ExxonMobil is (XOM) at loggerheads with the Russian government over the Sakhalin I project. The issue is the one that eventually spelled Shell’s (RDS.A) doom in Sakhalin II: Development costs under the production sharing agreement (PSA):

THE WALL STREET JOURNAL

JANUARY 25, 2010

By Hassan Hafidh

Of DOW JONES NEWSWIRES

A consortium made up of Exxon Mobil Corp. (XOM) and Royal Dutch Shell PLC (RDSA) finalized a deal in Baghdad Monday to develop the West Qurna phase 1 oil field in southern Iraq, Iraqi oil officials said.

It represents the first time a U.S.-led group has been allowed into Iraq’s oil patch since the U.S.-led invasion in 2003.

Exxon and Shell won the right to develop the field following the country’s first postwar licensing auction held last year. The license to develop the field wasn’t initially awarded in the auction in June, but a deal was reached following subsequent negotiations.

Under the terms of the 20-year-long deal, Exxon and Shell will be paid $1.90 for each extra barrel of oil they extract on top of current production at the field.

The Exxon team said it would boost production at the field to 2.325 million barrels a day, up from just 279,000 barrels a day currently. The field has estimated reserves of 8.7 billion barrels.

-By Hassan Hafidh, Dow Jones Newswires; +962 799 831 831; hassan.hafidh@dowjones.com

WSJ ARTICLE

A version of this article appeared in print on January 25, 2010, on page A16 of the New York Times.

Big Food

As huge corporations merge and get even huger, we find ourselves yearning for some old-fashioned competition, and maybe a little diversity.

Banks have gotten so big that they can unleash havoc and bill us for the pleasure. Big Oil is so big that Royal Dutch Shell is the world’s 25th-biggest economy, bigger than Norway. Four -fifths of the chips in the world’s PCs come from Intel. In the United States, AT&T and Verizon account for over half of all cellular phone customers. Big companies are likely to become even bigger. Between 2003 and 2007, the number of big mergers reported to American antitrust regulators doubled to 2,201. Though merger activity fell during the financial crisis, it is expected to rebound sharply. There is already another behemoth lumbering toward consumers: Big Food.

The latest news is Kraft’s planned purchase of Britain’s Cadbury to create a mac-and-cheese-to-candy-bar megalith with combined worldwide sales of nearly $55 billion. It comes on the heels of Heineken’s purchase of the beer operations of Mexico’s Femsa to create a $25 billion megabrewer. These aren’t even the dominant companies in their business. Switzerland’s Nestlé is almost twice as large as Kraft. Heineken will now be about the same size as the brewing colossus built in 2008 when Belgium’s InBev bought Anheuser-Busch. At the end of 2008, 10 companies accounted for two-thirds of the world’s beer sales, up from 40 percent in 2000.

Consolidation is sold by corporate gurus as rich in synergy and efficiencies that eventually trickle down to consumers. But the supposed consumer benefits are often unconvincing. Pennzoil’s acquisition of Quaker State led to more expensive motor oil, Procter & Gamble’s purchase of Tambrands led to more expensive tampons, and General Mills’ purchase of the Chex brands led to more expensive cereal, according to one study. Despite limits imposed by antitrust regulators, the merger between Guinness and Grand Metropolitan to create the food and drink giant Diageo led to substantial increases in the price of Scotch.

Price isn’t the only concern. Whether you quaff a Baisha in China, a Diekirch in Luxembourg or a Paceña in Bolivia, you’re paying the same company that sold you that Bud. Call us pessimists, but chances are it won’t be long before they all taste the same.

New York Times Article

LONDON, Jan 24 (Reuters) – Royal Dutch Shell (RDSa.L) is slowing its expansion into high-cost Canadian tar sands, Chief Executive Peter Voser said in Monday’s edition of the Financial Times.

In an interview with the paper, Voser said Shell had scaled down plans to increase tar sands production to 700,000 barrels per day.

“Over the past two years and certainly over the past six to eight months, I’ve taken the pace out of that because we have enough other growth opportunities,” he said. Instead, Shell planned to rely more on conventional oil and gas reserves for future growth, he said, adding that Shell had become better at finding new oil and gas reserves after investing heavily in exploration.

Many oil sands developments were cancelled in the latter half of 2008 as crude prices tumbled from record highs.

Environmental groups have also waged campaigns on oil sands projects, protesting about their impact on air, land, water and communities.

(Reporting by Victoria Bryan; Editing by Diane Craft)

© Thomson Reuters 2010 All rights reserved.

REUTERS ARTICLE

After taking over last July, Voser put in place a new organisational structure and cut 5,000 jobs including 150 senior managers, all before the year was out. It is no surprise that, when asked to compare himself with his predecessor Jeroen van der Veer, he says: “I think I’m more direct, and I’m a faster decision taker.”

• Shell paid $2.2bn for leases to drill for oil off Alaska
• Groups claim US government skimped on review of dangers

Nick Mathiason
guardian.co.uk, Sunday 24 January 2010 17.08 GMT

Shell could extract billions of barrels of oils from the US part of the Chukchi Sea if its controversial plans go ahead. Photograph: Leon Neal/AFP/Getty Images

Royal Dutch Shell‘s controversial plans to drill for billions of barrels of oil in the Arctic’s environmentally sensitive frozen waters face a potentially damaging legal challenge.

An alliance of conservation and Alaskan indigenous groups has filed a legal claim to prevent Shell drilling for oil this year in the Arctic Ocean’s Chukchi Sea. Two years ago, Shell paid $2.1bn (£1.3bn) to the US government for 275 oil leases there.

The legal claim accuses the US’s minerals management service, part of the federal interior department, of waving through permission to allow Shell to drill wells on the basis of an “abbreviated and internal review” of the environmental dangers of exploration.

The US portion of the Chukchi Sea, which separates north-western Alaska from north-eastern Siberia, is believed to hold 15bn barrels of recoverable oil and 76tn cubic feet of recoverable natural gas, according to the interior department.

It is also home to endangered bowhead whales, threatened polar bears and rich and varied fish stock. There are further concerns that more drilling in the region will increase warming in the Arctic, which is heating up twice as fast as the rest of the world.

“Shell’s drilling brings with it the risk of large oil spills,” said Pamela Miller, Alaska programme director for the Northern Alaska Environmental Center. “Chronic spills are a fact of life from oil and gas operations on Alaska’s North Slope, where over 6,000 spills have occurred since 1996, and more than 400 of these took place at offshore oil fields. In the icy conditions of the Arctic Ocean, there is no way to effectively clean up spilled oil.”

Shell also needs air emission, oil discharge and marine mammal harassment permits before it can extract oil. Last year, the Anglo-Dutch oil group was forced to scale down oil drilling in the Beaufort Sea off Alaska amid concerns that oil spillages would cause devastation to marine life.

A Shell spokesman said: “The Chukchi Sea alone could be home to some of the most prolific undiscovered hydrocarbon basins in the US, and we believe those oil and natural gas reserves could play a major role in reducing our dependence on foreign sources of energy. Extensive scientific studies and technological advances demonstrate that we can operate in the Arctic in an environmentally responsible manner; it seems there are groups who are opposed to Arctic exploration, even though it can be done responsibly.”

Shell is one of the few companies to have been given permission to drill for Arctic oil. The region may be home to 30% of the planet’s undiscovered natural gas reserves and 13% of its undiscovered oil, according to recent findings by the US Geological Survey.

But the issue has become increasingly fraught for environmentalists and, in a further embarrassment to Shell, one of the world’s leading marine conservation scientists has resigned from the University of Alaska, claiming he lost state funding partly because of his criticism of Shell’s Alaskan activities.

Professor Rick Steiner, who is one of the most respected and outspoken academics on the oil industry’s environmental record, claims that the oil industry pays $300m to the University of Alaska – a sum which, he says, compromises its academic integrity. Steiner alleges the university was told by a state environmental funding agency that his stance on oil exploration was “a problem” which led to his grant being withdrawn.

A spokeswoman for the University of Alaska acknowledged that the grant was conditional on academics not being environmental advocates, but that the university offered to make up the the difference in Steiner’s pay “specifically because we value our faculty and the necessity of academic freedom and freedom of speech”.

“He was not forced to resign and there hasn’t been action taken ‘against him’ by the university because of his views on oil or anything else,” she added.

The oil industry provides about 40% of Alaska’s tax revenue and underpins the payment of an oil royalty to each Alaskan citizen. Shell did not comment on how much it contributes to the University of Alaska.

“Instead of moving forward with piecemeal and poorly analysed development that puts Arctic wildlife and subsistence cultures at risk, the Obama administration should take a time-out on all new Arctic oil exploration and development until we have a far better understanding of the science and potential impacts of development, particularly in the face of climate change,” said Nicole Whittington-Evans, acting regional director of The Wilderness Society’s Alaska office.

Shell insisted it was taking steps to improve its environmental impact. “Our goal is to meet or exceed air emissions requirements for operating in the Arctic,” the company said. “The use of ultra-low sulphur diesel fuel and the voluntary retro-fit of our drilling rig is part of that commitment. We are currently installing a $25m catalytic exhaust system to further curb air emissions. We combine operational experience, technological excellence, and long-standing dedication to sustainable development in meeting Arctic operations challenges.”

GUARDIAN ARTICLE

Grateful if you can follow up on my complaint against Shell Malaysia employee Surya Hidayat Abdul Malik (contracting and procurement country manager, Shell Malaysia E&P).

While stressing Nigeria’s importance, Shell chief executive Peter Voser earlier this month played down its significance to the company’s global activities. “Nigeria is still a heartland for Shell, but we no longer depend on it for our growth aspirations. This gives us more flexibility in deciding when and how to develop oil and gas resources in Nigeria,” he said. – Sapa-AFP

If successful, Mrs al Musawi’s case could set a legal precedent that would invalidate all the agreements that Iraq secured last year – with BP, CNPC, ExxonMobil, Petronas, Royal Dutch Shell, Eni, Gazprom and Lukoil.

Essar, which plans to have a refining capacity of one million barrels a day, is in talks to buy three European refineries from Royal Dutch Shell PLC. In July, Essar acquired a 50% stake in 80,000-barrel-a-day Mombasa- based Kenya Petroleum Refineries Ltd. from Shell, Chevron Corp. and BP PLC.