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March 15th, 2006:

THE WALL STREET JOURNAL: Shell, BP Chiefs Received Richer Pay Deals for '05

Van der Veer Got
Total of $8.3 Million;
Browne's Grew 14%
March 15, 2006

LONDON — The chief executives of BP PLC and Royal Dutch Shell PLC saw their overall pay packages rise last year as higher energy prices led to a surge in industry profits.
But a series of performance stumbles by BP, the world's second-largest oil company by market capitalization, sent CEO John Browne's annual performance bonus — one component of his overall pay — tumbling 23%.
Stephen Moore, of The Journal's editorial board, and Foundation for Taxpayer & Consumer Rights President Jamie Court discuss whether oil firms are gouging Americans with high gas prices.Lord Browne took home a pay package valued at about £6.5 million ($11.3 million) last year, some 14% more than he did in 2004. BP paid Lord Browne the equivalent of £3.29 million in salary, bonus and other benefits. He was also awarded stock valued at £3.2 million as part of an executive incentive plan.
His annual bonus — based on a series of benchmarks including financial and other performance goals — was £1.75 million in 2005, down from £2.28 million in 2004.
• Oil-Firm Merger, Tactic Controls Appear to Advance in the Senate
BP enjoyed a surge in profit last year, but a series of operational problems hurt the company, including a deadly explosion at its refinery in Texas City, Texas, and unexpected damage to its Thunder Horse oil-production platform in the Gulf of Mexico. Those setbacks affected bonus awards for Lord Browne, a company spokesman said.
No. 3 oil company Royal Dutch Shell's chief executive, Jeroen van der Veer, was paid the equivalent of about $8.3 million in cash, benefits and stock for 2005, according to the company's annual report.
Shell paid Mr. van der Veer $4.33 million in pay, bonus and other benefits last year and awarded him incentive stock valued at $3.94 million for the period. That compares with $3.29 million in pay, bonus and other benefits in 2004. Mr. van der Veer took over amid an accounting scandal at Shell in 2004, and Shell revamped its incentive share plan last year. He didn't receive any incentive shares in 2004 as part of the current plan.
The payments are large ones for European executives, and they come as lawmakers across the continent and in the U.S. scrutinize the record profits oil companies are making amid soaring energy prices. But they may prove relatively modest compared with their American peers in the oil industry, who in the past have been paid much more handsomely. Exxon Mobil Corp. former Chief Executive Lee Raymond took home a combined pay package of $38 million in 2004. Exxon, the largest oil producer by market value, has yet to disclose executive pay for last year.
Write to Chip Cummins at [email protected] read more

This website and sisters,,,, and, are owned by John Donovan. There is also a Wikipedia segment.

The Ecumenical Council for Corporate Responsibility, Oxford: Press Statement RE ROYAL DUTCH SHELL PLC

The Ecumenical Council for Corporate Responsibility, Oxford:
15 March 2006 for immediate release
The oil and gas giant Royal Dutch Shell has accepted a strongly worded shareholder resolution for debate at its 2006 Annual General Meeting. It has the backing of 130 shareholders representing almost 1 million shares.
The resolution was initiated by the Ecumenical Council for Corporate Responsibility and calls for ‘a major improvement in Shell’s performance in terms of community and stakeholder consultation, risk analysis, and social and environmental impact analysis’. It was delivered to the company at the end of February after weeks of building shareholder endorsement.
The motion, whose supporters include the Joseph Rowntree Charitable Trust in the UK and major faith-based fundholders in the USA, focuses on the social and environmental impacts of Shell’s activities in County Mayo in Ireland, the Niger Delta and Sakhalin Island in Russia.
ECCR will present the resolution at Shell’s AGM in The Hague on 16 May and is keen to build further support from registered shareholders to ensure a substantial AGM vote.
People who do not own Shell shares are being asked to lobby their insurance companies and pension providers, who almost certainly have holdings, to vote for the resolution.
Further details regarding the resolution are available on the ECCR website – – and from Christopher Hall, ECCR Oxford Group ([email protected], tel. +44 (0)1869 338 225), or Miles Litvinoff, ECCR Co-ordinator ([email protected] , tel. +44 (0)20 8965 9682).
Royal Dutch Shell Plc’s 2006 AGM will take place on 16 May simultaneously in The Hague, Netherlands, and by live telelink at the Novotel London West Hotel and Convention Centre in Hammersmith, UK.
ECCR is an ecumenical organisation founded in 1989 to promote corporate responsibility in companies and in the churches. Its work arises from concern that companies should adopt worldwide operational standards for their environmental and ethical practices, and from the need for faith communities to monitor their own corporate responsibility through socially responsible investment of their financial resources in such a way that their faith credentials are respected.
ECCR has been engaged with Shell for the last 12 years. In 1997 it tabled a shareholder resolution which the Chemical Engineer said 'could signal a change in the way multinational companies, many of which have Gross Domestic Products as large as a medium-sized country, do business throughout the world'. Four years later Sainsbury’s Environment Manager said that the ECCR resolution sent warning ripples throughout the corporate world and strengthened the arms of those who were working internally to get companies to clean up their act.
ROYAL DUTCH SHELL Shareholder resolution for the Annual General Meeting 2006
The Resolution set out below has received the support of over 130 shareholders with nearly one million shares – enough for it to be put on the agenda at the AGM to be held in The Hague on Tuesday 16 May, and simultaneously at the Novotel London West Hotel in Hammersmith.
It is now important to drum up support for the Resolution. Even those who do not have shares in Shell can help by lobbying their insurance companies and pension providers, who almost certainly do have large holdings, to ask them to vote for it.
Ordinary Resolution
At this the first Annual General Meeting of Royal Dutch Shell, the shareholders request that, in the interests of the good reputation of the Company, and the avoidance of costly delay to, or interruption of, production, and for the present and future peace, safety, environment and prosperity of local communities directly affected by the Company’s operations:
1. the Directors undertake, in all the Company’s international exploration and development operations, to collaborate with local stakeholder communities in order to reach, before project works begin, a mutually acceptable Memorandum of Understanding based on an independently conducted and transparent Social and Environment Impact Assessment;
2. the Directors undertake on the acquisition of companies (or assets and operations of other companies) to exercise due diligence in respect of risk, by subjecting social and environmental reports relating to business operations and activities to qualified independent assessment, and to revise the Company’s plans or adopt alternative methods of extraction and refinement in the light of such assessments;
3. the Directors institute rigorous policies in risk assessment and community consultation particularly when proposing to use unproven techniques such as untested gas production and processing on peat and in proximity to occupied dwellings, or when operating in ice-congested waters;
4. the Directors ensure, through proper oversight by the Board’s Social Responsibility Committee, that all policies, procedures and standards on environmental and social issues are rigorously enforced at all stages of project planning and operation;
5. the Directors report to the shareholders by the 2007 AGM how the Company has implemented these measures.
Pursuant to Section 376(1) of the Companies Act 1985, I/We, the undersigned, being a member of ROYAL DUTCH SHELL plc (the “Company”) and having at the date hereof the right to vote at the annual general meeting of the Company, hereby require you to give notice to each member of the Company entitled to receive notice of the next following annual general meeting of the resolution set out above and of the statement set out overleaf.”
Registered shareholders, who support the above resolution (and statement overleaf) and wish to cast their votes for the Resolution to be moved at the 2006 AGM of the ROYAL DUTCH SHELL plc, are invited to sign and send their proxy cards, when issued by the Company, to: ECCR, c/o The Knowle, Deddington, Banbury OX15 0TB, UK
Tel: +44 (0)1869 338225 Fax: +44 (0)871 750 3483.
It is also likely to be possible to register the appointment of a proxy at
ECCR has actively engaged with Shell since 1994, initially in relation to issues in the Niger Delta. Seeing no change, in 1997, along with the Pensions and Investments Research Consultants (PIRC), we sponsored a resolution on environment, human rights and local communities.
In 2001 an ECCR delegation visited Nigeria to check on progress and we have continued to raise questions with the Company.
Our involvement with the Corrib gas field development, off County Mayo, Ireland, began in 2002 when we were contacted by concerned residents. We provided an international observer to the Irish National Planning Board hearings in that year, which rejected the Company’s application. We raised questions with the Company then and subsequently. However, the day after the 2005 Shell AGM five local Mayo residents were imprisoned for denying the Company access to their land, leading to national public demonstrations against Shell.
We believe the issues faced by the Company largely stem from:
• failing to carry out effective and complete environmental and social impact assessments of new developments or modifications to existing facilities, in contravention of its own guidelines;
• failing to develop and abide by memoranda of understanding with local communities.
Experience in the three different areas outlined below indicates the importance of supporting this resolution.
(1). Corrib, Ireland
The first application for developing the Corrib Gas project was made by Enterprise Energy Ireland in 2000. This involved a sub-sea tieback to a gas processing plant 9 km inland. The consequences of this highly unusual development concept included the need to run a production pipeline though a populated area and through unstable Atlantic bog terrain.
When Shell took over Enterprise Oil in 2002 it adopted, without change, this production concept. This was despite significant local opposition, which centred on the routing of the high-pressure production pipeline 70 metres from people’s homes. Residents instead proposed that the gas be processed offshore before being piped past their homes.
Although Shell claims engagement with local communities, it has consistently rejected this proposal, usually on cost grounds.
The cost of an offshore platform is approx. 300 million Euros. The value of the Corrib Gas field is at least 8 billion Euros. The gas was meant to be ashore in the summer of 2003, but Shell’s conflicts with local residents have put paid to any immediate prospect of this happening. The return on Shell’s investments will be delayed until a mutually acceptable Memorandum of Understanding is reached.
The only way that the field can be developed is with local consent.
(2). Bayelsa State, Niger Delta
Shell Petroleum Development Company (SPDC) Nigeria has met resistance in the Niger Delta in large part as a result of poor stakeholder engagement, lack of transparency, and perceived environmental and human rights abuse.
SPDC understands the critical necessity of effective project management if it is to sustain its Gbarain-Ubie Integrated Oil and Gas Project (IOGP) operations in Bayelsa State and profit-making in the long term. SPDC’s practice thus far in
the preparatory stages of the IOGP is hindering the success of the project.
However, the IOGP presents an opportunity to resolve past issues and lay the foundation for sustainable mutual benefits to SPDC and the 92 communities in the project area. As the highest investment ever to be made in the region, it could represent a new era of positive stakeholder engagement, community development and standards-based operations. With such improved relationships, the Company
is more likely to gain community support for this and other activities, as well as the favour of shareholders and NGOs.
SPDC needs to engage effectively with the stakeholders – especially the impacted communities – so as to ensure that the process delivers environmental, social and financial benefits.
(3). Sakhalin, Russia
Shell’s Sakhalin II project has the potential to threaten the future of a Russian island the size of England, and the communities and species which rely on the natural resources there. There is concern that Shell’s activities have already resulted in the 100 remaining critically endangered Western Gray Whales being exposed to excessive noise levels. The whales’ only feeding habitat will be threatened by the risk of oil spills in sea-ice conditions, which Shell has no recognised technique for cleaning up.
Local communities meanwhile are fearful that the fishing industry which supports one third of the island’s economy will be destroyed. Dredging activity in Aniva Bay has resulted in reduced fish catches and lost business for local fishing companies. Inland, Shell’s inability to apply environmental measures to river crossings has seen salmon spawning areas ruined.
The root of these problems can be traced back to Shell’s original environmental and social impact assessments. Shell made its decisions on project design before gaining essential information on biodiversity and local people. The ineffective project management has compounded problems and seen costs double to US$20 billion. As a result, the project is far from meeting international expectations or standards.
Sources: for background documents please see
ROYAL DUTCH SHELL plc Shareholder resolution for the Annual General Meeting 2006 Supporting Statement The Ecumenical Council for Corporate Responsibility (ECCR) proposes this resolution because of significant concerns relating to the loss of production, environmental costs and reputational risk faced by our Company. read more

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THE WALL STREET JOURNAL: Oil-Firm Merger, Tactic Controls Appear to Advance in the Senate

March 15, 2006; Page A8
A proposal to place further restrictions on oil-company mergers and marketing tactics appears to be gaining support among Senate Judiciary Committee members who see the approach as a way to respond to consumer complaints about soaring gasoline and natural-gas prices.
But the industry doesn't see it that way, and the effort could face significant hurdles. The chief executives of six of the nation's largest energy company's told the committee yesterday that they need the bigger size and financial power created by recent mergers to find new oil and gas and to compete for supplies in increasingly tight international markets.
“The energy industry follows what I call the law of large numbers,” said Rex Tillerson, chairman and chief executive of Exxon Mobil Corp. He said that tightening antitrust laws would make it more difficult for his firm to be a reliable national supplier of gasoline.
Committee Chairman Arlen Specter (R., Pa.) received support from some of the panel's Republicans and nearly all of its Democrats for legislation he is drafting that would make it easier for the Justice Department to challenge proposed mergers. Specifically, it would remove language from existing law that requires the government to prove a merger would “substantially” lessen competition, in effect shifting more of the burden of proof that competition won't be lessened to the companies. It also would allow the Justice Department to sue members of the Organization of the Petroleum Exporting Countries for conspiring to fix the world price of oil.
Despite the panel's support, it's unclear how legislation would fare. Last year the House rejected similar OPEC language.
Severin Borenstein, a business professor at the University of California at Berkeley, said changing current laws won't bring down oil prices, which are set by growing world demands.
Separately, the CEOs of BP PLC and Shell saw their overall pay packages rise last year as higher energy prices led to a surge in industry profits. But a series of stumbles by BP, the world's No. 2 oil company by market value, sent CEO John Browne's annual performance bonus tumbling 23%.
Lord Browne took home a pay package valued at £6.5 million ($11.3 million), 14% more than in 2004. BP paid him the equivalent of £3.3 million in salary, bonus and other benefits. He was also awarded stock valued at £3.2 million. His bonus, based on a series of benchmarks, was about £1.8 million, down from £2.3 million.
BP has a surge in profit last year, but was hurt by problems, including an explosion at its refinery in Texas City, Texas.
No. 3 oil company Shell's CEO, Jeroen van der Veer, was paid the equivalent of about $8.3 million in cash, benefits and stock for 2005, according to the company's annual report. Shell paid Mr. van der Veer $4.3 million in pay, bonus and other benefits, and awarded him incentive stock valued at $3.9 million. That compares with $3.3 million in pay, bonus and other benefits in 2004. Mr. van der Veer took over in 2004.
Write to John J. Fialka at [email protected] and Chip Cummins at [email protected] read more

This website and sisters,,,, and, are owned by John Donovan. There is also a Wikipedia segment.

The Times: Oilfields promise rich harvest

By Peter Klinger
CAIRN ENERGY yesterday upgraded the oil-in-place estimates for its oilfields in north-western India by one million barrels to 3.5 billion barrels — only four years after Royal Dutch Shell relinquished its rights to the Rajasthan exploration licence for $7.2 million.
Yesterday, Cairn estimated that its three key fields on the Rajasthan block — Mangala, Bhagyam and Aishwariya — contained 606 million barrels of proven and probable oil reserves, boosted to 795 million barrels if using enhanced recovery techniques. The reserve figures are 20 per cent higher than earlier estimates.
The Edinburgh-based company expects that the three fields combined can produce 150,000 barrels of oil per day from 2008, contributing substantially to reducing India’s reliance on oil imports. India, the world’s second-most populous country and boasting one of the fastest-growing economies, imports about 70 per cent of its 2.6 million barrel-a-day consumption.
Cairn has invested $450 million on drilling 125 wells in Rajasthan, and expects to spend another $100 million (£57 million) this year to further appraise the block. The company hopes to be granted government approval within months for a well that will search for oil beneath the Utarlai military airfield, situated in the midst of Cairn’s Rajasthan exploration block. read more

This website and sisters,,,, and, are owned by John Donovan. There is also a Wikipedia segment.

The Guardian: Calling all artists who like to think they have a social conscience.

Calling all artists who like to think they have a social conscience.
Check out, the website produced by climate change campaigners who disapprove of the oil industry's attempts to buff its public image by funding cultural activities.
BP supports the National Portrait Gallery, while Shell is the proud new sponsor of the Wildlife Photographer of the Year. The mischievous folk at Rising Tide are holding a competition to produce the most beautiful illustration on the subject Art not Oil. First prize is justice, second is survival. read more

This website and sisters,,,, and, are owned by John Donovan. There is also a Wikipedia segment.

The Independent: Cairn Energy plans pounds 3bn flotation of Indian oil assets

Miichael Harrison
United Kingdom; Mar 15, 2006
Cairn Energy, the independent oil exploration group, unveiled plans yesterday to reward shareholders by spinning off its Rajasthan fields in India into a separate Bombay-listed company with a market valuation of at least pounds 3bn.
The company said the bulk of the proceeds from any partial flotation of its Indian assets would be returned to investors. The initial public offer is planned to take place before production begins from the Rajasthan fields in 2008.
Cairn indicated it was likely to retain a majority stake in the new Bombay-quoted company, which will own virtually all of the company's exploration acreage in India. Under Indian law, Cairn would have to sell a minimum of 25 per cent and a maximum of 80 per cent of its Indian assets, which in turn account for about 90 per cent of the group.
Shares in Cairn surged 6.5 per cent on the news to give the com-pany a market valuation of pounds 3.3bn, although some analysts expressed disappointment that it had not announced the outright sale of its Rajasthan assets.
News of the planned spin-off came as Cairn increased its estimates of the total amount of oil in place in Rajasthan from 2.5 billion barrels to 3.5 billion and raised its estimate of recoverable reserves by 20 per cent to a little less than 900 million barrels. Production is forecast to be at least 150,000 barrels a day.
Sir Bill Gammell, Cairn's chief executive, owns about 1 per cent of the company and would make about pounds 15m if the company chose to float off a little less than half of its Indian assets. Sir Bill, a personal friend of Tony Blair and George Bush, has presided over a six-fold increase in Cairn's valuation since buying the rights to the Rajasthan fields from Shell five years ago.
He denied the decision to opt for a partial flotation of the Rajasthan fields was a defensive measure to ward off a potential bid for the assets from India's state-controlled Oil and Natural Gas Corporation.
Sir Bill said an initial public offering had been in the pipeline for the past two years and would result in a “win-win” for shareholders in India and the UK. He said the new company, to be known as Cairn India, was likely to trade at a higher valuation which would in turn feed back into the rating of the existing UK-quoted company, which will be renamed Cairn Resources.
Cairn Resources will retain the group's acreage in Bangladesh and Nepal and probably a small chunk of its Indian assets, and would seek to build up a new portfolio of d iscoveries. read more

This website and sisters,,,, and, are owned by John Donovan. There is also a Wikipedia segment.

Lloyds List: Gun law threatens the flow from Nigeria's oil-rich delta lands

Militant groups are the legacy of years that have yielded little benefit to the public in the world's eighth largest producer of crude, writes David Osler
Mar 15, 2006
THEY call themselves the Movement for the Emancipation of the Niger Delta. They threaten to bring about a 'huge crippling blow to Nigeria's oil industry'. To show they mean business, they kidnap Western oil executives. But who is this group? What do they want? And just how much of a threat do they pose to Western interests?
Conflict in the delta source of almost all of the country's 2.4m barrels-a-day output has been endemic for decades.
The Ijaw ethnic group has been politically marginalised while seeing little benefit from the oil industry in a country that is the world's eighth largest producer of crude.
Ever since exploration began in the 1950s the area has been subject to low-level insurgency that reached its earlier peak in 2003 and 2004.
So sabotage, political killings and kidnap for ransom have become almost traditional.
According to political risk intelligence consultancy Exclusive Analysis the rebellion is diffuse, and hundreds of small groups have been active in recent years.
'Most are small and carry out only discreet attacks, focusing mainly on oil theft,' said Martin Kimani of Exclusive Analysis' Africa division. 'They form a complex web of actors drawing on agendas that are partly political and partly criminal.'
Unknown until the start of this year, MEND is already showing itself to be a more challenging proposition.
Its seizure of nine foreign oil workers last month immediately marked it out from previous insurgents.
This time the abductors did not want cash. Instead, they threatened to kill their prisoners. Six have since been released.
Other activities have included bombing of key oil pipelines and organised military assaults on platforms. Dozens have been killed as a result.
Royal Dutch Shell, the largest producer in the delta, has been forced to withdraw personnel from some remote locations. Total of France and Agip of Italy have also been affected.
'Sources suggest that [MEND] is comprised of several loosely connected factions, rallying under a name recognised by the media,' said Mr Kimani.
This hydra-like nature will make it difficult to quash the rebels by conventional means.
Based deep in the mangrove forests, their use of small boats gives them rapid mobility.
They are well-armed with rocket launchers, machine guns and US-made M16 rifles and there are even indications that they are militarily trained.
That marks them out as superior to other militias and criminal gangs. MEND also denies any involvement in rackets such as the local oil theft cartel.
Nevertheless, an oil market already jittery over the tension with Iran has suddenly found something else to worry about.
'It is not a full-blown rebellion yet, but definitely an escalation,' said Tom Cargill, Africa analyst at the Royal Institute for International Affairs.
Given the importance of oil to the Nigerian economy, the federal army has already been deployed in strength in Bayelsa state. A crackdown now seems inevitable.
'With global supply fears having pushed crude prices 7% higher this year, Western donor nations are unlikely to oppose strong-arm tactics,' Mr Kimani continued.
'While the army has a surplus of soldiers and equipment compared with the militias, it is a crude instrument whose past operations have alienated large sectors of the delta's civilian population.
'Its moves against MEND have so far been mostly unsuccessful and their intensification will only fuel popular opposition to the federal government.'
MEND's campaign has already had the effect of reducing Nigeria's output by up to 20%.
Its stated demands have included the release of ethnic Ijaw leaders, a payment of $1.5bn from Shell to compensate for years of pollution and local control over oil wealth.
However, one significant difference from the past is that MEND is seeking greater autonomy rather than separation from the Nigerian state.
The delta area is the only region of Nigeria never to have held the presidency.
However, the top job is expected next year to go to a northern Muslim after Olusegun Obasanjo, from the southwest, steps down.
Mr Kimani's verdict for the future is gloomy: 'Shell and other oil corporations will continue to be targeted for the remainder of 2006.
'We forecast more oil worker kidnappings, flow station attacks and an increasing number of force majeure declarations as oil flows are interrupted.'
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This website and sisters,,,, and, are owned by John Donovan. There is also a Wikipedia segment.

AP Worldstream: American oil worker abducted by Nigerian militants fears for life

Mar 15, 2006
A man who identified himself an American kidnapped by militants in Nigeria's oil-rich southern delta last month said he feared for his life after he was separated from two other hostages.
During a telephone call Tuesday with The Associated Press, militants of the Movement for the Emancipation of Niger Delta passed the phone to the man, who identified himself as U.S. citizen Cody Oswald.
Militants have been holding Oswald and two others _ American Russel Spell and Briton John Hudspith _ since a Feb. 18 raid on an oil industry barge. It was unclear why the hostages were split up.
“I was separated from the rest of the guys after I was allowed to talk to my family on Saturday,” Oswald said.
“Since then I've not seen them, and I really fear for my life. Something needs to happen to see that their demands are met,” he added, before the phone was apparently taken from him.
The militants group claims to be fighting to win a greater share of oil wealth on behalf of the Niger Delta's impoverished inhabitants, who have remained poor despite the fact that most of Nigeria's oil is being pumped from the swampy region. The government calls the militants criminals and oil thieves.
A militant spokesman who initiated the telephone call reiterated their demands for the release of jailed ethnic Ijaw leaders and the payment by Royal Dutch Shell of a US$1.5 billion (A1.26 billion) compensation to Ijaw communities for oil pollution, also demanded by Nigerian lawmakers, in exchange for the hostages.
Foreign oil workers are frequently taken hostage in Nigeria, and most are released unharmed.
The militants took nine foreign oil workers hostage Feb. 18 from a barge owned by Houston-based oil services company Willbros Group Inc., which was laying pipeline in the delta for Royal Dutch Shell. They released six of them after 12 days in captivity.
Authorities in Nigeria's Delta state met Wednesday with prominent ethnic Ijaw political leaders in the oil-port city of Warri to seek ways of obtaining the release of the remaining hostages.
A statement signed by key Ijaw youth leaders, who were involved in negotiating the earlier release of the six Willbros employees, called for the other three to be freed.
The militants, however, rejected the demand.
“No amount of blackmail, intimidation or threat of military attack will make us give up our demands or the hostages,” said the militant, who declined to give his name but described himself as one of the group's commanders.
A wave of militant attacks over the last two months has forced Nigeria to cut daily exports by 20 percent. Nigeria normally exports about 2.5 million barrels per day and is the fifth-biggest source of U.S. oil imports.
Associated Press writer Osmond Chidi contributed to this report from Warri, Nigeria. read more

This website and sisters,,,, and, are owned by John Donovan. There is also a Wikipedia segment.

The Guardian: BP's Browne outperforms Shell boss with pounds 19m pay deal

Mar 15, 2006
Lord Browne, BP's chief executive, was given pay and shares last year and early this year that could be worth more than pounds 19m, it was revealed yesterday.
His basic remuneration rose slightly last year to pounds 1.4m and his income was lifted to pounds 3.3m with his performance bonus. But long-term and share-based payments sent his potential payouts soaring, in particular an award of 2m shares in April 2005 – only now disclosed – worth pounds 10.7m.
The payments have been made during a period of record profits on the back of strong oil prices but BP has had setbacks – not least a fire at its Texas City refinery. A BP spokesman defended the package, saying most of it was tied to the strong financial performance of the group, which had seen a 25% rise in its share price over the past year.
The pounds 10.7m award in shares was a maximum payout that would only be paid to Lord Browne if BP “continued to perform strongly against a large number of criteria”, the spokesman said.
The oil boss has benefited from 356,667 shares vested in February 2005 worth pounds 1.9m, dating back to a 2002-04 remuneration plan. Lord Browne took a further pounds 3.2m worth of shares last month under a scheme that ran from 2003 to 2005. But he has presided over a period when replacement-cost profits rose to a record $19.3bn (pounds 11bn) from $15.4bn in 2004. The company has also made big dividend payouts to investors and returned billions of dollars to shareholders in share buybacks.
Lord Browne's remuneration package puts him ahead of his European rival at Shell, Jeroen van der Veer. The annual report from the Anglo-Dutch group revealed that the Dutchman's total package for last year – including pension, bonus and deferred bonuses – totalled pounds 3.9m.
The previous year Mr Van der Veer earned pounds 2m, but this was a figure that did not include his bonus nor his pension, which was then calculated under a different Dutch reporting regime. The company said the only way to compare the two years for the chief executive was to look at his basic salary, fees and cash benefits, which rose from pounds 1.8m in 2004 to pounds 2.4m last year.
Shell has reported strong profits but has also had its weak points. The group replaced only 67% of its reserves last year. It previously said the figure was between 60% and 70%.
Meanwhile, Centrica, the owner of British Gas, announced that it had hired Sam Laidlaw to replace Sir Roy Gardner as executive director and chief executive.
Mr Laidlaw is executive vice-president of the US oil group Chevron, and was a chief executive of the former British exploration and production company Enterprise Oil. His basic salary will be pounds 850,000 and he will come in at a time of speculation that Centrica will become a target for takeover by Gazprom. read more

This website and sisters,,,, and, are owned by John Donovan. There is also a Wikipedia segment.

THE NEW YORK TIMES: A Senate Panel Interrogates Wary Oil Executives

Published: March 15, 2006
The nation's top oil executives were called before Congress again yesterday to defend their industry's recent mergers and record profits, in the face of public outrage over high oil and gasoline prices.
It was the second time in four months that the oil industry faced strong criticism from both Republican and Democratic senators. In November, the Senate held similar hearings, which produced a show of indignation but were followed by little legislation.
Most of the companies represented, including Exxon Mobil, Chevron and ConocoPhillips, participated in the wave of mega-mergers of the late 1990's and early 2000 that created today's behemoths. Given the sharp rise in oil prices, the top five of them reaped record earnings of well over $100 billion.
Senator Arlen Specter, the chairman of the Senate Judiciary Committee, called the hearings to examine whether mergers in the oil and gas industry had resulted in higher gasoline prices at the pump.
Gasoline prices jumped above $3 a gallon after Hurricane Katrina last summer and are now about $2.37 a gallon. They have risen by 60 percent in the last five years.
“We do know that there have been mergers and that gasoline prices have risen,” Senator Specter, Republican of Pennsylvania, said in his opening remarks.
He proposed to introduce a bill that would tighten scrutiny on mergers that might hurt competition and would reconsider some of the $14.5 billion tax incentives that were granted to energy companies in last year's energy law.
Increasingly, rising energy and fuel costs are becoming potent issues in Washington. In his State of the Union message in January, President Bush said that he wanted to cut America's “addiction” to oil and develop alternative fuels.
When five oil executives testified last November, they successfully lobbied for their top executives to be spared the fate of tobacco executives, who were made to testify under oath in 1994. After the hearings, some Democrats said that the executives had misled them with incomplete and inaccurate answers.
Yesterday, the executives, six of them this time, were sworn in. This formality created the very kind of picture — some of the most powerful American executives lined up with their right hands up in the air — that oil executives had sought to avoid.
Otherwise, theatrics were largely absent although the arguments from the oil executives were the same.
“With respect to the committee's specific question — whether mergers and acquisitions in our industry have contributed to higher prices at the pump — my answer is no,” Rex W. Tillerson, Exxon Mobil's chairman and chief executive since January, said in response to Senator Specter.
“We need U.S. energy companies that have the scale and financial strength to make the investments, undertake the risks and develop the new technologies necessary to provide Americans with greater energy access and greater energy security,” he said.
John Hofmeister, the president of Royal Dutch Shell's American unit, said that despite the immense size of the largest oil companies, “this remains a highly competitive industry.”
Also testifying were the top representatives of Chevron, ConocoPhillips, BP America, and Valero, the nation's largest independent refiner.
While oil prices remain high, the American economy has so far absorbed the increased energy costs. Still, in an election year, politicians seemed eager to turn the heat on oil men.
Exxon Mobil came under the most criticism. The company was formed in 1999 from the merger of Exxon, the top American oil company, with Mobil, the No. 2. Last year, it earned net income of $36.1 billion.
There have been 2,600 mergers since 1991 in the oil and gas industry, according to a report by the Government Accountability Office.
Senator Dianne Feinstein, Democrat of California, said that the degree of competition and the amount of market power held by oil companies following the mergers raised “really serious questions.”
“Although each of these mergers reduced the companies' costs they were nevertheless followed by increases in the costs to consumers,” she said.
Speaking during a witness panel before the industry executives, Severin Borenstein, a professor at the Haas School of Business at the University of California, Berkeley, said oil companies were not solely responsible for high gasoline prices. “It's a world market for oil and that's why we have high gasoline prices,” Mr. Borenstein said.
Senator Specter's proposed legislation would also permit the government to take legal action against the Organization of the Petroleum Exporting Countries for fixing oil prices.
“One of the biggest causes of high crude oil prices is the illegal price-fixing of the OPEC cartel,” said Senator Mike DeWine, Republican of Ohio, a sponsor of the provision.
Still, there were some moments of levity, such as when Senator Herb Kohl, Democrat of Wisconsin, said: “Our constituents, your consumers, aren't very happy with your explanations. If you'd be losing money, they wouldn't be so upset.”
One senator — John Cornyn, Republican of Texas — defended the industry, providing the oil executives with an easy plank to make their case.
“Since it isn't a crime to make a profit, what I would ask is, What can the government do that would be positive to bring down the price of oil and gas?” the senator asked.
“Would it be productive or destructive for us to pass a windfall profit tax?”
The answer from the executives, of course, was “not productive.” read more

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Financial Times: BP top executives outstrip their Shell counterparts on pay

By Thomas Catan
Published: March 15 2006 02:00 | Last updated: March 15 2006 02:00
Senior executives at Royal Dutch Shell saw their pay generally lag behind their counterparts at BP.
That was in spite of a year of record profits at both companies, according to annual reports published by both oil majors yesterday.
Shell executives in general received lower pay than their BP equivalents after missing out on pay-outs from their long-term incentive plan, which are linked to total shareholder return.
The company is still suffering the after-effects of the reserves accounting scandal in 2004, when it admitted to having overstated its oil and gas reserve estimates. However, Jeroen van der Veer, Shell's chief executive- appointed following the scandal, was paid £2.4m in salary, fees, bonus and benefits, up from £1.8m the year before.
Mr Van der Veer's base pay rose 3.3 per cent, broadly in line with inflation.
However, Peter Voser, chief financial officer, received a 7.6 per cent pay raise to bring him into line with his peers at other companies, Shell said.
BP cut Lord John Browne's bonus from £2.3m to £1.8m following an explosion at the company's Texas City refinery, production losses during the hurricanes in the Gulf of Mexico and expensive repairs to its Thunder Horse platform.
Even so, Lord Browne's total compensation rose by nearly 14 per cent to £6.5m.
BP's remuneration committee said it had considered the performance of its executives in the light of “significant events during the year, both positive and negative”.
It cited the sale of BP's petrochemical unit, Innovene, the Texas City blast and repairs to the Thunder Horse platform in the Gulf of Mexico, which listed badly after an accident.
Both Shell and BP reported record profits last month, driven by higher oil and gas prices.
However, the two companies' production was hit by the hurricanes in the Gulf of Mexico.
Shares in Shell closed down 5p at £18.50, while BP rose 1½p to 651p. read more

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The Times: The bankers who lend credibility march east

By Carl Mortished
THE trouble with banks is that they love to lend to those with the least need to borrow.
Credit availability is in inverse relationship with credit risk — and that was the logic behind the creation of the European Bank for Reconstruction and Development (EBRD), which last year made a net profit of €1.5 billion (£1 billion) as it cashed in the returns from its Central European equity portfolio. Set up in 1991, the EBRD’s task has been to get the private sector going in “transition economies”, the former communist countries of Central and Eastern Europe. Seed capital from rich Western governments would help to lubricate wheels in underdeveloped markets.
The EBRD wants to be a braver lender, bringing credit to places that no loan officer has ventured to before. It suffered a false start under its first president, Jacques Attali, who was distracted from the tiresome task of rebuilding Europe by the business of building a fine banking hall. Since then, however, the EBRD has invested vigorously and the question some of its founders are asking is whether the transition from commune to marketplace is now complete.
Firmly embedded in the European Union, there is little doubt that states such as Estonia, Hungary, the Czech Republic and Poland are market economies that attract commercial lenders. The EBRD is slowly winding down its EU presence, with lending to “advanced” transition countries reduced from almost €1 billion in 2004 to €699 million in 2005.
One shareholder, the US Government, wants this lending to end now, being ideologically opposed to a government-funded institution competing where private lenders operate effectively.
The EBRD says that there is still a job to do, albeit a smaller one, lending to small businesses. Core EU shareholders, notably France and Germany, want the EBRD to carry on, not least because the bank’s activity mitigates the call on the European Commission’s budget. The bank’s new mantra is “south and east”. Last year’s profits, earned largely beneath the EU’s protective cloak, will be reinvested in Europe’s fringe and beyond, in Asia. The Balkan states, the Caucasus and Central Asia accounted for more than half of the €4.3 billion invested by the EBRD in 2005.
Russian investments totalled €1.1 billion. The eastwards push poses the question whether the bank remains European. It is more than a matter of geography and nomenclature. The EBRD’s mandate is to promote the private sector in countries committed to democracy, pluralism and free markets — in other words, liquidity for people who want to be like us.
It worked in Central Europe, but will it work in the former Soviet Union? Without the prospect of EU membership, the pre-condition embedded in the EBRD’s mandate will prove difficult to satisfy. Transition in Central Europe was policed by the European Commission, a prop without which the EBRD faces enlarged political risk from despotic Central Asian governments and gangster capitalism.
Further east, the EBRD will be lending to resource-based economies where basic infrastructure is the primary need and which lack an entrepreneurial middle class. Loans to energy projects accounted for a big portion of the EBRD’s Russian investment last year, a questionable allocation of resources when international banks fight for access to oil and gas deals. The high price of crude is swelling Russian state coffers. What should be the role of a development bank in Russia? The EBRD would like to stimulate enterprise and small business lending, but barriers to that activity are political and cultural, not financial. It is the dead hand of the State and the slow pace of reform that hinders smaller businesses, while crony and oligarch capitalism dominates the Russian private sector.
Meanwhile, the EBRD frets over one of its big tasks in Russia, a loan to Sakhalin II, a $20 billion (£11.5 billion) gas project operated by Shell in eastern Siberia. The issue is not funding — Shell is rich. Project lenders want the EBRD to bless a project that arouses passionate concern because of fears over the survival of a population of rare whales. The EBRD is under pressure to reject Shell’s plans, which would be a blow to the company but would not stop Russia from developing the Sakhalin gasfields.
It’s a political game in which public institutions, such as the World Bank and EBRD, play judge and jury, lending not money but credibility to controversial infrastructure.
Commercial banks want the EBRD to take on this burden, but it is risky. Were the bank to reject Sakhalin, it would enjoy a moment of green glory, but would find its march to the east brought to a sudden halt.

Yukos carcass leaves nasty odour
THE march of investment banks to Moscow is turning into an unseemly scramble for commissions.
A consortium of lenders has pulled the plug on Yukos, petitioning a court in Moscow to declare it bankrupt. The banks, including Société Générale, BNP Paribas, Deutsche Bank and Citigroup, are seeking repayment of $475 million outstanding on a $1 billion (£570 million) loan to Yukos.
The loan was secured on Yuganskneftegaz, a Yukos oil subsidiary that was transferred to Rosneft, the Russian state oil company, after an auction ordered by the Russian tax authorities.
Some regard the winding up of Yukos as a blessed release, but it’s not clear that it is in anyone’s interest, least of all Rosneft. The state oil company is in technical default because it owns Yugansk and, more importantly, is being groomed for a big public offering in London to raise $20 billion.
Some say that the syndicate is doing the Kremlin’s bidding, clearing up a debt prior to the float and causing Yukos, an eyesore on Russia’s financial landscape, to disappear.
Unfortunately, carcasses have a tendency to leave an odour if you don’t dispose of them properly. Only last week, and just months before the float, Sergei Alexeyev, Rosneft’s chief financial officer and head of investor relations, quit without explanation.
The Rosneft listing documents should make very interesting reading.
[email protected] read more

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BLOOMBERG: Amec, Brit Insurance, Shell, Smiths: U.K., Irish Equity Preview

March 15 (Bloomberg) — The following stocks may rise or fall in U.K. and Irish markets today. Stock symbols are in parentheses and prices are from yesterday's close.
The benchmark FTSE 100 Index slipped 2.2, or less than 0.1 percent, to 5950.6 in London, even as more stocks rose than fell. The FTSE All-Share Index added 0.1 percent to 3032.12. Ireland's ISEQ Overall Index lost 0.6 percent to 7899.81.
U.K. Companies:
Amec Plc (AMEC LN): The world's third-largest engineering- services provider will report preliminary full-year 2005 earnings figures, according to the company's Web site. The stock dropped 5.75 pence, or 1.4 percent, to 400.5 pence.
BP Plc (BP/ LN): The world's second-largest oil company said its 2005 profit from trading oil and natural gas rose 56 percent to $2.9 billion as energy prices soared.
The net gain included $1.55 billion for oil trading and $1.31 billion for natural gas, the London-based company said in its 2005 annual report. The company reported a loss of $64 million from power trading. The profit from oil and gas trading in 2004 was $1.83 billion. The shares added 1.5 pence, or 0.2 percent, to 651.
Brit Insurance Holdings Plc (BRE LN): The Lloyd's of London insurer is due to report 2005 results. The company will report a 2005 pretax profit of about 60 million pounds ($107 million), beating analysts' estimates, the company said in a Feb. 1 statement. The insurer's earnings are “significantly ahead of market consensus,'' the company said in the statement. Shares of the London-based company slid 1 pence, or 1 percent, to 102.
GlaxoSmithKline Plc (GSK LN): Two blood-thinning drugs, GlaxoSmithKline Plc's Arixtra and Sanofi-Aventis SA's Lovenox, help people survive heart attacks better than current therapies, studies show. Arixtra, now used to prevent blood clots in people undergoing major surgery, reduced deaths and additional heart attacks by 14 percent after 30 days when given in hospitals to heart attack patients. The shares added 4 pence, or 0.3 percent, to 1,574.
London Stock Exchange Plc (LSE LN): Nasdaq Stock Market Inc.'s 2.4 billion-pound hostile offer for LSE is too low, according to Martin Currie Investment Management Ltd., which owns 1 million shares in the U.K. market.
The offer of 950 pence a share isn't acceptable with the current stock price at 1,190 pence, said Eric Woehrling, who helps oversee 8.7 billion pounds at the Edinburgh-based firm. LSE's biggest shareholders, Threadneedle Investments and Scottish Widows, have said they're willing to discuss the bid. The shares added 41 pence, or 3.6 percent, to 1,190.
Royal Dutch Shell Plc (RDSA LN): Europe's second-largest oil company and its partners building a $20 billion natural-gas venture in Russia's far east should be denied funding by Eastern Europe's biggest lender because it's causing ecological damage, activists said.
The European Bank for Reconstruction and Development shouldn't give loans as the Sakhalin-2 liquefied natural gas project endangers the island's wildlife, waterways and inhabitants, ecologists including Igor Chestin, Chief Executive Officer of the Russian branch of the World Wildlife Fund, said in Moscow. The shares slid 10 pence, or 0.6 percent, to 1,774.

Smiths Group Plc (SMIN LN): The maker of components for Boeing Co. (BA US) planes and supplier of anthrax-detection systems to the U.S. Postal Service will probably say its fiscal first-half net income rose to 135 million pounds ($235.8 million) from 119.6 million pounds a year earlier, according to the median estimate of seven analysts surveyed by Bloomberg. The stock gained 3.5 pence, or 0.4 percent, to 986.5 pence.
Wolseley Plc (WOS LN): The world's biggest distributor of plumbing and heating equipment was downgraded to “underperform/neutral'' from “in-line/neutral'' by Tim Cahill, an analyst at Goldman Sachs & Co. The shares gained 15 pence, or 1.1 percent, to 1,442.
Irish Companies:
Grafton Group Plc (GN5 ID): Ireland's biggest builders' merchant may report a 31 percent increase in second-half profit from a year earlier to 87.4 million euros, as acquisitions and demand in Ireland boost sales, according to the median estimate of four analysts surveyed by Bloomberg. The shares rose 5 cents, or 0.5 percent, to 10.57 euros.
To contact the reporter on this story:
Aisha Phoenix in London at [email protected]. read more

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The Independent: BP and Shell chiefs take home £13m after surge in oil prices

By Michael Harrison, Business Editor
Published: 15 March 2006
BP's chief executive Lord Browne of Madingley took home a total of £9.3m last year – more than double the £3.98m collected by Jeroen van der Veer, his counterpart at Royal Dutch Shell, even though it made bigger profits than BP.
The pay of the two men was bolstered by record oil prices, bumper bonuses linked to company performance and increased payments into their respective pension pots, and confirmed them as being among Britain's best-remunerated executives.
Lord Browne's £9.3m pay packet for 2005 compares with one of £6.8m for the previous year. His annual performance bonus fell from £2.28m to £1.75m, partly due to the blast at BP's Texas refinery last year which killed 13 workers. But he more than made up for this through an increase in his bonus shares payment under BP's long-term incentive scheme from £1.9m to £3.2m.
In addition, the value of Lord Browne's pension pot leapt by £2.8m to just under £20m. Although still two years away from retirement, he has already amassed a pension worth £991,000 a year.
For the current year, he is being paid a basic salary of £1.486m – up from £1.45m in 2005 – and has provisionally been awarded a further 2 million performance shares which will vest in 2008 just before he reaches retirement age.
Mr Van der Veer's basic pay and annual bonus at Shell went up from £1.8m to £2.38m, including an annual bonus of £1.33m. In addition, he received a £1.48m top-up into his pension pot. The pay increase came after a tumultuous year during which the Anglo-Dutch company sought to put its reserves reporting scandal behind it by ditching almost a hundred years of tradition and becoming a unified company with a single board, headquarters and stock market listing.
BP's annual report and accounts also show that Dick Olver, a former senior director of the company and now chairman of the defence contractor BAE Systems, received £300,000 in consultancy fees in relation to its activities in Russia, where BP has a 50 per cent stake in the joint venture TNK-BP.
Peter Sutherland, the chairman of BP, saw his salary rise from £390,000 to £500,000, putting him among an elite band of FTSE 100 chairman earning half a million pounds or more a year. read more

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Alfred Donovan Sketch.gif

This website and sisters,,,, and, are owned by John Donovan. There is also a Wikipedia segment. Leaked Shell Internal Email received from a Shell Insider

From a Shell Insider

Dear Alfred

When I saw this one I thought this was a joke, trying to outdo Dogbert of Scott Adams Dilbert. But this is serious matter, sent from a very senior Finance manager. Scott Adams manages to get the message across in 3 pictures. But it now is clear that the top of the Finance community in Europe has gone stark raving mad.

He must have cracked under the pressure of all the ‘process apparatchicks’. This is what continuous exposure to mad and obsessed ‘leaders’ can do to what was once a first class brain!!
I could not even complete reading all the utter nonsense. read more

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