Investors ‘Misled’ by Shale Oil Developers
Investors ‘Misled’ by Shale Oil Developers, Claim Greenpeace
Auckland, 7 June 2000: Greenpeace has lodged a formal complaint with the Australian Stock Exchange (ASX) alleging investors have been misled about the profitability of the Stuart Oil Shale Project in Queensland. The complaint argues that the companies have failed to take account of the high greenhouse-related costs of the development.(1)
“The developers of the Stuart Shale Oil Project, in their rush to exploit a huge new fossil fuel resource have not only ignored the huge impact their greenhouse gas emissions will have on the climate, but also the additional costs they will be forced to pay under climate protection protocols,” Greenpeace climate campaigner, Robbie Kelman, said. “These costs may amount to millions.”
Greenpeace’s investigation of technical and commercial statements made by Southern Pacific Petroleum and Central Pacific Minerals (SPP/CPM) reveals serious discrepancies in company reports and suggests misleading statements have been made as to the true costs associated with the shale oil project. (2)
Greenpeace Corporate Campaigner, Monica Richter, says this is the first time company reports have been scrutinised in relation to the financial liabilities associated with greenhouse emissions. “Greenpeace has conducted this analysis to alert investors to the hidden financial risks of big new fossil fuel developments,” she said. “Our analysis raises issues the ASX should investigate thoroughly with reference to Stock Exchange Listing Rules and the Corporations Law.”
The Greenpeace report suggests that greenhouse-related costs to SPP/CPM may reach up to $442 million (42%) of their projected annual revenue from the Stuart project. “Obviously, this is a substantial risk to the company’s profitability” said Richter. “This complaint should put the commercial risks associated with greenhouse intensive industries, such as shale oil, squarely onto the investment community’s agenda.” (3)
“Not all investors have information about the commercial impacts of climate change policies. Given that this project has a 30 year projected life, superannuation funds might be particularly vulnerable to these kinds of issues and companies like SPP/CPM have an obligation to fully disclose the real risks of their oil shale project,” said Richter. (4)
“This report brings home the need for fossil fuel companies to incorporate the costs of climate change into their business”, says Sue Connor of Greenpeace New Zealand. “The era where the fossil fuel industry can use the atmosphere as a free dumping ground for carbon dioxide, the major cause of climate change, is at an end”.
“The New Zealand government has made a commitment to reducing New Zealand’s greenhouse gases to the 1990 levels by the end of the decade, this will require fossil fuel companies to account and pay for their carbon dioxide pollution”, said Connor.
For more information contact: Sue Connor at
Greenpeace New Zealand (09) 630 6317
In Australia contact: Climate Campaigner, Robbie Kelman on +61 2 92630306, + 61 407 008 917
or Media Officer, Jade Richardson +61 413 837 134 or +61 2 9263 0348.
Visit Greenpeace Australia website: www.greenpeace.org.au/asxreport for the report and background information.
Backgrounder available from Greenpeace New Zealand on request
Notes to the Editor:
(1) Greenpeace’s 104-page report delivered to the ASX today argues that shale oil producers, Southern Pacific Petroleum and Central Pacific Minerals (SPP/CPM), failed to inform investors of the material risks associated with their greenhouse gas emissions. Greenpeace alleges that the companies have misled and deceived investors, made serious omissions in business reports and promised massive decreases in carbon dioxide emissions that will be impossible to deliver.
(2) SPP/CPM claim the Stuart Project’s emissions can be reduced by 80% in line with conventional oil like that produced in Bass Strait. However Greenpeace research suggests there is no existing technology that can deliver this outcome. The imminent imposition of a carbon tax or carbon credits will have a material impact on the Stuart Shale Oil Project, according to the Greenpeace complaint.
(3) These figures are calculated using a price per tonne of carbon dioxide based on Australian Greenhouse Office estimates.
(4) Specific commercial risks Greenpeace allege SPP/CPM have not adequately addressed with investors include:
The costs of greenhouse gas emissions
under national and international emission trading programs
or carbon taxes;
the true extent to which the companies may be able to reduce their greenhouse emissions;
uncertainty that tree planting will be an acceptable greenhouse gas emission “offset” for their operations;
that Governments will be forced to substantially constrain future fossil fuel usage in response to more stringent post-Kyoto agreements.