Posts from ‘May, 2007’

By Rebecca Bream and Ben Hall in London
Published: May 30 2007 03:00 | Last updated: May 30 2007 03:00

BP, the global energy group, last night announced a $900m (£455m) gas exploration deal with Libya, in a sign of Tripoli’s transformation from pariah to attractive investment destination for UK and US companies.

Tony Hayward, BP’s new chief executive, described the agreement as the group’s “single biggest exploration commitment”.

The deal coincides with a visit to Tripoli by Tony Blair, the outgoing prime minister.

Describing the planned contract as “unthinkable” only a decade ago, Mr Blair said after a meeting last night withMuammar Gadaffi, Libya’s leader: “The relationship between Libya and Britain has completely transformed in the past three years.”

He added that investment links were “going from strength to strength”.

US and British energy companies have been scrambling to get back into Libya over the past two years to secure a share of the country’s largely unexplored gas and oil reserves.

Their return follows the lifting of sanctions after Tripoli abandoned weapons of mass destruction and resolved the crisis over the 1988 Lockerbie bombing.

Some analysts said yesterday that BP was “a little behind the curve”, returning to Libya after oil groups including Royal Dutch Shell and ConocoPhillips. BP will also have to vie with companies long established in the north African country, such as Italy’s Eni and Spain’s Repsol.

Analysts yesterday said BP needed to expand in new areas, especially as it faced the threat of losing its licence to exploit one of its main Russian assets, the Kovykta gas field.

“As Russia becomes more of a risk, BP’s portfolio starts to look weaker compared with Shell’s,” said Oswald Clint, oil analyst at Sanford Bernstein. “Opportunities are few and far between, and BP needs to grasp all the opportunities it can.”

BP withdrew from Libya in 1974 when the country’s oil industry was nationalised by Colonel Gadaffi. But early last year the company said it was in early-stage talks about gas projects.

A delegation of BP executives, including Mr Hayward, were in the Libyan capital last night as Mr Blair arrived in Tripoli for the beginning of his trip, part of an international tour before standing down on June 27.

Mr Blair can point to Libya’s decision in 2003 to destroy its weapons arsenal voluntarily as a rare achievement in a foreign policy otherwise overshadowed by the war in Iraq.

Col Gadaffi has complained that his country has yet to see the benefits of disarmament. But with large oil and gas reserves, and a more open investment policy than most Opec members, Libya has become highly desirable for foreign companies.

Libya’s Sirte Basin is the largest oilfield in Africa, holding22 per cent of the continent’s 300bn barrels of reserves.

But venturing into Libya, where economic policy shifts depend on the mood of Col Gadaffi, is challenging. Foreign companies operating in the country are finding that high taxes and royalties mean their profits margins are lower than they originally might have expected.

Copyright The Financial Times Limited 2007

 

By Rebecca Bream andBen Hall in London
Published: May 30 2007 03:00 | Last updated: May 30 2007 03:00

BP yesterday said it was set to announce a $900m gas exploration deal with Libya, a country it withdrew from more than 30 years ago when its leader Col Muammar Gaddafi nationalised the oil industry.

The deal came as Tony Blair, the UK prime minister, began a tour of Africa with a visit to Libya and is a further sign of Tripoli’s increasing ties with the west after decades of isolation.

Mr Blair said the planned deal would have been “unthinkable” only a decade ago, but was the product of a “transformed” diplomatic, security and commercial relationship between Libya and the west.

It is one of a series of commercial contracts for UK companies to be unveiled during a visit to Africa by Mr Blair.

The prime minister’s visit to Tripoli kicked off his last international tour before he stands down on June 27. It is intended to underline his foreign policy achievements and to build momentum for fresh commitments on climate change and aid to Africa ahead of next week’s G8 summit of industrialised nations in Germany.

Mr Blair’s tour will include Sierra Leone, where he deployed UK troops in 2001 to curb civil violence, and South Africa, where he will be seeking strongerAfrican and international action to end fighting in Darfur and an economic crisis in Zimbabwe.

Mr Blair regards Libya’s emergence from pariah status as a vindication of his activist foreign policy and tough stance against nuclear proliferation, which has been rewarded by close co-operation on counter-terrorism between London and Tripoli.

Major oil companies including Royal Dutch Shell, Eni and ConocoPhillips have been moving back into Libya since the US lifted sanctions against the country in 2004. One oil analyst said yesterday that BP was in fact “a little behind the curve”.

BP withdrew from Libya in 1974 when the oil industry there was nationalised by Col Gaddafi.

Libya is attractive to foreign oil companies because it has large oil reserves and is more open to investment than some other Opec members. The country’s Sirte basin is the largest oil field in Africa, holding 22 per cent of the continent’s 300bn barrels of reserves. Much of Libya’s oil is located onshore and close to the surface, making it relatively low cost to extract.

But foreign companies already operating in Libya are finding high taxes and royalties mean their profit margins are lower than they might have expected.

Analysts said BP needed to expand in new areas, especially as there was a risk it could be stripped of its licence to exploit one of its main Russian assets, the Kovykta gas field, as soon as this week.

“As Russia becomes more of a risk, BP’s portfolio starts to look weaker compared with Shell’s,” said Oswald Clint, oil analyst at Sanford Bernstein.

Copyright The Financial Times Limited 2007

By Stacy-Marie Ishmael
Published: May 30 2007 03:00 | Last updated: May 30 2007 03:00

The shrinkage of the London stock market is accelerating, driven by frenetic takeover activity and continuing corporate share buy-backs, according to a survey.

Shares worth net $60bn (£30.3bn) have either been bought by acquirors or corporates themselves since January, equivalent to 1.4 per cent of the market’s overall capitalisation, data from TrimTabs Investment Research shows. The level would have been higher but for a continued flow of initial public offerings.

Most of the shrinkage came from cash-funded takeovers. Deals announced in London since the beginning of April surged to $54bn – almost equal to the value of all deals recorded in the last two quarters of 2006. Trim- Tabs said private equity groups were involved in half of these deals.

Some of the shrinkage is also attributable to corporate share buy-backs. BT Group, BP and Royal Dutch Shell have all announced big buy-backs so far this year. Stock buy-backs reached $520m daily this past week, the strongest pace seen since December of last year.

“Buy-backs have been pretty stable on the LSE,” Vincent Deluard, editor of TrimTabs’ weekly Global Liquidity Review, said. “But private equity buy-outs have soared. It just cannot continue. There’s only so much private equity can digest at the same time – and there are only so many listed companies left.”

Still, Mr Deluard thinks there are a few large buy-out candidates left, including Royal Dutch Shell, Rio Tinto and Friends Provident.

Copyright The Financial Times Limited 2007

Press Association
Tuesday May 29, 2007

Oil giant BP is to confirm its return to Libya’s oil and gas fields for the first time in more than 30 years.

A spokesman for prime minister Tony Blair, who is on a five-day visit to Africa, spoke of BP’s return at a briefing today.

BP has not operated in Libya since 1974, when the oil industry was nationalised.

The group confirmed today it had been in talks with the Libyan government over re-entering the country.

BP’s move back into Libya comes two years after rival Royal Dutch Shell announced its return to the country, timed to coincide with the Mr Blair’s 2004 visit.

Mr Blair became the first British leader in 60 years to visit Libya after Colonel Gaddafi abandoned efforts to produce weapons of mass destruction and handed over agents blamed for the bombing of an airliner over Lockerbie.

British companies have been keen to exploit business opportunities in Libya since sanctions were formally lifted in 2003, with the country attractive in particular to oil companies.

Libya produces high quality “sweet” crude oil at low costs and has plentiful reserves of both gas and oil.

The country’s first oil fields were discovered in the late 1950s and Libya became a major producer in the 1970s before nationalisation and introduction of United Nations and US sanctions.

State-owned company National Oil Corporation (NOC) now runs the country’s oil industry, but is now actively drawing up agreements with oil majors, such as Shell, which signed a long-term strategic partnership with NOC in March 2004.

BP was reported to be close to striking a similar deal in December 2004, with suggestions the company was looking to invest in projects including the construction of a gas liquefaction project, gas pipelines and gas field developments.

The group’s former chief executive Lord Browne – who recently brought forward his retirement from the group after being found to have lied to the high court about his private life – also reportedly flew to Libya in 2005 to hold talks with Colonel Gaddafi.

http://business.guardian.co.uk/story/0,,2090462,00.html

By Roland Gribben
Last Updated: 1:09am BST 30/05/2007

BP is returning to Libya after 34 years as it struggles to maintain its interests in a major Russian gas complex.

The price of re-entry to a desert state with the biggest oil reserves in Africa is a down payment of $900m (£450m) in an exploration programme targeted at tapping the country’s huge gas potential.

Tony Hayward, new chief executive, signed a deal that gives BP exploration rights over 54,000 square kilometres onshore and offshore and could involve total spending of up to $2bn in the deal with the state-owned National Oil Corporation.

Mr Hayward said: “It is BP’s single biggest exploration commitment.”

Tony Blair heralded the BP deal during a visit to Libya as part of his farewell tour and to mark the rehabilitation of Muammar Gaddafi following the lifting of economic sanctions. He said British companies stood to win huge contracts because of Gaddafi’s support in the fight against terrorism.

Shell has already made a Libyan comeback but the BP accord provides relief for an energy giant attempting to recover from the hasty resignation of Lord Browne, chief executive, and a crisis over its US safety record.

Mr Hayward has been working behind the scenes for more than a year to hammer out the exploration deal and cope with demanding terms following the signing of a memorandum of understanding with the state oil company. “This is his baby,” said an insider.

BP was kicked out of Libya during Gaddafi’s nationalisation blitz. The company fought a dogged rearguard action, tracking oil from its former Libyan interests to try to block deliveries, but after a lengthy legal battle ended up with compensation of just £17.4m.

Mr Hayward is facing a tougher battle in Russia where BP and its partners stand to lose their licence to operate the huge Kovytka gas field in Siberia because the Kremlin wants to see Gazprom, the state gas giant, in control.

Russian authorities say TNK-BP has failed to meet licence conditions and a meeting of regulators on Friday could end with the companies being stripped of the licence.

TNK-BP says it is ready to let Gazprom move into the driving seat but a Gazprom spokesman said: “The project can be basically described as a suitcase without a handle. It would be a pity to throw it away but it is tough to drag it around.”

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/05/30/cnbp30.xml 

May 30, 2007
Steve Hawkes

BP is poised to return to Libya after a 33-year absence in the first big contract to be signed by Tony Hayward, its new chief executive.

The details of a $900 million (£454 million) gas exploration deal were due to be released last night as the centrepiece of a surprise visit to the former pariah state by Tony Blair.

Shokri Ghanem, chairman of Libya’s state-owned National Oil Corporation, said yesterday: “We are going to sign with BP an exploration and prospecting accord on Libyan territory worth $900 million.”

Confirmation of the agreement would mark a milestone for BP continually dubbed “Blair Petroleum” because of its close ties to the Labour Government. It was forced to leave the North African country, seen by analysts as one of the few under explored regions in the world, in 1974 when Colonel Gaddafi said that he was going to renationalise the oil and gas industry.

Shell was one of the first Western companies to return when it unveiled a $1 billion gas exploration deal three years ago in Tony Blair’s last visit to Libya. Western companies began to negotiate new deals when the United States and the European Union lifted sanctions against the Gaddafi regime in 2004.

Mr Hayward was in Tripoli yesterday alongside Mr Blair. Officially, BP would say only that it remained in “constructive talks” with Libya, but one insider told The Times: “The prize in Libya is potentially a great one.”

Libya, an OPEC member, is thought to hold reserves of nearly 40 billion barrels of oil and at least 45,000 billion cubic feet of gas.

The country is expected to play a key role in supplying gas to the UK in the coming years, given its proximity to Europe.

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article1857160.ece

May 30, 2007
By Justin Brown

Johannesburg – Engen Petroleum had agreed to acquire a 60 percent stake in Shell’s Democratic Republic of Congo (DRC) petroleum business as well as a 13 percent stake in a DRC petroleum distributor, Engen said yesterday.

Engen Petroleum spokesperson Tania Landsberg said the company would not disclose the value of the purchase due to confidentiality agreements.

Landsberg said she did not know how much fuel the DRC businesses distributed in the country nor the number of people that the operations employed.

The deal is subject to approval by the DRC government.

Engen said the acquisition was part of the group’s strategy of expanding its petrol distribution in sub-Saharan Africa.

Engen distributes 26 percent of South Africa’s fuel.

The company also has a “significant presence” in 14 other African countries.

Engen chief executive Rashid Yusof said in a statement yesterday: “Engen welcomes this investment opportunity. We have the utmost confidence in the DRC, the government and its people and are very positive about the prospects and opportunities for this company now and in the future.”

“We have been interested in this specific deal for some time and consider it a great opportunity to build our network in Africa,” the Engen chief added.

Engen operates in the DRC through a joint venture with Total and Belgian-based Aristea, which distributes petroleum.

Engen has a 49 percent stake in Aristea. Aristea holds 60 percent of Fina Congo and is the managing partner.

The remaining 40 percent is owned by the DRC government.

Xavier Le Mintier, a Shell Oil Products Africa executive, said: “Shell’s divestment is in accordance with the Shell group strategy to focus on more upstream and profitable downstream business.”

http://www.busrep.co.za/index.php?fSectionId=566&fArticleId=3856522

By Marc Wolfensberger

May 29 (Bloomberg) — Iran expects to sign a multibillion- dollar agreement with a foreign partner next month to produce liquefied natural gas, or LNG, from the South Pars field, the world’s biggest gas reservoir.

“We’ve signed the draft contract with a foreign contractor and the main contract will be signed within the next month,” Ali Kheir-Andish, the project director, said today on Shana, the oil ministry press agency, without providing the name of the foreign company. The LNG project, called IRAN LNG, will use gas from phase 12 of South Pars, he said.

In April, OMV AG, central Europe’s biggest oil company, signed a preliminary agreement to develop that phase and build an onshore gas liquefaction plant. Vienna-based OMV said then a final agreement might not be made until the second half of this year. “This deadline is too early for us,” OMV spokesman Thomas Huemer said in a telephone interview from Vienna today.

Iran, the site of the world’s second-largest oil and gas reserves, is pushing foreign companies to sign energy agreements quickly, as its international isolation grows over its nuclear program. Total SA and Royal Dutch Shell Plc are studying similar LNG projects in Iran and both companies have delayed decisions, citing the country’s geopolitical situation.

“We’ve said `second half of this year,’ and we’re sticking to this deadline,” OMV’s Huemer said. It “could be” that Iran is talking to other foreign companies to develop that phase 12, the spokesman said.

Qatar’s Advantage

Qatar, which shares ownership of South Pars, has taken advantage of Iran’s economic isolation to widen the gap with its neighbor in developing the field. The Arab country became the world’s largest LNG exporter in 2006, ahead of Indonesia. Iran still hasn’t produced its first ton of LNG.

The field, discovered in 1966 by Shell, contains an estimated 600 trillion cubic feet of gas, or almost a 10th of the world’s reserves.

Iran LNG is expected to yield 10 million tons of LNG and 700,000 tons of liquefied petroleum gas (LPG) a year, Shana said. LNG is gas cooled to liquid form for transport by ship to places not connected by pipelines. LPG is generally used by households for cooking and heating.

In February, as part of the Phase 12 development, Iran awarded a $500 million LNG and LPG storage-tank contract to a group that includes South Korea’s Daelim Industrial Co. and the economic arm of Iran’s Islamic Revolutionary Guards Corps.

To contact the reporter on this story: Marc Wolfensberger in Tehran at mwolfens@bloomberg.net

Last Updated: May 29, 2007 04:04 EDT

Associated Press 05.29.07, 4:44 PM ET

Houston-based energy company Ashmore Energy International on Tuesday said it will buy Royal Dutch Shell PLC’s stakes in energy businesses in Brazil and Bolivia, including part of the Bolivia-Brazil natural gas pipeline.

Financial terms of the deal weren’t disclosed, and the transaction requires regulatory approval and consent, AEI said.

AEI already owns stakes in each of the projects from its May 2006 purchase of the Latin American assets of bankrupt U.S. energy company Enron Corp.

AEI will increase its stake in both the Bolivian and Brazilian sections of the Bolivia-Brazil natural gas pipeline, which has capacity to transport 30 million cubic meters of natural gas a day.

AEI will increase its stake in the Bolivian unit, GasTransboliviano SA to 34 percent from 17 percent, and will raise its stake in the Brazilian unit, Transportadora Brasileira Gasoduto Bolivia-Brasil SA, to 8 percent from 4 percent, according to the statement.

AEI also will buy 25 percent of Bolivia’s largest natural gas transport company, Transredes Transporte de Hidrocarburos SA, increasing its overall stake to 50 percent.

“These assets are strategically located and are critical for the energy supply of the region, and the acquisition will further strengthen our platform to grow in South America,” said Joao Carlos Albuquerque, AEI’s vice president responsible for Brazil and Bolivia.

In 2006, the Bolivian government took over the other 50 percent of Transredes, which had been in the hands of Bolivian pension funds. As part of its drive to nationalize the hydrocarbons industry, the government has said it wants to own at least 50 percent plus one share of Transredes.

AEI also will buy Shell’s 50 percent stake in the Cuiaba Integrated Project in Brazil, increasing its stake to 100 percent. The project includes a 480-megawatt thermoelectric power plant in Cuiaba, Mato Grosso state, and an accompanying natural gas pipeline transporting Bolivian gas to Cuiaba.

Copyright 2007 Associated Press. All rights reserved.

LONDON, May 29 /PRNewswire-FirstCall/ — Royal Dutch Shell plc (NYSE: RDS.A; NYSE: RDS.B) announces that on 29 May, 2007 it purchased for cancellation 450,000 “A” Shares at a price of 27.61 euros per share. It further announces that on the same date it purchased for cancellation 250,000 “A” Shares at a price of 1874.38 pence per share.

Following the cancellation of these shares, the remaining number of “A” Shares of Royal Dutch Shell plc will be 3,672,100,000.

As of 29 May, 2007 2,759,360,000 “B” Shares of Royal Dutch Shell plc were in issue.

SOURCE Royal Dutch Shell plc