December 20th, 2006:

Thursday, December 21, 2006. Page 7.
By Miriam Elder
Staff Writer

Shell is due to sell half of its 55 percent stake in Sakhalin-2 to Gazprom for cash, a source close to the talks said Wednesday, in an imminent deal that looks likely to be a significant setback for a major blow to the oil major.

The project’s three shareholders will each give up one-half of their holdings to hand Gazprom a controlling stake, the source said, citing part of the proposed deal finalized last week.

Project operator Shell would then have a stake of 27.5 percent, while Mitsui would reduce its stake to 12.5 percent from 25 percent and Mitsubishi to 10 percent from 20 percent. Gazprom would need just 50 percent plus one share to take control. read more

By Matthew Lynn
Thursday December 21, 2006
By Guest Columnists 

How much provocation does big business need before it has doubts about Russia?

Anglo-Dutch oil company Royal Dutch Shell has been threatened with lawsuits from the Russian Government, which is tightening its grip on the energy industry.

Companies as diverse as Swedish furniture chain IKEA and German retailer Metro are also finding that Russia can be a tough place to do business.

Yet Western companies are still pouring money, energy and expertise into Russia. They are attracted by a high-growth, low-tax economy offering the chance to make a lot of money quickly. read more

By Maher Chmaytelli

Dec. 20 (Bloomberg) — OAO Gazprom, the world’s largest natural-gas producer, and another Russian company, OAO Tatneft, secured oil-drilling rights in Libya, beating offers from the largest U.S. and European oil companies, Exxon Mobil Corp. and Royal Dutch Shell Plc.

Libya, holder of Africa’s largest crude-oil reserves, will offer more plots for exploration before April, said Shokri Ghanem chairman of state-owned National Oil Corp. Tatneft was awarded rights in three of 14 plots offered at an auction today in Tripoli. Gazprom secured one, offering to keep only 10 percent of the production of any field, while Exxon wanted 24.9 percent. read more

December 20, 2006 17 40  GMT

Summary

The new rumor out of Russia is that Gazprom plans to pay cash to take over majority control of the Sakhalin-2 energy project in the Russian Far East. For the foreign firms involved, a bad deal just keeps getting worse.

Analysis

Press releases from Russian government spokesmen Dec. 20 cite Deputy Energy Minister Andrei Dementiev as saying that state energy firm Gazprom will pay cash for a majority stake in the Sakhalin-2 oil and natural gas project in the Russian Far East. Assuming for the moment that the Russians do intend to pay cash, it will be more than simply a bad financial deal for the foreign firms involved in Sakhalin-2. read more

Wednesday, December 20, 2006
By Russell Gold,

The oil industry is readying for a new wave of consolidation on the heels of the $30 billion deal combining Norwegian energy giants Statoil and Norsk Hydro.

The Norwegian government owns large stakes in both companies and wants to create a single national energy champion. The underlying logic of the deal — that bigger companies will better compete in the world’s increasingly crowded oil fields — also is driving the biggest publicly traded oil companies toward consolidation. These globe-spanning companies, often referred to as Big Oil, are struggling to add oil and natural-gas reserves and to increase production as they face stiffer competition and tightening access to oil and gas fields around the world. They, too, want to bulk up. read more

By Tom Bergin

LONDON (Reuters) – Royal Dutch Shell Plc’s plan to cede a 30 percent stake in its biggest project to Russia’s Gazprom could force the oil major to slash its proven oil and gas reserves by around 10 percent, analysts said on Wednesday.

Under pressure from the Kremlin, Shell and its partners in the $22 billion (11.2 billion pound) Sakhalin-2 project have agreed to sell the stake in a deal expected this week, a source close to talks between the companies told Reuters on Tuesday. read more

By: Terry Nolan
Wednesday, December 20, 2006

The last six months have seen steady progress in the Corrib gas project but the old rifts persist, concedes Terry Nolan, Deputy Managing Director, Shell Ireland.

IT’S now six months since I took up the post of Deputy Managing Director with Shell Ireland and an opportune time for reflection. I returned to Ireland in June – pleased to be back home after 25 years working abroad with Shell and looking forward to joining the Corrib project, despite its troubled history. read more

Email received 19 December 2006

Dear Web-editors!

I have seen the website of RoyalDutchShellplc and I think its contents match with the new campaign of Milieudefensie (Friends of the Earth Netherlands) and other ngo’s around the world. That’s why I write you this e-mail.

On the 1st of February, Royal Dutch Shell is going to publish its annual financial report. By publishing a number of large (page filling) newspaper-advertisments in Dutch and British newspapers, Milieudefensie is going to ask Shell to invest part of the annual profit in improving environmental and human conditions of their production of oil around the world. read more

 (Militants say they would rather kill them than accept ransom)

2006-12-20 14:36

LAGOS (ANSA) – A Nigerian militant group which is holding three Italian oil workers hostage said on Wednesday that it would rather kill the men than accept a ransom for their release.

In an e-mail sent to media organisations, the Movement for the Emancipation of the Niger Delta (MEND) said that Agip, a subsidiary of Italian oil giant Eni, had offered cash for the release of the Italians and a fourth hostage who is from Lebanon. read more

20.12.2006, 11.25  

TOKYO, December 20 (Itar-Tass) – President & CEO of Mitsubishi Corp. Yorihiko Kojima has expressed the hope that Gazprom’s entry in the oil and natural gas project Sakhalin-2 will improve relations of the current projects participants with the Russian government.

“If Gazprom becomes our partner, then I hope that relations with the Russian government will be developing more smoothly,” Kojima said in an interview published by the Japanese leading economic newspaper Nihon Keizai on Wednesday. read more

(Gardai in action at Rossport)

Wednesday, Dec 20 2006, 12:38pm

A consortium of Shell, Statoil, and Marathon do a deal with the government allowing them exclusive exploitation rights to the Corrib gas field, off Mayo. Not only that, but they are allowed to write off their costs against taxes, meaning that the whole project is being funded by the PAYE taxpayer, who will receive nothing, not even lower gas prices. It may sound a bit iffy but there is no garda investigation into possible bribery or corruption. read more

By Torrey Clark

Dec. 20 (Bloomberg) — OAO Gazprom, Russia’s gas-export monopoly, will pay cash for a stake in Royal Dutch Shell Plc’s $22 billion Sakhalin-2 project, allowing the state-run company to enter the liquefied natural gas business while depriving Shell of reserves.

Gazprom will pay for the stake with cash rather than assets, an Energy Ministry spokesman said in Moscow today, citing Deputy Minister Andrei Dementiev and declining to elaborate. Gazprom Chairman Dmitry Medvedev, who is also first deputy prime minister, said last week that Gazprom may buy half of Sakhalin-2. read more

Fitch Ratings 12/19/2006
URL: http://www.rigzone.com/news/article.asp?a_id=39311

Fitch Ratings says that Royal Dutch Shell PLC’s (“Shell” ‘AA+’/Stable Outlook) new proposals for state-run OAO Gazprom (‘BBB- (BBB minus)’/Positive Outlook) to acquire a controlling stake in Sakhalin Energy Investment co. (“Sakhalin II”), one of the largest integrated oil-and gas developments in the world, may have an adverse impact on its reserve replacement strategy. read more

By Joe Carroll

Dec. 20 (Bloomberg) — Bill Thornburg, a senior drill-site manager for Chevron Corp., opens a steel door on a floating oil rig off the Louisiana coast and stops dead in his tracks.

Red plastic tape warns that crews are hauling pipe and wrenches the size of baseball bats across a deck slick with sea spray. If it were up to Thornburg, there’d be a dozen more $1- million-a-day rigs plying the Gulf of Mexico, full of roughnecks so busy their bosses would need to stay out of the way. read more

EXTRACT: Shell got the largest fine of 108mn euros for being a repeat offender and for starting the cartel with Dutch builder Royal Volker Wessels NV.

THE ARTICLE

Published: Wednesday, 20 December, 2006, 10:40 AM Doha Time
 
LONDON: Royal Dutch Shell Plc, Total SA and eight other oil and construction companies are appealing 267mn euros ($352mn) in European Union fines for fixing prices of bitumen, a petroleum byproduct used to make asphalt.

The European Commission on September 13 penalised 14 companies for joining the cartel that affected prices of bitumen across the Netherlands for at least eight years. read more

December 20, 2006

Judging by the drama unfolding at BP, the company that casts the longest shadow in Britain today is not Barclays or Tesco or Vodafone. It’s Gazprom. The Russian energy giant hovers not only over BP’s joint venture in Russia, but the succession saga at St James’s Square and even its future as a British business.

This is getting repetitive, no doubt, but Lord Browne’s departure has been appallingly handled. Peter Sutherland, the chairman, has reduced his chief executive to a lame duck president; the candidates to replace him are being exposed to the humiliations of a public talent contest; and the office politics is distracting BP at a time when it has too many external fires to put out to be able to afford a bonfire of the vanities in-house. 
 
But the intrigue inside the executive suite needs to be put aside. The future of one of Britain’s most important companies is at stake. While this transition drags on, the company will be weakened. If mishandled, it could be wounded. A powerful multinational that 18 months ago was seriously mulling a bid for Shell could swiftly find itself a takeover target. This time, Shell might be doing the bidding. Or, quite conceivably, Gazprom. The British Government could do little to stop a Russian acquisition of BP. read more

By Torrey Clark

Dec. 20 (Bloomberg) — OAO Gazprom, Russia’s gas-export monopoly, will pay cash for a stake in Royal Dutch Shell Plc’s $22 billion Sakhalin-2 project in the country’s Far East, the Energy Ministry’s press service said today.

A spokesman for the ministry declined to elaborate or give his name, in a telephone interview in Moscow.

To contact the reporter on this story: Torrey Clark in Moscow at

[email protected]

Last Updated: December 20, 2006 03:08 EST read more

Wed Dec 20, 2006 3:06am ET

MOSCOW, Dec 20 (Reuters) – Russia’s gas monopoly Gazprom (GAZP.MM: Quote, Profile , Research) will pay cash for a stake in the Royal Dutch Shell-led (RDSa.L: Quote, Profile , Research) Sakhalin-2 oil and gas project, Interfax quoted deputy energy minister Andrei Demetyev as saying on Wednesday.

Russian officials have said Gazprom was looking to acquire around 50 percent in Sakhalin-2 from Shell and its Japanese partners, Mitsui (8031.T: Quote, NEWS , Research) and Mitsubishi (8058.T: Quote, NEWS , Research). read more

Dec 20 2006 11:22AM

MOSCOW. Dec 20 (Interfax) – Gazprom will enter the Sakhalin-2 hydrocarbons project not via an asset swap but it will buy into the project, Deputy Russian Industry and Energy Minister Andrei Dementyev told reporters.

Asked how the gas company might enter the project, Dementyev said: “It will buy [the stake] for cash.”

He said Russian Industry and Energy Minister Viktor Khristenko was due to meet with Sakhalin-2 shareholders at the end of this week. “[The meeting] will take place either on Thursday or on Friday,” he said. 
  read more

Guardian headline: Gazprom closes in on Shell and signs $85bn French deals

· Contract lets consumers buy Russian gas
· Fears energy supply will be used as a political tool

Terry Macalister
Wednesday December 20, 2006

Gazprom extended its grip on the European gas market yesterday after it said it expected to sign a contract to take control of Shell’s Sakhalin-2 project within 48 hours. It also agreed a huge contract to supply gas to France for the next 24 years and to sell directly to French consumers. read more

EXTRACT: Some private sector organisations such as Royal Dutch Shell, the oil company, are known for their work on the future but they tend to specialise in developing detailed scenarios rather than in horizon scanning across the board, Sir David says. (*Wonder if Shell’s crystal ball gazers foresaw that the Sakhalin II $26 billion white elephant project in Russia would end up being derailed by a $2 a week website which has provided the prime evidence for the $30 billion lawsuit being launched by Oleg Mitvol against Sakhalin Energy) read more