October 10th, 2006:

THE WALL STREET JOURNAL ONLINE
October 9, 2006 8:14 p.m.

After rising more than a dollar in early trading, crude futures finished up 20 cents at $59.96 a barrel on the New York Mercantile Exchange. Reports that OPEC members agreed to cut output by one million barrels a day, and that North Korea completed a nuclear test, propped up prices. Here is Monday’s roundup of oil and energy news.

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GAUGING OPEC: The Organization of Petroleum Exporting Countries, looking to stem the erosion in the price of crude oil, has been urged to apply its anticipated 1 million barrel-a-day cut to real production, rather than its theoretical ceiling, Reuters reported. OPEC’s president, Edmund Daukoru, who is also Nigeria’s oil minister, wants responses by Oct. 10 to his plan to make the cut from group output. OPEC is concerned prices could go into freefall if members keep pumping at will. read more

By GREGORY WHITE
October 9, 2006

YUZHNO-SAKHALINSK, Russia — Exxon Mobil Corp.’s $12.8 billion Sakhalin-1 project in Russia’s Far East could fall short of planned output targets because of a recent government decision refusing to expand the project’s permit to develop a key oilfield, an executive at OAO Rosneft, the Russian state oil company that is a 20% partner in the project, said Monday.

The news comes amid growing pressure from the government on high-profile foreign-led energy projects on Sakhalin, alarming investors in what is widely viewed as part of an effort to win more favorable terms in the deals for Russia. read more

Published: Oct 10, 2006

SHELL Exploration Company has offered India’s state-owned Oil ‘ Natural Gas Corp a profit-sharing business model for productivity improvements in their exploration and production activities joint venture, writes Shirish Nadkarni in Mumbai.

ONGC is understood to be considering the Shell subsidiary’s proposal, based on a framework outlined by the energy major. The two companies have been holding high-level discussions on the issue.

It would appear that ONGC was not open to going beyond government prescribed norms on making joint investments and yielding operatorship of fields. read more

By: Auk and Fulmar assets sold by Shell and ExxonMobil as being no longer part of their core activities, writes Martyn Wingrove, Lloyds List: Published: Oct 10, 2006

TALISMAN Energy is expecting to increase reserves and oil production from the Auk and Fulmar fields after acquiring the assets from Shell and ExxonMobil.

The Canadian group hopes to start operating the two mature production platforms before the end of this year after signing a sales agreement with subsidiaries Shell UK and Esso Exploration and Production. read more

Published: Oct 10, 2006

ABILITY Group has launched a NKr79m ($12m) joint industry project with BP and Shell to test riserless drilling systems in deepwaters, writes Martyn Wingrove.

The company intends to perform a test on its latest riserless mud recovery system in water depths of up to 1,500 m on a BP or Shell well next year.

The technology, developed by subsidiary AGR Subsea, has already been proved to work in other petroleum provinces including the North Sea, off Sakhalin Island and in the Barents Sea. read more

(Murmansk is Russia’s only western all-year ice-free port)

There is a general perception that increasingly politics are driving these big energy deals

By Jorn Madslien
Business reporter, BBC News, Murmansk  

Just hours after the Arctic city of Murmansk celebrated its 90th birthday with a giant fireworks display in the town’s main square, its patriotic people have again good cause to fly the Russian flag.

The Russian energy giant Gazprom has said it will construct the world’s largest offshore gas field, Shtokman, on its own, thus dealing a huge blow to some of the world’s largest oil and gas companies, which had hoped to be parts of a consortium. read more

By: Tom Shiel,
Published: Oct 10, 2006

Protesters trying to prevent workers employed by Shell contractors from getting on to the 400-acre site of the proposed Corrib gas terminal in north Mayo staged a flying picket on a road a mile away.

Instead of picketing the main entrance to the site at Bellanaboy shortly after dawn yesterday, the protesters chose a location on the Bangor Erris to Bellanaboy road to stage a sit-down demonstration.

Some 100 demonstrators sat down on the road for about three hours from daybreak. read more

By Sheila McNulty
Published: October 10 2006 03:00 | Last updated: October 10 2006 03:00

One hundred and forty miles out into the Gulf of Mexico, the most high-tech drill ship in the world is drilling a well 4,300ft below the water.

The process is risky, expensive and time-consuming. It takes about 80 days and requires about 350 people to work at least 12-hour days in two-week shifts, monitoring the drilling of a well that reaches 19,000ft below the ocean floor.

The equipment being pushed down into the ocean from Transocean’s Discoverer Deep Seas ship must pass through a canopy of salt, and even the latest seismic technology cannot clearly reveal what is underneath. read more

By Neil Buckley in Moscow and Carola Hoyos in London
Published: October 10 2006 03:00 | Last updated: October 10 2006 03:00

Gazprom said yesterday it would develop Russia’s massive Shtokman natural gas field alone – and switch eventual output from the US to Europe – dashing the hopes of foreign companies vying for stakes in the $20bn project.

Alexei Miller, chief executive, told Russian television the monopoly had decided against offering 49 per cent of Shtokman to five short-listed international groups because they had been unable to offer suitable assets in exchange. read more

By ANDREW E. KRAMER
Published: October 10, 2006

MOSCOW, Oct. 9 — Gazprom, Russia’s natural gas monopoly, abruptly broke off talks Monday with five international companies bidding for a stake in an offshore field in Russia, canceling the largest energy deal involving foreigners expected here this year.

Gazprom’s chief executive, Aleksei B. Miller, said his company would wrest natural gas from the challenging field without foreign help — though energy analysts were skeptical — and retain full ownership of a gas deposit that is one of the world’s largest untapped sources of energy. read more