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Posts on ‘February 14th, 2006’

Washington Post: Shell's Nigerian oilfield hits 220,000 bpd: source

Reuters
Tuesday, February 14, 2006; 6:00 AM

LAGOS (Reuters) – Shell's new Bonga oilfield in Nigeria has performed better than expected since starting production on November 28 and has already hit 220,000 barrels per day (bpd), just below full capacity, a company source said. The field, which came on stream two years late and a third over budget, is intended to produce an average of 225,000 bpd.

“It has already hit 220,000 barrels a day, and the startup has been much better than expected,” the source told Reuters.
“It's a full-time job just getting enough tankers to ship the crude away, because we need a million barrel tanker every three days,” he added.
Traders had expected Bonga to pump an average of 170,000 barrels per day in February.
Repairs are under way to Shell's 106,000 barrel per day Trans-Ramos pipeline, which was blasted by militants on Jan 11, and should be complete before the end of this week, another Shell source said.
But no decision has yet been taken on when to restaff the four production platforms which provide crude to the pipeline, the source added.
Shell declared force majeure on Forcados exports on Jan 13. read more

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The Times: Dating game

OILMEN know that this is a special time in the calendar: it is International Petroleum Week. Jeroen van der Veer, the chief executive of Royal Dutch Shell, did not wait for Valentine’s Day to send a billet-doux to Gordon Brown. In a speech at the opening morning of the industry get-together, he gave warning that if governments wanted to encourage investment, then their tax regimes should not provide any disincentives.
He had in mind the tax increases imposed on North Sea oil. Somewhat optimistically, he suggested that the Chancellor should commit to reversing the tax increase should the price of oil fall.
Mr van der Veer will probably have been disappointed if he hoped that this morning would bring flowers, chocolates and just such a commitment from the Treasury.
But Shell has already demonstrated that companies can react against inhospitable tax regimes. When the organisation melded its two component companies into one, it chose to have its main listing in the UK but its head office in Rotterdam. A less oppressive tax regime was one of the factors that influenced that decision.
Global companies are not rooted to one spot. Shell is about to establish a major research and development centre in Bangalore. The universities in India are turning out the talent that the company needs whereas in the West fewer students are pursuing science. In the United States, the number of university students studying petroleum engineering has fallen by more than 80 per cent since the early 1990s.
Yet it will be a very long time before demand for oil specialists disappears. Shell is already the largest marketer of biofuels in the world, but Mr Van der Veer believes that there is plenty of oil still to be found. Getting at it is just harder, and more expensive. read more

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Daily Telegraph: BrandIndex: Oil giants' image slips up on big profits

The public just doesn't like it when oil companies make money. BP and Shell report bumper profits and there's an immediate dip in their scores on YouGov's BrandIndex, which measures public approval of companies.
After a year in which consumers have been forced to pay ever higher prices at the petrol pumps, Shell's profits announcement sent its “general impression” score down by eight points from +9 to +1, and its “value for money” score from 0 to -8.
BP's figures started to fall on speculation about its profits and the company's eventual announcement of an £11 billion profit knocked it even further. BP's “general impression” rating has fallen to +12 and its “value for money” score to -10, compared with +21 and -4 at the end of January.
Shell and BP's record profits have also dragged down the reputation of the rest of the sector as consumer and motorist groups put the boot in.
So “value for money” reputations have fallen for all the oil companies tracked on BrandIndex including Esso down eight points, Texaco down three, Jet down three and Gulf down five.
Concerns over health and obesity continue to be the driving force for public opinion about confectionery and snack brands. The joint decision by Mars and Cadbury's to put health warnings on chocolate – the “Be Treatwise” campaign – seems to have paid off. Mars' corporate reputation has risen four points since the move, while Cadbury's has risen three.
Meanwhile, China remains an image problem for Google. When the story of Google's censored Chinese search engine first broke there was just a small effect but that has since snowballed.
Google's “buzz” has now fallen a full 21 points to +15. Google is such a strong brand that it remains one of BrandIndex's best performers, but it is now outshone by Cadbury's and Marks & Spencer. (See www.BrandIndex.com/about for details of methodology.) read more

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Irish Times: Shell appoints Mayo journalist to advise on Corrib gas project

Lorna Siggins, Marine Correspondent
Feb 14, 2006
Shell E&P Ireland has appointed a prominent Mayo journalist, Christy Loftus, as its new external affairs adviser for the controversial Corrib gas field project.
Mr Loftus, a native of Newport, Co Mayo, has been a senior journalist with the Western People for the past 28 years. He has chaired the executive council of the NUJ and was a president of the union from 1999 to 2000.
Mr Loftus is a former secretary and chairman of the Mayo GAA board, a founding member and chair of the South West Mayo Development Company and a board member of Meitheal Mhaigh Eo.
In a statement yesterday, Shell also highlighted the fact that Mr Loftus was a member of the Mayo 2000 group, which campaigned in the late 1990s to bring the Corrib gas find ashore to Mayo, and also lobbied the EU for Objective One status for the western counties.
He is a member of the Mayo County Community Forum, a member of Mayo County Council's Housing Strategic Policy Committee and stood, unsuccessfully, as an independent candidate for Mayo County Council in the Westport area elections in June 2002.
Mr Loftus is the second journalist to be recruited by the multinational's Irish branch in recent months. It has already appointed former RTE and BBC journalist John Egan to its public affairs division.
Mr Loftus said in the company's statement that he was a supporter of bringing the Corrib gas find ashore.
“Shell recognises that it has a huge amount of work to do to rebuild the trust and confidence of the people of Rossport and the wider community in Erris. I hope I can play some role in helping to restore trust, rebuild relationships and support Shell's goal to work in partnership with the local community.” read more

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Financial Times: Wake up to the old-fashioned power of the new oligopolies

By Barry Lynn
Published: February 14 2006
What will it take to wake us up to the ever-tightening grip of oligopolies over ever more of our global marketplaces? Even though their power increasingly warps our production systems, and our free market system, alarms are rare and fleeting.
The collapse of an overly consolidated US flu vaccine system two years ago did not set off any bells. Nor did the revelation, by experts studying the potential impact of an avian flu pandemic on commerce, of deep fragilities in our hyper-rationalised medical and food supply systems. The mega-merger of Procter & Gamble and Gillette last year did not do it. Nor did the general consolidation of food processors; in the US, 10 groups account for half of all retail sales, with single companies often capturing more than 75 per cent of particular product markets. Neither the fact that Wal-Mart controls 30 per cent of sales for many goods in the US economy, nor that four companies account for 94 per cent of UK supermarket sales, seem to concern policymakers.
What about Samsung's effort to capture world markets for liquid crystal display screens and D-Ram computer chips? Or Tokyo's rewriting of antitrust laws to allow companies to consolidate 100 per cent monopolies over key technologies? Or the capture of 60 per cent of the global trainer market by Nike and Adidas? In every case, there has been almost no reaction. Mittal Steel's play for Arcelor may not be a global-scale problem, as the two companies combined account for only 10 per cent of the world steel market. But what of the fact that three companies account for 75 per cent of global iron ore production?
There is no shortage of competition in many markets. Just ask Volkswagen or Delta Airlines. But the further down we look below the level of branded companies, the more consolidation we tend to find. This is true in commodities, services, industrial components and shipping. Many executives and investors do understand what is happening, and recognise the stakes. In a recent article for McKinsey & Co, one consultant wrote of the rise of “global mega-institutions”. Although the writer did not refer to these as oligo­polies, he described their character well. Not only, he wrote, have these companies developed “extraordinary scale and scope”, but they capture “disproportionately high profits”. It seems that only the citizen and politician remain in the dark. The global corporate endgame is well under way, and none of our societies is prepared for it, intellectually or institutionally.
It is not as if we need to search long for evidence of the problems traditionally associated with monopoly. Capture of political power? Consider Boeing's hold over the Bush administration. Extreme pricing distortions? We see them throughout Wal-Mart's supply system. Artificial control over what technologies are brought to market and when? One blatant example is the power over renewable energy systems of British Petroleum and Royal Dutch Shell. Extreme profiteering? America's big energy companies have not only resurrected the art of gouging the consumer, they have raised it to a new state of perfection.
As bad as these old-fashioned problems may be, many of our 21st-century global oligopolies appear to pose entirely new dangers. This is due largely to how power is exercised in systems characterised by extremeoutsourcing. Alfred D. Chandler, an industrial scholar, has written thatone of the main factors behind therise of the huge, vertically integrated corporation early in the 20th century was enforcement of US antitrustlaw, which limited the horizontal growth of these companies. Unable to exert power over the market, many scrambled instead to internalise key functions, for competitive advantage.
This means we cannot ignore the effect on global industrial organisation of the radical relaxation of antitrust enforcement by the Reagan administration in 1981. One result of giving big companies a licence to grow horizontally was that many producers, once they captured control over their markets, opted to sell off or shut down expensive and risky manufacturing and research and development operations and buy these “services” from outside suppliers with few or no other pathways to the marketplace. Over time, many of these top-tier companies relied ever more on their power to dictate prices to their suppliers (including workers) to capture profits.
The increasing power of a few leading trade-oriented companies over entire production and supply systems results in a variety of economic and political ills. One is the degradation of many production systems themselves. That is what happens when the actual producers of goods or components are unable to capture a sufficient share of revenue to support innovation, or sometimes even to maintain existing machinery and workforces. Another is the heightening of competition within society as opposed to between leading companies. In a production system marked by extreme outsourcing,oligopoly does not result in the end of competition so much as the redirection of competition downwards, as lead companies capture more power to set supplier against supplier, community against community and worker against worker.
It is here we find at least a partial explanation for one of the more confusing paradoxes of today's global system – the simultaneous rise in consolidation and competition. So far, especially in America, the tendency has been to blame extreme competition on “globalisation”, not least because faulting foreigners for domestic ills can be a good way to sell books and win votes. The real explanation, however, is not only globalisation, or even mainly globalisation, as much as radical changes in the structure of industry. In other words, it is not the Chinese who destroy US and European jobs, but roll up by the world's largest traders and retailers of the power to pit producer against producer, and to capture most or all of the gain from the arbitrage.
Outright monopoly is absolutely defensible – when granted temporarily to reward companies for bringing truly new ideas to market. But most of today's powerful companies are not the result of new ideas, only the strategic reordering of markets. If anything, their goal is the oldest one in commerce – to fence in the place where deals are done, and to tax producers and consumers for the right to meet there. It will not be long until we realise that to save our free market system will require, among other actions, far more aggressive enforcement of antitrust. Simply stopping any further consolidation of power will not be enough. True believers in the free market will admit there is no other choice than to roll the power back.
The writer, senior fellow at the New America Foundation, is author of End of the Line, The Rise and Coming Fall of the Global Corporation (Doubleday) read more

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THE NEW YORK TIMES: Oil Prices Finish Above $61 Per Barrel

By THE ASSOCIATED PRESS
Published: February 13, 2006
Filed at 5:48 p.m. ET
NEW YORK (AP) — Oil futures fell Monday and analysts said retail gasoline prices could soon dip below $2 a gallon in some parts of the country. But traders said any relief would likely be short-lived, warning of an upturn in prices come spring.
''We should see gasoline at the pump drop 15 to 20 cents in the coming weeks as it catches up with falling wholesale prices,'' said James Cordier, president of Liberty Trading in Tampa, Fla. ''But if the economy stays strong, gas prices are set for a pretty big rebound in April and May.''
Light sweet crude for March delivery fell 60 cents to close at $61.24 a barrel on the New York Mercantile Exchange, as traders weighed lagging demand and bulging supplies against political tensions in major producing nations. Brent futures lost 26 cents to close at $59.38 a barrel on the ICE Futures exchange.
Traders remained concerned about the international dispute over Iran's nuclear activities and to a lesser extent unrest in Nigeria.
''Healthy U.S. crude inventories — indicating a well-supplied market — would have justified a substantial downward correction but latest supply worries about Iran put a floor on declining prices,'' said Vienna's PVM Oil Associates.
Heating oil futures fell by less than a penny to $1.6386 per gallon, while natural gas futures dipped 7.3 cents to close at $7.243 per 1,000 cubic feet.
Front-month gasoline futures fell 3.09 cents to settle at $1.4312 per gallon, and are down more than 30 cents since Jan. 30. At the retail level, gasoline prices averaged $2.28 a gallon nationwide last week. In the Midwest, retail prices are about 10 cents below the nationwide average.
''We will probably see some states this week with retail gasoline prices of $2 a gallon or lower,'' said analyst Tom Kloza of Oil Price Information Service. However, ''it won't last into April,'' he said.
In Tehran on Monday, officials announced that Iran, the second-biggest oil producer in the Organization of Petroleum Exporting Countries, had indefinitely postponed its negotiations with Moscow over a Russian plan to enrich Iranian uranium and would consider withdrawing from the Nuclear Nonproliferation Treaty if it considers it detrimental to its nuclear plans.
Crude oil futures had slipped Friday on reports of less demand and bigger supplies. The International Energy Agency, the Paris-based energy watchdog, reported falling demand because of the high costs of crude.
The agency slashed its fourth-quarter growth estimate by 420,000 barrels a day to a negligible 80,000 barrels a day even as it maintained its forecast for 2.2 percent oil demand growth in 2006 due to expected strong economic expansion.
It pinned the big year-end demand drop on high energy prices, mild U.S. weather that cut heating demand, and market disruptions stemming from hurricanes Katrina and Rita in the United States.
The IEA also cut its estimates of demand growth in the first and second quarters of this year by 120,000 barrels a day, and by 130,000 barrels a day in the third quarter.
With oil prices retreating in recent weeks, Royal Dutch Shell PLC's chief executive on Monday said Britain's government should lower taxes on domestic oil producers in order to spur investment in North Sea drilling projects. Britain's Treasury Chief Gordon Brown doubled a ''windfall'' tax on oil production in the British North Sea from 10 percent to 20 percent in 2006, bringing protests from oil companies and free market advocates.
''If oil prices fall we'd like to see taxes fall,'' Shell Chief Executive Jeroen van der Veer said at an industry conference, Dow Jones Newswires reported.
——
Associated Press Writer George Jahn in Vienna, Austria, contributed to this report. read more

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THE NEW YORK TIMES: U.S. Royalty Plan to Give Windfall to Oil Companies

By EDMUND L. ANDREWS
Published: February 14, 2006
WASHINGTON, Feb. 13 — The federal government is on the verge of one of the biggest giveaways of oil and gas in American history, worth an estimated $7 billion over five years.
Royalty-Free Oil and Gas New projections, buried in the Interior Department's just-published budget plan, anticipate that the government will let companies pump about $65 billion worth of oil and natural gas from federal territory over the next five years without paying any royalties to the government.
Based on the administration figures, the government will give up more than $7 billion in payments between now and 2011. The companies are expected to get the largess, known as royalty relief, even though the administration assumes that oil prices will remain above $50 a barrel throughout that period.
Administration officials say that the benefits are dictated by laws and regulations that date back to 1996, when energy prices were relatively low and Congress wanted to encourage more exploration and drilling in the high-cost, high-risk deep waters of the Gulf of Mexico.
“We need to remember the primary reason that incentives are given,” said Johnnie M. Burton, director of the federal Minerals Management Service. “It's not to make more money, necessarily. It's to make more oil, more gas, because production of fuel for our nation is essential to our economy and essential to our people.”
But what seemed like modest incentives 10 years ago have ballooned to levels that have alarmed even ardent supporters of the oil and gas industry, partly because of added sweeteners approved during the Clinton administration but also because of ambiguities in the law that energy companies have successfully exploited in court.
Short of imposing new taxes on the industry, there may be little Congress can do to reverse its earlier giveaways. The new projections come at a moment when President Bush and Republican leaders are on the defensive about record-high energy prices, soaring profits at major oil companies and big cuts in domestic spending.
Indeed, Mr. Bush and House Republicans are trying to kill a one-year, $5 billion windfall profits tax for oil companies that the Senate passed last fall.
Moreover, the projected largess could be just the start. Last week, Kerr-McGee Exploration and Development, a major industry player, began a brash but utterly serious court challenge that could, if it succeeds, cost the government another $28 billion in royalties over the next five years.
In what administration officials and industry executives alike view as a major test case, Kerr-McGee told the Interior Department last week that it planned to challenge one of the government's biggest limitations on royalty relief if it could not work out an acceptable deal in its favor. If Kerr-McGee is successful, administration projections indicate that about 80 percent of all oil and gas from federal waters in the Gulf of Mexico would be royalty-free.
“It's one of the greatest train robberies in the history of the world,” said Representative George Miller, a California Democrat who has fought royalty concessions on oil and gas for more than a decade. “It's the gift that keeps on giving.”
Republican lawmakers are also concerned about how the royalty relief program is working out.
“I don't think there is a single member of Congress who thinks you should get royalty relief at $70 a barrel” for oil, said Representative Richard W. Pombo, Republican of California and chairman of the House Resources Committee.
“It was Congress's intent,” Mr. Pombo said in an interview on Friday, “that if oil was at $10 a barrel, there should be royalty relief so companies could have some kind of incentive to invest capital. But at $70 a barrel, don't expect royalty relief.”
Tina Kreisher, a spokeswoman for the Interior Department, said Monday that the giveaways might turn out to be less than the basic forecasts indicate because of “certain variables.”
The government does not disclose how much individual companies benefit from the incentives, and most companies refuse to disclose either how much they pay in royalties or how much they are allowed to avoid.
But the benefits are almost entirely for gas and oil produced in the Gulf of Mexico.
The biggest producers include Shell, BP, Chevron and Exxon Mobil as well as smaller independent companies like Anadarko and Devon Energy.
Executives at some companies, including Exxon Mobil, said they had already stopped claiming royalty relief because they knew market prices had exceeded the government's price triggers.
About one-quarter of all oil and gas produced in the United States comes from federal lands and federal waters in the Gulf of Mexico.
As it happens, oil and gas royalties to the government have climbed much more slowly than market prices over the last five years.
The New York Times reported last month that one major reason for the lag appeared to be a widening gap between the average sales prices that companies are reporting to the government when paying royalties and average spot market prices on the open market.
Royalty-Free Oil and Gas Industry executives and administration officials contend that the disparity mainly reflects different rules for defining sales prices. Administration officials also contend that the disparity is illusory, because the government's annual statistics are muddled up with big corrections from previous years.
Both House and Senate lawmakers are now investigating the issue, as is the Government Accountability Office, Congress's watchdog arm.
But the much bigger issue for the years ahead is royalty relief for deepwater drilling.
The original law, known as the Deep Water Royalty Relief Act, had bipartisan support and was intended to promote exploration and production in deep waters of the outer continental shelf.
At the time, oil and gas prices were comparatively low and few companies were interested in the high costs and high risks of drilling in water thousands of feet deep.
The law authorized the Interior Department, which leases out tens of millions of acres in the Gulf of Mexico, to forgo its normal 12 percent royalty for much of the oil and gas produced in very deep waters.
Because it take years to explore and then build the huge offshore platforms, most of the oil and gas from the new leases is just beginning to flow.
The Minerals Management Service of the Interior Department, which oversees the leases and collects the royalties, estimates that the amount of royalty-free oil will quadruple by 2011, to 112 million barrels. The volume of royalty-free natural gas is expected to climb by almost half, to about 1.2 trillion cubic feet.
Based on the government's assumptions about future prices — that oil will hover at about $50 a barrel and natural gas will average about $7 per thousand cubic feet — the total value of the free oil and gas over the next five years would be about $65 billion and the forgone royalties would total more than $7 billion.
Administration officials say the issue is out of their hands, adding that they opposed provisions in last year's energy bill that added new royalty relief for deep drilling in shallow waters.
“We did not think we needed any more legislation, because we already have incentives, but we obviously did not prevail,” said Ms. Burton, director of the Minerals Management Service.
But the Bush administration did not put up a big fight. It strongly supported the overall energy bill, and merely noted its opposition to additional royalty relief in its official statement on the bill.
By contrast, the White House bluntly promised to veto the Senate's $60 billion tax cut bill because it contained a one-year tax of $5 billion on profits of major oil companies.
The House and Senate have yet to agree on a final tax bill.
The big issue going forward is whether companies should be exempted from paying royalties even when energy prices are at historic highs.
In general, the Interior Department has always insisted that companies would not be entitled to royalty relief if market prices for oil and gas climbed above certain trigger points.
Those trigger points — currently about $35 a barrel for oil and $4 per thousand cubic feet of natural gas — have been exceeded for the last several years and are likely to stay that way for the rest of the decade.
So why is the amount of royalty-free gas and oil expected to double over the next five years?
The biggest reason is that the Clinton administration, apparently worried about the continued lack of interest in new drilling, waived the price triggers for all leases awarded in 1998 and 1999.
At the same time, many oil and gas companies contend that Congress never authorized the Interior Department to set price thresholds for any deepwater leases awarded between 1996 and 2000.
The dispute has been simmering for months, with some industry executives warning the Bush administration that they would sue the government if it tried to demand royalties.
Last week, the fight broke out into the open. The Interior Department announced that 41 oil companies had improperly claimed more than $500 million in royalty relief for 2004.
Most of the companies agreed to pay up in January, but Kerr-McGee said it would fight the issue in court.
The fight is not simply about one company. Interior officials said last week that Kerr-McGee presented itself in December as a “test case” for the entire industry. It also offered a “compromise,” but Interior officials rejected it and issued a formal order in January demanding that Kerr-McGee pay its back royalties.
On Feb. 6, according to administration officials, Kerr-McGee formally notified the Minerals Management Service that it would challenge its order in court.
Industry lawyers contend they have a strong case, because Congress never mentioned price thresholds when it authorized royalty relief for all deepwater leases awarded from 1996 through 2000.
“Congress offered those deepwater leases with royalty relief as an incentive,” said Jonathan Hunter, a lawyer in New Orleans who represented oil companies in a similar lawsuit two years ago that knocked out another major federal restriction on royalty relief.
“The M.M.S. only has the authority that Congress gives it,” Mr. Hunter said. “The legislation said that royalty relief for these leases is automatic.”
If that view prevails, the government said it would lose a total of nearly $35 billion in royalties to taxpayers by 2011 — about the same amount that Mr. Bush is proposing to cut from Medicare, Medicaid and child support enforcement programs over the same period. 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: Doubts over Nigeria oil awards

By Dino Mahtani in Abuja
Published: February 14 2006
Nigeria's first open oil licensing round has ended with a roughly $1.5bn shortfall in pledged signature fees amid perceptions that some awards have been subject to political favouritism and back-room dealing.
Edmund Daukoru, Nigeria's minister of state for petroleum, said at a closing ceremony last week that Nigeria could only expect “about a billion dollars” in signature fees after 19 winners of blocks were unable to raise funds. Nigeria is the biggest oil producer in Africa.
The bid round is part of an ambitious strategy to boost production by 60 per cent to 4m barrels in the next five years. The signature fees are a fraction of the investment needed to develop the blocks to produce new oil.
The bid round did not raise interest from established multinationals, instead attracting new entrants, including those from Asian countries keen to expand their energy sources. Nigeria's main producers, Shell, Exxon, Agip, Total and Chevron, complained that the new contractual terms would make it unprofitable to explore and invest.
Nigeria stands to benefit enormously from the recent sale of a share of an oil block originally awarded under military rule to a former defence minister. China's largest offshore producer, CNOOC, last month agreed to pay close to $2.3bn (€1.9bn, £1.3bn) for rights in the lucrative oil block that has been partly backed into by the government.
The auction was presented as a transparent process marking a break from the types of discretionary awards prevalent in Africa's largest oil producer under military rule, which ended in 1999. Olusegun Obasanjo, Nigeria's president and also a former military ruler, has staked much of his credibility on bringing transparent governance to Nigeria before he is due to step down after elections in 2007.
A panel report seen by the Financial Times, reflecting the views of oil companies, diplomats and a presidential consultant criticised the implementation of a new policy of reserving a 10 per cent minority stake in awarded oil blocks for local companies. It said the policy could have led to “forced marriages”.
Consultants who performed due diligence on the minority companies said many did not even exist before the auction, and few had track records in the industry. Many companies are connected to senior politicians.
“This process was a far bit ahead of the discretionary awards but there is still a problem of encouraging genuine players as opposed to those who think they have got the winning lottery ticket,” said Antony Goldman of Clearwater Research Services.
Only 25 of 44 blocks originally awarded are to be finalised. In contrast to bid rounds in some other countries, no deposits on signature fees were required. Many winners also could not provide bank guarantees. The “lack of sanctions and flexible bid framework may have encouraged unprofessional, reckless and frivolous bids now abandoned”, the report said.
However, at least $300m in signature fees had been finalised for some of the awards, executives said. Another $485m is expected to be settled only when the confusion over ownership of the two most prized blocks is resolved between India's ONGC and Korea's KNOC, which has exercised pre-emptive rights in both blocks in return for promises to undertake huge infrastructure projects. The signature fees for the remaining blocks should be effected once those contracts have also been finalised.
Meanwhile, some blocks have been partly farmed out to other interests, without being declared. Oil executives say at least $16bn would need to be invested every year over five years for Nigeria to meet its production targets for oil and gas. Currently, the figure stands at about $13bn. 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.

MarineLink.com: Exxon, Shell Lose Nigerian Field Access

Monday, February 13, 2006
Chevron Corp. and Exxon Mobil lost an auction for Nigeria's most promising oil and gas fields last year to companies controlled by South Korea. In Venezuela, Royal Dutch Shell's bid to develop an offshore gas deposit collapsed when Brazil's state oil company stepped in.
The world's biggest publicly traded oil producers are losing reserves to state-run companies willing to pay higher prices for energy needed to fuel growing economies. Petroleo Brasileiro SA, China's Cnooc Ltd. and India's Oil & Natural Gas Corp. have all bought reserves in the past year.
The increasing competition for oil and gas fields is driving up costs, hurting corporate profits, while bolstering crude oil prices by inflating the cost of production. In the early 1990s, less rivalry for fields existed because countries such as China produced more oil than they consumed and prices were lower.
(Source: The Journal News) 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.

TreeHugger.com: Shell Bets on Thin Film Solar

February 13, 2006 02:25 PM – Justin Thomas, Virginia
Last week, Shell bowed out of the crystalline solar industry, agreeing to sell all of its yearly solar crystalline production capacity to SolarWorld. A combination of the tight silicon supply and a very strong German market is actually driving solar costs higher and making the technology less competitive. Shell will instead focus on CIS thin film solar, based principally on Copper, Indium and Selenium. The cells typically produce a lower total energy output than crystalline solar cells but they're also cheaper to manufacture; most of all, they don't rely on silicon.
The efficiency of thin solar film is getting better. Last fall, Shell announced its CIS solar had achieved 13.5 percent efficiency, a new world record for thin-film.
So in divesting its entire crystalline operation — approximately 80 MW of yearly production capacity potential — the company held on to its small, 3 MW production line in California for thin-film CIS solar. And on the same day as this announcement from Shell, the company struck a deal to explore the eventual construction of a 20 MW CIS module production facility with the France-based glass specialists St. Gobain. 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.

Blog: Outsourcing: Bangalore’s Shell Tech

Post details: Outsourcing: Bangalore’s Shell Tech
2006-02-14
01:44:42, Categories: Offshore outsourcing, 604 words
Outsourcing: Bangalore’s Shell Tech
If there were any doubts about outsourcing to India, they are continually being laid to rest, as more and more global majors follow the trend. The newest convert is oil major Shell, with plans to set up a 40-acre campus in Bangalore, India to house its third global technology centre. Currently, the Anglo-Dutch company has major tech facilities in Netherlands and Houston (USA).
So far, Vikram Singh Mehta, Chairman of the Shell group of companies in India has been unwilling to provide any investment details for the project. But, taking into account the area where Anglo-Dutch giant intends to set up its campus, undeveloped land in Whitefield, Bangalore is Rs. 6.5-crore an acre. This means the total cost of the land alone will come to Rs. 260-crores.
Mehta confirms the tech centre will become operational by July 2006, with Shell initially working out of 1-lakh sq. ft leased facilities, saying: “We expect the campus to be ready by 2009. By then, we will have about 1,000 technology professionals, and over 300-support staff.”
Set up to provide tech support to Shell firms around the world in areas spanning upstream exploration and production activities, downstream refinery and chemical operations, the Bangalore facility at a later stage will be used to conduct research and development (R&amp).
According to Mehta, it is challenging for oil companies to find hydro-carbon reserves in harsh geographic locations. “We need the right technology for this, and Shell feels India has the talent to develop such technology. We chose Indian and Bangalore after a very rigorous look at many other countries and locations.” he said.
Already, Shell has invested close to $1-billion in India, a major part of it in an LNG import terminal at Hazira, while also in the process of setting up a large chain of petrol stations across the sub-continent.
With daily, global investments pouring into India for setting up tech or R&amp centres in India, history seems to be coming full circle. As India transforms itself into the knowledge base of the world, the same scenario is playing itself out as it did many thousands of years ago, albeit with a difference.
In early 5th century B.C, India, the cradle of civilisation was the centre of learning when Greeks, Arabs, Chinese, et al came to Patiliputra city to study at Nalanda (International Scholastic Centre), the world’s First University, where 50 to 60-subjects were taught covering every field of learning from brahminical Vedic texts, philosophy, logic theology, grammar, astronomy, mathematics and medicine. A residential university with an extensive library, a College of Fine Arts, it had over 2,000 teachers and 10,000 scholars.
India taught the world then, and once again it teaches by excelling in knowledge based processes, because the knowledge is not new. It is deeply ingrained in the genetic make-up of Indians, who in times ancient imparted it to the world. But, that same world it so generously taught; used that knowledge to manufacture weapons of mass destruction to subdue, rape and plunder the sub-continent of its physical, spiritual, cultural and wealth of knowledge. A physical violence oriented west that wreaked its vengeance on the gentle, peaceful races of the world.
It is ironic, indeed, that India is once again conquering the world not through use of weapons of mass destruction, but through the mass power of brain cells. A right form of conquest as no boundaries are crossed, no races are eliminated, no cultures impressed with their own stamp; just a peaceful service rendered.
For details read here.
The article is sponsored by A-1 Technology Inc, dealing in offshore website development, offshore outsourcing and offshore software development. read more

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RIGZONE: Shell E&P Offering Gulf of Mexico Farm-in Opportunities

IndigoPool.com
Shell Exploration & Production Company is marketing working interest positions, associated with a suite of prospects, located across the Gulf of Mexico – one of the most prolific hydrocarbon basins in the world. Most are deep water prospects but there are several on the shelf. These farm-outs are now being made available as a result of portfolio rationalization. The successful farm-in companies will take over operatorship and all responsibilities for the leases, from the effective date of farm-out until lease expiration.
A total of twenty-seven mostly Plio-Pleistocene to Miocene prospects are being offered as farm-in opportunities. The prospects range from shallow amplitude supported to deep non amplitude supported structures. The prospects are considered to have a high probability of success with individual reserve potential ranging from 20-30 MMBOE to 100 MMBOE. All but one prospect are supported by high quality 3D seismic and surrounding well data. All prospects are located close to existing infrastructure. Fifty-three OCS lease blocks are covered. Some of the blocks being offered will expire in mid to late 2006 – providing near term production potential, with adequate time for proper analysis and drilling operations. Offers can be made on any combination of prospects. These farm-in opportunities offer a sizable position for portfolio enhancement and growth in one of the most attractive, highest margin, hydrocarbon provinces in the world.
Transaction Details:
21 prospects on 53 OCS blocks available for farm-in
Prospect information sheets and technical presentations (CA req'd) available on IndigoPool through March 15th
Physical data rooms available at Shell's offices in Houston
Data rooms will be open until mid March 2006
A Confidentiality Agreement (CA), incl. verification of appropriate seismic licenses, needs to be signed before entering the data rooms
Full farm-out of Shell equity, terms subject to negotiation
Bids requested to be submitted by March 15th, 2006
Contact:
Sonny Lawson
Senior Contracts Representative, GoM Exploration
Shell Exploration & Production Company
200 N. Dairy Ashford, Houston, TX 77079
United States of America
Office Phone: +1-281-544 2118
Email: [email protected] read more

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Business Times (Malaysia): Shell to expand petrol station ops in Malaysia

By KANG SIEW LI
February 14 2006
OIL company Shell Malaysia Trading Sdn Bhd plans to add 20 filling stations to its network this year, bringing the total to 850 petrol stations.
Shell Malaysia Trading and Shell Timur Sdn Bhd managing director Mohzani Abdul Wahab said the company has allocated a RM440 million budget for 2005 and 2006.
“Of this total, RM120 million has been spent on the implementation of the EMV (Europay-MasterCard-Visa) chip-based payment card system last year. The remaining RM320 million will be used to add 20 new petrol stations and upgrade the existing petrol stations by December,” he told reporters after receiving John and Helen Taylor in Subang yesterday.
The couple are embarking on a trip around the world, fuelled by a new Shell petrol formulation. They plan to cover 28,970km, across 25 countries, in 70 days.
An additional RM25 million has also been set aside for Shell Malaysia Trading's marketing activities this year.
Mohzani said the company plans to open new petrol stations in the Klang Valley, Penang, Johor Baru and areas along the North-South Expressway such as Tapah, Seremban and Bangi.
However, it has no plans as yet to introduce natural gas vehicle (NGV) facilities at its petrol stations.
“We are open to the idea of supplying NGV, provided it is economical. Now the investments are too high,” he said, estimating that the NGV facilities will result in a petrol station operator incurring an additional RM1.5 million to the average RM8 million-RM10 million in investments of a new petrol station.
Meanwhile, Mohzani said Shell Malaysia Trading is keen on bringing Shell's newest petrol formulation to Malaysian shores, once the Shell Research and Technology Centre in Chester, the UK, endorses and rolls it out worldwide.
He believes the new Shell petrol formulation will help the company defend its dominant market share of 36 per cent in the Malaysian retail petrol market as competition from Petroliam Nasional Bhd and ExxonMobil intensifies.
“We are watching the progress of this new formulation and we expect it to fill Malaysian fuel tanks in the near future,” he said.
“(Nevertheless,) Malaysia has always been a country that gets priority from the Shell Group like when we launched the Shell 'Better Mileage' petrol in 2003. That's because we are one of the biggest retail petrol markets in Asia for the Shell Group,” he added.
Last year, Shell Malaysia Trading sold some five billion litres of petrol and diesel. read more

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LibCom.Org: Struggle continues against Shell in the west of Ireland

A report on the libertarian camp and direct action campaign against a hazardous Shell refinery and pipeline development project
Rossport Solidarity Camp is due to re-open on the 25th of February, in a hitherto remote and little heard of corner of county Mayo in the West of Ireland.
The camp has been part of a thus far successful community based struggle against a hazardous development being carried out by a multi-national consortium headed by Shell and backed all the way by the Irish State. The consortium includes Statoil, a Norwegian semi-state company, and Marathon, an American corporation.
From June last year onwards Shell’s construction of a raw gas pipeline, and a massive refinery, was brought to a halt by a wide variety of direct action and popular pressure. Actions included the simultaneous picketing of all Statoil petrol stations on a number of Friday evenings in Dublin (that is their busiest period), protests outside the Shell H.Q. in London, blockades of Shell terminals in Cork, a planned blockade of a pipelaying ship by fishermen (the ship was withdrawn), and continual picketing of all the construction sites associated with the development, by both residents and campers. Despite the fact they had planned to build most of the project last year, next to no work has been done.
The development has both health and safety issues surrounding it, which I’m about to detail using just the pipeline as an example, and economic, in the form of the neo-liberal privatisation deal given to energy corporations by successive Irish governments.
A recent independent safety analysis by U.S. based pipeline consultants Accufacts found that: “The Corrib pipeline is not a ‘normal’ pipeline given its potential to operate under exotically high pressures and because of unknown gas compositions associated with gas field production. This can seriously increase the likelihood of pipeline failure.”
The pipeline is planned to go through the village of Rossport 70 metres from the nearest inhabited house, and 30 metres from the public road. Should it be built 3 households will have to pass over it everyday to leave their homes.
The Accufacts safety analysis states that: “pipeline routing should be at least 200 metres away from dwellings and 400 metres away from unsheltered individuals to avoid massive casualties and/or multiple fatalities.”
A submission by Dave Aldridge, a retired US Navy officer with expertise in explosives, to a state ‘public hearing’ on the project, claimed that in the event of a rupture the resulting explosion would kill everyone within a mile radius.
The success and depth of struggle up to this point has had a radicalising and inspiring effect elsewhere on island, it being citied, for instance, by community groups in Dublin opposing gentrification. The campaign has also had an international element, particularly in linking in with Nigerians.
While the state has sold land to the developers, changed legislation for them, and given them a low tax rate, thus far its repressive role has been restrained by the massive popular reaction to the jailing of five residents on June 29th, for refusing to abide by a court order preventing them from denying engineers’ access to their small holdings, and those of their neighbours. Given as they will clearly not be building anything without changing from velvet glove to mailed fist, we expect to see a more robust policing this year or the next, up till now it has been quite low key.
The camp began in June 2005 at the invitation of local campaigners. It is organised in a disciplined libertarian fashion, and tries to be ecologically sustainable, with recycling and energy from wind power.
The camp is open to visitors and more long term volunteers, and thus far has included people from across the island, Britain, Holland, New Zealand and the United States.
Its main function has been participating in the picketing, which is important given the rural, sparsely populated, nature of the area, and serving as a sort of info-point, where people can visit and learn about the issues and resistance at first hand. The camp disbanded as a camp in September, as for climatic and geological reasons little construction work can happen over winter, and from then onwards concentrated on getting ready for this year.
More people are welcome to come for this years’ “construction season” – spring, summer, early autumn, and next year? Well we’ll see.
For more information visit:
www.struggle.ws/rsc
www.indymedia.ie/mayo
www.shelltosea.com read more

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Gulf Times Qatar: Shell, Statoil ‘output flaws’ may worsen LNG shortage

Published: Tuesday, 14 February, 2006, 09:13 AM Doha Time
SYDNEY: Royal Dutch Shell and Statoil are among liquefied natural gas producers that may miss output targets and worsen a scarcity of the fuel because of insufficient construction staff.
The shortage of engineers and other workers plus higher materials prices led to a 30% jump in building costs for new LNG plants over two years, Frank Harris at Wood Mackenzie Consultants Ltd estimated. That may delay startups and worsen a “tight’’ market through 2010, he said.
LNG producers are planning to build plants that will boost global output of the fuel 94% within five years, according to Citigroup Inc. The boom has stretched capacity at contractors such as Halliburton Co’s KBR and threatened to swell an estimated $67bn of capital investment in LNG plants, import terminals and ships in 2005-09.
“The level of activity on LNG construction is eating into the expertise and the resource base; we’re seeing a big squeeze,’’ said Andy Flower, an independent LNG consultant in London and a former executive at BP Plc. “It’s being manifested in delays in start-ups of new trains and in the cost increases, akin to the fact that there’s big demand and limited supply.’’
Demand for LNG may double to 264mn metric tonnes a year by 2010 because of increased consumption in the US and sales to new markets such as China, India and Mexico, Citigroup said in an October 24 report. About 97mn tons of LNG production capacity is under construction.
“We’re definitely talking about increased costs and/or delays and/or things going wrong when you try to start it up,’’ said Susan Farmer, a London-based partner at law firm Watson, Farley & Williams and an adviser on international LNG projects. Farmer is working in a group with MW Kellogg Ltd, a joint venture of Halliburton and Japan’s JGC Corp, to advise the Cyprus government on setting up an LNG import terminal.
Farmer joined senior executives from Shell, the world’s biggest non-government owner of LNG production capacity, and Korea Gas Corp, the world’s biggest LNG buyer, as a speaker at the LNG Asia Pacific 2006 conference in Seoul, that started yesterday.
James Boyd, California’s Energy Commissioner, and P Dasgupta, chief executive of Petronet LNG, India’s only LNG importer, will also speak at the two-day conference.
Development costs at Sakhalin-2, the world’s largest oil and gas project, may double to $20bn because of soaring metal prices, higher contractor fees and a declining US dollar, Shell said on June 14. LNG deliveries will start in the summer of 2008, about eight months behind schedule, Shell said.
Sakhalin and most other projects already under construction should meet their revised start-up targets, Robert Dencher, Shell’s country manager in South Korea, said at the conference yesterday. Those that aren’t so far advanced may be affected by shortages in LNG construction and shipbuilding capacity, he said.
“Beyond things that we already know, we wouldn’t foresee significant delays for the projects which are in the advanced development stage,’’ Dencher said in an interview at the conference. “For projects under consideration, of course it’s a totally different issue. If you look beyond 2009, 2010 it’s going to be very difficult to be precise.’’
Statoil, Norway’s largest oil company, on September 16 raised its estimate for the cost of its Snohvit liquefied natural gas project in the Arctic for a third time, to 58.3bn kroner ($8.6bn), or almost 50% more than initially budgeted in 2002.
Chevron, the second-largest US oil company, may announce by midyear an increase in the A$11bn ($8.1bn) 2003 cost estimate to build the 10mn tonnes-a-year Gorgon LNG project in Australia. The venture includes Shell and Exxon Mobil Corp. “There are challenges for the project as there are for those construction projects throughout Australia which include the cost of materials and the cost of labour and those types of issues,’’ said Scott Walker, a Gorgon spokesman. – Bloomberg read more

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Times Online: Shell chief calls for cut in tax on North Sea oil

By Times Online
Jeroen van der Veer, the chief executive of Shell, today called for cuts in corporate taxes on North Sea oil companies if the price of a barrel falls.
The UK Government said it would add a 10 percentage point tax increase on North Sea profits, in response to the bumper profits oil companies were enjoying as a result of booming oil prices.
In the past two weeks, BP, the second largest oil company in the world, has reported fourth-quarter profits up 26 per cent on 2004, as it announced annual profits of £11.04 billion, while Royal Dutch Shell reported annual profits of £12.93 billion, a record for a British-listed company.
But a slowdown in the output from the North Sea fields also saw Britain become a net importer of oil in 2005 for the first time since 1979.
Mr Van der Veer warned that rising taxes could hit investment in the declining off-shore oil field but added that a pledge to reduce taxes when prices fell would provide the kind of stability needed to guarantee investment in the Continental Shelf.
“If we see that kind of commitment, so that if oil prices fall then the tax (rise) is reversed, that would support the conditions to grow … additional investment in the North Sea,”Mr van der Veer told the International Petroleum Week conference in London. read more

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BBC NEWS: Shell workers in job threat

Angry Shell workers in job threat
Offshore workers have threatened to quit Shell after being denied bonuses.
The workers on 15 Shell platforms in the North Sea said they have been told they missed targets and will not get any extra money this year.
Shell recently announced profits of £13bn and the workers and unions have expressed anger at what they said is bad timing.
The company said performance bonuses were only paid when specific targets were met.
Many of the workers were said to be looking for other jobs in the wake of the news.
Jake Molloy, of the OILC, union told BBC Scotland on Monday: “Coming just days after the record £13bn profits to then tell a workforce that there will be no bonuses this year I think is very very poor timing.”
However he added: “Bonuses are not a God-given right and there's nothing from a lawful standpoint that the lads can do.”
One Shell worker said: “Only a week or so ago the company announced the biggest profit ever of any British corporation – £13bn.
'Slap in mouth'
“The man in the street might think this was good news for the workforce under Shell but nothing could be further from the truth.
“We're at the sharp end doing the business for the business and get nothing while the top bananas are stuffing their pockets and the pockets of shareholders.
“This is a real slap in the mouth from Shell and is probably going to cost them dear because a lot of people are putting in transfers and looking for other jobs.”
A spokesperson for Shell said performance bonuses were only paid when specific targets were achieved and that did not happen in 2005.
Shell said the scheme was being reviewed and the company was committed to offering competitive packages, part of which included bonuses. read more

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