December 13th, 2006:

EXTRACT: “It is a blow… but they had to accept the inevitable.” It is now unlikely that the project will gain backing from the European Bank for Reconstruction and Development, which specialises in encouraging private- sector development in Russia and Eastern Europe.

By: Sam Fleming
Published: Dec 12, 2006

The battle between Russia and Royal Dutch Shell over the massive Sakhalin 2 gas project looks set to end in humiliating defeat for the Anglo-Dutch energy titan.

It emerged that Shell offered to surrender its majority stake in the GBP11bn project after a series of cost overruns and environmental violations left it at the mercy of Russian state-controlled gas giant Gazprom. read more

Published: Dec 13, 2006

It is time to pause and take stock of the Corrib gas project, argues Mark Garavan , the main spokesman for the campaign against the project.

The last number of months has seen an extraordinary campaign of vilification directed at the Shell to Sea campaign group. Certain elements in the media have seized upon particular individuals, particular categories of supporters or isolated incidents to construct a false and misleading characterisation of the entire campaign.

The truth is that Shell to Sea is not an organisation but a loosely networked campaign comprising many disparate elements. However, it is rooted in a community of decent, law-abiding people, supported by many throughout the country, who have found themselves over six years confronted by the might of three large multi-national corporations fully supported by the Irish Government and the main Opposition party. read more

“Mr. Mitvol has wiped more than half a billion dollars off the value of gold producer Peter Hambro Mining in the past two weeks…”

Published: Dec 13, 2006

Environment watchdog Oleg Mitvol describes himself as a defender of the Russian people’s interests.

Critics portray him more as an attack dog unleashed by the Kremlin to grab back resources from foreign investors.

Mr. Mitvol, deputy head of Russia’s environment watchdog, has led an attack on the Royal Dutch Shell-led Sakhalin-2 energy project, the biggest single foreign investment in Russia. read more

By Scheherazade Daneshkhu
Published: December 13 2006 02:00 | Last updated: December 13 2006 02:00

Foreign direct investment more than trebled last year to a record high. But the official figures were distorted by Shell’s corporate restructuring, which contributed two-thirds of the rise.

Net direct investment inflows jumped to £106.5bn, up from £30.6bn in 2004 and the highest since records began in 1984, according to the Office for National Statistics. Of the £76bn increase, about £50bn was due to the merger between Shell Transport and Trading and Royal Dutch Petroleum into Royal Dutch Shell. The complicated restructuring to create a single parent company gave the parent headquarters and tax residency in the Netherlands but incorporation in the UK. read more

EXTRACT: Shell’s problems with its Sakhalin-2 gas project and the fatal poisoning of former spy Alexander Litvenenko in London had added to fund managers’ wariness, the person said, adding: “The market has come to hate Russia.”

By Rebecca Bream
Published: December 13 2006 02:00 | Last updated: December 13 2006 02:00

Peter Hambro, the gold mining entrepreneur, is planning to fly to Moscow today in an attempt to limit the damage being done to his company’s stock price by reports that its Russian mining licences might be revoked, writes Rebecca Bream. read more

By Raphael Minder
Published: December 13 2006 00:28 | Last updated: December 13 2006 00:28

One of Australia’s biggest natural resources projects, the A$11bn (US$8.6bn) Gorgon gas venture operated by Chevron of the US, cleared a major hurdle on Tuesday when it settled a dispute with state authorities over protecting wildlife.

Mark McGowan, environment minister of Western Australia, said state government had “effectively given the green light” to the Gorgon project after setting “a raft of tough new environmental conditions”. read more

By Robert Orr and Neil Hume
Published: December 13 2006 02:00 | Last updated: December 13 2006 02:00

*Regal Petroleum increased by 12 per cent to 178p after a Supreme Court of Ukraine ruling in favour of the oil and gas group brought to an end the long-running dispute about the validity of its Ukranian production licences. The ruling, which overturned a court decision, ended a dispute that has dragged through the Kiev courts for more than a year.

Peter Hambro Mining slid a further 16 per cent to 820p amid reports authorities in Russia had begun checks at all 54 of the gold producer’s assets in the country. read more

“It is understood that after its troubles in Russia, Shell’s appetite for accumulating further assets in the country has weakened.”

By Arkady Ostrovsky and Neil Buckley in Moscow
Published: December 13 2006 02:00 | Last updated: December 13 2006 02:00

Dmitry Medvedev, Russia’s first deputy prime minister and the chairman of Gazprom, yesterday said the company was “close to reaching agreement” with Shell on entry into the Sakhalin-2 project.

Mr Medvedev said: “The talks are going quickly and we can hope to reach a deal soon.” read more

“Shells shares have fallen by some 15% from the peak set earlier in the year…”
 
By: Nadeem_Walayat
 
Russia’s Environment agency Rosprirodnadzor, today said it was to file lawsuits against foreign oil companies developing the Sakhalin-2 oil and gas fields during early 2007. The agency estimated initial costs of the damage at $10 billions but could rise as high as $50 billion. Intense pressure from the Russian government is forcing Royal Dutch Shell to give up control of the lucrative $30 billion Sakhalin-2 project to state gas monopoly Gazprom as an attempt to elevate the pressure and get the project moving forward. Shell holds a controlling 55 percent stake in Sakhalin Energy. Japan’s Mitsui and Mitsubishi own 25 percent and 20 percent. read more

By Russell Hotten
Last Updated: 1:33am GMT 13/12/2006

The Russian agency pursuing Royal Dutch Shell over its Sakhalin-2 project has turned up the heat on Exxon Mobil and Peter Hambro Mining in what could be further assaults on foreign investors.

RPN, the state-run environmental watchdog, said it was starting fresh checks on Exxon’s Sakhalin-1 oil development and on all 54 operating licences affiliated to Hambro, Russia’s third largest gold producer.

Hambro shares crashed 154 to 822p yesterday amid fears it could be a repeat of the Sakhalin-2 affair. Shell looks set to relinquish control of Sakhalin-2 after Moscow claimed the company violated environmental conditions. read more

Bryce Elder
Wednesday 13 December 2006
 
Could Peter Hambro Mining become the next victim of the Kremlin’s enthusiasm for wresting mineral resources away from foreign ownership? Shares in the goldminer dropped 154p to 822p as Russia’s environmental regulator said that it had begun checks on all 54 of Hambro’s licence areas.

Last month, Oleg Mitvol, the outspoken deputy head of the Russian agency, threatened to revoke five Hambro licences, claiming that the company was violating environmental rules or was doing nothing to develop the sites. He also led the campaign against Shell’s Sakhalin-2 energy project. 
 
http://www.timesonline.co.uk/article/0,,748-2501490.html read more

December 13, 2006
Carl Mortished, International Business Editor
 
The loss of a quarter of the Sakhalin gas project in Siberia will upset Shell’s strategy to boost oil and gas output, leaving a serious dent in the company’s planned expansion over the next two years, City investment analysts reckon.

The chairman of Gazprom, Dmitry Medvedev, who is also First Deputy Prime Minister of Russia, confirmed that Gazprom would take approximately half of Sakhalin-2 in exchange for cash and assets. 
 
Shell’s chief executive offered the giant Russian utility a controlling stake in the project on Friday in a bid to end a campaign of harassment conducted by the state environmental agency, which has threatened criminal prosecutions for alleged breaches of environmental law on Sakhalin Island. read more

(Gazprom headquarters in Moscow / Photo from MosNews archive)

Created: 13.12.2006 09:46 MSK (GMT +3), Updated: 10:31 MSK

Russia’s state-controlled gas monopoly Gazprom is interested in joining Shell-led Sakhalin-2 oil and gas project in Russia’s Far East, but not at any price, the company’s chairman and Russia’s Deputy Prime Minister Dmitry Medvedev said on Tuesday, Dec. 12.

“Any business has its own price. Therefore, it is important to discuss the conditions of joining the company,” Medvedev said, quoted by RIA Novosti. read more

By ANDREW E. KRAMER
Published: December 13, 2006

MOSCOW, Dec. 12 — Gazprom hopes to buy up to 50 percent of Royal Dutch Shell’s $20 billion Sakhalin Island development, Dmitri A. Medvedev, Russia’s deputy prime minister, said Tuesday, signaling a large future role for the company in the venture.

After months of pressure from Russian environmental regulators, Shell offered to sell a stake in its oil and gas development to Gazprom, which is controlled by the Russian government. Shell effectively agreed to renegotiate the terms of its 1990s investment in Russia under pressure from the government of Vladimir V. Putin. read more

Shell under pressure from the Kremlin to sell up its stake in a gas plant in eastern Russia.

To watch the report click on link below:

http://www.channel4.com/news/special-reports/special-reports-storypage.jsp?id=4131

It’s an audacious move and a test of Russia’s willingness to abide by the rules.

The Kremlin is putting pressure on the Anglo-Dutch company Shell to sell its controlling stake in a gas plant in eastern Russia.

But Shell is resisting the swoop, which has implications for investors and Britain’s future energy security. read more

ComCom clearance expected in early 2007

Gas supplier BOC is to buy Shell New Zealand’s commercial LPG business, including its shareholding in Liquigas.

BOC says the move augments its existing international investments in LPG which currently generate more than $NZ 1.1 billion annually.

Sue Dale, BOC’s General Manager in New Zealand, says it will also increase the company’s market share and secure its position as a significant market player in New Zealand.

Shell says that while the LPG business is robust and has growth prospects, “it is no longer considered core to SNZ’s retail business.” read more

By LISA KALLAL
December 13, 2006

LONDON — Prices for U.K. wheat are likely to rise, and exports shrink, as the government pushes to have more of it converted into ethanol.

The number of wheat-ethanol projects announced for sites around the U.K., together with plans for an existing artificial-sweetener factory to switch to wheat from corn, add up to about 3.4 million metric tons a year of additional demand for the crop, the country’s biggest grain by production.

In the process, U.K. wheat prices could increase to parity with the price of imported wheat, industry experts say. General wheat freight costs alone from Continental Europe to the U.K. could reach £20, or about $39, a metric ton, depending on the inland destination, they calculate. read more

BUSINESS WORLD
By HOLMAN W. JENKINS, JR.
December 13, 2006; Page A19

You have to admire the perseverance of Western energy investors in Russia, whom no amount of homicide, arbitrary contract abrogation or naked shakedowns can discourage.

Though Shell is being muscled out of a $20 billion deal to develop a Far East oil and gas field, and though American minority shareholders got wiped out along with Mikhail Khodorkovsky in the seizure of Yukos, Western money continues to take its chances on Russia out of desperation more than anything else. The world may be rich in hydrocarbons but opportunities for Western corporations are vanishing behind closed nationalist doors in country after country, where governments increasingly monopolize the development and production of oil. read more

Crude-oil futures fell to about $61 a barrel, a fresh two-week low, on the New York Mercantile Exchange ahead of U.S. government inventory data expected to show builds in stockpiles of gasoline and heating oil. Here is Tuesday’s roundup of oil and energy news:

* * *
COOPERATION IN SOUTH CHINA SEA: China National Offshore Oil Corp., China’s largest offshore oil producer by output, signed production-sharing contracts with U.S.-based firm Devon Energy for two deepwater blocks in the South China Sea. The agreement underlines the interest in the South China Sea that has been reignited by Canada’s Husky Energy discovery of recoverable reserves of natural gas estimated at between 113 billion and 170 billion cubic meters in June. read more