By THE ASSOCIATED PRESS
Published: February 28, 2006
Filed at 3:31 p.m. ET
WASHINGTON (AP) — The Supreme Court on Tuesday threw out a lawsuit that accused two oil companies of inflating gas prices by at least $1 billion.
Justices unanimously said gas distributors did not prove that Chevron Corp. and Shell Oil Co., a U.S. subsidiary of Royal Dutch Shell Plc, violated antitrust laws in the joint venture, which ended four years ago.
Justice Clarence Thomas, writing for the court, said the companies had a legal partnership. ''The pricing decisions of a legitimate joint venture do not fall within the narrow category of activity that is per se unlawful'' under federal law, Thomas said.
At the time of the deal in 1998, Texaco was independent from Chevron. The company joined with Shell to form enterprises to handle refining and marketing of their gasoline.
Gas distributors filed a class-action lawsuit in California, alleging that Texaco and Shell had used the partnership to fix gas prices in violation of antitrust provisions of the Sherman Act.
A ruling in favor of the gas distributors would have had broad implications for business mergers beyond the oil industry.
Representatives of Chevron and Shell lauded the decision.
''As the Supreme Court noted, the joint venture, which no longer exists, was extensively reviewed and approved by the federal government's antitrust enforcement agency, the Federal Trade Commission,'' Chevron spokesman Donald Campbell said. ''It was also reviewed by four state attorneys general, who similarly concluded that the venture was not anticompetitive.''
A lawyer representing the plaintiffs did not immediately return a call seeking comment.
The case was argued at the court last month, and justices signaled then that they were not concerned that the giant gas companies went too far. Chief Justice John Roberts said that joint ventures must price their products, and it shouldn't matter whether they are sold as a new brand or under the Shell and Texaco labels.
Gas price-fixing has been a sensitive subject over the past year for Americans who experienced surging prices that exceeded $3 a gallon in many parts of the country.
A trial court judge dismissed the lawsuit against the oil companies. But the San Francisco-based 9th Circuit U.S. Court of Appeals ruled there was evidence that the ventures had improperly restrained trade.
The high court erased that decision. Justice Samuel Alito did not participate in the case because he was not on the court when the appeal was argued.
The cases are Texaco v. Dagher, 04-805, and Shell Oil v. Dagher, 04-814.
Shares of Chevron fell 59 cents to $56.51 on the New York Stock Exchange, where those of Royal Dutch Shell declined by 50 cents to $60.41.
In the past year, Chevron has traded in a range of $49.50 to $65.98, and Royal Dutch Shell has traded between $57.79 and $68.45.
On the Net:
Supreme Court: http://www.supremecourtus.gov/
Posts from ‘February, 2006’
By THE ASSOCIATED PRESS
Published: February 28, 2006
Filed at 10:40 a.m. ET
WASHINGTON (Reuters) – The U.S. Supreme Court ruled on Tuesday that Shell Oil Co. and Texaco Inc. cannot be held liable under the antitrust law for their now-defunct joint ventures that had been approved by the federal government and that set the selling price for gasoline.
The justices unanimously overturned a U.S. appeals court ruling that the antitrust law's automatic prohibition against price fixing applied to the economic arrangements under the two joint ventures set up in 1998 and discontinued in 2001.
The ruling for Shell and Texaco stemmed from a lawsuit brought by 23,000 gas station owners in the western United States who said the two companies conspired to fix prices for their gasoline brands through the joint ventures.
The joint ventures took over the gasoline wholesaling and retaining operations of the two companies. One venture, called Equilon Enterprises, operated in the U.S. West while the other one, Motiva Enterprises, covered the eastern United States.
Texaco left the joint venture when it merged with Chevron Corp. in 2001 to form ChevronTexaco Corp. (CVX.N). The company now is called Chevron Corp. Shell Oil is a unit of Royal Dutch/Shell (RD.AS) (SHEL.L).
A federal judge in Los Angeles dismissed the lawsuit, but the appeals court ruled it could go forward. It ruled the companies could be held liable because the joint ventures priced Texaco and Shell gasoline the same.
The companies said the U.S. Federal Trade Commission approved the joint ventures and that they cannot be held liable. The U.S. Justice Department supported them.
The Supreme Court ruled for the two oil companies.
Justice Clarence Thomas concluded in the seven-page opinion that it is not automatically illegal under the antitrust law for a lawful, economically integrated joint venture to set the prices at which the joint venture sells its products.
He said Equilon's pricing policy may be price fixing in a literal sense, but it is not price fixing in the antitrust sense.
ARTICLE BY JOHN DONOVAN
Zack Brown, an Arctic Wilderness Associate for the U.S. Public Interest Research Group arrived in London last Wednesday morning on an overnight flight from Washington DC. The sole purpose of his mission was to purchase sufficient shares in Royal Dutch Shell plc to enable a resolution to be submitted for inclusion on the agenda for Shell’s AGM in May 2006 relating to Shell’s exploration plans for the Arctic Wilderness. A resolution put forward on this basis has to have the support of 100 shareholders before being considered for inclusion.
Mr Brown had a meeting at The Shell Centre later the same day with Royal Dutch Shell Plc Assistant Company Secretary, Mr Mark Edwards. The events surrounding what unfortunately turned out to be an unsuccessful mission are set out in the correspondence below. It was unsuccessful despite the fact that Mr Brown had the necessary funds and shareholder names. I will leave it to readers to draw their own conclusions from the correspondence.
I have removed most telephone and fax numbers as it does not seem appropriate to publish them on the Internet. The exception is the contact information for Zack Brown which he has previously given us permission to publish.
EMAIL FROM JOHN DONOVAN TO SHELL INTERNATIONAL 21 FEBRUARY 2006
For the attention of Mr Gerard Paulides
Shell International Ltd
Group Investor Relations
London SE1 7NA, United Kingdom.
I am an existing shareholder in Royal Dutch Shell Plc.
I have been asked by the Zack Brown, an Arctic Wilderness Associate of the U.S. Public Interest Research Group to assist in purchasing 100 shares in Royal Dutch Shell Plc so that it is possible for their organisation to put a resolution on the agenda for the Shell AGM on 16 May 2006. I should make it clear that I am not authorised to speak on their behalf and this communication is therefore entirely at my initiative. I understand that a deadline is fast approaching for the introduction of any such resolution.
I have already been in contact with Lloyds TSN Registrars but it has not thus far been possible to obtain answers to questions on this matter. I have also spoken to my own stockbrokers via HSBC Bank and have been informed that I can act as a nominee and purchase 100 shares at a cost of £29.95 each which includes admin charges. The shares could then each be transferred in to a different shareholders name, in this instance US citizens. However it would take up to 5 working days for the names to appear on the register of shareholders, which probably takes us over the deadline.
I am sure that Shell would like to assist in any reasonable way that it can to facilitate the important issues relating to oil exploration in the Arctic Wilderness to be put before shareholders. I would therefore be most grateful for your answers to the following questions.
What is the deadline for submitting a shareholder resolution?
Would Shell accept a confirmation from share brokers that the shares had been purchased provided evidence was supplied of individual shareholder names?
If the answer to the above question is no, can I go to Lloyds Registrars with the cash to purchase 100 shares on the spot, in which case I would supply the names of the individual shareholders. If this can be done could you very kindly give me a contact name and phone number?
As there appears to be great urgency attached to this matter I would be most grateful for your reply ASAP.
My telephone number is:
I will also send a copy of this communication by fax.
EMAIL FROM JOHN DONOVAN TO ZACK BROWN 21 FEBRUARY 2006
I had a long informative chat with Mark Edwards, the assistant Company Secretary of Royal Dutch Shell Plc.
He says that you have also been in contact and that an email has been sent to you.
This is what he told me.
The deadline is 1st March for a non defamatory resolution to be filed.
All shareholder names/addresses must be straightforward i.e. no nominees names or addresses.
If deadline is missed the resolution could still be added but it would need to be filed 6 weeks before the AGM. However you would have to meet the distribution and postal costs estimated at between £70,000 and £100,000. This would appear to rule out that option.
He says that you would need to act with great speed to meet the 1st March deadline and has given me the name and phone number of a person to contact at Lloyds TSB: Mr Bert Groves on 01903 XXXXXX. Unfortunately he is not available tomorrow, so I hope you were given this information and have already been in contact. If you have not already done so I understand that someone else will answer his phone tomorrow and hopefully deal with the matter.
Mark suggested in any event that you should seek legal advice about your plans. Basically Shell considers the issues involved to be important and would be happy to see a resolution on the subject.
No doubt I will hear from you.
EMAIL FROM JOHN DONOVAN TO MR MAARTEN VAN DEN BERGH, CHAIRMAN, LLOYDS TSB BANKING GROUP: 23 FEBRUARY 2006
23rd February 2006
Mr. Maarten A van den Bergh
Lloyds TSB Group
25 Gresham Street
4 PAGES BY FAX ONLY TO:
FROM FAX NUMBER:
Dear Mr. Maarten van den Bergh
U.S. Public Interest Research Group
I am writing to you on an urgent matter both in your capacity as Chairman of the Lloyds TSB Group and a main board director of Royal Dutch Shell Plc. It concerns oil exploration in the Arctic Wilderness and associated vitally important issues, including for example the fate of the Caribou, Bowhead Whale and Polar Bear.
I attach a copy of a self-explanatory letter to Shell International Limited concerning Mr. Zack Brown, an Arctic Wilderness Associate of the U.S. Public Interest Research Group. I have also supplied a copy of a subsequent email that I sent to Mr. Brown following a conversation with Mr. Mark Edwards, the Assistant Company Secretary of Royal Dutch Shell Plc. By that time, Mr. Brown had already spoken by telephone to Mr. Edwards. All of these communications took place on Tuesday 21st February.
As a result, Mr. Brown decided to take an overnight flight to London from Washington DC and had a meeting with Mr. Edwards at The Shell Centre yesterday. He advised Mr. Edwards of his plans to visit Lloyds Registrars at Worthing with me today to purchase the relevant shares. No attempt was made to dissuade him from making the visit. Indeed, the impression given to Mr. Brown was the same as that given on Tuesday i.e. Shell would be happy to see a resolution on the agenda as it recognizes the importance of the issues involved. Obviously the text of the resolution would be subject to normal constraints.
When we arrived at Lloyds TSB Registrars at 12.30 today, we were politely asked by an official to wait in a meeting room while enquiries were made. After about half an hour, the same gentlemen explained that your share broker division – Shareview Dealing – carries out Shell share trades on a Tuesday only and that as a consequence the deadline of shareholder names appearing on the relevant registrar by 6pm on Wednesday 1 March 2006 could not be met. The gentleman involved seemed uncomfortable with the information he had been asked to pass on. His hands were trembling when he said that his instructions were that Lloyds TSB Registrars was unwilling to bend the rules – your standard terms and conditions – to facilitate the purchase and registration of the shares in time to meet the deadline.
Under all of the circumstances, including your senior management roles in both companies, I am appealing to you to look into the situation as a matter of urgency. The fact that Zack Brown got on the first plane to London after the encouraging response from Mr. Edwards demonstrates how passionate he and his highly regarded organization are about this worthy cause which they, and apparently Shell, believes is deserving of consideration at the Royal Dutch Shell Plc AGM. As time is of the essence, I would be most grateful for your reply ASAP.
It would be unfortunate if anyone was left with a suspicion, perhaps unfairly, that while Shell was making encouraging noises about the prospect of a resolution on this matter, an apparently insurmountable obstacle, which is actually purely of an administrative nature, is being used to thwart Mr. Brown’s important mission.
Mr. Brown is waiting in London in the hope that your intervention will allow him to return to Worthing to purchase the shares. He has the required shareholder names and the funds. With your help and some goodwill, I am sure the effort could be made to allow his laudable objective to be achieved.
My telephone number is:
Email address for Mr. Zack Brown: firstname.lastname@example.org
FAXED LETTER FROM JOHN DONOVAN TO MR MICHIEL BRANDJES, COMPANY SECRETARY, ROYAL DUTCH SHELL PLC: 24 FEBRUARY 2006
24th February 2006
Mr. Michiel Brandjes
Royal Dutch Shell Plc
Dear Mr. Brandies
5 PAGES BY FAX ONLY TO:
FROM FAX NUMBER:
RE: Mr. Zack Brown, U.S. Public Interest Research Group
I attach for your information a copy of a self-explanatory letter sent by fax to Mr. Maarten van den Bergh yesterday evening. I am sure that your Mr Mark Edwards has advised you of this matter.
I am a Royal Dutch Shell shareholder and have a long standing interest in the activities of Shell. I was asked by the U.S. Public Interest Research Group to do what I can to assist in this matter.
Mr. Brown is still attempting to purchase shares via a broker but it seems that time has run out unless Lloyds TSB Registrars relent and bend their admin rules to allow Mr. Brown to purchase and registrar Royal Dutch Shell Plc shares within the deadline set by Shell.
Is it possible for you to intervene with Lloyds TSB Registrars bearing in mind the factors and issues set out in the attached letters?
cc. Mr Jeroen van der Veer, Chief Executive, Royal Dutch Shell Plc.
LETTER TO JOHN DONOVAN FROM BERT GROVES, SENIOR RELATIONSHIP MANAGER, LLOYDS TSB REGISTRARS: 24 FEBRUARY 2006
Dear Mr Donovan,
Royal Dutch Shell plc.
The Chairman's Office of Lloyds TSB Group plc has asked me to reply to your faxed letter addressed to our Chairman, Mr. Maarten van den Bergh dated 23rd February 2006 and received earlier today.
I would refer you to our telephone conversation at 2 p.m. today, in which I explained the role and function Lloyds TSB Registrars fulfil in the provision of registration services to Royal Dutch Shell pic (“RDS”). As Registrar we are responsible to RDS for the maintenance and administration of their register of members. This principal role is entirely separate to share dealing services which we offer as a secondary service to shareholders.
Our understanding is that Mr Edwards met with Mr Brown on 22nd February and Mr Edwards explained that it was pointless in Mr Brown visiting us in Worthing in person to purchase shares.
It is unusual for shareholders to visit our offices and the gentleman that dealt with the enquiry was correct in advising Mr Brown that we could only deal with any applications to purchase shares in accordance with our share dealing terms and conditions. We could not make any special facility available which breached these rules.
Mr Brown has contacted me by telephone this afternoon to arrange for the transfer of shares into various individuals names. I have now explained the procedures to him and provided the necessary form by email for him to print, complete and return to us duly signed and fully completed in order that the new holders can appear on the register by 6 p.m. Wednesday 01 March.
I do not feel that Lloyds TSB Registrars has placed any insurmountable obstacle of an administrative nature in the way of Mr Brown's attempts to make the necessary changes to the RDS share register by the deadline set by the company.
If I can be of any further assistance, please do not hesitate to contact me using my direct line ……
Senior Relationship Manager
RESPONSE LETTER FROM JOHN DONOVAN
26 February 2006
Mr. Bert Groves
Senior Relationship Manager
Lloyds TSB Registrars
The Causeway, Worthing
5 PAGES BY FAX ONLY TO:
FROM FAX NUMBER:
Dear Mr. Groves
ROYAL DUTCH SHELL PLC & U.S. PUBLIC INTEREST RESEARCH GROUP
Thank you for your letter dated 24 February 2006. When I visited your offices on Thursday I was unaware that Mr Brown had not telephoned you in advance to make arrangements using the phone number which Royal Dutch Shell Plc Assistant Company Secretary, Mr Mark Edwards, had kindly provided to me during our first telephone conversation.
After drafting my subsequent letter to Mr. Maarten van den Bergh, I sent a copy to Mr Brown for his approval. He added a few words but made no alteration or comment in respect of my remark that no attempt was made to dissuade him from visiting your offices. Perhaps he had not noticed it or was keen for the fax to be sent without delay. I made the comment in good faith, but from what you say, I accept that it was unfounded.
Mr. Brown is passionate in a worthy cause and I guess that these apparent lapses were an example of a “can do” attitude for which Americans are renowned – a quality we are sometimes lacking. He was probably also anxious about achieving the objective of his visit to London – the sole purpose of his trip.
It is only fair to acknowledge that Mr. Edwards responded quickly, politely and directly to my faxed letter and fully answered the questions I had raised. It is however most unfortunate that Shell has not been prepared to go beyond making encouraging noises.
With regards to your Terms and Conditions, rules cannot cover every situation and can be bent if deemed appropriate in exceptional circumstances. They are made by man, not set in stone by our maker. What it comes down to is whether the plan to purchase shares by the deadline was a physical impossibility or was thwarted by an artificial technicality i.e. a stipulation that Shell shares trades are only processed by Lloyds TSB on a Tuesday.
With regards to our telephone conversation on Friday, I was left with the impression that Lloyds TSB Registrars are pointing the finger at Shell saying that Shell could change the 6pm 1 March deadline, while Shell is in turn passing the buck to Lloyds TSB Registrars and your Terms & Conditions.
Although everyone seems to agree that the fate of wild life in the Arctic Wilderness is deserving of consideration by shareholders at the 2006 Royal Dutch Shell Plc AGM, it now seems most unlikely to happen.
This is all extremely disappointing bearing in mind that Mr Brown had the funds, the shareholder names and a UK citizen available (me) to purchase the necessary shares when he was at the Shell Centre last Wednesday with Mr. Mark Edwards. This was a week before the 6pm 1 March deadline for submitting a resolution – a deadline imposed by Shell which claims that it is happy to see such a resolution on the agenda.
I have not heard anything from Zack Brown since Friday evening so I do not know what his plans are. He asked during our last conversation if I would be willing to travel to Worthing on Tuesday if he succeeds in transferring shares in time. I said that I would, but I doubt very much that he will be able to make arrangements by then. My guess is that he has returned to Washington DC.
My conscience is at rest in the knowledge that I have also done everything possible to try to help.
Shell has previously stated that it should be judged by its deeds, not by its words. It is not too late to go beyond encouraging noises bearing in mind the exceptional importance of the issues which are at stake.
I will be writing separately to Mr Maarten van den Bergh with whom my father and I corresponded when he was President of Royal Dutch Petroleum.
I would now like to turn to another matter; my fathers holding in The “Shell” Transport And Trading Company Plc. I attach his letters dated 21 June 2004 and 8 February 2006 to Lloyds TSB Registrars plus a response dated 13 February 2006. Basically he had a holding in Shell from 1994, but it was apparently reduced to “nil” for some unspecified reason on 20 July 2005, even though he had faxed the letter in June 2004 giving his new address. I suspect that your Terms and Conditions will be a factor in what has happened.
Mr. Maarten van den Bergh, Chairman, Lloyds TSB Banking Group PLC
Mr. Mark Edwards, Assistant Company Secretary, Royal Dutch Shell PLC
Mr. Jeroen van der Veer, Chief Executive, Royal Dutch Shell Plc
Mr Zack Brown, U.S. Public Interest Research Group
My telephone number: Mobile:
EMAIL TO JOHN DONOVAN FROM ZACK BROWN 27 FEBRUARY 2006
John – Thanks again for your help. You write in your letter that, “My conscience is at rest in the knowledge that I have also done everything possible to try to help.” I couldn’t agree more. I wouldn’t have made any progress at all without your help and hope that we can work together in the future (we’ve already begun planning for the 2007 AGM). If there is anything that U.S. PIRG can do to help you with your work, do not hesitate to ask. Thanks again, John.
Arctic Wilderness Associate
U.S. Public Interest Research Group
218 D Street, SE
Washington, DC 20003
202-546-9707 – 202-546-2461 fax
email@example.com – www.uspirg.org
RELATED ARTICLE BY ZACK BROWN
By Zack Brown
For the past seven years, the U.S. Public Interest Research Group (U.S. PIRG) Education Fund has led a broad coalition of environmental groups, financial organizations, investors, religious groups, students, activists and citizens in a campaign targeting oil companies that have expressed interest in drilling in the coastal plain of the Arctic National Wildlife Refuge.
The campaign has made progress with BP and ConocoPhillips, who have stopped lobbying in support of drilling in the Arctic Refuge, and have stated that drilling in the area is not a priority.
Our campaign continues to push Chevron and ExxonMobil on the Arctic, but in 2006 most of our attention will focus on Royal Dutch Shell. In March of 2005, Royal Dutch Shell bid $44 million for rights to explore for oil off the coast of the Arctic National Wildlife Refuge. With the acquisition of these leases, Royal Dutch Shell is now part of the contentious and controversial debate regarding the future of America’s Arctic.
Our organizations have repeatedly urged oil companies operating in Alaska to stay out of the Arctic Refuge and have often filed shareholder resolutions as part of this effort. We are currently working with concerned shareholders on the filing of a shareholder resolution for the Royal Dutch Shell 2006 annual meeting.
Our goal is to engage shareholders to call on Royal Dutch Shell to prepare a report on the negative impacts drilling in the Arctic Refuge would have on the environment, human rights of the Gwich’in and Inupiat peoples, and the company’s reputation. We believe that drilling in the Refuge would negatively affect the human rights of the Gwich’in and Inupiat peoples; cause irreparable harm to migratory birds, musk oxen, polar bears and the 130,000 member caribou herd; and negatively affect the company’s reputation for years to come.
As a part of our effort, we are building a large pool of individual Royal Dutch Shell common stock investors. If you, or anyone you know owns Royal Dutch Shell common stock (RDS-A or RDS-B) please contact Zack Brown at the U.S. Public Interest Research Group Education Fund prior to February 22nd at firstname.lastname@example.org
Arctic Wilderness Associate
U.S. Public Interest Research Group
218 D Street, SE
Washington, DC 20003
202-546-9707 – 202-546-2461 fax
A FORMER employee of Pilipinas Shell Petroleum Corp. has filed a complaint for illegal dismissal against the company and two of its officers with the National Labor Relations Commission. Complainant Maria Victoria C. Medina, former communications manager of Shell, was served notice of termination effective Dec. 15, 2003.
In a statement, Medina complained that Edgar O. Chua and Roberto S. Kanapi, both her supervisors when the termination notice was served, had summarily ignored her experience in the field of communications and public relations, and discriminated against her because of gender and age. Medina filed the case on Jan. 22. Two hearings had been set for March 16 and 23. On both days, the representatives for Shell, Chua and Kanapi failed to make an appearance. A third hearing is set Tuesday at 2 p.m.
Dear Mr Donovan,
My name is Caroline Buckingham and I am the Sales Executive with Asia Pulse Pty Ltd. I have noticed a large volume of Asia Pulse material on your web site www.shell2004.com/blog & have also noticed that you are offering free redistribution of our material via your web log.
I wish to draw your attention to the fact that Asia Pulse Pty Ltd reserves all rights including copyright in relation to services provided by it and that retransmission, dissemination or publication, whether in print, electronic or other means, is expressly forbidden without written authorisation from Asia Pulse Pty Ltd.
Selene H. Costello Esq.
Dow Jones & Company
200 Liberty Street,
9″‘ Floor New York,
NY 10281 (
212)416-2197 Fax (212) 416-2524
December 15,2005 Via First Class Mail
Mr. Alfred Donovan
847A Second Avenue
Dear Mr. Donovan:
Re: Unauthorized Use of The Wall Street Journal head cuts on www.royaldutchshellplc.com
I write on behalf of Dow Jones & Company, publisher of The Wall Street Journal newspaper and other publications.
28 Feb 2006
London, UK – WWF is urging the European Bank for Reconstruction and Development (EBRD) not to fund Shell’s Sakhalin II project in Russia's Far East.
In its submission to the EBRD’s public consultation, WWF has highlighted where the project’s environmental and social standards fail to stand up to those the Bank was founded on.
“WWF believes that if the EBRD funds this project it will be opening the door to lower environmental and social standards across the region it is trying to develop,” said Robert Napier Chief Executive of WWF-UK.
“Shell has had three years to resolve the issues highlighted with Sakhalin II but the simple truth is that this proposal doesn’t stand up to detailed scrutiny. If the EBRD goes ahead taxpayers money will be used to fund a project that the Bank has already admitted does not meet its policies.”
In admitting that the project doesn’t meet its policies, WWF is concerned that the EBRD is contradicting previous Bank statements that say “every project proposed for EBRD funding must comply with the Bank’s environmental policy” and that it “sets new standards in environment”.
“f the Bank funds Sakhalin II there is serious potential for not only the environment but also its reputation to be damaged,” Napier added.
Earlier this year the local Sakhalin community protested over the damage to fisheries caused by Shell’s activities; a complaint recognized by the EBRD, and local residents including the Sakhalin Regional Governor recently protested with banners calling for the EBRD to not fund the project.
In addition, whale experts are still not satisfied by Shell’s proposals to protect the last 100 endangered gray whales from noise, collisions and oil spills. And, Shell has not presented any comprehensive oil spill response plan for winter sea-ice conditions. With construction half-completed and decisions already made, Shell is only now creating its indigenous peoples plan. The timing of this plan is flawed and therefore it does not comply with EBRD policy.
Shell is also not meeting the most basic requirements for reducing impacts of river crossings, such as constructing both oil and gas pipelines simultaneously, as required by its construction permits. The project is subject to ongoing legal battles in local courts, and has already had a judgement against it. EBRD policy states that they should not fund a project that is not in compliance with all regulations.
“It is absurd to be asked to consult on the proposal when it is not complete,” said James Leaton, WWF oil and gas officer. “In an area which is covered by ice for six months of the year an oil spill could be devastating. Traditional methods such as booms would be useless and dispersants can’t be used because of the threat to the critically endangered whales.”
In addition to the whales, WWF believes the Production Sharing Agreement to be a very bad deal for Russia, especially for the people of Sakhalin. This lack of development benefits continues at all levels, with, for example, a specific sustainable development fund being used to construct housing for Sakhalin project workers rather than for local benefits.
“It is indicative of the project that local people struggle to gain access to reliable energy while Shell will be pumping gas away from the island,” continued Leaton. “The money the EBRD would make from this project will not be worth the loss of credibility and the risk of being responsible for the extinction of a species.”
For further information:
Anthony Field, Senior Press Officer
Tel: +44 1483 412379
By Hector Igbikiowubo with Agency reports
Posted to the Web: Tuesday, February 28, 2006
VIOLENT unrest in Nigeria that has led to about 30 per cent cut in the country’s crude output could persuade OPEC to maintain its level of oil output at a near historic high when it meets next week, an energy analyst has said. There are also indications that the current state of insecurity in the Niger Delta may escalate further shutting in at least half of Nigeria’s 2.6 million barrels per day capacity with implications for crude oil pricing.
Prior to violence breaking out last Thursday in Nigeria, Africa’s biggest producer of crude, analysts had predicted that the Organization of Petroleum Exporting Countries would cut output when it meets in Vienna at the start of March.
But Global Insight analyst Simon Wardell told AFP: “If the Nigerian situation means prices are US$60 to US$65 when they (OPEC) next meet, then again they’re going to have a really difficult time in cutting production back, so they’ll probably keep things steady.” His comments were made as Nigerian separatist guerrillas taunted the army with claims of further attacks after a weekend of violence forced the energy giant Royal Dutch Shell PLC to slash the country’s oil exports by a fifth.
The news prompted oil prices to spike almost 3.0 per cent in London trading, as they struck an intra_day high of US$61.63 per barrel.
Trading in New York was suspended for a national holiday but was expected to open higher today. In London trading, the price of Brent North Sea crude for April delivery surged US$1.79 to US$61.54 per barrel in electronic deals.
The Nigerian insurgents said the military had abandoned one of its posts in waterways west of the oil city of Warri, allowing the militants to dynamite a floating barracks block and another of Shell’s crude oil pipelines.
Shell officials, however, said they had evacuated all oil plants in the immediate area, bringing Nigeria’s losses to around half a million barrels per day.
The global oil market currently has spare capacity of roughly 1.5 million barrels per day, according to market analysts. That would be insufficient to compensate for a loss of total production in Nigeria, which stood at some 2.4 million bpd in January.
Mr. Wardell added that in reaction to the Nigeria unrest, OPEC would prefer to cut production. “It all depends on the price, that’s what they’ll be reacting to.”
Kuwait’s energy minister, however, said yesterday that a cut in oil production may be necessary at OPEC’s next meeting since over_supply may reach two million barrels per day (bpd) in the second quarter.
“We believe the market is well_supplied and we believe the second quarter will be over_supplied … with between 1_2 million bpd,” Sheikh Ahmad Fahd al_Sabah told reporters in his country’s parliament.
“We have to wait for our March meeting. If necessary and if prices will go back to be determined by supply and demand, we have to do our cut,” Sheikh Ahmad said. “But if prices continue as they are now we will continue to support stable prices for the future,” he added.
At its last meeting on Jan. 31, OPEC decided to keep its production ceiling of 28 million barrels per day.
The widely_expected move followed a 12% spike in the price of crude since the start of the year fuelled by controversy over Iran’s nuclear programme and a series of previous attacks against oil installations in Nigeria.
OPEC, which produces about 40% of the world’s crude, is actually producing more than 29 million barrels per day including output from Iraq, which is not included in the official quota.
While speaking exclusively with the Vanguard, a MEND spokesperson disclosed that government was taking their demands rather lightly and that there is the need to teach government a lesson in ‘quick response’.
“You are a media person, so I cant give you details. But I can let you know that we would no longer give any warnings regarding our actions. We shall go ahead and cripple oil activities in the Niger Delta before this time next month.
Our motive is to make the area unattractive to the multinationals. In no time we shall also take the fight to the streets of Port Harcourt, Warri and Yenagoa. Be rest assured that no oil installation in the Niger Delta can be safe from us neither shall any expatriate working in the area,” he said.
When reminded that their fight was with the government and not the multinationals, the MEND spokesperson countered, “these people are collaborators and we have given them a chance to exit the area. We shall not be held responsible for whatever happens to them.”
The spokesperson also served notice that as long as their demands are not met, more hostages would be taken.
The Niger Delta accounts for over 90 per cent of Nigeria’s crude oil export earnings resulting in revenues in excess of $400 billion in the last 50 years. However, the area is without basic infrastructures such as motorable roads, pipe-born water and electricity.
LONDON -(Dow Jones)- Royal Dutch Shell PLC (RDSB.LN) said Monday its oil facilities in Nigeria haven't suffered any fresh militant attacks, adding that 455,000 barrels a day, or 19% of Nigeria's daily production, remained shut in because of attacks in past weeks.
A media report earlier Monday said another attack on a Shell oil facility had cut an additional 65,000 b/d of output.
'To the best of my knowledge there have been no new attacks,' said Shell spokesman Andy Corrigan.
Shell said earlier Monday it hasn't started repairs to sabotage pipelines and a clean-up of oil spills caused by attacks from over a week ago because of the lack of security. 'In the current security situation our teams cannot access the pipelines to effect repairs and begin the clean up of oil spill. As soon as it safe to do so, we will commence immediate assessment of the environmental impact of such attacks ….,' the company said.
Shell's Trans-Ramos pipeline that was assaulted in January was repaired just before the most recent wave of attacks over a week ago, but isn't operating due to security concerns. That line pumps about 106,000 b/d.
Shell, which accounts for almost half of Nigeria's daily output of 2.4 million-2.5 million b/d, has borne the brunt of nearly all the militant attacks the past few months.
The militant group behind the attacks, the Movement for the Emancipation of the Niger Delta, or MEND, has said it's plans to attack more facilities to cut oil output Nigerian daily oil production by 30% by the end of February.
The group, which also kidnapped nine foreign oil workers more than a week ago, is demanding greater control of oil resources in the Niger Delta, where nearly all of the country's energy resources are produced, and the release of two leaders of the ethnic Ijaw group, which dominate the delta.
-By Spencer Swartz, Dow Jones Newswires; +44 207 842 9357; email@example.com
By Wenran Jiang
Western countries are quick to blame China's growing energy needs for rising prices. Instead, they should try to capitalize on it with new solutions
China's growing appetite for energy has caused widespread concern in the West. The Middle Kingdom is blamed for the sharp increase in global oil prices in the past few years. Meanwhile, the U.S. is uneasy about Beijing's cozy relations with major oil producers such as Iran, Saudi Arabia, Sudan, and Venezuela — some of which are hostile toward Washington. Some strategists think China's vast energy needs could eventually be a security threat in a world of diminishing resources.
That kind of talk creates plenty of resentment within the top echelons of Chinese President Hu Jintao's government. For one thing, China is paying a huge energy bill for a still-developing economy, a point not always recognized in the West.
Consider that in 2004, Beijing's oil bill rose by $7 billion thanks to climbing prices (the total energy bill that year topped $42 billion), making crude oil and petroleum products the country's largest single import item.
POLITICAL FIRESTORM. The dominant Western view holds that the worldwide increase in demand, especially from China and India, and tight global production capacity conspire to keep oil prices high. Beijing sees things far differently. The Chinese suspect the real culprit is Western government-backed, profit-seeking “international petroleum crocodiles” that manipulate oil prices. Reports in recent weeks of windfall earnings by Exxon Mobil (XOM), BP (BP), and Royal Dutch Shell (RDS-B) only enhance such perceptions.
Or take last summer's political firestorm in the U.S. over China National Offshore Oil Corp.'s (CEO) $18.5 billion bid for Unocal. CNOOC dropped its bid last August after the U.S. House of Representatives effectively blocked the deal by referring it to the Bush Administration for a national security review. California-based Chevron (CVX) ended up bagging Unocal — and plenty in Beijing came away convinced the U.S. doesn't always live up to the free-market rhetoric it broadcasts to the rest of the world.
Some even suspect the U.S. is committed to slowing down the pace of the mainland's development by keeping energy prices dear and limiting the role of Chinese companies in the global energy market. After getting snubbed on the Unocal bid, the Chinese have looked elsewhere, making a series of high-risk energy investments in Africa, the Middle East, and Latin America. So when they read Western media accounts of Beijing getting into bed with dictators or “rogue states” as defined by the U.S., they feel especially bitter.
SEA BATTLE. Given the perception gap, some Chinese strongly advocate a speedy buildup of the country's navy to protect vital energy shipping routes in Asia. Currently, a popular Chinese online novel, The Battle in Protecting Key Oil Routes, imagines a decisive sea engagement near the Strait of Malacca linking the Indian Ocean and South China Sea, in which the Chinese destroy an entire U.S. Pacific carrier group.
Beijing also objects to the working assumption among many Western analysts that Chinese demand is driving up oil prices. Most of China's energy needs are actually met by coal, a plentiful resource on the mainland. Only 6% of its energy comes from abroad.
True, China is a big and growing importer of oil, but the mainland still only represents about 3% of overall global oil trade. The U.S., with only 5% of the world's population, consumes 20% of the daily global oil supply, vs. 6% in China, home to about 22% of humanity.
DON'T BLAME CHINA. The idea that China's hypergrowth means it will quickly catch up with U.S. demand in absolute terms isn't valid, either. In 2005, with increased domestic energy production, China's oil imports grew by just 3.3% even as the economy surged by nearly 10%. This year oil imports will fall, says Lu Jianhua, director of the Foreign Trade Dept. of the Commerce Ministry. “It is unfair to blame China for rising international oil prices,” Lu says.
Meanwhile, Beijing is aiming for more self-reliance in energy. It's developing sources such as hydropower and nuclear reactors — and has met some initial success. That is crucial to Beijing's foreign policy. China doesn't want to be tarred as a rapacious energy user willing to do deals with any regime, no matter how internationally isolated, to lock up oil and natural gas assets. If China succeeds in keeping demand for oil from growing at explosive rates, it will be less vulnerable on that point.
It would also help remedy two other problems: China's serious environmental degradation and grossly inefficient use of energy. China remains the second-largest emitter of carbon dioxide (after the U.S.), while most of its cities and rivers are severely polluted. The mainland burns three times as much energy as the global average — and many times more than industrialized countries — in producing every dollar of gross domestic product. To change that, it is spending $150 billion on renewable and alternative energy projects during the next 15 years.
WORK TOGETHER. Instead of blaming Beijing for its energy demands or containing China as an energy threat, the industrialized countries should try to capitalize on China's need for new technologies that promote energy conservation and efficiency, environmental protection techniques, and renewable and alternative energy production. China also needs to be engaged in joint-efforts to manage global warming.
A cooperative approach in solving common energy security issues between China and the West will moderate Beijing's foreign policy behavior, making it easier to work out tough issues such as the ongoing Iranian nuclear crisis. Yet all this depends on some clear thinking in the West about what really drives Chinese behavior when it comes to energy security.
Wenran Jiang is a professor of international political economy and director of the China Institute at the University of Alberta, Canada. He can be reached at: firstname.lastname@example.org
Poverty Amid Wellheads Spawns Militant Group Promising More Attacks
February 28, 2006
By EDWARD HARRIS, Associated Press
BIRIYA-AMA, Nigeria — This village of palm-frond huts in Nigeria's southern Niger Delta sits atop one of Africa's richest energy deposits, but has electricity only when one of its young men paddles a canoe to the nearest city to buy fuel for a generator.
School is held in a cement-block church, the black footboard of a bed used as a chalkboard. There's no health clinic, and the ladies' latrine is a copse of bushes on the outskirts of town.
Most of the crude in Africa's largest oil producer is pumped from beneath this region, but it remains mired in deep poverty. A new militant group behind a spate of attacks and kidnappings that have driven prices up worldwide says that combination makes anger and more violence inevitable. Even those who have not resorted to taking up arms agree.
“The people are angry. The oil belongs to the Niger Delta, but we get nothing. That oil belongs to us,” said Innocent Johnson, a 21-year-old Biriya-Ama fisherman. “We will fight, if possible. I want to fight the government.”
Petroleum companies discovered oil underneath southern Nigeria before the west African nation gained independence from Britain in 1960. Biriya-Ama, and countless villages like it in the vast region of creeks and mangrove swamps, see little benefit. And with the oil spills and pollution that has befouled the waters and killed the fish that is their economic mainstay, the region's people say they're now growing poorer.
A new militant group, the Movement for the Emancipation for the Niger Delta, sprang up in recent months and pulled off some of the more spectacular attacks in years of violence.
In a matter of weeks, they kidnapped more than a dozen foreign oil workers and blew up oil installations to shut down about 20 percent of Nigeria's daily production – about 455,000 barrels. Prices, already near historical highs, soared on international markets.
The MEND militants, who have released four hostages, then took nine more, met with reporters for the first time on Friday, inviting them to a mid-creek meeting where they reiterated their demands: the release of two of the region's leaders from prison, a greater cut of the oil revenue and $1.5 billion from Royal Dutch Shell, the largest foreign oil firm operating in the region.
“Before independence, Nigeria fought for its freedom. Now we're fighting for our own freedom,” shouted one militant, pointing a rocket-propelled grenade at reporters.
“If the federal government can't take care of us, we need independence. We want to control our own oil,” he said from behind his black mask.
The oil question only adds to the volatility of a nation of more than 250 ethnic groups. Religion also at times appears to be pulling Nigeria apart, with the latest clashes between Muslims who predominate in the north and Christians in the south breaking out last week. The last major secessionist push ended in 1970, when the three-year Biafran war subsided after more than 1 million died.
Hostage takings and attacks on oil installations have been common for decades in the delta, but MEND has shown unusual sophistication and determination. They showed off one hostage, 68-year old Texas oil worker Macon Hawkins, to reporters last week.
The government, which has launched a military campaign dubbed Operation Just Cause to quell the violence, says the militants are little more than criminals who steal oil and sell it on the black market. The militants say the same of the military.
The oil companies say they're meeting their contractual obligations with the federal government while performing many community outreach programs in the delta, such as building schools and health clinics.
Across the delta, the people and militants blame their poverty on the oil companies, the former kleptocratic military rulers often from Nigeria's north and now President Oluesgun Obasanjo, who has won two elections since the country's return to democracy.
The militants say Obasanjo, who's not from the delta region, can't be trusted as an honest broker and they're threatening more attacks in a campaign they say will be coordinated and devastating.
It's unclear how many fighters MEND has – only 35 in four boats were seen on a recent day – or whether they have much popular support.
At Biriya-Ama, some said they weren't interested in fighting and questioned how blowing up oil facilities and shutting down production would help them in their quest to gain a greater share of the oil revenue.
“This crisis is all about the government not helping us, not giving us our share.” said Soki Brown, at 22 one of a crowd of young men with little to do in their village. “But I don't want to fight. I'm a Christian.”
People who bought Motiva gasoline from stations in Alabama, Florida, Louisiana and Mississippi during a three-week period in 2004 may be eligible to share in a settlement, says a notice ordered by a federal court in Louisiana.
The proposed settlement of a lawsuit against Shell Oil Co. and Motiva Enterprises LLC, in which neither defendant admits any wrongdoing, indicates that a batch of Motiva gasoline sold from May 11 to June 2, 2004, contained a chemical that may have damaged fuel gauges on some vehicles.
The court-ordered notice says most of the gasoline was sold at Shell or Texaco stations in the four states. “The settlement will make payments to people who submit valid claims for reasonable and necessary vehicle repairs, actual lost wages, incidental expenses and other damages,” the public notice says.
More information is available by calling 1-866-314-5812 or visiting the following Web site: www.gasclaims.com
Floridians who are among those whose automobile gas gauges broke after buying gasoline at a Shell or Texaco station last summer may be eligible for money back on repairs, missed work or other damages.
The U.S. District Court for the Eastern District of Louisiana has ordered defendants including Shell Oil Co. and Motiva Enterprises to alert people who bought Motiva gasoline from certain fuel stations in Florida, Louisiana, Mississippi and Alabama from May 11, 2004, to June 2, 2004.
A proposed settlement calls for the defendants to pay people who submit valid claims for reasonable and necessary vehicle repairs, actual lost wages, incidental expenses and other damages.
People included in the settlement may send in a claim form to ask for a payment or they may exercise other legal rights such as asking to be excluded from or objecting to the settlement.
The deadline for exclusions and objections is June 30. The deadline to submit claims is Sept. 12.
Lawsuits began in May 2004, after it was discovered certain batches of Motiva gasoline were sold with some amounts of elemental sulfur and/or hydrogen sulfide.
Although the total sulfur content was below applicable governmental regulations, sulfur compounds can damage fuel sensors in some makes and models of cars and vehicles, causing gas gauges to break or malfunction.
Problems with gas gauges usually occurred within a few days after the gas was used or not at all, the court said.
The defendants deny they did anything wrong and the settlement is not an admission of wrongdoing or an indication that any law was violated.
Notices informing people about their legal rights are to be mailed and also are scheduled to appear in newspapers and other publications in states where the gas was sold and other states where evacuees from hurricanes Katrina and Rita are now located.
At a Sept. 6 hearing, the court is to consider whether to approve the settlement.
The court has appointed Ben Barnow, of Barnow and Associates in Chicago, and Don Barrett, of Barrett Law Office in Lexington, Miss., to represent the people included in the class action, as the co- lead settlement class counsel.
A toll-free phone number, (866) 314-5812, has been established, and a Web site, www.gasclaims.com, holds notices, claim forms, the settlement agreement and lists of qualifying gasoline stations and storage facilities.
Those affected may also write to Gas Settlement, P.O. Box 2007, Chanhassen, MN 55317-2007.
By THE ASSOCIATED PRESS
BIRIYA-AMA, Nigeria (AP) — This village of palm-frond huts in Nigeria's southern Niger Delta sits atop one of Africa's richest energy deposits but has electricity only when one of its young men paddles a canoe to the nearest city to buy fuel for a generator.
School is held in a cement-block church, the black footboard of a bed used as a chalkboard. There is no health clinic, and the ladies' latrine is a copse of bushes on the outskirts of town.
Most of the crude in Africa's largest oil-producing country is pumped from beneath this deeply impoverished region. A new militant group behind a spate of attacks and kidnappings that have driven prices up worldwide say anger and more violence are inevitable, and even those who have not resorted to taking up arms agree.
''The people are angry. The oil belongs to the Niger Delta, but we get nothing. That oil belongs to us,'' said Innocent Johnson, a 21-year-old Biriya-Ama fisherman. ''We will fight, if possible. I want to fight the government.''
Petroleum companies discovered oil underneath southern Nigeria before the west African nation gained independence from Britain in 1960. But Biriya-Ama, and countless villages like it in the vast region of creeks and mangrove swamps, see little benefit. And with oil spills and pollution befouling the waters and killing the fish, their economic mainstay, the region's people say they are growing poorer.
The militant group, the Movement for the Emancipation for the Niger Delta, sprang up in recent months and pulled off some of the more spectacular attacks in years of violence. In a matter of weeks, they kidnapped more than a dozen foreign oil workers and blew up oil installations to shut down about 20 percent of Nigeria's daily production — about 455,000 barrels. Prices, already near record highs, soared on international markets.
The MEND militants, who released four hostages and then took nine more, met with reporters for the first time on Friday. They invited journalists to a mid-creek meeting where they reiterated their demands: the release of two of the region's leaders from prison, a greater cut of the oil revenues and $1.5 billion from Royal Dutch Shell, the largest foreign oil firm operating here.
''Before independence, Nigeria fought for its freedom. Now we're fighting for our own freedom,'' one militant shouted, pointing a rocket-propelled grenade at reporters.
''If the federal government can't take care of us, we need independence. We want to control our own oil,'' he said from behind his black mask.
The oil question only adds to the volatility of a nation of over 250 ethnic groups. Religion also at times appears to be pulling Nigeria apart, with the latest clashes between Muslims who predominate in the north and Christians in the south breaking out last week. The last major secessionist push ended in 1970, when the three-year Biafran war subsided after more than 1 million died.
Hostage takings and attacks on oil installations have been common for decades in the delta, but MEND has shown unusual sophistication and determination. They showed off one hostage, 68-year-old Texas oil worker Macon Hawkins, to reporters last week.
The government, which has launched a military campaign dubbed Operation Just Cause to quell the violence, says the militants are little more than criminals who steal oil and sell it on the black market. The militants say the same of the military.
The oil companies say they are meeting their contractual obligations with the federal government while performing many community outreach programs in the delta, such as building schools and health clinics.
Across the delta, the people and militants blame their poverty on the oil companies, the former kleptocratic military rulers often from Nigeria's north and now President Olusegun Obasanjo, who has won two elections since the country's return to democracy.
The militants say Obasanjo, who is not from the delta region, cannot be trusted as an honest broker. They are threatening more attacks in a campaign they say will be coordinated and devastating.
It is unclear how many fighters MEND has — only 35 in four boats were seen on a recent day — or whether they have much popular support.
At Biriya-Ama, some said they weren't interested in fighting and questioned how blowing up oil facilities and shutting down production would help them in their quest to gain a greater share of the oil revenues.
''This crisis is all about the government not helping us, not giving us our share,'' said Soki Brown, 22, one in a crowd of young men with little to do in their village. ''But I don't want to fight. I'm a Christian.''
Occasionally, when money is raised, one of the men will paddle a canoe for hours to the oil center of Port Harcourt to pick up fuel for the town's sole generator.
Then for a few hours they listen to music, charge mobile phones that rarely get signals and watch Nigerian-produced television on a set with grainy reception.
With unemployment rampant, they dream of jobs with the oil companies, whose grounds are bustling and bright with floodlights. Even Johnson, who says he would fight the government, would join up with the oil companies if he could.
''Those oil installations, they look like paradise,'' he says. ''There's light and life there.''
Feb 28, 2006
OIL supply disruptions such as those caused by Nigerian militants threaten to hurt crude demand and spot tanker rates, warns a leading New York shipbroker, writes Tony Gray.
Poten ' Partners says that successful attacks on export facilities by rebel groups have shut in at least 450,000 barrels per day from Shell's Forcados terminal in Nigeria.
And militants representing the Movement for the Emancipation of the Niger Delta have warned of more attacks that could reduce Nigeria's 2.5m bpd of exports by 30%.
Poten ' Partners says there were 1,010 reported spot tanker dirty fixtures from West Africa in 2005, dominated by suezmaxes (624) and very large crude carriers (334). Half of VLCC discharges are in the US and 44% in Asia.
North America takes the lion's share of suezmax cargoes, accounting for 51%.
Poten ' Partners says an interruption in West African crude exports affects all importers as it lowers overall supply.
In an ideal world, the broker points out, China would like replacement crude from the North Sea to meet their refinery specifications.
But North Sea producers are at capacity, making them an unlikely source of relief.
Instead, Poten ' Partners says replacement crude will mainly draw down on what little spare capacity there is in Saudi Arabia 1m-2m bpd.
The broker comments: 'On the surface, one would think that replacing West African crude with Middle Eastern crude will benefit VLCC owners, but long haul West Africa to the East is an important driver determining VLCC demand.
'Thus the shift in trade patterns will dictate the degree of gain or loss for VLCCs.
'Last week's drop in suezmax rates for West Africa-US of 70 Worldscale points indicates the degree of vulnerability of these tankers to a a supply interruption here.
'What this means is that VLCCs will pick up Arabian Gulf cargoes to compensate for losses out of West Africa.'
Last week's attack on a Saudi Arabian oil facility sent crude prices up $2 per barrel, underlining the global vulnerability to attacks on oil facilities and civil discord among suppliers .
'A major hike in crude prices from supply disruptions will adversely affect economic activity, shrink demand, and hurt spot tanker rates,' Poten ' Partners concludes.
It should be the best of times for the energy giant. But a look at its reserves show Royal Dutch Shell may soon be running on empty.
By Nelson D. Schwartz, FORTUNE senior writer
February 27, 2006: 1:24 PM EST
(FORTUNE Magazine) – Judging by the $23 billion it earned last year, these should be the best of times for Shell, the Anglo-Dutch energy giant that ranks third among the top five Western oil companies. But Wall Street isn't celebrating. Instead, analysts are worried that buried beneath the record profit figures are worrying signs of a business in decline.
That's because Shell (Research) hasn't been able to find nearly as much oil and gas as it's now pumping out of the ground. In fact, it hasn't even come close — replacing only 60 percent to 70 percent of what it produced in 2005 and only 19 percent in 2004. Shell has had reserve problems for years — a controversy over improperly booked assets forced it to reduce estimated reserves by roughly 30 percent and led to the resignation of its CEO, Phil Watts, in 2004.
But what's troubling now is that Shell is falling way behind rivals like Exxon and BP despite spending billions more each year on exploring and drilling new wells. Last year Exxon replaced 112 percent of production, and BP came up with 95 percent.
“I have never seen anything like this,” says Fadel Gheit, a veteran energy analyst with Oppenheimer & Co. “Shell used to represent the gold standard in this industry, but lately they can't get their act together.”
To be sure, Shell still has huge assets — nearly 12 billion barrels. But in the oil and gas industry, reserve replacement is the best guide to whether a company will be able to maintain — or grow — production in the future. So not replacing what you pump, says longtime industry observer Matthew Simmons, “is like eating your seed corn. If you're not finding new oil, you're just liquidating what you've got.” Indeed, Shell's daily production figures have been weak lately, falling 6.7 percent in 2005, to 3.52 million barrels a day.
Privately, Shell execs say the company's decision to cut spending for exploration when oil prices bottomed out in the late 1990s is partly to blame for the anemic numbers now. Shell CEO Jeroen van der Veer insists that projects like those on Sakhalin Island off Siberia and in Nigeria and the Gulf of Mexico will enable the company to start catching up with peers in the years ahead. It won't be easy.
“If you're not adding to reserves, you have a problem,” says Sanford Bernstein analyst Oswald Clint. “Shell will have to run twice as hard just to stay in place.”
LAGOS (AFP) – Anglo-Dutch giant Shell, which is locked in a bitter legal battle over environmental damage in Nigeria's oil-rich southern Delta, is appealing against a hefty 1.5-billion-dollar (1.2-billion-euro) fine for pollution.
On Friday, the federal high court in the southern city of Port Harcourt slapped the fine for environmental pollution on the company following a suit filed by the local Ijaw community.
“The court ruled that we should pay 1.5 billion dollars to communities in the Niger Delta (but we have) already lodged an appeal in a higher court,” a company spokesman said.
A group calling itself the “Ijaw Aborigines of Bayelsa State” had taken Shell to court because the company had ignored an order from the Nigerian senate in 2004 to pay the money to the impoverished local community.
Last year Shell made a net profit of 22.94 billion dollars (19.03 billion euros) for 2005, the highest full-year profit in British corporate history, on the back of record high oil prices.
The Anglo-Dutch giant said it had appealed “on, among other grounds, the strength of independent expert advice, which demonstrates that there is no evidence to support the claims of the group”.
Shell contends that the pollution of the waters and farmland in the Delta region is a result of sabotage and it is therefore not responsible for the damage.
But this stance is compromised not only by the rulings of parliament and the high court in Port Harcourt, but also by a verdict from the federal court in Benin City.
On November 14 last year the Benin City court ordered Shell to immediately cease gas flaring, following a complaint filed by seven Ijaw villages who said they were suffering from severe respiratory ailments.
The court decreed that flaring was a “violation of fundamental rights and dignity which was guaranteed under the constitution”.
Shell also appealed against this ruling and continued gas flaring, provoking a fresh suit on December 16.
The Ijaws have been aided in their fight by various local and international bodies, including the Environmental Rights Action and the Nigerian branch of environmental group Friends of the Earth (ERA/FoEN).
Akinbode Oluwafemi from ERA/FoEN told AFP that although the two suits were not directly linked, both were “from the Niger Delta people, who have been suffering.
“Both are trying to get justice for the people,” he explained.
“Our own demand is more than compensation. We think they should stop gas flaring completely,” Oluwafemi said.
“What we expect Shell to do is to stop ignoring the law and the judicial system of Nigeria. Shell should allow justice to prevail instead of launching appeal after appeal.”
Nigeria is Africa's largest oil exporter, producing a total of around 2.6 million barrels per day. But the wells and flow stations of the Niger Delta are vulnerable to attack from pirates, separatist militants and angry local groups.
Shell's woes have been exacerbated by increasing attacks by Ijaws on oil installations and the February 8 kidnapping of nine foreign oil workers.
There are a plethora of angry Ijaw separatist or militant groups.
All are united by a common complaint — Nigeria's 30-billion-barrel oil reserves are the rightful property of the Delta's 14-million-strong Ijaw tribe and have been unjustly taken by the federal government and foreign oil majors.
Since the latest kidnapping, Shell has slashed Nigeria's key crude exports — the source of more than 90 percent of the country's external revenue and two thirds of the government budget — by 455,000 barrels per day, or 20 percent.
Monday, 27th February, 2006
By Hillary Kiirya
THE Supreme Court has thrown out an appeal by Shell (U) seeking to challenge a Court of Appeal decision that declared its former employer’s dismissal illegal.
The court also ordered Shell to pay costs amounting to about sh150m to Eng. George Ndyabawe.
Five judges in a judgement delivered recently, upheld the Court of Appeal decision saying Shell’s appeal was incompetent and had also been filed out of time.
Shell dismissed Ndyabawe, who later sued them to the High Court but the presiding Judge, Mary Amaitum, dismissed his suit.
However, the Court of Appeal, reviewing maitum’s judgement, declared that the decision by Shell to dismiss Ndyabawe was illegal and unlawful as it was based on heresy from jealous people.
Published: February 27, 2006
Filed at 2:02 a.m. ET
SINGAPORE (Reuters) – Oil fell more than 1 percent on Monday as dealers cautiously weighed a “basic'' nuclear deal agreed by Iran and Russia, but fears over Saudi supplies after last week's thwarted al Qaeda attack checked losses.
U.S. oil futures for April delivery (CLc1) slid 72 cents, or 1.14 percent, to $62.19 a barrel.
Prices had soared 4 percent on Friday after news of the failed raid on an oil facility that handles most Gulf supplies from the world's biggest exporter, but dealers locked away some of those profits on Monday as exports flowed undisturbed.
London Brent crude (LCOc1) fell 69 cents to $61.91 a barrel.
“The Iran issue has settled down a little bit after they agreed this joint venture with Russia,'' said Nahiro Niimura, vice president of Mizuho Corporate Bank's derivatives unit in Tokyo. “That drives some market participants to sell.''
Iran said on Sunday it had reached a “basic agreement'' with Russia on jointly enriching uranium. Moscow had proposed for Iran's uranium to be enriched in Russia to defuse suspicions that it might use some of the fuel for nuclear weapons.
“Talks to complete this package will continue in coming days in Russia,'' said Iranian nuclear chief Gholamreza Aghazadeh.
But there was no immediate sign that Tehran would suspend home-grown enrichment, the crux of a dispute that oil traders fear could disrupt exports from OPEC's second-largest producer.
Dealers will now be looking for more clues when the board of the United Nations' watchdog, the International Atomic Energy Agency (IAEA), meets on March 6 to discuss its latest report.
Iran could next be referred to the U.N. Security Council for sanctions, which traders fear could spur Tehran to withhold oil supplies in retribution, although oil ministry officials have repeatedly insisted this will not happen.
“I don't think Iran will stop oil exports because of the money, but we have to wait and see for the IAEA meeting,'' said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures.
In Saudi Arabia, violence flared again on Monday as security forces killed about five suspected militants after besieging a villa in a Riyadh suburb, security sources said.
They said the men were believed to be linked to al Qaeda's raid last Friday on the Abqaiq crude processing plant — the world's biggest — which was foiled by security services before it could cause any serious damage to facilities.
Al Qaeda vowed at the weekend to carry out more attacks.
“The most important thing is the Saudi issue and al Qaeda saying they could attack at any time. We have to watch their activities. Geopolitics will support $60 this week,'' Emori said.
Most of Saudi Arabia's 7.5 million barrels a day of crude oil is exported from the Gulf via the huge producing, pumping and processing facility at Abqaiq.
It was the first direct strike on a Saudi energy target since al Qaeda launched attacks aimed at toppling the U.S.-allied monarchy in 2003, serving oil traders a fresh reminder of the geopolitical risks beyond those in Iran, Iraq and Nigeria.
There was no sign of Royal Dutch Shell (RDSa.L) restarting the 455,000 barrels of daily production that was shut in just over a week ago due to militant violence in Nigeria, the world's eighth-largest oil exporter.
With prices hovering above $60 a barrel, OPEC may be content to agree to keep pumping at near full throttle when it meets on March 8, despite worries about the downturn in second-quarter demand and robust inventories in the United States.
“Our position is that we should not change production,'' Algeria's Energy and Mines Minister Chakib Khelil said on Saturday.
KWARA State governor, Dr. Bukola Saraki, at the weekend expressed concern over the activities of militants in Niger Delta, noting that 25 per cent loss in oil production by Shell is a threat to the nation’s economy.
Dr. Saraki, who expressed the concern while signing the state 2006 budget of N35.71 billion into law, said the 25 per cent loss in oil production would affect the implementation of the country’s budget.
The governor expressed concern over the nine expatriates kidnapped by the youths in the Niger Delta and appealed to the foreign countries to show solidarity with Nigeria.
Speaking on the state budget, Dr. Saraki said the government focus was on education, health and agriculture because “we believe these are the key areas of human development.”
He stated that the government embarked on renovation of four secondary schools in the state last year to make them role models in the country, adding that 16 others would be renovated this year.
He said the government would lay more emphasis on primary health care which was started in 2005 through renovation of the 33 general hospitals across the state.
On agriculture, the governor said the budget would promote agriculture which he said could be sustained and be made effective through irrigation.
TEHRAN (Reuters) – Iran will next week grant Total (TOTF.PA: Quote, Profile, Research), Shell (RDSa.L: Quote, Profile, Research) and Repsol (REP.MC: Quote, Profile, Research) upstream development contracts in the giant South Pars gas field in the Gulf, an Iranian state oil firm said on Saturday.
Iran intends to use phases 11 and 13 of South Pars, which sits on the world's biggest reservoir of natural gas, to produce liquefied natural gas (LNG). The Islamic Republic hopes to export its first LNG shipments in 2009.
“The signings will be late this week,” said a spokesman for the Pars Oil and Gas Company.
The Iranian working week starts on Saturday and ends on Wednesday or Thursday, depending on the institution.
Total is looking to develop phase 11 of South Pars to produce LNG, gas supercooled to liquid for loading onto tankers, in a project called Pars LNG.
Shell and Repsol are looking to do the same with phase 13, a project called Persian LNG.
Akbar Torkan, managing director of the Pars Oil and Gas Company, was quoted by the Abrar-e Eqtesadi financial daily saying the contract to develop phase 11 would be worth $1.2-$1.4 billion (687-802 million pounds).
The phase 13 deal would be worth $1.5 billion, he added.
Although it sits on the world's second biggest reserves of natural gas, Iran has been very slow to develop exports.
Qatar, which draws its gas from the same Gulf reservoir, is a long-established LNG exporter.
Iran has been reported to the U.N. Security Council for possible sanctions after failing to convince the world its atomic ambitions are entirely peaceful.
However, Iran has struck a defiant tone on its oil and gas industry, saying industrialised countries would never dare embargo hydrocarbons from OPEC's number two exporter while oil prices remain high.
Torkan also told the ISNA students news agency that Pars Oil and Gas Company had tendered phases 19-21 of South Pars.
TEHRAN (AFX) – Shell, Total SA and Repsol YPF SA will soon sign contracts with Iran to develop two phases of the Islamic republic's offshore South Pars gas field, an Iranian official.
'The contracts will probably be signed in the current (Iranian) week,' said Akbar Torkan, the managing director of the state-run Pars Oil and Gas Co (POGC) which is in charge of the Gulf gas field.
The contracts concern phases 11 and 13 of South Pars, with the production of liquefied natural gas (LNG) scheduled for export.
Total will be working on phase 11 in a project called Pars LNG, while Shell and Repsol will be working on phase 13 under the name Persian LNG. The firms will be operating jointly with the National Iranian Oil Co.
Investment for each phase has been estimated at between 1.2 and 1.5 bln usd.
By Richard Orange
26 February 2006
US oil company Amerada Hess has put about $300m (E252m, £171.8m) of its North Sea oil assets up for sale, making it the second North American oil company to cut back investment in the North Sea since Chancellor Gordon Brown slapped a 10% extra tax on oil producers in November.
The Business understands that Hess has hired industry consultants Harrison Lovegrove to find a buyer for its stakes in the Scott and the Telford oil fields, 200 km north-east of Aberdeen.
Together the stakes represent about 20m-25m barrels worth of oil. The company has a 20.95% stake in Telford field and a 17.43% stake in Telford.
Brown’s tax hike seems to have given a push to the North Sea’s previously slow-moving asset market. Canadian oil giant Talisman Energy put a package of fields on the market at the end of January.
Royal Dutch Shell in December slashed its oil drilling plans in the North Sea, blaming Brown for the decision.
BP has recently sold its first North Sea field in at least two years, offloading its stake in the Statfjord Field to Japan’s Nippon Oil.
Shell has also launched its biggest North Sea clearout so far. The company has released a data package to potential buyers that covers some 350m barrels of “technical reserves” in the North Sea, with 35 exploration prospects.The entire package is potentially worth billions of dollars, but Shell is thought to intend only to sell a prospect if it receives a compelling offer.
Charles Westwood, of oil and gas intelligence consultancy Hannon and Westwood, said: “I think we’ll see a substantial number of later life assets coming to the market over the next 18 months. It’s a good time to get rid of everything that will come back and bite you when the oil price falls.”
Buyers were also hoping Amerada might throw in its 76.56% stakes in the far smaller Rob Roy and Ivanhoe fields.
Have your say e-mail: email@example.com
Royal Dutch Shell PLC, Europe's second-largest oil company, said it believes it has “strong grounds” to appeal a reported US$1.5-billion fine a Nigerian court has ordered it to pay the country's Ijaw people for environmental damage.
The court ordered Shell to make the payment following claims for compensation from the Ijaw dating back to 2000, the British Broadcasting Corp. said yesterday on its Web site. Nigerian militants calling themselves the Movement for the Emancipation of the Niger Delta have attacked oil facilities run by Shell's Nigeria venture and kidnapped foreign oil workers.
The group has previously called on Shell to pay the Ijaw the US$1.5-billion as compensation for environmental damage and the loss of life caused by company operations.
San Francisco, CA (PRWEB) February 24, 2006 — Five residents of County Mayo, Ireland, were jailed for blocking Shell Oil Company and their Irish Government partner’s plans to pipe raw gas through their communities and close to their family homes.
Shell Oil plans to build a giant processing plant on one of the county’s most spectacular and pristine stretches of coastline.
The jailings set off a storm of protest throughout Ireland with widespread international support, including protests, marches, petitions, fundraisers, blockades and pickets aimed at blocking the billion-dollar gas project.
“We have refused access because of the certainty that if this pipeline as currently proposed ruptures we, our families and neighbors, will die,” said Vincent McGrath, a retired teacher who was jailed with four others for 94 days last year for obstructing work on the pipeline.
“What would you do if a court ordered you to accept installation of a potentially lethal pipeline which no state agency has or will take responsibility for?” McGrath said.
McGrath and the four other prisoners have come to be known across Ireland as the “Rossport 5.”
The Rossport 5 gained international attention when they were imprisoned for what the Irish Judge, Finngean deemed to be contempt of a court order taken out by Shell.
This shot taken by Shell Oil was an apparent attempt to quickly silence a community’s efforts to ensure that the health and safety of their families, and the environment, would be protected.
Additionally, there is concern that relatively no local jobs would be created, and there would be no return to Irish owners of the resource. Shell would sell the oil back to Ireland, with no contribution to Ireland and the economy.
As Shell Oil threatens to put the Rossport 5 back into prison, Irish political leaders in the U.S. are urging U. S. citizens to support the Rossport 5 and their community.
“The Rossport 5 are to be commended for protecting their families and community,” commented Séamus Collins, Chairperson of Irish Northern Aid, San Francisco.
“It doesn’t make sense for the Irish government to put the interests of a big oil company before safety of its own citizens,” Collins said.
Irish Northern Aid is asking supporters in the U.S. to take action. To voice an opinion to Shell Oil and the Irish government, visit: www.inac.org
Click on: http://www.ShelltoSea.com for news and events.
The vast gas reserves controlled by Vladimir Putin give his nation enormous global influence. But he needs the Anglo-Dutch oil giant's help to fully exploit his position, reports Nick Mathiason
Sunday February 26, 2006
In July Russia's President, Vladimir Putin, will welcome the leaders of the world's seven richest nations to Moscow. At the top of Russia's G8 agenda will be energy security. To many, this has the makings of a joke waiting for a punchline. After all it was the Russian leader who just last month ordered the state energy giant Gazprom to turn off the gas supply to neighbouring Ukraine, forcing an icy shiver down the spine of the Western world.
Here was petropower writ large. The Russian bear showed its teeth at a time when world oil supplies have rarely been less secure. Royal Dutch Shell's top man in Russia, Chris Finlayson, 49, momentarily saw the funny side too. In London this week, he allowed himself a brief spluttering guffaw when asked whether he believes President Putin's primary concern was global energy security.
But for Finlayson, himself a roly-poly bear of a man, diplomacy is a prerequisite because for Royal Dutch Shell, Russia is vital. The Anglo-Dutch giant has two massive projects there. It is the single largest foreign direct investor in Russia and is desperate to win the right to extract more Russian oil and gas if it is to stave off nervous investors who are only now recovering from the company's mis-stating of its oil reserves by 40 per cent.
Composing himself on the 22nd floor of Shell's South Bank London headquarters, Finlayson says: 'I think frankly it's a good thing that they're bringing [energy security] up as an issue they want to discuss, rather than it being put to them as a concern and a challenge.'
Some might call that getting your retaliation in first. But not Finlayson. Careful with words, he says the renationalisation of vast swathes of industry, and in particular energy firms previously controlled by oligarchs, is a 'rebalance of the portfolio from one where it was a case of very little control for government.' The row with Ukraine, meanwhile, is 'robust negotiation style on display'.
Finlayson is not expecting a repeat performance of a Ukrainian-style Russian show of strength. 'Their own importance as an energy supplier means people are hanging on every nuance of every action…. So I would be surprised to see anything done in the same way in the future but that's my speculation.'
Does Putin, by having more gas reserves than any other country on the planet, want to effectively control the world? 'I think there can be no question that given the scale of the resources, Russia sees that this gives them a place of real influence and a place at the top table so they want to make sure that importance is recognised by the world.'
But this is something they can only do with Shell's help. Shell is the world leader in the liquified natural gas sector. This is the technique of freezing natural gas into liquid form which can then be transported around the world in ships. Far easier than using cumbersome, geopolitically sensitive pipelines.
At a stroke this changes the distribution of energy, broadening Russia's global horizons, yielding new markets and international relationships.
And it is why Shell was given the right to lead a consortium on what's known as Sakhalin-2 off the east coast of Russia. There is 4.9 billion barrels'-worth of oil and gas here. At a conservative estimate revenues to Russia will be in excess of $50bn and several billion to Shell.
But for the Anglo-Dutch oil giant, these are nervous days. Sakhalin-2 has gone an astonishing $10bn over its initial $10bn budget and Putin isn't happy. Russia is concerned that its share of the Sakhalin revenue will be delayed as a result of cost overruns. Finlayson has said that the ballooning budget will be borne by the consortium members alone.
Some in the City say that it is only because the price of oil has shot up and that Shell has merged its British and Dutch divisions that have allowed it to escape investors' flak.
Finlayson attributes overruns to a budget drawn up when oil was $10 a barrel. It is now six times that and the resulting construction inflation combined with rouble inflation and 'not having the information to fully appreciate all the challenges there from the start' have led to the $10bn overspend.
But questions are being asked. Is the company capable of handling such pivotal and difficult projects? Sakhalin is inhospitable. Winter temperatures average minus 24C, the area is prone to typhoons and is littered with unexploded ordnance – a legacy of Russian- Japanese hostilities.
Sakhalin Energy Company, 55 per cent owned by Shell, has to build platforms to withstand massive ice flows and dig trenches for pipes in frozen sea floors while trying not to disturb endangered grey whales who feed in the area. There's also the risk of poisoning of fishing stocks vital to islanders' livelihoods.
But Finlayson is convincing when he defends the handling of the scheme. 'It is estimated that up to 50 per cent of the total pipeline subcontractors in the Russian federation are working in Sakhalin at the moment. Those companies are learning about the challenges of working to full Western standards with external, independent monitoring and when they do other projects one hopes that learning will stay with them.'
He adds that Shell's responsibility is proved by its moving the route of a pipeline, at a cost of $300m, so that it will not affect the endangered whales.
And some do praise the firm for this. Jason Kenney, an energy industry analyst at ING says: 'The environmental aspects in Sakhalin that Shell has achieved have been groundbreaking for the industry. Not just the whales or the salmon industry or how they're dealing with the river crossings, but their efforts in trying to ensure the islanders benefit.'
But environmentalists pour scorn on this, pointing to vivid examples of Shell's failure. They argue that Shell only moved because it was pushed and until now they have had a field day at Shell's expense. The firm privately admits it has been on the back foot in dealing with campaigners, and Finlayson is eager to put Shell's side of the argument before Tuesday. Then, environmentalists will be lobbying the European Bank for Reconstruction and Development at a public meeting in London. They will be urging the bank to refuse to forward money to the Sakhalin consortium. The issue is portrayed as a test of the bank's environmental credentials.
Without the EBRD's backing, getting loans from other banks will be much harder. In two months, Shell will finally learn whose side the EBRD is on.
But, however Sakhalin is financed, it will happen. And it is just the start. There are many shelves beyond the island that will yield huge resources. But how secure is Shell in Russia? Once Russian companies have the ability to harness LNG, will they not just seize Shell's assets? 'No,' says Finlayson. 'I think we will jointly grow the space and I think we have a track record of showing we can work with national partners who then develop their own businesses. At the same time our business is not constrained by that.'
Shell is keen to win concessions in western Siberia. But it has to get Sakhalin right. If not then Putin's joke will be on the world's third biggest energy firm
Officials Worry Terrorists
Are Targeting Oil System;
Crude Futures Jump 4%
By BHUSHAN BAHREE and CHIP CUMMINS
February 25, 2006; Page A1
A foiled attack Friday on a Saudi oil-processing facility reinforced a dire concern for the U.S. and the energy industry: that terrorists are looking to score a direct hit on one of the world's largest petroleum chokepoints.
Friday's target, the vast Abqaiq facility, may be the single most vital cog in the world petroleum system. Saudi Arabia is the world's largest oil exporter. Abqaiq processes six million to seven million barrels a day of crude oil — equal to about two-thirds of daily Saudi output and 8% of the world's consumption.
“There is nothing that matches Abqaiq, in volume and strategic terms, in the world,” said Jim Burkhard, senior director of oil-market analysis at Cambridge Energy Research Associates in Cambridge, Mass.
Saudi officials said the thwarting of the attack proved that their oil assets are tightly guarded. Officials said two vehicles laden with explosives were attempting to drive through defenses at the facility's outer gates, roughly a mile from the main entrance, when security forces fired on them. The vehicles blew up, killing those inside and critically injuring two security guards. Al Qaeda has been implicated in previous oil attacks, but it wasn't clear if the group was behind this assault.
• Oil was first discovered there in 1940.
• The oil field has 17 billion barrels of proven reserves.
• Aramco facility there processes about two-thirds of Saudi Arabia's oil output
• It is Aramco's main crude processing center.
Sources: Saudi government, EIA, Aramco
MORE ON OIL MARKETS
Issue Briefing: Unrest Behind Oil's RiseThough Saudi oil minister Ali Naimi said the attack and explosions at the site didn't affect oil and gas production or exports, markets were jolted by the news. Crude-oil futures jumped 4% on the New York Mercantile Exchange. Light sweet crude for April delivery surged as high as $63.25 a barrel before settling at $62.91, an increase of $2.37, on the New York Mercantile Exchange. (See related article on page B5.)
The attack comes as trouble in a slew of oil-producing powers has put energy security back atop the world agenda. Insurgents have hobbled oil output in both Iraq and Nigeria. Russia last month briefly cut off gas supplies to neighboring Ukraine. Iran has threatened to disrupt Persian Gulf shipments amid its dispute with the West over its nuclear ambitions.
Oil prices have doubled since 2003, as growing demand has outpaced supply increases, leaving the world with only a thin cushion of spare pumping capacity. The shortage has made it easier for governments, rebels and terrorists alike to use energy as a potent political weapon, sending prices soaring by withholding supplies, attacking pipelines or merely threatening to cause havoc.
More broadly, the attack brought to mind the nightmare scenario that has worried Washington for more than three decades: a significant disruption at Saudi export facilities on the Persian Gulf side of the kingdom. The threat from internal subversion has always been considered greatest in that area, and the ability of foreign military forces to help prevent trouble there is the lowest.
Such fears help explain President Bush's declaration in his State of the Union address this year that the U.S. needs to reduce its dependence on Middle Eastern oil imports. The fact that Mr. Bush referred specifically to the risks of reliance of Middle Eastern oil — as opposed to imported oil generally — offended the Saudis, who have long prided themselves on being a reliable supplier to the U.S. and the West. The Saudis may point to the fact that the attack was stopped as evidence they remain as reliable as ever, but the Bush administration could suggest it shows the need to follow up on the president's challenge.
Underscoring growing concern about oil terrorism, the North Atlantic Treaty Organization last week in Prague held its first energy-security conference, attended by senior U.S. and NATO officials.
In recent years, Saudi Arabia has ramped up spending on security following a spate of terrorist incidents. In 2004, there was a rash of oil-infrastructure strikes in Saudi Arabia that involved refineries and foreign oil workers, which while sensitive aren't strategically important enough to hobble the global energy supply.
According to the Energy Department, Saudi spending on security rose by 50% in 2004 to $5.5 billion. Abqaiq, for one, is so well-protected that “you would need an army, probably with air support, to get through,” said Nawaf Obaid, a Saudi oil and security consultant and an adviser to the government.
Still, the mere attempt highlighted the world's dependence on the facility, which may have been the purpose of the attack. “This is a weapon of mass media,” said Anthony H. Cordesman, an energy-security analyst at Washington's Center for Strategic and International Studies. “Even if they fail, they get the publicity.”
Security analysts said terrorists in Saudi Arabia appear to have switched to targeting oil facilities after a backlash in the kingdom. In previous attacks in populated areas, Saudis were angered by the terrorists killing innocent Muslims, Mr. Cordesman said. At the same time, Friday's attack also suggests terrorists have so far been unable to recruit people inside oil facilities who could help them penetrate the huge plants, he said.
Abqaiq receives petroleum streams that are pumped in from Saudi Arabia's giant fields, processes and cleans the oil by separating out water and gas, then pumps it through pipelines for export via shipping terminals on the nation's coasts.
Damage to Abqaiq could cripple Saudi exports, bottling in crude streams that can't be processed for export. That has happened once before: An accidental fire at Abqaiq in 1977 knocked out 70% of Saudi Arabia's output for three days. The Saudis gradually fixed the damage and output recovered over several weeks. Had the fire reached the complex's generating plants, it might have taken months, and possibly years, to rebuild Abqaiq.
Saudi Arabia has a few other vulnerable targets, including Ras Tanura on the Persian Gulf, the world's largest oil-export terminal, which can ship up to 6 million barrels a day. But the kingdom's network of pipelines and export terminals has a large cushion of fallback facilities. The Saudis have built spare facilities on the Red Sea coast, on the other side of the Arabian Peninsula. All told, they can move some 14 million barrels a day through their pipelines and ports, much higher than their current daily output of some 9.5 million barrels.
Almost all of the world's slim spare oil-pumping capacity of some 1.5 million barrels a day is in Saudi Arabia. So a dislocation of Saudi supplies couldn't be made up by another oil producer. To cover any shortfall, the world would have to resort to the use of strategic stocks of oil held by the 26 industrial country members of the International Energy Agency, as happened after last year's hurricanes in the Gulf of Mexico.
–Gerald F. Seib contributed to this article.
Write to Bhushan Bahree at firstname.lastname@example.org and Chip Cummins at email@example.com
WARRI, Nigeria — Armed militants holding nine foreign oil workers hostage in Nigeria showed one of them to reporters for the first time Friday, a 68-year-old American who said he and his colleagues were being treated well.
Three Americans, two Egyptians, two Thais, one Briton and one Filipino have been missing since they were kidnapped Feb. 18 by militants who stormed a barge belonging to a U.S. oil company in the Niger Delta's Forcados estuary. The kidnappers are demanding that people in the country's south receive a greater share of their region's oil wealth.
“We're being treated quite well. Just let's hope it ends well,” said the American, who identified himself as Macon Hawkins of Texas.
Nine militants wearing black masks, military fatigues and carrying Kalashnikov assault rifles and rocket-propelled grenade launchers brought the hostage to a group of journalists by boat in the Niger Delta. The militants reiterated demands for a third party to mediate an end to the crisis before returning the hostage to a boat, firing their weapons into the air and setting off into one of the delta's creeks.
Thursday and Friday, militants issued photos of what they said were the nine kidnapped foreigners. In an email, they also threatened more attacks on oil workers and the country's volatile oil industry. The militants released a separate statement saying the photos, which appeared slightly out of focus, were “pictures of our hostages with a section of the unit that secured their capture.”
“Oil industry workers should accept that we are going nowhere very soon and will show little mercy especially in facilities previously attacked,” the militants said. “We are continuing with our attacks on oil facilities and oil workers in the next few days. We will act without further warning.”
The barge the hostages were abducted from was owned by Houston-based oil services company Willbros Group Inc., which was laying pipeline for oil major Royal Dutch Shell PLC.
The militants denied reports that any negotiations were taking place to secure the hostages' release.
Hostage takings have been a common occurrence in the volatile delta for years. Most of those kidnapped are released unharmed. Last month, militants held four foreigners for 19 days before releasing them unscathed.
The militants are demanding a greater share of oil wealth for their impoverished region, which has remained poor despite the large amounts of oil flowing from it. The militants say they also want to secure the release from jail of the delta's two most prominent leaders, Mujahid Dokubo-Asari and former Gov. Diepreye Alamieyeseigha.
Mr. Dokubo-Asari, who waged a struggle for autonomy for eight million Ijaws that dominate the Niger Delta for years, was jailed on treason charges in September. Mr. Alamieyeseigha was arrested recently in Nigeria after fleeing the U.K. on money laundering charges.
The militants said in the emailed statement that the hostages” release was “directly related to the release of Alamieyeseigha and Asari.” The statement added: “Politicians who don't care about how many soldiers and oil industry workers are killed as long as the oil keeps flowing.”
Separately, a Nigerian court on Friday ordered a Royal Dutch Shell joint venture to pay southern communities $1.5 billion in compensation for environmental pollution and degradation in the oil-rich Niger Delta. The payment was first ordered by the country's parliament in August 2004. The joint venture includes the Nigerian government, France's Total SA and Italy's ENI SpA.
Stuart Bruseth, Shell spokesman in London, confirmed the ruling and said he believed the company has “strong grounds to appeal.” Shell had gone to court to challenge the lawmakers' decision made in response to a petition by ethnic Ijaws.
The joint venture Shell operates produces a little under half of Nigeria's 2.5 million barrels daily of oil exports.
A thwarted attack on a massive oil facility in Saudi Arabia rattled oil markets Friday, pushing up crude-oil futures by more than $2 a barrel.
THE BACK STORY: Heavy demand has kept the price of oil at about $60 since the end of July 2005. But lately, political concerns have been the primary driver of energy prices. In Saudi Arabia, the No.1 oil producer accounting for more than 30% of OPEC's production in 2005, suicide bombers Friday attacked the world's largest oil refinery, the Abqaiq oil complex. Although security forces stopped the assualt, analysts worry about more attempts on oil installations. Nigeria, which produced about 8% of OPEC's output last year, has been dealing for several months with militant attacks. Earlier this month, gunman took nine foreign workers hostage there, forcing oil giant Shell to shut in 450,000 barrels of daily production amid the unrest. Traders are also concerned over Iran, which is currently in a standoff with the West over its nuclear-energy program. In 2005, Iran ranked second in OPEC crude production.
WHAT'S NEXT: Oppenheimer analyst Fadel Gheit warned that any attack that shuts down a major Saudi facility could send the price of oil skyrocketing to more than $100 a barrel. Meanwhile, supply concerns are likely to remain subdued for the next couple of months due to the greater-than-usual stockpiles of key energy products, including crude and heating oil, as the unusually warm winter comes to a close. — David A. Gaffen
LONDON (Reuters) – Oil jumped more than $2 on Friday after news of a suicide bomb attack at the huge Abqaiq oil facility in Saudi Arabia, which triggered worries about supply from the world's top crude producer.
At least two cars exploded at the gates of the Abqaiq site when security forces fired on suicide bombers trying to storm the facility in the country's eastern province.
“It's all about perception. Just the idea of an attack in Saudi Arabia is enough to make the market jumpy,'' said Glenn Murray, an oil broker at GM Oil.
Saudi Oil Minister Ali al-Naimi described the raid as a ''terrorist attempt'' but said oil exports had been unaffected. He said a limited fire at the site was being brought under control.
“This incident had no impact on oil and gas production in the kingdom,'' Naimi said in a statement carried by the official Saudi Press Agency. “The plant continued production at full levels and export operations are as usual.''
Most Saudi oil is exported from the Gulf via Abqaiq which handles about two thirds of the country's output.
“This just emphasizes fears over global oil supply security when we're already facing major ongoing risks in Nigeria, Iran and Iraq,'' said Gary Ross, CEO at PIRA Energy consultancy in New York.
U.S crude prices hit a high of $63.00 a barrel, up $2.46. They later eased back to $62.88 at 1920 GMT.
London Brent was up $2.04 at $62.58 a barrel.
U.S. blue chip stocks edged lower after the surge in oil price which revived worries about high energy costs and inflation.
TUGGED BY TWO FORCES
Oil prices had risen a dollar earlier Friday as fears of deeper disruptions to Nigerian exports overshadowed the comfort drawn from brimming fuel stockpiles in the United States.
Attacks on Nigeria's oil network have already forced Shell to cut output by 455,000 barrels a day, shutting in a fifth of the country's exports. Militants holding foreign oil workers hostage say they will continue attacks in the next few days.
But oil's upside may be limited by brimming U.S. fuel tanks. Gasoline stocks rose to 225.6 million barrels, the highest level in seven years, according to weekly data. Crude stocks rose 1.1 million barrels to 326.7 million barrels.
“The market is being tugged by two forces — data are pulling it down and political forces are pulling it up,'' said independent oil consultant Geoff Pyne.
Aside from tension in Nigeria, traders said Iran's nuclear ambitions and the possible ramifications for the nation's oil production also remained a worry.
The board of the International Atomic Energy Agencymeets on March 6 to discuss the next step in resolving Iran's nuclear row with the West.
Iraq, which has been struggling to get oil output back to pre-war levels, is suffering the worst sectarian violence since the fall of Saddam Hussein, compounding the geopolitical risks in the Middle East.
By LYDIA POLGREEN
Published: February 25, 2006
IN THE NIGER DELTA, Nigeria — They have, by all appearances, just a handful of boats, some machine guns and grenade launchers and, perhaps equally important, an e-mail address.
Macon Hawkins of Kosciusko, Tex., an employee of a pipe-laying company, is a hostage of the Movement for the Emancipation of the Niger Delta.
But with just those tools the Movement for the Emancipation of the Niger Delta has managed to shut down nearly a fifth of this nation's vast oil production, briefly push global crude oil prices up more than $1.50 a barrel and throw Nigeria's government into crisis over the group's demand that the oil-rich but squalid region be given a greater share of the wealth it creates.
“They have marginalized us for many years now!” shouted a machine-gun-wielding member of the militant group, his face covered in black cloth. “We are taking the bull by the horns now. Niger Delta is ready.”
For the last two months the shadowy militant group has mounted attacks on oil facilities here and taken more than a dozen foreign oil workers hostage, including some Americans, wreaking havoc on the industry that is the mainstay of Nigeria's economy. All of the hostages taken last month were released after 19 days, but new ones were seized last week.
In e-mail messages sent to the news media, the group says it seeks to liberate the Ijaw people, who make up the bulk of the population here and, the group says, have provided the lifeblood of the Nigerian economy, but with little reward.
The government says the group is made up of oil thieves and criminal gangs seeking to control the lucrative trade in oil stolen from pipelines in the labyrinth of creeks that make up the Niger Delta.
“It is pure criminality,” said Information Minister Frank Nweke Jr. “These are thugs who are using the plight of the poor to cover their illegal activities.”
Groups of militant youths in this restive region have long used hostage taking and sabotage to extort money from oil companies and prevent the authorities from stopping oil theft from pipelines, a process known as bunkering.
But the ferocity and frequency of the recent attacks, in which more than a dozen soldiers have been killed, have increased concern. The violence comes as oil prices have spiked and the political climate in Nigeria has deteriorated ahead of its next presidential election, to be held early next year.
Although the attacks have been directed primarily at Royal Dutch Shell, the oldest and largest oil producer in Nigeria, their real target is the government, said Sebastian Spio-Garbrah, an analyst at the Eurasia group, a private research firm.
“They are trying to hurt the government, not really the oil companies,” Mr. Spio-Garbrah said. “If the central government, which receives all these monies, is starved of money, the government will be weakened and they will be stronger.”
On Friday, boatloads of members of the group met with journalists on a creek in the delta to outline their demands and show their strength. They reiterated their insistence that foreign oil companies leave the region and the Nigerian military withdraw. They are also demanding the release of the leader of a militant group and the nation's only Ijaw governor, both of whom are in jail.
“We want the Nigerian military men to evacuate from this terrain,” one of the militants declared, brandishing his M-60 machine gun. “If we get them anywhere we are going to kill them one by one.”
Dressed in military fatigues and white T-shirts, dozens of men armed with Kalashnikov machine guns and grenade launchers sat aboard speedboats decked with the white flags of Egbesu, the Ijaw god of warfare. They showed one of the nine hostages they seized last week from a barge operated by an oil company contractor, and said they were prepared to seize more hostages and blow up more oil facilities if their demands were not met.
“These people are serious, very serious, about what they are doing,” said the hostage, Macon Hawkins, 68, an American from Kosciusko, Tex., who works for a company hired by Royal Dutch Shell to lay pipe in the region.
“They are going to fight,” Mr. Hawkins said, “and they are going to fight till death. So the army is not going to do a whole lot of good here. The best thing the army can do is pull out and get some negotiators in here and try to settle this thing before it really gets bad.”
Efforts to defeat the group militarily have not gone well, and it has managed to carry out several audacious attacks on oil facilities. The government says the group pays for its weapons by stealing oil, but several government officials, including two admirals of the Nigerian Navy, have been charged with stealing oil as well.
Nigeria is the world's eighth largest exporter of oil and an important supplier to the United States. Despite generating hundreds of billions of dollars in revenue since oil was discovered here in the 1950's, the Niger Delta is one of the poorest and least developed parts of the country.
Published: February 25, 2006
BERLIN/TEHRAN (Reuters) – U.N. nuclear experts arrived in Iran on Saturday after Tehran promised answers to outstanding questions about work the U.N. fears could be linked to atomic ''weaponisation,'' Western diplomats said.
Separately, two diplomats said Tehran had begun operating 10 uranium enrichment centrifuges at its Natanz plant in central Iran, meaning the Islamic Republic has made good on its threats to resume the small-scale production of uranium fuel.
On Thursday, a senior diplomat in Vienna told Reuters the Iranians had promised the deputy director general of the Vienna-based International Atomic Energy Agency (IAEA), Olli Heinonen, information about a shadowy uranium-processing project that Western intelligence has linked to possible atom bomb work.
In addition to this uranium project — called the “Green Salt Project'' — an EU diplomat in Vienna briefed on the IAEA's probe of Iran's nuclear program said Tehran had also promised information related to possible work on nuclear ''weaponisation.''
“This trip is related to the entire issue of weaponisation, one of the major unresolved issues,'' said a European Union diplomat who follows Iran. “The Iranians have promised answers but it's unclear whether the answers will be sufficient to clear up all the IAEA's questions about Iranian weaponisation work.''
The term weaponisation includes making, testing and fitting a nuclear warhead to a delivery system, such as a missile.
Two Vienna diplomats said they doubted the Iranians were ready to finally come clean after decades of covering up work that the United States, European Union and their allies believe has been part of a covert plan to develop atomic weapons.
Iran denies wanting nuclear weapons and says it is only interested in the peaceful generation of electricity.
DELAY OF SECURITY COUNCIL ACTION
One EU diplomat said the Iranians were afraid the IAEA report would include complaints that Tehran continues to stonewall U.N. inspectors in their attempt to verify whether or not Iran's nuclear program is peaceful.
“They are afraid (IAEA chief Mohamed) ElBaradei's report for the March 6 board meeting will not have very good things to say regarding their refusal to answer questions about weaponisation,'' the diplomat said. “They want to soften it.''
He predicted Iran would give the IAEA enough information to require lengthy examination. This could delay any action by the U.N. Security Council, which will receive a copy of ElBaradei's report once it is discussed by the IAEA board next week.
Corey Hinderstein of the Institute for Science and International Security (ISIS), a U.S. think-tank, said the IAEA's unanswered weaponisation questions included Iran's high explosives tests, its design information related to the core of a nuclear weapon and the military's role in its nuclear work.
There were also questions related to U.S. intelligence recovered from a stolen laptop computer that suggests Iranian missile experts have been trying to develop a missile re-entry vehicle capable of carrying a relatively small nuclear warhead.
The EU diplomat said Iran's decision to press ahead with the enrichment of uranium, a process of purifying it for use as fuel in nuclear power plants or weapons, was especially disturbing given the open questions about possible weaponisation.
He said Iran's decision to feed uranium gas into 10 centrifuges was not in itself “a big deal.'' A thousand centrifuges of the type Iran has at Natanz would need several years to produce enough highly-enriched fuel for a single bomb.
“Weaponisation combined with enrichment is a big deal,'' he said.
The 10 centrifuges had been sealed by the IAEA until Iran decided to resume enrichment earlier this year, prompting France, Britain and Germany to end 2-1/2 years of talks aimed at resolving the stand-off with Iran.
But while Western nations threatened to press ahead with sanctions, Iran is to grant gas contracts to European firms Total, Shell and Repsol, an Iranian state oil firm said.
Iran is the West will balk at setting sanctions on OPEC's number two exporter while oil prices remain high.
The Independent – United Kingdom; Feb 25, 2006
Shell's $20bn(pounds 11bn) Sakhalin project off Russia's eastern coast was boosted when it emerged that an environmental impact report for the European Bank for Reconstruction and Development was broadly favourable.
• London's plan to provide wireless networking throughout the City may expose companies to security breaches and legal action, lawyers believe.
• Former Morgan Crucible chief Ian Norris lost his legal challenge to Britain's extradition arrangements with the US.
• Royal Dutch Shell said it believes it has “strong grounds” to appeal a reported $1.5bn fine a Nigerian court has ordered it to pay the country's Ijaw people for environmental damage.
CALGARY, Alberta (Reuters) – Shell Canada Ltd. (SHC.TO: Quote) has halted production at its Muskeg River oil sands mine to repair a conveyor belt that was damaged on Friday, the company said.
The Calgary-based firm said bitumen production at the mine, which supplies feedstock to the Scotford upgrading refinery near Edmonton, Alberta, won't be restarted until it assesses the problem and a course of action can be determined.
The mine produced 178,000 barrels of bitumen a day during the fourth quarter, much of which was shipped to Scotford where it was converted to synthetic crude.
Janet Annesley, a spokeswoman for the majority-owned unit of Royal Dutch Shell Plc (RDSa.L: Quote), said the company has also reduced production at Scotford to the minimum needed to maintain critical systems, but would not specify current output.
“Production at the mine is being reduced and production at the upgrader has been reduced to a minimum,” she said. “We're hopeful that we'll be able to maintain some production.”
Annesley said workers at the mine site 75 km (45 miles) north of Fort McMurray, Alberta, noticed a tear in the conveyor belt, which Shell Canada says is the world's largest, on Friday morning. The company is trying to find out if the belt can be repaired or if it needs to be replaced by another that is on hand.
Annesley couldn't say how long the mine would be shut down for the repair. However Western Oil Sands Inc. (WTO.TO: Quote), which owns a 20 percent stake in the project, said in a release that replacing the belt would take four weeks.
Shell Canada said it will issue an update on the planned repairs early next week.
Chevron Corp. (CVX.N: Quote) is the third partner in the project with a 20 percent interest.
· Oil giant will appeal against court decision
· Kidnap and sabotage cripple production
Rory Carroll, Africa correspondent
Saturday February 25, 2006
A Nigerian court yesterday ordered Royal Dutch Shell to pay $1.5bn (£858m) in damages for polluting the Niger delta, a fresh blow to the company which was already reeling from a kidnap crisis and a wave of sabotage against its installations.
A federal high court in Port Harcourt, the heart of the country's oil industry, ruled that Shell must compensate communities in Bayelsa state for degrading their creeks and spoiling crops and fishing. The decision was a major victory for the Ijaw people – who have campaigned for compensation for more than a decade – and one of Shell's worst legal setbacks.
The ruling came on the same day that news emerged of the nine employees of a US subcontractor kidnapped on February 18. The kidnappers of the nine – a Briton, three Americans, two Egyptians, two Thais and a Filipino – are demanding that people in the country's south receive a greater share of the region's oil wealth. The kidnappers have released what they call “pictures of our hostages with a section of the unit that secured their capture”.
Yesterday they also brought one of the Americans along the Niger delta by boat to speak to journalists. Identifying himself as Macon Hawkins, from Texas, he said: “We're being treated quite well. Just let's hope it ends well.”
Communities have repeatedly accused Shell of letting its oil spill into the rivers of the Niger delta, degrading the environment, spoiling crops and poisoning fish. Shell says most spills are caused by saboteurs trying to steal the oil for sale by international criminal syndicates on the world market.
As well as the court ruling and the kidnapping, this week has also seen militants blowing up pipelines and storming a loading platform, crippling Shell's output.
Justice Okechukwu Okeke's ruling in Port Harcourt yesterday upheld a vote by Nigeria's senate in August 2004 to fine Shell $1.5bn. Shell had argued that the parliamentary committee that made the original order in 2000 did not have the power to require payment. But the judge ruled that since both sides agreed to go before parliament, the order was binding.
Shell in London said the company would not comment in detail until it had received the text of the judgment; “however, we believe that we will have strong grounds to appeal as independent expert advice demonstrates that there is no evidence to support the claims”.
It added that it remained committed to dialogue with the Ijaw people – a claim rejected by Ijaw leaders. Chief Malla Sasime, the ruler of the Ijaw Epie kingdom in Bayelsa, said: “Our people have gone through due process to get the judgment.”
“They must pay the money or be ready to leave our land.” Another Ijaw leader, Ngo Nac-Eteli, said Shell would be prevented from operating on Ijaw territory if it tried to buy time by appealing against the judgment.
Militant groups in the Niger delta have fought the government and the oil industry for 15 years, demanding a greater share of oil revenues and compensation for environmental damage. In 1995 the writer and campaigner Ken Saro-Wiwa was executed after leading a peaceful uprising of the Ogoni in opposition to Shell.
A report published by the European Bank for Reconstruction and Development today said Shell's plans for oil and gas pipelines in eastern Russia had environmental shortcomings. Reuters reported.
The bank is considering whether to extend a loan to the Shell-led Sakhalin Energy consortium for the $20 billion Sakhalin-2 project.
The application could be turned down if the bank decides the project fails to meet its environmental rules.
By Rhys Blakely and agencies
The Nigerian Federal High Court today ordered Shell, the Anglo-Dutch oil company, to pay $1.5 billion (£859m) to the Ijaw people of the country’s Bayelsa region. The Ijaw were first made the award in 2000 for environmental damage to their homeland in the Niger Delta through Shell’s oil exploration. Shell refused to pay and has since been targeted by Ijaw militants who have attacked the company’s facilities in Nigeria and are currently holding nine foreign oil workers hostage.
A statement today from the Movement for the Emancipation of the Niger Delta, the armed ethnic Ijaw group, said: “There have been reports that negotiations are ongoing towards the release of these individuals. This is absolutely untrue.”
It added: “We are continuing with our attacks on oil facilities and oil workers in the next few days. We will act without further warning.”
Following the violence, Shell – the biggest oil producer in Nigeria – has halved its output from the country.
A spokeswoman for the company told Times Online that the company was unable to comment on the court ruling because it had not yet been made aware of it.
She added Shell remained convinced “independent expert advice” showed that it strong grounds to appeal the order to pay compensation.
“We remain committed to dialogue with the Ijaw people,” she said.
According to the BBC, Shell's lawyers argued in the Pourt Harcourt Federal Court that the joint committee of the Nigerian National Assembly that made the order in 2000 did not have the power to compel the oil company to make the payment.
The Nigerian Senate approved the fine in August 2004 after it was presented to the lower House of Representatives in 2003 and reviewed by an independent legal advisory panel set up by the lower house.
However, Judge Okechukwu Okeke ruled that since both sides had agreed to go before the National Assembly, the order was binding on both sides.
Shell has argued in the past that most oil spills in the southern Niger Delta, which kill fish and crops, are caused by saboteurs trying to steal oil.
A report published by the European Bank for Reconstruction and Development today said Shell's plans for oil and gas pipelines in eastern Russia had environmental shortcomings. Reuters reported.
The bank is considering whether to extend a loan to the Shell-led Sakhalin Energy consortium for the $20 billion Sakhalin-2 project.
The application could be turned down if the bank decides the project fails to meet its environmental rules.
“The ill-fated Super Puma was airlifting 11 employees of Shell and its contractors when it ran into trouble and crashed into the South China Sea during a routine flight to the offshore gas production platform B11 in Bintulu waters at noon.”
Published by ShellNews.net 24 February 2006
FROM THE BORNEO POST
By Philip Kiew and Mohamad Abdullah
MIRI: A Malaysian Helicopter Services (MHS) Super Puma helicopter with 14 passengers spouted flames at the Miri airport as it was about to take off, forcing the pilot to abort the flight to two offshore platforms in Bintulu waters yesterday.
Ground crew reportedly heard a small explosion and saw flames coming out of the engine exhaust, prompting them to signal the pilot who immediately shut down the engine, and with help from ground crew, put out the flames.
· Shares in Vestas rise 6% on rumours of symbolic step
· Move comes amid rising interest in green energy
Friday February 24, 2006
The oil major Shell was linked yesterday to a possible $3.5bn (£2bn) takeover of a leading wind turbine manufacturer, adding to the excitement around the alternative energy sector. The value of Vestas rose 6% on the Copenhagen stock market amid mounting expectation that a major oil group could make a symbolically important move into “green” technology. Shell declined to comment.
There has been a massive surge of City interest in what has been seen until recently as a fringe part of global stock markets, helped by the high profile given to the government's energy review.
The latest green company admitted to the London market yesterday, Econergy, saw its shares rise 11% within hours. A day earlier, another company, Ceramic Fuel Cells, announced plans to list its shares and raise cash for new factories, probably in the north of England.
Shell, which made £13bn of profits last year, is already involved in some alternative energy projects but has so far only spent a relatively paltry $1bn in a range of small projects in areas such as wind, biofuels and solar.
The Anglo-Dutch group is using Vestas to provide turbines for an offshore wind scheme in the Netherlands as part of plans to increase its wind energy capacity from 350 megawatts to 500MW by 2007.
Shell is also planning to construct a £1.5bn wind farm in the south-east of England and has hopes of building others as far afield as China. But a move to buy Vestas would underline its green energy credentials and show a determination to be at the heart of the wind business, seen by British politicians as the most promising of the new energy sources.
A Shell spokesman refused to give any guidance on whether it was interested or not in the Danish wind firm. “We don't comment on market rumours,” he said.
Analysts said it would be a good time to buy Vestas, given that its share price was hit by a profit warning before Christmas. There has been previous speculation that industrial predators such as Siemens or GE might be tempted to make a takeover move.
Mainstream energy analysts such as Bruce Evers at Investec Securities would not rule out a move by Shell but believed the returns from alternative energy schemes would be unsatisfactory for traditional shareholders.
“Shell is having trouble replenishing its oil reserves without getting involved in a sideshow such as this. Wind farms, fuel cells and the like is pretty tiny stuff when you look at Shell's quarterly profits from oil and gas, but I would not put a takeover past it,” he said.
The oil industry is awash with money from historically high crude prices, which has attracted criticism. A bigger move into the wind sector would barely dent cash reserves and would improve its image with environmentalists who have been screaming for big oil majors to do more.
In November its rival BP launched its own alternative energy division and said it would invest up to $8bn over the next 10 years creating a low-carbon power business. BP intends to produce annual revenues of $6bn from this new business and is planning hydrogen plants in Scotland and California.
Possible diversification moves by Shell brought back bad memories for some oil industry experts. They remembered another time of very high oil prices in the past when Mobil – now ExxonMobil – bought the retail chain Montgomery Ward and BP had a meat business in the US.
But the purchase of Vestas by Shell or another mainstream industrial group would give further credibility to those alternative energy companies who have been beating their way to the stock market in Britain.
Econergy and Ceramic Fuel Cells join about 20 others in a growing alternative energy sector, which is estimated to be worth, in total, £1bn by the end of last year. Their value is estimated to have risen a further 30%, partly on the back of renewed interest in alternative technology following the government's energy review into the future of Britain's power needs.
But there are many uncertainties surrounding the sector, not least whether Tony Blair will, as expected, opt for a new generation of nuclear power stations. That could suck money away from alternative energy projects and companies, green supporters fear.
A Nigerian court has ordered oil multinational Shell to pay $1.5bn to the Ijaw people of the Delta region.
The Ijaw have been fighting since 2000 for compensation for environmental degradation in the oil-rich region.
They took the case to court after Shell refused to make the payment ordered by Nigeria's parliament.
Ijaw militants have staged a spate of attacks against Shell facilities recently and are holding seven foreign oil workers hostage.
Following the violence, Shell – the biggest oil producer in Nigeria – has halved its output from the country.
Shell says it believes there is no evidence to support the claim, and will appeal against the ruling.
A statement said: “We remain committed to dialogue with the Ijaw people.”
Shell's lawyers argued in the federal court in Port Harcourt that the joint committee of the National Assembly that made the order in 2000 did not have the power to compel the oil company to make the payment. But Judge Okechukwu Okeke ruled that since both sides had agreed to go before the National Assembly, the order was binding on both sides.
Ijaw community leader Ngo Nac-Eteli said that if Shell wanted to buy time by taking the case to the appeal court, the company would not be allowed to operate on Ijaw land until the case was settled.
He did not elaborate on how the community would stop Shell's operations.
The BBC's Abdullahi Kaura Abubakar in Port Harcourt says the case has the support both of community elders and the militant groups that have been attacking oil installations in the Delta region.
But our correspondent warns that even if the money is paid, the region would not necessarily be pacified unless the various groups were happy with how it was distributed.
Nigeria is one of the world's biggest oil exporters but despite its oil wealth, many Nigerians live in abject poverty.
(Updates item published at 1314 GMT with comments from Shell)
LONDON (MarketWatch) — A Nigerian court has ordered oil multinational Royal Dutch Shell PLC (RDSB.LN) to pay $1.5 billion to the Ijaw people of the Niger Delta region, the BBC reports on its Web site Friday.
The Ijaw have been fighting since 2000 for compensation for environmental degradation in the oil-rich region. They took the case to court after Shell refused to make the payment ordered by Nigeria's parliament.
Ijaw militants have staged a spate of attacks against Shell facilities recently and are holding foreign oil workers hostage.
Shell intends to appeal against the judgment.
“We have yet to receive the text of the judgment and can't comment until we've studied it in detail,” a spokeswoman from Shell told Dow Jones Newswires.
“However, we believe we will have strong grounds to appeal as independent expert advice demonstrate that there's no evidence to support the claims. We remain committed to dialogue with the Ijaw people,” she added.
Shell's lawyers argued in the federal court in Port Harcourt the joint committee of the National Assembly that made the order in 2000 didn't have the power to compel the oil company to make the payment. But Judge Okechukwu Okeke ruled that since both sides had agreed to go before the National Assembly, the order was binding on both sides.
Nigeria is one of the world's biggest oil exporters but despite its oil wealth, many Nigerians live in abject poverty.
Web site: http://www.bbc.co.uk
Well, here we go again. It's the time of year when the chairmen of some of our biggest companies prepare to face their shareholders at this year's annual meeting in the next 12 weeks.
Those of us who cling to the belief that shareholder democracy is still alive at UK plc attend these meetings in the hope that investors will make their boards sweat.
This doesn't always happen of course, not least because the biggest companies ensure that their chairmen are primed for the toughest questions by their investor relations team and highly paid PR advisers.
So, to make the battle more equal, here is a cut-out-and-keep list of the top 10 questions to make the chairmen squirm:
1. Which shareholders are most loyal to you, institutions or individuals?
2. Do you know what percentage of the company's shares is actually owned/controlled by hedge funds?
3. How often does the senior non-executive director meet private investors?
4. Do you think your company's registrar is doing a good job?
5. Why is there so much stuff in the annual report about corporate governance and corporate social responsibility, and not more about strategy?
6. Is your company committed to automatically reinvesting dividends in more shares for private investors?
7. Private shareholders at Shell and Hilton have found themselves facing large tax bills. Does the board agree it has a moral responsibility to offer options that are as tax efficient as possible for the individual investor?
8. If I was having breakfast with Gordon Brown this morning, I would tell him that he needs to cut capital gains tax, inheritance tax and council tax. Which three corporate breaks would the board ask for from the Chancellor?
9. How much of your company's overheads are driven by external regulation?
10. What is your company doing to encourage online voting at annual meetings?
Shell Exploration & Production Co. said it's pulled high-quality crude oil from Colorado's vast oil shale reserves but is still a few years away from determining whether oil shale is commercially viable in the long run.
The giant oil company, perhaps the furthest ahead in research on freeing oil locked in layers of rock deep underground, is moving into the next phase of its research — methods to stop potential groundwater pollution around shale sites.
“We are in this to make money. It's not a science fair project,” Mike Long, Shell's manager of regulatory affairs, said during his presentation on the company's research at the National Western Mining Conference in early February.
Other companies and the federal government are getting involved in oil shale, too.
In mid-January, the Bureau of Land Management said it will do environmental analysis on eight proposals for oil shale research filed by six companies: Chevron Shale Oil Co., EGL Resources Inc., Exxon Mobil Corp., Oil-Tech Inc., Shell Frontier Oil & Gas and Oil Shale Exploration, LLC. Projects that pass the environmental test will get 160-acre leases for oil shale research and development, and the right to reserve another 4,960 acres for commercial development.
The BLM hopes to make decisions on the projects and the leases next fall.
The goal is nothing less than bringing billions of barrels of domestically produced oil to the U.S. market.
The oil is locked in underground rock formations that sprawl across 16,000 square miles in Colorado, Utah and Wyoming. It's the largest known concentration of oil shale in the world and holds an estimated 800 billion barrels of recoverable oil, enough to meet U.S. demand for oil — at current levels — for 110 years, according to the BLM.
Six of the projects the BLM is considering are in Rio Blanco County on Colorado's Western Slope. The other two are in Utah.
But local officials, burned by the boom and bust of oil shale efforts in the early 1980s, are cautious about the latest development efforts.
“They're all R&Ds,” said Garfield County Commissioner Larry McCown, who worked in the oil shale industry in the 1980s and 1990s, and who remembers the day in May 1982 that Exxon announced it was pulling out of its research efforts — a day still known as “Black Sunday” among locals.
“Until we get further along on what the companies' plans are, I think it's premature to yell 'wolf' — that we're in another boom cycle,” McCown said.
“I think it's a tremendous resource. I don't think it can be overlooked,” McCown said of the oil shale reserves. “I'm not a naysayer, I'm optimistic about all types of alternative energy. This one's here. Whether it can be developed economically or not, I would hope that it's up to free enterprise.”
Shell has been working on oil shale since laboratory research started in 1981. It's had field tests in the Piceance Basin in Colorado since 2000.
“Colorado oil shale is the most concentrated energy source in the world,” Long said. “Basically, we hope to create a new domestic oil industry.”
The first tests revolved around “in situ” efforts — inserting electronic heaters into holes drilled into underground rock formations. The heaters slowly heated the rock to between 650 and 700 degrees over three or four years. Once hot enough, the oil shale melts into liquid, and both oil and natural gas began flowing into conventional wells, according to Shell.
The company said it got 1,500 barrels of light oil plus natural gas from a small plot.
The product was one-third natural gas and two-thirds light oil, easily refined into high-dollar products such as diesel and jet fuel and gasoline, Long said.
One acre can produce oil and natural gas equivalent to about 1 million barrels of oil, he said.
The underground heating process offers advantages, Long said.
Traditionally, oil shale was mined using open pits. The rocks were hauled to an above-ground heater, or retort, to melt the oil out of the rock.
The “in situ” or underground method doesn't require open-pit mining, there are no tailings to dispose of, it's more efficient — with a smaller footprint offering more oil and natural gas — and the product is a higher quality that needs less refining, Long said.
Shell believes the process is economical when the market price of oil ranges between $25 and $30 per barrel, said Jill Davis, spokeswoman for the Shell's “Mahogany Research Project” that's focusing on oil shale.
Oil has traded above $60 per barrel for much of this year.
Shell's next round of research, isolating a chunk of ground the size of a football field by freezing the groundwater around it in a “freeze wall,” kicked off late last year, Long said.
The test is to see if groundwater, heat and oil and natural gas can be contained in an area by a wall of frozen groundwater, and not be allowed to flow and mix outside that area, he said.
The test questions are: “Can we make it? Can we break it? How can we break it and can we fix it?” Long said.
If the company gets a 160-acre lease from the BLM, the third research phase will kick in — integrating the heating to get the product, and the freezing to contain the product, he said.
The process is still energy-intensive and will require Shell to build a power plant to support the heating and freezing equipment, Long said. But the company said its process produces 3.5 units of energy for every unit used.
And while decisions to move ahead on a large scale are far off, the company's research effort still is creating activity in the area, Davis said.
For instance, Shell is planning a 16,000-square-foot office-conference building to house employees now working out of trailers, she said.
Shell has about 35 employees and 30 contractors working at the site, plus 100 others in Houston and Denver supporting the research project.
The company also plans studies on roads and housing in the area — what's there and what's needed, Davis said.
“Economically viable, environmentally responsible and socially sustainable,” Davis said. “Those are the three things that will determine commercial viability. In the meantime, we'll start scoping and studying things. You don't build a large commercial project without that kind of scoping.”
UPI Energy Watch
By ANDREA R. MIHAILESCU
UPI Energy Correspondent
Royal Dutch Shell, which ranks third among the top five Western oil companies, could face a serious challenge in securing additional reserves, a prevalent fear among Wall Street analysts.
Whether Shell is able to replenish reserves will determine the company's ability to maintain growth and production in the future.
It is a crude reality, but the problem is not new.
Last year, Britain's TimesOnline depicted Shell in need of 3.8 million barrels per day, due to declines in output in the North Sea and United States along with rising costs worldwide. The Times graphic suggested a takeover or access to Iraqi oil might be a solution to some of Shell's problems.
Last year's earnings of $23 billion could be the best the British-Dutch venture can secure in years to come if it is unable to make a find to replenish its reserve count.
Fortune magazine said analysts fear “that buried beneath the record profit figures are worrying signs of a business in decline.”
Shell remains unsuccessful at making a discovery that is able to equate to the amount of oil and gas the company is currently pumping — it is still unable to replace 30 percent of what it produced in 2005.
In 2004, the company managed to replace 19 percent of what it extracted out of the ground. Shell's reserve problems and controversy surrounding improperly booked assets led the company to reduce estimated reserves by roughly 30 percent and resulted in the resignation of its chief executive officer Phil Watts in 2004.
Shell's competitors Exxon Mobil Corp. and BP managed to replace 112 percent of its production and 95 percent, respectively.
Turkey to diversify gas supplies
Turkey, which receives its natural gas from Russia and Iran, will begin purchasing its supplies from Egypt as of 2008, according to a bilateral agreement secured this week.
The move is designed to protect its stock and prevent problems during periods of high demand.
Under the agreement, the two sides will set up a joint venture called Tergas that will transfer natural gas, construct pipelines and also market Egyptian gas to Europe.
Tergas is expected to construct a 240-kilometer pipeline from Syria to the Turkish border, with an extension of 93 km from the Turkish border to the Turkish national network, Turkish Energy Minister Hilmi Guler said in a joint statement with Egyptian Oil Minister Sameh Fahmey.
Guler said he expects to have three-party talks in Cairo in early March with Syria and Egypt to discuss selling gas to Europe.
The project is aimed at diversifying natural gas sources for Turkey and Europe, Guler said, echoing the statements of Turkish Petroleum Cooperation General Manager Sami Dinc said.
Fahmey said Syria and Romania could possibly join the Tergas venture later.
The pipeline's proposed 93 km Turkish part is supposed to transport a total of 6.5 billion cubic meters of natural gas, of which 1.5 billion will be transported to Lebanon, 2 billion to Syria and 3 billion to Jordan.
Azerbaijan to boost output by 30 percent
Azerbaijan plans to boost its crude oil output by 30 percent to 30 million tons for 2006, Industry and Energy Minister Natik Aliyev told a meeting of Black Sea Economic Cooperation Organization experts last week.
The increase in production is expected to come primarily from growth in development of the Azeri-Chirag-Gyuneshli contract area consisting of three offshore oil fields in the Caspian.
The government hopes to see production at the contract area go up to 21.2 million tons against 13.2 million tons produced last year.
Aliyev said the first tanker carrying Azerbaijani crude could leave the Turkish port of Ceyhan in May.
“By that time construction will be completed of the Baku-Tbilisi-Ceyhan pipeline with a throughput of 50 million ton a year,” Aliyev said.
The boost in production would also help Azerbaijan's electric power production, as the country hopes to link its electric power grids with those of Russia, Georgia and Turkey.
“This would make it possible for us to exchange electricity and to market it in third countries,” he said.
Ecuador declares state of emergency
Ecuador declared a state of emergency Tuesday after strikes emerged in two provinces, one of which is a gasoline-producing region, as protesters demanded enhanced funds from the central government.
Global oil prices are affected by violent incidents such as those Ecuador and Nigeria. The prices of oil on London and New York markets were above $60 Tuesday and West Texas Intermediate rose again Wednesday to $62.05.
Last August, demonstrations provoked a force majeure on petroleum exports.
State-owned PetroEcuador had to halt crude oil exports Tuesday and closed a key pipeline that pumps 380,000 barrels per day as a result of protests, local reports said.
Protesters damaged the oil pipeline in the Amazonian Napo province.
Local reports said if the chaos continues, Ecuador will need to mobilize a multinational force to control it.
Ecuadorian Defense Minister Oswaldo Jarrin condemned sabotage done to the oil industry by locals claiming resources promised by the Executive.
Protesters want the government to construct two highways and an airport — projects promised by former President Lucio Gutierrez before he was forced out of office in April 2005.
Oil revenue accounts for approximately 25 percent of Ecuador's GDP.
(Please send comments to AMihailescu@upi.com)
MARK WILLIAMSON February 24 2006
The head of Shell's UK business said the oil giant could commit to taking on an additional drilling rig in the North Sea this year although tax rates are set to rise sharply from April. James Smith, chairman of Shell UK, told The Herald the North Sea remained a “crucial” part of the company's business and it had not ruled out the possibility of acquiring another rig to work the area this year, or in 2007.
Speaking during a visit to Edinburgh, Smith said fears Shell would “slash” activity in response to chancellor Gordon Brown's decision to increase taxes were as yet misplaced.
Following the chancellor's announcement in December that the tax premium payable on North Sea profits would rise from 10% to 20% from April, Shell said it had cut the number of rigs to which it would commit from three to two.
However, that did not mean it would drill fewer wells in coming months, said Smith.
Committing to rigs involves making judgment calls based on a variety of factors. North Sea rates have been increasing in response to soaring oil and gas prices and a relative shortage of kit.
“We had a tender out for three rigs and decided to cut that to two,” said Smith. “That does not mean we decided to reduce our drilling programme, we were simply preserving our options. We would still be able to acquire a rig.”
Maintaining the North Sea was in “vigorous middle age”, Smith made it clear Shell had no intention of abandoning the province in favour of emerging areas like West Africa.
“There are substantial volumes of oil and gas still to be produced in the North Sea. We are committed and will be staying in for the long term.”
Smith said Shell had not changed its plans for the current year in response to the tax increases as most projects were in train before the change was announced. Like other oil and gas companies it would factor the changes into its planning for future years.
However, he said it would make the government aware of any impact the tax changes were expected to have on its UK activity.
“Our hope is he (Brown) will keep the tax system under review and if prices fall, will reduce rates accordingly.”
Smith was in Edinburgh to award prizes to companies that have developed technology to tackle climate change under the Shell-sponsored Springboard programme
LONDON (AFX) – Royal Dutch Shell PLC declined to comment on speculations it is plotting a bid for Vestas Wind Systems AS, the world's biggest manufacturer of wind turbines. “We don't comment on market rumours,” said a Shell spokeswoman. The Anglo-Dutch oil giant, through Shell Renewables, is rumoured to be planning to launch a 200 dkr per share takeover bid for Vestas.
Vestas is the supplier of the turbines needed for Shell's offshore windpark project in the Netherlands. Shell owns a 50 pct stake in the project, while Dutch power company Nuon holds the remaining 50 pct.
Shell has so far invested over 1 bln usd in the development of alternative sources of energy, including biofuels, wind, solar and hydrogen.
The group considers wind as the most promising source of renewable energy. It is currently carrying out various projects in Europe and the US aimed at boosting its share of wind energy capacity from 350 megawatts currently to 500 MW by 2007.
In the UK, it is building a 1.5 bln stg wind farm in partnership with German energy group E.ON AG.
The project, in which Shell owns a 33 pct interest, will involve the construction of up to 270 wind turbines that could generate 1,000 mw of electricity, enough to supply over 750,000 homes in Britain.
Shell is also exploring possible wind energy projects in China. firstname.lastname@example.org mbe/tc COPYRIGHT Copyright AFX News Limited 2005. All rights reserved. The copying, republication or redistribution of AFX News Content,inculding by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited.
Home UK Print article | Email article
Main page content:
Cairn Energy defies oil sector dip by virtue of renewed takeover talk
By Robert Orr andPeter Garnham
Published: February 24 2006 02:00 | Last updated: February 24 2006 02:00
Cairn Energy bucked a falling oil sector yesterday as renewed takeover speculation pushed the oil explorer close to its all-time high.
Cairn shares have undergone a meteoric rise since it discovered oil in Rajasthan, India two years ago. Worth 400p at the start of 2004, the shares touched £19.87 yesterday, giving Cairn a market value of more than £3bn.
The lure of Cairn's reserves means it has long been seen as a target for the likes of Royal Dutch Shell, although the rumour pushing the stock higher yesterday was that Oil & Natural Gas Corp of India, its partner in the Rajasthan field, was ready to pounce.
Finlay Thomson, analyst at house broker ABN Amro, thought that the rumour was wide of the mark, but reiterated his view that Cairn would be bought eventually.
“In an industry so chronically short of reserves, Cairn is a viable takeover target. It is very likely to be taken out at some point,” he said. Cairn shares ended 4.1 per cent higher at £19.57.
Also up on bid talk that has refused to go away was Cable & Wireless, the telecoms group. It rose 2.3 per cent to 110p on strong volumes of more than 100m shares.
Bovis Homes gained 1 per cent to 812p on speculation that it could be the next housebuilder to receive a takeover approach. Redrow, up 0.1 per cent to 550½p, has been mooted as a possible acquirer in a sector where consolidation is expected following Persimmon's deal for Westbury last year.
Body Shop surged 7.3 per cent to 265p as L'Oreal of France confirmed it was considering a move for the beauty products retailer. Eithne O'Leary, analyst at Oriel Securities, said: “Body Shop is a strong global brand and would benefit from the improved execution L'Oreal could bring.
“With investors looking favourably on acquisitions designed to drive growth, this may be a sensible time for L'Oreal to act.”
The wider market was dragged lower by weakness in oil stocks. The FTSE 100 fell 36.4 points, or 0.6 per cent, to 5,836.0 and theFTSE 250 slipped 5.8 points to 9,467.1.
The biggest blue-chip faller was Reuters, off 11.5 per cent at 399½p, even though the news group met expectations with its annual figures. Lorna Tilbian, analyst at Numis Securities, blamed the “absence of upgrades which we believe had been priced in by the market”. Before yesterday Reuters shares had risen 8 per cent in a month.
Shares in BAE Systems, the defence group, lost 5.9 per cent to 421p on concerns about the size of its pension deficit. BAE said it intended to make a sizeable contribution to its pension scheme this year, a move that took the shine off sharply higher annual profits.
Centrica, fell 3.5 per cent to 285¾p in spite of record full-year profits, as the owner of British Gas admitted its decision to pass on rising costs to customers would lead to defections.
Shire rose 3.1 per cent to 902p on hopes that the drugs group can reach a settlement with Barr Pharmaceuticals, the US group Shire is suing over a generic version of Shire's Adderall XR drug, used to treat hyperactivity. “Settlement with Barr remains the key catalyst for share price appreciation,” Morgan Stanley said.
Brambles Industries, the world's biggest supplierof pallets, added 3.2 percent to 419¾p after annual profits beat expectations.
Strong full-year results from Capita Group pushed its shares 3.3 per cent higher to 445p, their highest level for almost four years.
In the mid-caps, Matalan, the discount retailer, rose1.5 per cent to 183½p in spite of some negative sentiment ahead of next week's trading statement.
Nick Bubb, analyst at Evolution, predicted “yet more bad news about trading” and said he expected falling sales to have accelerated since Christmas. John Stevenson, his peer at Shore Capital, was equally gloomy, cutting his rating on the stock from “hold” to “sell”.
Both noted the continued bid speculation surrounding the company – Mr Bubb picking up on talk that John Hargreaves, who owns 53 per cent of Matalan, could be willing to sell at 235p rather than the 300p he was originally thought to be seeking. Private equity groups are rumoured to be interested.
Spirent, the telecoms equipment testing company, lost 5.7 per cent to 49¼p as it slumped to a full-year loss, while Colt Telecom fell 6.9 per cent to 60½p after the business telecoms group announced plans to raise £300m of equity to pay off debt