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Brazilian Indians demand Shell leave their land

Survival’s Director, Stephen Corry, said today, ‘It’s a sad irony that people buy Shell’s ethanol as an ‘ethical’ alternative to fossil fuels: there’s certainly nothing ethical about its horrendous treatment of the Guarani.

Guarani man. Shell is using sugarcane planted on Guarani land. © F. Watson/Survival

Indians of the Guarani tribe in Brazil have demanded that energy giant Shell stop using their ancestral land for ethanol production.

Ambrosio Vilhalva, a Guarani man from one of the communities affected, told Survival, ‘Shell must leave our land… the companies must stop using indigenous land. We want justice, we want our land to be mapped out and protected for us’.

Shell is united with Brazilian ethanol company Cosan, in a joint venture company called Raizen. Some of Raizen’s ethanol, sold as a biofuel, is produced from sugarcane grown on the Guarani’s ancestral land.

In a letter to the companies, the Indians warn that, ‘Since the factory began to operate, all our health has deteriorated – children, adults and animals’.

The chemicals used on the sugarcane plantations are thought to be causing acute diarrhoea amongst Guarani children, and killing fish and plants.

The Guarani state, ‘We can no longer find many of the medicines which used to grow in the forest… the plants have died because of the poison’.

They continue, ‘The growers never asked our permission or consulted us before planting on our land’.

Download the Guarani’s letter (pdf, 266 kb).

The Brazilian government’s failure to uphold its own laws and map out and protect the Guarani’s land for their exclusive use has left it vulnerable to exploitation by sugarcane plantations.

Meanwhile, many Guarani live in appalling conditions, in overcrowded reserves or camped on roadsides.

Dozens of Guarani have been assassinated after trying to reoccupy their ancestral land, and many more subjected to violence. The Guarani of Pueblito Kuê are the latest to suffer attacks, since they reoccupied their land last month.

Survival’s Director, Stephen Corry, said today, ‘It’s a sad irony that people buy Shell’s ethanol as an ‘ethical’ alternative to fossil fuels: there’s certainly nothing ethical about its horrendous treatment of the Guarani. The Brazilian government needs to enforce its laws, and stop the wholesale destruction of the Indians’ land’.

Download Survival’s report to the UN, about the Guarani’s desperate situation (pdf, 2.4 MB)

The current boom in sugarcane production is taking over the Guarani’s ancestral land.
© S. Shenker/Survival

Act now to help the Guarani

Your support is vital for the Guarani’s survival. There are lots of ways you can help.

SOURCE ARTICLE

Karoo gas could fuel SA for decades — Shell

Shell says it would invest billions of dollars in the development of a Karoo gas field in the event that it got the go- ahead to drill and if its exploration of the area proved fruitful

LINDA ENSOR
Published: 2011/09/02 06:49:50 AM

CAPE TOWN — Shell would invest billions of dollars in the development of a Karoo gas field in the event that it got the go- ahead to drill and if its exploration of the area proved fruitful, Shell’s upstream manager for SA, Jan Eggink, said yesterday.

The US Energy Information Administration has estimated that there are 485-trillion cubic feet of shale gas in the Karoo, enough to make SA self-sufficient in energy for decades to come.

Exploration alone would cost Shell $200m even if it was found that the reserves were not exploitable, Mr Eggink told the Cape Town Press Club.

Shell, along with a number of other companies, has applied to the government to explore for gas in the Karoo — a proposal that has generated fierce opposition from environmental lobby groups and some Karoo landowners. The debate rages on, with opponents saying gas mining in the Karoo would desecrate an ecologically sensitive area of pristine beauty. Mineral Resources Minister Susan Shabangu has established a task team to investigate the pros and cons of “fracking” for gas, and is expected to receive this report in the next few months.

Mr Eggink stressed that Shell was committed to paying fair compensation to landowners in the Karoo to gain access to their land and also made the commitment that it would not compete with residents for water. This is one of the major concerns of landowners. Access to sufficient quantities of water will be a critical factor in the decision to develop the gas.

Mr Eggink said about 1-million litres would be required in the exploration phase and a further 5- million to 10-million litres in the development phase. If there was not enough water underground, it would have to be brought in by truck or by pipeline.

Contamination of underground water supplies is another of the key concerns of landowners, as chemicals would be used in the process of hydraulic fracturing.

But Mr Eggink said Shell knew from experience elsewhere “that if a well is properly constructed it will not leak any fluid into groundwater supplies.”

He believed SA would gain enormously from producing its own gas, which was a much cleaner form of fuel than the coal that was currently used to generate about 90% of the country’s electricity. Gas was a cleaner source of energy, which would enable SA to reduce its carbon footprint.

Developing renewable sources of energy, such as solar and wind, in sufficient quantities to make an impact would take decades.

Mr Eggink noted that a modern gas power plant generated up to 70% less CO² than the old-styled coal-fired plant and was cheaper to build.

He also stressed that the surface footprint of a shale gas development would be very small (1%) compared to the overall acreage that Shell had applied to explore in, and would create thousands of jobs.

“Rapid economic growth means electricity demand is rising. By drawing on potential abundant gas supplies you can meet rising energy demand while maintaining energy security,” Mr Eggink said.

In the exploration phase, Shell would drill at least six wells, which would reveal whether gas could be extracted in sufficient quantities to be commercially viable. But even before this phase started, an environmental impact assessment would have to be made — a process that could take between 18 months and two years.

ensorl@bdfm.co.za

SOURCE ARTICLE

Shell: nothing wrong with fracking and unconventional gas

From pages 32, 33 34 & 35 of “Royal Dutch Shell and its sustainability troubles” – Background report to the Erratum of Shell’s Annual Report 2010

The report is made on behalf of Milieudefensie (Friends of the Earth Netherlands)
Author: Albert ten Kate: May 2011.

Shell: nothing wrong with fracking and unconventional gas

In its communication, Shell makes no difference between conventional and unconventional gas in terms of environmental and health risks. The company generally refers to natural gas as being cleaner-burning than coal in power plants and as being a bridge to a low-carbon energy future.

On fracking, Shell states on its website: “This is a safe and proven technique according to the U.S. Environmental Protection Agency (EPA), which is now carrying out a new study into hydraulic fracturing and its potential impact. Fracturing has been used by oil and gas companies for over 60 years.” The company does not mention that there are great differences between the traditional fracking and the present high-volume fracking, that the EPA has been presently accused of hiding some severe impacts of fracking, and that the U.S. government has not been able and/or willing to monitor the booming U.S. shale gas business adequately.

Environmental and health risks caused by unconventional gas extraction

In this section, the environmental and health risks of the present high-volume fracking are considered more in-depth.

1) Enormous water use

According to the U.S. Environmental Protection Agency, the volume of water needed for hydraulic fracturing varies by site and type of formation. Fifty thousand to 350,000 gallons of water may be required to fracture one well in a coal-bed formation, while two to five million gallons of water may be necessary to fracture one horizontal well in a shale formation. A gallon stands for 3.78 litres.

Shell stated in September 2010 that hydraulic fracturing requires 1 to 5 million gallons of water per well and that it re-uses some of the water. For its Groundbirch tight gas operations in British Columbia (Canada) Shell claims to use 5 to 8 million litres per well, sourced locally from the Peace River, fresh water wells and some 20-40% recycled from producing wells. As with most unconventional gas operations presently going on, the Groundbirch operations have just been starting up. As of June 2010 Shell had drilled 103 wells, with almost 3,000 wells yet to come. Shell’s future aspiration is to use reclaimed water from a waste treatment plant at Groundbirch, transported via pipelines so the present disposal by trucks can be reduced.

To explore the shale gas possibilities of the Karoo region in South Africa, Shell states it may decide to hydraulically fracture vertical and horizontal exploration wells. It expects to need up to 2.2 million litres of water for hydraulic fracturing a vertical exploration well and up to 6 million litres for an exploratory horizontal well section. Whenever Shell is allowed to explore the Karoo region, and it does find gas it could produce on an economically basis, one wonders how Shell would cope with the enormous amounts of water needed in the semi-desert Karoo region. Shell has not yet shared its thoughts about this.

2) Pollution of water resources

There are several ways in which water could be polluted through high-volume fracking. With shale gas production, the two major pathways to water contamination are activities at the surface and errors below ground: − Once in the ground, a large portion of the fracturing fluid may be trapped in the target formation. The rest, however, comes back to the surface (flowback), combined with water produced from the formation itself. Both flowback and produced water represent large waste streams. If flowback and produced water are disposed of improperly, waste water may threaten public and environmental health.

− Errors below ground can endanger water resources as well. Improperly cased wells may contaminate penetrated aquifers. Potential shallow pockets of natural gas in formations above the target layer may enter into ground water.

− Trucks transporting water to the site for fracturing and from the site for disposal may stress nearby stream banks, contributing to erosion and adding sediment to surface water.

Experiences in Pennsylvania, United States

In February and March 2011, the New York Times published several articles about the pollution caused by drilling in Pennsylvania State, USA. During nine months the newspaper had obtained more than 30,000 pages of documents from state and federal agencies/officials.

The shale gas business is booming in Pennsylvania, sitting atop the enormous reserve called the Marcellus Shale. In 2010, drilling companies were issued roughly 3,300 Marcellus gas-well permits in Pennsylvania, up from just 117 in 2007.

The New York Times estimated that more than 1.3 billion gallons of wastewater was produced by Pennsylvania wells over the past three years. Based on the obtained documents, the newspaper estimated that some 10 to 40 percent of the water sent down the well during hydrofracking returns to the surface, carrying drilling chemicals, carcinogenic materials, corrosive salts and, at times, naturally occurring radioactive material. Most of the wastewater was sent by trucks to treatment plants not equipped to remove many of the materials, and ended up in rivers providing drinking water for millions of people. The U.S. Environmental Protection Agency states that it is dangerous when radioactive wastewater contaminates drinking water or enters the food chain through fish or farming. Once radium enters a person’s body, by eating, drinking or breathing, it can cause cancer and other health problems, many federal studies show.

The newspaper was able to map the wastewater released from 149 wells. The federal drinking water standards were exceeded for the carcinogenic benzene (41 wells), gross alpha (128 wells, gross alpha is a type of radiation caused by emissions from uranium and radium), uranium (4 wells), and radium (42 wells).203 At least 116 wells produced wastewater exceeding the federal standards for radium or other radioactive materials in drinking water more than 100 times.

3) Greenhouse gas emissions

The three main greenhouse gases (GHGs) that are relevant to the petroleum and natural gas industry are methane (CH4), carbon dioxide (CO2), and nitrous oxide (N2O). Methane’s chemical lifetime in the atmosphere is approximately 12 years. Its relatively short atmospheric lifetime, coupled with its potency as a greenhouse gas, makes methane a candidate for mitigating global warming over the near-term (25 years or so). Methane is about 33 and 105 times more powerful at warming the atmosphere than carbon dioxide (CO2) by weight, for a 100-year and 20-year horizon respectively.

New estimates U.S. Environmental Protection Agency

Recently, the U.S. Environmental Protection Agency (EPA) has re-estimated the GHG emissions from the petroleum and natural gas industry. It’s earlier estimations were from 1996. At that stage methane emissions were not considered to be so powerful at warming the atmosphere. In its new study, published in November 2010, the EPA found that CH4-emissions had been significantly underestimated. In its new estimate, the U.S. petroleum and natural gas industry emitted 317 million tonnes of greenhouse gases (measured in CO2 equivalents) in 2006. This is a 57% increase compared to the outdated calculation method. Of the total 317 million tonnes, the natural gas industry accounted for 261 million tonnes CH4 (measured in CO2 equivalents). The EPA had revised four emission sources that were believed to be significantly underestimated: well venting for liquids unloading; gas well venting during well completions; gas well venting during well workovers; centrifugal compressor wet seal degassing venting.

The EPA also made a distinction between the GHG emissions of conventional gas wells and unconventional gas wells. For unconventional wells, it estimated that the emission factors for venting during well completions and well workovers exceed emission factors of conventional wells by a factor 200. It was assumed that all unconventional wells were completed with hydraulic fracturing of tight sand, shale or coal bed methane formations. The water that is returning to the surface is accompanied by large quantities of methane. This is the main cause of the greater methane emissions than conventional wells.

Study Cornell University

In a study published in the journal Climatic Change, the Cornell University in New York assesses the likely GHG footprint of natural gas in comparison to coal.208 The study builds, among other, upon the recent findings of the EPA. The study acknowledges that natural gas produces less greenhouse gas emissions than coal when burned. However, the authors also take into account the GHG emissions that occur during the production of coal and natural gas. This lifecycle approach of GHG emissions from coal and natural gas presents a different picture. The authors compare the lifecycle GHG emissions of shale gas, conventional natural gas (both with low and high estimates for methane emissions to the atmosphere), coal from surface mines, coal from deep mines and diesel oil.

Largely based upon the recent EPA-study, the authors estimate that 3.6% to 7.9% of the methane from shale gas production escapes to the atmosphere through venting and leaks. This is 1.3 to 2.1 times more than from conventional gas operations. The higher emissions from shale gas occur when wells are hydraulically fractured – as methane escapes from flowback return fluids – and during drill out following the fracturing.

Calculated on the basis of a 20-year horizon, the authors conclude that the lifecycle GHG emissions of shale gas are at least 20% greater than the lifecycle GHG emissions of coal. For conventional natural gas, the emissions of coal fall between the high and low estimate.

The 20-year approach by the authors reflects the need to mitigate climate change in the near- term. As methane is known to have a relative short lifetime in the atmosphere, it especially causes climate change on a short-term. The authors also calculated the lifecycle GHG emissions for a 100-year horizon. Over the 100-year frame, the GHG footprint is comparable to that for coal: the low-end shale-gas emissions are 18% lower than deep-mined coal, and the high-end shale-gas emissions are 15% greater than surface-mined coal emissions.

As for Shell, it is not known how many GHG emissions it releases in the air due to venting and leaking CH4. The company promotes natural gas (including unconventional gas) as a replacement for coal. Natural gas is seen by Shell as a bridge to a low-carbon energy future, something for the near-term. However, for unconventional gas the opposite seems true: the GHG emissions increase compared to coal in the near-term.

A further extract from this section of the report will be published in the coming days.

THE COMPLETE 73 PAGE REPORT (with reference sources)

Shell Reports Higher Earnings on Oil Prices

Jason Alden/Bloomberg: A Shell station in London, U.K. Shell posted adjusted earnings of $6.6 billion, matching the mean estimate of nine analysts surveyed by Bloomberg.

By Eduard Gismatullin – Jul 28, 2011 8:47 AM GMT+0100

Royal Dutch Shell Plc (RDSA), Europe’s biggest oil company, said second-quarter earnings almost doubled on higher oil prices and project startups in Qatar and Canada.

Net income rose to $8.66 billion from $4.39 billion a year earlier, The Hague-based Shell said today in a statement. Excluding one-time items and inventory changes, profit matched analyst estimates.

“The cash generation in the company was already quite strong and they proved it again this quarter,” said Dimitri Willems, who helps manage about 1.3 billion euros ($1.9 billion) at Kempen Capital Management in Amsterdam. Cash flow from operations rose 43 percent to $12.3 billion.

Chief Executive Officer Peter Voser, who sold about $4 billion of “non-core” assets in the first half, is seeking to boost production with a $100 billion investment plan through 2014. Shell started the Pearl gas-to-liquids and Qatargas 4 liquefied natural-gas ventures in the Middle East this year. It also expanded an oil-sands project in Canada’s Alberta region.

“The first half of 2011 saw the successful startup of three of the largest-scale projects anywhere in our industry today,” Voser said in the statement. “The ramp-up of our new projects should drive our financial performance in the coming quarters.”

Statoil, Repsol

BP Plc (BP/), Shell’s smaller rival, earlier this week reported profit that missed analyst estimates following field disruptions in the Gulf of Mexico. Statoil ASA, Norway’s largest oil company, and Repsol YPF SA of Spain both reported earnings today that beat estimates. Exxon Mobil Corp. (XOM), the largest U.S. oil company, is scheduled to release earnings later today.

Adjusted earnings at Shell came in at $6.6 billion, in line with the mean estimate of nine analysts surveyed by Bloomberg.

Shell’s Class A shares traded in London fell 0.5 percent to 2,253 pence as of 8:20 a.m. local time. The stock is up 5.3 percent this year.

The startups in Qatar and Canada will contribute in excess of 400,000 barrels of oil equivalent a day at their peak, according to Voser.

Shell carried out work at its refineries in Canada, the U.S., the Netherlands, Malaysia and Singapore this year. As a result, refining availability fell to 90 percent in the second quarter from 94 percent last year.

‘Resilient Performance’

“Maintenance activities and weak industry refining margins masked a resilient performance from oil products marketing and chemicals,” the CEO said.

Production fell 2 percent to 3.046 million barrels of oil equivalent a day in the quarter, mainly because of asset sales. Shell plans to increase daily output to 3.7 million barrels in 2014. LNG sales rose 24 percent to 4.8 million tons in the latest quarter.

Brent crude futures, the benchmark for two-thirds of the world’s crude, were on average 48 percent higher in the second quarter compared with the year-earlier period. U.K. natural-gas prices were 58 percent higher.

In Mexico, Shell agreed to sell its 50 percent stake in an LNG import terminal at Altamira for about $200 million. It also completed the disposal of assets in Chile and the Dominican Republic for about $700 million in total.

Prelude Floating LNG

Shell is expanding in Australia after agreeing in May to invest as much as $12.6 billion in the Prelude floating LNG project. Earlier this month, it agreed to join Japan’s Inpex Corp. in a floating LNG project off Indonesia.

In the Gulf of Mexico, Shell started the Cardamom field development last month. In May, the company warned that its oil and gas production may be curbed by 50,000 barrels a day in the Gulf because of delays in receiving drilling permits following the Macondo crude spill last year.

Shell completed a $1.8 billion Texas gas field sale to Occidental Petroleum Corp. this year and also disposed of stakes in Canada, Pakistan and the U.K. This month it agreed to sell assets in Brazil.

Last month, Shell concluded the creation of a $12 billion biofuel joint venture with Cosan SA Industria & Comercio in Brazil. The partners plan to make transport fuel from wheat stalks and sugar-cane bagasse, a sugar industry waste product, in anticipation that the share of renewable energy in fuel will double in the next 10 years.

In Malaysia, Shell together with ConocoPhillips and Petroliam Nasional Bhd. agreed to invest in the offshore Sabah Gas Kebabangan project, which will pump 130,000 barrels of oil equivalent a day.

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

Shell serious about ethanol and other biofuels, says CEO

By NALIN VIBOONCHART
THE NATION
KUALA LUMPUR
Published on July 9, 2011

Royal Dutch Shell is heavily focused on investing in the exploration and production of gas and biofuels in promising countries, including China and Brazil, as it foresees that these sources of energy will play an important role over the next four decades as the demand for energy, particularly from Asian countries, will grow much faster than supply.

Chief executive officer Peter Voser yesterday said in Malaysia that Shell was focusing on four areas for future energy development: natural gas, biofuels, reduction of carbon-dioxide (CO2) emission and energy-efficiency products.

The company is collaborating with Cosan, Brazil’s biggest ethanol producer, to produce ethanol from sugar cane.

This is an important step, demonstrating that Shell is seriously engaged in biofuels.

Ethanol emits 70 per cent less CO2 than fossil fuels. Meanwhile, CO2 emissions from gas-fired power plants are also lower than those generating electricity from coal by 50-70 per cent.

Shell last year announced an agreement with China National Petroleum Corporation (CNPC) to co-explore for natural gas to serve the demand in the second-biggest economy in the world. This year, it committed to spending US$100 billion (Bt3 trillion) through 2014 to explore and produce oil and gas elsewhere in the world as well as to increase capacity at existing sites. The company is also investing many billions of dollars to develop the Cardamom oil and gas field in the Gulf of Mexico.

Voser said it was too early to conclude which sources of energy will replace nuclear power plants after the Fukushima accident, but coal and natural gas would be the major sources for the short and medium terms. Shell expects half of its production worldwide to be natural gas by 2012.

He said that the underlying reason driving Shell into its aggressive push towards gas and biofuels exploration and production was energy demand, which will grow faster than supply.

By 2050, the world’s population is forecast to grow to 9 billion from 6.8 billion currently, and the number of vehicles is predicted to triple to 2 billion, of which 90 million will be in Southeast Asian countries. So energy consumption in 2050 may be double the 2000 level.

The International Energy Agency has also said that developing countries will experience 64-per-cent growth in energy consumption, while the figure for developed countries is only 3 per cent.

Voser said the key driver for biofuel consumption was the joint commitments among communities, governments and non-governmental organisations to create a long-term framework for this kind of energy.

Many countries in Southeast Asia – Thailand, Malaysia and Indonesia among them – have plenty of resources for making biofuels. These countries can grow sugar cane, cassava and oil palm.

Although Shell is aggressively investing in exploring for and producing gas and biofuels, it has committed to invest many billions of dollars for technology to prevent accidents during oil and gas exploration and production activities.

Voser delivered this message in the wake of a report by The Guardian that said there were oil and gas spills on North Sea platforms once a week on average. Shell and Total had the most leaks the report said.

In a separate matter, the Thailand team has won the championship for Shell’s FuelSave 1 Litre Challenge in the Shell Eco Marathon held at the Sepang International Circuit in Malaysia on Thursday. This was the second time that the team from Thailand won the prize.

The average distance that the team was able to make on 1 litre was 15.952 kilometres, followed by the Singapore team with 15.856km and Malaysia with 15.749km.

SOURCE ARTICLE

Shell sees future in unconventional gas

Published: June 30, 2011 at 9:44 AM

LONDON, June 30 (UPI) — A so-called revolution in gas supplies driven in part by shale-gas reserves will allay global energy security concerns, a Shell official said in London.

Malcolm Brinded, executive director of global upstream activity at Royal Dutch Shell, told delegates at an energy summit in London natural gas is one of the best ways to cut greenhouse gases and develop a secure and sustainable energy supply.

He points to analysis from the International Energy Agency that predicts a rise in global gas demand of around 60 percent, fueled by booming economies in China and India, by 2035.

“This demand growth is being supported by the boom in the production of tight gas, shale gas and coal bed methane,” Brinded said.

North American unconventional gas reserves are large enough to meet domestic demand for the next century. Concerns about hydraulic fracturing, the method used to get natural gas out of shale rock, has resulted in bans on the method in several countries, however.

Brinded said this means energy companies must provide assurances to its customers while at the same time adhering to the highest operational standards.

“Otherwise, a public good in the form of abundant supplies of cleaner energy is at risk of being obscured by a deluge of misinformation,” he said in his prepared remarks.

Brinded noted that when unconventional natural gas operations are done correctly, there is little cause for concern.

SOURCE

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

Shell Says Australia Must Move on Climate With ‘Clock Ticking’

By James Paton – Jun 15, 2011 10:30 AM GMT+0100

Australia should introduce a cap- and-trade system to reduce greenhouse-gas emissions and act “earlier rather than later” to tackle climate change, Royal Dutch Shell Plc (RDSA) said.

“The clock is ticking,” Ann Pickard, chairman of Shell’s operations in Australia, said today in a speech in Sydney, according to an e-mailed copy of her presentation. “I do think that it’s in our interest for Australia to be an example to the rest of the world.”

Australia, which has about A$200 billion ($214 billion) of proposed liquefied natural gas projects targeting Asian demand for the fuel, also needs “well thought-out policies on labor and immigration” to deliver a skilled work force, she said. A surging Australian dollar has made labor “even more important to solve,” she said.

Shell, Europe’s largest oil company, expects to invest about $30 billion during the next five years on oil and gas developments in Australia, it said in May. The company plans to pioneer the use of floating LNG technology to develop the Prelude project off northwest Australia and is Chevron Corp. (CVX)’s partner in the proposed Gorgon LNG project.

To contact the reporter on this story: James Paton in Sydney jpaton4@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.

SOURCE ARTICLE

Comment posted on Shell Blog by “Outsider” on Jun 15th, 2011 at 4:46 pm

There’s a certain irony in Ann Pickard’s lecturing of the Australians. I believe her previous assignment included responsibility for Nigeria? Have her views on greenhouse gases really changed so significantly since she arrived Down Under?

Cosan Jumps After Shifting More Debt to Raizen Venture With Shell

By Lucia Kassai and Andrew Herndon – Jun 2, 2011 8:38 PM GMT+0100

Cosan SA Industria & Comercio rose the most in a week after it transferring $3.3 billion in debt to a joint venture with Royal Dutch Shell Plc (RDSA), more than previously announced.

Cosan rose 93 Brazilian centavos, or 4 percent, to 24.06 reais at 4:34 p.m. in Sao Paulo trading, the most since May 25. Shell’s Class A shares fell 1.7 percent in London to close at 2,122 pence.

Cosan shifted about 5.24 billion reais ($3.3 billion) in net debt to the Raizen venture, the Barra Bonita, Brazil-based company said today in a regulatory filing. That’s more than the $2.8 billion in debt it said in August that would transfer to the new company, which was formally created today.

By transferring the liabilities to Raizen, Cosan’s net debt dropped 69 percent to 1.63 billion reais, compared with 5.3 billion reais as of Dec. 31, 2010, the latest available figure.

“Cosan is contributing more debt as it is including debt from the Zanin mill acquisition,” chief financial officer Marcelo Martins said on a call with analysts today. “Cosan will become lighter and have an improved capital structure.”

Cosan bought in February assets from Usina Zanin Acucar & Alcool Ltda in Brazil for 142 million reais in cash and agreed to take on 236 million reais of debt.

Largest Cane Processor

Shell, Europe’s largest oil company by market value, and Cosan combined their their sugar, ethanol and fuel-distribution assets in Brazil to form Raizen, the world’s largest sugar-cane processor. Cosan contributed 23 mills, 1,730 gas stations and other assets, and Shell put up as much as $1.6 billion in cash and assets, including 2,740 stations.

As part of the agreement, The Hague-based Shell transferred a 15.7 percent stake in enzyme producer Codexis Inc. (CDXS) to Raizen, which is now its largest shareholder, Codexis said today.

The deal also includes part of Shell’s interest in Iogen Energy, a 50-50 joint venture with Ottawa-based enzyme producer Iogen Corp. that is developing cellulosic ethanol technology, Shell said today.

Brazilian billionaire Rubens Ometto Silveira Mello, who controls Cosan, will be chairman of Raizen and will have an annual compensation of about 13 million reais, Cosan said.

To contact the reporters on this story: Lucia Kassai in Sao Paulo at lkassai@bloomberg.net; Andrew Herndon in San Francisco at aherndon2@bloomberg.net

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net

SOURCE ARTICLE

Spoof 24 page section of Shell Annual Report published

Shell ‘apologises’ for worldwide damage in “erratum” to annual report

THE HAGUE, NETHERLANDS, May 17, 2011: During the Shell annual general assembly (AGM) in The Hague, today, Friends of the Earth International presented an “erratum” [1] to Shell’s 2010 annual report. In this spoof “erratum”, which was distributed among shareholders, Shell ‘admits’ that it is “causing a lot of unwanted and unnecessary damage” in its global oil-gas- and biofuels operations. The company also states that Shell “has learnt from these mistakes” and pledges to take “full responsibility to prevent and mitigate costs for the environment and people affected by our operations”.

The “erratum” published by Friends of the Earth International today highlights 12 cases from 5 different continents. It displays climate and other environmental impacts from Shell’s oil and gas operations, but also shows the involvement of Shell in the violation of human rights and labour irregularities, such as those resulting from Shell’s joint venture with Brazilian biofuel producer Cosan S.A., which has been linked to slave labour and violations of labour rights. Furthermore, the report lists cases of corruption and interference with politics in order to ensure business profits. The erratum, which should serve as a wake up call for Shell’s shareholders and board, is backed by an in-depth report about the 12 cases involving life threatening pollution, bribery, slavery and violation of national and international laws.

Paul de Clerck, coordinator of the corporates campaign at Friends of the Earth International, said: “We expect that the promises in the erratum we wrote for Shell will become reality. Shell is aware of the damage it is causing to the environment and of the violation of rights of local communities that it is involved in. We want the company to take measures to restore this damage and to prevent further wrongdoing”.

During the presentation of the “erratum” to Shell’s shareholders and board, today, representatives  from different communities affected by Shell’s wrongdoing were present:

Eric Dooh, a Nigerian farmer who is taking Shell to court in The Netherlands [2] for refusal to clean up oil spills in his fishponds and on his fields said: “Oil spills from Shell pipelines caused the water and agricultural land in our village to be severely polluted. We want Shell to clean up the pollution so we can fish and farm again”.

Lionel Lepine, representing the Athabasca Chipewyan First Nation in Canada said: “Shell’s tar sand operations are disrupting our traditional way of life. They are destroying our air, water, land and medicinal plants and the birds, fish and animals we depend on to sustain our people” Mr. Lepine also stated that “Shell’s footprint in our lands will have a multi-generational effect on our children not yet born, they are violating our Indigenous rights, the rights of our sacred Mother Earth and we are here at their AGM to put them on notice that we will stop them.”

Friends of the Earth International demands from Shell that the company:

*Cleans up pollution and compensates victims
*Improves maintenance of its operations to avoid new cases of pollution
*Reduces the carbon footprint of its operations
*Terminates operations posing severe risks to water supplies, health, agriculture  and biodiversity, such as high-volume gas-fracking, tar sands, Arctic and deep sea drilling
*Ceases the violation of human rights and compensates victims.

NOTES
[1] The spoof erratum can be downloaded here: http://www.foei.org/shell-report

[2] On May 19, Eric Dooh will for the first time face Shell in court during a hearing in The Hague. For more information about the court case and about what will happen on May 19, please visit: www.milieudefensie.nl/english/shellinnigeria


Democrats See Strategy to End Big Oil Tax Breaks

A version of this article appeared in print on May 9, 2011, on page A15 of the New York edition with the headline: Democrats’ Plan Would Offset Deficit by Ending Big Oil’s Tax Breaks.

WASHINGTON — Linking two of the politically volatile issues of the moment, Senate Democrats say they will move forward this week with a plan that would eliminate tax breaks for big oil companies and divert the savings to offset the deficit.

With high gas prices and rising federal deficits in the political spotlight, senior Democrats believe that tying the two together will put pressure on Senate Republicans to support the measure or face a difficult time explaining their opposition to voters whose family budgets are being strained by fuel prices.

President Obama and some top Congressional Democrats have said they want to take some of an estimated $21 billion in savings from ending the tax breaks and steer it to clean energy projects. But the Senate’s Democratic leadership is calculating that using it to cut the deficit instead makes it a tougher issue politically for Republicans who are trying to burnish their conservative fiscal credentials.

“Big Oil certainly doesn’t need the collective money of taxpayers in this country,” said Senator Robert Menendez, Democrat of New Jersey, one of the authors of the legislation that Democrats intend to showcase. “This is as good a time as any in terms of pain at the pump and in revenues needed for deficit reduction.”

As part of the effort to build support for the measure, the Senate Finance Committee has invited multinational oil company executives to discuss the tax subsidies and other government incentives at a hearing on Thursday.

Many Republicans are certain to oppose the proposal, making it hard for Democrats to assemble the 60 votes that will be needed to break a filibuster, given the resistance from energy-state senators in their own ranks. Republicans have characterized calls by Mr. Obama and Congressional Democrats to end the breaks as backdoor tax increases that will only increase gas prices.

“Instead of returning again and again to tax hikes that increase consumers’ costs, the administration and its Democrat allies in Congress should open their eyes to the vast energy resources we have right here at home and to the hundreds of thousands of jobs that opening them up could create,” Senator Mitch McConnell of Kentucky, the Republican leader, said in a statement.

Hoping to reinforce that point, House Republicans are set to approve legislation this week that would expand the coastal areas where energy companies can explore and produce oil and gas.

Democrats say they tailored their bill to make it harder for Republicans to reject after Senator Harry Reid, the majority leader, and Mr. Menendez wrote to colleagues last week that their goal was to “proceed with a bill that maximizes our chances of garnering bipartisan appeal.”

As currently written, the bill would apply only to what Democrats have identified as the five largest and most profitable oil companies: BP, Exxon Mobil, Shell, Chevron and Conoco Phillips. Those involved in writing the measure said they restricted it to those firms by using a definition that applied to major oil companies with certain levels of revenue. Democrats say they believe that approach thwarts Republican arguments that eliminating the tax breaks could affect more than just the major oil firms.

The proposal would end a series of tax advantages for the five companies and produce about $21 billion over 10 years, Democrats say.

More than $12 billion would come from eliminating a domestic manufacturing tax deduction for the big oil companies, and $6 billion would be generated by ending their deductions for taxes paid to foreign governments. Critics suggest that the companies have been able to disguise what should be foreign royalty payments as taxes to reduce their tax liability. The bill would also deny the companies the ability to deduct some intangible drilling and development costs, producing another $2 billion.

Some Congressional Democrats, including Senator Max Baucus, the Montana Democrat who heads the Finance Committee, have proposed using the revenue from the elimination of the tax breaks to promote alternative fuels and provide incentives to purchase fuel-efficient vehicles. Mr. Obama has made similar suggestions, and in his regular address over the weekend he again called for more emphasis on the development of clean energy.

But top Democrats said that reallocating the money that way would allow Republicans to accuse Democrats of picking winners and losers in the energy industry. At the same time, the strict focus on the deficit could cause unrest among Democrats who support alternative energy projects.

Last week’s sudden dip in oil prices, which could show up at the pump soon, might also sap momentum behind the tax measure.

Don Stewart, a spokesman for Mr. McConnell, noted that Democrats typically criticize oil companies when gas prices are high. He pointed to remarks made by Democrats at a 1974 Senate hearing that echoed the current talk of soaring profits and industry bonanzas.

“These guys need a new playbook,” Mr. Stewart said.

But Democrats said they see themselves as occupying the political and policy high ground in this case. They noted that top Republicans like Speaker John A. Boehner and Representative Paul D. Ryan, the Wisconsin Republican who is chairman of the House Budget Committee, have suggested that industry subsidies might have to be curbed.

Even talk of Republican delaying tactics does not seem to disturb Democrats who are eager to engage in a fight about oil.

“I am happy to have this debate on the floor for days,” Mr. Menendez said.

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