February 24th, 2006:

A report published by the European Bank for Reconstruction and Development today said Shell's plans for oil and gas pipelines in eastern Russia had environmental shortcomings. Reuters reported.
The bank is considering whether to extend a loan to the Shell-led Sakhalin Energy consortium for the $20 billion Sakhalin-2 project.
The application could be turned down if the bank decides the project fails to meet its environmental rules.

By Rhys Blakely and agencies
The Nigerian Federal High Court today ordered Shell, the Anglo-Dutch oil company, to pay $1.5 billion (£859m) to the Ijaw people of the country’s Bayelsa region. The Ijaw were first made the award in 2000 for environmental damage to their homeland in the Niger Delta through Shell’s oil exploration. Shell refused to pay and has since been targeted by Ijaw militants who have attacked the company’s facilities in Nigeria and are currently holding nine foreign oil workers hostage.
A statement today from the Movement for the Emancipation of the Niger Delta, the armed ethnic Ijaw group, said: “There have been reports that negotiations are ongoing towards the release of these individuals. This is absolutely untrue.”
It added: “We are continuing with our attacks on oil facilities and oil workers in the next few days. We will act without further warning.”
Following the violence, Shell – the biggest oil producer in Nigeria – has halved its output from the country.
A spokeswoman for the company told Times Online that the company was unable to comment on the court ruling because it had not yet been made aware of it.
She added Shell remained convinced “independent expert advice” showed that it strong grounds to appeal the order to pay compensation.
“We remain committed to dialogue with the Ijaw people,” she said.
According to the BBC, Shell's lawyers argued in the Pourt Harcourt Federal Court that the joint committee of the Nigerian National Assembly that made the order in 2000 did not have the power to compel the oil company to make the payment.
The Nigerian Senate approved the fine in August 2004 after it was presented to the lower House of Representatives in 2003 and reviewed by an independent legal advisory panel set up by the lower house.
However, Judge Okechukwu Okeke ruled that since both sides had agreed to go before the National Assembly, the order was binding on both sides.
Shell has argued in the past that most oil spills in the southern Niger Delta, which kill fish and crops, are caused by saboteurs trying to steal oil.
A report published by the European Bank for Reconstruction and Development today said Shell's plans for oil and gas pipelines in eastern Russia had environmental shortcomings. Reuters reported.
The bank is considering whether to extend a loan to the Shell-led Sakhalin Energy consortium for the $20 billion Sakhalin-2 project.
The application could be turned down if the bank decides the project fails to meet its environmental rules. read more

· Shares in Vestas rise 6% on rumours of symbolic step
· Move comes amid rising interest in green energy
Terry Macalister
Friday February 24, 2006
The oil major Shell was linked yesterday to a possible $3.5bn (£2bn) takeover of a leading wind turbine manufacturer, adding to the excitement around the alternative energy sector. The value of Vestas rose 6% on the Copenhagen stock market amid mounting expectation that a major oil group could make a symbolically important move into “green” technology. Shell declined to comment.
There has been a massive surge of City interest in what has been seen until recently as a fringe part of global stock markets, helped by the high profile given to the government's energy review.
The latest green company admitted to the London market yesterday, Econergy, saw its shares rise 11% within hours. A day earlier, another company, Ceramic Fuel Cells, announced plans to list its shares and raise cash for new factories, probably in the north of England.
Shell, which made £13bn of profits last year, is already involved in some alternative energy projects but has so far only spent a relatively paltry $1bn in a range of small projects in areas such as wind, biofuels and solar.
The Anglo-Dutch group is using Vestas to provide turbines for an offshore wind scheme in the Netherlands as part of plans to increase its wind energy capacity from 350 megawatts to 500MW by 2007.
Shell is also planning to construct a £1.5bn wind farm in the south-east of England and has hopes of building others as far afield as China. But a move to buy Vestas would underline its green energy credentials and show a determination to be at the heart of the wind business, seen by British politicians as the most promising of the new energy sources.
A Shell spokesman refused to give any guidance on whether it was interested or not in the Danish wind firm. “We don't comment on market rumours,” he said.
Analysts said it would be a good time to buy Vestas, given that its share price was hit by a profit warning before Christmas. There has been previous speculation that industrial predators such as Siemens or GE might be tempted to make a takeover move.
Mainstream energy analysts such as Bruce Evers at Investec Securities would not rule out a move by Shell but believed the returns from alternative energy schemes would be unsatisfactory for traditional shareholders.
“Shell is having trouble replenishing its oil reserves without getting involved in a sideshow such as this. Wind farms, fuel cells and the like is pretty tiny stuff when you look at Shell's quarterly profits from oil and gas, but I would not put a takeover past it,” he said.
The oil industry is awash with money from historically high crude prices, which has attracted criticism. A bigger move into the wind sector would barely dent cash reserves and would improve its image with environmentalists who have been screaming for big oil majors to do more.
In November its rival BP launched its own alternative energy division and said it would invest up to $8bn over the next 10 years creating a low-carbon power business. BP intends to produce annual revenues of $6bn from this new business and is planning hydrogen plants in Scotland and California.
Possible diversification moves by Shell brought back bad memories for some oil industry experts. They remembered another time of very high oil prices in the past when Mobil – now ExxonMobil – bought the retail chain Montgomery Ward and BP had a meat business in the US.
But the purchase of Vestas by Shell or another mainstream industrial group would give further credibility to those alternative energy companies who have been beating their way to the stock market in Britain.
Econergy and Ceramic Fuel Cells join about 20 others in a growing alternative energy sector, which is estimated to be worth, in total, £1bn by the end of last year. Their value is estimated to have risen a further 30%, partly on the back of renewed interest in alternative technology following the government's energy review into the future of Britain's power needs.
But there are many uncertainties surrounding the sector, not least whether Tony Blair will, as expected, opt for a new generation of nuclear power stations. That could suck money away from alternative energy projects and companies, green supporters fear. read more

A Nigerian court has ordered oil multinational Shell to pay $1.5bn to the Ijaw people of the Delta region.
The Ijaw have been fighting since 2000 for compensation for environmental degradation in the oil-rich region.
They took the case to court after Shell refused to make the payment ordered by Nigeria's parliament.
Ijaw militants have staged a spate of attacks against Shell facilities recently and are holding seven foreign oil workers hostage.
Following the violence, Shell – the biggest oil producer in Nigeria – has halved its output from the country.
Shell says it believes there is no evidence to support the claim, and will appeal against the ruling.
A statement said: “We remain committed to dialogue with the Ijaw people.”
Warning
Shell's lawyers argued in the federal court in Port Harcourt that the joint committee of the National Assembly that made the order in 2000 did not have the power to compel the oil company to make the payment. But Judge Okechukwu Okeke ruled that since both sides had agreed to go before the National Assembly, the order was binding on both sides.
Ijaw community leader Ngo Nac-Eteli said that if Shell wanted to buy time by taking the case to the appeal court, the company would not be allowed to operate on Ijaw land until the case was settled.
He did not elaborate on how the community would stop Shell's operations.
The BBC's Abdullahi Kaura Abubakar in Port Harcourt says the case has the support both of community elders and the militant groups that have been attacking oil installations in the Delta region.
But our correspondent warns that even if the money is paid, the region would not necessarily be pacified unless the various groups were happy with how it was distributed.
Nigeria is one of the world's biggest oil exporters but despite its oil wealth, many Nigerians live in abject poverty. read more

(Updates item published at 1314 GMT with comments from Shell)
LONDON (MarketWatch) — A Nigerian court has ordered oil multinational Royal Dutch Shell PLC (RDSB.LN) to pay $1.5 billion to the Ijaw people of the Niger Delta region, the BBC reports on its Web site Friday.
The Ijaw have been fighting since 2000 for compensation for environmental degradation in the oil-rich region. They took the case to court after Shell refused to make the payment ordered by Nigeria's parliament.
Ijaw militants have staged a spate of attacks against Shell facilities recently and are holding foreign oil workers hostage.
Shell intends to appeal against the judgment.
“We have yet to receive the text of the judgment and can't comment until we've studied it in detail,” a spokeswoman from Shell told Dow Jones Newswires.
“However, we believe we will have strong grounds to appeal as independent expert advice demonstrate that there's no evidence to support the claims. We remain committed to dialogue with the Ijaw people,” she added.
Shell's lawyers argued in the federal court in Port Harcourt the joint committee of the National Assembly that made the order in 2000 didn't have the power to compel the oil company to make the payment. But Judge Okechukwu Okeke ruled that since both sides had agreed to go before the National Assembly, the order was binding on both sides.
Nigeria is one of the world's biggest oil exporters but despite its oil wealth, many Nigerians live in abject poverty.
Web site: http://www.bbc.co.uk
-Contact: 201-938-5400 read more

TheHopeReport
Well, here we go again. It's the time of year when the chairmen of some of our biggest companies prepare to face their shareholders at this year's annual meeting in the next 12 weeks.
Those of us who cling to the belief that shareholder democracy is still alive at UK plc attend these meetings in the hope that investors will make their boards sweat.
This doesn't always happen of course, not least because the biggest companies ensure that their chairmen are primed for the toughest questions by their investor relations team and highly paid PR advisers.
So, to make the battle more equal, here is a cut-out-and-keep list of the top 10 questions to make the chairmen squirm:
1. Which shareholders are most loyal to you, institutions or individuals?
2. Do you know what percentage of the company's shares is actually owned/controlled by hedge funds?
3. How often does the senior non-executive director meet private investors?
4. Do you think your company's registrar is doing a good job?
5. Why is there so much stuff in the annual report about corporate governance and corporate social responsibility, and not more about strategy?
6. Is your company committed to automatically reinvesting dividends in more shares for private investors?
7. Private shareholders at Shell and Hilton have found themselves facing large tax bills. Does the board agree it has a moral responsibility to offer options that are as tax efficient as possible for the individual investor?
8. If I was having breakfast with Gordon Brown this morning, I would tell him that he needs to cut capital gains tax, inheritance tax and council tax. Which three corporate breaks would the board ask for from the Chancellor?
9. How much of your company's overheads are driven by external regulation?
10. What is your company doing to encourage online voting at annual meetings?
Christopher Hope read more

Cathy Proctor
Shell Exploration & Production Co. said it's pulled high-quality crude oil from Colorado's vast oil shale reserves but is still a few years away from determining whether oil shale is commercially viable in the long run.
The giant oil company, perhaps the furthest ahead in research on freeing oil locked in layers of rock deep underground, is moving into the next phase of its research — methods to stop potential groundwater pollution around shale sites.
“We are in this to make money. It's not a science fair project,” Mike Long, Shell's manager of regulatory affairs, said during his presentation on the company's research at the National Western Mining Conference in early February.
Other companies and the federal government are getting involved in oil shale, too.
In mid-January, the Bureau of Land Management said it will do environmental analysis on eight proposals for oil shale research filed by six companies: Chevron Shale Oil Co., EGL Resources Inc., Exxon Mobil Corp., Oil-Tech Inc., Shell Frontier Oil & Gas and Oil Shale Exploration, LLC. Projects that pass the environmental test will get 160-acre leases for oil shale research and development, and the right to reserve another 4,960 acres for commercial development.
The BLM hopes to make decisions on the projects and the leases next fall.
The goal is nothing less than bringing billions of barrels of domestically produced oil to the U.S. market.
The oil is locked in underground rock formations that sprawl across 16,000 square miles in Colorado, Utah and Wyoming. It's the largest known concentration of oil shale in the world and holds an estimated 800 billion barrels of recoverable oil, enough to meet U.S. demand for oil — at current levels — for 110 years, according to the BLM.
Six of the projects the BLM is considering are in Rio Blanco County on Colorado's Western Slope. The other two are in Utah.
But local officials, burned by the boom and bust of oil shale efforts in the early 1980s, are cautious about the latest development efforts.
“They're all R&Ds,” said Garfield County Commissioner Larry McCown, who worked in the oil shale industry in the 1980s and 1990s, and who remembers the day in May 1982 that Exxon announced it was pulling out of its research efforts — a day still known as “Black Sunday” among locals.
“Until we get further along on what the companies' plans are, I think it's premature to yell 'wolf' — that we're in another boom cycle,” McCown said.
“I think it's a tremendous resource. I don't think it can be overlooked,” McCown said of the oil shale reserves. “I'm not a naysayer, I'm optimistic about all types of alternative energy. This one's here. Whether it can be developed economically or not, I would hope that it's up to free enterprise.”
Shell has been working on oil shale since laboratory research started in 1981. It's had field tests in the Piceance Basin in Colorado since 2000.
“Colorado oil shale is the most concentrated energy source in the world,” Long said. “Basically, we hope to create a new domestic oil industry.”
The first tests revolved around “in situ” efforts — inserting electronic heaters into holes drilled into underground rock formations. The heaters slowly heated the rock to between 650 and 700 degrees over three or four years. Once hot enough, the oil shale melts into liquid, and both oil and natural gas began flowing into conventional wells, according to Shell.
The company said it got 1,500 barrels of light oil plus natural gas from a small plot.
The product was one-third natural gas and two-thirds light oil, easily refined into high-dollar products such as diesel and jet fuel and gasoline, Long said.
One acre can produce oil and natural gas equivalent to about 1 million barrels of oil, he said.
The underground heating process offers advantages, Long said.
Traditionally, oil shale was mined using open pits. The rocks were hauled to an above-ground heater, or retort, to melt the oil out of the rock.
The “in situ” or underground method doesn't require open-pit mining, there are no tailings to dispose of, it's more efficient — with a smaller footprint offering more oil and natural gas — and the product is a higher quality that needs less refining, Long said.
Shell believes the process is economical when the market price of oil ranges between $25 and $30 per barrel, said Jill Davis, spokeswoman for the Shell's “Mahogany Research Project” that's focusing on oil shale.
Oil has traded above $60 per barrel for much of this year.
Shell's next round of research, isolating a chunk of ground the size of a football field by freezing the groundwater around it in a “freeze wall,” kicked off late last year, Long said.
The test is to see if groundwater, heat and oil and natural gas can be contained in an area by a wall of frozen groundwater, and not be allowed to flow and mix outside that area, he said.
The test questions are: “Can we make it? Can we break it? How can we break it and can we fix it?” Long said.
If the company gets a 160-acre lease from the BLM, the third research phase will kick in — integrating the heating to get the product, and the freezing to contain the product, he said.
The process is still energy-intensive and will require Shell to build a power plant to support the heating and freezing equipment, Long said. But the company said its process produces 3.5 units of energy for every unit used.
And while decisions to move ahead on a large scale are far off, the company's research effort still is creating activity in the area, Davis said.
For instance, Shell is planning a 16,000-square-foot office-conference building to house employees now working out of trailers, she said.
Shell has about 35 employees and 30 contractors working at the site, plus 100 others in Houston and Denver supporting the research project.
The company also plans studies on roads and housing in the area — what's there and what's needed, Davis said.
“Economically viable, environmentally responsible and socially sustainable,” Davis said. “Those are the three things that will determine commercial viability. In the meantime, we'll start scoping and studying things. You don't build a large commercial project without that kind of scoping.” read more

UPI Energy Watch
By ANDREA R. MIHAILESCU
UPI Energy Correspondent
Royal Dutch Shell, which ranks third among the top five Western oil companies, could face a serious challenge in securing additional reserves, a prevalent fear among Wall Street analysts.
Whether Shell is able to replenish reserves will determine the company's ability to maintain growth and production in the future.
It is a crude reality, but the problem is not new.
Last year, Britain's TimesOnline depicted Shell in need of 3.8 million barrels per day, due to declines in output in the North Sea and United States along with rising costs worldwide. The Times graphic suggested a takeover or access to Iraqi oil might be a solution to some of Shell's problems.
Last year's earnings of $23 billion could be the best the British-Dutch venture can secure in years to come if it is unable to make a find to replenish its reserve count.
Fortune magazine said analysts fear “that buried beneath the record profit figures are worrying signs of a business in decline.”
Shell remains unsuccessful at making a discovery that is able to equate to the amount of oil and gas the company is currently pumping — it is still unable to replace 30 percent of what it produced in 2005.
In 2004, the company managed to replace 19 percent of what it extracted out of the ground. Shell's reserve problems and controversy surrounding improperly booked assets led the company to reduce estimated reserves by roughly 30 percent and resulted in the resignation of its chief executive officer Phil Watts in 2004.
Shell's competitors Exxon Mobil Corp. and BP managed to replace 112 percent of its production and 95 percent, respectively.
Turkey to diversify gas supplies
Turkey, which receives its natural gas from Russia and Iran, will begin purchasing its supplies from Egypt as of 2008, according to a bilateral agreement secured this week.
The move is designed to protect its stock and prevent problems during periods of high demand.
Under the agreement, the two sides will set up a joint venture called Tergas that will transfer natural gas, construct pipelines and also market Egyptian gas to Europe.
Tergas is expected to construct a 240-kilometer pipeline from Syria to the Turkish border, with an extension of 93 km from the Turkish border to the Turkish national network, Turkish Energy Minister Hilmi Guler said in a joint statement with Egyptian Oil Minister Sameh Fahmey.
Guler said he expects to have three-party talks in Cairo in early March with Syria and Egypt to discuss selling gas to Europe.
The project is aimed at diversifying natural gas sources for Turkey and Europe, Guler said, echoing the statements of Turkish Petroleum Cooperation General Manager Sami Dinc said.
Fahmey said Syria and Romania could possibly join the Tergas venture later.
The pipeline's proposed 93 km Turkish part is supposed to transport a total of 6.5 billion cubic meters of natural gas, of which 1.5 billion will be transported to Lebanon, 2 billion to Syria and 3 billion to Jordan.
Azerbaijan to boost output by 30 percent
Azerbaijan plans to boost its crude oil output by 30 percent to 30 million tons for 2006, Industry and Energy Minister Natik Aliyev told a meeting of Black Sea Economic Cooperation Organization experts last week.
The increase in production is expected to come primarily from growth in development of the Azeri-Chirag-Gyuneshli contract area consisting of three offshore oil fields in the Caspian.
The government hopes to see production at the contract area go up to 21.2 million tons against 13.2 million tons produced last year.
Aliyev said the first tanker carrying Azerbaijani crude could leave the Turkish port of Ceyhan in May.
“By that time construction will be completed of the Baku-Tbilisi-Ceyhan pipeline with a throughput of 50 million ton a year,” Aliyev said.
The boost in production would also help Azerbaijan's electric power production, as the country hopes to link its electric power grids with those of Russia, Georgia and Turkey.
“This would make it possible for us to exchange electricity and to market it in third countries,” he said.
Ecuador declares state of emergency
Ecuador declared a state of emergency Tuesday after strikes emerged in two provinces, one of which is a gasoline-producing region, as protesters demanded enhanced funds from the central government.
Global oil prices are affected by violent incidents such as those Ecuador and Nigeria. The prices of oil on London and New York markets were above $60 Tuesday and West Texas Intermediate rose again Wednesday to $62.05.
Last August, demonstrations provoked a force majeure on petroleum exports.
State-owned PetroEcuador had to halt crude oil exports Tuesday and closed a key pipeline that pumps 380,000 barrels per day as a result of protests, local reports said.
Protesters damaged the oil pipeline in the Amazonian Napo province.
Local reports said if the chaos continues, Ecuador will need to mobilize a multinational force to control it.
Ecuadorian Defense Minister Oswaldo Jarrin condemned sabotage done to the oil industry by locals claiming resources promised by the Executive.
Protesters want the government to construct two highways and an airport — projects promised by former President Lucio Gutierrez before he was forced out of office in April 2005.
Oil revenue accounts for approximately 25 percent of Ecuador's GDP.
(Please send comments to [email protected]) read more

MARK WILLIAMSON February 24 2006

The head of Shell's UK business said the oil giant could commit to taking on an additional drilling rig in the North Sea this year although tax rates are set to rise sharply from April. James Smith, chairman of Shell UK, told The Herald the North Sea remained a “crucial” part of the company's business and it had not ruled out the possibility of acquiring another rig to work the area this year, or in 2007.
Speaking during a visit to Edinburgh, Smith said fears Shell would “slash” activity in response to chancellor Gordon Brown's decision to increase taxes were as yet misplaced.
Following the chancellor's announcement in December that the tax premium payable on North Sea profits would rise from 10% to 20% from April, Shell said it had cut the number of rigs to which it would commit from three to two.
However, that did not mean it would drill fewer wells in coming months, said Smith.
Committing to rigs involves making judgment calls based on a variety of factors. North Sea rates have been increasing in response to soaring oil and gas prices and a relative shortage of kit.
“We had a tender out for three rigs and decided to cut that to two,” said Smith. “That does not mean we decided to reduce our drilling programme, we were simply preserving our options. We would still be able to acquire a rig.”
Maintaining the North Sea was in “vigorous middle age”, Smith made it clear Shell had no intention of abandoning the province in favour of emerging areas like West Africa.
“There are substantial volumes of oil and gas still to be produced in the North Sea. We are committed and will be staying in for the long term.”
Smith said Shell had not changed its plans for the current year in response to the tax increases as most projects were in train before the change was announced. Like other oil and gas companies it would factor the changes into its planning for future years.
However, he said it would make the government aware of any impact the tax changes were expected to have on its UK activity.
“Our hope is he (Brown) will keep the tax system under review and if prices fall, will reduce rates accordingly.”
Smith was in Edinburgh to award prizes to companies that have developed technology to tackle climate change under the Shell-sponsored Springboard programme read more

LONDON (AFX) – Royal Dutch Shell PLC declined to comment on speculations it is plotting a bid for Vestas Wind Systems AS, the world's biggest manufacturer of wind turbines. “We don't comment on market rumours,” said a Shell spokeswoman. The Anglo-Dutch oil giant, through Shell Renewables, is rumoured to be planning to launch a 200 dkr per share takeover bid for Vestas.
Vestas is the supplier of the turbines needed for Shell's offshore windpark project in the Netherlands. Shell owns a 50 pct stake in the project, while Dutch power company Nuon holds the remaining 50 pct.
Shell has so far invested over 1 bln usd in the development of alternative sources of energy, including biofuels, wind, solar and hydrogen.
The group considers wind as the most promising source of renewable energy. It is currently carrying out various projects in Europe and the US aimed at boosting its share of wind energy capacity from 350 megawatts currently to 500 MW by 2007.
In the UK, it is building a 1.5 bln stg wind farm in partnership with German energy group E.ON AG.
The project, in which Shell owns a 33 pct interest, will involve the construction of up to 270 wind turbines that could generate 1,000 mw of electricity, enough to supply over 750,000 homes in Britain.
Shell is also exploring possible wind energy projects in China. [email protected] mbe/tc COPYRIGHT Copyright AFX News Limited 2005. All rights reserved. The copying, republication or redistribution of AFX News Content,inculding by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited.
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Cairn Energy defies oil sector dip by virtue of renewed takeover talk
By Robert Orr andPeter Garnham
Published: February 24 2006 02:00 | Last updated: February 24 2006 02:00
Cairn Energy bucked a falling oil sector yesterday as renewed takeover speculation pushed the oil explorer close to its all-time high.
Cairn shares have undergone a meteoric rise since it discovered oil in Rajasthan, India two years ago. Worth 400p at the start of 2004, the shares touched £19.87 yesterday, giving Cairn a market value of more than £3bn.

The lure of Cairn's reserves means it has long been seen as a target for the likes of Royal Dutch Shell, although the rumour pushing the stock higher yesterday was that Oil & Natural Gas Corp of India, its partner in the Rajasthan field, was ready to pounce.
Finlay Thomson, analyst at house broker ABN Amro, thought that the rumour was wide of the mark, but reiterated his view that Cairn would be bought eventually.
“In an industry so chronically short of reserves, Cairn is a viable takeover target. It is very likely to be taken out at some point,” he said. Cairn shares ended 4.1 per cent higher at £19.57.
Also up on bid talk that has refused to go away was Cable & Wireless, the telecoms group. It rose 2.3 per cent to 110p on strong volumes of more than 100m shares.
Bovis Homes gained 1 per cent to 812p on speculation that it could be the next housebuilder to receive a takeover approach. Redrow, up 0.1 per cent to 550½p, has been mooted as a possible acquirer in a sector where consolidation is expected following Persimmon's deal for Westbury last year.
Body Shop surged 7.3 per cent to 265p as L'Oreal of France confirmed it was considering a move for the beauty products retailer. Eithne O'Leary, analyst at Oriel Securities, said: “Body Shop is a strong global brand and would benefit from the improved execution L'Oreal could bring.
“With investors looking favourably on acquisitions designed to drive growth, this may be a sensible time for L'Oreal to act.”
The wider market was dragged lower by weakness in oil stocks. The FTSE 100 fell 36.4 points, or 0.6 per cent, to 5,836.0 and theFTSE 250 slipped 5.8 points to 9,467.1.
The biggest blue-chip faller was Reuters, off 11.5 per cent at 399½p, even though the news group met expectations with its annual figures. Lorna Tilbian, analyst at Numis Securities, blamed the “absence of upgrades which we believe had been priced in by the market”. Before yesterday Reuters shares had risen 8 per cent in a month.
Shares in BAE Systems, the defence group, lost 5.9 per cent to 421p on concerns about the size of its pension deficit. BAE said it intended to make a sizeable contribution to its pension scheme this year, a move that took the shine off sharply higher annual profits.
Centrica, fell 3.5 per cent to 285¾p in spite of record full-year profits, as the owner of British Gas admitted its decision to pass on rising costs to customers would lead to defections.
Shire rose 3.1 per cent to 902p on hopes that the drugs group can reach a settlement with Barr Pharmaceuticals, the US group Shire is suing over a generic version of Shire's Adderall XR drug, used to treat hyperactivity. “Settlement with Barr remains the key catalyst for share price appreciation,” Morgan Stanley said.
Brambles Industries, the world's biggest supplierof pallets, added 3.2 percent to 419¾p after annual profits beat expectations.
Strong full-year results from Capita Group pushed its shares 3.3 per cent higher to 445p, their highest level for almost four years.
In the mid-caps, Matalan, the discount retailer, rose1.5 per cent to 183½p in spite of some negative sentiment ahead of next week's trading statement.
Nick Bubb, analyst at Evolution, predicted “yet more bad news about trading” and said he expected falling sales to have accelerated since Christmas. John Stevenson, his peer at Shore Capital, was equally gloomy, cutting his rating on the stock from “hold” to “sell”.
Both noted the continued bid speculation surrounding the company – Mr Bubb picking up on talk that John Hargreaves, who owns 53 per cent of Matalan, could be willing to sell at 235p rather than the 300p he was originally thought to be seeking. Private equity groups are rumoured to be interested.
Spirent, the telecoms equipment testing company, lost 5.7 per cent to 49¼p as it slumped to a full-year loss, while Colt Telecom fell 6.9 per cent to 60½p after the business telecoms group announced plans to raise £300m of equity to pay off debt read more

By Andrew Wallmeyer in Frankfurt
Published: February 24 2006 02:00 | Last updated: February 24 2006 02:00
Skies have been sunny this year for solar energy companies, because share prices have soared on strong earnings and news of government-backed renewable energy initiatives.
An index of solar stocks compiled by Photon Magazine, which covers the photovoltaic [devices that turn sunlight into electricity] industry, has risen 37 per cent since January 1, and is up 160 per cent during the past year. SolarWorld, of Germany, has climbed 164 per cent in the past 12 months.
Despite the boom, many analysts say it is not too late for investors to profit. They say that the factors fuelling the sector's growth will continue well into the future. They point out that the additional cost of solar power, compared with conventional energy sources, is falling. Until prices converge, government initiatives will sustain the industry.
“In the short-term, you could see share prices drop but in the mid and long-term I am quite convinced that this kind of technology offers further significant upside potential,” says Erkan Aycicek, who follows the solar industry for Commerzbank. Germany, where the environmental lobby has long been strong, has a concentration of solar power companies. Elsewhere, solar manufacturers are often part of larger industrial conglomerates.
The biggest challenge is to overcome a scarcity of silicon, which is used in photovoltaic cells. Silicon producers intend to increase output but experts anticipate that it will take at least two years for their plans to translate into higher production.
Until then, solar companies will have to compete with the semiconductor industry, which uses more silicon and is willing to pay more for it.
“Of the listed companies, SolarWorld is clearly in the best shape because it has ongoing long-term supply contracts with two of the major silicon producers, Wacker and Hemlock, and it also is going to be building its own capacity,” says Michael McNamara, an analyst at Jefferies, a New York-based investment bank. Q-Cells also has several long-term supply contracts that “put it in fairly good stead,” Mr McNamara says.
Mr Aycicek considers Conergy, another German firm, as one of the sector's best investment opportunities because uncertainties over its silicon supply have kept it trading at a significant discount to SolarWorld and Q-Cells. “We believe it is only a matter of time before the capital market's reservations about Conergy disappear,” he wrote.
The silicon shortage is forcing consolidation. Analysts say a failure to lock up long-term supply was one reason Shell Group sold its silicon-based photovoltaic manufacturing operations to SolarWorld this month, and they believe more consolidation is on the way.
The companies that emerge can look forward to a market expected to grow from $6.5bn in 2004 to $18.5bn in 2010, according to Solarbuzz, a research and consulting firm.
That growth will largely be driven by increased government incentives to encourage the development and use of renewable energy. In the US, for example, Californian regulators last month pledged $2.9bn in tax breaks for solar energy during the next 11 years.
European solar demand is being driven by a number of so-called feed-in tariffs that set above-market rates for renewable energy and force power companies to purchase what is produced.
Five years after passing its landmark feed-in law, Germany has supplanted Japan as the world's largest solar energy producer, with 39 per cent of global capacity, according to Solarbuzz. Germany still installs more solar cells each year than any other country but demand is expected to shift to sunny Spain, which last year approved a renewable energy law largely modelled on Germany's.
Some analysts see clouds on the horizon. Alastair Bishop, of Dresdner Kleinwort Wasserstein, says the industry's high margins and valuations have led him to take a “more cautious” view of the sector. The silicon shortage has limited solar cell production but with demand continuing to grow, solar manufacturers have been able to raise profit margins. When silicon is more readily available and cell production increases, he believes margins might come down again. read more

Feb 24, 2006
PERTH, Feb 24 Asia Pulse – Renewable fuel company Australian Biodiesel Group (ABG) (ASX:ABJ) has started selling its fuel alongside the traditional diesel, becoming the first company in Australia to do so.
It has today started the industry standard of terminal gate pricing (TPG) for the bulk supply of biodiesel from its Berkeley Vale production facility outside northern Sydney.
And significantly, Abets biodiesel will sell at around a seven cents per litre discount to diesel as the renewable industry is helped along by an excise holiday from the government.
Every diesel producer must generate TPG daily based on a minimum purchase of 32,000 litres, and ABG will start its daily pricing next week.
ABG chief executive Len Humphreys said it was significant milestone for both the company and the industry.
“It's the first time that any biodiesel company in Australia has published a terminal gate price,” he told AAP.
“It offers a real option for people who drive up to fossil fuel majors, like BP, Shell or Caltex. “Instead of going there they can go to our site and for exactly the same conditions fill up with biodiesel and gain a significant price advantage.
Biodiesel is made from renewable resources that can be blended with petroleum diesel and used with little or no modification in diesel engines.
Dr Humphreys said the product was being well received in particular by large trucking companies and councils.
The company expects to announce additional TPG bulk distribution sites in Sydney, Melbourne and Brisbane in the coming weeks.
ABG listed on the Australian Stock Exchange last December after raising $A20 million ($US14.75 million) in its initial public offering.
Shares in ABG dropped one cent to $1.055 by 1338 AEDT. read more

GILLIAN WONG
Feb 24, 2006
Crude oil futures gained Friday as persistent concerns over supply disruptions in Nigeria and Iran's nuclear program overshadowed U.S. government data showing gains in domestic crude supplies.
Light, sweet crude for April delivery rose 34 cents to US$60.88 a barrel in Asian electronic trading on the New York Mercantile Exchange. The contract slipped 47 cents to settle at US$60.54 a barrel Thursday.
Gasoline advanced 1.39 cents to US$1.5273 a gallon (3.8 liters) while heating oil gained 0.49 cents to US$1.6675 a gallon. Natural gas futures fell 13 cents to US$7.328 per 1,000 cubic feet.
The U.S. federal Energy Information Administration's weekly supply snapshot showed that crude stocks rose by 1.1 million barrels last week to 326.7 million barrels, their highest level since last June.
The data also showed that inventories of gasoline rose by 100,000 barrels to 225.6 million barrels, their highest level in nearly seven years.
But distillate stocks, which include heating oil and diesel fuel, shrank by a widely expected 1.3 million barrels to 135.6 million barrels.
Analysts said prices were supported by concerns about Iran's nuclear ambitions and militant attacks in Nigeria.
Nigeria is Africa's leading oil exporter and the United States' fifth-largest supplier, usually exporting 2.5 million barrels daily. Iran is the second-largest oil producer in the Organization of Petroleum Exporting Countries.
“Despite the inventory data, people are still concerned about the geopolitical risks in Iran and Nigeria, because of the potential for supply disruptions,” said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.
Militants in Nigeria on Thursday issued the first photos of what they claimed were seven of nine foreigners kidnapped in the West African nation, and threatened more attacks on oil workers and the country's volatile oil industry.
“We are continuing with our attacks on oil facilities and oil workers in the next few days. We will act without further warning,” the militants said in a statement.
Oil prices spiked earlier this week on news that militants in Nigeria attacked a pipeline switching station, operated by Royal Dutch Shell PLC, on Monday and a boat they claimed housed Nigerian military personnel. That, and an earlier attack, has forced Shell to halt the flow of about 455,000 barrels a day. read more

Feb 24, 2006
PERTH, Feb 24 Asia Pulse – Woodside Petroleum Ltd's (ASX:WPL) Browse discovery in the north of Western Australia has sparked lively bidding in the first round of offshore permitting for 2006.
Federal resources minister Ian Macfarlane has released eight new offshore petroleum exploration permits in WA which he said would create $A413 million ($US304.63 million) in new investment in the state.
“There was intense bidding interest in the Browse Basin near major gas discoveries,” he said.
Shell picked up a permit in the Browse Basin and Carnarvon Basin, while Woodside Energy, Total E&P Australia and Japan Australia LNG, Chevron Australia, Holloman Corporation and Goldsborough Energy were also granted permits. read more