First up, Upstream Online brings us news of Alberta’s new climate change policy:

Becoming a leader in climate change reform has been the Alberta government’s dream since the New Democratic Party took office in May 2015.
Now that dream could be reality with a proposed new policy aimed at reducing carbon emissions and holding everyone — including the general public — accountable.
Okay, that’s the facts out of the way.

There were a lot of shiny happy people at the Alberta Legislature on 22 November when the province announced its new climate leadership plan.

Industry, government, environmentalists and First Nations all joined together to hail the plan as a game-changer for the future.

Which industry?  The rent-seeking industry?

The province will set a 100-megatonne limit on carbon emissions from the oil sands, implement a C$20 (US$15) per tonne economy-wide carbon tax in 2017, increasing to C$30 per tonne in 2018, and phase out all coal-fired power generation by 2030.

A 100-megatonne limit?  That seems a bit arbitrary.  Why not 113 megatonnes?  And how many tractors should be produce this year, comrade?

Among the loudest supporters was Canadian Natural Resources’ chairman Murray Edwards, who only six months ago expressed extreme scepticism.

“This announcement removes barriers for collaboration with a broader group of stakeholders. We are now working together to realise the full value provided by the oil and natural gas,” said Edwards.

What nonsensical guff is this?  This sounds more like something extracted from a politician’s campaign speech than the reaction of an oil company chairman to legislation which has the potential to seriously damage his business. And why the volte face?  Did somebody wave a juicy, post-retirement government job in front of him?

Likewise, Pembina Institute executive director Ed Wittingham said the policy would “strengthen the competitive position of Alberta’s oil and gas companies”.

I had no idea what the Pembina Institute was until I looked them up.  They are a “clean energy” think tank which exists for the purpose of “advocating for effective policies and collaborative solutions” while “reducing the harmful impacts of fossil fuels while supporting the transition to an energy system that is clean, safe and sustains a high quality of life requires advancing solutions from various approaches.”  A green lobby group, in other words.  So it should come as no surprise, then, that its director likes a government-imposed initiative to clobber Alberta’s oil industry, but how he thinks this additional burden will make it more competitive he doesn’t say.

Of course, the elephant in the room is what long-term impacts the new climate policy will bring, environment aside.

Yes, you could say that.  Skeptics might also point out that, on the basis of what’s in this article, a single oil company chairman and the director of a green lobby group hardly demonstrates that “industry” is on board with this.  Presumably Shell, ExxonMobil, etc. were too busy to comment.

Albertans will be expected to pay an extra C$3 billion in taxes, oil sands producers could pay hundreds of millions of dollars implementing methane reductions, and the 100-megatonne limit could hamper forecasted oil sands growth.

Sorry, but how is this going to be anything other than an unmitigated disaster for the Albertan oil industry?  Their oil sands were just about profitable when oil was over $100 per barrel, now it sits at less than half that and shows no sign of recovering even though Russia and Turkey are rattling sabres.  And then along comes the state government which lumps on a few billion in additional taxes and imposes arbitrary, Soviet-style emissions targets.

It remains to be seen if the goodwill will last when the proposal becomes reality.

Won’t it be a bit late by then?

Next we have the BBC spinning the climate change jamboree in Paris for all it’s worth:

Observers say that the recent terror attacks on the French capital will increase the chances of a new agreement.

Funny, when Europeans reacted to news of jihadists entering the continent hidden among refugees by calling for tougher border controls, the global elites dismissed such plebian demands by saying “it’s what the terrorists would want” and that “we should not change our way of life”.  But if the cold-blooded murder of a hundred plus people can be harnessed to ram through a climate-change agreement, why it’s any means necessary, eh?

The gathering of 147 heads of state and government is set to be far bigger than the 115 or so who came to Copenhagen in 2009, the last time the world came close to agreeing a long term deal on climate change.

Yes, I’m sure the hookers of Paris are delighted.

While many leaders including Presidents Obama and Xi Jinping were always set to attend this conference, the recent violent attacks in Paris have encouraged others to come in an expression of solidarity with the French people.

Yeah, sure: expressing solidarity with the French is the foremost reason why thousands of people are flying to Paris on a taxpayer-funded junket. Uh-huh.

Unlike at Copenhagen, the French organisers are bringing the leaders in at the start of the conference rather than waiting for them to come in at the end, a tactic which failed spectacularly in the Danish capital.

Odd that not involving decision-makers from the beginning should not have worked.  Whoever would have thought it?  But with this one being organised by the French, they probably assume that the participants in the discussion are irrelevant because the actual decisions will be made over dinner later and the agreement announced as a fait accompli as if nobody else mattered.

A former UK government adviser on climate change and now chairman of environmental think tank E3G, Tom Burke, believes that some leaders will push the line that, by tackling rising temperatures, you remove one of the causes of terrorism.

Indeed.  Whereas most news outlets erroneously reported the jihadists in Paris screaming “Allah akbar!” as they gunned down innocent concert-goers, what they really said was “fuck it’s hot!” in a suburban Belgian dialect.

While the mood music around the event is very positive, there are still considerable differences between the parties.

Positive mood music?  Is this supposed to be a news report or a flyer for a health spa?

Naturally, this pointless event couldn’t have been held somewhere secure and remote to minimise the disruption to local citizens (apparently the shopping, dining, and prostitutes aren’t quite as good in Fort McMurray), so Parisians are instead subject to a raft of draconian security measures including:

Some major roads to be closed for two days

Remember folks, the numbers attending this circus swelled because they wanted to express “solidarity with the French people”.  Nothing demonstrates solidarity between the elite and the plebs quite like road closures and ZiL lanes.

One key problem is what form an agreement will take. The US for instance will not sign up to a legally binding deal as there would be little hope of getting it through a Senate dominated by Republicans.

Yeah, that’s the problem with having a Senate.

Many developing countries fundamentally disagree. As does the European Union.

See ?  Much easier without a Senate.

“We must translate the momentum we have seen on the road to Paris into an ambitious, operational, legally binding agreement,” said EU commissioner Miguel Arias Canete, in a statement.

“And fuck what the people think,” she added later, when the microphones were switched off.

As well as the form there are also many issues with the content.

Issues with the form and content.  But we must agree on an ambitious, legally binding agreement.

There are a wide range of views on what the long-term goal of the agreement should be.

While it will ostensibly come down to keeping temperatures from rising more than 2C above the pre-industrial level, how that will be represented in the text is the subject of much wrangling.

Some countries reject the very notion of 2C and say 1.5C must be the standard. Others want to talk about decarbonising the world by the middle or end of this century.

What about those who are not mentally ill?  What do they say?

While the fact that more than 180 countries have put forward national plans to cut emissions is a major strength of this conference, there are still big questions marks about how to verify those commitments that will actually be carried out.

Yes, as we discovered the other day when China forgot about that 600 million tons of coal it had burned out back.

And among the many other issues in dispute, almost inevitably, is money. While rich countries promised they would give $100bn by 2020 to the developing world back in 2009, the cash has been slow in coming.

In other words, this is less an event about climate change than an opportunity for thieving, grasping hands to seize monies purloined from the wallets of western taxpayers.

Many believe that a country such as India, with close to 300 million people without electricity, will refuse to sign up to a strong agreement that limits future fossil fuel use.

How unreasonable!

If that happens, the whole process could come unstuck, as nothing is agreed until everything is agreed.

We’re entering into a process to agree on cutting fossil fuel use which required the unanimous approval from participants which include countries where 300 million people are shivering in the dark?

Tom Burke for one believes that going against the flow will be particularly difficult this time round.

“I think one of the reasons people will find it hard to hold out at the end will be because of the level of political capital that Obama has invested in climate change, making it clear it is a primary legacy issue for him,” he said.

Oh, well so long as The Messiah has staked his legacy on it, that’s all right then.  Economic and political reality will just have to take a back seat.

Here’s my prediction: the talks will bog down in petty bickering as shitholes you’ve never heard of demand western governments hand over billions they don’t have, and at 3am on the final morning the half-dozen leaders who you could recognise will announce they have reached an agreement to…discuss it further next time.  Meanwhile, the Parisian restaurateurs, Louis Vuitton sales reps, and hookers will be phoning up their local Porsche garages to confirm they will go for the S-model after all.

Finally, having trumpeted the proposed Turkish gas pipeline as being a finger in the eye for those who were glad to see South Stream canned, it now looks as though this one too has been cancelled.  The lesson here that Mr Putin ought to be taking home is that if you are going to choose a country as a partner in your policy of thumbing your nose at the civilised world, at least ensure your relations with that country are friendly enough that they are not going to shoot down your planes.

Brother, can you spare a dime?

French supermajor Total has issued an interesting press release:

Total is raising approximately $1.2 billion of new debt financing through a structure combining the issue of non-dilutive cash-settled convertible bonds with the purchase of cash-settled call options to hedge Total’s exposure to the exercise of the conversion rights under the bonds.

Why does Total need to borrow $1.2bn?

Total intends to use the net proceeds of the issuance of the bonds for general corporate purposes.

General corporate purposes, eh?  Would that include paying salaries?

“You pay da vig, or it’s your kneecaps.  Capiche?”

Profile view

One of the most damning things about the state of the oil industry is how this downturn – which has sent oil to between $40-$50 per barrel – has caused the whole industry to freeze like a rabbit in the headlights.  As I have said before:

We last saw $50 per barrel oil in late 2004, before which it had been consistently lower than that.  I was working in the industry in late 2004 and I don’t recall there being mass panic among the oil companies about not being able to cope.  So what’s different this time?

The strategy – if it can be called that – of the major players in the oil industry seems to be one of “hold fast until the price picks up again”.  Most are “cutting costs” by not continuing with ongoing or potential developments, and then boasting about how they’ve steadied the ship.  This would be like Toyota cutting costs by putting a hiatus on car production for a while: all they’re doing is clobbering their future revenue streams.  It’s not as if the projects they are cancelling can be resurrected and brought on stream immediately the oil price rises; these projects take years to develop, so if they’re going to wait until oil is at $80-$100 per barrel before FID, it’s going to be 3-5 years down the line before you see any revenues by which time the oil price might have gone back down again.  The lack of leadership, or even basic imagination, is staggering.  Little wonder the sharks are circling from the anti-carbon lobby when they see such weakness on display by the supposed captains of the oil industry.

The oil companies have been maintaining this holding pattern for over a year now, with no sign of it ending.  If they are not careful, they will find smaller, nimbler companies have figured out a way of developing fields and making money at $50 per barrel.  We’re not there yet, but I think another year of this and we’ll see projects going ahead which the big players wouldn’t have thought possible.

The lack of strategy among certain players was apparent when they flipped the script completely as the oil price took a nose dive.  In other words, their entire strategy – one of maximising production regardless of costs – was utterly dependent on the oil price staying above $100 per barrel.  As soon as it tanked, the strategy changed.  This, dear readers, is not a company strategy.  Now everyone is talking about reducing CAPEX, but nobody has any idea how to do it.  Now I’m just a lowly cog in the belly of the great oil and gas machine, but I have worked on enough projects to see why they are so damned expensive.

Below is a graph showing what is called an oil production profile, showing the rate at which oil is produced against time for any given field.

I post this just to get any layman familiar with the concept.  Basically, the production rate of an oilfield quickly ramps up to a plateau, which is achieved by drilling more wells and bringing them on stream, and the plateau is maintained for as long as possible until the reservoir depletes and the production rate declines.

In reality, the situation is a little more complex, and we must consider also the rate of produced water.  When oil is extracted from a reservoir, it brings with it “associated gas” and “produced water”, both of which must be treated and handled (flaring the first and dumping the second in a nearby river is somewhat of a no-no in the modern industry).  I’m going to ignore the associated gas in this post, and concentrate on the oil and produced water.  In a real field situation, the production profile will look something like this (click on the picture to expand):

As you can see, the oil production looks good between 1970 and 1981, and then you hit a crossover point where you’re actually producing more water than oil.  From that point onwards, the oil production rate declines as the produced water increases until you’re producing a dribble of oil and a colossal amount of water.  In the above example, this isn’t much of a problem: the operators have had a good 10-12 years of steady production between 50k and 80k barrels per day, which would more than pay for the CAPEX of the facility in the first couple of years.

The economics of potential oil developments are judged in today’s industry largely on how quickly the CAPEX of the facilities, pipelines, etc. can be recovered.  With oil sailing along merrily at $100-$120 per barrel, oil companies and their permanently cash-hungry governmental partners favoured production profiles like the one below, which allowed them to collect as much cash as possible early on:

This is fine if CAPEX is not an issue, but as anyone who’s worked on the engineering of a facility with a production profile like the one above could tell you, the facilities get expensive very, very quickly.  For a start, most major projects these days are offshore, either on fixed installations or floaters.  That means size and weight is a serious constraint, and costs can accumulate very quickly.  As the above chart shows, your facility must be designed to handle 180k barrels per day of oil production: that means huge separators, inlet manifolds, power requirements, gas treatment, flare header, knock-out drum, flare stack, flare tip, etc. But you’re only using that capacity for 4-5 years before your production rate declines, so all that large, heavy equipment you’ve spend billions on is now under-utilised for the remaining 20 years of the development.  But note, due to the increased water cut later on in the profile, you also need produced water treatment equipment that can handle around 140k barrels of water per day, and this equipment is large, heavy, and expensive.  In short, opting for a production profile which maximises production in the first few years increases the size and weight of the equipment and facility considerably, and with it the CAPEX.  In the main, is is only these production profiles which the stakeholders of major projects have approved in the recent past.

The problem now that oil is at $40-$50 per barrel is CAPEX has become a cause for concern.  In the drive to minimise CAPEX, engineering contractors are being leaned on to cut corners, optimise equipment selection, bend safety rules (yes, really) and take a look at their own salaries (the generous packages of oil company employees are not up for consideration, of course).  But what has yet to happen is an oil company executive approve a production profile like the one below:

The production profile in the chart above is much flatter, and once plateau is reached it ticks along for 20 years at much the same rate, albeit much reduced from the plateau of Profile 1.  Your main process equipment need only be designed for 110kbpd of oil and 130kbpd of produced water, and this equipment will be well utilised for the entirety of the development.  This would bring the size, weight, and CAPEX of the facility down considerably, but stakeholders would have to wait longer to recoup the CAPEX and would not turn the project into a cash-cow until much later.  Which I expect is why these profiles don’t get approved very often.  Profile 2 also has another potential advantage over Profile 1: it is not as prone to fluctuations in the oil price.  Profile 1 is great if oil is at $100+ between 2011 and 2015, but not so great if 2011 sees the oil price plummet to $50 and not pick up again until 2017, just as production goes into decline.  What with these projects taking 5-8 years to get into production and oil company executives still reeling from the shock of the oil price collapse 18 months ago, I’d not be too confident of their ability to predict that this narrow window of opportunity will coincide with bumper prices.  Profile 2 is much less dependent on the oil price, and over the course of the development one would expect things would finish up about even having seen both a boom and a bust.

(Note: the two profiles I have shown above might not be strictly realistic, and I am sure a reservoir engineer or production geologist could point out a few faults with either graph.  But they serve to illustrate the concept, i.e. higher production rates = higher CAPEX.)

I have always been of the opinion that major oil companies should seek to have in their portfolio of developments a solid base of small-to-medium sized projects with profiles similar to that of Profile 2, a handful of large projects with profiles similar to Profile 1, and some number in between such that their exposure to an oil price collapse and a squeeze on CAPEX is limited.  But the mantra up until 2014 was that mega-projects were the future of the oil business, particularly those in harsh environments and/or deep water, which require tens of billions of dollars in CAPEX.  Only now that these projects are no longer being approved, we don’t see smaller, less risky project being approved either.  Now it might be that oil company executives insist on recouping CAPEX as quickly as possible in unstable, unpredictable places such as Nigeria and Russia and so are reluctant to expose their investments over longer time periods, and that would be reasonable enough.  But I suspect the reasons are different, and I speculated about this before.

The oil industry is now run by a generation of people who have gotten fat and lazy on bumper oil prices, and have forgotten how to make tough decisions and work with low oil prices.  The industry executives don’t know how to analyse an economic model which doesn’t fit with their modus operandi of the past 10 years, and the development, engineering, and project management divisions don’t know how to do a project cheaply any more.  The lower oil prices have dealt them a square kick in the bollocks, and they don’t know how to deal with it.  I reckon they have about 12 months, 2 years tops, to figure this out or they will be deep in the shit.  Time is running out.

“Is this really necessary?”


Christopher Helman at Forbes speaks sense on two issues.  Firstly, the witch hunt against ExxonMobil by the eco-loons:

But let’s get real. See this for what it is — a witch hunt against a big company with deep pockets that the anti-carbon lobby wants to fleece to support their pet renewable energy projects.

Go read the whole thing.

And secondly, Obama’s decision to deep-six the Keystone XL pipeline:

Rail is not as safe a method of moving oil as pipelines are, but who cares about safety when there are symbolic victories to be had?

And who cares about facts either? Last March the Washington Post’s fact checker column gave President Obama four Pinocchios for his continued assertion that Keystone would provide no benefit for Americans. On the contrary, the line would not have carried only heavy crude from the oil sands region, but also the light, sweet crude produced in the Bakken fields of North Dakota.

But whatever. Nobody cares anymore. Canadian oil is still getting in to the United States, and anyone with common sense would admit that it’s better for us to source oil from our neighbor Canada than from Iran, Venezuela or even Saudi Arabia.

Anyone but the White House.

As oil and gas industry says over on Twitter:

Obama blocks Canada from exporting oil by rejecting Transcanada XL Pipeline application, but signs a deal to allow Iran to export its oil.

That’s the problem with Obama: he never knew when to stop politicking and when to start governing.

Major comparison

Following on from this post, I thought it would be interesting to do a little digging and prepare charts for each supermajor showing their revenue, profit, staff headcount, and profit per employee for the past 3 years.

Once again, I will state that this is a pretty crude method of judging a company’s performance.  One obvious shortcoming is the fact that as Upstream revenues have dropped, the profitability of Downstream sectors – which are more labor-intensive – has increased, and so one would not expect an indiscriminate bloodbath in any event.  But the raw figures tell an interesting story nonetheless.


Financial YearRevenue(bn)Profit(bn)No. of EmployeesProfit per Employee

The table shows that between 2012-2014 ExxonMobil has maintained profitability fairly well despite declining revenues, and each employee is staggeringly productive in comparison with their peers in other majors.  This is probably why, as I speculated in my earlier post, ExxonMobil is not cutting staff.  On this measure, ExxonMobil seems to be very well run.


Financial YearRevenue(bn)Profit(bn)No. of EmployeesProfit per Employee

Shell have for some reason I cannot fathom increased its headcount by 8% as the oil price collapsed taking its profits with it.  In doing so, Shell’s employees are now adding half as much value as they were two years previously.  I once heard Shell referred to as “a pension fund with oil wells”.  If they want to go toe-to-toe with ExxonMobil, they need to start cutting numbers and getting their remaining employees working occasionally.


Financial YearRevenue(bn)Profit(bn)No. of EmployeesProfit per Employee

Jesus wept!  Total’s profit collapsed by 70% yet they added another 3,000 people to the payroll which was bloated to the tune of 40,000 souls to begin with. On this measure, Total looks less like an oil company and more like a government employment programme.  The decline in employee added value is shocking.


Financial YearRevenue(bn)Profit(bn)No. of EmployeesProfit per Employee

It’s hard to tell what’s going on with BP here, and I suspect the jumping around of their figures is something to do with the Macondo payouts and whatever mess they’ve bought into with Rosneft (I lack the patience to wade through all 263 pages of the annual report).  If 2013 was a normal year, they’re not doing too badly.  If 2014 is business as usual, they’re in the shit.  Bob Dudley might want to spend 2015 letting us know which it is.


Financial YearRevenue(bn)Profit(bn)No. of EmployeesProfit per Employee
Source 1,Source 2

Chevron aren’t doing as well as ExxonMobil, but they are holding steady in terms of profit and their employee added value is far from disgraceful.  Nevertheless, they have announced another 6,000-7,000 job cuts this week, which shows they are pretty serious about financial performance.  Any of those unlucky folk reading this post are probably wishing they’d joined Shell or Total.

“Thank f*ck we don’t work for Chevron!”

Coal scuttle

Last week we had Ambrose Evans-Pritchard telling us that:

It is patently obvious that China is not about to sabotage a climate deal.  Its submission to the COP21 summit aims for peak greenhouse emissions by 2030, if not before. It plans 200 gigawatts (GW) of wind and 100GW of solar by then, and a reduction in coal use from 2020 onwards.

This week the New York Times tells us:

China, the world’s leading emitter of greenhouse gases from coal, has been burning up to 17 percent more coal a year than the government previously disclosed, according to newly released data. The finding could complicate the already difficult efforts to limit global warming.

Even for a country of China’s size, the scale of the correction is immense. The sharp upward revision in official figures means that China has released much more carbon dioxide — almost a billion more tons a year according to initial calculations — than previously estimated.

The increase alone is greater than the whole German economy emits annually from fossil fuels.

If you can’t trust a Communist government, who can you trust?

The Chinese government has promised to halt the growth of its emissions of carbon dioxide, the main greenhouse pollutant from coal and other fossil fuels, by 2030. The new data suggest that the task of meeting that deadline by reducing China’s dependence on coal will be more daunting and urgent than expected.

Or maybe the promise falls into the category of “empty”.

“It’s created a lot of bewilderment,” [Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University in eastern China] said. “Our basic data will have to be adjusted, and the international agencies will also have to adjust their databases. This is troublesome because many forecasts and commitments were based on the previous data.”

Remember, these are the figures Ambrose Evans-Pritchard swallowed wholesale while dismissing ExxonMobil’s predictions on future hydrocarbon use as “pure fiction”.

When President Xi Jinping proposed that China’s emissions stop growing by 2030, he did not say what level they would reach by then.

And nobody thought to ask?  Or were the collective tongues of the world’s credulous media jammed too far up his arse for him to catch the question?

The new numbers may mean that the peak will be higher, but they also raise hopes that emissions will crest many years sooner, Mr. Yang, the climate adviser, said.

Raise hopes?  This is a bit of a comedown from “It is unstoppable. No amount of lobbying at this point is going to change the direction” that we heard last week.

“I think this implies that we’re closer to a peak, because there’s also been a falloff in coal consumption in the past couple of years,” he said.

Assuming nobody’s overlooked the odd 600 million tons here and there.

Chinese energy and statistics agency officials did not respond to faxed requests for comment on the data revisions.

Did anybody think to send an email?

Economists have grown increasingly skeptical about the economic data China publishes, and the revisions open a new episode in the debate over its energy use and greenhouse-gas emissions.

Doesn’t bode well for an agreement in Paris, does it?  What happened to this all being determined by fate?

So if China’s emissions have been much greater than believed, researchers will want to understand where the extra carbon dioxide output ended up — for example, how it might have been absorbed in natural “sinks” like forests or oceans, said Josep G. Canadell, executive director of the Global Carbon Project, which studies the sources and flows of greenhouse-gas pollution.

“If the emissions are partially wrong,” Mr. Canadell said, “we’ll be wrong in attributing carbon sources and sinks.”

This is science-speak for “we haven’t a fucking clue”.

“That?  Oh no, that’s organic rocking-horse shit.”

As convincing as Fred up front

This story raises more questions than it provides answers:

A federal judge in Brazil has reportedly sentenced the former vice president of local engineering firm Mendes Junior to 19 years and four months in prison for his role in the massive kickback scheme.

Judge Sergio Moro convicted Sergio Cunha Mendes of corruption, money laundering and racketeering for the payment of 31.5 million reais ($8.3 million) in bribes to obtain contracts with state-run oil company Petrobras, Reuters reported.

Okay, so somebody in Petrobras collected $8.3m in bribes, right?

The judge also ordered the former executive to return that same amount to Petrobras.

Sorry, what?  Return that same amount?  In which direction were the bribes flowing?  If Mendes has to return $8.3m to Petrobras, that implies he received $8.3m from Petrobras.  In order to obtain contracts.  Look, I know Brazil is hopelessly corrupt, but how does a local engineering firm shake down the state oil company for $8.3m in the course of obtaining contracts?  Alternatively, if Mendes was paying $8.3m in bribes to Petrobras, what is there to return?

Seven other people, including former Mendes Junior executives, intermediaries and former Petrobras director of refining and supply Paulo Roberto Costa were also convicted, according to the news wire.

So a single, solitary Petrobras director.  He must be one of the rogue employees they were talking about.  It appears he was the recipient (or originator!) of $8.3m in bribes, an enterprise in which he supposedly involved none of his colleagues.  Did nobody notice his turning up to work in a Bugatti Veyron?

Costa, who helped prosecutors unravel Brazil’s largest ever corruption scandal through a plea bargain deal he made after his arrest in March of last year, is under house arrest at his home in Rio de Janeiro.

Brazil’s largest ever corruption scandal, the congressional investigation into which concluded:

[Petrobras] and politicians did no wrong, and that suppliers and rogue employees were responsible for graft, according to a report.

Yet in the original article we are told that:

Money dealer Alberto Youssef received a suspended sentence because he has already accumulated 30 years in prison for previous convictions for his role in the scheme where kickbacks to Petrobras executives and politicians were skimmed off overpriced construction contracts.

So a corruption scandal run by a handful of rogue employees in which Petrobras and politicians are wholly innocent is the largest ever, whereas a previous corruption scandal involving Petrobras executives and politicians isn’t?

Prosecutors say more than $2 billion was lost to Petrobras in bribes paid out by what they call a cartel of engineering firms.

Well, yes.  So either this whole investigation is a complete whitewash, or the corporate governance in Petrobras so poor that the entire senior management should be fired for negligence.  Which is it?

Mendes Junior is the third top Brazilian construction and engineering company to have executives sentenced in the scandal, following Camargo Correa and OAS.

These “rogue employees” seem to have had more clout than the President.

Is anyone convinced by this?  Anyone?

“Nobody in Mr Costa’s car pool suspected anything.”

Stakhanovite spotted

Some whining recruiter has posted this picture on LinkedIn:

Let’s look at this in more detail, shall we?

A recruiter works hard…

Really?  What, exactly, does spamming everyone on a pilfered distribution list, demanding information such as salary details and passport information, have to do with working hard?

and sends 50 profiles to the Company.

50 profiles?!!  For one position?!  I suppose whittling down the candidates to a manageable number, say 7-10, is a bit too much effort for our busy recruiter, eh?  Or, more likely, our recruiter hasn’t the faintest fucking clue which profiles match the job description and so he sends in the whole damned lot leaving some poor sod in the Company to sift through the CVs of forklift drivers and security guards looking for a decent piping engineer.

10 candidates get shortlisted.

Meaning 40 candidates – 80 per cent – were shite.  Couldn’t our overworked recruiter have done this and sent in the 10 who were shortlisted?  Apparently not.

4 candidates attend the interview.

This is the first reasonable number we’ve encountered.

2 candidates attend all the 4 rounds.

4 rounds of interviews?  This must be for a pretty senior position: a telephone interview followed by a face-to-face would normally suffice for most positions, unless it is for somebody senior.  And if it is for a senior position, what the hell was he thinking sending in 50 profiles?!

1 candidate is offered the job.

So there was only one position.  And the recruiter sent in 50 CVs as if the Company was creating its own regiment.

Finally he rejects the offer.

Probably because he is either mightily unimpressed by the recruitment process (boy, have I been there) or he has been told a pack of lies from the beginning.  If a candidate turns down the job having come through 4 rounds of interviews and received an offer, something has gone badly wrong somewhere.

End of story.

Wait, what?  You mean you didn’t bother contacting the other candidate that attended all 4 rounds?  Fuck me, is this bloke a recruiter or a jizz-mopper who has stumbled by mistake into the offices of a manpower agency?  Anybody who knows anything about recruitment knows you interview 2 or 3 candidates and you wait until your first choice has accepted the offer before informing the others that they’ve not been successful.  That way, if your first choice decides not to accept you make an offer to your second choice.

Not our embattled recruiter though.  He just moans that he’s not making his 10% fee for doing fuck all and puts a stupid picture on LinkedIn.  He’d be better off learning how to use capital letters in sentences, especially ones he is going to splurge all over the internet.

“Meet our top recruiter.  He has shift-key issues.”

Where the axe should fall

ExxonMobil bucks layoff trend

reports Upstream Online.

ExxonMobil will not make any major staffing cuts or reorganisations of its corporate structure, bucking a growing trend within the industry of operators slashing their headcounts in order to preserve cash amidst the steepest decline in oil prices in decades.

I suspect the reason for this is that they were running a pretty lean operation to begin with.  Take a look at the table below (numbers taken from Wikipedia: ExxonMobil, Shell, BP, Chevron, Total;  Financial figures are for 2014, employee numbers for 2015).

CompanyRevenue(bn)Profit(bn)No. of EmployeesProfit per Employee

This is a very crude method of comparing the added value of oil company employees (for instance, it doesn’t take into account the split of operated to non-operated assets), but given each company does roughly the same thing (E&P, LNG, refining, and petrochemicals) it is nonetheless a useful indicator of where each company sits in relation to finances versus headcount.

ExxonMobil appears to be doing a lot better than its competitors here: with just over 75 thousand employees they made a profit of $32.5bn, which equates to $432k per employee.

This is miles better than its nearest rival Chevron, which is half the size in terms of revenue but marginally more profitable (percentage-wise).  However, Chevron needs 65 thousand employees to achieve this, only 10 thousand fewer than ExxonMobil.  It is probably a reflection of the US labour market, and the American attitude to employment in general, that ExxonMobil and Chevron are way out in front of their European rivals on this measure.

Shell has impressive revenues but makes 25% less profit than Chevron (who has half the revenue) yet apparently needs 94 thousand people to do so.  This is almost 20 thousand more people than ExxonMobil, and each Shell employee adds half as much value as a Chevron employee.

BP scores very badly as well, with enormous revenues rivalling ExxonMobil’s but a pathetic profit margin and a headcount of 84 thousand, with each employee adding $47k of value: close to a tenth of that of ExxonMobil, a sixth of Chevron, and a third of Shell.

But as you’d expect from a French company, Total is the worst of them all.  Revenues broadly similar to that of Chevron but with a profit of just $4.2bn – a full 75% less.  To achieve this, Total supposedly needs over 100 thousand employees: a third more than ExxonMobil, who have revenues twice as large and profits 8 times higher.  Each employee adds a miserable $41k of value, which in many cases would be a lot less than their annual salary.  On this (admittedly crude) measure, ExxonMobil’s employees are ten times as productive.

This is not an exact science by any means, and I’m tackling the subject with a broad brush.  But even using such unrefined methods it is easy to see why ExxonMobil is not in any hurry to cut employee numbers.  Shell look a bit overstaffed but could probably tick along on the back of large revenues and a decent enough profit margin, but it is difficult to look at the above table and not come to the conclusion that both BP and Total need to be shedding not thousands, but tens of thousands of employees.  BP might be able to avoid doing this by making better profit margins on its impressive revenues, but Total simply doesn’t have the revenues to support an employee headcount numbering over 100 thousand.

The problem is, being French, Total is the company least willing and able to do what’s necessary.

“We’re down to a skeleton crew.”

Gosplan revisited

There’s some real bollocks being peddled in Britain’s Daily Telegraph by Ambrose Evans-Pritchard ahead of the climate jamboree in Paris:

The fossil fuel industry has taken a very cavalier bet that China, India and the developing world will continue to block any serious effort to curb greenhouse emissions, and that there is, in any case, no viable alternative to oil, gas or coal for decades to come.

Why might that be?

Both assumptions were still credible six years ago when the Copenhagen climate summit ended in acrimony, poisoned by a North-South split over CO2 legacy guilt and the allegedly prohibitive costs of green virtue.

Presumably these issues have been overcome, as Mr Pritchard will explain.  Or rather, he doesn’t.

At that point the International Energy Agency (IEA) was still predicting that solar power would struggle to reach 20 gigawatts by now. Few could have foretold that it would in fact explode to 180 gigawatts – over three times Britain’s total power output – as costs plummeted, and that almost half of all new electricity installed in the US in 2013 and 2014 would come from solar.

Installed.  How does one “install” electricity?  Being old-fashioned, I assumed electricity was either generated or consumed.  Of course, there is a reason why this definition is being used:

Installed capacity, sometimes termed peak installed capacity or rated capacity, describes the maximum capacity that a system is designed to run at.

If for example, a solar farm has an installed capacity of 24 megawatts, the system will have the ability – the components and hardware – to produce a maximum of 24 megawatts with optimal sun exposure.

And if the sun is not shining, or the solar panels are dusty, then the actual capacity could be as low as zero.  So the statement:

almost half of all new electricity installed in the US in 2013 and 2014 would come from solar.

Doesn’t tell us anything about what was actually generated.  For good reason, I suspect.

Back to the original article.

Any suggestion that a quantum leap in the technology of energy storage might soon conquer the curse of wind and solar intermittency was dismissed as wishful thinking, if not fantasy.

Six years later there can be no such excuses.

At which point Mr Pritchard elaborates. In a way.

155 countries have submitted plans so far for the COP21 climate summit to be held by the United Nations in Paris this December. These already cover 88pc of global CO2 emissions and include the submissions of China and India.

Presumably this is the “quantum leap” in technology he is on about: countries submitting plans to the UN.  Who needs nuclear fusion when we have plans?

Taken together, they commit the world to a reduction in fossil fuel demand by 30pc to 40pc over the next 20 years, and this is just the start of a revolutionary shift to net zero emissions by 2080 or thereabouts.

How?  Mr Pritchard doesn’t say.  One would have thought, at this juncture, the technological details were quite important.  But alas, all we get is more politics:

“It is unstoppable. No amount of lobbying at this point is going to change the direction,” said Christiana Figueres, the UN’s top climate official.

True, lobbying won’t put the brakes on the grand plans of the global political elite.  But raw physics might, not to mention economics.

Yet the energy industry is still banking on ever-rising demand for its products as if nothing has changed. BP is projecting a 43pc increase in fossil fuel use by 2035, Exxon expects 35pc by 2040, Shell 43pc and Opec is clinging valiantly to 55pc.

Remember folks: these predictions are made by people who have billions invested in their being correct.  What skin do the authors of these grand plans have in the game?

These are pure fiction.

Predictions are fiction?

The Intergovernmental Panel on Climate Change (IPCC) may or may not be correct in arguing that we cannot safely burn more than 800bn tonnes of carbon (two-thirds has been used already) if we are to stop global temperatures rising two degrees above pre-industrial levels by 2100. I take no view on the science.

But this is the goal accepted by world leaders.

Then who cares about the science, economics, or reality? What is important is that “world leaders” – many of whom preside over nations where you can’t drink the tap water – have accepted the figures on how much carbon we can burn.

It is solemnly enshrined in international accords, and while it might once have been possible for energy companies to dismiss these utterings as empty pieties, to persist now is to trifle with fate.

Political goals are now fate? This sounds like a rehash of Marx’s inevitability of history that would result in a glorious Communist society.  How did that work out, again?

“This is a world apart from where we were going into Copenhagen. The centre of gravity has fundamentally and irreversibly shifted,” said Mark Kenber, head of the Climate Group.

Remember when this article started off with the promise of technological revelations?  That seems an awfully long time ago.

China switched sides several years ago, not least because it faces a middle class insurrection that has shaken the Communist Party to its core. An estimated 100m people viewed the anti-pollution video “Under the Dome” in just 24 hours before it was shut down by horrified officials in February.

Nothing demonstrates China changing its mind over climate issues like the shutting down of opposition videos.

The IEA says China invested $80bn in renewable energy last year, as much as the US and the EU combined.

Hang on.  Weren’t you boasting earlier that:

almost half of all new electricity installed in the US in 2013 and 2014 would come from solar.

Now we find that this is considerably less than $80bn worth of investment (I use that term charitably).  ExxonMobil’s yearly CAPEX is $37bn, and we’re in the middle of the most severe downturn in a generation.  Sorry, but $80bn isn’t going to change the world.

It is blanketing chunks of the Gobi Desert with solar panels, necessary to absorb the massive surplus production of its own solar companies.

Sorry, weren’t you calling this “investment” in the previous paragraph?  Now it seems they’re installing these things for no other reason than somebody has instructed their factories to churn them out regardless.  Why is a “massive surplus production” of solar panels considered anything other than a disaster in terms of opportunity costs?

It is patently obvious that China is not about to sabotage a climate deal.

They didn’t sabotage the last one: they just insisted that the West shoulder the heavy lifting while they get a free pass to do as they please.  Are things going to be different this time around?

Its submission to the COP21 summit aims for peak greenhouse emissions by 2030, if not before. It plans 200 gigawatts (GW) of wind and 100GW of solar by then, and a reduction in coal use from 2020 onwards.

It’s a veritable Great Leap Forward.

The text makes it very clear that China considers itself “among those countries that are most severely affected by the adverse impacts of climate change” and is pushing for a far-reaching COP21 deal in its own defence. Going green with a vengeance is one way that China wishes to reposition itself as a global “soft power” force, as will become clear during its presidency of the G20 next year.

Going green, and building artificial islands with which to bolster its claim to the South China Sea.  There’s nothing like a bit of soft power projection via windmills to establish one’s place in the world order.

The last hold-outs are increasingly lonely as China, the US, Europe, Japan and Mexico all flaunt their good intentions.

And that’s what’s important, right?  Good intentions.  And I’m glad to see the Mexicans are on board, we couldn’t possibly envisage a global response to an impending disaster without those masters of organisation and governance providing their input.

India has shifted safely into the middle ground, dashing the last hopes of those who thought COP21 would wither on the vine.

Then why have the summit at all if everyone is already in agreement?  A chance for the global elites to stock up on foie gras and Louis Vuitton handbags, perhaps?

India invoked “our planet Mother Earth”, Mahatma Gandhi, and the ancient practices of yoga in its poetic submission, pledging to raise renewables to 40pc of power output by 2030 (mostly solar) and to soak up three billion turns of carbon dioxide in new forests.

Remember, ExxonMobil’s investment forecasts are “pure fiction”.  By contrast, poetry and yoga form a sound basis on which to develop global energy policy.

It plans to cut the energy intensity of GDP by a third from 2005 levels, no easy task for an economy on the cusp of an industrial surge.

I assume they’ve decided not to continue with that industrial surge.  The wealthy western tourists always did like the rugged charm of the shanty towns, anyway.

India’s green think-tank TERI called it an “unprecedented” shift.

Purposefully hobbling your economy?  Oh no, this has been done before.

There is still a North-South haggle over money – erupting in terse words last week in Bonn –

Oh.  Now there’s a surprise, eh?

but this dispute has become ritualistic, increasingly hollow in a world where China is now a creditor.

So the Chinese are just going to pony up the cash?  This sounds very un-Chinese.  Methinks a certain Mr Pritchard is going to be in for one hell of a shock once this summit gets going.

It revolves around $100bn of annual funds pledged by the rich countries long ago. “It’s peanuts,” said Mrs Figueres.

When it’s taxpayers’ money, any sum is peanuts.  But weren’t we being asked to applaud China’s $80bn investment in renewable energy a few paragraphs back?

The sums are trivial set against the $90 trillion of new energy investment that the IEA deems necessary by 2030 just to keep the global juggernaut on the road.

Which does rather make the case that $80bn of unwanted Chinese solar panels littering the Gobi desert is nowt but a drop in the ocean and, perhaps, ExxonMobil and chums might be onto something after all.

The IEA says the COP21 pledges imply will require $13.5 trillion of energy-saving and low carbon investments alone over the next fifteen years. New emissions will “slow to a crawl” by 2030.

Where’s this money going to come from, exactly?

Global energy intensity will rise three times faster than hitherto, and 70pc of all new power added will come from low-carbon sources.

It will, because we say so.  The Revolution will find the roads to solve the problems!

Markets will do the job under the right terms and they are already making the switch

Then why do we need governments to intervene?

as they discover a potentially lucrative new home for the world’s glut of excess savings and capital.

Sorry?  What glut of excess savings and capital?  Isn’t every country either utterly skint or holding junk bonds of a country that is?  One minute we need to raise taxes on the rich to pay for more nurses.  The next we have trillions just sloshing about to be hosed on renewable energy schemes.

A Carbon Tracker forum in the City this week was packed with bankers and fund managers itching to find a way into the biggest investment boom of all time, which is what the Paris accord promises to ignite.

Or were they eager not to miss out on a chance to connect a hosepipe to the giant reservoir of taxpayers’ money these supposedly impoverished nations are about to unveil?

The COP21 emission targets imply an assault on multiple fronts at once. Fossil subsidies worth $600bn a year – or $5.3 trillion under the International Monetary Fund’s elastic definition – are already sliding fast. They will inevitably fade away.

Good luck persuading Gazprom and PDVSA on that one.

Shell says a carbon price of $40 would bring CCS into play under current technology – some say $80 – but that in itself would shift the balance of advantage further in favour of renewables just as the cross-over point arrives. In large parts of Africa it already has: it is cheaper and quicker to install micro-grids based on solar power than to bother with power stations.

A blast furnace in every garden!

The old energy order is living on borrowed time. You can, in a sense, compare what is happening to the decline of Britain’s canals in the mid-19th century when railways burst onto the scene and drove down cargo tolls, destroying the business model.

I doubt the owners of the GWR talked much about “installed capacity” and included references to yoga in their sales pitches.

Technology takes no prisoners.

Yes, but this does more to demolish your case than support it.

Nor does politics.

As the Soviets discovered to their detriment, politics does not trump economics.

World leaders have repeatedly stated that they would defend the line of a ‘two degree planet’,

Just as the Politburo repeatedly stated they would defend tractor production targets.

and now they are taking the concrete steps to do so.

Concrete steps consisting of…what, exactly?  Meaningless guff?

Fossil investors have been warned.

I assume he means the Natural History Museum.

Believe it or not, this garbage appears in the Economics section of the Daily Telegraph.

“History is on our side!”