December 23rd, 2006:

December 24, 2006

BP’s Lord Browne has had an annus horribilis but there may be worse to come in 2007, with probes of the company’s safety record and a looming battle to succeed him. Dominic Rushe reports 
 
The holiday season is a time for reflection. And 2006 has certainly given Lord Browne of Madingley plenty to think about. Once Britain’s most admired boss, the BP chief executive has seen his image tarnished this year by a series of scandals, disasters and an investigation into a fatal fire that killed 15 employees. read more

December 24, 2006

Paolo Scaroni headed the glassmaker Pilkington for six years. Now he is cutting deals with the Russians as boss of the Italian energy giant Eni. Why is he jumping in where others fear to go? 
 
JAWS dropped when Paolo Scaroni, the former Pilkington glass boss, was appointed head of Italy’s energy giant Eni last year. What does the elegant Scaroni, a glass-industry veteran, know about oil? Enough to cut a dash, that’s for sure.

Last month Eni — the sixth-biggest oil company in the world — announced a ground-breaking agreement with the aggressive gas giant Gazprom that will allow the Russians to sell gas direct to consumers in Italy. This month, the Russian media were reporting that Eni could be bidding for local energy assets there, at a time when other oil giants have become nervous about the region. read more

Last Updated: 12:01am GMT 24/12/2006

Vladimir Putin is making himself our problem. There is a difference between persecuting political opponents at home and doing so in neighbouring states; between presiding over the murder of dissidents within your borders and sanctioning their death abroad. The moral distinction may be slight, but the legal distinction is vast: the international order rests on the principle of territorial jurisdiction.

The latest country to suffer the Kremlin’s bullying is Georgia. Since electing Mikhail Saakashvili on a pro-Nato ticket in 2003, Georgians have been roughed up by their giant neighbour. Their exports are impounded, their citizens rounded up and deported. President Putin backs separatist rebels in South Ossetia, a stance that sits oddly with his insistence that the bestial repression of Chechen separatism is an internal Russian matter. Now, Russia has doubled the price of its gas. read more

(From right: Jeroen van der Veer of Royal Dutch Shell, Yuri Trutnev, Russia’s resources minister, and Stanislav Tsygankov of Gazprom)

Melissa Kite and Nicholas Holdsworth in Moscow,
Last Updated: 12:37am GMT 24/12/2006

Russia’s use of energy supplies as a political weapon should be a wake-up call to Britain and the West to deal urgently with the threat, senior Conservatives said last night.  

Liam Fox, the shadow defence secretary, stepped up Tory calls for a Nato-style “energy pact” after Gazprom, Russia’s state-controlled energy giant, forced the pro-Western former Soviet republic of Georgia to accept a doubling of gas prices. read more

By Upstream staff

Anglo-Dutch supermajor Shell’s chief executive Jeroen van der Veer said that the sale of half the company’s interest in Russia’s Sakhalin 2 project to Gazprom would have an impact on its reserves.

“Of course there’s a short-term impact on the reserves, the reserve bookings themselves, but when I look at the future of the company, we have really good opportunities,” Van der Veer told Reuters after sealing the deal in Moscow.

Gazprom will pay a total of $7.45 billion to Shell and its Japanese partners Mitsui and Mitsubishi to become the leader of the $22 billion project. read more

Providing coverage of Alaska and northern Canada’s oil and gas industry
Week of December 24, 2006
By Gary Park

Shell Canada is rapidly occupying the leading edge of Alberta oil sands growth.

Already the only major producer with holdings in the three largest regions — Athabasca, Cold Lake and Peace River — it has filed a regulatory application to turn Peace River from a largely experimental play into a serious player.

The Carmon Creek project would boost Shell Canada’s output from 12,000 barrels per day to 50,000 bpd by 2010 or 2011 and double those volumes over an indefinite period. read more

ASSOCIATED PRESS
By Dan Udoh
8:50 a.m. December 23, 2006

PORT HARCOURT, Nigeria – A car bomb exploded outside a state government office in Nigeria’s southern oil hub Saturday, soon after the military reported an overnight bombing of a water pipeline leading into a refinery.

The blast at the office building in Port Harcourt was the first targeting of a government installation by a militant group that has frequently kidnapped foreign oil workers and occupied pumping stations run by multinational companies.
 
The two bombings came at the end of a week of attacks against petroleum companies in Africa’s largest oil-producing nation. Militant groups say people in the oil-rich Niger River delta aren’t benefiting enough from the wealth. read more

By Simon Bowers

Shell’s sale of half of its interest in Sakhalin-2 will result in a “fairly dramatic impact” on the Anglo-Dutch group’s production in years to come, according to analysts. Jon Rigby, at UBS, wiped 7.4%, or 330,000 barrels of oil equivalent a day, off his forecast for reported production in 2015.

The deal, which hands control of Sakhalin-2 to Russian state monopoly Gazprom, will see Shell relinquish about 2% of its 60bn barrels of oil equivalent. Shell will update its future production profile when reporting full-year figures in February. Royal Dutch Shell A shares closed down 1p at £17.89. read more

Alex Brummer column
By: Alex Brummer, Daily Mail – London: KRTBN
Published: Dec 22, 2006

Big oil has a long history of having assets appropriated by hostile governments. Yet no one has been quite prepared for the land grab by Gazprom of a 50pc stake in the Sakhalin-2 project.

This will come as a nasty blow to all overseas investors in President Putin’s Russia and emphasises the vulnerability of European energy supplies to the whims of the Kremlin.

The way in which the Russian authorities slowly tightened the noose on Shell can be seen as carefully orchestrated blackmail. read more

Published: Dec 23, 2006

GardaI have denied that force was used during yesterday’s early morning protest at the Corrib gas terminal in north Mayo. Lorna Siggins , Marine Correspondent, reports.

Shell to Sea campaigners say that one of their local supporters was injured when a garda drew a truncheon and hit the man several times on the arm and leg. Mary Corduff, who was at the protest along with her husband, Willie, condemned the action and said it was a “very sad development, coming up to Christmas”. read more

By Matthew Richards
Published: December 23 2006 02:00 | Last updated: December 23 2006 02:00

Shell will prove there is still such a thing as a free lunch next month when it adds £7,000 to employees’ January pay packets to compensate them for the end of paid-for meals at the Shell Centre canteen.

Staff at the oil group’s London headquarters in Waterloo currently receive £3.75 to spend in the canteen for each day they come to work. But the payments will be made for the last time on January 31. After months of consultations, Shell offered to make the one-off payment to all centre-based staff employed on January 1 2007. read more

Published: December 23 2006 02:00 | Last updated: December 23 2006 02:00

For Brits, grainy footage of Neville Chamberlain clutching a piece of paper and talking about “peace in our time” captures an era when civilised chaps were flummoxed by foreign bullies. Jeroen van der Veer, chief executive of Royal Dutch Shell, returns from Moscow with a few bits of paper of his own after concluding negotiations with Gazprom over the Sakhalin-2 gas project.

Gazprom will pay $4.1bn in cash for half of Shell’s 55 per cent stake. It will also buy on the same terms the stakes of Shell’s minority partners, Mitsui and Mitsubishi, thereby taking control. At least Moscow has promised to call off the dogs and let the project proceed. In that respect, Mr van der Veer has extracted peace with a semblance of honour. read more

Crude-oil futures fell for a second straight session, settling at nearly $62 a barrel on the New York Mercantile Exchange on unseasonably warm Northeast weather and expectations of rising inventories.

Here is Friday’s roundup of oil and energy news:

* * *
COURT WIN FOR EXXON: A federal appeals court cut in half a $5 billion jury award for punitive damages against Exxon Mobil in the 1989 Valdez oil spill along the Alaskan coastline. The case, one of the nation’s longest-running, noncriminal legal disputes, stems from a 1994 decision by an Anchorage jury to award the punitive damages to 34,000 fishermen and other Alaskans harmed when the Valdez oil tanker struck a charted reef, spilled 11 million gallons of crude oil. read more

EXTRACT: Sakhalin II: Credit Suisse analysts cut their price target on Shell’s London-listed stock, saying the deal is not financially favorable to the company.

Fri Dec 22, 2006 3:11pm ET

NEW YORK, Dec 22 (Reuters) – Overseas shares traded in the United States fell broadly on Friday, led by declines in shares of oil giant Royal Dutch Shell (RDSa.N: Quote, Profile , Research) and embattled German industrial icon Siemens (SI.N: Quote, Profile , Research).

The Bank of New York’s index of leading ADRs < .BKADR> was down 0.5 percent, while the 30-share Dow Jones industrial average < .DJI> was off 0.5 percent at 12,359.16. read more

By James Moore
Published: 23 December 2006

For Shell, the cup runneth over when it comes to cash – but the glass is looking half empty when it comes to energy reserves.

The upshot of the Sakhalin-2 affair, which saw Shell and its Japanese partners giving up control of Russia’s largest energy project to Gazprom for £3.8bn in cash, is a big hole in the company’s reserves.

The cash Shell does not need, the vast pool of liquefied natural gas it desperately does. The estimated loss could be 5-6 per cent of proven reserves, because losing its majority stake means Shell can no longer consolidate the project in its figures. read more