Posts from ‘April, 2007’

By Babajide Komolafe
Monday, April 30, 2007

The Nigerian National Petroleum Corporation (NNPC) and Shell Development Petroleum Comapny are on a collision path with the Central Bank of Nigeria (CBN) over foreign exchange transactions rules.

The two companies,  it was gathered, have been flouting the directives of the apex bank that firms selling foreign exchange in the interbank foreign exchange market disclose the volume of forex been offered to the market.

Forex dealers had complained that the two firms particularly Shell are found of not disclosing the volume of forex been offered. This practice they say is anti market as it does discourages transparency in foreign exchange transactions.

Shell, however, said there was nothing wrong  about not disclosing the volume of forex it offers to the market. Shell spokesman, Mr Bisi Ojediran told Vanguard that it was an  industry practice that other oil firms do not disclose the volume of forex they offer to the market, adding that the practice is not an offence.

A top official of the CBN, however, said it was an offence not to disclose the volume of forex offered for sale in the market. According to the official, the apex bank had written to all the oil firms of the need to disclose what they are bringing to the market as this would enhance management of liquidity and monetary policy. “We were disturbed for the past few weeks when we noticed that, NNPC and Shell came to the market with undisclosed amount of forex”.

Vanguard investigations, however, revealed that the practice of not disclosing the volume of forex offered for sale is a deliberate attempt on the part of Shell and NNPC to create anxiety in the market hence compelling banks to quote higher bid rate hence maximizing the Naira value of the forex been sold.

According to a bank treasurer, “ when people don’t know hoe much forex is been offered for sale they would think that the amount been offered might not be sufficient for the market hence they quote higher bid rates to ensure that their bid succeed. But when people know the volume of forex been offered  scarcity  perception  will not be   there and they  will not  panick  with their  bid rate.

Meanwhile the CBN sold $80.840 million at the twice a week forex auction session of the Wholesale Dutch Auction System (WDAS) last week. This represents an  82 per cent decrease when compared with $146.85 million sold in the previous week.  On Tuesday the apex bank offered $50 million and sold $43.837 million. On Thursday it offered $80 million and sold $51.350 million.

On the other hand the Naira recorded slight appreciation as the exchange rate of the dollar decreased by 12 kobo to N126.6 per dollar from N126.72 per dollar in the previous week.

LONDON (Thomson IM) – The 75 bln stg Local Authority Pension Fund Forum (LAPFF), whose members own over 1 pct of shares in Royal Dutch Shell, has urged its pension fund members to vote against the company’s remuneration report at its annual general meeting on May 15.

The Forum is recommending an opposing vote on grounds that the company has failed to link directors’ management of non-financial issues such as health and safety with long-term pay awards.

The body said that, currently, such a linkage only exists to the annual bonus. It added the sustainable development component of the bonus, which covers a range of non-financial factors including safety, represents a maximum of only 5 pct of a director’s potential package.

‘The Forum does not consider this to be an adequate incentive, given the critical importance of issues like safety in the oil sector,’ LAPFF said in a statement.

It added that it also has ‘concerns’ about Shell’s climate change targets: ‘The Forum is not convinced that Shell’s target to reduce emissions to 5 pct below 1990 levels by 2010 is adequate.’

The Forum said that, while a reduction in emissions had been achieved between 2004 and 2006, the target effectively allows for a 20 pct increase in emissions between 2006 and 2010 rather than providing a real incentive for further emissions reductions.

It is now calling for an adjustment of Shell’s target in the bonus calculation to ensure that directors are ‘adequately stretched’ before receiving a payout.

LAPFF chairman Darrell Pulk said: ‘If companies believe that issues such as climate change, or safety, are critical to their future success then they need to make this crystal clear in the manner in which they reward their directors.

‘Simply linking a small portion of the annual bonus to non-financial targets does not focus executives enough on the longer term instead of the quarterly results treadmill.’

The forum said: ‘These are long-term issues, so why not link them to long-term incentives?’ By Raji Menon: +44 (0) 20 7422 4954; raji.menon@thomson.com ims/tc

By Benoit Faucon
Last Update: 9:02 PM ET Apr 29, 2007

LONDON (MarketWatch) — The U.K.’s Local Authority Pension Fund Forum Monday urged its members to vote against Royal Dutch Shell PLC’s remuneration report at its May 15 shareholders meeting over what it said was a lack of health and safety targets in executive pay.

The remuneration report contains both the pay awarded to executive and the policies set to decide them.

The LAPFF, whose members own over 1% of Shell shares, said it “believes the company should link management of non-financial issues such as health and safety to its long-term incentive plan.”

“Currently there is only linkage to the annual bonus and the sustainable development component of the bonus,” it added.

About 20% of the annual bonus is based on sustainable development, primarily based on number of reported cases of work-related injury, according to Shell’s annual report.

Although they have been less acute than at BP PLC some safety issues have been reported at Shell. The company was told in November to improve safety on its Clipper 48 natural gas platform in the U.K. North Sea. But the regulatory issue was formally closed in January.

The LAPFF also said it “is not convinced that Shell’s target (used to calculate bonus) to reduce emissions to 5% below 1990 levels by 2010 is adequate.” It called for “an adjustment of Shell’s target.”

-Contact: 201-938-5400 

By MIKE McKIBBIN
Monday, April 30, 2007

MEEKER — Finding and housing more than 500 workers to build an oil- shale test project in Rio Blanco County will be a challenge, according to Shell Oil Exploration and Production officials.

The company has three, 160-acre federal leases for oil-shale research, development and demonstration projects and estimates it will need 560 construction workers to build its first test project within the next few years.

Since 1982, Shell has tested a patented underground process that heats shale rock and pumps out the oil on private lands it owns north of De Beque in Rio Blanco County. It plans more tests and research, along with a freezewall to protect groundwater during the heating, until 2016. The company plans to make a decision on a commercial oil-shale project shortly after the next decade.

Shell Sustainable Development Manager Tracy Boyd is in charge of the project’s work force needs and said when Shell contracts with a company to oversee construction, it will provide enough workers.

“We have a lot of gas companies up here that have been really drilling a lot of wells,” he said. “As we get going, we might see them start to cut back a little, so we could see some of their workers move over here.”

Drilling wells for an oil shale test project differs from drilling an oil, gas or even water well, Boyd said, so workers might have to be trained.

“We’re going to be drilling holes to put electric heaters in, so we don’t have to have the well cased with concrete or perforated” to release gas, he said.

Shell spokeswoman Jill Davis said drillers would make up about 35 percent of Shell’s work force, with fewer numbers of carpenters, insulators and pipe fitters, electricians, welders, mechanics, heavy equipment operators and others.

“We think for 350 wells, or holes, for heaters, the freezewall and monitoring wells, we’ll need between 120 to 130 drillers and support people,” she said.

Boyd said the construction work force should peak in 2008-09.

As construction ends, work force numbers gradually drop to around 100 permanent, mostly Shell, employees, Boyd said. He estimates 20 people from that permanent staff will be on-site engineers. Other positions will include drafting technicians and support staff.

Many of the engineers Shell will need are at company headquarters in Houston, Boyd said.

“Most of the demand I see we’re going to have is what I call the operations workers, including the construction workers,” he said. “A lot of those operations positions require a two-year degree in an applied science.”

Shell and area natural-gas producers EnCana Oil and Gas and Williams Production have donated several million dollars to Colorado Mountain College and Colorado Northwestern Community College to expand or start those training and degree programs. Similar programs are planned at Western Colorado Community College.

Joel Journeay coordinates the process technology program at Colorado Northwestern Community College in Rangely. The new program is in its second semester, he said, with 16 students enrolled.

Meanwhile, the number of college students enrolled in engineering and other energy-related degree areas has declined, and many companies worry about a crisis when most of their baby boom workers retire.

Ron Brummett, director of the Colorado School of Mines career center, said energy companies such as Shell employ petroleum, geological, geophysical, electrical, mechanical and civil engineers.

“There’s not a whole lot of petroleum engineers out there, so a lot of companies will pay to train one of their other engineers,” he said.

Demand for all types of engineers exceeds the supply, Brummett said. His school awarded 504 bachelors in engineering and applied science degrees in the last school year.

Shell now has 100 workers living in temporary quarters at its Mahogany Research Project, which can expand to 400 beds.

 

EXTRACT: Local officials said that two bombs hit the Kolonnawa facility, destroying an oil storage tank, while the other two hit the Shell terminal, destroying a security hut and starting a fire that lasted 45 minutes.

April 30, 2007
Jeremy Page, South Asia Correspondent

The Tamil Tigers carried out its third air raid in just over a month yesterday, bombing fuel depots in Sri Lankan capital, Colombo, as thousands of people watched the cricket World Cup final on outdoor screens.

Fans watching the game in parks, hotels and bars scrambled for cover as Sri Lankan authorities cut power in the city and antiaircraft fire lit up the sky minutes before the raid at 1.50am local time.

“We thought it was firecrackers at first because [Sanath] Jayasuriya had scored three fours in an over,” said Sirial Ranasinghe, 41, a travel agent who was watching the game in a hotel garden in Colombo.

“One moment we were all cheering and partying and then the screen went dead and we heard gunfire and explosions.” Passengers boarding aircraft were called back to the terminals and air traffic was blocked for an hour. Cathay Pacific Airways and Emirates Airlines suspended all flights to Colombo until further notice.

The attack appeared to be designed to catch Sri Lanka’s armed forces off guard while an estimated 14 million of its 19.5 million people watched the final between Sri Lanka and Australia in Barbados.

It was the third time that the Tigers had deployed its tiny air force, exposing the country’s porous air defences and shaking confidence in the Sri Lankan economy.

The Tigers unveiled its air capability in March with a raid on a military airbase next to Colombo’s airport – their first aerial attack since they began fighting for an independent homeland in 1983.

That was followed by another air raid on a military base in northern Sri Lanka last week, which killed six soldiers. The rebels’ air force is thought to consist of between two and five Czech-made Zlin-143 twin-propeller aircraft which were smuggled to the Indian Ocean island in pieces.

Irasaiah Ilanthirayan, a Tiger spokesman, said that two of the aircraft had dropped a total of four bombs on two facilities that supplied fuel to the Sri Lankan Air Force.

The Tigers’ first target was a state-run oil depot in the suburb of Kolonnawa, about three miles north of Colombo city centre, while the second was a Shell gas depot in the suburb of Muthurajawela, he said.

Local officials said that two bombs hit the Kolonnawa facility, destroying an oil storage tank, while the other two hit the Shell terminal, destroying a security hut and starting a fire that lasted 45 minutes.

Doctors said that five people were wounded in the antiaircraft barrage. Lakshman Hulu-galle, a Defence Ministry spokesman, told The Times that there had been no casualties, no damage at Kolonnawa, and only minor damage at the Shell facilities.

He admitted that the Tigers’ air capability was a “new thing” for Sri Lankan forces and that they were still devising a strategy to deal with it but he denied they had been distracted by the World Cup.

“Although there was interest in the cricket, our security forces were very alert, ” he said. “Colombo is 100 per cent safe.” The Tigers had declared a ceasefire for Sri Lanka’s semi-final match against New Zealand but did not make a similar announcement for the final.

Cricket is wildly popular in Sri Lanka and one of the few things that bridges the divide between its ethnic Tamil minority, which is mostly Hindu, and the Sinhalese majority, which is mostly Buddhist.

Blue-sky thinking

— First World War pilots often had to improvise. One, Rex Warneford, used the only weapon he had – his carbine – to attack a Zeppelin

— Others often threw bombs out of their cockpits by hand, but Louis Strange invented a way to attach the bombs to Jaffna racks on his wings and drop them by pulling a wire

— In January 1974 Eddie Gallagher and Rose Dugdale hijacked a helicopter and used it to drop IRA bombs in milk churns on Strabane RUC station. They failed to detonate

http://www.timesonline.co.uk/tol/news/world/asia/article1722868.ece

EXTRACT: Mr Mitvol is best known for forcing Shell to cede a majority stake in the Sakhalin II project to Gazprom.

April 30, 2007
Steve Hawkes

Urals Energy, the oil and gas explorer listed in London, will risk the wrath of Oleg Mitvol, the Russian environmental regulator, today by revealing a spectacular 400 per cent upgrade in its estimated reserves in the country.

A report by the American experts DeGolyer and MacNaughton claims the upgrade means that the company could be worth almost double its present £500 million market capitalisation.

Urals’ new reserve figure — of 577 million barrels of 2P proven and probable oil and gas — follows the acquisition of the Dulisma field in Eastern Siberia last year.

It will come as Urals unveils Boris Yeltsin’s former son-in-law as its new chief executive. Leonid Y. Dyachenko, 41, an executive board member since Urals was set up in 2003, will replace Bill Thomas, the former Amoco executive.

Two weeks ago Mr Mitvol tore into Imperial Energy, a rival of Urals, sparking a 25 per cent share price fall, challenging the findings of a reserves upgrade carried out by DeGolyer and MacNaughton and released by Imperial last month. He said that the figure had been falsified, threatened to revoke Imperial’s production licence and rounded on Western independents operating in Russia as “artificial, puffed-up shell firms”.

Urals was one of 16 other companies that he claimed his department would be investigating. Analysts said that the attack could herald a push by the Kremlin to bring smaller foreign explorers under Russian control.

Mr Mitvol is best known for forcing Shell to cede a majority stake in the Sakhalin II project to Gazprom.

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article1723007.ece

April 29, 2007

Anglo-Dutch company Royal Dutch Shell is expected to show the impact of falling energy prices when it publishes first-quarter results on Thursday.

Consensus market forecasts for the first three months of the year are for 5.56 billion US dollars ( 2.78bn), nearly 5% lower than last year’s 6.09 billion US dollars ( 3.31bn), despite predicted sales more than 7% higher at 82 billion US dollars.

The company has had to cope with a steep decline in oil prices from last August’s record levels, which saw BP’s first quarter profits decline by 17% last week.

The City will also be watching for updates on production levels – hit last year by attacks on pipelines in Nigeria – as the firm looks to find new sources of oil and gas. In February, Shell predicted production of between 3.3 million and 3.5 million barrels a day during 2007.

Charles Stanley analyst Tony Shepard said: ‘Over the next 10 years, production from traditional areas such as the North Sea and Oman are expected to decline further and output from unconventional fields such as gas to liquids and oil sands are expected to progressively increase.’

Earlier this month Shell said it would pay 180 million to shareholders in compensation in an attempt to draw a line under the crisis over the downgrading of its oil reserves three years ago.

Meanwhile the UK’s biggest pub group, Punch Taverns, is expected to deliver a strong set of figures next Tuesday as it unveils its interim results.

The group, which was founded by entrepreneur Hugh Osmond, is forecast to benefit from impressive food sales, driving up like-for-like performance. The analyst consensus is for profits before tax of 128.1 million, up 10.5% on the previous year’s interims.

Goldman Sachs said the average profit in the tenanted and leased estate should show improvements thanks to the recent disposal of 869 pubs to rival Admiral Taverns for 326 million. Punch, which replaced Gallaher in the FTSE 100 Index last week, said the money would be used to reduce its debt.

Goldman analysts said the move was also sensible ahead of the smoking ban in England, as the pubs that were offloaded consisted of those that were smaller and less profitable and largely drinks-focused venues, which are set to suffer more when the ban comes in this summer.

Copyright © 2007 The Press Association, All Rights Reserved.  

EXTRACT: Shell Gas Lanka Ltd, whose liquefied petroleum gas (LPG) unloading and storage terminal in Muturajawela, which was hit by bombs within minutes of the first attack, is part of Netherland’s Royal Dutch/Shell Group since 1995.
 
April 29, 2007 (LBO) – The Indian and Dutch partners of petroleum facilities targeted by Tamil Tigers, which are jointly owned with the government of Sri Lanka, are confident of resuming normal business as the damage is minimal, officials said.

The Tigers first hit a petroleum facility in Kolonnawa, a suburb of Colombo, which is jointly owned by Indian and Sri Lankan governments since 2002.

One of the bombs failed to explode, and the other fell on a tar tank which did not catch fire.

The fuel distribution facility is run by Ceylon Petroleum Storage Terminals Ltd (CPSTL), is 33 percent-owned by Lanka IOC, a unit of the Indian Oil Corporation, which is an enterprise of the government of India.

The rest is owned by Sri Lanka government’s Ceylon Petroleum Corporation (CPC).

“It is a very bad thing, whether the company is owned by the Indian government or Sri Lanka,” Lanka IOC Managing Director K Ramakrishnan said.

“Fortunately nothing much happened and we will be operating without any disturbance.”

Lanka IOC owns a 33 percent stake in CPSTL, which was acquired from the Sri Lanka government when it entered the country’s oil business.

Shell Gas Lanka Ltd, whose liquefied petroleum gas (LPG) unloading and storage terminal in Muturajawela, which was hit by bombs within minutes of the first attack, is part of Netherland’s Royal Dutch/Shell Group since 1995.

Rimoe Saldin, finance director of Shell Gas Lanka, of which 49 percent is still held by the government of Sri Lanka said the company does not believe the attack was aimed at Shell’s gas terminal or that it would affect the multinational’s presence in the island.

“This is a new development. But we do not believe the attack was aimed at us,” Saldin told LBO.

“Shell always comes in for the long haul. The company is evaluating this situation.”

The Muturajawela terminal owned by Shell Terminals Lanka, is adjacent to a newly-built Ceylon Petroleum Corporation (CPC) oil storage complex, and is part of the same high security zone.

Its outer perimeter security is provided by government forces.

The Tamil Tigers claimed that they had hit two government oil storage facilities which were supplying the military.

Shell’s Saldin said there were no injuries to workers at the Muturajawela facility, north of the capital Colombo, from the one bomb that exploded at around 2.00 a.m.

“There was no damage to the gas storage tanks or pipelines,” Saldin told LBO.

“There was a minor fire which we contained in about an hour.”

The rebel air strike, using at least one light aircraft, caused some damage to fire water pumps and a fire engine at the facility.

Saldin said they do not anticipate any disruption of LPG supplies, with Sunday being a non-working day for distribution, and that the terminal was being checked.

Shell Gas Lanka’s has its bottling and distribution plant elsewhere, in Mabima.

EnergyRUSSIA

Russian Natural Resource Minister Yury Trutnev hopes that a significant number of Sakhalin II energy problems will be resolved. “We will calculate the damages, submit them and we will hope that a significant number of the problems will be resolved. For the remainder compensation will be paid to the state. It is good that we all had sufficient will, despite political pressure from across the ocean, to bring this to its conclusion and ensure that the company came to its senses and started to work with a proper attitude to Russian nature,” he told journalists in Moscow.

The minister said that by the end of the summer work would be completed on establishing damages and rectifying possible violations in subsurface operations for the Sakhalin II project.

He also said that at the moment “the ecological aspect of the Sakhalin-1 project is also being checked.” “We will also, it seems, approach Western companies with certain proposals,” he said.

28 April 2007 – Issue : 727
 
http://www.neurope.eu/view_news.php?id=73268

GUY DIXON
 
THE FTSE 100 briefly breached the 6,500 barrier last Thursday, taking its lead from Wall Street where the Dow Jones Industrial Average broke through the 13,000 mark.

But news that the US economy grew more slowly than expected in the first three months then expected weighed heavily on the FTSE and helped it close on Friday at 6,418.7 – a fall of 68.1 points over the week.

Yell, the Yellow Pages publisher, suffered a disastrous week after a warning over intense competition in the US wiped more than £800m off the value of the business. Shares finished the week more than 20% down at 480p.

It was also a mixed week for pharmaceutical firms as investors gave the thumbs-down to AstraZeneca’s £7.6bn acquisition of US vaccines firm MedImmune, suspecting it had overpaid.

Rival GlaxoSmithKline was hit by the weaker dollar in first-quarter results despite profits exceeding forecasts and ended the week down 3% at 1,440p.

Anglo-Dutch oil giant Royal Dutch Shell is expected to show the impact of falling energy prices when it publishes first-quarter results on Thursday.

Profits in the first three months of the year of £2.78bn are forecast, nearly 5% lower than last year’s £3.31bn, despite a predicted 7% increase in sales.

Investors will also be watching for updates on production levels, which were hit last year by attacks on pipelines in Nigeria, as the firm looks to find new sources of oil and gas.

Earlier this month Shell said it would pay £180m to shareholders in an attempt to draw a line under the crisis over the downgrading of its oil reserves three years ago.

Punch Taverns, the UK’s biggest pubs group, is expected to deliver a strong set of interim figures on Tuesday.

The group, headed by Giles Thorley, is forecast to benefit from impressive food sales, driving up like-for-like performance, and analysts are forecasting profits before tax of £128.1m, up 10.5% on the previous year’s interims.

Goldman Sachs said the average profit in the tenanted and leased estate should show improvements due to the recent disposal of 869 pubs to rival Admiral Taverns for £326m.

Punch said the money would be used to reduce its debt.

Performance at Punch’s Scottish operations will also be watched closely next week following the introduction of the smoking ban last March. Sales in the division sank 1.5% in the first half of last year and any sign of further deterioration could be seen as an indication of how the UK arm will fare after the ban comes into force across England and Wales.

Argos and Homebase parent Home Retail Group will announce its first full year results since splitting from Experian on Wednesday. The retailer said last month that full-year profits were likely to be “slightly above” expectations after a stronger performance at catalogue business Argos in the last eight weeks of the period, up to 3 March. But the group added it remained cautious about prospects as it expected the retail environment to be challenging.

Analysts expect profits before tax to rise 11% to £373m.

DIY chain Homebase is expected to add gloss to the full year figures, with like-for-like sales having risen 9.9% in the eight week period to the end of the financial year.

Online gaming group 888 Holdings announced earlier this month that talks regarding a possible “transaction” with bookmakers Ladbrokes had been terminated. With its full-year results due tomorrow, the City will be looking to see if the company provides any update on a possible tie-up or disposal of the company.

Analysts at Numis are forecasting pre-tax profits of £38.2m for the year to December 31.

This article: http://scotlandonsunday.scotsman.com/business.cfm?id=659242007

Last updated: 29-Apr-07 01:00 BST

Comments

1. John Donovan, Colchester, UK / 8:39am 29 Apr 2007

Your article mentions Shell’s desire to draw a line under the reserves scandal which has destroyed its reputation.

The June 2005 Royal Dutch “unification” AGM”, arising from the reserves scandal, commenced and ended with a classic Shell TV commercial being shown on giant screens. It featured the legendary crooner Bing Crosby singing the virtues of Shell ending with the memorable concluding lyric: “You can be sure of Shell!” How could anyone have forecast that The Wall Street Journal would end up publishing a headline, as it did the other day, saying “Shell settles U.S. fraud case”. Bing must be turning in his grave. I suspect the malady will linger on for many years to come.

Posted by John Donovan, co-owner of the website www.royaldutchshellplc.com