September 21st, 2006:

By: HIROKO TABUCHI, AP Worldstream
Published: Sep 20, 2006

Russia’s recent decision to halt a multibillion-dollar petroleum drilling project in the country’s Far East could hurt Japanese traders, a credit ratings agency said Wednesday.

Tokyo-based traders Mitsubishi Corp. and Mitsui & Co. have major stakes in the development and the cancellation could damage the companies’ credit quality, Standard & Poor’s said in a statement.

Russia’s withdrawal earlier this week of an environmental permit for the Sakhalin-2 project, led by Royal Dutch Shell PLC, could effectively halt work on the project and put at risk multibillion-dollar energy investments by a multinational consortium. read more

Published: Sep 21, 2006

SHELL affiliate Sakhalin Energy is facing more action from the Russian government and may be charged for forest destruction, writes Martyn Wingrove.

The natural resources ministry is chasing the Anglo-Dutch oil major and partners Mitsubishi and Mitsui with a criminal case after it suspended permits on the Sakhalin II project.

The ministry’s deputy head Oleg Mitvol claims Sakhalin Energy caused more than $400,000 worth of damage by laying pipelines through a forest. He also said his department might look at other environmental issues. read more

EXTRACT: Ewald Breuness of Shell emphasised the concern that fuel demands would compete with those for food, and a market for biomass might cause food shortages or the use of non-sustainable crops could cause environmental damage.

He said genuine sustainability was important and an international system of tracking and tracing origins of such biomass products was clearly needed. Shell would rather see waste streams employed, such as the use of Iogen from straw, while longer-term waste-based ‘bio-crude’ could be produced. read more

Clouds of uncertainty hover over a mammoth oil and gas project off Russia’s Sakhalin Island that offered a major new energy source for Japan. But all of a sudden, Russia’s Natural Resources Ministry has revoked its 2003 environmental approval for the Sakhalin II project.

Published: Sep 21, 2006

It seems inconceivable that the Russian government will take steps to forcibly shut down the project, which is now 70 percent complete. But the move is almost certain to delay the scheduled start of production and export of liquefied natural gas in summer 2008 read more

By Neil Buckley in Moscow

Published: September 21 2006 03:00 | Last updated: September 21 2006 03:00

Signs of disagreements emerged yesterday within the Russian government over whether work should be halted on Sakhalin-2, the $20bn oil and gas project led by Royal Dutch Shell in the Russian far east.

Russia’s natural resources ministry said on Monday it had cancelled a key permit for the project after finding irregularities in an environmental assessment on which the 2003 permit was based.

It said if its decision were upheld by a federal safety agency, construction work on Sakhalin-2 – the biggest single foreign investment in Russia – would have to be suspended pending completion of a new environmental study. read more

21 September 2006

MOSCOW (Reuters) – Russian oil firm Sibir Energy may hand half of a Siberian joint venture with Royal Dutch/Shell to Gazprom’s oil arm in return for control of Moscow’s oil refinery, Vedomosti newspaper reported on Thursday.

Sibir’s main shareholder Shalva Chigirinsky told Vedomosti that under the proposed deal Sibir would end up with 75 percent of the Moscow refinery. The City of Moscow government would have 25 percent, but control of the plant would be shared equally. read more

By Makiko Suzuki and Patrick Rial

Sept. 21 (Bloomberg)

Sakhalin-2 License

Sumitomo Mitsui also fell on speculation its share value will be diluted after the lender raised its conversion price of preferred stock to 1.273 million yen from 826,900 yen effective Oct. 1, prompting more people to apply to convert shares before the price change. The stock dropped 5 percent yesterday.

Mitsubishi Corp., Japan’s biggest trading company, added 20 yen, or 1 percent, to 2,110. Mitsui & Co., the nation’s second biggest, gained 7 yen, or 0.5 percent, to 1,453. read more

 (Shell Oil USA President, John Hofmeister)

At UT, president of company’s U.S. operations touts conservation, renewable energy and nontraditional approaches to boosting fuel supplies.
By Claudia Grisales
AMERICAN-STATESMAN STAFF

Thursday, September 21, 2006

The head of Shell Oil Co. is on a barnstorming tour of the country, hoping to spread his company’s viewpoints on energy issues and confront a backlash against high energy prices.

On Wednesday, John Hofmeister was in Austin, where he spoke at the University of Texas’ LBJ School of Public Affairs, touting conservation, renewable energy and nontraditional approaches to boosting fuel supplies. read more

Toru Kaneko Yomiuri Shimbun Correspondent
(Sep. 21, 2006)

The Russian Natural Resources Ministry’s cancellation of a permit for the Sakhalin-2 oil and gas development project reflects President Vladimir Putin’s steadfast determination to keep the domestic energy industry under the thumb of his administration.

The series of actions taken by the Russian government toward energy-related businesses in recent months, including the ministry’s latest decision, has illustrated risks involved in massive foreign investment in Russia, a nation blessed with vast amounts of natural resources. read more

Thursday, September 21, 2006. Page 1.

By Miriam Elder and Tim Wall
Staff Writers  

Steve Voss / Bloomberg
 
State pressure on foreign oil companies intensified Wednesday as the Natural Resources Ministry said it was reviewing whether to revoke Total’s production sharing agreement for its Arctic Khoryaga oil field.

The announcement came just two days after the ministry revoked Shell’s environmental license at its Sakhalin-2 gas fields, calling into question the future of the country’s largest foreign investment project. read more

DMITRY ZHDANNIKOV AND ELIF KABAN
IN MOSCOW

RUSSIA has drawn protests from Tokyo, Brussels and London after trying to renege on a deal involving a £10.5 billion oil and gas development in the country’s far east.

On Monday, Russia revoked environmental approval for Sakhalin-2, one of the world’s biggest energy projects, because of allegations Shell had violated its terms. Shell denies this and the project is all but complete.

The European Commission said it was taking Russia’s withdrawal of the permits “very seriously” and called on Moscow to guarantee a secure and predictable investment climate. read more

ALF YOUNG September 21 2006
 
BIG Oil – or rather Big Western Oil – is in increasingly big trouble. So far this week, Royal Dutch Shell and its Japanese minority partners have been plunged into a tense stand-off with the Russian government over the fate of the consortium’s $20bn Sakhalin-2 project.

BP has revealed further delays to production from its hurricane-damaged Thunder Horse installation in the Gulf of Mexico, and ExxonMobil has been lambasted by Britain’s Royal Society for funding lobby groups in the US which, the scientists claim, have “misrepresented the science of climate change in outright denial of the evidence”. read more

By Joseph Sato
Posted 20 September 2006 

(International Business Times) – After the Russian government announced its withdrawal of environmental approval for the Sakhalin-2 liquefied natural gas (LNG) project on Sep. 18, Alexander Losyukov, Russia’s ambassador to Tokyo, said on Wednesday that the construction continues as stated on their contract. 
 
The Russian Ambassador mentioned that Sakhalin-2, the world’s largest privately funded energy project due for completion in 2008, will offer oil and LNG to Japan after 2007 as planned if environmental concerns were solved. Russian officials said the project was ignoring environmental standards and revoked a permit for the project on Sep. 18. read more

TOKYO, Sept 21 (Reuters) – Japanese trading houses Mitsui & Co Ltd. and Mitsubishi Corp. are in talks to sell a combined 5 percent stake in the Royal Dutch Shell-led Sakhalin-2 oil and gas project to Russia’s state-run Gazprom , Japan’s Yomiuri newspaper reported on Thursday.

The Shell-led project is due to begin shipping large volumes of natural gas to Japan in two years. But it faces uncertainty after Russia revoked environmental approvals on Monday in a move seen by many as the Kremlin’s latest effort to wrest more control over energy resources. read more

Emad Mekay

WASHINGTON, Sep 20 (IPS) – Encouraged by a Russian government decision last week to enforce tougher environmental regulations for the controversial Sakhalin II oil project, international environmentalists say that the European Bank for Reconstruction and Development (EBRD) should change course and withhold funding for the project or risk violating domestic Russian law.

Russia revoked the environmental permit for the oil-and-gas project, led by Royal Dutch Shell PLC, a move that has prompted accusations by Europe and Japan that the decision was politically motivated and that Moscow is trying to give its national oil company Gazprom greater power in the oil sector. read more

The Associated Press
Published: September 20, 2006
 
TOKYO Two Japanese trading companies on Thursday denied a report that they plan to sell some of their shares in a multibillion-dollar petroleum drilling project in Russia’s Far East that was halted by Moscow earlier this week.
 
Russia’s withdrawal on Monday of an environmental permit for the Sakhalin-2 project, led by Royal Dutch Shell PLC, could effectively halt work on the project and put at risk multibillion-dollar energy investments by a multinational consortium.
 
Japan’s Yomiuri newspaper reported Thursday that Tokyo-based trader Mitsui & Co. has begun negotiations to sell a 3 percent stake out of its 25 percent holding in Sakhalin Energy Ltd., the international energy consortium operating the project, to Russian government-affiliated gas firm OAO Gazprom.
 
The report also said that trader Mitsubishi Corp., also based in Tokyo, was negotiating the sale of a 2 percent stake out of its 20 percent holding in the project to Gazprom.
 
Spokesmen for the two Japanese companies, however, denied the Yomiuri report as without factual basis. Both spoke on condition of anonymity, citing company policy.
 
The US$20 billion (€15.78 billion) Sakhalin-2 is one of two offshore projects in Russia’s Pacific being developed by overseas companies under production-sharing agreements signed in the 1990s, and was due to come online in 2008.
 
Russia’s Natural Resources Ministry said it decided to revoke the Sakhalin-2’s permit to satisfy arguments made by Russian prosecutors, which allege permission to develop the second phase of the project had been granted illegally.
 
Much of the liquefied gas from Sakhalin-2 is destined for Japan, which is seeking to reduce its dependence on the Middle East for energy.
 
TOKYO Two Japanese trading companies on Thursday denied a report that they plan to sell some of their shares in a multibillion-dollar petroleum drilling project in Russia’s Far East that was halted by Moscow earlier this week.
 
Russia’s withdrawal on Monday of an environmental permit for the Sakhalin-2 project, led by Royal Dutch Shell PLC, could effectively halt work on the project and put at risk multibillion-dollar energy investments by a multinational consortium.
 
Japan’s Yomiuri newspaper reported Thursday that Tokyo-based trader Mitsui & Co. has begun negotiations to sell a 3 percent stake out of its 25 percent holding in Sakhalin Energy Ltd., the international energy consortium operating the project, to Russian government-affiliated gas firm OAO Gazprom.
 
The report also said that trader Mitsubishi Corp., also based in Tokyo, was negotiating the sale of a 2 percent stake out of its 20 percent holding in the project to Gazprom.
 
Spokesmen for the two Japanese companies, however, denied the Yomiuri report as without factual basis. Both spoke on condition of anonymity, citing company policy.
 
The US$20 billion (€15.78 billion) Sakhalin-2 is one of two offshore projects in Russia’s Pacific being developed by overseas companies under production-sharing agreements signed in the 1990s, and was due to come online in 2008.
 
Russia’s Natural Resources Ministry said it decided to revoke the Sakhalin-2’s permit to satisfy arguments made by Russian prosecutors, which allege permission to develop the second phase of the project had been granted illegally.
 
Much of the liquefied gas from Sakhalin-2 is destined for Japan, which is seeking to reduce its dependence on the Middle East for energy. read more