October 23rd, 2006:

17:46 | 23/ 10/ 2006 

MOSCOW, October 23 (RIA Novosti) – Russia does not seek to revoke the license of the Sakhalin II oil and gas project in Russia’s Far East, the Russian foreign minister said Monday.

Russia signed the Sakhalin II production-sharing agreement in 1994 with Sakhalin Energy, an investment company controlled by oil major Royal Dutch Shell. The company recently raised its cost estimate for the project, thereby putting off the date by which the Russian government will receive a share of the profits. read more

MOSCOW, Oct 23 (Prime-Tass) — Sergei Stepashin, director of Russia’s Audit Chamber, called Monday for “a drastic revision” of production sharing agreements (PSAs) for the development of Sakhalin Island’s oil fields.

The Audit Chamber is Russia’s public spending and revenue watchdog.

However, the PSAs must remain in effect, he added.

The increase in Sakhalin Energy’s Sakhalin-2 oil and gas project’s costs would be unprofitable for the Russian government, Stepashin also said. read more

By CHIP CUMMINS
October 23, 2006 5:39 a.m.

LONDON — Royal Dutch Shell PLC said it would offer to buy out minority shareholders in its Canadian affiliate for about C$7.7 billion, or $6.85 billion, representing the latest effort in the oil giant’s long-running restructuring. The move would also solidify its growing position in Canada, where it and a handful of other companies have invested billions in heavy, unconventional oil deposits.

Shell said it had approached the board of Shell Canada Ltd., indicating its intention to offer shareholders C$40, or about $35.60, cash per share for the approximately 22% interest in the Canadian unit that the Anglo-Dutch parent company doesn’t already own. read more

By GREGORY L. WHITE
October 23, 2006 1:29 p.m.

MOSCOW — Exxon Mobil Corp. said it has reached a preliminary agreement to sell natural gas from a project on Russia’s Sakhalin Island to China. But the U.S. energy giant still needs to make a deal with OAO Gazprom, the Russia’s state-controlled gas monopoly, to get the fuel to market.

The $12.8 billion Sakhalin-1 project is starting to ship crude oil to Asian markets, but has held back large-scale gas development pending a deal on exports, which initially had been slated to start next year. At present, the project sells relatively small amounts of gas inside Russia at prices substantially below world-market levels. read more

By Peter Cook
Bloomberg
Article Last Updated:10/23/2006 11:40:28 AM MDT
 
Royal Dutch Shell Plc is encouraged by its research on the extraction of crude oil from shale in Colorado and might be able to produce oil there by the middle of the next decade, the head of the company’s U.S. unit said.

A decision on whether to invest in U.S. oil shale production will probably be made by 2010, John Hofmeister said in an interview in Washington.

Hague-based Shell today offered to pay $7.7 billion (Canadian dollars) for the 22 percent of its Canadian unit that it doesn’t already own. read more

By Mathew Carr and Sonja Franklin

Oct. 23 (Bloomberg) — Royal Dutch Shell Plc, the second- biggest European oil company, offered C$7.7 billion ($6.8 billion) to buy out its Canadian unit and gain greater production from the oil sands.

Shell, which owns 78 percent of Shell Canada Ltd., offered C$40 a share for the rest, according to a statement today from the Hague-based company. That’s 22 percent more than the closing price of the unit’s stock at the end of last week. The shares climbed 29 percent, topping the offer price. read more

23 October 2005

Received today from a Shell Insider…

Dear Sir

I like your frank site and here perhaps is something you might care to publish. I refer to the Shell HR email I have supplied. Naturally I want my name kept secret as you will understand.

Here is another HR activity that escaped the attention of the big chiefs (who are quite busy with their own spin stories). All other oil companies (big and small) will smile because this is certain to trigger another exodus of competent Shell engineers. read more

Viktor Yenikeev.
10/23/2006

An unofficial summit between Russia and the EU has taken place in Lahti, Finland. High on the agenda were strategic partnership and energy cooperation.

Russia and the European Union have reaffirmed mutual intention to develop both strategic partnership and energy cooperation. European Commission President Jose Barroza told a closing news conference that Russia and Europe both need one another, and Russia, as the German Chancellor Angela Merkel remarked, is both a leading EU partner and a top player on the international scene. read more

By Paul Abelsky
Russia Profile
October 23, 2006

Russian-Japanese Relations Suffer From A Lack of Compromise

Japan waited 41 years for a male heir to the Chrysanthemum Throne, and in September, Princess Kiko threw the country into elation with the birth of the longed-for boy. Russian-Japanese diplomatic relations, mired in an ongoing territorial dispute over the Kuril Islands that has befuddled several generations of policymakers, are also due resolution, though a compromise seems increasingly unlikely with every passing year. read more

Russian officials warned Sakhalin-2 investors on Friday to comply with environmental laws or face shut-down, also suggesting there could be adjustments to the “economic model” in the huge Pacific coast oil and gas project.

“If the Russian Federation’s laws are going to be violated, if irreparable damage is done to the environment, we will take measures to stop the project,” Natural Resources Minister Yury Trutnev told reporters.

Moscow’s increasingly hard-nosed approach to foreign energy investors has shaken its European partners, while the controversy over Sakhalin-2 is sparking alarm in Japan and South Korea, the main markets for gas shipments meant to start in 2008. read more

(EU leaders were reportedly taken aback by Mr Putin’s rebuff)

By William Horsley
BBC News Europe analyst 
23 October 2006
 
Insiders’ reports from EU leaders’ dinner with Russian President Vladimir Putin last Friday suggest Europe’s diplomats have begun the week suffering from diplomatic indigestion.

All 25 European Union leaders met Mr Putin in Finland.

Accounts of the meeting from some of those present there speak of unusually blunt exchanges between the two sides, in which Mr Putin said he would not listen to lectures about human rights, and rejected EU demands over its vitally important oil and gas business. read more

Sakhalin Energy   
Friday, October 20, 2006

Sakhalin Energy CEO Ian Craig sent a letter today to Minister Yuri Trutnev of the Ministry for Natural Resources of the Russian Federation. In his letter the company’s CEO re-affirmed Sakhalin Energy’s commitment to cooperate with the Ministry for Natural Resources and Rosprirodnadzor in a constructive dialogue, and informed the Minister of the company’s work to rectify acknowledged non-compliant environmental practices identified during the Rosprirodnadzor August 2006 pipeline inspections. read more

The Associated Press
Published: October 23, 2006
 
LONDON Royal Dutch Shell PLC, Europe’s second-largest oil company, said Monday it offered to buy out the minority shareholders in Shell Canada Ltd. as a further step in simplifying the structure of the energy group.
 
Shell, which holds 78 percent of the shares in Shell Canada, said it offered 40 Canadian dollars (US$35.55; €20.20) per share to acquire the stock it doesn’t already own. The offer values the stake at C$7.7 billion Canadian dollars (US$6.8 billion; €5.4 billion).
 
Royal Dutch Shell’s offer is conditional on more than half of the outstanding shares being tendered, the company said.
 
Royal Dutch Shell A shares were down 0.5 percent at 1758 pence (€26.26; US$33.12) in morning trading on the London Stock Exchange.
 
On the Net: http://www.shell.com read more

Investor Centre

Monday, October 23, 2006
VOLUME 1 ISSUE 278

Royal Dutch Shell plc (the ‘Group’) today announced that it has approached the Board of Directors of Shell Canada Limited to indicate its intention to offer to acquire the minority interests in Shell Canada Limited (Toronto Stock Exchange, ticker symbol SHC), for a cash price of C$40/share. This proposal would value Shell Canada Limited’s fully diluted minority share capital at approximately C$7.7 billion. The Group owns a 78% stake in Shell Canada Limited.
 
The proposed acquisition follows the successful unification of the Group in 2005 and is a further step in simplifying the Group structure. Once Shell Canada Limited is fully combined with the Group, the business will benefit from a simplified organization, additional economies of scale and portfolio development in the context of the Group’s global strategy. read more

By Caroline Muspratt Last Updated: 11:17pm BST 22/10/2006

Thursday October 26

Oil giant Shell could give an update on its Sakhalin-2 project in Russia when it reports third-quarter results on Thursday as well as an outlook on oil prices. Analysts say the company could report slightly lower income for the third quarter as volumes are marginally down. Last year, earnings benefited from a strong result in the oil products division on the back of high refining margins, but this year margins are expected to be lower. read more

(The think tank nef calls for a windfall tax on the profits of oil companies such as Shell and BP)

By Tom Stevenson Last Updated: 1:25am BST 23/10/2006

A leading think tank has called for a windfall tax on oil companies’ profits, warning that Britain has squandered billions of pounds of North Sea revenues.

The New Economics Foundation (nef) said the UK should follow the example of Norway, which had used its “accidental inheritance” to set up a Petroleum Fund worth $210bn at the end of 2005, equivalent to $45,000 for every person living in Norway. Nef’s call comes as both BP and Royal Dutch Shell prepare to unveil third quarter results this week.
 
Andrew Simms, policy director at Nef said: “Britain has squandered its windfall of natural resources from North Sea oil and gas. Instead of prudently investing the unearned income from nature to build a safe, clean and green energy supply for the nation, we face unnecessary shortages.” read more

Wednesday, October 25

Minister of Natural Resources Yury Trutnov will hold a meeting in South Sakhalin at which the results of the audit of the Sakhalin 2 project are expected to be announced.

Mark Tran
Monday October 23, 2006
Guardian Unlimited

Vodafone may be under the cosh from shareholders but it emerged today as a world-beater when it comes to corporate social responsibility.

The mobile phone giant led by the embattled Arun Sarin has been ranked as the world’s most accountable business in a survey by AccountAbility, a London thinktank on organisational and corporate accountability, and csrnetwork, a British corporate responsibility network.

“Trust is a pre-condition for doing business,” said Mr Sarin. “And it is directly linked to being accountable for your actions as a company.” read more

Terry Macalister
Monday October 23, 2006

Oil companies should be subjected to a windfall tax to fund a transition to a sustainable energy system, according to a leading charity and thinktank report published today.

The UK must follow the lead of Norway and create an oil legacy fund to ensure the benefits of hydrocarbons are shared by future generations, the WWF and New Economics Foundation (NEF) argue. The call for a new tax comes days before BP and Shell unveil third-quarter profits expected to reach a combined $11bn (£5.8bn). read more

Scheme that would provide 25% of London’s power is bogged down in planning

Terry Macalister
Monday October 23, 2006

Martin Bellis dries himself off with his towel and gives a wry smile when asked if he is not just another Nimby objector looking after his own patch of beach against the potential encroachment of a wind farm near Faversham, Kent. “No, I’m really not. I am a supporter of clean energy and really care for the environment,” he said. “I just happen to think wind is a bit of a white elephant because it’s so inefficient and I cannot understand why anyone would choose one of the best bird sanctuaries in Europe as a site.” read more

Asahi Shimbun headline: Japan will most likely lose out to China in the competition to secure a regular supply of natural gas from a major development project off Russia’s Sakhalin island.

Published: Oct 23, 2006

According to sources, U.S. oil giant ExxonMobil Corp. has recently agreed to begin full-scale negotiations with China to sell gas from the Sakhalin I project

Coming on top of the stalled Sakhalin II project and a large cut in Japan’s rights to an Iranian oil field, the move is yet another setback in Japan’s efforts to secure a stable supply of energy read more

Published: Oct 23, 2006

LONDON (AFX) – The New Economics Foundation think tank and the World Wildlife Fund are calling for a windfall tax on North Sea Oil companies, claiming that BP PLC and Shell have caused 27 bln stg of environmental damage over the last year, reports the Independent.

[email protected] gh/slm COPYRIGHT Copyright AFX News Limited 2006. All rights reserved.

Published: October 23 2006 03:00 | Last updated: October 23 2006 03:00

TUESDAY

*BP reports third-quarter figures ahead of rival Royal Dutch Shell later this week, with underlying earningsfor both likely to be down from the second quarter. The price of oil fell sharplyduring the three-month period and refining margins were squeezed, puttingpressure on both the upstream and downstream sides of BP and Shell, which reports on Thursday.

However, the figures for BP are generally expected to be worse than those for Shell. BP’s third-quarter earnings will be lower than in the same period of last year, according to Fadel Gheit, of Oppenheimer in New York, while Shell’s could be higher. read more

CALGARY, Oct. 23 /CNW/ – Shell Canada Limited confirmed that it has received a proposal from Royal Dutch Shell plc to make an offer for all of the common shares of Shell Canada not already owned by Royal Dutch Shell for consideration consisting of CDN$40 cash per common share, subject to a number of terms and conditions. A formal offer has not yet been made to shareholders.

Royal Dutch Shell has reserved the right not to proceed with making a formal offer if it is unable to obtain a favorable recommendation from the Shell Canada Board of Directors. read more

Mon Oct 23, 2006 6:47 AM BST

MOSCOW (Reuters) – Royal Dutch Shell , Mitsui and Mitsubishi have overestimated the costs of the developing the giant Sakhalin-2 project, a Russian state-owned oil firm has found, the Vedomosti daily reported on Monday.

Russian officials were incensed by Shell’s decision last year to double Sakhalin-2’s costs to over $20 billion (10.6 billion pounds), since under the production sharing agreement (PSA) that governs it, Shell can recoup its costs before the Kremlin sees any profit. read more

The company is spending $30 million to make a huge underground “freeze wall” to safeguard oil-shale reserves in the region.

By Steve Raabe
Denver Post Staff Writer
DenverPost.com
Article Last Updated:10/22/2006 04:56:15 PM MDT
 
Piceance Creek – In an arid, sage-dotted valley here, Shell Exploration & Production Co. has begun work on what could be the final technological challenge to large-scale production of oil from shale.

Shell already has figured out how to melt kerogen – the oil-like substance – from underground shale deposits with electric heaters to produce oil from one of the world’s largest potential petroleum sources. read more

Last Update: 6:55 PM ET Oct 22, 2006

LONDON (MarketWatch) — Costs for Royal Dutch Shell PLC’s (RDSA) liquefied natural gas project Sakhalin-2 could spiral to $28 billion, the Observer reports Sunday.

The predicted construction budget for Sakhalin-2 has risen to $20 billion from $15 billion in 2003, the report says, citing a leaked report by the Russian government.

The report by the Russian Ministry of Natural Resources could limit the revenue Russia will receive from Shell under the production-sharing agreement signed a decade ago. read more

THE WEEK AHEAD IN THE MARKETS
MARTIN FLANAGAN
 ([email protected])

OIL giants BP and Shell are expected to report a fall in underlying third-quarter earnings this week, ending a three-year boom of record earnings on the back of surging oil prices.

Analysts believe higher oil prices in the quarter will have failed to offset soaring oil field costs, higher taxes, a fall in refining profit margins and lower production.

BP is the first of the pair to report, tomorrow, with the City consensus being for a profit of $4.7 billion (£2.5bn) – down 12 per cent on the same quarter last year. However, because the group was hit with a $700 million charge for damage by Hurricane Rita in the third quarter of last year, the headline result is likely to be up year on year. read more