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December 12th, 2006:

UpstreamOnline: Russia ‘may triple’ claim against Shell

Oleg Mitvol 

(Oleg Mitvol)

By Upstream staff

Russia’s environmental agency said today it may triple its claim for damages against the Shell-led Sakhalin 2 project to $30 billion after being advised to do so by Western lawyers.

“We will be ready to take legal action from March,” said Oleg Mitvol, deputy head of environmental agency RosPrirodNadzor.

Industry sources earlier said that Shell was prepared to cede majority control in its $22 billion oil and gas project on the Pacific island to gas monopoly Gazprom. read more

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The Guardian: Eco Soundings: Uncomfortable truth

John Vidal
Wednesday December 13, 2006

If the National Union of Teachers is quick, it might just be able to get hold of 50,000 free DVDs of Al Gore’s film, An Inconvenient Truth, and use them to explain to every child in Britain the reality of climate change.

The DVDs, sitting in a Los Angeles warehouse, were destined for America’s huge National Science Teachers Association, but were declined on the basis that free teaching materials could not be accepted, nor political endorsements given. read more

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The Guardian: Shell struggles to get a better deal as Russia closes in

Terry Macalister and Tom Parfitt in Moscow
Wednesday December 13, 2006

Shell is fighting a rearguard action against attempts by the Kremlin to seize control of the world’s largest liquefied gas project, Sakhalin-2, at a knockdown price by insisting that it will only hand over assets as part of a wider peace settlement.

The demands by the Shell chief executive, Jeroen van der Veer, followed renewed attacks on the company’s environmental record yesterday in which a Russian state agency said it would be seeking damages of $30bn (£15.4bn). read more

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Daily Telegraph: Kremlin Inc. – Putin runs Gazprom in-house

Last Updated: 1:20am GMT 12/12/2006

The world’s largest gas company, on which Europe is reliant for supply, is a fiefdom of the former KGB man who appointed his deputy as chairman, writes Adrian Blomfield

The critics, of which there are plenty, despairingly dismiss it as phallic, unharmonious and a soulless manifestation of the corporate ego. For Kremlin loyalists, though, it is a thing of beauty and innovation, a symbol of Russia resurgent.

But on one thing everyone agrees: Gazprom’s new headquarters in St Petersburg, plans for which were unveiled earlier this month, will be very big. read more

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Associated Press: OPEC Meets in Nigeria Under the Shadow of Militant Attacks on Oil Industry

Dulue Mbachu
December 12, 2006 – 2:05 p.m.

(AP) – LAGOS, Nigeria — The West African host of this week’s OPEC meeting has seen its oil industry hobbled by militant attacks and pipeline sabotage, making Nigeria a reminder of the vulnerabilities of world supplies as the cartel prepares to discuss production quotas.

OPEC was meeting for the first time in Nigeria, which currently holds the cartel’s presidency. A small OPEC delegation visited the country in 1972, but a spokesman for Nigeria’s oil ministry, Levi Ajuonuma, said the West African country had never hosted a general meeting of the organization. read more

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From Economist.com: Strong-arm tactics

Gazpom Putin

Dec 12th 2006

Russia’s bullying of Shell, over a huge gas project, shows it is becoming a riskier place to do business

THE quest for oil demands flexibility when operating in harsh environments, and big companies are used to accommodating some unsavoury regimes. These days few places are tougher than Russia, where Royal Dutch Shell has been forced to bend over backwards. On Monday December 11th the Anglo-Dutch energy giant reportedly offered to cede control of Sakhalin II, a huge natural-gas project in the east and the country’s biggest single foreign investment, to Gazprom, the state-controlled gas titan. Shell and its two Japanese minority partners succumbed after months of bullying by the government, which has now acquired a big chunk of a private enterprise. read more

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The Scotsman: Shell may struggle to recoup Sakhalin-2 costs

By Tom Bergin

LONDON (Reuters) – Gazprom may pay Royal Dutch Shell for money already spent developing the Sakhalin-2 oil and gas fields if it buys a stake, but analysts do not expect the Russian giant to pay a premium for expected profits or control.

Shell has offered to cede control of the project, Russia’s biggest single foreign investment, to the world’s largest gas company after months of government pressure, industry sources told Reuters on Monday.

On Tuesday Gazprom Chairman Dmitry Medvedev said his company planned to buy around 50 percent of the Shell-led project, which is based off Russia’s east coast. read more

This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.

RIA Novosti: Gazprom wants to join Sakhalin-II, but not at all costs – deputy PM

20:34 | 12/ 12/ 2006 

MOSCOW, December 12 (RIA Novosti) – Gazprom [RTS: GAZP] is interested in joining the Sakhalin-II oil and gas project in Russia’s Far East, but not at any price, the first Russian deputy prime minister said Tuesday.

“Any business has its own price. Therefore, it is important to discuss the conditions of joining the company,” said Dmitry Medvedev, who is also the board chairman of the Russian energy giant.

He said Gazprom heads met with representatives of project operator Royal Dutch Shell and Russian Industry and Energy Minister Viktor Khristenko earlier this week. read more

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Reuters: Gazprom close to deal to take half of Sakhalin-2

12 Dec 2006 18:20:12 GMT
By Oleg Shchedrov and Tom Miles

MOSCOW, Dec 12 (Reuters) – Russia’s Gazprom closed in on half of Royal Dutch Shell’s $22 billion Sakhalin-2 energy project on Tuesday while Shell denied it had buckled under Kremlin pressure and warned Moscow the world was watching.

“The two sides are close to reaching an agreement over how Gazprom can enter this project,” the gas monopoly’s Chairman Dmitry Medvedev, who is first deputy prime minister, said after signals emerged that Shell would cut a deal. read more

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Daily Telegraph: Shell can take ‘comfort’: it’s not personal, just business

Business comment
By Damian Reece, City Editor
Last Updated: 1:20am GMT 12/12/2006

Royal Dutch Shell is coming to terms with an inevitable mugging at the hands of the Russian state. Luckily it is well used to such economic GBH having been pumping oil out of British waters for years. Gordon Brown is just the latest in a long line of Chancellors who have launched smash-and-grab raids on the industry using the equally effective, and only slightly less brutal weapon, of windfall taxes.

Grabbing a share of the profits of the global energy industry is a well rehearsed political manoeuvre that generally goes down quite well with large parts of the population. Russia is no paragon of democratic virtues but even if it was, I doubt Russian voters would have opposed their government’s campaign to extract a higher price out of Shell than the oil giant has so far paid for control of the Sakhalin-2 project, the world’s biggest liquified natural gas resource. read more

This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.

Daily Telegraph: Shell losing in Russian battle for Sakhalin-2

By Russell Hotten, Industry Editor
Last Updated: 1:20am GMT 12/12/2006

Sakhalin is a remote, austere island in the furthermost reaches of Russia – a haven for wildlife, and home to one of the richest oil and gas reserves on the globe.

And in the past few months these two issues have clashed to cause an international political storm that looks likely to do lasting damage to Russia’s relations with western companies. For months Shell has been bombarded with threats from Russian state agencies that it has breached environmental rules. read more

This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.

Daily Telegraph: Russia gets its hands on Royal Dutch Shell’s Sakhalin-2 field

By Russell Hotten
Last Updated: 1:21am GMT 12/12/2006

Royal Dutch Shell has bowed to pressure from the Russian government to allow state-owned energy company Gazprom to take over its Sakhalin-2 oil and gas field.
 
The Anglo-Dutch oil company said yesterday that it has made several proposals to Moscow and Gazprom. These are understood to involve Shell and its partners giving up control of the $20bn (£10.2bn) project.

The move by the Kremlin will be seen as a sign that Russia will no longer tolerate foreign investors controlling strategic assets. read more

This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.

MarketWatch: Russia’s environmental watchdog to file lawsuits on Sakhalin-2

Last Update: 5:50 AM ET Dec 12, 2006

MOSCOW (MarketWatch) — Oleg Mitvol, the deputy head of Russia’s environmental watchdog Rosprirodnadzor, said Tuesday his agency would file lawsuits against foreign companies developing the Sakhalin-2 oil and gas project in the spring of 2007, Russian news agency Interfax reported.

Mitvol said his agency plans to file suits in Russian courts and in Stockholm around March.

Mitvol said that a preliminary assesment of the damage to Sakhalin Island inflicted by the Sakhalin Energy Ltd. consortium and its subcontractors was around $10 billion, although Mitvol has cited figures as high as $50 billion. read more

This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.

RIA Novosti: Court proceedings on Sakhalin II likely to start in March

14:26 | 12/ 12/ 2006 

MOSCOW, December 12 (RIA Novosti) – Court proceedings on compensation for environmental damage inflicted by the Sakhalin II oil and gas project in Russia’s Far East are likely to start in March 2007, the environmental watchdog said Tuesday.

The $22-billion project, controlled by Royal Dutch Shell, has been accused of causing serious damage to Sakhalin Island’s ecology, including deforestation, toxic waste dumping and soil erosion.

“I think we must be ready to start court proceedings by early March,” said Oleg Mitvol, deputy head of the Federal Agency for the Oversight of Natural Resources. read more

This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.

Reuters: Russian watchdog may claim $30 bln Sakhalin damage

Tue Dec 12, 2006 11:25 AM GMT

MOSCOW, Dec 12 (Reuters) – Russia’s environmental agency said on Tuesday it may triple a damages claim against the Royal Dutch Shell-led (RDSa.L: Quote, Profile , Research) Sakhalin-2 energy project to $30 billion after being advised to do so by Western lawyers.

The outspoken deputy head of the agency, Oleg Mitvol, who has repeatedly accused Shell of breaching environmental law on the Pacific island of Sakhalin, said he was determined to press ahead with legal action regardless of Shell’s future role. read more

This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.

The Times: Russia: ‘a contract with Russia is worth little more than the paper it is written on’

12 December 2006
 
Life is anything but a gas for foreign business interests in Russia, as Gazprom moves closer towards wresting control of Sakhalin-2, the giant Siberian gas project, from Royal Dutch Shell. The news emerges as The Times reports that foreign energy companies will in future not be welcome as owners in Russia’s energy industry, only as subcontractors.

More on Russia

Most broadsheets lead with reports that Shell has made a new proposal in negotiations over Gazprom’s participation in Sakhalin Energy, the company building a $20 billion (£10.2 billion) liquefied natural gas scheme in Eastern Siberia. read more

This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.

International Herald Tribune: Business is different in Russia

Posted by Daniel Altman in Doing the business, High energy

Let’s say there’s a company operating in your country, and it’s not quite living up to the environmental standards set by your government. So you call them on it, and tell them to clean up their act. What happens? Well, perhaps they decide to argue in court. Or perhaps they pay a fine. Or perhaps they agree to strict monitoring and reporting to ensure compliance with environmental regulations. But do they ever offer to sell a government-controlled competitor a big stake in their company? read more

This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.

The Independent (UK): Shell cedes control of Sakhalin-2 as Kremlin exerts its iron fist

By Andrew Osborn, Moscow Correspondent
Published: 12 December 2006

Royal Dutch Shell is poised to radically scale back its stake in the world’s largest offshore oil and gas project, Sakhalin-2, and possibly relinquish control altogether in favour of an increasingly proprietorial Kremlin.

Shell’s move to step back from Sakhalin-2 in such a dramatic fashion follows months of sustained pressure from the government and loud complaints from Russian environmental inspectors that have led to prolonged delays and uncertainty. read more

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Vanguard (Nigeria): Shell donates N35m to six rural communities

By Emma Arubi
Posted to the Web: Tuesday, December 12, 2006

WARRI—IN demonstration of care and good neighbourliness, the Shell Petroleum Development Company (SPDC) has donated over N35million to six rural and riverine communities in Warri South, South- West, Isoko North and Ekeremo local government councils of Delta and Bayelsa States.

The amount covers four 16- seater Hiace buses donated to Kokodiagbene and Angalaweigbene communities; Micro-credit loan to Kantu, Omadino and  Kokodiagbene communities; a rice processing mill to Ayamassa community and a cassava mill valued at N2,437,940 to the Ovrode community respectively. read more

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allAfrica.com: Nigeria: Shell Spends N12.7 Billion On Devt

This Day (Lagos)
December 11, 2006
Posted to the web December 11, 2006
Ahamefula Ogbu
Port Harcourt

Shell Petroleum Development Company (SPDC), has said within 2005, it went into different developmental intervention efforts in the Niger Delta worth $97.5 million (about N12.675 billion), aimed at improving the lives of the people.

This was in addition to other empowerment programmmes in partnership with organisations which have similar developmental interventions.
 
According to a statement from the oil company, it went into a $73 million road construction in partnership with the Niger Delta Development Commis-sion on the construction of the Ogbia-Nembe road in Bayelsa, which they said would open up a lot of communities. read more

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AFX News Limited: Shell, Total may partner India’s ONGC-Mittal Energy in Nigeria bid – report

12.12.06, 2:04 AM ET

LONDON (AFX) – India’s ONGC Mittal Energy Ltd (OMEL) is in advanced talks with Royal Dutch Shell PLC and France’s Total to take them on as equity partners in the Nigeria blocks OPL 212 and 209, reported the Economic Times citing ONGC chairman and managing director RS Sharma.

The equity being offered to Shell and Total could be around 10-15 pct, the report said, quoting unnamed sources.

OPL 209 is close to Shell’s Bongo fields, which has reserves of 800 mln barrels, the report said. read more

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The Wall Street Journal: BP’s Woes Mount in U.S.

By PHIL IZZO
December 12, 2006

BP’s woes continued to mount in the U.S. as the Supreme Court ruled against the company in a royalty dispute and documents reviewed by the Wall Street Journal showed executives worried about cost cuts affecting safety prior to a refinery blast.

BP officials so far have said that they believe budgetary decisions didn’t play a critical role in the accident, caused when workers restarted a small gasoline-processing unit. In a series of internal interviews, however, BP executives painted a more-complicated picture. Their thinking is laid out in notes and interview summaries that were collected earlier this year as part of an internal BP review of the refinery accident. The interviews were conducted as part of a wide-ranging “accountability” review, designed to determine what led to the accident, according to a BP spokesman. The documents haven’t previously been made public. read more

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The Wall Street Journal: BP Review of Blast Cites Worry Over Cost Cuts

Some Top Officers See Link
To ’05 Refinery Accident;
Outside Report Is to Come

By CHIP CUMMINS
December 12, 2006; Page A3

Some top BP PLC executives worried that cost cutting at a Texas refinery may have contributed to the plant’s poor state of safety and equipment, according to an internal BP review that is likely to turn up the heat on the company over a deadly explosion at the site.

Documents reviewed by The Wall Street Journal also quote a former senior BP safety executive saying that BP Chief Executive John Browne “showed little interest” in safety issues. read more

This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.

The Wall Street Journal: Shell/Gazprom: ‘Bullies often get what they want…’

Tuesday 12 December 2006

Bullies often get what they want, and the Russian state is no exception. Moscow appears to have finally managed to cut Gazprom, the Russian state gas monopoly, into Royal Dutch Shell’s Sakhalin-2 liquid natural-gas project. The terms aren’t clear, but Gazprom will end up controlling the $20 billion gas project — the biggest of its kind in Russia — in return for some oil assets and possibly some cash, according to reports. Shell and its two Japanese partners, Mitsui and Mitsubishi, will become minority investors in Sakhalin. read more

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The Wall Street Journal: THE KREMLIN PREMIUM

By PHIL IZZO
December 12, 2006

Once again the cost of doing business in Russia has become apparent. Moscow appears to have finally managed to cut Gazprom, the Russian state gas monopoly, into Royal Dutch Shell’s Sakhalin-2 liquid natural gas project. The terms aren’t clear, but Gazprom is expected to end up controlling the $20 billion gas project — the biggest of its kind in Russia — in return for some oil assets and possibly some cash, according to reports.

Despite the apparent blow to Shell, analysts and industry executives were expecting Gazprom to wind up with a big stake one way or another. While the viability of the project was never in serious doubt, Shell executives worried about any delays to construction and to production that could have affected the economics of the project. read more

This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.

The Wall Street Journal: Shell Gets Poloniumed

December 12, 2006; Page A18

The authoritarian drift of Russia continues apace. Yesterday the Kremlin managed to pull the rug out from under the largest foreign investment in the country, Royal Dutch Shell’s $20 billion oil and gas project off the Pacific island of Sakhalin. You might call it the economic version of Polonium 210.

Connoisseurs of Russian black humor can appreciate the methods used to wrest control of the Sakhalin-2 project from the Dutch-British energy giant. In recent months, local authorities went after the company for “unauthorized tree felling” and other environmental and labor violations — finding about 100 in all. Last week, the Natural Resources Ministry threatened to pull permits needed to proceed with the exploration work over allegedly misused water permits. This is the same Russia whose environmental record includes Chernobyl and the dry Aral Sea, among other offenses. read more

This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.

The Wall Street Journal: Shell May Cede Control of Project To Russia’s Gazprom

By GUY CHAZAN in Moscow and CHIP CUMMINS in London
December 12, 2006; Page A3

The Russian government may be close to a victory in a long-running dispute with Royal Dutch Shell PLC over a $20 billion energy project, a development that would bolster Kremlin control of the nation’s vast oil and natural-gas reserves in a time of concern over world supplies.

Shell has proposed ceding a controlling stake in the Sakhalin-2 project in Russia’s far east to state-run OAO Gazprom, an official close to the situation said. Another person close to the talks stressed they are continuing and an agreement hasn’t been reached. Such a move would underscore the Kremlin’s opposition to foreign control of large energy projects in Russia at a time when an increasingly confident Russian state, buoyed by high oil prices, is determined to restore its domination of the country’s oil and natural-gas industry.
 
Shell owns a 55% stake in Sakhalin-2, which has an expected total cost of $20 billion to develop. Russian regulators threatened to impose sanctions on the project following Shell’s announcement in 2005 of big cost overruns. That cast a pall over what is one of the biggest liquefied-natural-gas projects in the world and the single-biggest foreign investment in Russia. read more

This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.