Posts from ‘September, 2006’

28th September 2006
By Anne Marie Davis

Groupe Caisse d’Epargne has joined Shell in S’Miles, a major syndicated retail loyalty card scheme in France. The French retail bank will represent a welcome addition to the scheme for Shell, increasing the number of card touch points for its customers in a market where an independent loyalty card may not be the best route for the fuel retailer.

Groupe Caisse d’Epargne bank serves 26 million customers in France and has one of the largest distribution networks, with around 4,300 branches and 5,900 ATMs across the country. Now that it has joined the S’Miles scheme, members of the bank’s Satellis service will be offered free membership to the scheme.

The S’Miles program has 12 million customers and there are 46 scheme members, including French railway operator SNCF, Casino supermarkets, department store Galeries Lafayette and Shell. Caisse d’Epargne will be a welcome addition for Shell as withdrawals from the company’s ATMs will earn all scheme members points.

There are two key loyalty card options for traditional fuel retailers. The first is to have an independent proposition such as Total’s ‘La Carte Club,’ which enables members to redeem points for products and services including small gifts, hotels and roadside recovery. In general, such schemes require a significant amount of spend for motorists to redeem anything of real value, with the more attractive programs allowing points to be redeemed against fuel purchases. In most European markets, however, the opportunity to offer such fuel rebates is limited by slim fuel margins. Furthermore, in France, traditional fuel retailers have a relatively low market share given that most fuel in the country is sold by hypermarkets.

The alternative is to join a syndicated loyalty program that gives members a greater number of touch points, such as S’Miles, the Nectar scheme in the UK and Payback in Germany. Under such schemes, points can be redeemed for something of value more quickly.

Being one of many companies involved in a scheme often means that the program does not always suit the needs of each individual participant, but given that Shell currently holds less than a 5% share of the French fuel market by volume, a syndicated scheme is likely to be the best option for the company. Moreover, the addition of Caisse d’Epargne only serves to further engage scheme members off the forecourt, increasing member numbers and thus potentially encouraging more members to earn points at Shell forecourts.

Headline: Social Setbacks as Big Oil Expands Pipelines

Emad Mekay

WASHINGTON, Sep 29 (IPS) – Predominantly foreign male workers who relocated to build massive oil and gas projects, combined with feeble gender policies, have brought  and greater burdens for local communities around those projects, new research finds.

This array of problems was found at two of the world’s largest pipeline projects, the 3.2-billion-dollar Baku-Tbilisi-Ceyhan (BTC) and Russia’s 20-billion-dollar Sakhalin II.

Both projects are run by international oil giants and funded in part by multilateral public banks that are dominated by energy-thirsty industrialised nations.

The World Bank’s arm that lends to the private sector, the International Finance Corporation, has backed both projects. The European Bank for Reconstruction and Development (EBRD) has backed the BTC project with a 250-million-dollar public loan. It is poised to make a final funding decision on the highly controversial Sakhalin II project.

Shell is leading the consortium running Sakhalin II in Russia, while oil giant British Petroleum is constructing the BTC pipeline to transfer oil from the Caspian Sea to the Mediterranean.

The Baku-Tbilisi-Ceyhan pipeline will run 1,100 miles, from the Sangachal terminal near Baku, the capital of Azerbaijan, through Georgia and to the Turkish Mediterranean port of Ceyhan.

Sakhalin II aims to extract oil and gas from beneath the coast of far eastern Russia’s Sakhalin Island. Production is due to start in 2008 with 60 percent going to the Japanese market.

The report, “Boom time blues: Big oil’s gender impacts in Azerbaijan, Georgia, and Sakhalin”, argues that the projects have brought an increased social burden and poverty for local communities, and particularly women, as a workforce of mostly foreign male workers settles in those areas.

Shell and BP’s mega-projects have also lead to environmental degradation, land loss and damaged communal infrastructure, according to the report by CEE Bankwatch Network and the Washington-based Gender Action.

The report is based on CEE Bankwatch Network’s fact-finding missions to Azerbaijan, Georgia and Sakhalin earlier this year, an analysis of existing accounts from local non-governmental organisations and activist groups, and Gender Action’s survey questionnaire and gender assessment of both projects’ extensive documentation.

In the case of the Russian project, the groups say it has brought considerably fewer employment opportunities to local women than originally promised, with catering and cleaning accounting for most jobs.

Working conditions for women employed in cleaning and catering are often viewed by locals as unacceptable as they entail very long hours, which decrease the time for their family responsibilities and personal activities.

Because many of the workers in the project come from “exotic” countries, they have brought “exotic” diseases with them, such as tuberculosis, which were not found in the area in the past, the report finds.

It says that local women were both embarrassed and alarmed about the indications of increased prostitution, and have experienced sexual harassment and crime as a result of contact between the pipeline workers and resident populations.

“Again and again on Sakhalin Island, I heard strong discontent about Shell’s behaviour towards the local environment and the harsh effects of the project on Sakhalin’s social fabric,” said Fidanka Bacheva-McGrath of the Czech Republic CEE Bankwatch Network, who conducted research for the report on Sakhalin Island.

Calls for comment from British Petroleum and the EBRD were not returned. The IFC said it was considering a response, but did not answer questions from IPS by Friday.

According to the report, the BTC project didn’t fare much better.

“Despite the pledges of the project sponsors and lenders, it has failed to increase women’s access to natural resources and improved infrastructure, has not provided employment and permanent income, nor has it empowered women to participate in decision-making,” it said.

The report finds that women’s rights, trafficking and the spread of HIV/AIDS have been major concerns for local communities near the BTC pipeline. It relays statements from the police chief of one of the regions around BTC as saying that the increased narcotics trade and spread of AIDS is directly connected with prostitution due to the pipeline’s construction.

During the construction of the pipeline, there were an increased number of foreigners as well as workers from other regions within the country, bringing the development of related businesses such as restaurants and hotels. As a result, the amount of drug use, prostitution and alcohol consumption increased.

The groups behind the report held it up as further evidence that the institutions backing the projects should either stop bankrolling them or insist on much tougher social and environmental standards, something the companies involved have resisted because of the added costs of stronger environmental measures.

“Both the EBRD and the IFC have turned a blind eye to the increased prostitution, human trafficking and HIV/AIDS that the BTC and Sakhalin II pipeline projects generate,” said Elaine Zuckerman of Gender Action.

Zuckerman says that public lenders should take steps to curb abuse of women and integrate better gender protections in their lending safeguards.

“What we are saying is that they need to create and, of course more importantly, implement policies to prevent the kind of gender impacts that large investments that they are making have,” she told IPS.

“On one hand they have these small projects that claim to be financing health care services and on the other hand, there are big bucks projects, like the pipelines, that in fact undermine their own poverty reduction and health services goals,” she added. Those lenders have no rules to recognise the rights of women by ensuring that social management, community development, and consultations reach out to women and protect them from gender-based human rights violations, the report says.

Critics say such big projects have traditionally brought limited and short-term employment opportunities, and often fail to provide promised support for local communities or to help alleviate poverty. (END/2006)

SEPTEMBER 2006

EXTRACT: According to an article written for Amnesty International: “It’s 10 years since the Nigerian Government executed the well-known Ogoni writer and human rights campaigner Ken Saro-Wiwa. But little has changed for the people of the Niger Delta, reports Seth Jordan…

“…Oil was discovered in the Ogoni region in the late 1950s by the Royal Dutch/Shell Group….by the 1990s an estimated US $30 billion worth of oil had already been extracted, and oil revenues accounted for over 98 per cent of Nigeria’s foreign exchange earnings; the 550,000 local farmers and fishermen who inhabited the coastal land had received little except a ravaged environment. Once fertile farmland had been destroyed by uncontrolled pollution, and virtually all fish and wildlife had vanished. Only a handful of local people were employed by the oil companies or benefited economically in any way….

THE ARTICLE

by Jason Miller

“It is like paradise and hell. They throw our petitions in the dustbin. They have everything. We have nothing… If we protest, they send soldiers. They sign agreements with us and then ignore us. We have graduates going hungry, without jobs. And they bring people from Lagos to work here.”

~Eghare W.O. Ojhogar, chief of the Ugborodo community in Delta State (of Nigeria)

In describing the situation in Nigeria, Eghare presents us with a microcosm of a modern Inferno, Purgatorio, e Paradiso (about which there is little divine or comic). In the timeless struggle between the “haves and “have nots,” alarming numbers of “useless eaters” (“have nots”) are sliding from Purgatorio into the abyss of abject poverty’s Inferno.

And what heinous transgression did they commit that necessitated their banishment into the Inferno? They were born, of course. Most of those experiencing the misery of indigence had the misfortune to enter this world bearing a losing lottery ticket.

From their birth, the psyches of the poor and homeless in the “developed” nations and those of the impoverished in the “developing” nations are battered with the hopelessness and despair of their harsh realities. (Realities carefully created and perpetuated in a variety of ways by their “betters”).

After spending their formative years pitted against nearly every overwhelming economic and social force imaginable, the message many of them internalize probably reads something like this: “Sorry, washout. You are the wrong color, ethnicity, caste, social class, or nationality. Surviving to age 40 will be no small task for you. And if you manage to do so, your chances of significantly bettering your situation are quite slim. After all, the lottery winners invest a great deal in maintaining structural barriers to hold you down. But the good news is that you can add meaning to your miserable existence by working for slave wages (or simply withering and dying) to ensure that the tiny percentage of humanity enjoying economic Paradiso continues to do so and that the shrinking number of fortunates in Purgatorio experience a degree of comfort and security.”

To gain some perspective on the extent of human suffering, avarice, and depravity associated with the gross imbalance in wealth and power, weigh these facts:

1. More than half of the 6.5 billion human souls populating Earth subsist on less than $2 per day. 790 million of the deeply impoverished suffer from chronic malnutrition (while 65% of Americans are overweight).

2. 20% of the human race does not have access to clean water and 31% of the world’s population has no electricity.

3. Combining the gross domestic products of the 48 poorest nations (representing 25% of global population) yields a figure that is less than the combined wealth of the three richest people in the world.

4. “Developed nations” account for 80% of the world’s consumption and 20% of the world’s population.

5. The wealth gap between the richest and poorest countries went from 3 to 1 in 1820 to 72 to 1 in 1992.

6. Corporations account for over half of the 100 wealthiest entities in the world.

7. And most tragically: According to UNICEF, 30,000 children die each day due to poverty. And they “die quietly in some of the poorest villages on earth, far removed from the scrutiny and the conscience of the world. Being meek and weak in life makes these dying multitudes even more invisible in death.”

That is about 210,000 children each week, or just under 11 million children under five years of age, each year” (Thanks to Global Issues.org for the above information).

Earth’s ruling oligarchs and plutocrats have created and perpetuated a socioeconomic dynamic in which the destitute have little or no access to education, basic healthcare, decent employment, or even basic necessities. From the United States to sub-Saharan Africa to Southeast Asia, those isolated in despairing communities with crumbling or non-existent infrastructures find themselves mired in impoverished breeding grounds for crime, high birth rates, substance abuse and AIDS.

Perhaps an apt message for those impoverished children arriving in this world with three strikes against them would be: “Lasciate ogne speranza, voi ch’intrate,” which is most commonly translated as “Abandon all hope, ye who enter here.”

How humane and politically correct those monopolizing Earth’s bounty have become. Monarchy has essentially been relegated to the dustbin of history. Empire building through brute force is becoming an increasingly rare event. Certainly the ruling elite maintain potent militaries to exercise their right to “defend themselves” (as they are doing in Iraq and Lebanon). But more often than not, the masters of the human race have learned to wield their economic power like a heavy cudgel, capable of battering their foes into submission with a few swift strokes.

New age dawning?

As humanity basks in the nurturing rays of a long-awaited sunrise marking the dawn of a glorious new paradigm, a determined privileged class is determined to make utopia a reality for themselves. Ushering in a veritable paradise of free trade, “robust economies,” “ownership societies,” “freedom and liberty” and unprecedented profits generated by massive companies unfettered by frivolous government regulation, predatory human beings now issue their edicts from corporate skyscrapers rather than moated castles.

Wage slaves and sweat shop laborers have supplanted serfs and chattel slaves. Five major corporations comprise 90% of the mass media in the United States. What are their specialties? Shaping public opinion to maintain the illusion that one of the world’s most rapacious and bellicose nations is a “benevolent superpower” and enticing those who fall prey to their charms to experience a virtually insatiable desire to acquire more material possessions. A brain-washed complacent citizenry perpetually ready to go on a buying binge is a wet dream for the ruling elite.

For many, the survival of their families depends upon the meager pay they receive from corporate behemoths like Wal-Mart. More fortunate wage slaves earn enough to cover the cost of necessities and to attain the goods the corporate media push like Ecstasy. Shopping….what a rush!

Between the Americans who have high discretionary income and easy credit issued to those who don’t, demand for consumer goods is nearly infinite. With grossly unfair laws (protecting consumers, the environment, and workers) squeezing their profits, those ingenious devils amongst the ruling elite concluded they would locate in “developing” countries where they could truly rape, pillage and plunder. Hence the worsening plight of those beholden to their corporate masters both in the United States and abroad.

Where is the wealth?

And just how heavily are the world’s assets concentrated into the hands of the elite? While the U.S. is by no means home to the entire world’s de facto aristocracy, it is the “leader of the obscenely rich world” and, by default, is the “leader of the (ostensibly) free world.”

For example, Professor G. William Domhoff of the University of California at Santa Cruz wrote in 2001: “In terms of types of financial wealth, the top 1 percent of households have 44.1% of all privately held stock, 58.0% of financial securities, and 57.3% of business equity. The top 10% have 85% to 90% of stock, bonds, trust funds, and business equity, and over 75% of non-home real estate. Since financial wealth is what counts as far as the control of income-producing assets, we can say that just 10% of the people own the United States of America.”

And thanks to the Bush administration, that 10% is maintaining a firm grasp on what they own.

Pernicious and enduring lies

The predator class pacifies its subservient underclass with the myth that in the U.S. and the satellite “free market economies” it has established (at gun-point or through the subversive activities of the CIA), everyone can become a successful entrepreneur by starting their own businesses. Yet like the lie that all impoverished individuals except widows, orphans and the infirm are responsible for their own circumstances, this malicious fairy tale ignores several realities. Like the fiction about the impoverished, it assumes that all people are on a level playing field. However, that notion is far removed from reality. Some people have a higher quality education than others. Individuals receiving a high degree of support from friends and family are much more likely to succeed than those who have little or no support. While some starting a business have financial resources behind them, others have virtually nothing but their drive and ideas. Market forces, weather patterns, competition, health and many other variables can serve to make or break a “budding capitalist.” And no two people are alike or face the same conditions.

Approximately 150 million of those young and healthy enough to work in the United States earn a wage or salary (Versus a relatively paltry figure of 20 million who are self-employed). Eighty-five percent of small businesses fail within five years. Corporate leviathans like Wal-Mart and Microsoft have defied anti-trust laws to crush myriad competitors, including many small entrepreneurs. Horatio Alger success stories are none too plentiful in the “land of opportunity.” And the grim reality is that the Goliath corporate giants usually prevail against the David small businesses.

In 2003, the average worker in the United States was netting $517 per week. How much were CEO’s taking home at that time? A mere $155,000—52 times per year. That is a staggering 301 to 1 differential. In 1982 the ratio of CEO-to-average-worker pay was “a mere” 42 to 1. From 1990 to 2003 US corporate profits rose 128%.

To further appreciate the obscene avarice of the world’s plutocracy, consider that the average garment worker in Bangladesh earned 13 cents per hour in 2004. The “10% of the people who own the United States” and their counter-parts in nations around the globe are doing very well thanks to the blood, sweat, and tears of the remaining 6 billion or so human beings on the planet.

Incorporating their avarice

Corporations are the Holy Grail for the rich and powerful. They provide moneyed individuals investment vehicles which afford them extremely limited personal liability, financially and criminally. By the late 19th century in the U.S., corporations had acquired many of the legal rights of a human being. Despite their roots in British colonialism and the deep apprehensions of founders like Thomas Jefferson, corporations have come to dominate the U.S. and much of the world culturally, politically, and economically.

Jefferson’s expression of concern to George Logan in 1816 was well-founded: “I hope we shall crush in its birth the aristocracy of our moneyed corporations which dare already to challenge our government in a trial of strength, and bid defiance to the laws of our country.”

Not only was the aristocracy of moneyed corporations born, its power has grown to such monstrous proportions that it has virtually crushed the life from a still relatively nascent social experiment based on democratic ideals and constitutional law.

According to the Center for Public Integrity, the pharmaceutical industry alone has spent $675 million lobbying the government to shape public policy over the last seven years. The insurance industry spent even more if one includes campaign donations. Through their corporate proxies, the moneyed elite invest a great deal in the United States’ political system. They expect and receive a great deal in return.

“Defending” the predator class is an expensive proposition

Spending at a clip of $600 billion per year (including Iraqi Occupation costs), the U.S. accounts for 50% of the world’s military spending. As George Bush (the current public face of the world’s plutocracy) so sagely reminded us, “Free nations are peaceful nations.”

To manufacture the many instruments of peace which prove how free we are, the United States relies on 737 defense contractors, sometimes known as the military-industrial complex. Of those 737 contractors, a mere five have received government contracts totaling $284 billion over the last six years. Lockheed Martin, Boeing, Raytheon, Northrop Grumman, and General Dynamics do quite well at the public trough. Halliburton has also fared nicely since former CEO Dick Cheney took office and helped lie the U.S. into the Iraqi Occupation. Facilitating killing is their business—and business is good.

Sedating the masses with consumerism, spin, fear-mongering and historical revisions; lobbying heavily; donating huge sums to political campaigns; and maintaining the military industrial complex are powerful means of securing the seats of power in D.C. and Tel Aviv.

However, the predator class has yet another weapon at its disposal: The revolving door between government and major corporations. Men like Donald Rumsfeld and Dick Cheney are but two stalwarts of the privileged class who have traversed back and forth from roles of great influence in major corporations to positions of power within the government. But they are not pioneers. Theirs is a path blazed by many before them and almost certain to be followed by many after them.

A glimpse of the ugly reality of pathological avarice in action…

To move beyond an abstract analysis of the machinations of the oppression and exploitation of most of the human race by a select and privileged few, consider one of many specific examples: For years, British and U.S. oil interests have enjoyed the complicity of the criminal ruling elite in Nigeria in plundering an incredibly valuable natural resource. In return, a majority of the indigenous people have received land too polluted to farm, brutal attacks by government forces, and extreme poverty.

According to an article written for Amnesty International: “It’s 10 years since the Nigerian Government executed the well-known Ogoni writer and human rights campaigner Ken Saro-Wiwa. But little has changed for the people of the Niger Delta, reports Seth Jordan…

“…Oil was discovered in the Ogoni region in the late 1950s by the Royal Dutch/Shell Group….by the 1990s an estimated US $30 billion worth of oil had already been extracted, and oil revenues accounted for over 98 per cent of Nigeria’s foreign exchange earnings; the 550,000 local farmers and fishermen who inhabited the coastal land had received little except a ravaged environment. Once fertile farmland had been destroyed by uncontrolled pollution, and virtually all fish and wildlife had vanished. Only a handful of local people were employed by the oil companies or benefited economically in any way….

“On 4 February 2005, soldiers from Nigeria’s Joint Task Force fired on protesters from the Ugborodo community at the Escravos oil terminal run by Chevron Nigeria. One man was shot and later died from his injuries. Thirty other demonstrators were injured by blows from rifle butts and other weapons. Neither the government nor the oil company provided adequate medical care or helped to transport the injured.”

Nigeria provides a potent example of blatant abuses directed at the impoverished masses by the privileged few. But sadly, it is but one of many such cases.

While the rapacious individuals who wield the power in this world have stacked the deck heavily in their favor, there are glimmers of hope. The United States and Israel are both failing in their wars of aggression in the Middle East. A Bolivarian revolution is beginning to sweep South America. A populist narrowly lost a presidential election in Mexico. Joe Lieberman was ejected. And checks and balances were at least temporarily restored in the United States when a federal judge ordered George Bush to obey the Constitution with regard to his policy of unwarranted wiretapping.

A collective populist movement is slowly evolving. It is only a matter of time before humanity’s oppressed put aside their religious, racial, and nationalist differences to unite against their common enemy. When six billion people act in unison against a few million, there will, indeed, be a new world order.

Jason Miller is a wage slave of the American Empire who has freed himself intellectually and spiritually. He writes prolifically and his essays have appeared widely on the Internet. He welcomes constructive correspondence at willpowerful@hotmail.com or via his blog, Thomas Paine’s Corner, at http://civillibertarian.blogspot.com/.

“Justice is when the rules of the game are the same for everyone.” ~Dennis Riness (www.civilizationengineering.com)
  
The Idaho Observer
P.O. Box 457
Spirit Lake, Idaho 83869
Phone: 208-255-2307
Email: observer@coldreams.com
Web:
http://idaho-observer.com
http://proliberty.com/observer/

29 September 2006

Expert comments on the Sakhalin II situation by a Shell Insider…

The costs of Sakhalin have doubled, so the payback time is approximately doubled. If 2013 is the new estimate for breakeven, based on a start up in 2008 and $22bn costs, then it is fair to assume that the date should have been 2009, based on $10bn costs and start-up in 2007 – as per the PSA.

(1) Apart from the $12bn in extra costs to be paid by the Russians (how much of this is Shell “overhead”?) an NPV calculation shows that the value of the future income stream due to the four year delay, and assuming a discount rate of 12% (typical for upstream E&P projects) is reduced by 60%.

(2) Shell calculates the costs of delaying the project by one year as $10bn. The $10bn includes $5bn as the notional cost of delaying the income stream by one year. However, the cost overrun and the delay in start-up means that the Russians are being asked to wait an extra four years for their income already, which by Shell’s own calculations is going to represent a cost of $20bn ($5bn x 4 years).

Whether Shell’s figures (2), or the NPV calculation (1) is used, the true additional cost to the Russians of the extra $12bn in costs and a one year delay (to 2008) of first exports is going to be over $30bn

The $2bn annual cost (quoted by Shell) of buying LNG elsewhere to fulfil the Sakhalin contract in case of a delay implies that the price to be paid by the Japanese for Sakhalin gas is too low: if Sakhalin gas was being sold at a market price, it would be possible to replace the gas on the world market at approximately the same price for which it was being sold. 

It is hardly surprising that the Russians are questioning the viability of the project.

Posted By Newsroom On 29th September 2006 @ 10:15 In Home, Economy, Companies,

YUZHNO-SAKHALINSK – A stretch of a pipeline in the Sakhalin II energy project has been illegally laid through the territory of a national preserve, Russia’s environmental watchdog said Friday.

Oleg Mitvol, the deputy head of the Federal Service for the Oversight of Natural Resources, who is currently leading a probe into the project on the island of Sakhalin, said part of the Sakhalin II pipeline near the village of Sovetskoye passed through the Zubrovy nature preserve in violation with the original route plan.

“This is a criminal violation,” the official said. “We will study the situation and pass all the materials to prosecutors.”

Mitvol also said ecology experts would start aerial photography of the current Sakhalin II pipeline on Monday to compare the results with the original scheme and determine where the pipeline deviates from the planned route.

Russian officials accuse project operator Sakhalin Energy of failing to fulfill environmental recommendations, and the Ministry of Natural Resources last Monday annulled the 2003 environmental expert review for the $20 billion project, which is led by Royal Dutch Shell (55%).

“Further work to build the Sakhalin II pipeline as it has been done to date is unacceptable,” Mitvol said Thursday, although he stressed that the consortium running the project, which also includes Japan’s Mitsui (25%) and Mitsubishi (20%), would not be stripped of its operating license.

A spokesman for the Russian Natural Resources Ministry said earlier that the project might have caused ecological damage worth $50 billion, but said it will take a long time to make detailed calculations.

But Sakhalin Energy said prior to the revocation of the study that accusations about environmental performance were “deeply misleading” and were “based on a procedural argument relating to the internal workings and mandate of component agencies making up the Ministry of Natural Resources.”

The possible suspension of the project following the revocation of the environmental review means plans to develop a crucial LNG plant will be delayed, which will put in jeopardy contracted deliveries to Japan, South Korea and the United States, due to start in 2008.

Sakhalin Energy said September 20 this would “lead to significant delay of the project, extra costs and irreparable damage to the reputation of this venture and the Russian Federation as a whole.”

Royal Dutch Shell has already suspended work on several stretches covering seven kilometers (four miles) overall of the 800 kilometer (500 miles) line.

Shell announced last year that the estimated cost of the project implemented under a production-sharing agreement had doubled. The cost increase has complicated state-controlled energy giant Gazprom’s bid to swap one a share in one its fields for 25% of Sakhalin II.

Source: RIAN.

Article printed from The Russia Journal: http://www.russiajournal.com

URL to article: http://www.russiajournal.com/?p=10303

By Angela Macdonald-Smith

Sept. 29 (Bloomberg) — Chevron Corp. said design work on the $10.4 billion Gorgon liquefied natural gas venture, which has been delayed, is due for completion in the “next few months” in advance of an investment decision in 2007.

The number of contractors working on the project is set to fall over the next few weeks as the initial engineering and design work nears completion, Chevron said today in an e-mail from the San Ramon, California-based company’s Perth office in Western Australia. Exxon Mobil Corp. and Royal Dutch Shell Plc have stakes in the venture.

Chevron is counting on the project to boost its share of the expanding Asian LNG market and propel it from the current 14th ranking among the world’s LNG producers to one of the top five. The project was originally scheduled to start production in 2008 and has been delayed due to environmental approvals, while rising construction costs have increased the probable cost.

“The joint venture partners have said for some time now that the Gorgon project is confronted with the overheated global construction market for large capital projects and that the partners are addressing the significant challenges to cost and schedule,” Chevron said in the e-mail. The partners “are doing additional study work to offset cost increases and mitigate some of the uncertainty before a final investment decision is considered.”

Chevron has 50 percent of the Gorgon venture, while Exxon Mobil and Shell each have 25 percent. The Western Australian government is yet to grant development approval to build an LNG production plant on Barrow Island, a nature reserve off the Western Australian coast.

`Uncertainty’

The uncertainty about the project’s timetable is raising questions about how other proposed LNG projects in Australia such as Inpex Holdings Inc.’s Ichthys project and Woodside Petroleum Ltd.’s Browse project may be similarly affected, Frank Harris, co-head of global LNG at Wood Mackenzie Consultants Ltd. said Sept. 27 in an e-mail.

“The ongoing uncertainties at Gorgon are undoubtedly making LNG purchasers edgy,” Harris said. “However, Pacific Basin purchasers have few options other than Australia in the next few years so I think the outlook is still pretty good.”

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net .

Last Updated: September 29, 2006 07:08 EDT

 

RBC, 29.09.2006, Yuzhno-Sakhalinsk 13:35:26.

Sakhalin Energy illegally changed the route of its oil and gas pipelines to pass through a state wildlife reserve, Oleg Mitvol, the deputy chief of the Russian environmental watchdog Rosprirodnadzor, told journalists following his trip to inspect Sakhalin-2 project construction sites. He said that according to the project’s plan, the pipelines were supposed to bypass the Zubrovy reserve near Sovetskoye village.

As the pipeline has now been laid straight through the environmentally protected site, the change of route can be deemed a criminal offense. After additional inspections at the disputed site, materials will be submitted to the General Prosecutor’s Office to launch criminal proceedings.

SINGAPORE (September 29, 2006) — World-scale petrochemical facility will be a major provider of raw materials in Asia.  

Singapore’s petrochemicals industry has attracted one of its biggest construction projects to date from international chemicals and energy giant, Royal Dutch Shell plc.

In late July, Shell, which enjoys a local presence dating back to the 19th century, announced its biggest investment yet in the Republic. Named Shell Eastern Petrochemicals Complex (SEPC), the new integrated refinery and petrochemicals project will be threefold, and upon completion by 2010, will serve as a crucial raw materials provider to the Asian region.

“This project represents another significant step in Shell’s commitment towards delivering a profitable downstream business for the group,” said Rob Routs, executive director, downstream, for Shell. “Shell is committed to growing chemicals investments in Asia Pacific and the Middle East and [this] announcement is another example of how we are delivering on that strategy.”

The project in Singapore is just one of several new investments, planned or under construction by a number of producers, destined for the region.

“Asia is the world’s fastest growing market for petrochemical derivatives and during the next 10 years is likely to require several new ethylene crackers to meet this demand,” said Pieter Eijsberg, general manager of SEPC. “Singapore offers us a business-friendly environment, where we have excellent experience from previous investments.”

In addition to the proposed ethylene plant, Shell will commence work on another new plant — this one dedicated to Mono-Ethylene Glycol (MEG), with a capacity of 750,000 tpa. When completed, the facility will boost Shell’s MEG capabilities to 1.3 million tpa, and raise its profile to the third-largest MEG producer in the world. The MEG from the facility will be exported to countries around the region, as well as the large-scale China market.

“The world-scale MEG plant being planned for Jurong Island as part of the investment will consume a significant share of new ethylene capacity and is an integral part of the project,” Eijsberg said.

Minister denies environmental complaints are a ruse to obtain a stake in Sakhalin
ALEX NICHOLSON

Associated Press

MOSCOW — Russia’s environmental watchdog has called for pipe-laying work to be halted at a Royal Dutch Shell PLC-led liquefied natural gas project on Russia’s far eastern Sakhalin Island, even as the country’s Foreign Minister says problems could be resolved through dialogue.

“We want criminal cases for every destroyed tree or damaged river,” Oleg Mitvol, deputy head of Russia’s state environmental agency Rosprirodnadzor, said, according to Interfax news agency. “If the criminal cases are opened for everything, the company will read the Criminal Code, come to its senses and stop the barbaric activity.”

Still, Russian Foreign Minister Sergey Lavrov said environmental concerns threatening to halt work on the $20-billion (U.S.) Sakhalin-2 project could be resolved.

“I am convinced that a dialogue with the relevant Russian government agencies . . . will allow these issues to be settled,” Mr. Lavrov said in televised remarks.

Russia’s Natural Resources Ministry has opened a full environmental review of the project, and has given the Shell-led consortium, Sakhalin Energy Investment Co. Ltd., until the end of October to show it can correct a range of alleged environmental violations and save the work from being frozen.

On Wednesday, Mr. Mitvol estimated the environmental damage at $50-billion. Yesterday, he listed instances of illegal logging on pipeline routes worth just $1-million.

The Natural Resources Ministry says Sakhalin Energy is illegally felling trees, and has silted streams and rivers with its pipe-laying work. Officials from the consortium have admitted problems with some contractors laying pipes, but insist they are working within the law.

Observers have suggested the probe is aimed at securing better conditions for state gas monopoly OAO Gazprom, which is negotiating to join the project.

On Wednesday Mr. Lavrov called such allegations “groundless,” while Sakhalin Energy’s chief executive officer Ian Craig said it is “highly unlikely” that work will be interrupted.

Anglo-Dutch Royal Dutch controls 55 per cent of Sakhalin Energy, while Mitsui & Co. Ltd., and Mitsubishi Corp., both of Japan, have 25 and 20 per cent, respectively.

September 29, 2006

YUZHNO-SAKHALINSK – Using oil pipelines within the framework of the Sakhalin-2 project could lead to an environmental disaster, Oleg Mitvol, Deputy Director of Russia’s Federal Service for Environmental Supervision (Rosprirodnadzor), said on Thursday after inspecting the construction of gas and oil pipelines near the Sovetskoye village. He said Rosprirodnadzor would send the results of its examination to the Prosecutor’s Office. He did not elaborate on the nature of the possible damage.

Mitvol said this area was characterized by high seismic activity, and mudslides were possible, which could cause oil spills and contaminate the sea. “It is unclear why the operator did not point to these risks in its technical and economic study. Unfortunately, the predictions of environmentalists came true, and what we see now looks much worse than it was in pictures,” Mitvol stressed.

He said Sakhalin-2 operator Sakhalin Energy had been aware of the problems since February 2006, but it has not reported them to controlling agencies. It was only in June 2006 that Rosprirodnadzor began to receive detailed reports, Mitvol said.

Environmental violations are not punished with license withdrawal, according to Mitvol. “But the operator in fact prevents the inspection. In any other country a company which does not allow inspectors to do their job, will not go unpunished,” he said.

Sakhalin-2 envisages the development of the Lunskoye and Piltun-Astokhskoye fields with total reserves of 600 million tonnes of oil and condensate and 700 billion cubic meters of natural gas. The operator of the project is Sakhalin Energy, in which Shell Sakhalin Holdings B.V. (controlled by Royal Dutch/Shell) has 55 percent, Mitsui Sakhalin Holdings B.V. (founded by Mitsui) has 25 percent, and Diamond Gas Sakhalin B.V. (controlled by Mitsubishi Corporation) has 20 percent.

The second stage of the project was announced in May 2003. Along with the construction of offshore platforms in Aniva Bay (southern Sakhalin), the second phase of Sakhalin-2 includes the construction of an oil terminal and a LNG plant with a capacity of 9.6 million tonnes, estimated at $2 billion.

On 19 September, Russian Natural Resources Minister Yuri Trurnev signed a decree withdrawing the approval of an environmental study on the second phase of Sakhalin-2. To take effect, this document needs to be approved by the Federal Environmental, Engineering and Nuclear Supervision Agency (Rostekhnadzor). The Prosecutor General’s Office insists that the Russian Natural Resources’ decree is in violation of the Russian law.

On 26 September Rosprirodnadzor launched the comprehensive examination of Sakhalin-2, which will continue until 25 October. After that the environmental service will announce its estimate of the environmental damage. The Natural Resources Ministry said it would not allow the implementation of Sakhalin-2 unless Sakhalin Energy ensures environmental safety.

Environmental damage from Sakhalin-2 project could top $50 billion, Mitvol told reporters on Wednesday, commenting on remarks by Sakhalin Energy Vice President Igor Ignatyev who said his company could suffer direct losses of $10 billion if the project was blocked by the Russian authorities.

Source: RBC.