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Posts from ‘May, 2011’

Shell and Cairn Energy announce ‘risky’ drilling plans in Arctic

Explorations off Alaska’s north coast condemned by environmentalists after Deepwater Horizon disaster

Terry Macalister: Thursday 5 May 2011 17.25 BST

The Inupiat people – who have ‘lived off the Arctic waters for thousands of years’ – are threatened by Shell’s plans, says the Alaska Wilderness League. Photograph: Laurent Dick/AP

A new battle between environmentalists and Big Oil over drilling in the Arctic was triggered today when Shell unveiled “risky” plans for the Beaufort Sea while a Cairn Energy rig set sail for Greenland.

Shell, Europe’s largest oil group, has submitted plans to the US government for permission to drill 10 exploration wells in the Beaufort and Chukchi seas off the north coast of Alaska in 2012 and 2013.

Previous plans to start this summer were halted first by the moratorium imposed after the Deepwater Horizon disaster last April and then by a ruling from the Environmental Protection Agency.But Shell said it was now confident that it could offer regulators the reassurances that should enable it to proceed with a programme said to have cost it $2bn to lease the acreage and possibly an additional $4bn in planning.

“Shell was one of the original offshore explorers in Alaska,” said a spokesman at the company’s head office in The Hague. “As in years past, Shell remains committed to employing world-class technology and experience to ensure a safe, environmentally responsible Arctic exploration programme in 2012 – one that has the smallest possible footprint and no negative impact on traditional substance-hunting activities of the people of the North Slope.”

Cairn meanwhile has given the green light to the drill ship, Ocean Rig Corcovado, to leave Aberdeen heading for Nuuk. It is also bringing a separate drilling rig, Leiv Eriksson, through the Mediterranean en route for the far north. Greenpeace has already boarded the rig off the coast of Turkey in protest at the Greenland drilling plans and said it remained totally opposed to what both Cairn and Shell plan to do in the Arctic region.

“The high north is becoming the frontline of the global environmental battleground,” said Ben Ayliffe, senior oil campaigner at Greenpeace. “Shell is gambling with the fragile Alaskan environment a year after the Deepwater Horizon spill, lining up to start dangerous drilling in one of the world’s most pristine natural habitats despite the terrible risks of a spill there.

“As climate change causes the sea ice to retreat, oil companies are rushing in to extract the fossil fuels that caused the melt in the first place. It’s madness – you don’t put out a fire with gasoline. Instead of drilling in the Arctic, we should be extracting oil from the car industry by driving up the efficiency of their vehicles and forcing them to use new clean technologies.”

The Alaska Wilderness League also condemned Shell, saying it was relying on “the same failed technology” used in BP’s devastating spill 12 months ago off the coast of Louisiana, yet the drilling conditions were far worse and the marine environment rich but less understood.

“Despite the risk of a spill that could eclipse the devastation in the Gulf of Mexico, Shell’s proposed scope for 2012 and 2013 is more risky and aggressive than ever,” said Cindy Shogan, the league’s executive director. “The [Inupiat] people who have thrived off the Arctic waters for thousands of years and those who treasure the Arctic’s unique wildlife will continue to demand that the Obama administration not allow Shell to move forward.”

The northerly region has become a new frontier for exploration since global warming caused ice to melt, oil escalated in value to its current $114 a barrel and the US Geological Survey concluded that almost a quarter of the world’s undiscovered oil and gas reserves may lie in the Arctic.

Cairn created excitement last summer when it reported it had found indications of hydrocarbons with a well off Greenland, while BP has signalled its interest by signing up for a controversial deal to explore in the far north of Siberia with Russian group Rosneft. This scheme is being challenged by another of its partners inside TNK-BP. The region has seen wider industrial, political and military interest over the last two years.

SOURCE ARTICLE

Shell Nigeria appeal dismissed in Bonny land dispute

Thu May 5, 2011 1:29pm EDT

* Court rules in favour of local communities in land dispute

* Shell appeals decision again

* Dispute has had no operational impact

By Austin Ekeinde

PORT HARCOURT, Nigeria, May 5 (Reuters) – A court in Nigeria’s oil-producing Niger Delta on Thursday dismissed an appeal by Royal Dutch Shell (RDSa.L) in a land rights dispute with community elders over its Bonny oil export terminal.

The court in Bori, in the southern state of Rivers, found in favour of local elders three years ago who disputed the right of the Shell Petroleum Development Company (SPDC) — a joint venture with the Nigerian state — to use the land at Bonny.

Shell filed an appeal against that ruling but a court in the state capital Port Harcourt dismissed it on Thursday.

“(The original judgement) said that Bonny communities are the rightful holders of the certificate of occupancy of the land currently being occupied by Shell as tenants,” said Emmanuel Asido, one of the lawyers representing the communities.

“Justice Ekembi Eko upheld that judgement and said that Shell failed to convince the court that they have the certificate of occupancy on the land,” he said.

Shell said it was appealing to the Supreme Court.

“We believe the judgement is wrong,” Shell spokesman Precious Okolobo said.

“We are also filing to suspend enforcement of the earlier judgement … pending the determination of the appeal.”

Bonny is home to major crude oil and liquefied natural gas (LNG) export terminals but the dispute has had no impact on operations because Shell’s appeals have meant that the legal process continues.

Relations between foreign oil firms and local communities have long been fragile in the Niger Delta, home to Africa’s biggest oil and gas industry but hobbled by poverty.

Foreign oil firms pay billions of dollars a year in royalties but corruption and mismanagement by government means relatively little of the funds go towards community development.

Multi-billion dollar oil installations sit among polluted villages nestled in its labyrinthine mangrove creeks, many of them lacking electricity or clean water.

Foreign investors say Nigeria ranks among the most litigious and bureaucratic business environments in the world. Legal disputes commonly take years to settle, usually becoming bogged down in a tangle of counter-claims and appeals.

(For more Reuters Africa coverage and to have your say on the top issues, visit: af.reuters.com/ ) (Writing by Nick Tattersall)

SOURCE ARTICLE

Federal oil shale plan focus of public hearings in Colorado

By Catherine Tsai
The Associated Press: 05/05/2011

GOLDEN — Revising a Bush administration plan to open nearly 2 million acres of public land to potential oil- shale development will only delay efforts to reduce U.S. reliance on foreign oil, Shell Exploration and Production Co. said Wednesday.

Tracy Boyd, a Shell official, was among speakers at Bureau of Land Management public meetings in Golden on efforts to review the Bush administration plan released in 2008. About 50 people attended afternoon and night sessions.

A similar meeting a day earlier in Rifle on the Western Slope drew about 100 people.

While some say developing oil shale could help reduce U.S. oil imports, the Government Accountability Office said in a report last year that oil-shale development could have “significant” impacts on water quality and availability.

Past studies have shown one to 12 barrels of water, or up to about 500 gallons, may be needed to produce one barrel of oil, the report said.

Interior Secretary Ken Salazar has said the review of the 2008 oil-shale plan could result in an update to account for water demands in the West and new research and technology. The BLM also plans to consider whether to prohibit development in wilderness areas, sage grouse habitat and other areas of concern.

While Boyd said a bureau review leading to the 2008 plan was “adequate and comprehensive,” other speakers raised concerns about what oil-shale development could do to water, air quality, wildlife and communities.

Companies are still years from finding a profitable way to heat kerogen in the shale to produce oil.

“By then, most of us should be driving electric cars,” said Mike Chiropolos of Western Resource Advocates.

He and others contend Colorado has other forms of sustainable energy that should be explored before heating rocks to extract oil.

The BLM has said there is an estimated 1.5 trillion barrels of recoverable oil in Utah, Colorado and Wyoming.

Delays in efforts to boost domestic oil production will mean higher imports, and lower tax revenues generated by the oil industry, Boyd said.

John Gale of Colorado Backcountry Hunters and Anglers questioned giving industry more access to public lands for oil-shale research when it already has access to private lands.

“As a ranch kid, my mom used to say you’re supposed to finish what’s on your plate before you ask for more,” he said.

Curt Moore, an attorney who recently moved from the energy-rich Western Slope, said the best deposits are on public land, though.

SOURCE ARTICLE

Shell expands Canadian oil sands operation

Published: May 5, 2011 at 8:32 AM

CALGARY, Alberta, May 5 (UPI) — The expansion of a production facility processing Canadian oil sands goes a long way toward addressing global energy concerns, Shell said.

Shell announced that it started production at its Scotford expansion project that increased the capacity in the region from 100,000 barrels per day to 255,000 bpd of heavy oil from Athabasca oil sands in Canada.

“This start-up is an important milestone for our heavy oil business,” Marvin Odum, Shell Upstream Americas director, said in a statement. “And it adds new capacity from an important source of oil in a world requiring more secure energy.”

Shell’s announcement marks the first time production ensued from the expansion. The Scotford project processes heavy oil for use in refined oil products.

Oil sands in the Athabasca region of Canada are among the world’s richest deposits, though environmental groups claim exploiting the unconventional plays is harming the environment.

© 2011 United Press International, Inc. All Rights Reserved.

SOURCE ARTICLE

Shell embedded spies in host governments of Nigeria, Dubai and Iraq

By John Donovan

Today we provide a unique insight into the shadowy world of Shell Corporate Security, formerly known as “CAS” – Shell Corporate Affairs Security.

Shell has had advance sight of everything you are about to read and therefore the opportunity to challenge authenticity of the featured CAS Intel Summary, correct any inaccuracies and provide comment for unedited publication with the article. Shell has also had the opportunity to obtain an injunction to prevent publication.

Shell’s private army of security specialists has expanded its activities far beyond what is necessary in a defensive posture to protect company assets and employees against potential internal and external threats.

Shell has taken a proactive approach to intelligence led security, for example by infiltrating spies into host governments, including Nigeria, Dubai and Iraq, seeking to gather intelligence and influence events.

Prime sources of information include government security and intelligence agencies, Shell Regional Security Advisers and commercial security companies, such as Hakluyt, in which titled Shell directors have been major shareholders, directors and the ultimate spymasters. Hakluyt undercover operations on Shell’s behalf have been directed against the oil giants perceived enemies, including Nigerian activists associated with Ken Saro-Wiwa.

So-called “proactive intelligence” is also relevant to Shell’s quest for commercial opportunities. Last year, US Defense Dept Attorneys confirmed to me, via a senior US intelligence source, that Shell has been investigated on allegations of industrial espionage relating to potentially valuable Intellectual Property, which has commercial and military applications. The ramifications are still in progress.

We have provided an example of a top secret Shell Intelligence document supplied to us by our source. It is 22 pages long, was originated inside Shell Corporate Security and relates to Shell operations in Nigeria. It shows how closely Shell has worked with the Nigerian Federal Government and its security forces. It also provides an indication of the role of intelligence gathering in Nigeria, which is routinely shared with the US, UK and Dutch Embassies. The revelations about Shell spies embedded in the Nigerian government resulted from Shell sharing information with the US Embassy in Nigeria.

The extract below is proof of the secrecy classification attached to the Intel Summary document. Shell will be distressed by the news that the Shell intel information/documents in our possession cover Shell’s security plans stretching forward to 2014.

THIS IS THE COMPLETE DOCUMENT

It can be seen that intel developments and related perceived threats are itemized in date order and analyzed by SINC (Security Information Network) and when appropriate, recommendations made.

The document provides evidence that in the lead up to the trial in the USA in June 2009, when Shell was accused of human rights abuses in Nigeria, the actions and movement of Ken Sar-Wiwa’s supporters and Ogoni groups, “in particular MOSOP”, were “closely monitored” by CAS operatives.

Shell settled the case for $15.5 million.

In November 2010, Shell’s underhand activities in Nigeria led to a $30 million “criminal penalty” being imposed on Shell in relation to the bribery of Nigerian officials.

We have confirmed the authenticity of our source, who has years of experience inside Shell Security and shares our conclusions about the hypocrisy, ruthlessness and greed of senior Shell management.

Our source is also concerned at a blurring of the line between state intelligence agencies (held to account by national governments) and commercial intelligence organizations, including Shell Corporate Security, which operate internationally, without independent oversight.

Shell Security staff  have worked in association with intel agencies such as MI6 for example, in restoring Shell’s relationship with governments in Libya, Iraq, and Iran. On other occasions, Shell is the target of investigations by government intel and/or investigative agencies.  As will be seen, there is also a crossover of staff.

INSIDE THE WORLD OF SHELL GLOBAL SECURITY

Shell Corporate Security is a shadowy organisation managed and staffed by former/current members of Dutch and British Intelligence, the SAS, Royal Commando’s, and SBS.

BRITISH INTEL CONNECTIONS

As already pointed out, Shell is also linked with Hakluyt, a spy firm said to be the commercial arm of MI6.

Ian Forbes McCredie OBE, the former/current MI6 senior official, who until December 2010 headed up Shell Corporate Security, has recently returned to the Hakluyt/MI6 spy nest.

US CONNECTIONS

Shell’s relationship with US law enforcement and intelligence agencies is more complex.

In the US, Shell Corporate Security is staffed by former FBI, State Dept Diplomatic Security and law enforcement officials. There are also high level links to the CIA. The current head of the Shell US Corporate Security team is a Lt Commander in US Coast Guard Intelligence.

Frank T. Garcia, a former senior FBI official until recently at the top of Shell Global Security has left the oil giant and joined Vanguard Defense, a US defense contractor which has just supplied the ShadowHawk unmanned spy plane to an oil company client for anti-piracy operations in Africa.

Royal Dutch Shell senior executives Malcolm Brinded and Roxanne Decyk, have had friendly meetings with the CIA in Langley in relation to “forecasting geopolitical security risk.” Jon Hofmeister also met with the CIA’s Directorate of Operations (when Hofmeister was President of Shell Oil).

At the same time, Shell has itself been the subject of unwelcome attention from US investigative agencies. The US Securities & Exchange Commission found Shell guilty of securities fraud in relation to deliberate overstatement of its claimed hydrocarbon reserves. We supplied insider evidence to a New York law firm acting for the lead plaintiff in a related class action lawsuit.  Shell has also been found guilty of electricity market manipulation in relation to its US subsidiary, Coral Power. More recently Shell attracted headlines in relation to its role in a Sex and Drugs Corruption scandal involving officials of the now defunct US Minerals Management Service. As previously stated, last year, US Defense Dept Attorneys confirmed that Shell has been investigated on allegations of industrial espionage relating to Intellectual Property. On a separate matter, I supplied Shell internal documents to the US government after being approached by a US investigative agency (in relation to the Shell/Gale Norton Corruption investigation).

We have a personal interest in Shell cloak and dagger operations. In the 1990′s Shell was cornered into admitting the activities of a Shell uncover agent who used fake credentials while on a mission at our offices during a period when we were besieged by clandestine activity, including a series of linked burglaries.

In more recent years, because of Shell’s US intel connections, it was able to use a Pittsburgh based specialist unit (National Cyber Forensics and Training Alliance) partly funded and staffed by the FBI) in a CAS invisible investigation of me, which included a global operation spying on Shell employees. The objective of the operation was to trace my insider sources. This was all discovered from Shell internal documents the company was compelled to supply to me under UK law.

Shell’s concern at our activities was plain from a Shell internal email dated 15 July 2009.

Extract…

“…says he has about a dozen high level executive who regularly feed him inside infor. For example, he broke XXXXXX reorg plans in May. Is this worrying? are you trying to root out who these people are?

The missing name was “Vosers”.

The person who authored the email seems to agree that Shell insider information supplied to us has cost the company “many billions in lost revenue.”

It asks “… are you doing anything to get the website shut down?

The Shell spying operation against us was instigated and overseen by Ian Forbes Mcredie and Frank T. Garcia.

According to the Shell intel source, the spying operation included tracking devices being secretly implemented on the Blackberry’s of Shell managers.

The source says:

“It became apparent early on that CAS senior leadership viewed the opportunity to exploit your internal sources as a way to ingratiate themselves with the ED’s, particularly following Ian’s Chatham House debacle, whilst further promoting the longer-term desire to see CAS viewed as an internal Intelligence organization.  This was also a play toward extending the CAS hand directly into information security.”

“The players extended beyond CAS, including ‘Business Integrity Services’ (Shell’s investigative arm led by Roger Hickman) and comprised of former senior police investigators, FBI agents (with John Estes, a former agent, leading the US team) as well as forensic auditors.  Whilst the nature of their investigations were primarily focused on violations of the GBP’S by others, it’s questionable if they held themselves or CAS to the same standards when it came to exposing your sources.”

Irish Police are currently investigating death threats allegedly made against Shell employee/whistleblowers leaking Shell emails to me about the controversial Corrib Gas Project, as reported recently in The Irish Times under the headline: “Gardaí investigate alleged death threats to Corrib whistleblowers.”

Shell cloak and dagger activity has been particularly energetic in Nigeria. In December we published secret US Embassy cables revealing that Shell had embedded spies throughout the Nigeria government. On 23 April, we published evidence of how in the 1990′s, Shell helped to organise and pay for a virtual private army of police spies in the Niger Delta. The Financial Times published an article on 27 April 2006 revealing Shell’s surprising commercial relationship with militant groups: “Shell gives Nigerian work to militants’ companies.” The attacks on Shell installations have driven up the global price of oil, which in turn has generated billions of dollars in increased profit for Shell.

Industrial espionage involving such underhand activity, is of course totally incompatible with Shell’s claimed core business principles of honesty, integrity and  transparency. Planting spies inside host governments can hardly be construed as being transparent.

Our source is also concerned at the sheer hypocrisy of it all and at the unhealthy growth of private security agencies, which in some cases have far more intelligence operatives than state intel agencies, but with no independent oversight. We share this concern, especially in view of Shell’s treacherous track record of skulduggery, aimed at friend and foe alike and used, in the case of Shell, to intimidate critics, and even its own employees.

The source is particularly concerned at the Shell/G4S relationship and the global private army that is being brokered. G4S, which has attracted controversy and criticism,  is already the world’s largest security company measured by revenue, with over 600,000 employees and operations in over 110 countries.

ARTICLE ENDS

Comment received from a former employee of Shell Oil USA in response to a related teaser article

“I am certain RD Shell hands out dart boards with your picture on it. Be careful. Shell is a snake with a nasty bite.”

Inside the Shadowy World of Shell Corporate Security

By Alfred & John Donovan

We knew that Shell took seriously the leaks of information and Shell internal documents which have been supplied to us over several years by Shell employees. This was plain from Shell internal documents the company has been legally obliged to disclose to us.

We did not know just how seriously, until information reached us recently from a Shell Corporate Security source.

Leaked Shell Corporate intelligence documents now in our possession cover Shell’s security plans until 2014.

This is evidence that Shell’s counter-measures have not been entirely successful.

The email below was sent yesterday evening to the Company Secretary & General Counsel Corporate of Royal Dutch Shell Plc.  We also sent copies to Peter Voser and Malcolm Brinded. The draft article contains revelations about Shell’s cloak and dagger activities, including infiltrating Shell spies into host governments.

The “CAS” mentioned in the email is an abbreviation for Shell Corporate Affairs Security.

We will publish the article at midnight UK time tonight unless we receive a response from Shell before then, or receive notification of a High Court Injunction blocking publication.

THE EMAIL

Dear Mr Brandjes

Printed below is a self-explanatory draft article.

I have supplied as an attachment the sample CAS Intel Summary document mentioned in the article, which we plan to make accessible online.

Please advise if Shell has any objections to publication of this document, and if so, on what grounds? Obviously we do not want to put anyone at risk, though we cannot see that this would be the case, as the intel information is not current.

As usual, Shell is invited to supply for publication on an unedited basis, any comments you wish to make on this matter. You are also invited to point out any factual inaccuracies, so that appropriate action can be taken before publication.

Please let me know if you need time to consider this matter, in which case kindly indicate when a substantive response is likely to be supplied. We are, as always, more interested in accuracy than expeditious publication.

If, however, I receive no indication from you within the next 24 hours that a substantive response is being prepared, I will assume that Shell has no objection to publication, fully accepts the accuracy of what is stated in the article and does not challenge the authenticity of the Intel Summary Document.

Best Regards

John Donovan

RELATED ARTICLE

Shell embedded spies in host governments of Nigeria, Dubai and Iraq

Hakluyt, Enron, and Shell

By John Donovan

Information herein is sourced from Wikipedia articles relating to:

(1) Hakluyt – the British private intelligence agency, “…staffed almost entirely by ex-intelligence [services] staff”, according to a 2006 report in The Times[1]

(2) Shell, the oil giant notorious for a massive securities fraud when it swindled its shareholders. The company is closely associated with Hakluyt.

(3) Enron, a corrupt energy company based in Houston, Texas that went bankrupt as a result of committing institutionalized, systematic and well-planned accounting fraud.

In May 2001, Christopher James of Hakluyt wrote to Enron‘s Jeff Skilling following up on introductory letter from Phillip J Carroll, the then President of Shell Oil.

“Following Phil Carroll‘s letter to you of April 16 I would be delighted to call on you to tell you more about Hakluyt. While we have already done some work for Enron (Scott Tholan), virtually all our work for our clients is at a strategic level where our coverage of issues is of greatest value. With your challenging international objectives I am confident we could be of value to you. If you would find it useful to meet I will contact your office to arrange a suitable time.”[4]

In an apparent follow-up email in August of that year, James expanded on what Hakluyt could offer:

“Your office has asked me to outline Hakluyt’s services. Rather than fall back on the usual corporate information that we have sent to your people previously, I would say simply this; Hakluyt is what you make of it – it places an unparalleled private intelligence network at the personal disposal of senior commercial figures.”
“The range of deployments we have completed for core clients is wide. In all cases we guarantee complete confidentiality. And, although we work for divisional directors on tactical issues, we have found our most rewarding work in personal dealings with CEOs who wish – for whatever reason – to have a confidential agency at their own disposal. It was this, which prompted Phil Carroll to write to you about us in April as he has found our work of considerable value to him personally. We look at people and the issues, which often drive them to make the decisions or act as they do. All our work is unattributable… We also have an association with Kissinger/McLarty Associates for although our work is very different the services we both provide can be complementary. Our US client base is increasing well but at the same time we wish to remain small and discreet.”[5]

Recommended by Shell CEO?

James’s assertion that Phil Carroll wrote to Enron’s Skilling in April 2001 about Hakluyt appears likely to be a reference to a former Shell CEO. In January 2006, Carroll was quoted by the Houston Chronicle as a friend of disgraced Enron CEO Ken Lay:

“Despite the burdens of his high-profile indictment, Lay hasn’t lost his warm demeanor, according to his friends. ‘Ken is always extremely pleasant,’ said Phil Carroll, the former CEO of Shell Oil Co. who served as the Bush administration’s first energy czar in Iraq.”

Norfolk gas terminal explosion: Shell UK pleads guilty


Christine Cunningham Wednesday, May 4, 2011

Shell UK admitted seven breaches of health and safety and environmental regulations following an explosion and fire at its Bacton gas terminal in Norfolk at a hearing today at Norwich Crown Court.

The gas blast at the terminal in Paston Road happened back in February 2008.

The case was not opened and has been adjourned for a full two day hearing and sentence on June 16 and 17.

Shell admitted in count one to failing to take all measures necessary to prevent major accidents and limit the consequences to people and the environment; in a second count Shell admitted failing to ensure, as far as reaonably practicable, the health and safety and welfare at work of its employees at the Bacton site and also failing to ensure that those people not employed by Shell were not exposed to health and safety risks.

In a fourth charge, Shell admitted failing to operate in accordance with an Integrated Pollution Control authorisation by not maintaining plant and equipment, namely separator vessel VG110 and associated equipment, in good operating condition.

Shell also admitted failing to comply with a polution control regulation by failing to notify the Environment Agency on the failure or malfunction of the separator vessel VG110 which could cause significant pollution.

Shell also admitted failing to comply with a pollution prevention control permit on February 28 by failing to prevent emissions of run-off and fire-fighting foam and also admitted a final charge of failing to comply with a pollution prevention control permit between May 2007 and February 2008 by failing to provide staff with sufficient training and levels of competance properly to operate te Environmental Waste Treatment Plant.

SOURCE ARTICLE

Shell fraud and tax evasion in Ethiopia

The headquarters of Libya Oil Ethiopia Ltd, located on Aba Sebsib Avenue (Debre Zeit Road) in Gotera.

Oil Libya Ltd was ordered last week to pay 210 million Br in back taxes for the purchase of shares from Shell Ethiopia Ltd, to the Ethiopian Revenues and Customs Authority (ERCA).

Shell Ethiopia, which was established pursuant to the United Kingdom (UK) Companies Act, was engaged in the distribution of petroleum products in Ethiopia since 1948. Shell Petroleum, a London based company, was the major shareholder with 587,813 of the company’s total 587,817 shares.

Shareholders of Shell Ethiopia passed a resolution on November 14, 2008, to sell all its shares to Libya Oil for an amount they claimed was 99 million Br.

Libya Oil, owned by the Libyan government and registered in Mauritius, became operational in Ethiopia upon acquiring the shares of Shell Ethiopia on May 20, 2009.

Libya Oil had a registered capital of 60.1 million Br at the time, according to the data from the former Ministry of Trade and Industry (MoT).

The company has five major shareholders: Libya Oil Holding Ltd and Tamoil Africa Holding Ltd as well as three Libyan individuals named Sultan Abusahawashi, Saleh Saad Abdall, and Abadulsalah Yuneus.

Upon receiving the payment of seven million Br for capital gain tax dues from Shell Ethiopia following the share transfer, the ERCA issued a tax clearance certificate to the company.

However, in August 2010, the ERCA was approached by a Libya Oil employee claiming that the tax authority had been intentionally defrauded over the transfer of the shares between the companies to avoid paying taxes, according to sources inside the ERCA.

Subsequently, an investigation was launched into the matter by the authority which ended in England, according to sources inside the authority who were not authorised to comment.

Information was obtained from Her Majesty’s Revenues and Customs (HMRC) and authenticated by the Ethiopian Embassy in London that Oil Libya acquired the downstream operations and assets of Shell in Africa for 323.4 billion Br, according to a senior official at the ERCA.

“Shell Ethiopia’s attorney in England also affirmed it and confessed that the companies had entered into a contract not to disclose the details of the agreement,” sources told Fortune.

Both companies acted intentionally to evade taxes, the ERCA claimed.

Had the real amount been disclosed, the capital gains tax would have amounted to 16 million Br.

The transaction between Shell Ethiopia and Libya Oil was not a mere transfer of shares but a transfer of business, some legal experts argued.

The experts were called in by the ERCA upon learning of the alleged fraud.

“Since such kinds of cases are unique for the authority, we were very careful in deciding everything,” a senior official at the ERCA told Fortune.

The group included instructors from the Law Faculty of Addis Ababa University (AAU) and notable legal experts such as Membere Tsehay, former president of the Supreme Court and now director of the Justice and Legal Systems Institute.

Shell Ethiopia vanished following the transfer of the shares, which is contrary to the normal transfer of shares which results in a change of shareholders while the company continues to operate, some of the experts argued.

Upon concluding the transaction to be a business transaction, the ERCA was advised by some experts to levy all the dues that are usual when a business is transferred. These are business profit tax, VAT, dividend tax, stamp tax, property tax, and capital gains tax.

A different legal argument was made by other experts who suggested that the transaction be considered a transfer of both shares and business property. This would allow the ERCA to levy capital gains tax, stamp tax, and dividend tax from the share transfer in addition to all the other taxes involved with a business transfer.

These different legal arguments on how to proceed with the case delayed the authority’s decision.

“The discussion lasted for about six months before a decision was made as a result of the international nature of the case,” sources disclosed.

The ERCA was finally convinced by the arguments of first group. The authority had little recourse but to take Libya Oil to task as Libya Oil Holding and Shell Petroleum had entered into a contract that Libya Oil would be liable for any debt or third party claims arising from their agreement.

The payment of 119 million Br in capital gains tax (including interest and penalties) and 91 million Br in dividend taxes that should have been declared truthfully and paid by the company to begin with was ordered by the authority.

Mengistu Demesse, deputy manager of Libya Oil, claimed the company had not received the notice, on Friday, April 29, 2011. He refused to say more.

The ERCA is also putting together a case to claim the taxes for a business transfer, which would not amount to less than the current claim, sources disclosed.

The company’s shareholders may also be held criminally liable for not declaring the correct sum of the share transfer, sources pointed out.

Supplying false information to the authority is regarded as a crime, according to the income tax law.

Questions arose about whether Ethiopian courts have the jurisdiction to try the case, since both companies are registered abroad.

Since Shell Ethiopia was established in Ethiopia, a regular tax payer, registered with the former MoTI, and all the dispute assets are situated in Ethiopia, Ethiopian federal courts have the jurisdiction to try the case, experts argued.

Over the past two years, the ERCA has paid around 33 million Br in rewards to informants who supply information about tax crimes and people who aided in the seizure of contraband and illegal items.

If the ERCA succeeds in securing its claim for 210 million Br, the informant would be paid around 41 million Br, the highest reward the authority has ever paid to an informant. To date, the largest payout was 2.5 million Br, in August 2010, to an informant who tipped off the authority about an individual who attempted to smuggle gold to Djibouti.

SOURCE ARTICLE

Shell cites history to allay Karoo fears

May 3 2011 at 07:01pm

Shell Oil Company, which has decades of experience in natural gas development in Alberta, Canada and in Texas, US, believes the procedure of drilling wells and using millions of gallons of water to extract shale gas in the karoo can be done without significant environmental damage.

It is also looking at, and piloting, other technology applications, including tight and shale gas fracturing which do not use water. One option is the use of liquefied petroleum gas (LPG). This effectively uses gas to extract gas.

One company that has spearheaded the use of gelled LPG in place of conventional fracturing fluids – water and various chemicals, which environmentalists are up in arms about – is GasFrac Energy Services. It also drills for gas in the US and Canada.

GasFrac believes that this process results in significant savings on material expenses and “fracture clean up”.

Returned from a recent round of public consultations in Graaff Reinet and Beaufort West in the Karoo, Frederick Palmer, a senior communications manager for onshore gas for Shell, said the company had considerable experience in gas fracturing in Sublette County, Wyoming – a desert-like area like the Karoo – and contended that the procedure was done without significant damage to the environment.

It had also created new wealth in the region boosting revenues to Sublette County and boosting business and employment in towns such as Pinedale, Big Piney and Marbleton.

Environmentalist groups argue that gas has come out of water taps in Colorado following “fracking” – as the procedure is dubbed.

Palmer said in three instances of contamination of aquifers in this US state, two were the result of natural contamination by gas due to decomposition of organic material and the third case a combination of gas development and natural decomposition. None were examples of contamination by chemicals.

He backed up his argument with a report from the State of Colorado Oil and Gas Conservation Commission, which found that a documentary – Gasland, which has created much antagonism to fracking at viewings in the Karoo – incorrectly attributed several cases of water well contamination in Colorado to oil and gas development.

Its investigations determined that “the wells in question contained biogenic methane that is not attributable to such development (fracking)”.

Hydraulic fracturing takes place thousands of metres below the earth, below underground aquifers. Well shafts were encased with cement and steel, so damage to the environment was prevented, Palmer said. Shell is interested in building 24 wells – eight each in three regions of the Karoo – should it get exploration rights.

On Friday, Mineral Resources Minister Susan Shabangu halted all applications for licences to prospect for shale gas in the Karoo. She said that given the intensity and scale of the issue “and the fact that this (shale gas exploration) has never been done before… my department will conduct a comprehensive study which will assist us to formulate our approach after which we will go back to the cabinet”.

Until the conclusion of a feasibility study, no new applications will be accepted – nor will existing ones be finalised. This means that existing rights held by companies – including Shell – will be put on ice.

Palmer noted that Shell was planning over the long term. It was known that energy demand would be double that of the present by 2050 and it would require a mixture of fossil fuels – including shale gas – and renewables. He said moratoriums put in place did not constitute “a ban” but provided authorities with more time “to decide” on the appropriateness of hydraulic fracturing. To prevent environmental damage, “the design and execution of the wells is absolutely key”.

There was potential for vast job and wealth creation through shale gas development, he noted. In Louisiana in the US, $10.6 billion (R69.1bn) in new business sales were generated in 2009 – in a recession year – while household income in the state climbed by almost $6bn. – Donwald Pressly

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