Large Oil Spills - the Gordian Knot for the Risk Taker?
November 7, 2012 9:49 AM
Despite global economic decline, oil prices have remained at a historically high level of roughly USD 100 per barrel , which has supported the economics of many unconventional petroleum projects. However, environmental liabilities and on-going operating costs in projects requiring assumption of greater operational leverage continue to grow, exemplified by clean-ups of marine hydrocarbon spills, water treatment costs in hydraulic fracturing, and tailings remediation in oil sands projects.
We highlight Statoil (‘AAA’) and BG (‘AAA’) as best positioned in our integrated oil & gas coverage to manage associated environmental and social impacts, including such aspects as hydrocarbon spills. Conversely, we note concerns on BP (‘BB’) and Chevron (‘B’), as we find these companies’ high risk exposure to environmental risks is coupled with significant long-term evidence of operational failures.
In this summary, we provide examples of the financial materiality of hydrocarbon spills, and comment on environmental risk levels undertaken by integrated oil & gas companies and the corresponding quality of risk management. Full details are available in the 'MSCI ESG IVA Industry Report: Integrated Oil and Gas', along with analysis of additional key ESG risk factors including health and safety, toxic releases, corruption, carbon emissions, and corporate governance. Read a summary of this report.