Sector update: energy providers shift their focus further afield

Since the Gulf of Mexico oil spill in 2010, oil giant BP has barely been out of the headlines.

The legal battle spawned by the case continues to rumble on, and in the latest development, according to Computer World UK, the company has asked a US court to allow a detailed examination of IT systems belonging to the cementing contractor Halliburton.

BPsays that Halliburton is hiding evidence about its role in the oil spill, claiming that the contractor failed to use its own OptiCem modelling software correctly to analyse safe drilling conditions.      The Financial Times, meanwhile, reports that BP is to face an additional five charges relating to the spill from the US offshore safety regulator, in addition to the seven safety breaches it has already been charged with.

The paper says that each citation carries a minimum daily penalty of $35,000 and that the charges are likely to have a bearing on the civil trial of BP due to start in February.

Despite its woes, BP is on track to win 11 new leases for oil exploration in the Gulf of Mexico after making winning bids for the leases at sale in New Orleans according to a separate report in the Financial Times.

The paper says that BP welcomed the results and planned to drill further wells to develop past discoveries and explore new prospects.

While it may be expanding its drilling operations, BP has finally decided to sell its solar business. Mike Petrucci, chief executive of BP Solar, told employees in an email that the global economic situation was having a significant impact on the solar industry,

“making it difficult to sustain long-term returns for the company,” the Financial Times reports, adding that the solar industry has had a troubled year, in particular because of competition from low-cost solar panel manufacturers in China.

Tata Power, the company’s Indian partner, is to buy out its 51 per cent stake in the companies’ joint venture, Tata BP Solar.

A BP competitor, Royal Dutch Shell, is one of more than a dozen international companies to sign a letter to the European Commission president, José Manuel Barroso, asking Brussels to prop up the EU carbon market, according to the Financial Times.

The letter said that the eurozone crisis meant carbon prices were likely to stay low for at least another year in the EU emissions trading system, the world’s largest carbon market.

The signatories “urged governments to bolster the six-year-old scheme by withholding allowances due to be released into the market from 2013” because this “would address an oversupply of allowances that, along with eurozone uncertainty, has seen prices plunge this year,” the paper says.

The role of multinational energy companies in Iraq has been the subject of several news stories.

According to The Economist, the Iraqi government has signed a 25-year agreement with Shell and Mitsubishi to create the Basra Gas Company, a joint venture in which Shell and Mitsubishi will hold 49 per cent between them.

The new venture has been awarded rights to the gas from the Rumaila, Zubair and West Qurna fields, the paper reports, adding, however, that “the oil there is already controlled by an assorted group of rival oil and gas giants” including BP and its partner, the Chinese National Petroleum Company.

Apparently BP has made it clear that it does not want Shell “anywhere near their fields”, which will make it challenging for Shell to manage gas production from the site.

Despite this and many other problems (such as a creaking energy infrastructure), the rewards for Shell and other energy companies could be substantial, the paper says, as Iraq has estimated reserves of around 143 billion barrels of crude oil and 126.7 trillion cubic feet of gas.

“The oil giants,” the report concludes, “cannot afford to ignore this vast bounty.”

Exxon, however, has “shocked” the oil industry, according to the Financial Times, by  signing contracts to explore in Kurdistan, Iraq’s semi-autonomous northern region, despite the fact that the Baghdad government regards such contracts as illegal and has responded angrily.

It is now considering whether to cancel the company’s contract as an operator to develop the West Qurna field in southern Iraq.

Royal Dutch Shell’s move into gas exploration could be part of a significant trend.

A Financial Times story on the release of the 2012 edition of ExxonMobil’s report The Outlook for Energy reveals that Exxon sees gas as an increasingly viable long-term option: the report reveals that the company believes that over the next three decades natural gas will overtake thermal coal to become the world’s most important source of energy except oil.

“The company goes as far as to predict that the energy market will start to wave goodbye to thermal coal,” the paper says.

BPis not the only power company facing legal headaches.

CIOreports that the head of nuclear security at EDF, the French parent company of EDF Energy, has been given a prison sentence and his company fined 1.5 million euros (£1.3 million) after being found guilty of spying on environmental campaigners Greenpeace by using Trojan malware.

EDF was accused of setting out in 2006 to spy on Greenpeace’s then head of campaigns in France, Yannick Jadot, with the aim of discrediting the campaigning organisation.

The fine is “one of the largest ever imposed by a court on a French corporate for any reason”, CIO says.

To add to the firm’s troubles, EDF Energy has been on the receiving end of complaints from angry customers this year.

A report in the Financial Times says that the company was at the bottom of the league table for customer complaints created by industry watchdog Consumer Focus, after experiencing a 75 per cent leap in customer grievances between July and September.

“The London-based company, which became the first supplier to have a zero star rating, issued an apology to customers after admitting the introduction of new billing systems had affected its performance,” the paper says.

Finally, the Financial Times reports that National Grid has been fined by the energy regulator Ofgem for delays in tackling gas escapes last winter.

The company’s subsidiary NGG was fined £4.3m. Along with Northern Gas Networks, it was judged to be in breach of licence conditions that stipulate distribution firms attend 97 per cent of uncontrolled gas escapes within one hour and 97 per cent of controlled gas escapes in two hours.

Pic: Paul Lowrycc2.0