July 17th, 2006:

Tuesday July 18, 2006
By Tom Miles
 
ST PETERSBURG – Russian state oil firm Rosneft will vastly expand its refining and boost output with the help of new equity partners after fund managers said Rosneft’s record IPO had overvalued the company.
 
Rosneft’s CEO Sergei Bogdanchikov said his firm would spend US$3 billion ($4.8 billion) on refining and US$15 billion on production by 2010 and expand ties with new partners and buyers of its IPO – Britain’s BP, Malaysia’s Petronas and China’s CNPC.
 
Rosneft placed around 13 per cent of stock and raised US$10.4 billion last week in Russia’s largest and the world’s fifth-biggest initial public offering on the eve of the G8 summit, which Russia is hosting for the first time.
 
By sharing Rosneft with the likes of BP, analysts say President Vladimir Putin wants to allay concerns that the Kremlin is tightening its grip over oil assets amid global fears over energy security.
 
Although oil majors were keen to invest in the Kremlin’s oil firm, many fund managers spurned the placement, which they said made Rosneft the world’s most expensive big-oil stock.
 
Bogdanchikov sought to calm those fears, saying Rosneft’s current 1.6 million barrel-per-day output would grow to 2.0 million by 2010 and 2.4 million by 2015, without new acquisitions, to stand at one fifth of Russia’s total.
 
He said the key to growth would be refining. Rosneft, Russia’s No 3 oil firm, could boost profitability if it added to its scant processing capacity.
 
“Some of the Yukos refineries can be bought,” he said.
 
Rosneft says Yukos, which is facing possible bankruptcy, owes it US$3.2 billion, which could rise to US$4.5 billion.
 
“We expect to get our money back,” he said.
 
Bogdanchikov added that Rosneft would also consider buying refineries in the Volga region of Bashkortostan if they came on the market, as well as assets in southeastern Europe. Yukos says the Kremlin has used a massive campaign of back-tax bills and intimidation to cripple it and force it to sell its main production asset, which Rosneft subsequently bought, propelling itself into energy’s major league.
 
Yukos’ owners promised “a lifetime of litigation” to any buyer of Yugansk, including Rosneft, and Yukos is trying to halt the market debut of Rosneft in London, planned for this week.
 
But Bogdanchikov said he expected the move to fail as Yukos has so far lost all of its suits in Russia and abroad.
 
The suits did little to stop major oil firms investing in the IPO with BP buying US$1 billion worth of stock, Petronas US$1.1 billion and CNPC US$500 million.
 
Bogdanchikov did not confirm that India’s ONGC or Royal Dutch Shell had also bid nor did he name the fourth large buyer and only said that a bank bought a stake: “They paid about US$3 billion,” he said.
 
He said Rosneft would continue to seek tie-ups such as the ventures with BP on the Pacific island of Sakhalin.
 
BP controls half of Russia’s No 2 oil firm TNK-BP, but it works directly with Rosneft on several projects on the island.
 
“As for Petronas, we had a meeting. This is one of the leaders of the energy industry in Asia Pacific.
 
“We have no concrete projects but given that Rosneft’s role in this region is growing, we may well have some,” he said.
 
He said Rosneft and CNPC would jointly bid for assets, firms and deposits in Russia like Rosneft did in June with another Chinese firm, Sinopec. The two teamed up to buy mid-sized producer Udmurtneft from TNK-BP for US$3.5 billion.
 
CNPC already buys nine million tonnes of crude and three million tonnes of oil products a year from Rosneft.
 
He added Rosneft would pay 10 per cent of net profit on dividends in the coming years, much lower than its Russian and global peers, as it has to proceed with huge investments.
 
– REUTERS read more

THE WALL STREET JOURNAL ONLINE
July 17, 2006 8:46 p.m.

Crude-oil futures fell sharply from record highs, dropping $1.73 a barrel to settle at $76.40 on the New York Mercantile Exchange. Traders reacted to hopes of an end to the flare-up of violence in the Middle East, along with a German television report that Iran had accepted incentives promoted by Western nations to resolve the dispute over its nuclear program. But that report had not been confirmed by the close of trading, and the fighting in Lebanon continued apace. Here’s Monday’s roundup of oil and energy news. read more

EXTRACT: Companies that stand to benefit from the tax breaks include Chevron Corp.; ConocoPhillips; Marathon Oil Co.; and Motiva Enterprises LLC, a joint venture of Royal Dutch Shell PLC of Britain and the Netherlands and Saudi Arabia’s government-controlled Saudi Arabian Oil Co., known as Saudi Aramco.

THE ARTICLE

Need for Gasoline — and Jobs —
Limits Resistance to Incentives
By JOHN M. BIERS and JESSICA RESNICK-AULT
July 18, 2006; Page A5

Despite public frustration over high pump prices and flush industry profits, major refining companies are seeking and winning large local tax breaks for their refinery-expansion plans with little political opposition. read more

Published: Jul 18, 2006

EXTRACT: It is also participating in Shell’s BC10 project, now renamed Parque das Conchas, which involves developing the Abalone, Ostra, Argonauta and Nautilus oil fields.

THE ARTICLE

PETROBRAS expects to install up to nine deepwater oil production units from 2007 to 2010 to boost Brazilian production to 2.37m barrels per day, writes Martyn Wingrove .

The state oil company will also need to deploy another 15 production systems in the five years after 2010 to ramp up domestic output to 2.8m bpd by 2015. read more

By Virginia Marsh in Sydney
Published: July 18 2006 03:00 | Last updated: July 18 2006 03:00

John Howard yesterday drew attention to Australia’s growing strategic importance, saying the country had the makings of an energy superpower and it was in the world’s interests that it assumed such a role.

“Australia can, and should, supply the domestic and world economies with low-cost energy,” the prime minister told a business gathering in Sydney. “Making the most of a comparative advantage in energy is not just in the national interest. It raises global economic welfare as well.” read more

A sheriff has criticised oil company Shell over the deaths of two oil workers on board a North Sea platform.

Keith Moncrieff, 45, of Invergowrie near Dundee, and Sean McCue, 22, of Kennoway in Fife, died in the accident on Brent Bravo in September 2003.

In his findings after a 38-day inquiry, Sheriff Colin Harris said their deaths might reasonably have been prevented.

Shell said safety was a top priority but was unwilling to comment further until it had seen the report in full.

Mr Moncrieff and Mr McCue had been making an inspection of a temporary repair patch in a leg of the platform when they were overcome by gas. read more

UPDATED 18 July 2006

We reveal the latest moves by Shell in its avalanche of legal proceedings against Dr John Huong, the former Shell geologist… 

In June 2004, eight Royal Dutch Shell companies collectively brought defamation proceedings in Malaysia against Shell whistleblower Dr John Huong. 

The draconian proceedings were in respect of articles published by Alfred Donovan (and his son John) on their websites focused on the activities of the Royal Dutch Shell Group. 

Shell has issued further proceedings over the last two years against Dr Huong, including multiple interim injunctions and proceedings for contempt of court.  The legal papers have been supplied to us by the solicitors acting for Dr Huong.  read more

July 17, 2006

EXTRACT: Royal Dutch Shell will consider selling its Dominican assets, including a 50 per cent stake in the Caribbean nation’s sole oil refinery, the group said.
 
THE Times Stop Press Article

RBS prepares Enron settlement offer 
 
Royal Bank of Scotland (RBS) is thought to be preparing to offer as much as $200 million (£110 million) to settle a lawsuit by shareholders of Enron. The bank, which is accused of helping the failed energy group to hide its accounting fraud, is seeking to draw a line under the episode. US banks including Citigroup and JPMorgan recently agreed a $6.6 billion settlement. read more

By Christopher Hope
(Filed: 17/07/2006)

EXTRACT: Not all gifts are well-received though. Oil giant Shell angered some of its investors by giving them mugs to commemorate the company’s historic restructuring of its British and Dutch parts into one company last year. The mugs seemed particularly inappropriate for the thousands of holders in its Dutch arm who had been left with a large tax bill.

THE ARTICLE

Questions, questions, questions. Annual general meetings are full of them. Yet this year surprisingly few of them have been about company business. Instead, the Annual General Meetings of 2006 seem (so far) to have been dominated by weightier issues, such as “where’s our lunch?” or “why is the writing so small in the annual report?” read more

SAINT PETERSBURG (AFX) – Russian President Vladimir Putin has called for Russian companies to be allowed to operate in the UK on the same basis as those from Britain. Putin wants Russian cos to be allowed to operate in UK on equal terms.

BEIJING (XFN-ASIA) – Shell Gas and Power Developments BV and Shenhua Ningxia Coal Industry Co Ltd will jointly invest 6 bln usd in a coal-to-liquids plant in northern China’s Ningxia Hui Autonomous Region, the Economic Observer reported.

For more information and to contact AFX: www.afxnews.com and www.afxpress.com read more

Published: Jul 17, 2006

SYDNEY (XFN-ASIA) – Fitch Ratings said its has assigned Australia’s Woodside Petroleum Ltd a long-term foreign currency issuer default rating (IDR) and foreign currency senior unsecured debt rating of “BBB+” with a stable outlook.

The ratings agency said it has also assigned a short-term foreign currency rating of “F2” to the company which is 34 pct owned by the Royal Dutch Shell group.

Fitch said the ratings reflect Woodside’s cash flow stability, which is supported by long-term contracts for liquefied natural gas produced by its one-sixth owned North West Shelf project. read more

The country’s poverty-stricken, oil-rich south is accustomed to vandalism and pipeline explosions, but a new threat is raising the stakes. Inside the Delta’s insurgency

By SIMON ROBINSON / OPOROZA
(Story from 14 May 2006 being added to Royal Dutch Plc .com searchable archive)

EXTRACT: Militant attacks have cut production by 20%, hitting companies such as Royal Dutch Shell, and costing the oil majors and Nigeria hundreds of millions of dollars. “There used to be clashes and other problems, but in the past five or six months things have gotten much more serious…” read more