Corruption in

Chevron ruling

Haze shuts down

Indonesian oil wells

US judge rules that an

Ecuador spill judgement
was obtained using
fraudulent means

Seasonal slash and burn

forest fires blanket region
in pall of smoke, forcing
oil firms to cease work

See p6

See p7

. . . US refiners told to strip more sulphur p13 . . . Aussie emissions fall p14 . . . Fusion breakthrough revealed p20 . . .

International news
SOS for Europes chemical industry
INEOS Jim Ratcliffe calls on Barroso and the EU to halt the decline
INEOS chairman Jim Ratcliffe has written an open letter
to Jos Manuel Barroso, the president of the European
Commission, warning that the European chemical industry
could disappear within the next decade.
The European chemical industry is facing very tough conditions
and competition from overseas, and Ratcliffe urges Barroso to take
urgent steps to protect the industry, which in Europe alone provides
annual revenues of US$1trn, on a par with the automotive industry.
While intensely technical as an industry, and one of the reasons
historically that Europe has been so successful, technology alone
will not save it, he says.
He writes that INEOS profits in Europe have halved in the
past three years, while those in the US have tripled. BASF, the
worlds largest chemical company has, for the first time in its
history, announced cutbacks in Europe blaming stagnant markets,
expensive energy and expensive labour.
Ratcliffe likens the chemical industry decline to that of the
European textile industry in the 1980s, which likewise, could not
compete with Asian labour rates. The biggest problem is the cost
of energy and feedstocks. Gas is three times the cost in Europe as
in the US, while electricity is 50% more expensive.
There are US$71bn worth of announced petrochemical
expansions [in the US] on the back of shale gas flowing into
chemicals. This is predicted to grow to over US$100bn, he writes.
In the Middle East too, low gas prices have caused a boom
in petrochemical investment, while China is likely to become
self-sufficient in chemicals in the near future, and will soon start
exporting.
I can see green taxes, I can see no shale gas, I can see closure
of nuclear, I can see manufacturing being driven away, he says.
Ratcliffes concerns echo those raised by Cefic director general
Hubert Mandery in February, who also warned of a manufacturing
shift to Asia and the US.

The EU announced new energy and climate change targets in

January, which include a target to cut greenhouse gas emissions
by 40% by 2030 and to generate 27% of electricity from renewable
sources in the same time frame. The emphasis on lowering
emissions, through phasing out cheaper fossil-fuelled generation
and the cost of emitting greenhouse gases as a result of the
EU Emissions Trading Scheme are part of what is pushing up
manufacturing costs in the bloc and damaging competitiveness,
Mandery says.
Energy supplies that support a cost-efficient and
competitive transition towards a low-carbon economy, including
unconventional sources like shale gas, must now be developed.
Our trade agreements with other countries need to provide for
competition and fair access to energy and feedstock, he says,
adding that climate policy must be balanced with competitiveness
and affordability.
Stephen Elliott, CEO of the UKs Chemical Industry Association
(CIA), tells tce that industry must work with the EU to make its
concerns known.
With the European elections coming up and new
commissioners and MEPs coming in, I think our industry needs to
get its key priorities and manifesto in front of them, he says.
The EU as a whole, he adds, would do well to follow the UKs
example, where the government has set up the Chemistry Growth
Partnership, to work with the industry to tackle key themes on
skills, innovation, supply chains, finance and energy.
As the European Council begins debating the 2030 targets
proposed by the Commission, it will be interesting to see what,
if anything, they do to help energy-intensive industries, like the
chemical industry.
The biggest concern is the extent to which we do the right
thing in leading the way against climate change but we dont cut
our throats as far as competitiveness goes, says Elliott.

april 2014

www.tcetoday.com

tce

NEWS

Ecuador spill ruling

obtained fraudulently
Judgement gained using corrupt practices, says judge
US JUDGE Lewis Kaplan has
meansto obtain the ruling
ruled that a judgement in
against the company. Kaplan,
Ecuador ordering Chevron to
of the US District Court for the
pay US$9.5bn in damages for
Southern District of New York,
oil spills in the Amazon was
has now agreed. He found that
obtained by fraudulent means. Donziger violated the federal
Racketeer Influenced and Corrupt
The decision is another victory
Organizations Act (RICO).
for Chevron in its long-running
legal battles, which began in
In a 500-page document,
1993, over oil spills in Lago Agrio
Donziger has been found to have
made between 19641990 by
falsified evidence and persuaded
Texaco, which it bought in 2001.
experts to write fraudulent reports.
The company has always claimed
For example, a piece of evidence
that Texaco fully remediated
submitted by the plaintiffs was
all spills and that the work was
the independent Cabrera report
certified by the Ecuadorean
into pollution in the Ecuadorean
government. InSeptember last
Amazon. However, far from being
year, the Permanent Court of
independent, the report had in
Arbitration in The Hague ruled
fact been largely written by an
that this was indeed the case
environmental consulting firm,
and the agreements release
Stratus Consulting, working for
the company from liability for
Donziger.
collective compensation claims.
One member of the plaintiffs
Chevron has long argued
legal team, Jeffrey Shinder,
in court that Steven Donziger
quit in 2010 after discovering
the lawyer for the plaintiffs
the extent of the deception. He
from Lago Agrio used corrupt
later provided evidence against

US ban on BP contracts is
lifted
THE US Environmental Protection Agency (EPA) has lifted a
ban on BP signing new contracts for oil and gas operations in
US government-owned territory.
EPA imposed the ban in November 2012 after BP pleaded
guilty to 11 criminal charges relating to the Deepwater
Horizon disaster. EPA said the oil giant had shown a lack
of business integrity. With the lifting of the ban, BP and its
subsidiaries, including BP Exploration and Production, will
once again be able to bid for federal contracts, including in
the Gulf of Mexico.
As part of the agreement, BP has agreed to various
conditions covering safety and operations, ethics and
compliance, and corporate governance requirements. BP will
also drop legal action against EPA, which it began last year in
an effort to get the ban overturned.
After a lengthy negotiation, BP is pleased to have reached
this resolution, which we believe to be fair and reasonable,
says John Ming, chairman and president of BP America.
Todays agreement will allow Americas largest energy
investor to compete again for federal contracts andleases.

www.tcetoday.com

april 2014

Donziger in court.
Kaplan said that the court had
also found clear and convincing
evidence that Donziger paid
the Ecuadorean judge Nicols
Zambrano US$500,000 to sign
a judgement written by the
plaintiffs. Thebribery was
facilitatedby Alberto Guerra
Bastidas, the first judge assigned
to the trial. Guerra had
ghostwritten drafts of
several other orders for
Zambrano that mostly
found in favour of
the Lago Agrio
plaintiffs, and had
received payments
from their legal
team.
Kaplan has also
ruled that neither
Donziger nor the Lago
Agrio plaintiffs are
allowed to keep
proceeds resulting
from litigation against
Chevron. Any money
obtained so far must be returned.
The saga of the Lago Agrio
case is sad. It is distressing
that the course of justice was
perverted. The LAPs [Lago
Agrio plaintiffs] received the
zealous representation they
wanted, but it is sad that it was
not always characterised by
honour and honesty as well. It
is troubling that, in the words of
Jeffrey Shinder, what happened
here probably means that well
never know whether or not there
was a case to be made against
Chevron, concluded Kaplan.
Chevron vice president and
general counsel Hewitt Pate
welcomes Kaplans judgement
and says that Chevrons
reputation has been taken
hostage by a handful of corrupt
lawyers looking to enrich
themselves. He says that the
company is confident that any
country respecting the rule of
law will also find the Ecuadorean

judgement fraudulent
and unenforceable.
Chevron believes that
the people of the Oriente
deserve a better quality
of life. They lack basic
infrastructure, including water
and sewage treatment. We hope
that this ruling will prompt the
government of Ecuador and
Petroecuador to finally take
responsibility and address the
issues facing the region and its
people, he says.
Donziger has accused Kaplan
of implacable hostility towards
him and says that he is wrong on
the law.
This decision is full of vitriol,
is based on paid evidence
from a corrupt former judge,
and ignores the overwhelming
evidence that Chevron committed
environmental crimes and fraud
in Ecuador. Through this decision,
we now have the spectacle of a
Manhattan trial judge purporting
to overrule Ecuadors Supreme
Court on questions of Ecuadorian
law, says Donziger.
He plans to appeal the
ruling and expects to be fully
vindicated.

CAREERS
NEWS tce

Haze shuts
down Indonesia
oil wells
Chevron hit hardest as smog
sweepsacross Sumatra

FMC will divide in two

CHEMICALS manufacturer
FMC will split into two
companies with one holding its
agriculture, health and nutrition
businesses, and the second its
minerals business.
The move is part of the
companys ongoing strategy to
realign its business segments,
allowing each company to
pursue its own strategy.
This will give each company
greater focus on the success
factors that are most important
to its business and allow the
adoption of a capital structure
that is appropriate to its
business profile, says FMCs
CEO Pierre Brondeau.
FMCs agriculture business
produces crop protection
chemicals including
insecticides, while its health
and nutrition businesses make
colourings and stability agents
for the food industry and
bindings, coatings and omega-3
oils for the pharmaceutical and
nutraceutical sectors. These
activities will be combined into
a single company called New
FMC, led by Brondeau.
Meanwhile the newly-formed
FMC Minerals will take the
companys alkali chemicals and
lithium businesses. It will be the
largest global producer of soda
ash for use in the glass, chemical

processing and detergent

industries. Lithium is sold into
a range of sectors including
the pharmaceuticals and
polymers markets. Growth in
electric vehicles provides strong
underlying growth for lithium in
car batteries, FMC says.
The company has 5,600 staff
working in research, production
and sales offices across the
world. FMC expects to complete
the separation in early 2015, and
list each company on the New
York Stock Exchange.

A CHOKING haze caused by

forest and plantation fires
is forcing oil companies
across Indonesia to
close down wells, cutting
production by an estimated
12,000 bbl/d.
According to SKKMigas,
the countrys oil and gas
regulator, hundreds of wells
have been closed due
to poor air quality, while
limited visibility has halted
construction projects. The
biggest production loss has
come from Chevrons Rokan
project, where a total of 573
wells have been shut down
since 11 March.
This condition is very
alarming, says SKKMigas
spokesperson Handoyo Budi
Santoso. If it continues like
this, national oil production
will come under threat.
Each year, thousands of
forest fires are lit deliberately
across the Riau Province

on the Indonesian island of

Sumatra to clear the land for
planting. This illegal slashand-burn practice engulfs the
trees and peat, unleashing a
pall of smog that drifts across
the region.
SKKMigas says that the
pollution standard index
(PSI) used to quantify
levels of smog at Chevrons
operations has been at the
maximum value of 500 for
several days, and workers
and their families have been
evacuated. Similar levels
have been found at projects
operated by Indonesias
state-owned energy company
Pertamina.
From the health and safety
point of view, this thick haze is
clearly not safe for workers,
says Handoyo. We hope all
can work together to combat
this situation, so that the
disruption to production does
not last long.

MTI wins minerals firm Amcol for US$1.7bn

MINERALS TECHNOLOGIES (MTI) has
emerged victorious in a bidding war for Amcol
International, beating Imerys with a US$1.7bn
bid for ownership of the minerals firm.
The tie-up of MTI (a leading supplier of
calcium carbonate) and Amcol (focussed on
bentonite clays) will create a more robust
international minerals supplier, the pair say.
The deal trumps Imerys previously-agreed
US$1.47bn bid and brings to an end a bidding
war that began in February. Amcol will pay
US$39m to sever its deal with Imerys.
MTI, based in the US, sells calcium
carbonate, quicklime, limestone and talc
for use in a range of sectors including
paper, construction, paints, polymers and
pharmaceuticals. Amcol, also based in the US,

mines bentonite. The versatile mineral is used in

a range of applications including metal casting,
as a lubricant for oil drilling, and in cat litter and
makeup.
The combination of MTI and Amcol
will create a minerals platform that is wellpositioned for growth through geographic
expansion and new product innovation,
says Joseph Muscari, CEO at MTI.
We will be a leading industrial
minerals company with
more than US$2bn in
sales, he adds.
The deal is
expected to be
completed in the first
half of 2014.

april 2014

www.tcetoday.com

tce

NEWS

Argentina pays US$5bn over

YPF nationalisation
Repsol accepts half the compensation it was looking for
ARGENTINA has agreed to
pay US$5bn to Repsol in
compensation for the 51% of
YPF shares it expropriated from
the companyin April 2012.
The amount is less than half of
the US$10.5bn that Repsol says
that the stake is worth, and which
it has been trying to claim back
through a World Bank tribunal.
However Repsols chairman
Antonio Brufau says the company
is very pleased to have reached
an agreement, after beginning
direct negotiationswith the
Argentinean government in
November 2013.
Cristina Fernndez de
Kirchner accused Repsol of
underinvestment in the then
former state oil company YPF,
and seized back its controlling
stake in a move she said
was in the national interest.
Repsol claimed that the
expropriation contravened its
purchase agreement with the
Argentinean government,
and launched legal action in
Argentina, the US and Spain.
However, as part of the deal,

these cases will be dropped.

Repsol will receive a fixed
package of government bonds
with a market value of US$4.67bn,
and an additional complementary
package of bonds which could be
worth up to US$1bn. The bonds
essentially act as collateral and
guarantee the US$5bn payment
from the government, even in
the case of a payment default.
Repsol can choose to wait for the
bonds to mature or sell them to
raise money quickly, although
any money over and above the
US$5bn would revert to the

www.tcetoday.com

a higher degree of success, which

will no doubt provide us with
more opportunities for growth.
The deal has been unanimously
approved by Repsols board,
but must still be approved by
shareholders at the AGM, and
signed into law by Argentinas
parliament.

Petronas sells 10% of Canada

LNG project

Russian investors snap up

RWE oil business for US$7bn
RWE is selling its upstream oil
and gas business to L1 Energy,
an investment group headed
by Russian billionaire Mikhail
Fridman.
The 5.1bn (US$7bn) deal for
RWEs Dea unit secures stakes
in 190 oil and gas field licences
in 14 countries, including the
UK, Germany and Algeria.
L1 Energy was set up by
Fridman and business partner
German Khan using a portion
of the US$14bn they gained
from selling their stakes in
TNK-BP to Rosneft in 2013. Its
reported that the group has put
aside US$10bn for investment

Argentinean government.
I believe that reaching a
friendly agreement in this
dispute, which has gone on for
two years, is extremely positive,
says Brufau, adding that it
provides a financial boost that
will allow us to look towards the
future with more hope and with

in the oil and gas sector.

RWE has been looking
for a buyer of its oil and gas
business for around a year, as
part of a major restructuring
exercise. Subsidised renewable
power at home in Germany has
reduced profits from RWEs
power stations, forcing it to sell
off assets to reduce debt.
The deal is subject to
approval by the RWE board
and the authorities of a
number of countries in which
it operates. A date for when
the deal is expected to be
concluded has not been
disclosed.

april 2014

MALAYSIAN energy giant Petronas is selling a 10% stake in

the US$11bn Pacific Northwest LNG project to the Indian Oil
Corporation (IOC).
The exact value of the deal has not been disclosed, but it is
thought that IOC Indias biggest refiner will pay around C$1bn
(US$900m) for its stake in Pacific Northwest. As part of the deal,
it has agreed to buy a fixed amount of gas from the project for at
least 20 years.
IOC chair RS Butola says: This transaction provides an
excellent opportunity for IOC to secure upstream participation
in the highly prospective Montney play in Canada, along
with securing long-term LNG supply for Indias growing gas
requirements.
The deal mirrors an agreement Petronas made with
Japan Petroleum Exploration roughly one year ago, while
PetroleumBRUNEI has bought a smaller 3% stake.
The project will see two natural gas liquefaction trains built at
Lelu Island in western Canada, with production expected to begin
in 2018. The two trains will produce 12m t/y of LNG, of which IOC
has committed to buy 1.2m t/y to export to India, with an option
to build a third train depending on the market performance.
Petronas which is owned by the Malaysian government
acquired complete control of the project in late 2012 when it
bought out its Canadian partner Progress Energy for US$4.75bn.