April 4th, 2006:

By Alena Mae S. Flores
The Royal Dutch Shell Group will keep its refinery in the Philippines and even expand its capacity, scuttling an earlier plan to shut it down and transfer it elsewhere in Asia.
An industry source said officials of Pilipinas Shell Petroleum Corp. (Shell), which owns and operates a 130,000 barrel-per-day refinery in Tabangao, Batangas province, are now considering an expansion in the wake of better refining margins.
“Given that refineries all over the world have had greater margins in more than a year now, then that is an encouragement for those who existing refinery facilities to expand,” the source said.
“The environment has changed such that in the past, they were not in a position to even (convince) their headquarters to consider an expansion. They are now at the point where they are serious about considering expansion and therefore are making the appropriate studies. There’s a qualitative change,” the source added.
Shell reported higher refining margins in 2005, the second straight year it posted positive revenues. The margins of oil refineries, including Shell, have turned negative since the economic crisis of 1997.
The source attributed Shell’s positive margins in the past two years to the significant difference in the price of Dubai crude, the benchmark used by refiners, and imported finished products.
The price difference between crude and imported diesel is $20 per barrel at $57.69 per barrel (Dubai crude) versus $77 (diesel) for March.
In February, Dubai crude averaged $57.61 per barrel against imported diesel at $71.90 per barrel. Last year, Dubai crude averaged $50 per barrel against imported diesel at $67 per barrel and unleaded gasoline at $62.10 per barrel.
The source said the government was also keen in granting tariff differential to Shell.
“There is a need to balance, on one hand, the need for more refinery facilities, because we need to secure the energy needs of the country against a situation where (oil refineries) make very little profits and there is no incentive for them to expand,” the source said.
He said the government must ensure that profits that refineries get from the country are reinvested in terms of expansion.
He said Shell would make its decision to pursue an initial public offering once it has undertaken its expansion program.
Shell in the past two years has been weighing its refinery operations in the Philippines. It earlier said it was set to make a decision on whether to shut down its refinery by the end of the year. read more

Published: Tuesday, 4 April, 2006, 08:28 AM Doha Time
MOSCOW: Oil major Royal Dutch/Shell wants to expand its Russian operations and add a third big project, despite a huge cost overrun at its Sakhalin Energy venture, the firm’s Russia chairman Chris Finlayson said.
“I’m looking for a substantive increase in the size of the business, both in Sakhalin and in west Siberia and potentially a third platform,” Finlayson told Reuters in an interview.
“I think it will be a platform which is based on remote areas, strong technology input, probably Arctic, but a range of different options.” Shell is still smarting from ballooning costs at Sakhalin, a huge liquefied natural gas project off Russia’s Pacific coast.
It doubled the Sakhalin cost estimate from $10bn to $20bn last July, dismaying shareholders and angering the Russian government, which says it will now have to wait much longer before it sees any share of the profit.
Shell has sent “truckloads” of documents to the Russian agency investigating the cost overrun, which Finlayson said was caused by booming prices for inputs such as steel, the strength of the rouble and the project’s complexity.
Another extra will be $300mn to re-route pipelines to avoid harming rare grey whales, a decision taken last year.
But Finlayson said revised calculations carried out by top Russian experts showed Sakhalin remained a very good deal for Russia even at a conservative oil price, and he expected the cost negotiations to end during the third quarter of the year.
The cost hike also jeopardised Shell’s plan to swap 25% of Sakhalin – out of its total 55% holding – for a half share of the massive deep deposits of Zapolyarnoye gas field, owned by Russian gas giant Gazprom.
Finlayson did not put a figure on Zapo’s gas and condensate reserves, which Shell wants to market in Europe, but indicated there was more in its deposits than Shell has in Sakhalin. “We are not going to be doing deals which reduce our reserves,” he said.
With the value of Sakhalin Energy slashed by the cost overrun, Shell and Gazprom will spend months haggling over the two sides of the swap. Finlayson said the firms’ confidential memorandum of understanding included a way of adjusting the value of the swap in case there was a difference in value.
One adjustment will be for Shell’s minority partners in Sakhalin Energy, Japan’s Mitsui and Mitsubishi, to give up some of their equity in the project, in which they hold 25% and 20% respectively.
“I think it’s an excellent illustration of the strong alignment of the current shareholders in wanting to have Gazprom in this project,” said Finlayson.
It is not clear what the Japanese firms will get in return.
Despite the cost overrun and a delayed first delivery date, Sakhalin Energy has sold virtually all its production capacity and is looking to expand. Its infrastructure would allow four LNG production trains instead of the current two.
“Whilst clearly the company must focus on delivering the first two trains of this massive project, you don’t sit and wait until that’s completely finished before you start thinking about more than that,” Finlayson said.
Aside from Sakhalin, Shell is also looking for oil production opportunities, possibly expanding its west Siberian oil production joint venture, Salym Petroleum Development.
“We certainly have an aspiration to grow that position in west Siberia. Our preferred route is … new field development rather than the purchase of mature assets. So we’re on the look-out for more.”
Salym, which is set to be producing around 165,000bpd by the end of the decade, is jointly owned by London-listed Sibir Energy, but Finlayson said Shell had no plans to buy out its joint venture partner.
Much of Russia’s oil production growth in the last 15 years has come from using technology to eke more out of existing fields, but Finlayson said that trend would soon have to end.
“There are lots of undeveloped resources in Russia and the time is rapidly coming when attention will have to be paid to changing that exploration acreage into new development. “That’s where we’re focusing at the moment,” he said.
Shell was looking at the “whole periphery”, including new areas of west Siberia, the undeveloped but remote fields of east Siberia and the Arctic, where changes in the sea ice were making the coast much more accessible and a likely home for another LNG terminal in the future, he said. – Reuters read more

Nigeria
Vanguard (Lagos)
Yemie Adeoye
April 4, 2006
Posted to the web April 4, 2006
THE Ministerial investigation committee into alleged dumping of toxic waste by the Shell Petroleum Development Company (SPDC) at Igbeku and Ejekimoni communities of Sapele local government area of Delta State has come up with recommendations for the company to remove and treat in situ the “alleged buried waste” to acceptable statutory levels.
The ministerial committee disclosed that its recommendations follows a detailed site assessment to delineate and determine the size, and spread of the contaminants, as well as institute post corrective action compliance monitoring plan to ensure that the mitigation measures are effective and the sites do not pose a running risk to the wider environment.
The committee, which has as its chairman, the secretary to the state government, in a recently issued statement confirmed that an independent consultant in the name of Global Environmental Consultants limited, was contacted to carry out the analysis and that ten analytical procedures and tests were carried out.
The scope of the study consisted of four major sections; characterization of tests sediment (alleged buried waste)samples, Toxicity Bioassays, Biodegradability assessment of tests substance and Hazard risk assessment.
All the collected samples were homogenized and shared between the independent consultants, SPDC, and federal ministry of environment for independent analysis. Analytical procedures as well as required parameters were specified inline with the Federal Ministry of Environment, guidelines and other recognized international laboratories standards.
The new England Testing Laboratory Improved Standard Methodology was used for characterizing and decoding the alleged buried waste samples from the Amukpe/Rapele Trunk line Crude oil sample for point sourcedetermination, bioassay toxicity and degrade-ability testing with the following results and findings.
The result of the study carried out by the committee shows that the Igbeku-Ejekimoni “alleged waste” samples contains petroleum hydrocarbon fraction residues that are identical and consistent with the Amukpe/Rapele Trunk Line crude oil sample, and therefore probably derived from past spills recorded in the area.
The varied toxicity of the test samples and correlation of petroleum degrading bacteria population and TPH concentrations are indicative of degrade-ability of the “alleged buried wastes” hence the low Hazard Risk Assessment rating of the sites if it is properly managed.
The Global Environmental Consultants Limited was appointed to carry out the investigation studies in line with the terms of reference of the ministerial committee, and had carried out a field visit to the alleged burial sites in company of all members of the committee.
During the visit the team inspected and collected four water samples and seven soil samples from the alleged burial sites in Igbeku and Ejekimoni communities.
Another scheduled visit comprising of members of the committee and the independent consultants brought about the collection of additional six soil, five water, and six vegetation samples for analysis. Following which the team made a final scheduled visit to sapele flow station for the collection of crude oil sample from the Amukpe/Rapele Trunk line. read more

18:54 | 04/ 04/ 2006
MOSCOW, April 4 (RIA Novosti) – A board overseeing the gas production project on the Far East island of Sakhalin will select bidders for contracts on liquefied natural gas (LNG) supplies shortly, a project operator manager said Tuesday.
Contracts for supplies of 75% of the liquefied natural gas to be produced on Sakhalin have already been signed, while talks on the remaining 25% of LNG output are nearing an end, said Viktor Snegir, a manager for project operator Sakahlin Energy.
The Dutch-British-Japanese venture is developing two vast fields with estimated recoverable reserves of 150 million metric tons of oil and 500 billion cubic meters of gas and is building Russia's first ever liquefied gas plant on Sakhalin with a designed capacity of 9.6 million tons a year.
The supervisory board – comprising three members of the Sakhalin administration, representatives of the industry and energy ministry, finance ministry, and the federal energy agency, and six Sakhalin Energy executives – will gather April 5 to discuss the contracts to be signed and will make its selection later, Snegir said.
He said the companies involved in existing contracts would retain their options, amounting to 0.5 million metric tons of LNG each, and that new contracts could be signed with new partners.
Sakhalin Energy, owned by Royal Dutch/Shell (55%) and Japan's Mitsui (25%) and Mitsubishi (20%), is working in Russia under a production sharing agreement that gives the company major tax breaks in exchange for a certain share of the output. The project is being implemented in difficult climate conditions and has been complicated by environmental obstacles and repeated spending delays on the part of the Russian authorities. read more

State Also Assumes Control
Of Five Other Properties
As It Pursues Sweeter Terms
By BHUSHAN BAHREE
April 4, 2006; Page A2
Venezuela stepped up its battle to extract more-favorable terms from big international oil companies operating in the petroleum-rich country, by seizing control of two oil fields run by France's Total SA and Italy's ENI SpA and taking back five others voluntarily given up by other firms.
The two companies said they had failed to reach an agreement with the government to cede majority ownership in the two fields — called Jusepin and Dacion — to Petróleos de Venezuela SA, or PdVSA, the state-owned oil company, by a deadline at the end of last month. The fields, seized by PdVSA officials over the weekend, produce a combined total of about 85,000 barrels of oil a day. Together, the seven fields produce a total of 115,000 barrels a day, said Venezuelan Oil Minister Rafael Ramirez.
Venezuela, which pumps about 2.6 million barrels a day of oil, is the third-largest producer in the Organization of Petroleum Exporting Countries and is a major supplier to the U.S. It also has been among the most aggressive of the many oil-producing countries seeking to get a greater share of revenue or reclaim ownership of energy concessions from international oil companies, at a time when high oil prices are swelling treasuries and emboldening governments.
Worries from oil-producing nations such as Iran and Nigeria have renewed upward pressure on oil prices. In New York, the price of the benchmark crude-oil futures contract rose 11 cents to $66.74 a barrel.
Some nations, like Bolivia, are going further and trying to nationalize their oil industries, though details of exactly what government officials intend to do remain unclear. On Sunday, the chief executive of Brazil's state-run oil company, Petróleo Brasileiro SA, or Petrobras, said he preferred a negotiated solution in a dispute over Bolivia's plan to nationalize the oil and natural-gas industry but also warned the company would respond with unilateral actions if Bolivia took unilateral action. Petrobras has operations in Bolivia.
In Venezuela Friday, just before the government deadline, 16 companies — including Royal Dutch Shell PLC, Chevron Corp. and Spain's Repsol YPF — signed deals changing terms of their contracts. Some others, notably Exxon Mobil Corp. and Norway's Statoil AS, are selling their interests to their partners or to PdVSA. As part of its new deal, Repsol returned two of its four fields, and Japan's Teikoku Oil Co. returned one of its two fields. Smaller Colombian and Venezuelan companies each returned a field.
Under Hugo Chávez, Venezuela's populist president, the country has been insisting on revising terms on dozens of oil-field contracts signed by previous governments in the 1990s. Through higher taxation, royalties and other levies, Venezuela wants more of the share of revenue and profit.
Venezuela in the 1990s signed 32 agreements known as service contracts with 22 foreign oil companies to invest and produce oil from specific fields. The companies operate the fields, and PdVSA pays a fee and buys the oil produced at market-linked prices. The fields under these service contracts produce 500,000 barrels a day of oil, about a fifth of Venezuela's total output.
In 2001, the Chávez government passed a law raising royalties and guaranteeing PdVSA majority stakes in joint ventures. Since then, the government also has said foreign companies must pay a tax of 50% on their Venezuelan profit rather than a previously agreed-upon rate of 34%. Venezuela tax authorities have claimed back taxes under this new interpretation.
The changes have forced oil companies to look carefully at the economics of operating in Venezuela. Many have concluded that they can still turn a profit. But some, like Exxon, Total and ENI, have balked. Exxon decided to sell out. In contrast, industry officials say, Total and ENI appear not to have decided yet whether to operate the fields under new terms or to sell their interest to PdVSA or another buyer.
A spokeswoman said Total hoped to resume talks with Venezuelan officials. She said Total had handed over to PdVSA officials the keys to the Jusepin field, which produces 25,000 barrels a day of oil.
In Milan, ENI issued a statement saying PdVSA had unilaterally terminated its contract to operate the Dacion field, which is estimated to produce 60,000 barrels a day of oil.: “This action is a violation of contract rights,” ENI said. “It is ENI's intention to offer PdVSA a period of time in which a full reparation of ENI's contract rights can be agreed.” If no agreement is reached, ENI said it would pursue legal means to claim its rights.
–Peter Millard contributed to this article.
Write to Bhushan Bahree at [email protected] read more

By Roland Gribben (Filed: 04/04/2006)
A new round of increases in the cost of petrol and other petroleum products is closer after oil prices hit a new peak.
North Sea Brent oil for delivery next month topped the previous peak of $67.48 a barrel to finish up $1.59 at $67.50 in a market unnerved by events in Nigeria and Iran and increased demand from American refiners in the run-up to the start of the “gasoline season”.
There was equally feverish activity in commodities with copper and zinc prices setting records while gold, the sanctuary in volatile markets, reached a 25-year peak of $590.30 an ounce, up $6.15. Silver also benefited from a flow of institutional money, climbing 20c to $11.71 an ounce.
The continued loss of more than 20pc of Nigerian production as a result of rebel attacks is continuing to tighten the oil market as traders prepare for the upsurge in petrol demand in America, which accounts for 40pc of world sales.
Further rises that could take oil above $70 a barrel could see the International Energy Agency, the consumers 'cartel', releasing supplies of crude from strategic stocks, say analysts.
Nigerian ministers are making optimistic noises about restarting shut-in production but Shell, the biggest operator, is more cautious because of the risk to employees.
Oil hawk Hugo Chavez, Venezuelan president, is adding to market unease. He told the BBC he plans to ask fellow members of Opec at their June 1 meeting to set $50, last year's average price, as a long-term objective.
The move is seen as an attempt to keep the development of Venezuela's large reserves of heavy crude oil economic. Venezuela has increased its grip on domestic production with the takeover of fields operated by Total of France and Eni of Italy after failing to agree new terms.
Events in Iran are also preoccupying traders but Iranian officials are insisting they would not use oil as a weapon to counter any UN sanctions over the country's nuclear programme. read more

By Jeremy McDermott
(Filed: 04/04/2006)
Venezuela's president Hugo Chavez yesterday seized control of a French-run oil field, strengthening his control of the country's vast oil wealth, the lifeblood of his “Bolivarian Revolution”.
Total SA confirmed from its Paris headquarters that the state oil company, Petroleos de Venezuela SA, “took control of our operations” during the weekend after it refused to turn the site over to a state-run joint venture.
Mr Chavez has decided to redefine the terms under which foreign companies can operate in Venezuela, which has the largest oil reserves outside of the Middle East.
The new terms state that the Venezuelan government must have a 60 per cent share in any venture. Sixteen companies have bowed to the demands by the president, among them BP and Shell, but Exxon Mobile, the world's largest oil company, sold its interests instead.
Total and ENI, of Italy, have refused to sign accords, hence the seizure of Total's concession. The Venezuelan government has said that both companies owe taxes and face being shut down.
Mr Chavez is using his oil windfall to promote a social reform programme, arms purchases and to engage in anti-US diplomacy, selling oil at below market rates to detach Latin American nations from Washington's orbit. read more

Mark Milner
Tuesday April 4, 2006
The Guardian
Oil and gas group BG said yesterday that its first-quarter performance was on course to beat expectations thanks to a strong performance by its fast growing liquefied natural gas business. The LNG arm was expected to make an operating profit of at least £130m over the period. That compares with £79m in the fourth quarter of last year and £172m for 2005 as a whole.
BG said it had shipped 40 LNG cargoes in the first three months of the year, of which two-thirds were sold outside the United States, with strong demand from Europe and Japan. The first quarter figure was similar to the previous quarter but the cargoes commanded higher prices. “It wasn't volumes it was much more the price realisations,” according to a spokeswoman.
Britain is among a number of countries building LNG facilities, which allow the import of gas from sources too distant to be linked by pipeline.
Analysts at Citigroup said the first-quarter performance of the LNG business was roughly double consensus expectations. BG said its largest source of profits, its exploration and production business, which made an operating profit of almost £2bn last year, was trading in line with expectations as were the smaller transmission and distribution and power businesses.
Yesterday BG shares rose 9p to 728.5p compared with 426p a year ago. The rise has been driven by high energy prices and increased production. In recent weeks takeover speculation has provided an additional spur.
Exxon Mobil, the world's largest listed oil company, is the latest name to be linked with that of BG, the former exploration and production arm of British Gas. BP and Royal Dutch Shell have previously been tipped as possible suitors. At yesterday's closing price BG has a market capitalisation of about £25bn.
The company is expected to report first quarter results at the beginning of next month. read more

(BNamericas.com) – Brazil's federal energy company Petrobras (NYSE: PBR) has bought the downstream operations of Anglo-Dutch oil company Shell (NYSE: RDS-B) in neighboring Paraguay for an unspecified amount, Petrobras said in a statement. The transaction covers Shell's fuel commercial and retail operations including service stations, liquefied petroleum gas (LPG) outlets and outlets for the sale of aviation fuel in Paraguayan airports, Petrobras said.
The company will keep Shell's Paraguayan staff and the takeover will be complete in 18 months, Petrobras said.
Petrobras said that the acquisition is in line with its expansion strategy in South America. Chile is now the only country in which Petrobras is not directly operating. – (BNamericas.com) read more

By THE ASSOCIATED PRESS
DALLAS (AP) — The tiny biodiesel industry received a boost from Big Oil on Monday when a major petroleum refiner, Motiva Enterprises LLC, began blending the soy-based alternative with traditional motor fuel at a Dallas terminal.
Biodiesel supporters say the impact is more than symbolic. Earth Biofuels CEO Dennis McLaughlin, one of the partners in the $120,000 pilot program, said Motiva's name lends credibility to biodiesel.
Biodiesel is not raw vegetable oil. It is a biodegradeable and nontoxic soybean derivative, and can be blended at any level with petroleum diesel.
The amount of biodiesel sold in the U.S. has grown from 500,000 gallons in 1999 to roughly 75 million gallons in 2005. By comparison, the U.S. burns roughly 140 billion gallons of gasoline each year and 4 billion gallons of ethanol, a fuel additive derived from corn.
Biodiesel advocates say terminal blending is a critical step in bringing the fuel to more drivers.
''Frankly, a behemoth step,'' said Paul Nazzaro, the National Biodiesel Board's petroleum liaison.
Motiva, a partnership between Shell Oil Co. and Saudi Refining Inc., is among the first major oil companies to provide a blending and loading terminal for the alternative fuel, which can be burned in diesel engines without modification, Nazzaro said. Other refiners who already blend biodiesel at the terminal level include Valero Energy Corp. and Tesoro Corp., according to National Biodiesel Board spokeswoman Jenna Higgins.
The soy derivative is mostly sold in a blend called B20, which is 20 percent biodiesel and 80 percent diesel. It is available at about 600 pumps nationwide, according to the National Biodiesel Board, and sales tripled last year.
Willie Nelson, who developed the BioWillie brand of biodiesel for truckers, was joined by actor Morgan Freeman to announce the installation of a 30,000-gallon heated tank that will allow biodiesel to be loaded onto tanker trucks already fully blended with petroleum diesel. Blending at the terminal level reduces costs associated with ''splash'' blending inside trucks and provides a more consistent blend of the fuel.
Nelson and Freeman are both on the board of directors of Earth Biofuels, which produces biodiesel and is the exclusive diestributor of BioWillie.
Motiva said it has no immediate plans to provide blending at other terminals, said Dan Grinstead, general manager of commercial sales and distribution.
Grinstead said the program allows Motiva to build business relationships with biodiesel distributors and customers.
Houston-based Motiva refines, distributes, and markets oil products in the eastern and southern United States. The company refines and markets gasoline to about 8,900 Shell and Texaco gas stations.
On the Net:
Earth Biofuels: www.earthbiofuels.net
Motiva Enterprises LLC: www.motivaenterprises.com
National Biodiesel Board: www.biodiesel.org read more

By THE ASSOCIATED PRESS
VIENNA, Austria (AP) — World oil prices rose Monday, briefly topping $67 a barrel, on the uncertain outlook for supplies out of Iran and Nigeria.
Light sweet crude for May delivery settled 11 cents higher at $66.74 a barrel on the New York Mercantile Exchange, after climbing as high as $67.90 earlier in the day.
Last week, prices made solid gains on supply concerns linked to U.S. gasoline inventories, which have been falling ahead of the U.S. summer driving season, when demand peaks.
Iran's nuclear ambitions were keeping a high floor under prices, analysts said.
''A lot of uncertainty remains in how the Iranian situation will work itself out,'' said Victor Shum, energy analyst with Purvin & Gertz in Singapore. ''There is some concern in the Asian market on whether Iran is a reliable supplier.''
The U.N. Security Council on Wednesday voted unanimously to demand that Iran suspend nuclear enrichment but Iran has remained defiant, saying enrichment is ''irreversible.'' The standoff has ratcheted up tensions over Iran's nuclear program.
Iran said Monday it successfully tested its second new torpedo in as many days, the latest weapon to be unveiled during war games in the Gulf that the military said are aimed at preparing the country's defenses against the United States.
Elsewhere, Nigerian Oil Minister Edmund Daukoru said Monday that Royal Dutch Shell PLC has told him it will take around a month to bring back most of the oil production shut down because of unrest in the country's oil-rich delta.
Daukoru, who is also the president of the Organization of Petroleum Exporting Countries, told Dow Jones Newswires that around 27 percent of Nigeria's output had been knocked out by ethnic rebel attacks in the Niger Delta region. Militants have pledged more attacks to get a bigger cut for southerners of the oil revenues held by the federal government.
The recent attacks and kidnappings cut the country's crude oil production by more than a quarter, or 641,000 barrels a day, out of some 2.4 million barrels a day of production.
Looking further ahead, David Dugdale of MFC Global Investment Management took note of the approaching hurricane season in the Gulf of Mexico. That, plus real or threatened instability in Iran and Nigeria, make for ''good reasons to believe that prices should remain at high levels,'' he said.
Supply concerns also supported gasoline prices.
U.S. gasoline stocks have fallen nearly 10 million barrels in the past four weeks, a trend analysts expect to continue for several more weeks as refiners undergo seasonal maintenance work.
Gasoline futures fell 2.11 cents to close at $1.8632 a gallon, while heating oil futures were essentially unchanged at $1.8622 a gallon.
Natural gas futures rose by 3.4 cents to settle at $7.244 per 1,000 cubic feet.
Venezuela's President Hugo Chavez, in an interview to be broadcast Monday, says he would like to see oil prices stabilized at $50 a barrel. ''That's a fair price, it's not a high price,'' Chavez said in an interview with the British Broadcasting Corp. read more

By THE ASSOCIATED PRESS
CARACAS, Venezuela (AP) — President Hugo Chavez has tightened his grip on Venezuela's energy resources, following through on threats to punish international companies that resist government control of the nation's oil fields.
Venezuela seized two oil fields from France's Total SA and Italy's Eni SpA after the companies failed to comply with a government demand that operations be turned over to state oil company Petroleos de Venezuela SA, or PDVSA, Oil Minister Rafael Ramirez said Monday.
''Those two companies resisted adjusting to our laws,'' he said at a news conference. ''Those fields return to total, absolute control by Petroleos de Venezuela.''
Until PDVSA took control of the oil fields Saturday, Total and Eni had operated them under contract. Some other companies, including Exxon Mobil Corp., decided to sell their stakes among the 32 Venezuelan oil properties rather than go along with the new terms.
Ramirez, asked if companies that resist will be forced out of Venezuela, replied: ''We don't have a veto against any company here.'' But he added: ''Companies that don't adjust to our laws, we don't want them to continue in the country.''
Venezuela's weekend seizures were the first as part of Chavez's effort to draw more revenue from companies pumping crude in the South American country.
Private oil companies had run 32 oil fields in Venezuela independently under contract with the government. But Venezuela demanded last year those contracts be changed into so-called ''mixed company'' joint ventures that give PDVSA a minimum 60-percent stake.
Many companies have accepted the new terms without a fight, apparently betting the ventures would still be profitable even with a larger share of revenue going to the state.
Venezuela has been emboldened to take a harder line due to rising oil prices, political instability in the Mideast and Nigeria, and new buyers in Asia. Light sweet crude for May delivery rose 11 cents to settle at $66.74 a barrel Monday on the New York Mercantile Exchange.
Ramirez said 20 companies, including Spanish-Argentine Repsol YPF, Royal Dutch Shell PLC and China National Petroleum, representing 25 oil fields have signed on to the new legal framework to create joint ventures.
Another five oil fields were voluntarily returned to PDVSA after companies with stakes decided to turn them over rather than operate them as joint ventures. Ramirez declined to say if those companies, which include Repsol and Japan's Teikoku Oil Co., would be compensated financially.
The new joint ventures will allow PDVSA to save $31.34 billion over the next 12 years, PDVSA director Eulogio del Pino told reporters. Under the old contracts, PDVSA was forced to buy oil from the companies at five times the cost of extraction.
Total spokeswoman Patricia Marie told The Associated Press that PDVSA had rejected an alternate offer made by the company for its 30,000 barrel-a-day Jusepin oil field in eastern Venezuela.
''We didn't migrate the field … and PDVSA took it,'' Marie said by phone from Total's Paris headquarters.
Ramirez said it was ''unacceptable'' that Total had made an offer demanding a higher stake just 15 minutes before it was supposed to sign on to the new joint ventures at a ceremony Friday. Under a previous 1993 agreement, PDVSA had awarded Total a 55 percent stake in oil pumped at Jusepin, with BP PLC holding 45 percent.
Ramirez said BP will be compensated with an increased stake at a separate field.
Meanwhile, Italy's Eni SpA protested PDVSA's seizure of the Dacion oil field and said it expected to be compensated for a ''violation of contract rights.''
PDVSA told the company that its contract had been terminated and that it would appoint personnel to manage operations at the site, Eni said in a statement. ''It is Eni's intention to offer PDVSA a period of time in which a full reparation of Eni's contract rights can be agreed,'' it said.
Eni, which had a 100-percent stake in the field, said it would take legal action if an agreement could not be reached.
''We're ready to go to the celestial court if they want but, of course, companies that come here with litigation and confrontation will not be invited'' to join future projects, Ramirez said. ''We at least have the right to choose our partners.''
The Venezuelan government also claims Eni and Total owe millions of dollars in unpaid taxes.
Some companies have sold their stakes instead of facing the changes, including Irving, Texas-based Exxon Mobil, which sold its holdings in the 15,000-barrel-a-day Quiamare-La Ceiba field in December to its partner, Repsol.
Norway's Statoil ASA said Monday it, too, had sold its 27 percent share in the LL 652 oil field in Lake Maracaibo to PDVSA.
Those companies, as well as Total, retain other investments in Venezuela. read more

By THE ASSOCIATED PRESS
CARACAS, Venezuela (AP) — Venezuela tightened its grip on the petroleum sector after taking control of an oil field from Total S.A. when the French company refused to sign an agreement to turn the site over to a state-run joint venture.
State oil company Petroleos de Venezuela SA, or PDVSA, ''took control of our operations at Jusepin. It was during the weekend,'' Total spokeswoman Patricia Marie told The Associated Press by telephone from the company's headquarters in Paris.
The move is another step in Venezuela's campaign to take on Big Oil at a time when rising oil prices, political instability in the Mideast and Nigeria and new buyers in Asia have put the world's fifth-largest oil exporter in a winning position.
Last week, Venezuela's oil minister, Rafael Ramirez, said of Exxon Mobil Corp. ''we don't want them to be here'' because the Irving, Texas-based company has resisted tax increases and contract changes that are part of a policy by President Hugo Chavez's government to re-nationalize the oil industry.
The government has increasingly sought projects with state-controlled oil companies, including China's CNPC, India's ONGC and Iran's Petropars.
In the case of Total, it operated the oil field independently under a contract with the government. Total was unable to immediately provide further details, including how many Total employees work at the site.
The 30,000 barrel-a-day Jusepin oil field was one of 32 in the country that have been run by private oil companies under contract. Venezuela demanded last year those contracts be changed into joint ventures giving PDVSA a minimum 60-percent stake.
On Friday, 17 oil companies including Spanish-Argentine Repsol YPF, Royal Dutch Shell PLC and China National Petroleum, signed on to the new legal framework.
''We didn't migrate the field … and PDVSA took it. That's logical,'' Marie said, adding the company had not made any formal decision yet on how to proceed.
Meanwhile, Italian oil and gas company Eni SpA said Monday that PDVSA had unilaterally terminated its contract at the Dacion oil field on Saturday.
PDVSA had told the company that management of the site will be transferred to personnel appointed by the state oil company, Eni said in a statement.
The Jusepin oil field in eastern Venezuela has been producing about 30,000 barrels a day. PDVSA awarded Total a 55 percent stake in the field and British Petroleum PLC a 45 percent stake under 1993 license agreement.
Eni had a 100 percent stake in the Dacion field. read more

By JUAN FORERO
Published: April 4, 2006
CARACAS, Venezuela — President Hugo Chávez is spending billions of dollars of his country's oil windfall on pet projects abroad, aimed at setting up his leftist government as a political counterpoint to the conservative Bush administration in the region.
With Venezuela's oil revenues rising 32 percent last year, Mr. Chávez has been subsidizing samba parades in Brazil, eye surgery for poor Mexicans and even heating fuel for poor families from Maine to the Bronx to Philadelphia. By some estimates, the spending now surpasses the nearly $2 billion Washington allocates annually to pay for development programs and the drug war in western South America.
The new spending has given more power to a leader who has been provocatively building a bulwark against what he has called American imperialistic aims in Latin America. Mr. Chávez frequently derides Mr. Bush and his top aides. In March, he called Mr. Bush a “donkey,” a “drunkard” and a “coward,” daring him to invade the country.
But with the biggest oil reserves outside the Middle East, Mr. Chávez is more than an irritant. He is fast rising as the next Fidel Castro, a hero to the masses who is intent on opposing every move the United States makes, but with an important advantage.
“He's managed to do what Fidel Castro never could,” said Stephen Johnson, a scholar at the conservative Heritage Foundation. “Castro never had an independent source of income the way Chávez does. Chávez is filling a void that Castro left for him, leading nonaligned nations.”
It remains unclear exactly how much the government has spent, because the state oil giant, Petróleos de Venezuela, has not made detailed financial records public, and its balance sheets have been shielded from independent audits. Mega-projects, like Mr. Chávez's utopian plan of building a gas pipeline through the Amazon from Venezuela to Argentina, are not likely to materialize.
But Mr. Johnson estimates that Venezuela pledged $3 billion in aid last year to its neighbors, including generous bond purchases that made the government a lender of last resort across the continent.
The Center of Economic Investigations, an economic consulting firm in Caracas, issued a study recently that said Mr. Chávez had spent more than $25 billion abroad since taking office in 1999, about $3.6 billion a year, while First Justice, a leading opposition party, put the figure at $16 billion, based on Mr. Chávez's own declarations.
What is clear is that upward of 30 countries as far away as Indonesia have received some form of aid or preferential deals.
His government has purchased $2.5 billion in Argentine debt, the Venezuelan finance minister, Nelson Merentes, recently said, and was selling oil at cut-rate prices to 13 Caribbean countries and buying a big stake in Uruguayan gas stations. Some projects are as ambitious as the planned $3 billion purchase of 36 Brazilian oil tankers. Others are as modest as the $3.8 million in aid Venezuela has provided to four African countries.
Critics see the spending as a reckless exercise in populist decadence intended to burnish Mr. Chávez's image as the region's leading statesmen while embarrassing the Bush administration, the Venezuelan leader's principal obsession since American officials gave tacit support to a failed coup against him in 2002. Venezuela may be enjoying record high oil prices, they say, but it remains poor and mismanaged.
Mr. Chávez is “spending considerable sums involving himself in the political and economic life of other countries in Latin America and elsewhere, this despite the very real economic development and social needs of his own country,” said John Negroponte, the American director of national intelligence, in February at a Congressional hearing in Washington.
Antonio Ledezma, an opposition leader and one of the president's more determined foes, said the policy's aim was to build “a political platform with an international reach.”
Mr. Chávez celebrates the spending as revolutionary largesse, intended to further his dream of unifying Latin America in a way Simón Bolívar could only dream of. read more

Apr 04, 2006
CS MUTIARA Petroleum Sdn Bhd, a joint-venture company between Petronas Carigali Sdn Bhd and Shell Exploration and Production Malaysia BV, has made its sixth successful gas discovery within its operation blocks.
The joint-venture company has discovered gas in Block PM302, offshore Kelantan and Terengganu in Peninsular Malaysia.
In a statement, CS Mutiara said the Bunga Dahlia Channel-1 exploration well, located in a water depth of 67 metres, was spudded on February 18.
The well was drilled to a total depth of 2,260 metres and encountered multiple gas zones, the company said.
Further technical evaluation is required to determine the volumes of the discovery.
With the latest discovery in Block PM302, CS Mutiara has recorded six consecutive exploration successes, including Bunga Kamelia, Bunga Zetung, Bunga Anggerik, Bumi South and Bunga Kesumba in the adjoining Block PM301.
The company, which was formed in July 2001, is embarking on technical studies to assess the development options for the gas discoveries in both blocks.
CS Mutiara, in which Petronas Carigali and Shell Exploration and Production Malaysia equally hold a 50 per cent stake, operates Blocks PM301 and PM302, both located off the northeast coast of Peninsular Malaysia.
Copyright © Asia Intelligence Wire read more

By Carola Hoyos in Londonand Gareth Smyth in Beirut
Published: April 4 2006 03:00 | Last updated: April 4 2006 03:00
European crude oil prices yesterday jumped to their highest level since Hurricane Katrina after Iran announced it had tested new weapons during wargames in the Strait of Hormuz.
Tehran's declaration that it had test fired a missile and a newly developed torpedo in the strait, the world's main oil shipping route, propelled benchmark Brent crude oil futures nearly $2 higher to trade at a high of $67.93 a barrel.
Iran's armed forces frequently conduct military manoeuvres that are given extensive coverage on domestic television. But market nerves have been jangled by the timing and strategic location of Iran's latest military tests, which follow last week's 30-day deadline set by the UN Security Council for Iran to suspend its nuclear programme.
Traders warned yesterday that the oil market had entered a more volatile phase, fuelled by speculative buying over fears that the diplomatic stand-off over Iran's nuclear programme could threaten supplies.
The US Department of Energy calls the Hormuz Strait, which links the Persian Gulf with the Gulf of Oman and the Arabian Sea, “by far the world's most important oil chokepoint”. More than a third of the world's exported oil travels through the strait. Iran is the world's fourth largest producer.
In the current military exercises, Tehran has also announced the testing of a radar-evading missile. Iran has three diesel-electric Russian submarines and has started building midget submarines, although there has been greater western concern over its ballistic missile programme.
Mohammad Hadi Nejad-Hosseinian, Iran's deputy oil minister, yesterday hinted at Iran's ability to influence the oil price, when he said: “Owing to the current situation, any fall in oil prices this year is unlikely . . . a sum of factors show that prices will not fall in the next two or three years unless there is a conspiracy against oil.”
But any move to influence prices by Tehran would be double edged, as Iran is heavily dependent on its oil exports, which account for about 60 per cent of government revenue and 80 per cent of export earnings.
Oil markets also reacted nervously yesterday to events in Nigeria, the world's eighth largest exporter, where rebels have shut down about a quarter of the country's production. Edmund Daukoru, Nigeria's energy minister said it would take Royal Dutch Shell, the Anglo/Dutch energy group and the country's biggest foreign producer, a month to restore the bulk of its lost production.
Oil futures in the US, which is particularly depen-dent on Nigeria's light, sweet crude oil to make petrol, rose more than $1 to a high of $67.90 a barrel. read more

By Kevin Morrison
Published: April 4 2006 03:00 | Last updated: April 4 2006 03:00
As business strategies go, it is hard to argue with. Oil companies such as BP and Royal Dutch Shell are selling hedging services to help industrial customers mitigate the soaring cost of the oil they sell them.
Heavy energy consumers such as airlines, road transport companies, miners and utilities are increasingly turning to oil companiesfor financial risk management services instead of going to investment banks, which are the traditional dominant operators in energy hedging.
“In the past, customers saw energy prices as a small and irritable part of their cost base; now it forms a large part of their costs and therefore becomes a necessity for them to manage their risk to energy prices,” says Mike Conway, vice-president of global product and trading at Shell International Trading and Shipping Company, the trading unit of Royal Dutch Shell.
Mr Conway says the demand from customers for advice and help prompted Shell to bolster its risk management capabilities in the past two years to offer it as a service to its traditional industrial customers as well as fellow oil and gas producers.
BP says that, although the company has been providing risk management services to customers for nine years, it is only in the past two years, as prices have risen, that the company has stepped up its efforts in the area.
It has hired more staff, including former traders from investment banks, and it has been more active in marketing the services, including setting up a dedicated website for the small but expanding BP unit.
Both BP and Shell employ between 10 and 15 people in this area, with staff split between London and New York.
Total, the French oil company, also provides risk management services to its customers, and Chevron-Texaco is looking at the area.
ExxonMobil has no plans as it has a strict policy of not hedging on its own behalf.
Mr Conway says the oil companies are not a competitive threat to the banks. “The market has grown so much in the past threeyears that it has opened up to new customers rather than the oil companies coming in and trying to take clients away from the banks,” he says.
However, one senior energy trading executive at an investment bank says: “They [oil companies] could have an advantage over the [investment] banks in the area of credit, particularly in emerging markets where they [oil companies] may have a long-term relationship with a company and are therefore more comfortable to provide credit to it than a bank.”
He added, however, that energy producers or a refiner may not feel comfortable dealing with BP or Shell because there are competitors.
Mr Conway said he did not see any conflict of interest by conducting riskmanagement services on behalf of a fellow oil and gas producer.
Oil companies are highly skilled in energy trading. The large listed oil producers such ExxonMobil, ChevronTexaco, BP, Total and Royal Dutch Shell have few peers when measuring their combined networks of production, shipping, refining and distribution.
These networks provide them with knowledge and expertise of the oil and gas market that can often give them the edge over investment banks.
This scale and competitive advantage is reflected in the bottom-line.
BP reported a pre-tax and interest payments profit of $2.97bn (£1.7bn) from its trading activities in oil, natural gas and power last year. The bulk of this profit came from the trading it did on its own behalf rather than third parties.
The trading profitformed a significant part of BP's 2005 net profit of $22.3bn. read more