February 3rd, 2006:

FEB 2 2006
On the 29th June last we were imprisoned due to our opposition to Shell’s proposed pipeline in North Mayo. Since then, our position has been vindicated by the Accufacts and Corcoran Reports and even, despite its flawed and limited terms of reference, the Advantica Report.
In our ‘Open Letter’ from prison in August we proposed entering into talks with Shell to resolve the conflict once their injunction on us was lifted. On the day prior to the application by Shell to the High Court to vacate the injunction, Minister Dempsey proposed mediation between Shell and us. We accepted this proposal in good faith hoping that it indicated Shell’s acceptance that their project could only proceed with community consent.
On that day, September 29th, the Minister said:
''Following the debates [in the Dail] I contacted both sides in an effort to break the impasse and have indicated that the Government will appoint a mediator if both sides are willing to participate in a mediation process. I am now calling on both parties to create the conditions which will allow
such a process to commence immediately.''
The following week in the Dail the Minister announced:
''As the House is aware, both sides responded positively to my indication on Thursday last that the Government would appoint a mediator provided both sides were willing to respond positively. The response was positive, the injunction was lifted and the men released … I am now moving, in consultation with both sides, to identify a person or body who might be willing to undertake that work. It is my intention that by this weekend a list of possible mediators will be provided to both sides to establish their acceptability and to see if we can come up with an agreed name. As soon as that process is complete, the mediator will then commence the work.”
It is clear from these remarks that mediation was envisaged and understood by us and any reasonable observer to be between the Rossport Five and Shell.
On the 29th October, Minister Dempsey announced:
''The Minister for Communications, Marine & Natural Resources, Noel Dempsey T.D., has today appointed Peter Cassells as mediator in the Corrib Gas Project Dispute. It has been agreed that Mr. Cassells will have access to and support from the Mediators Institute Ireland''.
In our early informal discussions with Mr. Cassells he confirmed to us that mediation was to be a process between the Rossport Five and Shell.
It now transpires that Minister Dempsey misled us and possibly the Dail as to the true nature of what he understood mediation to mean. On January 25th, the Minister stated in a written reply to Jerry Cowley TD:
“I also nominated a mediator, Mr. Peter Cassells, to work with the community and the developer”.
In addition, the Minister said:
“The role of the mediator is wider than just the gas project and I understand he is looking at the availability of services generally throughout the region, including in particular, the role of gas supply in the area.”
Nothing in our understanding of mediation could have implied our acceptance of this definition of the process. The Minister was now unilaterally proposing that the mediation process include anyone who had any views to contribute. This clearly was against what had been agreed with us and rendered mediation impractical and amounting more to a process of investigating local views. As late as yesterday evening the Minister was on local radio in Mayo informing listeners that he had never meant the mediation to be between Shell and the imprisoned men.
Our agreement to enter into direct talks with Shell was a serious decision. Shell after all were responsible for our jailing and the breaking up of our families for three months. It is with great concern and anger that we discover that Minister Dempsey omitted to tell the Dail and us in October that he had in mind a much wider process that could not warrant the designation ‘mediation’.
Our concern is that the Minister’s real intentions all along have been to obtain a favourable safety report from Advantica, complete a bizarre form of mediation and then announce to the public the continuation of the Corrib gas project whatever the cost. Subjugation not mediation!
We call on the restoration of proper mediation where both sides work together, confidentially and without reporting to a third-party, to reach agreement. We call on Minister Dempsey to cease interfering with and re-defining the process agreed by Shell and ourselves. Finally, we call on Mr. Cassells to defend the integrity of the mediation process from this political inteference.
Vincent McGrath
Michael O Seighin
Willie Corduff
Philip McGrath
Brendan Philbin
For verification and comment contact Dr. Mark Garavan 087-9023687 read more

Part of a PLC Law Department series profiling general counsel in the world's leading companies.
Brief career to date: Held various positions in private practice, government and courts. From 1977, worked in various legal roles for Brown Boveri of Switzerland, including as head of the Brown Boveri legal department where he, together with his legal team, handled the merger between ASEA of Sweden and Brown Boveri. Since that merger in 1988, held the role of senior vice president, general counsel and secretary to the board of ABB until 2003 when assumed the role of group legal director for the Royal Dutch/Shell Group of Companies.
Location of company headquarters: The Hague, The Netherlands.
Primary industry sector: Oil and Gas.
Number of employees worldwide: Over 112,000 within the Shell Group.
Turnover of the company in the last financial year: Net income of US $18,536 million (approximately UK£10.498 million).
Subsidiaries: Approximately 1,947 active subsidiaries
How many lawyers are there in the company worldwide? Approximately 650 (excluding tax lawyers).
In which locations is the law department based? Principally in The Hague, London and Houston. Additionally, however, there are numerous in-house lawyers employed by various Shell companies around the world in over 50 countries.
How is the legal function structured? See previous answer. Additionally, the legal function is multi-structured along business function lines, headquarter function lines, and regional lines.
Who has overall responsibility within the company for the business ethics and corporate governance functions? A combination of me, Jyoti Munsiff (our chief ethics & compliance officer) and Michiel Brandjes (the Royal Dutch Shell plc corporate secretary). They both report to me, but also have direct access to the Chief Executive and Chairman.
Which areas of legal risk do you predominantly encounter in your sector? US litigation risk; regulatory compliance legal risks; health, safety & environmental legal risks; product liability risks and so on.
Which areas of law does the legal function provide advice on, and which does it tend to outsource and why? Our in-house lawyers provide advice in all areas of the law. External lawyers are used on an exceptional basis, either to handle litigation or where a particular expertise or resource is needed which cannot be accessed in-house.
Which two law firms (anywhere in the world) that you have instructed over the last few years have most impressed you and why? Kirkland & Ellis (David Bernick) and Debevoise Plimpton (Ralph Ferrara, Ann Ashton, Jon Tuttle, Kolby Smith).
What type of actions would be most likely to induce you to dismiss an external law firm? Poor quality of work and refusal to work within agreed standards or guidelines.
What do you consider to be the three most successful improvements you have introduced to your department over the last few years?
1) Globalisation of the legal function by establishing a “One Team” model where all lawyers providing in-house legal services to Shell companies feel and are part of a global functional legal team;
2) Functional reporting world-wide (i.e., all Shell lawyers functionally report, directly or indirectly, to me as legal director); and
3) Movement toward a single global legal functional budget.
What have been the three most challenging issues that your law department has faced over the last two years?
1) Litigation and regulatory investigations resulting from hydrocarbon reserves recategorisation issues;
2) Unification of our former parent companies into one parent company (Royal Dutch Shell plc); and
3) Functional globalisation and unification of the various Shell legal departments world-wide.
What are the three most challenging issues that your law department is likely to face over the next two to three years?
1) Apparent increasing trend of US courts and regulatory authorities extending their jurisdiction extraterritorially;
2) Continued management of “big ticket” legal risks, and
3) Successful legal management succession planning.
How would you describe your typical day? I generally get in around 07:30 or 08:00. I drive into the office. My first priority is to vet my email and voicemail for urgent messages. My closing time varies considerably depending on the issues of the day. On a “normal” day I get home around 19:30.
Which piece of technology could you not operate without ? The telephone, to talk to my wife and children.
If not a lawyer what would you be? A painter or a medical doctor.
What is the one piece of advice you would pass on to any prospective general counsel? Don’t say “Yes” if you would prefer to say “No”. read more

AS THE OIL GIANT DELIVERS RECORD RESULTS OF 313 bn WE ASK…
ARE SHELL'S PROFITS OBSCENE?

YES says Tony Woodley: TRANSPORT AND GENERAL WORKERS UNION
THOUSANDS of people are anxious about their pensions. Industry is worried about mounting energy costs.
A lot of older people are dreading the next fuel bill. That's why the T&G believes a windfall such as rising oil prices should deserve special tax treatment.
That is why it sticks in the throat when vast companies such as Shell rake in multi-billion-pound profits through no great risk-taking – and hand the bulk of it to lucky shareholders.
There are environmental concerns too. As Friends Of The Earth said yesterday: “Oil companies must be forced to face up to their wider responsibilities -on climate change, on the environment and on human rights.”
Shell's £13billion profit announced yesterday comes hard on the heels of record results at Exxon and anticipated records next week at BP
As a trade unionist from a manufacturing background I recognise the high levels of investment these companies make. I know the risks my members take in working offshore as well as delivering fuel to forecourts. But these profits are down to one thing – sky-rocketing world oil prices (up 44 per cent last year) – not enterprise or initiative by the companies.
We don't propose this new windfall tax just to punish the oil majors. There is a real social problem this unearned cash could help solve. Tens of thousands of loyal employees at companies such as United Engineering Forgings, ASW, Dexion and others have seen their pensions evaporate through bankruptcy or corporate cutbacks.
It is to help them that lobbying and legal actions by unions have forced Government action such as the Financial Assistance Scheme. The Pension Protection Fund has also been set up to help those including MG Rover workers who have seen their pensions put under pressure as companies collapse. But there is more to be done.
This is where the windfall tax comes in because those whose pensions were robbed have only limited access to the Financial Assistance Scheme.
Behind the headlines are people struggling to make ends meet. Those struggles, ironically, involve fears of rising fuel and energy prices. It is the elderly who, even after the Government's winter fuel payments, still live in fear of the bills. Track those bills back and the big oil companies are implicated. They also stand accused of raising prices to industry, which puts jobs and pensions under even greater pressure.
That is why when such companies as Shell and BP enjoy the benefits of rising prices, the Government should say they have a duty to the rest of the community to donate part of their windfall.
Critics say an extra tax is anti-business and anti-profit. Nonsense. Are Shell and BP saying they won't carry on investing and paying shareholders' dividends? Of course not. The truth is they have got lucky and should put a bit more in to help the rest of the country with the real difficulties we face.
• Tony Woodley is general secretary of the TGWU.
NO says Chris Skrebowski: EDITOR OF PETROLEUM REVIEW
WHY does [financial success by an oil company attract such consistently negative reactions? During the Second World War it was said of American GIs that they were “overpaid, over¬sexed and over here”.
The oil companies appear to be heirs to this sort of simplistic analysis. Part of the resentment of the GIs was the subconscious realisation that success in the war depended on them. Similarly, do we resent the oil companies because we depend on them so much?
Western society is wholly dependent on the oil industry's products for transportation, and for food in both its growing (pesticides, fertilisers) and its delivery and packaging.
All our petrochemicals, lubricants and solvents are oil derived.
As President Bush observed, our societies are “addicted to oil”. Even if we use the less pejorative term “dependent”, it is easy to see how we resent our dependence while remaining fearful that the supply might dry up.
It is hardly a revelation that there is increasing concern about the price and availability of future energy supplies. The traditional oil companies that you can buy shares in, such as Shell, now produce only about 16 per cent of the world's oil supplies – although, by buying from other producers, they supply more than 20 per cent of global demand.
Since the oil crisis of the Seventies, oil companies have had little or no ability to set prices. Initially, this passed to Opec but since the mid-Eighties the market has determined the price of oil.
The market simply reconciles the buyers and sellers – and what the steady rise in the oil price is telling us is that there is more demand than there is supply. The world is operating flat out, with a limited volume of technically unattractive crude in Saudi Arabia as the planet's only spare capacity.
Oil company profits are the basic source of investment capital and shareholder reward. So, at a time when we want oil companies to be investing to increase supply, and at a time when we are worrying about the solvency of our pension funds, shouldn't we be rejoicing that they are making large profits? (One pound in eight earned by our pensions funds comes from BP and Shell).
If we examine Shell's latest results, we find that the company is already struggling to maintain its oil and gas output but is committed to investing in alternatives and building at least some of these into major new businesses.
The power of oil companies means that they will always have more critics than friends. However, we would do well to wish them success in balancing out investment to increase oil and gas production, rewards to shareholders – to give many of us pensions – and the amounts to be invested in the new energies which are the future.
Oh, and if they could just make sure they don't trigger climate change as well, please.
• Petroleum Review is published by the Energy Institute. read more

'It is absolutely ridiculous with drivers hit on all sides by tax and profiteering'
OIL giant Shell provoked a backlash from motorists yesterday after making profits of £1.5million an hour last year – a record for a UK business.
The company – full name Royal Dutch Shell – generated £12.93billion during 2005, up 30 per cent on the previous year. That amounts to £400-a-second profit.
Shell bosses said the company had benefited from high world-wide oil and gas prices.
But last night the firm came under attack from consumer groups and environmentalists. “It is ridiculous, absolutely ridiculous,” said Andrew Spence, chairman of the Fuel Lobby which last year organised protests to galvanise the Government into bringing down tax on fuel. “Yet again the British motorist is being hammered by, if not excessive taxation, then excessive profiteering. We are getting hit on all sides.”
Shell chief executive Jeroen van der Veer, who earned £l.77million in salary and expected bonuses, rejected the criticism. He said: “It is not correct to think that all the profits are coming out of the UK. It is a world market and these are world market prices. This is the reality of the world.” He added: “Our good performance in the fourth quarter 2005 gives us a solid platform to build on in 2006. We delivered record cash and earnings. Success in exploration and gaining access to new resources continues.”
Shell said its profits came from more than 140 countries, with operations outside the UK making up significantly more than 90 per cent of the figures.
Mr van der Veer said Shell had invested significantly in the UK over the past 10 years and this had been very important for the UK economy.
But Roger King, of the Road Haulage Association, said: “How much of this profit is generated-by sweat and how much because of the record price of a barrel of oil? We suspect it is the latter. “Shell has benefited from high global prices.
Meanwhile, road hauliers' dependent on corresponding high price of diesel can barely make ends meet with increasing numbers going out of business. It seems all gain for some, and all pain for others. “We suggest that the Government takes a little more from the oil companies and uses this to reduce fuel tax for road transport operators, a tax that is still some 24p per litre more on average than that paid by our EU competitors.”
Other critics were more concerned about the home-heating costs faced by pensioners this winter. Derek Simpson, general secretary of union Amicus, said: “It's difficult to reconcile these colossal profits with the fact that some of the most vulnerable people in society can't heat their homes and industry is struggling to keep going.”
Karen Darby of price comparison and switching service SimplySwitch.com said: “It's not just motorists that get hit by high oil prices. “Every household will feel the pinch – from the increased cost of manufacturing everyday items such as supermarket plastic bags to oil-fired power stations which generate electricity.
Householders have, seen their energy bills rocket in the past year and have been told to expect further rises of up to 15 per cent in 2006. With providers blaming increases on the rise in the wholesale cost, this latest profit announcement will not be well received.” She urged lower-income customers to check to ensure they were getting the best deal.
Tony Woodley, general secretary of the Transport and General Workers Union, said he was concerned the rich were getting richer and the poor poorer. “Part of this windfall should be handed back to the public through a one-off tax to help ease the pensions crisis facing thousands of workers,” he said.
Friends of the Earth also called for a windfall tax on Shell, which it claimed was profiting from climate change, with the revenue invested in renewable technologies to heat and power public buildings. Spokesman Craig Bennett, said: “Shell is profiting from the current high oil prices, but we are all paying the price. Oil companies must be forced to face up to their wider responsibilities -on climate change, on the environment and on human rights.”
A Shell spokeswoman said: “Fuel prices in the UK before tax are among the cheapest in Europe. Fierce competition in the UK has driven down prices making fuel retailing a high-volume low-margin business.” read more

By BILL MARTIN
OIL giant Royal Dutch Shell is looking to return more than £8.5 billion to shareholders after reporting record year-end profits.
Chief executive Jeroen van der Veer said the company will return £5.5bn through an above-inflation rise in its dividend payout. And he pledged a further £3bn through a share buyback. The promise came as the company unveiled a 30% hike in underlying profits from £l0bn to £13bn for the year to December.
Profits were driven by high oil prices, which sent profits in the group's exploration and production division soaring by 45% to £7.9bn, despite a drop in production from 3.8m to 3.5m barrels of oil a day hit by the Gulf of Mexico hurricanes.
“We had good results last year,” said van der Veer. “We do realise oil and gas prices were high, but we had a good operational performance and made our production targets.” He insisted the company has not profited at the expense of British motorists, pointing out that the UK is one of the most competitive markets for selling petrol.
Shell made less than 10% of its total profits in the UK, which also include gas and oil production interests in the North Sea, and had paid UK taxes of £675m.
Despite the record profits, the City was not happy. Analysts said Shell had failed to repeat Exxon Mobil's achievement in beating forecasts when reporting £20bn year-end profits earlier this week. More serious concerns were also expressed by Shell's failure to replace all the reserves it pumped out of the ground last year.
The company said its so-called reserves replacement ration was between 60% to 70%. Exploration chief Malcolm Brinded said he had only “reasonable confidence” that the company will hit a target of 100% reserves, replacement ratio by 2008.
Shell shares fell 49p to 1956p. Analysts say Shell is also having to deal with rising labour and equipment costs – plus the fact that new oil discoveries are harder to extract because they are in sand, shale or beneath deep water.
Shell promised to invest more money in “green” energy options such as solar, hydrogen and wind power. read more

By PAUL MALLEY
OIL giant Shell made a staggering profit of £12.93 billion last year – an all-time UK record.
The megabucks sum works out at almost £1.5m every HOUR and is a massive 103 times bigger than tonight's £125m EuroMillions jackpot.
Shell's profits rocketed 30% on the previous year's haul, thanks to sky-high oil and gas prices around the world.
Consumer groups called the figure obscene, claiming motorists and householders are being hammered by “excessive profiteering”.
Shell's results come as motorists face petrol prices of about 90p a litre at the pumps – compared to 79.6p a year ago.
Edmund King, the RAC Foundation's executive director, said: “I think drivers will be surprised that oil companies are making record profits while they pay record prices.”
Andrew Spence, chairman of the Fuel Lobby, which last year organised protests over the high levels tax on fuel, blasted: “It is absolutely ridiculous. “Yet again the British motorist is being hammered by excessive taxation and excessive profiteering. “We are getting hit on all sides.”
Charity National Energy Action (NEA) says thousands of vulnerable people are being forced further into the poverty trap. William Gillis, chief executive of NEA, said: “Continuing domestic energy price rises will lead to a major increase in the number of households struggling to pay their bills, or paying the health and social costs of living in cold damp homes. “We urge Shell to consider gas consumers facing debt and cold homes.”
Ann Robinson, director of consumer policy at switching and comparison service uSwitch.com, said: “It's great news for shareholders but little comfort for the 1.8m households that are currently victim to fuel poverty in the UK. “We believe that organisations' like Shell should be doing more to protect UK consumers who are footing the bill.”
Tony Woodley, general secretary of the Transport and General Workers Union, said: “Part of this windfall should be handed back to the public through a one-off tax to help ease the pensions crisis.”
Friends of the Earth called for a windfall tax on Shell to tackle climate change. The campaign group's head of corporate accountability, Craig Bennett, said: “Oil companies must be forced to face up to their wider responsibilities – on climate change and the environment.”
Defending the profit – which could buy 645 Wayne Rooneys or build more than 17 Wembley Stadiums – Shell said it will use some of the windfall to return billions of pounds to investors in share buybacks; It's the Business: Page 51
[email protected] read more

Friday, February 03, 2006 5:28:18 AM ET
0911 GMT [Dow Jones] Morgan Stanley cuts Royal Dutch Shell (RDSB.LN) to equalweight from overweight, price target to 2,100p from 2,150p on “disappointing” cash return. “With the results for 4Q '05 (Thursday), Shell announced its intention to buy back up to $5 billion of shares in 2006”, a surprise “on the downside.” Says “either the company is planning major acquisitions, or there are real risks of further capex increases.” read more

The seismic shock of President George W Bush's mid-week bombshell that America had to break its addiction to oil continues to send ripples across the Atlantic.
Speaking on BBC Radio 4's In Business last night, former US vice president Al Gore said too many big US corporations are living in a “bubble of unreality” by failing to look beyond the carbon economy.
Mr Gore quoted a senior Bush-supporting CEO at one of America's biggest companies saying: “Let's face it, 15 minutes after President Bush leaves office the United States will have a new policy on climate change and carbon emissions.”
The former Veep might earn a living from saying this sort of thing nowadays (he runs a consultancy that advises companies on investing in a sustainable future) but his warning carries weight.
He continued: “Many business leaders are now looking at their whole cards, as we say in America, and realising America is in a kind of bubble of unreality. As soon as the current administration leaves, and perhaps before it leaves, there will be a change and those companies that get out in front of this curve are going to be a better positioned.”
Shell is one European oil company which might reasonably be described as ahead of the curve on alternative energy. Yesterday it (fruitlessly) tried to divert attention away from more claims of profiteering by accompanying its announcement of record annual profits with a press release trumpeting its green credentials. “New developments in biofuels, wind, solar and hydrogen,” it boasted, “Shell has now invested over $1billion in alternative energies, making it one of the world's leading companies in the sector.”
Shell's investment in alternative energy amounts to little more than a week's worth of profits and represents a fraction of the $19billion that Shell will spend on capital expenditure this year. Even Shell's chief executive, Jeroen van der Veer would probably admit that oil seed or straw are never going to replace oil and gas as the world's number one energy source.
However, betting on different energies is spreading the chips at the roulette wheel. Sooner or later, Shell will produce a winner which it can add to the “energy mix” it offers to customers.
The current enthusiasm for these alternative energies (two months ago BP unveiled plans to invest $8billion in non-carbon energies over the next 10 years) makes sense with oil prices at $60 a barrel.
But what will happen when the oil price comes down? After all, the barrel price is just a product of supply and demand. History tells us that today's shortage is almost always tomorrow's glut. read more

By Christopher Hope, Industry Editor (Filed: 03/02/2006)
Royal Dutch Shell yesterday shrugged off suggestions from US president George W Bush that America should lose its addiction to oil, adding that the world was nowhere near to running out of black gold.
The news came as Shell, the world's third biggest oil and gas company, unveiled record profits for a British-listed company of $22.9billion (£12.9billion), up 30pc, on surging oil prices and strong refining margins. This is likely to beat the $21.7billion forecast for BP next week.
Jeroen van der Veer, Shell's chief, said: “President Bush has to run America and we have to run Shell, but there is a huge energy challenge in the world. We have plenty of opportunities. This is not about proved resources, but hydrocarbon resources.”
Shell was feeling “very good” about the prospect of finding plenty of oil and gas, by developing hitherto untouched parts of the globe.
World oil and gas production was nowhere near peaking because of the potential of untapped reserves made economic by the higher oil price.
He said: “There is the theory of 'peak oil' – that the big discoveries have all gone. But we don't know where the peak will come with oil sands. With oil shale, we have not yet started. There will be many peaks in many time frames.”
Shell's production last year fell from 3.7m barrels a day (bpd) to 3.5m after hurricanes in the Gulf of Mexico knocked out some platforms. Production would not be more than 3.65m bpd in 2006, it added, although Shell is targeting up to 5m bpd by 2015.
A lingering concern was local unrest affecting the company's interests in Nigeria, which meant that Shell has lost 1m barrels of oil production over the past 10 days. Shell was working to bring full production back on stream, it said. It admitted it only replaced six or seven of every 10 barrels the company extracted last year, up from five out of every 10 in 2004.
It stuck to a target of averaging a “reserve replacement ratio” of more than 100pc, a figure it last surpassed in the 1990s, between 2004 and 2008, however.
Shell is increasing capital expenditure to try to find more oil and gas, spending $19billion on looking for more hydrocarbons this year, compared with $15.6billion in 2005.
Last year seven out of 12 “big cat” prospects – containing more than 100m barrels of oil and gas – were drilled successfully. This year, Shell will drill between 15 and 20 similar wells.
Shell brushed off renewed claims it was profiteering, though pre-tax profits were up 41pc to $44.5billion, less than the world record $59.4billion posted by Exxon Mobil last week. Despite record petrol prices in the UK, Shell said it derived only a small part of these profits at UK petrol pumps. Its UK tax bill doubled to $1.2billion. Shell's shares closed down 49 at £19.56.
In London last night, the Brent oil price closed down $2.15 at $62.88.
Listen to Christopher Hope talk to Jeroen van der Veer at podcast.telegraph.co.uk read more

From Bloomberg News
Royal Dutch Shell, the world's third-biggest oil company, said Thursday that profit in the fourth quarter fell 4% as hurricane damage left it unable to take advantage of near-record crude oil prices.
Net income declined to $4.4 billion, or 66 cents a share, from $4.6 billion, or 68 cents, in the year-earlier period, The Hague-based company said in a statement. Shell said it would buy back about $5 billion of its shares this year, half the level expected by some analysts.
Shell, whose output growth has lagged behind competitors', is the first major oil company to report a drop in earnings as oil trades near records. Exxon Mobil posted the biggest quarterly and annual profit in U.S. corporate history.
Shell Chief Executive Jeroen van der Veer plans to spend $19 billion this year compared with more than $15 billion in 2005 to boost reserves.
“Production growth is not going to be anything spectacular over the next couple of years,” said Albert Thomson, who helps manage $6.5 billion, including Shell shares, at Aberdeen Asset Management in London. “For world-class output growth, investors need to focus on 2008 and afterward.”
Profit, excluding changes in inventory values, gained 3% to $5.4 billion, in line with the median forecast from nine analysts surveyed by Bloomberg News.
Full-year profit was $25.3 billion, a record for Shell. Revenue in the fourth quarter, excluding sales taxes and excise duties, slipped 1% to $75.5 billion.
Oil prices peaked at $70.85 a barrel in New York intraday trading Aug. 30, a day after Hurricane Katrina struck the U.S. Rita swept through almost four weeks later, and production has yet to return to normal.
Production in the fourth quarter fell 8.9% to 3.5 million barrels of oil equivalent a day, compared with 3.8 million a year earlier, Shell said. read more

By CHIP CUMMINS
Staff Reporter of THE WALL STREET JOURNAL
February 3, 2006; Page A3
LONDON — Royal Dutch Shell PLC reported a 4.4% drop in fourth-quarter net income to $4.37 billion, as big year-earlier gains and softer refining-profit margins offset the high oil and natural-gas prices that have boosted profits throughout the industry.
The energy company, the world's largest by market value behind Exxon Mobil Corp. and BP PLC, benefited from last year's run-up in oil, gas and fuels prices spurred in part by hurricanes in the Gulf of Mexico. Profit at Shell's core exploration-and-production unit rose 22%, even as the storms contributed to a 9% drop in oil and gas production. For the year, Shell earned $25.31 billion, a record for the company and 37% higher than in 2004.
In addition to the year-earlier gains, Shell was held back by its oil-products division, which includes its refining and marketing operations. Shell saw a weakening in its refining margins, or the difference between the price of crude oil and the price of selling fuels such as gasoline, especially in the West Coast, Europe and Asia.
Shell indicated that it continues to face trouble replacing all the oil and gas reserves it depleted last year.
The results disappointed some analysts. Shell shares fell 2.4% to 18.66 ($33.10) in London yesterday, off 45 pence.
Shell said fourth-quarter net income amounted to 66 cents a share, compared with net income of $4.57 billion, or 68 cents a share, a year earlier. Revenue fell 1% to $75.5 billion. Its numbers conform to international financial reporting standards, which differ from U.S. generally accepted accounting principles.
The results reflected a net gain for nonoperational items of $34 million, compared with a $499 million net gain in the year-earlier quarter, which included proceeds from divestments and the reversal of a large impairment.
The results come as governments around the world ratchet up pressure on oil companies, who are throwing off a gusher of profit from today's high energy prices. Some U.S. lawmakers have threatened to impose new “windfall” taxes on oil companies. Meanwhile, countries from Britain to Bolivia have boosted the share of the revenue they take from oil and gas produced on state-controlled acreage by the international oil giants.
Despite the government moves and despite sharply escalating costs for everything from drilling rigs to engineers, high oil prices have more than made up the difference for Shell and its largest rivals.
Shell reported total oil and gas production of 3.5 million barrels of oil equivalent a day.
Its refining margins — the difference between the price of crude oil and the price of selling fuels such as gasoline and heating oil — softened during the fourth-quarter compared with the year-earlier period amid higher crude prices.
The company said it estimates its closely watched reserve-replacement ratio — the rate at which a company finds new reserves of oil and gas to replace the energy it pumps out of the ground each year — was between 60% and 70% for 2005. Companies typically try to achieve 100% reserve replacement to satisfy investors concerned about future production growth.
Write to Chip Cummins at [email protected] read more

By Carl Mortished, International Business Editor
RECORD profits at Royal Dutch Shell last year yielded an extraordinary harvest for the Inland Revenue which collected $1.2 billion (£674 million) from the oil giant, double the amount Shell paid in UK taxes in 2004.
Soaring oil and gas prices pushed Shell’s current cost profit up 30 per cent to $22.9 billion but investors were disappointed by a 3 per cent gain in profit to $5.4 billion in the final quarter.
Lingering doubts over Shell’s ability to replace the oil and gas it produces with new reserves and disappointment that the oil company did not match ExxonMobil’s strong fourth quarter gain pushed Royal Dutch Shell “B” stock down 2.4 per cent to £19.56 per share.
Jeroen Van der Veer, chief executive, said that the company had a good year, meeting its investment and production targets. The oil giant spent $15 billion on new projects and plans to raise that to $19 billion this year. But output slipped in the fourth quarter from more than 3.8 million barrels per day (bpd)in 2004 to 3.5 million bpd, partly due to loss of production caused by damage to offshore platforms during last year’s violent hurricanes in the Gulf of Mexico.
Mr Van der Veer said that Shell was continuing to target an increase in output to between 4.5 million and 5 million bpd over the next decade. The group found some two billion new barrels of hydrocarbons last year but is only booking between 750 million and 850 million to its formal statement of reserves.
Soaring oil prices boosted Shell’s cash flow from $28 billion to $35 billion but it disappointed some investors by failing to boost its share buyback programme. Shell bought in for cancellation some $5 billion in stock in 2005 and paid out $10.7 billion in dividends. read more

By Carl Mortished, International Business Editor
ROYAL DUTCH SHELL yesterday announced the largest profit ever recorded by a company on the London Stock Exchange. And the annual combined profits of Shell, ExxonMobil and that anticipated from BP next week, well exceed the annual income of a small nation such as Bulgaria, Sri Lanka or Tunisia.
So much money but not much cheer for the energy titans because they are struggling to achieve their core purpose: to meet the world’s ever-increasing demand for fuel. ExxonMobil suffered a decline in production after years of flat performance, Shell suffered its third year of falling oil and gas volumes, and analysts expect BP and Total to show small declines in output for 2005.
The image of a champagne reception on the bridge while the mechanics struggle in the engine-room to get the propellers turning is embarrassing to the oil industry.
Jeroen van der Veer, Shell’s chairman, was at pains to explain to motorists that Shell’s $22.9 billion (£12.9 billion) profit had little to do with UK petrol retailing, still an impoverished offshoot of the multinational empire. The company pays $18 billion in taxes worldwide, of which $1.2 billion are pocketed by Inland Revenue — a figure that may rise this year with the Chancellor’s increase in oil and gas taxation.
Investment levels have soared: the company spent $15 billion last year and will spend $19 billion this year. Shell drilled 15 major prospects in 2005, known as “big cats”, with the potential of delivering at least 100 million barrels of oil or gas. Of the twelve that have been assessed, seven were successful in Australia, Malaysia, Norway and Nigeria.
It is a good performance in an industry where wildcat exploration has a one in twelve success rate and exploration in known hydrocarbon regions generally yields one in three.
Still, the output challenge remains. This year’s production figures from the majors will be peppered with qualifications — hurricanes, riots and the depressing effect of high oil prices on output governed by production sharing contracts.
These should not be seen as excuses in an industry for which war and revolution are as frequent problems as bad weather. Last week Repsol YPF, the Spanish oil major, had to remove a quarter of its oil reserves, in large part because Bolivia’s new tax laws make further investment uneconomic.
With global oil demand rising at between 2 and 3 per cent per year and Opec running at near full capacity, it is not reassuring that the world’s top three private sector producers are shrinking.
SHELLING OUT
What can you do with $23bn (£13bn)?
Give every Tesco customer in the UK a 50 per cent refund on everything they bought last year
Rival Lebanon for size, the world’s 103rd largest economy, according to the latest IMF figures
Buy every Shell employee an Aston Martin Vantage sports car, with change to spare
Clear 80 per cent of student debts built up with the Student Loans Company
Pay off all secured and unsecured loans taken out by consumers in December 2005 read more

Shell: not enough profit, too little investment; Eurotunnel: more misleading claims
Published: 03 February 2006
Just a giant ramp, or is Gazprom serious about bidding for Centrica? Whatever the answer, Centrica's chief executive, Sir Roy Gardner, will be pressing the Takeover Panel for an urgent clarification after remarks yesterday from a senior Gazprom official to the effect that a bid is indeed being considered. If he hasn't already done so, Sir Roy will also be beating a trail to No 10 Downing Street to establish whether it is remotely acceptable for the state-controlled Russian gas monopoly to acquire such a key part of the British gas supply market.
From Norsk Hydro to Shell, Gaz de France and BG Group, every man and his dog is rumoured to be interested in bidding for Centrica, yet Gazprom has long been the most outspoken in expressing an interest. The world's largest gas producer is on record as saying it would like to have at least 20 per cent of the British gas market by 2015, with acquisitions the most obvious way of achieving this goal. Indeed, it is a little puzzling that yesterday's remarks from Alexander Shkuta, Gazprom's deputy general director, should have had such an electrifying effect on the share price, since the company has admitted its interest before.
Even so, I guess there's something of a difference between possibly being interested in bidding, and yesterday's admission that it is actively considering, analysing and reviewing such a move. Mr Shkuta insisted last night that something had been lost in translation, and that in fact his remarks were directed at the UK market as a whole, not Centrica in particular, yet it is hard to see who else he could mean.
Assuming Gazprom is serious, is there any reason for obstructing its advances? As things stand, Russia supplies only about 2 per cent of the UK market's gas needs, but this is expected to rise strongly over the years ahead as North Sea sources of supply decline. To make Britain so beholden to such a potentially hostile and politically unstable source of energy supply is in itself worrying enough, and is one of the main reasons for the Government's belated energy review.
Yet to allow what is in effect an arm of the Russian government to acquire a company which still accounts for 60 per cent of Britain's gas supply market might seem almost wantonly neglectful. As things stand, Centrica derives its gas from a variety of different sources and contracts. In order to protect itself from high levels of volatility in the gas price, it has also been acquiring its own sources of supply, both in the North Sea and the west coast of Africa. The underlying strategy is to seek security of supply in diversity.
With Gazprom as owner, Centrica would presumably quite quickly become only a conduit for Russian supply. In the short term, this might have some positive impact on the price. Gazprom lays claim to about 60 per cent of Russia's gas reserves and is responsible for about a fifth of the world's supply of gas. Despite its inefficencies it is also one of the cheapest sources of gas around.
Yet to see how potentially dangerous it might be for Britain so wholeheartedly to embrace the Russian bear, just look what happened to Ukraine, where for largely political reasons the Russian government overnight trippled the price. In a diplomatic crisis, what is there to stop Gazprom turning off the taps entirely? Britain has prospered by keeping its borders open to inward investment, but there are genuine issues of national security involved here.
Back in the 1980s, the Kuwait Investment Office was ordered to slash its stake in BP on the grounds that this was a sovereign state attempting to take control of a strategically important company. The same standard should be applied with Centrica. It took huge amounts of political capital to free Centrica, once part of British Gas, from the dead but at least largely benign hand of the British state. To stand idly by and watch it renationalised by the Russians really would be a pretty pass.
Shell: not enough profit, too little investment
First Exxon, now Shell, next week BP. We are in the midst of another round of record profits from the oil majors, which for those who still think of profit as a dirty word, means it's oil bashing time again. The UK government has already had two bites at the “windfall” profits of the oil majors, the last one in the pre-Budget report two months ago, but the TUC wants one-third, with the money to go to the pensions compensation scheme or some such other worthy cause.
It's a natural enough response, since a rising oil price feels to most of us like a tax, eating away at our disposable income. Why should the fruits of this tax go to the City? I don't want to act as an apologist for Big Oil, but scratch the surface of the $25bn of annual profits announced yesterday by Shell, and you can begin to see the answer.
The profits were at a record, but oil production was sharply lower and the reserve replacement ratio – the rate at which the company matches the oil it sells with new finds – is down to a miserable 60-70 per cent. The days of easy oil – accessible reserves capable of being developed at marginal cost – are over.
To satisfy the world's demand for fossil fuels, the oil majors must drill in ever more inaccessible and inhospitable places. The oil isn't yet running out, but it is becoming ever more expensive to extract. The political complications of the Middle East make the remaining sources of cheap supply look uncertain too.
Jeroen van der Veer, Shell's chief executive, reacts with almost visible anger to any suggestion that he and others in the industry are deliberately underinvesting so as to keep the oil price high. Not so many years ago, when the world was flush with spare capacity, Shell's annual capital spending would rarely top $10bn. For this year, it will be almost double that number.
Throughout the industry, oil companies are ramping up investment in exploration and development. The only constraints are the lack of available assets and the capacity of the oil majors and the industries that service them to cope. The service sector has had 15 years of famine and so far just two years of feast. It's going to take time to manage the necessary adjustment.
In his State of the Union address, President George Bush committed himself to reducing American dependence on oil. Good luck to him. The only surprise is that it has taken him so long to realise that from both a geopolitical and environmental perspective this is a desirable public policy aim.
Yet in the meantime the world's demand for the stuff just keeps growing, and with it the costs of extraction. It's small wonder that after the reserving fiasco of a few years back, Shell is being so mean with the share buy-backs. Shell needs all those profits and some if it is to keep the oil gushing.
Eurotunnel: more misleading claims
You say tomato, I say tomato… If you ever wondered why the Eurotunnel share price doesn't seem to connect with anything happening in the real world, then compare the statement the company issued yesterday with the one sent out by its creditor banks.
If Eurotunnel is to be believed then it has concluded a “memorandum of agreement” with the key creditor committee on the restructuring of its £6.3bn in debt. According to the creditor committee, on the other hand, the two sides “have agreed a memorandum of understanding that sets out a road map for a restructuring of Eurotunnel's capital structure”.
There are two important differences between the two statements. First, an “understanding” does not amount to an “agreement” and second, “capital” refers to both debt and equity. In fact, Eurotunnel and the banks are nowhere near an agreement, let alone one which would allow the company to write-off two-thirds of its debt without giving the banks anything back in return. And yet, the Eurotunnel share price rose 10 per cent in Paris and 15 per cent in London, making a company which is essentially bust worth more than £800m. Hey ho.
j.warner@ independent.co.uk read more

By Michael Harrison
Published: 03 February 2006
The oil giant Royal Dutch Shell defended itself yesterday against charges of profiteering at the expense of motorists and householders after announcing the biggest profit in UK corporate history.
The Anglo-Dutch company increased profits last year by 30 per cent to $23bn (£13bn) on the back of surging oil prices, enabling it to pay out $17bn to shareholders. But Shell said it made little money selling petrol in the UK, describing it as “one of the toughest and most competitive markets in Europe”.
Shell said the bulk of the $7.5bn profit made last year from its oil products division had come from refining and retailing operations in other parts of the world. It added that “significantly more” than 90 per cent of total profits had come from outside the UK and yet its UK tax bill had doubled last year to $1.2bn.
The bumper results led to renewed calls for a windfall tax on oil company profits and demands that Shell use its vast profits to cut fuel costs for the poor and protect the pensions of employees in companies which went bust. Friends of the Earth said Shell should pay a windfall tax because it was profiting from climate change and the environment was paying the price.
But Jeroen van der Veer, Shell's chief executive, rejected the idea of a special tax. He also denied claims that it had profiteered by overcharging UK motorists or domestic gas consumers. “That is incorrect. It is a very competitive market with small margins,” he said.
The company said its huge profits had to be seen in the context of an investment programme which was almost as large, with capital spending due to rise by $4bn next year to $19bn. Last year, Shell took on nearly 1,500 extra engineers to help meet its expanded exploration programme.
Shell's performance follows the world record $36bn profit announced on Monday by Exxon of the US and will be mirrored by BP when it reports its 2005 results next week. Mr Van der Veer indicated that returns to shareholders would be even higher this year, with $5bn of share buy-backs and an increase in its $10bn dividend payments last year in line with inflation.
Shell, which was hit by a corporate scandal in 2004 over the misreporting of reserves, said it booked between 750 million and 850 million barrels of new reserves last year, enabling it to replace between 60 and 70 per cent of production, using the stricter definition demanded by the US Securities and Exchange Commission. The company aims to achieve a reserves replacement ratio of 100 per cent over the 2004-08 period. read more

Friday February 3, 2006
Shareholders may relish the prospect of a bidding war for Centrica – but any interest shown by Gazprom, which prompted yesterday's share price roller-coaster, would be far less welcome elsewhere.
For Gazprom a bid makes sense, anchoring its effort to enter the UK wholesale gas market to the biggest domestic supplier. But British authorities would, rightly, take a very dim view indeed.
Last night the DTI promised “robust scrutiny” if a bid emerges. Since Gazprom shut off supplies to Ukraine, the government would hardly relish the Russian company having its hands on the gas tap to half of UK homes.
Maybe the competition authorities would block the deal on the basis that a combined Centrica/Gazprom would be too dominant. The government would certainly be loth (if, indeed, it has the power on national security grounds) to take an overtly political decision – not least because of potential repercussions for BP and Shell's Russian interests.
But they are big players and know the risks of global investment. No such considerations should cloud the issue of a Gazprom move on Centrica.
Shock and ore
The chart above, courtesy of Mike Lenhoff at brokers Brewin Dolphin, shows an extraordinary thing: the mining sector now comprises a bigger slice of the FT All-Share than telecoms. Sure, foreign miners like Vedanta, Antofagasta and Kazakhmys have flooded into London, but it's still a stunning reversal. At the height of the dotcom boom the score was 24%-2% to telecoms.
The travails of Vodafone, BT and smaller fry such as Colt and Thus is another part of the story. So is the boom in metals markets, demonstrated yesterday by Rio Tinto's doubled profits and return of $4bn cash. Digging up copper is clearly an easier line of business right now than putting it back the ground in the form of telephone cables.
But nothing is forever, and the rise of the miners underlines how the UK economy is no longer reflected in the UK stock market. Rio, Anglo American and BHP Billiton are three of our top-15 companies but have only a handful of small British quarries between them.
UK pension funds, seeking to match UK liabilities, should be concerned because the All-Share is their prime focus for equity investment. While Rio and others are throwing off cash, there will be few complaints. But a sudden stall in Chinese demand for copper and iron ore could spell serious news for those funds in deficit.
You can call it globalisation; it's also a new layer of risk.
Follow Greenspan
The cat-and-mouse game between the European Central Bank and the financial markets is over: ECB boss Jean-Claude Trichet has in effect confirmed the bank will raise interest rates by a further 0.25% next month and again later this year. The markets, which expect four increases (including last December's), after a 30-month standstill, were playfully told by Mr Trichet: “You're right.”
Unlike Fed chairman Alan Greenspan who retired on Tuesday with a final jump to 4.5% in the US, Mr Trichet made plain yesterday that he does not plan a series of monthly jumps. But eurozone rates can now be expected to be 3% a year from now – barring the unforeseen.
Trichet, emphasising that he alone speaks for the bank, signalled a March rise by repeatedly pointing to the need for “vigilance” about inflationary expectations and arguing that the risks to price stability, largely driven by energy costs, are “progressively augmenting”. The die seems cast for the ECB to play catch-up with the Fed. read more

KARL WEST, City Editor February 03 2006
Shell saw more than £3bn wiped off its stock market value yesterday over concerns about reserves replacement, despite it setting a new annual profits record of $22.94bn (£12.8bn) for a UK-listed company.
The oil major also revealed the amount it pays into chancellor Gordon Brown's Treasury coffers – through UK taxes – almost doubled last year to $1.2bn (£674m), up from $646m in 2004.
Brown is squeezing the North Sea oil industry to cough up another increase in taxes this year. The chancellor announced in his pre-budget statement in December that he was increasing the supplementary corporation tax on North Sea activities from 10% to 20%, to bring in around £6.5bn more revenue over three years.
The hike has caused consternation in the UK oil and gas industry. Shell immediately decided to cut its contract for exploration rigs in UK waters from three to two.
Jeroen van der Veer, chief executive of Shell, said: “We were in doubt whether to order two or three (new rigs). We decided to wait to order the third to see the market reaction to the (tax rise) announcement.
“It was a more commercial stance rather than a tit-for-tat.”
Lord Browne of Madingley, chief executive of BP, last month warned the government that investments in the North Sea could be abandoned if the controversial windfall tax does not drop when the oil price falls.
Van der Veer yesterday appeared to agree with Browne's sentiments, saying: “Even at the present (oil) price level it's quite attractive to go for smaller fields (in the North Sea). In the long term, we have to take into account price levels, including taxes, whether to go for them.”
Shell last night said plans may be drawn up for the eventual decommissioning of the Brent Field, once the biggest in the North Sea, which gave its name to the most famous trade crude oil in the world. But a spokeswoman emphasised Brent's remaining assets were “significant”.
The oil and gas giant notched up annual profits of £12.8bn for 2005, up 13% on the back of record high $70 per barrel oil prices and fat refining margins.
However, this profit record is likely to be trumped by rival BP when it reports year-end figures next week.
Fourth-quarter profits at Shell rose 3% to $5.39bn, in line with forecasts of about $5.38bn.
The exploration and production business was the main profits engine, with earnings leaping 22% in the fourth quarter compared with a year earlier.
It achieved this even though production fell to 3.5 million barrels of oil equivalent per day from 3.84 million in the corresponding quarter in 2004. Hurricanes hit production in the Gulf of Mexico in the past two quarters.
Van der Veer said: “These were good results. We realise we had a good tailwind with oil and gas prices last year.”
However, some analysts had hoped for better after larger rival ExxonMobil reported stronger- than-expected fourth-quarter results and a record $36bn annual profit earlier this week.
There was also some disappointment over Shell's weak performance upstream where it only managed to replace 60% to 70% of the oil it pumped with new additions to reserves.
This is well below the 100% rate needed to stop an oil firm's asset base from shrinking.
Peter Hitchens, oil analyst at Teather & Greenwood, said: “Shell has had another poor performance with the drill bit.”
And the analyst didn't fancy the group's chances of turning this situation round any time soon, adding: “(The target) would require the group becoming one of the best explorers among the integrated oil companies, rather than one of the worst.”
As a result, shares in the group fell 45p to close at 1866p, valuing the group at £127bn.
Unions and consumer groups criticised the group for profiteering from high petrol pump prices in the UK.
However, the company indicated it had not made much, if any, profit from UK garage forecourts, saying: “The UK market is, without any doubt, one of the toughest in Europe.
“Our profits come from 140 countries … it is not correct to think all the profits are coming out of the UK.”
Shell said that less than 10%, or less than £1.2bn, of total group profits come from the UK.
In addition, the group said it would buy back e5bn (£3.4bn) of its own shares in 2006, less than many investors had hoped for, prompting some to speculate that Shell could be planning acquisitions.
Van der Veer said he did not think that acquisitions above $10bn (£5.6bn) were likely to create value for shareholders, but suggested that smaller ones could. He added: “$10bn – that would still be considered in the oil industry as something small.”
The group declined to comment on whether it was eyeing anything in particular. read more

By M K Anwar
Local fishermen were puzzled by the appearance of an oil slick at about noon off the coast of Tutong beach on Monday. The Marine Department in a press statement confirmed the oil slick, which was 10 kilometres long and one kilometre wide.
The oil slick, classified as 'emulsified oil', was seen floating about six miles off the Tutong beach.
As per procedure, both Marine Response Coordination Centre (MRCC) of the Marine Department and Emergency Coordination Centre (ECC) of Brunei Shell Petroleum were activated.
A support team was also put on standby to carry out important beach cleaning procedures should the slick move ashore. Meanwhile, continuing surface and aerial surveillance were carried out immediately by vessels and air units from the Royal Brunei Armed Forces, Royal Brunei Police Force and Brunei Shell Petroleum to determine further the movement or drift of the oil slick.
Brunei Shell Petroleum also continued its air surveillance and monitoring on Monday and Tuesday.
The source of the oil slick is still unknown.
The Marine Department also stated that the slick had moved offshore since the day it was spotted. Due to rapid weathering process read more

CEO denies profiteering at expense of consumers Unions, activists and buyers call for windfall tax
Terry Macalister
Friday February 3, 2006
Shell yesterday announced the biggest ever profits by a British company – £1.5m an hour – on the back of soaring oil prices and came under immediate attack from consumers, trade unions and green groups.
Chief executive Jeroen van der Veer insisted the company was not profiteering on the back of the UK motorist or gas consumer, saying 90% of its profits came from abroad. “Our profits come out of 140 countries where we are. It's not true to say that all $23bn [£13bn] came out of the UK,” he said, claiming later that the UK figure was below $2.3bn.
The company also said $1.2bn had been paid to the British Treasury in tax, almost double the amount for 2004. And that was before a recent tax rise by the chancellor which had not yet kicked in, it said.
Shell plans to hand back £3bn of the £13bn profits to investors through share buybacks over the next 12 months.
The earnings were up 30% on 2004 but shares fell 2.5% to 1956p as some figures disappointed the City. There was particular concern that Shell had only replaced up to 70% of its reserves year-on-year, while oil and gas production fell from 3.7m barrels a day to 3.5bn.
The oil group tried to head off wider criticism by saying the profits resulted from long-term investments, for instance in the North Sea. But this did not impress the trade unions.
“It is high time the government acted decisively and brought in a proper windfall tax,” said Tony Woodley, general secretary of the T&GWU. “At a stroke a windfall tax could strengthen the Financial Assistance Scheme and put some backbone into the Pension Protection Fund.”

Fellow union Amicus described the figures as “obscene” and said it undermined the “huff and puff” of the oil industry over the November tax hike by Gordon Brown.
Meanwhile fuel poverty activists argued that Shell's profits came at the expense of one million more households falling into fuel poverty.
“Continuing domestic energy price rises will lead to a major increase in the number of households struggling to pay their bills, or paying the health and social costs of living in cold, damp homes,” said William Gillis, chief executive of National Energy Action. “NEA urges Shell to consider gas consumers who are facing debt and cold homes this winter and to dedicate more of their profits to poor communities and practical energy saving programmes.”
Shell is a major supplier of gas to the wholesale market but Mr van der Veer was unable to say exactly how much his company had earned from this business.
The Road Haulage Association also joined in the attack on Shell, urging the government to “take a little more” from the oil companies and use the cash to reduce fuel tax for road transport operators.
“Shell has benefited from high global prices; meanwhile road hauliers dependent on the corresponding high price of diesel can barely make ends meet,” said chief executive Roger King.
And Friends of the Earth also called for higher taxes, saying everyone else was paying the price for Shell's profits.
“Oil companies must be forced to face up to their wider responsibilities on climate change, on the environment and on human rights. Shell claims the costs are too great to protect the western Pacific whale – and yet again announced record profits,” said FoE's head of corporate accountability, Craig Bennett.
The Shell boss described the financial performance of the group as good and said it gave the company a “solid platform” to build on during 2006. He said oil and gas production was in line with expectations, given the impact of hurricanes in the US Gulf. After a very turbulent 2004 on the back of reserves downgrades, Mr van der Veer said Shell's position was “solid”.
Backstory
The £13bn-plus profit reported by Shell catapults it above banking giant HSBC, which last year set a new record when it broke through the £10bn barrier for the first time in British corporate history. The two firms have been playing leapfrog, with Shell briefly taking the record a year ago with profits of £9.4bn, only to be trumped by HSBC a couple of weeks later. But the surge reported by Shell yesterday looks likely to see it retain the record this year. Though HSBC and BP have yet to report their 2005 figures, analysts do not expect them to top Shell's numbers. read more

Leader
Friday February 3, 2006
President Bush's strong espousal of alternative fuels such as cellulosic ethanol as a way of weaning America off its dependency on Middle East oil should be warmly applauded. The president has often made reference to oil in previous State of the Union addresses but not by endorsing a particular solution with such enthusiasm and never with a specific target in mind: to cut dependence on Middle East oil by 75% by 2025. It would have been even better if Mr Bush had worked with the international community to reduce oil dependence and to combat global warming, but this move at least shows that the US could make a significant contribution on a unilateral basis. It now remains for Mr Bush to prove that this was not just a headline-grabbing initiative that will be quietly forgotten like others in the past. The fact that he is only putting $150m behind it next year does not bode well, but it does not mean it will not happen. The striking thing is that Mr Bush has singled out cellulosic ethanols that are derived from waste wood chips and stalks rather than corn-based ethanols which are more energy-intensive in their production. Unlike some other parts of the world where ethanol production is at the expense of cutting down forests, the US has plenty of land to utilise.
Mr Bush has been thinking big. If he wants to think laterally as well he should abandon controversial farm subsidies (supposedly covered by the derailed international trade talks) exempting only farms switching to cellulosic ethanol or other approved fuels. This could trigger a big rise in output without extra government outlays. It also offers scope for growing GM crops uncontroversially if done in faraway fields and destined for refineries, not the dining table. But increased reliance on biomasses will only slow the growth of oil consumption, not cut it drastically. There is a chance here for the oil industry which has been riding on the back of the shortages by making excess profits, including Shell's £13bn announced yesterday. It would mitigate some of the bad publicity, besides doing them a favour for the future, if they ploughed back more of those profits into alternative fuels. It remains a moot point whether heavy investment in alternatives will remove the need for a nuclear expansion unless accompanied by measures to cut demand and use existing energy supplies better. The key question our government must ask before authorising more nuclear stations is what would the same amount of money – many billions – do if invested in alternative fuels. President Bush has given us a big clue. read more

Turkey's top administrative court suspended the US$4.14 billion (A3.42 billion) sale of the Tupras oil refiner to the Koc-Shell consortium Thursday after objections from a Turkish labor union.
The court said that some of the conditions of the sale failed to comply with Turkish law on privatization, halting a deal celebrated by Turkey's government as a sign of the country's commitment to its International Monetary Fund-backed privatization program.
On Thursday, a consortium led by Turkey's Koc Holding and including Anglo-Dutch oil giant Royal Dutch Shell PLC deposited billions of dollars into a Turkish government account, and took control of a 51 percent stake in the formerly state-owned refiner.
The head of Turkey's Petrol-Is Union, which represents employees in the oil and gas sector, told private NTV television Thursday that the purchase was invalid.
The Koc Holding group said it would withhold comment until it had time to evaluate the court's decision. read more

Lorna Siggins, Marine Correspondent
Feb 03, 2006
Former Ictu secretary-general Peter Cassells says he is “very keen” to clarify any confusion over his mediation of the Corrib gas field row, in the wake of this week's breakdown of talks in north Mayo.
However, the five Rossport men, who have suspended participation in the formal talks, have said that a clear discrepancy has emerged between Minister for Communications, Marine and Natural Resources Noel Dempsey and Mr Cassells in relation to the mediator's role.
The five men, who had agreed to the Minister's offer of mediation between themselves and Shell after 94 days in prison last year, called yesterday on Mr Dempsey to stop interfering and “redefining the process agreed by Shell and ourselves”.
Responding to Mr Dempsey's statement on MidWest Radio this week that he never intended mediation to take place solely between the five men and Shell, the group referred to several statements to the contrary which Mr Dempsey had made on the subject last year.
In a speech to the Dail on October 4th – made four days after the five men were released from prison – Mr Dempsey said that he had “contacted both sides” (while the men were still in Cloverhill) “in an effort to break the impasse”.
He said he had “indicated to them that the Government would appoint a mediator if both sides were willing to participate in a mediation process”.
Mr Dempsey told the Dail he “then called on both parties to create conditions which would allow such a process to commence immediately” and was “glad to report to the House that both sides responded positively to my initiative”. This was a reference to Shell's decision on September 30th to lift its temporary injunction restraining interference with the pipeline.
Mr Cassells would not comment to The Irish Times on claims that Mr Dempsey had interfered. However, he said his understanding of mediation involved a number of elements, including formal mediation between Shell and the Rossport five and mediation with several other non-consenting landowners, including BrId McGarry and Monica Muller.
Mr Cassells said he was also consulting other landowners on the high-pressure pipeline route.
“They obviously have concerns about the pipeline and wider issues, and there were also rumours that a number of them had withdrawn their consent and so I had to find out if I should be mediating with them if they had.
“I was also expected to consult with the wider community.”
He added: “This wider consultation is effectively over and now we are back to formal mediation between the Rossport five and Shell, and mediation between Shell and the other non-consenting landowners, and what you might call the ongoing consultations with the other landowners.”
During talks with the “wider community”, he said the issue of lack of provision of natural gas to Mayo had been raised. He had referred this to Mr Dempsey, among other concerns.
It was in this context that the Minister said in a Dail reply on January 25th that the mediator's role involved “looking at the availability of services generally throughout the region, including in particular the role of gas supply in the area”.
The five men said Mr Cassells had confirmed to them in informal discussions that mediation was “to be a process between the Rossport five and Shell”.
“It now transpires that Minister Dempsey misled us and possibly the Dail as to the true nature of what he understood mediation to mean,” they said.
The Minister's spokeswoman said last night that Mr Dempsey had no further comment to make. read more

Exploration and production successes lifted group to record highs, writes Martyn Wingrove
HIGH oil prices and strong liquefied natural gas production boosted Royal Dutch Shell's profits to record highs in 2005, but capital expenditure continues to climb.
The Anglo-Dutch oil and gas group reported yesterday a 30% rise in profits to $23bn with the biggest gain coming from a 45% jump in exploration and production earnings to $14.23bn.
Shell's oil and gas production fell almost 7% to 3.5m barrels per day due to the impact of hurricanes, divestments and low entitlements in production sharing contracts.
'Our good performance in 2005 gives us a solid platform to build on in 2006,' Shell chief executive Jeroen van der Veer said.
'We delivered record cash and earnings, success in exploration and gained access to new resources.'
In 2005, Shell spent $17.44bn on projects, up from $15.3bn in 2004. This included $2.1bn on exploration, which added 2bn barrels of oil equivalent to its resources, more than offsetting total production of 1.3bn boe last year.
Excluding $1.8bn spent on the Sakhalin II project in Russia, Shell spent $15.6bn, $600m more than its own expectations.
This year, it expects to boost investment to $19bn, excluding expenditure on the Sakhalin II project.
'We continue to expand our portfolio of integrated gas, unconventional resources, oil projects and new energy technologies,' Mr van der Veer said. 'We expect to invest around $19bn in 2006.'
Shell kept its position as the leading equity producer of LNG with a 13% rise in production capacity during 2005 to 12.4m tonnes per annum.
This is consistent with the group's target to deliver 14% average annual growth in LNG capacity from 2004 to 2009.
Last year, Shell's LNG production benefited from a ramp up in output from the fourth train at the North West Shelf plant in Australia.
This year's production will grow as two trains are coming on line in Nigeria as part of the Bonny plant expansion, plus new volumes will come from the Qalhat project in Oman.
In December, Shell took the final investment decision on the Qatargas 4 project, which will transport LNG to the Elba Island terminal in North America, where the London-listed group has gained additional regasification capacity.
Mr van der Veer also said the Sakhalin II project in eastern Russia was on track as according to its July 2005 schedule and negotiations with state group Gazprom are continuing on a swap deal that involves other Russian fields.
Shell managed to meet its 2004-2006 divestment target a year early with total proceeds of $14.3bn so far, of which $6.6bn came from last year's sales.
It also highlighted new investments in renewable and alternative energy including offshore wind farms, hydrogen plants and biofuels. read more

By Neil Dennis
Published: February 3 2006 02:00
European stock markets fell yesterday as oil stocks retreated in the face of a slide in crude prices. The FTSE Eurofirst 300 index fell 1 per cent to 1,319.80.
More bad news on reserves for Royal Dutch Shell overshadowed the Anglo-Dutch oil group's record-breaking full-year results and prompted a retreat for the sector. Spain's Cepsa lost3.8 per cent to €44.00, while Austria's OMV shed 3.3 per cent to €57.84 and the Finnish refiner Neste Oil fell2.9 per cent to €25.75.
Atlas Copco rose 6.4 per cent to SKr175.00, an all-time high, after the Swedish engineering group reported record fourth-quarter profits and promised a significant cash return to shareholders from the sale of its US rental services unit that could raise more than $3bn.
Domestic rival Sandvik, which reports its results on February 8, gained 3.8 per cent to SKr392.5.
Vivendi Universal fell2.4 per cent to €24.80 after the French media giant spent $1.154bn to complete 100 per cent ownership of Universal Studios by buying out the remaining 7.66 per cent minority stake owned by Matsushita Electric Industrial of Japan. The biggest casualty of the day was Thomson after the French media services group reported an 8.5 per cent rise in full-year core sales, but missed expectations due to slowing sales of DVD players and set-top boxes. Shares fell 16.1 per cent to €14.09.
“The market is likely to question whether Thomson can organically grow revenue,” said Sandeep Deshpande at Dresdner Kleinwort Wasserstein. “There were contributions from the acquired companies in 2005 in services and in systems and equipment, but organically the company showsvirtually no growth.”
SolarWorld had good news with the acquisition of Shell's lossmaking solar wafer and cell manufacturing business for an undisclosed price. The deal puts the German solar energy group in a leading position in the US, where interest in renewable energy is soaring. Caroline Slama, at SociétéGénérale, said takeover speculation might increase as General Electric and Siemens were likely to target market leading companies. SolarWorld jumped17.4 per cent to €218.85
Henkel, the German consumer goods manufacturer, struggled after reporting weak growth in its core divisions. The shares fell 3.3 per cent to €30.81 after it showed slowing growth at its cosmetics, laundry and homecare units, causing its fourth-quarter earnings to miss expectations.
Early in the session, investors focused on the upbeat results of Alcatel. The French mobile phone equipment maker, gained 3.3 per cent to €11.58 after it announced a forecast-beating 16 per cent rise in fourth-quarter operating profit and provided an optimistic outlook on first-quarter sales. read more

By Rebecca Bream and Tom Griggs
Published: February 3 2006 02:00
Royal Dutch Shell broke UK corporate profit records yesterday, as the impact of hurricanes in the US and recent unrest in Nigeria failed to counteract the benefit of high oil prices.
The group reported current cost of supply profits, the industry standard, for 2005 of $22.9bn (£12.9bn), up 30 per cent from $17.6bn in 2004. Revenues rose 12 per cent to $379bn.
But analysts said earnings were lower than expected and failed to match up to the $36.1bn profits unveiled by larger rival ExxonMobil on Monday.
Shell said production fell 7 per cent to 3.5m barrels of oil per day (bpd), after hurricanes affected production in the Gulf of Mexico and a production-sharing contract in the Middle East ended. The group added that there would be little, if any, growth in production in 2006.
Jeroen van der Veer, chief executive, said he was confident of finding new oil reserves to replace those pumped from the ground. He rejected suggestions that the world was running short of oil.
“The theory of peak oil, that oil production has peaked, is correct if you look at easy oil close to markets, like west Texas and the North Sea,” he said. “But think about deep-water drilling, think about the Arctic.”
Mr Van der Veer said Shell would be increasingly looking for oil in frontier areas, as more companies entered the exploration business. “The market will become more and more competitive. We like to go to unconventional [locations], where we can use our project skills.”
He said cost inflation would account for about 20 per cent of the extra funds given by Shell to exploration and project development. Shell currently replaces 70-80 per cent of its proven reserves each year, but says it will reach 100 per cent replacement by 2008. It also aims to expand production to between 4.5m and 5m bpd by 2015.
The company has pledged to spend $19bn a year on new schemes, focusing on long-term projects in Nigeria, China, Oman, Russia and Malaysia. This excludes investment in the minority share of the Sakhalin project off the east coast of Russia. Exploration, discoveries, appraisals programmes and new business development added more than 2bn barrels of oil equivalent to reserves in 2005.
Mr Van der Veer said out of 12 “big cat” wells drilled in 2005, seven found hydrocarbons. A “big cat” well is one the company expects to yield 100m barrels of oil equivalent. He said 15 to 20 such wells would be drilled this year, but declined to say where.
Peter Voser, finance director, said Shell was not looking at large acquisitions, in spite of its large cash balance, and was focusing on “bolt-on” deals worth $10bn or less.
Shell's B shares fell 49p to £19.56 in London.
Royal Dutch Shell broke UK corporate profit records yesterday, as the impact of hurricanes in the US and recent unrest in Nigeria failed to counteract the benefit of high oil prices. read more

By Jonathan Guthrie
Published: February 3 2006
Cometh the hour, cometh the multinational. Earlier this week the Trades Union Congress unveiled a splendid plan for the government to adopt “national champions” to fight the UK's industrial corner. With uncanny timing, Shell yesterday announced profits of £13.12bn, the highest ever from a UK business.
What better champion for the UK than this huge oil business? Imagine how much higher Shell could soar on the rocket fuel of Department of Trade and Industry training grants and Business Link marketing advice. Shell could soon challenge ExxonMobil for the title Most Profitable Company Ever. If you need a champion, you train up the biggest bruiser you can find, right?
Wrong. Unionists were frosty when Notebook nominated Shell to participate in their scheme. “Shell's multibillion profits suggest it can stand on its own two feet,” sniffed one official. Mindful that if you lose one bet, you might win the next, Notebook then suggested Mittal Steel. After all, Lakshmi Mittal has already benefited from Tony Blair's altruistic help and is pluckily bidding for Arcelor, Johnny Frenchman's favourite steel company.
“Mittal Steel isn't really British,” quibbled a unionist. Neither is the Royal Family. We still subsidise them. But it transpires the TUC's preferred champions would be companies that need propping up. This seems a loser's strategy, like supporting Peterborough FC in preference to Chelsea. You can imagine who the TUC's sectoral sweethearts would be: automotive – MG Rover; telecoms – Marconi; retailing – Courts. The painful truth is that the only business the state can safely help is one that needs no assistance. Such as Shell.
Notebook has retreated from the debate with wounded feelings. The fuss yesterday over Shell seemed pretty silly anyway. Large companies will go on producing record profits as long as the world economy grows and inflation erodes the value of money. People have simply picked on the hapless oil company because it sells a commodity whose price has risen sharply. Even though the government, via tax, has been the main beneficiary in the UK. The conclusion? Don't be a messenger. You get shot. read more

Published: February 3 2006 02:00
Investors can be a churlish lot. Unveil $25bn of profits, as Royal Dutch Shell did yesterday, and what happens? The shares fall by 2 per cent.
In the world of Big Oil, it takes more than just big numbers to impress – particularly coming so soon after ExxonMobil's stellar results. Shell's upstream production in 2005 fell 7 per cent. Reserve replacement of 60-70 per cent means Shell must now replace 130 per cent of production over the next three years to meet its targets. Shell has an impressive drilling record and some of those infamous “lost” reserves to rebook, but that is still a tall order.
At the operational level, Shell is performing decently enough. Beyond 2008, the breadth of its portfolio holds great promise. Most investors, however, rightly discount jam tomorrow. Meagre dividend growth and a $5bn target for share buybacks in 2006 suggest the management is hoarding cash. That not only emphasises the risk of high-priced acquisitions, but is no way to keep shareholders sweet while they wait. Meanwhile, the tailwind from surging oil prices will ease, even if an Iranian crisis causes a short-term spike.
In the past year, Shell's discount to BP on a prospective price/earnings multiple has narrowed from 22 per cent to just 8 per cent. That is despite BP's higher growth, and the potential for it to give away $20bn this year to keep its own shareholders on board. On that basis, Shell cannot complain. read more

By BLOOMBERG NEWS
Published: February 3, 2006
Royal Dutch/Shell said yesterday that its profit in the fourth quarter fell more than 4 percent from the quarter a year earlier as hurricane damage left it unable to take advantage of near-record crude oil prices.
Net income declined to $4.4 billion, or 66 cents a share, from $4.6 billion, or 68 cents a share, in 2004. Revenue, excluding sales taxes and excise duties, slipped 1 percent, to $75.5 billion. Profit for all of 2005 was $25.3 billion, a record for the company.
Shell said that it would buy back about $5 billion of its shares this year, half the level expected by some analysts.
The company, whose increase in production has lagged behind rivals including Exxon Mobil, is the first major oil concern to report a drop in earnings as oil trades above $60 a barrel. It plans to spend $19 billion this year to help rebuild reserves.
Production in the fourth quarter fell nearly 9 percent, to the equivalent of about 3.5 million barrels of oil a day, compared with 3.84 million a year earlier, Shell said. The company reaffirmed that for 2006 it expected to produce in the “lower half” of a range of 3.5 million to 3.8 million barrels a day.
Of oil companies that drill in the Gulf of Mexico region, Shell was among those that suffered the most damage. It has said that it expects a major installation, the Mars platform, to resume operations in the second half of 2006.
In London yesterday, the Class B shares of Royal Dutch/Shell fell 2.4 percent. read more

02 Feb 2006 16:57:08 GMT
Source: Reuters
LONDON, Feb 2 (Reuters) – The EBRD said on Thursday it will consult non-governmental organisations and the public in Russia, Japan and Britain before deciding whether to approve a loan for the environmentally controversial Sakhalin-2 gas project.
The European Bank for Reconstruction and Development, the main development bank for ex-communist countries of eastern Europe and the USSR, started a 120-day assessment period of the loan idea in December.
While the loan is expected to amount only to $200-$300 million, an EBRD stamp of approval could be key to unlocking further funding for the $20 billion Royal Dutch Shell-led project , which is dogged by fears it could hurt the habitat of the endangered Western Gray Whale.
The bank said in a statement that it was inviting all parties with an interest in the Sakhalin-2 project off Russia's Pacific coast to take part in a series of public meetings.
“The comments from the general public being solicited at these meetings will provide important input to determine if the project has adequately identified and mitigated environmental, safety and social impacts,” the EBRD said.
The meetings will be in London on February 28, Moscow on March 14, Sakhalin island on March 20, 23 and 24 and Sapporo, Japan in mid-April.
Representatives of government and local adminstrations, environmental groups and academics would be among those consulted during the public meetings, it added.
Sakhalin-2 is estimated to contain over four billion barrels of oil and gas equivalent of recoverable reserves and aims to produce liquefied natural gas to supply Asia's energy-hungry markets.
EBRD president Jean Lemierre said last month the decision could be delayed beyond the expected mid-April deadline because further consultations with shareholders could be needed.
The bank insisted on a longer consultation period than the usual 60 days because of the environmental sensitivity of the issue. read more