Financial Times

Shell stands to make $20mn from contentious Russian oil trade

Discounted cargo was bought days after group announced it was pulling back because of war

Neil Hume and Tom Wilson

Shell stands to make a $20mn profit from a cheap cargo of Russian crude it bought just days after the oil major announced it was pulling back from the country following its invasion of Ukraine.

When the London-listed company revealed on Monday plans to exit its joint venture in Russia, its chief executive Ben van Beurden said he was shocked by the loss of life in Ukraine, resulting from a “senseless act” of military aggressive, which “threatens European security”.  read more

Shell calls ‘Force-Majeure’ on Ukraine project

Sources familiar with the situation said Ukraine’s government received a “Notice of Withdrawal” from Shell on a project that they had hoped could raise up to $10bn of investment and further diversify gas imports away from Russia, Roman Olearchyk reports from Kiev.

Shell said it “has been prevented from performing its commitments under Yuzivska [a production sharing agreement] for an extensive period of time due to Force-Majeure, i.e. circumstances beyond Shell’s control.” Due to the said events, project implementation conditions have been materially changed. Therefore, we have begun discussions with the Ukrainian government and our partner Nadra Yuzivska LLC on the way forward with the PSA, pursuant to its terms. read more

By John Donovan

The Russian News Agency Tass is reporting that Graham Tiley, the country manager of Shell Ukraine has admitted in a meeting with a local high-ranking official that Royal Dutch Shell has failed to achieve the desired progress in the Yuzovka gas field in Ukraine’s east.  Tiley blamed the fracking failure on the situation in the neighbouring Donetsk region.

TASS REPORT

The whole geopolitical situation has now become even more precarious following the deliberate shooting down of the Malaysian Airlines Flight MH-17. If that was not bad enough, it transpires that over 170 of the people on board the ill-fated flight were Dutch and three of the passengers were Shell employees. What will Ben van Beurden do if it is confirmed that the Sun front page headline today is accurate, bearing in mind that Putin has already annexed Crimea and is behind the rebels/terrorists trying to grab an even larger slice of the Ukraine for him?  

By John Donovan

Shell’s relationship with Russia and the Ukraine became more difficult earlier this week when the USA escalated sanctions against Russia, targeting in particular Russian energy giant Rosneft and Gazprombank, the financial arm of Gazprom. 

Rosneft and Gazprom are controlled by the corrupt and aggressive Putin regime. Both companies have important business dealings with Shell.

Shell has already pledged to comply with all international sanctions against Russia, but the pledge seems at odds with grovelling comments made to Putin on 18 April 2014 by Royal Dutch Shell CEO, Ben van Beurden.  read more

Royal Dutch Shell Plc Chief Executive bows to President Putin during a meeting in Moscow April 2014: Maxim Shipenkov/European Pressphoto Agency

Extracts from a New York Times article by ANDREW E. KRAMER and STANLEY REED published in print 10 June 2014

Despite the push by Western governments to isolate Moscow for its aggression in Ukraine, energy giants are deepening their relationships with companies here by striking deals and plowing more money into the country. Royal Dutch Shell’s chief executive, Ben van Beurden, met with Mr. Putin in April and told him, “Now is the time to expand,” referring to a liquefied natural gas plant project. The companies are taking a calculated risk, given the threat of further sanctions. The risk for energy companies is that the next stage of sanctions, called the third phase, will be broader, cutting off dealings with major sectors of the economy like finance, metals and energy. The United States and its allies proposed such sanctions at a Group of 7 summit meeting in Brussels last week, to be carried out if the violence in Ukraine did not subside within a month. read more

Extract from a Bloomberg/Businessweek article by Ladka Bauerova and Will Kennedy published 3 June 2014

Royal Dutch Shell Plc (RDSA) has halted drilling for shale gas in eastern Ukraine to protect its personnel from clashes between pro-Russian separatists and the Ukrainian army. Shell is taking a “time-out” on exploration work after drilling two wells since the Hague-based explorer signed a production-sharing agreement last year, Chief Financial Officer Simon Henry said in an interview with Bloomberg TV in London.  “We obviously need to assess the future security situation as it develops because the safety of our own people is our first priority,” Henry said. “There’s no pulling out, but we take a time out on the actual drilling activity on the ground.” read more

Sir Henri was fanatically anti-Soviet as a result of the confiscation of Shell oil fields in Russia. Might be best if Ben does not mention this past history to his new chum, Vlad the Bad, who is rather keen to restore the Soviet empire. “Had Putin asked ‘and now you kiss my ass’, I am sure van Beurden would have complied.”

18 April 2014

By John Donovan

There are a number of news reports about a meeting earlier today between President Putin and Royal Dutch Shell CEO Ben van Beurden, in which the sensitive subject of Ukraine was discussed.

Interesting to note that the same subject was also discussed at a high level by Shell in the 1930’s, on that occasion with Hitler, who like Putin, also had territorial ambitions. 

Printed below are extracts from a book, “Hitler As Frankenstein” by Johannes Steel (born Herbert Stahl,1908-1988), the son of a German-Dutch landowner. When the Nazis took power in Germany he fled to the USA working as a journalist for the New York Post. Because of his prescience, which included predicting World War 2, he became widely followed as a popular radio commentator in the U.S. during the war. (Information taken from Wikipedia) read more

Ben van Beurden, Chief Executive Officer. Royal Dutch Shell Plc

Extract from an article by Alexei Anishchuk published by Reuters on Friday 18 April 2014

(Reuters) – Royal Dutch Shell is committed to expansion in Russia, Chief Executive Ben van Beurden told Russian President Vladimir Putin at a meeting on Friday amid sanctions imposed on the country after its annexation of Ukraine’s Crimea region. Shell plans to expand Russia’s only liquefied natural gas (LNG) plant with Russian partner Gazprom, he said at a meeting at Putin’s residence.

FULL ARTICLE

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WALL STREET JOURNAL ARTICLE

Shell Pledges to Continue Projects in Russia

Extract

Ben van Beurden praised the oil giant’s cooperation with Russia state-controlled natural gas monopoly Gazprom (GAZP.RS) at the Sakhalin II project and with its oil arm Gazprom Neft (SIBN.RS). read more

Extract from an article by Alan Neuhauser published 14 April 2014 by USNews.com
read more

Extract from a Reuters article published 25 March 2014 by The Peninsula

Tension over the future of Ukraine is prompting the European Union and United States to look at deepening their economic ties. Europe is hoping to tap the abundant energy resources of its key ally to reduce dependence on Russia, which feeds a bulk of the region’s gas demand.  Liquefied natural gas (LNG) will in the meantime remain tight due to Japan’s post-Fukushima demand, until new supply comes onstream from Australia, Angola and Papua New Guinea, Maarten Wetselaar, executive vice president of Royal Dutch Shell’s integrated gas division, said in an interview. read more

Extract from a Reuters article by Meeyoung Cho published Monday 24 March 2014

GOYANG, South Korea (Reuters) – Growing interest in sending more U.S. natural gas to Europe does not hold a big threat for Asian gas markets, although such exports would help improve spot market liquidity for the super-chilled form of the fuel, a Shell executive said on Monday. Tension over the future of Ukraine is prompting the European Union and United States to look at deepening their economic ties. Europe is hoping to tap the abundant energy resources of its key ally to reduce dependence on Russia, which feeds a bulk of the region’s gas demand. read more

Extracts from an article by Reuben Brewer published on 23 March 2014 by The Motley Fool under the headline: Will an Emboldened Russia Hurt This Major Industry?

Russia is a complex beast and is often hard for Western nations to understand. The latest bit of world drama that the country has caused is, effectively, making Crimea part of Mother Russia again. It’s a move that could lead to sanctions against this giant, natural resource-rich nation. This whole event could cause more pain than you may expect in the international oil and gas space. Chevron inked a $10 billion deal with Ukraine to explore for shale gas in late 2013. Royal Dutch Shell made a similarly sized agreement with the country in early 2013. Both deals have 50-year terms. Clearly, Russia taking over part of Ukraine is a less than auspicious start to these deals, which have another five decades or so left to go. Shell isn’t sitting pat; the company pulled out of talks over an offshore gas drilling deal early this year. While that helps to reduce the company’s exposure to a region in turmoil, the 50 year shale drilling contract keeps Shell on the firing line. read more

 Extracts from a Reuters article published 21 March 2014

(Reuters) – Royal Dutch Shell traders are allowed to keep dealing with commodities trading house Gunvor after the United States imposed sanctions on its co-founder, Shell said in an internal email seen on Friday by Reuters. The email said Shell had been able to review the status of Gunvor following the imposition on Thursday of U.S. sanctions against Gunvor co-founder Gennady Timchenko.

FULL ARTICLE

Extracts from an article by Justin Scheck published 19 March 2014 by the Wall Street Journal

LONDON— Royal Dutch Shell PLC said Wednesday that it withdrew from negotiations over an offshore exploration deal in the Black Sea, west of Crimea. Shell made the decision to pull out in January, a spokesman said. Withdraws From Talks on Skifska Field But Is Still Pursuing Other Ukraine Projects

LINK TO FULL ARTICLE

Selection of links to Shell related articles kindly supplied by a regular contributor

Shell starts commercial US output of new motor oil made from …

Back in oil shale

Big Oil’s Biggest Project in Decades Is About to Start Paying Off

Review: Little Thing, Big Thing

Doubling Tar Sands production for Imperial War

Energy diplomacy with the Dana Gas chief executive read more

Extracts from an article Stephen Bierman published on 10 March 2014 by Bloomberg News

Before violent protests in Kiev overthrew pro-Moscow President Viktor Yanukovych and Russian troops occupied parts of Crimea, a group including Exxon and Royal Dutch Shell Plc (RDSA) planned to spend $735 million drilling two wells about 50 miles (80 kilometers) from the region’s southwest coast. “Exxon and Shell are now in a legal limbo,” said Chris Weafer, a partner at Macro Advisory in Moscow. They pursued an “exploration deal with a government which may soon no longer have jurisdiction over the region.” read more