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Energy»US and Australian funds join BP rebellion on oil sands

»Tuesday, April 13,2010

A collection of influential international investors have added their support to a shareholder rebellion over BP's plans to invest in the controversial Canadian oil sands.

Pension funds from the US and Australia say they will back a resolution at BP's annual general meeting next week that calls for the oil group to publish a report on the financial and environmental risks involved in developing oil sands.

The California Public Employees' Retirement System (CalPers), the California State Teachers' Retirement System (CalStrs), and the Vermont Pension Investment said yesterday they will vote in favour of the resolution – which BP management is opposing – as will AMP Capital Investors and Christian Super in Australia.

Jack Ehnes, chief executive of CalStrs, said: "The environmental risks associated with oil sands development comes with long-term financial risk for the CalStrs portfolio."

The investors that have committed to the resolution hold stakes of less than 0.5pc in BP, but CalStrs and CalPers are among the top ten largest pension funds in the world and their support is a blow to BP.

Oil sands, or tar sands as they are also know, are controversial because extracting the oil requires significant amounts of energy – giving off more carbon dioxide and costing more than conventional methods, as well as potentially scarring the landscape.

BP does not have any oil sands production at present but expects to approve the development of its Sunrise site in Canada later this year. The $10bn (£6.6bn) venture is shared with US group Husky and covers an area in Alberta roughly the size of England.

Fair Pensions, the investment charity which is co-ordinating the resolution, said BP had not made "adequate disclosures" to satisfy investor concerns. It warned BP faces "legal and reputational risks" if there is damage to the local environment, as well as pointing to the high costs of extraction.

However, many British investors have said they will support BP's stance, or have not committed either way.

The Local Authority Pension Fund Forum said BP has "provided sufficient evidence that its approach was well-grounded".

The ABI has given the resolution an amber rating, simply indicating that it is resolution not proposed by the company and requires the attention.

A spokesman for BP said: "BP assesses the use of shareholder funds with the same rigour whether the proposed investment is in renewable energy, refining and marketing, oil sands or other oil and gas production. BP's strategy is very clear: it is to invest to grow production profitably by taking big positions in the world's most prolific hydrocarbon basins."





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