September 25th, 2006:

Terry Macalister and Tom Parfitt
Tuesday September 26, 2006

Western oil companies were in confusion about the investment climate in Russia last night after the government appeared to soften its position with Shell but opened a new line of attack against BP.

Yuri Trutnev, natural resources minister, said there would be a full inquiry into environmental problems at Shell’s $20bn Sakhalin-2 scheme but insisted the operating permit was safe – for now.

“There is no question of removing the licence because of the result of the investigations. The inspection should only examine whether the operator is abiding by the environmental protection legislation,” said Mr Trutnev. read more

By Arkady Ostrovsky in Moscow
Published: September 26 2006 01:38 | Last updated: September 26 2006 01:38

Russia had no intention of removing an operating licence from Royal Dutch Shell for Sakhalin 2, the world’s largest energy project, its minister of natural resources said yesterday.

Yuri Trutnev confirmed his ministry was planning to conduct a fresh investigation of Shell’s compliance with environmental regulations, but had no power over the project’s economic aspects.

Shell, the operator of Sakhalin 2, came under fire from Russian authorities after more than doubling the projected cost of the oil and gas project. Such a move would affect Russia’s profit from the venture. read more

Tuesday, September 26, 2006. Page 10.
By Konstantin Sonin
 
Two leading financial newspapers, the Financial Times and The Economist, wrote last week that the “environmental attack” on Shell, the main stakeholder in the Sakhalin-2 project, had been brought about by Russia’s desire to bring foreigners to the negotiating table. This was a logical conclusion.

Both newspapers also wrote that the government’s response was misguided, but here they missed the mark. Of course, both the method of initiating negotiations — using the Prosecutor General’s Office — and the decision to have Gazprom manage the state’s (future) share in the project are bad news. But the government’s intention is correct. The time has come to renegotiate its production sharing agreements. read more

25/09/2006 21:11 (Recasts paragraph 2, adds paragraphs 4-9)

MOSCOW, September 25 (RIA Novosti) – Russian prosecutors issued a warning Monday that a BP joint venture operating in East Siberia could have its license revoked if it fails to address environmental protection and other problems.

The Prosecutor General’s Office said Rusia Petroleum [RTS: PTRL], majority owned by Russian-British joint venture TNK-BP, had failed to comply with legislation on the use of natural resources and environmental protection, as well as with the terms of its license agreement on the development of the Kovykta gas field, in the Irkutsk Region. read more

Mon Sep 25, 2006 11:58am ET

HOUSTON, Sept 25 (Reuters) Shell Oil Co.’s 334,000 barrel per day joint-venture refinery in Deer Park, Texas, slowed de-coking operations on Sunday, according to a notice filed Monday with the state pollution regulation agency.

During de-coking operations, the coker released coke dust into the air, according to the notice filed with the Texas Commission on Environmental Quality.

A coker processes the gunky residue at the bottom of barrel of crude into refinable material or solid carbon chunks called petroleum coke that are sold as a replacement for coal. Periodically, cokers have to be cleared of carbon powder, which is called de-coking. read more

Shell are threatening to start work at the Bellinaboy site, where they intend to build a giant refinery to process Corrib gas onshore. There are daily pickets at the entrance to the site, and local people are adamant that the work can not be started without their consent.

In recent days there has been a noticeable increase in Garda activity in the vicinity. From before dawn this morning (Monday 25th) Gardaí have been filming the protesters and the area. A large number of crowd control barriers have been brought to Belmullet Garda station, and the garda barracks has recently taken delivery of FIVE police vans. read more

09/25/2006

Russia is strongly opposed to any politicization of economic issues that emerged during the implementation by foreign companies of the oil-and-gas project on Sakhalin Island, as Foreign Minister Sergei Lavrov said. He confirmed that Russia remained committed to its obligations and urged his country’s foreign partners to strictly observe the earlier reached agreements.

He said as much ahead of his participation in the international conference, “Oil and Gas from Sakhalin”, that will take place on Sakhalin Island from September 27th to 28th. read more

25.09.2006, 16.16 
 
TOKYO, September 25 – The Japan Gas Association’s chief Akio Nomura has expressed concern over the situation around the oil and gas project Sakhalin-2 that has been suspended because of incompliance with ecological standards.

A stop to the project would have serious consequences for Japan’s energy security, he told a news conference on Monday.

Nomura, who is also the head of Osaka Gas Corporation, said that four Japanese gas companies had signed contracts for buying liquefied natural gas under the Sakhalin-2 project beginning from 2008. read more

25.09.2006, 15.30

MOSCOW, September 25 (Itar-Tass) — The World Wildlife Fund has dismissed as “not convincing” speculations the mass death of fish and animals washed ashore in the Sakhalin Island’s Aniva Bay late last week was due to a storm.

“According to the Ecological Watch of Sakhalin there was no storm in the area on that day,” said WWF Director Igor Chestin. “Moreover, as hurricanes approach, fish and crabs usually move to greater depths. Monday’ s explanation by the Sakhalin Region natural resources committee to the effect the south wind, not typical of the region, caused massive death of sea animals looks not plausible.” read more

Last Update: 11:39 AM ET Sep 25, 2006

HOUSTON, Sept 25, 2006 /PRNewswire via COMTEX/ — To encourage middle and high school students’ interest in math and science, while introducing them to the world of energy, Shell Oil Company is launching a new educational website, “Energizing Your Future with Shell” at http://www.shell.com/us/energizeyourfuture.

In the energy industry, there is an anticipated shortage of technical workers due to the pending retirement of the baby boomers and the declining number of students pursuing technical careers. As part of a Workforce Development Initiative to increase the number of individuals in engineering, the geosciences and process technology, Shell created this online tool for teachers and students. read more

By Stephen Voss

Sept. 25 (Bloomberg) — Chevron Corp., the second-largest U.S. oil company, said it started a joint research project with the Los Alamos National Laboratory to study hydrocarbon reserves trapped in rock formations known as oil shales.

Oil shales are sedimentary rocks that contain a high proportion of organic matter that can be converted into crude oil or natural gas. The research will be based on formations in the Piceance Basin in Colorado and experiment with underground processing techniques that might mitigate greenhouse gas emissions, Chevron said in a statement. read more

September 25 2006

(Fortune) — Royal Dutch Shell (Charts) ranks no. 3 on FORTUNE’s Global 500 this year, with $306.7 billion in revenues, up 14.2% from the previous year.

The Hague, Netherlands-based company was ranked no. 4 on the 2005 list. Its 2005 profits were $25.3 billion, up 39.2% from a year earlier. 2005 was a banner year for most Global 500 companies.

It took $13.7 billion in revenue just to make this year’s list – up from $12.4 billion last year. And profits for the 500 companies jumped 30%. Total revenues for the Global 500 in 2006 add up to $18.9 trillion, a third of the world’s GDP. In the Petroleum Refining industry, profits were up 44% from the previous year. read more

Tigre, Venezuela — On the hot, shrub-covered plains around this dusty, dingy town, an odd courtship is being carried out between the world’s most prominent revolutionary and the world’s biggest oil companies.

Just as there is no love between President Hugo Chavez and the Bush administration, there is little love lost between Chavez and the foreign oilmen who are pumping up the huge reservoirs of underground oil. But they need each other. The United States needs Venezuela to help quench its bottomless thirst for oil, and Chavez needs America to buy it from him in order to fund his dreams of spreading his leftist ideology around the hemisphere. read more

By Julie Ziegler

Sept. 25 (Bloomberg) — Nigeria, Africa’s biggest oil producer, may revoke as many as 10 oil licenses for the Niger delta region and put them up for bid as part of a plan to increase development in the impoverished region.

Oil Minister Edmund Daukoru is reviewing recommendations to include 10 dormant oil licenses held by Royal Dutch Shell Plc, Chevron Corp., Exxon Mobil Corp. and a unit of Total SA, among others, said Tony Chukwueke, the head of the Department of Petroleum Resources. Preferential rights to those blocks might then be offered to other companies willing to invest in refineries and development, he said. read more

By Torrey Clark

Sept. 25 (Bloomberg) — Oleg Mitvol, the Russian official who is pushing to revoke Royal Dutch Shell Plc’s environmental permit for its Sakhalin-2 oil and gas project, will inspect the project this week for environmental damage.

Mitvol, the deputy head of the Natural Resources Ministry’s environmental inspectorate, will tour the project’s overland pipeline construction site by helicopter and meet with officials from Shell’s project operator, Sakhalin Energy, the ministry said in an e-mail today. read more

15:00 | 25/ 09/ 2006 

MOSCOW, September 25 (RIA Novosti) – Water tests near the site of the Sakhalin Energy project off Russia’s Pacific coast are expected this week after the discovery of mass fish deaths, a global environmental organization said Monday.

Dead crabs and fish appeared September 21-22 on a strip of 10 kilometers (6 miles) along the coast of the Sea of Okhotsk, where Shell-led Sakhalin Energy is building facilities for the massive Sakhalin-II oil project, the World Wildlife Fund in Russia said. read more

Sep. 25, 2006

Russia has found a new way to pressure the participants in Sakhalin 2. A complex audit by Rosprirodnadzor, the federal resources supervisory service, of the project begins today and may lead to stiff financial claims being made against the operator company, Sakhalin Energy, when it is finished.

Officials are making every assurance that the new tensions are related to the rising expenses for the project and are promising to make every effort to increase its financial attractiveness for the state. read more

Mon Sep 25, 2006 3:52 PM BST

MOSCOW (Reuters) – Russia’s environmental agency has ordered a full environmental investigation into the Shell-led Sakhalin-2 oil and gas project, the Natural Resources Ministry said in a statement on Monday.

But Natural Resources Minister Yuri Trutnev said the investigation should only cover environmental aspects of the $20 billion (10.5 billion pound) project in Russia’s far east and not interfere with the economics.

“There is no question of removing the licence because of the results of the investigation,” the statement quoted Trutnev as saying. read more

Published: September 25. 2006 3:00AM
Nation/World

Venezuela now tops U.S. in aid to Latin America

September 25, 2006
BY ROBERT COLLIER

CARACAS, Venezuela — He pops up almost everywhere — Africa, Asia, the Mideast, South America and at the United Nations last week, denouncing U.S. policy with revolutionary fervor.

Like a recurring bad dream for the Bush administration, Venezuelan President Hugo Chavez is molding himself into one of the world’s preeminent anti-American leaders.

Days before he addressed the United Nations — where he called President George W. Bush the devil — Chavez hosted Iranian President Mahmoud Ahmadinejad in Caracas. They signed more than 20 trade and investment deals, and Chavez said he would cut off oil supplies to the United States if there were a U.S. military attack on Iran. read more

25 September 2006

Dear Mr Van der Veer

I received an email from a Shell insider this morning containing a timely proposal which, although partly tongue-in-cheek, I believe actually has considerable merit in regard to resolving the Sakhalin II impasse. As you will see, it also has other advantages. I therefore thought it appropriate to bring this brainwave to your attention immediately. 

Here it is without further fanfare.

Email received from a Shell Insider 

Subject: Gazprom takeover? Why the hell not? read more

EXTRACT: The New York Times reported that two auditors claim Shell Oil Co. inflated transportation costs to avoid paying $18 million in royalties.

THE ARTICLE

Sept. 24, 2006, 9:59PM

Lawsuits and testimony suggest the U.S. Interior Department has forgotten its duty to the public.

In 1998 and 1999, U.S. Interior Department officials incompetently botched leases aimed at encouraging oil companies to venture into deeper waters in the Gulf of Mexico. For years afterward, department officials kept mum about the mistake, which allowed oil companies to avoid paying fair royalties on assets owned by the taxpayers. read more

Monday September 25th, 2006 / 9h37 

MOSCOW -(Dow Jones)- Sakhalin Energy said Monday it signed letters of intent for service provision during phases one and two of the Sakhalin II oil and gas project with two companies.

The contracts are valued at about $100 million each.

The first Letter of Intent for the long-term maintenance and services for the liquified natural gas plant and oil export terminal and an option for maintenance of further assets, was signed with SakhalinNefteGasServis.

SNGS is a newly-formed Sakhalin-based Russian enterprise combining the international experience of its partners Fluor and Dietsmann, and an experienced local contractor Dalelectromontazh, which is a Sakhalin-based enterprise. read more

By Upstream staff
Monday 25 September 2006

Shell and ExxonMobil said today it was business as usual at their projects on Russia’s Sakhalin Island, despite a political row over the Kremlin’s tough line on rising costs.

The Sakhalin 1 and Sakhalin 2 projects, led by ExxonMobil and Shell respectively, have drawn criticism from Russia’s Natural Resources Ministry because their costs are expected to soar.

The ministry last week withdrew environmental approvals for Sakhalin2, sparking fears the Kremlin was preparing to demand the companies renegotiate terms or even lose their licences. read more

(Deseret Morning News graphic)  

EXTRACTS: During the litigation, lawyers have found corruption, fraud, horrible mismanagement and gaping holes in the accounting system by which Indians were paid for oil on their land, Cobell said.”What’s wrong with this picture when we have someone who is living in a shack and they have four oil wells pumping on their land?” she asked. “They should be living in a mansion.”

Shell and Texaco oil companies, which both have operated on Johnson’s land, never have provided accurate figures about how much oil was pumped there, which makes it impossible for the family to determine exactly what Johnson is owed. In one recent case, an oil company paid $20 for a 20-year oil pipeline right of way. read more

EXTRACT: The Victorian Government has just given the greenlight to a 50-year mining licence for a $5 billion joint project by from Shell Oil Group and Anglo American to convert Latrobe Valley brown coal into diesel fuel.

THE ARTICLE

Sydney, Sept 25, 2006 (ACN Newswire) – You are going to hear a lot about gas/coal to liquids technology in Australia in coming years and it could very well end up supplanting the likes of ethanol and biodiesel as a source of energy in competition with oil.

South Africa has used it for years (Sasol), the Germans used similar technology during World War Two and intensive studies are being made to use it to process natural gas in the Middle East, the US and even Australia’s north west shelf. read more

Sep 25 2006 9:03AM

COMPIEGNE, France. Sept 25 (Interfax) – Russian President Vladimir Putin on Saturday confirmed that the Russian government had “grievances” against French oil company Total concerning its operations at a Russian oil field but added, “there is nothing that should cause any panic.”

Putin was speaking to reporters in Compiegne after talks with French President Jacques Chirac and German Chancellor Angela Merkel.

On Friday, Putin told a reporter in Paris before talks with Chirac that “rumors on the withdrawal of the license from the company are greatly exaggerated.” read more

EXTRACT: Shell’s overall capital investment this year is up almost $4bn to $19bn, including the higher capital cost bill. About 55pc of the $10bn-$11bn allocated for upstream oil and gas projects is targeted to ramping up new schemes, including the $20bn Sakhalin programme where Russian intervention is threatening the timetable.

By Roland Gribben
(Filed: 25/09/2006)

Rapidly rising exploration, production and project costs are forcing oil companies to increase investment budgets to avoid a slowdown in new developments. read more

EXTRACT: The project, a joint venture of Shell and the TransCanada Corporation, has already been charged, tried and convicted of being an industrial menace…
 
Published: September 24, 2006

It is fair to say that the local reaction to the giant floating natural gas depot that Broadwater Energy has proposed for Long Island Sound has been overwhelmingly negative.

The project, a joint venture of Shell and the TransCanada Corporation, has already been charged, tried and convicted of being an industrial menace by a chorus of politicians and environmentalists. This chorus has been notable for its size, loudness and strident harmony. read more

Published: Sep 25, 2006

SYDNEY (XFN-ASIA) – Woodside Petroleum Ltd said it may have made a new gas discovery in same 100 pct owned permit off the north west coast of Australia that contains the Pluto gas field which Australia’s largest pure oil and gas company plans to develop as a liquefied natural gas (LNG) project.

The company, 34 pct owned by the Royal Dutch Shell group, said preliminary analysis indicates its Xena-1ST1 exploration well in Western Australia’s Carnarvon Basin encountered a gross gas column of about 49 meters in good quality reservoir sandstones. read more

By Kevin Morrison
Published: September 25 2006 03:00 | Last updated: September 25 2006 03:00

The long awaited arrival of a commercial technology that could significantly alter the incomes of big Qatar gas producers has been put on hold until the new year, leaving the energy industry and financiers to cool their heels before they can truly assess the merits of gas-to-liquids (GTL) technology.

The delay in the Oryx GTL plant in Qatar until the start of next year, almost a year after it was scheduled to begin delivering diesel and a range of products to customers, underlines the complications with such an advanced technology. read more

EXTRACT: Andy Brown, Shell’s country chairman in Qatar, says the research the company will undertake “is directly related to and responds to the needs of our business” in the country. In relation to the gas-to-liquids project he has been working on, he says: “It will be great to look at how to use the by-products of the process, and it’s valuable to have the opportunity to do this in Qatar.”

Shell will be working on a catalyst project that is fundamental to its business, says Mr Brown, and hopes to look a surface geology, where a lot of work needs to be done. Shell welcomes the training aspect of the park, “because it gives us a link to civil society”.  read more

Minister says country is ‘long way’ from backing out of 1993 deal. US adds voice to concerns

By Susie Mesure
Published: 25 September 2006

Russia attempted to defuse the growing diplomatic crisis over its threats to strip Shell of its licence to operate the $20bn (£10.5bn) Sakhalin-2 oil and gas project yesterday, insisting it was a “long way” from breaking the deal it struck in the early 1990s.

Sergei Lavrov, the Foreign Minister, offered the oil major an olive branch in an attempt to calm down a dispute that has embroiled most Western governments and raised serious concerns over the Kremlin’s plans for its vast natural resources. read more

Sakhalin Controversy
Deepens Amid Signs
Of Dispute in Moscow
A WALL STREET JOURNAL NEWS ROUNDUP
September 25, 2006

Managers at Royal Dutch Shell PLC are looking at legal options that could help overcome the cancellation of an environmental permit for a $20 billion project in Russia, people familiar with the matter said late Friday.

Last week, Russia’s Ministry of Natural Resources pulled a key environmental permit for the Sakhalin II oil-and-gas project in Russia’s Far East. Shell, which leads the international consortium on the project, denies wrongdoing. read more