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Posts on ‘January 27th, 2006’

Petroleum News: Shell declares hand

Focused on offshore in Alaska, committed to using cutting-edge technology
Alan Bailey
When Shell announced its re-entry to the Alaska oil and gas industry through its purchase of a swathe of leases in the March 2005 Beaufort Sea outer continental shelf lease sale, many people speculated on the mega-major’s intentions. Those intentions became crystal clear on Jan. 20 when Rob Ryan, Shell Exploration and Production’s vice president for corporate affairs, addressed the Alaska Support Industry Alliance’s Meet Alaska conference in Anchorage.
“We’ve been watching for the right opportunity to re-enter the Alaska scene, and we believe that time has come,” Ryan told the conference attendees.
Ryan cited new technology and available capacity in the trans-Alaska pipeline as key factors in Shell’s decision.
“Shell’s re-entry focuses on the outer continental shelf with 102 leases now in the Beaufort,” he said. “We’re looking to try seismic this season (summer) and we’re hoping to drill our first well of this modern campaign no later than next year.”
Shell also purchased 33 nearshore and onshore leases in Bristol Bay in the state of Alaska’s fall 2005 lease sale Ryan said.
But Shell is no newcomer to Alaska.
“Since the 1950s Shell has explored almost all of the major Alaska basins,” Ryan said.
Ryan explained that in the 1980s Shell was a partner in six of the 12 Beaufort Sea discoveries and drilled four of the five exploration wells in the Chukchi Sea. But oil prices had not been high enough to justify development of any discoveries and the company relinquished all of its leases.
Ryan pointed out that, whereas Shell has not been active in Alaska in recent years, the company has been involved in some major Arctic projects in Russia, the Mackenzie Delta and Norway.
Global agenda
Alaska dovetails right into Shell’s current global business strategy.
That strategy consists of three themes: new material oil; more unconventional oil; and more integrated gas — Alaska enjoys huge potential to support all of these themes, Ryan said.
“We need to make Alaska one of Shell’s production heartlands in support of this strategy,” he said.
From the point of view of material oil, “there are still many unexplored and underexplored basins in Alaska,” Ryan said. There are major discoveries for those willing to make the commitment and develop them in a responsible manner, he said. And unconventional oil, especially in the form of heavy oil deposits, exists in billions of barrels.
Additionally, Alaska is rich in gas.
“We are excited about the positive steps to see that gas eventually gets to market,” Ryan said.
Ryan said that Shell also sees potential for a world-class liquefied natural gas project in the Bristol Bay area.
“One area that could provide relatively direct access to the U.S. and Asia-Pacific LNG market is Bristol Bay,” he said. “We look forward to the opportunity to one day acquire seismic and explore in the shallow ice-free waters of this prospective basin. We believe it can be done with no adverse impact on the fisheries or the marine mammals.”
Ryan emphasized that Shell did not see that type of LNG project competing with or undermining the proposed North Slope gas line development.
Shell sees new technology as a key component of Arctic exploration and development, especially in the ice-prone and stormy outer continental shelf offshore northern Alaska. Recent advances in subsea technology may, in particular, unlock oil and gas deposits in this challenging environment.
“Long distance subsea projects can extend our onshore reach without the need for permanent offshore structures,” Ryan said.
Ryan particularly cited the Ormen Lange gas field, offshore Norway, where subsea completions are being tied back 75 miles to onshore facilities. State-of-the-art remote operated vehicles have also made deep-sea work possible. In the United States, for example, Shell has used remote operated vehicles to repair the Mars field export pipelines that were damaged in last year’s Gulf of Mexico storms.
“You can imagine 3,000 feet of water and doing the repairs on two pipelines which were damaged by the storm entirely with remote operated vehicles,” Ryan said.
Shell’s experience in deep waters of the Gulf of Mexico also gives the company confidence that it can maintain product flow through pipelines in frigid water — the water temperature at depths of 8,000 feet in the Gulf of Mexico is similar to that in the Arctic, Ryan said.
“Over the past 10 years our deep-water operations have taught us much about how to keep oil and gas flowing in such frigid conditions,” he said. “Much of this technology is directly applicable to the Arctic subsea.”
But sea ice remains a major challenge, especially when drilling wells. Shell hopes to try the use of air cushion supported drilling rigs, with a hovercraft-like rig design pioneered on the Siberian tundra back in the 1960s. This type of rig could perhaps hover over ice after the end of the open water season.
“In areas where the open season is very short this type of drilling platform might be able to extend the drilling season by more than 50 percent, and so reduce exploration and development time and cost,” Ryan said.
Shell is also investigating the use of ice-resistant tension leg drilling platforms. Ryan said that this technology did not exist in a mature form when Shell last explored offshore Alaska. A study has now indicated that a flexible structure using a tension leg platform designed for Arctic applications could withstand sea ice up to six feet thick, he said.
The environment and communities
Ryan said that in addition to having clear oil and gas business objectives in its new foray into Alaska, Shell views environmental protection and the interests of local communities as top priorities “to cause no long term harm to the environment and to make a positive impact on the community.” Protecting the environment involves operating in the most responsible and safest manner, and leaving as small a footprint as possible, Ryan said. Working with local communities means being a good corporate citizen, providing jobs, respecting cultures and enhancing the lives of people.
“For Shell it just makes good business sense,” he said.
Ryan cited Shell’s Athabasca oil sands project in Canada as an example of community involvement. There the company worked with the local First Nations community to establish contracts for services such as heavy trucking, he said. That has resulted in local long term employment, with $1 million per year in local services 10 years ago growing to more than $20 million per year now.
And in the massive Sakhalin-2 project, in the Russian Far East, more than 75 percent of the 17,000 project workers are Russian and more than 40 percent of the workers are from Sakhalin Island, Ryan said. Shell has a 55 percent interest in that project, he said.
Ryan also described Shell’s efforts to minimize the impact of gas development around Wyoming’s environmentally sensitive Pinedale anticline, a critical habitat area for deer, antelope and other wildlife. He said that Shell has minimized the footprint of operations that produce 150 million cubic feet per day of natural gas from more than 60 wells. Additionally the company has funded local wildlife protection initiatives and taken other measures to minimize environmental impacts.
“By deploying portable gas processing units Shell has reduced flaring during completion operations 98 percent in just three years,” Ryan said. “… (That was) something that needed to be done and we’ve started to do it.”
And for Alaska, Ryan said that Shell is designing new and better emergency response systems for ice-covered seas and finding ways to protect endangered marine mammals.
Alaska communities
Shell has already started talking to local communities in Alaska about the company’s plans, Ryan said. In particular the company has been working to complete a conflict avoidance agreement with the communities for the upcoming exploration season. Ryan said that Shell pioneered this type of negotiation back in the 1980s.
“We have great respect for the people who live in the area in which we plan to operate, generations of whom have developed a livelihood and a culture in these extreme conditions, and for whom the Arctic is home,” Ryan said.
He said that Shell will also develop contracting strategies to support its exploration programs. The company anticipates development opportunities and jobs in the communities where it operates and sees many opportunities for local people if the company’s operations prove commercially successful.
Meantime the company has been moving ahead with a program of Alaska hire in support of its growing Alaska operations. Earlier in January the company announced the hiring of an Alaska management team consisting of Alaska Asset Manager Rick Fox; Alaska Government and External Affairs Manager Cam Toohey; and Community Affairs Manager George Ahmaogak Sr. Fox has previously worked in the Bering, Beaufort and Chukchi Seas; Toohey is a lifelong Alaskan; and Ahmaogak is a lifelong Alaskan, who was formerly mayor of the North Slope Borough, president of Ukpeagvik Inupiat Corp. and Piquniq Management Corp. and a member of the Interior’s National Outer Continental Shelf Policy Committee.
“We’re not done hiring,” Ryan said, adding that Shell also looks forward to working with Alaska Support Alliance companies. Shell wants to employ Alaskans with the critical skills needed to operate its future assets, Ryan said.
“To achieve this we will partner with the University of Alaska, the community colleges, industry liaisons and other as we search out proactively staff that can fill our needs,” he said. Meantime the company expects to hire about six interns this year, with a need for more interns in future as the operations mature.
“We really are glad to be back in Alaska,” Ryan said. “… The world needs energy and it’s no secret that Shell is in the energy business … and we believe responsible development of Alaska’s resources is in everyone’s best interests.
Ryan said that Shell wants to set the standard for socially responsible and environmentally mindful development.
“Alaska is a place of great vision, commitment and stamina,” he said. “We see how the land is and we intend to be part of it.” read more

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SEA TO SHELL: Local people confront Shell executives

An unscheduled meeting for Shell executives with concerned locals over the proposed controversial Corrib Gas project.
Last evening (25/01/06) saw an important step in the Corrib Gas dispute. The day was set aside for an executive team from the oil company Shell to meet with various groups involved in the controversial project. All meetings were behind closed doors and by invitation only, as a group of concerned locals found out when attempting to meet with the team in Belmullet.
It became known that a further meeting was to take place in the community centre in Greannaí, a short distance from Rossport, to discuss with locals the problems to date. An impromptu group of people, residents directly affected by the proposed refinery and associated pipeline, converged on the venue to take part in the event.
On arrival they were informed this was yet another private meeting, and were refused entry. This reflected an earlier statement from Shell that the team were seeking to meet with non-opposing landowners only. Clearly an unacceptable situation, the people asserted their right to be involved in any debate on something which affected their community so seriously, and in what was supposed to be their own community centre! The Gardaí present (as part of the security laid on for Shell) wisely used their discretion and allowed access to the gathering group.
Inside, a surprised looking collection huddled together to talk over the new arrangement. The team included Andy Pyle, MD Shell Exploration & Production Ireland Ltd (SEPIL); Nina Henderson, Non-executive Director of Shell Transport; and Wim Kok, former Dutch Finance Minister, Prime Minister, and Royal Dutch Supervisory Board member.
What followed was an informal, virtually one-sided debate on the conduct of Shell in the area. The people were highly insulted by the further attempt to exclude them from proper discussion, a fact that had continued to contribute to the growing rift between the developers and the community ever since the project was announced.
Andy Pyle attempted to justify the admitted mix-up over invitations by blaming the Rossport Five for not wishing to meet the team, and this was taken that everyone in Erris opposed to the current project were not interested. The fact that protests by hundreds of people at the Bellanaboy refinery site had taken place, and that thousands of people nationally and internationally had voiced their displeasure at the actions of the oils giants, seemed to be totally ignored by SEPIL, who had been charged with organising the meetings.
Some hard truths were presented to the executives who were informed that, given their past and current actions (here in Ireland and further afield in places such as Nigeria), under no circumstances would an experimental and potentially lethal refinery and pipeline be tolerated in the area. The not-so-polite message was, ''wake up and pull out … the people of Erris are not for sale!''
The evening passed off without incident (due in large part to the Gardaí handling things in a sensitive manner; unusual of late but very welcome) and the Shell crew left among cheers, jeers and even a few fireworks. The people on the ground, the people who have been living with this ongoing nightmare and the ones that really count, had finally got a chance to let the hitherto faceless corporations know what they really desired; a peaceful existence in a beautiful and unspiolt part of the world.
Surely not too much to ask. read more

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MSN Money: Shell Chairman: No Word Nigeria Hostages

All Associated Press NewsDAVOS, Switzerland (AP) – The managing director of Royal Dutch Shell said Friday he was unaware of any plans to free four workers seized from an oil platform in Nigeria earlier this month.
Speaking on the sidelines of the World Economic Forum's annual meeting, Jeroen van der Veer said there was no resolution of the hostages' fate.
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“I checked my e-mail 30 minutes ago, and there was no information,” he said.
Earlier in the day, the Nigerian daily newspaper The Punch reported that the workers, kidnapped in the Niger Delta, could regain their freedom “soon.”
Ekiyor Welson, press secretary to the governor of Bayelsa State, told the newspaper the impending release came after a deal was allegedly struck between the Nigerian government and the militants. He gave no details of the deal.
Nigerian President Olusegun Obasanjo did not comment about a deal.
“All I know is that the hostages will be released soon,” he told Dow Jones Newswires. “I can't tell you how many days.”
The four oil workers — a Briton, an American, a Bulgarian and a Honduran — were kidnapped at a Shell oil platform in the oil-rich delta Jan. 11. read more

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The New York Tmes: Nigeria Hostages Won't Be Released: Militants

By REUTERS
Published: January 27, 2006
Filed at 7:26 a.m. ET
LAGOS (Reuters) – Nigerian militants believed to be holding four foreign oil workers hostage said on Friday they did not plan to release them any time soon, dashing hopes of an imminent end to the 17-day crisis.
A spokesman for Bayelsa state, which is leading government contacts with the kidnappers, had said negotiators had reached a point where the foreigners — an American, a Briton, a Bulgarian and a Honduran — could be released at any time.
But in an e-mail to Reuters the militants said: “I promised you the hostages were going nowhere in spite of the rumors and repeat that to you.''
The militants added that more hostages could be taken soon.
The Movement for the Emancipation of the Niger Delta is demanding more local control over the region's huge oil wealth, the release of two ethnic Ijaw leaders and compensation to delta villages for decades of oil pollution.
It has launched a wave of attacks on oil pipelines and platforms which have forced Royal Dutch Shell, Nigeria's largest oil producer, to cut a tenth of Nigeria's output and withdraw 500 staff.
“As promised we will soon commence with our second wave of attacks. … We intend to inflict as much damage as we can with each attack (so) that careful planning and coordination is key,'' the militants said.
These militants, who have consistently denied being in any talks with the government and rejected any idea of release until their demands are met, have provided proof they are holding the hostages by allowing them to speak to Reuters twice.
There has been no contact with the hostages since January 20, when they complained of fatigue and diarrhea.
SECURITY TALKS
Nigerian President Olusegun Obasanjo said on Thursday talks with the hostage takers were progressing, and downplayed any effect on investment in the Africa's largest oil producer.
However, Shell Chief Executive Jeroen van der Veer said the company would not repair damage to its installations until it held talks with the government on improving security in the world's eighth largest exporter.
The rising militant threat in the delta, which produces nearly all Nigeria's 2.4 million barrels of oil a day, is entwined with political uncertainty ahead of elections next year and constitutes a threat to Nigerian unity, analysts Eurasia Group said.
Some of the demands of the kidnappers are echoed by the delta's politicians, who are vying with other geo-political zones for the ruling party's presidential nomination.
“There is a real risk that 2006 will be the year in which the essentially irreconcilable differences between Nigeria's Muslim north and mostly Christian south threaten the unity of the country,'' Eurasia Group said in a report.
Dozens of people have been killed in the attacks on two major oil export pipelines and two oil production platforms since December 20, although it is unclear if this week's attack on Italian oil company Agip, a unit of ENI, was by the same group.
More troops have been deployed to key oil installations, villagers have fled and Obasanjo has declined to say whether the crisis, now in its third week, will be resolved by force.
Many villagers in the vast delta of mangrove swamps and tidal creeks fear military reprisals for the killing of at least a dozen soldiers.
Oil unions have threatened to withdraw members completely from the delta if the security situation worsens.
Tensions in Nigeria helped drive oil prices above $67 a barrel on Friday but OPEC President Edmund Daukoru said he did not expect any cutback in supplies in his country to last.
“The drop is very very short term. … So I know the market is jittery but really there is not much need for concern for Nigeria,'' he said in Davos. read more

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Shell Insider: Botts will pop a vein once he sees this

FROM A SHELL INSIDER
Most people in Shell EP will know what this really means: Platenkamp talked back too much to Botts (head EPE) and is therefore eased out with someone who does not know anything about EP and is therefore more pliable. I call this ‘surrounding oneself with sycophants’. How does this jive with the wish of v.d.Veer to improve know-how and longer postings in EP?
A plain powergame and further ethnic cleansing of Dutchmen in EP. Something that even Lo van Wachem fought but without success. NAM is one of the biggest dividend payers of the Shell Group so normally one would put a professional in place. Remember that Platenkamp was the man who pointed out in 2000 to the top of Shell that there was another cycle of overpromise and underperformance in the making. They all refused to listen and take action. Now he is sidelined….
Internal Shell message: (The official Spin/BS)
Roelof Platenkamp, currently VP Commercial in EPE and MD NAM, will be appointed to a new role as VP Hydrocarbon Maturation (Chief Petroleum Engineer) in the EP Technical organisation, reporting to Matthias Bichsel, EVP Technical, with effect from 1st March 2006. Roelof will play a leading global role in coordinating our hydrocarbon maturation plans and he will provide functional leadership for the global Petroleum Engineering community. Roelof joined Shell in 1981 and has held various technical and managerial roles in several countries.
Roelf Venhuizen, GM Moerdijk – Manufacturing Chemicals, will be appointed to EPE VP Commercial and MD NAM with effect from 1st March. Roelf joined Shell in 1975 and has held various technical, commercial and managerial roles in the Netherlands and internationally in Shell’s Downstream Chemicals and Manufacturing organizations. From August 2000, until May 2005 when Roelf began his current role, Roelf was GM Shell Nederland Chemie BV (SNC) managing the Moerdijk and Pernis Chemical Manufacturing sites where he also sponsored the Shell Sigma beachhead project for Shell Chemicals.
Please join us in wishing Roelof and Roelf every success in their new roles. Roelf’s successor is subject to normal Open Resourcing, staff consultation and SNC corporate processes and will be announced separately. read more

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Nigeria Daily Independent: Shell Revamps 36 Ogoni Oil Spill Sites

By Odudu Okpongete
Senior Correspondent,
Port Harcourt
Anglo-Dutch oil giant, Shell Petroleum Development Company (SPDC), says it has completed remediation work in 36 oil spill sites out of 87 such sites identified in Ogoniland, Rivers State.
Shell puts the number of such sites identified in the Niger Delta between 1999 and June 2005 at 2,056, out of which it said remediation was successfully carried out in 586 sites.
Shell’s Corporate External Affairs Manager, Senibo Don Boham, disclosed the figures during an interactive session with journalists in Port Harcourt on Tuesday just as he lamented the gross underdevelopment in the region despite its huge oil wealth.
Boham, however, stated that the company was forced to discontinue the remediation of the Ogoni spill sites towards the end of 2004 after the indigenes interpreted the government exercise to mean resumption of oil exploration in the area.
He said in almost all the areas where the company had undertaken such remediation, the soil had been restored to its original state and the inhabitants able to carry out farming activities in such spots.
The company’s spokesperson attributed most of the oil spills recorded in the region in recent times to acts of sabotage, citing the case of Rumuekpe in Rivers State where 135 hacksaw cuts were inflicted on its pipelines in 2004 alone.
Boham further stated that Shell was deeply disturbed over the underdevelopment in the Niger Delta 60 years after it began oil exploration in the area, attributing it to abandonment by the Federal Government’s.
He stressed that if the government had implemented the recommendations of the Willinks Commission, which sought special funding for the development of the area, the prevailing poverty and restiveness witnessed there would have been adequately tackled. According to him, it was wrong for anybody to wait for pressure from foreign governments before giving attention to the region’s problems.
Boham disclosed that Shell spends about $60 million annually on development in its 1,600 host communities, but admitted that the figures which amounted to about N4 million per community was inadequate to meet the development needs of the communities.
He, therefore, appealed to the Federal Government to take the development of the Niger Delta as a priority while also appealing to state governments in the region to use the 13 per cent derivation revenue judiciously to tackle the endemic poverty in the area. read more

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Peoples Daily Online: Sustainability is core concept as energy giant Shell expands

Peoples Daily Online (China)
Global energy giant Royal Dutch Shell is using sustainable development as part of its business principles, balancing both short- and long-term interests when making its business decisions.
This year Shell China's largest capital investment, the Nanhai petrochemicals complex, moves into start-up phase.
The Dutch-based company has integrated economic, environmental and social considerations in the construction of the project, said Liu Xiaowei, deputy director of external affairs at Shell China.
Located in Daya Bay of South China's Guangdong Province, the co-operative project by Shell and China National Offshore Oil Corporation is so far the largest joint venture project in China.
With a total investment of 34.8 billion yuan (US$4.3 billion), it will manufacture 2.3 million tons of petrochemicals products to supply the markets in Guangdong and China's coastal areas, where demands for petrochemicals products are high, said Liu.
“As a crucial project for Shell in China, the Nanhai Petrochemicals Complex is being designed to international standards,” said Liu. “In order to do this we have taken a lot of measures, which can be broadly separated into three categories, energy efficiency, water conservation, and waste minimization.”
Liu said energy efficiency plays a major role in selecting which processes to use in the complex.
Hydrocarbon waste streams from the process plants, for example, are captured and used as fuel gas elsewhere in the complex.
As for the complex water use, using air-cooling to the fullest extent will minimize the amount of cooling water that is used. Compared with other complexes, it is expected to reduce the water use by 20 per cent to 25 per cent, said Liu.
Liu said the waste management strategy is based on handling waste internally. Waste that is generated will be reused or recycled to the maximum extent possible.
Liu said sustainable development has become a core value for Shell, which has practiced the concept in China for 3 years.
As part of its many sustainable development programmes, last year Shell signed an agreement with the Science and Technology Commission of the Shanghai municipal government, which is expected to help Shanghai develop clean and efficient energy solutions.
The MOA outlined a number of areas for co-operation, including joint studies on clean alternative fuels and cost-effective ways to save energy and reduce emissions in the transport sector.
Liu said the commission and Shell are already collaborating on two ongoing trials of clean gas-to-liquid fuel.
The new generation fuel is being used in a taxi trial involving Volkswagen Passat vehicles in Shanghai in co-operation with Tongji University. It will also be tested in a laboratory trial on Chinese-manufactured heavy-duty engines in partnership with Jiaotong University.
According to Jack Jacometti, vice-president of Shell Gas & Power, energy conservation is the building blocks for any city; the co-operation with Shanghai is setting an example for clean energy development.
Liu said Shell is also working hard to advocate the sustainable development scheme in public. This year is the second year of Shell's Rural Energy Fellowship programme. The programme, which focuses on rural energy issues, invites graduate students from top universities in China.
These students go out into the field to study rural energy and try to find solutions to improve community sustainability.
Source: China Daily read more

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Malaysia Star: Koc-Shell consortium pays US$4b for 51% of Turkish oil refinery

ISTANBUL: A consortium led by Turkey's Koc Holding and including Anglo-Dutch oil giant Royal Dutch Shell PLC officially purchased a controlling stake of Turkey's state-owned oil refiner Tupras on Thursday, a state-run news agency reported.
Paying US$4.14 billion (euro3.35 billion) to the country's Privatization Administration, the consortium officially took control of the 51-percent stake, according to Anatolia.
The payment valued Tupras at around US$8.1 billion (euro6.56 billion).
The consortium had outbid eight other competitors in 11 stages of bidding for what was one of the most important sales on Turkey's privatization agenda.
Koc Holding holds 75 percent of the consortium's shares, while Turkish gas company Aygaz has 20 percent and several other companies – OPET Petroleum, Shell Overseas Investment and the Shell Company of Turkey – all have less than 5 percent, Anatolia said.
The Koc family that runs Koc Holding placed 103rd on Forbes' 2005 list of the world's richest people. – AP read more

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The Scotsman: Oil giant ready to Shell out $10bn

JOHN BOWKER
DEPUTY CITY EDITOR
SHELL is prepared to spend as much as $10 billion (£5.6 billion) on a single acquisition despite the high oil price in what is the group's latest attempt to replenish its dwindling reserves.
The oil giant's chief executive, Jeroen van der Veer, said that deals of around that scale would create value for its shareholders, and he would not rule out an expansion into any geographic region around the world.
“Even in times of high oil prices, it's possible,” he said on the sidelines of the World Economic Forum in Davos. “You may do small acquisitions or swaps of up to $10bn.” However, he ruled out any larger deals as the high price of oil would make them uneconomic.
Shell, the world's third-largest listed oil firm by market value, is still living down a reserves scandal that shocked investors in 2004. The revelation that its oil and gas reserves were massively overstated sent Shell's shares tumbling.
The market is awaiting an update on Shell's reserve replacement progress at its annual results next Thursday. A year ago, the group reported that it found only 45-55 per cent of the oil it pumped in 2004, vexing investors.
One area where Shell is unlikely to expand is the North Sea. The group revealed in December that it was cutting back future exploration plans following a tax hike on production by Gordon Brown, while it put three of its fields in the maturing area up for sale last April.
Van der Veer was also keen to discuss troubled Nigeria, where Shell ranks as the biggest foreign producer. He said his first concern was for the safety of four oil workers held hostage by militants – a flash point in a five-week campaign of sabotage and kidnapping by the Movement for the Emancipation of the Niger Delta.
The crisis has pushed world oil prices to four-month highs and shut in 221,000 barrels per day of Shell's output in Nigeria.
“I expect the government would like to sit down with [the oil] industry and talk about what can happen on security and keeping the oil flowing,” Van der Veer said.
The Nigerian movement said it would make Shell suffer unless it paid $1.5bn to delta villages in compensation for decades of oil pollution, which is one of its demands for releasing the hostages. Van der Veer said repairs could not start on damaged oil infrastructure until discussions about ensuring security in the OPEC producer had taken place. “When the situation is safe again, then you can restart production very quickly,” he said.
The Dutchman added that Shell remained committed to increasing output of oil from so-called “unconventional” deposits despite some project cost overruns and a string of unplanned outages.
Shell has started a study for an oil shales project in Colorado, he said. It will test technology for heating oil underground there. Oil shales is a type of rock that can be turned into an oily substance at a high temperature – and can be found in Scotland.
Shell is also looking at oil deposits in ever-deeper water, and analysing deposits of tight gas, or gas left in reservoirs after conventional drilling. The group's shares closed off 6p at 1,835p. read more

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Daily Telegraph: Shell eyes acquisitions to give reserves a lift

By Melanie Feisst (Filed: 27/01/2006)
Shell chief executive Jeroen van der Veer said yesterday the company would consider making acquisitions of up to $10billion (£5.6billion) to increase reserves.
“Even in times of high oil prices it's possible, but not sure, that you may do small acquisitions or swaps of up to $10billion,” he said at the World Economic Forum in Davos, as the price of Brent crude veered around $65.
He said it was difficult to see where larger acquisitions could create value for Shell's shareholders.
Mr van der Veer also hinted that the group's spending may become more geared towards unconventional ways of gathering oil, such as drilling for oil in ever-deeper water and analysing deposits of gas left in reservoirs following conventional drilling.
He would not comment on possible group targets, but the most likely avenue is believed to be swaps or oil fields, as few oil companies are now worth less than $10billion. Shell is due to publish its full-year results on February 2.
Yesterday, Spain's largest oil company, Repsol, slashed its oil and gas reserves by 25pc, signalling trouble with it development prospects, primarily for natural gas in Bolivia and Argentina.
The majority of the revisions are in Bolivia, accounting for 52pc, and Argentina, 41pc, Repsol said in a filing to the Spanish regulator.
As a result of the downgrade, Repsol's reserves will fall to 3.672 billion barrels of oil equivalent from 4.926 billion barrels.
Repsol shares were suspended ahead of the announcement. They last traded at €24.78 (US$30.33). read more

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The New York Times: Nigeria Hostage Talks Making Progress: Obasanjo

By REUTERS
DAVOS, Switzerland (Reuters) – Nigeria is making progress in talks with the kidnappers of four foreign oil workers, President Olusegun Obasanjo said on Thursday, playing down any impact on investment in Africa's largest oil producer.
The four men were abducted from an offshore oilfield operated by Royal Dutch Shell 15 days ago by militants demanding the release of ethnic Ijaw leaders, more local control of oil wealth and compensation to delta villages for pollution.
“We are very much in contact with them,'' Obasanjo said. ''Immediately after it happened, we set up a committee … It's not only in contact, it's making progress.''
The Movement for the Emancipation of the Niger Delta's five-week campaign of violence and kidnapping has forced Shell to withdraw at least 500 staff and cut its output by 221,000 barrels a day, or one tenth of Nigerian exports, adding to fears of a global oil shortage.
Analysts have said the growing insecurity in Nigeria's southern delta, which produces nearly all of its 2.4 million barrels of oil daily, is raising the risks of doing business and scaring off some investors.
The army deployed more troops to key oil installations after armed men stormed the headquarters of Italian oil firm Agip in the delta on Tuesday, robbing a bank and killing eight policemen and one civilian. Agip is a unit of Italy's ENI.
Asked if he was concerned about the impact on oil investment, Obasanjo told Reuters at the World Economic Forum in Switzerland: “Not really.''
The militants have insisted they will not accept money for the hostages' release, and promised to stage more attacks to halt exports totally and drive away oil workers.
BREAKTHROUGH
Government officials in the southern Nigerian state of Bayelsa, one of six delta regions, said on Wednesday they believed the committee had made a breakthrough in talks to free the American, British, Bulgarian and Honduran captives.
“The hostages are close to being released, but I cannot be specific about a date,'' said Bayelsa Information Commissioner Nelson Azibolanari.
The release has been complicated by rivalry between Ijaw groups, which has risen since the impeachment of former Bayelsa state governor Diepreye Alamieyeseigha, one of the two Ijaw leaders whose release is demanded by the kidnappers. They have also asked for the release of militia boss Mujahid Dokubo-Asari, on trial for treason.
Villagers have begun to flee the delta's mangrove swamps and tidal creeks in fear of military reprisals against the highly organized, heavily armed group. Oil unions have threatened to pull members out of the region if security deteriorates further, after dozens of people have been killed in recent raids.
Obasanjo declined to comment when asked if he believed the crisis would be resolved by negotiation or by force.
“There are two situations, if you like. There's the immediate situation of the hostages, and we have to get the hostages released, and then there's the situation of criminality in the Niger Delta, that's a different issue altogether,'' Obasanjo told Reuters Television at Davos.
The militants' demands for more local control over the delta's oil wealth is echoed by the region's politicians, who are also vying with other zones for the ruling party's presidential nomination in elections next year.
Analysts say this means the violence against the oil industry is likely to continue into 2007. read more

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AP Worldstream: Koc-Shell consortium pays US$4.14 billion for 51-percent of Turkish oil refinery

A consortium led by Turkey's Koc Holding and including Anglo-Dutch oil giant Royal Dutch Shell PLC officially purchased a controlling stake of Turkey's state-owned oil refiner Tupras on Thursday, a state-run news agency reported.
Paying US$4.14 billion (A3.35 billion) to the country's Privatization Administration, the consortium officially took control of the 51-percent stake, according to Anatolia.
The payment valued Tupras at around US$8.1 billion (A6.56 billion).
The consortium had outbid eight other competitors in 11 stages of bidding for what was one of the most important sales on Turkey's privatization agenda.
Koc Holding holds 75 percent of the consortium's shares, while Turkish gas company Aygaz has 20 percent and several other companies _ OPET Petroleum, Shell Overseas Investment and the Shell Company of Turkey _ all have less than 5 percent, Anatolia said.
The Koc family that runs Koc Holding placed 103rd on Forbes' 2005 list of the world's richest people. read more

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AP Worldstream: Crude oil prices rise; hover under US$67 a barrel on geopolitical concerns

GILLIAN WONG
Crude oil futures rose Friday on persistent supply fears linked to Iran's nuclear standoff with the international community and militant attacks in Nigeria.
Light, sweet crude for March delivery gained 42 cents to US$66.68 a barrel in Asian electronic trading on the New York Mercantile Exchange midmorning in Singapore. The contract on Thursday rose 41 cents to settle at US$66.26 a barrel.
Heating oil gained 1.47 cents to US$1.7927 a gallon (3.8 liters) while gasoline advanced 1.52 cents to US$1.6995 a gallon.
“Geopolitical tensions remain in Iran and Nigeria. They pose potential threats to supply that together with the world's spare capacity tightness and strong global demand, keep a relatively high floor under crude prices,” said Victor Shum, energy analyst at Purvin & Gertz in Singapore.
Markets were concerned about the dispute between Iran _ the second-largest oil producer in the Organization of Petroleum Exporting Countries _ and the West over the restarting of its nuclear program. Iran insists the program is aimed at generating electricity, while the U.S. and several European countries fear it could lead to nuclear weapons.
In Nigeria, four foreign oil workers _ a Briton, an American, a Bulgarian and a Honduran _ are still being held hostage after being kidnapped at a Shell oil platform in the oil-rich delta on Jan. 11. Militants who say they are holding the men are demanding the release of two tribal leaders and for Shell to pay local communities US$1.5 billion (euro1.2 billion) in compensation for oil pollution.
The kidnappings came amid a spate of attacks on oil installations in Africa's largest oil exporter that have forced firms to evacuate hundreds of their workers and cut 10 percent of the country's daily oil output.
Meanwhile, natural gas futures rose 10.1 cents to US$8.330 per 1,000 cubic feet, after falling 23.1 cents to US$8.229 in the previous session _ their lowest level in almost six months, after U.S. government data showed domestic inventories were well above the five-year average for this time of year.
Above-normal winter temperatures in the U.S. have helped moderate demand, soothing a market that had otherwise been jittery because 16 percent of daily natural-gas production in the Gulf of Mexico remains shut-in nearly five months after Hurricane Katrina ripped through the region, knocking out platforms, pipelines and processing plants.
The U.S. Energy Department said domestic storage of natural gas stood at 2.49 trillion cubic feet at the end of last week _ 8 percent above year-ago levels and 22 percent above the five-year average for this time of year. read more

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Business Times (Malaysia): New Shell Malaysia chairman to head business council

NEWLY appointed Shell Malaysia Bhd chairman Saw Choo Boon will head the company's business council effective March 1. He will be the third Malaysian to hold such position since the establishment of the council.
He replaces outgoing Shell Malaysia chairman Datuk Jon Chadwick, who will be moving to another senior Shell position within Asia, also effective March 1.
In a statement, Shell Malaysia explained that the business council is the company's highest coordinating body.
It comprises the chairman, leaders of Shell Malaysia's key business portfolios in exploration and production, downstream oil and gas, the finance director and senior managers in human resources, information technology, legal and external affairs.
As Shell Malaysia chairman, Saw will lead the business council in shaping the company for greater growth in Malaysia.
Additionally, he will retain his current downstream oil responsibilities as well as serve as chairman of the boards of several companies where Shell Malaysia has business interests.
In the statement, Shell Malaysia also announced the revision of the business council leaders as well as appointment of several new council members. New members will assume their positions with effect from February 1.
New members appointed are the company's Sarawak asset manager Wee Yiaw Hin, Shell Malaysia general manager for corporate affairs Wahiruddin Abdul Wahid, general counsel Sufian Shamsuddin and human resources director Jonathan Kohn.
Other members retained in the business council are Shell Malaysia Trading Sdn Bhd managing director Mohzani Abdul Wahab, Shell Malaysia's downstream gas and power business vice president Dick Benschop (who replaces Idris Jala, the former Shell MDS (Malaysia) managing director and now Malaysia Airlines managing director), Shell Malaysia finance director Michael Taylor and Shell Information Technology International Sdn Bhd country manager Steve Clearwater. read more

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Financial Times: S America problems hit Repsol

By Mark Mulligan in Madrid
Published: January 27 2006 02:00
Shares in Repsol YPF plunged nearly 8 per cent yesterday after the Spanish oil and gas group announced a 25 per cent cut in its proven reserves and warned of reduced profits this year.
The company partly blamed last year's increase in production royalties from 18 per cent to 50 per cent in Bolivia, where it was forced to write off 659m barrels of oil equivalent (boe) of gas – half of its total there. However, it also admitted that “new information” about gas deposits in Bolivia and Argentina had forced it to reassess the probability of extraction.
In Argentina, it said production difficulties and contractual uncertainties had led to a 20 per cent downward revision of its booked oil and gas reserves. As a proportion of total proven reserves, the Repsol downgrade eclipsed that of Shell, which two years ago admitted to overstating reserves by 20 per cent.
Although some downgrade in the troubled Southern Cone of South America was expected, analysts were surprised by the scale of the revision at Repsol. In a note, CSFB also raised the prospect of “further downgrades in Bolivian reserves”, referring to political uncertainty.
Repsol last revised down its proven reserves a year ago, when it announced a 4.1 per cent cut, to 4.93bn boe, because of problems in Trinidad and Tobago and in Argentina. That followed a radical revamp of the company, aimed at streamlining its unwieldy structure and decentralising its decision-making. The number of corporate and business divisions was halved.
Yesterday's move, which followed a year-long review of the company's reserves, was likely to add to uncertainty about Repsol's future.
With its stock market discount and troubled upstream business, the company has long been seen as a takeover target given its profitable refining and service station activities. However, its exposure to Latin America, which accounts for about 75 per cent of reserves, anddifficult shareholding structure acts as a deterrent.
Antonio Brufau, chief executive, said yesterday the company was confident of improving its poor reserve replacement rate, which was running at less than 20 per cent before the announcement. However, he warned that production levels would drop slightly, from 1.3m to 1.18m barrels a day by 2009, and that “between €160m and €170m” would be wiped off net profits this year.
However, the discounted book value of its Argentine and Bolivian gas reserves meant the write-down on assets would be contained at “less than €50m”.
The company has frozen €400m of planned investment in Bolivia pending talks with the administration of Evo Morales, the new socialist president.
The shares, which were suspended until early afternoon, closed down 7.7 per cent at €22.88. read more

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Financial Times: Shell-Mex House on market for £520m

By Jim Pickard, Property Correspondent
Published: January 27 2006 02:00
Robert and Vincent Tchenguiz, the property investors, are poised to put one of London's most prominent landmarks on the market at an estimated asking price of £520m.
Shell-Mex House, an Art Deco building next to the Savoy hotel on the Strand, was bought by Rotch, the Tchenguiz brothers' company, and entrepreneur Jack Dellal for £327.5m in early 2002.
The purchase, from Lehman Brothers and Steven Witkoff, the New York property developer, was at the time the biggest single investment in a UK building.
Nearly four years later, in one of the hottest commercial property markets ever seen in London, the building is likely to attract bids well over half a billion pounds.
The 575,000 sq ft building is occupied by Pearson, the owner of the FT, Vodafone, Omnicom and Shell. It generates annual rent of £25.5m. An offer of £520m would imply a gross initial yield of about 4.9 per cent.
It is understood that the building, which looms large over the Thames, will be marketed by CB Richard Ellis and DTZ, the property agents.
The 13-storey building, with a central clock tower, started life in 1886 as the Cecil Hotel, then the largest hotel in Europe, and was bought by Shell Mex in 1930.
The Tchenguiz brothers, along with rivals Ian and Richard Livingstone, are close to selling a £400m portfolio of Shell garages.
It is understood that the 180 petrol stations will be bought by the Englander Group, a north London family trust, on a net initial yield of 6.5 per cent.
The obscure group beat off competition from the likes of Golfrate and Reit Asset Management to buy the garages, which have Shell leases until 2017.
The Livingstones and Tchenguiz brothers bought the stations in 2000 for £300m. read more

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