Royal Dutch Shell has shut three oil flow stations in Nigeria’s Niger Delta region after a pipeline was sabotaged, a company spokeswoman has said.
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Posts from ‘January, 2010’
More job cuts at ailing Royal Dutch Shell
The Sunday Times
January 31, 2010
By Danny Fortson
PETER VOSER, boss of Royal Dutch Shell, will warn of fresh job cuts this week as he reveals sagging profits at the oil giant. Since taking the top job six months ago Voser has cut 5,000 staff. He warned this weekend that the restructuring “may need to go further” as the company battles falling production and a huge cost base. He added: “As part of that, it may also mean that some more people have to go.”
Analysts expect the group to report a quarterly profit of $2.9 billion (£1.8 billion) on Thursday, a 40% drop over the same period last year. This would take its annual profit to $13.4 billion, down 57% on the $31.4 billion it made in 2008 when the oil price hit a record of $147 a barrel.The results will come in stark contrast to rival BP. Analysts expect it to post a profit of $4.8 billion for the quarter, about 75% better than the same time a year ago. The jump is largely thanks to the overhaul initiated by Tony Hayward since he took over as chief executive in 2006.
Peter Hitchens, analyst at Panmure Gordon, said: “The question is, can Voser turn it round and get Shell going in the right direction? The underlying business is still in decline.”
Voser is carrying out a raft of other cost-cutting measures, including the sale of large swathes of its Nigerian oilfields, a plan revealed in The Sunday Times last month.
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Chinese in £3bn battle to buy Shell assets in Nigeria
Shell to sell oil licenses in Nigeria
By Tom Burgis in Lagos
Published: January 30 2010 03:20
Royal Dutch Shell is to sell its stake in three Nigerian oil-producing licenses, underlining its new chief executive’s cool stance towards what was long a mainstay of the group’s operations.
In recent weeks fresh rumours have circulated that Shell was seeking to dispense of Nigerian assets worth billions of dollars.
Peter Voser, Shell’s new chief executive, said in October that the group’s production in Nigeria had fallen to 120,000 barrels a day from 300,000 b/d before the start of a rebellion by militant groups in the Niger delta demanding a greater share of the region’s oil wealth.
Mr Voser has said Shell is “no longer depending on Nigeria for growth”.
FULL FT ARTICLE (SUBSCRIPTION)
Copyright The Financial Times Limited 2010.
More Shell related FT Articles
Shell investors call for clarity – Jan-17
Court rules on Niger Delta oil spill – Dec-30
Time to redraw the battle lines – Dec-30
Shell reins back expectations – Nov-29
Shell COE Peter Voser warns of more redundancies
Sunday Telegraph
BP expected to exend gap with Shell in the battle of oil giants
The British oil major, now the biggest in Europe, is currently winning the race against its Anglo-Dutch rival
By Rowena Mason
Published: 8:12PM GMT 30 Jan 2010
Royal Dutch Shell is likely to endure more humiliation at the hands of BP this week, when it posts profits an estimated $1.7bn lower than its rival.
BP, which recently stole Shell’s crown as Europe’s largest oil company by market value, is likely to report profits of $4.6bn (£2.9bn). This 80pc up from $2.6bn in the last quarter of 2008 on a “replacement cost basis – a measure used by oil companies to strip out the effect of changing inventories.
BP is reaping the harvest of an aggressive $4bn cost-cutting drive that began before the recession and doubled in pace last year.
Meanwhile, analysts have been downgrading the forecasts for Shell’s profits over concern that its refining business has been performing below expectations.
According to consensus estimates, it is likely to report that profits have fallen to $2.9bn from $4.8bn in same quarter of the 2008, when it reports on Thursday.
Shell started cutting costs much later than its rival, resulting in 5,000 job losses during the downturn.
Its chief executive Peter Voser warned last week at the Davos economic summit that there were likely to be more redundancies this year.
“It’s normal in any business that you have to go further and you have to operate your operating expenditure in a very tough way,” he said, sounding a cautious note on global recovery. “As part of that, it may also mean that some more people have to go.”
Both the companies’ profits are expected be down sharply for the year – in the case of BP, 40pc lower at $15bn, and more than 60pc down at $11.4bn for Shell.
The first US oil company to report, Chevron, showed on Friday the difficulty of maintaining healthy profits when refining margins remain low, with hefty losses in that division.
The corporation posted a 37pc fall in quarterly profits, as the cost of producing petrol and diesel prices failed to keep up with a big rise in the cost of crude oil.
The second-largest oil company in the US made a net profit of $3bn between October and December, down 37pc from in 2008.
Data from BP shows that companies are now making just $1.49 per barrel of petrol product, compared with $5.19 a year ago.
Downstream divisions – responsible for refining, marketing and selling petrol-based products – are expected to suffer at all the majors, owing to lower demand in the recession. Many oil companies are frantically trying to offload their refineries, concerned about overcapacity in the industry.
Shell is in the process of selling its UK-based Stanlow refinery in Cheshire to Indian company Essar and three others in Europe.
A higher oil price of $76.13 in the fourth quarter – almost a third above last year – will have supported profits in the exploration and production arms.
But BG Group, the oil and gas producer, is still likely to report pre-tax profit of £1.05bn on Friday – down 10pc from £1.16bn a year earlier, with annual profits 23pc below last year’s £4.1bn.
Analysts often see discrepancies between BP and Shell’s performance as merely part of the cycle of rivalry between the two companies.
BP rose by 19pc on the stock market this year and boosted production to 3.9m barrels, while Shell fell by 3pc and saw its output drop below 3m barrels.
“Shell began restructuring last year, so is lagging BP, and furthermore its massive capex expenditure in recent years does not see new volumes start to kick in until 2011-2012,” said Richard Griffith, an analyst for Evolution Securities. “On balance, earnings won’t look great when they’re announced but we see more scope for positive surprises at BP and less dividend risk.”
Most industry experts are more concerned with the expected dash for new production assets in the aftermath of the recession than any temporary drop in profitability.
Citi analyst Mark Bloomfield said: “We expect the focus to shift from a defensive cost-saving mode towards pursuit of opportunities for expansion.”
This shift in emphasis towards new projects has led some City investors to favour Shell over BP.
Mr Voser has promised that Shell would commit to record capital expenditure. It is forecast to see a boost in output from European gas and Nigeria this year and, looking to 2013 and beyond, it will see new prospects at its Qatar gas-to-liquids project, and the Canadian oil sands come on stream. The company has staked its future on a number of technically difficult fields, including unconventional reserves in Canada and deepwater projects in the Gulf of Mexico and Brazil.
BP will also increase production over the next couple of years and is exploring deep drill sites in the Gulf of Mexico and under the Arctic ice.
However, it lacks its competitor’s big flagship projects to lift future output.
Is Iraq’s oil strategy too ambitious?
Published: Jan. 29, 2010 at 4:46 PM
BAGHDAD, Jan. 29 (UPI) — The chief executives of two of the world’s oil giants have been waxing lyrical about helping Iraq quadruple its oil production over the next decade, but questions linger about whether it can be done.
Some energy industry experts believe that given the plethora of problems that the Iraqi government of Prime Minister Nouri al-Maliki is having to deal with, Baghdad is being way too ambitious.
Others are less sanguine about the prospects of Iraq raising its production level from the current 2 million barrels a day to 12 million bpd by 2020.
Tony Hayward, CEO of BP, is confident it can be done. He said during the recent World Economic Forum in Davos, Switzerland, that even though Iraq has yet to finalize a long-delayed oil law, he believes that aided by foreign oil companies and their state-of-the-art technology Baghdad will hit its target.
BP and the China National Petroleum Corp. were awarded a 20-year production contract for the huge Rumaila field, with reserves estimated at 17.8 billion barrels, in southern Iraq in leasing auctions held in Baghdad in 2009.
Hayward, speaking at a Davos session on sustainable energy supply, reckons that BP will be able to boost Rumaila’s current output of 1 million barrels a day to 3 million bpd by 2020.
“All the current plans show more is possible, but 10 million barrels per day is realistic,” he said.
Peter Vosser, Hayward’s opposite number at Royal Dutch Shell, which has two large oil projects now under way in Iraq, was equally confident that the country is on track to rival Saudi Arabia’s production level.
Shell, along with Exxon Mobil, completed a deal on Monday to develop the vast West Qurna Phase 1 field, which holds 7 billion barrels of recoverable oil.
Shell also is part of a consortium with Malaysia’s state-owned oil company Petronas that won the Majnoon field in eastern Iraq. It contains an estimated 12.8 billion barrels of oil.
Shell has pledged to boost production there from a paltry 46,000 barrels a day to 1.8 million.
If Iraq gets anywhere near its production target, it will provide a new supply of oil at a period when world demand for energy is expected to swell from the current level of 85 million barrels a day to 100 million by 2030.
In that context, Iraq will have to pull out all the stops to boost production in an industry that has been battered by war and international sanctions over two decades and which has had no investment in that time.
Hayward stressed, “We’re cautiously optimistic about the potential that Iraq can play in providing a new source of supply to global oil markets.”
But he admitted that this could be jeopardized by what transpires in Iraq, where violence has surged recently as the country heads toward critical parliamentary election on March 7.
“The realities of the challenges of execution on the ground and the need to build capability on the grounds mean things will happen a little slower than all of us are perhaps planning for today,” Hayward said.
“The resources there are relatively easy to bring on stream and there is no reason to believe that Iraq can’t be producing 10 million barrels per day by 2020 or so.”
Iraq’s ambitions could be snarled if the Organization of Petroleum Exporting Countries imposes a new production quota. Iraq, a member of OPEC, has not had a quota since the 1990 invasion of Kuwait.
But in the meantime, the experts seem split on Iraq’s prospects as outlined by its go-get-em oil minister, Hussain al-Shahristani, who spent years in Saddam Hussein’s torture gulag.
“A major, rapid production increase, as envisioned by Dr. al-Shahristani, is not entirely unprecedented — Russia managed something comparable in the 1990s although that was a recovery to previous levels, not a new high,” according to energy analysts Richard Savage and Alex Martinos at Mirabaud Securities.
“However, in the case of Iraq, it must be seen as highly unlikely. Even though the worst of the post-invasion strife seems, thankfully, to have passed, Iraq still faces a raft of challenges.”
Savage and Martinos concluded: “The 12 million barrels per day target is, arguably, inflated after a licensing process that encouraged competing companies to set high production targets for each field, with limited economic penalties if these are subsequently missed.”
© 2010 United Press International, Inc. All Rights Reserved.
Ex-BAE middleman charged with bribery
First ever criminal case is brought during corruption investigations into British weapons manufacturer, which began more than five years ago after disclosures in the Guardian
David Leigh and Rob Evans
Friday 29 January 2010 19.47 GMT
One of BAE’s former confidential agents, Count Alfons Mensdorff-Pouilly, was today charged by the Serious Fraud Office with bribery over arms deals. He was remanded in custody in London.
It is the first ever criminal case brought during long-running corruption investigations into the British weapons manufacturer, which began more than five years ago after disclosures in the Guardian.
However, in an unusual turn of events, the attorney general, Lady Scotland, has not yet agreed to let the case proceed. David Huw Williams QC, for the SFO, told Highbury Corner magistrates court that the case should be adjourned for a month while she decided.
The charges were formally brought by the SFO director, Richard Alderman.
Mensdorff-Pouilly, 56, of Austria, was accused of conspiring to make corrupt payments to promote the sale of fighter jets to Czech Republic, Hungary and Austria. He has not yet entered a plea.
Because the charges have been brought under the 1906 Corruption Act, Lady Scotland can halt the case before it reaches trial. A bribery bill is currently going through parliament but has not yet become law.
*The SFO was prevented from investigating allegations of BAE corruption in Saudi Arabia. Tony Blair, then prime minister, intervened on the grounds the probe was displeasing the Saudi royal family, and a threat to British “national security”.
The move to lay charges was “an operational decision by the director of the SFO”, Scotland’s office spokesman said.
The SFO said the count was charged with conspiracy to give corrupt payments between 2002 and 2008 to agents and officials of central European governments “as inducements to secure, or as rewards for having secured, contracts from those governments for the supply of … Saab/Gripen fighter jets by BAE Systems plc”.
Mensdorff-Pouilly, who has purchased a sporting estate at Dalnaglar Castle, Perthshire, was charged after an international investigation, the SFO said. Those involved in the inquiry included the ministry of defence, police in London, Viennese police and prosecutors, and the Europe-wide prosecutors’ group Eurojust.
The charges follow the SFO announcement last year that it intended to bring a criminal prosecution against BAE for alleged bribery in central Europe and Africa if the attorney general agreed. There was then a prolonged delay while the SFO made further inquiries.
The move to pursue BAE with criminal charges followed the breakdown of talks aimed at a US-style plea bargain under which the firm would have pleaded guilty to certain offences and paid a large fine. No charges have yet been brought against BAE or any of its employees. BAE said last night the firm could not comment in view of criminal proceedings.
*Royal Dutch Shell and BP played a money laundering role in the Saudi/Al-Yamamah BAE arms scandal
Nigeria militants ‘end truce in Delta oil region’
BBC NEWS: Mend has carried out many attacks over several years
Saturday, 30 January 2010
A militant group in Nigeria’s oil-rich Niger Delta says it is ending the ceasefire it declared last October.
Jomo Gbomo, who said he was a spokesman for the group Mend, said it did not believe the government would restore control of resources to local people.
Mend has demanded that residents be given a greater share in profits from oil resources and land.
It warned oil companies to prepare for what it called an all-out onslaught against installations and personnel.
Analysts say it is not yet clear if this statement comes from the whole of Mend – the Movement for the Emancipation of the Niger Delta – or just a faction that did not accept the offer of an amnesty from President Umaru Yar Adua.
‘Nothing will be spared’
In a statement announcing the end of the ceasefire, the group said that the decision had been taken “after careful consideration and extensive consultation”.
“All companies related to the oil industry in the Niger Delta should prepare for an all-out onslaught,” it went on.
“Nothing will be spared,” it added, saying that the companies themselves would “bear the guilt” if their staff were harmed.
The BBC’s Caroline Duffield in Lagos says the statement will raise fears of a fresh wave of kidnappings targeting foreigners.
Militants have carried out a series of attacks which have cost Nigeria millions in lost revenue over the years.
The attacks have meant that facilities in the area have been unable to work beyond two-thirds capacity, costing $1bn a month in lost revenue.
Despite the ceasefire, one Mend faction attacked a pipeline in December, saying it was a “warning strike” over what it called government delays in progressing with peace talks.
Talks have been held up by the long absence of President Yar’Adua in Saudi Arabia, where he has been undergoing medical treatment.
But our correspondent says he has made it is his personal project to end militant activity in the Delta and this development will increase the pressure on him to return.
BP May Widen Valuation Gap With Shell on Higher Profits, Output
Shell, whose production has dropped below 3 million barrels of oil equivalent a day, has cut 5,000 jobs. It’s also reorganized management by erasing 20 percent of senior posts.
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Oil giants promise to rebuild industry in Iraq
Tony Hayward, the chief executive of BP, said that his company hoped to increase production in the Iraqi field it has agreed to modernise from one million to three million barrels a day over the next 10 years. His counterpart at Royal Dutch Shell, Peter Voser, made a similar commitment on the two fields Shell is involved with.
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Shell Sells 3 Nigeria Oil Blocks To Local Companies
LONDON (Dow Jones)–The Nigerian joint venture company operated by Royal Dutch Shell PLC (RDSB.LN) agreed Friday to sell its 30% interest in three oil production licenses that have been shut down since 2008 to a consortium led by local companies for an undisclosed sum, the venture said in a statement.
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