Since chief executive Richard Baker took over two years ago, profit warnings have been issued, a tough Christmas has been followed by a slowdown in consumer spending and competition continues apace.Snapping at its heels are upmarket beauty outlets such as Space NK and the lower-brow Superdrug, owned by AS Watson, the retail arm of Asian giant Hutchison Whampoa. Boots has done so many things wrong in the past that anything would be an improvement." "Traditionally, there have been three great British retail groups: Sainsbury's, Marks & Spencer and Boots. Two have fallen by the wayside and some people say to themselves: 'Is Boots the next to go?' But we are well equipped to deal with the competitive threat." Both quotes could have been made at any time over the past few weeks. Oil groups will meet in Houston later this month to share lessons learnt from last year's Hurricane Ivan You can bet that representatives from BP will be attending Shell may now want to hold its own conference in Siberia.. He would like to develop similar products for oil companies so they are insured for lost production caused, say, by hurricanes So far, there appears to be little appetite for this. But Mr Carabello said that as markets become more aware of the economic impact of extreme conditions and climate change, "blaming the weather for losses will no longer be acceptable".Companies are getting better at minimising such effects, said Mr Oynes from the Minerals Management Service.
The National Oceanic and Atmospheric Administration forecasts that this year's hurricane season, like every one since 1995, will be more severe than average. Felix Carabello, the associate director of environmental products at the Chicago Mercantile Exchange, provides companies such as drinks retailers with financial products that hedge against unfavourable weather. The UK Offshore Operators' Association says that not all companies insure their platforms and rigs.In the Gulf of Mexico at least, weather conditions seem to have deteriorated over the past decade. But as BP and ExxonMobil, which owns 25 per cent of the platform, have learnt to their cost, building them is not simple. BP does not have cover for Thunder Horse as the premiums would be huge, while platforms in calmer seas such as those off the West African coast are easier to insure. You book rigs two years in advance," the executive said.So one answer for oil groups is to build the platforms themselves, sharing the cost by leasing them out to other com- panies.
These costs compare with $10m to $12m to drill an exploration well in shallow waters of 100 metres.Groups like Saipem, Wood and Galaxy Drilling, which provide the platforms, cannot keep pace with demand "One of the big problems is availability. An executive for a small exploration firm operating off the coast of West Africa said: "You are drilling for big targets. Five hundred metres used to be deep, now it's barely getting your ankles wet. Extra deep is 1,500 metres."It might cost $18m to drill a single exploration well in deep water, he said, but this can escalate to $35m if there are delays.Deepwater rigs are often hired out, and with a current going rate of $400,000 per day - in some cases, double that of a year ago - companies hope to find oil quickly. With oil prices hitting a new high of more than $61 for a barrel last week, the odds look more attractive.Wood Mackenzie and research firm Fugro Robertson say 65 per cent of oil and gas reserves found in 2002-03 were in deep water, against 40 per cent in 1996. Costs for Sakhalin Energy, a huge gas project in Siberia, had doubled to $20bn, it said.
