Shell has agreed to partner with Argentina’s Medanito on a shale oil and natural gas project in southwestern Argentina, with plans to invest at least $200 million over the next five years, a person involved in the deal said Thursday.

Energy companies are shifting their focus away from the Middle East and toward the West—with profound implications for the companies, global politics and consumers

DECEMBER 5, 2011

By GUY CHAZAN

Big Oil is redrawing the energy map.

For decades, its main stomping grounds were in the developing world—exotic locales like the Persian Gulf and the desert sands of North Africa, the Niger Delta and the Caspian Sea. But in recent years, that geographical focus has undergone a radical change. Western energy giants are increasingly hunting for supplies in rich, developed countries—a shift that could have profound implications for the industry, global politics and consumers.

Driving the change is the boom in unconventionals—the tough kinds of hydrocarbons like shale gas and oil sands that were once considered too difficult and expensive to extract and are now being exploited on an unprecedented scale from Australia to Canada.

The U.S. is at the forefront of the unconventionals revolution. By 2020, shale sources will make up about a third of total U.S. oil and gas production, according to PFC Energy, a Washington-based consultancy. By that time, the U.S. will be the top global oil and gas producer, surpassing Russia and Saudi Arabia, PFC predicts.

That could have far-reaching ramifications for the politics of oil, potentially shifting power away from the Organization of Petroleum Exporting Countries toward the Western hemisphere. With more crude being produced in North America, there’s less likelihood of Middle Eastern politics causing supply shocks that drive up gasoline prices. Consumers could also benefit from lower electricity prices, as power plants switch from coal to cheap and plentiful natural gas.

And the change is reshaping the oil companies themselves, as they reallocate their vast resources to new areas and new kinds of fuel. Working in the rich world—with its more predictable taxes and investor-friendly policies—removes some of the risks about the big oil companies that worry investors, making them less vulnerable to the resource nationalism of petrostates like Russia and Venezuela.

“A company like Exxon Mobil can eliminate the technological risk” of developing unconventionals, says Amy Myers Jaffe, senior energy adviser at Rice University’s Baker Institute. “But it can’t eliminate the risk of a Vladimir Putin or a Hugo Chavez.”

This new way of looking at risk is at the heart of the transformation. International oil companies traditionally face a choice: They can either invest in oil that is easy to produce but located in politically volatile countries. Or they can seek opportunities in stable countries where the oil is hard to extract, requiring complex and expensive production techniques.

Now, in a sense, the choice has been made for them. Big onshore fields in the world’s most prolific hydrocarbon provinces are increasingly the preserve of national oil companies, state-owned behemoths like Saudi Aramco and Russia’s OAO Rosneft and OAO Gazprom. For foreign majors like Royal Dutch Shell PLC and BP PLC, their former heartlands in the Gulf sands are now largely off-limits.

Shut out of the Middle East, they have responded with a huge push into new areas, both geographic and technological. Over the past few decades, they have built vast plants to produce liquefied natural gas, or LNG. They have drilled for oil in ever-deeper waters, ever farther offshore. They have worked out how to squeeze oil from the tar sands of Alberta. And they have deployed technologies like hydraulic fracturing, or fracking, and horizontal drilling to produce gas from shale rock.

Wood Mackenzie, an oil consultancy in Edinburgh, says that more than half of the international oil companies’ long-term capital investments are now going into these four “resource themes”—a huge shift, considering how marginal the companies once considered them.

There are also drawbacks to the new focus on nontraditional kinds of hydrocarbons. Environmentalists strongly oppose shale-gas extraction due to fears that fracking may contaminate water supplies, the oil-sands industry because it is energy-intensive and dirty, and deep-water drilling because of the risk of oil spills like last year’s Gulf of Mexico disaster.

There are financial considerations, too. While conventional assets are relatively easy to develop and historically have offered good returns, projects in some more technically difficult sectors—like deep-water and LNG—typically take longer to bring on-stream, and are higher cost, meaning returns are lower.

But there is an upside for the majors. “The silver lining is the shape of the profile of these projects, which is different than conventional ones,” says Simon Flowers, head of corporate analysis at Wood Mackenzie. LNG ventures, for example, can deliver contract levels of gas at a steady rate over 20 years. “So the returns may be lower, but overall you have a more dependable cash-flow stream,” he says.

By pursuing these nontraditional fuels, the oil companies are committing themselves ever more deeply to the wealthy nations of the Organization for Economic Cooperation and Development. Wood Mackenzie says $1.7 trillion of future value for all the world’s oil companies—52% of the total—is in North America, Europe and Australia. The consultancy has identified a “significant westward shift” in oil-industry investment, away from traditional areas like North Africa and the Middle East “towards the Brazilian offshore, deepwater oil in the Gulf of Mexico and West Africa and unconventional oil and gas in North America.” And then there’s Australia, far out east, “which is in the early stages of a spectacular growth phase.”

Consider Shell. Seven years ago, the oil giant, synonymous with turbulent hot spots like Nigeria, decided to shift resources to more-developed nations that offered a friendly environment for investors and predictable tax regimes. Shell used to split spending on the upstream—the basic business of exploring for and producing oil and gas—roughly 50/50 between nations in the OECD and those outside of it. It’s now 70/30 in favor of the OECD, with the bulk going to Canada, Australia and the U.S.

“The risks in OECD are technical, but they’re easier to manage than political risk,” says Simon Henry, Shell’s chief financial officer. “In the OECD, you have more control of your operations.”

With the new turf comes a new focus: Shell will soon be producing more natural gas than oil. That might have scared investors a decade or two ago. But with gas demand set to grow strongly, especially in Asia, the future for gas-focused companies is looking increasingly rosy—especially after the Fukushima disaster, which prompted a rethinking of nuclear power in Japan and elsewhere.

Entrenching Its Position

Like Shell, Exxon Mobil Corp. is entrenching its position in the Americas, home to just over half its resource base. Its unconventional resources have grown by almost 90% over the past five years to 35 billion oil-equivalent barrels—partly thanks to its 2010 acquisition of XTO Energy, a big shale-gas player. Exxon’s U.S. unconventional production alone is expected to double over the next decade.

Some giants are looking further afield. Chevron Corp.’s three focus areas—the parts of the world that account for the bulk of its exploration budget—are the U.S. Gulf of Mexico, offshore West Africa and the waters off western Australia.

In particular, the company has staked out a huge position in Australian natural gas; its Gorgon LNG project in Australia is one of the world’s largest. The push is based on expectations of surging demand for the fuel in Asia, largely in China, which wants to improve air quality in its heavily polluted cities by switching from coal to gas in power generation and running more commercial vehicles and buses on natural gas.

It “wasn’t a conscious decision” to move into the OECD, says Jay Pryor, head of business development at Chevron. The company doesn’t decide what projects to pursue based on where they are in the world, but on the quality of the resource, the commercial terms and the geopolitical risk. “The best rocks with the best terms are going to get the quickest investment,” he says. Money has flowed into the U.S. and Australia because they offer the best incentives to oil companies, he says.

In recent years, Chevron has also expanded into another promising part of the OECD—Europe, which some estimates suggest has shale-gas reserves comparable to those in the U.S. Chevron has picked up millions of acres of land in Poland and Romania, where it will soon be drilling for shale gas. That’s part of a wider trend: Dozens of companies are now exporting to Europe technologies used to open up shale deposits in the U.S.

Holding Back

Not all oil companies have piled into unconventionals the way Shell and Chevron have. BP, for one, has far fewer investments in tar sands and shale gas than its peers, though it has an unrivaled position in deep-water oil. That means it has less of a presence in the OECD than Shell: Its biggest projects are in poorer countries like Angola, Azerbaijan and Russia, and in recent years it has won a string of licenses and contracts in India, Iraq, Egypt and Jordan.

Yet even BP has been bolstering its position in the OECD. It said recently it was pressing ahead with a £4.5 billion ($7 billion) investment in the North Sea’s Clair oil field, part of a five-year, £10 billion program.

Still, being in the OECD doesn’t guarantee oil companies an easy ride. Operators in the North Sea were shocked earlier this year when the U.K. government suddenly increased taxes on oil producers. In France, authorities recently banned hydraulic fracturing. And in the U.S., the drilling moratorium in the Gulf of Mexico, imposed after the Deepwater Horizon blowout, threw many of the majors’ plans into disarray.

But still, for the most part, the risks are much greater in the non-OECD. “The majors went to Venezuela and lost their property,” says Ms. Myers Jaffe of the Baker Institute. “They went to Russia and had to whisk their CEO off to a safe house. They went to the Caspian and realized they couldn’t get the oil out. I for one would much rather invest in a company that had 70% of its spending in the OECD.”

Mr. Chazan is a staff reporter in The Wall Street Journal’s London bureau. He can be reached at guy.chazan@wsj.com.

SOURCE ARTICLE

Native oath-of-office ceremony for 3,000 representatives

STATEMENT ISSUED BY MOSOP MEDIA: 30 November 2011 13:15 GMT

As Native Authority is sworn-in with 3,000 villagers under oath to provide grassroots leadership to enforce the United Nations Universal Declaration on Rights of Indigenous Peoples (UNDRIP), the President/Spokesman of the Movement for Survival of Ogoni People (MOSOP), MOSOP President /Spokesman, Dr. Goodluck Diigbo, has said that as ordinary Ogoni peasants often despised and exploited take over local governance from the corrupt Nigerian local government system, it will confirm that no sacrifice for freedom, is ever in vain.

Dr. Diigbo spoke today, Tuesday, 29th November, 2011, at the Ken Saro-Wiwa Peace and Freedom Center, Bori, during a native oath-of-office ceremony for 3,000 representatives, voted into village councils by villagers throughout Ogoniland, according to each village electoral process. “The Ogoni Central Indigenous Authority (OCIA), represents a big pro-active investment to address petroleum-related conflicts that threaten international peace from within Nigeria, and other acts of aggression directed at the non-violent Ogoni people by Nigerian rulers,” Diigbo remarked.

Dr. Diigbo vowed that Ogoni people under MOSOP are fully prepared to back the OCIA in order to restore and save Ogoniland, as Ogonis cannot wait for 25 – 30 years, which the disputed UNEP Ogoniland Environmental Assessment Report says will take to restore Ogoniland, already, devastated by 55 years of irresponsible petroleum operations.

“This authority is not new because Ogoni was merely returning to its original Native Authority status, which was operational in 1948, but forcefully dismantled by the new Nigerian nation state in 1960. We are taking lawful native and international approach; nonviolently and peacefully, but firmly poised to not giving up,” MOSOP President declared. “Our greatest concern is the NNPC steady conspiracy with Royal Dutch/Shell, Chevron and other oil companies, to continually commit environmental crimes and engage in persistent violations of the indigenous rights of the Ogoni people,” Diigbo stated.

On the institutional framework, Diigbo explained that OCIA has reactivated and consolidated sixteen old structures from its original 96 political native sub-sets of 1948, and that the elected representatives from villages throughout Babbe, Eleme, Gokana, Kenkhana, Nyokana and Tai Kingdoms as well as Bori and Ban – Ogoni administrative units are to prepare grounds to replace the imposed local government system which has so far existed as channels for looting of public funds and organized crime. Elected village representatives will now elect members of the kingdom management teams in an electoral college, while those elected to the kingdoms; will in turn, elect members of the Ogoni Central Indigenous Authority (OCIA), in which any Ogoni person, at home or abroad, will be free to vie for position, but through nomination filed by the village of origin.

Explaining how the system works, Dr. said that the power to elect or remove any elected representative rests with each village electoral process, which will define change and nurture effective grassroots leadership that is accountable to the people. On why Nigeria ignores the demands of the Ogoni people, Diigbo explained that Nigeria has conflict of interest with the Charter of the United Nations, which guided the September 13, 2007 Universal Declaration on Rights of Indigenous Peoples (UNDRIP).

Diigbo said that Nigeria as a multi-ethnic nation state, without a formal Sovereign National Conference, has continued to survive because of the rights and privileges it enjoys from the United Nations Charter, but for Nigeria to persistently violate the same Charter, which it has previously signed; is to shoot itself in the foot. On what he described as “local government embedded corruption”, Dr. Diigbo explained that influential politicians at the national and state levels often plant stooges in the local system, and in turn use them as pressure points to get money from State and National coffers; while they get back such monies from their stooges and paid contractors without any job done. The politicians will have to return to their villages to seek fresh mandate under the OCIA, while local government employees will be retained to play vital role in City Hall or Village Council administration, Diigbo added.

UNEP Ogoniland Environmental Assessment Report, is ship without a rudder, says MOSOP President Goodluck Diigbo

In an interview on why Dutch Cabinet has asked Nigeria and not Royal Dutch/Shell to clean up oil spills and restore devastated lands in Ogoniland, MOSOP President Diigbo said: “I can’t speak for Dutch parliament or cabinet, but the UNEP Ogoniland Assessment Report is a like ship without a rudder, it can be tossed back and forth, because it did not follow due process that plugs loopholes. Nigeria’s responsibility is very obvious to me, but this was why I called for joint stakeholders’ review, while others continue to shout implement, as if you can fetch water with a basket. No foreign oil company can do what has been done in Ogoniland without the consent of the home government. The Nigerian government and oil companies are partners in crime. “

Hon. Dum Ade John Budam
Secretary General, Movement for Survival of Ogoni People, MOSOP
mosopint@gmail.com /mosopmedia@gmail.com

English.news.cn 2011-11-18 11:34:39

Wednesday, November 16, 2011

By KEVIN KOENINGER

MANHATTAN (CN) – Three Nigerian widows say Shell Petroleum and its African subsidiaries conspired with each other and with Nigeria’s military government “to violate basic human rights … so as to ensure their continued enjoyment of disproportionately huge profit from very cheap oil they obtained from the Ogoniland,” a 400-square-mile section of the Niger Delta.

The widows say their husbands, members of the Movement for the Survival of Ogoni People (MOSOP), were part of “the Ogoni 9,” who were falsely accused of murdering tribal elders.

“Although none of the Ogoni 9 was near the town where the murder of the four tribal elders took place, they were convicted and sentenced to death in a trial that was widely condemned locally and internationally and resulted in the suspension of Nigeria from the Commonwealth of Nations. The Ogoni 9 were denied appeal process and were hurriedly executed by hanging eight days after the decision in spite of national and international pleas,” the complaint states.

“The lawyers for the plaintiffs and the other Ogoni 9 were harassed, threatened and denied access to their clients and as a result most of them withdrew their representation in protest and their clients had to face the rigged tribunal themselves.”

That Shell Petroleum Development Co. of Nigeria Ltd. (SPDC) “had a firm hold and control of the Nigerian government is undisputable as defendant Royal Dutch/Shell with and through defendant SPDC produces about half the oil and gas that constitute about 80 percent of Nigerian government’s annual revenue,” the complaint states.

“It is equally clear that defendants recklessly and heartlessly exploited this relationship with the Nigerian government to amass enormous annual profits at the expense of the Nigerians and the Ogoni people in particular.”

Shell began drilling in the Niger Delta in 1958, and since then “it had acquired land for oil drilling unfairly, dubiously and fraudulently from indigenes and built pipelines across the farmland and through the yards and in front of the homes of indigenes thereby … exposing the indigenes to heightened daily danger,” according to the complaint.

“Hydrocarbon pollution found in water in Ogoniland is reported to be more than sixty times of that allowed in the U.S. and a[t] 360 times the limit in the European community.”

The complaint adds: “The conspiracy that exist[s] among defendants and between defendants and the Nigerian government make it possible for defendant SPDC to hijack for the exploration and extraction of oil and gas, very scarce land from the indigenes of Ogoni communities and pay the indigenes sums that are far below value of the land.

“The defendants in step with the Nigerian government orchestrates a repressive and hopeless atmosphere in the Ogoniland and makes the prospect of meaningful living and subsistence in the Ogoniland impossible and as a result undermined the value of all that is of the Ogonis and their otherwise scarce and very valuable real estate.”

Since MOSOP was organized in the early 1990′s, Shell has used the mobile police, “the paramilitary branch of the Nigerian police … commonly referred to as ‘kill and go’ for their reputation of killing innocent people and walking away” to quell protests, the widows say.

The Ogoni people suffered repeated attacks in 1993, including one “against Ogoni villages near the Andoni border by armed troops who usually operated in boats belonging to Shell and Chevron … [in which] over one thousand (1,000) villagers were killed and twenty thousand (25,000) [sic] rendered homeless,” according to the complaint.

It adds: “As SPDC intensified its attacks with the help of Nigerian Security Forces against Ogoni communities, SPDC coordinated [a] media campaign by Royal Dutch/Shell that denigrates and attempts to discredit MOSOP leaders by blaming MOSOP and its leaders for the heinous crimes committed in Ogoniland.”

The vilification of the plaintiffs included pinning the killing of four Ogoni tribal elders on them in May 1994, leading to their arrest, torture and “obtaining false testimonies by bribing at least two witnesses to implicate MOSOP leadership … and having the Nigerian Military Government falsely charging the MOSOP leaders for murder,” the complaint states.

After their husbands were executed, the widows say, “two or more of the witnesses that testified at the trial against the MOSOP leaders later admitted in the presence of Shell’s attorney that Shell and the Nigerian Military junta bribed them to give false testimonies with promises of money and jobs at Shell.”

The widows say the attack on the elders was actually carried out by Lt. Col. Paul Okutimo, who was seen days before the murder “receiving seven large bags of money … that … were so heavy that one of them fell, broke open and [spilled] bundles of money … all over the ground.”

The plaintiffs, suing as individuals and as administrators of their husbands’ estates, seek compensatory and punitive damages for RICO violations, human rights violations, emotional distress, conspiracy, assault, torture and wrongful death.

The widows – Victoria Bera, Blessing Nkem Nordu Eawo and Vureka Charity Paul Levula – are represented by Francis Kadiri and Alaba Rufai.

SOURCE ARTICLE

EXTRACTS FROM THE RepRisk WATER SCARCITY REPORT

RepRisk is the leading provider of dynamic business intelligence on environmental social and governance risks.

In 2010, access to clean water received recognition as a basic human right through a majority vote of the United Nations General Assembly. According to the UN, nearly 900 million people have no access to clean drinkable water, almost 1.8 billion live in areas where water is scarce, and a further 1.6 billion live in countries, which lack the infrastructure to extract water from natural sources. The World Bank calculates that by 2030, water demand will exceed supply by 40 percent, as a growing world population demands more water for agricultural, industrial and personal use.

By Motley Fool Staff Posted 9:58PM 11/03/11

EXTRACTS

Last week, my Foolish colleague Alex Planes wrote a superb article offering the conclusion that “Cheap Oil Isn’t Coming Back,” an assessment with which I completely agree. Beyond that, though, I’d add, “And Cheap Gas Has a Brief Future, Too.” With that in mind, it’s crucial to look back at the recent earnings season to garner what we can about which major oil companies appear to offer the biggest boosts for our portfolios.

Shell’s full of LNG
Royal Dutch Shell also doubled its earnings in the past quarter, chalking up a growth rate that one advertisement used to refer to as “a silly millimeter” beneath Chevron’s. The company is casting a major lot with LNG, where it leads the world in production and distribution. That’s a sufficient reason for placing the Anglo-Dutch giant next to Chevron as another member of Big Oil’s most promising trio.

As an indication of the potential in natural gas — obviously including LNG — Shell’s gas earnings jumped by a whopping 40% outside the Americas, while they eked out just a 1% increase in this part of the world. A large part of that massive differential stemmed from the fact that gas is sitting near a paltry $4 in the U.S., while it yielded $15 for Shell in Asia. That being the case, should we deny that the U.S. price is headed for higher ground? Indeed, Asia’s levies appear to be headed even higher.

And then there’s Russia. Several years ago, I began a Motley piece with the observation, “Only a few things are absolutely inevitable in today’s world: death, taxes, and the Russian government’s lusting after energy projects once they’ve been developed by Western companies.” For instance, you’re probably aware that Shell was squeezed out of the operatorship of the country’s Sakhalin-2 project precisely five years ago.

I’m not certain of Shell’s likely future with the Russkies, since, with the world running low on potential major oil finds, the Western companies have displayed a curious tendency of dusting themselves off after having been body-checked by Vladimir Putin’s minions and heading right back into the game.

FULL INTERESTING ARTICLE

Published: Oct. 19, 2011 at 8:36 AM

NEW YORK, Oct. 19 (UPI) — Officials were divided on how a U.S. Supreme Court decision to hear a case against Shell filed by Nigerians reflects on Chevron’s legal issues in Ecuador.

The Supreme Court announced Monday it would hear a case filed by 12 Nigerians who claim Royal Dutch Shell is responsible for human rights violations in the Niger Delta in the 1990s.

Fadel Gheit, an analyst at Oppenheimer, told the Platts news service that ruling could have ramifications for a legal case against Chevron’s activity in Ecuador.

Plaintiffs in Ecuador blame Texaco, which later merged into Chevron, for environmental contamination and adverse health effects tied to operations in the country’s rainforests from 1972-90. Chevron points to a 1998 agreement between Texaco and Ecuador that absolves of it liability in the case.

Gheit said Chevron might have to rethink its position in light of the Supreme Court decision.

“If you open the case for Shell, you have to open it for Ecuador,” he was quoted as saying.

But Chevron spokesman Kent Robertson told the news service the legal connection wasn’t so clear cut.

“Chevron is being sued under Ecuadorian law, not U.S. law,” he said. “I’m not sure I see how a ruling from the U.S. Supreme Court, regardless of which way it goes, would have any influence over Ecuador’s courts.”

SOURCE ARTICLE

OCTOBER 17, 2011 12.35 P.M. ET

Associated Press

WASHINGTON — The Supreme Court said Monday it will use a dispute between Nigerian villagers and oil giant Royal Dutch Shell to decide whether corporations may be held liable in U.S. courts for alleged human rights abuses overseas.

The justices said they will review a federal appeals court ruling in favor of Shell. The case centers on the 222-year-old Alien Tort Statute that has been increasingly used in recent years to sue corporations for alleged abuses abroad.

Other cases pending in U.S. courts seek to hold accountable Chiquita Brands International for its relationship with paramilitary groups in Colombia; Exxon and Chevron for abuses in Indonesia and Nigeria, respectively, and several companies for their role in apartheid in South Africa.

The Nigerians argue Shell was complicit in torture and other crimes against humanity in the country’s oil-rich Ogoni region in the Niger Delta.

A divided panel of federal appeals court judges in New York said the 18th century law may not be used against corporations. More recently, appellate judges in Washington said it could.

In a second case the court agreed to hear, the justices will weigh whether the Torture Victims Protection Act of 1992 can be invoked against organizations, or only individuals.

The sons and widow of Azzam Rahim have filed a civil lawsuit against the Palestinian Authority and the Palestine Liberation Organization. The Palestinian-born Rahim was a naturalized U.S. citizen who was beaten and died in the custody of Palestinian intelligence officers in Jericho in 1995. Three officers were jailed for their role in the case, according to a State Department report.

But when Rahim’s relatives sought money damages for his death, the federal appeals court in Washington said they could not use the 1992 law to go after the Palestinian organizations. The law may be applied only to “natural persons,” the appeals court said.

The Nigerians’ lawsuit stems from alleged human rights violations between 1992 and 1995. The suit claims that Shell was eager to stop protests about continuing oil exploration in the area and was complicit in Nigerian government actions that included fatal shootings, rapes, beatings, arrests and property destruction.

Specifically, the villagers claim Shell gave soldiers money, food and transportation, and allowed its facilities to be used as staging grounds.

A divided panel of the 2nd U.S. Circuit Court of Appeals in New York voted 2-1 to throw out the suit, saying corporations cannot be held liable under the Alien Tort Statute. The full appeals court split 5-5 on whether to rehear the case. The tie vote left the panel ruling in place.

The cases will be argued early next year.

The cases are Kiobel v. Royal Dutch Petroleum, 10-1491, and Mohamad v. Rajoub, 11-88.

—Copyright 2011 Associated Press

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