WATCHING THE WORLD THE INDUSTRY'S "GREEN REPORTS"

The public receives lots of annual reports this time of year.

This year, almost all oil company results include a report on environmental performance for 1994. Several companies have published their environmental report separately The press is not a major target audience for annual reports, but investors are. An environmental report gives a company a chance to put forth its view on environmental priorities and detail spending on "green" projects.

A U.K. Offshore Operators Association (Ukooa) official said the oil industry's green projects are not a reaction to a recent trend among investors to back only companies that demonstrate a responsible attitude toward the environment.

"Oil companies have been trying to do the environmental thing for a few years," he said."In general, they have acted ahead of the marketplace."

COMPANY REPORTS

Here are some samples of what these green reports contain:

Norway's Den norsk stats oljeselskap AS spent 395 million kroner ($60 million) on environmental measures last year. Statoil's report is an account of improved operations and work toward legislative targets.

"Reduced emissions and waste are signs of good resource management," Statoil said."Recovering volatile organic compounds during offshore loading and extinguishing flares provides good examples. A special ship that recovers oil previously flared during well testing was successfully tried out."

Chevron U.K. Ltd. reported that in 1994 "A second annual waste and emissions inventory report was produced, quantifying wastes and releases from offshore operations. Data collected from 1992 to 1994 will be used to prioritize wastes and releases and establish goals and timing for reduction efforts in keeping with pollution prevention management practices."
And from Texaco Inc.: "From 1989 to 1993 our average daily domestic production of refined barrels of crude oil increased more than 6%, from 619,000 to 658,000 bbl. In the same period, refinery releases decreased 66.5% to a total 3.9 million pounds."

HEADLINES DANGER

Admirable though these projects are, investors also read negative news headlines, as Shell Transport & Trading Co. plc found last October.

Despite Shell being highly active in promoting its green agenda, major investor Trustee Savings Bank plc (TSB), London, sold its shares in Shell Transport because of accusations against Shell over operations in Nigeria.

Nigeria is notorious for its unique business ethics. Shell said accusations of environmental damage were a ploy by local political groups to get a bigger share of oil money (OGJ, Feb. 13, Newsletter).

Yet TSB has kept its money out of Shell shares since then. In the meantime, the bank's advisers sent a representative to Nigeria to witness Shell's operations.

A TSB official said following the visit Shell will soon be invited to meet TSB's investment committee, with a view to coming off the black-list.

Although Shell is thought likely to win the committee's "all clear," this case suggests that while the green investors' acid test is monitoring the correct indicators, its reaction time may need slowing down.