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Posts on ‘October 17th, 2006’

The Australian: Woodside rocked by Pluto veto

Nigel Wilson, Energy writer
Wednesday October 18, 2006

THE North West Shelf joint venturers have rejected a bid by Woodside to process gas from the Pluto reservoir through facilities at the existing gas processing site on Burrup Peninsula.

Woodside is a one-sixth partner in the export LNG phase of the Shelf project – Australia’s biggest resources development. It is also the project operator.

Its concept was to have the Burrup site, which involves investment of $20 billion, declared an open access facility and to fund a sixth gas-processing train. This would have let Pluto gas be processed along with gas from existing NW Shelf reservoirs.

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Agence France Presse: Russia moves to ease energy giants’ concerns by Nick Coleman

17 October 2006

Russia moved to ease concern among energy majors, pledging to abide by all contractual obligations with foreign firms and dismissing fears that Moscow might renege on earlier promises.

Energy and Industry Minister Viktor Khristenko vowed specifically that Russian state-controlled companies would abide by the terms of three key energy production sharing agreements (PSAs) and expected foreign investors to do the same.

“We approach these agreements as the existing obligations of Russia and the existing obligations of investors,” he said. “Everything contained in these agreements is for us the obligations we have to fulfil, just as the investors have to.”

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RIA Novosti: Wrap: Russian authorities relax pressure on Shell over Sakhalin II

22:33 | 17/ 10/ 2006 

MOSCOW, October 17 (RIA Novosti) – Pressure on oil major Royal Dutch Shell over a vast oil and gas project in Russia’s Far East, which has come under attack over environmental destruction allegations, seemed to lift Tuesday.

Energy Minister Viktor Khristenko said the project’s 1994 production sharing agreement would remain unchanged, while a Moscow district court refused to consider a lawsuit by the environmental watchdog to enforce the Natural Resources’ Ministry’s annulment of a key permit for the project.

read more Russia’s New Environmentalist? The Kremlin


(copyright The New York Times)

October 17, 2006 11:45 AM – Alex Pasternack, Beijing, China

As if taking a cue from its green-wannabe neighbor, the Russian government has lately started to use its strong-arm tactics to protect the environment. In the most visible case, the Kremlin is parroting concerns that local environmentalists have made for years about two offshore oil projects around near-pristine Sakhalin Island, along the Siberian coast. While the government’s real motives in blocking Exxon Mobil’s and Shell’s projects probably have more to do with recovering billions of dollars than with recovering precious forest and water life potentially damaged by the world’s largest oil and gas field, the Kremlin’s effort may do much to protect the region in the future, even though drilling will happen one way or another. It sounds like the deputy director of the state’s environmental watchdog agency is learning a lot about oil drilling. ‘“We signed a deal with the company to drill for oil and gas… Cutting trees in a nature preserve is something else, excuse me.”’

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Friends of the Earth (London): Africa: Shell’s Neighbors Expose Hypocrisy of Wildlife Prize

October 17, 2006
Posted to the web October 17, 2006

Communities living next door to the oil giant Shell are in London this week to expose the oil giant’s hypocrisy in sponsoring the Wildlife Photographer of the Year competition – to be announced on Wednesday 18 October.

Shell is the new sponsor of this year’s prestigious wildlife prize, which is jointly organised by the Natural History Museum and BBC Wildlife Magazine, contributing 750,000 GBP or 1,117,000 Euros.

But Shell’s neighbours have branded the oil giant a “wildlife destroyer” and say that Shell is trying to hide the damage it does to wildlife and the environment behind the prestigious wildlife prize.

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RIA Novosti: Sakhalin II changes depend on corporate interests – minister

21:10 | 17/ 10/ 2006 

MOSCOW, October 17 (RIA Novosti) – Changes in the composition of the participants in the controversial Sakhalin II oil and gas project in Russia’s Far East are dictated purely by corporate interests, Russia’s industry and energy minister said Tuesday.

Oil major Royal Dutch Shell, which is leading the vast hydrocarbon project, said earlier that negotiations with Gazprom on the Russian energy giant’s participation in the project were going well.

The negotiations follow the Natural Resources Ministry’s move to annul a key permit for the project in September, which leading environmental groups had been campaigning against for years over large-scale destruction to the island’s ecology.

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RIA Novosti: Prosecutors summon head of Sakhalin environmental service


19:14 | 17/ 10/ 2006 

MOSCOW, October 17 (RIA Novosti) – The Sakhalin prosecutor’s office for environmental protection has summoned the acting head of the local environmental agency for questioning, the Russian Natural Resources Ministry said Tuesday.

Dmitry Belanovich “has been ordered to attend the prosecutor’s office on October 18, with a full list of people involved in inspecting the observation of environmental protection legislation on Sakhalin,” the ministry said.

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RIA Novosti: Court refuses to review lawsuit on Sakhalin II probe

15:36 | 17/ 10/ 2006 

MOSCOW, October 17 (RIA Novosti) – A Moscow district court refused to consider Tuesday a lawsuit filed by Russia’s environmental watchdog against the Natural Resources Ministry to enforce the annulment of a 2003 environmental review for the massive Sakhalin II oil and gas project in Russia’s Far East.

The project, led by Anglo-Dutch oil major Shell, has met with strong opposition from environmental groups and authorities over accusations of inadequate safety, massive volumes of waste disposal, seismic threats, erosion, and threats to marine life.

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International Herald Tribune: Shell says talks with Gazprom over troubled Far East energy project going well

The Associated Press
Published: October 17, 2006
MOSCOW Royal Dutch Shell PLC said Tuesday that negotiations with Russia’s natural gas monopoly over its participation in a troubled US$20 billion (€15.9 billion) energy project on the Pacific island of Sakahlin were progressing well, Russian news agencies reported.
Meanwhile, Russia’s industry minister signaled that Moscow would respect the terms of a series of controversial deals that were signed with major Western energy companies — including Shell — in the 1990s.
Viktor Khristenko’s comments appeared to indicate that the government was willing to negotiate with Western companies amid probes by Russian environmental regulators into Western-led energy projects.
Russian regulators last month froze a key environmental permit for the Shell-led Sakhalin-2 project. Analysts suggested this was aimed at pressuring Shell to offer OAO Gazprom better terms as it jostles to join what will be the world’s biggest liquefied natural gas development.
Negotiations between the two energy companies are “going well,” the head of Shell’s Russian operations, Chris Finlayson, was quoted by Interfax as saying.
The freeze provoked alarm in Western capitals that the Kremlin was using strong-arm tactics to secure a strong role in Russian energy projects controlled by multinational oil companies and worried Asian countries such as Japan and South Korea which are to be major customers for the gas.
Talks over the original deal in which Gazprom was to swap a stake in a giant gas field for a share in Sakhalin-2 have been complicated by Shell’s announcement last year that the cost of the complex development would more than double to over US$20 billion (€16 billion).
A Gazprom spokesman declined to comment.
In September the monopoly said that talks had been frozen for a year over the cost increase, which had complicated the terms of the asset swap.
Finlayson also said that the company had resolved nearly all of the ecological violations at Sakhalin-2 so far presented by environmental officials. He said he was looking forward to a meeting slated for next week with Natural Resources Minister Yury Trutnev, who is to visit the island.
“We want to show what progress we have made,” he was quoted as saying.
However, Shell spokesman Maxim Shub told The Associated Press that an ongoing audit of environmental watchdog Rosprirodnadzor could yield further claims of violations.
Sakhalin-2 is one of a handful of major field developments signed in the 1990s by BP PLC, Exxon Mobil Corp., and Total SA to have come under closer environmental scrutiny in recent months. Analysts have linked the scrutiny to a drive by the Kremlin to increase state control of the energy sector.
The deals — called production sharing agreements — handed control of difficult energy projects to foreigners as a way to get them going at a time when Russian lacked the money to get them under way independently. Foreign companies were allowed to recoup their costs before the state took a share of the profits.
Russian officials, however, now criticize the terms of those deals as being unfair.
Khristenko criticized the PSAs as they were negotiated in the 1990s.
“Today I would have never signed the agreements in that form,” he told reporters at a news conference in Moscow.
Khristenko also said that if the costs in Sakhalin-2 were indeed going to double, then an agreement that would protect Russia’s economic interests should be negotiated.
The natural resources ministry also has been reviewing the licenses of Russian companies, including the nation’s No. 1 producer Lukoil. However, some observers have suggested that those checks are aimed at shaking off charges of bias over the audits of foreign-led projects.
Meanwhile, a Moscow court on Tuesday refused to hear a suit filed by Rosprirodnadzor that aimed to annul the key environmental permit at the project, in an apparent victory for Shell.
Last month, the ministry froze the permit but it has allowed construction work to continue at Sakhalin-2. 

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Reuters: UPDATE 1-Shell awaits more Sakhalin environment claims

Tue Oct 17, 2006 10:15am ET

By Tanya Mosolova

MOSCOW, Oct 17 (Reuters) – Royal Dutch Shell (RDSa.L: Quote, Profile, Research) said on Tuesday that Russian officials may hit its $20 billion Sakhalin-2 oil and gas project with a slew of new environmental claims just as it resolves a list of existing complaints.

Chris Finlayson, head of Shell in Russia, said the company had dealt with 97 percent of the alleged breaches found by an environmental audit conducted in mid-September and hoped to have resolved all of them by the end of the week.

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RIA Novosti: Shell aims to save its Sakhalin II project during minister visit

15:27 | 17/ 10/ 2006 

MOSCOW, October 17 (RIA Novosti) – Oil major Royal Dutch Shell, which is leading the vast Sakhalin II oil and gas project in Russia’s Far East, said Tuesday it will demonstrate to Russian authorities during a minister’s visit to the region next week that it has tackled the environmental infringements of which it is accused.

The Sakhalin II project, being implemented under a production-sharing agreement dating back to 1994, has faced accusations of inadequate safety, massive volumes of waste disposal, seismic threats, erosion, and threats to marine life.

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New York Times: Russia Threatening to Revoke Lukoil Licenses

Published: October 17, 2006

MOSCOW, Oct. 16 — In a sign of continuing turmoil in the Russian oil industry, the government threatened on Monday to revoke oil field licenses held by the country’s largest private energy concern, Lukoil.

The action affected 19 of 406 licenses owned by Lukoil, a company that is 20 percent owned by ConocoPhillips of the United States. Lukoil said in a statement that it expected to resolve the complaints soon, and analysts agreed that was likely.

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Daily Telegraph: Russia says ‘about-turn’ by Shell brings Sakhalin deal closer

By Russell Hotten (Filed: 17/10/2006)

Royal Dutch Shell and the Russian government appear closer to resolving environmental issues that have held up the massive Sakhalin-2 oil and gas project. The news comes amid speculation that an agreement over the environmental problems will be followed soon by the state-controlled energy company, Gazprom, taking a stake in the $20bn (£11bn) project.

Shell’s chief executive Jeroen van der Veer said yesterday that the ecological issues had been “fully addressed”, while Russia’s resources minister Yuri Trutnev made conciliatory noises.

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Irish Independent: Protesters unreasonable, says minister

Published: Oct 17, 2006

SOME of the protesters opposing the Shell gas terminal and pipeline in Mayo made the likes of Gerry Adams and Ian Paisley look like very reasonable men, a minister insisted yesterday, writes Brian McDonald.

The protesters who want Shell to process gas from the Corrib Field at sea had not moved an inch from their position and would probably still find something to protest at, even if the oil giant moved its operation out to sea, Noel Dempsey declared.

But in a response to Mr Dempseys comments, the Shell to Sea organisation said it was shocking he should still see fit to belittle and patronise people who had genuine concerns.

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The Scotsman: Shell faces environmental battle over Sakhalin-2

By: Martin Flanagan City Editor, The Scotsman – United Kingdom
Published: Oct 17, 2006

RUSSIA threatened the oil giant Shell with “absolutely any sanctions” as the row about alleged environmental violations at its Sakhalin-2 project rumbled on yesterday.

The hardening of the Russian stance came as Shell chief executive Jeroen van der Veer said all the problems had been fully addressed.

Yuri Trutnev, Russia’s resources minister, said the British/Dutch oil major had no reason to fear for the future of the vast oil and gas project if it tackled the many environmental concerns raised by the country’s officials.

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Irish Independent: Shell ‘offered to pay 15,000’ for support

Published: Oct 17, 2006

Oil giant rejects cash claim by ex-Army officer

A FORMER army officer yesterday claimed Shell offered him 15,000 in return for his support for the construction of the controversial Corrib Gas pipeline and terminal.

Ciaran O Murchu, who heads up the Colaiste Uisce Adventure Centre in Elly Bay, said he had been assured by Shell company officials that nobody would know the money had come from Shell if he agreed to take it. Mr O Murchu turned down the offer.

Shell E and P Ireland said in response to Mr O Murchu’s claims that at no point was such an offer made as it was against their business principles.

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Reuters: Russia govt seeks prosecutors’ help in oil disputes

Tue Oct 17, 2006 6:24am ET

MOSCOW, Oct 17 (Reuters) – Russia’s resources ministry will meet state prosecutors next month to discuss joint action in its campaign against ecological violations by international oil majors, it said on Tuesday.

The General Prosecutor’s Office has become one of the most feared institutions among Russia’s investment community since the demise of private oil company YUKOS (YUKO.MM: Quote, Profile, Research), in which prosecutors played a key role.

Oil majors such as Royal Dutch Shell (RDSa.L: Quote, Profile, Research) and Exxon Mobil (XOM.N: Quote, Profile, Research) have come under pressure from the ministry in recent months over ecological and technical violations.

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Reuters: Shell confident Sakhalin problems solved in a week

Tue Oct 17, 2006 5:36am ET
MOSCOW, Oct 17 (Reuters) – Royal Dutch Shell (RDSa.L: Quote, Profile, Research) said on Tuesday it was confident of resolving all the environmental issues around its huge Russian Sakhalin-2 project within a week.

Chris Finlayson, head of Shell in Russia, said the firm had already dealt with 97 percent of claimed breaches of environmental rules and would have resolved 100 percent of the issues by Oct. 24, the date of an inspection by Russian Natural Resource Minister Yuri Trutnev.

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Financial Post – Canada: Russia probes oil firms: Government crackdown on big producers widens

Published: Oct 17, 2006

OAO Lukoil and OAO Rosneft, Russia’s largest oil companies, are being investigated by the Natural Resources Ministry, and state-controlled OAO Gazprom and others may follow, as the government extends a crackdown on oil producers.

Lukoil may lose some licences for failure to develop fields, Oleg Mitvol, the deputy head of the Natural Resource Ministry’s environmental inspectorate, said yesterday in Moscow.

Mr. Mitvol has led efforts to cancel a key permit for Royal Dutch Shell PLC’s US$22-billion Sakhalin-2 venture on environmental grounds.

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The Moscow Times: LUKoil License Probe Expands

Tuesday, October 17, 2006. Issue 3520. Page 5.

The Natural Resources Ministry has asked the Federal Tax Service to provide information on 398 licenses held by LUKoil, the ministry said Monday.

The request followed the ministry’s threat to withdraw 19 of the company’s licenses to develop oil fields in northern Russia due to violation of licensing agreements.

“We have requested the information on how LUKoil paid subsoil use and mineral resource taxes on these licenses,” ministry spokesman Nikolai Gudkov said. “The logic is, if the taxes are not paid or delayed, it means that there are problems with fulfilling licensing agreements.”

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The Moscow Times: Foreign Investors Press State for Clarity

Russian Minister Trutnev

(Vladimir Filonov / MT
Trutnev, pictured at the conference on Monday, appeared dissatisfied with Shell’s clean-up efforts in Sakhalin-2. )

Tuesday, October 17, 2006. Issue 3520. Page 1.

By Miriam Elder
Staff Writer  
Foreign executives appealed to Prime Minister Mikhail Fradkov and senior economic officials for clarity and transparency Monday amid a major review of many of the country’s largest foreign investment projects.

They warned that corruption, administrative barriers, entangled bureaucracy and selective application of the law were casting a shadow over the country’s strong economy and scaring away potential investors.

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The Guardian: Shell’s environmental efforts fail to quell Russian threat

Terry Macalister
Tuesday October 17, 2006

The Russian government tightened the pressure on Shell over the Sakhalin-2 gas project by warning that failure to sort out environmental problems would lead to “absolutely any sanctions”.

The tough stance from the resources minister, Yuri Trutnev, came even though Shell’s chief executive, Jeroen van der Veer, said his company had already sorted out the bulk of the problems.

The Sakhalin-2 scheme, the world’s biggest liquefied natural gas project, has been dogged by ecological difficulties and soaring financial costs.

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Itar-Tass: Court to consider watchdog’s appeal over Sakhalin-2 project

17.10.2006, 03.12
MOSCOW, October 17 (Itar-Tass) – Moscow’s Presnensky court on Tuesday will consider the action filed by the Rosprirodnadzor Federal Service for Supervision of Natural Resources against the Ministry of Natural Resources, demanding overturning of the Ministry’s instruction to endorse the feasibility study of the complex development of the Piltun-Astokhskoye and Lunskoye licensed areas /2nd phase of the Sakhalin-2 project; operator is Sakhalin Energy/.

The action was filed because of the operator’s failure to meet a number of recommendations stated in a concluding report by the state environmental expert examination, as well as numerous deviations from the Sakhalin-2 feasibility study.

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The Guardian: Friends of the Earth vs Shell

Bibi van der Zee
Tuesday October 17, 2006

Campaign of the week

The Shell sponsorship of the Wildlife Photographer of the Year award – hosted by BBC Wildlife and the Natural History Museum (and handed out tomorrow night) – is causing a bit of a headache. According to Friends of the Earth, as one of the world’s major oil companies, Shell is a “wildlife destroyer” and “has played a significant part in contributing … to climate change. Shell’s sponsorship of the award completely undermines its value.”

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The Guardian: Shell’s charity rebuked by watchdog over Benn meeting (*more scandal relating to Shell Sakhalin)

· Foundation was out of line, says commission
· Independence ‘must be clearly demonstrated’

Rob Evans and Terry Macalister
Tuesday October 17, 2006

Shell’s efforts to improve its image as a socially responsible company have suffered a major blow after the charity it set up was rapped over the knuckles by the official watchdog.

The criticism from the Charity Commission came after the Guardian revealed that the charity, the Shell Foundation, jointly lobbied a cabinet minister with the head of the multinational’s UK commercial operations.

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MarketWatch: Shell manager warned of Sakhalin faults in e-mails

Last Update: 9:40 PM ET Oct 16, 2006
(This article was originally published Monday.)

LONDON (MarketWatch) — A Royal Dutch Shell (RDSB.LN) manager sent e-mails in 2002 expressing concern that the designs for oil and gas wells on Russia’s Sakhalin Island didn’t properly address seismic risks.

The e-mails from Hans Bouman, a natural-gas field manager, to Engel Van Spronsen, then Sakhalin Energy’s technical director, raise the possibility that the company’s risks at the Sakhalin II project go beyond the river bank erosion now under Russian government scrutiny.

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