February 23, 2024

U.S. Steps Up Anti-Corruption Inquiry Against BHP

The company has been under investigation by the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) since 2009, mainly over exploration activities that had been terminated and its hospitality at the Beijing Olympic Games.

“As a part of the U.S. process, the SEC and DOJ have recently notified the group of the issues they consider could form the basis of enforcement actions and discussions are continuing,” BHP said in a statement, adding that it could not comment on possible outcomes.

BHP has said previously it believed it had complied with all applicable laws in regards to its Olympics sponsorship, and said on Friday it has what it considers to be a “world class anti-corruption compliance program.”

“BHP Billiton is fully committed to operating with integrity and the group’s policies specifically prohibit engaging in unethical conduct,” the company said, adding that it was cooperating fully with the authorities.

After being approached by the SEC, the company said in 2010 that it had uncovered potential violations of anti-corruption laws “involving interactions with government officials”, which media have said related to a payment to Cambodian officials in 2006 for a bauxite project that BHP later dropped.

Penalties for violations of the U.S. Foreign Corrupt Practices Act can vary widely, depending on, among other factors, the extent and duration of the violations, the level of benefit the company received, and the level of cooperation from the target of the probe.

In one recent case, French oil giant Total SA agreed to pay $398 million to settle U.S. criminal and civil allegations that it paid $60 million in bribes to win oil and gas contracts in Iran over nine years.

In another recent settlement, Parker Drilling booked a $15.85 million charge to settle allegations by the SEC and Justice Department that it bribed officials in Nigeria and Kazakhstan.

SEC spokesman John Nester declined to comment on the BHP probe. The Department of Justice was not immediately available for comment.

The company released the update on the anti-corruption probe ahead of its annual results, due on August 20, the first results under new Chief Executive Andrew Mackenzie.

(Reporting by Sonali Paul; Editing by Richard Pullin)

Article source: http://www.nytimes.com/reuters/2013/08/15/business/15reuters-bhp-investigation.html?partner=rss&emc=rss

Exxon Earnings Rise 41%

NEW YORK (AP) — Exxon Mobil Corp. said Thursday that higher oil prices and improved refining margins boosted its second-quarter profits 41 percent.

The largest publicly traded oil company reported earnings of $10.68 billion, or $2.18 per share, for the three months ended June 30. That compares with $7.56 billion, or $1.60 per share, for the same part of 2010. Revenue grew 36 percent to $125.5 billion.

It’s the highest profit for Exxon since it set a corporate earnings record of $14.8 billion in the third quarter of 2008. But the results fell short of Wall Street estimates of $2.30 per share. Revenue topped projections of $119.2 billion.

Oil and natural gas prices rose during the quarter, and the Irving, Texas oil giant took advantage by cranking up production 10 percent. Exxon’s production business increased earnings 60 percent to $8.5 billion.

Much of that added production was in natural gas, however, including huge volumes in the U.S. from XTO Energy, which Exxon acquired last year. During the second quarter, natural gas prices rose 2 percent in the U.S. for Exxon to $4.20 per 1,000 cubic feet, while crude oil prices rose 44 percent to $105.27 per barrel.

“I wonder whether it makes sense to be producing as much (natural gas) as they are at these prices,” Argus Research analyst Phil Weiss said.

In the U.S., many natural gas drilling leases require the holder to maintain at least a base level of natural gas production. But Weiss said Exxon should still be able to cut back while prices remain relatively low.

“If I reduce supply, then prices have to rise,” he said.

Higher oil prices also boosted earnings for Exxon’s European rivals BP and Royal Dutch Shell PLC in the second quarter. All three missed Wall Street expectations, however, as they reported weaker oil production from fields outside the U.S. Foreign entitlement contracts force them to take less oil as prices rise, analysts said.

Exxon said its refining business increased earnings 11 percent overall to $1.4 billion as prices climbed for gasoline, jet fuel, diesel and other petroleum products. Profits dropped, however, for Exxon’s international refineries. Profits also slipped 3 percent to $1.3 billion for Exxon’s chemicals operation because of lower sales volumes and higher taxes.

Shares fell $1.39, about 1.7 percent, to $81.91 in morning trading.

Article source: http://feeds.nytimes.com/click.phdo?i=d3c3e3a7919849e6709d31d51815ded2

British Reach Deal Package With India

Britain and India will unveil about £1 billion ($1.6 billion) in commercial deals, days after BP, the oil giant, won approval to buy $7.2 billion in stakes in oil and natural gas blocks owned by Reliance Industries of India.

The British chancellor of the Exchequer, George Osborne, and his Indian counterpart, Pranab Mukherjee, will present the agreements Monday in London after the regular talks that both countries hold each year. The talks also seek to improve financial partnerships and ways to support businesses trying to establish a presence in each country.

“Britain is now making the largest foreign investment in India,” Mr. Osborne said Sunday in a statement released by his office. “British companies are competing with the best in the world, despite some skeptical voices, and it is good for growth in Britain.”

Mr. Osborne and Prime Minister David Cameron are striving to increase trade with India, China and Brazil, and break British reliance on finance as a source of income. The BP deal may reach as much as $20 billion, the Treasury said.

Five months after announcing the accord, BP will acquire a 30 percent interest in 21 of 23 blocks proposed by Reliance, S. Jaipal Reddy, the Indian oil minister, said after a cabinet meeting in New Delhi last week.

Last year, BP signed a deal to explore off Brazil and sealed a partnership with Cnooc, the biggest offshore oil producer in China, for South China Sea licenses.

When the Reliance deal was announced in February, analysts approved. The wave of unrest from North Africa to the Persian Gulf made countries like India and Russia look more attractive to multinational oil companies. And BP’s chief executive, Robert Dudley, was eager to find new ways for BP to grow after it was forced to sell assets to pay for last year’s Gulf of Mexico oil spill.

Article source: http://feeds.nytimes.com/click.phdo?i=35112b9684e23ab65e279c8b392231ca

Deadline Looming, BP Tries to Salvage Rosneft Deal

BP is trying to salvage a partnership with Rosneft that was announced in January but quickly hit a legal snag when Russian shareholders in a separate BP partnership filed a legal action to block the Rosneft deal.

BP’s shares fell 1 percent in London on Monday amid concern that the Rosneft deal could collapse — and with it BP’s plan to recover from last year’s Gulf of Mexico debacle by expanding into Russia.

The agreement with Rosneft, Russia’s state-owned oil giant, called for the companies to invest in each other through a share swap and to jointly explore for offshore oil in the Russian Arctic. BP’s offshore drilling technology was to make possible the first significant Russian oil exploration project in the Arctic Ocean.

The two companies originally planned to complete that deal a month ago, but had extended the deadline to midnight Monday, London time, to give BP time to resolve its dispute with its Russian partners in a separate venture called TNK-BP.

Those Russian partners, operating through a holding company known as AAR, contend that BP violated terms of the partnership in forging the agreement with Rosneft.

A lapse of the midnight deadline without a Rosneft deal would be a major blow to BP’s effort to win back investors’ confidence, some analysts said. The deal was to give BP access to the Kara Sea, one of the icy backwaters of the Arctic Ocean that has recently become an object of keen attention by the international energy industry as a new oil frontier.

“This deal is very important,” Doug Youngson, an analyst at Arbuthnot Securities in London, said. “This is how BP in theory was going to come back after the Gulf of Mexico accident.”

After the deal was announced in January, and was publicly blessed by Russia’s prime minister, Vladimir V. Putin, and president, Dmitri A. Medvedev, BP’s stock rose. The company seemed poised to secure access to the Arctic at a time when lawsuits and regulations in the United States and Canada were delaying drilling, and when in particular BP’s chances of winning new offshore licenses in North America appeared dim.

But BP’s partners in TNK-BP sued within days to block the arrangement and demanded to be part of the new business. The Russian partners in TNK-BP rejected an offer from BP in January to pay them in oil assets and cash to remove their objections. They later turned down an offer to buy them out of TNK-BP.

A Stockholm arbitration court that has handled the AAR partners’ case against BP, ruled recently that BP and Rosneft could proceed with the share swap with restrictions including waiving voting rights in each others’ shares. But they would have to cede the Arctic exploration venture to TNK-BP, the court ruled.

Under this arrangement, BP would still retain a financial interest in the Arctic deal but would lose some operational control. But the arbitration ruling also created a new issue: any compromise hinged on Rosneft’s approving the involvement of TNK-BP, whose Russian partners are not necessarily in synch with the Kremlin leaders who ultimately oversee Rosneft.

Rosneft has said it would prefer to work with BP directly, rather than through TNK-BP. This has left the three parties — BP, Rosneft and the AAR partners — at an impasse.

With the deadline for the deal approaching, some analysts described three possible outcomes for BP. One would involve Rosneft either agreeing to the changed terms, or at least extending the deadline again, which would give the three parties more time to find a compromise.

Another possibility could be BP’s resolving the dispute with AAR by buying the stake in the TNK-BP joint venture it does not already own. Such a step would be costly for BP, which is still paying for the Gulf of Mexico spill, but Rosneft could take a part in any buyout.

And it is unclear whether the Russian shareholders in TNK-BP would sell. BP said a month ago that it had made a cash offer of about $27 billion to the shareholders but they rejected it. The AAR partners have valued TNK-BP at about $70 billion, meaning a buyout would cost Rosneft and BP about $30 billion.

A third possibility, of course, would be the collapse of the BP-Rosneft deal. And yet, some analysts said that if the deadline was not met and the deal expired, BP could still try to strike a new pact with Rosneft.

Rosneft, though, would also be free to open talks with other major international oil companies to explore the Kara Sea if its deal with BP collapsed. That agreement requires Rosneft to negotiate exclusively with BP on developing the two exploration blocks. 

A spokesman for BP in London declined to comment, as did a spokesman for the group of Russian billionaires who are shareholders in TNK-BP. Rosneft representatives were not available.

Oil analysts in Moscow have said AAR, by becoming an obstacle to this pivotally important deal for both BP and the Russian government, could be positioning itself to win a higher buyout price. AAR representatives have said that was not their motivation in blocking the deal.

Despite a quarrelsome history with its partners, BP’s Russian venture has been a success for years. After contributing about $6 billion in cash and assets to the founding of the TNK-BP venture in 2003, BP has since then made more than $14 billion in dividends from it — it still retains 50 percent of the assets.

With BP’s operations in Russia becoming nearly as important to the company as those in the United States, it was logical that in the wake of the Gulf of Mexico oil spill last year BP would seek to expand its Russian operations.

The question now is whether that logic can play out.

Andrew E. Kramer reported from Moscow.

Article source: http://feeds.nytimes.com/click.phdo?i=4603030e2b0051d618231dc1a7dff555

BP Tells Shareholders of Efforts to End Rosneft Rift

BP has been in a three-month legal battle with its Russian billionaire partners in its joint venture TNK-BP, who had blocked a potentially lucrative share-swap agreement with Rosneft, the state-controlled oil giant in Russia. BP won a last-minute respite Thursday in its efforts to salvage the Rosneft agreement when the two companies agreed to extend by another month the deadline to complete the deal.

The BP chief executive, Robert W. Dudley, played down the severity of the dispute, saying the company’s relationship with its TNK-BP partners was “noisy” but not “dysfunctional.”

“It’s not personal,” he said. “It’s business.”

“We’ve offered participation in the Arctic, we’ve offered cash, we’ve offered participation in international ventures,” Mr. Dudley told investors at BP’s annual shareholder meeting in London. “But we won’t offer a large amount or significant stake in BP because it’s not in the interest of shareholders.”

BP’s partners in TNK-BP rejected Mr. Dudley’s claims and said “BP has never made a constructive proposal to turn the Rosneft deal over to TNK-BP.”

The Russian partners are “not interested in the selective parts of the deal that BP feels it can give up,” Stan Polovets, a spokesman for the group, said in an e-mailed statement. “Now is the time for sensible proposals from BP to resolve the problems that have been created.”

Mr. Dudley said BP would be “working to bring about a resolution,” adding that “Russia is one of the world’s most important sources of oil and gas as well as a massive market. BP needs to be there. It is part of our strategy.”

BP now has until May 16 to persuade an arbitration tribunal to lift the block or settle with its partners in TNK-BP to allow the Rosneft deal to go ahead. The TNK-BP shareholders oppose the deal because they say it violates their shareholder agreement. BP’s shares fell 0.9 percent on Thursday in London.

BP made clear that it remained committed to TNK-BP and its business in Russia despite recent difficulties there. “Whilst life has not always been easy, TNK-BP has been a successful venture with superior returns,” BP’s chairman, Carl-Henric Svanberg, said.

Some analysts said previously that BP’s options to salvage its Rosneft deal, which is valued at about $7.8 billion, include buying the stake in TNK-BP it does not already own. It could also let TNK-BP strike the agreement with Rosneft instead or sell the stake in TNK-BP, though that is less likely because the Russian venture accounts for about a third of BP’s oil production.

Apart from questions about Russia, BP’s management also faced angry comments from shareholders about how it handled the cleanup of the oil spill in the Gulf of Mexico.

Julie Tanner, assistant director for social responsibility at Christian Brothers Investment Services, criticized BP’s board for not disclosing enough details about the spill. At one point, a handful of activists protesting BP’s tar sands activities approached the stage and were carried out of the room by security staff.

Outside the Excel convention center in the east of London, about 30 people, including fishermen from the United States, gathered to protest BP’s role in the oil spill. They banged drums and held up banners. Some shareholders were refused entry to the meeting, Mr. Svanberg said, because they appeared to have a plan to disrupt the meeting.

David Jolly contributed reporting from Paris.

Article source: http://www.nytimes.com/2011/04/15/business/global/15bp.html?partner=rss&emc=rss