December 5th, 2006:

By Raphael Minder
Published: December 5 2006 02:00 | Last updated: December 5 2006 02:00

In July, China received its first supplies of Australian LNG. The long-term contract, valued at about A$25bn, is the single largest export deal struck in Australian history.

Even though some experts raised concerns that Australia had locked into acontract that set too low a price for its future gas shipments, the agreement with Beijing was hailed as a significant step towards cementing China’s reliance on Australia as an energy supplier. read more

By Daniel Pimlott
Published: December 5 2006 02:00 | Last updated: December 5 2006 02:00

Liquefied natural gas, or LNG, made by supercooling gas into liquid form to shrink its volume and make it easier to transport, has traditionally been a niche product.

However, consumption is now growing at 10 per cent a year, compared to 2 per cent a year for pipeline gas, and it is among the fastest growing energy markets in the world.

With European and North American gas reserves near or over production peaks and demand up in Asian countries with little native gas, LNG is experiencing an explosion in demand. By 2010-11 it is expected the LNG industry will have doubled relative to 2004. read more

By Neil Buckley in Moscow and Jimmy Burns and Daniel Dombey in London
Published: December 4 2006 20:42 | Last updated: December 4 2006 20:42

Russia warned on Monday that the mounting furore over the poisoning in London of Alexander Litvinenko was damaging relations between the two countries.

As British investigators arrived in Moscow last night for a highly unusual joint probe, Sergei Lavrov, Russian foreign minister, hit out at what he called the “politicisation” of the case.

UK investigators and officials have refused to rule out the possibility that the former KGB agent was killed as a result of a conspiracy involving Russian security services involved in political manoeuvring. read more

Crude-oil prices fell below $63 a barrel, while natural-gas futures dropped more than 7% with traders concerned about the potential for U.S. energy supplies to outpace demand. Here is Monday’s roundup of oil and energy news:

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CHINA AND OPEC: China wants to negotiate directly with the Organization of Petroleum Exporting Countries to secure oil supply and an equitable share of the oil market, according to the Associated Press. “Only through this can we maintain security and stability of our oil imports,” Zhai Jun, China’s assistant minister of foreign affairs, said in a speech to the Arab Strategy Forum in Dubai. Soaring demand for oil in rapidly industrializing China has been blamed as one of the chief causes for oil prices that have spiraled higher over the past two years. read more

December 05, 2006
Bryce Elder

Shell, Europe’s largest oil company, closed 6p lower at £17.69 despite suggestions that the group would be sensible to investigate a multibillion-pound union with one of its closest peers.
 
“The case for merging Royal Dutch Shell with BP or Total is compelling and overlooked,” ABN Amro told clients. “The creation of an oil mega-major would generate important strategic and financial benefits for the companies and significant value for shareholders.”

Bringing together two companies both worth in excess of £100 billion is unlikely to be a simple task. Antitrust authorities would need to be placated, requiring sales of downstream operations, such as petrol stations. Nevertheless, David Cline, the ABN analyst, thought that the cost savings would make it worth the effort. He calculated synergies in excess of $10 billion (£5 billion) a year, equivalent to an extra £10 per Shell share if the Anglo-Dutch group’ s management were prepared to cede control. The Dutch broker conceded that the City was not expecting such an audacious move. However, it saw enough potential in the prospect to upgrade Shell to “buy” from “hold”. 
 
http://business.timesonline.co.uk/article/0,,8211-2487025,00.html read more