British Petroleum PLC (BP), the global energy giant, announced on January 13, 2004, that it had concluded its 2″ stake in PetroChina Company Limited (PetroChina) on January 12, 2004. Tibetans and Tibet supporters had waged a campaign against BP’s involvement in PetroChina following reports of oil explorations in Tibet.
According to news reports, the sale of the stake of around 3.5 billion shares in PetroChina was effected through a bookbuilt placing on public markets for HK$3.70 per share, a total of approximately HK$13 billion (US$1.65 billion) arranged by Goldman Sachs International.
BP is one of the largest foreign investors in China’s energy and petrochemicals sectors. When news surfaced in 2000 about possible BP involvement in PetroChina’s construction of the Sebei-Lanzhou (Tsaidam, Amdo) oil and gas pipeline, the International Campaign for Tibet, along with a diverse coalition of Tibetan, human rights, national security, and environmental groups, launched a campaign asking BP to divest from PetroChina or use its influence to stop a controversial natural gas pipeline. Development of the 953-km pipeline and the gas fields to supply it represented a significant escalation of China’s ongoing strategy of developing Tibet into a resource extraction colony.
After the campaign BP made an announcement on February 15, 2000. Headlined, “Following BP’s decision to acquire a minor participation in PetroChina, there have been some enquiries from the public about what this means for issues relating to Tibet and Sudan,” the announcement said the following on Tibet:
The Tibet Issue
“A few NGOs have opposed our investment in PetroChina — a company that has some limited operations in Tibet — and have urged us to influence PetroChina’s operations and plans, although they are outside our joint venture agreements. Alternatively they have demanded that we sell our PetroChina shareholding. Over the past nine months we have had discussions with several of the NGOs with an interest in Tibet. We have explained our policies, as well as our determination to actively engage our Chinese partners in an effort to be a presence for good wherever we work together.
“Unfortunately, we have been unable to persuade the International Campaign for Tibet and some other Tibet interest groups of the soundness of our approach.
“We believe we can be a presence for good in China and the other areas of the globe where we operate. Here is how we responded to the International Campaign’s call to pull our investment in PetroChina:
‘We appreciate the concerns you express about human rights and environmental issues. BP takes these matters very seriously. We therefore regret that our investment in PetroChina is causing concern to your coalition.
‘Our commitment to sustainable development and an ethical approach to business is clear. In China and elsewhere, senior executives, led by Sir John Browne, have spoken out in favour of human rights, responsible development and the rule of law.
‘These words have been backed by actions. Our joint ventures are helping to integrate China more deeply into the global economy in line with the country’s membership of the World Trade Organization. We are bringing natural gas to China, so enabling the country to reduce its dependence on coal.
‘We have a range of projects under way to raise environmental awareness and to help improve living standards in China in line with the United Nations goal of alleviating global poverty. By taking these initiatives we believe we are addressing two human rights concerns of importance to your coalition – the right to development; and the right of the people of China and the world to a cleaner environment.
‘In your letter you ask BP to use its influence with PetroChina to stop the construction of the Sebei-Lanzhou pipeline. You also urge us to divest our 2.2″ shareholding in PetroChina if construction of the pipeline is not suspended by January 15th, 2001.
‘Neither request is practical or desirable. Although BP’s 2.2″ stake allows us to influence joint ventures constructively we do not control or direct PetroChina. Moreover, we have not been involved in the Sebei-Lanzhou pipeline project, which in any case is close to completion.
‘We believe that engagement and investment both advance the broader goals you mention in your letter, and that responsible business involvement will bring general benefit in the future. We have been working to ensure that PetroChina is fully aware of the concerns expressed by your coalition with the aim of building a new consensus through dialogue.
‘If suitable opportunities occur, BP would welcome the chance to participate in social investment projects in the western parts of China, including Tibet. These might involve partnership with non-governmental organisations and could include environmental conservation schemes, renewable energy projects and training programmes. We would welcome discussion about these ideas with you and your members.
‘We recognise that we do not have all the answers to the challenges before us, but we remain committed to playing a constructive role in China and the region as a whole.
‘In summary, we understand the concerns raised by the International Campaign but we firmly believe in improvement through engagement, not isolation, and our preference is to maintain an active presence in China and be a constructive force over the long term.'”
PetroChina has adopted a low profile attitude to BP’s sale of the shares. Mao Zefeng, PetroChina head of investor relations, said on January 13, 2004, “BP has indicated to PetroChina its disposal of PetroChina shares is for its own financial purpose and nothing to do with its confidence in PetroChina and China’s development.”