|Royal Dutch Shell B
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|The UK’s struggling oil refineries face a fresh economic threat as oil prices rise Credit: Paul Grover/Paul Grover
28 May 2016 • 7:10pm
The UK’s struggling oil refineries face a fresh economic threat as rising oil prices begin to erode the healthy margins of the past year.
The refining industry suffered hundreds of job losses and major closures before the oil price crash offered relief by lowering costs and boosting profits.
However, as the oil market rebound takes hold, profit margins are waning, bringing an imminent risk of closures, experts have warned.
“UK refineries are coming under a lot of pressure and there is a risk of further businesses closing, if they do not get the right degree of support,” Robert Turner, of PwC, said.
“Europe has many of the wrong kind of refineries: typically smaller, older refineries, trying to serve a declining market in the face of extremely high competition from abroad. For these more challenged units, this adds up to low margins, low profitability and makes it a very tough place to be,” he explained.
UK reliance on oil product imports hits 32 year high
Britain faces diesel drought following refinery closures
This month, the UK’s Petroleum Industry Association (PIA) warned a committee of MPs that the six remaining refineries in the UK face “a real and imminent threat” which could damage the UK’s security of supply in the diesel and jet fuel markets.
“We have had a dramatic decrease in refining capacity. We have had three refineries close since 2009 alone, the last the Murco Milford Haven refinery in 2014 in Wales. Obviously that has had a massive impact on jobs, the economy, growth, our security of supply as well,” PIA spokeswoman Nunzia Florio said.
Mr Turner said “the air of crisis” felt by the industry following the recent closures has dissipated as refineries made money during the oil market downturn.
“However, the fundamentals that caused the crisis of two years ago are still there. The solution to avoid another crisis is to continue to invest to maintain their competitive position.
“When Coryton and Milford Haven closed I think it caused a bit of a shock. Will more close? It’s entirely possible,” he said.|
|Shell Refining Co's refining margin is expected to remain under pressure owing to weak recovery in crude oil demand, news website theedgemarkets.com reported on Friday.
The company's refining margin has come off from the peak of an average U.S.$7 per barrel in 2015 to about U.S. $4.96 (3.38 pounds) per barrel in the first quarter of this year, SRC chairman Datuk Iain Lo was quoted to have said after the group’s annual general meeting Thursday, as per the report
"We expect the margin to continue to be under pressure if the demand does not pick up but oil price [continues to] recover," Lo said adding the margins will continue to be volatile.
(Reporting by Apeksha Nair in Bengaluru; Editing by Michael Perry)|
the grumpy old men
|Shell says it will limit solar investment until it proves profitable
Chief executive Ben van Beurden tells shareholders the firm wants to gradually increase its operations in clean energy
Shell chief executive Ben van Beurden
Shell’s chief executive, Ben van Beurden, insisted the company was ‘not the opposition’ to renewables. Photograph: Bloomberg via Getty Images
Terry Macalister Energy editor
Thursday 26 May 2016 19.35 BST
Last modified on Thursday 26 May 2016 19.39 BST
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Shell will avoid investing too heavily in solar or other technologies until they can make financial profits, its chief executive has said.
Ben van Beurden told a meeting of shareholders in London that the oil company was already established in windfarms, a carbon capture plant, and wanted to gradually increase its operations in clean energy.
But he rejected the idea contained in a shareholder resolution that Shell should switch its investments from hydrocarbons to renewables although he firmly believed the Paris climate change agreement by world governments was to be welcomed.
“We want to be part of shaping the future ... in the face of growing environmental challenges,” said Van Beurden. “We believe our current strategy provides much greater scope to play a wider role in that energy transition (to a lower carbon future).”
“Its not going to happen overnight ... We will have to adapt to a more diverse portfolio to reduce carbon,” he added, saying it would take time to develop and insisting “we are not the opposition” to renewables.
Van Beurden highlighted the investment it had already made in wind and solar but said it had learned a painful lesson with a previous foray in photovoltaics that taught the company that petroleum geologists did not make the best electrical engineers.
The Shell boss offered both praise and scathing criticism of the wider solar industry, saying it had a very bright future but then claiming the top 10 solar companies last year made “zero profits and no dividends”.
He added: “I am not against solar. Far from it but we have to find a way of making money out of it. We cannot rely on subsidies.”
Shell recently set up a separate division, called New Energies, to demonstrate its commitment to low carbon activities but admitted the amount of annual investment attached was less than 1% of the amount being put into oil and gas.|
the grumpy old men
|thanks for the comments losos and waldron-i read the fool because they are the only ones to comment about updates in terms of buy or sell and use them to confirm others comments. the fool should not comment for theske of getting prople to subscribe exactly because they are not fools!|
|waldron - "pile in is not what i would suggest"
Agree, the energy scene is changing albeit slowly, RDSB will (hopefully) adapt over time while keeping a sensible business policy.
The Motley Fool publishes a lot of stuff which IMO is really aimed at getting you to subscribe to their 'paid for' services. I am not saying that they are wrong, just that not everything they publish is appropriate for everyone. You have to pick and choose.|
|I'm piling it in :-)|
|whilst i like rdsb i reckon the market is looking toppy and rdsb has just gone ex divi
for me i would look again just before ex divi dates during the later part of year
oil energy market and companies are radically changing so its difficult to
use historic correlations and fundementals
pile in is not what i would suggest
|what do people here make of the fools forecast- good time to buy he says
|Chevron, Shell Eye Qatar Oil Field
7:28 AM CEST
May 26, 2016
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Chevron and Shell are said to be among the companies competing to operate Qatar's biggest offshore oil field. They've already submitted bids to Qatar Petroleum, along with Total, ConocoPhillips and Maersk. Bloomberg's Mohammed Sergie reports on "Bloomberg Markets Middle East." (Source: Bloomberg)|
|Royal Dutch Shell plc’s very existence is at risk according to management!
By Motley Fool | Wed, 25th May 2016 - 11:41
Shell's (LSE:RDSB) Chief Executive Ben van Beurden shocked the market yesterday when he revealed that Shell's dividend payments and even its very existence are under threat if the shift to renewables takes place too fast.
The group's CEO made these comments at Shell's annual meeting this week as 97% of the company's shareholders voted to reject a resolution to invest profits from fossil fuels in becoming a renewable energy company. Speaking at the meeting, Ben van Beurden said: "We cannot [transition to renewables] overnight because it could mean the end of the company."
These comments from Shell's CEO shouldn't necessarily be taken at face value but they do send a stark warning to shareholders.
As the world shifts towards renewable energy and becomes less dependent on oil, Shell is going to have to change with the times, and if the company doesn't keep up, then Ben van Beurden's message to shareholders will become more than just a warning.
What's more, as the price of oil languishes, Shell is losing money on its upstream operations. The company lost just under $1.5bn during the first quarter as the cost of production far exceeded the cash generated from oil sales. And if this trend continues, it could end up being a bigger problem for Shell than the renewable energy movement.
The oil market is already oversupplied, and Saudi Arabia seems happy to continue to pump crude at an ever increasing pace without any consideration to the price. This is probably Shell's most pressing issue at present, and the longer Saudi keeps following this strategy, the more important it will be for Shell to expand into other areas of business, which will most likely be renewables. In other words, Shell's hand could be forced, bad news for the company's long-term growth and dividend policy, if Ben van Beurden is to believe.
So, what should investors do following this dire warning? Well, Shell is already investing in its renewable energy arm, but the transition will take time for the company to complete. If the company's hand is forced, then it might be time to sell Shell and find another attractive income investment elsewhere.
Still, for the time being Shell is one of the best dividend stocks around. The company's shares currently support a dividend yield of 7.7%, and Shell hasn't cut or missed its payout since the Second World War. The company's shares trade at a forward P/E of 22.7, which looks relatively expensive when you consider the fact that City analysts believe earnings per share will fall by 35% this year as low oil prices continue to bite. That said, those analysts are currently predicting earnings per share growth of 76% for 2017 as oil prices move steadily higher.
Rupert Hargreaves owns shares of Royal Dutch Shell B. The Motley Fool UK has recommended Royal Dutch Shell B. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.|
|Global Equities Breath New Life, Europe To Fly
By IGMarket Overview37 minutes ago
Trading Accounts (7)
If price action is a road map of supply and demand and a portrayal of whether the bulls or bears are control of a market, then it seems that the bulls are firmly back in charge. As said before, 2016 has been clearly been defined by doing the opposite of what feels right and this worked in mid-February and its working perfectly now. Weren’t equity markets supposed to be savaged on a higher probability of rate hikes in the US? Weren’t oil, credit and equity markets supposed to be smashed on USD strength? Well, the market has priced in a 28% chance of a second hike from the Fed by the December FOMC meeting and the trade-weighted USD is rallying AND the S&P 500 has broken the April downtrend and European markets are flying and are facing another solid open.
Asian markets have had limited news flow to deal with today, so the bold moves are a reflection of the belief that the global economy is actually not so shabby. All markets seem to be heavily bid, with the likes of the ASX 200 testing the top of their recent trading range of 5400. S&P futures are starting to move higher, again putting upside into our euro equity calls, while US oil (July contract) is once again honing in on the 18 May high of $49.56. All eyes on today’s DoE oil inventory report and after last nights huge drawdown in the API private inventory report of 5.1 million barrels, if we see a big drawdown in the official report then $50 oil is a reality and we are back into the breakeven levels of the US shale gas companies.
In the US retail sales, inflation, new homes sales and claims all look good and in Europe the Citigroup Economic Surprise Index (which tracks European economic data relative to expectations) has moved into positive territory for the first time since 22 January. The Fed’s message in the recent minutes was ‘the world isn’t so bad, you have to have faith’. Throw in a data that confirms Armageddon isn’t happening, Brexit is seeing diminishing support from the over 65’s and there is a turn in sentiment. Positioning is also clearly helping the bulls trading case and there has been some talk of Asset managers being heavily short of markets such as NASDAQ futures. One has to feel that part of the short-term move higher has been influenced by market positioning, but also the term ‘never short a dull market’ is just so true.
In fact, rather than panic that the USD is rallying, the opposite is true in Europe and the Stoxx 50 and other markets are rejoicing at the move lower in EUR/USD. Assess the Stoxx 50 futures (green line) relative to EUR/USD of late…tick for tick! EUR/USD has seen a touch of short covering today, but the trend is firmly lower and rallies into $1.1200 will likely be sold. This should support equity and credit markets and one questions if markets are going up after a fairly sleepy period whether the fear of being underinvested kicks in, creating a second wave of buying and this well used acronym; FOMO.|
|Acceptance of directors renumeration,particularly of the CEO is galling in the light of low oil prices.Are the institutions just happy with the status quo,when we have a low oil and gas price environment,coupled with a sunken share price? Will the BG takeover be a Trojan horse for a future dividend cut?The buck stops with van Beurden.|
|Royal Dutch Shell Shareholders Reject Special Resolution
Dow Jones News
Shell B (LSE:RDSB)
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Today : Wednesday 25 May 2016
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By Razak Musah Baba
LONDON--Royal Dutch Shell PLC (RDSA, RDSB) shareholders rejected a special resolution out forward by a group of holders, calling for the company to change course and move toward sustainable energy.
At the annual general meeting held Tuesday, Shell said resolutions 1 to 18, which includes the approval of directors' remuneration report, were carried.
Shell said 3.47 billion votes or 85.83% votes favored the approval of the directors' remuneration report.
Write to Razak Musah Baba at email@example.com; Twitter: @Raztweet
(END) Dow Jones Newswires
May 24, 2016 13:01 ET (17:01 GMT)|
|US crude inventories drawdown 5.14m barrels.........thought forecasts were for a drawdown of 2.5m!.hTTp://news.forexlive.com/!/oil-american-petroleum-institute-api-inventory-data-draw-million-barrels-20160524$50 on its way!.DD|