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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) read more

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 read more

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 read more

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. read more

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. read more

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. read more

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. read more

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. read more

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. read more

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. read more

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”. read more

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.) read more

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. read more

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. read more

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. read more

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