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Posts on ‘October 26th, 2006’

The Guardian: Shell beats forecasts

What the analysts say

Hans Kundnani, business reporter
Thursday October 26, 2006
Guardian Unlimited
 
Royal Dutch Shell today posted better-than-expected underlying profits.

The company yesterday learned it could face prosecution over environmental failures at its massive Sakhalin-2 project in Russia.

Today it announced profits on current cost replacement basis for the third quarter fell 4% from $7.2bn to $6.9bn.

However, this was because the third quarter of 2005’s earnings were boosted by divestment gains of $1.7bn. read more

Houston Chronicle: A first: Shell plans to produce at 8,000 feet in Gulf

Oct. 26, 2006, 1:31PM
By BRETT CLANTON
Copyright 2006 Houston Chronicle

Shell said today it will be the first oil company to begin producing oil and natural gas in water that’s 8,000 feet deep, trumping competitors in the Gulf of Mexico who have made discoveries or announced intentions to drill in the region but not started to develop them.

The European oil giant, whose U.S. arm is based in Houston, said it will take the lead on the so-called Perdido project, which it will co-develop with Chevron and BP, and expects to begin tapping three fields near the site “around the turn of the decade.” read more

The Moscow Times: Shell Sees Sakhalin-2 in Black by 2013

Moscow Times Sakhalin II

(Ivan Sekretarev / AP
The Shell-run LNG terminal on Sakhalin Island. Shell said it would report on its talks with Gazprom by year’s end.)

Friday, October 27, 2006. Issue 3528. Page 7.
Bloomberg 
Ivan Sekretarev / AP

LONDON — Royal Dutch Shell said Thursday that it expected to recover by 2013 the costs incurred under a production-sharing agreement governing its Sakhalin-2 project.

Shell is in talks with Russian authorities and is still negotiating an asset swap that would bring Gazprom into the venture, chief executive Jeroen van der Veer said in a conference call. read more

The Moscow Times: Trutnev Grills Sakhalin-2 Chief on Violations

Thursday, October 26, 2006. Issue 3527. Page 1.
By Miriam Elder
Staff Writer  

YUZHNO-SAKHALINSK — Natural Resources Minister Yury Trutnev on Wednesday publicly clashed with the head of Shell-led Sakhalin Energy and called for a criminal case against the company over at least five environmental violations.

After touring work sites around Sakhalin Island, Trutnev said he had prolonged an audit of the project by four months after seeing the extent of the environmental damage.

He gave Sergei Sai, head of the ministry’s environmental agency, two weeks to hand over a criminal complaint to the Prosecutor General’s Office. read more

The Scotsman: Russian threat to Shell over environmental inspections

By: Martin Flanagan
Published: Oct 26, 2006

RUSSIA has prolonged an environmental inspection of Royal Dutch Shell’s dollars 22 billion Sakhalin oil and gas project and may prosecute the scheme, a minister said yesterday.

Yuri Trutnev, Russian’s natural resources minister, told a meeting of environmental inspectors and officials from Sakhalin Energy: “The breaches at Sakhalin-2 fall under five articles of the criminal code.

“This falls under criminal law and we think it’s necessary to apply it. All the relevant documents should be sent to the prosecutor general within two weeks.” read more

AFX Europe (Focus): Shell says asset swap talks with Gazprom continue despite Sakhalin woes

Published: Oct 26, 2006

LONDON (AFX) – Royal Dutch Shell PLC and Gazprom are continuing discussions over a possible asset exchange, which includes Sakhalin-2, despite the environmental problems suffered by the controversial 20 bln usd Russian gas project.

The pair last year signed a preliminary agreement giving Gazprom, the Russian gas monopoly, a 25 pct stake in Sakhalin-2.

Shell, in return, will get a 50 pct interest in Gazprom’s Zapolyarnoye field in Siberia, the world’s fifth-largest gas deposit. read more

AP Worldstream: Villagers agree to vacate seized Shell oil platforms in Nigeria

By: DULUE MBACHU,
Published: Oct 26, 2006

Angry villagers in Nigeria who took over three Shell oil platforms in the volatile Niger Delta have agreed to end their siege and allow operations to resume, Nigerian and company officials said Thursday. But they were still at the stations by day’s end.

Members of the Kula community living near Royal Dutch Shell PLC’s Ekulama 1, Ekulama 2 and Belema oil pumping stations invaded the facilities Wednesday, accusing the oil giant of failing to meet the terms of an agreement to provide them aid, Shell said. read more

AFX News: Shell reaffirms production goals despite Nigerian outage

10.26.2006
 
LONDON (AFX) – Royal Dutch Shell PLC has reiterated its output targets for 2006 and 2007 despite the production outages in Nigeria after separatist militants launched a series of violent attacks on its facilities in the oil-rich Niger Delta region.

Shell also kept its capital spending guidance of 19 bln usd for 2006, excluding the 3 bln usd already spent for acquisitions. However, it put the 21 bln usd capex plan for 2007 under review because of rising costs.

‘Our guidance for the year of 3.4 mln boepd has been maintained,’ Peter Voser, the chief finance officer, told reporters in a conference call following the group’s third quarter results. read more

International Herald Tribune: Kremlin threatens to criminally prosecute Shell within two weeks

Headline: Russia raises pressure on Sakhalin-2 project 
By Andrew E. Kramer The New York Times
 
MOSCOW The Kremlin ratcheted up pressure Wednesday on Royal Dutch Shell’s $22 billion oil and natural gas project on Sakhalin Island when a minister threatened to criminally prosecute employees of the British-Dutch oil company within two weeks.
 
The remarks suggested a further unraveling of the relationship between Western energy companies and the Russian government, which is intent on gaining control of the energy sector.
 
In the case of Shell, the company and two Japanese partners are accused of violating Russian environmental law in the construction of the project, called Sakhalin-2.
 
The project consists of two offshore platforms, a pipeline, the world’s largest liquefied natural gas plant and an oil terminal.
 
A Russian state company, Gazprom, wants a 25 percent share of Sakhalin-2.
 
The Russian government also has rejected a cost overrun by Shell, which, according to the terms of the 1993 contract, would cut into the state’s royalties.
 
“The breaches at Sakhalin-2 fall under five articles of the criminal code,” Yuri Trutnev, the minister of natural resources, said after touring a pipeline Wednesday, according to Reuters.
 
“This falls under criminal law and we think it’s necessary to apply it. All the relevant documents should be sent to the prosecutor general within two weeks,” he said.
 
Russian officials had threatened criminal charges earlier this month.
 
Trutnev’s statement, however, suggested an escalation because he is a cabinet member and because he also promised a two-week timeline for criminal cases.
 
Trutnev said the Natural Resources Ministry would calculate the cost of environmental damage from Sakhalin-2 within four months.
 
He added that work on some pipeline sections should be halted immediately and that he would prepare documentation to cancel a water-use permit.
 
Also on Wednesday, President Vladimir Putin denied that environmental laws were being enforced selectively against foreign energy companies. Putin, speaking during an annual televised call-in show, said Russia was balancing the need for economic development against the inevitable environmental damage.
 
Trutnev, whose ministry inspected Sakhalin-2 in August and again in September, had said earlier this month that the second inspection provided grounds to revoke a key environmental permit.
 
He said the permit would “likely” be canceled this week.
 
However, on Wednesday he delayed a decision on that permit by one month to allow for further study.
 
Meanwhile, Shell on Wednesday provided the ministry with its response to the initial inspection in August; the company said 98 percent of the infractions cited had been rectified.
 
“I am pleased that Minister Trutnev has taken the time to visit Sakhalin to see first hand the work in progress,” Ian Craig, chief executive of Sakhalin Energy, said in a statement.
 
A company spokesman, Ivan Chernyakhovsky, said he could not respond to Trutnev’s threats of criminal prosecution.
 
“A lot was said today. We aren’t ready to comment on it all in detail,” Chernyakhovsky said. “We think we have complied with Russian legislation.”
 
Wednesday marked the third anniversary of the arrest of Mikhail Khodorkovsky, then chief executive of Russia’s largest private oil company, Yukos, on tax evasion and fraud charges.
 
Khodorkovsky is serving an eight year sentence in a Siberian penal colony not far from the Chinese border.
 
He is employed in the prison workshop, his attorneys said this week.
 
Yukos, once a concern very much in vogue with Western investors, is now in liquidation proceedings.
 
 MOSCOW The Kremlin ratcheted up pressure Wednesday on Royal Dutch Shell’s $22 billion oil and natural gas project on Sakhalin Island when a minister threatened to criminally prosecute employees of the British-Dutch oil company within two weeks.
 
The remarks suggested a further unraveling of the relationship between Western energy companies and the Russian government, which is intent on gaining control of the energy sector.
 
In the case of Shell, the company and two Japanese partners are accused of violating Russian environmental law in the construction of the project, called Sakhalin-2.
 
The project consists of two offshore platforms, a pipeline, the world’s largest liquefied natural gas plant and an oil terminal.
 
A Russian state company, Gazprom, wants a 25 percent share of Sakhalin-2.
 
The Russian government also has rejected a cost overrun by Shell, which, according to the terms of the 1993 contract, would cut into the state’s royalties.
 
“The breaches at Sakhalin-2 fall under five articles of the criminal code,” Yuri Trutnev, the minister of natural resources, said after touring a pipeline Wednesday, according to Reuters.
 
“This falls under criminal law and we think it’s necessary to apply it. All the relevant documents should be sent to the prosecutor general within two weeks,” he said.
 
Russian officials had threatened criminal charges earlier this month.
 
Trutnev’s statement, however, suggested an escalation because he is a cabinet member and because he also promised a two-week timeline for criminal cases.
 
Trutnev said the Natural Resources Ministry would calculate the cost of environmental damage from Sakhalin-2 within four months.
 
He added that work on some pipeline sections should be halted immediately and that he would prepare documentation to cancel a water-use permit.
 
Also on Wednesday, President Vladimir Putin denied that environmental laws were being enforced selectively against foreign energy companies. Putin, speaking during an annual televised call-in show, said Russia was balancing the need for economic development against the inevitable environmental damage.
 
Trutnev, whose ministry inspected Sakhalin-2 in August and again in September, had said earlier this month that the second inspection provided grounds to revoke a key environmental permit.
 
He said the permit would “likely” be canceled this week.
 
However, on Wednesday he delayed a decision on that permit by one month to allow for further study.
 
Meanwhile, Shell on Wednesday provided the ministry with its response to the initial inspection in August; the company said 98 percent of the infractions cited had been rectified.
 
“I am pleased that Minister Trutnev has taken the time to visit Sakhalin to see first hand the work in progress,” Ian Craig, chief executive of Sakhalin Energy, said in a statement.
 
A company spokesman, Ivan Chernyakhovsky, said he could not respond to Trutnev’s threats of criminal prosecution.
 
“A lot was said today. We aren’t ready to comment on it all in detail,” Chernyakhovsky said. “We think we have complied with Russian legislation.”
 
Wednesday marked the third anniversary of the arrest of Mikhail Khodorkovsky, then chief executive of Russia’s largest private oil company, Yukos, on tax evasion and fraud charges.
 
Khodorkovsky is serving an eight year sentence in a Siberian penal colony not far from the Chinese border.
 
He is employed in the prison workshop, his attorneys said this week.
 
Yukos, once a concern very much in vogue with Western investors, is now in liquidation proceedings.
 
Published: October 25, 2006 read more

Independent Online (Africa): Villagers to leave seized oil platforms

By Dulue Mbachu

Lagos, Nigeria – Angry villagers in Nigeria who took over three Shell oil platforms in the volatile Niger Delta have agreed to end their siege and allow operations to resume, Nigerian and company officials said on Thursday.

Members of the Kula community living near Royal Dutch Shell PLC’s Ekulama 1, Ekulama 2 and Belema oil pumping stations invaded the facilities on Wednesday, accusing the oil giant of failing to meet the terms of an agreement to provide them aid, Shell said. read more

regnum.ru: Sakhalin Energy ready to indemnify for the damage caused by Sakhalin 2 project but skeptical of the figures

The operator of the Sakhalin 2 project, the Sakhalin Energy company, is ready to indemnify the ecological damage caused by the project but is skeptical of the figures given during the Oct 25 conference on the ecological safety of the Sakhalin 2 project, reports Sakhalin.info.

If an objective assessment finds out that the damage caused by Sakhalin Energy to the environment is much bigger than the company’s preliminary estimates, we are ready to make all the necessary payments, says Sakhalin Energy CEO Ian Craig and adds that the company doubts that the figures are precise. He says that the company has made no changes to its estimates of late. read more

The Wall Street Journal: Shell’s Net Falls 34% as Unrest In Nigeria Offsets Oil-Price Rise

By BENOIT FAUCON
October 26, 2006 3:19 a.m.

LONDON — Royal Dutch Shell PLC said Thursday its third-quarter net earnings declined 34% as continued unrest in Nigeria, higher U.K. taxes and cost pressure more than offset a rise in oil prices.

Shell said net income fell to $5.94 billion, or 93 cents a share, compared with $9.03 billion, or $1.35 per share, in the same period a year earlier. But revenue rose 10% to $84.25 billion from $76.44 billion.

Third-quarter 2005 earnings had included divestment gains of some $1.7 billion related to the divestment of pipeline assets held through Gasunie NV in the Netherlands. read more

MosNews: Sakhalin Energy Admits to Environmental Violations in Sakhalin-2 Oil Project

mosnews Sakhalin story

Created: 26.10.2006 11:18 MSK (GMT +3), Updated: 11:18 MSK

Sakhalin Energy, operator of Sakhalin-2 oil and gas project, admitted to damaging the eco-system of Russia’s Sakhalin Island, while the country’s Natural Resources Minister Yuri Trutnev gave environmental watchdog Rosprirodnadzor another month to complete its inquire into alleged violations at Shell-led project.

As MosNews has reported on several occasions, the multi-billion-dollar project, led by Royal Dutch/Shell, has been accused of inflicting large-scale damage on Sakhalin’s ecosystem, including illegal deforestation, the dumping of toxic waste, and soil erosion. The production-sharing agreement behind the project, which allows Shell to comfortably recoup all its expenses before sharing any of its profits with the state, is also hugely unpopular with the Russian government. It became especially unpopular last year when Shell announced that expenditures for the project have been doubled to $22 billion. read more

The Times: Russia threatens to prosecute Shell over Sakhalin-2

Sakhalin II

By Tony Halpin, in Moscow
26 October 2006

RUSSIA sharply raised the temperature of its dispute with Shell over the Sakhalin-2 project by threatening criminal prosecutions for environmental damage.

Yuri Trutnev, the Natural Resources Minister, accused the Anglo-Dutch company of breaking at least five Russian laws and warned that it faced the loss of licences to develop the giant oil and gas project.

“This falls under criminal law and we think it’s necessary to apply it,” he said.

A file would be sent to Russia’s prosecutor-general within two weeks. At least one of the violations carried a penalty of up to seven years in prison, he said. read more

The Times: Putin on the line

EXTRACT: His KGB background should also make him realistic in assessing Russia’s strengths and weaknesses in dealing with the outside world. There is a tendency to overestimate Russia as an “energy superpower”: it still needs Western technology. This may lie behind Russia’s cavalier dealings with foreign oil companies such as Shell and BP, which it wants to force out of contracts that it dislikes. There are suggestions that Exxon’s new deal with China may prompt a strategic reassessment. But pressure on Shell shows no sign of abating. Mr Putin’s vaunted plain speaking should extend beyond domestic issues to a new realism on foreign policy. read more

Daily Telegraph: Russia threatens Shell with criminal inquiry

Sakhalin II

(Workers at the Sakhalin-2 project’s liquefaction gas plant in Prigorodnoye, south of Yuzhno-Sakhalinsk)

By Ambrose Evans-Pritchard Last Updated: 12:34am BST 26/10/2006

Russia has threatened to launch a criminal inquiry into Royal Dutch Shell’s Sakhalin-2 project, alleging breach of ecology laws on the mountainous Pacific island. The heavy-handed approach is widely seen as a ruse to pressure Shell and its Japanese partners to let the Kremlin into the venture. Critics call it as a thinly disguised repeat of the Yukos seizure. read more

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