December 19th, 2006:

Wednesday 20 December 2006

• Royal Dutch Shell, Total and eight other construction and oil companies are appealing €267m in EU fines for fixing prices of bitumen, a petroleum by-product used to make asphalt.

• Russia’s proposed acquisition of a majority stake in the Royal Dutch Shell-led Sakhalin-2 oil and natural-gas project may hurt Shell’s goal of replacing reserves, Fitch Ratings said.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/12/20/cxbloom20.xm

Wednesday, December 20, 2006. Issue 3565. Page 8.
By Yulia Latynina
 
Royal-Dutch Shell is going to end up handing half of its shares in the Sakhalin-2 oil and gas project to Gazprom. When Gazprom first said it wanted a stake, it could not reach agreement with Shell on a price. That is when Oleg Mitvol, the head of the Natural Resources Ministry’s environmental inspectorate, appeared. Mitvol’s presence influenced Shell in the same manner that thugs influence a stubborn street vendor to sell his business on the cheap. read more

By Tom Miles and Dmitry Zhdannikov
Reuters
Wednesday, December 20, 2006. Issue 3565. Page 5.

Shell and its partners in the $22 billion Sakhalin-2 project have accepted cash and a promise of future cooperation with Gazprom in a deal to let the Russian firm into the venture, a source close to talks between the companies said Tuesday.

Shell and Gazprom have both signaled that their negotiations may yield a deal later this week, with Shell CEO Jeroen van der Veer expected to make a third visit to Moscow in as many weeks on Thursday or Friday. read more

Crude-oil futures rebounded to more than $63 a barrel on the New York Mercantile Exchange, boosted by expectations that U.S. government data due Wednesday will show crude inventories fell last week and by gasoline prices, which hit a three-month high. Here is Tuesday’s roundup of oil and energy news:

* * *
TRANSITION AT BP: BP’s board is considering creating a high-level post for the heir apparent to Chief Executive John Browne — a job designed to smooth the transition at the top of the oil giant ahead of his 2008 retirement, according to people familiar with the situation. read more

By Kamarul Yunus
[email protected]

December 20 2006

KUALA LUMPUR-based Shell Global Solutions (SGS), a unit of oil giant the Royal Dutch Shell, expects its Malaysian operations to register a double-digit growth in sales next year.

However, the company declined to reveal any financial details.

SGS provides business and operational consultancy, technical services and research and development expertise to energy and processing industries worldwide.

For instance, it could help oil refineries to cut costs and improve their processes, which in turn would help them boost their profits. read more

Last Update: 3:29 PM ET Dec 19, 2006

LONDON (MarketWatch) — Royal Dutch Shell PLC’s (RDSB.LN) reserves replacement may be under pressure if it cedes control to Gazprom (GSPBEX.RS) in Sakhalin-2, its largest oil and gas project, credit agency Fitch Ratings said Tuesday.

Cutting some of the Sakhalin reserves would be bad news for Shell, which has struggled to replace barrels following a reserves scandal.

Under International Financial Reporting Standards, or IFRS, it uses to report earnings, Anglo-Dutch major normally books 100% of the reserves brought from the units it operates. read more

By: Lorna Siggins, Marine Correspondent,
Published: Dec 19, 2006

North Mayo fishermen have turned down a 1 million plan to restock lobster grounds which would have been paid for by Shell E&P Ireland.

The proposal could have involved additional funding and support from An Bord Iascaigh Mhara, the State’s fisheries development board.

A shellfish grouping within the Erris Inshore Fishermen’s Association said it could not accept money from Shell until the issue of a discharge pipe from the Corrib gas terminal was resolved. read more

By: Brand concerns beat catastrophes as top bugbears, writes James Brewer, Lloyds List: Published: Dec 19, 2006

BIG energy companies are far more worried about damage to brand and reputation than natural catastrophes that can hit their installations, a survey by Willis broking group has shown.

Willis asked senior risk managers from, BG, Chevron, Borealis, Shell, Petroplus, Hess Corp and MOL to list their most pressing risk management concerns.

Reputation issues were top of the list, believed to be spurred by such crises as the Enron meltdown, potential environmental disasters, refinery explosions, pipeline corrosion, a failure to find oil in promising areas and disruption of the integrated gas chain. read more

Published: December 19 2006 02:00 | Last updated: December 19 2006 02:00

If there is one word that sums up 2006 for the global energy industry, it is nyet. The year kicked off with Gazprom, Russia’s state-controlled energy giant, briefly cutting off gas supplies to Ukraine. By December, Royal Dutch Shell was painfully aware that legal contracts in Russia count for only so much when the Kremlin says “no”.

The rise of so-called national oil companies (NOCs) has been punctuated by the sound of doors slamming – mostly in the faces of traditional energy companies. Control of energy supplies has re-emerged as a geopolitical priority. Look at how the European Union’s ideal of an untrammelled, unified energy market has descended into several member states promoting vertically integrated national champions and striking bilateral deals with big external suppliers such as Gazprom. read more

Published: December 19 2006 02:00 | Last updated: December 19 2006 02:00

Today the Financial Times publishes the second part of a long investigation into the environmental and safety record of BP, one of the largest companies in the world. The investigation highlights a worrying series of accidents in the US. For oil companies, faced with the challenge of increasing profits in a world where new reserves are hard to come by, it shows that there are limits to how far costs can be cut.

In March 2005 an explosion at BP’s Texas City refinery killed 15 workers; a March 2006 oil spill at BP’s operations in Prudhoe Bay, Alaska, led to a complete shutdown of the field in August. But as the FT investigation reveals, doubts over BP’s safety performance were being voiced long before the most recent problems. read more

By ANDREW HILL
Published: December 19 2006 02:00 | Last updated: December 19 2006 02:00

The Russian regulatory epic has placed Peter Hambro Mining, the gold miner, somewhat uncomfortably alongside Royal Dutch Shell, still wrangling with Moscow over its Sakhalin-2 project. Rosprirodnadzor, the natural resources ministry’s environmental watchdog, has been casting an eye over both companies’ Russian operations. But, in spite of its British blue-blood name, Aim-listed PHM arguably has more similarities with Polyus, the much larger Russian gold miner whose American Depositary Receipts were admitted to a listing on London’s main market yesterday, than with Shell. read more

Region welcomes foreign investors
By HEIDI VOGT
Associated Press

DAKAR, Senegal – Angola is joining the Organization of Petroleum Exporting Countries, African oil exploration is booming and China is investing. The stampede for African oil has continued, even as militant attacks in some countries and precarious governments in others make returns uncertain.

Though much of the continent is just as conflict-ridden as the Middle East, analysts say Africa is increasingly attractive because it’s one of a diminishing number of regions still welcoming foreign corporations. read more

13:26 | 19/ 12/ 2006 

MOSCOW, December 19 (RIA Novosti) – International rating agency Fitch Ratings said Tuesday a mooted deal on the acquisition by Gazprom [RTS:GAZP] of a controlling stake in the vast Sakhalin II energy project in the country’s Far East would certainly benefit Russia’s energy giant, but could have a credit impact on Royal Dutch Shell.

Project operator Sakhalin Energy, in which the British-Dutch major holds a 55% stake and Japan’s Mitsui and Mitsubishi own 25%, and 20%, respectively, is developing the $22 billion oil and liquefied natural gas (LNG) project under a production-sharing agreement (PSA) with the Russian government, signed in 1994. read more

By Stephen Voss

Dec. 19 (Bloomberg) — Russia’s proposed acquisition of a majority stake in the Royal Dutch Shell Plc-led Sakhalin-2 oil and natural-gas project may hurt Shell’s goal of replacing reserves, Fitch Ratings Ltd. said.

Shell executives have said they expect to reach an agreement to give state-run energy company OAO Gazprom a controlling stake in the $22 billion project in Russia’s Far East by the end of this week, following months of scrutiny from Russian authorities over environmental violations. read more

Gazprom is to supply gas directly to French homes and firms for the first time through a deal with Gaz de France.

The Russian firm will start supplying French customers in July, providing 1.5 billion cubic metres a year to them.

The two firms have extended existing supply contracts to 2030, enabling Gazprom to deliver an extra 2.5 billion cubic metres a year to western Europe.

Gazprom is expanding rapidly across Europe and has been linked with a bid for British energy firm Centrica.

Long-term partners read more

MORGAN CITY, La. — A Morgan City man who claimed that Shell Oil Co. fired him in retaliation for whistleblowing has received more than $600,000 in tripled back pay and pension benefits, and interest on the award.

William C. Overton Jr. said he was fired because he reported alleged violations involving both pollution and paperwork on Shell offshore rigs.

Shell spokesman Fred Palmer did not have immediate comment.

Overton got a check for just under $614,000 on Friday, nearly a month and a half after the Louisiana Supreme Court refused to hear Shell’s appeal. The total award was nearly $921,000, but his attorneys got one-third. read more