Posts under ‘Dow Jones Newswires’

Published February 07, 2012 Dow Jones Newswires

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FEBRUARY 2, 2012

– Shell aiming to exploit difference in price between U.S. gas and LNG, GTL

– Investment in U.S. gas exploration to be at lower end of planned spending

– Company to make further moves into oil-rich shales

By Alexis Flynn

Of DOW JONES NEWSWIRES

LONDON (Dow Jones)–Royal Dutch Shell PLC (RDSA) is actively looking at ways to improve the profits it gets from U.S. natural gas, including seeking out land for a potential gas-to-diesel plant, the company said Thursday.

The Anglo-Dutch energy giant has invested heavily in U.S. shale gas assets, but new extraction techniques have led to abundant supply. Prices have fallen to a decade low and risk driving up the costs of Shell’s recent shale acquisitions. By contrast, the oil price has risen some 40% in the last two years.

“We have been looking for ways to leverage Shell’s strong resource position in North America,” said Chief Executive Peter Voser.

Chief Financial Officer Simon Henry said Shell was examining plans to develop the gas into products that are more closely linked to oil prices, such as liquefied natural gas for export and gas-to-liquids technology that turns gas into a transport fuel.

He said Shell was even seeking out land to build possible sites to build the types of facilities needed but cautioned that at a cost of “around $5 billion to $10 billion a project, we have to be selective.” Shell completed a giant gas-to-diesel project in Qatar last year, but its final cost was in the region of around $18 billion, rather than the $5 billion initially estimated in 2003.

Voser also said Thursday the company would broaden its focus to include oil-rich shale, with the company planning to spend $1 billion on liquid-rich shales alone in 2012, with production from the source expected to account for as much as 250,000 barrels of oil equivalent a day by 2017. By contrast, Voser said Shell’s expected outlay on U.S. gas exploration would be at the low end of its spending range given the weak pricing environment.

“Spending could be in the range of $5 billion and $6 billion per year on a worldwide basis over the next few years, including exploration, of which $3 billion to $5 billion could be North American gas plays,” said Voser.

The depressed U.S. natural gas price has compelled some U.S. firms to cut back on drilling. However, Exxon Mobil Corp. (XOM), the country’s largest natural-gas producer, said Wednesday it had no intention of curtailing its output.

-By Alexis Flynn, Dow Jones Newswires; +44 207842 9471, alexis.flynn@dowjones.com

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Feb. 2, 2012, 2:39 a.m. EST

By Alexis Flynn

LONDON (MarketWatch) — Royal Dutch Shell PLC Thursday posted an 18% rise in adjusted profit for the fourth quarter, but Europe’s largest company by market capitalization still missed analyst expectations, as poor refining margins and lower natural gas demand crimped some of the benefits of higher crude prices.

“Our fourth quarter results were impacted by a sharp downturn in industry refining margins and North American natural gas prices,” said Chief Executive Peter Voser, adding that “the global economy and energy markets are likely to see continued high volatility.”

The Anglo-Dutch energy company said the clean current cost of supplies, a keenly-watched figure that strips out gains or losses from inventories and other non-operating items, was $4.85 billion in the three months ended Dec. 31, compared with $4.11 billion in the fourth quarter of 2010. This was below expectations of $5.16 billion in a Dow Jones Newswires poll of fifteen analysts.

Total oil and gas production was 3.305 million barrels of oil equivalent per day, a decline of 5% on the year as asset sales and the temporary shutdown of one of its biggest Nigerian fields affected output. Analysts were expecting production to decline 6.4%.

Net profit for the quarter totaled $6.50 billion, down 4% from $6.79 billion a year ago.

Group revenues were $119.13 billion, compared with $105.53 billion in the fourth quarter of 2010.

Diluted earnings per share were 1.04 compared with $1.10 the previous year.

Shell B shares closed at 2,326 pence Wednesday. The stock rose 11% in 2011 despite volatile equity markets, buoyed by continued high oil prices and its improved financial performance.

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Gazprom Expansion of Sakhalin-2 LNG Plant May Cost $7 Billion

January 30, 2012, 5:20 AM EST

By Jake Rudnitsky

Jan. 30 (Bloomberg) — OAO Gazprom and its partners in the Sakhalin-2 project may decide on expanding their liquefied natural gas plant this year, to add supplies by 2018, said Andrey Galaev, the venture’s chief executive officer.

An expansion may cost $5 billion to $7 billion based on preliminary estimates, Galaev told reporters today in Moscow. Depending on changes in oil and gas prices, the construction cost may drop as low as $3 billion or climb as high as $8 billion, he said.

A decision should be made this year to reach a window for supplies in 2016 to 2018, before global LNG production capacity rises, according to Galaev.

Royal Dutch Shell Plc holds 27.5 percent of the project after agreeing to cede control of Russia’s first LNG plant to Gazprom in 2006. Mitsui & Co. has 12.5 percent and Mitsubishi Corp. owns 10 percent.

–Editors: Torrey Clark, Stephen Cunningham

To contact the reporter on this story: Jake Rudnitsky in Moscow at jrudnitsky@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net

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Putin call to ‘cut Gazprom stake’

Russian Prime Minister Vladimir Putin has called for the government to reduce its stake in state-owned companies, including gas monopoly Gazprom, according to a report.

Steve Marshall and newswires 30 January 2012 13:41 GMT

Meanwhile, Russian Energy Minister Sergey Shmatko said all outstanding issues with production sharing contracts signed with companies such as ExxonMobil and Shell on Sakhalin projects in the country’s far east have now been resolved.

The PSAs were signed in the 1990s but Russia subsequently backpedalled as it felt the terms were too favourable to foreign players and sought to renationalize its oil and gas sector.

Shell was forced to relinquish control of the Sakhalin 2 project to state-owned Gazprom in 2007, while Russian officials have threatened to revoke ExxonMobil’s operator status on Sakhalin 1 over the past two years.

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JANUARY 16, 2012

SINGAPORE (Dow Jones)–Oil major Royal Dutch Shell PLC (RDSB.LN) said Monday it has signed two production-sharing contracts with Malaysia’s state-owned oil and gas company Petroliam Nasional Bhd. for enhanced oil recovery projects offshore Sarawak and Sabah.

The two companies had agreed in November to jointly develop the oil fields in Malaysia using enhanced oil recovery techniques, in a project that was valued at $12 billion, Petronas had said then.

The project is expected to help the Malaysian national explorer extract a greater portion of oil from its existing reserves and extend the life of its oil fields.

Associated work activities and new investments from the partners are expected to extend the life of the fields beyond 2040 and lead to increased oil production, Shell said in a statement.

-By Gurdeep Singh, Dow Jones Newswires; 65-6415 4064; gurdeep.singh@dowjones.com

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JANUARY 12, 2012

HOUSTON (Dow Jones)–Royal Dutch Shell (RDSA, RDSA.LN) is confident it will be able to drill for oil and natural gas in Alaska’s arctic region this summer as it hopes to overcome its remaining legal challenges.

“We still have a few not insignificant hurdles to get past, but it looks that we will be drilling,” Marvin Odum, president of Shell Oil Co., the U.S. unit of the Anglo-Dutch giant, said in prepared remarks delivered at a conference in Houston.

Shell recently received various federal environmental permits to drill in Alaska’s Chukchi and Beaufort Seas, but environmental groups have filed lawsuits challenging those approvals.

-By Isabel Ordonez, Dow Jones Newswires; 713-547-9207; isabel.ordonez@dowjones.com

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MOSCOW -(Dow Jones)- BP PLC (BP, BP.LN) is to exit the Sakhalin-5 gas project, and Russian state oil company OAO Rosneft (ROSN.RS) will continue working on it on its own, Interfax news agency reported Monday, citing Rosneft Chief Executive Eduard Khudainatov.

“BP is not interested in this project and we have made no secret of that…” Khudainatov was quoted as saying. “We are very interested. And we will not offer this project to anyone else.”

Rosneft agreed in January with BP to a $16-billion share swap and development of three Arctic offshore licenses, but that deal was blocked by BP‘s partners in the TNK-BP Ltd. joint venture. Rosneft later announced a global partnership with Exxon Mobil Corp. (XOM).

-By Nadia Popova, Dow Jones Newswires; +7 495 232-9198, nadia.popova@ dowjones.com

(END) Dow Jones Newswires 12-26-111014ET Copyright (c) 2011 Dow Jones & Company, Inc.

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DECEMBER 1, 2011

– Royal Dutch Shell has been using algorithmic FX trading for the last six months

– It uses computer model-driven trading to get trades done rather than to speculate

– The oil major uses three types of algorithms to trade in London, Singapore and Rio de Janeiro

By Katie Martin Of DOW JONES NEWSWIRES

LONDON (Dow Jones)–Anglo-Dutch oil company Royal Dutch Shell PLC (RDSA.LN) has been using algorithmic trading in foreign exchange for the past six months, the firm’s head of foreign exchange said Thursday.

This high-tech computer model-driven form of trading is more common among profit-seeking funds and trading firms. But speaking at a conference in London, Paul Downie said he tracks all algo trades against prevailing market rates after execution to ensure he has received the best price–a rare insight into corporate trading methods.

Unlike funds, Downie does it not to speculate on the market, but to get trades done.

He said algorithmic trading offered Shell complete transparency over order execution and enabled it to be more flexible when deciding the size of its orders. He also said it ensured anonymity and more control over the trade, and predicted a bright future for the practice.

“Using algos has made currency dealing very exciting,” Downie said. “For me they are the linchpin for continuous improvement in our dealing.”

Shell–one of the first non-financial firms known to be dabbling with such execution methods–said it was using three types of algorithms to trade in London, Singapore and Rio de Janeiro.

One type is suitable for large trades, when the market impact on price is minimized by the algorithm splitting the trade up into smaller, more easily digested sizes. The second type involves a more sophisticated method where the computer searches for liquidity on separate venues, while the third involves programs that incorporates algorithmic decision-making into the process.

“We have seen a lot of new algos coming out this year from banks,” Downie said. “We are now more focused on pre-trade analysis and there are now algos that monitor other algos.”

But there are disadvantages, Downie added, noting that it means paying brokerage fees to banks, and that the company can be left to market swings during the execution period.

When a company executes its trades algorithmically, the executing bank doesn’t take on the risk involved in the trade, but allows the company to hold on to it and make the execution on the bank’s platform. This means that the company holds the currency risk all the way through, in contrast with traditional methods where the bank takes on the currency risk for a fee that is built into the bid-offer spread.

-By Katie Martin, Dow Jones Newswires; 44 20 7842 9305; (katie.martin@dowjones.com) @djfxtrader

(Eva Szalay contributed to this article.)

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RELATED ARTICLE: ROYAL DUTCH SHELL WORLDS LARGEST “SPECULATOR”

NOVEMBER 11, 2011

By GURDEEP SINGH

SINGAPORE—Malaysia’s state-owned oil and gas company Petroliam Nasional Bhd. said Friday that it has agreed with Royal Dutch Shell PLC to jointly develop oilfields in Malaysia using enhanced oil recovery techniques.

The companies say the $12 billion project will help the Malaysian national explorer extract a greater portion of oil from its existing reserves and extend the lives of its oilfields.

The Malaysian company, also called Petronas, has been grappling with shrinking output from aging fields and targets capital expenditure of 50 billion ringgit-55 billion ringgit ($15.89 billion-$17.47 billion) a year over the next five years to replace and refurbish them.

Many of its producing Malaysian oil and gas fields are between 19 years and 28 years old.

Last year, Malaysia unveiled a package of tax incentives to boost oil output from mature fields, including cutting tax rates for the development of new oil and gas resources and enhancing recovery from depleted fields.

Petronas said it signed a deal with Shell for two 30-year production-sharing contracts under which the companies will employ enhanced oil recovery methods at oilfields offshore Sarawak and Sabah states in East Malaysia.

They will also develop nine oil fields in the Baram Delta offshore Sarawak and four in the North Sabah development area.

The two projects together may yield an additional 90,000 barrels to 100,000 barrels a day and could be the largest offshore enhanced oil recovery development in the world.

Malaysia, which produced 658,000 barrels of oil and condensates a day as of Jan. 1 last year, is expected to become a net oil importer by 2013 because of declining domestic output.

The projects will increase the average recovery factor in the Baram Delta and North Sabah fields to about 50% from around 36%, halt the decline of Malaysia’s oil output by improving production in the fields and extend the field life beyond 2040, Petronas said.

Write to Gurdeep Singh at gurdeep.singh@dowjones.com

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Oct 24, 2011

By Tennille Tracy, Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- Environmental groups have filed a formal challenge to air-quality permits that Royal Dutch Shell needs to drill for oil in the Arctic.

The challenges, filed Monday, represent the latest effort to block Shell ( RDSA, RDSB, RDSA.LN, RDSB.LN) from drilling off the coast of Alaska and could derail the company’s plans to begin exploring the region in 2012.

The permits under question were approved by the U.S. Environmental Protection Agency in September. The permits allow Shell to use the drillship “Discoverer” and a fleet of icebreakers and other vessels in the Chukchi and Beaufort Seas.

The environmental groups, led by Earthjustice, say the permits granted by EPA don’t protect air quality.

“The EPA essentially is green-lighting dangerous Arctic Ocean oil drilling,” Earthjustice attorney Colin O’Brien said in a statement.

Shell wasn’t available for immediate comment.

Environmental groups have launched several challenges to Shell’s plan to drill in the Arctic. In September, the groups sued the Interior Department for approving the company’s exploration proposal for the Beaufort.

Monday’s challenge marks the second time Shell’s air-quality permits have been appealed. In 2010, environmental groups and Alaska Native groups successfully blocked an earlier set of permits, forcing the EPA to amend the permits and re- issue them. The amended permits are being challenged today.

On Friday, the EPA approved a separate permit for Shell, allowing the company to operate a drill rig known as “Kulluk.”

Unlike drilling projects in the Gulf of Mexico, where the Interior Department is responsible for clean-air permits, projects in the Arctic require approval from the EPA.

Republicans on Capitol Hill have started to take notice of Shell’s struggles. The Republican-controlled House of Representatives approved a bill in June that imposes deadlines on U.S. regulators to approve or deny permit applications. The Senate has not yet taken up the bill.

Shell has said it wants to begin exploring for oil in the Arctic in the summer of 2012. It will have to reconsider those plans, however, if environmental groups are successful in blocking the air-quality permits or delaying a review of them.

–By Tennille Tracy, Dow Jones Newswires; 202-862-6619; tennille.tracy@ dowjones.com

  (END) Dow Jones Newswires
  10-24-111736ET
  Copyright (c) 2011 Dow Jones & Company, Inc.

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