Mitsui Asked To Help BP Pay For Oil Disaster

Mitsui is deeply involved in oil drilling around the world. BP has just asked the Japanese company to help pay for clean up operations in the Mexican Gulf. Not much has been reported here in Japan about the toxic goo but if BP insists, what will Mitsui Oil Exploration Company do? To pay or not to pay...

BP's clean-up costs to date amount to some $3.12bn (£2bn), including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid, and federal costs. To recoup some of those losses, in June BP sent out demands for almost $400m to its partners in the well – Houston-based Anadarko and Japan's Mitsui Oil Exploration Company. Anadarko owns 25% of the well and Mitsui has 10%. Anadarko, however, has flatly refused to pay up.

Guardian: BP attempts to place new cap over Gulf of Mexico oil rupture

MOECO website said on May 10, 2010:

Mitsui Oil Exploration Co., Ltd. (''MOECO'') announced today that on April 20, 2010, a third party semi-submersible drilling rig, which was conducting exploration work on the Mississippi Canyon 252 block in the Gulf of Mexico, experienced a fire incident, which sank the drilling rig and resulted in leakage of hydrocarbons from the well, as reported in the press. MOEX Offshore 2007 LLC, a 100% subsidiary of MOEX USA Corporation (a 100% subsidiary of MOECO), has a 10% working interest in the block as a non-operator, which is operated by BP Exploration and Production Inc. A full response is being conducted by the operator, the drilling rig owner and government entities. MOECO maintains insurance policies.

MOECO is unable, at this time, to determine the cause of the incident, and the impact, if any, that the incident will have on MOECO's future operating results, financial position or cash flows.

But these huge companies are almost never held accountable. Mitsui is also involved in many other ventures, such as a project in the ocean near Thailand and Cambodia.

If a similar disaster struck there, would we be getting daily reports in international media?

Would clean up operations be properly paid for and would local fishermen and others be compensated?

Where is your oil, gasoline and gas coming from? Can you reduce? What about "fossile fuels" and climate change issues? By mid 2010, are we getting closer to supplying our energy needs using renewable energy?

Are you prepared to deal with life without cheap oil?


Welcome back, Martin!

Mitsui is one of the investors of the exploded BP rig, From the Wall Street Journal:
MAY 31, 2010,
Mitsui Braces for Costs From Gulf of Mexico Oil Leak By MARI IWATA

TOKYO -- Japanese trading company Mitsui & Co. Ltd said Monday it expects to shoulder part of the costs stemming from the massive oil spill in the Gulf of Mexico because one of its unit has a 10% stake in the block from which oil is leaking.

"We will have to carry part of it as a stakeholder," said a spokesman of Mitsui & Co. "But specifics like the percentage and the total amount are unclear" because there are parties involved who aren't shareholders in the leaking well and as the leak is still ongoing, he noted.

The official was responding to questions about the failure of oil field operator BP PLC's efforts to plug the estimated 12,000 to 19,000 barrels a day of crude oil spewing into the Gulf of Mexico from a broken pipe 1,500 meters under the water.

The Japanese trading company's unit with a stake in the offshore oil block with the spill. is Mitsui Oil Exploration Co. Mitsui & Co. holds 70% of Mitsui Oil Exploration, while Japan's Ministry of Economy, Trade and Industry owns 20%. The reminder is held by several other Japanese companies.

Insurance contracts of Mitsui Oil Exploration may cover the spill and collateral damage to third parties to a maximum of $45 million, the Mitsui spokesman said. The Mitsui oil unit hasn't sent staff to the disaster area, but it is ready to do so upon request, he said.

U.S. oil company Anadarko Petroleum Corp. has a 25% stake in the Gulf of Mexico block.

Other companies, including oil field rig operator Transocean Ltd. and oil field services company Halliburton Co., which performed cementing work on the well which ruptured April 20, have been collaborating in efforts to contain the flow and to find out what happened.

Mitsui & Co has diversified interests in oil and gas, metals, power generation, chemicals and transport.

On May 7, Mitsui & Co. said its net profit slid to 149.72 billion yen ($1.64 billion) from 177.61 billion yen a year earlier, while revenue sagged 29% to 9.358 trillion yen from 13.125 trillion yen, although at the time it forecast a sharp recovery in net profits and revenues for the current year...

It may take years to settle the total cost, including compensation to industries like fisheries and tourism, and to work out how to divide the costs, he noted.

"It is likely that Mitsui & Co. will build reserves for future costs in this fiscal year's earnings" started in April, and book these as an extraordinary item, Mr. Shioda added.

The company's oil exploration and production business is focused mainly in the Middle East, Southeast Asia and Australia.

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