February, 2006:

By Andrew Wallmeyer in Frankfurt
Published: February 24 2006 02:00 | Last updated: February 24 2006 02:00
Skies have been sunny this year for solar energy companies, because share prices have soared on strong earnings and news of government-backed renewable energy initiatives.
An index of solar stocks compiled by Photon Magazine, which covers the photovoltaic [devices that turn sunlight into electricity] industry, has risen 37 per cent since January 1, and is up 160 per cent during the past year. SolarWorld, of Germany, has climbed 164 per cent in the past 12 months.
Despite the boom, many analysts say it is not too late for investors to profit. They say that the factors fuelling the sector's growth will continue well into the future. They point out that the additional cost of solar power, compared with conventional energy sources, is falling. Until prices converge, government initiatives will sustain the industry.
“In the short-term, you could see share prices drop but in the mid and long-term I am quite convinced that this kind of technology offers further significant upside potential,” says Erkan Aycicek, who follows the solar industry for Commerzbank. Germany, where the environmental lobby has long been strong, has a concentration of solar power companies. Elsewhere, solar manufacturers are often part of larger industrial conglomerates.
The biggest challenge is to overcome a scarcity of silicon, which is used in photovoltaic cells. Silicon producers intend to increase output but experts anticipate that it will take at least two years for their plans to translate into higher production.
Until then, solar companies will have to compete with the semiconductor industry, which uses more silicon and is willing to pay more for it.
“Of the listed companies, SolarWorld is clearly in the best shape because it has ongoing long-term supply contracts with two of the major silicon producers, Wacker and Hemlock, and it also is going to be building its own capacity,” says Michael McNamara, an analyst at Jefferies, a New York-based investment bank. Q-Cells also has several long-term supply contracts that “put it in fairly good stead,” Mr McNamara says.
Mr Aycicek considers Conergy, another German firm, as one of the sector's best investment opportunities because uncertainties over its silicon supply have kept it trading at a significant discount to SolarWorld and Q-Cells. “We believe it is only a matter of time before the capital market's reservations about Conergy disappear,” he wrote.
The silicon shortage is forcing consolidation. Analysts say a failure to lock up long-term supply was one reason Shell Group sold its silicon-based photovoltaic manufacturing operations to SolarWorld this month, and they believe more consolidation is on the way.
The companies that emerge can look forward to a market expected to grow from $6.5bn in 2004 to $18.5bn in 2010, according to Solarbuzz, a research and consulting firm.
That growth will largely be driven by increased government incentives to encourage the development and use of renewable energy. In the US, for example, Californian regulators last month pledged $2.9bn in tax breaks for solar energy during the next 11 years.
European solar demand is being driven by a number of so-called feed-in tariffs that set above-market rates for renewable energy and force power companies to purchase what is produced.
Five years after passing its landmark feed-in law, Germany has supplanted Japan as the world's largest solar energy producer, with 39 per cent of global capacity, according to Solarbuzz. Germany still installs more solar cells each year than any other country but demand is expected to shift to sunny Spain, which last year approved a renewable energy law largely modelled on Germany's.
Some analysts see clouds on the horizon. Alastair Bishop, of Dresdner Kleinwort Wasserstein, says the industry's high margins and valuations have led him to take a “more cautious” view of the sector. The silicon shortage has limited solar cell production but with demand continuing to grow, solar manufacturers have been able to raise profit margins. When silicon is more readily available and cell production increases, he believes margins might come down again. read more

Feb 24, 2006
PERTH, Feb 24 Asia Pulse – Renewable fuel company Australian Biodiesel Group (ABG) (ASX:ABJ) has started selling its fuel alongside the traditional diesel, becoming the first company in Australia to do so.
It has today started the industry standard of terminal gate pricing (TPG) for the bulk supply of biodiesel from its Berkeley Vale production facility outside northern Sydney.
And significantly, Abets biodiesel will sell at around a seven cents per litre discount to diesel as the renewable industry is helped along by an excise holiday from the government.
Every diesel producer must generate TPG daily based on a minimum purchase of 32,000 litres, and ABG will start its daily pricing next week.
ABG chief executive Len Humphreys said it was significant milestone for both the company and the industry.
“It's the first time that any biodiesel company in Australia has published a terminal gate price,” he told AAP.
“It offers a real option for people who drive up to fossil fuel majors, like BP, Shell or Caltex. “Instead of going there they can go to our site and for exactly the same conditions fill up with biodiesel and gain a significant price advantage.
Biodiesel is made from renewable resources that can be blended with petroleum diesel and used with little or no modification in diesel engines.
Dr Humphreys said the product was being well received in particular by large trucking companies and councils.
The company expects to announce additional TPG bulk distribution sites in Sydney, Melbourne and Brisbane in the coming weeks.
ABG listed on the Australian Stock Exchange last December after raising $A20 million ($US14.75 million) in its initial public offering.
Shares in ABG dropped one cent to $1.055 by 1338 AEDT. read more

GILLIAN WONG
Feb 24, 2006
Crude oil futures gained Friday as persistent concerns over supply disruptions in Nigeria and Iran's nuclear program overshadowed U.S. government data showing gains in domestic crude supplies.
Light, sweet crude for April delivery rose 34 cents to US$60.88 a barrel in Asian electronic trading on the New York Mercantile Exchange. The contract slipped 47 cents to settle at US$60.54 a barrel Thursday.
Gasoline advanced 1.39 cents to US$1.5273 a gallon (3.8 liters) while heating oil gained 0.49 cents to US$1.6675 a gallon. Natural gas futures fell 13 cents to US$7.328 per 1,000 cubic feet.
The U.S. federal Energy Information Administration's weekly supply snapshot showed that crude stocks rose by 1.1 million barrels last week to 326.7 million barrels, their highest level since last June.
The data also showed that inventories of gasoline rose by 100,000 barrels to 225.6 million barrels, their highest level in nearly seven years.
But distillate stocks, which include heating oil and diesel fuel, shrank by a widely expected 1.3 million barrels to 135.6 million barrels.
Analysts said prices were supported by concerns about Iran's nuclear ambitions and militant attacks in Nigeria.
Nigeria is Africa's leading oil exporter and the United States' fifth-largest supplier, usually exporting 2.5 million barrels daily. Iran is the second-largest oil producer in the Organization of Petroleum Exporting Countries.
“Despite the inventory data, people are still concerned about the geopolitical risks in Iran and Nigeria, because of the potential for supply disruptions,” said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.
Militants in Nigeria on Thursday issued the first photos of what they claimed were seven of nine foreigners kidnapped in the West African nation, and threatened more attacks on oil workers and the country's volatile oil industry.
“We are continuing with our attacks on oil facilities and oil workers in the next few days. We will act without further warning,” the militants said in a statement.
Oil prices spiked earlier this week on news that militants in Nigeria attacked a pipeline switching station, operated by Royal Dutch Shell PLC, on Monday and a boat they claimed housed Nigerian military personnel. That, and an earlier attack, has forced Shell to halt the flow of about 455,000 barrels a day. read more

Feb 24, 2006
PERTH, Feb 24 Asia Pulse – Woodside Petroleum Ltd's (ASX:WPL) Browse discovery in the north of Western Australia has sparked lively bidding in the first round of offshore permitting for 2006.
Federal resources minister Ian Macfarlane has released eight new offshore petroleum exploration permits in WA which he said would create $A413 million ($US304.63 million) in new investment in the state.
“There was intense bidding interest in the Browse Basin near major gas discoveries,” he said.
Shell picked up a permit in the Browse Basin and Carnarvon Basin, while Woodside Energy, Total E&P Australia and Japan Australia LNG, Chevron Australia, Holloman Corporation and Goldsborough Energy were also granted permits. read more

By THE ASSOCIATED PRESS
CARACAS, Venezuela (AP) — Venezuela's oil minister has delayed submitting to congress details on new oil contracts that are being awaited by private energy producers.
Oil Minister Rafael Ramirez was scheduled to deliver to the National Assembly on Thursday the general guidelines for new joint-venture agreements that bring operations by private oil firms here under state control.
But Mario Isea, a lawmaker from congress's Energy and Mines Commission, said a group of lawmakers will meet with Deputy Oil Minister Bernard Mommer on Friday to discuss progress on the new business model and that the final document will not be ready until next month.
President Hugo Chavez's government last year declared as illegal previous contracts under which foreign oil companies like Royal Dutch Shell PLC, Chevron Corp., BP PLC, and Brazil's Petrobras SA independently pumped oil at 32 Venezuelan fields.
It has since ordered the firms to become minority shareholders in new ''mixed companies'' controlled by state firm Petroleos de Venezuela SA. Congress must approve the general guidelines for the new ventures, as well as the specific contracts for each new company.
Ramirez has said the government will group the 32 fields into 19 separate companies and that PDVSA, as the state firm is known, will have stakes of 60 percent or more in each venture.
Industry analysts say investment by the companies have stalled as they await the outcome of the difficult contract negotiations.
The contract overhaul is part of the Chavez government's wider strategy to gain more control over private oil operations and increase revenue from existing oil output.
The 32 fields pump approximately 500,000 barrels a day, roughly a fifth of the Venezuela's total petroleum production, according to industry estimates.
Venezuela is the world's fifth-largest exporter of oil and among the top five suppliers to the United States. read more

EDWARD HARRIS
Feb 24, 2006
Militants in Nigeria issued the first photos of what they claimed were seven of nine foreigners kidnapped in this West African nation, and threatened more attacks on oil workers and the country's volatile oil industry.
The two photos, sent in an e-mail to reporters, showed seven unidentified men sitting on a bench with a dozen gunmen wearing black masks and camouflage hats behind them. The militants had ammunition belts wrapped over their shoulders and held an array of assault rifles and rocket-propelled grenade launchers pointed in the air.
In a Feb. 18 assault, militants stormed a barge belonging to a U.S. oil company in the Niger Delta's Forcados estuary, seizing three Americans, two Egyptians, two Thais, one Briton and one Filipino.
The purported hostages in the photos were dressed in short-sleeve shirts and appeared to be in good health. Three bottles of water were situated at their feet as they sat in a clearing with palm trees in the background.
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 giant Royal Dutch Shell.
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.
Nigeria is Africa's top crude producer, exporting 2.5 million barrels a day.

In the latest unrest over the past week, militants have blown up pipelines and sabotaged a Shell oil loading platform, forcing the company to shut off the flow of several hundred thousand barrels of oil.
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.
Dokubo-Asari, who waged a struggle for autonomy for 8 million Ijaws that dominate the Niger delta for years, was jailed on treason charges in September. Alamieyeseigha was arrested recently in Nigeria after fleeing Britain on money laundering charges.
The militants said the e-mailed statement that the hostages' release was “directly related to the release of Alamieyeseigha and Asari.”
The statement added: “Politicians who do not care about how many soldiers and oil industry workers are killed as long as the oil keeps flowing.”
Militants are also demanding Shell pay local communities US$1.5 billion to compensate for environmental pollution. Shell has rejected the demand.
Associated Press writer Todd Pitman in Dakar, Senegal contributed to this report read more

Shell Q4 profit drops
Feb 24, 2006
SHELL Refining Co (Federation of Malaya) Bhd said its net profit for the final quarter of 2005 fell by 50 per cent due to lower refining margins and lower tax rates.
The net profit for the quarter was RM94.5 million compared to RM187.7 million a year ago.
Its revenue grew 26 per cent to RM2.75 billion from RM2.19 billion before.
Shell Refining recorded a full-year net profit of RM522.1 million on RM9.7 billion revenue for 2005, helped by an after-tax stockholding gain of RM210 million due to the overall increase in oil prices.
The firm has proposed a final dividend of 38 sen and another special dividend of 20 sen. Chairman Datuk Jon Chadwick said the company intends to declare a total dividend in the range of 90 sen to RM1.30 for this year.
He confirmed that he would be stepping down as chairman after the company's upcoming shareholder meeting. read more

By Clay Harris
Published: February 24 2006 02:00 | Last updated: February 24 2006 02:00
Shell Centre on London's South Bank is going to be renovated, meaning disruption for the 3,100 employees who work there.
But what about the denizens of its five tropical fish tanks? They will have to be moved, but no one knows quite what to do with them.

What have we learned this year? That $50 oil is a thing of the past. These stocks will thrive as crude prices stay high.
By Jim Jubak
The first two months of 2006 should end any dreams that oil will drop below $50 anytime soon. They make a good case that the new price range for oil is between $55 and $70 a barrel.
Investors now know that fears of a confrontation with a heavily armed and militant Iran — the No. 4 exporter of crude oil in the world — is enough to push oil to the $69.20 it hit on Jan. 23. And that relative global “peace,” combined with oil inventories running well above average for this time of year, is enough to send oil prices down to $55.
Short of a major global economic slowdown, $50-a-barrel oil just isn't in the cards. Not in a world where fears of a future nuclear Armageddon are closely followed by news that Nigerian militias have taken oil workers hostage and forced Royal Dutch Shell (RDS, news, msgs) to cut its production there by 455,000 barrels a day.See the news
that affects your stocks.
There may indeed be, as the oil bears argue, a risk premium of about $10 a barrel in the current price of oil. In a world at peace, speculators and traders wouldn't be able to use fears of a supply disruption to drive oil prices so high. But those who believe oil prices should be lower keep getting slapped around by the world as it is. The risk premium in oil looks very, very permanent.
And that's important to investors because so many analysts on Wall Street are still using $45-a-barrel oil — or less — when they set their target prices for oil stocks. Take Citigroup Global Markets as an example: Even though the investment bank recently raised its forecasts for oil prices in 2006 to $60, Citi is still using $45-a-barrel oil to set its price targets for oil stocks.
More from MSN Money
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• O Canada, can we have Alberta?
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Investors who remember the early stages of the rally in oil stocks know that these stocks moved higher as analysts abandoned price targets based on $20- or $25-a-barrel oil and gradually came to admit that oil prices might be permanently above $30 and then $40 a barrel.
I think we've got one more round of that process ahead of us before oil stocks are fully priced. (Please remember that my picks for my appearance on CNBC are for a six-month time horizon. One thing that will sink oil prices is a slowdown in economic growth and some economists are looking for just that in the second half of 2006. If that happens, you certainly don't want to be holding a big position in energy stocks. But I think we'll get a nice rebound in growth in the first quarter of 2006, which would be good for the stocks.) The longer that the price of oil refuses to drop below $55 a barrel, the more likely Wall Street is to finally admit that the risk premium in oil is here to stay and to gradually move target prices for these stocks higher.
Cheap, safe and sour
That process will help all stocks in the energy sector — but it will help some more than others. The big beneficiaries of this process are oil producers that are adding big, low-cost deposits of oil to their proven reserves, that have concentrated their production in the securer parts of an insecure world, and that specialize in types of oil that will see the most price leverage from any scares about supply disruption.
In my Wednesday, Feb. 22, appearance on CNBC's “Morning Call” I recommended these three oil stocks that fit that profile:
Berry Petroleum (BRY, news, msgs). Last time Nigeria held a presidential election, an uprising among the Ijaw majority in the oil-rich Niger delta forced a 40% drop in Nigeria's oil production. The same pattern seems to be playing out this year as the country gets ready for elections in 2007. And with violence breaking out in the Muslim-dominated north of the country, the Nigerian army is so over-stretched that it can't provide effective security to international oil companies. Shell, the biggest producer in Nigeria, has already ordered the evacuation of workers from the most isolated parts of the delta. read more

By Funmi Komolafe, Omoh Gabriel, Kingsley Omonobi & Victor Ahiuma-Young
Posted to the Web: Thursday, February 23, 2006
ABUJA— THERE were strong indications in Abuja yesterday that the nine foreign oil workers kidnapped by Ijaw militants may be released in the next 24 hours following Federal Government’s agreement not to carry out any military attack or arrest the kingpins and their foot-soldiers whenever the hostages are released.
The Federal Government is already losing a total of $27.3 million per day to the activities of militants youths in the Niger Delta. From Shell Petroleum Development Company alone, government may have lost a total of $819 million in revenue from oil export as a result of the decision of Shell to shut in a total of 455,000 barrel of crude oil export per day for the month of January alone even as it has evacuated all its 600 workers in its Western division
Reliable security sources told Vanguard that the militants are also basing their commitment to release the hostages on the grounds that a trusted ally of theirs whose identity should be protected is allowed to come for the hostages.
In addition, the hostage takers want the government to guarantee that there will be no reprisal of any sort on them since they kept their promise of not harming the hostages.
Already, President Olusegun Obasanjo who is said to be monitoring the situation closely, is said to have told the Military High Command to create the atmosphere of non-confrontation around the creeks where the hostages are suspected to be held up.
According to the source, “we have reasons to believe that the hostages are so frightened that one or two of them may have fallen ill and the militants knowing the implications of anything happening to them would not want to incur the wrath of the Nigerian government as well as the international community.
FG loses $27.3m

Given an average oil price of $60 per barrel, the country is losing an average of $27.3 million from non export of crude by Shell. In a week, the country would have lost a total of $191.1 million while in a month, the loss would rise to $819 million if the crisis is allowed to linger.
Nigeria, a developing country with a myriad of social economic problem, needs every cent it can earn for developmental purposes. Shell on Tuesday said it had extended force majeure on Nigerian exports from the EA and Forcados fields after a string of militants attacks at the weekend. Forcados and EA off takes have been extended as of today.
Shell declared force majeure on liftings in January after a wave of militants’ attacks but extended it Tuesday after another string of attacks on its facilities at the weekend. The company, which pumps over 40 per cent of Nigeria’s oil, has shut in a total of 455,000 barrels per day as a precaution after militants at the weekend bombed the Forcados terminal, sabotaged two pipelines and kidnapped nine foreign oil workers. The militants snatched the nine oil workers—three Americans, two Egyptians, two Thais, one Filipino, one Briton—from a barge operated by US services company, Willbros, that was working on a Shell project off Forcados.
President Obasanjo, fearing that more attacks against the oil industry will force oil giants to pull out from the winding creeks of the Niger Delta thus leading to greater loss of revenue for the country, has ruled out military action to free the hostages. According to President Obasanjo, “we believe that very, very soon we should be able to reach the hostage takers. We’ve put in place a very powerful committee,” said Abel Oshevire, a spokesman for the Delta State government.
The panel is chaired by Chief Edwin Clark and will seek to contact the Ijaw youths who are holding the oil workers. The Niger Delta militants, in statements to the media, have said the men will not be released, and attacks on oil facilities will not stop until Shell pays $1.5 billion in compensation to polluted Ijaw communities.
On the international oil market scene, European oil refiners were taking the latest disruption to Nigerian crude exports in their stride because of ample supply, despite delays of more than two weeks in Forcados loadings, traders said Monday. Royal Dutch Shell was forced to shut in production feeding Nigeria’s Forcados export terminal and its 115,000 EA oilfield after militants bombed the terminal and sabotaged two pipelines.
Nigerian oil output was reduced last month after armed gunmen kidnapped four oil workers from the offshore EA field. Buyers since then have been looking for replacement barrels. “Refineries have already started working to solve the shortage because the problem started on January11,” a trader said Last month, Shell told traders that loadings of Forcados in the second half of February would be pushed into March, according to market sources.
For example, cargoes loading February 19-20 would load March 6-7, and those loading February 17-18 will load March 2-3. It was too early to say whether the rescheduled February loadings will be delayed further as a result of the latest disruption to supply.
In the meantime, refiners have taken measures to substitute the gaps in their supply of Nigerian crude. “There is lots of crude out there besides Forcados,” a trader said.
NLC appeals for hostages’ release
Meanwhile, the Nigeria Labour Congress (NLC) has appealed to militants holding the oil workers hostage to release them and ensure that no harm is done to the workers even as it acknowledged the political marginalisation of the Niger-Delta people.
In a statement in Abuja yesterday, the NLC president, Mr Adams Oshiomhole said: “The Nigeria Labour Congress (NLC) wishes to once again passionately appeal for the release of the nine oil workers being held in captivity since last Saturday. We strongly appeal that no harm be done to these workers.
“Oil workers, irrespective of their nationalities, are not responsible for the situation in the Niger Delta or for the immediate grievances being canvassed by our compatriots.
The NLC added that it “recognises that the political marginalisation and colossal injustices suffered by our compatriots in the Niger Delta area are real, legitimate and required to be redressed urgently.”
On efforts by the Federal Government, the NLC said: “While we endorse the strategy of negotiation adopted by the Federal Government, it bears emphasis that redressing the injustices requires fundamental political, welfarist and constitutional solution.” read more

By THE ASSOCIATED PRESS
WARRI, Nigeria (AP) — Militants holding nine foreign hostages said Wednesday they have no plans to release their captives soon and accused Nigeria's government of wasting time in securing their freedom.
The oil workers, who include three Americans, two Egyptians, two Thais, one Briton and one Filipino, were seized Saturday by militants belonging to the Movement for the Emancipation of the Niger Delta.
The militants, who are pressing for the release of two of the region's leaders from prison and greater control of oil revenues, accused the Nigerian government of a ''time-wasting venture'' in searching for a high-level negotiation team.
''We have no immediate intention of setting these guys free,'' a spokesperson for the group said in an e-mail to The Associated Press.
Government officials weren't immediately available for comment.
Recent attacks by the militant group on oil facilities in the West African nation — the United States' fifth-largest oil supplier — has cut production by nearly 20 percent and sent prices soaring on international markets.
The militants say they plan to widen their campaign across the vast region of swamps and creeks in southeastern Nigeria, where people remain deeply impoverished despite the great oil riches being pumped from beneath them.
Nigeria is reeling from weekend attacks in which the militants blasted oil and gas pipelines and sabotaged a key oil loading terminal belonging to Shell. That and an earlier attack has forced the company to halt the flow of about 455,000 barrels a day — about one-fifth of daily output.
Hostage takings are also a common occurrence in the volatile delta, but most are released unharmed. Last month, the militants held four foreigners for 19 days before releasing them unscathed.
Nigeria is Africa's leading oil exporter, usually exporting 2.5 million barrels daily. read more

By REUTERS
Published: February 22, 2006
Filed at 3:23 p.m. ET
NEW YORK (Reuters) – U.S. crude oil futures ended sharply lower for the first time in four sessions on Wednesday as analysts predicted a further increase in already ample petroleum stockpiles in the United States.
Crude for April delivery (CLJ6), the new front-month contract, settled down $1.73, or 2.8 percent, at $61.01 per barrel on the New York Mercantile Exchange. It fell as low as $60.52.
Traders said sell stops were triggered in late trading, but a bout of short covering near the close pared losses.
“The markets are bracing for Thursday's DOE reports, with traders cringing since the recent (supply) trends have been bearish,'' said Tim Evans, senior analyst at IFR Energy Services.
March gasoline (HUH6) settled 0.12 cent off at $1.4745 a gallon, recovering much of its losses after falling to the session low of $1.434.
March heating oil (HOH5) ended down 1.43 cents, or 0.9 percent, at $1.6521 a gallon, also cutting losses after dropping to the day's low of $1.64.
In London, April Brent crude (LCOJ6) settled down $1.16, or 1.9 percent, at $60.44 a barrel.
In an expanded Reuters survey, 13 analysts on average estimated that U.S. crude oil and gasoline supplies each rose last week by 1.1 million barrels.
Distillate inventories, which include heating oil, were forecast to drop by 1 million barrels, the poll showed.
The U.S. Energy Information Administration will release its official data for the week ended February 17 on Thursday morning, a day later than usual due to Monday's Presidents Day holiday.
NYMEX crude soared $1.45 on Tuesday after militant attacks shut in a fifth of Nigeria's crude supply.

Royal Dutch Shell shut 455,000 barrels per day of output and evacuated hundreds of staff from Nigerian oil fields due to the violence in the oil-producing delta of the African nation, a member of the Organization of Petroleum Exporting Countries.
The rebels, who also hold nine foreign workers captive, said on Tuesday they would continue their attacks and take more hostages.
Ships began moving again along the Houston Ship Channel at noon Wednesday, after dense fog dissipated, according to the U.S. Coast Guard.
A two-day halt of vessel traffic along the channel had not affected production at several refineries along the busiest U.S petrochemical waterway, refiners said.
TECHNICALS
Technical support is seen next at $60 for front-month NYMEX April crude. Last week, the contract hit a low of $59.20.
Support for gasoline was pegged at $1.40, with resistance at $1.60.
Heating oil support lies at $1.60, with resistance at $1.70, technical analysts said.
The forward curve for crude remains in contango, with September crude trading at $65 per barrel. read more

Feb 23, 2006
SINGAPORE (AFX) – Oil prices continued lower in Asian trading hours, as expectations of a buildup in US crude and gasoline stockpiles offset concerns about supply disruptions in Nigeria, dealers said.
At 11.00 am (0300 GMT) here, New York's main contract, light sweet crude for delivery in April, was down 0.26 usd at 60.75 usd a barrel from its close of 61.01 usd in the US overnight.
“The big thing is the inventory report,” said Tony Nunan, Tokyo-based manager for energy risk management with Mitsubishi Corp. “Everybody is predicting builds in crude and gasoline.”
The US Department of Energy publishes its weekly inventory data on today, a day later than usual, owing to a public holiday in the US on Monday.
Analysts expect stockpiles of US crude to have risen 700,000 barrels, with gasoline up 800,000 barrels and distillates, which include heating fuel, down 1.4 mln barrels.
The US is the world's biggest energy consumer and its energy inventories are closely monitored by the market.
The fall in crude prices also came despite renewed jitters over supply disruption in Nigeria, Africa's biggest oil exporter.
Jason Schenker at Wachovia Securities said: “The market might have overpriced the Nigerian disruption potential.”
He added that there is “a well-supplied market, especially on gasoline” that is likely to be confirmed by the US report on oil inventories.
“The expectation for inventory data,” he said, “is that you will get a buildup of crude and a buildup of gasoline.”
Attacks by Nigerian militants over the weekend on Shell's Forcados oil terminal forced the firm to cut production by 455,000 barrels per day (bpd), equivalent to almost 20 pct of the country's output.
Nigeria, the world's sixth-biggest exporter of oil, produces light, sweet crude, which is easier and cheaper to refine than the heavy, sour crude produced by Saudi Arabia.
“The geopolitical tensions are still there, but the market is getting desensitized to it,” said Nunan.
He added that as long as the situation in the US remains okay, “people will feel that we can get through this thing.”
The market was also keeping an eye on Iran, with analysts saying that tensions over that country's nuclear program could lead to disruption of its oil exports.
Russia has said it hopes to persuade Tehran to create a joint enterprise that will enrich uranium for Iran on Russian territory, enabling Iran to restore a moratorium on enriching uranium at home.
However, Russian President Vladimir Putin said yesterday that his country's talks with Iran were not progressing “easily”.
Iran exports 2.6 million bpd and is the second biggest producer in OPEC after Saudi Arabia.
str/mba/bmm/jm
null read more

Martyn Wingrove
Feb 23, 2006
Tankers
NIGERIAN oil export problems could knock back otherwise strong tanker markets if lower output continues in the medium term.
Royal Dutch Shell has shut in 455,000 barrels of oil per day of production and exports after militant attacks damaged tanker loading facilities. The Anglo-Dutch oil major also extended force majeure on exports from the Forcados and EA terminals, leaving tankers idle without cargoes. Brokers fear a a long period of downtime at these terminals or any attacks on other export facilities could force shipowners to move their tankers around Africa to the lucrative Middle East.
'How long the Nigerian situation lasts will determine how rates in the Atlantic and Middle East markets are affected,' said a London-based broker.
'The Middle East market is looking healthy and owners don't want to see tankers cruising around the Cape [of Good Hope] to swell the market.'
The market is motoring along nicely for owners and would turn back in favour of charterers if more tonnage becomes available.
This week, charter rates for very large crude carriers have remained firm despite quiet fixture activity.
Brokers said rates for VLCCs taking Middle East crude to Japan were around W115 and those making tracks to Singapore are being fixed for W130.
Brokers reported that South Korean refiners booked NYK's 1994-built, 264,457 dwt Takayama at a rate of W117.5 to carry a Middle East crude cargo.
'The market is not terribly busy, although reasonably good, but more ships competing in the Middle East market could drive rates down,' the London broker said.
Oil companies are booking VLCCs at rates of around W115 to take Middle East crude to the US, but most of the fixtures have been for voyages across the Indian Ocean.
Rates to the US west coast are about W142.5 as shown by BP booking 2002-built, 308,875 dwt Front Falcon at this rate, although this fixture was seen to be at a premium by brokers. read more

Feb 23, 2006
Crude oil prices slipped Thursday as expectations of higher U.S. oil inventories calmed a market that has been rattled recently by supply disruptions in Nigeria and Iran's nuclear program.
Light sweet crude for April delivery fell 27 cents to US$60.74 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell more than a US$1 Wednesday to settle at $61.01 a barrel.
Prices fell amid expectations that weekly U.S. oil inventory data, to be released Thursday, will show crude and gasoline stocks grew but distillate fell. The report was to be released a day later than usual because of the Presidents Day holiday in the U.S. this week.
But some analysts said the concerns about Iran and Nigeria would continue to support prices.
“People are looking at the inventory data,” said Tetsu Emori chief commodities strategist at Mitsui Bussan Futures in Tokyo. “But once actual figures are announced, the price may rebound. The market is more focused on political risk like Nigeria and Iran in the medium and longer term.”
Oil prices spiked earlier this week on news that militants in Nigeria attacked a Royal Dutch Shell PLC-operated pipeline switching station on Monday and a boat they claimed housed Nigerian military personnel. That, and an earlier attack, has forced Shell to halt the flow of about 455,000 barrels a day.
Light, sweet Nigerian crude is in high demand, especially in the United States, making the latest supply disruptions all the more important, traders said.
The Nigerian militants, who are pressing for the release of two of the region's leaders from prison and greater control of oil revenues, have threatened to fire rockets at any ships transporting crude oil from Nigeria.
Nigeria is Africa's leading oil exporter and the United States' fifth-largest supplier, usually exporting 2.5 million barrels daily. Recent attacks on oil facilities by a militant group have cut production there by nearly 20 percent.
Meanwhile, traders remained somewhat concerned about Iran, OPEC's No. 2 producer, after Iran and Russia completed the two days of inconclusive talks Tuesday on Russia's offer to enrich uranium for Tehran to avert suspicions that Iran could divert the nuclear fuel for atomic weapons. That comes amid Western pressure to impose sanctions against Iran.
Nymex gasoline futures were down 0.2 cent to US$1.4745 per gallon, while heating oil futures dipped 0.31 cent to $1.6490 a gallon. Natural gas futures declined 6.3 cents to $7.220 per 1,000 cubic feet. read more

Feb 23, 2006
Ann O'Loughlin
MEATH County Council has brought a 5m action for damages against Irish Shell Ltd.
The case arises from the leakage of petrol and diesel hydrocarbons from a Shell filling station to the adjoining site of the council's new civic offices at Trim.
The council wants up to 5m damages, plus legal costs, for the costs it's incurred through a continuing failure to build the civic offices.
It also wants the High Court to order Shell to clean up the Trim site to an acceptable level.
Pat Butler, SC, for the council, told the court Shell had accepted responsibility for the cost of cleaning up the site arising from the contamination, which was detected in January 2001 after a “sheen” from petrol hydrocarbons was observed in the nearby River Boyne.
The site had still not been cleaned to a standard which was agreed between the sides, Mr Butler said.
Shell had tried to renegotiate the clean-up standards but the Environmental Protection Agency had held there was no reason to alter those standards.
Mr Butler said Shell was also refusing to accept responsibility for the costs incurred by the council.
Solicitors for Shell had said that, as a “responsible” body, it would, if found liable for the contamination, act appropriately, counsel said. read more

By FT correspondents
Some see it as a late-blossoming relationship, others as a new kind of colonialism. Either way, China is resolutely and rapidly extending its presence and influence across the African continent as its companies move into terrain where western businesses hesitate to tread.
The Chinese advance – government-backed, led by state-run corporations and propelled by the drive to secure oil supplies – has in the span of a few years changed the pattern of Africa’s investment and trade. A secondary player on the continent until recently, China is establishing a position as Africa’s top commercial partner behind the US and France, overtaking Britain.
For China, Africa offers an extra dimension: a continent three times its own size, less populated than itself and stocked with many of the raw materials it needs. Crude oil from Angola, platinum from Zimbabwe, copper from Zambia, tropical timber from Congo-Brazzaville, iron ore from South Africa: all are on China’s shopping list.
In return, the Chinese offer advantages to African governments. They bring first-hand experience of fast development, are attuned to conditions in poor countries and are unconcerned by scruples over governance standards or human rights. In a different way to the ideological competition that took place in Africa during the cold war, China is emerging strongly as an alternative option for governments more used to dealing with former European colonial powers and the US.
At one level China is involved in a straightforward resources grab, sinking billions of dollars into promising oil zones. But it is also engaged in a mix of influence-building and opportunism. Like Africa’s former colonisers, it cements its political and trade relations with aid, special concessions, debt relief, scholarships, training and the provision of specialists. It has recently sent peacekeepers and – perhaps more surprisingly – election observers. At the same time, again like Africa’s chief western partners, it has been ready to back its commitments with military assistance and arms, providing equipment to countries such as Zimbabwe and Sudan where other suppliers are barred by embargoes.
In post-civil war Angola, Chinese contractors are rebuilding the legendary Benguela railway, originally completed by a British company in the 1920s, between the mineral-rich heart of Africa and the Atlantic coast. In Uganda a Chinese company is transforming Entebbe’s decaying State House into a ceremonial complex for next year’s Commonwealth summit.
Trade between China and Africa has almost quadrupled since the start of this decade, jumping 36 per cent last year to $39.7bn ($22.8bn, €33.4bn), according to official Chinese figures. About half of China’s exports are machinery, electronic and high- technology products. Tens of thousands of Chinese have moved to Africa, including labourers in countries such as Ethiopia or Botswana as well as engineers, traders and small businessmen. One study found the number of Chinese registered in Sudan had tripled since the late 1990s to almost 24,000 in 2004. Chinese tourism to Africa has boomed, with official numbers doubling last year to 110,000.
According to the Beijing government, more than 600 Chinese-funded companies have been set up in Africa in the last 10 years. These include manufacturing operations aimed at regional markets or possibly exports to the European Union or the US, exploiting the duty-free access granted to products from poorer African countries.
China’s search for African political allies goes back to the 1960s and 1970s, when it competed for favour with the both the west and the Soviet Union – building stadiums, ministries and, most spectacularly, 1,850km of railway from central Zambia to the Tanzanian port of Dar es Salaam, a project that western partners had turned down. Some African countries transferred their allegiance to Taiwan during the 1990s as Beijing and Taipei vied to buy their support. But today all but six of Africa’s 53 nations – Burkina Faso, Chad, Gambia, Malawi, São Tomé and Principe, and Swaziland – maintain relations with Beijing. Senegal was the latest to switch back last year.
Li Zhaozing, China’s foreign minister, made a high-profile visit to six African countries last month. The trip, which took in Nigeria and Libya, two leading energy producers, also sent a signal to smaller countries about the technical and financial aid they could expect in return for co-operation.
China’s policy nowadays is subordinated to economic objectives, with core interests in not only oil and strategic metals but also food resources. As latecomers, Chinese companies have been willing to take risks that other investors have shunned and enter countries where others have held back. In Sierra Leone they have quietly filled a vacuum in sectors from hotels to building materials, while the Chinese government has bolstered the navy by donating a fisheries patrol vessel.
A Chinese government policy document last month pledged easier market access for African commodities, duty-free treatment for some products and further encouragement for Chinese investment, backed by preferential loans and buyer credits. It set out a broad front of co-operation embracing agriculture, transport, tourism and defence as well as natural resources. While a US energy department study this month found China’s purchases of overseas assets to be economically neutral for the US, it pointed to potential problems arising from China’s readiness to deal with despotic regimes.
The clearest example of China’s energy quest clashing with western policies is Sudan, an emerging oil producer in which China is the leading investor and dominant client. China has consistently used its veto in the United Nations Security Council to block US-led efforts to impose sanctions on Sudan over atrocities committed in Darfur.
A Sudanese official describes China’s presence as important “not only on an economic level but also on a political level”. Since entering Sudan’s oil business China has stepped up sales of arms including fighter aircraft. The manufacture in Sudan of Chinese weapons and ammunition complicates the enforcement of a UN embargo on supplies to militias in Darfur. Chinese-designed arms and radios are reported to have been used across the border in Chad – where France keeps a garrison – by rebels alleged to be operating with Sudanese support.
In war-ruined Angola, the Chinese have leapt into one of the world’s most inhospitable investment environments, offering a $2bn oil-backed credit at a time when western banks and international institutions have been cautious about lending. An agreement between Angola and the International Monetary Fund has been held up, largely because of IMF concerns about how the government manages its oil money. Similar misgivings have prevented the holding of an international donors’ conference. “The Chinese are offering the loan as an alternative to working with the IMF,” says Princeton Lyman, director of Africa policy studies at the Council on Foreign Relations in Washington.
Up to now, the African view of China’s fast-growing involvement has been overwhelmingly positive. China is widely regarded as a model of modernisation, more responsive to African needs than western partners, able to build dams, roads and bridges more quickly and cheaply and providing consumer products better suited to African pockets. Although Africa’s non-oil countries have suffered from higher import costs, the continent is also benefiting from the rise in commodity prices driven by Chinese demand.
But criticism is growing. Trades­people from Cape Verde to Namibia complain about a Chinese invasion. In Lagos, West Africa’s main commercial hub, Nigerian authorities have been ejecting unlicensed Chinese market traders. Companies from China are censured for preferring Chinese labour or, when they employ locals, providing poor conditions. China’s cheap consumer goods displace local production.
Garment factories have been shutting across Africa, with devastating effect in countries such as Lesotho, where some were Chinese-owned. There is a clamour for protection. When South Africa’s Cosatu labour federation staged an anniversary celebration in December, participants peeled off their red union T-shirts in disgust when word went round that they were Chinese-made.
“There’s no altruistic relationship between China and Africa,” says Lyal White of the South African Institute of International Affairs. China’s interest is not in the high-value manufactured goods South Africa wants to promote. “Africa is a treasure trove of raw materials and that’s what China needs.”
Chris Alden, an expert at the London School of Economics, says of the relationship: “African actors are beginning to see this as a mixed blessing.” While in some countries China’s involvement appears benign, in others its approach undercuts efforts by the African Union and western partners to make government and business more transparent and accountable. Chinese co-operation provides a lifeline to countries such as Togo, largely cut off from European aid, and comfort to pariah regimes.
Avisit to Beijing in November by Jendayi Frazer, US assistant secretary of state for African affairs, marked only a first step in interaction with China over Africa. China does not provide figures for development aid, has declared no arms sales to the UN register since 1996 and its technological assistance has raised questions about its motives. For a satellite to be launched next year, Nigeria has turned to Great Wall Industry Corporation, a Chinese company against which the US has applied sanctions for allegedly supplying Iran with technology that could be useful for a nuclear weapons programme.
A senior Nigerian foreign affairs official says: “The perception is that China is catching up with the level of engagement that western governments have?.?.?.?Being a developing country, they understand us better. They are also prepared to put more on the table. For instance, the western world is never prepared to transfer technology – but the Chinese do. It is our view that, while China’s technology may not be as sophisticated as some western governments, it is better to have Chinese technology than none at all.”
Money flows to oil
In less than 10 years China has secured oil production and exploration deals in a swathe of countries reaching across Africa from the Red Sea to the Gulf of Guinea.
Its rapid emergence in African oil reflects the explosive growth of its energy needs and its desire – in common with the US – to find sources outside the Middle East. China relies on Africa for between one-quarter and one-third of its oil imports. “It’s the same as US policies [on oil],” says Li Zhibiao, a researcher at the Chinese Academy of Social Sciences, a state think-tank. “China wants to have diversified channels in case of disruptions.”
Its first big foray came in late 1996 when state-owned China National Petroleum Corporation took a 40 per cent stake in concession blocks in Sudan originally held by Chevron of the US. The Chinese co-built a 1,500km pipeline from the oilfields to Port Sudan, and a refinery near Khartoum. China now takes half or more of Sudan’s oil exports, while western oil majors have kept their distance. US oil companies are barred from doing business there.
Remaining Canadian, Swedish and Austrian interests were almost all sold in 2002 and 2003 after pressure from church and human rights groups over the role of oil in fuelling the long war in southern Sudan. More recently, China has invested heavily in larger African oil exporters. In Angola, China National Petrochemical Corporation (Sinopec) bought into a BP-operated offshore block in 2004, securing its entry with a $2bn credit line to rebuild the country’s infrastructure. It has tied up with Angola’s Sonangol to run another block, previously run by Total. China is already Angola’s second customer for oil after the US.
In Nigeria, Africa’s biggest producer, the state-controlled China National Offshore Oil Corporation is to pay $2.3bn for a 45 per share of output from an offshore block. CNPC is in talks over a Nigerian refinery in an effort to win preferential treatment in oil block allocations.
CNPC also has exploration deals with Algeria and Niger and a stake in exploration in Chad, a country that officially deals with Taiwan rather than China. Sinopec has signed an evaluation contract in Gabon, where activities headed by Shell and Total have dwindled. In Equatorial Guinea, where US groups dominate a surging oil business, China is said to be providing military training and specialists in the hope of gaining oil concessions. Teodoro Obiang Nguema, that country’s dictator, describes China as its main development partner.
Mugabe gets shelter
Zimbabwe, according to president Robert Mugabe, is “returning to the days when our greatest friends were the Chinese”. On independence day last year he told supporters: “We look again to the East, where the sun rises, and no longer to the West, where it sets.”
Mr Mugabe’s ties with China date from the pre-1980 struggle against white minority rule, when the Soviet Union backed the rival Zapu movement and his Zanu relied on Chinese support. The relationship has flourished anew. Mr Mugabe is no longer welcomed in Europe or the US but is still fêted in China.
Last year China became Zimbabwe’s largest supplier after South Africa, shooting up from 11th place in just three years. Businesspeople believe the figures may be understated because of the large volume of Chinese goods – disparagingly referred to as “zhing zhong” – smuggled in or re-exported from neighbouring countries.
Zimbabwe’s pro-government media tout China as the main target market for tourists, the main source of inward investment, the most likely foreign partner to help finance the government’s plans and the single most important source of defence equipment. The state investment agency talks of proposed Chinese investment of more than $1bn. But it is hard to separate fact from government efforts to convince Zimbabweans that an economic boom is about to materialise.
Reports of Chinese plans include a joint coal venture, a glass factory, a ferrochrome smelting plant, telephone assembly and beef production on vast tracts of acquired land. China’s ambassador recently told some western counterparts that none of the seven co-operation agreements signed a year ago had yet been activated. But there is no doubt about China’s interest in Zimbabwean tobacco and platinum and other mineral reserves, which are mostly controlled by South African or British companies.
China was reported in 2004 to have agreed to sell Zimbabwe FC-1 multi-role fighters as replacements for its F-7s, the Chinese version of the Russian MiG-21. Defence sales are also said to include equipment to enable intelligence services to spy on internet and e-mail traffic. Struggling Air Zimbabwe has meanwhile received three Chinese MA-60 aircraft, on a buy-two-get-one-free basis.
Defending himself against charges of extravagance in building a mansion in Harare, Mr Mugabe retorted: “Of course it is lavish: the Chinese are doing the roofing. They are our good friends, you see.”
Reporting by David White, with Andrew England, Tony Hawkins, Dino Mahtani, John Reed and Andrew Yeh read more

Titans Acquire Minority Stakes
With Little Control of Their Own;
Will the Strategy Prove Wise?
By KATE LINEBAUGH
February 23, 2006
The world's banking titans, including Bank of America Corp., Royal Bank of Scotland PLC and Merrill Lynch & Co., have spent billions of dollars buying small stakes in China's biggest lenders. So far, they are looking pretty smart.
When Bank of America took a 9% stake in China Construction Bank Corp. last June, the North Carolina lender agreed to pay $3 billion. That stake is valued at about $9.2 billion, following a surge in the shares after the bank's initial public offering of stock in October. HSBC Holdings PLC's 19.9% interest in China's fifth-largest lender, Bank of Communications Co., is valued at more than $5 billion, more than double what the British bank invested. Shares in both Chinese banks have soared about 40% so far this year.
Those numbers help explain foreign investors' decision to put down a lot of money with not a lot of say in how their investments are managed. The investors have minimal influence over the operations of their Chinese partners, and so far they have received few of the benefits they anticipated, such as credit-card joint ventures. They are barred from holding more than 25% of a Chinese lender.
For a major Western bank, though, it remains an open question whether taking a minority stake with little control makes for a good China strategy. The returns can be huge, but there is no assurance that the investors' highflying stakes won't decline before their three-year lockup expires — or that China will succeed in turning its banks into institutions that the foreigners will be glad to be part of.
Low prices have increased the temptation for foreign bankers to buy into the financial system of one of the world's fastest-growing major economies. As a result, they will be well-positioned if China eases foreign-investment limits. “The growth potential is huge,” says Chi Lo, an economist in Hong Kong and author of several books on China. “That is why everyone is trying to get in and get a slice of it.”
As more of China's banks go public, their pre-IPO investors are hoping for gains. Bank of China, the country's second-largest bank by assets, is looking to raise about $6 billion in an initial public offering in the first half of the year, when the likes of RBS, Merrill Lynch and others may see the value of their investments increase. They say they are in China for the long haul.
The largest Chinese bank, Industrial & Commercial Bank of China Ltd., finalized a $3.8 billion pact last month for a consortium led by Goldman Sachs Group Inc. to buy a 10% stake. ICBC wants to go public by the end of the year.
The bank stakes give foreign investors broad exposure to all sectors of China's booming economy as the government is driving its lenders to overhaul. In the past two years, foreigners — including financial investors with no plans to do any banking in China, such as Singapore's state investing arm, Temasek Holdings Pte. Ltd. and New York hedge fund Och-Ziff — have sunk more than $20 billion into the banking sector. Meanwhile, the Chinese government has spent more than 10 times that to resuscitate its banks so they can help stimulate domestic spending and provide capital for its businesses.
The government aims to transform China's banks from de facto cashiers of the state into commercially driven enterprises. It hopes they will draw on the expertise of foreign financial institutions to improve their risk management, develop products and put in place stricter oversight.
What investors get, beyond the return on their investments, is access to China's biggest lenders and their client lists, and an inside view of banking in the world's fourth-biggest economy. In addition, the foreign banks can ingratiate themselves with Chinese authorities by helping to build confidence in a financial sector better known for poor management, corruption and lax lending policies.
“There is a level of enhanced access to the Chinese economy which isn't immediately obvious to the naked eye,” says Matthew Ginsburg, a managing director at Morgan Stanley, which advised on China Construction's listing.
Risks like China's chronic bad-loan problem have in part been mitigated through guarantees that the Chinese banks have made against future financial troubles. A recent Standard & Poor's Corp. report said the sector is high-risk in comparison with its global peers, but found that profitability, asset quality and the quality of information have improved. Asked if S&P expected China to change the 25% cap on foreign ownership in Chinese banks, Ping Chew, an analyst, said there won't be a “general liberalization,” but it could be done on a case-by-case basis.
Citigroup Inc. and Société Générale SA of France are fighting tooth and nail for the two companies and their partners to get an 85% stake in Guangdong Development Bank, a midsize lender in desperate need of capital to offset a balance sheet laden with bad loans. Citigroup is seeking an exemption to the foreign-ownership limit so it can hold between 40% and 45%, while Société Générale's eventual portion would be within current rules of 25% maximum foreign ownership.
China has frequently sold stakes to foreign companies in the same line of business before state-owned enterprises go public, to increase confidence in the share sale. Those arrangements have generally resulted in handsome profits for the investors, though not always in lasting partnerships. Royal Dutch Shell PLC and BP PLC, for instance, bought stakes in China's major oil companies before they went public and sold those stakes, for substantial gains, after the three-year lockup expired.
The situation is a bit different for the banks, because China is opening its vast retail-banking market to foreign institutions at the end of the year, under its World Trade Organization obligations. Foreign investors will then have a shot at China's $1.7 trillion in savings.
But foreign banks' true access to that money is limited by their tiny branch networks. HSBC has the biggest presence of any foreign bank in China, with its 20 banking outlets, compared with some 20,000 for ICBC, the country's biggest bank.
At present, one small local bank is effectively controlled by a foreign party. Private-equity firm Newbridge Capital has about an 18% stake in Shenzhen Development Bank, a lender with a broad base of shareholders with small stakes, that it purchased at the end of 2004.
The Chinese company's chairman, Frank Newman, a former Bankers Trust chief executive, says control has been essential to make the changes needed to bring the Chinese lender closer to modern banking. “Chinese banks historically have been very decentralized,” he says. “There are some functions, particularly credit and management functions, that need to be more coordinated across the entire bank.” Mr. Newman is a director of Dow Jones & Co., which publishes The Wall Street Journal. The lender has pulled back from marginal businesses with low returns, such as transactions between banks.
The investors that have cast their lot with China's biggest banks won't enjoy that kind of control. China isn't expected to allow foreigners to control any of its biggest four banks, which control more than 50% of banking assets.
Bank of America, for instance, has a seven-year strategic alliance with China Construction that involves committing the equivalent of 50 Bank of America employees' time to work at the bank, an institution with 14,000 branches and 300,000 employees. Bank of America has one seat on a 15-person board. The two sides have agreed to discuss a potential credit-card joint venture in China. As part of this, Bank of America agreed to withdraw from retail banking in China, though it retains its corporate and commercial-banking presence.
Investors “have these short-term windfalls and huge returns on their investments,” says Mei Yan, a banking analyst at Moody's Investors Service in Hong Kong. As to the chance they will find long-term partners, she says, “we have questions in our mind whether eventually that will work out or not.”
Write to Kate Linebaugh at [email protected] read more

Global Supply Concerns
Had Sent Crude Higher
By MYRA P. SAEFONG
MarketWatch
February 22, 2006 3:04 p.m.
Crude-oil futures fell Wednesday as focus shifted away from some of the world's trouble spots and toward weekly U.S. inventories data, which are expected to show the nation well supplied with oil and petroleum products.
On the New York Mercantile Exchange, crude oil for April delivery fell $1.73 to $61.01 a barrel, marking its first full day as the front-month contract. On Tuesday, the March and April contracts closed up 2%, driven higher by supply concerns relating to Nigeria, Iran and Ecuador.
The Energy Department will release reports on supplies of oil and its products and on natural gas separately Thursday, which are expected to show builds for the week. The oil data are being released a day later than usual because of the Presidents Day holiday earlier this week.
Traders “seem to have shrugged off potential threats to supply … and to have refocused on swelling supplies,” said Michael Fitzpatrick, an analyst at Fimat USA. “The governor of Nigeria doesn't think that militants are set to attack again soon — and that has apparently prompted a little profit taking in front of tomorrow's reports,” he said, but “certainly seeing a 2.4 million barrel-per-day producer threatened is not something that can be fully discounted.”
Royal Dutch Shell halted 455,000 barrels a day of production over the weekend after nine of its workers were kidnapped. The company also extended force majeure, whereby it is legally protected from not meeting contractual obligations on Nigerian crude-oil exports.
The governor of the oil delta state said Tuesday that he has been in contact with the kidnapped workers and urged Shell to resume suspended operations, according to Man Financial's Edward Meir.
Meanwhile, “the Palestinian situation is probably about to roil Middle East tensions, as the withholding of tax revenues from the Palestinian authority could result in a breakdown of control and a flaring of hostilities,” said Mr. Fitzpatrick. Also, “Iran overnight offered to finance Hamas, and that is sure to whip up anxiety, as well,” he added in a note to clients.
Elsewhere, Ecuador has stopped pumping oil after protesters invaded a station late Tuesday. The state oil company halted exports of 144,000 barrels a day because of the protests, whose organizers are demanding that more resources be provided to the poverty-stricken area.
And after failing to reach an agreement with Russian negotiators at the weekend, Iran is due to restart talks on Thursday ahead of a pivotal meeting of the U.N. “If the talks fail, Iran will most likely face a response from the Security Council, although what exactly is in store for them at this stage is no doubt the subject of intense back-room negotiations,” said Mr. Meir. “The murky geopolitical backdrop … should keep markets nervous.”
Indeed, with the “geopolitical pot somewhat higher than a low boil, a quick retest of the February lows seems out of the question,” said Mr. Fitzpatrick. “While stockpiles could continue to swell, and temperatures will eventually break higher, there doesn't appear to be and easy or quick solution to a cornucopia of woes that could potentially threaten supply.”
Write to Myra P. Saefong at [email protected] read more

Home, to Karafuto
February 22, 2006 | More from Dan Hilton
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Dan Hilton is a freelance writer and photojournalist from Victoria, BC now living in Sapporo, Japan. He is a regular contributor to several Japanese publications and his articles about politics, culture, travel, and daily life in Japan have appeared in magazines and newspapers in Canada, Japan, and the United States.
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It's a five-hour journey that spans 60 years. Standing on the deck of the Eins Soya, a sparkling white Japanese passenger ship marked with conspicuous orange and red stripes, I listen as seventy-year old Kanari Yoshikatsu explains that this is no simple vacation. “We're coming home,” he says, gazing out over the Okhotsk Sea towards Russia's Sakhalin Island.
Sakhalin Island is a rugged Russian outpost that cuts southward towards Japan like a Samurai sword, stopping just 40 kilometres from the tip of Hokkaido. A former czarist penal colony, Sakhalin Island – known as Karafuto in Japan – might seem like an unlikely vacation spot for elderly Japanese tourists, and it is. An estimated five million Japanese visit Hokkaido each year, but only about five thousand make short trip from there to Sakhalin. But those who do aren't on vacation – they're on a journey.
Russian students returning home to Sakhalin wave goodbye to Wakkanai, Japan
Judging by the melancholy tone on board the ship, for many Japanese it's not an easy journey to make. Elderly Japanese men and women, some accompanied by their adult children, sit quietly in groups or stare out over the expanse of ocean. There is little conversation and less laughter on board, and those who speak do so in a pensive tone. The past, all six decades of it, hangs in the air.
As he recalls his family's flight from Soviet troops in August, 1945, Yoshikatsu's eyes grow misty. Over several cigarettes, he tells how thousands of Japanese were killed, disappeared, or taken to Siberian labour camps. “Many Japanese families left everything behind, and most didn't make it back to Japan,” he explains. “Our family was very lucky.”
Ownership of the narrow, 948-km-long island has been long in dispute. In 1845, Japan unilaterally declared sovereignty over Sakhalin but ceded the northern half to Russia in the Treaty of Shimoda ten years later.
Japan held the southern half of the island until the 1875 Treaty of Saint Petersburg, when it was traded back to Russia in exchange for the nearby Kurile islands. Then in 1905, with the conclusion of the Russo-Japanese war, both countries signed the Treaty of Portsmouth which saw the southern part of the island return to Japanese control, where it remained until the closing days of the Second World War.
Emboldened by Imperial Japan's impending defeat, Soviet troops disregarded a non-aggression pact signed with Japan and advanced on southern Sakhalin in 1945. After a fierce resistance, the vastly outnumbered Japanese defenders surrendered and all of Sakhalin became Russian territory once again, one hundred years after Japan first claimed the island as its own.
Many Russians view the partition of Sakhalin as a temporary and embarrassing occupation by a foreign power; Japanese, in contrast, consider it a fair division of a long-disputed territory. Today the dispute continues with many in Japan calling for the return of both the Kurile Islands and southern Sakhalin, which is unlikely.
Russia has suggested it might be willing to return half of the Kurile islands, but this falls far short of appeasing those Japanese who long to see Sakhalin reunited with Japan. “Sakhalin is much closer to Japan than Moscow, and many people in Japan are talking about this possibility to end the dispute.” explains Yoshikatsu. “But this will probably never happen. Russians are very proud of their past, and of Sakhalin.”

Today, the dispute over ownership of Sakhalin Island has less to do with pride, patriotism, than oil, fishing, and gas. Sakhalin is home to vast offshore energy reserves that are only now being exploited, and the waters surrounding Sakhalin teem with dozens of species of sea creatures, many caught by Russian fishermen and sold in Japanese ports.
Because of its growing energy-economic importance, Sakhalin has changed much in the post-Soviet period. Just over a decade ago, residents stood in long lines for meager rations handed out at poorly stocked government grocery stores, and foreign visitors weren't permitted on the island.
Today, in Sakhalin's capital city, Yuzhno-Sakhalinsk, new hotels, shopping centres, and restaurants stand alongside decrepit concrete apartment buildings and crumbling wooden cottages. Thousands of tourists visit Sakhalin every year, and the island has attracted more foreign investment than any other region in Russia.
But despite the current pace of change and the past six decades of Russian administration, Japan's history remains etched on Sakhalin Island. Japanese bunkers can still be found on remote beaches, the narrow-gauge railway built by the Japanese army is still in use today, and Japanese buildings still stand in the capital.
Much of Sakhalin's past also remains deeply etched in the memories of the Japanese who were born here and still call it home. “I come to remember the past, but also to help build something for the next generation,” says Yoshikatsu. Although his family lost everything fleeing the Red Army in 1945, he doesn't hold any historical grudges.
“Many of my friends are Russian,” he says. “In Soviet times, they were people suffering under a terrible system, and that system did terrible things. But that system is gone, and today we can focus on the future.”
He's been doing just that. In 2000, together with a partner, he established a Japanese-language school in Yuzhno for Russian students of all ages. “We're trying to build bridges, with our homeland, with Russians, and with our past. Language is the best way for us to do that,” he explains.
It's unlikely the Japanese and Russian governments will ever build a bridge between Hokkaido and Sakhalin, but in the meantime, people like Yoshikatsu are building bridges between two cultures and countries that may just last. read more

11:39 | 22/ 02/ 2006
YUZHNO-SAKHALINSK, February 22 (RIA Novosti) – A blanket of yellowish snow has covered a town on Russia's oil-rich Far East island of Sakhalin, off the Pacific coast, local emergencies officials said Wednesday.
Samples of the snow, which has a strong odor and an oily texture, have been sent to a chemical laboratory for tests, the officials said. It may be a result of the environmental pollution caused by the island's oil and natural gas industry.

'Quasi-permanent state' of violence in oil-rich delta
By LYNN J. COOK and GREGORY KATZ
Copyright 2006 Houston Chronicle
RESOURCES
Countries ranked by net crude oil exports in 2004:
Country Million barrels per day
1. Saudi Arabia 8.73
2. Russia 6.67
3. Norway 2.91
4. Iran 2.55
5. Venezuela 2.36
6. United Arab Emirates 2.33
7. Kuwait 2.20
8. Nigeria 2.19
9. Mexico 1.80
10. Algeria 1.68
Source: Energy Information Administration
A wild card rebel group has emerged from the swampy mangrove thickets of Nigeria's oil-rich delta region.
The Movement for the Emancipation of the Niger Delta has kidnapped oil workers — most recently nine Willbros employees, including three Americans — sabotaged pipelines and hobbled the flow of crude from Africa's top exporting nation. The militants may be new, but violence in Nigeria is not.
As the oil industry attempts to get a handle on what exactly this group wants, some experts are linking the violent streak to domestic political rivalries and jockeying for power as the mid-2007 presidential elections draw closer. Others worry that the militants have given up on the government entirely.
Abby Crawford, a geopolitical analyst in Washington with Strategic Forecasting, said the same spike in violence was seen before the 2003 election in Nigeria.
“It's more of the same in that sense,” she says. “What's uncertain about this period is that this group is an unknown commodity.”
In January the rebels kidnapped four foreign oil workers, including Houston resident Patrick Landry, from a Royal Dutch Shell oil project and held them for almost three weeks before releasing him. That's not much of a track record, though and Crawford says it's tough to determine whether the militants are after “money as usual or are looking for something completely different.”
Nigerian energy consultant Dapo Odesanya has listened for decades as locals complained about corrupt government officials frittering away oil revenues and multinational energy companies wrecking the environment.
“These are old battles, but there is a disturbing element this time,” he said. “I think they're totally disillusioned with the political process. Those involved seem absolutely determined to cause violence and embarrassment to the government as the only way to bring about change.”
Worries about oil supplies were one of the factors why crude oil jumped $1.22 to close at $61.10 per barrel on the New York Mercantile Exchange in the first day the market was open after this weekend's attacks.
New threats
The rebel movement, dubbed MEND, issued new threats this weekend, ranging from shanghaiing a Shell oil tanker and killing everyone on board to assassinating Nigerian President Olusegun Obasanjo if he enters the region.
The group has also called for international mediators to intervene in the current hostage situation, calling the Nigerian “fraudulent,” according to the Associated Press.
MEND also said it would welcome entreaties from the nine captives' families, a classic move kidnappers hope will bring international attention to their cause.
So far, those American families have remained steadfastly silent.
Odesanya laments what he sees as a tremendous step back for Nigeria's oil industry.
“It's tragic. At a time when there's every opportunity for Nigeria to become more prominent in the news as one of the last frontiers for petroleum and natural gas production, this sort of thing is particularly depressing,” he said.
Six months ago Nigeria seemed like a place where companies could finally calculate the risks and begin pouring in capital, said Odesanya, who works in Beijing with Chinese oil companies looking to invest in Africa.
“What's happened in the last three, four, five weeks have set things back a hell of a long way. It's one of those situations where I can't see the benefit for anyone.”
But Robert Mabro, director of the Institute for Energy Studies at Oxford, thinks this round of rebel activity could end as abruptly as it began.

“I see it as a quasi-permanent state of civil strife,” he said. “If there are … more abductions of personnel, one could reach a situation where the oil companies will have to pull out their men, but I don't know if we've reached that yet.”
For better or worse?
Whether oil is a blessing or a curse depends on the nation's population, according to Keith Myers, a fellow at London-based think tank Chatham House.
In a briefing on petroleum, poverty and security in Africa, Myers wrote: “For oil-rich countries with few people, the benefits are enormous,” pointing to rapidly modernizing Middle Eastern nations such as Qatar and the United Arab Emirates.
“For those with less oil but a huge population, such as Nigeria, it is a very different story.”
Put simply, Nigeria's oil wealth does not trickle down.
Few local jobs are created by oil projects while generating a volatile — and ultimately unsustainable — revenue stream for the government, according to Myers.
Toss in rampant smuggling and a government whose modus operandi has been corruption and it's like throwing fuel on the fire of resentment about how oil wealth is taken out of the Niger River Delta and squandered by far-flung politicians, said Manouchehr Takin, an oil analyst at the Center for Global Energy Studies in London.
“For years they had a very corrupt dictator as president, Sani Abacha, and an investigation has shown that billions of dollars were stolen. This has inflamed the situation,” he said, adding that government officials “always promise a more equal distribution of revenue, but they don't do it.”
Obasanjo is barred from seeking a third term in office, but he has hinted to the press in that country that he plans to alter the constitution and run again when the vote is held in mid-2007.
This has angered militiamen who accuse the president of rampant corruption and even raised the ire of some from within Obasanjo's own ranks — the People's Democratic Party.
Multinational energy companies, including Royal Dutch Shell, produce crude oil in Nigeria under joint ventures formed with the federal government. Experts say much of the money generated through these arrangements does, in fact, flow to government coffers, but it's not equitably distributed throughout the country.
“The Nigerian government has a 50 percent interest, and the profits come back in the form of grants to the states, and the state governors wield enormous power because they decide how to use the money,” said Dylan Hendrickson, an analyst with the International Policy Institute at King's College in London. “So many people feel excluded.”
The task of governing is made much more difficult by the incredible ethnic diversity of Nigeria, where more than 200 languages are spoken and tribal rivalries are intense.
The oil companies spend substantial amounts on “development grants” to schools, hospitals or water treatment projects in oil-producing regions, but in reality this money is paid directly to competing groups to try to keep everyone happy so that oil production can proceed, Hendrickson said.
“It's a very complicated balancing act to try to keep the different groups happy. The question is at what point does it stop being financially viable to operate there,” Hendrickson said. “Oil has been central to Nigeria's development, and some people would argue it's been a curse.
“When a poor country suddenly has all this wealth and is unable to use it effectively so that it benefits everyone, you have real problems.”
[email protected] [email protected]
Gregory Katz reported from London, while Lynn J. Cook reported from Houston. read more

By Kevin Morrison
Published: February 22 2006 02:00 | Last updated: February 22 2006 02:00
Oil futures in London eased before closing slightly ahead after the large gains from the previous session, triggered by attacks on production facilities in Nigeria. In the US, oil rose sharply as it played catch-up with London following Monday's Presidents' Day holiday.
IPE Brent for March delivery slipped 39 cents in early trade but closed at $61.60, up 6 cents, a barrel in London trade. It had gained $1.65 in the previous session.
The March West Texas Intermediate contract on Nymex added $1.22 to settle at $61.10 a barrel in New York trade. With the March WTI contract expiring at the close of trade yesterday, there was more attention on the April WTI contract, which rose 86 cents to $62.15.
Nigeria's oil exports have fallen by about 25 per cent following militant attacks on oil production facilities and pipelines. Royal Dutch Shell has closed a total of 455,000 barrels a day of oil production in Nigeria, or about19 per cent of its output.
The fall in Nigerian oil output ahead of the March 8 meeting of oil ministers from the Organisation of the Petroleum Exporting Countries has reduced the prospect of the oil cartel cutting output at the meeting.
“Until last weekend, I would have said there was a good chance that Opec would cut output – now I am not so sure, with Nigerian oil exports falling so much,” said Adam Sieminski, global energy strategist at Deutsche Bank.
Venezuela's oil minister last week said he wanted the cartel to cut output by up to 1m b/d, following the increase in oil inventories in the US and Europe.
Gold eased more than $1 to $554.70/$555.60 a troy ounce in late London trade.
“We believe that gold is attempting to find a range with the recent extremes of $535 and $555 likely to confine the metal for a while,” John Reade, precious metals strategist at UBS said in a note.
Base metal prices extended their recovery from the large declines suffered in the past two weeks.
Copper rose for a fourth consecutive day, adding $44 to $4,945 a tonne on the London Metal Exchange. The three-month LME aluminium price gained $52 to $2,425 a tonne. The benchmark zinc price rose more than 5 per cent to $2,235 a tonne, but remains almost $200 below its record high reached two weeks ago.
US cocoa futures fell more than 3 per cent to their lowest level this year, taking their drop in the last month to almost 10 per cent. The New York Board of Trade's cocoa contract for May delivery slipped $30 to $1,455.
The fall in cocoa prices comes at a time whenconfectionery companies have warned of potential cocoa shortages due to increased Chinese chocolate consumption. read more

A number of independent TDs have issued a joint call for Natural Resources Minister Noel Dempsey to resign over his handling of the Corrib gas pipeline situation.
The five TDs have accused Mr Dempsey of interfering in mediation talks between Shell and local residents who are opposed to the pipeline project.
Mayo TD Jerry Cowley claimed today that the minister was meddling in the situation despite promising that the mediation process would be independent.
“The minister has unilaterally interfered with and changed the mediation process to include anyone who had any views to contribute,” he said.
“This clearly was against what had been agreed and has rendered mediation impractical and amounting to little more than a process of investigating diverse views.” read more

(Interfax News Agency Via Thomson Dialog NewsEdge)MOSCOW. Feb 20 (Interfax) – Dale Rollins, CEO of Salym Petroleum Development (SPD), a joint venture between the British-Dutch company Shell and Russia's NK Evikhon, has been appointed vice president of production, staff, health and the environment for Shell Russia, Shell told Interfax.
Rollins will keep his post as SPD general director. He will continue to head the project to develop the Salym group of fields in the Khanty-Mansiisk Autonomous District.
Shell said that Evikhon has been informed of the change. Chris Finlayson was appointed head of Shell Russia in Novemberoflast year. He is responsible for developing existing and new projects in Russia.

In addition to SPD, Shell is also taking part in the oil and gas project Sakhalin-2 in Russia, which is expected to build Russia's first plant to produce liquefied natural gas (LNG). read more

More Disruptions Expected
Amid Conflict With Rebels;
Crude Hits $61.10 a Barrel
By SPENCER SWARTZ
February 22, 2006; Page C3
LONDON — World oil markets should expect more supply disruptions in Nigeria as military forces are stretched in dealing with militants emboldened by a series of recent attacks on oil facilities.
Stability in Africa's biggest oil-producing nation hit a new low Saturday when militants abducted nine foreign oil workers and attacked a handful of oil pipelines and loading facilities, cutting Nigeria's output available to global markets by 19%.
“I think this is the most serious it's been in three years,” said Stewart Williams, Africa analyst at Wood Mackenzie, the Edinburgh, Scotland, consultancy. “There was a period when things looked like they were getting better, and clearly they are now going the other way.”
The attacks have pushed crude-oil prices higher in the past few days. Benchmark light, sweet crude-oil futures for March settled up $1.22, or 2%, to $61.10 a barrel on the New York Mercantile Exchange, marking the highest closing in a front month since Feb. 13.
Nigeria's high-quality light, low-sulfur oil, referred to as sweet, is coveted by refiners in the U.S. and Europe because of its high gasoline content and relatively cheap processing costs.
Nigeria, a member of the Organization of Petroleum Exporting Countries, is the fifth-biggest oil exporter to the U.S., which took on average about 1.1 million barrels a day of Nigerian crude in 2004.
Recent supply disruptions aren't expected to have any immediate impact on U.S. gasoline prices because demand is in a seasonal lull, with many U.S. refineries going into planned maintenance and with gasoline inventories well above year-ago levels. But any prolonged disruptions in Nigeria would likely hit U.S. consumers as the summer driving season approaches.
The militants' attacks are concentrated on facilities owned by Royal Dutch Shell PLC, which produces almost half of Nigeria's daily oil output. The company said yesterday the attacks curtailed production of 455,000 barrels a day. Some analysts believe that level of production offline could be routine in the months ahead.
“While in the past, small-scale intermittent attacks have normally curbed 5% to 10% of Nigerian crude-oil supply, escalating well-organized and sophisticated attacks against oil installations this year will likely regularly disrupt about 10% to 20% of supply,” wrote Sebastian Spio-Garbrah, an analyst at the Eurasia Group, in a research note.
The Movement for the Emancipation of the Niger Delta, or MEND, is behind most of the attacks. The militants are seeking to have two leaders of the ethnic Ijaw group, which dominate the Niger Delta, released from prison and absolved of treason and money-laundering charges.
In addition to their demands, the militants also want to wrest greater control of oil resources. While military troops have moved to control the unrest, the government faces the task of decreasing the violence and protecting oil staff and facilities.
“Obviously, the situation in Nigeria is very serious, and one hopes it doesn't get out of hand,” said Rilwanu Lukman, former secretary-general of the Organization of Petroleum Exporting Countries and former Nigerian oil minister. “But the government doesn't want to overdo things by using too much force.”
MEND said it launched attacks Saturday in response to military raids last week on militants suspected of stealing crude oil. The group has vowed to shut down 30% of Nigeria's daily oil output by the end of February.
MEND is allied with other militia groups, such as Martyrs Brigade, which thwart government efforts to track down militants.
Analysts say troops in the field often are underpaid and sometimes help militants in plundering crude oil, a lucrative business that fuels a cycle of violence in which oil is sold for weapons.
In other commodity markets:
SOYBEANS: Prices on the Chicago Board of Trade fell as rains showered Argentina's parched soy belt this week and worries grew about the spread of deadly bird flu in Europe. The diet of poultry consists of soybean products, so culling of birds in Europe lessens soy demand. March soybeans fell 13.75 cents a bushel to $5.8750.
COPPER: Futures rose on the Comex division of the Nymex. Speculative traders bought up copper when prices passed through important technical chart levels. Spot-month March gained 7.25 cents to $2.2735 per pound.
—- Sally Jones contributed to this article.
Write to Spencer Swartz at [email protected]
RELATED WALL STREET JOURNAL ARTICLE:
Nigerian Militants Resist Talks
Associated Press
February 21, 2006 2:54 p.m.
LAGOS, Nigeria — Militants holding nine foreign oil workers hostage refused to negotiate directly with the Nigerian government Tuesday, while crude oil prices climbed on worries that the country's recent pipeline attacks could disrupt global supply.
The West African nation — the fifth-largest oil supplier to the U.S. — is reeling from weekend attacks in which militants blasted oil and gas pipelines and sabotaged a key oil-loading terminal belonging to Shell Oil Co. That and an earlier attack have forced Shell to halt the flow of about 455,000 barrels a day, about one-fifth of daily output.
The Movement for the Emancipation of the Niger Delta said there have been no negotiations for the release of the hostages — three Americans, two Egyptians, two Thais, one Briton and one Filipino — who were seized Saturday. The militants called for independent negotiators. “The Nigerian government is fraudulent and we can never go into negotiations or dialogue with this fraudulent government without the involvement of a neutral third party,” the group's spokesman said in an email to the Associated Press.
The militants, who are pressing for the release of two of the region's leaders from prison and greater control of oil revenues, said they would welcome entreaties from the captives' families.
Dozens of armed militants seized the nine foreigners after storming a barge belonging to the Houston-based oil services company Willbros Group Inc., which was laying pipeline for Shell. The kidnappings came amid a rise in violence in Nigeria's oil-rich south that has cut some 20% of the country's crude production.
Nigeria, Africa's leading oil exporter, usually sends out 2.5 million barrels daily. Violence and sabotage of oil operations have been common in the oil-rich Niger Delta for the past 15 years amid demands by the region's impoverished communities for a greater share of the oil revenue flowing from their land.
The violence led to concerns about supply disruptions that helped send oil prices higher on international markets. (See related story.)
Hostage takings are a common occurrence in the volatile delta, but most captives are released unharmed. Last month, militants held four foreigners for 19 days before releasing them unscathed.
On Monday, the group attacked a pipeline and a houseboat they said housed Nigerian military, vowing to spread their campaign across the vast southern region of swamps and creeks from where most of the African oil giant's crude is pumped. A Shell spokeswoman said the houseboat was abandoned before attackers blew it up. It was unclear who owned the boat and military officials could not be reached for comment Tuesday.
The group also has threatened to kill President Olusegun Obasanjo if he enters the region. read more

By Katherine Griffiths, City Correspondent (Filed: 22/02/2006)
Insurers representing airlines whose fuel supplies were hit by the Buncefield explosion last December are preparing to sue France's Total and Texaco of the US, the main operators at the site in Hertfordshire.
The news comes as the insurance industry braces itself for claims of up to £500m following the explosion near Hemel Hempstead on December 11. The largest blast in Europe since the Second World War miraculously caused no deaths but destroyed several local businesses and forced residents to move out of their homes.
Major airlines such as British Airways, Virgin Atlantic and BMI were severely affected with the Buncefield site being one of four main suppliers of fuel to Heathrow airport. Supplies have been dramatically cut, forcing up the price of fuel when it is already at historic highs.
Those hit by the disaster were disappointed by the first report into events surrounding the explosion, issued yesterday, as it contained nothing on who was to blame. A final report will be issued in several months' time following further investigations by the Health and Safety Executive and the Environment Agency.
Sources say several major corporate claims are being prepared. Among those considering litigation are members of Lloyd's of London which writes much aviation insurance.
BA, Virgin and BMI would not comment on whether their insurers were planning litigation. US carriers such as American Airlines, which use Heathrow as their UK base, might also take legal action because of being hit by the fuel shortages.
Total and Texaco are the main oil companies in the firing line as the owners of the joint venture Hertfordshire Oil Storage Terminal (HOSL) which took up the majority of the space at the Buncefield complex.
But BP and Shell could also be implicated as they own stakes in the British Pipeline Agency which operated storage tanks at Buncefield and was part of the consortium running the West London Pipeline supplying Heathrow.
A spokesman for HOSL said: “We have great sympathy for all those affected by the Buncefield incident, but the cause of the incident has not yet been determined so we are not yet in a position to discuss compensation claims or comment on specific legal proceedings.”
Companies involved are concerned that claims could escalate to cover a wide range of issues, from breach of contract over fuel supply to airlines to hundreds of demands for compensation from those who breathed in noxious fumes.
Several individuals and small businesses have already filed claims for compensation and people close to the situation believe that there could even be grounds for a criminal prosecution.
A row is also brewing over whether Buncefield will be rebuilt. Companies relying on fuel will want the site to be replaced, but environmental groups and local politicians are keen to fight against the rebuilding of such a potentially dangerous site. read more

Royal Dutch Shell suspended almost half of its Nigerian output after a series of attacks over the weekend.
The Anglo-Dutch oil giant said production is down by 455,000 barrels a day, out of a total of around a million.
The price of a barrel of oil rose as much as $1.74 to $61.63 in London trading as news of the violence in the West African country emerged.
Rebels kidnapped nine foreign oil workers on Saturday, and a fire broke out at an export terminal.
Militants are threatening to escalate their attacks on foreign producers as they call for more local control over oil revenues.
The violence is sparking concerns that both Nigeria and Shell will find it hard to meet their production targets this year, pushing global oil prices higher. The setback comes as Shell struggles to replace reserves and boost production, even after reporting record profits. read more

Feb 22, 2006
Crude oil prices were flat Wednesday after climbing earlier in the week on concerns that militant attacks on pipelines in Nigeria would disrupt supply.
Light sweet crude for March delivery was unchanged at US$61.10 a barrel in electronic trading on the New York Mercantile Exchange. On Tuesday, it gained US$1.22.
Nymex gasoline futures slid by 0.16 cents to US$1.4741 per gallon, while heating oil futures dipped US$1.6650 a gallon. Natural gas futures rose 54.9 cents to end at US$7.750 per 1,000 cubic feet.
Nigeria is Africa's leading oil exporter and the United States' fifth-largest supplier, usually exporting 2.5 million barrels daily.
The militants, who are pressing for the release of two of the region's leaders from prison and greater control of oil revenues, have threatened to fire rockets at any ships transporting crude oil from Nigeria.
Militants attacked a Royal Dutch Shell Plc-operated pipeline switching station on Monday and a boat they claimed housed Nigerian military personnel, vowing to spread their campaign across the south _ the area from which most of the country's crude is pumped. That, and an earlier attack, has forced Shell to halt the flow of about 455,000 barrels a day _ about one-fifth of the country's daily output, or less than 1 percent of total global demand.
The violence Monday didn't cause further production cuts, but sent prices higher. Shell said Tuesday it was extending its force majeure that protects the company from meeting its contractual obligation on Nigerian oil exports.
The fact that light, sweet Nigerian crude is in high demand, especially in the U.S., makes the latest supply disruptions all the more important, traders said.
Insurgent violence in Iraq also has increased over the past few days, with sabotage to northern Iraqi oil installations halting exports of 400,000 barrels a day. The country produces about 2 million barrels a day, down by about 800,000 barrels from before the U.S.-led invasion. read more

Martyn Wingrove
Feb 22, 2006
DESIGN and engineering work is under way on the Olokola liquefied natural gas project in Nigeria after three oil companies signed a project development agreement with the government.
Four LNG trains with a combined production capacity of 22m tonnes per annum are in the plans of Royal Dutch Shell, Chevron and British firm BG Group.
Front-end engineering and design studies can begin now the agreement is signed with Nigerian National Petroleum Corp and the partners expect the technical work will be completed by the end of this year.
The joint venture group expects to make the final investment decision early in 2007 and to have the first two trains on-stream in 2010.
'The Olokola LNG project creates new LNG infrastructure from which Shell can enhance its leadership in LNG,' said Shell's gas and power executive vice-president Catherine Tanna.
'Olokola will supply much needed energy to the rapidly growing LNG markets of Europe and North America.'
Four trains of 5.5m tpa capacity each are planned, plus a processing plant to produce natural gas liquids as a by-product.
The complex will be built in the Olokola free trade zone on the Nigerian southwest coast and will take gas from the West Niger Delta onshore and offshore fields.
Shell and Chevron are well established upstream in Nigeria. BG Group entered this section in last year's licensing round. read more

FRED PEARCE
THE 20th century was warmer than any time in the past thousand years, but that is nothing compared with how hot the Earth could become over the next millennium.
If we burn all the fossil fuels that are left underground, the globe will warm by an average of up to 13 °C, according to the first serious assessment of how global warming might progress beyond 2100, the normal time frame of model predictions. That will wipe out most rainforests, destroy the fertility of many soils and leave the Arctic ice-free even in midwinter.
London will be as hot as Cairo – except that, along with many of today's most populous areas, it will have been engulfed by an 11-metre rise in sea levels.
So far humans have released about 400 billion tonnes of carbon into the atmosphere, as carbon dioxide, by burning fossil fuels and destroying forests – enough to have already raised global temperatures by around 0.6 °C. Ten times as much carbon remains underground in reserves of oil, natural gas and coal, according to ateamledbyTim Lenton of the Tyndall Centre for Climate Change Research in Norwich, UK. And unconventional fossil fuels like tar sands, oil shales and methane-rich ices called clathrates beneath the seabed may contain another 10,000 billion tonnes.
Lenton and his colleagues studied the likely impact of burning all these fuels over the coming millennium. He says that the oceans would ultimately absorb most of the carbon dioxide, but even so, air temperatures in AD 3000 would stabilise at some 13 °C warmer than today (Climate Dynamics, DOI: 10.1007/S00382-006-0109-9).
Meanwhile, the thermal expansion of the oceans plus the melting of the Greenland ice cap, which is likely to be irreversible above a 2.6 °C wanning, would raise sea levels by some 11 metres. “Only by starting to reduce carbon dioxide emissions now can we avoid the melting of the Greenland ice cap,” Lenton says. Sea level rise could be even greater if the Antarctic ice sheet starts to disintegrate.
If the world burnt all its conventional fossil fuels but left underground all the unconventional forms, then global warming might not exceed 7 °C, according to Lenton's calculations. That already looks unlikely. George W. Bush's call last month for the US to end its addiction to foreign oil produced a flurry of interest in exploiting unconventional sources of oil in North America.
Shell has announced a breakthrough in extracting oil from shale in Colorado, and the US Department of Energy has reportedly identified oil sands in the Canadian province of Alberta as a vital future resource.
Lenton dismisses the theory that a new ice age may be upon us by 3000, counteracting the warming trend. He says variations in the Earth's orbit mean “the current interglacial era is likely to be exceptionally long”.
Lenton's predictions neatly complement a study published last week that pieced together temperatures in the northern hemisphere over the past 1200 years. Tim Osborn and Keith Briffa of the University of East Anglia, Norwich, assembled sets ^of data, such as the growth of tree rings, that act as a proxy for past temperatures. They show significant natural variation during the medieval warm period from AD 900 to 1200 and in the “little ice age” from 1550 to 1850 (Science, vol 311, p 841). The 20th century, and particularly the past 40 years, emerges as a period of exceptional warming that, unlike previous anomalies, covered virtually the whole northern hemisphere.
Climate sceptics have argued that evidence of this past climate variability, which is probably due to solar cycles, suggests we need not worry about future man-made climate change. But Briffa told New Scientist: “Greater natural climatic variability implies a greater sensitivity of climate to forcing, whether from the sun or greenhouse gases. So greater past climate variations imply greater future climate change.” read more

February 21, 2006 17 23 GMT
Summary
Representatives from Royal Dutch/Shell and Japanese energy firms Mitsui & Co., Ltd., and Mitsubishi Corp. are meeting with Russian state energy major Gazprom to discuss the future of the Sakhalin-2 petroleum project. Before all is said and done, the Japanese will be out, Gazprom will control a very large share of the project, and Shell executives will be extremely depressed.
Analysis
The three participants in the Sakhalin-2 petroleum project — supermajor Royal Dutch/Shell, Japan's Mitsui & Co., Ltd., and Mitsubishi Corp. — are meeting with Russian state energy major Gazprom on Feb. 21 to decide the future of their joint efforts in the Russian Far East.
The Sakhalin-2 project is an offshore oil and natural gas project to the east of Russia's Sakhalin Island that aims to provide liquefied natural gas (LNG) for export throughout the Pacific Rim. The project has been one of the single largest recipients of foreign direct investment in Russia, and the tripartite consortium behind it initially planned to spend $12 billion on its development.
At least that was the plan. In 2005, Gazprom, currently expanding its reach and tightening its grip over Russian energy resources, bullied its way into the project. Though the details are not finalized, Gazprom will soon take 25 percent of Shell's 55 percent stake. Mitsui and Mitsubishi will share the remaining 45 percent. In essence, Gazprom told Shell the same thing it is telling nearly every other foreign energy investor in Russia: Let us in, teach us the technology and pay our way — or we will have your project killed.
These are not idle threats. Gazprom Chairman Dmitry Medvedev is first deputy prime minister, guaranteeing the firm sizable pull with the Kremlin. In addition to being one of Russia's few oil majors, Gazprom is also the state-ordained natural gas monopoly, giving it all the market pull it needs. Some firms, most notably ExxonMobil, simply boarded up their Russian shops and left.
But not Shell. The Anglo-Dutch supermajor has suffered a number of defeats recently, but none more damning than a reserve accounting scandal that would leave even the Enron team impressed. Shell intentionally overstated its reserves by nearly a quarter — an offense that national regulatory bodies, not to mention shareholders, do not take lightly. To be summarily ejected from Sakhalin-2 would have poured fuel onto boardroom fires, and so Shell sued for peace. It accepted Gazprom's offer that it dare not refuse in exchange for a partnership with Gazprom at the Zapolyarnoye field on the Russian mainland that would boost the supermajor's overall reserve holdings.
The first catch came almost immediately. No one ever expected an offshore project in a region with no infrastructure and moving sea ice to be easy or cheap, and costs have spiraled from the initial estimate of $12 billion to $20 billion. Gazprom said this made its involvement in Sakhalin-2 financially questionable, and that it would require additional compensation.
The second catch arrived Feb. 9 when the Russian State Audit Chamber alleged that Sakhalin-2 intentionally selected inappropriate suppliers and contractors, cheating the Russian state out of $2.5 billion in the process — an amount the chamber suggested the Sakhalin-2 consortium should reimburse. Although the audit chamber's decision has no direct legal weight, it often is used by the Kremlin to float policy ideas just before their implementation.
All this proved too much for the Japanese. They wanted to get in on the ground floor of energy development in the Russian Far East in order to secure non-Middle Eastern supplies. Between cost increases, project delays (the first LNG shipment is now set for mid-2008), and Gazprom's pressure tactics, they see no reason to continue with an increasingly bad deal. That became doubly the case when Mitsui and Mitsubishi discovered that the project would have trouble getting financing even in Japan, where money tends to be no object. The Feb. 21 talks are all about how the Japanese can leave the Sakhalin-2 consortium with as much grace as possible (and ideally, still be able to purchase LNG cargoes).
The question now is who gets the Japanese shares. Public discussion of the topic from the firms involved indicates a sale to Shell is in the offing, something the supermajor can certainly afford. Gazprom, in contrast, is extremely cash poor, given that it is the Russian government's largest taxpayer.
But just because Shell is the likely purchaser does not mean it will end up holding all it buys. Gazprom has laid claim to Sakhalin-2, and is likely to bet that Shell's board remains in dire enough straits to capitulate once again. And Gazprom is probably right. read more

Shell, in a seemingly innocent effort to give away a free phone card valued at $2 to students away from home during the Chinese New Year, has, according to Tian, distributed promotional pieces around the Arizona State University campus. In order to redeem the offer, students must fill out a web form including email address, name, address and some other optional demographic information. Certainly, this information is needed to send the actual card, however, the promotion's Terms and Conditions state the cards are only available first come first serve causing one to wonder why Shell needs to collect the information from any person who signs up after the cards run out. Surely, Shell knows exactly how many cards it has to give out and could very easily terminate the promotion once all cards have been claimed rather than continue to collect information up to an arbitrary end date thereby building itself a nice fat database of names for future use.
Of course, the sign up form contains check boxes to control whether or not the person wants Shell to contact them in the future but even if these boxes are left unchecked one has to wonder where that person's contact information ends up. Oops…it just mistakenly ended up in Shell's direct marketing department.
It's inconceivable to imagine Shell would not know how many cards it has to give out in the first place and that they would not be able to track this down to the exact, last applicant, at which time, they could close the promotion thus ending the needless collection of names it knows it can't send the card to. Are we over analyzing this or are companies just coming up with ever sneakier means to collect our contact info? read more

Last Update: 7:24 AM ET Feb 21, 2006
LAGOS (MarketWatch) — Royal Dutch Shell (RDSB.LN) said Tuesday it has extended a force majeure that legally protects it from not meeting its contractual obligations on Nigerian crude oil exports from the EA field and Forcados oil fields.
A company spokesman said the original force majeure, declared in January after militant attacks, had been previously expected to end by late February, the spokesman said. The extension has no time limit, he added.
“No time has been fixed for the end of the force majeure,” the spokesman said.
-Contact: 201-938-5400 read more

Tue Feb 21, 2006 9:42 AM GMT
LAGOS (Reuters) – Royal Dutch Shell (RDSa.L: Quote, Profile, Research) extended a contractual exemption clause on exports of Nigerian crude oil from the EA and Forcados fields on Monday after militant attacks shut output, a company source said.
The force majeure clause, which exempts the company from delivering crude oil under long-term contracts, was initially imposed in January after a first wave of militant attacks, but was extended on Monday after another series of attacks at the weekend. read more

21 Feb 2006

Shell oil has shut down its operations in the Niger Delta following another attack on an installation in the region.
The group holding nine foreign oil workers claimed a fresh attack on another facility and an explosion which destroyed a military house boat.
Three Americans and a Briton and Filipino were among those abducted at the weekend while laying a Shell pipeline.
Shell has cut production by 450,000 barrels a day, one-fifth of Nigeria's oil output.
The latest attacks have not been confirmed by the Nigerian authorities.
The Nigerian government has accused militants in the region of smuggling oil and called the abduction of workers a criminal act. read more

By Charles Pym in Lagos
(Filed: 21/02/2006)
Militia fighters carried out a series of fresh attacks on Nigeria's oil installations yesterday, blowing up Shell Oil pipelines and a houseboat used by soldiers.
Two days after kidnapping nine oil workers, including a Briton, John Hudspith, the attacks by the Movement for the Emancipation of the Niger Delta (Mend) raised the pressure on Shell and other major producers in the region.
These companies account for most of the country's daily output of 2.4 million barrels of crude oil.
Violence has shut down more than a fifth of Nigeria's oil production but much more could still be affected.
Two militia fighters were killed in a gunfight during the hostage-taking and the army has confirmed that 14 of its men also died. Since then, the military has not launched any fresh offensives despite the new militia attacks.
A ringleader of the militants said that they killed 11 soldiers in a 40-minute gun battle near Shell's Chanomi Creek hub of pipelines yesterday, although this could not immediately be confirmed by the army.
A Shell spokesman, Lisa Givert, confirmed the pipeline attack but said the houseboat was abandoned when it was blown up. It was unclear who owned the boat.
The militants also gave warning that it would kill President Olusegun Obasanjo if he entered the region. The government did not comment.
“We are declaring a war on Obasanjo,” a spokesman said. “We will attack and kill him should he venture into the Niger Delta for any reason.”
The group also threatened to attack a Shell Oil tanker “and execute everyone on board”.
There were conflicting reports on the health of the hostages. One of three Americans has high blood pressure and is “seriously sick”, said the militia ringleader, on condition of anonymity.
A Mend spokesman, Jomo Gbomo, said they were all in good health.
“But we received intelligence reports that in spite of our attacks and warnings Shell continues to operate in the Forcados area,” he said in an e-mail.
Nigeria is the world's eighth largest oil exporter, and accounts for 10 per cent of America's oil imports.
Shell has shut down a key export terminal and an offshore field accounting for 455,000 barrels per day because of the unrest, but is still pumping in other areas.
A security official said that Chevron had pulled out non-essential staff from areas affected by violence.
However, hundreds of expatriate workers remain in its Escravos export terminal, even though two oil pipelines leading from there were blown up at several points by militants over the weekend.
The latest round of attacks was triggered by army air raids on ethnic Ijaw villages last week, in which militants claim that more than 20 people were killed. read more

· Crude price rises as attacks disrupt supply
· Shell evacuates staff after pipeline targeted
Rory Carroll Africa correspondent Larry Elliott
Tuesday February 21, 2006
Militants in the Niger delta mounted fresh attacks on oil installations yesterday, extending a wave of sabotage which has crippled exports from Africa's leading oil producer. The guerrillas seized a Nigerian army post in waterways east of the city of Warri after soldiers fled, allowing them to dynamite a floating barracks block and an oil pipeline operated by Royal Dutch Shell.
A Shell spokeswoman confirmed the oil pipeline attack, and said the boat was abandoned when the attackers blew it up. It was unclear who owned the boat. The Anglo-Dutch multinational, the biggest foreign operator in Nigeria, has evacuated all its facilities in the immediate area, a stretch of creeks and swamps which normally produces 500,000 barrels a day.
The attacks sent oil prices surging in London amid concern that the world's eighth largest producer was facing months of turmoil. Despite reassurances from the International Energy Agency (IEA), threats of further action from the rebels against installations in the Niger delta pushed up the price of a barrel of Brent crude by $1.46 to $61.35 in the City. Geoff Pyne, an independent oil consultant, said: “There is a realisation that no one can be complacent about supplies.” But IEA analyst Harry Tchilinguirian said that high US fuel stocks and refinery maintenance should soften the blow of losing so much Nigerian oil. “Yes, it's a disruption of a sizeable amount. But in the short term we have very heavy inventories and very heavy maintenance in the United States, so you can mitigate some of it,” he said.
Yesterday's violence followed a series of raids at the weekend which damaged several installations and resulted in the kidnap of nine foreign employees of a Shell subsidiary. A spokesman for the militants said their fate had not been decided.
The group of three Americans, two Thais, two Egyptians, a Filipino, and a Briton – John Hudspith – were seized by up to 40 gunmen who stormed a pipe-laying barge. In emails to news agencies, the Movement for the Emancipation of the Niger Delta (Mend) said its goal was to punish oil corporations and the government for siphoning off the region's wealth without returning anything to its impoverished ethnic Ijaw communities; as well as saying the hostages' fate had yet to be decided, the movement also warned that they might end up being killed in crossfire with the army. Government officials say the militants are bandits whose real aim is to sow chaos so they can steal the oil, a practice known as bunkering.
The militants set a target last month of halting a third of Nigeria's 2.5m daily barrels, most of it sweet crude bound for refineries in the US and Europe. If yesterday's attacks are confirmed, that target could be reached soon. The Mend statement said that it overran an army houseboat and an oil pipeline switching station. “Both were destroyed with explosives,” it said. No casualties were reported.
Shell confirmed several flow stations had closed. On Sunday the militants threatened to fire rockets at international oil tankers, the first time such a threat had been made. The military said it could guarantee the security of shipping but admitted it did not know the capability of its foes. Much of their arsenal was supplied by the government in 2003 to help control the delta during elections.
Backstory
Militant groups in the oil-rich 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. They have attacked oil facilities and taken hostages. The Movement for the Emancipation of the Niger Delta is fighting for control of the area's oil wealth, saying local people have not benefited. In 1995 Ken Saro-Wiwa, a writer and campaigner, was executed. One group has demanded $1.5bn (£860m) from Shell to compensate for pollution. Stealing oil from pipelines has resulted in fatal explosions. Analysts say attacks will halt up to 20% of the delta's crude production this year. read more

Lloyds List; Feb 21, 2006
SHOWING what might be described as a typically up-to-the minute appreciation of the maritime industries, the intervention by a number of US politicians to prevent the takeover of P'O by DP Ports must be regarded with certain scepticism. In that virtually all of America's exports and imports are transported in foreign bottoms, after politicians of all colours colluded in the relegation of the US flag to the domestic coasting trades, one must ask whether this sudden burst of patriotic apprehension about the beneficial ownership of a number of terminals is a trifle precious.
If the P'O deal has been in the public domain for months, and security issues certainly discussed in the due diligence process, why has it taken until now for the politicians to break cover? A cynic, who might have noted the huge lack of political interest in the maritime industry in the US over many years, might conclude that it is the sort of risk-free populist cause that will attract the attention of politicians wishing to embarrass the current administration.
It is worth recalling that the US has form in this respect, with the fuss generated some years ago when a major Chinese shipping company was negotiating to acquire its own terminal in the San Francisco Bay area. Regardless of the fact that China had become the biggest exporter of goods to the US, this was deemed a move too far.
Politicians aside, the position of joint venture partners who find that their bedfellows have changed without their being asked are, perhaps, in a stronger position. But it is a fact of modern day business that these things happen, and it is premature for such a joint venturer to start playing the national security card when there is not a shred of evidence to suppose that the change of ownership to Dubai will prejudice security in any way. The discommoded partners can always walk away.
US ports and terminals, which, let's face it, are not regarded as a benchmark for efficiency or productivity, will assuredly benefit from a more 'international' approach, and modern port operations is an important global industry that is of unquestioned benefit to everyone. Generating a huge security scare for some political advantage is crass. The objectors should get real and consider who is going to be running these terminals. Mostly Americans, like they do today.
A GROWING law and order problem in Nigeria has forced Shell to shut down a sizeable portion of that country's oil exports. The seeds of a full-blown insurrection, with hostage-taking and increasingly serious firefights between government forces and rebels, is not an ideal background for the development of a reliable energy industry.
A descent into anarchy in the strategically important Delta, an oilfield of immense importance to Nigeria, is a dreadful prospect for a country that has the potential to be the richest in Africa. It is doing no good to Shell either.
There seems little sign that the authorities have any real idea of how to address this crisis other than through military intervention. With the rebels busily engaged in oil smuggling, financing further purchases of arms, a more imaginative approach would appear necessary before there is a complete breakdown.
IT IS, of course, too early to decide what caused nearly 100 containers to be lost from containerships in two separate and unconnected incidents in European waters last week. Some might suggest that it is merely something to be expected at this time of year and it is happening every day of the week. Old-fashioned people still cling to the notion that piling boxes seven high on deck does not demonstrate clever naval architecture.
Lloyd's List
69-77 Paul Street, London EC2A 4LQ read more

Martyn Wingrove
Lloyds List; Feb 21, 2006
OIL PRICES soared and Nigerian offshore workers went on high alert after militants attacked oil facilities and took nine people hostage.
Crude export facilities were again the target for Nigerian rebel groups over the weekend, with militant leaders warning of more attacks on platforms, supporting vessels and possibly tankers.
Oil output from the world's eighth largest crude exporter is down some 450,000 barrels to around 2m barrels per day after Royal Dutch Shell's Forcados terminal was attacked and the EA field evacuated. Oil prices in London climbed $1.50 to around $61.50 a barrel in yesterday's trading and more rises are expected today after New York opens for the week after the Presidents' Day holiday.
Nine foreign workers were abducted at the weekend from a service barge operated by US contractor Willbros, including three Americans, two Egyptians, two from Thailand, one from the Philippines and a British security consultant.
Rebels on speedboats attacked Shell's Forcados terminal 50 kms west of Warri, hitting a pipeline and a tanker loading platform.
'We are investigating the damage and we evacuated the EA field as a precaution,' said a Shell spokeswoman. We have shut in 115,000 barrels of daily oil production at EA and all of the oil production from our western delta area a total of 455,000 bpd gross.'
Force majeure continues for Forcados and EA tanker loadings after it was imposed in January when the Trans Ramos pipeline was blown up and EA facilities were attacked.
Militants have warned of more attacks on production and export facilities, threatening to reduce Nigeria's exports by 30%. They have also warned that tankers and barges could also become targets.
The Movement for the Emancipation of the Niger Delta said it carried out the attacks in retaliation for Nigerian army strikes on villages. It claims to be acting for the Ijaw tribe to claim a greater share of the region's oil wealth, but the government has claimed the rebels are a front for illegal oil exports. read more

By JAD MOUAWAD
Published: February 21, 2006
Oil prices rose sharply yesterday after a series of attacks in the Niger Delta that shut down nearly a fifth of Nigeria's oil production.
In Visits to 3 States, Bush Pushes Alternative Energy (Feb. 21, 2006) Brent crude oil for April delivery jumped $1.57 a barrel, to $61.46, on London's ICE Futures exchange. The market in the United States was closed because of Washington's Birthday.
Tensions in the oil-rich Niger Delta have flared since Saturday after militants kidnapped nine foreign oil workers, set pipelines on fire and disrupted a major export terminal in the latest series of clashes between local ethnic groups and the Nigerian central government. As a result of these attacks, Nigeria's oil production has been cut by 455,000 barrels a day out of a total of about 2.5 million barrels, according to Royal Dutch Shell, the main foreign producer in Nigeria.
A major oil field was shut down as a precautionary measure, Shell said.
The threat to oil supplies from Nigeria, Africa's largest oil producer, comes at a time of heightened concerns about the security of global supplies given the overall tightness in production and the rising demand for oil. Because there is little spare capacity in a global oil system that consumes some 84 million barrels of oil a day, small incidents can have broad effects.
“The incidents in Nigeria are happening at a time when geopolitical events seem to be following each other at a near-continuous rhythm — the worsening of Iraq's oil industry, the tensions with Iran, or the continuous war of words with Venezuela's Hugo Chávez,” said Frédéric Lasserre, the head of commodity research at Société Générale in Paris. “It's a long list, and it fosters a climate of very volatile oil markets.”
Rebels with a group called the Movement for the Emancipation of the Niger Delta have threatened more violence in a campaign to free two imprisoned leaders, according to the Reuters news agency.
The rebels aimed to cut Nigeria's oil production by 30 percent and warned all foreign workers to leave the delta immediately, Bloomberg News said.
Nigeria is the fifth-largest oil exporter to the United States, after Mexico, Venezuela, Canada and Saudi Arabia. Nearly half of Nigeria's oil exports go to the United States.
According to Shell, the Forcados loading platform, which is located about 20 kilometers offshore, was set on fire while a pipeline was blown up on Saturday.
The nine foreign contractors who were kidnapped on Saturday — three Americans, two Egyptians, two Thais, one Briton and one Filipino national, working for Willbros Group of Houston — were working on a pipe-laying barge.
On Monday, another pipeline was damaged in a new explosion, said Caroline Wittgen, a spokeswoman for Shell in London. Shell has maintained a declaration of “force majeure” for the Forcados terminal, meaning it can no longer honor delivery of its supplies. Last month, the company had already been forced to cut its output sharply because of previous attacks. Analysts said the weekend events showed the rebel groups were willing to step up pressure on the government by aiming at offshore oil facilities, which had largely been spared so far.
“We would expect the potential for further chaos in Nigeria to provide a floor for prices above $60, and we expect that Nigeria will continue to be a major issue in terms of supply security,” Kevin Norrish, an analyst at Barclays Capital in London, wrote in a note to investors.
Armed ethnic groups in the Niger Delta, one of the country's poorest regions, have been fighting for years for a better distribution of the country's oil wealth. Recently, they have increased their attacks to protest the government's crackdown on the theft of oil, a common practice known as “bunkering,” and the arrest of a prominent militia leader.
Since mid-December, incidents in the Western part of the delta have regularly shut down about 10 percent of the country's oil production. Four foreign workers were abducted in January by the Movement for the Emancipation of the Niger Delta and were held for three weeks before being released.
“Such escalating attacks are likely going to be the norm, rather than the exception, for the remainder of 2006,” according to the Eurasia Group, a consulting firm based in New York. It said that the “well organized and sophisticated attacks against oil installations this year will likely regularly disrupt about 10 percent to 20 percent” of Nigeria's supplies.
The country's oil is particularly sought by refiners, especially in the United States, because it is a light, sweet variety that is easier to refine than the thicker, sulfur-rich oil that comes from the Middle East or Venezuela.
Still, analysts said, one mitigating factor against further price increases might be the high level of commercial inventories held in consuming countries. While oil prices remain high because of political tensions, there is no lack of oil sloshing around.
“The markets are very well supplied right now,” Mr. Lasserre said. “Stocks are at a high level and buyers are not queuing up at the door of producers asking for more oil.” read more

Canadian firm plans to develop satellites having gained control of virtually all assets in Clyde area, writes Martyn Wingrove
Feb 21, 2006
TALISMAN Energy has acquired Royal Dutch Shell and ExxonMobil's interests in the Auk and Fulmar oil production platforms in the UK central North Sea.
The Canadian oil firm intends to invest in both facilities to boost production and reduce operating costs.
The deal will see Talisman expanding its position around the Clyde area, where it already operates one platform, plus the Orion satellite and an interest in the Fulmar oil pipeline.
'This is a good business opportunity for us and is a continuation of our successful acquire and develop strategy in the North Sea,' said Talisman's president and chief executive Jim Buckee.
Talisman has agreed to purchase Shell and ExxonMobil's 85.8% interest in Fulmar and 100% in Auk, but remains tight-lipped on the price and other conditions.
The Fulmar and Auk platforms lie in central North Sea block 30'16 at the southern end of the UK's oil producing basins.
The Auk platform is more than 30 years old after being installed in 1975 – the field came on line in December of that year. It is currently producing around 7,000 barrels of oil per day.
Its oil is piped to Fulmar, which came on stream in February 1982 and is producing around 4,000 bpd. Both oil streams are exported to Teesside through the Norpipe.
Gas from Fulmar goes through a 290 km trunk pipeline to the treatment plant at St Fergus. Talisman will control the vast majority of assets in the Clyde area after this acquisition, with only Maersk Oil's Janice production semi-submersible close by.
The Calgary-based group will seek to gain efficiencies in offshore operations and will look to develop satellites to the platforms. Talisman has already drilled the Medwin field from the Clyde platform and could be interested in developing the nearby Hailey and Appleton discoveries through these facilities.
'The combined Clyde, Orion, Fulmar and Auk operations could yield a number of operating efficiencies,' said Dr Buckee. 'We believe redevelopment of the Auk field will deliver significant increases in recoverable reserves and production volumes.'
Shell put up for sale its interest in the platforms in April last year, when it also wanted to find a buyer for its Dunlin platform in the northern North Sea.
Meanwhile, the UK Department of Industry, which is yet to approve the Auk-Fulmar deal, has given the green light to four oil and gas projects so far this year.
In January the DTI sanctioned two incremental Nevis projects for ExxonMobil. This will involve more subsea wells tied back to the Beryl platform this year.
It also approved Venture's Goosander project in January, involving subsea wells tied into the Kittiwake platform.
This month the DTI gave Maersk Oil the go-ahead to develop the Dumbarton field, once known as Donan, with the Global Producer III floating production storage and offloading system.
Maersk Oil is moving the vessel from the Leadon field and has started development drilling work.
Maersk has also submitted new plans to develop the Affleck field in block 30'19a as a 28 km tieback to the Janice production facilities, south of Talisman's Clyde platform.
– ConocoPhillips is thought to have found hydrocarbons with its Finlaggan exploration well in block 21'5a and sees it as another potential satellite to the Britannia platform. The US oil major thinks it may need to drill an appraisal well into the new find in order to firm up reserves before moving ahead with a development programme. read more

1966: Isaac Boro, a young delta revolutionary, proclaims a Niger Delta Republic to comprise mainly the delta’s majority tribe, the Ijaw. He launches a “twelve day revolution” in the Niger Delta which is eventually crushed by the Nigerian military.
1967-70: Nigerian civil war sparked by the secession of eastern states. Boro released from prison and used by the Federal government to fight against the secessionist Biafran republic. Boro killed in mysterious circumstances in 1968. Biafra surrenders in 1970.
1993: Military annuls elections. Protests in Nigeria including the delta.

1995: Writer and delta activist Ken Saro-Wiwa hanged by military junta of Sani Abacha after a hasty trial on charges of conspiring to murder. Saro-Wiwa, from the minority Ogoni tribe, had been an outspoken critic of Shell and the military regime. Nigeria is expelled from the Commonwealth until 1998.
1999: End of military rule after President Olusegun Obasanjo, a former military ruler wins civilian elections. Scores of people massacred in the delta town of Odi by security forces after the killing of 12 policemen by delta militants.
2000: 12 northern states declare Islamic Sharia law.
2003: Scores die in ethnic fighting after an Ijaw uprising in the western delta forces oil companies to shut down 40 percent of the country’s oil production.
2004: Delta militant Mujahid Dokubo-Asari threatens an “all out war” against the Nigerian oil industry saying elections in 2003 were rigged. His men battle Nigerian troops from their jungle hideaways. He eventually disarms after the government brokers a peace accord with a rival militia.
2005: Military raid devastates the delta town of Odiama after a land dispute with a neighbouring community results in the killing of local councillors. Nigeria’s Senate goes on a fact finding mission but never publishes its report.
2005: Dokubo-Asari teams up with other civilian activists who accuse President Obasanjo of presiding over a “civilian dictatorship”. He draws comparisons with himself, Isaac Boro and Ken Saro-Wiwa. Nigerian authorities arrest and charge Dokubo-Asari for treasonable felony after he allegedly calls for the disintegration of the Nigerian state in a newspaper interview.
2005: Government starts locking up leaders of various separatist groups and militia across the country.
2005: British police arrest Diepreye Alamieyeseigha, Nigeria’s only Ijaw governor, at London’s Heathrow airport and charges him with three counts of money laundering. The governor escapes back to Nigeria where he resumes office before eventually being impeached. Alamieyeseigha is one of several prominent Ijaws who have called for more oil revenues to be shared between oil-producing delta states. Many Ijaw leaders complain Alamieyeseigha’s arrest is an example of selective attacks on corruption.
2005: Political tensions rise across as Nigeria heads towards elections in 2007, when President Obasanjo is due to step down after two terms in office. Opposition rises across the country against rumours of a possible third term bid by Obasanjo. The president neither refutes or confirms the rumours.
2006: Delta militants calling themselves the Movement for the Emancipation of the Niger Delta start carrying out serious attacks against oil facilities. Four foreign hostages are kidnapped in January and later released. Militants step up attacks in February in an apparent retaliation against military operations in the delta, taking nine more hostages and destroying part of an export terminal. The militants say they are partly fighting for the release of Dokubo-Asari and Alamieyeseigha and demand $1.5bn in compensation payment for environmental damage from Shell.
2006: Security forces move Dokubo-Asari to an undisclosed location for “his own safety”.
2006: At least 15 people die after a protest against Danish cartoon depictions of the prophet Mohammed turn bloody. Tensions are high in the north after the federal government puts a ban on Islamic police in a northern state. Analysts say political tensions across Nigeria could feed into the delta’s crisis. read more

By Kevin Morrison
Published: February 21 2006 02:00 | Last updated: February 21 2006 02:00
Oil prices rose by more than $1 in London yesterday following further sabotage on production and distribution facilities in Nigeria. Attacks by militants, including the kidnapping of nine oil workers on Saturday, have led to a 25 per cent cut in oil exports from Nigeria, the world's eighth biggest crude exporter.
IPE Brent for April delivery added $1.65 to $61.54 a barrel by the close of London trade. The New York Mercantile Exchange was closed for the Presidents' Day holiday in the US. Benchmark West Texas Intermediate ended at $59.88 on Friday.
Fresh attacks were reported yesterday against the Nigerian army anda Royal Dutch Shell oil installation.
The attacks have forced Shell to suspend 455,000 barrels a day of output, about 19 per cent of Nigeria's total.
Although Nigeria's supply problems come while markets are fairly well supplied with oil, the disruption could reduce the likelihood that the Organisation of the Petroleum Exporting Countries will cut production when it meets on March 8.
Nigeria, an Opec member, had been pumping about 2.4m barrels per day of its light, sweet crude oil, which is highly sought after because it is easier to refine into petrol.
Nigeria's geographical location means it is well placed to serve the US and Europe.
Concerns about Nigerian oil supplies pushed up the March IPE gasoil contract by $14.25 to $541.50 a tonne.
UK natural gas futures jumped more than 20 per cent to its highest price in four weeks on the temporary closure of the country's biggest gas-storage site following a fire last week. Centrica, the owner of the Rough gas storage facility, said it did not expect to open the site for a month, which is longer than the market had expected.
IPE natural gas for March delivery add 12.23 pence to 67p per therm.
Gold prices were pushed higher by the rise in the oil price. Gold was quoted at $555.60/$556.50 a troy ounce, up almost $4 from the late quote in New York on Friday. Platinum gained about two per cent on the day to $1,028 an ounce.
Copper prices continued to recover from the large losses incurred two weeks ago with the three-month copper contract on the London Metal Exchange rising for the third successive session. The benchmark contract added $92 to $4,900 a tonne. It has now recouped more than half of its decline from the record high of $5,100 a tonne reached two weeks ago.
The three-month aluminium price gained $68 to $2,373 a tonne, but is still down more than 11 per cent from its 17½ year high reached two weeks ago. Zinc added $86 to $2,131 a tonne. read more

By Dino Mahtani
Published: February 21 2006 02:00 | Last updated: February 21 2006 02:00
Villagers in Okerenkoko, once a peaceful settlement along a creek in Nigeria's oil-producing delta region, have feared for weeks what a big military operation against a guerrilla insurgency could bring.
“Helicopters have been flying over us, and there have been navy boats shooting warning shots in the air. Some people have fled and not come back,” says Talbort Babanimi, a fearful village elder.
Okerenkoko's fishing community lies in the middle of the Niger Delta's labyrinth of swamps and creeks; the village is also near the centre of a military campaign to stop attacks by militant groups on oil and gas facilities, including on a major export terminal operated by Shell, Nigeria's largest oil producer.
Shell halted 455,000 barrels a day of oil production, or 19 per cent of Nigeria's output, after pre-dawn raids on installations in the western delta over the past three days. The Anglo-Dutch company closed 340,000 barrels a day of production from facilities feeding its Forcados export terminal, and halted another 115,000 barrels from a nearby offshore field.
As a precautionary measure, Shell said it was evacuating staff from remotelocations in the eastern delta.
Fresh attacks yesterday destroyed a crude oil installation and a Nigerian military houseboat. Some oil industry officials said mass evacuations could take place if the attacks intensified.
The new wave of violence in the area and the abduction last week of nine foreign oil contractors in the world's eighth-largest oil exporter have rattled international oil markets. On London's futures market yesterday, benchmark Brent oil jumped $1.46 a barrel to $61.35 on fears that Nigeria's problems could create a shortage of oil. The US market was closed.
Nigeria's military has been desperately trying to hunt down the soldiers of the Movement for the Emancipation of the Niger Delta (Mend), a militia that has claimed responsibility for the attacks. Mend said yesterday it was declaring a war on President Olusegun Obasanjo.
The group claims it is fighting for the rights of the delta's majority Ijaw tribe, many of whom say they have been cheated of oil wealth pumped from their land by the central government and oil companies. They say they have also been politically marginalised in rigged elections.
Mend also claims loyalties from many armed groups across the delta and appears to have become a formidable fighting force over the past six months. But its command structure and backers are unclear. “Our movement is fluid and therefore capable of flowing with ease between states of the Niger Delta,” Mend said.
The military has had little success in fighting the insurgents and protecting oil installations. Many of Mend's threatened strikes have been accomplished. The web of mangrove waterways offers hiding spots for speedboats with armed attackers ready to launch rockets on unsuspecting oil workers at flow stations and unprotected oil wells. About 14 soldiers have been killed over the past two months.
“It's easy to avoid the navy, and soldiers,” says Harry, a boatman in the area, as his boat edged beside a fishing boat loaded with oil drums used to store stolen oil.
This weekend's attacks, militants say, were sparked by operations by the Nigerian army near Okerenkoko that bombed oil barges suspected of being used for stealing crude oil. Militants also claim the army machine-gunned villages.
Stolen crude oil helps militant groups buy arms. But the job of the military task force in the delta is made harder by the fact that some army and navy personnel and political figures are also involved in the theft from wells and pipelines.
Nigeria's forces in the delta do not have sufficient boats or manpower to patrol the wetlands. The military also uses local militiamen as scouts, who have been involved in uprisings in the past. Security analysts say the military is riddled with corruption and not disciplined enough to protect the oil industry or local communities. Police employed by the Nigerian state to protect oil facilities often have their salaries handled by the oil companies. “They take on the character of mercenaries who are protecting companies perceived as despoiling the environment,” said Nowa Omoigui, a lecturer at Nigeria's national war college.
The upsurge in violence is the worst in the delta for three years. Heightened political tension across Nigeria in the run-up to presidential elections next year threaten to feed into the delta's crisis. In the run-up to elections in 2003, an Ijaw uprising forced oil companies to shut down 40 per cent of Nigeria's oil output.
The delta violence coincides with unrest in Nigeria's Muslim-dominated north where at least 30 people were killed in violence related to protests over controversial cartoons of the Prophet Mohammed.
President Obasanjo has not yet dispelled suspicions that he may run for a third term in office. He is due to step down next year.
John Negroponte, US intelligence chief, said this month that a third term for Mr Obasanjo could threaten to unleash “major turmoil and conflict” and “could lead to disruption of oil supplies, secessionist moves by regional governments, major refugee flows and instability elsewhere in west Africa”. read more

By Carl Mortished, International Business Editor
VIOLENCE in the Niger Delta has forced Shell to shut down almost half of its Nigerian oil production, a loss of output that threatens the Dutch multinational’s efforts to meet its volume targets.
Shell has shut down its Forcados oil export terminal after attacks on installations in the Eastern Delta over the weekend by a militant rebel group that also took hostage nine foreign workers employed by a Shell contractor.
Fears of further sabotage caused Shell to stop production at its offshore EA field, close to the Forcados oil terminal. The combined closures, including the loss of oil from previous damage to pipelines, leaves Shell and its venture partners with the loss of 455,000 barrels per day, almost one fifth of Nigeria’s total oil output.
The escalating loss of barrels will be a setback to Shell, which is struggling to keep its annual output within a range of 3.5 million to 3.8 million barrels per day.
The violence prompted a surge in the price of crude oil on global commodity markets, reversing a recent weakening trend. The price of Brent crude in London gained almost $1.50 per barrel to $61.35.
Rising stocks of crude in the Atlantic basin and evidence that high prices are finally curbing demand have caused the oil price to weaken, but prolonged Nigerian disruption could keep a floor under the cost of crude.
America is a keen customer for Nigeria’s 2.5 million daily barrels of high-quality crude. Nigerian blends are valued for their high gasoline content and lack of impurities. They are easier to distill into high- specification road fuels than alternative crudes from Saudi Arabia, Venezuela or Russia.
The Movement for the Emancipation of the Niger Delta claimed responsibility for the weekend sabotage and hostage-taking, which included an attack on a boat used by Willbros, a United States-based Shell contractor, to lay pipe and the destruction of a pipeline linking oilfields with the Forcados terminal. A spokesman for Shell also indicated that there had been a fire at the Forcados terminal, forcing them to shut the facility. The nine hostages include one Briton, three Americans, two Egyptians, two Thai and one Filipino national.
The rebels have threatened to kill President Obasanjo of Nigeria and remove all foreign oil companies from the Delta.
Insurrection, hostage-takings and violent attacks on oil facilities are a common occurrence in the Delta. However, they have increased in recent months at the same time as an increase in “bunkering”, the theft of oil from pipelines, which the Nigerian authorities blame on criminal gangs that in turn arm and finance the insurrection. Frustration with endemic poverty and corruption, which has prevented development of a non-oil economy in the Delta, has also encouraged the violence. read more

20 February 2006
OIL prices surged today as investors took fright at the renewed terrorist attacks on Shell's operations in Nigeria. Brent crude jumped $1.51 a barrel to $61.40 after militants claimed to have launched fresh attacks on the company's oil platforms.
The unconfirmed incidents came after nine foreign oil workers were kidnapped at the weekend by the Movement for the Emancipation of the Niger Delta.
GNI-Man trader Kevin Blemkin said: 'There has definitely been an escalation in Nigeria.'
He added that the closure of US markets for Presidents' Day exacerbated the price volatility as fewer trades were made than normal. Shell has shut operations delivering 455,000 barrels a day due to the unrest. read more

Reuters
LONDON – Attacks on Nigerian oil facilities could make Royal Dutch Shell 2006 production goals unattainable, analysts said today.
Shell suspended a total 455,000 barrels a day (bpd) of oil production — 19% of Nigeria’s total output — after a string of militant attacks at the weekend.
It said today it had also evacuated staff from remote locations on the eastern side of the Niger Delta as a precaution.
Shell operates the fields on behalf of a consortium that includes Total of France, with a 10% share, and Italy’s ENI, with 5%.
Shell’s share of the current lost production is equivalent to almost 4% of the firm’s 2005 average daily output.
After its production fell around 7% last year to 3,5 million barrels of oil equivalent per day (boepd), and with an uncertain pipeline of new projects, the Anglo-Dutch company can ill afford the shortfall, analysts said.
Shell, the world’s third-largest oil and gas firm by market capitalisation, has indicated it expects production at the lower end of a 3,5-3,8 million boepd range in 2006.
But if the Nigerian violence continues, as the militants promise, this target could be lost.
“Their production target this year has had a bad start …
It will be difficult to reach the bottom part (of the target range),” said Jason Kenney, oil analyst at ING.
Although the shut-in barrels will eventually flow, Shell’s first-quarter results will be hit.
One analyst said the cost, in terms of lost revenues, damage repair and extra security costs, was likely to be hundreds of millions of dollars.
One consolation for Shell is that the lost barrels are not its most profitable, because the production-sharing contract which governs its operations means all the benefit of prices above $30 per barrel accrue to the government, a spokesman said.
Last year’s hurricanes in the Gulf of Mexico were especially harsh on oil firms’ bottom lines because the region yields such high margins.
Nonetheless, the Nigerian trouble could have a longer impact. Analysts at Eurasia Group said in a report that attacks could worsen before presidential elections in 2007.
Analysts at Citigroup noted that up to 40% of Nigeria’s production was disrupted by militant attacks in the run up to elections in 2003.
The militants seek the release of imprisoned ethnic Ijaw leaders and more local control over oil revenues.
Shell’s output in the eastern side of the delta, totalling 390,000 barrels a day, was not affected by the evacuation of its staff, a Shell official said. read more

Mr Donovan
After reading some contributions to your site of insiders it made me decide to share something with you and your readers. Perhaps you see it fit to publish, I have no other avenue to vent my frustration and very deep anger.
Of late the networks have highlighted the treatment of prisoners by Americans in their prisons for presumed terrorists. At least to me it has become very clear that there has been a fundamental flaw in the command structure of the armed forces. And I am cynical enough to believe this flaw was designed and knowingly created by the 'brass' and top politicians.
They first brainwashed the soldiers (mostly non professionals and reservists who only joined the army to have medical insurance and get an education) via direct messages and via the various media that are under their control to prepare them psychologically to commit acts that most of them would never dream of doing in a normal life, whether or not these acts comply with the Geneva Convention. I am a mere engineer and not a psychologist so I am out of my depth here. But I am convinced that if you repeat messages time and again that your enemies are all evil terrorists, people will start to believe this, especially if they are in an elevated state of stress such as a war in Iraq. Next the brass (from the president down) says that no stone must be left unturned to get the truth out of the prisoners to defend the nation of good citizens and god fearing Americans, and the foundation is laid to get excesses. To top it off you put reserve personnel in charge of these prisons and interrogation and on purpose do not arrange for extra controls to check how things go, and you have disasters in the making.
Praise the interrogators if they come up with some 'confessions' beaten out of prisoners, real or simply made up, remove anyone that wants to say that this is wrong, and the result is very easy to predict. No instructions to do bad things will be on paper so the brass can always blame the little guys at the coalface. They overstepped and need to be punished. And you hand out severe prison sentences to simple soldiers who thought they were merely following orders. I guess this happens in all wars and if you quickly score a victory, it can all be covered up many years, enough to erase the tracks of the real culprits. The winner takes all and is right!
However, in this era of digital cameras and internet, there are fewer secrets. Images can be circulated globally and instantly. And then there is real trouble and on a global scale. It is totally beyond me that the advisors to the president and top brass did not see this coming. I leave that to psychologists to analyze and explain.
Why this long story and what does it have to do with Shell?
The whole reserves problem as well as the extremely poor project management that Shell is experiencing the last few years is almost a carbon copy of what happened to the armed forces. Great changes, such as the large reorganisation started by Herkstroeter in 1994, created great stress in the workforce. These changes were considered unnecessary by Bob Sprague, one of the cleverest people who ever worked for Shell. But initially this was still fairly positive stress and it led to a feeling of freedom and desire to conquer and improve the world. Remember, at that time we were the biggest and the best oil company and had been since the mid 70s! So there was still a lot of latent know-how and professionalism around, which the company cannibalised in creating a 'new Shell' with 'self managing teams', 'Olympic targets', 'unleashing talent' and other trendy nonsense. It even led to record profits in one year, I believe it was 1997.
But by then the company was getting (with the explicit knowledge of the top brass) into the hands of people who were only motivated by personal rewards, and who smelled their chance. None of that 'Enterprise First' stuff. It was 'Me first' and all the snouts were in the trough and nobody wanted to take their snout out of the trough. Anyone complaining or making remarks that things were not right was publicly destroyed and removed. And those with their snouts in the trough started to make promises and ever more ridiculous demands. When Watts came to power (he actually stole that job at the time with his gorilla talk and behaviour) the pigs were truly feeding. Explicit instructions to cook the books or 'err on the high side' were hardly given in written form or were at least well disguised. It was said and whispered in meetings, conferences and workshops and personal discussions during the annual staff evaluation time. There were clear instructions to aim for the impossible with those stretched targets and anyone who said he could go even further or higher was handsomely rewarded with promotions or fat bonuses.

Brinded was a real champion of this, he was #2 and later MD in Shell Expro and I believe they missed their business targets for 7 years in a row under his reign!
So, the foundation was laid and Watts started his circus with new and bigger promises every year. And then it became unsustainable and the truth came out. We have internet, everyone knows what has happened and why it happened.
But to prove that in a court of law will be very difficult. And with the vast profits created by high oil prices, the top brass can buy all the time they need and hire the most expensive lawyers to keep them out of prison. All paid for with the shareholders' money.
To illustrate how difficult it will be to prove, consider the following story. I recently confronted a colleague who works on the Sakhalin project and told him that I had known that the project would be severely over budget in early May 2005. The word was out and a figure of $15.5 billion was being suggested by project managers from Sakhalin. How come, I asked him, that Malcolm Brinded and Jeroen van der Veer claim they did not know? The answer was very simple: Brinded was told there were severe problems and his response was: 'give me a report as soon as you have the exact details and know precisely how much and what'. This led to a further delay and a week after the deal with Gazprom was announced, out came the surprise statement of the $20 billion and enormous time overrun. But there are probably no documents showing that Malcolm Brinded and Jeroen van der Veer knew. They are genuinely clever people. But in my simple world, the boss should know how his most expensive project is progressing, even if it is not exact all the time. So, Malcolm Brinded is certainly lying when he states that he did not know. He means he had no formal report.
And Jeroen van der Veer should step down because he either knew and lied or he did not know and that is just as bad for someone in his position.
I apologise for this longish note but it helped to reduce my anger. I hope others will follow and you will publish this on your great site. I think the top echelons in Shell by now know there are no secrets anymore. read more

By WESLEY LOY
Published: February 19, 2006
Last Modified: February 19, 2006 at 02:24 AM
For oil giant Shell to reach its goal of pumping oil from Beaufort Sea fields, it'll have to deal with two behemoths: the endangered bowhead whale, which North Slope Natives hunt and fervently protect, and the U.S. Department of the Interior, which regulates offshore drilling.
To help, Shell recently made a couple of key hires: a prominent Native whaling captain and the Interior Department's former point man in Alaska.
George Ahmaogak Sr., who until last fall was mayor of the Barrow-based North Slope Borough, joined Shell last month as the company's Alaska community affairs manager. He's taken part in many a hunt for the bowhead, an animal so large its tongue alone can weigh a ton.
Ahmaogak's new boss is Cam Toohey, who is Shell's Alaska government and external affairs manager. Toohey also joined Shell in January after leaving his post as Alaska special assistant to Interior Secretary Gale Norton.
Both men say they want to help Shell achieve its agenda in Alaska while preserving values they believe are important to North Slope whalers and other Alaskans.
“A job like this doesn't come along that often in Alaska,” Toohey said in a recent interview in Shell's office on the 13th floor of the Frontier Building in Midtown Anchorage. “Shell's returning to Alaska with some big plans. They plan to work on creating jobs and put oil in the pipeline and generate some exploration activities on the North Slope that we haven't seen for quite some time.”
Joining an industry player marks a significant departure for Ahmaogak, who as mayor spoke out against the oil and gas industry edging closer and closer to North Slope villages, disrupting subsistence hunts and threatening the bowhead whale migration. He fought the Interior Department's recent decision to expand leasing in the coastal zone north and east of Teshekpuk Lake, one of the state's largest inland water bodies and a vital haven for migratory geese.
For Toohey, this isn't the first time a job change has created controversy. Before Norton tabbed him as her special assistant in Alaska in 2001, Toohey had served for several years as executive director of Arctic Power, a nonprofit organization devoted to opening the Arctic National Wildlife Refuge to oil exploration.
Toohey's jump from Arctic Power to Interior drew criticism from opponents of ANWR drilling, and a Washington, D.C., government watchdog group contends it's unethical for Toohey to now leave Interior to take a job with an oil company the department regulates.
“I'm not too worried about what people in the Lower 48 or Washington, D.C., think of my move in Alaska,” Toohey said. “But I do value what Alaskans think and what my neighbors think, and they're all excited for me.”
Royal Dutch Shell, based in the Netherlands, is one of the world's largest oil companies, with operations in more than 140 countries.
Shell once was a vigorous oil hunter in Alaska, drilling in such forbidding Arctic waters as the Beaufort and Chukchi seas. But the company never found the elephant oil discoveries it hoped for, and by the late 1990s it completed a slow pullout from Alaska.
Now, with oil running close to $60 a barrel, and as global titans scour the planet for new reserves, Shell has stormed back to the North, last spring bidding $44 million on acreage in the Beaufort Sea. The U.S. Minerals Management Service, an Interior Department agency, conducted the sale and regulates offshore leasing and drilling.
Shell also is pushing for offshore leasing in Bristol Bay, where drilling is now prohibited.
A Shell executive, speaking at a November industry conference in Anchorage, called the Arctic a final frontier his company couldn't ignore, its basins holding perhaps a quarter of the world's remaining undiscovered oil and gas.
Ahmaogak, 56, is a stout man with a ready laugh and a folksy charm that's instantly likable. He wears a black vest emblazoned “George N. Ahmaogak Sr., Mayor Emeritus.”
He delights in telling the story of how, after he got the Shell job, he lit out of Barrow in mid-January in his wife's Hummer H2, bouncing for 17 hours across open, roadless tundra to Deadhorse, then down the highway to Anchorage.
Mention hunting the bowhead and he spouts: “This coming spring I'm going to be beating the band — my adrenaline will be pumping and I want to get out on that ice and harpoon!”
His wife, Maggie, knows something about whaling, too. She's executive director of the Alaska Eskimo Whaling Commission, an agency formed in 1977 to represent subsistence whaling villages before federal and international whaling managers.
As mayor, Ahmaogak said, he worked closely with oil companies on offshore projects, including BP's Northstar oil field.
He said he'll be Shell's man in the villages, explaining the company's work and seeking, for example, “conflict avoidance agreements” specifying in what seasons seismic exploration can safely occur without scaring away the bowheads with noise. If whales are disturbed and move out of their normal migration routes, it can mean longer, riskier and less productive hunts for whalers.
Ahmaogak wouldn't say how much Shell is paying him, though for weeks it was no secret in industry circles what his and Toohey's positions would pay — well into six figures, a salary not uncommon in Alaska's oil industry.
No one, said Ahmaogak, has accused him of being a turncoat for industry. He said he believes he can make a difference with Shell.
“I'm pretty positive they're gonna hear me loud and clear,” he said.
Edward Itta, himself a whaling captain and Ahmaogak's successor as North Slope mayor, said he has no worries about Ahmaogak joining an oil company. Itta held several posts during Ahmaogak's multiple terms as mayor, including public works director.
“I've known George a lot of years, and I really believe I know where his heart is,” he said.
Toohey, 42, is a lanky, lifelong Alaskan who exudes more polish than personality, especially when sat next to Ahmaogak. He studied business administration at the University of Washington, and international business in Denmark.
He said his job will involve lobbying state legislators in Juneau, plus helping Shell workers based in Texas understand Alaska — from its politics to its weather.
As soon as he became interested in the Shell job on a tip from a friend last fall, Toohey said, he informed Shayla Simmons, the Interior Department's designated ethics official.
Simmons wrote back in an e-mail: “You should not participate in any way, including phone calls or meetings on particular matters in which Shell is a party.”
Toohey said he followed that advice and now he's adhering to a yearlong “cooling-off” period before representing Shell on any business with the Interior Department, even though he believes his position and pay grade were not high enough to require him to follow that rule.
Craig Holman, of the watchdog group Public Citizen, said it's wrong for Toohey to jump from Interior to an oil company the agency regulates, even if he does abide by the cooling-off period. He said the job switch is typical of a “revolving door” of people moving into government posts and then “cashing in” on their insider knowledge by joining private industry.
Even though Toohey said he won't lobby his former employer, he's still free to help others within Shell navigate the Interior Department, Holman said.
“The only thing he can't do is pick up the telephone and call Gale Norton for one year,” he said.
Toohey said Holman's point is moot.
“I grew up at a gold mine. My convictions have been pretty consistent throughout my adult life, supporting resource development,” he said. “Believe me, I've got enough work that's unrelated to the Department of the Interior.” read more