BP: Our tankers won’t sail through Strait

Iranian vessels have tried to block a BP-flagged tanker in the Strait. (Reuters)
Updated 30 July 2019

BP: Our tankers won’t sail through Strait

  • “We will continue to make shipments through there but you won't see any BP-flagged tankers going through in the short term,”

LONDON: BP has not taken any of its oil tankers through the Strait of Hormuz since a July 10 attempt by Iran to seize one of its vessels, the British company’s Chief Financial Officer Brian Gilvary said on Tuesday.

The oil and gas company has no current plans to take any of its own vessels through the strait, Gilvary said, adding that BP is shipping oil out of the region using chartered tankers.

“We will continue to make shipments through there but you won't see any BP-flagged tankers going through in the short term,” he said.

Gilvary was speaking as the company reported better than expected second-quarter earnings due to a strong increase in oil and gas production.

Tensions spiked between Iran and Britain this month when Iranian commandos seized a British-flagged tanker in the Strait of Hormuz, the world’s most important waterway for oil shipments.

That came two weeks after British forces captured an Iranian oil tanker near Gibraltar suspected of violating EU sanctions on Syria.

Earlier this month, three Iranian vessels tried to block the passage of a BP-operated tanker through the Strait of Hormuz but withdrew after warnings from a British warship.

Washington, which has by far the strongest Western naval contingent in the Gulf, on July 9 proposed stepping up efforts to safeguard the Strait of Hormuz.

The strong increase in oil and gas production helped BP to offset weaker crude prices and refining profit to beat second-quarter profit expectations on Tuesday, lifting its shares.

BP's result contrasts with Total and Norway's Equinor, which both reported sharp earning drops, and builds on a steady recovery following deep cost cuts since the 2014 downturn, project start-ups and last year's $10.5 billion acquisition of BHP's U.S. shale assets.

Shares in BP were up 3 percent in early London trade, compared with a 0.1 percent gain in the broader FTSE index. BP and rival Royal Dutch Shell kept the blue-chip index in positive territory.

“At the midpoint of our five-year plan, BP is right on target,” Chief Executive Bob Dudley said in a statement.

BP’s underlying replacement cost profit, the company’s definition of net income, reached $2.8 billion in the second quarter, exceeding a company-provided forecast of $2.46 billion.

The second-quarter profitwas up from $2.4 billion in the previous quarter.

The results beat expectations for 10 quarters in a row, analysts at Bernstein said.

“Strong volume growth from accretive barrels and seamless execution remains underappreciated,” said Bernstein, which has an “outperform” recommendation on the stock.

The company's operating cash flow recovered to $6.8 billion in the quarter from $5.3 billion inthe previous quarter as a result of a one-off working capital release.

BP’s dividend remained unchanged at 10.25 cents per share.

Gilvary said the company would consider raising the dividend towards the end of the year as proceeds from asset sales come through and debt is reduced.

Second-quarter production rose to 3.8 million barrels of oil equivalent per day, 4 percent higher than a year earlier.

BP said it expects third-quarter 2019 reported production to be less than second-quarter, reflecting maintenance activities and the impact of Hurricane Barry on operations in the Gulf of Mexico.


New emissions blow for VW as German court backs damages claims

Updated 26 May 2020

New emissions blow for VW as German court backs damages claims

  • Scandal has already cost firm more than €30 billion; ruling serves as template for about 60,000 cases

KARLSRUHE, Germany: Volkswagen must pay compensation to owners of vehicles with rigged diesel engines in Germany, a court ruled on Monday, dealing a fresh blow to the automaker almost 5 years after its emissions scandal erupted.

The ruling by Germany’s highest court for civil disputes, which will allow owners to return vehicles for a partial refund of the purchase price, serves as a template for about 60,000 lawsuits that are still pending with lower German courts.

Volkswagen admitted in September 2015 to cheating in emissions tests on diesel engines, a scandal which has already cost it more than €30 billion ($33 billion) in regulatory fines and vehicle refits, mostly in the US.

US authorities banned the affected cars after the cheat software was discovered, triggering claims for compensation.

But in Europe vehicles remained on the roads, leading Volkswagen to argue compensation claims there were without merit. European authorities instead forced the company to update its engine control software and fined it for fraud and administrative lapses.

Volkswagen said on Monday it would work urgently with motorists on an agreement that would see them hold on to the vehicles for a one-off compensation payment.

It did not give an estimate of how much the ruling by the German federal court, the Bundesgerichtshof (BGH), might cost it.

Volkswagen shares were 0.5 percent lower. The BGH’s presiding judge had signaled earlier this month he saw grounds for compensation.

Costs mount

“The verdict by the BGH draws a final line. It creates clarity on the BGH’s views on the underlying questions in the diesel proceedings for most of the 60,000 cases still pending,” Volkswagen said.

A lower court in the city of Koblenz had previously ruled the owner of a VW Sharan minivan had suffered pre-meditated damage, entitling him to reimbursement minus a discount for the mileage the motorist had already
benefited from.

The court at the time said he should be awarded €25,600 for the used-car purchase he made for €31,500 in 2014.

“We have in principle confirmed the verdict from the Koblenz upper regional court,” said BGH presiding federal judge Stephan Seiters.

Volkswagen had petitioned for the ruling to be quashed altogether by the higher court, while the plaintiff had appealed to have the deduction removed.

A Volkswagen spokesman said that outside Germany, more than 100,000 claims for damages were still pending, of which 90,000 cases were in Britain.

The carmaker also said it had paid out a total of €750 million to more than 200,000 separate claimants in Germany who had opted against individual claims and instead joined a class action lawsuit brought by a German consumer group.

The carmaker said last month it would set aside a total of 830 million for that deal.

In a separate court, Volkswagen agreed last week to pay €9 million to end proceedings against its chairman and chief executive, who were accused of withholding market-moving information before the emissions scandal came to light.