December, 2006:

Crude-oil futures rose to nearly $64 a barrel on the New York Mercantile Exchange after the Energy Department reported a fourth-weekly decline in U.S. crude supplies, but price gains were capped as traders factored in the first distillate-inventory climb in 11 weeks and the first gasoline supply rise in four weeks.

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

* * *
DEFENDING THE KREMLIN: Roman Abramovich, a longtime Kremlin insider who last year sold energy producer OAO Sibneft to state-run gas giant OAO Gazprom, endorsed the Kremlin’s expansion of control over the country’s energy sector and dismissed rising Western criticism of President Vladimir Putin’s rule. read more

Thursday, December 21, 2006. Page 7.
By Miriam Elder
Staff Writer

Shell is due to sell half of its 55 percent stake in Sakhalin-2 to Gazprom for cash, a source close to the talks said Wednesday, in an imminent deal that looks likely to be a significant setback for a major blow to the oil major.

The project’s three shareholders will each give up one-half of their holdings to hand Gazprom a controlling stake, the source said, citing part of the proposed deal finalized last week.

Project operator Shell would then have a stake of 27.5 percent, while Mitsui would reduce its stake to 12.5 percent from 25 percent and Mitsubishi to 10 percent from 20 percent. Gazprom would need just 50 percent plus one share to take control. read more

By Matthew Lynn
Thursday December 21, 2006
By Guest Columnists 

How much provocation does big business need before it has doubts about Russia?

Anglo-Dutch oil company Royal Dutch Shell has been threatened with lawsuits from the Russian Government, which is tightening its grip on the energy industry.

Companies as diverse as Swedish furniture chain IKEA and German retailer Metro are also finding that Russia can be a tough place to do business.

Yet Western companies are still pouring money, energy and expertise into Russia. They are attracted by a high-growth, low-tax economy offering the chance to make a lot of money quickly. read more

By Maher Chmaytelli

Dec. 20 (Bloomberg) — OAO Gazprom, the world’s largest natural-gas producer, and another Russian company, OAO Tatneft, secured oil-drilling rights in Libya, beating offers from the largest U.S. and European oil companies, Exxon Mobil Corp. and Royal Dutch Shell Plc.

Libya, holder of Africa’s largest crude-oil reserves, will offer more plots for exploration before April, said Shokri Ghanem chairman of state-owned National Oil Corp. Tatneft was awarded rights in three of 14 plots offered at an auction today in Tripoli. Gazprom secured one, offering to keep only 10 percent of the production of any field, while Exxon wanted 24.9 percent. read more

December 20, 2006 17 40  GMT

Summary

The new rumor out of Russia is that Gazprom plans to pay cash to take over majority control of the Sakhalin-2 energy project in the Russian Far East. For the foreign firms involved, a bad deal just keeps getting worse.

Analysis

Press releases from Russian government spokesmen Dec. 20 cite Deputy Energy Minister Andrei Dementiev as saying that state energy firm Gazprom will pay cash for a majority stake in the Sakhalin-2 oil and natural gas project in the Russian Far East. Assuming for the moment that the Russians do intend to pay cash, it will be more than simply a bad financial deal for the foreign firms involved in Sakhalin-2. read more

Wednesday, December 20, 2006
By Russell Gold,

The oil industry is readying for a new wave of consolidation on the heels of the $30 billion deal combining Norwegian energy giants Statoil and Norsk Hydro.

The Norwegian government owns large stakes in both companies and wants to create a single national energy champion. The underlying logic of the deal — that bigger companies will better compete in the world’s increasingly crowded oil fields — also is driving the biggest publicly traded oil companies toward consolidation. These globe-spanning companies, often referred to as Big Oil, are struggling to add oil and natural-gas reserves and to increase production as they face stiffer competition and tightening access to oil and gas fields around the world. They, too, want to bulk up. read more

By Tom Bergin

LONDON (Reuters) – Royal Dutch Shell Plc’s plan to cede a 30 percent stake in its biggest project to Russia’s Gazprom could force the oil major to slash its proven oil and gas reserves by around 10 percent, analysts said on Wednesday.

Under pressure from the Kremlin, Shell and its partners in the $22 billion (11.2 billion pound) Sakhalin-2 project have agreed to sell the stake in a deal expected this week, a source close to talks between the companies told Reuters on Tuesday. read more

By: Terry Nolan
Wednesday, December 20, 2006

The last six months have seen steady progress in the Corrib gas project but the old rifts persist, concedes Terry Nolan, Deputy Managing Director, Shell Ireland.

IT’S now six months since I took up the post of Deputy Managing Director with Shell Ireland and an opportune time for reflection. I returned to Ireland in June – pleased to be back home after 25 years working abroad with Shell and looking forward to joining the Corrib project, despite its troubled history. read more

Email received 19 December 2006

Dear Web-editors!

I have seen the website of RoyalDutchShellplc and I think its contents match with the new campaign of Milieudefensie (Friends of the Earth Netherlands) and other ngo’s around the world. That’s why I write you this e-mail.

On the 1st of February, Royal Dutch Shell is going to publish its annual financial report. By publishing a number of large (page filling) newspaper-advertisments in Dutch and British newspapers, Milieudefensie is going to ask Shell to invest part of the annual profit in improving environmental and human conditions of their production of oil around the world. read more

 (Militants say they would rather kill them than accept ransom)

2006-12-20 14:36

LAGOS (ANSA) – A Nigerian militant group which is holding three Italian oil workers hostage said on Wednesday that it would rather kill the men than accept a ransom for their release.

In an e-mail sent to media organisations, the Movement for the Emancipation of the Niger Delta (MEND) said that Agip, a subsidiary of Italian oil giant Eni, had offered cash for the release of the Italians and a fourth hostage who is from Lebanon. read more

20.12.2006, 11.25  

TOKYO, December 20 (Itar-Tass) – President & CEO of Mitsubishi Corp. Yorihiko Kojima has expressed the hope that Gazprom’s entry in the oil and natural gas project Sakhalin-2 will improve relations of the current projects participants with the Russian government.

“If Gazprom becomes our partner, then I hope that relations with the Russian government will be developing more smoothly,” Kojima said in an interview published by the Japanese leading economic newspaper Nihon Keizai on Wednesday. read more

(Gardai in action at Rossport)

Wednesday, Dec 20 2006, 12:38pm

A consortium of Shell, Statoil, and Marathon do a deal with the government allowing them exclusive exploitation rights to the Corrib gas field, off Mayo. Not only that, but they are allowed to write off their costs against taxes, meaning that the whole project is being funded by the PAYE taxpayer, who will receive nothing, not even lower gas prices. It may sound a bit iffy but there is no garda investigation into possible bribery or corruption. read more

By Torrey Clark

Dec. 20 (Bloomberg) — OAO Gazprom, Russia’s gas-export monopoly, will pay cash for a stake in Royal Dutch Shell Plc’s $22 billion Sakhalin-2 project, allowing the state-run company to enter the liquefied natural gas business while depriving Shell of reserves.

Gazprom will pay for the stake with cash rather than assets, an Energy Ministry spokesman said in Moscow today, citing Deputy Minister Andrei Dementiev and declining to elaborate. Gazprom Chairman Dmitry Medvedev, who is also first deputy prime minister, said last week that Gazprom may buy half of Sakhalin-2. read more

Fitch Ratings 12/19/2006
URL: http://www.rigzone.com/news/article.asp?a_id=39311

Fitch Ratings says that Royal Dutch Shell PLC’s (“Shell” ‘AA+’/Stable Outlook) new proposals for state-run OAO Gazprom (‘BBB- (BBB minus)’/Positive Outlook) to acquire a controlling stake in Sakhalin Energy Investment co. (“Sakhalin II”), one of the largest integrated oil-and gas developments in the world, may have an adverse impact on its reserve replacement strategy. read more

By Joe Carroll

Dec. 20 (Bloomberg) — Bill Thornburg, a senior drill-site manager for Chevron Corp., opens a steel door on a floating oil rig off the Louisiana coast and stops dead in his tracks.

Red plastic tape warns that crews are hauling pipe and wrenches the size of baseball bats across a deck slick with sea spray. If it were up to Thornburg, there’d be a dozen more $1- million-a-day rigs plying the Gulf of Mexico, full of roughnecks so busy their bosses would need to stay out of the way. read more

EXTRACT: Shell got the largest fine of 108mn euros for being a repeat offender and for starting the cartel with Dutch builder Royal Volker Wessels NV.

THE ARTICLE

Published: Wednesday, 20 December, 2006, 10:40 AM Doha Time
 
LONDON: Royal Dutch Shell Plc, Total SA and eight other oil and construction companies are appealing 267mn euros ($352mn) in European Union fines for fixing prices of bitumen, a petroleum byproduct used to make asphalt.

The European Commission on September 13 penalised 14 companies for joining the cartel that affected prices of bitumen across the Netherlands for at least eight years. read more

December 20, 2006

Judging by the drama unfolding at BP, the company that casts the longest shadow in Britain today is not Barclays or Tesco or Vodafone. It’s Gazprom. The Russian energy giant hovers not only over BP’s joint venture in Russia, but the succession saga at St James’s Square and even its future as a British business.

This is getting repetitive, no doubt, but Lord Browne’s departure has been appallingly handled. Peter Sutherland, the chairman, has reduced his chief executive to a lame duck president; the candidates to replace him are being exposed to the humiliations of a public talent contest; and the office politics is distracting BP at a time when it has too many external fires to put out to be able to afford a bonfire of the vanities in-house. 
 
But the intrigue inside the executive suite needs to be put aside. The future of one of Britain’s most important companies is at stake. While this transition drags on, the company will be weakened. If mishandled, it could be wounded. A powerful multinational that 18 months ago was seriously mulling a bid for Shell could swiftly find itself a takeover target. This time, Shell might be doing the bidding. Or, quite conceivably, Gazprom. The British Government could do little to stop a Russian acquisition of BP. read more

By Torrey Clark

Dec. 20 (Bloomberg) — OAO Gazprom, Russia’s gas-export monopoly, will pay cash for a stake in Royal Dutch Shell Plc’s $22 billion Sakhalin-2 project in the country’s Far East, the Energy Ministry’s press service said today.

A spokesman for the ministry declined to elaborate or give his name, in a telephone interview in Moscow.

To contact the reporter on this story: Torrey Clark in Moscow at

[email protected]

Last Updated: December 20, 2006 03:08 EST read more

Wed Dec 20, 2006 3:06am ET

MOSCOW, Dec 20 (Reuters) – Russia’s gas monopoly Gazprom (GAZP.MM: Quote, Profile , Research) will pay cash for a stake in the Royal Dutch Shell-led (RDSa.L: Quote, Profile , Research) Sakhalin-2 oil and gas project, Interfax quoted deputy energy minister Andrei Demetyev as saying on Wednesday.

Russian officials have said Gazprom was looking to acquire around 50 percent in Sakhalin-2 from Shell and its Japanese partners, Mitsui (8031.T: Quote, NEWS , Research) and Mitsubishi (8058.T: Quote, NEWS , Research). read more

Dec 20 2006 11:22AM

MOSCOW. Dec 20 (Interfax) – Gazprom will enter the Sakhalin-2 hydrocarbons project not via an asset swap but it will buy into the project, Deputy Russian Industry and Energy Minister Andrei Dementyev told reporters.

Asked how the gas company might enter the project, Dementyev said: “It will buy [the stake] for cash.”

He said Russian Industry and Energy Minister Viktor Khristenko was due to meet with Sakhalin-2 shareholders at the end of this week. “[The meeting] will take place either on Thursday or on Friday,” he said. 
  read more

Guardian headline: Gazprom closes in on Shell and signs $85bn French deals

· Contract lets consumers buy Russian gas
· Fears energy supply will be used as a political tool

Terry Macalister
Wednesday December 20, 2006

Gazprom extended its grip on the European gas market yesterday after it said it expected to sign a contract to take control of Shell’s Sakhalin-2 project within 48 hours. It also agreed a huge contract to supply gas to France for the next 24 years and to sell directly to French consumers. read more

EXTRACT: Some private sector organisations such as Royal Dutch Shell, the oil company, are known for their work on the future but they tend to specialise in developing detailed scenarios rather than in horizon scanning across the board, Sir David says. (*Wonder if Shell’s crystal ball gazers foresaw that the Sakhalin II $26 billion white elephant project in Russia would end up being derailed by a $2 a week website which has provided the prime evidence for the $30 billion lawsuit being launched by Oleg Mitvol against Sakhalin Energy) read more

Wednesday 20 December 2006

• Royal Dutch Shell, Total and eight other construction and oil companies are appealing €267m in EU fines for fixing prices of bitumen, a petroleum by-product used to make asphalt.

• Russia’s proposed acquisition of a majority stake in the Royal Dutch Shell-led Sakhalin-2 oil and natural-gas project may hurt Shell’s goal of replacing reserves, Fitch Ratings said.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/12/20/cxbloom20.xm

Wednesday, December 20, 2006. Issue 3565. Page 8.
By Yulia Latynina
 
Royal-Dutch Shell is going to end up handing half of its shares in the Sakhalin-2 oil and gas project to Gazprom. When Gazprom first said it wanted a stake, it could not reach agreement with Shell on a price. That is when Oleg Mitvol, the head of the Natural Resources Ministry’s environmental inspectorate, appeared. Mitvol’s presence influenced Shell in the same manner that thugs influence a stubborn street vendor to sell his business on the cheap. read more

By Tom Miles and Dmitry Zhdannikov
Reuters
Wednesday, December 20, 2006. Issue 3565. Page 5.

Shell and its partners in the $22 billion Sakhalin-2 project have accepted cash and a promise of future cooperation with Gazprom in a deal to let the Russian firm into the venture, a source close to talks between the companies said Tuesday.

Shell and Gazprom have both signaled that their negotiations may yield a deal later this week, with Shell CEO Jeroen van der Veer expected to make a third visit to Moscow in as many weeks on Thursday or Friday. read more

Crude-oil futures rebounded to more than $63 a barrel on the New York Mercantile Exchange, boosted by expectations that U.S. government data due Wednesday will show crude inventories fell last week and by gasoline prices, which hit a three-month high. Here is Tuesday’s roundup of oil and energy news:

* * *
TRANSITION AT BP: BP’s board is considering creating a high-level post for the heir apparent to Chief Executive John Browne — a job designed to smooth the transition at the top of the oil giant ahead of his 2008 retirement, according to people familiar with the situation. read more

By Kamarul Yunus
[email protected]

December 20 2006

KUALA LUMPUR-based Shell Global Solutions (SGS), a unit of oil giant the Royal Dutch Shell, expects its Malaysian operations to register a double-digit growth in sales next year.

However, the company declined to reveal any financial details.

SGS provides business and operational consultancy, technical services and research and development expertise to energy and processing industries worldwide.

For instance, it could help oil refineries to cut costs and improve their processes, which in turn would help them boost their profits. read more

Last Update: 3:29 PM ET Dec 19, 2006

LONDON (MarketWatch) — Royal Dutch Shell PLC’s (RDSB.LN) reserves replacement may be under pressure if it cedes control to Gazprom (GSPBEX.RS) in Sakhalin-2, its largest oil and gas project, credit agency Fitch Ratings said Tuesday.

Cutting some of the Sakhalin reserves would be bad news for Shell, which has struggled to replace barrels following a reserves scandal.

Under International Financial Reporting Standards, or IFRS, it uses to report earnings, Anglo-Dutch major normally books 100% of the reserves brought from the units it operates. read more

By: Lorna Siggins, Marine Correspondent,
Published: Dec 19, 2006

North Mayo fishermen have turned down a 1 million plan to restock lobster grounds which would have been paid for by Shell E&P Ireland.

The proposal could have involved additional funding and support from An Bord Iascaigh Mhara, the State’s fisheries development board.

A shellfish grouping within the Erris Inshore Fishermen’s Association said it could not accept money from Shell until the issue of a discharge pipe from the Corrib gas terminal was resolved. read more

By: Brand concerns beat catastrophes as top bugbears, writes James Brewer, Lloyds List: Published: Dec 19, 2006

BIG energy companies are far more worried about damage to brand and reputation than natural catastrophes that can hit their installations, a survey by Willis broking group has shown.

Willis asked senior risk managers from, BG, Chevron, Borealis, Shell, Petroplus, Hess Corp and MOL to list their most pressing risk management concerns.

Reputation issues were top of the list, believed to be spurred by such crises as the Enron meltdown, potential environmental disasters, refinery explosions, pipeline corrosion, a failure to find oil in promising areas and disruption of the integrated gas chain. read more

Published: December 19 2006 02:00 | Last updated: December 19 2006 02:00

If there is one word that sums up 2006 for the global energy industry, it is nyet. The year kicked off with Gazprom, Russia’s state-controlled energy giant, briefly cutting off gas supplies to Ukraine. By December, Royal Dutch Shell was painfully aware that legal contracts in Russia count for only so much when the Kremlin says “no”.

The rise of so-called national oil companies (NOCs) has been punctuated by the sound of doors slamming – mostly in the faces of traditional energy companies. Control of energy supplies has re-emerged as a geopolitical priority. Look at how the European Union’s ideal of an untrammelled, unified energy market has descended into several member states promoting vertically integrated national champions and striking bilateral deals with big external suppliers such as Gazprom. read more

Published: December 19 2006 02:00 | Last updated: December 19 2006 02:00

Today the Financial Times publishes the second part of a long investigation into the environmental and safety record of BP, one of the largest companies in the world. The investigation highlights a worrying series of accidents in the US. For oil companies, faced with the challenge of increasing profits in a world where new reserves are hard to come by, it shows that there are limits to how far costs can be cut.

In March 2005 an explosion at BP’s Texas City refinery killed 15 workers; a March 2006 oil spill at BP’s operations in Prudhoe Bay, Alaska, led to a complete shutdown of the field in August. But as the FT investigation reveals, doubts over BP’s safety performance were being voiced long before the most recent problems. read more

By ANDREW HILL
Published: December 19 2006 02:00 | Last updated: December 19 2006 02:00

The Russian regulatory epic has placed Peter Hambro Mining, the gold miner, somewhat uncomfortably alongside Royal Dutch Shell, still wrangling with Moscow over its Sakhalin-2 project. Rosprirodnadzor, the natural resources ministry’s environmental watchdog, has been casting an eye over both companies’ Russian operations. But, in spite of its British blue-blood name, Aim-listed PHM arguably has more similarities with Polyus, the much larger Russian gold miner whose American Depositary Receipts were admitted to a listing on London’s main market yesterday, than with Shell. read more

Region welcomes foreign investors
By HEIDI VOGT
Associated Press

DAKAR, Senegal – Angola is joining the Organization of Petroleum Exporting Countries, African oil exploration is booming and China is investing. The stampede for African oil has continued, even as militant attacks in some countries and precarious governments in others make returns uncertain.

Though much of the continent is just as conflict-ridden as the Middle East, analysts say Africa is increasingly attractive because it’s one of a diminishing number of regions still welcoming foreign corporations. read more

13:26 | 19/ 12/ 2006 

MOSCOW, December 19 (RIA Novosti) – International rating agency Fitch Ratings said Tuesday a mooted deal on the acquisition by Gazprom [RTS:GAZP] of a controlling stake in the vast Sakhalin II energy project in the country’s Far East would certainly benefit Russia’s energy giant, but could have a credit impact on Royal Dutch Shell.

Project operator Sakhalin Energy, in which the British-Dutch major holds a 55% stake and Japan’s Mitsui and Mitsubishi own 25%, and 20%, respectively, is developing the $22 billion oil and liquefied natural gas (LNG) project under a production-sharing agreement (PSA) with the Russian government, signed in 1994. read more

By Stephen Voss

Dec. 19 (Bloomberg) — Russia’s proposed acquisition of a majority stake in the Royal Dutch Shell Plc-led Sakhalin-2 oil and natural-gas project may hurt Shell’s goal of replacing reserves, Fitch Ratings Ltd. said.

Shell executives have said they expect to reach an agreement to give state-run energy company OAO Gazprom a controlling stake in the $22 billion project in Russia’s Far East by the end of this week, following months of scrutiny from Russian authorities over environmental violations. read more

Gazprom is to supply gas directly to French homes and firms for the first time through a deal with Gaz de France.

The Russian firm will start supplying French customers in July, providing 1.5 billion cubic metres a year to them.

The two firms have extended existing supply contracts to 2030, enabling Gazprom to deliver an extra 2.5 billion cubic metres a year to western Europe.

Gazprom is expanding rapidly across Europe and has been linked with a bid for British energy firm Centrica.

Long-term partners read more

MORGAN CITY, La. — A Morgan City man who claimed that Shell Oil Co. fired him in retaliation for whistleblowing has received more than $600,000 in tripled back pay and pension benefits, and interest on the award.

William C. Overton Jr. said he was fired because he reported alleged violations involving both pollution and paperwork on Shell offshore rigs.

Shell spokesman Fred Palmer did not have immediate comment.

Overton got a check for just under $614,000 on Friday, nearly a month and a half after the Louisiana Supreme Court refused to hear Shell’s appeal. The total award was nearly $921,000, but his attorneys got one-third. read more

Tue Dec 19, 2006 7:29 AM ET
By Tom Miles and Dmitry Zhdannikov

MOSCOW (Reuters) – Royal Dutch Shell and its partners in the $22 billion Sakhalin-2 project have accepted cash and a promise of future cooperation with Gazprom in a deal to let the Russian firm into the venture, a source close to talks between the companies said on Tuesday.

Shell and Gazprom have both signaled that their negotiations may yield a deal later this week, with Shell CEO Jeroen van der Veer expected to make a third visit to Moscow in as many weeks on Thursday or Friday. read more

By Charles Clover, Environment Editor
Last Updated: 7:11am GMT 19/12/2006

A licence to build the world’s largest offshore windfarm in the Thames estuary was granted by the Government yesterday.

The London Array windfarm, 12 miles off Kent and Essex, should eventually consist of 341 turbines, occupying an area of 90 square miles between Margate and Clacton.  
 
London Array, a consortium of Shell WindEnergy, E.On UK Renewables and Core, is behind the £1.5 billion, 1,000 megawatt project. read more

• Hardman Resources shareholders voted in favour of a £588m takeover offer from Tullow Oil, an oil and gas explorer on three continents.

• Royal Dutch Shell expects to reach an agreement by the end of this week that will give the state-run Gazprom a stake in the $22bn Sakhalin-2 project in Russia’s far east.

• The government approved two offshore wind farms planned for the Thames Estuary, including one that will become the world’s biggest.

• Shares of Cairn Energy, an Edinburgh-based company that drills for oil and gas in South Asia, fell after the company announced a plan to sell shares in its Indian unit at the lower end of its targeted range. read more

Associated Press
December 19, 2006 12:16 a.m.

PORT HARCOURT, Nigeria — Militants seeking a greater share of oil revenues for their impoverished region detonated two car bombs nearly simultaneously Monday in southern Nigeria, the latest in a series of attacks that have cut crude production in Africa’s oil giant by one quarter.

No casualties were reported at either site.

One blast, at a compound belonging to Italian oil firm Agip, blew out windows of a medical facility and cracked compound walls. Agip said the car bomb was parked outside the compound wall and that no injuries were reported. read more

Wald, Now Retired, Seeks Help
From Allies in Defending
Caspian Line, Africa Coast
Pondering Doomsday Scenario
By CHIP CUMMINS
December 19, 2006; Page A1

STUTTGART, Germany — Gen. Charles F. Wald has been projecting American power all his career. As a young air controller, he flew target-scouting missions over Vietnam. More recently, he led bombing runs in the Balkans and commanded the air war in Afghanistan.

But in his final military post, as deputy commander of U.S. forces in Europe, Central Asia and Africa, the Air Force general awoke to a vulnerability at the heart of that power: oil.
 
The modern economy runs on petroleum, which powers 98% of the world’s cars, trucks and planes. Gen. Wald realized that two regions under his watch, West Africa and the Caspian Sea, were emerging as major sources of crude — and potential sources of trouble. read more

Oil-Rich Norway Emerges
As a Power With the Heft
To Compete on Global Scale
By ELIZABETH COWLEY, MICHAEL WANG and CHIP CUMMINS
December 19, 2006; Page A12

Statoil ASA’s $30 billion share swap for Norsk Hydro ASA’s petroleum business makes the government of tiny but oil-rich Norway the majority owner of a bulked-up and acquisitive player in the global oil industry.

The deal, which the two companies announced yesterday, would create a European oil giant with a market capitalization estimated at more than $80 billion. That would be Europe’s fifth-largest oil company by market value, placing it behind Anglo-Dutch giant Royal Dutch Shell PLC, London-based BP PLC, Total SA of France and Italy’s Eni SpA. read more

December 18, 2006 6:25 p.m.

The following are excerpts from public statements, speeches and articles by Vladislav Surkov. Translated by The Wall Street Journal.

EXTRACT RELEVANT TO SHELL SAKHALIN II

Comments to a July 2006 conference in Moscow on the application of sovereign democracy to business

Surkov: I was deeply moved by the title of the report ‘The Economic Model of Sovereign Democracy’. In preparing for this forum and studying the works of the classic, I found the spiritual precursor of today’s discussion. Surprising as it may seem, it turned out to be Ernesto Che Guevara. In 1960 he delivered a speech, entitled, ‘Political sovereignty and economic independence.’ I think it has much in common with the topic of today’s discussions. read more

Crude-oil futures fell to less than $63 a barrel on the New York Mercantile Exchange, as the benchmark contract for natural-gas futures dropped near a two-year low, in reaction to forecasts for warmer-than-average temperatures in the Eastern U.S. Here is Monday’s roundup of oil and energy news:

* * *
NORWEGIAN CRUDE: Statoil ASA, Norway’s state-owned oil company, has agreed to buy the oil and natural-gas division of Norsk Hydro ASA for nearly $30 billion, in a deal that gives the company control of more than 70% of Norway’s petroleum output. The deal would create a European oil giant with a market capitalization estimated at more than $80 billion, The Wall Street Journal reports. That would be Europe’s fifth-largest oil company by market value, placing it behind European rivals Royal Dutch Shell, BP, Total and Eni. read more

Published: December 19, 2006

President Vladimir Putin believes that a powerful, state-controlled energy sector is the key to Russia’s economic future, even if he has to strong-arm foreign investors to get it. But trampling property rights is risky. It is as likely to leave Russia an economic pariah as an energy superpower.

The latest intrigue centers on a huge oil and natural-gas project off of Russia’s eastern coast. The project, Sakhalin 2, includes offshore platforms and the world’s biggest liquefied natural gas plant. It is also the single largest foreign investment in Russia. Royal Dutch Shell owns a 55 percent stake, but won’t for much longer from the looks of things. read more

Tuesday, December 19, 2006. Issue 3564. Page 1.
By Mayumi Negishi
Reuters

TOKYO — Japan’s Mitsui and Mitsubishi are seeking cash from state gas monopoly Gazprom in exchange for part of their stakes in the $22 billion Sakhalin-2 project, sources close to the talks said Monday.

The two Japanese partners, who together hold a 45 percent stake in Sakhalin-2, are in talks with majority stakeholder Royal Dutch Shell about ceding control of the world’s biggest liquefied natural gas project to Russian ownership, the sources said. read more

December 19, 2006
Carl Mortished: Analysis
 
How do you change a corporate culture when it loses credibility? It is a moot question for BP, where the senior executives are beating their chests — Tony Hayward, head of exploration and candidate for the chief executive’s job, recently told an internal audience in Houston that the top of the organisation was not listening.

He said that management was too directive and too fond of making a virtue out of doing more for less. “(BP) has lived too long in the world of making do and patching up this quarter for the next quarter,” he said. 
 
It was a pep talk for staff bruised and battered by bad news from the deadly explosions at Texas City to the oil pipeline corrosion in Alaska, all blamed on cost-cutting. It was also, no doubt, an effort by Mr Hayward to project himself as a potential architect of change, a necessary image for a man who would like to be BP’s next leader. read more