris climate deal on public relations or lobbying that is “overwhelmingly in conflict” with the landmark accord’s goals, a watchdog said Friday.
Despite outwardly committing to support the Paris agreement and its aim to limit global temperature rises, ExxonMobil, Shell, Chevron, BP and Total spend a total of $200 million a year on efforts “to operate and expand fossil fuel operations,” according to InfluenceMap, a pro-transparency monitor.
Two of the companies — Shell and Chevron — said they rejected the watchdog’s findings.
“The fossil fuel sector has ramped up a quite strategic program of influencing the climate agenda,” InfluenceMap Executive Director Dylan Tanner told AFP.
“It’s a continuum of activity from their lobby trade groups attacking the details of regulations, controlling them all the way up, to controlling the way the media thinks about the oil majors and climate.”
The report comes as oil and gas giants are under increasing pressure from shareholders to come clean over how greener lawmaking will impact their business models.
As planet-warming greenhouse gas emissions hit their highest levels in human history in 2018, the five companies wracked up total profits of $55 billion.
At the same time, the International Panel on Climate Change — composed of the world’s leading climate scientists — issued a call for a radical drawdown in fossil fuel use in order to hit the 1.5C (2.7 Fahrenheit) cap laid out in the Paris accord.
InfluenceMap looked at accounts, lobbying registers and communications releases since 2015, and alleged a large gap between the climate commitments companies make and the action they take.

 

It said all five engaged in lobbying and “narrative capture” through direct contact with lawmakers and officials, spending millions on climate branding, and by employing trade associations to represent the sector’s interests in policy discussions.
“The research reveals a trend of carefully devised campaigns of positive messaging combined with negative policy lobbying on climate change,” it said.
It added that of the more than $110 billion the five had earmarked for capital investment in 2019, just $3.6bn was given over to low-carbon schemes.
The report came one day after the European Parliament was urged to strip ExxonMobil lobbyists of their access, after the US giant failed to attend a hearing where expert witnesses said the oil giant has knowingly misled the public over climate change.
“How can we accept that companies spending hundreds of millions on lobbying against the EU’s goal of reaching the Paris agreement are still granted privileged access to decision makers?” said Pascoe Sabido, Corporate Europe Observatory’s climate policy researcher, who was not involved in the InfluenceMap report.
The report said Exxon alone spent $56 million a year on “climate branding” and $41 million annually on lobbying efforts.
In 2017 the company’s shareholders voted to push it to disclose what tougher emissions policies in the wake of Paris would mean for its portfolio.
With the exception of France’s Total, each oil major had largely focused climate lobbying expenditure in the US, the report said.
Chevron alone has spent more than $28 million in US political donations since 1990, according to the report.
AFP contacted all five oil and gas companies mentioned in the report for comment.
“We disagree with the assertion that Chevron has engaged in ‘climate-related branding and lobbying’ that is ‘overwhelmingly in conflict’ with the Paris Agreement,” said a Chevron spokesman.
“We are taking action to address potential climate change risks to our business and investing in technology and low carbon business opportunities that could reduce greenhouse gas emissions.”
A spokeswoman for Shell — which the report said spends $49 million annually on climate lobbying — said it “firmly rejected” the findings.
“We are very clear about our support for the Paris Agreement, and the steps that we are taking to help meet society’s needs for more and cleaner energy,” they told AFP.
BP, ExxonMobil and Total did not provide comment to AFP.

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$ 28m

Chevron alone has spent more than $28 million in US political donations since 1990, according to the report.