Posts from ‘October, 2010’

OCTOBER 13, 2010

Production Revival Will Challenge Big Suppliers Like Saudis, IEA Chief Says

Reuters: Iraqi police check oil pipelines during a patrol at the Shueiba refinery in the country’s southern province of Basra in August.

By GUY CHAZAN

The revival in Iraqi oil production will be a “game-changer” for global oil supplies and a challenge for other big oil producers like Saudi Arabia, the International Energy Agency said Tuesday

Fatih Birol, the IEA’s chief economist, said in an interview that 20 years from now, Iraq could be pumping two to three times more than the 2.5 million barrels a day it currently produces—”comforting” oil markets worried about shrinking supplies, and possibly buffering against price spikes.

To achieve those levels, Iraq needs to repair its infrastructure, overcome a water shortage and improve its parlous security situation. “If Iraq addresses all these problems … it could be one of the few provinces where we’ll see net growth in oil production,” Mr. Birol said.

He was speaking a week after Iraq’s oil ministry raised the country’s proven oil reserves by around a quarter to 143.1 billion barrels. If the figure is confirmed, Iraq would overtake Iran to become the world’s second-largest holder of crude resources after Saudi Arabia.

The birthplace of the Organization of Petroleum Exporting Countries—formed in Baghdad in 1960—Iraq was once a titan of the oil industry, but its output and exports slumped as decades of war took their toll.

Optimism about Iraq’s prospects has increased significantly over the past year, however, following two licensing rounds that resulted in a string of service contracts aimed at unlocking the vast potential of some of its largest oil fields with major international companies such as BP PLC and Exxon Mobil Corp.

Officials say the deals will boost Iraq’s oil-producing capacity to around 12 million barrels a day by 2017, putting it on a par with Saudi Arabia. That, said Mr. Birol, “may be a challenge to the other oil producers.”

Iraq will be a “very important element for future [oil] supply,” said Nobuo Tanaka, head of the IEA.

Peter Voser, chief executive of Royal Dutch Shell PLC, which was awarded one of the Iraqi contracts last year, said Tuesday that Shell has already increased production from Iraq’s Majnoon field to 70,000 barrels a day from 45,000 barrels a day. The world “will need Iraq,” he said, to offset declining production from mature oil fields.

Others have poured cold water on Iraq’s rosy projections. Shokri Ghanem, chairman of Libya’s national oil company, said Iraq’s oil output would likely only reach 7 million barrels a day by the middle of this decade—not enough of an increase to affect world crude prices.

However, the increased reserves and forecasts of higher output could strengthen Iraq’s position in OPEC. Iraq is currently exempt from OPEC’s system of production quotas as it rebuilds its battered economy. But it has said it would rejoin the quota system once it hits output of 4 million barrels a day.

Analysts say that by upgrading its reserves estimate, Iraq is ensuring that the quota it is awarded by OPEC is as high as possible. Mr. Ghanem appeared to endorse that aspiration Tuesday, saying that Iraq had “the right to have quite a good size of production.”

Yet the challenges Iraq faces in reviving its oil industry remain huge. Tensions are simmering between some Iraqis and foreign oil companies operating in the country. Last month, officials backed by local police in Wasit province raided the al-Ahdab oil field, which is being developed by China National Petroleum Corp. They demanded to see contracts signed by CNPC and the oil ministry in Baghdad, but were turned away.

Shell’s Mr. Voser emphasized that the situation in Iraq was still precarious. “The risk profile has increased over the last weeks and months,” he said, amid “uncertainty on the political front.”

Write to Guy Chazan at guy.chazan@wsj.com

WSJ SOURCE ARTICLE

Peter Voser, the chief executive of Royal Dutch Shell, has strongly criticised BP’s well design and internal inquiry into the causes of the Gulf of Mexico oil spill.

By Rowena Mason, Energy Correspondent
Published: 8:58PM BST 12 Oct 2010

Royal Dutch Shell management is obsessed with my Wikipedia editing/contributions. Among the documents Shell has been legally obliged to supply to me are several Shell internal documents and emails, some marked confidential, which discussed my editing on Wikipedia and the possible impact on shareholders and students. There was also discussion about the risk of Shell being caught if it tried to edit the material.

By Tom Bergin

LONDON | Tue Oct 12, 2010 7:23am EDT

LONDON (Reuters) – The chief executive of Royal Dutch Shell Plc (RDSa.L) criticized the investigation that rival BP Plc (BP.L) conducted into the causes of its Gulf of Mexico oil spill, and the design BP chose for its blown out well.

Peter Voser said that to correctly investigate the accident one had to examine the thinking behind the particular well design BP used.

The Macondo well design included a number of cheaper options, including the use of a single tube from the surface to the reservoir, rather than two overlapping tubes, and U.S. lawmakers said these choices reflected a tendency on BP’s part to put profits before safety.

“Shell clearly would have drilled this well in a different way and would have had more options to prevent the accident,” Voser said, referring to Shell’s preference to include more barriers to hydrocarbon leaks in its well designs.

However, Voser accepted that oil companies had not invested enough in developing solutions to clean up spills.

Shell has raised output at the field to 70,000 barrels of oil per day from 45,000 bbls/day previously.

He said Shell was abiding by United Nations sanctions against Iran but added:

“I have not given up my long term hope that we can actually develop sources in Iran.”

(Editing by Elaine Hardcastle)

SOURCE

OCTOBER 12, 2010, 6:07 A.M. ET

LONDON (Dow Jones)–Royal Dutch Shell PLC (RDSB.LN) has already raised oil production from Iraq’s Majnoon field to 70,000 barrels a day, from 45,000 barrels a day previously, the company’s Chief Executive Peter Voser said Tuesday.

The risk of operating in Iraq has increased in recent months, but operations are still going well, he said. The production increase required “relatively little investment because infrastructure is already there,” he said.

-By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317; james.herron@dowjones.com

WSJ SOURCE ARTICLE

FT: October 12, 2010 11:05am

by Kiran Stacey

Oil & Money conference in London

The keynote speech this morning was delivered by Peter Voser, the CEO of Shell. He talked about the role natural gas has to play in global energy supplies, and especially in the UK, which our energy editor Sylvia Pfeifer wrote about in today’s FT.

But when it came to the Q&A sessions, there are no prizes for guessing what came up first: the BP oil spill. How far would Voser go in criticising his company’s main rival? How confident was he that such an incident would not happen to Shell?

His reply went further than I expected in attacking BP:

From what I know today Shell clearly would have drilled this well in a different way and would have had more options to prevent the accident from happening.

FULL FT ARTICLE

OCT 12, 2010

LONDON (Dow Jones)–The U.K. government should divert investment from offshore wind power to natural gas exploration and production, Peter Voser, chief executive of energy giant Royal Dutch Shell PLC (RDSB.LN), said Tuesday.

It will be impossible to hit 2020 carbon dioxide emission reductions targets without increased use of natural gas in the country, Voser said at the Oil and Money conference in London. Using natural gas instead of coal is also a cheaper way to cut emissions than offshore wind, he said.

-By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317; james.herron@dowjnes.com

SOURCE

12.10.10

Network Rail appointed a new non-executive director today under moves to reshape its board.

Malcolm Brinded, Royal Dutch Shell‘s executive director, joined NR with his appointment to be confirmed at next year’s annual meeting.

NR chairman Rick Haythornthwaite said: “My priority when joining Network Rail was to reshape the non-executive element of the board. Building on the success of the current and former non-executives, this reflects the change agenda on which the company is now embarked.

“Malcolm Brinded will play a vital role in Network Rail’s corporate governance. His many years of experience at a senior level at one of the world’s biggest companies will be a great asset to Network Rail’s board.

“The appointment is one of the final elements of my task to reshape the board. It is now well-equipped to support the company as it embarks on a new phase of its evolution – a phase that will see a change of approach and direction as it works to deliver a better, less costly railway.”

SOURCE

By Gerard Wynn LONDON | Mon Oct 11, 2010 12:35pm EDT

(Reuters) – Anglo-Dutch oil company Royal Dutch Shell (RDSa.L) opposed tougher European Union carbon emissions targets, as proposed by some EU countries, the company’s head of carbon dioxide (CO2) said.

A unilateral EU move to tighten its carbon caps before other countries followed suit would entail “very real business risks,” Graeme Sweeney told Reuters on Monday.

An EU draft document said in April a 30 percent target would be “technically feasible and economically affordable,” especially after recession had cut EU industrial carbon emissions.

And in June, Britain, France, and Sweden’s environment ministers said they supported EU plans to move to a deeper, 30 percent cut by 2020, compared with 1990 levels. But Italy, east European countries, and some business lobbies were opposed, saying it would impose higher costs on industry.

“There are very real business risks that arise from this kind of potential change in policy,” said Sweeney.

“We would not support the unilateral move to 30 percent,” he said, adding Shell favored a floor price in the 27-country bloc’s emissions trading scheme, after plummeting industrial production led to a surplus of carbon emissions permits.

“The depth of the recession was particularly significant, and that creates the case for recalibration. This would probably be best achieved by withdrawing some allowances between 2013 and 2020.”

U.N. climate talks have failed to agree a new climate deal after the present round of the Kyoto Protocol expires in 2012, and made little headway last week in China.

Part of the deadlock is centered around a reluctance by countries to move first, especially before the two biggest emitters — China and the United States. That prompted an EU debate whether the bloc should move unilaterally to kick-start the process.

In February, Shell struck a deal with Brazilian group Cosan (CSAN3.SA) to create a $21 billion-a-year ethanol joint venture, which Sweeney pointed to as evidence the company was committed to low-carbon technologies.

Sugar-based ethanol is widely considered one of the lowest carbon alternative road transport fuels to oil.

Sweeney said Shell supported California’s green law, called AB 32 and aimed at cutting the state’s carbon emissions to 1990 levels by 2020, a move opposed by some oil companies.

On November 2, Californians will vote on a proposal to put the law on hold.

The oil major also did not oppose mooted Environmental Protection Agency regulation of U.S. greenhouse gases, depending on how that was implemented, he said.

(Reporting by Gerard Wynn, Nina Chestney and Daniel Fineren, Editing by Dan Lalor)

SOURCE

The corporate defendants who settled are probably not happy either. With Drimmer’s help, we count at least 17 settlements flowing from alien tort suits. These include three large Holocaust agreements ($5.25 billion from German state and industry, $1.25 billion from Swiss banks and $210 million from Austrian state and industry); a reported $30 million from Unocal for Burmese pipeline allegations; a reported $20 million from U.S. clothing retailers for Saipan sweatshop allegations; and $15.5 million in Wiwa, which (like Kiobel) arose out of Shell’s activity in the Niger delta.