December 1st, 2006:

EXTRACT FROM MITVOL INTERVIEW: I have email correspondence between executives in Sakhalin Energy management from 2002. I received these letters from John Donovan, owner of the anti-Shell website www.royaldutchshellplc. com. I received them on 19 October and forwarded them to Sakhalin Energy with a request for an official reply. But I have not received any reply so far. I presume that they are in shock.

How could you prove that these documents are genuine?
They appear genuine and we have special services working to prove this. Once they have been verified, we will have enough evidence to take Sakhalin Energy to court. If we win, the Sakhalin 2 consortium should pay compensation for all the environmental damages — which will come to over $10bn — as well as compensation to the state for loss of revenues caused by the additional delays. read more

4 December 2006

Shell will begin an assessment of its abandoned facilities in its west Niger delta operations as early as this week, with a view to restarting the 477,000 b/d of Forcados and EA production shut in since February. A Shell source says production could restart “in a matter of weeks” if damage to the facilities is “minimal” and if it is safe to do so.

Shell, which operates around half of Nigeria’s 2.2mn b/d production, held a meeting with community leaders, militant organisation the Federated Niger Delta Ijaw Communities (FNDIC) and the Delta state government, at which it was agreed that the company would send in workers to assess the damage to facilities from sabotage and environmental damage caused by subsequent spillages. The FNDIC is linked to rebel group Mend, which has spearheaded hostage-taking and the seizure of oil facilities this year. Mend has threatened to execute any technician fixing damaged facilities (WPA, 31 July, p2). read more

Last Update: 1:59 PM ET Dec 1, 2006

LONDON (MarketWatch) — Italian oil giant Eni SpA’s (E) chief executive Friday said any extra payments as a result of delays in its Kazakh Kashagan oil project won’t be large, and won’t lead to woes similar to those experienced by Royal Dutch Shell PLC (RDSB.LN) in its Sakhalin oil and gas development.

Under the contract of Eni’s Kashagan project, the “delay will imply extra payment” to Kazakhstan, Paolo Scaroni said at a press and analyst briefing.
“It is set by the contract but it isn’t a large number so we are relaxed,” he added later. read more

By Jim Efstathiou Jr.

Dec. 1 (Bloomberg) — The top official at the U.S. agency that oversees Gulf of Mexico oil and gas drilling helped cover up missteps on leases that may cost taxpayers $10 billion in lost royalties, said U.S. Representative Darrell Issa.

Minerals Management Service Director Johnnie Burton was “less than forthcoming” when she testified before the House Government Reform Committee on Sept. 14 that she first learned of errors in some leases early this year, said Issa, a California Republican. “Johnnie Burton became part of the coverup.” read more

DECEMBER 11, 2006

Flagging output from its vast reserves could diminish Tehran’s influence

Few countries can match Iran in its ability to generate angst among Westerners. It appears determined to become a nuclear power. Tehran’s Islamic leaders aid radical groups across the Middle East. And as the U.S. gets bogged down in Iraq, Iran’s influence in the region is on the rise, fueled in large part by its vast energy wealth.

Yet Iran has a surprising weakness: Its oil and gas industry, the lifeblood of its economy, is showing serious signs of distress. As domestic energy consumption skyrockets, Iran is struggling to produce enough oil and gas for export. Unless Tehran overhauls its policies, its primary source of revenue and the basis of its geopolitical muscle could start to wane. Within a decade, says Saad Rahim, an analyst at Washington consultancy PFC Energy, “Iran’s net crude exports could fall to zero.” read more

HOUSTON, Nov 30 (Reuters) – Motiva Enterprises LLC said on Thursday it was drawing up a final design and engineering plan for a possible 325,000 barrel per day (bpd) expansion of its 275,000 bpd refinery in Port Arthur, Texas.

Motiva’s board plans to make a final decision by the middle of 2007 on investing an estimated $5 billion in the expansion of the refinery located on the coast of the Gulf of Mexico.

If completed, the project would make the Motiva Port Arthur refinery the largest in the United States. read more

(Photo: Sergei Karpukhin/reuters 
BIG STAKES: A worker inspects a segment of an 850-kilometer-long pipeline that Royal Dutch/Shell is laying on Russia’s Sakhalin Island as part of a huge oil and gas development program.)

By Sandra Upson

When it comes to oil and gas, things in Russia are large—very large. Russia controls more oil and gas reserves than any other single country and is the world’s largest natural gas producer and exporter. Two of the world’s three largest natural gas fields lie within its borders. And as Western Europe, the northeast Asian countries, and the United States maneuver to line up reliable suppliers for the next decade, Russia has gained enormous leverage. read more

London, 30 November: Shell’s troubled Sakhalin II oil and gas project has received a further blow, after it was accused of ignoring the advice of a panel of scientists on protecting the rare Western Grey Whale.

Funding from the European Bank for Reconstruction and Development (EBRD) and other international bodies is contingent on the project adhering to the recommendations of the scientists.

The project, sited off Russia’s pacific coast and run by a consortium headed by Shell, involves undersea infrastructure which crosses the only known breeding ground of the Western Gray Whale. Only an estimated 122 whales are left, and the scientific panel says that the population is on track for extinction. read more

This entry is the second installment in a series of posts addressing the realities of the formation of a potential natural gas cartel.

The first installment can be viewed here.

http://www.robertamsterdam.com/2006/11/the_reality_of_a_russialed_gas.htm

Since the Financial Times broke the big story about the NATO report warning Europe to be wary of a possible gas cartel led by Russia, numerous media have rushed forward with reports and editorials arguing the absurdity of such a notion.

But to what extent are these arguments valid? What are the real possibilities of a Russia-led gas OPEC, and how will coordination among exporters impact prices and geopolitics in the short, medium, and long term? read more

By Rebecca Bream and Neil Buckley: Published: December 1 2006 02:00 | Last updated: December 1 2006 02:00

Peter Hambro Mining is one of the London market’s success stories and one of the few Aim-listed mining companies to have succeeded in Russia.

However, on Wednesday more than £100m was wiped from its market value after a Russian government official said he wanted to revoke five of its mining licences and accused it of breaching environmental regulations.

Following a 14 per cent fall in PHM’s stock price on Wednesday, the shares slid a further 10 per cent yesterday to 925p. The company says it has not yet been contacted by any Russian government body and is adamant it has not broken any rules. read more

December 01, 2006
Martin Waller: City Diary
 
Worrying news from Islay, where they are running out of whisky. This is a cold, wet island off the west coast of Scotland with several distilleries, one of which claims it has had to shut down because they are out of oil.

Bruichladdich managing director Mark Reynier says they depend on oil imported by tanker. A delivery earlier this month was turned back, and none can get through now because of the averagely awful weather.

At blame is the EU, or possibly supplier Shell. The EU caused the size of tankers to be increased, and the local pier had to be altered, even though the locals claimed the new tankers would only be able to use it in calm weather. “Shell has left the island in the lurch,” claims Reynier.   read more

By Ying Lou

Dec. 1 (Bloomberg) — PetroChina Co. overtook Royal Dutch Shell Plc to become the world’s second-largest oil company by market value after its shares rose to a record.

Shares of PetroChina climbed as much as 1.82 percent to HK$10.08 and were at HK$10 at 2:51 p.m., valuing the Beijing- based company at $230.2 billion. Royal Dutch Shell Plc had a market value of 116.8 billion pounds ($229.8 billion) at the close of trading in London yesterday.

The company’s shares have soared 58 percent in Hong Kong this year, reflecting increasing energy demand in the world’s fastest-growing major economy. China’s oil consumption has almost doubled in a decade, drawing investors to PetroChina and rivals China Petroleum & Chemical Corp. and Cnooc Ltd. read more

Crude-oil futures topped $63 a barrel on the New York Mercantile Exchange and finished at their highest level in more than 2 months, as supply concerns mounted.

Here is Thursday’s roundup of oil and energy news:

* * *
•More on Tap From Tesla: After starting deliveries of its $100,000 battery-powered sports car next year, Tesla Motors plans to develop a less-expensive four-door car and then perhaps a compact car that can sell for $30,000 to $40,000, Chief Executive Martin Eberhard said at the Los Angeles auto show. read more