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Posts on ‘January 24th, 2006’

Western People: Shell to Sea pickets Council over water quality concerns

MEMBERS of the Shell to Sea campaign last week picketed the headquarters of Mayo County Council in Castlebar to highlight their concerns over water quality and environmental issues arising from site works at the company’s proposed Bellanaboy terminal, writes Christy Loftus.
The protestors claim that works carried out to date by the company pose a risk to the water quality in Carrowmore Lake which is the source of domestic supply to thousands of homes in the Erris area.
They are demanding that the local authority examine existing conditions in the area and are seeking assurances with regard to the water filtration system which Shell is constructing on the site.
The protestors claim that runoff from the site, from which vast quantities of peat have been removed, is a threat to the water quality and fish life in Carrowmore Lake.
They argue that Shell had committed to providing the filtration system in two to three weeks last October but still had not delivered on the promise.
Ms Mary Corduff, wife of Willie Corduff, one of the five Rossport men who recently spent 94 days in Cloverhill Prison because of his opposition to the upstream pipeline, said the main objective of the picket was to get a commitment from the council to inspect the ongoing works and to reassure the community about water quality,
One of the group, Mr. John Monaghan said contaminated water is still running off the site and has been since early October. He questioned the role of the Project Monitoring Committee; the Environ-mental Protection Agency; the Regional Fisheries Board; Mayo County Council and the Department of the Marine and Natural Resources.
“The local people are monitoring the monitors and they are doing nothing,” he said.
Another protestor, Terence Conway explained that the group had decided to picket the County Council offices to highlight their concerns. “It is the only way left open to us,” he declared.
• Last Sept the council wrote to Shell requiring them to address concerns about pollution of waterways in the vicinity of the site and threatened to take action under the Local Government Water Pollution Acts.
In late October Shell, in a press statement, confirmed that the delivery and installation of the of the filtration equipment (to address the run-off problem) had commenced and that the testing and commissioning should be completed in a matter of two to three weeks.
It is understood that the water treatment units will be up and running in the next few days. read more

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IrelandOn-Line: Shell Oil directors to meet with TDs over pipeline

Four directors of Shell Oil are due to meet with west of Ireland TD's this week, it emerged this afternoon.
The delegation, which will include former Dutch Prime Minister Wim Kok, is expected to try to advance progress on the Corrib gas field.
The meeting, scheduled for Leinster House on Thursday, is likely to involve Government deputies.
Independent TD Jerry Cowley has been at the forefront of the anti-pipeline campaign, and he said no representative of anti-pipeline groups had been invited to have talks with the company.
“If they did want to seriously address the safety concerns and issues, well then they should certainly be outlining who they're going to meet,” he said.
“It would appear that people have been contacted who are very much pro the gas, this is seen as a softening of the ground before a final onslaught to impose their will.” read more

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Asia Pulse News: SHELL'S WITHDRAWAL FROM PACIFIC DISAPPOINTS SOLOMONS GOV'T

HONIARA, Jan 24 Asia Pulse – The recent announcement by oil company, Shell of its planned withdrawal from the Pacific, including the Solomon Islands, is disappointing says caretaker Prime Minister Sir Allan Kemakeza.
Sir Allan said it is disappointing from the perspective of the region's loss of a major international company.
Last year Shell announced its withdrawal from the smaller Pacific Island states with claims that it wanted to concentrate on bigger projects.
Sir Allan said Shell has clearly stated the commercial reasoning for its business decision and the Solomon Islands Government respects that decision.
“The government recognizes the current decision to withdraw must be viewed in light of the Pacific market size relative to other global opportunities for Shell.
“The government acknowledges the commitment Shell has made to the country over many decades, including its support during several difficult years.”
Sir Allan added that the government anticipated that Shell would continue an association with Solomon Islands via supply of oil products to the successful purchaser of Shell's business.
Shell's existing business is a large and economically critical operation, and its sale presents an opportunity for local business to participate in this essential industry, Sir Allan said.
“Government policy consistently advocates local talent and ownership, and encourages Shell to give priority to suitable local businesses with the capability to purchase and manage the business as a going concern.
“At the same time, it is important that an appropriate level of competition is maintained in the industry to avoid any undesirable monopoly outcomes caused by Shells withdrawal,” Mr Kemakeza said.
(Pacnews) read more

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The Scotsman: Inquiry told Shell rig men's deaths avoidable

LOUISE HOSIE
THE deaths of two oil workers on board a North Sea rig were “entirely avoidable”, an inquiry has heard.
It was claimed that a series of failures by the oil giant Shell led to Keith Moncrieff 45, of Invergowrie, near Dundee, and Sean McCue, 22 of Kennoway in Fife, dying on a utility leg of the company's Brent Bravo platform on 11 September, 2003.
The pair had gone to inspect a temporary repair on a leaking pipe, when they were overcome by a release of hydrocarbon gas.
The fatal accident inquiry, which began at Aberdeen Sheriff Court last October, was ordered by Lord Advocate Colin Boyd.
During closing submissions yesterday, the procurator fiscal, Ernest Barbour, said: “The deaths on the Brent Bravo of Sean McCue and Keith Moncrieff could, and should, have been avoided. The tragic events that occurred were entirely avoidable.”
He added that this was due to Shell's failures to follow certain procedures and “fundamentally flawed thinking” in the system being used.
The inquiry had earlier heard that a temporary patch had been placed on the leaking pipe nearly a year before the incident on the platform.
When Mr Moncrieff and Mr McCue went to inspect it, a broken valve led to the release of up to 2.5 tonnes of gas.
“This whole tragedy may have been avoided if the patch had been replaced earlier,” said Mr Barbour.
Sheriff Colin Harris heard that, since the Brent Bravo deaths, there had been changes and improvements in Shell's operating procedures.
The inquiry continues. read more

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Independent Online (South Africa): Militants show signs of split in kidnap drama

By Austin Ekeinde
January 24 2006 at 09:54AM
Yenagoa – Nigerian militants dissociated themselves on Monday from “bounty hunters” negotiating with authorities for the release of four foreign hostages, raising the possibility of divisions within the group.
Officials had expressed hope the hostages could soon be released after receiving a recent photograph of the oil workers on Sunday from a person they believed was a credible go-between with militants.
Authorities met the representative again on Monday to pursue ransom discussions, a government spokesperson said, despite an email from the group to Reuters saying they were not involved in the talks.
'These individuals are making a lot of money from the Nigerian government'
“These individuals are making a lot of money from the Nigerian government and oil companies pretending to be in a position to facilitate their release. They are going nowhere. Rather we intend to add to their number,” the email said.
The government has paid $77 000 (about R460 000) to the group to negotiate the hostages' release, it added.
An ethnic Ijaw activist familiar with the situation said there were two different groups within the militant movement: a politically motivated band responsible for attacks on oil installations and a commercially motivated one holding the hostages.
“At the end of the day the hostages' release could just be about money, but the attacks on the oil facilities will continue,” he said, asking not to be named.
The Movement for the Emancipation of the Niger Delta, which said it was a coalition of militant groups in the delta, abducted the workers during a month-long campaign of violence which has cut Nigerian oil output by one tenth and pushed world oil prices to their highest level since September.
Bayelsa State Police Commissioner Hafiz Ringin said that he believed the person claiming to represent the kidnappers was a “genuine contact”.
The photograph provided by this person showed the hostages – an American, a Briton, a Bulgarian and a Honduran – in apparently good health and sporting beards, indicating it was taken recently, diplomats said.
A group of 10 youths attacked an oil platform operated by Agip, a unit of Italy's ENI, on Monday but were repelled by troops.
A security official said one person was killed in the raid, which appeared to be caused by a local dispute over money. Oil output was unaffected.
Unions have threatened to withdraw workers from the restive delta, which produces almost all the nation's 2,4 million barrels per day, if the security situation deteriorates.
Dozens of people have been killed in raids and bombings by the militia.
Royal Dutch Shell has cut its production by 210 000 barrels a day and pulled out more than 500 staff. Hundreds of contractors have also fled.
The militant group has insisted that it will not compromise on its demands for the release of two ethnic Ijaw leaders, more local control over oil revenues, and $1,5-billion (about R9-billion) in pollution compensation to delta villages from Shell.
“We are going ahead with the planned attacks aimed at grounding the Nigerian economy and further hurting the oil companies,” the group said in am email on Monday.
Its key demand is the release of militant leader Mujahid Dokubo-Asari and former Bayelsa state governor Diepreye Alamieyeseigha.
Alamieyeseigha, impeached last month for money laundering after escaping arrest in Britain, is a political foe of the president and a major scalp in his war on corruption. Asari is on trial for treason after leading a bloody insurgency in 2004.
Industry sources say the political aims of the militants mean attacks may last until elections next year. An uprising before 2003 polls hit 40 percent of Nigeria's oil production.
Additional reporting by Tom Ashby and Tume Ahemba read more

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Scoop.co.nz: Safety Comes First At Shell

Press Release: Shell New Zealand
Safety Comes First At Shell
The health and safety of Shell staff, site staff and customers is the number one priority for Shell New Zealand, and to reinforce its importance, Shell is rolling out a safety-training programme across its 220-strong company owned retail network.
Entitled Hearts & Minds, the programme is an extension to Shell's existing world class training processes, which aim to make Shell sites safer for site staff and customers.
“Hearts & Minds is about putting the safety of site staff and customers first,” says Shell's Retail General Manager Rob Mahoney. “Safety remains our number one priority across all of our New Zealand operations.”
Mr Mahoney said the number of incidences of abuse, violent and aggravated robberies and attacks occurring at retail sites are a continuing concern.
“Shell is investing more than $2 million dollars over the next 18 months on improving the security features at our sites to make sure they are safer, and our sites are less attractive to robbers.”
The improved security features included anti-jump wires on some sites, eight-camera digital CCTV systems, world class “intelligent” cash safes, monitored emergency alarms at all sites, mobile alarm pendants for staff, as well as changes inside the shop to enhance site staff security.
“While we are making physical improvements to our retail sites, most importantly, the Hearts & Minds program is focused on site staff training,” said Mr Mahoney.
“Hearts & Minds teaches site staff how not put themselves at risk and it also equips site staff with modern tools and training to keep themselves and their customers' safe.”
The training encompasses a DVD which includes detailed advice on what to do in certain circumstances such as a robbery or intimidation, and includes real-life experiences as told by current site staff.
Hearts & Minds is being rolled out over the next month at all Shell operated service stations in New Zealand. In selected areas, local police representatives will be attending launches of the new safety training.
Hearts & Minds is a global initiative that puts health and safety first across all of Shell's operations, and Shell New Zealand has developed the New Zealand-specific training programme from Shell's world leading initiatives and resources.
In addition to Hearts & Minds, Shell has also improved its overall incident reporting system across its retail network to now record all incidents that occur on sites.
“We record all incidences on the basis that “what gets reported, gets fixed,” said Mr Mahoney. “While we have seen an increase in reported safety incidents, largely due to the improved incident reporting from sites, we believe the underlying safety performance is improving.”
In a selected number of areas, Shell is also trialling a follow up procedure to recover costs as a result of petrol thefts and drive-offs. read more

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Lloyds List: Small fields equate to big opportunity for ONGC

OIL and Natural Gas Corp of India has set its sights on developing up to 28 small and marginal fields off the country's coast over the next three years.
ONGC is India's largest hydrocarbon producer and wants to take advantage of high prices by developing as many projects as possible in a fast track process.
'We are in the process of developing these 28 fields. We are assessing the feasibility of this project,' said ONGC's general manager Ramashish Rai.
'We hope to get approval and begin development activities by March this year,' added the head of new and marginal field developments.
ONGC hopes to get a minimum production of 5-8m tonnes of oil and 15-20m cu m of gas from these 28 fields, starting in 2008.
First ONGC needs to find partners to help develop these fields before it can progress with these plans, said a spokesperson. An early choice for a partner could be Shell, which signed a memorandum of understanding last week regarding co-operation in upstream and downstream projects.
ONGC is looking at a hub and spoke solution, that could involve a floating production system deployed on the Indian west coast, plus it is also looking at developing small fields off the east coast.
Meanwhile, ONGC is hoping to deploy a temporary replacement production system over the Bombay High field, where last year it lost a large production platform.
The state oil group expects to deploy a floating production system over the field by the end of March this year and to have production of 75,000 barrels per day through this unit by the end of June, said a spokesperson. read more

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

Lloyds List: BG Group takes a 45% interest in Nigerian deepwater block

BG GROUP has farmed into a Nigerian deepwater block to extend its upstream focus around the Atlantic Basin, writes Martyn Wingrove .
The London-listed energy firm has taken a 45% interest in block 332 in the western Niger Delta and signed a production-sharing contract with Nigerian National Petroleum Corp.
BG Group took the interest from Sahara Energy Exploration ' Production, which still retains another 45% stake in the block it gained in August 2005 during the country's licensing round.
The other partner in the block, which lies in water depths of 100 m and 1,000 m, is Seven Energy Nigeria, holding the remaining 10%.
'Nigeria is a prolific hydrocarbon province, which fits well with our market-focused Atlantic Basin strategy,' said BG's vice-president for the Mediterranean and Africa, Stuart Fysh.
He thinks BG Group will build its presence in the country's energy sector further from this early position.
A spokesperson confirmed BG was looking for more investment opportunities after failing to gain blocks in last year's licensing rounds.
On block 332 there will be two phases of exploration, with a seismic survey shot this year followed by at least one exploration well.
BG Group has an agreement with Nigeria Liquefied Natural Gas to take 2.5m tonnes of LNG per annum for 20 years from the Bonny plant. The first of these shipments to the Lake Charles import terminal in Louisiana left Nigeria this month.
BG also has a memorandum of understanding with US major Chevron, London-listed Shell and NNPC to jointly develop an LNG facility near Olokola, in the western delta area.
Block 332 lies 50 km southwest of the proposed LNG plant site.
– Chevron has spudded the first exploration well in the joint development zone between Nigeria and S'o Tome with the hope of finding another large oilfield in the Gulf of Guinea.
The US oil major has taken Transocean's drillship Deepwater Discovery to probe the Obo prospect in JDZ block 1. The well is in 1,750 m of water and is likely to take 60 days to drill and test.
Chevron has a 51% stake in the block, ExxonMobil has 40% and Dangote Energy Equity Resources holds the rest. read more

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

Lloyds List: Oil in Norway slumps as gas output grows

Production plummets by 10% because of field shutdowns and delayed company drilling plans, writes Martyn Wingrove
NORWEGIAN oil production is well into decline after a disappointing year for one of the world's top exporters, but gas output is climbing consistently.
Field shutdowns, late arrival of developments and lack of drilling rigs meant oil production from the Norwegian continental shelf was down 10% last year.
Figures from the Norwegian Petroleum Directorate showed oil production fell to 148.4m cu m, or 2.45m barrels per day, in 2005, compared with 162.8m cu m the year before.
The NPD blamed the loss of production from the large Snorre field in the northern North Sea early in the year, plus late start-up of the Kristin field in the Norwegian Sea for the lower than expected output levels.
There were also delays to oil company drilling plans as a result of the shortage of rigs and strikes by offshore workers.
The government directorate expects oil production to fall again this year to 141m cu m, or 2.4m bpd, its lowest since the mid 1990s due to the lack of fresh oil developments.
Its medium term prediction is output rising a little in 2007 and remaining at 152m cu m until 2009, while production of natural gas liquids and condensates will continue rising to 2010.
'Stable oil production is expected in the period 2006-2010. It is estimated that a total of 735m cu m will be produced, which is 100m cu m less than the previous five-year period,' said the NPD in its latest report.
The slowing stream of new field developments is a big problem for the Norwegian government, which relies heavily on taxes and export revenues.
Last year saw the start of just two fields with hydrocarbon liquids, Kristin and Urd, both in the Norwegian Sea.
This year could see the start of Enoch and Blane, both lying across the UK boundary and operated by Paladin Resources, being gobbled up by Canadian independent Talisman Energy.
The lack of new projects means the NPD expects 97% of the oil produced to 2010 will come from maturing fields already on line now.
Although there were delays to operations, investment on the NCS grew to NKr83bn ($12.36bn) last year, NKr16bn more than the year before.
A large slice of this investment went on two gas projects, which are not due on stream until next year, including Norsk Hydro' Shell's Ormen Lange and Langeled pipelines, plus Statoil's Snohvit development in the Barents Sea.
The NPD forecasts a similar level of investment in projects this year, around NKr81bn, with more of this going into existing fields improved recovery programmes.
Last year the Ministry of Energy and Petroleum received 16 plans for development and operation for oil and gas projects on the NCS. It anticipates receiving another 10 PDOs for new projects this year, including several amended development plans for existing fields.
The slowdown in drilling activity in recent years has left operators with fewer projects to undertake so investment levels will be falling over the next five years to around NKr63bn in 2010.
Completion of Ormen Lange, Langeled and Snohvit projects will also mean expenditure levels will return to levels last seen in the 1990s.
The directorate forecasts total capital investment of NKr366bn for the five years to 2010, 43% of this in production wells, 19% for modifications to existing platforms, 20% to the construction of new offshore infrastructure and 18% for pipeline and land facilities.
Norwegian drillers had plenty of success last year from a record low number of drilled exploratory wells, but most of the discoveries were outside the frontier areas.
Twelve exploration wells were spudded in Norway last year, nine were wildcats and three were appraisal wells. This activity resulted in six discoveries, three in the North Sea and the rest in the Norwegian Sea.
'The results are considered good with discoveries in new areas and discoveries in new plays in mature areas,' said the NPD in its latest report.
Hydrocarbon volumes discovered made up half of the oil and gas produced in Norway in 2005.
'The resource growth from exploration activities is in the range of 3-16m cu m of oil and 39-119bn cu m of gas,' said the state directorate.
'Compared with 2004, this constitutes an increase in resource growth.'
Norsk Hydro was the most successful of the Norwegian drillers, bagging four discoveries including its Stetind gas discovery in the Norwegian Sea.
This opens up the area for finding more gas resources that could eventually be linked to existing infrastructure such as the Asgard export pipeline.
The Oslo-listed group also found one gas and two oil fields in the North Sea last year with its Astero, Peon and Oseberg J wells.
Astero lies north of the Troll oil field, where two production semi-submersibles could act as hubs for any satellite development.
The Peon well was interesting for the NPD and Hydro as it was the shallowest reservoir found to be potentially commercial and it opens up a new exploration play in the North Sea.
State oil firm Statoil also made a Norwegian Sea gas discovery with wildcat well 6302'6-1, although it is thought to be small at present.
Norske Shell perhaps found the largest field last year with the Oryx discovery in the Norwegian Sea.
It found up to 50bn cu m of gas with the wildcat well 6406'9-1 and is likely to follow this up with an appraisal well this year.
The NPD figures do not take into account Eni's recent discovery of more oil at the Goliat field with an appraisal well in the Barents Sea.
The Italian oil company now has around 250m barrels of recoverable oil and gas resources in Goliat after drilling well 7122'7-3 with Ocean Rig's semi-submersible Eirik Raude this month.
Oil companies have new opportunities for exploring for hydrocarbon resources this year and into 2007 following the award of licences in two rounds, both successful in attracting new players.
The pre-defined acreage licence round known as APA 2005 resulted in the award of 45 production licences to 26 companies in areas around existing infrastructure.
The energy ministry's 19th licensing round, covering frontier areas of the Norwegian and Barents Seas, led to applications for new acreage from 24 companies, with the award of blocks expected in March this year.
With drillers having a 50% success rate in Norway we can look forward to a raft of new discoveries and potential new projects this year. read more

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

Lloyds List: New gas pipeline planned to boost Troll link with Europe

Statoil and partners in talks with Gassco as part of proposal to increase output capacity via Kollsnes, writes Martyn Wingrove
STATOIL and state firm Gassco are planning to build another pipeline across the North Sea to transport more gas from the giant Troll field.
The Oslo-listed oil group is talking with project partners Norsk Hydro, Shell, Total, ConocoPhillips and Gassco about building a new pipeline to supply European markets with gas from other parts of the Troll field.
Statoil wants to raise daily production capacity at the Troll offshore platform and the onshore processing plant at Kollsnes, near Bergen, by 40m cu m.
It is planning to target the rest of the Troll East gas followed by the large volumes in the Troll West area, where two floating production platforms are recovering the oil resources.
Gas in Troll, Norway's largest field, is piped to Kollsnes where natural gas liquids and condensates are extracted, with the gas exported to Europe through the Zeepipe system.
The additional gas resources would be enough to justify building a new pipeline from Kollsnes either to continental Europe or to the UK, possibly via Norwegian offshore infrastructure at Sleipner or Draupner.
Statoil's chief executive Helge Lund thinks the reserves in the rest of the Troll field are similar to those under development at Norsk Hydro's Ormen Lange project in the Norwegian Sea.
That project is due on line in 2007 with exports via the Langeled pipeline to the UK via Sleipner.
'Statoil wants the remaining gas in Troll to be landed at Kollsnes with daily capacity at this facility and on Troll A raised by 40m cu m,' Mr Lund told delegates at the Norwegian Petroleum Society's oil policy seminar.
'That would open opportunities for laying a new export pipeline from Kollsnes to Europe or the UK.'
Last year Statoil increased production capacity at Troll from 85m cu m to around 110m by installing new modules on the platform.
Development of the gas resources in Troll West needs to be performed with delicacy as over-production would harm oil recovery and output levels.
Statoil intends to submit a plan for development and operation for this next phase of Troll's development in 2007 and could begin production by 2010.
For this project schedule, Statoil and Gassco will need to be laying the offshore pipelines in 2008 and 2009, so will need to secure pipelay and support vessels for these activities.
'The new pipeline could be used to help develop the smaller fields around Troll or to link with a pipeline from the northern seas,' Statoil manager Kristofer Hetland told Lloyd's List.
The state oil company is investigating a development of the fields in the Gjoa area north of Troll with a new floating production platform and will need pipeline capacity to markets.
Its rival Norsk Hydro has discovered new fields in that area also and is looking to develop them as satellites to the Troll field, via the Fram subsea facilities.
– Statoil has shut down production from the Visund platform in the North Sea after a gas leak in the flare pipe, where a large hole has appeared.
The Petroleum Safety Authority will investigate the leak, which forced Statoil to evacuate the platform on January 19.
Statoil thinks a large volume of gas flowed from a 50 cm diameter hole in the pipework leading to the flare stack.
The Oslo-based firm had to halt production immediately. Last week it returned production to the Asgard B, Krisin and Mikkel gas condensate fields in the Norwegian Sea after smoke was seen coming from the exhaust of a gas compressor. read more

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

Financial Times: Field work: why Kuwait's rulers are being forced to ponder a new pact with big oil

By Carola Hoyos
Published: January 24 2006
As Saleh al-Ajmi clasps the antiquated little red wheel on oil well B473, the vast, dusty expanse of the world's second largest oil field unfolds behind him.
“I love Burgan,” the Kuwaiti engineer says with a pride and tenderness usually reserved for girlfriends, not oil fields. But Burgan has earned his devotion. It is perhaps the world's best-behaved reservoir. It has produced more than 28bn stock tank barrels of oil in the last 60 years with only minimal investment in new technology.
Oil rises to the ground naturally and once there, gravity sends it down Burgan's gentle slope to the storage tanks below. Mr al-Ajmi and his colleagues have had to do little more than watch and maintain the equipment that was installed by the Anglo-Iranian Oil Company (now BP) and Gulf Oil (now Chevron) in the 1940s and 1950s and bequeathed to Kuwait when the industry was nationalised in 1975.
But the days of easy oil are over. Even the great Burgan field is beginning to falter and will no longer compensate for stalling oil production in the north of the country, where the oil fields are ageing more quickly. After many years in which it did not have to look beyond its borders for help, the country is being forced to seek the advanced equipment and managerial skills only foreign oil companies can supply.
“We will need the technology,” Mr al-Ajmi acknowledges, although he is more reluctant to concede that Kuwait's state oil company will also need foreigners to run what has been named Project Kuwait. Last month Sheikh Ahmad Fahad Al-Ahmad Al-Sabah, Kuwait's oil minister, warned: “For production to reach 4m barrels a day by 2020, it is a must. It is a must from the technical side.”
Kuwait is not alone. From the Middle East to the North Sea, and Alaska to Latin America, the large oil fields on which the world has come to rely to fuel its economic expansion since the second world war are requiring increasingly advanced technology and know-how to coax their last oil barrels to the surface.
Whether or not Kuwait and its fellow petrostates, in particular Saudi Arabia and Mexico, invest enough – in many cases by turning to foreign companies for support – will be the biggest factor in determining the oil price in the coming decades. Iran and Iraq are the other key players but there foreign investment is necessarily limited by international politics and security issues. So companies and consumers alike have particular reason to worry about the outcome of the Kuwait debate.
It has also underlined the recent shift in the balance of power between national and international oil companies. The national oil companies are flexing their muscles at home and, increasingly, abroad, arguing that service companies such as Halliburton and Schlumberger can give them all the technical support they need. But Kuwait and other countries whose oil reserves cannot be reached without sophisticated technology reveal the flaws in that model.
Meanwhile, being allowed back into Kuwait is arguably as important for the future of the big international energy groups as Project Kuwait is for the country itself. ExxonMobil, Chevron and BP each lead a consortium of companies that have already agreed to bid on the 20-year project.
They must remain on tenterhooks for some time longer, however. Parliament had been due to begin debating the issue yesterday. But the succession dispute set off by the death of Sheik Jaber Al-Ahmad Al-Sabah, the country's emir, has again delayed matters, with oil industry insiders warning that Project Kuwait could be pushed back a year if the turmoil leads to a change of energy minister.
Technocrats first mooted Project Kuwait in 1991. But the country was too busy rebuilding the wells and equipment torched by Saddam Hussein's army in the retreat from its invasion the previous year. Most of Burgan's facilities had been ruined, 445 wells were set ablaze and another 191 were damaged.
Mr al-Ajmi still remembers the 45 days of occupation when his wells were surrounded by unexploded mines and he made his daily inspections under the disconcerting gaze of Iraqi soldiers. To this day Gathering Centre 14 stands as a monument to the destruction – a graveyard of charred and mangled pieces of metal jutting out against the power blue sky like huge Victorian paper silhouettes. “I had worked at this gathering station from 1988. I remember every place of it, each piece. Where the control room was,” says Mr Al-Ajmi, his voice trailing off as he turns away to point his sunglasses to the empty spot where it once stood.
It was February 1993 before Kuwait's oil industry was back to pre-war levels. But it would take another decade to convince Kuwait's ruling elite to back the $8.5bn plan to almost double the oil production of the northern fields with the help of international companies.
Nader Sultan, the former chief executive of Kuwait Petroleum Corporation and adviser to seven past oil ministers, recalled that one, seeking support for the plan, liked to ask: “Why would you want to be the camel? A major oil company can be the camel while you can sit on it and ride it.” (Today the camel race is fiercer than ever as Kuwait and its neighbours compete to cash in on the high demand and oil prices generated by China's growth.)
But with eight changes of oil minister in 15 years Project Kuwait went from delay to delay. Finally, at the end of last year, the majority in parliament looked ready to agree – only for the vote to be delayed yet again.
The outcome remains far from assured. Kuwait is rare in the Middle East in having a powerful parliament. But the absence of political parties means the government does not have a built-in majority. Leo Drollas, deputy executive director at the Centre for Global Energy Studies, the London-based consultancy, asserts: “What you are seeing in Kuwait are the problems with democracy.”
Many parliamentarians opposing the project hope to wring favours from the government in return for their support. Much, however, will depend on whether the oil minister stays in his post as the succession battle between rival members of Kuwait's ruling family unfolds. If he remains, Mr Nader forecasts he will be able to push the issue through parliament by this summer.
But while the politicians procrastinate, the technical challenges engineers face at Kuwait's northern fields, 100 kilometres from the capital, grow ever larger. The fields make up 10 per cent of the country's reserves and produce about 500,000 barrels a day, one-fifth of Kuwait's total output. By 2025, Kuwait hopes they will make up closer to one-quarter of production so that more of Burgan's oil can be kept for later generations.
Estimates suggest that, by using sophisticated technology, the amount of oil ultimately recovered from the field could be boosted from 40 to 60 per cent of available reserves. It is a statistic to gladden the heart of international oil companies, including Europe's BP and Royal Dutch Shell, and the US's ExxonMobil and Chevron, which have honed their skills in places such as the US Gulf of Mexico and the North Sea.
This expertise is the best hope of persuading countries such as Kuwait that the companies must again be given access. Removing, cleaning and disposing of the millions of barrels of water the north fields will produce every day as they come to the end of their lives, is more than Kuwait's oil company can handle, its engineers and executives say.
Kuwait's experience in other fields has shown engineers that one delicate task – pushing oil to the earth's surface by injecting this water back into an ageing reservoir that has lost its natural pressure – is also better left to well-practised international oil companies (IOCs), says Hosnia Hashim, a senior executive of Kuwait Oil Company.
If they are kept out, not only will there be serious delays but some reserves may be lost entirely, warns Ahmed al-Arbeed, head of Project Kuwait. One analyst, Stewart Johnston, of Cambridge River Associates, the consultancy, adds: “The three most important things international oil companies can provide for national oil companies are: access to advanced technology, teaching employees how to use that technology, and creating jobs.”
It is crucial for the oil majors' future that they win the day. With few, if any, big oil fields left to find, the big western companies are facing shrinking production and reserves. They are forced to venture into riskier spots such as the harsh terrain of Siberia's Sakhalin island where extracting a barrel of oil can cost 6-7 times as much as it does in Kuwait.
Returning to Kuwait would not be an immediate boon because the contract's terms are too restrictive. But regaining a foothold in the Middle East is of great strategic importance, explains Alastair Bee, who spent six years working in Kuwait for BP.
“[For] any big oil company, having part of its portfolio in the Middle East is a big plus because 10 years on, it's the place to be.” Kuwait, Iran, Iraq, United Arab Emirates and Saudi Arabia hold two-thirds of the world's oil reserves. UAE has reached out to foreign oil companies for help.
But for big corporate oil, Saudi Arabia, home of the world's biggest oil reserves and Ghawar, its largest field, is the grand prize. It is for this reason that Saudi Arabia has long bristled at the idea of needing outside help. Its fields face some of the same challenges as those in Kuwait. But Saudi Arabia, unlike its smaller neighbour, has had a stronger drive to make Saudi Aramco, its state oil company, the most sophisticated in the world.
When Gulf Oil and the Anglo-Iranian Oil Company left Kuwait, “they left us with the body, but took away the brains”, Khalid Yousef Al Fulaij, head of Kuwait Oil Company in the 1990s, famously declared.
But in Saudi Arabia, Exxon and Mobil left behind some of the brains – Saudi Aramco had inherited expertise from its foreign counterparts. The kingdom has been working to advance its industry through training, international exchanges and technology research ever since. It can now argue more robustly than any other oil state that its national company needs no help. Kuwait is far from being able to make the same claim.
For now, the talk is only of letting foreigners into the northern fields, but Mr al-Arbeed told the Financial Times last month: “If North Kuwait is a success, everyone will be happy to see another success in other reservoirs.” Perhaps not everyone will rejoice. Mr al-Ajmi is fiercely proud of what he and his colleagues have achieved, especially since 1991.
As he bends down to inspect a puddle of crude oil below his well, he maintains that Kuwaitis could handle Burgan without help. As his head pops back up, he is holding a sample of oil. He sniffs it and says: “Hmm, smells . . beautiful.” read more

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The Times: Investors hope GUS boss can spur Lloyds TSB

By Caroline Merrell, Banking Correspondent
SIR VICTOR BLANK’S expected arrival to the chairmanship of Lloyds TSB in May will help to improve the profile of the bank among City investors, sources said yesterday.
Despite turning around Scottish Widows, its life insurance subsidiary, and growing profits from corporate banking, the bank’s share price has failed to reflect recovery with investors holding the shares for the generous dividend.
It is thought that Sir Victor will devote most of his time to Lloyds once the demerger of GUS — where he is also chairman — is complete. After the split, Lloyds is expected to be his only FTSE 100 chairmanship. His arrival could hasten the sale of the funds management division of Scottish Widows, sources said yesterday.
The bank has been in the midst of turning round Scottish Widows, which it bought for more than £7 billion at the top of the market. However, despite the fact that the insurer paid a dividend to Lloyds for the first time last year, advisers claim that it still could be sold or merged with another asset management division.
The bank recently held talks with Fortis, the Dutch bank, about creating a joint venture in investment management. The talks are believed to have stalled but, according to some banks, a complete sale could be on the agenda.
Yesterday shareholders in Lloyds gave a cautious welcome to Sir Victor who is succeeding Maarten van den Bergh, who has been head of the bank since 2000. One top-ten shareholder said: “We are viewing it as a net positive. We have not met him, but he does seem to be the sort of person who could be better than the present chairman.” Mr van den Bergh, who was at Royal Dutch Shell, was hired to carry out a cross-border banking deal. The deal eluded the bank as it struggled with Scottish Widows and was forced to address a number of mis-selling problems.
Another shareholder said: “It is hard to form a view until we meet him, but he has done some good things at GUS.” Sir Victor was chairman of Charterhouse, the investment bank, as well as a director Royal Bank of Scotland, a rival to Lloyds.
One analyst said that his negotiating skills would be useful if the British bank eventually fell to either an American bank — such as Bank of America or Citigroup — or to BBVA, the Spanish bank that is on the acquisition trail.
The arrival of a new chairman could lead to a review of the bank’s dividend policy — the stock yields 7 per cent, which makes it popular with funds that invest to produce income. The bank has maintained the dividend despite a dip in profits five years ago.
A banker who has worked closely with Sir Victor said: “He is a very tough operator. One thing is for sure, he is unlikely to sit around and do nothing.”
Analysts pointed out that Eric Daniels, chief executive, has made considerable headway in turning round Lloyds TSB’s fortunes, but this had not yet been reflected in the share price performance. One said: “He may be able to sell the Lloyds TSB message more fully to investors.”
The bank recently hired Terri Dial, an American banker and veteran of Wells Fargo, to run its retail division. Ms Dial has been bought in to raise service standards at the bank which has been struggling to compete with HBOS in the UK.
BLANK THE DEALMAKER
1971: co-author of Weinberg and Blank on Takeovers and Mergers read more

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Daily Telegraph: Don't snub private investors, companies warned

By Paul Farrow (Filed: 25/01/2006)
The Association of Private Client Investment Managers and Stockbrokers has fired off letters to the head of every FTSE350 company urging them not to snub private investors in corporate deals.
With merger and acquisition activity on the rise, Apcims fears that private investors could be left out of pocket when companies restructure – as happened last year when Royal Dutch merged with Shell Transport & Trading. The letter also coincides with the flotation of Qinetiq, the government-owned defence company, which excludes private investors.
Angela Knight, the chief executive of Apcims, said: “Investors have fallen off companies' radar. Shareholding is not just for institutions. ”
Knight is calling for companies to use loan notes to help investors mitigate capital gains tax bills and to give greater voting rights to nominee shareholders. She said: “It is unfair that, as a result of company reorganisation, merger, or takeover, private investors face CGT bills where there has been no change of ownership in the underlying shares. It is noticeable that some plcs have made sure that loan notes are available while others have not.”
Last year the Sunday Telegraph revealed that hundreds of shareholders in Royal Dutch faced huge CGT bills as a result of the Shell merger. Shell eventually backed down by offering loan notes but the deal came too late for many who had already agreed to swap their old shares for equity in the unified company. read more

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.

Daily Telegraph: Stockbrokers gun for Qinetiq float

(Filed: 25/01/2006)
Stockbrokers are outraged that Joe Public is to be excluded from the float of the defence group. But, as Paul Farrow reports, this is only the latest in a series of snubs to private investors
Stockbrokers are up in arms following the move by Qinetiq, the Government-controlled defence group, to exclude the British public from its impending float. They say it is yet another in an increasing number of cases where private investors are being discriminated against.
Gunning for shares: brokers are outraged that private investors are excluded from Qinetiq's float
The Ministry of Defence, which is selling its 50.6 per cent stake, has ruled out an offer to the public because it is expensive to administer while the business is “complex and unusual” and does not lend itself to the British Gas “Tell Sid” and BT offers of the 1980s.
The Association of Private Client Investment Managers and Stockbrokers says the trend of small shareholders being marginalised is a major concern. Last year many shareholders of mmO2 and Shell Transport & Trading were discriminated against, the association added.
It has now fired off letters to the bosses of all FTSE350 companies to remind them to bear in mind private shareholders should an expected pick-up in M&A activity cause them to alter their corporate structures and issue new shares.
Angela Knight, chief executive of Apcims, says the Qinetiq excuse of the IPO being costly is “spurious” and is a mixed message from a Government apparently committed to encouraging share ownership. “It is nothing like as costly as Qinetiq has implied. Individuals use the internet and electronic means these days. There is time for them to change their minds,” she says.
The UK Shareholders' Association has branded the decision by the Government to exclude private investors as “patronising and arrogant”, while Gavin Oldham at the Share Centre is equally outraged.
“The chancellor says he wants a share-owning democracy – this is not the way to achieve it,” says Oldham. “The way it's been done denies private investor access at the offer price, it also requires them to make their purchase in the secondary market subject to stamp duty. As a result, the company's capital structure is polarised towards institutions, resulting in an illiquid secondary market. This is not good for the health of democratic capitalism.”
“Millions of people latched on to the privatisation dream in the 1980s and 1990s but at the time, new issues were required to offer at least 25 per cent of shares to the public. This is no longer the case,” says Oldham.
“The rule was changed as a result of persistent pressure from investment banks and corporate brokers. The effect is now clearly visible as the great majority of new issues are made as placings,” he adds.
The storm over the Qinetiq IPO comes with brokers urging the Government to take a fresh look at all the deterrents to direct share ownership – tax, shareholder's rights, lack of access to new issues. For example, they say that people are increasingly investing in companies by trading in contract for differences rather than shares. CFDs do not incur stamp duty, while trading in shares costs a punter 0.5 per cent of the value of shares bought.
Another major bug bear of brokers is the rights of private investors who hold shares in a nominee account. Brokers say investors who choose to use a nominee company should be enfranchised as if they hold full legal title. In other words, they should get the perks, the annual report and the invitation to meetings.
But they do not always get the same rights. For example, small nominee shareholders in mmO2 were not allowed to apply for the cash alternative in the mobile phone company's share swap offer when it rebranded itself as O2 last March.
The O2 offer involved either a straight share swap or a cash alternative at a 5p premium to the share price. But only shareholders whose names were listed on mmO2's share register were eligible for the cash alternative. Nominee investors did not get the opportunity to accept the cash offer because they were not named individually on the share register.
The issue of nominee rights is high on the agenda because the number of such investors is increasing by the day: 85 per cent of shares owned by private investors are held electronically in nominee accounts.
However, only the registered shareholders – which include investors with share certificates – are automatically sent interim and annual reports and accounts, for instance. Only registered investors are invited to annual meetings and, importantly, are allowed to speak and vote.
In addition, most nominee investors miss out on shareholder perks. For example, nominee shareholders in Eurotunnel do not qualify for discounts of up to 30 per cent off their fares. Many people with nominee accounts don't even have a choice about how their shares are held. Shares in Isas and Peps, for instance, have to be held in nominee names.
Bosses are keeping their fingers crossed that nominee investors may be given equal rights in the Company Law Reform Bill, which had its second reading 10 days ago. But Oldham wants an amendment in the Bill because as it stands the disenfranchisement would be voluntary and not compulsory. “If companies are given the choice, I fear that the situation we have today will remain.” read more

royaldutchshellplc.com and its sister websites royaldutchshellgroup.com, shellenergy.website, shellnazihistory.com, royaldutchshell.website, johndonovan.website, shellnews.net and shell2004.com are all owned by John Donovan. There is also a Wikipedia article.
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