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Posts from ‘January, 2006’

Reuters: Chevron says Gorgon partners secure new acreage

Tuesday 31 January 2006, 11:41pm EST
SYDNEY, Jan 31 (Reuters) – Chevron Corp. (CVX.N: Quote, Profile, Research) said on Tuesday it had been awarded new oil and gas exploration acreage in the Carnarvon Basin off the northwest coast of Australia, adjacent to its existing Gorgon gas field development.
Chevron will operate the W05-16 block with a 50 percent share. Royal Dutch Shell (RDSa.L: Quote, Profile, Research)(RDSb.L: Quote, Profile, Research) and Exxon Mobil Corp. (XOM.N: Quote, Profile, Research), its partners in Gorgon, will hold 25 percent each.
The partners will begin seismic investigations of the 1,020 square miles (2,650 square kilometres) block this year, and plan a three-year exploration program.
Meanwhile, the Gorgon partners are expected to make a final investment decision on that project, which claims certified gas reserves of 12.9 trillion cubic feet, by the middle of this year.
Chevron has already secured sales of liquefied natural gas
(LNG) from Gorgon to Osaka Gas (9532.T: Quote, Profile, Research), Chubu Electric Power Co. (9502.T: Quote, Profile, Research) and Tokyo Gas Co. (9531.T: Quote, Profile, Research), all of which could also take a stake in the project.
The Carnarvon Basin is also home to the North West Shelf, Australia's only LNG producing facility.
($1=A$1.33)

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AFX News Limited: Shell, Chevron, Exxon expand Gorgon exploration area off Australia

01.31.2006, 01:05 AM
SYDNEY (AFX) – Partners in the Greater Gorgon gas project in the Carnarvon Basin, off northwestern Australia, have expanded their exploration area in the basin, Shell Development Australia said.
The Royal Dutch Shell unit said the partners have been awarded exploration rights to offshore block WA-374-P, covering 2,650 square kilometers.
Shell will have a 25 pct interest in the block, Chevron Australia will be the operator and will hold 50 pct, and Exxon Mobil Corp will hold the rest.
The Carnarvon Basin includes the North West Shelf gas project and the yet-to-be developed Greater Gorgon resources.
Shell Exploration & Production Asia Pacific Exploration vice-president Wouter Hoogeveen said the permit is the sixth awarded to Shell over the last seven months in three different areas.
Recent permit awards included permit area WA-371-P, in the northern Browse Basin, in which Shell will have a 100 pct interest.
Shell Development (Australia) chief operating officer Chris Gunner said Shell's reinvigorated exploration underlines the importance of Australia to the company's growth ambitions for gas.
The Greater Gorgon project partners are expected to commit to a development worth more than 11 bln aud by the middle of this year, which could see the delivery of 10 mln tonnes a year of liquefied natural gas to export markets by 2011.
(1 usd = 1.33 aud)
[email protected]
blh/jm

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The Times: Mystery of £400,000 ransom as oil hostages are released

By Jonathan Clayton and Simon de Bruxelles
NIGERIAN separatist rebels yesterday released a British security contractor and three foreign oil workers taken hostage in Nigeria almost three weeks ago, but immediately vowed a fresh wave of attacks in the lawless, but oil-rich Delta area.
Nigel Watson-Clark, a former paratrooper employed by the British company Ecodrill as a security expert, and three others — an American, a Bulgarian and a Honduran — were handed over to the Bayelsa state government after 19 days in captivity.
A Foreign and Commonwaelth Office spokesman said: “The men are free, they are in the hands of Nigerian officials.” A British embassy official said that the men were as “well as could be hoped for”.
After medical checks the four men were flown to the capital, Abuja, to meet Olusegun Obasanjo, the Nigerian President, who has staked his reputation on bringing the militants to heel. It was not clear if a ransom was paid. One militant source, involved in previous kidnappings, said that more than £400,000 was paid, but the kidnappers denied the report, saying the men were released on humanitarian grounds. “Money normally changes hands. I can’t believe this did not happen this time,” a human rights activists in the region told The Times.
A hitherto unknown group calling itself the Movement for the Emancipation of the Niger Delta (Mend) said that the action was taken as a “goodwill gesture to the international community”, but added that the attacks would continue. The group’s leader warned international companies of grave consequences if they continued to co-operate in the “criminal activities” of the Nigerian G overnment and singled out Britain for special mention.
“We the Ijaw and Niger Delta people want to remind the people of the world that Great Britain has facilitated the illegal, criminal and inhuman occupation and exploitation of our lands for 112 years,” said Mujahid Dokubo-Asari, the Mend leader, in a statement.
The arrest of Mr Asari, the self-styled Lord of the Creeks, two months ago triggered the current unrest in the Delta, a patchwork of dense swamps where the local people claim to have received no benefit from almost 50 years of oil and gas exploitation.
Shell, which evacuated some 260 staff from four oil installations in the area, said that it had no plans yet to return. Nigeria is Africa’s biggest oil exporter, producing 2.6 million barrels of crude per day. The attacks, in which at least 25 people have been killed, have cut production by one tenth and helped to push world oil prices to record highs. The four men were seized on January 11 when Ijaw militia boarded a supply vessel.
Mr Watson-Clark’s partner Briony Tomkies, a 35-year-old nurse from Saltford, near Bristol, said: “Nigel’s release has come as a huge relief for all his family. I spoke to him this morning and he seems OK, if a little shaken. But he told me that he was treated well by his captors and is in good spirits.”
Mr Watson-Clark is expected to be fully debriefed by both the Nigerian authorities and officials from the Foreign Office before returning home.
VIOLENCE IN THE DELTA
January 28 Armed robbers attack local offices of the South Korean firm Daewoo
January 15 One dead as Shell platform is attacked January 13 Bomb wrecks pipeline carrying 10 per cent of Shell’s daily output
January 11 Four foreign oil workers kidnapped (released yesterday); explosion damages crude oil pipeline
December 20, 2005 Main export pipeline bombed

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Daily Telegraph: Emerald oil

(Filed: 31/01/2006)
Some may detect a whiff of Compton Mackenzie's Whisky Galore about the suggestion that fuel smugglers have helped to drive three of the world's biggest oil companies out of Northern Ireland. Esso, BP and Shell have all passed their filling stations in the province to franchisees.
One reason for this, according to Ray Holloway, director of the Petrol Retailers Association, is that cheap fuel is being smuggled over the border from the Irish Republic, where it costs up to 24p per litre less than in the north.
This would be funny and charming, like Whisky Galore, if it were just a traditional story of free-spirited Britons trying to cheat the hated excise-man. In fact the perpetrator of this organised crime is the IRA, which has now added fuel-smuggling to its portfolio of intimidation, drug-dealing and bank robbery.
The scandal is that the authorities are so anxious for the fraudulent “peace process” to continue that they turn a blind eye to the fuel tankers crossing the border. They seem to have given up enforcing the law.

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Daily Telegraph: Exxon profits shoot up 42pc to world record of $36bn

By Roland Gribben (Filed: 31/01/2006)
Exxon Mobil got the oil companies' profit season underway in spectacular fashion yesterday by announcing a 42pc jump in full-year net income to $36.1billion (£20.3billion).
The world's biggest oil and gas business set a new world record in corporate profits on the back of surging prices and attracted more criticism from American motorists protesting about the price of gasoline and environmental groups pressing for more investment in alternative fuels.
In global terms Exxon has effectively emerged as the world's 49th biggest “economy” with profits in excess of the gross national product of 125 of the 184 countries figuring in World Bank statistics.
At the pre-tax level its ranking is even higher. Gross profits were up by 44pc to $59.4billion before the tax authorities around the world creamed off $23.3billion. Net profits in the final three months set another quarterly record with income up 27pc to $10.7billion.
The better-than-expected performance set a new benchmark for the industry and provided a boost for Wall Street as oil prices edged higher despite favourable indicators. Opec ministers were resisting pressure from Iran to cut output while militants in the Nigerian delta released four Shell workers held hostage for 19 days.
A reconstructed Shell, the world's second biggest energy group, will set a UK profits record on Thursday with full-year net earnings of around $23billion, marginally ahead of the $22billion expected from BP next week.
Oil companies have been on the defensive since the price explosion started to fuel the surge in profits. They have responded with share buybacks, higher dividends, substantial increases in investment and greater emphasis on the search for more environmentally friendly fuels.
Exxon's total sales grew 24pc to $370billion last year, while cash flow, including $6billion from asset sales, grew to $54billion. The group paid $23billion to shareholders in buybacks and dividends, while capital spending rose 56pc to $23.2billion.
Upstream earnings were up $6billion to $22.7billion but oil production slipped 3.6pc, with higher output in West Africa, the North Sea and North America more than offset by the slide in the contribution from mature fields and the impact of hurricanes Katrina and Rita on the flow of oil from the Gulf of Mexico.
Fourth-quarter net income was equivalent to $1.71 a share or $1.65 after excluding special gains.

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Daily Telegraph: IRA fuel smuggling 'drove oil giants to abandon Ulster'

By Tom Peterkin, Ireland Correspondent
(Filed: 31/01/2006)
Fuel smuggling by the IRA has contributed to major oil companies pulling out of Northern Ireland, it was claimed yesterday.
Esso, BP and Shell no longer directly own filling stations in Ulster, where police believe cross-border fuel smuggling and illegal selling of treated diesel is rife.
Less than 48 hours before the body monitoring IRA activity publishes its next report, the Petrol Retailers' Association claimed that “gangland” fuel smuggling had had a bearing on the commercial decisions made by oil companies.
The trade is estimated to be worth £130 million a year and illegal petrol and diesel is thought to account for 50 per cent of road fuel used in the province.
Ray Holloway, the director of the organisation representing 6,000 businesses, has been asked to give evidence to MPs on the Northern Ireland affairs committee next month.
He claimed yesterday that diesel laundering, whereby criminals remove the dye that identifies cheaper off-road diesel, had affected the quality of fuel available in Ulster.
The dye is removed by adding acid to the fuel, which is then sold to drivers at a profit. Unless the acid is neutralised, the fuel can ruin engines.
“Fuel integrity is probably part of the whole review process the oil companies carry out when they are looking at Northern Ireland,” Mr Holloway said.
“The commercial ability to trade in that total environment is what the oil companies are looking at.”
Tomorrow sees the publication of the International Monitoring Commission's latest report into paramilitary organisations. Any suggestion that the IRA is still engaged in criminality after its promise to embrace democracy last year will prove damaging to the peace process.
Police have long suspected the IRA of running a sophisticated cross-border smuggling operation.
Ian Paisley Jnr of the Democratic Unionist Party said: “My understanding is that the IRA is by far the biggest player in fuel crime here, and the Government hasn't any idea how it is going to deal with it.”
According to Mr Holloway, the tax differential that results in fuel being substantially cheaper in the Republic of Ireland had led to smuggling.
South of the border a litre of unleaded petrol costs around 72p compared with 90p in Northern Ireland. Diesel is also around 72p per litre against 96p in Ulster.
Esso, Shell and BP logos are still seen in Ulster though the petrol stations are not directly owned by the companies but run by businesses licensed to sell their fuel.
Mr Holloway said the companies' decision to sell was also influenced by the rise of supermarket petrol stations, a UK-wide trend to sell, and cross-border shopping.

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The Independent: Market Report: Prospect of bumper profits lifts the oil giants

By Andrew Dewson
Published: 31 January 2006
It is arguably the biggest week for results of the year so far and the market spent most of yesterday placing bets on who the winners and losers are likely to be. And it doesn't take a post-graduate finance degree to work out that Royal Dutch Shell is likely to be a big winner.
All the oil majors are likely to report bumper profits this year, with demand for oil and oil-related products showing no sign of abating, just as the price of oil shows no sign of a meaningful fall. For most of the last quarter, oil has traded close to $70 a barrel – not a bad price when most integrated oil majors are geared up to make money even if it trades at $10 per barrel.
On Thursday Shell reports its first set of full-year figures since the company abandoned its dual listing structure, and analysts are expecting the largest corporate profits in UK history – about £13bn for 2005.
As a result shares in Shell rose 42p to close at 2,002p, a rise of 2.1 per cent. That may not sound like a big rise until you consider that a 42p rise equates to an increase of £1.16bn to Shell's market value. It also announced that it had bought back 425,000 shares for cancellation. Shell's rival BP performed even better, rising 16.5p to close at 682p. It is due to report results on 8 February.
The oil analyst Jason Kenney, at the Dutch bank ING, is one of the few to suggest selling Shell. In a note to clients he said: “We believe this is as good as it gets for most of the pan-European oil stocks. We reiterate our neutral stance on the oil sector and significantly we downgrade Shell from 'hold' to 'sell'.”
The heavyweight US broker Merrill Lynch also thinks there is better value in the sector than Shell can offer, downgrading its stance on the oil giant's shares to “neutral”.
The stock market cannot seem to get enough of mining stocks, and once again a slew of miners were bid higher in anticipation of good results from Rio Tinto tomorrow. Buyers pushed its price to another all-time high, closing up 20p, 0.7 per cent, at 2,953p. The company dragged most of its peers along with it, with Antofagasta up 28p to 2,080p and BHP Billiton up 8p to 1,060p. ButAnglo American bucked the trend, falling 22p to 2,165p.
Elsewhere among the blue chips, the sugar company Tate & Lyle fell again after a “sell” note was published by Merrill Lynch last week. The stock is expected to drop out of the FTSE 100 at the next meeting of the indices committee and tracker funds have been selling the stock. It fell 11p to close at 562.5p, a fall of 1.9 per cent.
Shares in London Stock Exchange were once again bid higher after a couple of days of profit-taking, following talk of a bid from the New York Stock Exchange. Some traders said a 900p bid could be around the corner, leaving Australia's Macquarie Bank offer of 580p looking dead in the water. The shares closed at another all-time high of 731.5p, up 24.5p or 3.5 per cent.
Internet-based gambling stocks were again in focus, all suffering a bad day as traders decided that more profit-taking was in line after some strong gains last week. PartyGaming, the largest online gambling stock, which reported strong numbers on Friday, fell 8.25p, or 5.85 per cent, to 132.75p, the largest faller in the FTSE 100. Its rival 888 Holdings fell 11p to close at 209p while Sportingbet fell by 20p to end the day at 419.5p.
Surfcontrol, the internet security provider, is due to report its half-year numbers today. Some traders are expecting a strong set of results, which sent the shares to 577.5p, 8p higher, on relatively light volume, but the broker Shore Capital advised its clients to sell the stock before the results. In a note to clients it said: “Given the lack of revised guidance we do not see any near-term catalyst for a rise in the share price. Surfcontrol has been left outside the recent sector consolidation and we now judge its sales ecosystem to be weak.” Analysts are also expecting a new competitor on the block, one with enough clout to give Surfcontrol and all its rivals a major headache – Microsoft.
Bespak, the biotechnology delivery devices company, has had a good couple of days on the market and was buoyed by news that the FDA has approved Pfizer's Exubera, an insulin inhaler device for which Bespak has one of two global manufacturing contracts. The EU gave its approval on Friday.
The shares rose another 8p to close at 644.5p. However, the broker Bridgewell Securities advised clients to sell into strength, warning that growth in Exubera will take time and that the recent rise in Bespak's share price gives it a 30 per cent premium over its rivals.
Among the small caps African Copper rose 9.5p to close at 92p after it announced that copper has been found at its Thakadu-Makala site in Botswana.

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The New York Times: Oil Holds Above $68 as Iran Clouds High OPEC Output

By REUTERS
Published: January 31, 2006
Filed at 2:18 a.m. ET
SINGAPORE (Reuters) – Oil prices held steady above $68 on Tuesday as international pressure grew on fourth-largest exporter Iran over its nuclear program, overshadowing an expected OPEC decision to maintain output near a 25-year high.
U.S. light crude (CLc1) edged 3 cents up at $68.38 a barrel by 0653 GMT, after climbing 59 cents on Monday. London Brent crude (LCOc1) gained eight cents to $66.67.
OPEC ministers meeting in Vienna have given strong support to keeping oil output steady as worries over supplies from major producers have helped U.S. prices gain 12 percent since the start of the year.
“Geopolitically there are lots of hot spots, like Iran and Nigeria. Supply disruptions are bigger concerns than high oil inventory levels in the United States,'' said broker John Brady at ABN AMRO in New York.
The five permanent members of the U.N. Security Council agreed on Tuesday that the U.N.'s nuclear watchdog, the International Atomic Energy Agency, should report Iran to the Council over its nuclear program when it meets in an emergency session on Thursday.
Traders fear this would be a move that could prompt Tehran to consider using its oil as a political weapon. Analysts say any disruption from Iran, OPEC's second-biggest producer, would send prices soaring.
Major U.S. supplier Venezuela has also promised to back Iran in its argument with the West. Concerns over lost output from Nigeria and a fall in Russian energy exports have also added to a market boosted by strong fund investor buying.
Prices were given a further boost on Monday as refiners in the United States, the world's top oil consumer, slowed fuel production due to slumping profit margins and units being shut for maintenance.
The market has rallied despite healthier U.S. inventory levels, a pledge from Saudi Arabia to fill supply gaps and the promise of an emergency release from Western government stockpiles if Iran or Nigeria halted exports.
Although OPEC remains concerned over a seasonal dip in second quarter demand, Saudi Arabian Oil Minister Ali al-Naimi told reporters in Vienna that all OPEC ministers were in agreement to leave output unchanged at their Tuesday meeting.
“It makes no sense to cut,'' said Libyan Energy Minister Fathi Omar Bin Shatwan. “The price is quite high. Maybe we will monitor the situation because usually in Q2 the situation can change,'' he told reporters in Vienna on Monday.
Al-Naimi said on Sunday he saw absolutely no reason for OPEC to cut output this year, pointing to economic growth in Asia as driving oil prices.
Japan, the world's third-largest oil consumer, imported nearly eight percent more crude in December than a year earlier, leaving crude imports over 2005 up 0.7 percent on the year, government data showed on Tuesday.
In Nigeria, major producer Royal Dutch Shell (RDSa.L) has partially restarted output at its 115,000 barrel per dayEA field, but industry sources said it has no immediate plans to resume repairs on the damaged onshore pipeline that has cut the other 106,000 bpd of its production.
Nigerian militants have said they will continue with their attacks with an aim of reducing exports by 30 percent next month.

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The New York Times: Oil Giants Seen in Nigeria for Long Haul

By THE ASSOCIATED PRESS
Published: January 31, 2006
Filed at 12:55 a.m. ET
LAGOS, Nigeria (AP) — Oil giants are likely to continue investing billions of dollars in Nigeria, even though a rash of recent militia attacks and kidnappings could mean violence is on the rise.
The past two months have seen militias blow up oil pipelines and launch attacks on two oil platforms run by Nigeria's main crude producer Royal Dutch Shell PLC. Armed gangs also robbed two oil companies last week, making their getaway in speedboats.
Four foreign oil workers were kidnapped and held for nearly three weeks until their release Monday. It was the second-longest kidnapping during more than a decade of unrest in the Niger delta area, where poor local communities complain they get little benefit from the oil riches flowing from their land.
Much of the violence, though, appears less political than criminal. Gangs who tap into pipelines steal tens of thousands of barrels a crude a day. The oil thieves may be getting bolder as their illicit wealth allows them to buy more weapons.
The recent attacks forced Shell to shut down nearly 10 percent of the OPEC member nation's 2.5 million barrels-per-day oil output and evacuate over 300 workers. However, company spokesman Andy Corrigan said that Shell ''expects to continue to be a major player in Nigeria in the years to come.''
Rights campaigner Demieari Von Kemedi in the delta city of Port Harcourt said top Nigerian power brokers and security forces collaborate with the oil thieves. Although the Nigerian government has denied allegations of collaboration, two top navy officials were court-martialed last year for involvement in oil theft.
Another reason for the recent upsurge in attacks may be reaction to renewed government determination to quell unrest. Nigerian President Olusegun Obasanjo has declared that ''stability will be returned to the oil region.''
The arrest in September on treason charges of Mujahid Dokubo-Asari, the delta's most prominent militia leader, marked the start of a new crackdown on breakaway groups. Dokubo-Asari's campaign for independence for the over 8 million Ijaws that dominate the Niger delta is fueled in part by complaints that southerners see too little benefit from oil.
Another prominent Ijaw, Diepreye Alamieyeseigha, also was recently jailed. Alamieyeseigha is a former Bayelsa state governor who fled money laundering charges in Britain in November before being arrested in Nigeria. Alamieyeseigha is a member of Obasanjo's ruling party, but had increasingly found himself at odds with the president over demands that the Ijaw get a greater share of oil revenues.
Unrest here, together with worries over the nuclear standoff in Iran, have been pressuring world oil prices upward. At a time of high prices and diminishing reserves, Nigerian oil blocks remain attractive, said Antony Goldman, Africa analyst at London-based oil consultancy Clearwater Research.
''Nigeria, for all its difficulties, offers quite a bit,'' Goldman said, citing the country's expanding oil production capacity and the rapid growth of the natural gas industry.
Nigeria has the world's seventh-largest proven reserves of natural gas. It is the fifth-largest provider of crude to the United States.
The major investments now are in deep offshore fields, considered much safer than the onshore facilities currently accounting for the bulk of Nigeria's oil. The newer projects are much farther from the coast and harder for militants to reach.
Multi-billion-dollar investments by Anglo-Dutch Shell and Texas-based ExxonMobil Corp. and others are likely to raise oil exports from just under 2.5 million barrels per day now to over 3 million by mid-2007, security conditions permitting, Goldman said. The Nigerian government aims to increase oil production to 4 million barrels per day by 2010.
Nontraditional partners, including China and India, have been striking huge deals in Nigeria's petroleum sector. Earlier this month, the China National Offshore Oil Corporation announced a $2.27 billion acquisition of a share in an oil block.
Chronic poverty and oil pollution have stoked the delta's regular violence over the past decade. Peaceful dialogue took a blow in 1995, when writer Ken Saro-Wiwa and eight other activists from his Ogoni tribe were executed under the regime of the late dictator Gen. Sani Abacha.
Abel Oshevire, a spokesman for the regional Delta state government, says that local authorities are trying to find a permanent solution by tackling key issues such as poverty and education. But the regional government needs to be given control of oil resources, and to have much more money, Oshevire said.
Critics say that, with 13 percent of oil revenues flowing back to them, oil-producing states have plenty of money, but that governors squander or steal it.

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Financial Times: Surprise at first rating for Nigeria

By Joanna Chung in London
Published: January 31 2006
Fitch Ratings surprised some bond market participants yesterday by assigning Nigeria its first credit rating – at only three notches below investment grade.
The long-term debt rating of BB- puts the government debt of the oil-rich country, on a par, among others, with Turkey, Ukraine, Serbia, and Brazil.
The rating, accompanied by a stable outlook, should help attract foreign direct investment and allow Nigerian companies to borrow money by issuing bonds.
The development, likely to be welcomed by the Nigerian government, came as Nigerian militants released four foreign oil workers kidnapped this month, despite threatening to continue attacks on the nation's oil industry.
One of the most crucial factors in the ratings decision was the government's agreement last year with the Paris Club of creditor nations that culminated in Nigeria “extinguishing” all of $31bn of debt originally owed to the group by April this year, said Veronica Kalema, director at Fitch's sovereign ratings group.
The agency estimates the government public debt burden will be equivalent to just 17 per cent of gross domestic product by the end of this year, compared with 66 per cent in 2004. Fitch said that Nigeria's rating was “underpinned by the current government's strong commitment to economic reform, including measures to improve governance, tackle corruption, accelerate privatisation and rationalise the banking system”.
With public foreign debt of a little over $5bn, compared with $42bn of international reserves forecast by the end of the year, Nigeria will be a net external creditor nation.
But some analysts viewed the rating as too generous. Richard Segal, chief strategist at Argo Capital, the hedge fund, said the rating reflected net creditor status but that it was “a net creditor with an erratic track record”.
Tim Ash, emerging markets analyst at Bear Stearns, said the country had been “perennially in default on bilateral debts” and had had long track-record of problems with official creditors.
He added: “I feel a bit uncomfortable with the rating, given the huge over-dependency of the economy on oil, the history of strained relations between the federal and state level governments, and political, social and inter-ethnic conflicts.”
Fitch warned investors about social unrest andviolence in the oil-producing Niger Delta region.
There is the risk that political and social tensions might intensify in the run-up to the presidential elections in 2007.
Mr Ash said anotherconcern was that Nigeria would see a big increase in commercial debt, creating potential problems for the future.

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Financial Times: Energy groups caught in delta conflict

By Dino Mahtani in Lagos
Published: January 31 2006 02:00 | Last updated: January 31 2006 02:00
An escalation of violence in Nigeria's turbulent oil-producing delta region has left multinational oil companies wondering how sustainable their presence is in Africa's biggest oil producer.
In spite of the release of four foreign hostages who were abducted this month from an offshore field operated by Royal Dutch Shell, Nigeria's largest producer, industry officials and security analysts fear more attacks on oil facilities.
A group calling itself the Movement for the Emancipation of the Niger Delta (MEND) has claimed credit for several operations since December. They include the abductions and attacks on export pipelines and other oil facilities, which forced Shell to cut a 10th of Nigeria's oil production. MEND has promised more attacks, in spite of the hostage releases.
Nigeria deployed thousands of soldiers to the Niger Delta after an uprising by the delta's majority ethnic group, the Ijaw, forced a 40 per cent cut in the country's oil production in the run-up to elections in 2003.
Oil facilities are already guarded by police specifically seconded to the multinationals that have ploughed billions of dollars into joint venture agreements with the Nigerian government. Additional troops were intended to beef up security on critical export terminals as well as prevent the illegal theft of crude oil from pipelines and oil wells.
But Nigeria's taskforce is underequipped to guarantee the safety of the waterways. Nowa Omoigui, who lectures at the National War College, says at least 200 patrol boats are needed to patrol the delta's 112,000 sq km effectively. Nigeria has barely 25 boats that are appropriate for use in the delta.
This month's attacks against Shell facilities in the western delta was also accompanied by attacks on an oil platform belonging to Italy's Agip and a seemingly opportunistic raid on the company's corporate offices in the eastern delta.
“It would take a massive deployment of resources and manpower to secure the entire delta. As well as this, hostage rescue capacity is just not there. It's not difficult to sabotage the system,” says Dr Omoigui.
The military's lack of grip over the delta is compounded by the uneasy alliances it has to forge with local armed gangs. Many of the gangs were armed during Nigeria's military rule to act as local strong men, and again by politicians looking to rig elections in 1999 and 2003.
Meanwhile, many such armed groups operate as cartels in the illegal theft of crude oil from pipelines, alongside international criminal syndicates. Some industry estimates say up to 100,000 barrels a day is stolen.
Some estimates put conflict in the delta on par with Chechnya and Colombia. But analysts say improvements to Nigeria's military capabilities would have to be introduced in tandem with political change to avoid the “high-intensity conflict” that could force multinationals offshore by 2008, as predicted by a report commissioned by Shell and leaked in 2004.
Ijaw leaders say the government has failed to tackle poverty among their people who straddle the oil wealth that is pumped from their tribal lands. Resentment against the government is intertwined with ill-feeling against oil companies whose land acquisition and hiring policies often fuel local conflict.
With many delta constituents still talking of rigging by security forces during the 2003 elections, oil companies are watching closely to see how Nigeria's ruling party handles its internal divisions in the run-up to polls in 2007.
A UK parliamentary committee that visited the delta late last year said the delta's “simmering tensions are likely to explode unless steps are taken to rectify the deep-seated causes of conflict”.

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Financial Times: Lukoil optimistic on Iraq

By Carola Hoyos
Published: January 31 2006
Lukoil, Russia's biggest oil company, is on the verge of reopening negotiations with Iraq on the Arab country's most lucrative oil development contract.
Leonid Fedun, Lukoil's vice-president, said: “This year we will be able to start specific negotiations to develop fields.” He added: “2006 for us is the year that we are very optimistic. Finally we have a legitimate government in Iraq.”
Lukoil has the major stake in the $3.8bn (€3bn, £2bn) West Qurna oilfield, for which it signed a contract in 1997. But Saddam Hussein, Iraq's former president, severed the contract in late 2002, shortly before the US invasion that toppled him.
Mr Fedun said Lukoil, which has set up an office in Baghdad, expects the contract to be honoured. “We have running contact. It proves that, unlike western companies, we are willing to work under any circumstances,” he said.
Iraq is believed to have the world's second largest oil reserves, after Saudi Arabia. But its fields are underdeveloped. International oil companies, such as Europe's Royal Dutch Shell, Total and BP and ExxonMobil and Chevron of the US, are keen to help develop the fields.
These companies are finding it difficult to discover large new fields and face political challenges to investing in many oil-rich countries. But they have all also said that the bombings and hijackings in Iraq make it too dangerous to send large numbers of their employees to the country.
Lukoil is hoping to benefit from their caution.
“It looks like Russians have a different definition of risk,” Mr Fedun said. Vagit Alekperov, Lukoil's president, had been to Baghdad several times in the past two years – a claim not one leader of a western oil company could match, he said.
West Qurna is believed to hold as many as 11.3bn barrels of oil and is expected to produce 600,000 barrels of oil a day, the same as the entire production of Qatar, the smallest member of the Organisation of the Petroleum Exporting Countries.
“It is a huge contract and we don't need anything else, provided it is realised,” Mr Fedun said.
But analysts warned Iraq still had much to sort out before it would be able to sign any legitimate large oil deal. It is still unclear whether the power to sign oil contracts will rest with Baghdad or the provincial governments. There is still no petroleum law governing foreign investment and no model contract, one analyst pointed out.
Once these issues have been sorted out, Iraq will have to decide if it would rather sign such a large development deal with US and European oil companies that have the most advanced technology and knowhow, or with Lukoil, which would be willing to start work more quickly.
(ConocoPhillips, the US oil company, has a minority stake in Lukoil.)

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Financial Times: ONGC to buy stake in Brazil oilfield

By Khozem Merchant in Mumbai
Published: January 31 2006
India’s state-owned Oil and Natural Gas Corporation has agreed to pay $1.4bn to buy ExxonMobil’s 30 per cent stake in a field in Brazil’s Campos Basin, securing its first asset in the region after a string of setbacks.
ONGC officials say its offer has been approved by the Indian government.
The stake represents the company’s most valuable overseas asset since it paid $2.7bn for 20 per cent of the ExxonMobil-operated Sakhalin-1 project in Russia’s western Siberia region in 1998.
Speaking to the Financial Times, a senior ONGC official described the acquisition as “a highly prospective field”.
ONGC’s acquisition of the stake in the project means it will gain as partners Petrobras, the Brazilian state-owned company, and Royal Dutch Shell, the Anglo-Dutch energy group, both of which hold 35 per cent stakes in the field.
Final agreement is subject to pre-emption rights that must be exercised in the next month. Last night ONGC officials were confidently expecting a rapid conclusion to the transaction.
ONGC’s success came as Subir Raha, chairman, held a first round of talks with Murli Deora, India’s new petroleum minister.
Mr Deora has pledged to continue the Indian government’s widely applauded efforts to strengthen the country’s energy security through a strategy of aggressive “energy diplomacy” and alliances.
ONGC’s role in Campos Basin will align it with Petrobras, whose upstream exploration expertise is valued in New Delhi. Brazil’s president has spoken of India as a future energy partner for Latin America’s largest economy.
“This is not only a first move in a promising region; it also puts ONGC in a partnership with companies that has potential to grow elsewhere,” said Madhu Nainan, of Petrowatch, an energy industry publication in Mumbai.
ONGC’s earlier effort to achieve a presence in the region failed when it was outbid by Chinese rivals for assets in Ecuador. The Indian group has interests in Sudan, Libya, Myanmar, Iran, Iraq and Syria.

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Financial Times: Nigerian militants free kidnapped oil workers

By Dino Mahtani in Lagos
Published: January 31 2006 02:00
Nigerian ethnic militants released four expatriate oil workers yesterday, ending a 19-day hostage crisis amid renewed threats on oil facilities in the world's eighth largest exporter.
The hostages were abducted from an offshore oilfield in the turbulent Niger Delta region among a wave of attacks since December that have killed dozens of people and forced Royal Dutch Shell to cut Nigerian output by a tenth.
The Movement for the Emancipation of the Niger Delta (MEND), a group that claims responsibility for the kidnapping of the American, British, Bulgarian and Honduran Shell contractors, said it released the hostages on “humanitarian grounds”. An e-mail believed to be from a representative of MEND said the group would nonetheless ensure a “February target of a 30 per cent reduction in Nigeria's export capacity”.
Shell, Nigeria's largest producer, said yesterday that 106,000 barrels per day of production feeding its Forcados export terminal was still cut, after an explosion on a large export pipeline this month. Production at Shell's 115,000 bpd EA field, where the hostages were taken, resumed on Saturday but officials could not confirm when it would reach full capacity. The company said a force majeure was still in effect.
Shell has withdrawn about 500 workers from its facilities in the delta since this month's attacks, and oil unions have also threatened to withdraw their staff if security is not improved.
Industry and security officials say Nigerian security forces do not have the capability to guarantee the complete safety of the network of pipelines, oilfields and several hundred oil wells dotted around the swamps and creeks of the Niger Delta, where most of Nigeria's oil is produced.
“In any case, there needs to be a political solution to the Niger Delta crisis,” said Dimieari Von Kemedi, a political and security analyst.
MEND claims it is fighting for the rights of the Ijaw, the most populous tribe in the delta. Ijaw community leaders and militants say the Nigerian state has marginalised their people in spite of the huge oil wealth pumped from their tribal lands.
Heightened political tensions across Nigeria in the run-up to elections in 2007 are likely to feed into the crisis in the delta, where hundreds of people die in ethnic fighting, political violence and street crime each year.
An Ijaw uprising ahead of elections in 2003 forced Nigeria to cut 40 per cent of its production.

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Houston Chronicle: Exxon profits hit record $36 billion

The amount is the largest by any U.S. company, analysts believe
By LYNN J. COOK
Exxon Mobil Corp. posted a profit of $36 billion on sales of $371 billion for 2005, making it the best year the energy company has ever had.
In fact, Exxon Mobil's massive year-end earnings make it the most profitable year on record for any company in U.S. history, according to Standard & Poors, thrilling many analysts and investors and outraging some consumer advocates.
Exxon Mobil's stock price popped $1.82 per share on the news to close at $63.11 on Monday. Deutsche Bank analyst Paul Sankey said the company handily beat all the forecasts on profits.
“Today's result has surprised even bulls such as ourselves,” he said.
But while most on Wall Street rejoiced, many consumers stewed.
The Foundation for Taxpayer and Consumer Rights issued a statement claiming Exxon Mobil unfairly profited from hurricanes Katrina and Rita, echoing the sentiments of many of those with gripes about gasoline prices.
“No oil company should be allowed to reap world record profits from one of the nation's worst natural disasters,” FTRC President Jamie Court said.
Company execs have said they worked tirelessly to keep as much gasoline pumping into the market as they could in anticipation of the storms. In the aftermath, the company imported an extra 1 million barrels a day from Europe to fill the gap between supply and demand.
Taking out ads
Exxon Mobil and several other energy companies, including Royal Dutch Shell and ConocoPhillips, were the target of a widely publicized hearing on Capitol Hill in the fall where elected officials questioned their profits in the wake of the storms.
So the company anticipated the complaints.
Exxon Mobil took out full-page advertisements in several major newspapers on Monday, including the Houston Chronicle, New York Times and Washington Post, in an effort to defend profits and anticipate consumer questions.
The ad argues that, as a group, energy companies' profits are not out of line with other industries. Oil and natural gas companies earn, on average, 8.2 cents for every dollar of sales. A lot of other industries — from software to semiconductors and banking to biotechnology — make more money on every dollar sold.
But Exxon Mobil, which focuses intensely on efficiency, is a better performing company than the typical oil outfit.
For 2005, the company made 9.7 cents on the dollar, which an industry lobbying group pointed out was better than some big names but not as good as others. According to the American Petroleum Institute, Pepsi made 3.4 cents on every dollar. And GE made 7.5 cents per dollar. But those with higher profit margins include Big Mac-purveyor McDonald's, which made 11.6 cents on the dollar; Viagra-maker Pfizer, which made 20.1 cents on every the dollar; and Internet giant Yahoo, which made 45.5 cents on every dollar.
Exxon Mobil's 2005 profits are up 42 percent over 2004, but today American drivers are shelling out about 25 percent more than they were a year ago for a gallon of regular unleaded gasoline, according to the AAA price survey.
John Lowe, an energy economist and professor of law at Southern Methodist University, said that means consumers see oil companies as getting richer while their own pocketbooks are getting emptied.
“This should be no surprise,” he said. “When you take a very large company and then triple the market price that people pay for their product in a period of four years then you get huge profits. This is a phenomena of high oil prices. And it should be apparent that Exxon Mobil is not setting the price of oil. It's set by world markets.”
Exxon Mobil's sales and profits look especially large because of the scale of the industry.
Just how big is Exxon Mobil? Its $371 billion in sales last year make it, far and away, the biggest publicly traded company in the U.S. Not even Wal-Mart comes close.
If Exxon Mobil were a country, it would rank among the world's top 30 economies, ahead of more than 200 nations, including Saudi Arabia, Switzerland and Hong Kong.
Exxon Mobil has long argued that its international size and scope can often be difficult for the average consumer to grasp. The technological costs of finding and producing more crude oil and natural gas out of the ground are huge, too. Last year, Exxon Mobil spent $18 billion on exploring for more oil and revamping refineries to process more crude.
Buying stock back
Critics say they could have spent more. Last year Exxon Mobil put almost that much — some $16 billion — into buying back its own stock, which makes every shareholders' stake in the company more profitable. It's a program that makes Wall Street happy but, in effect, is slowly liquidating the company.
Ted Harper, an energy analyst at Frost Bank, said there's a Catch-22 at work in the energy world.
Oil is becoming harder and more expensive to find but demand is climbing. So the price goes up. And yet large companies have a tough time winning the right to drill in some of the most promising areas.
“If you're the size of Exxon, where do you go? To some extent they are sitting on cash because it's difficult to redeploy it at high returns,” Harper said.
“This speaks to the fact that, fundamentally, this is actually a tough time in the industry. Other companies are beginning to deploy more capital into alternatives like solar. At some point in time, energy as we know it will migrate into some other form.”

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AP Worldstream: Major oil firms in Nigeria for the long haul, despite rising unrest

DANIEL BALINT-KURTI
Jan 30, 2006
Oil giants are likely to continue investing billions of dollars in Nigeria, even though a rash of recent militia attacks and kidnappings could mean violence is on the rise.
The past two months have seen militias blow up oil pipelines and launch attacks on two oil platforms run by Nigeria's main crude producer Royal Dutch Shell. Armed gangs also robbed two oil companies last week, making their getaway in speedboats.
Four foreign oil workers were kidnapped and held for nearly three weeks until their release Monday. It was the second-longest kidnapping during over a decade of unrest in the Niger delta area, where poor local communities complain they get little benefit from the oil riches flowing from their land.
Much of the violence, though, appears less political than criminal. Gangs who tap into pipelines steal tens of thousands of barrels a crude a day. The oil thieves may be getting bolder as their illicit wealth allows them to buy more and more weapons.
Rights campaigner Demieari Von Kemedi in the delta city of Port Harcourt says top Nigerian power brokers and security forces collaborate with the oil thieves. Although the Nigerian government has denied allegations of collaboration, two top navy officials were court-martialed last year for involvement in oil theft.
Another reason for the recent upsurge in attacks may be reaction to renewed government determination to quell unrest. Nigerian President Olusegun Obasanjo has declared that “stability will be returned to the oil region.”
The arrest in September on treason charges of Mujahid Dokubo-Asari, the delta's most prominent militia leader, marked the start of a new crackdown on breakaway groups. Dokubo-Asari's campaign for independence for the over 8 million Ijaws that dominate the Niger delta is fueled in part by complaints that southerners see too little benefit from oil.
Another prominent Ijaw, Diepreye Alamieyeseigha, also was recently jailed. Alamieyeseigha is a former Bayelsa state governor who fled money laundering charges in Britain in November before being arrested in Nigeria. Alamieyeseigha is a member of Obasanjo's ruling party, but had increasingly found himself at odds with the president over demands that the Ijaw get a greater share of oil revenues.
Dokubo-Asari and Alamieyeseigha both were seen as conduits of funds to militant groups. Their arrests may have dried up the flow of cash, angering militants.
The recent attacks forced Shell to shut down nearly 10 percent of the OPEC member nation's 2.5 million barrels-per-day oil output and evacuate over 300 workers. However, company spokesman Andy Corrigan said that Shell “expects to continue to be a major player in Nigeria in the years to come.”
Unrest here, together with worries over the nuclear standoff in Iran, have been pressuring world oil prices upward. At a time of high prices and diminishing reserves, Nigerian oil blocks remain attractive, said Antony Goldman, Africa analyst at London-based oil consultancy Clearwater Research.
“Nigeria, for all its difficulties, offers quite a bit,” Goldman said, citing the country's expanding oil production capacity and the rapid growth of the natural gas industry.
Nigeria has the world's seventh largest proven reserves of natural gas. It is the fifth largest provider of crude to the United States.
The major investments now are in deep offshore fields, considered much safer than the onshore facilities currently accounting for the bulk of Nigeria's oil. The newer projects are much further from the coast and harder for militants to reach.
Multi-billion-dollar investments by Anglo-Dutch Shell and ExxonMobil of the United States and others are likely to raise oil exports from just under 2.5 million barrels per day now to over 3 million by mid-2007, security conditions permitting, Goldman said. The Nigerian government aims to increase oil production to 4 million barrels per day by 2010.
Nontraditional partners, including China and India, have been striking huge deals in Nigeria's petroleum sector. Earlier this month, the China National Offshore Oil Corporation announced a US$2.27 billion acquisition of a share in an oil block.
Chronic poverty and oil pollution have stoked the delta's regular violence over the past decade. Peaceful dialogue took a blow in 1995, when writer Ken Saro-Wiwa and eight other activists from his Ogoni tribe were executed under the brutal regime of the late dictator Gen. Sani Abacha. They were hanged for the murder of four political rivals, but Saro-Wiwa's supporters say he was really targeted because he led protests against environmental damage by Shell.
Since then, there have been countless local community protests.
Abel Oshevire, a spokesman for the regional Delta state government, says that local authorities are trying to find a permanent solution by tackling key issues such as poverty and education. But the regional government needs to be given control of oil resources, and to have much more money, says Oshevire.
Critics say that, with 13 percent of oil revenues flowing back to them, oil-producing states have plenty of money, but that governors squander or steal it.
Rights campaigner Von Kemedi said he is worried the military may eventually step in. On previous occasions, the army has responded to the killing of security forces or government officials with “punitive raids,” in which villages are razed and dozens, even hundreds, massacred. Concern for the hostages most likely prevented a major crackdown this time around.

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Business Wire:Shell Brings Employees Together With New Orleans Civic, Business & Political Leaders to Mark Return to Downtown; $500,000 Donation to New Orleans Police Foundation for Housing

Jan 30, 2006
Today Shell marked the re-opening of its downtown New Orleans offices with a community ceremony at One Shell Square that included Shell employees, civic and political leaders, and business partners.
“Like so many other businesses, Shell left its headquarters in the Central Business District in preparation for Hurricane Katrina five months ago,” said Marvin Odum, Executive Vice President, Shell Exploration & Production – who heads the Americas. “Many of our New Orleans team relocated to temporary offices in Robert, Louisiana and Houston. And other dedicated employees were able to return to other Shell offices and facilities in the region, working hard to deliver energy to the country during an otherwise chaotic time. Yet throughout it all, the Shell commitment to the region has remained firm.”
“Approximately 250 New Orleans-based Shell employees returned home today. Another 750 employees will follow the week of February 20th,” said Frank Glaviano, Vice President – Production, Americas Region. “These individuals and their jobs represent important contributions to the emerging economic recovery of the region and its community fabric. Shell is one of the largest New Orleans Central Business District employers and employs more than 4,000 people in the State.”
Odum was joined by Henri Wolbrette, Chairman of the New Orleans Police Foundation, who was presented with a donation of $500,000 to address immediate housing needs for police officers, firemen and EMS personnel.
“Shell's generous donation to the New Orleans Police Foundation will go a long way toward helping the brave men and women of New Orleans Police Department and other first responders re-equip, re-build and restore their lives,”' said Wolbrette. “When these individuals have a home to return to at the end of the day, they're better able to serve and protect our community.”
Also represented at the ceremony were dozens of business leaders and scores of downtown neighbors.
“New Orleans has steadily been returning to business,” said Kurt Weigle, Executive Director of the Downtown Development District, “But the Shell return to One Shell Square is an exclamation point for all of us. The Shell commitment sends an important message: Downtown New Orleans is back in business!”
“All of us must now adapt to a 'new normal' in New Orleans,” continued Odum, “and I'm proud that Shell has been a leader in bringing together the community organizations, businesses of all sizes, and the enthusiasm of countless individuals to contribute to the steady momentum of rebuilding.”
Shell Oil Company, including its consolidated companies and its share in equity companies, is one of America's leading oil and natural gas producers, natural gas marketers, gasoline marketers and petrochemical manufacturers. Shell, a leading oil and gas producer in the deepwater Gulf of Mexico, is a recognized pioneer in oil and gas exploration and production technology. Shell Oil Company is an affiliate of The Shell Group, which operates in over 140 countries and territories employing more than 112,000 people.
Disclaimer statement:
This announcement contains forward-looking statements, that are subject to risk factors associated with the oil, gas, power, chemicals and renewables business. It is believed that the expectations reflected in these statements are reasonable, but may be affected by a variety of variables which could cause actual results, trends or reserves replacement to differ materially, including, but not limited to: price fluctuations, actual demand, currency fluctuations, drilling and production results, reserve estimates, loss of market, industry competition, environmental risks, physical risks, risks associated with the identification of suitable potential acquisition properties and targets and the successful negotiation and consummation of transactions, the risk of doing business in developing countries, legislative, fiscal and regulatory developments including potential litigation and regulatory effects arising from recategorisation of reserves, economic and financial market conditions in various countries and regions, political risks, project delay or advancement, approvals and cost estimates.
Please refer to the Annual Report on Form 20-F for the year ended December 31, 2004 (as amended) for a description of certain important factors, risks and uncertainties that may affect the Shell Group's businesses. Neither Royal Dutch Shell plc nor any member of the Shell Group undertakes any obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information, future events or other information.
Cautionary Note to US Investors: The United States Securities and Exchange Commission ('SEC') permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this presentation, such as “expected producible resources” and “amount of reserves we expect to produce”, that the SEC's guidelines strictly prohibit us from including in filings with the SEC.Shell E & P Fred Palmer, 504-728-4407 (office) 504-232-2027 (cell) Shell US Media Line: 713-241-4544 www.shell.com/us/sepco

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Yahoo! News: Oil execs refuse to testify at U.S. Senate hearing

Mon Jan 30, 5:15 PM ET
WASHINGTON (Reuters) – Officials from six major oil companies have refused to testify this week at a Senate hearing looking into whether oil industry mergers in recent years have made gasoline more expensive at the pump.
With oil companies reporting record profits from higher energy prices, consumer groups have complained that mergers in the industry have stifled competition.
Exxon Mobil said on Monday it earned $10.7 billion in the fourth quarter of last year and $36.1 billion for all of 2005 — bigger than the economies of 125 countries.
The Senate Judiciary Committee, which is holding the hearing on Wednesday morning, said it asked representatives from Exxon Mobil, Chevron, ConocoPhillips, Valero Energy and the U.S. units of BP and Royal Dutch Shell to tell their side of the story.
“All declined the invitation to testify,” the committee said in a statement on Monday, without providing details.
The companies, with the exception of Valero, took a beating at a Senate hearing last November on the industry's soaring profits at the time and high energy prices.
Bill Kovacic, a member of the Federal Trade Commission, is scheduled to testify at Wednesday's hearing.
The FTC is investigation whether oil companies manipulated gasoline prices and oil refining production levels. The agency plans to finish its probe and send its findings to Congress this May.
Connecticut Attorney General Richard Blumenthal will also testify.
The price for gasoline jumped 2.1 cents over the last week to a national average of $2.36 a gallon, up 45 cents from a year ago, the government said on Monday.

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Monsters and Critics.com: Released oil workers handed over to Shell director

Four expatriate oil workers abducted by gunmen from a Shell Petroleum Development Company facility in Nigeria nearly three weeks ago were handed over to Shell's managing director on Monday, hours after their release.
The four, named as Briton Nigel Watson-Clark, Bulgarian Milko Nichev, Harry Ebanks from Honduras and U.S. national Patrick Handry, were released in Yenagoa, capital of Bayelsa State, before being welcomed by Nigerian President Olusegun Obasanjo.
Handing the freed hostages over to Shell managing director Basil Omiyi, Obasanjo said his administration would not be blackmailed by criminals.
'No self-respecting government will give into blackmail, intimidation or threat,' he said. 'This incident only exposed them (the militants) for what they are…criminals. I hope they have seen the futility of their actions.'
He added that his government was working on a new strategy to prevent similar kidnappings in future.
'I want to assure you and the international community that we will try to prevent the recurrence of this kind of incident,' he told the hostages, while appealing to the media 'to stop glorifying people who have done bad, you are undermining the security of the country.'
The kidnappers, a previously unknown militia group called the Movement for the Emancipation of the People of the Niger Delta, originally said it would only release the men if the government freed two detained leaders of the ethnic Ijaw group.
A Foreign Office spokesman in London confirmed the release earlier Monday, saying: 'The men are free. They are in the hands of Nigerian officials.'
Earlier, Nigerian Army Major Said Ahmed, spokesman for 'Operation Restore Hope,' a special military unit aiding police in the Niger Delta, had also confirmed the release.
The kidnappers were reportedly demanding ransom money as well as the release of two people currently on trial in Abuja.
Reports in London said the kidnappers' conditions were not met before the hostages were released.
The abductors were demanding the immediate release of the impeached governor of Bayelsa State, Diepreye Alamieyeseigha, on trial for embezzlement while in office.
It also demanded immediate freedom for a militant separatist leader, Mujahid Dokubo-Asari, who is standing trial for treason.
Dokubo-Asari led a bloody uprising in the Niger Delta in 2004 in a crusade to demand that Nigeria's oil resources be controlled by the oil-rich Delta region.
Nigeria's oil industry has been the target of militant attacks in recent weeks, with a January 15 bombing attack on Shell houseboats killing 13 people.
Gunmen also stormed the premises of another oil company in Port Harcourt over the weekend and stole the equivalent of 300,000 dollars.
The southern Niger delta is home to 90 per cent of Nigeria's oil reserves, making the populous West African nation one of the world's biggest oil exporters.
But some 20 million residents of the delta region have long complained they were not benefiting from the oil wealth, and that the pollution from frequent oil spills and gas flares had damaged the soil on which they rely for farming.

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Anarkismo.net: News from anti-pipeline struggle in Ireland

By Finbar Dwyer – WSM – Workers Solidarity 90 Monday, Jan 30 2006, 1:59pm

Rossport – Go west (and make Shell go offshore

Though the issue of the Rossport pipeline was last in the news when the the five local men were released from prison, the conflict with Shell hasn't gone away. Since then the government commissioned a report, which essentially whitewashed Shell and gave the go ahead to build this dangerous pipeline.
The people of Rossport, however, are not lying down in the face of either the multinational or government. Last summer they stopped Shell from carrying out pipeline work. This summer the plan is the same. Safety is not negotiable.
Five years ago when Shell decided to push ahead with this pipeline it was clear it wasn't safe. Five years later, government reports or bullying a small community will not change this fact. It wasn't safe then and it isn't safe now.
Beyond safety, the Shell is ripping us off. Five years ago Shell got the deal of a century when our esteemed leaders gave them the entire gas field and then paid them to build the refinery by giving them massive tax breaks on all their construction work. If it was a rip-off then, it's still a rip-off now.
Shell are aware that they face a very strong campaign and so have been sending out fancy leaflets all across Mayo telling people how safe the pipeline is. They are getting ready for a big push to have it built this spring.
The local Campaign is also preparing too. Last autumn a delegation went to Norway to successfully publicise the complicity of Statoil, who own the second largest stake in the field.
At the moment there are several people preparing a camp site in Mayo to facilitate people who want to go and show solidarity. The camp is opening on February 25th and is for all interested in showing solidarity with the people of Rossport.
In this sparsely populated area the campers will help with the continuous picket which makes sure that Shell don't start their pipelaying. If you have a few days to spare, come to Mayo and help with the blockades. If you can't get to Mayo, you can get in touch with your local 'Shell to Sea' group.
For more information about the camp contact Bob 0863201612. http:// www.shelltosea.com

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The Australian: Barrow doubt hits Gorgon

By Nigel Wilson
January 30, 2006
THE $11 billion Gorgon gas project faces big delays after warnings by its engineering advisers that placing the processing facilities on Barrow Island may be too costly.
Engineers are looking again at whether gas from the Greater Gorgon reservoirs in the Indian Ocean could be piped directly to the mainland – a solution previously dismissed as being up to $800 million more expensive than the Barrow Island option. The review is being undertaken amid concerns about higher costs, including those of meeting stringent environmental standards for the nature-protected Barrow Island.
Chevron and Shell, which own 75 per cent of the project, have negotiated preliminary sales agreements for 7.5 million tonnes of Gorgon liquefied natural gas output for delivery from 2010.
The project, to produce 10 million tonnes of LNG from two production trains, is in the final stages of assessment following a $100 million engineering and design program. But a full-scale engineering review of alternatives to Barrow could take several months to complete and most likely would involve further delays in seeking environmental clearances.
The partners, which also include ExxonMobil, have repeatedly said they expect to commit themselves to the project by the middle of the year.
“We don't comment on speculation,” a Gorgon spokesman said yesterday. But he added that the Gorgon development was not isolated from issues such as higher material and labour costs affecting other construction projects around the country.
Losing the Gorgon development would be embarrassing for the West Australian Government, which has promoted the project as a key part of a $40 billion investment program for the northwest, most of which remains unfulfilled.
It is understood that much of the engineering concerns revolve around the costs of meeting an unprecedented level of environmental protection and monitoring being demanded by the West Australian Environmental Protection Authority.
Barrow Island, about 60km off Western Australia's northwest coast, is a controversial site for an LNG plant, even though it is host to Australia's biggest onshore oil field, which has been producing for more than 40 years, attracting international recognition for its sensitivity to the environment.
It has been a class A nature reserve since 1911 – the highest form of conservation protection available in Western Australia. Barrow has internationally significant bio-diversity, including 24 known species or subspecies that occur only on the island.
The island is also a refuge for the Perentie, which is the world's second-largest lizard.
Environmentalists have long been opposed to an LNG plant on the island but in 2003 the West Australian Government legislated to allow the proponents to use up to 300ha of the island under strict environmental assessment.
In November public comment closed on a 2500-page environmental impact statement, the largest in Australia.
The proponents are responding to public submissions with the EPA scheduled to present its final advice to the Government within three months.
A main concern is the plan to dispose of carbon dioxide from Gorgon gas in a saline percolating aquifer deep below Barrow Island.
Critics say the ERMP does not contain adequate safeguards and monitoring processes for this untested carbon removal plan.

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Shell Whistleblower Dr Huong files defence to Shell defamation suit

By Alfred Donovan
Dr Huong, a former Shell geologist of almost 30 years standing was the FIRST SHELL employee to blow the whistle on the Shell reserves fraud (and other important issues relating to the discredited senior management of Royal Dutch Shell).
As a result Shell appears determined to silence him at all costs. Hence the unprecedented highly distasteful spectacle of EIGHT giant Shell companies collectively bringing a defamation action against one human being – an unemployed Malaysian who has no prospect whatsoever of finding alternative employment in his profession while the litigation cloud hangs over the heads of himself and his family.
Dr Huong has now filed a Defence which contains a staggering array of allegations, facts and evidence directed against Royal Dutch Shell Group. It represents an unprecedented indictment of Shell by a former Shell insider.
We will shortly publish information on how Shell shareholders and stakeholders can provide financial support for this courageous Malaysian, victimised by Shell, who has been unable to secure alternative employment because of the draconian litigation which has blighted his life.
Dr Huong made the mistake of believing in Shell's STATEMENT OF GENERAL BUSINESS PRINCIPLES and in particular the pledges of “honesty, integrity, respect for people” in all of Shell's dealings and Shell's philosophy in the new ways of working, including the promotion of trust, openness, teamwork, professionalism and pride in what Shell does.
He did not realise that the pledges were purely hype and spin meant for use in global PR campaigns such as “Profits and Principles” i.e. for the consumption of gullible consumers and stakeholders.
We now know as a result of the reserves fraud that the slogan should have been “Profits and NO Principles”.
To read the full article including the court documents:

http://shell2004.com/ShellNewsnet Original news stories/shellnewsnet-dr-huong-defence-29-january-2006.htm

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Shell CEO Jeroen van der Veer still faces potential criminal prosecution by US Justice Department

By Alfred Donovan
ShellNews.net has obtained a copy of the decision by the US Justice Department taken on 29 June 2005 against prosecuting Shell. This followed an investigation headed by Mr David Kelly, United States Attorney for the Southern District of New York.
Mr Kelly, a member of the US President's Corporate Fraud Task Force, praised the efforts of the FBI for their role in the investigation. He also thanked the US Securities and Exchange Commission for its valuable assistance.
According to a report in THE WALL STREET JOURNAL coinciding with the release of the decision, the role of individuals in the accounting scandal at Shell was still being investigated. In an interview, Mr. Kelley stated, “We're continuing to evaluate the case against the individuals.” He indicated that the decision against prosecuting Shell had been taken bearing in mind co-operation by the company in the investigation and went on to say: “Moreover, criminal prosecution would likely have a severe and unintended disproportionate economic impact upon thousands of innocent Shell employees.”
There has been no subsequent word from the US Justice Department on the on-going investigation against individuals allegedly implicated in the fraud, including Shell CEO Jeroen van der Veer, who also faces civil proceedings via US class action lawsuits.
The investigation is referred to in paragraph 23.5 of a defence document filed by Shell whistleblower Dr John Huong (with the High Court of Malaya on 25 January 2006) in relation to a defamation lawsuit brought against him by EIGHT Royal Dutch Shell companies registered in the UK, the Netherlands and in other Countries.
To read the Justice Department document click on the article link below:
http://shell2004.com/week26/shellnews-net-shell-ceo-jeroen-van-der-veer-29-january-2006.htm

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Strategiy: Shell companies donate tents to Pakistan earthquake victims

Strategiy: United Arab Emirates
[Monday, January 30, 2006 8:59:00 am]
A group of Dutch expatriates donated AED 55,000 to Earthquake Relief Action Dubai, an organisation formed by Dubai Aid and Humanitarian City, towards the purchase of school tents for earthquake victims in Pakistan. The funds are the proceeds of a private photo exhibition organised by the group with the support of Shell Middle East, Caspian and South Asia.
“The idea was born spontaneously among a few friends who share a love for photography,” said Michael Dukker, organiser of the charitable initiative. “We were shocked by the tragedy in Pakistan and decided to make use of our hobby to raise money for the earthquake victims. We organised an exhibition with 50 works of art that we offered for sale to friends and colleagues. The amount raised by us was generously matched by Shell. We are confident that with the assistance of Dubai Aid and Humanitarian City, our donation will be used in the most effective way”, he added.
“Shell is honoured to have been invited to contribute to this worthy cause. The donation demonstrates the commitment of Shell' Dubai staff and their families to social improvement here and in the wider region. We would like to thank the individuals behind it and laud their efforts,” said Erik Slotboom, VP HR, Shell Middle East, Caspian and South Asia.
The donation was handed over to Earthquake Relief Action Dubai, which was set up in the immediate aftermath of the Pakistan earthquake by Dubai Aid and Humanitarian City for coordinating and facilitating relief aid for earthquake victims.
“Apart from its monetary value, this initiative is important because it proves that Dubai and its corporate community have not forgotten Pakistan,” said Barbara Castek, CEO of Dubai Aid and Humanitarian City. “We are still receiving calls from individuals, groups or companies who want to contribute”, she added.
“After consulting persons working on the field in Pakistan, we decided to use the donation for purchasing thermally insulated school tents, designed especially for the affected mountainous areas in Pakistan”, explained Castek.

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Radio New Zealand: Oil company attacks continue in Nigeria

Posted at 8:47am on 30 Jan 2006
Armed men stormed the headquarters of a South Korean oil services company in Nigeria's delta region and stole 40 million naira ($US307,000) in the latest attack on foreign firms.
There were no casualties.
The raid came five days after nine men were killed during a suspected armed robbery at the delta headquarters of an Italian oil company, Agip.
Rebels abducted four foreign oil workers 18 days ago and have crippled a tenth of Nigeria's production in a six-week campaign of violence.
The movement's campaign has forced Shell to withdraw 500 employees and cut its output by 221,000 barrels a day – or nearly a tenth of the output from the world's eighth largest exporter.

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Reuters: Shell resumes partial output at EA oilfield

Mon Jan 30, 2006 7:39 AM GMT
LAGOS (Reuters) – Royal Dutch Shell has partially resumed production at its 115,000 barrels per day EA offshore oilfield in Nigeria after repairs to a technical fault, oil industry sources said on Monday.
The field was shut after a militant attack on January 11 in which four foreign oil workers were kidnapped.
One of the sources said the field would take about a week to reach full production.

BBC NEWS: Kidnapped oil worker 'released'

A British oil worker kidnapped in Nigeria three weeks ago has been freed, a local official has said.
Nigel Watson-Clark, from Saltford near Bath, and three other foreigners were taken hostage by armed militants demanding more control over resources.
A spokesman for the southern state of Bayelsa said the four were alive and well and with the state governor.
British officials and representatives of oil company Royal Dutch Shell said they were checking the report.
Mr Watson-Clark was in an elite band of security men who guard Nigeria's oil rigs.
The former paratrooper was snatched, together with an American, a Bulgarian and an Honduran, from an offshore oil platform on 11 January.

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The Scotsman: IPods and oil set to power up profits

THE WEEK AHEAD
MARTIN FLANAGAN
SCOTTISH group Wolfson Microelectronics is expected to unveil doubled full-year profits on Wednesday, helped by the surge in popularity of iPod music players.
Wolfson, which makes the chips that change digital signals to analogue ones so that people can hear sounds or see images, said in October that demand for chips used in iPods and other consumer electronics had accelerated since its July update.
Analyst Ian Robertson at broker Altium Securities said the group's results should be “impressive”. Robertson said: “The recent news flow from other semiconductor companies, except Intel, has been comforting, giving us increased faith that Wolfson will have had a good end to the year.” Altium predicted pre-tax profits of $32 million (£18m) against $15m in the previous 12 months.
Star turn on the big reporting canvas this week will be oil major Royal Dutch Shell, with many analysts believing that its first set of full-year results as a unified company will be marked by the biggest profits performance in UK corporate history.
Analysts expect Shell to reveal on Thursday that it made $23 billion (£12.9bn) in 2005, fuelled by buoyant oil prices, against $17.6 billion the previous year.
That is despite hurricane damage in the Gulf of Mexico meaning that Shell's production in 2005 was about 3.5 million barrels of oil a day – at the bottom end of earlier targets laid out by the group.
There should be information about the cost of repairs to rigs in the region and whether they are in line with Shell's estimates at the end of October, along with the group's forecast for oil and gas output in 2006.
On the “current cost of supplies” measurement, Shell is expected to report earnings of $5.48bn in the fourth quarter compared with $5.22bn in the same period of 2004.

Strong sales of blockbuster drugs are expected to inject life into pharmaceuticals giant AstraZeneca's full-year figures on Thursday.
The British-Swedish company forecast sales growth around the double-digit mark in an update in October, after sales of its top five medicines rose 25 per cent in the three months to September.
Anti-obesity drug Crestor and ulcer treatment Nexium are among the company's biggest-selling products.
Analysts will be interested in any more news on Astra's pipeline of new drugs – the firm recently struck four deals in the course of a month, including the £121m acquisition of KuDOS Pharmaceuticals.
According to a consensus of analysts' forecasts, operating profits for the full year should be about $6.5bn against $4.77bn last time.
Soaring fuel costs will be a major factor in lower third-quarter profits from British Airways on Friday after it forecast an annual fuel bill of £1.67bn in November.
But another issue of concern is the airline's £1.3bn final salary pension deficit, which is one of the biggest among FTSE 100 companies.
Pre-tax profits for the three months to the end of December are expected to come in at £145m against £151m last time, according to a consensus of analysts.
Satellite broadcaster BSkyB hit its goal of eight million UK subscribers by the end of 2005 but the City will be interested in how its “churn rate” – the percentage of subscribers that leave BSkyB each year – has turned out after putting prices up by between £1.50 and £3 per month in the summer.
The consensus estimate for operating profits for the six months to the end of December stands at £399 million – up from £354m in the same period of 2004.
This article: http://business.scotsman.com/index.cfm?id=147942006
Last updated: 30-Jan-06 02:25 GMT

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Los Angeles: Militants Release 4 Foreign Oil Workers

From Times Wire Reports
Four foreign oil workers held hostage by Nigerian militants were released and were well, a government spokesman said.
The hostages — an American, Briton, Bulgarian and Honduran — were abducted Jan. 11 from an offshore oilfield in the Niger Delta operated by Royal Dutch Shell.
Militants have crippled a tenth of Nigeria's oil production in six weeks of violence. They have demanded more local control over the delta's oil wealth, compensation for pollution to villages and the release of two ethnic Ijaw leaders.

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The Australian: Kidnapped oil workers released

From correspondents in Lagos
January 30, 2006
NIGERIAN separatist militants released four Western oil workers today, after holding them hostage in the swamps of the Niger Delta for almost three weeks.
The men – an American, a Briton, a Bulgarian and a Honduran – were handed over to the Bayelsa state government, spokesman Welson Ekiyor said by telephone from the state capital Yenagoa.
Today's release will come as a relief to those working in Africa's largest oil industry, which is reeling from a three-week series of violent attacks that has left 22 members of the security forces and three Nigerian workers dead.
“They've been released. They're with the governor right now. They're very OK,” Mr Ekiyor said.
The British embassy and the oil giant Shell said they were checking the report.
On January 11, a heavily armed ethnic Ijaw militia riding speed boats boarded an oil industry supply vessel and captured four crew members. The vessel, Liberty Service, was working for the energy giant Shell off the coast of Bayelsa.
The boat's US skipper, Patrick Landry, British security expert Nigel Watson-Clark and engineers Milko Nichev of Bulgaria and Harry Ebanks of Honduras were held hostage for nearly three weeks in Ijaw areas of the Niger Delta.
The hostage-takers issued statements demanding that the Nigerian government release two prominent Ijaw leaders from jail and that Shell pay $US1.5 billion ($2 billion) in compensation to villages polluted by oil spills.
There was no initial information as to what kind of a deal, if any, had been struck with the kidnappers to secure the men's release.
On the same day as the hostages were taken, militants blew up Shell's Trans-Ramos pipeline. Four days later, they stormed the firm's Benisede oil flow station, killed 14 soldiers and two oilmen, and burned down buildings.
Then on January 24, gunmen wearing camouflage fatigues and armed with AK-47 Kalashnikov assault rifles stormed an office and workshop complex run by the Italian oil firm ENI in the southern oil city of Port Harcourt.
The unidentified gang killed seven serving policemen, one retired officer seconded to the firm as a security guard and a company accountant, before escaping on speed boats with a large haul of cash.
Two days ago, in an almost identical attack, gunmen scared off the police protecting the Korean engineering company Daewoo's oil services centre outside Port Harcourt and stole $US307,000 ($410,000) in cash.
Nigeria has been producing oil for five decades, longer than it has been an independent country, but most profits from the multi-billion dollar sector end up in the pockets of multinationals and corrupt government officials.
According to the World Bank, more than three quarters of Nigerians live in abject poverty on less than one dollar per day.
The Niger Delta, a Scotland-sized swathe of coastal swamp and mangrove forest dotted with oil wells and criss-crossed by pipelines, is home to several well-armed illegal militias fighting for a greater share of oil revenues.

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The Australian: Barrow doubt hits Gorgon

By Nigel Wilson
January 30, 2006
THE $11 billion Gorgon gas project faces big delays after warnings by its engineering advisers that placing the processing facilities on Barrow Island may be too costly.
Engineers are looking again at whether gas from the Greater Gorgon reservoirs in the Indian Ocean could be piped directly to the mainland – a solution previously dismissed as being up to $800 million more expensive than the Barrow Island option. The review is being undertaken amid concerns about higher costs, including those of meeting stringent environmental standards for the nature-protected Barrow Island.
Chevron and Shell, which own 75 per cent of the project, have negotiated preliminary sales agreements for 7.5 million tonnes of Gorgon liquefied natural gas output for delivery from 2010.
The project, to produce 10 million tonnes of LNG from two production trains, is in the final stages of assessment following a $100 million engineering and design program. But a full-scale engineering review of alternatives to Barrow could take several months to complete and most likely would involve further delays in seeking environmental clearances.
The partners, which also include ExxonMobil, have repeatedly said they expect to commit themselves to the project by the middle of the year.
“We don't comment on speculation,” a Gorgon spokesman said yesterday. But he added that the Gorgon development was not isolated from issues such as higher material and labour costs affecting other construction projects around the country.
Losing the Gorgon development would be embarrassing for the West Australian Government, which has promoted the project as a key part of a $40 billion investment program for the northwest, most of which remains unfulfilled.
It is understood that much of the engineering concerns revolve around the costs of meeting an unprecedented level of environmental protection and monitoring being demanded by the West Australian Environmental Protection Authority.
Barrow Island, about 60km off Western Australia's northwest coast, is a controversial site for an LNG plant, even though it is host to Australia's biggest onshore oil field, which has been producing for more than 40 years, attracting international recognition for its sensitivity to the environment.
It has been a class A nature reserve since 1911 – the highest form of conservation protection available in Western Australia. Barrow has internationally significant bio-diversity, including 24 known species or subspecies that occur only on the island.
The island is also a refuge for the Perentie, which is the world's second-largest lizard.
Environmentalists have long been opposed to an LNG plant on the island but in 2003 the West Australian Government legislated to allow the proponents to use up to 300ha of the island under strict environmental assessment.
In November public comment closed on a 2500-page environmental impact statement, the largest in Australia.
The proponents are responding to public submissions with the EPA scheduled to present its final advice to the Government within three months.
A main concern is the plan to dispose of carbon dioxide from Gorgon gas in a saline percolating aquifer deep below Barrow Island.
Critics say the ERMP does not contain adequate safeguards and monitoring processes for this untested carbon removal plan.

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THE WALL STREET JOURNAL: Oil-Price Shock Tops List Of Global Economic Risks Amid Supply, Geopolitical Worries

By MARC CHAMPION
Staff Reporter of THE WALL STREET JOURNAL
January 30, 2006; Page A2
DAVOS, Switzerland — The good news about oil is that even if terrorists were to blow up key infrastructure around the world, there probably would be enough reserves to make up the shortfall for as long as a year. At least that was the conclusion from a crisis simulation held here at this year's World Economic Forum.
The bad news: Oil prices would still soar as high as $120 a barrel, and economists, chief executives and risk analysts gathered at Davos still put an oil-price shock at the top of their list of global economic risks. Lack of spare output capacity and growing worries over geopolitics are making that more possible, they say.
In fact, some economists say the U.S. economy already is suffering from an oil-price shock. It just doesn't realize it yet. Research by Washington-based consultant Robert F. Wescott, a former International Monetary Fund and White House economist, suggests oil prices are already hurting stock prices, and may hurt profits and growth.
COMPLETE COVERAGE
See video reports from Davos including publisher Mort Zuckerman and Cisco CEO John Chambers. Plus, track the latest Davos news.Mr. Wescott looked at what has happened to U.S. stock prices since 1950 when corporate profits rose sharply, as they did last year. He found that stocks rose by an average 21.5% when profits were up by 30% or more — except in 2005. Last year, profits rose about 30%, but stocks were flat. In Mr. Westcott's view, oil prices are the key reason.
“Oil prices have been creaming our companies,” he said after the simulation. The only reason the oil-price surge hasn't hammered U.S. growth, he said, is that job creation in housing-related sectors of the economy and mortgage-equity withdrawals have kept U.S. consumers spending, despite higher gasoline and heating costs. As the housing market slows, he says, that cushion will disappear and the ill effects of expensive oil will become clear. He cited weak U.S. growth figures for the fourth quarter of 2005, released last week, as evidence.
Mr. Wescott's is a minority view. Most economists believe the oil-price rise of recent years has had little impact so far. But his contention underlines a general unease that with oil prices now over $60 a barrel, the global economy might not weather an additional runup the way it has handled the climb so far.
To test that question, a four-hour energy-crisis simulation held at the forum here assumed that a series of terrorist attacks had taken about 5% of daily oil production off the market. Saudi Aramco Chief Executive Abdallah S. Jumah said afterward that his company could pump about an extra 1.5 million barrels a day. Strategic reserves released by the International Energy Agency, together with increased output from other producers, could cover the rest of the deficit.
Royal Dutch Shell PLC Chief Executive Jeroen van der Veer said at a separate news conference that there was “no need for pessimism” about energy. The current high oil price would stimulate investment and new energy supplies, he said. Similarly, Fatih Birol, the IEA's chief economist, said the response to Hurricane Katrina in the U.S. last year showed that the agency was willing to use its strategic reserves and that markets were calmed by the move.
Yet the simulation still predicted oil prices would soar to as much as $120 a barrel. Roland O. Rechtsteiner, director of Mercer Oliver Wyman, which helped produce a report on global risks for the forum, said that was because markets would focus on the lack of any further capacity in case of another disruption.
Analysts in a similar Davos discussion a year earlier had predicted dire effects from $80-a-barrel oil. Meantime, oil in the real world hit $70, without killing global growth. But at $70, oil expenditure still makes up only about 4% of global gross domestic product, compared with 7% during the oil crises of the 1970s and 1980s. At $120, oil expenditure would make up nearly 8% of global GDP.
The driver for most of the oil-price rise has been growing demand from China and India, which has offset the potentially inflationary impact of the price increase with rising economic growth. But that has been changing, and price rises are increasingly the result of supply concerns. “This year, Chinese oil demand grew by zero,” says Daniel Yergin, chairman of Cambridge Energy Research Associates.
The volatile Middle East's dominant share of oil output is projected to rise. To cushion against shocks, the U.S. and other developed countries, as well as fast-growing China and India, would have to cut their growth in energy use, according to Richard N. Haass, a former senior U.S. State Department official and now head of the U.S. Council on Foreign Relations. Noting the example set by the U.S., he added, “None of us can afford for them to take a trajectory in energy use that in any way resembles ours.”
Write to Marc Champion at [email protected]

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The Times: Look ahead

Royal Dutch Shell is expected to report the biggest profits performance in UK corporate history when it announces its fourth-quarter results on Thursday.
Analysts expect the oil and gas group to reveal that it made $23.03 billion (£12.9 billion) last year, up from $17.59 billion over the previous 12 months.
Shell is expected to report earnings of $5.48 billion in the fourth quarter, compared with $5.22 billion over the same period in 2004.
Damage caused by hurricanes in the Gulf of Mexico has meant that production in 2005 will be about 3.5 million barrels of oil a day — at the bottom end of the target range. The group said recently that the cost of repairing damage to rigs and refineries would be about $350 million, although most of this would be covered by insurance.

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Daily Telegraph: The week ahead

A guide to company results and meetings, and economic statistics
Royal Dutch Shell is expected to unveil record profits for a British company fuelled by a steep increase in oil prices over the past year.
The oil giant's fourth quarter results on Thursday are expected to push the company's annual earnings up to a record $23billion (£13billion).
Also this week, US oil giant Exxon Mobil is expected to post the world's biggest-ever profit of about $32billion and BP is expected to continue the trend with profits of around $22billion reported on February 7.
At Shell, analysts' consensus forecast for current cost of supplies earnings, the standard measure used in the oil industry, is $5.5billion for the three months to December.
For the nine months to September Shell earned $17.5billion compared to $12.4billion earned in the same period a year earlier.
The earnings would be the highest ever reported by a UK-listed company, beating the record $17.6billion posted by Shell a year ago.

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Daily Telegraph: Refiners urge Brown to rethink

By Roland Gribben (Filed: 30/01/2006)
Pressure is growing on the Government to end opposition to the creation of a new agency to control Britain's strategic oil stocks, amid worries about the future of the refinery business.
The Chancellor Gordon Brown has been reluctant to support the move because he is concerned the Government may end up being exposed to a huge financial obligation by effectively underwriting the oil stocks.
BP, Shell, Esso and independent oil companies along with importers and petrol retailers, including Tesco and Sainsbury, are attempting to persuade him to change his mind, and pointing out that by adopting the Stockholding Agency framework used in other EU states the Government will not be exposed to financial risk.
At present, oil reserves are held by oil companies without any cost to the Government, although Alan Johnson, Trade and Industry Secretary, is responsible for administering them.
Under existing rules BP, Shell and other oil majors with refineries in Britain are required to hold the equivalent of 67.5 days' sales while supermarkets and other non-refiners have a smaller 48.5 days' obligation.
Oil companies and supermarkets believe an agency would be better placed to administer stocks and ensure they were meeting obligations. They feel their arguments have been reinforced by confusion surrounding specific stocking requirements covering particular products.
One industry executive said: “It's very frustrating. We've been talking to the Government about setting up the agency for three years now and there's been little progress.”
The unity in the industry on the agency issue masks wide differences between the oil majors and supermarkets on other stocking and strategic issues. BP and Shell are pressing the DTI to end the stocking differential with supermarkets and refiners, arguing that Britain is the only EU country with a two-tier system.
They maintain the current set-up is anti-competitive, penalises domestic refineries, and will not survive changes in the industry or the longer-term need to fall in line with the EU's 90-day stock obligation. Britain has been given a dispensation because North Sea oil provides a “reserve cushion”, but as offshore production runs down stocks will need to rise.
Supermarkets, faced with a massive bill to bring them into line and anxious to protect their 33pc share of the petrol market, have mounted strong opposition to the move. They have told ministers that “big oil” is trying to shackle them and undermine their competitive position

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AFX Europe (Focus): Hostage oil workers released in Nigeria – official UPDATE

LAGOS (AFX) – Four foreign oil workers who had been held hostage by Nigerian separatist militants for 19 days have been released by their captors, a state government spokesman told Agence France-Presse.
“They've been released. They're with the governor right now. They're very OK,” said Bayelsa State spokesman Ekiyor Welson, speaking by telephone from the state capital Yenagoa.
A British diplomat and an official of the energy giant Royal Dutch Shell said that they are checking the report.
On January 11 a heavily armed ethnic Ijaw militia riding speed boats boarded the oil industry supply vessel Liberty Service off the coast of Bayelsa and captured four crew members.
The boat's American skipper Patrick Landry, British security expert Nigel Watson Clark and engineers Milko Nichev of Bulgaria and Harry Ebanks of Honduras have since been held in Ijaw areas of the Niger Delta.
Statements from the hostage-takers demanded that the Nigerian government release two prominent Ijaw leaders from jail and that Shell pay 1.5 bln usd in compensation to villages polluted by oil spills.
There was no initial information on what kind of a deal, if any, had been struck with the kidnappers to secure the shipmates' release.
[email protected]
afp/jlw/jlw

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The New York Times: Nigerian Militants Free Foreign Oil Workers

By REUTERS
Published: January 30, 2006
Filed at 2:39 a.m. ET
YENAGOA, Nigeria (Reuters) – Nigerian militants released four foreign oil workers on Monday, ending a 19-day hostage crisis that also saw Nigerian oil output cut by a tenth.
The hostages — an American, Briton, Bulgarian and Honduran — were abducted from an offshore oilfield in the southern Niger Delta on January 11, one of a series of attacks on the oil industry in the world's eighth largest exporter.
“They have all been released. They are all alive and well,'' said the spokesman for the southern state of Bayelsa.
The militants had demanded more local control over the delta's oil wealth, compensation for oil pollution to villages in the vast wetlands region and the release of two Ijaw leaders. The Ijaw are the biggest ethnic group in the delta.
Diplomats and militants said it was unlikely that the release of the hostages would mark the end of attacks on oil platforms and pipelines, which have forced Royal Dutch Shell to close 221,000 barrels per day of production.
“I think there will be more attacks,'' said a security consultant for a multinational oil company in Nigeria.
A militant Ijaw group with apparent links to the kidnappers sent an email on Sunday agreeing to the hostages' release as a goodwill gesture to the international community.
“The Movement for the Emancipation of the Niger Delta has agreed to release the four hostages on humanitarian grounds as an offer of goodwill to the people of the world,'' said the statement, signed by imprisoned Ijaw militia leader Mujahid Dokubo-Asari.
The kidnappers had demanded freedom for Asari, who is standing trial for treason, as one condition for releasing the hostages.
A militant source involved in the negotiations said the government paid 100 million naira ($770,000) as a ransom to the kidnappers.
On Sunday, police said about 20 armed men stormed the headquarters of a South Korean oil services company in the delta and stole more than $300,000 in the latest attack on foreign firms. There were no casualties.
The attack occurred only five days after nine men were killed during an attack on the offices of Italian oil company Agip, a unit of ENI. The attackers robbed a bank on the premises.
The militants' violent campaign has forced Shell to remove more than 500 employees from the delta.
Oil unions have threatened to withdraw from the delta, which produces almost all of Nigeria's 2.4 million barrels a day of oil, if security deteriorates further.
With oil markets already nervous about tension between the West and Iran, the unrest in Nigeria's oil heartland has contributed to a rise in prices to four-month highs of more than $67 a barrel.

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The New York Times: Oil Pushes Over $68 as Iran Talks Overshadow OPEC

By REUTERS
Published: January 30, 2006
Filed at 1:19 a.m. ET
SINGAPORE (Reuters) – Oil prices climbed half a dollar to above $68 a barrel on Monday, shrugging off a likely rollover in OPEC production to focus on key talks over Iran's nuclear program and more militant attacks in Nigeria.
U.S. light crude climbed 46 cents to $68.22 a barrel after soaring $1.50 a barrel on Friday. Prices are up more than $7 this year and touched $69.20 a barrel a week ago, the highest since Hurricane Katrina hit the U.S. Gulf Coast last summer.
London Brent crude climbed 55 cents to $66.79.
OPEC's meeting in Vienna on Tuesday is being overshadowed this week by talks on Iran, with the United States and European Union powers gathering later on Monday to try to convince Russia and China to back tough diplomatic action to prevent Tehran from continuing with its nuclear activity.
On Thursday, the U.N.'s International Atomic Energy Agency will hold an emergency session at which the board could decide to send Iran to the U.N. Security Council, a move traders fear could prompt Tehran to consider using its oil as a political weapon.
“The market has the same buy factors — Iran and Nigeria — and now increasing tension ahead of the IAEA meeting could drive the market higher,'' said Naohiro Niimura, vice president of the derivatives unit at Mizuho Corporate Bank in Tokyo.
Concerns over supplies from the world's fourth-largest exporter, as well as lost output from Nigeria, have added fuel to a market ignited by a new flood of fund money into the commodities complex, which has performed strongly for two years.
Last week's robust U.S. inventory levels, a pledge from Saudi Arabia to fill supply gaps and the promise of an emergency release from Western government stockpiles if Iran or Nigeria halted exports failed to reverse the rally.
Although OPEC producers remain concerned over the seasonal dip in second quarter demand, most agree the Organization of the Petroleum Exporting Countries has little choice but to keep output steady at near a 25-year high when it meets on Tuesday.
“I think we should leave things as they are,'' Algerian Energy and Mining Minister Chakib Khelil told reporters in Vienna on Sunday. “We will look again in March.''
Saudi Oil Minister Ali al-Naimi went a step further, saying he saw no reason to cut production at any time this year.
OPEC is scheduled to meet again on March 8, also in Vienna.
In Nigeria, where major producer Royal Dutch Shell has already shut in over 200,000 barrels per day (bpd), around 20 armed men stormed and robbed a South Korean oil services firm on Saturday, the latest attack on a foreign oil company.
In a positive step, the Nigerian government said on Monday that four foreign oil workers who had been abducted from a Shell platform nearly three weeks ago had been released and were well.

Disruptions to Russia's natural gas supplies to Europe and some of its former Soviet neighbors have also unsettled traders and lifted oil demand. Exports to Georgia began flowing again on Sunday, a week after pipeline explosions cut supplies, while supplies to Italy improved over the weekend.
Norway, the world's third-biggest oil exporter, joined the list of supply concerns after a small oil workers' union said on Friday it would consider a strike to halt production at the Oseberg field if talks on a wage deal failed.
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Financial Times: Filtronic aims for predictability

Published: January 30 2006
MONDAY
*Filtronic, which is due to report its interim results, has “a long record of not meeting expectations”, according to one analyst. Today's announcement will provide clues as to whether the company, which makes microwave electronics for the wireless telecommunications and defence industries, is moving into more profitable and predictable times following the sale last year of its LK handsets business. That allowed Filtronic to pay down debt and reinvest in areas with greater growth potential, such as its wireless infrastructure operation. Last month, the company said trading in wireless infrastructure and in its integrated products division was in line with expectations. But the first-half results will contain a £1m charge linked to the closure of its Australian wireless infrastructure operation and a US semiconductor sales office. With that and the loss of the handsets business, Filtronic may post an interim operating loss.
TUESDAY
*ARM Holdings, the chip designer, will be under pressure to show it has managed to turn round flagging licence sales when it reports full-year results. The company, whose chip designs are used for devices, such as mobile phones and iPods, was forced to lower annual forecasts twice in the past six months owing to weak licensing. Consensus forecasts are for pre-tax profit of £78.7m on revenues of £230.9m for the 2005.
WEDNESDAY
*British Sky Broadcasting, the satellite television group that will be releasing its second-quarter results, announced at the end of last year that it had reached the 8m target subscriber figure. Analysts expect the net additional subscribers during the quarter to December to total about 180,000, with churn at about 10.8 per cent. Investors will also be looking for further guidance on how Easynet, the broadband group BSkyB bought for £211m, will add value.
THURSDAY
*AstraZeneca's results, which are predicted to be in line with expectations, should have a settling effect on investors, due to strong sales of heartburn treatment Nexium, as well as cost cutting and a share buy-back programme. Earnings per share are expected to be about $2.90, up by more than 30 per cent, hitting the group's earlier guidance of between $2.85 to $2.95. Sales are predicted to be just under $24bn (£13.5bn). But in his first set of results as chief executive, David Brennan, is likely to face questions about where future growth will come from in the face of a dwindling pipeline and theprospect of generic competition to some of its starperformers.
FRIDAY
*Royal Dutch Shell will unveil its fourth-quarter and full-year results, which promises to be as high-profile an event as ever. At the end of last year, the group pledged to spend an extra $4bn (£2.2bn) a year on finding new reserves of oil and gas, in part, to replace those Shell had previously overstated. The market will be eager to hear the latest news on where Shell's reserves stand and where it thinks the best prospects are for new oil discoveries. Shell is likely to be asked about the progress of its mammoth Sakhalin project in the far east of Russia, which the company last year admitted was running late and over-budget. The group is also expected to update the market on the status of the Mars platform in the Gulf of Mexico, which was shut down by hurricanes last year.

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Financial Times: Streamlined websites net top graduates

By Jon Boone, Education Correspondent
Published: January 30 2006
Top companies are pouring resources into their recruitment websites as the battleground for scooping up top graduates has moved from university career fairs to the internet.
According to the second annual study of 102 corporate career websites, published today, leading companies were busy in 2005 relaunching their online recruitment efforts in order attract top talent.
Ernst & Young, the professional services firm, was rewarded for its relaunch by rising 22 positions to sixth favourite website among the 4,339 students from across Europe surveyed by Potentialpark Communications, a Swedish recruitment consultancy.
Stevan Rolls, head of recruitment at Ernst & Young, said the firm's global site had needed an overhaul as the recruitment market has got “a bit tighter”.
“We realised the old site had an awful lot of information on it and we decided to design something that better reflected what students tell us they want. That meant simplifying things and cutting out a lot of excess information.”
Potentialpark said companies were learning to make sparing use of such fashionable web tools as blogging and podcasts because simplicity and ease of use are more important to many jobseekers.
Goldman Sachs also rose 43 positions to 13th place after the investment bank overhauled its website.
Torgil Lenning, a consultant at Potentialpark, said: “It is great to see that so many companies are relaunching their career websites. If all companies did work this way, the employment market would be much smoother.”
HSBC, another company that enjoyed a 49-place rise to 14th position, said it had involved students in the design of their new website.
John Morewood, from the bank's graduate recruitment department, said the streamlined website, which is designed to be used by potential applicants worldwide, had already led to an increase in the number and quality of applicants.
“We have been able to fill up particular programmes much faster than in previous years because we have seen an improvement in the quality of candidates applying this year.”
Carl Gilleard, chief executive of the Association of Graduate Recruiters, said the large amounts of resources that companies are prepared to dedicate to their career websites was an indication that the battle for top graduates has become fiercer.
“When recruiters first started using the web they were taken with the novelty of it and the content was not so good. Now that the net has become such a vital tool they are all working hard to attract as many people as possible by improving the user-friendliness of their sites.”
The website that European students chose as their favourite was Shell, which has moved up from number 11 last year. The oil giant was followed by ABB in second place and then Siemens and Procter & Gamble.
Navjot Singh, head of recruitment at Shell, said the secret of a good career website was to keep things simple and not burden the user with onerous requests for information about themselves.
“Too many of these online application forms ask for huge amounts of data – you don't, for example, need someone's date of birth just so they can receive an e-letter about jobs going at Shell. Candidates will want to know how that information is going to be used.”

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The Observer: Treasury cashes in on the UK's financial jiggery-pokery

Frank Kane
Sunday January 29, 2006
The front-page headline in the Financial Times last week was good news indeed. 'UK tops inward investment league,' it declared, going on to explain that Britain had attracted more cash than any other country in 2005. Hawk-eyed foreign investors had spotted the opportunities of the keenly competitive and efficient UK economy, and poured their money in – some $219bn of it. America, at $106bn, and China, with a meagre $60bn inward investment, were also-rans.
A great triumph for Gordon Brown's economic master-plan then, and so it was trumpeted. Des Browne, the Treasury Chief Secretary, said: 'Once again, we have shown that – even in the most difficult of years – the British economy remains resilient and competitive.' It was the highest figure recorded for a European country, and all the more impressive because the figures came from the United Nations Conference on Trade and Development – about as impartial and global as you could get.
But just read Unctad's small print: 'However, the increase was largely accounted for by the merger of Shell Transport and Trading with Royal Dutch Petroleum for some $100bn.' The rest of the increase was due to the high level of mergers and acquisitions business in Britain and the rest of the developed world, which totalled $2.9 trillion.
So rather than demonstrating Britain's resilience and competitiveness, the Unctad figures actually show how good we've all got at financial engineering, in particular a huge accounting item from a bit of Anglo-Dutch jiggery-pokery.
In fact, as the FT reported later in the piece, the level of total investment in the economy last year as a share of national income was the lowest on record.
What we are actually getting very good at is selling off the family silver in ever-increasing quantities, and smoke-and-mirrors financial accounting. I wonder if Browne is proud of that.
Parker shows how it should be done at P&O
If Browne, or Brown for that matter, wants to know about real inward investment, and value creation, he should study what has happened at P&O over recent weeks. This is most decidedly not a case of the family silver going abroad – most of the assets and employees are overseas anyway, and the company has long been a global player, beneath an ever-thinning veneer of British imperial tradition. It seems entirely appropriate in the 21st century that P&O's worldwide assets should be in the ownership of one of the great trading international centres, like Dubai or Singapore.
And if you are going to sell premium assets, you must demand a premium price, and there is no better man for the job than Sir John Parker. He has orchestrated the auction currently under way between DP World of Dubai and PSA of Singapore (owned by trading conglomerate Temasek) with all the finesse of a maestro. Last Thursday, when Dubai came back to top a recommended £3.5bn bid by Singapore, with a quickly recommended £3.9bn cash offer of its own, it was as good an example of value-creation as you could find.
Parker has successfully exploited the rarity value in P&O – there are no other international ports groups available. He admits that the current price, at 38 times earnings, is 'out of normal valuation territory'. It is a persuasive offer, but not just for shareholders – it becomes compelling when P&O pensioners are taken into account. Dubai has undertaken to put £125m into the estimated £200m pensions deficit now and make up the rest over five years. (Compare this with the meagre, but government-sponsored pensions element of the scandalous Qinetiq flotation.) The question Parker must now ponder is: can he do even better? Can he persuade the Singaporeans to come back with a higher offer, lifting the value of P&O well over the £4bn mark.
The PSA executives who flew home for the Chinese New Year – apparently without even knowing of the new Dubai bid – must decide exactly what price they are willing to put on P&O. They face bigger regulatory hurdles than DP World, but have said they will do whatever is required to get P&O. Backed by Hong Kong's Hutchison group, they have pockets just as deep as Dubai's. On the other hand, they may not want to be tied up in red tape for six months by Brussels.
I think in the end the unique nature of P&O's business will tempt them back. There is another twist to come in this tale, I believe, but it will only be for the good of P&O shareholders, employees and pensioners.
Is Sir Victor the black horse's white knight?
Sir Victor Blank has never been a man to decline a challenge. He had plenty of those in his time at Trinity Mirror, and for the most part rose to meet them. He will be less in the media spotlight at Lloyds TSB, but as chairman of one of Britain's most venerable financial institutions, he will be under even closer scrutiny from his real peers – the small but powerful circle of bankers who run the financial services industry and much of UK plc.
He will want to get his feet under the desk, of course, but he must already know intuitively that Lloyds cannot go on as it is. From being at the top in the 1990s, when it avoided the expensive mistakes on non-core banking suffered by its rivals, it has languished for years.
Its focus on UK banking – which looked so sensible back then – now makes it look like a laggard, too timorous to be entrepreneurial in a rapidly globalising business world.
The options are limited: Lloyds must either persuade the government to abandon its veto on British domestic banking consolidation, and then lead the next round of that process; or it must negotiate a successful exit for shareholders via a takeover by one of the big international groups that want to expand in Europe. Put bluntly, it must either merge with Barclays, or be bought by the likes of Bank of America or Standard Chartered.
Your move, Sir Victor.

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The Observer: Who's to blame for the big bang?

As families suffering from the multiple effects of the Buncefield oil depot blast wait for compensation, no one is accepting responsibility, reports Jon Robins
Sunday January 29, 2006

Sixty families who were injured or suffered damage to their homes in the Buncefield fuel depot explosion have begun legal action in the High Court against one of the oil companies operating from the site.
It's now seven weeks since the huge blast at the depot in Hemel Hempstead, Hertfordshire, registered 2.9 on the Richter scale but there has yet to be any acknowledgement of responsibility by the oil companies to their devastated neighbours.
Hertfordshire Oil Storage Limited (HOSL), a joint venture between Texaco and Total that operates on the site, told Cash last week: 'HOSL continues to work closely with the Health and Safety Executive [HSE] and the Environment Agency in their investigation to ascertain the cause of the incident and in the clean-up at the site. It is not possible to speculate about the cause of the incident or liability at this stage, and it is recommended that all people affected notify their own insurers, who will advise them on the most appropriate way to proceed.'
The British Pipeline Agency (BPA), a joint venture between BP and Shell, which also operates from Buncefield, issued a statement via City law firm Freshfields. It said its client 'has no reason to believe that it was responsible for the incident and refuses to accept any liability in this regard'.
Local homeowners, frustrated by the lack of positive response from the industry, lodged a litigation order again HOSL on Friday. Bill Burgar, managing director of a computer telephony company who has lived next to the site for 10 years, is one of those joining the legal action. 'We were woken up by what sounded like a jet engine, then a massive explosion,' he said. 'My immediate reaction was that there had been a terrorist strike.' About 2,000 people were evacuated after Britain's fifth-largest fuel distribution depot went up in flames. More than 100 families were rehoused. While, miraculously, only 50 people were injured, some residents claim to have been traumatised and many want to move on, but fear no one will want to live next door to the depot that became 'Britain's biggest blaze in peacetime'.
The explosion blew the plasterboard ceiling down on Burgar and his wife. They then went into 'autopilot', putting into effect an evacuation plan to make sure they and their two daughters, Alex and Charlie (five and seven), were out of the house quickly. Burgar had complained many times about the smell of petrol vapour and was so worried about safety at the depot that he was preparing to sell the house in the new year. As he ran to get the children, he saw the extent of the devastation, only 800 yards from the house. 'Flames were spread across half the horizon. I reckon they were already 400ft high. We were aware there were a lot more oil tanks, so another explosion was very likely. It was terrifying.'
The family have yet to return to the property for more than a day – they are living in a rented house a few miles down the road, paid for by their insurer, Norwich Union, while work is being done on their home, which Burgar estimates will probably take six months. But what about their plans to move? At the beginning of December their house was valued at £625,000 but a surveyor has just valued it at half that. 'We aren't going to be able to sell it now,' said Burgar. 'None of us are sleeping well and the slightest noise wakes us up. The children don't want to go home.'
Rachel Lampey, who works at Tesco, was diagnosed with post-traumatic stress and has been signed off work since 11 December. 'I've been suffering nightmares and undergoing counselling, as has my husband,' she said. 'The children have lost their appetite and had nightmares. Normally they are happy and independent, but it was only for the first time last week when I could leave them without them clinging on to me in tears and screaming.' She reckons somebody must be held responsible if only to make sure history does not repeat itself. 'This isn't the only depot in the country.'
Insurers, such as Halifax Home Insurance, sent staff to Hemel Hempstead within hours of the explosion to advise policyholders. 'We had many customers whose houses were uninhabitable and there was cover for alternative accommodation plus any damage that was the result of an explosion and subsequent fire,' said Martin Folds, senior manager in Halifax's claim team.
But what are the chances of compensation for the value of a house being halved or for an accident claim? 'Our policy can only pay for repair to any physical loss or damage resulting from the explosion,' said Folds. 'Obviously we sympathise, but the policy would not respond for loss of value like that.'
Des Collins, a solicitor acting for the 60 families, argues that the oil companies should accept liability under the law of nuisance. If landowners take something on to their land which is potentially dangerous they automatically bear responsibility for any damage, without the victim having to demonstrate negligence.
'People can't accept that the industry which blew their houses apart is fighting shy about saying whose fault it was or how they are going to be compensated,' said Collins. 'They have to accept responsibility.'
The BPA argues that the HSE has yet to report on its investigation into the incident and that it is, in the view of its lawyers, 'wholly inappropriate' to talk about liability at this stage.
Collins is calling for a public inquiry. 'We do not feel that the HSE is sufficiently independent, bearing in mind their role will also have to be subject to scrutiny. After all, they sanctioned the site being where it was in the first place and carried out a risk assessment and ultimately are responsible for it being there. That's a pretty big conflict of interest.'

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THE WALL STREET JOURNAL: OPEC Expected to Maintain Current Production Quota

A WALL STREET JOURNAL ONLINE NEWS ROUNDUP
January 28, 2006 11:49 a.m.
ALGIERS — OPEC will maintain its current production quota when it meets Tuesday in Vienna, Algerian Oil Minister Chakib Khelil said Saturday.
“There is a consensus with the member countries to maintain the current quota as there is enough oil in the market,” Mr. Khelil said in a press conference in Algiers. He predicted that economic growth in the world will continue, keeping prices high.
“I expect a barrel at $50 at least for the second quarter of the year,” he said.
The oil minister was asked whether the Organization of Petroleum Exporting Countries would put more oil on the market if Iran reduces exports, amid its nuclear dispute with the U.S. and European Union.
“OPEC is committed to help replace any lack of supplies as it did with Nigeria's production in 2003, but this still depends on the production capacity of its members,” he responded. The production quota for the 11-nation cartel of oil-producing nations is currently 28 million barrels a day, which is near capacity.
Regarding a recent price upsurge, Mr. Khelil said the situation is not due to a lack of supply. He ascribed high prices partly to market fundamentals, but the mostly to geopolitical uncertainties.
The situation is different than previous oil crunches, Mr. Khelil said. Price upsurges result from unexpected growing demand caused by economic growth in the United States and China, as well as to shortages in refining capacity, he said.
Speaking in Vienna, Nigerian oil minister Edmund Daukoru said Saturday that he expects four foreign hostages being held by kidnappers to be released within a week. The four oil workers — a Briton, an American, a Bulgarian and a Honduran — were kidnapped at a Shell oil platform in the oil-rich delta on Jan. 11. Militants who say they are holding the men are demanding the release of two tribal leaders and for Shell to pay local communities $1.5 billion in compensation for oil pollution.
Mr. Daukoru added that he doesn't see a need for OPEC to cut crude oil production if prices remain above $67 a barrel.

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THE WALL STREET JOURNAL: Nigerian Militants Warn Against Rescue Attempt

Associated Press
January 28, 2006 7:56 p.m.
LAGOS, Nigeria — Militants who claim to be holding four foreigners hostage in Nigeria's oil-rich delta warned the military Saturday against attempting to free them by force.
In a statement, the group claiming to hold the men accused the Nigerian government of planning military action with unidentified foreign countries “in a last ditch effort to release the hostages.”
“Any attempt to employ military force … shall be the greatest military mistake ever,” the statement said.
It was signed by Brutus Ebipadei, self-described leader of the Movement for the Emancipation of Niger Delta, which claims to be holding the hostages. The statement's authenticity could not be independently verified, but it came from an address used by the same group in the past.
Two Nigerian newspapers Friday published a photograph of the hostages for the first time since their Jan. 11 abduction from an oil platform.
The photos published Friday showed the four — Patrick Landry of Texas, Briton Nigel Watson-Clark, Bulgarian Milko Nichev and Honduran Harry Ebanks — sitting on white plastic chairs under palm trees. Behind them were several men, one sitting next to several automatic rifles mounted on tripods.
The four appeared to be in good health. On the ground before each was a transparent bottle containing orange-colored juice.
In exchange for the hostages, the militant group is demanding the release of Mujahid Dokubo-Asari, the oil region's best-known militia leader, who was jailed in September on treason charges. The group is also calling on Royal Dutch Shell PLC to pay $1.5 billion in compensation for oil pollution.
The group has also claimed a string of attacks on pipelines and oil facilities that cut oil exports by nearly 10% in Nigeria, Africa's leading oil producer and the fifth-biggest source of U.S. oil imports.
The militants have also said they want to secure local control of oil wealth for the impoverished ethnic minorities in the Niger Delta, who accuse bigger ethnic groups from other regions of denying them access.
Over the past two decades, oil companies in the Niger Delta have faced frequent disruptions to their operations, including protests, pipeline sabotage and kidnappings.
Most hostages, however, have been freed within days after ransom payments, and rarely harmed.

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The Observer: Oil delta burns with hate

Escalating violence means western firms are thinking of quitting Nigeria. China may be quick to fill the vacuum, writes Nick Mathiason
Sunday January 29, 2006
Levels of thuggery that once seemed acceptable to major oil firms operating in the Nigerian delta are now spilling over into widespread, vicious attacks. Will murder and kidnapping force them to pull out of the country altogether?
Fears are growing from investors, oil workers and agencies working in the Niger delta that the escalating violence may force the four major oil companies – Royal Dutch Shell, Chevron, Exxon and ENI – to close onshore operations.
Paul Horsnell, head of commodities research at Barclays Capital, said: 'There's always been low-level violence about not enough money trickling down or local difficulties, but this is different. There's a sliding scale of events that could happen and at one end it gets to the stage where it becomes impossible to continue operations in certain areas of the delta. There's no getting away from the fact that this is a possible outcome.'
And, in a new report out last week, Stakeholder Democracy Network, an anti-corruption campaign group active in the region, said: 'We, and most experts on the region, are gravely concerned by many strong indications that, despite the outward appearance of a year-long ceasefire, various factions are quietly arming as though for war… The most pessimistic assessments suggest Shell and foreign oil operators may have to go offshore altogether by 2008 as security and public order deteriorates.'
The report suggests that the crisis could worsen once the election primaries begin in a few months: 'This is far sooner than the 2007 horizon line … previously suggested by many analysts.' Attacks last week on Italian oil firm Agip resulted in the death of nine people. This followed the blowing up of a major pipeline and the kidnapping of four foreign oilmen working offshore.
Shell relies on Nigeria for 11 per cent of its global output. But it has suffered four attacks in recent weeks and had to cut production in the delta by 10 per cent. Now some Shell insiders are privately questioning how secure its operations are and to what extent it can rely on production there. Shutdowns would not only hurt the revenues of oil majors but also threaten a surge in oil prices.
The Niger delta is already classified by international agencies as a danger zone on a par with Chechnya and Colombia. The number of guns in circulation has increased dramatically since 2003, the year the last presidential elections were held. Those elections were widely condemned as being rigged, with armed gangs seizing ballot boxes and intimidating voters.
Since then hopes have dwindled that Africa's largest country, with a population of 129 million, would transform itself into a functioning democracy. The state has failed to protect its citizens from criminality and impose anti-pollution measures to curb the worst excesses of the oil industry.
Criminal gangs with international connections make billions of pounds by 'bunkering' – illegally siphoning off – a tenth of all Nigerian oil. Some say the oil firms must know oil bunkering happens but tolerate it so operations can continue. Bunkering gangs then launder their cash abroad and buy machine guns to bolster their criminal empires.
Then there has been the recent rise of the Movement for the Emancipation of the Niger Delta (Mend). The organisation claims responsibility for the kidnapping of Shell workers and is demanding $1.5bn compensation from the firm for the pollution it says Shell has caused.
'Mend has so far perpetrated the most brazen act of terror in the region for years and taken it on to a new level,' says an aid worker. 'There's a feeling of fear in communities near oil installations who are braced for government reprisals.'
Oil shutdowns in Nigeria would have serious implications as the light, sweet crude that lies beneath the delta is excellent for making gasoline. One analyst said: 'The Saudis have offered to make up for any loss of production but its oil is not of the same quality.'
In 50 years, Nigeria has earned more than $350bn from oil, but the consequent wealth has remained in the hands of a ruthless, corrupt elite. Former president Abaja moved several billion dollars out of the country and much of that cash went through banks in the Square Mile.
The country could have earned more: increased refining capacity would allow it to diversify its economy and charge more for oil exports.
Glasgow Labour MP John Robertson, chairman of the All-Party Parliamentary Niger Delta Group, led a Commons delegation to the region last year. He said signs of corruption were everywhere. Examples include roads of short distances costing several billion pounds that taper off into pot-holed dirt tracks. Ostentatious wealth – cars, jets, jewellery – taunt the majority of those living in poverty in the delta. But the dam appears to be breaking.
Meanwhile, the oil firms have lost credibility with communities, who blame them for failing to tackle gas flares and for the contamination of creeks and waterways that is ruining the fishing industry. The oil firms' attempts to engage with communities have been disastrous. Plans to provide facilities such as hospitals and schools have come to nothing. Empty buildings stripped of all valuable materials litter the countryside. And oil firms face accusations of paying militants to act as security for their operations, thereby fuelling the flames of gang rivalry.
Some suggest that the wave of violence will see oil majors sell out to Chinese firms desperate to secure oil supplies, who will come into the country with a clean slate. Two weeks ago, Cnooc, the state-owned Chinese energy company, said it would pay nearly $2.3bn to acquire a large stake in a Nigerian oil and gas field, one of the biggest overseas acquisitions by a Chinese company.
Others say that the Nigerian government has plans to take control of the oil industry in a tactic similar to that used by Russia's President Putin. One thing is clear, though: the oil supply from Nigeria is now far from secure – and it could not have come at a worse time for the global economy.

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Sunday Times: Shell and Exxon to smash transatlantic profit records

Tracey Boles
OIL companies on both sides of the Atlantic will gush record profits this week, with America’s Exxon Mobil posting the world’s biggest-ever profit, and Shell setting a new record for British companies.
Exxon is tomorrow expected to unveil a profit of about $32 billion (£18 billion) for 2005, according to Thomson Financial. It will be the largest single profit in the history of corporate America.
It shatters last year’s previous record for a company of $25 billion, set by Texas-based Exxon, the world’s largest listed oil company, and easily trumps the benchmark $22.1 billion made by Ford in 1998.
On Thursday Shell will top record-setting results with an estimated profit of $23 billion for 2005. This is up nearly a third from 2004, when its profits were $17.6 billion, at the time the biggest by a British company.
BP is expected to continue the trend on February 7 by revealing full-year profits estimated at $21.7 billion. This contrasts with earnings of $16.4 billion in 2004.
Oil-company profits, driven by the surging price of oil and gas, have drawn criticism as the cost of petrol remains high and domestic-heating bills soar.
Gordon Brown increased taxes on oil companies in his pre-budget statement in November. The tax rise, which came into effect this month, has already caused Shell to scale back its plans for exploration in the North Sea.
The bumper profits enjoyed by big British companies have caused several political outcries in recent years, especially those posted by Vodafone and HSBC.
In November American oil firms were forced to justify their bulging third-quarter profits to Congress, where they tried to dissuade the US government from imposing a windfall tax on their gains. Exxon has long been a focal point for criticism, not least because the $34 billion in its coffers could pay for the construction of more than a dozen refineries.
Shell, the world’s third-largest oil firm by market value, is still living down a reserves scandal that shocked investors two years ago.
The revelation that its oil and gas reserves were overstated hit Shell’s shares hard and forced changes in the way it is run.
The Anglo-Dutch company will announce the details of the 2006 share buyback programme alongside its results. Shell paid dividends of $10 billion in 2005, up from $7.2 billion in 2004, and bought back shares worth $5 billion, compared with $1.7 billion in 2004.

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Financial Mail, London, Week Ahead column

Daily Mail – London: KRTBN; Jan 29, 2006
Royal Dutch Shell is expected to make corporate history on Thursday when it announces the biggest profits from a UK company.
The figures, the first since the group merged its UK and Dutch sides last summer, are expected to show before-tax profits of GBP12.9 billion, up from GBP9.4 billion last year.
But Shell is unlikely to retain its record for long. Oil rival BP, Britain's biggest company, will release full-year figures next week, and some analysts predict pre-tax profits could top GBP18 billion.

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Daily Telegraph: Shell sets $20bn-plus profits record

By Sylvia Pfeifer (Filed: 29/01/2006)
Royal Dutch Shell, the Anglo-Dutch oil giant, is on course to set a British corporate record when it reports post-tax annual profits of about $23bn (£13bn) on Thursday.
Industry analysts forecast that Shell will announce adjusted net profits for the fourth quarter of $5.4bn, fuelled by high oil prices, which last week hit $66 a barrel. The forecast represents a 14 per cent rise from the $4.72bn Shell made during the same period last year.
Even if its earnings are half the level forecast, the oil giant is set to become the first UK-listed company to report annual profits above the $20bn mark and break its own record of $17bn last year.
The bulk of these record profits are likely to be reinvested as the industry struggles to find new oil and gas reserves. Last month the company raised its annual spending forecast by 27 per cent to $19bn, citing increasing costs and the need to find new reserves.
Jeroen van der Veer, Shell's chief executive, said the company would consider making acquisitions of up to $10bn (£5.6bn) in order to increase its proven oil and gas reserves.
“Even in times of high oil prices it's possible, but not sure, that you may do small acquisitions or swaps of up to $10bn,'' he said at the World Economic Forum in Davos.
He would not comment on possible targets, but the most likely strategy is for Shell to consider asset swaps or to buy oilfields because few groups in the industry are now worth less than $10bn.
Investors, however, are also in line to benefit from the profit bonanza. Last year Shell pledged to return $5bn to shareholders via a share buyback- at the higher end of previous expectations. Analysts expect the payout to remain at that level for the foreseeable future. At its third quarter results last year, the company also announced an interim dividend of €0.23 per share for the quarter.
Shell's stellar performance over the past 12 months is in marked contrast to the problems it faced two years ago when it admitted that it had overstated its proven oil and gas reserves.
The scandal led to the departure of its three most senior executives, including Sir Philip Watts, the chairman. It also acted as a catalyst for the wholesale shake-up of the group and prompted the historic merger of its two operating companies, Shell Transport & Trading and Royal Dutch Petroleum.
The company has paid more than $150m in fines imposed by US and British regulators over the reserves scandal. Last year it paid $90m to settle claims brought by its US employees, who also claimed that their pension fund had been hit by the reserves restatements.
Nevertheless, Shell is not out of the woods yet. Earlier this month, in a separate development, 26 mostly Dutch pension funds launched an action against the group for overstating its oil reserves between 1999 and 2003.
Led by ABP, Europe's largest retirement fund, the pension funds have withdrawn from a class-action lawsuit in the US and launched their own claim in a New Jersey court for several hundred million dollars.

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The Scotsman: Shell to post UK record £13bn profit

IAIN DEY
CITY EDITOR
OIL giant Royal Dutch Shell is poised to unveil the biggest profit ever recorded by a British company this week, clocking up earnings of close to £13bn.
Soaring crude prices, which have been close to $70 a barrel for much of the year, are expected to have propelled the company's profits almost 40% higher.
The £13bn profit figure would see Shell edge past banking giant HSBC, which recorded the highest ever profits from a UK company last year with earnings of £10bn.
Although both HSBC and Shell's rival, BP, have still to report their 2005 results, City estimates indicate that neither of the other two contenders for the title will steal it back.
The oil price boom will also see US giant ExxonMobil set a new American record this week, with analysts expecting its profits to break through $34bn (£19bn).
With petrol prices and domestic fuel bills rocketing on the back of the crude price rises, the oil companies are likely to come under further fire from consumer groups and politicians.
The profits come in spite of the additional 10% tax that Chancellor Gordon Brown levied on North Sea oil in his pre-Budget report – which prompted Shell to slash its North Sea exploration programme.
Despite the record profits, all the oil majors are likely to come under fire in the City over their exploration performance – all are believed to be producing more oil than they are now able to find.
Shell chief executive Jeroen van der Veer revealed at the Davos economic forum last week that he may be willing to spend up to $10bn (£5.6bn) on acquisitions to help plug the gap in its reserves base. The company has been repeatedly linked to a possible bid for Edinburgh-based Cairn Energy.
Merrill Lynch analysts said in a research note: “Watch for another sub-100% replacement from Royal Dutch Shell, despite a pick-up in exploration performance. The company is paying the price for chronic under-investment over the past five years.”
Shell's fourth-quarter profits are forecast to hit $5.4bn (£3bn), a rise of about 14%. Production problems in the Gulf of Mexico caused by last autumn's hurricanes will make the fourth quarter its weakest period of the year, with profits likely to be marginally down on those seen in the third quarter.
Analysts predict that Shell's output will fall 8% to around 3.5 million barrels of oil equivalent per day (boepd) in the fourth quarter, from 3.8 million boepd in the final quarter of 2004.
The group's downstream business, which incorporates refining and petrol retailing, is expected to have performed better than many of its peers, including BP.
Following the reserves reporting scandal which rocked Shell to its foundations in 2004, the company has been increasing its exploration activity.
Analysts will watch closely the extent to which Shell managed to match the oil it pumped with new finds.
Oil firms try at least to match each barrel they extract with a new discovery over time – otherwise their business will start to shrink.
In 2004, Shell replaced less than half of its production with new finds and is likely to miss the 100% reserve replacement rate in 2005 as well.

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The Business Online: Oil boom masks Shell's poor record

By Graeme Davies
29 January 2006
Plan to ramp up CapEx gets mixed response
THE boom in the oil sector over the past three years has helped Anglo-Dutch giant Royal Dutch Shell mask a poor reserves replacement record which could otherwise have sunk its share price.
Fuelled by hefty cash generation, Shell has decided to ramp up its capital expenditure plans for 2006 by $4bn to $19bn in an attempt to correct its falling reserves replacement record, a move which was greeted with a mixed response by analysts.
Oil prices are predicted to remain around $60 a barrel for much of 2006 and this should allow Shell to produce an acceptable performance while returning significant amounts of cash to shareholders. The amalgamation of the UK and Dutch businesses in the middle of last year also helped to significantly boost Shell’s share price. FTSE100 tracker funds were compelled to buy shares in the company as its weighting in the index increased.
Shell shares have been as high as £18.75 since the amalgamation and are currently steady around the £18.35 level. Thursday’s fourth-quarter and full-year results should demonstrate strong performance but will also highlight Shell’s continuing battle on reserve replacement.
Merrill Lynch recently downgraded Shell to neutral and said: “In particular watch for another year of sub-100% reserve replacement (we forecast 70%-80%) and another flat year of exploration and production revenues.” Merrill thinks BP represents better value than Shell because of its superior portfolio mix and better shareholder returns.
The Merrill team is also concerned shareholder returns could disappoint, particularly in contrast to BP’s hefty returns. It said: “The group has the financial clout to release some $30bn and still enjoy gearing below 20%. However, we doubt it will announce a special dividend.” It believes share repurchases will be restricted to $10bn as Shell reserves some firepower for a possible acquisition, which in itself carries risks.
Numis Securities also recently reduced its recommendation on Shell from add to hold following the increase in capital expenditure plans. It said: “The higher level of investment has not been accompanied by higher production or activity levels. It simply reflects a higher cost base.”
Other analysts are more positive, Credit Suisse First Boston’s team has an outperform rating on Shell with a price target of £21.70. It believes reserves replacement levels will witness a “steep rise” from 2006 onwards as the recent investment programme begins to kick in.
JP Morgan’s Gordon Gray is overweight on Shell with a price target of £19.75. Gray believes the increase in capital expenditure will relieve a key overhang on Shell’s share price and “long term volumes are likely to be more stable than most of its peers”.
Goldman Sachs is also overweight on Shell but has cut its price target by 3% to £21. It feels the recent upgrade to spending will not have a significant effect on the shares.
Graeme Davies writes for Investors Chronicle
NOTE: The authors on these pages have been selected for their expertise in various areas of investment. They or the funds they manage may or may not hold positions in the stocks discussed.

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