B.P. Amoco & Petro-China

B.P. & Petro-China

In April 2000 BP invested $580m in Petro-China a subsidiary of China National Petroleum Corporation. Petro-China had hoped to raise $7 billion on the New York Stock Exchange, but human rights activists appalled at CNPC's human rights record in Sudan, and Petro-China's proposed pipelines in East Turkestan and Tibet, ensured that the target amount fell to less than $3 billion. B.P. went ahead and insist "As a strategic investor in Petro-China we will encourage the company to adopt progressive policies which meet international standards. We will encourage them to respect the interests of all citizens in their business activities be they in Tibet Autonomous Region, or any other region."

B.P. say they are not participating in the Tibet project, which ignores the fact that their $580m input makes possible the $530m scheme to put a 953km pipeline from Sebei gas field on the Tibetan plateau to North-West China, due for completion in October 2001.

Clearly B.P. are greedy to join the avaricious activities of destruction of the already oppressed, and wish to nail the Uighur and Tibetan peoples to their stake in Petro-China. B.P. are advised to disinvest from Petro-China. Failure to do so makes them guilty of collaboration with the Chinese invasion and occupation of the independent countries of Tibet and East Turkestan.

Tibet Vigil, Tibet Society and Free Tibet Campaign held 4 joint lunch-time demos outside BP's headquarters in Finsbury Circus last summer. Later we held 2 all-day demos which included a delegation to BP comprised of Paula Hollings of the Vigil and Alison Reynolds of Free Tibet Campaign. On 29th of September the Tibetan Government in Exile issued an important statement of opposition to the pipeline:

"This project will be harmful because it will:
  -  Employ a sizeable and disproportionate number of Chinese and other non-Tibetans
   - Deplete natural resources with little or no benefit to the Tibetan people
   - Consolidate the Chinese control and occupation of Tibet as well as increase the            Chinese government's reasons for maintaining control
   -   Facilitate the erosion of Tibetan culture and traditions
   -   Facilitate the transfer of Chinese settlers or workers to Tibetan areas
   -   Negatively affect the sustainability of Tibet's ecosystems
   -   Employ only a few Tibetans in unskilled labour positions."

Tibet Vigil continues to strongly take the view that no investment by foreign companies in Tibet or Chinese companies operating in Tibet is permissible until the Tibetan Government in Exile has satisfactorily had dialogue with China for the future of Tibet, whether or not China or the foreign companies have taken it upon themselves to decide that such investments are for the benefit of Tibetans. As the Tibetan Government in Exile statement says, such projects as the Sebei-Lanzhou pipeline will, "Consolidate the Chinese control and occupation of Tibet as well as increase the Chinese government's reasons for maintaining control".

On January 31st
Tibet Vigil held another demo outside bp's headquarters in Finsbury Circus.[see
report]. Free Tibet Campaign put forward a resolution for bp's AGM calling on bp
to disinvest from Petrochina.[Full wording on FTC website]

In reply bp stated
"BP Directors' Response to Resolution 17
The board opposes Resolution 17 for the following reasons:
The resolution and supporting statement ask BP to walk away from a commercially attractive venture that forms one of the main building blocks of our China strategy and to diminish or destroy our ability to influence the way in which one of the world's most important markets will develop.
That is not in the best interests of shareholders. Constructive engagement is not simply a concept in the context of doing business in China. Over the past 25 years BP has learned time and time again about the importance of building long-term relationships in China.
Such relationships are not only the key to commercial payoffs, they are also the main medium through which broader business principles and policies are transmitted.
Although directed at BP's $578m, 2.2 per cent stake in PetroChina, the resolution contains an implied question as to whether we should continue to invest in China. We believe we should. China offers a unique business challenge. No global company can afford to ignore it. But understanding such a complex cultural, political, economic and social landscape can only come through a long-term presence and commitment.
Nor can the individual components of our Chinese business interests be viewed in isolation. The idea that BP could divest its stake in PetroChina and still retain its reputation in China and remain a positive force there is contrary to the experience we have painstakingly built up over 25 years.
BP's shareholder interest in PetroChina is a symbol of our commitment to build a long-term relationship with a leading Chinese energy group. BP has no management role in the company and has no operations in the areas which the resolution claims present human rights and environmental concerns.
As a shareholder we can and do raise issues with PetroChina's management, and we have helped that management to better understand the expectations of western markets and investors. PetroChina's listing on stock exchanges in the US and Hong Kong has subjected it to stringent reporting requirements, a process that has further enhanced the transparency of the company. BP's aim in China is to use such relationships and the trust we have built up though 25 years of experience on the ground to create a broad based
energy business that will benefit our shareholders through exposure to China's rapid economic growth, but which will also help China rise to the challenge of lifting the living standards of its 1.2 billion citizens, and through the development of the country's natural gas infrastructure - help it to keep its carbon emissions in check as that economy expands, a development that will be important to the world as a whole.
Our values and commitments are laid out in the document What We Stand For and are applicable to the full scope of our activities.
BP conducts its business worldwide through a variety of relationships, the structure and organization of which vary widely. Any BP-owned operation must comply fully with those policies. We also apply such policies fully when we are the operator of joint ventures.
But we are also involved in relationships in which we do not have the lead role. In such cases we encourage those we do business with to adopt similar policies.
As a strategic equity investor in PetroChina, we do not have the right nor the desire to impose policies or dictate executive decision-making. But as a shareholder and at the request of PetroChina we have tried to help its senior managers to better understand the broader business environment and stakeholder expectations.
Earlier this year we held meetings at a senior level to discuss shareholder relationships, transparency and the need for external communication. Last year we responded to a similar request for senior BP staff to lead seminars with PetroChina on issues related to health, safety and the environment as well as relationship management. More generally, we have used the position of trust we have created in China to address a variety of issues. In the past three years the need for transparency has been a recurrent theme in speeches made by BP Managing Directors and the CEO of BP China. At seminars, think tanks and academic institutions, BP executives have spoken about the importance of the rule of law, respect for human rights, the dangers of corruption, the importance of good corporate
governance, the need for investment to benefit the many and not just the few and the
requirement for the highest environmental and safety standards. Along with a number of other international energy companies BP has expressed an interest in receiving details of the East-West Pipeline project. As part of the application we made it clear that any potential involvement by BP would require detailed environmental and social impact assessments in line with our normal practice and policies.
Neither BP nor PetroChina does not link it in any way to activities in that country. We support US efforts and those of the Commission on International Freedom to monitor and ensure that funds from investments such as BP's are not transferred to Sudan.
We also support the appointment by PetroChina of independent advisers to monitor the use of funds raised from the share sale for capital investment and debt repayment.
CNPC and PetroChina are legally distinct entities. CNPC's 90 per cent interest does not entitle it to 90 per cent of PetroChina's profits, though it would be entitled to 90 per cent of declared distributions. And while it is true that PetroChina inherited $15bn of debt from CNPC it also received $35bn in domestic Chinese assets, leases, current production,
facilities and personnel. The debt was associated with these assets.
The resolution directs BP to withdraw from its investment in PetroChina, a primary component of BP's long-term China strategy. The Board does not consider that to be in the best interests of shareholders.
The board recommends voting AGAINST resolution 17 " At the AGM on April 19th"

No real change since the 19th century.The contiued bp investment in Petro-China is to the shame of Britain.
At the AGM on 19th April, 95% of shareholders predictably voted against resolution 17. BP's chairman, Peter Sutherland, brazenly twisted all the facts which had been so eloquently put before him and insisted again that BP's investments have no relation to Tibet and that
"disinvesting from PetroChina means, in reality, departing from China, which would be a mistake and would be wrong".
This is a continued denial of the most important fact: that Tibet has been illegally occupied by China for 50 years and that an investment in any Chinese company which is raping Tibet of its resources against the will of its people is undeniably aiding and abetting that occupation. He also denied that PetroChina has any connection with the appalling operations in Sudan. On the one hand he said it is in the interests of China for BP to be involved in the Chinese economy, yet on the other he maintained that their 2% stake in PetroChina has no influence. If they have no influence, how can it be in anyone's interest - Tibet's, China's or BP's - to maintain their investment? BP clearly does have influence - it is time they actively used it and pulled out of PetroChina.

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