December 30th, 2006:

BEHOLDEN TO BIG OIL…. If I didn’t know better, I might just think the Bush administration is a little too cozy with the oil industry.

The Justice Department is investigating whether the director of a multibillion-dollar oil-trading program at the Interior Department has been paid as a consultant for oil companies hoping for contracts.

The director of the program and three subordinates, all based in Denver, have been transferred to different jobs and have been ordered to cease all contacts with the oil industry until the investigation is completed some time next spring, according to officials involved. read more

There will be bruises as predators, politicians and regulators get stuck in. Chief executives will have to rise to the challenge if they want to keep their jobs – and their huge salaries. Oliver Morgan reports

Sunday December 31, 2006

Politics are likely to play a big role in the last full year that Lord Browne spends at the top of oil group BP. Much of BP’s recent growth has come from its 50:50 joint venture with Russian company TNK. However, earlier this month, BP’s rival Shell was forced to cede control of its joint venture to develop the massive Sakhalin-2 oil and gas field off Russia’s east coast to Gazprom after pressure from the Kremlin. read more

By Sylvia Pfeifer
31 December 2006

Europe’s top development bank is set to walk away from the Sakhalin-2 energy project in what will be seen as an embarrassing snub to the renationalisation policy of Vladimir Putin, the Russian president.

The London-based European Bank for Reconstruction & Development – which was established to encourage free markets in the former Soviet bloc – fears that the $20bn Russian scheme no longer qualifies for support after Shell and its two partners were forced to sell stakes to Gazprom, the state-owned gas company.
  
“With the emergence of Gazprom as the major shareholder in Sakhalin Energy Investment Company, the project has effectively been nationalised,” said one industry executive familiar with Sakhalin. “The bank doesn’t normally back projects of that nature.” read more

By Alfred Donovan

Saturday 30 December 2006

The Sakhalin II project and related backdrop events have been marked by deception, double-dealing, corruption, massive pollution, intrigue, blackmail, murder and spies. Some might unfairly say this constitutes a fairly typical Shell project, as per the example of Shell’s activities in Nigeria.

With the assistance of a number of Shell/Sakhalin Energy insiders, we are completing the draft of an article which will be published next week on our own website and simultaneously by a news publishing source. Individuals associated with the project who are mentioned in the current draft include Jeroen van der Veer, Malcolm Brinded, David Greer, Mike Taylor,  Steve McVeigh, David Meehan, Campbell Wyper and Togrul Tosun. We understand that Tosun was made redundant in the late 90s when the failure of managing Kashagan was unfairly blamed on him in order to keep the real culprits (such as Henk Dijkgraaf) out of the firing line. read more

By ANDREW E. KRAMER
Published: December 30, 2006

MOSCOW, Dec. 29 — For Gazprom, the Russian energy monopoly, 2006 is ending as it began: in a dispute over prices and control of a pipeline in a neighboring country that is threatening the smooth flow of natural gas to Europe.

But this time, the price increase was levied on a Russian ally, Belarus, a country whose foreign policy is aligned with Moscow in all but one important aspect: support for increasing cash flow at Gazprom.

“All this means destruction of our relations” with Russia, Belarus’s president, Aleksandr G. Lukashenko, said in comments carried on state television on Friday. read more

(Photo: Joseph Sywenkyj for The New York Times: The Sakhalin 2 project in Russia’s Far East is still under construction. Last week Gazprom took control of the project when foreign developers, led by Royal Dutch Shell, agreed to sell it 50 percent plus one share.)
 
By ANDREW E. KRAMER

MOSCOW: The Russian government has won another concession from the foreign partners of the oil and natural-gas field being developed in Russia’s remote Far East, known as Sakhalin 2.

Last week Gazprom, the Russian energy monopoly, took control of the project when foreign developers led by Royal Dutch Shell agreed to sell 50 percent plus one share to Gazprom, after months of pressure on the company and accusations about environmental issues from a Russian regulator. Critics called the sale a forced nationalization. read more

By Robert Orr
Published: December 30 2006 02:00 | Last updated: December 30 2006 02:00

The year’s worst performer was Carnival, the cruise-ship operator, while other notable underperformers included oil giant BP and GlaxoSmithKline, the pharmaceuticals company.

With the price of crude falling below $60 a barrel for the first time in a month,oil stocks were lower. Royal Dutch Shell eased 0.7 per cent to £17.90, further unsettled by news that it would have to share the burden of cost overruns at the Sakhalin-2 development in Russia with its two Japanese partners. The news is the latest blow to Shell in Russia, where it has been forced to cede control of Sakhalin-2 to local group Gazprom. read more

By Christopher Brown-Humes
Published: December 30 2006 02:00 | Last updated: December 30 2006 02:00

…one of the surprises of the year was just how many of the UK’s top 20 companies did so badly. Six of them actually saw their share prices fall – BP, Shell, GlaxoSmithKline, AstraZeneca, BHP Billiton and HSBC.

BP was the FTSE 100’s third worst performer, falling 8.3 per cent, while Royal Dutch Shell dropped 3.7 per cent. Both felt the effect of the drop in oil prices towards the end of the year but the average price of crude in 2006 was still almost 17 per cent higher than in 2005. BP was beset by problems in the US, including the fatal explosion at its Texas City refinery in March last year, an oil spill in Alaska in March and delays to the opening of the flagship Thunder Horse project in the Gulf of Mexico. read more

David Teather and Angela Balakrishnan
Saturday December 30, 2006

Behind many of the year’s stories was the shifting world order: the emerging power of Russia, India and China.

The year began with Russia cutting gas supplies to Ukraine, raising fears of shortages and soaring prices across Europe. At the end of the year Shell was forced by the Russian government to reduce its stake in the world’s biggest liquefied gas project. Both raised fears about the Kremlin using the country’s natural resources as a political weapon as well as highlighting concerns about both the security and cost of energy supplies as emerging economies began to compete for resources. read more

Nick Fletcher
Saturday December 30, 2006

Oil prices eased below $60 in the US for the first time for a month leaving BP, 4p lower at 567.5p, and Royal Dutch Shell down 7p to £17.85. Shell was also hit by reports the company and its partners would have to stump up a third of the $10bn overrun on the controversial Sakhalin-2 gas project in eastern Siberia.

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http://business.guardian.co.uk/marketforces/story/0,,1980260,00.html

By Josephine Moulds
Last Updated: 12:58am GMT 30/12/2006
FTSE falls on a quiet day ahead of break

City trader

Oil stocks were down on a weaker crude price as traders disregarded a sharp drop in US crude stockpiles on Thursday night. BP slid 4 to 567½p. Royal Dutch Shell was hit by news that it will be made to foot the bill for huge cost overruns at the Sakhalin-2 oil and gas project in Russia together with its two Japanese partners. It retreated 12p to £17.90. BG Group, which on Thursday announced it had bought a US power plant, lost 4½ to 693p. read more

• Shares of Exxon Mobil, the world’s biggest corporation, had their largest annual increase since 1980 as the company boosted oil production and crude prices rose to an all- time high.

• Royal Dutch Shell will cut its proven oil and gas reserves by more than 4pc when it gives up half its stake in Russia’s Sakhalin-2 venture, analysts said.

• Gazprom, Russia’s natural-gas export monopoly, is continuing talks with Belarus to avoid a Jan. 1 cutoff that could curb deliveries to Europe. read more