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January 5th, 2006:

San Francisco Chronicle: Muzzling Russia's independent voices

“Lisitsyn lives on Sakhalin, a remote island off Russia's Pacific Coast where Shell, Mitsubishi, ExxonMobil and others are aggressively drilling for oil and gas.”: Posted Thursday 5 January 2006
By David Gordon
Russian President Vladimir Putin's attempt to tighten regulations on the country's estimated 450,000 public-interest groups has been interpreted by many to be a sinister, Soviet-like crackdown on democracy. After an outcry from Russian and international organizations, Putin ordered modest changes to the law. These changes removed some of the worst provisions, such as forcing all Russia's public-interest groups to re-register.
Yet the new version, which was just adopted by the Duma and was rubber-stamped by the Putin-controlled Federation Council and is expected to be signed by Putin, threatens to muzzle political discourse in the country.
Ostensibly, the new regulations forbid nongovernmental organizations from engaging in political activity. If interpreted narrowly — that NGOs financially should not support political candidates or campaign on their behalf — then this restriction is no different from restrictions on lobbying that apply to charitable organizations in the United States. But some interpret the restriction broadly — that NGOs should not make statements in the press about political issues.
Unfortunately, the new law does not define political activity, and this is where the danger lies: How will these new directives be interpreted at the local level? Putin's statements last summer about NGOs and political activity led to a spike in harassment by local officials throughout Russia's far-flung regions in Siberia and the Russian Far East.
It is clear that despite what the law says, local bureaucrats are taking advantage of the current atmosphere to crack down on groups they see as dissenters. Some of Russia's brightest lights — people who are truly working toward sustainable and positive change in the society — will end up without support.
Among the many activists that this would hurt is Dmitry Lisitsyn and his organization, Sakhalin Environment Watch. Lisitsyn lives on Sakhalin, a remote island off Russia's Pacific Coast where Shell, Mitsubishi, ExxonMobil and others are aggressively drilling for oil and gas. Despite being outspent and outgunned by these big oil companies, Lisitsyn and his colleagues have been effective in mitigating the environmental impacts from the Sakhalin projects.
They have forced Shell to reroute an underwater pipeline around the habitat of the critically endangered western gray whale. They have represented the concerns of the island's indigenous people, who have seen their subsistence fishing economy take a downturn since the arrival of the companies. Also, their advocacy has changed the behavior of international finance institutions, which have learned the importance of listening to local concerns before putting their money behind huge projects in places like Sakhalin.
You might think that someone such as Lisitsyn would be considered a thorn in the side of the government. On the contrary, the head environmental regulator on Sakhalin, Sergei Kotelnikov, says he relies on the information that Lisitsyn supplies. Without adequate funding from Russia's government, Kotelnikov and his few regulators can't monitor the oil projects. Last month, Sakhalin Environment Watch uncovered an oil spill in northern Sakhalin from a pipeline owned by Russia's state-owned Rosneft. Without NGO activists such as Lisitsyn having gone to visit the site, the spill may have remained hidden for months.
But Russia's proposed NGO law opens the door for harassment of groups such as Sakhalin Environment Watch. In 1986, the Chernobyl nuclear power plant in the Soviet Union exploded and inadvertently set in motion a vibrant environmental movement there. This growing public cause began by asking the government questions, suspicious a cover-up might occur: How safe are Soviet-made power plants? Where is the radioactive waste stored? These were questions that the authorities had no tolerance for before Chernobyl, yet couldn't avoid afterward. These same questions contributed to the collapse of the Soviet Union and the creation of a new environmental awareness reflected in some of the toughest environmental laws in the world. Since then, despite the challenges, Russia supports a robust grassroots environmental movement.
Putin should reconsider changing the law regulating public-interest groups.
He should ensure that this law is clearly designed to prevent harassment of NGO activists in Russia and encourage a healthy discourse about public policy. Given the immense pressure for Russia to plunder its minerals, oil, fish and timber, this is not the time to take power from the people who can ensure it is done responsibly.
David Gordon is executive director of Pacific Environment (, a San Francisco nonprofit that supports grassroots environmental groups throughout Russia.
Page B – 9 read more

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Houston Chronicle: Shell Agrees to Settle Bogus Trade Charges

Thursday 5 January 2006
By BRAD FOSS AP Business Writer
© 2006 The Associated Press
WASHINGTON — Federal commodity-trading regulators on Wednesday announced that a subsidiary of Royal Dutch Shell PLC has agreed to pay a $200,000 penalty to settle charges of making “fictitious” trades of crude oil futures contracts.
The Commodity Futures Trading Commission said Shell International Trading and Shipping Co. of London engaged in prearranged “non-competitive” trades on the New York Mercantile Exchange with a U.S.-based Shell subsidiary, Shell Trading US Co., on five occasions between November 2003 and March 2004.
“In each instance, the traders prearranged the trade by agreeing on the quantity and the settlement month, and agreeing to take the opposite positions of the trade. There was no prearrangement as to price,” the CFTC said in an order detailing the case against Shell.
The head trader at Shell Trading, Nigel Catterall of Sugarland, Texas, will pay an additional $100,000 to settle the charges. Catterall was involved in three of the five instances of alleged abuses, the CFTC said.
A spokeswoman for Shell said the company did not immediately have any response. As part of its agreement to pay the fines, Shell neither admitted nor denied the CFTC's findings. read more

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THE WALL STREET JOURNAL: Shell Trader, Unit Are Fined Over Bogus Oil Trades

Thursday 5 January 2006
January 5, 2006; Page C3

The Commodity Futures Trading Commission fined a top oil trader at Royal Dutch Shell PLC and one of the energy titan's trading subsidiaries a combined $300,000 for a series of bogus oil-futures trades on the New York Mercantile Exchange.
While the fines are small, they come as the Anglo-Dutch oil company struggles to repair its reputation, battered in an energy-reserves accounting scandal in 2004. The fines also come at a time of popular resentment over steep energy prices, including all-time highs last year for benchmark U.S. oil futures at Nymex.
The CFTC said it had found that, on at least five occasions from November 2003 to March 2004, traders for Houston-based Shell Trading U.S. Co. and London-based Shell International Trading & Shipping Co. executed prearranged and noncompetitive trades in crude-oil futures contracts, in violation of exchange rules. In each instance, the regulator found, Shell traders agreed to swap a prearranged quantity of oil-futures contracts for delivery in the same month.
The mirror-image trades, which were then executed on the exchange via brokers, “constituted fictitious sales” that eliminated price competition and market risk for the two entities, the CFTC said in a regulatory order released yesterday. Further details of the trades weren't disclosed.
It isn't clear whether — or by how much — Shell benefited financially.
The CFTC said it agreed to settle charges of trading violations and issued a $100,000 civil fine against Nigel Catterall, head futures trader at Shell Trading U.S., who the commission said was engaged in three of the trades. The commission ordered Shell International Trading & Shipping to pay a further $200,000.
Shell agreed to the fine without admitting or denying the commission's findings. In a statement, Shell said it had reached a separate, unspecified settlement with Nymex over the same matter. “We are pleased that this matter has been brought to a close,” Shell said.
A spokeswoman for Nymex said the exchange didn't have any comment on the settlement.
Shell declined to say whether it brought any disciplinary action against Mr. Catterall. He was unavailable for comment.
The CFTC said that none of the prearranged trades included prior agreements on pricing for the contracts, thus distinguishing the transactions somewhat from so-called round-trip, or wash, trades. Wash trades, which typically include two parties agreeing to exchange the same amount of a commodity for the same price, can be used to inflate revenue figures or manipulate prices.
Heavy wash trading in the natural-gas market in the U.S. earlier this decade undermined the credibility of that market. Oil-futures markets, however, are more liquid, making it much more difficult for isolated trades to distort prices. In late 2003, BP PLC agreed to a record $2.5 million fine with Nymex, settling charges of improper crude-oil trading, including wash trading.
Write to Chip Cummins at [email protected] read more

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Financial Express (India): GSPC firm on ending Shell pact

Financial Express (India): GSPC firm on ending Shell pact Posted online: Thursday, January 05, 2006
MUMBAI, JAN 4: The future of Shell’s LNG business in India was further thrown into uncertainty, with the Gujarat State Petroleum Corporation (GSPC), Shell’s first and only customer for LNG from its Hazira project, deciding not to renew its gas sales agreement with the company.
GSPC’s 7-month agreement with Shell to source 0.7 MMSCMD (a per day measure) of gas ended in December 2005, and GSPC is now refusing to renew the deal citing high prices of gas charged by Shell in its new contract.  
A GSPC source said, “Shell was asking almost three times higher prices over $9 per million metric British thermal units (mmbtu) for LNG, while it was supplying LNG at $3.7 mmbtu to us a per the GSA. It is not viable to source LNG at that price so there is no scope of renewing the GSA.
“Admitting that Shell has at present no clients in India, Shell official spokesperson said, “We have honoured the GSA with GSPC, which has come to an end. We are now in talks with a number of customers for our LNG supply.” When asked about reports of Shell terminating operations at its LNG terminal at Hazira, he said, “Our LNG terminal is fully operational.”
GSPC’s decision may cause shortage of around 7 lakh cubic meters per day of natural gas for Gujarat industries. The state’s gas requirement was increasing in leaps and bounds and the impact of the shortage was likely to be felt in the next few months.
However GSPC, the nodal agency for the Government of Gujarat (GoG) for distribution of LNG in the state of Gujarat, has ensured uninterrupted supply of LNG for Gujarat industries. Confirming the development, GSPC’s managing director, DJ Pandian told FE, “Gujarat will not face LNG shortage. GSPC will ensure uninterrupted LNG supply to Gujarat industries as per schedule. We have alternative sources of LNG supply.” read more

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The Wall Street Journal: SEC Stakes Out Middle Ground On Fines Policy

Thursday 5 January 2006
Agency Will Consider Cooperation,
Penalty's Effect on Shareholders;
Critics Say Guidelines Aren't Clear
January 5, 2006; Page C1
The Securities and Exchange Commission, seeking to defuse a controversy about its use of big fines to punish corporate wrongdoing, publicly laid out a set of guidelines to help determine whether and how much to fine companies engaged in financial fraud.
The move is an attempt by Christopher Cox, who took over as SEC chairman five months ago, to address concerns by Republican commissioners and some in the business community that the practice of fining companies was a double hit on shareholders: once for being harmed by the fraud and again in the use of shareholder money to pay a fine. Others also had argued that the SEC was inconsistent in its use of corporate penalties.
Yesterday, Mr. Cox, with the full backing of the agency's four other commissioners, appeared to stake out a middle ground. He said the agency will take into account whether shareholders improperly benefited from a fraud and if a penalty would create further harm or could be used to repay shareholders.
The SEC also said it would consider whether the conduct was widespread in the corporation and whether the company cooperated when the fraud came to light. The guidelines don't apply to companies in regulated industries, such as broker-dealers or mutual-fund firms, or individuals.
“Our intention is that these principles will establish objective standards that will provide the maximum degree of investor protection,” Mr. Cox said.
The agency used two enforcement cases announced yesterday to elucidate the principles. The SEC filed a case against McAfee Inc. in which the Santa Clara, Calif., software maker agreed to pay $50 million, without admitting or denying wrongdoing, to settle allegations it overstated revenue by $622 million from 1998 to 2000. During the period, McAfee, formerly called Network Associates Inc., used its inflated stock to acquire other companies, and the fraud was concealed, the SEC said.
In the second case, Applix Inc., a Westborough, Mass., software company, settled, without admitting or denying wrongdoing, charges of improper revenue recognition. Applix wasn't subject to a fine.
In explaining the difference, Linda Chatman Thomsen, the SEC's enforcement chief, said McAfee was subject to a penalty because it benefited from the conduct. Given the financial strength of the company, it was unlikely that a fine would hurt shareholders, she said.
Applix and its shareholders didn't appear to benefit from the fraud, which was more limited than McAfee's, she said. Applix is a smaller firm, and a fine could have a disproportionate effect on shareholders.
Peter Wallison, a resident fellow at the American Enterprise Institute for Public Policy Research who has been critical of the SEC's policy making in the past, said the agency has “set out principles that look as though they will be workable and give the market a sense of what to expect.” Mr. Wallison, a former colleague of Mr. Cox's from their days in the Reagan White House, said the guidance affirms the view that “it makes no sense to fine a company when the fine simply hurts the shareholders.”
But others argued that the guidelines were far from clear and would inevitably result in arguments about whether companies had benefited from the fraud.
Susan Hackett, general counsel of the Association of Corporate Counsel, which represents in-house corporate attorneys, said the SEC's guidelines don't seem to go much beyond what companies and attorneys already knew about the agency's expectations. “In looking at this, I'm still not given such a degree of additional guidance that I feel that I know a heck of a lot more than I did before,” she said.
In particular, she said the guidance reaffirms the SEC's view that companies will be rewarded if they cooperate with the agency, but said it still doesn't give a clear explanation of what cooperation entails. “Part of the difficulty, especially for lawyers, is if cooperation means a company pleads guilty any time a company is accused and is supposed to roll over and play dead. Well, defense lawyers are paid to defend a corporation,” she said. The guidance issued yesterday, she said, seems to still give SEC lawyers great latitude in determining what level of cooperation is sufficient to prevent a fine.
Ms. Hackett said corporate lawyers also want more clarity of what remedial steps are expected by the SEC. “If remedial steps means as soon as an allegation surfaces a company is supposed to disassociate itself and fire all the employees involved, that's a problem,” she said. “A company puts itself between a rock and a hard place when it gets into making prejudgments.”
Derek M. Meisner, a former branch chief in the enforcement division who is now in private practice, said, “The problem is that the criteria are not nearly as objective as I suspect many in the corporate world and defense bar were hoping for.”
SEC commissioners acknowledged there likely would still be disagreements among them. Cynthia Glassman and Paul Atkins, two Republican commissioners, had clashed with the two Democratic commissioners and former Chairman William Donaldson, a Republican, in arguing against corporate penalties.
“It's a very good start that we had two cases in the context of this policy statement in that we had full consent,” said Annette Nazareth, a Democratic commissioner. “I don't think it would be realistic to expect that every time people are presented with a set of facts that they would necessarily view them in the same light.”
Known as a consensus builder when a congressman, Mr. Cox focused the commissioners on the Enforcement Remedies Act of 1990, which gave the SEC the authority to fine corporations, and the fair-funds provision of the 2002 Sarbanes-Oxley law.
Mr. Wallison said the guidance would at least stem some of the divisiveness at the SEC under Mr. Donaldson. “This reflects the fact that Chairman Cox has been able to bring the four other commissioners together on an agreed position on this question,” he said. “That is the most significant thing about it, as far as I am concerned, because we're now getting beyond what had happened before where the commission was split on everything that Bill Donaldson wanted to do.”
–Deborah Solomon contributed to this article.
Write to Kara Scannell at [email protected] read more

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CNN MONEY: Shell settles on bogus trades

CNN MONEY: Shell settles on bogus trades: Posted Thursday 5 January 2006
Commodities agency settles Shell oil trading case for $300,000
January 4, 2006: 9:44 PM EST
WASHINGTON (Reuters) – Two Royal Dutch Shell units and a Shell trader will pay $300,000 to settle charges of making prearranged crude oil trades on the New York Mercantile Exchange, the U.S. Commodity Futures Trading Commission said on Wednesday.
The units, Shell Trading U.S. and Shell International Trading and Shipping, and Shell trader Nigel Catterall were accused of making the fake trades between November 2003 and March 2004, the CFTC said in a statement.
“The traders prearranged the trade by agreeing in advance on the quantity and the settlement month, agreeing to take the opposite positions of the trade and executing the trade on the NYMEX,” the CFTC said. “Catterall was involved in the prearrangement of certain of these trades.”
In a settlement with the CFTC, the two Shell units and Catterall agreed to pay a total of $300,000 in penalties and did not admit or deny any wrongdoing.
A Shell spokeswoman said the firm was “pleased that this matter has been brought to a close,” and said Catterall is still employed at Shell Trading U.S.
The prearranged trades constituted fake sales that violated federal law and CFTC regulations, the CFTC said.
Separately, NYMEX has taken disciplinary action against Shell Trading U.S. and an employee of the company, the CFTC said.  read more

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Bloomberg News: Shell pays $300,000 to settle case: Houston unit one of two accused of 'fictitious' deals

Posted Thursday January 5, 2006
Royal Dutch Shell agreed Wednesday to a $300,000 settlement of charges that two of its subsidiaries engaged in “fictitious” crude oil futures trades on the New York Mercantile Exchange.
Shell Trading U.S., based in Houston, and London-based Shell International Trading and Shipping will pay $200,000 to settle the Commodity Futures Trading Commission case. Nigel Catterall of Sugar Land, then head of the futures desk for the U.S. subsidiary, will pay $100,000, the agency said.
Catterall and Shell engaged in prearranged trades for oil futures “on at least five occasions between November 2003 and March 2004,” the CFTC said in a prepared statement Wednesday..
Traders for the two subsidiaries agreed in advance on the quantities and delivery month for contracts to be traded on Nymex. The price was not prearranged, and the contracts traded at prevailing market prices. Shell neither admitted nor denied any wrongdoing in the settlement.
“We are pleased that this matter has been brought to a close,” Shell spokeswoman Darci Sinclair said. Catterall, who was a trader for the British subsidiary until September 2003, is still employed by Shell Trading U.S., Sinclair said. She said she didn't know what position he held.
The CFTC said Shell cooperated in the investigation.
A commission spokesman in Washington, Dennis Holden, would not comment on how the trading violations came to light.
The commission said in the settlement that it defines fictitious sales as “the use of trading techniques that give the appearance of submitting trades to the open market while negating the risk or price competition incident to such a market.”  read more

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Bernama, Malaysia: Sabah Shell Tops Prime Minister's Hibiscus Award Honours

Bernama, Malaysia: Sabah Shell Tops Prime Minister's Hibiscus Award Honours: Posted Thursday 5 Jan 2006
KUALA LUMPUR, Jan 4 (Bernama) — Sabah Shell Petroleum Co Ltd topped the list of the Prime Minister's Hibiscus Award Honours 2004/2005 in recognition for its continuous efforts towards environmental management.
The Excellent Achievement Award was presented, here Wednesday to its managing director Datuk Jon Chadwick by Deputy Prime Minister Datuk Seri Najib Tun Razak, who officiated the glittering ceremony.
Sabah Shell led a field of 31 finalists to capture the challenge trophy while Shell MDS (M) Sdn Bhd, Intel Products (M) Sdn Bhd, Intel Technology (M) Sdn Bhd, Advanced Micro Devices Export Sdn Bhd and Tioxide (Malaysia) Sdn Bhd received Exceptional Achievement Awards.
Notable Achievement Awards were presented to Dell Asia Pacific Sdn Bhd, Toshiba Electronics (M) Sdn Bhd, SKF Bearing Industries (M) Sdn Bhd, Motorola Technology Sdn Bhd, Silterra Malaysia Sdn Bhd, Petronas Carigali Sdn Bhd (Kerteh), Johnson & Johnson Sdn Bhd, Petronas Carigali Sdn Bhd (Labuan), Cargill Palm Products Sdn Bhd, 1st Silicon (M) Sdn Bhd, BASF Petronas Chemicals Sdn Bhd, Matsushita Industrial Corp Sdn Bhd, Shell Refining Company (FOM) Bhd, Henkel (M) Sdn Bhd, Freescale Semiconductor (M) Sdn Bhd, Tex Cycle Sdn Bhd, Kualiti Alam Sdn Bhd, Petronas Carigali Sdn Bhd (Sarawak), and Petronas Penapisan Melaka Sdn Bhd.
Tex Cycle also won in the Small and Medium Enterprise (SME) category.
State Awards were given to Petronas Penapisan Melaka Sdn Bhd (Melaka), Cargill Palm Products Sdn Bhd (Pahang), Henkel (M) Sdn Bhd (Perak), Shell MDS (M) Sdn Bhd (Sarawak) and Toshiba Electronics (M) Sdn Bhd (Selangor).
A record number of 53 companies, the largest entries in the award's 10-year history, participated in the two-stage assessment process, including on-site verification of their environmental management performance.
The biennial award was jointly organised by the Business Council for Sustainable Development in Malaysia, Environmental Management and Research Association Malaysia, Federation of Malaysian Manufacturers and Malaysian International Chamber of Commerce and Industry.
The award was supported by the Natural Resources and Environment Ministry and its Department of Environment.
— BERNAMA read more

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New Straits Times (Malaysia): Call to use less-polluting methods

Thursday Jan 05, 2006
KUALA LUMPUR, Wed. – The private sector has been urged to use less-polluting methods and materials and produce more environment-friendly products and services.
In making this call, Deputy Prime Minister Datuk Seri Najib Razak said environmental issues have become more important in international trade.
He also called on the business community to do its part by acting responsibly towards the environment as environmental protection and conservation is a joint effort of the Government, the private sector and the public.
“Today, more than ever, markets were emphasising another compliance mechanism, such as environmental or green compliance, and many governments in these markets, particularly in the developed countries, had enacted laws to protect and preserve the environment.
“Therefore, it is pertinent for Malaysian producers and exporters to keep an eye on the development of the many markets for such issues on compliance,” he said.
He was speaking during the presentation ceremony for the Prime Minister's Hibiscus Award 2004/2005.
The biennial award, in its 10th year, recognises and rewards companies, businesses and organisations for their commitment to environmental awareness while successfully operating their business in Malaysia.
This time, the award was won by Sabah Shell Petroleum Co Ltd, which also won the Excellent Achievement Award. Shell Malaysia chairman Datuk Jon Chadwick received the award on behalf of his company from Najib.
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Lloyds List: Shell exports first crude cargo from Bonga field

Thursday Jan 05, 2006
SHELL has exported its first crude cargo from the $3.6bn Bonga deepwater oil project off Nigeria, writes Martyn Wingrove.
One of the world's largest floating production storage and offloading vessels operating over the Bonga field delivered its first cargo to Andriaki's very large crude carrier Avion at the end of December.
Analysts at Lloyd's Marine Intelligence Unit said the tanker will be taking the cargo to the US Gulf and brokers expect it to load its next cargo in the UK Continent area.
Shell's Bonga project started production on November 25 through a newbuild FPSO, moored in 1,000 m of water and with a storage capacity of 2m barrels.
Shell hopes to raise output to the nameplate capacity of 225,000 barrels per day of oil and 150m cu ft of gas this quarter as it connects 16 oil producing and water injection wells.
'It is a technology triumph that Shell is producing oil and gas from the Nigerian deepwater frontier and we have capped this with the first shipment,' said Chima Ibeneche, managing director of Shell Nigeria Exploration and Production.
The 60 sq km field lies in oil prospecting licence OPL 212 and produces through the FPSO with oil exported via the world's largest single point mooring buoy, built by Nigerdock. read more

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