BP and Shell just can’t catch a break. While earnings are being squeezed by falling crude prices, it’s also open season on the companies’ public standing. Oddly enough, both look better placed to tackle the former than the latter, despite the huge reshaping of the industry that must come in the new, much lower price environment.
BP and Shell just can’t catch a break. While earnings are being squeezed by falling crude prices, it’s also open season on the companies’ public standing. Oddly enough, both look better placed to tackle the former than the latter, despite the huge reshaping of the industry that must come in the new, much lower price environment.
That’s because oil companies have been fighting a rear-guard action against their detractors, even before the Macondo oil spill in 2010 — which, perhaps not coincidentally, was a time when the connectivity of social media was beginning to be felt. Campaigns against oil companies have been actively waged for decades — think Brent Spar, the Niger delta, Colombia et al — but, in the last few years, it has been easier for pressure groups to reach beyond their core support and muster those who may otherwise have been unaware.
These groups, fuelled by the ease of recruitment and of publicity that comes with an online campaign, are lined up against oil companies like never before. Such groups are small and reactive — like speedboats nipping around companies that more resemble oil tankers; large, unwieldy and slow to adjust course.
This is one reason why Shell and BP, along with Chevron and ExxonMobil, showed up so badly in recent Harris Poll research about corporate reputations.
BP is being shouted at to abandon its long-standing arts patronage in the UK, with opponents saying the company gets a social licence at a low, low price.
Shell, meanwhile, is getting it in the neck because the only ship it can possibly use to decommission the North Sea Brent field has been named — by another — after a man with a Nazi past.
Even doing what is unquestionably the right thing isn’t earning the companies much credit. Both BP and Shell this week agreed to shareholder resolutions calling for a greater commitment to moving to a low carbon economy, including more detailed reporting on emissions management, on portfolio resilience to the IEA's 2035 climate scenarios and on low-carbon investment strategies (see Petroleum Argus, 30 January, p3). The investors, led by no less an august institution as the Church of England, called this a “potential paradigm shift, both in terms of corporate shareholder activism and an acceptance of the need to act on Climate Change by oil and gas producers”.
Agreeing to this brings some goodwill and certainly chimes with the times, but snipes from the sidelines show that this is not a panacea for all.
So much greenwash, some cry, while Shell is still committed to drilling in the Arctic. And BP’s post-Macondo reputation certainly won’t be salvaged by some more annual environmental reportage when new research still insist its oil remains on the Gulf of Mexico seabed. The research is “funded by the Gulf of Mexico Research Institute created to allocate the money made available to support scientific research by BP”. You couldn’t make it up.
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