Dissident BP shareholders have attacked the global oil company's justification for possible investments in Canada's controversial oil sands by arguing it is based on projections that entail catastrophic consequences for the climate. About 150 investors say the company's assessment of the outlook for the oil sands shows that it has not properly considered the risks involved and have called for BP to commission an in-depth report. BP is one of the few large international oil companies not to have oil sands production, but it is looking at investing in a $2.4bn (£1.6bn) project - a 50/50 joint venture with Husky Energy of Canada - and plans to make a decision by the end of the year.
Investors including Cooperative Financial Services and the pension fund of Unison, the UK public-sector workers union, have put forward a resolution for BP's annual meeting calling for a report on the financial, environmental and reputational risks of the oil sands projects for investors. BP responded by saying that the production would be needed to meet global demand, which it projects to rise about 40 per cent between 2007 and 2030, with fossil fuels still satisfying as much as 80 per cent of total demands.
However, this is based on the "business as usual" forecast put out by the International Energy Agency, the Paris-based watchdog backed by the leading developed economies. The IEA has warned that allowing energy demand to rise in that way would have "dire consequences" for greenhouse gas emissions and global warming. The BP investors, advised by Fair Pensions, a consultancy, wrote to BP last week asking the company to say whether it saw this scenario as the most likely outcome. Lauren Compere of Boston Common Asset Management, another institution backing the resolution, said BP had not made an effort to discuss the issue with its North American investors.
She added: "We are still concerned that BP is not examining their oil sands strategy against a range of scenarios. This is in contrast to Shell which has acknowledged in its responses the need to do so." BP has responded, arguing that the decline in conventional oil fields now in production meant that other sources would be needed, including the oil sands.
It added that its views were also "broadly consistent" with the IEA "450 scenario", in which the atmospheric concentration of carbon dioxide is kept to 450 parts per million - the level that some scientists suggest could be enough to avoid the most serious consequences of global warming. However, Duncan Exley of Fair Pensions criticised BP's "lack of thought-out figures". Mr Exley added: "Investors need clarity about the risks and assumptions involved, which BP is not adequately providing."