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Posts on ‘September 23rd, 2006’

Sunday Telegraph: BP and Shell need help

Business comment
By Dan Roberts, Business Editor

(Filed: 24/09/2006)

My colleague Robert Watts shows how the DTI could be dismantled relatively painlessly elsewhere, but one function that urgently needs to be reinvented is a Department for Energy.

Proper government support for business should be about creating an internationally competitive environment, and there is no more competitive international challenge or environmentally sensitive issue than energy security.

Passing energy to an enlarged environment department would inevitably mean getting this balance wrong on important issues such as nuclear generation and gas supply.

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The Business Online: Royal Dutch Shell hit as Kremlin cans agreement

By Leia Parker Dow Jones Newswires
Sunday 24 September 2006
 
THE Kremlin and NGOs make strange bedfellows. But this new pairing suggests life is going to get tougher for Western oil companies in Russia as Gazprom’s grasp over the Russian energy sector tightens.

The Ministry of Natural Resources yanked a key environmental permit on Tuesday from the Royal Dutch Shell-led Sakhalin-2 project – effectively mothballing its huge second development phase to try to extract greater benefits from a production-sharing agreement with a Western company.

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UpstreamOnline: Changing rules on Sakhalin…

Is the Kremlin’s environmental blocking move a concealed attempt to shift the tax goalposts?

BY VLADIMIR AFANASIEV
Moscow
 
THE onslaught by Russia’s Natural Resources Ministry and technical compliance watchdog Ros-tekhnadzor that threatens to derail the second phase of the Shell-led Sakhalin 2 project may have an environmental guise — but all the signs are that it is really about hard cash and political control.

On Tuesday, the ministry cancelled its own order dated 15 July 2003 that approved the environmental endorsement of the Russian far east project’s Phase 2 expansion. The original endorsement was delivered by Russian scientists and scholars who studied construction blueprints, technical decisions and documentation prepared by the operating company, Sakhalin Energy.

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UpstreamOnline: Two-edge sword of resource nationalism

THERE is little doubt that “resource nationalism” as a state ideology is on a roll, whether in Bolivia, Chad or Russia.

It offers local politicians a high-profile way of courting popularity and in theory offers a burst of wealth and economic independence. What could be a more welcoming sight to impoverished Latin American peasants than seeing on television their national army seizing control of the country’s oilfields from supposedly money-grabbing foreign-owned multinationals? What a sense of empowerment for a nation dependent on one commodity for the bulk of its income.

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indymedia.ie: Shell’s Threat to Re-start Work in Mayo

Saturday September 23, 2006
By Terry – [email protected]

Latest news from Erris: New police presence, Shell misinformation on technical difficulties of refining Corrib gas at sea, new Shell boss announces attempt to resume work next week.

A number of grilled paddy wagons were seen patrolling the highways and by-ways of northwest Mayo between Crossmolina and Belmullet Friday evening. This can be interpreted as a feeble attempt at intimidation or as reinforcements being drawn in for Shell’s apparent resumption of work at the refinery next week.

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UpstreamOnline: Shell-led Sakhalin II: Pipeline work ‘wreaked environmental damage’

RUSSIAN pipeline contractor Starstroi, a joint venture between the country’s Lukoil-
Neftegazstroi and Italy’s Saipem, has denied that it inflicted irreparable damage to the environment of Sakhalin Island during building of onshore oil and gas pipelines for the Shell-led Sakhalin 2 development, writes Vladimir Afanasiev.

According to a September report from Russia’s technical compliance watchdog
Rostekhnadzor, a copy of which was obtained by Upstream, Starstroi committed various environmental violations during the construction work.

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Petroleum News: Exxon raises stakes in Russia standoff

Several projects impacted in battle between Western majors, Russian government, including Sakhalin 1 and 2, Kharyaga and Kovykta

The Associated Press

Exxon Mobil Corp. said Sept. 21 that the cost of Sakhalin-1 oil project it is leading has increased by 30 percent, an announcement that could raise the stakes in a growing industry standoff with the Russian government.

An Exxon spokesman told Dow Jones Newswires that the increase at the Sakhalin-1 project on the Pacific island of Sakhalin was due to inflation and currency, and added that the company had not yet submitted the change to the government for approval.

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Petroleum News: Shell stopped Chukchi operations Sept. 19

Shell has said that it has no interest in the lawsuit filed by ConocoPhillips over the 120-decibel monitoring zone for bowhead whale cow/calf pairs.

“We do not think it’s in Shell’s interests to pursue litigation,” Rick Fox, Shell’s asset manager for Alaska, told Petroleum News on Sept. 20.

Fox said that the company instead ended its Chukchi seismic program on Sept. 19, to avoid infringing the IHA stipulations.

He said that the operation of the required aerial surveys for the 120-decibel monitoring zone in a huge region without any support infrastructure would entail an unacceptably high safety risk for people. Shell has also not yet determined that passive acoustic monitoring would be practical in the Alaska seas.

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Petroleum News: Chukchi Sea seismic a go: Temporary injunction granted on Conoco lawsuit

Temporary injunction granted on need for 120-dB monitoring zone in Conoco lawsuit

Alan Bailey

When ConocoPhillips, Shell and GX Technologies embarked on their summer 2006 seismic programs in the Chukchi and Beaufort seas it seemed that the various stakeholders in the Arctic offshore environment had reached acceptable agreements on the issues relating to the potential impact of seismic on marine wildlife. The companies had signed a conflict avoidance agreement with the Eskimo Whaling Commission, the Minerals Management Service had issued geophysical permits and the National Marine Fisheries Service had issued incidental harassment authorizations (referred to as IHAs) for the seismic work.

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UpstreamOnline: Shell and BP build for future

TWO oil and gas supermajors have cut the ribbon on ambitious campus expansions in Houston to house their growing exploration & production businesses, writes Blake Wright.

BP has launched a major three-phase growth at its Westlake complex in west Houston designed to accommodate an employee and contractor population that could grow by 2000 to about 8000 by 2010.

A seven-storey building and a new parking garage are part of phase one of the expansion work to be carried out by BP.

A ground breaking for the initial phase is slated for early 2007 with targeted completion in the fourth quarter of 2008.

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UpstreamOnline: France monitoring Total in Russia

President Chirac

By Upstream staff

France is following closely the status of French oil company Total in Russia, a spokesman for French President Jacques Chirac said.

“The situation with Total is that we are looking at things with vigilance with the concern that French investments should enjoy all necessary legal security,” Chirac’s spokesman told reporters at a briefing.

He was speaking ahead of a meeting between Chirac and Russian President Vladimir Putin in Paris.

The meetings come as Moscow has sparked concern by flexing its economic muscles with firms like Royal Dutch Shell over huge oil and gas projects in the remote Sakhalin region.

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UpstreamOnline: Sakhalin 2 hit by broadside

(with corrected headline)

Building work is carrying on for Phase 2 despite ministry ruling

VLADIMIR AFANASIEV
Moscow
 
SHELL-led Sakhalin Energy is refusing to halt construction work on Phase 2 of its operated Sakhalin 2 oil and gas development project off Sakhalin Island in Russia’s far east until it receives a legally binding copy of the Natural Resources Ministry’s order that it does so, according to a Sakhalin Energy spokesman in Moscow.

The ministry released a statement this week saying that Russia’s Natural Resources Minister Yuri Trutnev had cancelled an earlier ruling by the ministry dated 15 July 2003 that backed an environmental endorsement of Phase 2 of Sakhalin 2.

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UpstreamOnline: Investor demands Western Oil Sands sale

By Upstream staff

A major shareholder of Canada’s Western Oil Sands has urged the company’s management and directors to consider the sale of the company.

“As a meaningful shareholder, we are officially requesting that management and the board of directors hire an advisor to seek alternatives to maximise shareholder value, and announce this to the public,” the letter, sent by shareholder Salida Capital, said, Canada’s Globe & Mail newspaper reported.

The letter,dated 20 September cited rapidly rising costs at the company’s Ahabasca oil sands venture, as well as the company’s plans to explore for oil and gas in Iraq, the newspaper said.

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UpstreamOnline: Sakhalin 2: Building work is carrying on for Phase 2 despite ministry ruling

VLADIMIR AFANASIEV
Moscow
 
SHELL-led Sakhalin Energy is refusing to halt construction work on Phase 2 of its operated Sakhalin 2 oil and gas development project off Sakhalin Island in Russia’s far east until it receives a legally binding copy of the Natural Resources Ministry’s order that it does so, according to a Sakhalin Energy spokesman in Moscow.

The ministry released a statement this week saying that Russia’s Natural Resources Minister Yuri Trutnev had cancelled an earlier ruling by the ministry dated 15 July 2003 that backed an environmental endorsement of Phase 2 of Sakhalin 2.

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The Washington Post: Putin moves to reassure West on EADS, energy

By James Mackenzie and Christian Lowe
Reuters
Saturday, September 23, 2006; 11:22 AM

COMPIEGNE, France (Reuters) – Russia sought to reassure France and Germany on Saturday on its plans for Airbus parent EADS and held out the prospect of more gas for Europe to ease fears over Moscow’s leverage of its growing economic clout.

Putin’s remarks at a joint news conference with his French counterpart Jacques Chirac and German Chancellor Angela Merkel followed a meeting which took place against a background of renewed Western concern on energy security and aviation.
 
The meeting in an 18th century chateau, close to the spot where the armistice after World War One was signed, was billed by France as a chance to exchange views.

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Houston Chronicle: Russia grabs oil field: Government takes offshore area from Exxon Mobil

By ALEX NICHOLSON
Associated Press

MOSCOW – An offshore oil field originally claimed by Exxon Mobil Corp. has been given to state-controlled oil giant Rosneft, a Russian government official said Friday.

The Kremlin, which appears to be seeking a greater stake in the country’s natural resources at a time of high prices, has dealt a series of blows to Western oil companies recently.

The decision by the Natural Resources Ministry to give the Lebedinsky field off Sakhalin island to Rosneft comes days after the ministry announced it would pull a key environmental permit at a $20 billion liquefied natural gas project on the Pacific island controlled by Royal Dutch Shell.

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UpsteamOnline: Controversial cancellation by ministry sets off investment alarm bells

THE move by Russia’s Natural Resources Ministry to cancel its approval of the environmental endorsement of Sakhalin 2 was met with a wave of concern from politicians both in the East and West, writes Valdimir Afanasiev.

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.

EU Energy Commissioner Andris Piebalgs called on Russia to make its rules clear.”In order to ensure that companies are willing to invest in multi-billion euro energy projects, a secure and predictable investment climate is necessary in Russia as in the EU or indeed any country,” he said. “Without this, investment in new energy projects will be highly problematic, providing uncertainties for the world’s future energy supply.”

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THE WASHINGTON TIMES: U.S. doubts Moscow on energy

By David R. Sands
September 23, 2006

The State Department yesterday sharply criticized a recent move by the Russian government to curb a major Western oil-and-gas-investment project in Siberia, saying it put in doubt Moscow’s willingness to honor major energy deals with foreign investors.

Spokesman Tom Casey said the Bush administration was “very concerned” by a Russian government move earlier this week to revoke the environmental permits for a $20 billion liquefied natural gas project being developed by the Royal Dutch Shell Group and two Japanese investment houses on Sakhalin Island.

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MosNews: Energy High on Agenda as Chirac Hosts Putin and Merkel in Compiegne

EXTRACT: Part of the aim of the meeting will be to ease worries over energy security which have resurfaced in a standoff with Western oil companies over huge oil and gas projects in Russia’s remote Sakhalin region. Russia, which caused deep alarm in Europe last winter by cutting off gas supplies to Ukraine, has pressured oil groups such as Royal Dutch Shell and Exxon Mobil to gain a greater share of the Sakhalin revenues.

THE ARTICLE

Created: 23.09.2006 14:20 MSK (GMT +3)

The leaders of France, Germany and Russia met in an 18th century chateau near Paris on Saturday with Western worries about energy security high on the agenda, Reuters correspondents report from France.

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The Times: Province transformed by its stinking asset

By Carl Mortished
September 23, 2006  
 
IT STINKS and it makes a horrible mess, but the black gunk that Shell and others are digging from Canada’s muskeg wasteland is transforming Fort McMurray, once a one-horse fur-trapping town in northern Alberta, into a Shanghai of the north.

Alberta’s economy is rivalling China in pace of expansion, and growth is expected to continue. According to Statistics Canada, the Albertan economy has grown by an average of 12.7 per cent a year since 2002, compared with 14.8 per cent for China. Unlike China, which is growing because of its ever-expanding manufacturing engine, Alberta’s growth is all about oil prices. 
 
Still, Canada’s Government reckons that Alberta is experiencing more than a fillip from energy prices because the non-oil economy is growing at 4 per cent, well above the rest of Canada, and the rate of growth has continued longer than any previous boom. The average Albertan earned C$66,275 (£31,177) last year, half as much again as the average Canadian, money that is fuelling a lifestyle envied by the rest of Canada, helping to stimulate steady emigration to the western province.  
 
RELATED ARTICLE

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MosNews: U.S. “Very Concerned” by Russia’s Move to Curb Sakhalin Project

Created: 23.09.2006 13:31 MSK (GMT +3)

The State Department sharply criticized a recent move by the Russian government to curb a major Western oil-and-gas-investment project in Siberia, saying it put in doubt Moscow’s willingness to honor major energy deals with foreign investors, The Washington Times reported Saturday.

Spokesman Tom Casey said the Bush administration was “very concerned” by a Russian government move earlier this week to revoke the environmental permits for a $20 billion liquefied natural gas project being developed by the Royal Dutch Shell Group and two Japanese investment houses on Sakhalin Island.

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The Times: A deal is a deal: Russia threatens Western investors at its peril

More than 3,000 miles east of Moscow, in the remote but not quite pristine wilderness of Sakhalin island and its coastal waters, the Kremlin is fighting its latest battle for control of Russia’s prodigious mineral wealth.

This time the aim is not to rein in home-grown but presumptuous oligarchs. It is to rewrite the terms under which Western oil firms operate in the “supergiant” oil and gas fields of Siberia and the Russian Far East — fields that represent the most plausible long-term hope of weaning the de- veloped world off its reliance on Middle Eastern energy.

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Daily Telegraph: Kremlin ‘bullying’ leaves western energy companies furious

 Sakhalin II

(Sakhalin Energy extracts oil and gas from one of the world’s most inhospitable regions)

By Adrian Blomfield in Moscow
(Filed: 23/09/2006)

In the past few years, mention of Vladimir Putin at the dinner table of some western leaders could have brought on a case of indigestion. In the past week, though, the Russian president has been causing ulcers.
 
On Monday, Russia suspended an environmental permit for an oil and gas project led by Royal Dutch Shell on Sakhalin Island in the Pacific Ocean.

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Daily Telegraph: Dutch pressure Putin over Sakhalin

By Roland Gribben

(Filed: 23/09/2006)

Diplomatic pressure on Russia to tackle the crisis over the cancellation of Shell’s environmental licence for the $20bn Sakhalin oil and gas project in Siberia increased with the Netherlands joining British protests. Jan Peter Balkenende, the Dutch prime minister, phoned President Vladimir Putin asking for an explanation about why the Anglo-Dutch giant was being penalised and voiced concern about the impact on inward investment.

Britain has already registered concern, with Margaret Beckett, the Foreign Secretary, lobbying her opposite number, Sergei Lavrov, while Japan, one of the main markets for liquid gas from Sakhalin, and the EU have made similar representations. The Kremlin skirted the Sakhalin issue in a statement declaring the talks had discussed agreements reached during Mr Putin’s visit to Holland last year when he heavily criticised project cost increases imposed by the Anglo-Dutch oil group. But a spokesman for the Dutch premier said Sakhalin was the main subject of the conversation and diplomatically described the talks as constructive.

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Daily Telegraph: Oil workers run dry

By Roland Gribben
(Filed: 23/09/2006)

A recruitment crisis is threatening the oil and gas industry boom and dozens of important projects, a research report claimed yesterday. BP, Shell, ExxonMobil and the other big groups face ”severe stagnation” because of the failure to replace an ageing workforce.

Graeme Sword, partner and head of energy at 3i, the private equity and venture capital group, makes the bleak predictions in a survey analysing the challenges facing the industry.

His analysis reflects growing concern among industry leaders about the shortage of new recruits, particularly engineers. Oil at $70 a barrel oil has changed the investment climate, triggering a sharp rise in conventional oil and gas projects while improving the economics of alternative and renewable energy sources.

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Business Week: A Gusher For Big Oil Is Drying Up

Western giants used to have easy pickings in Russia. Now Moscow is taking a harder line…

It’s a new world for oil companies, as Royal Dutch Shell PLC (RDS.A), Exxon Mobil Corp. (XOM), and others are learning the hard way in Russia. In the mid-1990s, the country was in economic turmoil. So the Kremlin agreed to advantageous deals for Western oil majors, which agreed to use their capital and technology to expand oil and gas production into new areas, particularly the icy waters off Sakhalin Island in Asia.

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The Wall Street Journal: Oil News Roundup: September 22, 2006 4:57 p.m.

THE WALL STREET JOURNAL ONLINE
September 22, 2006 4:57 p.m.

Crude-oil futures sank again on the New York Mercantile Exchange, tumbling more than $1 a barrel to settle at $60.55. Crude is more than 20% below its all-time high close set in mid-July. Here is Friday’s roundup of oil and energy news.

* * *
CLINTON’S RENEWABLE ENERGY FUND: Former President Bill Clinton announced the launch of an investment fund expected to raise more than $1 billion for renewable energy. The announcement, made on the last day of his Global Initiative Conference, came a day after British business mogul Richard Branson pledged $3 billion to battle global warming.

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The Wall Street Journal: Russia Favors Rosneft Over Exxon on Project

September 22, 2006 10:17 p.m.; Page A3

MOSCOW — Russia said it would grant OAO Rosneft a development license for a Pacific coast oil bloc, despite an attempt by Exxon Mobil Corp. to have the reserves counted as part of its adjacent Sakhalin-1 consortium.

The move came amid crossed signals from within the Ministry of Natural Resources over an order to pull the environmental permit for the nearby Sakhalin-2 project led by Royal Dutch Shell PLC. Analysts have said Russia is trying to force foreign oil majors to give up part or all of their advantageous production-sharing agreements, negotiated when oil prices were much lower.

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The Los Angeles Times: Oil Firms Pressured by Russia

Exxon loses out when an offshore field is given to a company controlled by the state, and a key permit is pulled at a Shell project.

From the Associated Press
September 23, 2006

MOSCOW — An offshore oil field originally claimed by Exxon Mobil Corp. has been given to state-controlled oil giant OAO Rosneft, a Russian government official said Friday.

Western oil companies operating in Russia have been dealt a series of blows recently by the Kremlin, which appears to be seeking a greater stake in the country’s natural resources at a time of high prices.

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Gulf Times (Qatar): Shell faces Sakhalin grab as Putin seeks command

President Putin

Published: Saturday, 23 September, 2006, 10:08 AM Doha Time
 
MOSCOW: First Russian President Vladimir Putin (above) attacked Yukos Oil Co. Now it’s Royal Dutch Shell Plc. This week’s threat to shut down Shell’s $20bn 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 Gazprom and Rosneft after the government filed $30bn in tax claims against the company.

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The Independent: lubricates Chinese operation

By Michael Harrison, Business Editor
Published: 23 September 2006

Shell increased its presence in China yesterday by buying a controlling stake in the country’s biggest independent manufacturer of lubricants.

The price paid by Shell for the 75 per cent shareholding in Tongyi was not disclosed. But the deal will increase Shell’s share of China’s lubricants market to 9 per cent, making it the third biggest player behind the two state-controlled giants Sinopec and Petro-China.

Tongyi has revenues of about $375m (£197m) a year and has three lubricant plants with a total annual capacity of 600,000 tonnes.

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The New York Times: Gas Pipeline Has Risks, U.S. Says

By THE ASSOCIATED PRESS
Published: September 23, 2006

NEW HAVEN, Sept. 22 (AP) — A giant liquefied natural gas terminal proposed for Long Island Sound poses safety and security risks that would require more firefighters, escort boats and other measures to prevent accidents or terrorist attacks, according to a Coast Guard report released Friday.

The Coast Guard issued a security analysis that does not take a position on the proposal by Broadwater Energy, but concludes that additional measures would be needed to “responsibly manage risks to navigation safety and security risks” associated with the project.

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The New York Times: Gazprom Reaps the Benefit of Friends in the Kremlin

Sakhalin II

(Royal Dutch Shell, via PRNewsFoto: Royal Dutch Shell’s $20 billion liquefied natural gas project on Sakhalin Island is scheduled for completion and its first shipment in 2008.)

By ANDREW E. KRAMER
Published: September 23, 2006

MOSCOW, Sept. 22 — Gazprom, the natural gas operator, has benefited handsomely from its position as the monopoly supplier of Russian natural gas to Europe. Now the Kremlin-backed energy company may get a similar role in Asia.

This year Gazprom surpassed BP and Shell to become the second-largest energy company in the world by market capitalization, after Exxon Mobil. The value of its stock, traded in London and on Russian exchanges, doubled in 2005.

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Houston Chronicle: Nigerian official says Shell to lose a license

Associated Press

THE HAGUE, NETHERLANDS – The Nigerian government plans to take away Royal Dutch Shell’s oil operating license in the restive Ogoni region of the Niger Delta, an official visiting The Hague said Friday.

“We are going to revoke Shell’s license to operate in Ogoniland,” Bamibele Ogedenjbe told Dow Jones Newswires.

 Ogedenjbe is assistant director at the Nigeria Department of Petroleum Resources, which oversees permits of the country’s hydrocarbon licenses.

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