February 26th, 2006:

TEHRAN (Reuters) – Iran will next week grant Total (TOTF.PA: Quote, Profile, Research), Shell (RDSa.L: Quote, Profile, Research) and Repsol (REP.MC: Quote, Profile, Research) upstream development contracts in the giant South Pars gas field in the Gulf, an Iranian state oil firm said on Saturday.
Iran intends to use phases 11 and 13 of South Pars, which sits on the world's biggest reservoir of natural gas, to produce liquefied natural gas (LNG). The Islamic Republic hopes to export its first LNG shipments in 2009.
“The signings will be late this week,” said a spokesman for the Pars Oil and Gas Company.
The Iranian working week starts on Saturday and ends on Wednesday or Thursday, depending on the institution.
Total is looking to develop phase 11 of South Pars to produce LNG, gas supercooled to liquid for loading onto tankers, in a project called Pars LNG.
Shell and Repsol are looking to do the same with phase 13, a project called Persian LNG.
Akbar Torkan, managing director of the Pars Oil and Gas Company, was quoted by the Abrar-e Eqtesadi financial daily saying the contract to develop phase 11 would be worth $1.2-$1.4 billion (687-802 million pounds).
The phase 13 deal would be worth $1.5 billion, he added.
Although it sits on the world's second biggest reserves of natural gas, Iran has been very slow to develop exports.
Qatar, which draws its gas from the same Gulf reservoir, is a long-established LNG exporter.
Iran has been reported to the U.N. Security Council for possible sanctions after failing to convince the world its atomic ambitions are entirely peaceful.
However, Iran has struck a defiant tone on its oil and gas industry, saying industrialised countries would never dare embargo hydrocarbons from OPEC's number two exporter while oil prices remain high.
Torkan also told the ISNA students news agency that Pars Oil and Gas Company had tendered phases 19-21 of South Pars. read more

TEHRAN (AFX) – Shell, Total SA and Repsol YPF SA will soon sign contracts with Iran to develop two phases of the Islamic republic's offshore South Pars gas field, an Iranian official.
'The contracts will probably be signed in the current (Iranian) week,' said Akbar Torkan, the managing director of the state-run Pars Oil and Gas Co (POGC) which is in charge of the Gulf gas field.
The contracts concern phases 11 and 13 of South Pars, with the production of liquefied natural gas (LNG) scheduled for export.
Total will be working on phase 11 in a project called Pars LNG, while Shell and Repsol will be working on phase 13 under the name Persian LNG. The firms will be operating jointly with the National Iranian Oil Co.
Investment for each phase has been estimated at between 1.2 and 1.5 bln usd.
aet/sas/np/swp read more

By Richard Orange
26 February 2006
US oil company Amerada Hess has put about $300m (E252m, £171.8m) of its North Sea oil assets up for sale, making it the second North American oil company to cut back investment in the North Sea since Chancellor Gordon Brown slapped a 10% extra tax on oil producers in November.
The Business understands that Hess has hired industry consultants Harrison Lovegrove to find a buyer for its stakes in the Scott and the Telford oil fields, 200 km north-east of Aberdeen.
Together the stakes represent about 20m-25m barrels worth of oil. The company has a 20.95% stake in Telford field and a 17.43% stake in Telford.
Brown’s tax hike seems to have given a push to the North Sea’s previously slow-moving asset market. Canadian oil giant Talisman Energy put a package of fields on the market at the end of January.
Royal Dutch Shell in December slashed its oil drilling plans in the North Sea, blaming Brown for the decision.
BP has recently sold its first North Sea field in at least two years, offloading its stake in the Statfjord Field to Japan’s Nippon Oil.
Shell has also launched its biggest North Sea clearout so far. The company has released a data package to potential buyers that covers some 350m barrels of “technical reserves” in the North Sea, with 35 exploration prospects.The entire package is potentially worth billions of dollars, but Shell is thought to intend only to sell a prospect if it receives a compelling offer.
Charles Westwood, of oil and gas intelligence consultancy Hannon and Westwood, said: “I think we’ll see a substantial number of later life assets coming to the market over the next 18 months. It’s a good time to get rid of everything that will come back and bite you when the oil price falls.”
Buyers were also hoping Amerada might throw in its 76.56% stakes in the far smaller Rob Roy and Ivanhoe fields.
Have your say e-mail: [email protected] read more

Royal Dutch Shell PLC, Europe's second-largest oil company, said it believes it has “strong grounds” to appeal a reported US$1.5-billion fine a Nigerian court has ordered it to pay the country's Ijaw people for environmental damage.
The court ordered Shell to make the payment following claims for compensation from the Ijaw dating back to 2000, the British Broadcasting Corp. said yesterday on its Web site. Nigerian militants calling themselves the Movement for the Emancipation of the Niger Delta have attacked oil facilities run by Shell's Nigeria venture and kidnapped foreign oil workers.
The group has previously called on Shell to pay the Ijaw the US$1.5-billion as compensation for environmental damage and the loss of life caused by company operations. read more

San Francisco, CA (PRWEB) February 24, 2006 — Five residents of County Mayo, Ireland, were jailed for blocking Shell Oil Company and their Irish Government partner’s plans to pipe raw gas through their communities and close to their family homes.
Shell Oil plans to build a giant processing plant on one of the county’s most spectacular and pristine stretches of coastline.
The jailings set off a storm of protest throughout Ireland with widespread international support, including protests, marches, petitions, fundraisers, blockades and pickets aimed at blocking the billion-dollar gas project.
“We have refused access because of the certainty that if this pipeline as currently proposed ruptures we, our families and neighbors, will die,” said Vincent McGrath, a retired teacher who was jailed with four others for 94 days last year for obstructing work on the pipeline.
“What would you do if a court ordered you to accept installation of a potentially lethal pipeline which no state agency has or will take responsibility for?” McGrath said.
McGrath and the four other prisoners have come to be known across Ireland as the “Rossport 5.”
The Rossport 5 gained international attention when they were imprisoned for what the Irish Judge, Finngean deemed to be contempt of a court order taken out by Shell.
This shot taken by Shell Oil was an apparent attempt to quickly silence a community’s efforts to ensure that the health and safety of their families, and the environment, would be protected.
Additionally, there is concern that relatively no local jobs would be created, and there would be no return to Irish owners of the resource. Shell would sell the oil back to Ireland, with no contribution to Ireland and the economy.
As Shell Oil threatens to put the Rossport 5 back into prison, Irish political leaders in the U.S. are urging U. S. citizens to support the Rossport 5 and their community.
“The Rossport 5 are to be commended for protecting their families and community,” commented Séamus Collins, Chairperson of Irish Northern Aid, San Francisco.
“It doesn’t make sense for the Irish government to put the interests of a big oil company before safety of its own citizens,” Collins said.
Irish Northern Aid is asking supporters in the U.S. to take action. To voice an opinion to Shell Oil and the Irish government, visit: www.inac.org
Click on: http://www.ShelltoSea.com for news and events. read more

The vast gas reserves controlled by Vladimir Putin give his nation enormous global influence. But he needs the Anglo-Dutch oil giant's help to fully exploit his position, reports Nick Mathiason
Sunday February 26, 2006
In July Russia's President, Vladimir Putin, will welcome the leaders of the world's seven richest nations to Moscow. At the top of Russia's G8 agenda will be energy security. To many, this has the makings of a joke waiting for a punchline. After all it was the Russian leader who just last month ordered the state energy giant Gazprom to turn off the gas supply to neighbouring Ukraine, forcing an icy shiver down the spine of the Western world.
Here was petropower writ large. The Russian bear showed its teeth at a time when world oil supplies have rarely been less secure. Royal Dutch Shell's top man in Russia, Chris Finlayson, 49, momentarily saw the funny side too. In London this week, he allowed himself a brief spluttering guffaw when asked whether he believes President Putin's primary concern was global energy security.
But for Finlayson, himself a roly-poly bear of a man, diplomacy is a prerequisite because for Royal Dutch Shell, Russia is vital. The Anglo-Dutch giant has two massive projects there. It is the single largest foreign direct investor in Russia and is desperate to win the right to extract more Russian oil and gas if it is to stave off nervous investors who are only now recovering from the company's mis-stating of its oil reserves by 40 per cent.
Composing himself on the 22nd floor of Shell's South Bank London headquarters, Finlayson says: 'I think frankly it's a good thing that they're bringing [energy security] up as an issue they want to discuss, rather than it being put to them as a concern and a challenge.'
Some might call that getting your retaliation in first. But not Finlayson. Careful with words, he says the renationalisation of vast swathes of industry, and in particular energy firms previously controlled by oligarchs, is a 'rebalance of the portfolio from one where it was a case of very little control for government.' The row with Ukraine, meanwhile, is 'robust negotiation style on display'.
Finlayson is not expecting a repeat performance of a Ukrainian-style Russian show of strength. 'Their own importance as an energy supplier means people are hanging on every nuance of every action…. So I would be surprised to see anything done in the same way in the future but that's my speculation.'
Does Putin, by having more gas reserves than any other country on the planet, want to effectively control the world? 'I think there can be no question that given the scale of the resources, Russia sees that this gives them a place of real influence and a place at the top table so they want to make sure that importance is recognised by the world.'
But this is something they can only do with Shell's help. Shell is the world leader in the liquified natural gas sector. This is the technique of freezing natural gas into liquid form which can then be transported around the world in ships. Far easier than using cumbersome, geopolitically sensitive pipelines.
At a stroke this changes the distribution of energy, broadening Russia's global horizons, yielding new markets and international relationships.
And it is why Shell was given the right to lead a consortium on what's known as Sakhalin-2 off the east coast of Russia. There is 4.9 billion barrels'-worth of oil and gas here. At a conservative estimate revenues to Russia will be in excess of $50bn and several billion to Shell.
But for the Anglo-Dutch oil giant, these are nervous days. Sakhalin-2 has gone an astonishing $10bn over its initial $10bn budget and Putin isn't happy. Russia is concerned that its share of the Sakhalin revenue will be delayed as a result of cost overruns. Finlayson has said that the ballooning budget will be borne by the consortium members alone.
Some in the City say that it is only because the price of oil has shot up and that Shell has merged its British and Dutch divisions that have allowed it to escape investors' flak.
Finlayson attributes overruns to a budget drawn up when oil was $10 a barrel. It is now six times that and the resulting construction inflation combined with rouble inflation and 'not having the information to fully appreciate all the challenges there from the start' have led to the $10bn overspend.
But questions are being asked. Is the company capable of handling such pivotal and difficult projects? Sakhalin is inhospitable. Winter temperatures average minus 24C, the area is prone to typhoons and is littered with unexploded ordnance – a legacy of Russian- Japanese hostilities.
Sakhalin Energy Company, 55 per cent owned by Shell, has to build platforms to withstand massive ice flows and dig trenches for pipes in frozen sea floors while trying not to disturb endangered grey whales who feed in the area. There's also the risk of poisoning of fishing stocks vital to islanders' livelihoods.
But Finlayson is convincing when he defends the handling of the scheme. 'It is estimated that up to 50 per cent of the total pipeline subcontractors in the Russian federation are working in Sakhalin at the moment. Those companies are learning about the challenges of working to full Western standards with external, independent monitoring and when they do other projects one hopes that learning will stay with them.'
He adds that Shell's responsibility is proved by its moving the route of a pipeline, at a cost of $300m, so that it will not affect the endangered whales.
And some do praise the firm for this. Jason Kenney, an energy industry analyst at ING says: 'The environmental aspects in Sakhalin that Shell has achieved have been groundbreaking for the industry. Not just the whales or the salmon industry or how they're dealing with the river crossings, but their efforts in trying to ensure the islanders benefit.'
But environmentalists pour scorn on this, pointing to vivid examples of Shell's failure. They argue that Shell only moved because it was pushed and until now they have had a field day at Shell's expense. The firm privately admits it has been on the back foot in dealing with campaigners, and Finlayson is eager to put Shell's side of the argument before Tuesday. Then, environmentalists will be lobbying the European Bank for Reconstruction and Development at a public meeting in London. They will be urging the bank to refuse to forward money to the Sakhalin consortium. The issue is portrayed as a test of the bank's environmental credentials.
Without the EBRD's backing, getting loans from other banks will be much harder. In two months, Shell will finally learn whose side the EBRD is on.
But, however Sakhalin is financed, it will happen. And it is just the start. There are many shelves beyond the island that will yield huge resources. But how secure is Shell in Russia? Once Russian companies have the ability to harness LNG, will they not just seize Shell's assets? 'No,' says Finlayson. 'I think we will jointly grow the space and I think we have a track record of showing we can work with national partners who then develop their own businesses. At the same time our business is not constrained by that.'
Shell is keen to win concessions in western Siberia. But it has to get Sakhalin right. If not then Putin's joke will be on the world's third biggest energy firm read more