September 27th, 2006:

EXTRACT: Russia wants to secure more control over its natural resources through taxation, deceit, bullyboy tactics, cunning and acquisitions. It will achieve this any which way it can and companies clearly need to be on their toes when dealing with the Kremlin.

THE ARTICLE

Published: Sep 27, 2006

AS the Sakhalin Oil ‘ Gas conference begins this week in eastern Russia, delegates will be no doubt be wondering if it is worth investing in the region given the state’s current tendency towards picking gaping holes in the existing project contracts. read more

Published: Sep 27, 2006

Italian energy company ENI is reportedly concerned for its agreement with Gazprom after seeing deals between several of its western rivals and Russian companies blocked by Moscow.

The government in Russia has intervened to halt the progress of BP, Shell, Exxon-Mobil and Total in recent days, citing environmental or financial reasons, but there is concern that the real motive is favouring Russian companies, such as Gazprom and Rosneft, so they can be dominant in the country’s richest oil and gas fields. read more

By: ALEX NICHOLSON,
Published: Sep 27, 2006

Russia’s Foreign Minister said Wednesday that environmental checks being conducted at a Shell-led liquefied gas project off the far eastern island of Sakhalin will not necessarily lead to the revoking of its license.

Speaking at the first day of an international oil and gas forum on the island, Sergey Lavrov’s comments were aimed at reassuring western governments that have been rattled by a decision to pull a key environmental permit at the project, where LNG supplies have already been contracted 20 years ahead. read more

Published: Sep 27, 2006

CALGARY – With both sides set to resume negotiations on fiscal terms for the Mackenzie Valley Pipeline, the federal minister responsible for the project has issued a strong vote of confidence that it will go ahead.

Indian Affairs and Northern Development Minister Jim Prentice said he expects formal talks between Ottawa and oil companies to resume shortly, after lead partner Imperial Oil Ltd. stepped away over the summer to re-examine the entire project, including cost estimates that are expected to escalate, the number of construction seasons it would take to build it, and project parameters. read more

Published: Sep 27, 2006

A CHORUS of prayers drowned out the words of a garda superintendent yesterday as he demanded access for about 60 workers at the site of the proposed Corrib Gas terminal in Co Mayo.

Some 100 protesters loudly recited the Sorrowful Mysteries of the Rosary for up to 15 minutes until Supt Joseph Gannon, officer in charge of the Belmullet garda district, ordered work crews to leave the area.

It is understood that Shell, who expressed “extreme disappointment” at the continued blockade, will try again in the next few days to enter the site, possibly backed up by increased garda numbers or even Army members. read more

By: Lorna Siggins, Western correspondent, and Tom Shiel, Irish Times
Published: Sep 27, 2006

Shell E&P Ireland has said it is its “firm intention” to return to work at the Corrib gas terminal at Bellanaboy, Co Mayo, following yesterday’s protest in which company workers were blocked from gaining access to the site.

The company has also offered additional payments of 10,000 annually to landowners on the onshore pipeline route, who are all eligible for small compensation amounts under compulsory acquisition orders. read more

By Arkady Ostrovsky
Published: September 27 2006 03:00 | Last updated: September 27 2006 03:00

Yuri Trutnev, Russia’s minister for natural resources, yesterday said Moscow would not take any decision on whether to stop the Shell-led Sakhalin 2 project until a month-long environmental study had been completed, Arkady Ostrovsky writes from Moscow.

“Until the end of the probe, the expert opinion won’t be cancelled. If it is cancelled, further work becomes illegal,” Mr Trutnev said. read more

YUZHNO-SAKHALINSK, Russia (MarketWatch) — Sakhalin Energy’s chief executive said Wednesday he was confident his company would resolve a conflict over alleged environmental violations soon.

“I do believe these issues will be resolved very quickly with the ministry” said Ian Craig, referring to Russia’s Ministry of National Resources.

Russian authorities had threatened to pull a key environmental permit for the company, a move Sakhalin Energy said Tuesday could create an additional $10 billion in costs for the project. read more

YUZHNO-SAKHALINSK, RUSSIA (MarketWatch) — The entry of Russian gas giant OAO Gazprom (GSPBEX.RS) into Sakhalin-II will likely result in the alleviation of regulatory pressure on the project’s operator, Sakhalin Energy Ltd., a member of Russia’s chamber of commerce, told a conference on Sakhalin Island Wednesday.

“We must introduce Russian participation, of course that means Gazprom,” said Zalery Garipoz, head of the chamber’s oil industry development committee.
Once Gazprom enters the project, “there will be no more criticism of Sakhalin Energy, there will be only ‘hoorah’,” he said. read more

· Permit withdrawn ‘for ecological reasons’
· Official says no political or economic issues involved

Tom Parfitt in Moscow and Terry Macalister
Wednesday September 27, 2006

A senior Russian official has hit back at western accusations that Moscow is deliberately raising environmental obstacles against Shell and other foreign companies as part of a political mission to seize back control of energy reserves.

In an interview with the Guardian, Oleg Mitvol defended the government’s decision last week to revoke a 2003 environmental assessment that approved the development of huge oil and gas reserves off Sakhalin Island in the Russian far east. read more

Wed Sep 27, 2006 2:05 AM ET

MOSCOW (Reuters) – Russian Foreign Minister Sergei Lavrov sought to alleviate Western concerns over Russian energy deals on Wednesday, saying talk of revising production sharing deals or pushing foreigners out of the sector was unfounded, Russian news agencies reported.

A recent barrage of threats from Russian officials to withdraw an ecological permit for the Shell-led Sakhalin-2 oil and gas project have sparked fears that Russia wants to renegotiate the production sharing agreement (PSA). read more

09.27.2006, 12:08 AM

YUZHNO-SAKHALINSK, Russia (XFN-ASIA) – Russian officials warned that safety rules have been violated at the the Sakhalin-2 oil and gas site, a week after Moscow revoked environmental authorisation for the project of Royal Dutch Shell and Japanese firms Mitsui and Co and Mitsubishi Corp.

‘There have been quite a lot of violations of industrial safety rules … this worries our inspectors,’ Konstantin Pulikvosky, head of the environmental, engineering and nuclear monitoring agency Rostekhnadzor told an energy conference here. read more

Terry Macalister and Rob Evans
Wednesday September 27, 2006

Shell told the British government earlier this year that the now troubled Sakhalin-2 project could become a model for future operations worldwide. The boasts were made by Shell UK’s chairman, James Smith, in a meeting with Hilary Benn, the international development secretary, and the European Bank for Reconstruction and Development (EBRD) in London.

Despite criticism about the scheme from green campaigners – and from the Kremlin in the past week – Shell said it had broken new ground by establishing Russia’s first offshore project and had handled the environment with care. read more

(Russian Foreign Minister Sergei Lavrov)

Created: 27.09.2006 11:54 MSK (GMT +3), Updated: 11:54 MSK

On Wednesday, Sept. 27, Russian Foreign Minister Sergei Lavrov sought to alleviate international concerns of energy deal, saying talk of revising production sharing deals or pushing foreigners out of the sector was unfounded.

MosNews has reported that Russian environmental watchdog and Natural Resources Ministry has threatened to withdraw a permit for Shell-led Sakhalin-2 oil and gas project.

The Russian authorities have also made some similar threats about Exxon-led Sakhalin-1 project, Total’s Kharyaga gas field prject and TNK-BP’s Kovykta gas condensate project. The threats have sparked fears that Russia wants to renegotiate the production sharing agreements (PSA) it signed with these companies earlier. read more

The Associated Press
Published: September 27, 2006
 
MOSCOW Russia’s Foreign Minister Sergey Lavrov said Wednesday that the environmental checks being conducted at a Shell-led liquefied gas project off the far eastern island of Sakhalin will not necessarily lead to the revoking of its license.
 
“The checks that are being carried out by no means signify that the licenses for exploration as part of the Sakhalin-2 project will be revoked,” Lavrov said at an oil and gas forum on Sakhalin in televised remarks.
 
“The aim of the checks is solely to ensure that all sides abide by the terms of the agreement in good faith.”
 
Last week authorities announced that they would revoke a key environmental permit at Royal Dutch Shell PLC’s Sakhalin-2 project.
 
Observers interpreted the move as a means to pressure the company to secure better terms for state gas monopoly OAO Gazprom, which is seeking to join the project.
 
“The opinion of squeezing out foreign investors from the fuel and energy sector are groundless,” Lavrov was quoted as saying by the Interfax news agencies.
 
Natural Resources Minister Yuri Trutnev said Tuesday that authorities will try to avoid shutting down the project, but insisted that it was riddled with environmental violations that needed to be addressed if the project is to be allowed to continue.
 
Igor Ignatyev, Sakhalin Energy’s vice president for corporate affairs, has warned that a decision to revoke the permit could lead to delays of 17 months and 15,000 redundancies.
 
The case comes amid pressure on a number of foreign-controlled energy projects that observers say is an attempt to secure a bigger role for Russian companies.  read more

Venture Firms Ignite Bitter Fight
With Push for California Oil Tax

By GEORGE ANDERS and REBECCA BUCKMAN
September 27, 2006; Page A1

Still smarting from California’s recent enactment of emissions caps, the oil industry is confronting another assault in the Golden State — this one bankrolled in part by Silicon Valley tycoons pushing to fund conservation and alternative-energy initiatives with a tax on oil output.

Two of the nation’s most influential constituencies are locked in an increasingly nasty battle over a ballot initiative that could squeeze an estimated $4 billion over the next decade from oil producers in California through a tax that would be as high as 6% a barrel. Energy companies already pay such levies in most other oil-producing states, but the hit in California would be especially steep, given that some 13% of the nation’s oil output is generated there. read more