BP wins support against oil sands move

Ed Crooks, Financial TImes, March 31 2010--has scored a twin success in its battle to block a shareholder resolution that raised doubts about its proposed investment in Canada’s oil sands, with a group of local authority investors and a leading advisory service recommending a vote against the move.

About 150 investors, advised by the campaign group FairPensions, put forward a resolution calling on BP to commission a report on the risks involved in its proposed investment in the $2.4bn (£1.6bn) Sunrise project, including environmental costs and the effect on its reputation.

However, it emerged on Tuesday that BP had won backing for its opposition to the resolution from two influential groups.

The Local Authority Pension Fund Forum, which has 52 members, said BP had “provided sufficient evidence that its approach was well-grounded”.

It added that while the purpose of the resolution was to encourage more disclosure from BP, “the company has disclosed a great deal of information on this issue” and “the spirit of the resolution had been met”.

Separately RiskMetrics, which makes voting recommendations to institutional investors, confirmed that it would also advise shareholders to reject the proposal at BP’s annual meeting on April 15.

Louise Rouse, director of investor engagement at FairPensions, said she was “very surprised” by the RiskMetrics recommendation, because the adviser appeared to agree there was a need for BP to be more open about its involvement in the oil sands.

BP says it has disclosed more detail than other companies about the business case for its possible investment, which is set to be given the go-ahead by the end of the year. It has, for example, specified an assumed cost of carbon dioxide emissions in its planning of $40 a tonne.

Under Lord Browne, its previous chief executive, BP held back from oil sands investments while others piled in.

It is now planning the Sunrise development as an integrated project to serve its Toledo refinery in Ohio. Sunrise and the refinery are owned 50-50 by BP and Husky Energy of Canada.

RiskMetrics has not taken a decision on a similar resolution about oil sands proposed for Royal Dutch Shell’s AGM on May 18.