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Posts on ‘October 24th, 2006’

Daily Telegraph: Browne predicts wave of mergers in oil industry

Lord Browne
(BP chief executive, Lord Browne: ‘There are an awful lot of players and I guess the sector will change shape’)

By Russell Hotten, Industry Editor
25 October 2006

Lord Browne, the chief executive of BP, predicted a wave of consolidation in the oil and gas industry as falling prices led companies to re-assess the finances of their exploration and development activities.
 
Speaking as he unveiled a small rise in the company’s third-quarter net profits, Lord Browne said oil prices would continue downward. “A lot of supply is coming on to the market. We are not suggesting a crash, but more of a moderation.”

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The Moscow Times: ‘The scandal surrounding Sakhalin’

Headline: Rendering Sharing Agreements Unproductive

Wednesday, October 25, 2006. Issue 3526. Page 9.
By Mikhail Subbotin

At a news conference last week, Industry and Energy Minister Viktor Khristenko said there were no grounds for annulling existing production sharing agreements, or PSAs, in Russia. But apart from earlier ecological concerns, a rise in the projected cost of developing the Sakhalin-2 project to $1.6 billion is also causing problems.

The scandal surrounding Sakhalin once again demonstrates not only the government’s lack of understanding when it comes to the idea of the inviolability of contracts, but in the area of direct investment in resource development in general.

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The Times: The right moment for a buyout

October 24, 2006
By Carl Motishead
 
IT IS a big play on dear oil, but Shell chose its moment well, offering to buy out the Canadian minority investors just after the Shell Canada share price had slumped by more than a quarter in value.

This is a company that rode high on the oil sands hysteria, its share price soaring to C$47 in January, only to tumble to $29. 
 
Canadian investors have been dumping oil sands stocks, scared by the potential squeeze from escalating costs and the falling oil price.

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Irish Independent: Coming home to roost at Bellanaboy

Published: Oct 24, 2006

I note that you seem to proffer some praise to Dr Jerry Cowley TD for his efforts in trying to clear a way for workers to get on to the Bellanaboy Gas Terminal (Irish Independent, October 21). Tribute was paid to the same deputy by a senior Garda officer in the area. I also noted that Dr Cowley was heckled by some of the imports into the place. Now, having watched the situation for some time, I am wary of people who have helped bring about a situation and perhaps created a Frankenstein monster trying to control a situation when it gets out of hand. Chickens do come home to roost. Dr Cowley also calls on the Government for “talks”. I would remind him that Peter Cassells, one of our foremost negotiators tried his best in this dispute and came up against a stone wall. The Garda operation, however expensive must continue, and the Government cannot yield. BRENDAN CAFFERTY, BALLINA, CO MAYO

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Irish Times: Corrib protesters want ‘all options’ discussed

By: Lorna Siggins, Marine Correspondent, Irish Times
Published: Oct 24, 2006

The Shell to Sea campaign has said it has always been willing to enter into discussions with Shell E&P Ireland on the Corrib gas project if such discussions include all options for the project.

Campaign spokesman Dr Mark Garavan was responding to last weekend’s appeal by Shell E&P Ireland’s deputy managing director Terry Nolan for dialogue, after three weeks of protests near the Corrib gas terminal site in Bellanaboy, Co Mayo.

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Financial Post (Canada): Investors snub $40 offer from Shell: Shell Canada minority: ‘They are very clearly being opportunistic’

Published: Oct 24, 2006

CALGARY – Minority shareholders of Shell Canada Ltd. have given a thumbs down to Royal Dutch Shell PLC’s offer yesterday to pay $7.7-billion in cash for the remaining piece of its Canadian unit.

“I don’t think $40 is going to be the number,” said Len Racioppo, president of Jarislowsky Fraser Ltd., which owns 29.5 million shares, or about 17% of the minority stake.

“They are very clearly being opportunistic,” he said, noting the offer comes at a time of low natural gas prices and after Shell Canada announced high costs for a large oilsands expansion this summer that contributed to a sector-wide correction in share prices.

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AFX Europe (Focus): Northern Petroleum and ExxonMobil Shell unit start drilling at Dutch well

Published: Oct 24, 2006

LONDON (AFX) – Northern Petroleum PLC said drilling at its first Netherlands-based exploration well, Steenwijk, in partnership with the joint Shell and ExxonMobil unit Nederlandse Aardolie Maatschappij B.V., began on October 22, ahead of schedule.

[email protected] gp COPYRIGHT Copyright AFX News Limited 2006. All rights reserved.

BBC Monitoring Service: Nigerian environment activist group supports new UN assessment of oil spills

BBC Monitoring Service – United Kingdom
Published: Oct 24, 2006

Text of report by Kelvin Ebiri entitled “MOSOP welcomes fresh UN assessment of oil spills” published by Nigerian newspaper The Guardian website on 24 October

The Movement for the Survival of the Ogoni People (MOSOP) says it would support any environmental clean up within the framework of subsisting recommendations of both the United Nations (UN) Secretary General’s Fact Finding Team to Ogoni and the UN Special Rapporteur on human rights in Nigeria.

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London Evening Standard: Shell at key stage over Sakhalin future

By: Bill Condie, Evening Standard – London: KRTBN
Published: Oct 24, 2006

As BP today unveiled its problems, its great rival Shell was preparing for a crunch meeting with Russia’s Minister for Natural Resources.

Yuri Trutnev will tomorrow fly the length of the Sakhalin project pipeline which is at the centre of threats to the viability of Royal Dutch Shell’s massive gas project in Russia’s far east.

Sakhalin 2 has been delayed after licences were revoked on charges that environmental rules were being disregarded. But sceptics say those claims are trumped up as part of a bid by Moscow to grab a greater share of the project for Russia’s gas giant Gazprom.

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Daily Mail (London): Shell moves to control costs in Canada buyout: BP Shell mega merger?

Published: Oct 24, 2006

Royal Dutch Shell is taking control of its Canadian venture as it tries to stem massive budget overruns. The firm, which has been plagued by spiralling costs across the world, will spend GBP3.6bn of its acquisitions war chest buying out its Canadian minority shareholders.

Shell, which already owns 78pc of Shell Canada, is offering C$40 (GBP18.95) a share for the rest, 22pc more than last week’s closing price.

The move underlines the growing importance to Shell (down 3p at 1763p) of the oil sands in Alberta in Canada, which could contain the world’s biggest source of recoverable oil after Saudi Arabia.

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Daily Mail (London): BP Shell supermerger?

By: Alex Brummer, Daily Mail – London: KRTBN
Published: Oct 24, 2006

The oil price has slipped back below $60 a barrel despite the OPEC decision to cut back production. But this is proving no disincentive to the big oil players as they scramble to find new reserves.

Rather than explore themselves it is sometimes easier to let others deal with the searching and political risk and pick up assets through the stock market.

Shell, which is struggling in Russia’s Sakhalin field against surging costs and an increasingly mercurial Putin government, is opting for the calm of the Canadian wilderness for its latest investment. It is offering to buy up the 22pc minority in Shell Canada for GBP18.95 per share, or GBP3.6bn.

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London Evening Standard: City Spy column

Published: Oct 24, 2006

SHELL’S DECISION to increase its exposure to Canada’s oil-sands deposits is unlikely to meet with the approval of those who have long been critical of the oil giant’s environmental record.

As well as strip-mining the deposits, extracting crude from the oil shale is so energy-intensive that natural-gas-powered refineries have traditionally been needed as part of the process. However, the price of gas is also rising, so the latest plan somewhat incredibly envisages building nuclear power plants in the Alberta wilderness to provide the power to help extract the oil.

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AP Worldstream: Russian minister: Total-controlled oil field in Russia has ‘violations many times over’

By: ALEX NICHOLSON,
Published: Oct 24, 2006

An Arctic oil field being developed by France’s Total SA has “violations many times over,” Russia’s natural resources minister said Tuesday.

But Yuri Trutnev, speaking after a conference of prosecutors’ agencies and environmental regulators, also signaled that Total was in no danger, at least not immediately, of losing licenses to develop the Kharyaga field in the Nenets region.

“Significant violations have come to light there, in particular connected with geological surveys, drilling and extracting. All these violations are violations many times over,” Trutnev told reporters in the Siberian oil town of Nefteyugansk.

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AFX Europe (Focus): Russia gives oil companies six months to shape up

Published: Oct 24, 2006

MOSCOW (AFX) – Russia’s natural resources ministry has given oil companies working in Russia six months to update plans for their projects amid a crackdown on foreign and domestic energy companies for alleged environmental violations, news agencies reported today.

“I want to ask companies to promptly make changes to their license agreements … voluntarily introducing terms on the length of time and rules for extraction” for their project licenses, ITAR-TASS quoted Minister of Natural Resources Yury Trutnev as saying.

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The Independent: BP in spotlight over leaked Kremlin energy documents

By Andrew Osborn in Moscow
Published: 24 October 2006

Russia has opened a criminal investigation into several government officials it believes leaked state secrets concerning the energy sector to Anglo-Russian oil giant TNK-BP.

The incident has generated adverse publicity for the company at a time when foreign oil and gas firms are under pressure to cut state-controlled entities into their extraction projects. TNK-BP, a 50-50 joint venture between BP and a Russian oil firm controlled by a group of oligarchs, is putting a brave face on the dispute.

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Mainichi Daily News: Japan, Netherlands confirm cooperation on Sakhalin II

Japan and the Netherlands agreed Tuesday to cooperate closely in efforts to ensure the smooth progress of the Sakhalin II gas and oil project.

Japanese Minister of Economy, Trade and Industry Akira Amari reached the agreement at a meeting with visiting Dutch Economy Minister Joop Wijn.

Specifically, the two countries will urge the project’s participants to address the environmental issues caused by the project in line with Russia’s requests.

Japan and the Netherlands will also urge Russia to fulfill its obligations as a modern state, including compliance with contracts on the project.

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RIA Novosti: stake in Sakhalin II project

14:22 | 24/ 10/ 2006 

ST. PETERSBURG, October 24 (RIA Novosti) – Shell does not intend to sell its stake in Sakhalin Energy, the operator of the Sakhalin II oil and gas project in Russia’s Far East, the head of Shell Russia said Tuesday.

The Anglo-Dutch oil major has come under attack from Russian authorities over environmental violations on the country’s largest island.

Christopher Finlayson said there were no changes in the timeframe for implementing the Sakhalin II project, and that the first delivery of liquefied natural gas was expected in the summer of 2008.

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Financial Times: Shell offers to buy up rest of Canadian oilsands unit

By Ed Crooks: Published: October 24 2006 03:00 | Last updated: October 24 2006 03:00

Royal Dutch Shell has delivered a vote of confidence in the potential of Canada’s oilsands by offering to buy out the 22 per cent of its Shell Canada subsidiary that it does not already own at a price 22 per cent higher than lastFriday’s close.

Shell said the purpose of the C$7.7bn (£3.6bn) offer was to continue simplification of its structure that began with last year’s company unification.

Jeroen van der Veer, chief executive, said the deal was an opportunity to integrate Shell Canada fully with its parent company’s strategy and operations.

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Financial Times: Premier ‘in talks’ with unnamed bidder

By Rebecca Bream and Mark Odell: Published: October 24 2006 03:00 | Last updated: October 24 2006 03:00

Premier Oil is in takeover talks with an unnamed bidder, following months of speculation about the future of the UK oil group.

Shares in Premier Oil rose 98p, or 8 per cent, to £13.03p, valuing the company at about £1bn.

The stock has risen strongly, from under £10 a share two months ago, on rumours suggesting that oil majors including Royal Dutch Shell and Pemex of Mexico wanted to buy Premier. However, last month Premier chief executive Simon Lockett denied having received an offer from Shell.

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Financial Times: Alberta oilsands lose none of their allure

By Bernard Simon in Toronto and Ed Crooks in London

Published: October 24 2006 03:00 | Last updated: October 24 2006 03:00

The potential of Canadian oilsands has been challenged in recent months, but this has not damped Royal Dutch Shell’s enthusiasm.

Yesterday it announced plans to spend £3.6bn taking full control of Shell Canada, which has substantial oilsands operations.

“We think that unlocking Canada’s resources requires the large industrial and financial scale of a company like Royal Dutch Shell,” said Jeroen van der Veer, chief executive.

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Financial Times: GREENPEACE USED BRENT SPAR AS SYMBOL OF DUMPING PROBLEM

By Ed Crooks: Published: October 24 2006 03:00 | Last updated: October 24 2006 03:00

The decommissioning of North Sea installations first emerged as a public issue in 1995, with the row over the disposal of Brent Spar, writes Ed Crooks.

It was a huge oil storage and loading buoy, brought into use in 1976 before the Brent field was connected to pipelines. It went out of service in 1991, and Shell, its owner, spent two years consulting on what should be done with it.

Sinking it deep in the North Sea was judged the cheapest and safest solution, with “minimal environmental impact”, Shell said. This was a view backed by an Aberdeen university study and then approved by the government at the end of 1994.

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Financial Times: Smaller oil companies step in to grab slice of North Sea’s declining energy resources

By Ed Crooks
Published: October 24 2006 03:00 | Last updated: October 24 2006 03:00

Next month a new oilfield will come on stream in the North Sea to boost the region’s output. Buzzard, operated by Nexen, a Canadian company, is expected to produce 210,000 barrels of oil a day, helping to make next year the first year of rising UK oil and gas output since 1999.

There is no denying that the best days of the North Sea are behind it. In June the UK’s output was at its lowest since 1978.

However, that does not imply a dearth of oil and gas to be extracted.

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Financial Times: Lex column: Shell

Published: October 24 2006 03:00 | Last updated: October 24 2006 03:00

Gently does it. Since its reserves scandal in 2004, the rumour mill has linked Royal Dutch Shell with big, bold deals involving everyone from supermajor BP to minnow Premier Oil.

In contrast, its C$7.7bn offer to buy out the minorities in Shell Canada is unlikely to have either hedge funds or Shell’s own shareholders jumping up and down. For a company still rebuilding credibility, that is no bad thing. Shell is committed to developing oil sands, the heavy source of crude that makes up half of Shell Canada’s production. Given the complexity and costs involved in these projects, it makes sense to streamline operations.

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The Salt Lake Tribune: Shell looking to revive oil shale industry Energy

Company is exploring new technology for extracting in the Uinta Basin

By Robert Gehrke
Article Last Updated:10/23/2006 11:25:53 PM MDT

WASHINGTON – The president of Shell Oil Co. said Monday the company is hopeful that oil shale, plentiful in Rocky Mountain states, could be one component of America’s future energy security.

“Conventional oil and gas, the easy stuff, as we call it in the industry, is running out,” said company president John Hofmeister. “What will be enough to provide energy security in this country? Well, we can start by developing the oil shale of Colorado.”

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The Wall Street Journal: Oil News Roundup: October 23, 2006 5:27 p.m.

THE WALL STREET JOURNAL ONLINE
October 23, 2006 5:27 p.m.

Crude-oil futures tumbled again, settling at less than $59 a barrel on the New York Mercantile Exchange, as doubts grew about OPEC’s ability to keep supplies low enough to support prices of $60 or more. Here is Monday’s roundup of oil and energy news:

* * *
EXXON TO SELL GAS TO CHINA: Exxon Mobil said it has reached a preliminary agreement to sell natural gas from a project on Russia’s Sakhalin Island to China. But the U.S. energy giant still needs to make a deal with OAO Gazprom, the Russia’s state-controlled gas monopoly, to get the fuel to market. The $12.8 billion Sakhalin-1 project is starting to ship crude oil to Asian markets, but has held back large-scale gas development pending a deal on exports, which initially had been slated to start next year.

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The Guardian: Desperation may be heating this oil rumour (article speculates on Shell BP mega-merger)

Nils Pratley
Tuesday October 24, 2006

There is no evidence that talks are taking place. There is no suggestion that executives on either side are agitating for it to happen. Yet the idea that BP and Shell could merge to create the world’s largest company refuses to go away. Oppenheimer & Co, a Wall Street investment house with a reputation for being close to the pulse of the oil industry, has published a detailed analysis of a deal it thinks could be “an intelligent, strategic response to a shifting global landscape”.

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The Guardian: Mega-merger talk fuelled by Shell’s Canadian move (article speculates on BP Shell mega merger)

· Oil group tries to simplify North American business
· Unnamed bidder in talks with Premier Oil

Terry Macalister
Tuesday October 24, 2006

Shell was at the centre of buyout moves and speculation last night after it unveiled plans to spend C$7.7bn (£3.7bn) simplifying its North American business. This was seen by some as a step towards a £230bn mega-merger with BP.

The Anglo-Dutch oil group has also had its name linked with Premier Oil, although most industry experts rule out Shell being the unnamed company in takeover talks with the exploration firm.

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The Guardian: Gardaí break up Shell protest in County Mayo

Owen Bowcott, Ireland correspondent
Tuesday October 24, 2006

A sit-down protest by environmental activists trying to stop Shell building a gas terminal in County Mayo was broken up by police yesterday in the latest clash over the future of Ireland’s Corrib gas field.

Campaigners, supported by many local residents, are demanding that the Anglo-Dutch oil company and its Norwegian partner, Statoil, build an offshore treatment plant instead of one at Bellanaboy, near Erris, in the far west of Ireland. Work on the site restarted earlier this month after an independent mediator failed to resolve the dispute.

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ShellNews.net: Shell’s international mobility policy

24 October 2006

From a former Shell insider

Dear Sir

I would just like to make some comments on the recent email regarding Shell’s international mobility policy.  I leave it to your judgement as to whether they are worthy of publication.

(ShellNews.net: leaked internal email from Royal Dutch Shell ‘Expatriate Policy Manager’, Stephanie Boyde)

The email demonstrates that virtually everything is cyclical; these studies have been done previously and they are usually a lagging indicator of a business problem.  This one can probably be summarised as saying – we intend to spend more on people in hardship locations (eg. Nigeria) and less on those in nice locations (eg. Oman) whilst making irritating changes to travel policies.

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New York Times: Oil Patch’s Profit Party Is Slowing Down

By THE ASSOCIATED PRESS
October 23, 2006: Filed at 3:54 p.m. ET

WASHINGTON (AP) — The oil industry’s profit party is still raging, just not as wildly as last year.

Five of the world’s largest energy companies are expected to report combined third-quarter earnings this week of more than $30 billion, though profits were weighed down by falling prices for natural gas and gasoline.

The industry derived much of its strength from crude oil prices, which averaged roughly $70 a barrel in the July-September period and hit an all-time peak above $78 amid conflict in the Middle East. A sharp decline in crude-oil futures since then, however, suggests profit growth in the oil patch could slow further in the months ahead, analysts said.

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New York Times: Royal Dutch Shell Seeks to Buy the 22% of Shell Canada It Doesn’t Own

By IAN AUSTEN and HEATHER TIMMONS
October 24, 2006

OTTAWA, Oct. 23 — Royal Dutch Shell, seeking to streamline its businesses and increase reliance on unconventional sources of fuel, offered on Monday to buy the public shares of Shell Canada for 7.7 billion Canadian dollars ($6.8 billion).

Shell hopes to buy the 22 percent of Shell Canada that it does not own for 40 Canadian dollars ($35.56) a share, a premium of 29 percent over Shell Canada’s closing price Friday on the Toronto Stock Exchange. The deal is being examined by Shell Canada’s board. Holders of 50 percent of the outstanding public shares would need to approve it.

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