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Posts from ‘September, 2010’

Total, Shell, Eni to End Iran Investments, U.S. Says

Sep 30th, 2010
by John Donovan.
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Bloomberg

By Flavia Krause-Jackson and Ali Sheikholeslami – Sep 30, 2010 6:30 PM GMT+0100

Total SA of France, Statoil ASA of Norway, Italy’s Eni SpA and the Netherlands’ Royal Dutch Shell Plc have “pledged to end their investments in Iran’s energy sector,” U.S. Deputy Secretary of State James Steinberg said.

Steinberg said the pledge means the companies are “eligible” to avoid U.S. sanctions. “These companies have provided assurances they will stop or are taking significant verifiable steps to stop their activity in Iran and have provided assurances not to undertake new energy-related activities in Iran that may be sanctionable,” he told reporters in Washington.

The U.S. also announced that it is imposing sanctions on an Iranian energy-trading company operating in Switzerland. The action was taken against Lausanne-based Naftiran Intertrade Co., also known as Nico. The company is involved in the trading of oil and refined products and seeks to invest in energy projects, according to its website.

Iran, the Middle East’s second-largest oil producer, is under international sanctions over its nuclear program, which the U.S. and many of its allies allege are cover for the development of atomic weapons. Iran rejects the allegation and says it needs the technology to advance efforts to generate electricity and for other civilian purposes such as energy and medical research.

‘Direct Impact’

“The nature of the effect we are trying to produce is not to take down the Iranian economy or harm ordinary Iranians, what we are looking at is direct impact on the kind of people who can make significant investments in their energy sector,” Steinberg said.

An Eni spokeswoman declined to comment. Eni Chief Executive Officer Paolo Scaroni said in February that the company would reduce its presence in the country, although it wouldn’t pull out of existing projects.

Total spokeswoman Phenelope Semavoine declined to comment. Statoil and Shell said they would try to offer a comment later, when contacted about the State Department announcement.

Seifollah Jashnsaz, Nico’s managing director, headed the National Iranian Oil Co. prior to this post. Petropars, Petroiran and Iranian Oil Company U.K. Ltd. are subsidiaries of Nico. National Iranian Oil Co. allocated more than 13 projects to Nico for financing in 2009, according to the company’s website.

Calls made to the mobile phone of Ramin Mehmanparast, Iran’s foreign ministry spokesman, and to Nico after working hours weren’t answered.

Tougher Steps

An advocate for sanctions against Iran said the Obama administration should take tougher action.

“I support sanctions against Iranian-government controlled entities operating in Europe,” Mark Dubowitz, executive director of the Foundation for Defense of Democracies in Washington, wrote in an e-mail. “I am disappointed in the Obama administration’s decision to sanction only one company, while ignoring the many foreign energy firms that are violating U.S. laws.”

To contact the reporters on this story: Flavia Krause-Jackson in Washington at fjackson@bloomberg.net; Ali Sheikholeslami in London at alis2@bloomberg.net

To contact the editors responsible for this story: Mark Silva at msilva@bloomberg.net

BLOOMBERG ARTICLE

Shell to Spend $40 Billion in Americas, Boost Output

Sep 30th, 2010
by John Donovan.
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Bloomberg

By Eduard Gismatullin – Sep 29, 2010 10

Royal Dutch Shell Plc, Europe’s biggest oil company, plans to invest about $40 billion in the Americas through 2014 to boost production by 40 percent.

Shell’s oil and gas output in the region may reach 1 million barrels of oil equivalent a day in the period, The Hague-based company said in a statement.

Operations in the Americas have the potential to generate over $10 billion in cash flow in 2012, Simon Henry, the chief financial officer at Shell, said in a video interview posted on the Internet. It’s “a very good position to be in, very much fits our global ambition for financial growth and the strategy to allocate more capital” to the Organization for Economic Cooperation and Development region.

The company has spent more than $60 billion on extraction projects and acquisitions in the Americas since 2004. Since March, Shell has been assessing more than 35 projects worldwide that may add 8 billion barrels of oil equivalent resources, boosting production until 2020. Global project investments may exceed $100 billion by 2014, Shell said March 16.

“Americas will be a key growth engine for Shell in the years to come,” Shell Chief Executive Peter Voser said in the statement distributed yesterday.

‘Key’ Projects

Shell plans to start 13 “key” projects in 2010 and 2011, Matthias Bichsel, a director for projects and technology at Shell, also said in a video interview. Five of these projects have already started, including the BC-10 in Brazil, Perdido in the Gulf of Mexico, tight gas in North America, the Gbaran-Ubie project in Nigeria and the expansion of the Athabasca Oil Sands Project in Canada.

Shell has been examining final investment decisions for more than 20 projects in 2010 and 2011, Bichsel said. The company has agreed to start work on the second phase of the BC- 10 deepwater project in Brazil.

Shell is tapping North American tight gas fields, which have 40 trillion cubic feet of potential resources in hard-to- reach rock formations, it said. Production of the fuel may double to 400,000 barrels of oil equivalent a day in the period between 2009 and 2015.

The Anglo-Dutch company added more than 500 million barrels of oil equivalent resources in the Gulf of Mexico in 2009 and 2010, it said. It plans to pump more than 250,000 barrels a day in the Gulf, it said, without giving a time frame.

Shell intends to sell at least $2 billion of producing assets in the region in 2010 and 2011 as part of a $7 billion to $8 billion global disposal plan, according to today’s statement.

“The Upstream Americas organization is well positioned for profitable growth in Shell,” Marvin Odum, director of exploration and production at Shell in the Americas, said in another video interview on the Internet. “This is a region with substantial and diverse energy resources.”

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

BLOOMBERG ARTICLE

BP’s Tony Hayward: the right man in the right place at the wrong time?

Sep 30th, 2010
by John Donovan.
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Daily Telegraph

When BP became a sponsor of the US Olympics team for London’s 2012 games in February, Tony Hayward could have been forgiven for thinking he deserved a pat on the back, if not quite a medal.

By Richard Blackden
Published: 6:00AM BST 30 Sep 2010

Tony Hayward’s fate was sealed as the scale of the disaster emerged, though the public-relations gaffes did not help Photo: Getty Images

Five years on from the explosion at its Texas City refinery, the company had recovered its position in the country where people consume more oil than anywhere else.

The chief executive of Britain’s biggest energy company had made the Gulf of Mexico central to hitting BP’s aggressive production targets. The Tiber discovery in September 2009 had seen the drilling of a well to a record 35,000 feet, and the Gulf’s deep waters were a stage for BP to do what the company had long believed distinguished it from rivals: find oil and gas in places no one else could. Hayward also liked the US, describing to an audience in Houston the special American traits of being “can-do, adventurous and optimistic”.

Shareholders and analysts disagreed – these qualities weren’t exclusively American. By April 2010, Hayward, who had been in the company’s ranks since the age of 22 after briefly flirting with a career at Mobil, was winning applause in the City. “BP was almost firing on all cylinders,” said Jason Kenny, an analyst at ING. “It was very well-respected and delivering the goods.”

Profits climbed to $21.2bn in 2008 from $20.8bn in 2007, though fell to $16.8bn last year as recession took hold of the world economy. BP’s dividend-hungry shareholders were happy, too, with the payout climbing to 36.4p in 2009 from 29.4p in 2008. And BP’s shares had trounced those of rival Royal Dutch Shell, climbing 12pc between when Hayward started in August 2007 and April 19, 2010, the day before the spill, compared with a 1.6pc decline for Shell.

Led by then chairman Peter Sutherland, BP had billed former geologist Hayward as the man who would bring some operational efficiency and greater focus to a sprawling company that had swelled dramatically under his predecessor, Lord Browne. After a string of deals, including the merger with US rival Amoco in 1998, BP’s staff has almost doubled to 98,200 by the time Lord Browne was forced from his the chief executive’s role in the spring of 2007. “With Hayward it was about getting BP back to basics, back to exploration and production,” according to Dougie Youngson, an analyst at Arbuthnot Group.

Informed by management consultants that BP’s structure was “pretty ugly”, Hayward simplified it. Taking senior executives away for a few days from BP’s headquarters near London’s Liverpool Street at the end of August 2007, the group returned with a simpler model.

BP was essentially divided in two: Exploration and Production, or getting the stuff out of the ground, and then the business of selling it, an operation that was called Refining and Marketing. The structure helped BP fuel its exploration and production drive under the now departed Andy Inglis, analysts say. This included Russia, where its long-standing joint venture TNK-BP, would prove a valuable but hugely problematic asset during Hayward’s tenure. But also a push into Iraq, where last year the company won licences with a Chinese partner to develop the oil fields at Rumaila in the north of the country.

BP appeared to be, as Hayward boasted in the company’s annual report last year, setting itself apart by “operating and succeeding at the frontiers of the energy industry.”

That same report mentioned the word safety 150 times, and repairing BP’s battered reputation was central to Hayward’s remit from the start. A broken pipeline in Alaska’s Prudhoe Bay oil field in 2006 had added corrosion to the damage caused by the Texas refinery explosion that took 15 lives a year earlier. Hayward himself said that safety was instilled in him as the priority after early in his career in Venezuela he was confronted by the mother of a young man who had died at its operations there. And there was evidence that the company was taking steps to improve its record. A new “operating management system” that set uniform safety standards across the company had been implemented in 70 operations by the end of last year.

“We believed he was addressing the culture and safety issues, but with the benefit of hindsight that had not gone far enough or fast enough,” said Robert Talbut of Royal London Asset Management (RLAM), which owns shares in BP.

If Hayward had set out to improve efficiency and safety, last year’s global recession offered him a chance to cut costs. In his last major strategy statement before the spill, Hayward outlined in March plans to cut a further $3bn in costs and lauded the fact that the company’s exploration and development costs were at a five-year low of $12 a barrel.

The BP chief executive has always insisted that cost-cutting played no role in the fatal explosion at the Deepwater Horizon rig on April 20, something many critics take issue with. In a widely criticised performance he told the House of Representatives committee on energy and commerce in June that “there’s nothing I’ve seen in the evidence so far that suggests that anyone put costs ahead of safety”. Hayward’s fate was sealed as the scale of the disaster emerged, though the public-relations gaffes did not help.

“We don’t take the view that he was an appalling chief executive,” said Talbut of RLAM. “The appalling tragedy would likely have destroyed any chief executive.”

Right up until the spill Hayward was winning praise from the City for his running of BP, much as many bank bosses were before the financial crisis. As he heads off to TNK-BP and Bob Dudley takes over, the question of whether BP can both profitably and safely hunt down oil and gas at the planet’s frontiers remains unanswered.

SOURCE ARTICLE

Regal Falls to Record on Greer Exit, Ukraine Gas Flow Failure

Sep 30th, 2010
by John Donovan.
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Bloomberg

By Eduard Gismatullin – Sep 30, 2010

Regal Petroleum Plc, the U.K. explorer focusing on natural-gas projects in Ukraine, fell to the lowest share price on record after Chief Executive Officer David Greer quit and as gas wells failed to stabilize output.

Regal dropped as much as 31 percent to 18.25 pence in London trading, the lowest price since Sept. 27, 2002. The stock was at 21 pence at 10:03 a.m. local time, valuing the company at 66.86 million pounds ($106 million). The shares have fallen about 80 percent in the last year.

Keith Henry, Regal’s chairman, will assume Greer’s responsibilities until further notice, the London-based company said today in a statement.

Some Ukrainian wells have failed to stabilize gas production, Regal said in a separate statement. Its perforation works and tests of the T- and D-sands in the Mex-106 well didn’t “show any evidence of inflow,” it said.

In April, Regal decided to shift its focus away from deep- level exploration of Tournasian- and Devonian-age layers, or T and D-sands, toward production from Visean aged, or B-sand, shallower deposits. It has been working to boost production from its Mekhediviska-Golotvshinska and Svyrydivske fields in Ukraine after missing an output target of 3,000 barrels of oil equivalent a day last year.

Output rose to an average 2,377 barrels of oil a day in June, up from 1,452 barrels a day in December, Regal said.

Greer, a former Royal Dutch Shell Plc executive, joined Regal on Nov. 22, 2007, a day after the Anglo-Dutch company bid $410 million for Regal’s two Ukrainian gas fields. On Nov. 23, Shell called off its approach.

Greer worked on Shell’s Sakhalin-2 oil and gas exploration project in Russia. He quit as project director in June 2007 after sending a motivational memo to staff in April urging them to advance pipeline construction and saying he despised cowards, according to Shell. The company denied the two events were linked.

OAO Gazprom, Russia’s state-owned natural gas monopoly, took control of Sakhalin-2 on April 18, 2007, to accelerate its development after criticism by the Russian government over environmental damage and construction delays.

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

SOURCE ARTICLE

RELATED ARTICLES

ShellNews.net: Regarding “Are these astonishing allegations about the Sakhalin-2 project true or false?”: 20 May 2007

ShellNews.net: more Sakhalin-2 insider allegations and an astonishing leaked email purportedly from David Greer: 2 June 2007

Royal Dutch Shell has this morning confirmed the authenticity of a leaked email from David Greer, Deputy CEO of Sakhalin Energy: 5 June 2007

ShellNews.net: Former Shell Executive Paddy Briggs comments on the David Greer memo scandal: 6 June 2007

Financial Times: Revised article on speech by General Patton-Greer: ‘Pipeliners All!’ Shell’s memo to Sakhalin: 6 June 2007

Financial Times: Front Page Story: ‘Pipeliners All!’ memo urges Shell’s workers to bounce off the bottom: 6 June 2007

ShellNews.net: Index of articles covering David Greer plagiarism scandal: 9 June 2007

Financial Times: David Greer Memo: 12 June 2007

ShellNews.net: David Greer, Deputy CEO of Sakhalin Energy resigns in disgrace: 21 June 2007

Another blunder by former Shell MD David Greer sinks Shell deal 23 Nov 2007

King-size platform to rise in Gulf

Sep 29th, 2010
by John Donovan.
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“The outlook for deep water remains positive, despite the current drilling moratorium in the Gulf of Mexico,” the Dutch oil giant said in a prepared statement.

Click to continue reading “King-size platform to rise in Gulf”

Nexen, Shell primed for deepwater drilling

Sep 29th, 2010
by John Donovan.
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Calgary-based Nexen Inc. and its partner Royal Dutch Shell PLC are trumpeting a major oil find in the Gulf of Mexico, a discovery that will serve as a test of feared regulatory gridlock in the prolific oil-producing region.

Click to continue reading “Nexen, Shell primed for deepwater drilling”

Shell plans rapid North American growth

Sep 29th, 2010
by John Donovan.
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Financial Times

By Ed Crooks in New York Published: September 29 2010

Royal Dutch Shell is planning a rapid expansion of its North American business to raise production by 40 per cent to 1m barrels equivalent per day in 2014, including gas, Canadian oil sands and deepwater oil.

The strategy, announced in Canada on Tuesday, is part of Europe’s largest oil company’s plan to meet its “aspiration” of producing 3.7m barrels per day in 2014, compared with 3.15m last year.

One of its announcements included approval for a deepwater project in the Gulf of Mexico where BP is a junior partner.

FULL FT ARTICLE

Oil firms reap benefit of Iran’s build-up of crude stocks

Sep 28th, 2010
by John Donovan.
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In the two months before the UN voted through its fourth set of sanctions, on 9 June, affecting finance, insurance and shipping sectors, Shell’s trading company, Satsco, spent at least $778m on Iranian crude, according to documents seen by the Guardian.

Click to continue reading “Oil firms reap benefit of Iran’s build-up of crude stocks”

Shell Approves Investment in Mars B Gulf of Mexico Oil Platform

Sep 28th, 2010
by John Donovan.
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Bloomberg

By Joe Carroll – Sep 28, 2010

Royal Dutch Shell Plc, Europe’s largest energy company, gave final approval to an investment in an oil platform in the Gulf of Mexico.

Shell, based in The Hague, said in a PR Newswire statement that the Mars B platform will pump the equivalent of 100,000 barrels of crude a day when it begins output sometime after 2014. The dollar amount of the investment was not disclosed.

Shell owns a 71.5 percent stake in Mars B and will operate the platform, according to the statement. BP Plc of London also owns an interest in the project.

Editor: Kim Jordan.

To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net.

BLOOMBERG ARTICLE

Shell’s Brazil Unit Finds Oil In Santos Basin Well

Sep 28th, 2010
by John Donovan.
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THE WALL STREET JOURNAL

SEPTEMBER 28, 2010

RIO DE JANEIRO (Dow Jones)–The Brazilian unit of Royal Dutch Shell PLC (RDSA, RDSB, RDSA.LN, RDSB.LN) discovered oil in the Santos Basin during the company’s first exploration attempt in the region famous for its deepwater discoveries, the company said Tuesday.

Shell Brasil’s first well in the BM-S-54 block showed indications of hydrocarbons, the company said in a statement emailed to Dow Jones Newswires. Earlier Tuesday, the discovery was also published on the Brazilian National Petroleum Agency’s website.

Shell operates the block, with an 80% stake. France’s Total SA (TOT, FR.FR) earlier this year purchased a 20% stake in the block from Shell, although the transaction has not yet been approved by local regulators, Shell said.

The Santos Basin where the BM-S-54 block is located is home to the presalt cluster that produced several oil discoveries, including the two of the largest finds made in the past 30 years. Shell Brasil is actively targeting the presalt region as part of a 10-well exploration program over the next 18 months.

The Santos Basin presalt finds were made under a thick layer of salt off the coast of Sao Paulo and Rio de Janeiro states. The oil lies under more than 2,000 meters of water and a farther 5,000 meters under sand, rock and a shifting layer of salt.

Shell’s well in the BM-S-54 block is targeting a final depth of about 6,000 meters, the company said.

Earlier this year, Shell also discovered oil in a presalt well in the Campos Basin.

-By Jeff Fick, Dow Jones Newswires; 55-21-2586-6085; jeff.fick@dowjones.com

WSJ ARTICLE

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