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Posts on ‘October 28th, 2006’

The Observer: Big oil may have to get even bigger to survive: *Shell BP mega-merger?

Sunday October 29, 2006

The international giants are in trouble, with reserves shrinking, taxes and costs rising, and producing nations reneging on deals or nationalising their assets. The answer to their problems could be massive mergers, writes Oliver Morgan

Multinational oil companies are having a tough time. Crude prices are falling, maintaining production is a struggle, yet taxes set by the world’s resource-rich nations are rising – as are costs. Topping it all is a rising trend of energy nationalism stretching round the globe.

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Business Week: Moscow’s Eco-Crusader Aims at Big Oil

By Jason Bush

Oleg Mitvol, head of Russia’s EPA, is targeting the Sakhalin II oilfield and making enemies—possibly even in the Kremlin.

He’s fast becoming one of Russia’s best-known public figures. His face is regularly on television, the pages of newspapers, and the covers of magazines. Now, his activities are making waves internationally, causing one of the biggest stirs to affect foreign investors in Russia for years. Not bad going for the deputy head of a small government agency that, until a few months ago, very few people had heard of, even in Russia.

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Petroleum News: Shell to head joint development of three Lower Tertiary fields in Gulf

By Ray Tyson
Week of October 29, 2006

Shell Offshore and its partners in three Lower Tertiary discoveries in “ultra-deepwater” Gulf of Mexico have decided to combine the fields — Great White, Tobago and Slivertip — into a single hub development located in Alaminos Canyon, with first production “around the turn of the decade,” Shell said Oct. 26.

The project is called the Perdido Regional Development and will be designed to process daily 100,000 barrels of oil and 200 million cubic feet of natural gas, Shell said, noting that the hub or “spar” installation would be moored in about 8,000 feet of water.

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Petroleum News: Shell plans 4 Beaufort wells in ‘07

Two wells at Siv Ullig and two at another location north of Camden Bay; seismic planned for the Chukchi and Beaufort

Alan Bailey
Petroleum News
Week of October 29, 2006

Shell is moving ahead with its exploration plans for the northern Alaska outer continental shelf.

At the National Marine Fisheries Service’s annual Arctic Open Water Peer Review Meeting on Oct. 24 Shell Operations Manager Paul Smith said that Shell plans to drill four wells in the U.S. Beaufort Sea during the 2007 open water season.

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AP Worldstream: Protesting villagers in Nigeria vow to remain at Shell platforms until demands met

Published: Oct 28, 2006

Protesting villagers who took over three Shell oil platforms in Nigeria’s troubled southern delta region will not end their occupation of the facilities until their demands for aid are met, a community spokesman said Saturday.

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

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The Wall Street Journal: Oil News Roundup: October 27, 2006 4:11 p.m.

October 27, 2006 4:11 p.m.

Crude-oil futures rose, after reports of a terror alert in the Gulf region. Crude ended the day up 39 cents to $60.75 a barrel on the New York Mercantile Exchange. Here’s Friday’s roundup of oil and energy news:

* * *
CHEVRON’S $5 BILLION: Chevron Corp.’s third-quarter profit soared to $5.02 billion to easily surpass analysts’ estimates, continuing prosperous times in the oil industry. The results marked the first time the San Ramon, Calif., company’s quarterly earnings have surpassed $5 billion in its 127-year history. It is also the third time in the past year that Chevron’s quarterly profit has hit a new high.

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Petroleum News: Open season declared on oil sands majors

By Gary Park
Week of October 29, 2006

The grab for control of Shell Canada could bring more of Canada’s largest oil and gas companies into play as global majors look for a slice of the oil sands action.

In addition to Royal Dutch Shell’s hunger for assets in Alberta, BP and Marathon have dangled their U.S. refineries in an apparent desire to participate in the upstream, while ConocoPhillips set a precedent in forming a joint venture with EnCana to both develop and process bitumen deposits.

Now that the international powerhouses are no longer under pressure to maintain Canadian subsidiaries for political reasons and Canadian governments show little appetite for meddling in the free market, analysts think most of the major oil sands players are takeout targets.

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Petroleum News: Shell’s C$7.7 billion bid no slam-dunk

Buying out Canadian assets could force Royal Dutch Shell to dig deeper; parent company wants to align Canadian decision-making

Gary Park
For Petroleum News
Week of October 29, 2006

Royal Dutch Shell, still reeling from its 2004 reserves accounting scandal, is in a hurry to rearrange some of its global operations.

It may be in too much of a hurry.

A year after a complex merger of Shell Transport and Trading and Royal Dutch Petroleum — the two companies that have been the foundation of Royal Dutch Shell for 100 years — it swooped in Oct. 23 with a C$7.7 billion offer for the 22 percent of Shell Canada shares it doesn’t already own.

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Daily Telegraph: Brokers’ say: *Royal Dutch Shell most likely bidder for BG

(Filed: 28/10/2006)

BG Group

Buy at 686p (this week’s price 702p) recommends Cazenove.

Following highly leveraged bids for Western Gas Resources and Kerr McGee, along with stake building in Spanish oil group Repsol, Cazenove has reviewed the potential for a bid for BG Group.

In conclusion, Cazenove believes that even a bid recommended by the board could come in at around the 900p per share mark.

Furthermore, Cazenove believes that any one of BP, Royal Dutch Shell or Exxon Mobil would be capable of making such a bid while still leaving its finances comfortable. Cazenove favours Royal Dutch Shell, given its greatest need and biggest operational overlap with BG of the three possible bidders.
*Headline comment added by

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The Boston Globe: Shell executive sees gas supplies tightening

Saturday October 28, 2006

Taking a page from US Senator Hillary Rodham Clinton’s 2000 campaign “listening tour” across New York, Shell Oil Co. has launched a two-year, 50-city tour by senior executives aimed at improving communications — and defusing hostility to Big Oil and its recent record-breaking profits.

Shell, which recently bought Texaco stations across Massachusetts, controls about 10 percent of the Bay State gasoline market. Shell president John Hofmeister came through Cambridge this week and spoke with the Globe’s Peter J. Howe before a speech at Harvard Business School.

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Calgary Sun: Shell names directors

Sat, October 28, 2006
UPDATED: 2006-10-28 01:27:53 MST
Shell Canada Ltd. has added two blue-chip appointees to its board of directors as it contemplates being taken over by its international parent company.

The integrated oil producer and gasoline retailer said yesterday it is expanding its board to 12 directors with the addition of Louise Frechette, a former senior federal bureaucrat and diplomat who was deputy secretary general of the UN from 1998 until this year, and David Galloway, chairman of Bank of Montreal and former CEO of Torstar Corp.

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Reuters: Shell Canada staffing seen shifting after buyout


By Jeffrey Jones

CALGARY, Alberta (Reuters) – Shell Canada Ltd. looks headed for big staffing changes after its Anglo-Dutch parent buys out minority shares, but that may not mean across-the-board layoffs, industry watchers said Friday.

Royal Dutch Shell Plc , one of the world’s biggest oil companies, is offering C$40 a share, or C$7.7 billion ($6.9 billion), to buy out the 22 percent of Shell Canada it does not already own.

After the buyout, some Shell Canada departments, such as investor and public relations, will likely be cut or drastically reduced in size. After all, the company, which employs about 5,000 people, will no longer have its own shareholders to report to.

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RIA Novosti: Sakhalin II may be suspended in some sections – minister

17:45 | 27/ 10/ 2006 

MOSCOW, October 27 (RIA Novosti) – The Shell-led Sakhalin II hydrocarbon project in Russia’s Far East could be suspended in some sections, Russia’s natural resources minister said Friday.

The multibillion-dollar Sakhalin II project has been accused of inflicting large-scale damage to the ecosystem on Sakhalin’s, including illegal deforestation, the dumping of toxic waste, and soil erosion.

Yury Trutnev said the project would not be suspended in its entirety before the operator submits plans to fix environmental violations.

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The Times: Rich pickings for the poor of Nigeria

October 28, 2006
By Carl Mortished

Pipeline oil thefts, kidnappings and now the seizure of Shell’s pumping stations … just another crisis 
IS IT extortion or just everyday business? Youths from two villages in the eastern Niger Delta were yesterday occupying several oil pumping stations belonging to Shell Petroleum Development Company (SPDC). The protesters at Akulama and Belema want a contract to supply food to the oil platforms that operate in the adjacent swamps.

Negotiations continue and in the meantime, some 47,000 barrels per day of high-quality Nigerian crude is not flowing. That represents some $2.8 million per day in revenue forgone, a headache for Shell and, more importantly, a big loss for the Nigerian Government, which owns 55 per cent of SPDC and takes the lion’s share of the income from each barrel. 
This is a minor disturbance for Shell, compared with the violence that has shut down operations in the Western Delta for most of this year. Shell evacuated all its field staff and contractors after an armed uprising and a series of hostage-takings in which two contractors were killed.

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The Times: Shell ticking over nicely again

Saturday 28 October 2006
By Graham Searjeant

WITH dogged Dutch precision, Jeroen van der Veer is slowly and carefully repairing the engine at Royal Dutch Shell and yesterday its pistons could be heard firing with a good, regular beat.

Problems have not disappeared and he gave no particular comfort on Sakhalin, where the signals from the Kremlin are getting more, rather than less tangled and confused. Still, the Shell chief’s approach looks right: address all the problems methodically, attend every meeting and give away nothing that is not owed.

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The Yomiuri Shimbun: *Sakhalin II partners surrender in face of Russian onslaught?

Actual headline: Russians get cut slack on Sakhalin / Companies to review oil, gas project to reduce burden on Moscow

Saturday 28 October 2006

Royal Dutch Shell PLC, Mitsui & Co. and Mitsubishi Corp., which are leading oil and gas development off Sakhalin, Russia, have decided to drastically review the project plan to give favorable conditions to the Russian side, sources close to the companies said Friday.

The three companies now plan to cut the nominal amount of the total cost of the Sakhalin-2 project by billions of dollars from the current estimate of 20 billion dollars (about 2.38 trillion yen) to reduce the burden on the Russian side. They also will move forward the time when the Russian side receives profit from the project to develop oil and natural gas fields.

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