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Posts on ‘September 22nd, 2006’

International Herald Tribune: U.S. says Russian actions against Shell’s projects violate summit commitments to G-8

The Associated Press
Published: September 22, 2006
 
WASHINGTON The United States is very concerned by recent Russian government actions threatening the revocation of permits granted to Royal Dutch Shell PLC for oil and gas projects, the State Department said Friday.
 
Spokesman Tom Casey said the actions cast doubt on Russian commitments, including those made at the G-8 summit this summer in St. Petersburg, Russia.
 
At the summit, Russia agreed to “transparent, efficient and competitive energy markets, as well as specific obligations to uphold contracts,” Casey said.
 
He urged Russia to abide by the commitments.

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Dow Jones Newswires: U.S. Raps Russia for Obstructing Shell

Published: September 22, 2006 2:45 PM  

WASHINGTON (AP)–The U.S. is very concerned by recent Russian government actions threatening the revocation of permits granted to Royal Dutch Shell PLC (RDSA) for oil and gas projects, the State Department said Friday.

Spokesman Tom Casey said the actions cast doubt on Russian commitments, including those made at the Group of Eight summit this summer in St. Petersburg, Russia.

At the summit, Russia agreed to “transparent, efficient and competitive energy markets, as well as specific obligations to uphold contracts,” Casey said.

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Reuters: US says “very concerned” by Russian steps on Shell

Fri Sep 22, 2006 6:24 PM BST

WASHINGTON (Reuters) – The U.S. State Department said on Friday it was “very concerned” by Russia’s threat to revoke the environmental permit at Royal Dutch Shell’s Sakhalin-2 oil and gas filed project.

“The United States is very concerned by recent Russian government action threatening the revocation of Shell’s environmental permit for the Sakhalin-2 oil and gas project,” State Department spokesman Tom Casey told reporters.

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The Australian: Sakhalin row risk to energy alliance

David Pilling, Tokyo
Saturday September 23, 2006

RUSSIA’S withdrawal of a permit for the $US20 billion ($26billion) Sakhalin-2 liquefied natural gas project could be a “massive blow” to Tokyo’s plans to secure a strategic energy partnership with Russia, a senior Japanese official said.

The official, who did not want to be identified, said: “If this contract is eventually cancelled, it will demonstrate how vulnerable LNG contracts are to the geopolitical intentions of host nations.”

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Bloomberg: Russian Ministry Renews Attempt to Annul Shell Permit (Update3)

By Garfield Reynolds and Torrey Clark

Sept. 22 (Bloomberg) — Russia’s Natural Resources Ministry resubmitted a request to revoke Royal Dutch Shell Plc’s license for its Sakhalin-2 oil and gas project, maintaining a government threat to halt construction work at the $20 billion venture.

Rostekhnadzor, the federal industrial safety service, said today it wasn’t authorized to grant the Natural Resources Ministry request. It then retracted the comment, saying in an e- mailed statement that the earlier declaration had been sent because of a technical error.

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Financial Times: On London: Tough times for resource stocks

By Chris Brown-Humes
Published: September 22 2006 18:09 | Last updated: September 22 2006 18:17

Times are tough for the bulls on oil and commodity stocks. The sharp falls in oil prices since July have coincided with fresh bouts of troubles for sector heayweights BP and Shell. That has raised doubts about one of the biggest and most successful trades of the last few years – overweight oils and miners. But the the bulls should hold on. The story is not yet over, even if the ride is going to get bumpier.

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Bloomberg: Shell Faces Sakhalin Grab; Putin Seeks Energy Control (Update1)

By Lucian Kim and Garfield Reynolds
Sept. 22 (Bloomberg) — First Russian President Vladimir Putin attacked OAO Yukos Oil Co. Now it’s Royal Dutch Shell Plc.

This week’s threat to shut down Shell’s $20 billion Sakhalin Island project, the country’s biggest foreign investment, is another maneuver to force companies in Russia to share more profits with the state, analysts said. It’s a reminder of the tactics used in Putin’s dismantlement of Yukos, whose assets ended up at state-run OAO Gazprom and OAO Rosneft after the government filed $30 billion in tax claims against the company.

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Reuters: Dutch PM wants answers on Sakhalin

Fri Sep 22, 2006 2:21 PM BST 
By Tom Miles

MOSCOW (Reuters) – Dutch Prime Minister Jan Peter Balkenende phoned Russian President Vladimir Putin late on Thursday to demand an explanation for Russia’s tough line on a project run by British-Dutch major Royal Dutch Shell (RDSa.L: Quote, Profile, Research).

Russia withdrew ecological permits for Shell’s Sakhalin-2 venture this week because the firm doubled the estimate of costs for the project to $20 billion (10.5 billion pounds), infuriating the Kremlin and gas monopoly Gazprom (GAZP.MM: Quote, Profile, Research), which wants to join Sakhalin-2.

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Daily Mail: Shell’s Russia row reaches United Nations

Margaret Beckett

Margaret Beckett

By Sam Fleming
Friday 22 September 2006

THE crisis over Royal Dutch Shell’s Sakhalin-2 oil and gas project has erupted into a diplomatic row between Britain and Russia.

Foreign Secretary Margaret Beckett challenged her counterpart Sergei Lavrov over the issue at the United Nations in New York, it emerged yesterday.

The UK is said to be making ‘high-level’ representations amid fears that the Western energy industry is under concerted attack by the Kremlin.

Relations between the countries were strained earlier this year after Russia threatened to turn off gas supplies to the Ukraine and expressed interest in buying British Gas owner Centrica.

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This is Money: Shell buys into Chinese lubricants firm

22 September 2006

Energy giant Royal Dutch Shell secured third spot in the world’s fastest growing consumer market for lubricating oils today.

Shell bolstered its position in China by acquiring 75% of Tongyi, which sells lubricants for cars, motorcycles, trucks and industrial customers through a network of 2,000 distributors and 90,000 retailers.

The move for China’s leading independent brand will increase Shell’s finished lubricants volume by 8% and give it the third largest share of a market expected to grow by 10% a year at least until 2010.

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The Scotsman: S.Korea in talks for extra LNG if Sakhalin delayed

By Moon Hae-won
Fri 22 Sep 2006

SEOUL (Reuters) – South Korea’s dominant liquefied natural gas importer is in talks to secure alternate supplies in case its shipments from Royal Dutch Shell’s $20 billion (10.6 billion pound) Sakhalin LNG project are delayed, a company source said on Friday.

Importers in Japan, which is counting on Sakhalin-2 to meet some 6 percent of the country’s growing gas demand, said they were considering their options after Russia revoked key environmental permits and Shell warned of potential further set-backs.

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Dow Jones Newswires: Russia Agency: Sakhalin Statement Was Released In Error

Friday September 22nd, 2006 / 14h45 
 
MOSCOW -(Dow Jones)- A statement saying a government agency wouldn’t agree to cancel a key environmental permit for a $20 billion oil and gas project led by Royal Dutch Shell PLC (RDSA.LN) was mistakenly released and doesn’t reflect the agency’s position, a spokesman for the state body said Friday.

The spokesman for the agency, known as Rostekhnadzor, said: “This press release was sent out by mistake, and it does not reflect the official position of Rostekhnadzor.”

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Dow Jones Newswires: Nigeria To Strip Shell Ogoni Oil License-Official

Friday September 22nd, 2006 / 14h13 
By Arien Stuyt and Spencer Swartz
Of DOW JONES NEWSWIRES

AMSTERDAM -(Dow Jones)- The Nigerian government will revoke Royal Dutch Shell PLC’s (RDSB.LN) oil license in the country’s Ogoniland, although the timing hasn’t been officially set, a Nigerian oil official said Friday.

“We are going to revoke Shell’s license to operate in Ogoniland,” Bamibele Ogedenjbe, an assistant director at the Nigeria Department of Petroleum Resources, told reporters on the sideline of an energy conference here. DPR oversees the permitting of Nigeria’s hydrocarbon licenses.

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International Herald Tribune: Russian regulator denies report it refused to revoke Shell permit

Full headline: Russian regulator denies report saying it refused to revoke Shell permit at Far East project
 
The Associated Press
Published: September 22, 2006
 
MOSCOW A Russian state regulator quickly refuted a report Friday claiming that it had refused to revoke a key environmental permit at a giant liquefied natural project controlled by Royal Dutch Shell PLC.

 
A spokesman for the state technological safety agency, Rostekhnadzor, told The Associated Press that the information carried by the Prime-Tass agency was incorrect and based on a news release that had since been annulled.
 
Russia’s Natural Resources Ministry said Monday it would pull the permit at Shell’s Sakhalin-2 project and would seek approval for the move from Rostekhnadzor. On Friday, Prime-Tass had reported that Rostekhnadzor had referred the decision back to the ministry, arguing that it was its responsibility.
 
The ministry’s move rattled investors in Russia’s energy sector: Analysts have interpreted it as a bid to seek a stronger position for Russian companies in the project.
 

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AFX News Limited: Russia Loses Millions in Deals with Western Oil Majors

Russia is losing hundreds of millions of dollars in potential revenues under deals signed with Western oil majors in the 1990s, a senior official said in an interview.

Taxes from the Royal Dutch Shell-led Sakhalin-2 project in Russia’s far east “could amount to 300-400 mln usd” per year, Sergei Fyodorov of Russia’s ministry of natural resources told the official daily Rossiiskaya Gazeta.

Instead, Fyodorov said, “we receive around 20 mln usd in royalties” under a production sharing agreement (PSA) that spares the Shell-led consortium from paying the government a share of revenues until the project turns a profit.

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Reuters: UPDATE 1-Russia snubs Exxon field claim, chooses Rosneft

Fri Sep 22, 2006 4:29am ET

MOSCOW, Sept 22 (Reuters) – Russia said on Friday it would snub claims by Exxon Mobil for a small field located near the U.S. oil major’s giant Sakhalin-1 project, as it will grant it to its state oil firm Rosneft.

The move shows the Kremlin is keeping up pressure on production sharing deals with foreign majors, which fell out of Moscow’s favour after global oil prices rose and the state decided to gain more control over top industries.

“There was one bid at the auction and it came from Rosneft. It means that it will be automatically granted a licence after the auction commission meets,” a Resources Ministry official told Reuters.

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Bloomberg: Rosneft to Win License Next to Exxon’s Sakhalin-1 (Update1)

By Garfield Reynolds and Lucian Kim

Sept. 22 (Bloomberg) — OAO Rosneft, Russia’s state oil company, will win a license to explore for oil and gas at an offshore area bordering Exxon Mobil Corp.’s Sakhalin-1 project in the Pacific Ocean.

Rosneft was the only company to apply by the Sept. 14 deadline to take part in a planned auction of the license for the Lebedinsky field, said Nikolai Gudkov, a spokesman for the Natural Resources Ministry, today by phone. That means the auction will be canceled and the license awarded to Rosneft, he said.

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UpstreamOnline: Tepco waits on Sakhalin news

By Upstream staff

Asian utility Tokyo Electric Power (Tepco) is not yet seeking alternative suppliers of liquefied natural gas as Shell’s Sakhalin 2 project faces the risk of delays.

The world’s single largest commercial LNG buyer is still gathering information about uncertainty regarding the $20 billion Sakhalin 2 project, the company’s president Tsunehisa Katsumata told a news conference.

It has committed to buy 1.5 million tonnes of the fuel from the Sakhalin 2 project every year, Reuters reported.

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BG News: Labeling terrorists should be left to government, not colleges

EXTRACT: As for Shell Oil, who you suggested should be included in a list of terrorist organizations with extremist groups like Hamas, I have trouble equating an unfortunate oil spill with a terrorist attack. Shell Oil did not set out to Nigeria with 56 million gallons of oil to intentionally spill it onto the farmland of the Ogonis. It was a very unfortunate incident indeed, but definitely not a terrorist attack. Furthermore, how do we expect Shell Oil to get into areas such as these for cleanup when the volatile Nigerian military government and the protesting Ogoni people are at each other’s throats?

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RIA Novosti: Russia has outgrown PSA (*Shell accused of inflating Sakhalin II costs?)

MOSCOW. (Igor Tomberg for RIA Novosti) – A Russian environment official has said recently that inspections of the large Sakhalin 2 energy project are to continue.

“We have not checked the stream flows and outside sea areas yet,” said Oleg Mitvol, deputy head of the Federal Service for the Oversight of Natural Resources. “Based on preliminary information, these checks can prove that the suspension of the project had been justified. We have the results of a study done by the Russian Academy of Sciences and reports of public organizations and environmentalists.”

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Mosnews: Russia’s Putin Heads to France for Talks

President Putin

Russian President Vladimir Putin (above) arrives in Paris on Friday on a visit that will test Western responses to Moscow’s push to use its booming oil and gas revenues to gain a foothold in some of Europe’s key industries, Reuters reports.

Putin meets French President Jacques Chirac before the two leaders join German Chancellor Angela Merkel for a three-way meeting on Saturday where Moscow’s ambition to join the core of European aerospace group EADS will be a top issue. That will add an extra twist to the familiar themes of energy policy and Iran’s nuclear program that have dominated recent diplomacy between Russia and the West.

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The Wall Street Journal: COMMENTARY: The Power Broker

By PIERRE BRIANÇON
September 22, 2006

The picture has become much clearer over the last few days. The massive power play is now for all to see. Once again, Russia has not chosen subtlety to make its point.

Its acquisition of a 5% stake in Airbus parent company EADS has the stated goal of enlisting the pan-European aeronautics and defense company in the industrial modernization campaign President Vladimir Putin has launched. At stake are big markets for a troubled company. Moscow’s order for 22 of Airbus’s new A350 midsize airplanes has been left dangling in the wind for all to see. Give us a seat on the EADS board, the Russians are saying, or else.

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The Wall Street Journal: Russia Switches Focus to Exxon In Crackdown on Sakhalin Costs

A WALL STREET JOURNAL NEWS ROUNDUP
September 22, 2006; Page A6

Russia appeared to switch the focus of its attack on huge foreign-led projects to the Exxon Mobil Corp.-led Sakhalin I oil project, saying it would likely forbid a $4.2 billion cost overrun since that would cut Moscow’s profit from the venture.

Moscow has already taken aim at Royal Dutch Shell PLC’s massively overbudget Sakhalin II project, which it ordered partly halted for environmental infringements, prompting criticism from Japan and the European Union.

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The Times: Oil giants in legal row with Russia over joint projects

September 22, 2006
From Julian Evans in Moscow
 
RUSSIA and a group of oil multinationals have begun drawing the legal battle lines in a fight over the legitimacy of oil and gas production licences worth £40 billion.

Sergei Fyodorov, head of subsoil policy at the Russian Natural Resources Ministry, yesterday told the Reuters news agency that the Government was considering withdrawing the licence for ExxonMobil’s Sakhalin I offshore project because its costs are set to surge by 20 per cent to $17 billion (£8.9 billion). Higher costs mean delayed profits for the Russian State. 
 
Mr Fyodorov said that the Government’s lawyers had advised that this was grounds for the cancellation of Exxon’s licence. He also suggested that another so-called production-sharing agreement (PSA), with Total for the Kharyaga oilfield in northern Russia, could have its licence cancelled because the project was not being developed quickly enough.

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Daily Telegraph: Database: Energy: Friday 22 September 2006

• Premier Oil, a UK-based company operating in the North Sea, Asia and Africa, said first-half profit rose 64pc on higher oil and gas prices.

• John Wood, a UK oilfield services company, said it will provide additional services at UK oilfields to Total under an existing seven-year agreement.

• Sibir Energy will increase its stake in a venture that controls the Moscow Oil Refinery to 75pc this year, paying cash and assets, including a stake in a Siberian venture with Royal Dutch Shell Global Marine Energy. The stock rose.

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Lloyds List: Sakhalin II on course for 2008 start

Published: Sep 22, 2006

With the completion last month of the 800 m finger pier and LNG loading jetty at Prigorodnoye in Aniva Bay, at the southern tip of the Sakhalin Island, Russia’s Sakhalin II project is on course to begin exporting gas in the third quarter of 2008.

The Sakhalin II project not only represents the largest foreign direct investment scheme ever undertaken in Russia, it also marks the start of an ambitious programme to develop the country’s vast gas resources in the form of LNG.

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AFX Europe (Focus): Shell-led Sakhalin consortium warns Russia on environmental permit

Published: Sep 22, 2006

MOSCOW (XFN-ASIA) – A Shell-led consortium developing the Sakhalin-2 energy project warned that the Russian government’s move to retract an environment permit would cause “irreparable damage.”

The move “would lead to a significant delay in the project, extra costs and irreparable damage to the reputation of this venture, the Sakhalin region and the Russian Federation as a whole for failure to deliver gas to buyers,” Sakhalin Energy said in a statement.

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Lloyds List: Shell seeks help for Sakhalin ‘bullying’

By: Martyn Wingrove, Lloyds List
Published: Sep 22, 2006

SHELL-led consortium Sakhalin Energy has the backing of the Japanese and British governments and the European Union over its tangle with Russian authorities.

The Russian government is putting pressure on Shell and partners Mitsui and Mitsubishi over the developments on the Sakhalin II concession in what many see as a bullying tactic to gain more state control.

The natural resources ministry is threatening to cancel Sakhalin Energy’s project permits due to environmental damage from the building of oil and gas pipelines across the island.

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Financial Post (Canada): Oilsands projects could crumble

Oilsands projects could crumble, top investor warns: Costs worry Murray Edwards: ‘You start wondering at what point are projects still economic’

Published: Sep 22, 2006

BANFF, ALTA. – Canada’s top energy investor is bullish, long-term, on both oil and natural gas, but is also wary that Canada’s oilsands sector is so overheated projects could crumble without sustained high oil prices.

Murray Edwards, vice-chairman of Canadian Natural Resources Ltd., said he doubts oilsands output will grow in Alberta as high as many are predicting.

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Irish Independent: Shell rules out offshore gas platform for Corrib Field

Published: Sep 22, 2006

A PLATFORM nearly as high as the Empire State Building would be required to process gas from the Corrib Field offshore, Shell has claimed.

Categorically ruling out the offshore alternative, Shell E&P Ireland (SEPIL) indicated that preliminary work on the onshore terminal at Bellanaboy would begin next week, despite the likelihood of protests and picketing.

Terry Nolan, deputy managing director, told a news briefing in Castlebar that offshore processing was not an option as the gas was 350m down in an area 83km out to sea where conditions are worse than in the North Sea.

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Irish Times: Shell rules out offshore platform in Atlantic

By: Lorna Siggins, in Castlebar, Co Mayo, Irish Times
Published: Sep 22, 2006

Shell E&P Ireland has firmly ruled out an offshore platform for the Corrib gas project, comparing any such structure to an “Empire State Building” in the Atlantic.

The company’s new deputy manager, Terry Nolan, said that no oil or gas company would ever contemplate such an option, located 83km offshore, and it was “never going to happen”.

However, Shell to Sea campaign spokesman Dr Mark Garavan said last night that it had always sought a shallow-water platform as the safer option. He said that the company was being “disingenuous” in suggesting that any such platform would be built as far out as the well-head.

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The Wall Street Journal: Oil News Roundup: September 21, 2006 5:01 p.m.

THE WALL STREET JOURNAL ONLINE
September 21, 2006 5:01 p.m.

Crude-oil futures rebounded on the New York Mercantile Exchange, rising nearly $1 a barrel to settle at more than $61.50. Crude is still 20% below its all-time high close set in mid-July. Here is Thursday’s roundup of oil and energy news.

LOST ROYALTIES: The U.S. Interior Department said it was forgetting about $1.3 billion in royalties lost because of faulty drilling leases and is focusing its talks with oil companies on future production. Acting Assistant Secretary Johnnie Burton said “it would be very hard to recoup” revenue lost from oil already pumped under terms of the 1998-99 leases. The announcement came on the heels of a lawsuit alleging the Interior Department tried to keep auditors from collecting some $30 million in royalties major oil companies owed the government, according to a lawsuit filed by the auditors, the New York Times reports.

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Financial Times: Sakhalin-2 casts cloud over Japan energy strategy

By David Pilling in Tokyo and Arkady Ostrovsky in Moscow: Published: September 22 2006 03:00 | Last updated: September 22 2006 03:00

Russia’s withdrawal of a permit for the $20bn Sakhalin-2 liquefied natural gas project could be a “massive blow” to Tokyo’s plans to secure a strategic energy partnership with Russia, a senior Japanese official said.

The official, who did not want to be identified, said: “If this contract is eventually cancelled, it will demonstrate how vulnerable LNG contracts are to the geopolitical intentions of host nations.”

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Financial Times: Premier Oil plans exploration drive

By Mark Odell
Published: September 22 2006 03:00 | Last updated: September 22 2006 03:00

Premier Oil is ramping up its exploration programme over the next year by targeting nine prospects that management believes have the potential to significantly boost reserves.

The oil and gas exploration and production company is planning to spend some $50m (£26m) in the next 12 months, drilling some of its most promising prospects spread across its four regions: Asia, West Africa, the Middle East and Pakistan, and the North Sea.

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Bloomberg: Shell Faces Sakhalin Grab as Putin Seeks Greater Energy Control

By Lucian Kim and Garfield Reynolds

Sept. 22 (Bloomberg) — First Russian President Vladimir Putin attacked OAO Yukos Oil Co. Now it’s Royal Dutch Shell Plc.

This week’s threat to shut down Shell’s $20 billion development on Sakhalin Island, the country’s biggest foreign investment, is another maneuver to force companies operating in Russia to share more profits with the government, analysts said. It’s a reminder of the tactics used in Putin’s dismantlement of Yukos, whose assets were transferred to state-run OAO Gazprom and OAO Rosneft after the government filed $30 billion in tax claims against the company.

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AFP: Japanese firms talking to Russia over Sakhalin-2

AFP , TOKYO
Friday, Sep 22, 2006,Page 10

Japanese stakeholders in the huge Sakhalin-2 energy project said yesterday they will continue negotiating with Russia after it revoked a permit in an apparent bid to reassert control over its resources.

On Monday Russia canceled an environmental permit for a Shell-led consortium to develop the fields, threatening a halt to work on the US$20-billion project and sparking a sharp riposte from Japanese government officials.

Two Japanese trading companies — Mitsui and Co and Mitsubishi Corp — hold a 45 percent stake in Sakhalin-2, the world’s largest privately funded energy project designed in part to supply oil and gas for energy-short Japan.

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Finance24 (South Africa): Anglo teams up with Shell

21/09/2006 11:36
By: Gareth Tredway

Johannesburg – Anglo American, the global mining giant, said in a statement that it had signed a joint development agreement with oil giant, Shell on the Monash Energy project in Victoria, Australia.

During next year, the first phase of the deal would have been completed, according to Anglo. This phase will see advisers from both companies studying the commercial and technical aspects of the project.

“If successfully concluded, the study will form the basis for the feasibility phase and demonstration activities,” said the statement.

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The Herald: Russia threatens oil giants’ licences

MARK WILLIAMSON September 22 2006
 
Oil majors’ relations with the authorities in Russia came under renewed strain when a senior official raised the prospect of taking ExxonMobil’s licence for the giant Sakhalin-1 development off the company as a punishment for possible cost overruns.

Sergei Fyodorov, head of geological and subsoil use policies at the Ministry of Natural Resources, said it had been told on a preliminary basis that the US firm’s costs for the project in Siberia could rise to $17bn (£8.9bn) from an initial £6.7bn.

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Newsday: Shell Oil donation has environmentalists concerned

BY JENNIFER SMITH
Newsday Staff Writer

September 21, 2006, 11:00 PM EDT

Some local environmentalists have accused Shell Oil of trying to buy local support for a liquefied natural gas terminal proposed for Long Island Sound.

The Shell Marine Habitat Program donated $130,500 to a federally controlled conservation fund whose grants were announced last week. It is the first time the Long Island Sound Futures Fund, which pools federal and private money for Sound-related projects, has received money from Shell, whose Broadwater Energy subsidiary is proposing the gas terminal.

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Platts: Shell takes September Singapore jet buying spree to 14 cargoes

Singapore (Platts)–21Sep2006

Shell, one of the largest suppliers of jet fuel in Asia, took its cargo
buying this month to at least 14 shipments of 100,000 barrels each, leaving
observers struggling to work out where the oil was headed.

     The major, which was said by traders to have also built up a long
September jet swaps position, bought a further two cargoes Thursday, one from
Morgan Stanley and another from BP.

     “Shell has huge demand (this month), but I don’t know where it’s coming
from,” said one Asia-based trader.

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The New York Times: Interior Official Says She Will Not Try to Recoup Lease Money

By EDMUND L. ANDREWS
Published: September 22, 2006

WASHINGTON, Sept. 21 — A top official at the Interior Department said on Thursday that she would not try to recover $1.3 billion in royalties that the government lost as a result of flawed oil and gas leases it signed in the late 1990’s.

“That would be very hard to recoup,” said Johnnie M. Burton, director of the Minerals Management Service of the Interior Department, at a forum held by Platt’s, an oil industry newsletter.

Ms. Burton added that she had little or no bargaining power — and did not want any — to force more than 50 companies to renegotiate offshore drilling leases that currently allow them to escape as much as $10 billion in royalty payments over the next decade.

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Reuters: Shell and BP royalties deal close

Fri Sep 22, 2006 2:40 AM BST
By Tom Doggett

WASHINGTON (Reuters) – The United States will not seek $1.3 billion (683 million pounds) in back oil royalties on some Gulf of Mexico drilling leases but is negotiating a deal with BP and Shell to make payments on those offshore tracts in the future, a government official said on Thursday.

The Interior Department’s Minerals Management Service, which oversees offshore energy exploration, mistakenly left out language in drilling contracts signed with energy companies in 1998 and 1999 that would have ended a waiver of royalties when oil prices rose to certain levels.

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