January 14th, 2008:

Tuesday, 15 January 2008 

GAZPROM will find it hard to become a major player in Nigeria, making it unlikely that the Russian gas giant will rival Western oil companies’ dominance there or be able to divert Nigerian gas from European markets. 

But if Gazprom redirected cash to foreign investment, gas supplies to Europe could be at risk, analysts warned. Gazprom, which is state-controlled, said last week that it wanted a presence in Nigeria, and a Nigerian government official said the company had offered an initial investment of up to $2.5 billion. Nigeria is one of a diminishing number of major countries where Western oil companies can access large reserves. read more

By Leslie Crawford in Madrid
Published: January 15 2008 01:12 | Last updated: January 15 2008 01:12

The European Union has wasted too much time squabbling over how to share power among its member states, when it should have been working to recoup economic and political influence in the world, says Felipe González, the former Spanish prime minister.

The EU asked Mr González last month to chair a committee that will ponder the future of Europe. The former premier, who took Spain into the EU in 1986, was surprised at his nomination. read more

15 January 2008

SINGAPORE (Reuters) – Oil was steady on Tuesday after new supply disruptions in Nigeria and renewed geopolitical concerns about Iran rekindled supply worries, offsetting growing talk of a U.S. recession that would hurt oil demand.

U.S. light crude for February delivery rose 5 cents to $94.25 a barrel by 8:52 p.m. EST after leaping $1.51 on Monday, snapping a three-day losing streak. The gains were also aided by a weakening dollar, which lifted the whole commodities sector.

“People realize that oil is going to be relatively tight despite the recession, despite the slowdown in OECD,” said Tony Nunan, manager at Mitsubishi Corp’s risk management unit. read more

Company Won’t Be
The Sole Operator
With Deal on Project

By GUY CHAZAN and GABRIEL KAHN
January 15, 2008

Energy company Eni SpA of Italy will cede its role as sole operator of the huge Kashagan oil field in the Caspian Sea as part of a deal to end a long-running dispute with Kazakhstan over one of the world’s biggest oil-development projects.

From 2011, when oil finally starts to flow from Kashagan, Eni will jointly operate the field with Royal Dutch Shell PLC, Exxon Mobil Corp. and Total SA of France, the other major shareholders in the Kashagan consortium. The renewed operational arrangement is part of a deal signed late Sunday in the Kazakh capital Astana, according to Kazakh officials. read more

The Wall Street Journal: Exxon Knows When to Fold

COMMENT FROM breakingviews 

Lone Holdout Gives Approval
To Save Deal With Kazakhs
Over Kashagan Oil Field

January 15, 2008

Exxon Mobil finally blinked in its showdown with Kazakhstan over the Kashagan oil field. Exxon was the last of the deal’s partners to accept the less-advantageous contract terms acceded to by Italy’s Eni — the project’s leader — under Kazakhstan government pressure. Exxon recognizes that it can no longer afford to simply walk away from deals. So it may face more compromises to come.
 
Exxon isn’t known for being easily bullied. Last year, it said adios to Venezuela after Hugo Chávez tried to strong-arm it into renegotiating its contracts. Earlier, it walked away from a deal to develop natural-gas wells in Saudi Arabia after disagreeing over terms. read more

By JOHN FLOWERS
January 14, 2008 2:19 p.m.

The battle between oil exploration and its inevitable environmental impact is coming to loggerheads in the Great White North, as proceedings in a federal court in Alberta begin tomorrow to determine whether a new oil sands field met critical environment requirements.

The judicial review, currently scheduled to last four days, is over the Kearl Tar Sands project, part of one of the second largest proven oil reserves in the world. It’s located in the Alberta region, about 70 km north of Fort McMurray, and is ultimately expected to produce 300,000 barrels of bitumen, the heavy oil recovered from oil-sands deposits, a day. read more

Tue Jan 15, 2008 2:29am GMT 
By Maryelle Demongeot

SINGAPORE, Jan 15 (Reuters) – Oil was steady on Tuesday after new supply disruptions in Nigeria and renewed geopolitical concerns about Iran rekindled supply worries, offsetting growing talk of a U.S. recession that would hurt oil demand.

U.S. light crude for February delivery CLc1 rose 5 cents to $94.25 a barrel by 0152 GMT after leaping $1.51 on Monday, snapping a three-day losing streak. The gains were also aided by a weakening dollar, which lifted the whole commodities sector. read more

By Ed Crooks and Isabel Gorst
Published: January 15 2008 02:00 | Last updated: January 15 2008 02:00

Financially, the deal to resolve the dispute over the giant Kashagan oilfield could have been worse for the companies involved. The most serious damage has been done to corporate reputations.

The deal struck late on Sunday was, in its principal features, the same one that the oil companies working on the project, with the exception of ExxonMobil, signed up to in London before Christmas.

There was disagreement yesterday over the exact terms. Kazakhstan said its compensation payments for the delays and cost overruns at the project were worth $5bn, while the consortium had suggested a figure of $2.5bn to $4.5bn. read more

Published: January 15 2008 02:00 | Last updated: January 15 2008 02:00

It can be hard to pick out the loser when both sides emerge from a dispute wreathed in smiles and claiming victory. But in the resolution to the set-to over the giant Kashagan oilfield in Kazakhstan, there really is something for everyone.

The international majors are giving up equity in the development of the field to KazMunaiGaz, the state-owned operator. In return, the group – led by Eni, ExxonMobil, Royal Dutch Shell and Total – will receive compensation of about $1.8bn. According to Lehman Brothers, this reflects a 15 per cent discount to the project’s net present value, assuming a long-run oil price of $60 a barrel. read more

By Isabel Gorst in Baku and Ed Crooks in London
Published: January 15 2008 02:00 | Last updated: January 15 2008 02:00

Eni, the Italian oil company, is to lose operating control of the giant Kashagan oilfield, the crown jewel of its upstream portfolio, as Kazakhstan asserts greater control over the troubled oil development.

The settlement between an Eni-led oil consortium and Kazakhstan over production delays and ballooning costs at Kashagan, finalised on Sunday night, allows Eni to remain operator of the first, experimental phase of the project scheduled to produce oil in 2011. read more

MARK WILLIAMSON
January 15 2008

Shell and ExxonMobil started pumping gas from the Starling field in the North Sea following a £175m development which, they said, showed they were prepared to invest in the right projects in the mature province.

The two oil majors, which last June announced plans to sell off a portfolio of North Sea assets, hailed the launch of the Starling field on time and on budget as a contribution to meeting the UK’s growing energy supply needs.

The field, which was discovered in 1979, lies 170 miles east of Aberdeen in the central North Sea. It is expected to produce 140 million standard cubic feet of gas daily at peak production. read more

By Russell Hotten, Industry Editor
Last Updated: 12:29am GMT 15/01/2008

A group of Western energy majors has been forced to cede some control of the massive Kashagan oil field under a deal that resolves a long-running dispute with the Kazakhstan government.

Italy’s ENI, which leads a consortium that includes Royal Dutch Shell, ExxonMobil and Total, are selling part of their stakes in the project to the Kazakh state energy company KazMunaiGaz.

The company will pay $1.78bn (£900m) to double its stake in Kashagan to 16.8pc – level with other main consortium members – but the Eni-led group will pay the government $5bn in compensation for lost revenues because of delays to the project.
 
Kazakh president Nursultan Nazarbayev said last night: “The balance of justice has been restored.” read more

Tuesday, January 15, 2008. Issue 3820. Page 5.
By Tai Adelaja
Staff Writer

Russian and foreign companies whose activities are deemed by the authorities to pose serious environmental threats will see no relief this year despite the resignation of the federal environmental watchdog’s chief, a senior official said Monday.

Oleg Mitvol, deputy to the outgoing chief, Sergei Sai, said the regulator “would target big and very big companies” for thorough checks on their compliance with environmental standards starting next month. read more

Shell factors environmental fines into its costs to continue polluting, according to environmentalists.

January 14, 2008
Reporting by Roddy Scheer

The Sierra Club, the nation’s largest and oldest environmental group, filed suit in federal court last week against Shell Oil over ongoing pollution at a refining and chemical plant complex along the Houston Ship Channel in Texas. According to the lawsuit, Shell should be held financially accountable—in the amount of $32 million each—for an estimated 1,000 incidents between 2003 and 2007 when its Deer Park, Texas facility exceeded maximum allowable levels of pollution. read more

Mon Jan 14, 2008 12:16pm EST

LONDON, Jan 14 (Reuters) – Royal Dutch Shell (RDSa.L: Quote, Profile, Research) has declared a force majeure on crude shipments from its Forcados export terminal in Nigeria after last week’s pipeline attack, a spokesman said on Monday. Exports have been halted since Friday due to sabotage at two of its pipelines connected to the Forcados export terminal. Production has not been affected, the spokesman said.

Oil output at Forcados was around 100,000 barrels per day, an industry source said last week, and was expected to reach 200,000 bpd by April. read more

By Ben Moshinsky
14-Jan-2008 

Careers are finite and everyone has a last day.

The imminent retirement of BP’s long-serving legal chief Peter Bevan, and his shock replacement with GlaxoSmithKline general counsel Rupert Bondy, highlights a slow but sure generational shift taking place behind some of the world’s most coveted corporate legal budgets.

It also highlights a trend of big companies now preferring to hire externally to replace a retiring general counsel rather than promoting internally. read more

Offshore staff
01/14/2008 

ABERDEEN, UK — Shell UK has produced first gas from the £175 million ($324 million) Starling development in the central North Sea.

The Starling field, discovered in 1979 in 100 m (328 ft) water depth in block 29/3a, is tied back subsea to Shell’s Shearwater platform, 33 km (20.5 mi) to the northeast.

Produced gas from the wellstream is exported via the SEAL pipeline from Shearwater southeast to the Bacton processing terminal on the English east coast.

Starling’s oil and natural gas liquids head to BP’s Kinneil terminal in Scotland, via the Forties trunkline. read more

By Nick Carey

DETROIT (Reuters) – General Motors Corp said on Sunday it has bought a stake in start-up biofuel company Coskata Inc. which has developed a commercially viable process to bring cellulose-based ethanol to the market in 2011.

“We are very excited about what this breakthrough will mean to the viability of biofuels and, more importantly, to our ability to reduce dependence on petroleum,” GM Chief Executive Rick Wagoner said in a statement.

GM said it would not disclose the size of the stake or how much it had invested in Coskata. read more

Reuters
Monday January 14 2008

LAGOS, Jan 14 (Reuters) – Nigeria has inaugurated a sixth unit at its largest natural gas export plant, lifting annual shipments by a fifth to 22 million tonnes, an official said on Monday.

The $1.6 billion unit took three years to build and should raise annual sales of liquefied natural gas (LNG) from the whole complex, located on Bonny Island in the southern Niger Delta, to about $6 billion.

“It produced its first LNG on Dec. 23 and is now going through performance tests,” said Ifeanyi Mbanefo, a spokesman for the plant. read more

January 14, 2008: 07:03 AM EST

LONDON -(Dow Jones)- Royal Dutch Shell PLC (RDSB.LN) said Monday it, along with Exxon Mobil Corp. (XOM), had started natural gas output from its U.K. North Sea Starling field.

The project represents a GBP175 million investment and gas is to be exported to the U.K. mainland.

Shell owns 28% in, and is operator of, the field, while ExxonMobil has 72% in the acreage.

Peak production is estimated at some 140 million standard cubic feet a day.

-By Benoit Faucon, Dow Jones Newswires; +44-20-7842-9266; benoit.faucon@ dowjones.com read more

January 14, 2008: 05:44 AM EST

BRUSSELS, Jan. 14, 2008 (Thomson Financial delivered by Newstex) — The European Commission said it has cleared Petroplus Holdings AG’s (OOTC:PEPFF) proposed acquisition of two French refineries from Royal Dutch Shell PLC. (NYSE:RDS A)

The transaction was reviewed under the EU’s ‘simplified’ merger review procedure for cases which the commission does not believe to pose regulatory concerns.

The Petit Couronne refinery is located 130 km northwest of Paris and produces 40 pct middle distillates and 20 pct gasoline. read more

By Ben Farey and Mathew Carr

Jan. 14 (Bloomberg) — The smartest money in natural gas may get its best trade this year by exploiting the difference between London, where prices are the highest in almost two years, and New York, where the market is cheapest.

Investors should sell natural gas in London and buy contracts in New York for the summer, where prices are “the lowest in the world,” Goldman Sachs Group Inc. analysts wrote Jan. 11. The opportunity may become more lucrative because London gas will drop 50 percent to $4.88 per million British thermal units as imports rise and demand slows, said Jason Kenney, an energy analyst at ING Wholesale Banking in Edinburgh. read more

By Henry Meyer

Jan. 14 (Bloomberg) — The U.K. resumed operations at its cultural office in St. Petersburg today in defiance of a Russian order to shut it down, deepening the chill in relations between the two countries.

“We are open and we plan to continue,” James Kennedy, the British Council’s Russia director, said in an interview in the St. Petersburg office.

Ties between Russia and the U.K. have sunk to a post-Cold War low since Russian authorities refused to extradite a former KGB bodyguard wanted for the 2006 murder in London of dissident ex-Russian agent Alexander Litvinenko. Russia last month ordered the U.K.’s cultural promotion body to close its regional offices and warned that failure to comply would be a “provocation.” read more

January 14, 2008
By Gregory Solman 
 
LOS ANGELES You’d think sinking billions into alternate energy would earn any corporation a “green” thumbs up. But if that corporation is also the world’s second-largest producer of fossil fuels, there’s a lot more explaining to do. And that’s exactly what BP has been doing for seven years in a rebranding effort that touts its alternate-energy initiatives and positions the company as environmentally friendly.

Separate from the retail campaign for its products such as gas stations, BP’s corporate campaign tacitly positions it as the energy company that’s more honest with consumers than other oil companies and one that tries to reconcile their need for fuel with their fear of polluting. read more

By Nariman Gizitdinov and Lucian Kim

Jan. 14 (Bloomberg) — Eni SpA and its partners in Kashagan, a project to develop the world’s biggest oil discovery in 30 years, ceded a greater stake to Kazakhstan after the government passed a law enabling oil contracts to be annulled.

The foreign companies signed an accord to transfer equity and give state-run KazMunaiGaz National Co. a stake equal to the largest shareholders as of Jan. 1, KazMunaiGaz said in an e- mailed statement today, without being more specific. A spokeswoman for Rome-based Eni said an agreement was reached, asking not to be identified because of company rules. read more

By GUY CHAZAN
January 14, 2008; Page A3

LONDON — A long-running dispute over one of the world’s biggest oil-development projects was finally resolved last night with an agreement to let the Kazakhstan state oil and gas company double its stake in the multibillion-dollar venture.

But the amount JSC NC KazMunaiGaz will pay for its increased share shows how little leverage Western companies have these days when faced with oil-rich countries emboldened by soaring crude prices and determined to regain control of their natural resources. read more