December 14th, 2006:

December 14, 2006] 

Evening Standard, London, Neil Collins column

One of the rules of engineering states that things don’t fail catastrophically without warning. There’s almost always an indication of trouble ahead some time before the event. As the gruesome facts of the disaster that overtook BP’s Texas City refinery leak out like a toxic spill, it’s clear that plenty of warning signs had been ignored before the plant blew up, killing 15 people.

The harbinger of trouble can take many different forms, but here’s a strange one: a long analysis of the benefits of merging BP with Royal Dutch Shell, put together by David Cline of ABN Amro. Over 116 pages, he grinds through aspects of such an unlikely event — from synergies to regulation and divestment — concluding that none of the multitude of problems is insurmountable, and that Shell (rather than BP) is an absurdly cheap stock. read more

Crude-oil futures rose more than $1 a barrel to close at $62.51 after OPEC announced plans to cut production in February. Here is Thursday’s roundup of oil and energy news:

* * *
OPEC AGREES TO CUT: In a strong signal it will try to prevent oil prices from sliding further, OPEC said it plans to slice its output by an additional 1.9% starting Feb. 1. The cartel also accepted Angola, whose oil output is climbing sharply, as its 12th member — the first new entrant since 1973. The West African country will join March 1, the Qatari oil minister told The Wall Street Journal. The real impact of the cartel’s latest output move on oil markets remains unclear. The big unknown is whether OPEC members will actually implement the decision, which calls for a cut of 500,000 barrels a day. read more

Dec 14, 2006 12:18:00 PM MST
 
MOSCOW (AP) _ Russia‘s natural resources minister has rejected a call to reprimand outspoken environmental regulator Oleg Mitvol, who has led a controversial environmental probe against a major Shell-led liquefied gas project, a spokesman said Thursday.

Sergei Sai, the head of state environment watchdog Rosprirodnadzor, had asked Natural Resources Minister Yuri Trutnev, who oversees his agency, to review Mitvol‘s work, citing “inefficiencies.‘‘

Trutnev flatly rejected the appeal. read more

By Jim Efstathiou Jr.

Dec. 14 (Bloomberg) — Royal Dutch Shell Plc, BP Plc, ConocoPhillips and Marathon Oil Corp. reached agreement with the U.S. Minerals Management Service to pay oil and gas royalties under botched Gulf of Mexico leases from 1998 and 1999.

The companies are among a group of about 50 oil and gas producers holding leases that omitted price triggers needed to ensure payment of royalties when energy prices rise. Congress narrowly defeated a measure last week that would have forced the companies to renegotiate the contracts. read more

Terry Macalister
Thursday December 14, 2006

The British lawyer who represented Greenpeace in the battle with Shell over the disposal of the Brent Spar oil platform has been hired by Russia to prepare a case against the Anglo-Dutch oil company over problems at its development project on Sakhalin island off Siberia.

Mark Stephens, partner at Finer Stephens Innocent, said he expected court proceedings in the spring, although he would not say whether that would be in London, New York or Moscow.

In another twist to the Sakhalin story today, there was news that the environmental official dubbed a “Kremlin attack dog” for his verbal assaults on Shell’s environmental records faces disciplinary proceedings.
Oleg Mitvol, the deputy head of RosPrirodNadzor, Russia’s environmental agency, has been recommended for a formal warning by his own boss in a move which was variously interpreted as the result of internal jealousy or a softening of the Kremlin’s line as a deal neared between Shell and state-owned Gazprom over an asset swap. read more

Oleg Mitvol

Sergey Say, who is the chief of Russia’s Federal Service for Natural Resources Supervision (Rosprirodnadzor), has set into motion the ousting procedures for his deputy, Oleg Mitvol, RIA Novosti reported referring to a source with Rosprirodnadzor.

Sergey Say addressed Natural Resources Minister Yury Trutnev, urging him to arrange the office probe into Mitvol “with subsequent disciplinary punishment and ouster,” the source specified on condition of anonymity. The ministry’s news service confirmed the receipt of the letter. read more

Posted on : Thu, 14 Dec 2006 16:09:00 GMT | Author : Amsterdam & Peroff
News Category : PressRelease  

LONDON, Dec. 14 /PRNewswire/ — Following news of the dismissal of Russia’s chief environmental inspector, Oleg Mitvol, just two days after Shell’s offer to give up a majority stake in the Sakhalin-2 project to the Russian government, Attorney Robert Amsterdam issued the following statement:

“This decision on behalf of Royal Dutch Shell to give in to the extortion of the Russian government is a betrayal of not only their shareholders’ interests, but also an abandonment of those who fight for rule of law,” said Amsterdam. “The Kremlin’s theft of Sakhalin-2, carried out with Yukos-like tactics and veiled by fraudulent environmental claims, deserves a stout response from Western corporations, banks, governments – not the complicity and silence currently promoted by the Dutch.”
 
“The environmental concerns at Sakhalin are just one component of Russia’s established expropriation template, illustrated by the hypocrisy of the North European Gas Pipeline planned for the Baltic Sea, which poses the clearest environmental threat of all Russian energy projects. Not only has Shell given up the largest foreign investment project in Russia without a fight, they have contributed to Europe’s weakening energy security and emboldened the Kremlin’s impunity to rewrite contracts, ignore property rights, and harass and interfere with foreign investors of its choosing.” read more

Thu Dec 14, 2006 1:57 PM ET
(Updates with reprieve for Mitvol)
By Tom Miles

MOSCOW, Dec 14 (Reuters) – Russia’s resources minister on Thursday backed environment watchdog Oleg Mitvol, who has rocked the $22 billion Shell-led Sakhalin-2 energy scheme, even after the official’s own boss demanded he be brought to heel.

News that Sergei Sai, head of the environmental agency RosPrirodNadzor, had asked Resources Minister Yuri Trutnev to formally warn Mitvol came amid signs Royal Dutch Shell is nearing a deal to cede control in Sakhalin-2 to state gas monopoly Gazprom . read more

The Associated Press
December 14, 2006, 10:32AM EST
MOSCOW

The head of Russia’s environmental watchdog has called for an official review of his outspoken deputy, Oleg Mitvol, who has led a controversial environmental probe against a giant Shell-led liquefied gas project, a spokesman said Thursday.

Mitvol has been the face of an environmental campaign against Royal Dutch Shell PLC’s $22 billion Sakhalin-2 project, which observers say is aimed at securing control for state gas monopoly OAO Gazprom. read more

By Tom Miles

MOSCOW, Dec 14 (Reuters) – Russia’s outspoken environment watchdog Oleg Mitvol, who has waged a campaign against the Royal Dutch Shell-led Sakhalin-2 energy project, faced a disciplinary rap on Thursday that could herald his dismissal.

News that Mitvol’s boss at the state environmental agency had asked Resources Minister Yuri Trutnev to give Mitvol a formal warning came amid signals Shell is nearing a deal to cede control in Sakhalin-2 to Gazprom .

“The document has been submitted to the ministry, but it hasn’t been reviewed by the minister himself,” Rinat Gizatullin, a spokesman for Trutnev, said. “We will examine it and respond at the start of next week.” read more

December 14,2006
The Freedom View

The Russian government has successfully pressured Shell, the Anglo-Dutch oil company, into reducing its stake in a promising but difficult oil and natural-gas field in Siberia from a majority share to a minority share. Gazprom, the Russian state-owned energy group, which has invested little or nothing in exploiting the energy resources on and around Sakhalin Island, will now have the majority interest. The interests of two minority Japanese investors, Mitsui and Mitsubishi, have also been reduced. read more

15:36 | 14/ 12/ 2006 

MOSCOW, December 14 (RIA Novosti) – The head of Russia’s environment watchdog has proposed firing his deputy, who led a recent crackdown on a vast Shell-run hydrocarbon project in Russia, a source in the federal service said Thursday.

Oleg Mitvol has overseen inspections of a series of leading Russian and foreign mining and hydrocarbon companies, and is known for radical moves such as ordering the demolition of cottages in a water-protection zone near Moscow.

“Sergei Sai wrote a letter to Natural Resources Minister Yury Trutnev yesterday, requesting an official probe into Mitvol’s activities, a reprimand, and his dismissal,” a source said. read more

December 15, 2006

By John Helmer

MOSCOW- There are three opponents of Russia’s strategy to become a global liquefied natural gas (LNG) exporter – the western gray whale, the US government and Gazprom.

Until this week, and for quite different reasons, all three, including the LNG producer itself, Gazprom, have succeeded in delaying and redirecting plans to start shipments from the first of Russia’s LNG plants at Aniva Bay on Sakhalin Island, in the Far East; and to postpone indefinitely drawing-board plans and joint-venture agreements to build the second and third LNG plants on the Baltic, and to the north, on the Barents Sea. read more

Thu Dec 14, 2006 6:35am ET

MOSCOW, Dec 14 (Reuters) – Russia’s outspoken environment watchdog Oleg Mitvol, who has waged a harsh campaign against the Shell-led Sakhalin-2 energy project, faced disciplinary proceedings on Thursday that could herald his dismissal.

The head of state environmental agency RosPrirodNadzor, Sergei Sai, has asked Resources Minister Yuri Trutnev to hand Mitvol a formal warning, a ministry spokesman said.

“The document has been submitted to the ministry, but it hasn’t been reviewed by the minister himself,” said ministry spokesman Rinat Gizatullin. “We will examine it and respond at the start of next week.” read more

MOSCOW, Dec 14 (Prime-Tass) — Sergei Sai, director of Russia’s Federal Service for Natural Resources Oversight, wants his deputy, Oleg Mitvol, to be fired, a source at the service said Thursday, ITAR-TASS reported.

Sai sent a letter requesting Mitvol’s dismissal to Natural Resources Minister Yury Trutnev on Wednesday. The Federal Service for Natural Resources Oversight reports to the Natural Resources Ministry.

However, on Thursday the Natural Resources Ministry denied that Sai had asked the minister to fire Mitvol. Sai only wanted to have Mitvol formally rebuked, said Rinat Gizatulin, spokesman for the Natural Resources Ministry, according to Vesti.ru. read more

Thu Dec 14, 2006 4:53 AM ET
By Dmitry Zhdannikov

MOSCOW, Dec 14 (Reuters) – Royal Dutch Shell denied on Thursday that it had again increased costs of its Sakhalin-2 oil and gas project as such a move would further complicate talks on including Russia’s Gazprom in the project.

The previous costs revision to $22 billion from $12 billion at Sakhalin in 2005 infuriated the state gas monopoly, which was then prepared to buy 25 percent in the project, and prompted a flurry of investigations by Russian authorities. read more

EXTRACT: Before moving into politics Mr Mitvol ran a media business, and was majority shareholder in the Russian daily newspaper, Noviye Izvestia, once owned by exiled oligarch Boris Berezovsky. There have been reports that Mr Putin installed Mr Mitvol at the newspaper after the president fell out with Mr Berezovsky.

THE ARTICLE:

By Russell Hotten, Industry Editor
Last Updated: 1:07am GMT 14/12/2006

Oleg Mitvol, the Moscow official pursuing western oil and gas com-panies over alleged environmental violations, insisted he is not being directed by President Vladimir Putin and that his campaign will make Russia a better place for foreign investors.
  
Rusty green? The Molikpaq offshore oil platform, producing up to 70,000 barrels a day, off Sakhalin island
 
The millionaire businessman-turned-“green”-protector said environmental concerns were not “exclusive to western liberals” and that he would press on with legal action against Royal Dutch Shell for up to $30bn (£15bn) in damages. read more

EXTRACTS: On the one hand, the state-controlled company, increasingly seen as an instrument to project the Kremlin’s power, is hungry for assets, as the latest showdown with Shell over the Sakhalin-2 project demonstrates.

At the top the company appears indivisible from the state: Kremlin spokesmen explain its decisions; its chairman, Dmitry Medvedev, happens also to be a deputy prime minister.

THE ARTICLE

Mark Rice-Oxley in Novy Urengoi
Thursday December 14, 2006

In the frigid emptiness of northern Siberia, where the winter dusk descends soon after lunch and darkness lingers until after breakfast, there’s an old vodka toast that locals raise to take the edge off the Arctic chill: “Za nas, za vas i za gas” – to us, to you and to gas. read more

Published: Dec 14, 2006

THE Corrib Gas partners, who include Norwegian firm Statoil, US firm Marathon Petroleum and the project operator Shell, are moving ahead with the construction of onshore facilities at Bellanaboy in Co Mayo.

At the signing of a new deal by Shell were Pat Ahern, MD of SIAC Butlers Steel Ltd with Andy Pyle, MD of Shell E&P Ireland, Gerry Costello, Shell, Keith Elliott from PM Group, Roger Woodrow and Brian Foley from Shell.

By Neil Buckley and Arkady Ostrovsky in Moscow
Published: December 13 2006 22:07 | Last updated: December 13 2006 22:07

Russia is preparing to cut off natural gas supplies to neighbouring Belarus and Georgia unless the two former Soviet republics agree by the year-end to pay much higher prices in 2007.

Coming a year after Gazprom, the Russian gas giant, briefly cut gas to Ukraine in a similar pricing dispute, such a move could provoke further international criticism that Moscow is using energy as a political tool. read more

December 14, 2006: Carl Mortished, International Business Editor

Russia accused of bullying staff
Expatriates fear withdrawal of visas
 
The cost of Royal Dutch Shell’s Sakhalin-2 gas project is close to $25 billion (£12.7 billion), a rise of $5 billion from previous estimates, after a campaign of harassment by the Russian Government, The Times has learnt.

Progress on the project has been delayed by harassment that includes refusal of drilling permits and visas and the bullying of Shell staff. The soaring costs and delays come as Shell’s responsibility for Sakhalin is being reduced. 
 
The late start of drilling at Lunskoye, a huge offshore gasfield, threatens to delay vital deliveries of liquefied natural gas (LNG) to Shell’s Japanese and South Korean customers, due to start in September 2008. read more

(Vladimir Filonov / MT
Oleg Mitvol)

EXTRACT: Peter Hambro, Russia’s third-largest gold miner, has lost nearly $500 million in the last two weeks — almost one-quarter of its value — after the environment agency called for the withdrawal of licenses it said were affiliated to the company.
 
Peter Hambro said Tuesday that the talks are a “huge positive step.” Hambro is flying to Moscow to meet the outspoken deputy head of the environment inspectorate, Oleg Mitvol, who said Tuesday that checks were under way of all 54 licenses owned by Peter Hambro-affiliated companies in the country. read more