Thursday, December 30, 2010

Russian tycoon Khodorkovsky gets 6 more years. Justice not served!


MOSCOW – Jailed Russian oil tycoon Mikhail Khodorkovsky was sentenced to six more years in prison Thursday following a trial seen as payback for his defiance of Vladimir Putin.

Judge Viktor Danilkin sentenced Khodorkovsky to 14 years after convicting him of stealing oil from his own company and laundering the proceeds. The 14-year sentence, which was what prosecutors had demanded, will be counted from his 2003 arrest and include a previous term in prison. Khodorkovsky is in the final year of an eight-year prison sentence.

Putin, now prime minister, is seen as the driving force behind the unrelenting legal attack on Khodorkovsky, who challenged him early in his presidency. As he considers a return to the presidency in 2012, Putin appears unwilling to risk the possibility that a freed Khodorkovsky could help lead his political foes.

The outcome of the second trial exposes how little has changed under President Dmitry Medvedev despite his promises to strengthen the rule of law and make courts an independent branch of government.

"It's a very cruel and absurd sentence that proves the well-known fact that Russia has no independent courts," said Lyudmila Alexeyeva, a veteran rights activist and chairwoman of the Moscow Helsinki Group. "An independent court would have acquitted the defendants and punished the investigators who concocted the charges."

Following a 20-month trial, the judge convicted Khodorkovsky and his business partner Platon Lebedev on charges of stealing almost $30 billion worth of the oil that his Yukos company produced from 1998 to 2003 and laundering the proceeds. Lebedev also was sentenced to 14 years.

Defense lawyers said much of the judge's verdict was copied from the indictment and the prosecutors' final arguments.

The defense called the charges ridiculous, saying they reflected a lack of understanding of the oil business, including the payment of transit fees and export duties. Numerous witnesses, including current and former government officials, testified that Khodorkovsky could not have stolen what amounted to almost all of the oil Yukos had produced.

The charges also contradicted the first trial, in which Khodorkovsky was convicted of evading taxes on Yukos profits.

Danilkin's conduct during the trial had raised some hopes among Khodorkovsky's family and supporters that he would prove to be more independent than the judge in the previous trial, who openly supported the prosecutors. Those hopes were dashed as soon as Danilkin began to read the verdict.

"They must have tortured him to get him to say what he did," said Khodorkovsky's mother, Marina. "He has put his title of judge in shame."

Khodorkovsky had angered Putin by funding opposition parties in parliament, which at the time had the power to oppose Kremlin policies and influence the choice of prime minister. He also pursued his own oil export plans independent of the state pipeline system, and publicly questioned the appearance of Kremlin corruption.

"The court decision has nothing to do with the law or justice," said Boris Nemtsov, a former deputy prime minister who is now among the leaders of the opposition. "It's Putin's personal vendetta."

The guilty verdict was widely condemned in the West as being driven by politics rather than the rule of law. The criticism, however, only angered Russia's government, which pointedly told the U.S. and Europe to mind their own business.

The defense lawyers said they planned to appeal, a process that could take months, and in the meantime Khodorkovsky and Lebedev will remain in a Moscow jail. After the first trial, Khodorkovsky was sent to a labor colony in eastern Siberia near the Chinese border, while Lebedev served the first part of his sentence in a prison above the Arctic Circle.

AP writers Mansur Mirovalev and Lynn Berry contributed to this report.

Tuesday, December 28, 2010

World economies can handle $100 a barrel for oil

Kuwait's oil minister has said that the world economy can cope with oil prices of $100 a barrel as demand continues to soar

Oil minsters

The global economy can withstand an oil price of $100 a barrel, Kuwait's oil minister said Saturday as other exporters indicated that OPEC may decide against increasing output through 2011 as the market appears well supplied.

Analysts have said that oil producing countries are likely to raise output after crude rallied more than 30 per cent from a low in May because they fear high prices could damage economic growth in fuel importing countries.

European benchmark ICE Brent crude closed at $93.46 on Friday after hitting $94.74 a barrel, its highest level since October 2008.

Arab oil exporters meeting in Cairo this weekend said they saw no need to supply more crude as stocks were high and prices had been inflated temporarily by cold weather in Europe.

Asked by Reuters if the world economy could stand a $100 oil price, Kuwaiti Minister of Oil Sheikh Ahmad Al-Abdullah Al-Sabah said: "Yes it can."

Iraq's new oil minister and the head of Libya's National Oil Corporation both told Reuters that $100 was a fair price, while Qatar's minister, Abdullah Al-Attiyah, said he did not expect OPEC to increase production in 2011.

"I do not expect an OPEC meeting before June because oil prices are stable," he said.

Some delegates even called for exporters to comply better with agreed production limits. OPEC members' compliance with promised cutbacks reached 56 per cent in November, according to Reuters estimates.

When asked if output could be raised, Kuwait's Sheikh Ahmad said: "No. More compliance, more compliance".

Market "Well supplied"

The Cairo meeting of the Organization of Arab Exporting Countries (OAPEC) brought together Arab members of OPEC, including top exporter Saudi Arabia, which has traditionally been viewed as a price moderator, as well as non-OPEC countries Tunisia, Egypt, Syria and Bahrain.

OPEC cut output drastically after the global financial crisis struck in 2008, to prop up collapsing oil prices.

As demand has risen steeply in 2010, and is expected to rise further in 2011, the market is watching closely whether OPEC can release at least some of its spare capacity to prevent prices from soaring to around $150 per barrel as they did before the crisis struck in summer 2008.

OPEC's most influential oil minister, Saudi Arabia's Ali Al-Naimi, said Friday he was still happy with an oil price of $70-80 a barrel and there was no need for an extra OPEC meeting before the next scheduled one in June.

Others in the group have been pressing for a higher price, arguing that quantitive easing and a weakened US dollar that spurred gains across financial markets mean oil price strength is partly nominal.

Egyptian Oil Minister Sameh Fahmy said the current increase in oil prices was the result of higher demand on heating fuel because of the cold weather in Europe.

Monday, December 27, 2010

TOP Oil Market News: Oil Rises to Two-Year High; Nigeria Blasts

The following is a selection of the most important news affecting the oil market.

Crude Rises to Two-Year High on Bets China Will Sustain Growth

Oil rose to a two-year high in New York on speculation China’s monetary tightening will sustain economic growth in the world’s largest energy user.


Death Toll in Nigeria Bomb Blasts Rises to 32 (Update2)

At least 32 people were killed in suspected bomb blasts yesterday in the central Nigerian city of Jos, where violence between Christians and Muslims has left hundreds dead this year, Police said.

Addax Oil Output Rises 14% After Sinopec Acquisition (Update1)

Addax Petroleum Corp.’s crude output has risen 14 percent since the Geneva-based company was acquired by China Petrochemical Corp. in August last year as oil and gas reserves increased.

QE2 Joins Eisenhower Yields in 1% Returns for Bonds (Update1)

Wall Street’s biggest bond-trading firms say investors in U.S. government debt will barely break even next year as yields climb from the lowest levels since the 1950s and the Federal Reserve boosts economic growth.

Qatar’s Tasweeq Offers to Sell High-Sulfur Gasoil in January

Qatar International Petroleum Marketing Co., known as Tasweeq, offered to sell a cargo of high-sulfur gasoil for loading in January, the company said in a document e-mailed to potential buyers.

Total Buys Cargo of North Sea Crude From Trafigura, BP Bids

Total SA bought a cargo of North Sea Forties crude today. BP Plc and Mercuria Energy Trading SA sought supplies of the grade unsuccessfully.

REFINERIES Map global refinery outages

Russian Refinery Explosion May Have Killed 5 Chinese Workers

Russian prosecutors are investigating an explosion and fire at a refinery in the country’s Zabaikalsky region, which may have killed as many as five Chinese workers.

China Major Refineries Biweekly Crude Run Rate (Table)

The following is a table of biweekly survey of crude run rates at 23 major Chinese refineries by December 23, according to data from, a Shandong based energy information website.

Idemitsu Delays Restarting Hokkaido RFCC Till January,

Idemitsu Kosan Co. delayed restarting the 33,000 barrel-a- day residue fluid catalytic cracker at its Hokkaido refinery until January because further work is needed, spokesman Ryuichi Sato said by phone today. The unit was shut on Dec. 4 because of a malfunction and was due to restart this month.

Idemitsu Restarts Residue Desulfurizer at Aichi Refinery

Idemitsu Kosan Co. restarted the 60,000 barrel-a-day residue desulfurization unit at its refinery in Aichi in central Japan on Dec. 24, spokeswoman Maki Yasunaga said by phone today. The unit was shut on Dec. 14 because of a malfunction.

Oil Rise to $100 May Stall as Refiners Curb Tax: Energy Markets

Oil supplies may come back to the U.S. Gulf Coast in January, sapping crude’s drive toward $100 a barrel, after stockpiles tumbled the most in 30 years this month as refiners sought to avoid year-end tax liabilities.

Hovensa Restarts St. Croix Refinery Catalytic Cracker (Update1)

Hovensa LLC restarted a 150,000- barrel-a-day fluid catalytic cracker at its St. Croix refinery in the U.S. Virgin Islands on Dec. 24, a company spokesman said. The unit was shut Dec. 9 for unplanned repairs, according to data compiled by Bloomberg.

Gary-Williams Has Explosion at Refinery in Oklahoma (Update3)

Gary-Williams Energy Co., a closely held U.S. oil and gas company, had an explosion and fire at its Wynnewood, Oklahoma, refinery today.


Oil Product Shipping Costs to Japan Are Unchanged

The cost of shipping a gallon of gasoline, jet fuel or other so-called clean petroleum products from the Middle East to Japan was unchanged at 7.28 U.S. cents yesterday, according to data compiled by Bloomberg. The cost is based on a cargo of 55,000 metric tons.

Libya Raises Sider Crude Price to Brent Minus 25 Cents (Update1)

Libya, holder of Africa’s largest oil reserves, raised the official selling price for exports of Es Sider crude in January to a discount of 25 cents to Dated Brent, according to data posted on the website of state-run National Oil Corp. today.


BlackRock Blames Loan Crisis for Clean-Energy Outflow (Update2)

Renewable-energy funds suffered record outflows this year, reversing their direction from 2009, as money managers including BlackRock Inc. said the credit crunch dimmed the outlook for solar and wind power projects.

Oil Trades Near Two-Year High on Bets China Will Sustain Growth

Oil traded near a two-year high in New York, paring earlier losses, on speculation China’s monetary tightening will sustain economic growth in the world’s largest energy user.

Oil Slips From Two-Year High Before Meeting of Arab OPEC Heads

Crude oil fell from its highest in two years in London as the Arab members of OPEC gathered in Cairo for their annual meeting tomorrow.

China Gas Names Managing Directors After Executives Taken Away

China Gas Holdings Ltd., the energy supplier to mainland homes and businesses, said it appointed two managing directors and an ad hoc management committee after two top officials were taken from its offices.

Oil Consumers Grow Wary as Some OPEC Members Target $100 Crude

Oil importers are growing wary of the impact of prices near two-year highs as some OPEC members foresee a further rally to the $100-a-barrel level and Arab oil ministers gather for a meeting in Cairo.

Former Venezuelan President Perez Dies at 88, Universal Reports

Former Venezuelan President Carlos Andres Perez died today of “respiratory arrest” in Miami, El Universal reported, citing his daughter Maria Francia Perez. He was 88.

Dollar, Yen Near 3-Week Highs as China Rates Spur Growth Concern

The dollar was near a three-week high against the euro after China’s second interest-rate increase since mid-October highlighted concern that efforts to tame inflation will curb global growth.

European Gasoil Contango Narrows as Demand Rises: Oil Products

Europe’s gasoil futures contango narrowed as freezing weather boosted demand for heating oil.

Australia Uranium Stocks ‘Undervalued’ on Pent-up Global Demand

Uranium stocks, already trading at higher valuations than their national benchmark indexes, will rise further amid predictions the price of the fuel may surge as much as 30 percent, investors and analysts said.

Kazakhs to Curb Debt Sales of KazMunaiGaz, Other State Companies

Kazakhstan, the biggest energy producer in central Asia, may curb debt sales by KazMunaiGaz National Co. and other state- owned companies as it considers limits for borrowings.


Asian Stocks Gain, Copper Rises to Record; Treasuries Decline

Asian stocks climbed, copper rallied to a record and Treasuries fell on speculation global growth will accelerate in 2011 and that China will succeed in taming inflation.

Hildebrand Unable to End ‘Burden’ of Record Franc (Update1)

Swiss central bank President Philipp Hildebrand, who ended 15 months of intervening in foreign- exchange markets this year, may prove powerless to stop the franc from extending a record rally that he calls a “burden.”

Most Asian Stocks Rise as China Rates Seen to Curb Inflation

Most Asian stocks rose on speculation an interest rate increase in China will help curb inflation in the country and Japanese stocks rose on reports of business alliances.

Euro Pain Turns to 23% Gain for Europe Adding Cash to S&P 500

For all the losses facing Europeans this year, investors from the region who bought U.S. stocks as the euro weakened are getting the best returns in a decade.

Copper in New York Advances to Record After China Rate Increase

Copper in New York climbed to a record and Shanghai gained after China raised interest rates for the second time since mid- October, spurring expectations that the government may refrain from further tightening measures in the short term.

China May Front-Load Tightening to Fight Inflation

China’s monetary tightening in 2011 may be mainly in the first half as officials tackle the fastest inflation in more than two years, JPMorgan Chase & Co. and Morgan Stanley said.

Japan’s Budget May Fail to Spur Growth While Debt Stays High

Japan’s budget plan for next year may fail to achieve the government’s goal of spurring private demand, while making little progress on reducing the country’s debt, Shinkin Asset Management Co. said.

Air Security Improved Year After Bomb Attempt, Napolitano Says

U.S. Homeland Security Secretary Janet Napolitano marked the one-year anniversary of a foiled airplane bombing by touting improved security and warning of new threats.

To contact the editor responsible for this story: Clyde Russell in Singapore at

Russia finds Khodorkovsky guilty in second trial

MOSCOW (AFP) – A Moscow court on Monday found tycoon Mikhail Khodorkovsky guilty in his second fraud trial, a judgement seen as a pivotal moment in Russia's post-Soviet history that rang alarm bells in the West.

Khodorkovsky and co-accused Platon Lebedev were convicted of embezzlement and money laundering, said judge Viktor Danilkin, dashing the hopes of Russian liberals that the trial would show a new approach from Russian courts.

In a stinging reaction from some Western powers, Germany's foreign minister said the verdict was a step backwards for Russia while US Secretary of State Hillary Clinton said it would have a negative effect on Russia's reputation.

The pair were charged with embezzling 218 million tonnes of oil from Khodorkovsky's Yukos oil giant between 1998 and 2003 and laundering 487 billion rubles (16 billion dollars) and 7.5 billion dollars received from the oil.

"This is an unjust verdict by a court that is not free," Khodorkovsky's lead lawyer Vadim Klyuvgant told journalists.

"It is shameful for the country. We will appeal the verdict."

Amid chaotic scenes, only a handful of reporters were allowed into the courtroom for the verdict and judge Danilkin then requested even those journalists to leave as the rest of the verdict was read out.

"The court has established that M. Khodorkovsky and P. Lebedev committed embezzlement acting in collusion with a group of people and using their professional positions," said Danilkin in the judgement.

Both reacted impassively to the judgement in the glass-fronted defendants' cage in the packed courtroom, Khodorkovsky leafing through papers and looking into the air while Lebedev appeared to be reading a book.

Hundreds of supporters gathered outside the court shouted "Russia without Putin" and "down with the police state" and an AFP correspondent saw police arresting 20 people.

The court adjourned Monday evening until 0700 GMT Tuesday and it was not clear when the final sentence would be delivered. Defence lawyers expressed hope it would come by the end of the year.

Once the country's richest man and now its most prominent prisoner, Khodorkovsky, 47, is already serving an eight-year sentence for fraud on charges his supporters insist were trumped up by the authorities.

But with his release scheduled for 2011, Khodorkovsky was put on trial last year on charges of money laundering and embezzlement that could see the head of the now-defunct Yukos oil giant stay in jail until 2017.

The verdict was watched as a possible indicator of Russia's future direction under Prime Minister Vladimir Putin and President Dmitry Medvedev, amid speculation that Putin is planning a return to the Kremlin in 2012 polls.

Liberals had hoped an acquittal would send a signal to the West that Russia was serious about reform and displaying the independence of its judiciary.

"The judge would have had to have been a hero to have given an acquittal verdict," Lyudmila Alexeyeva, one of Russia's best known rights defenders, told the Interfax news agency.

Chief US diplomat Clinton said the conviction raises questions "about the rule of law being overshadowed by political considerations."

"This and similar cases have a negative impact on Russia's reputation for fulfilling its international human rights obligations and improving its investment climate," she added.

German Foreign Minister Guido Westerwelle said that "the way the trial has been conducted is extremely dubious and a step backward on the road toward a modernisation of the country."

Britain had a more muted reaction, stressing to Russia that the law should be applied in a "non-discriminatory and proportional way" while also welcoming Medvedev's "focus on the need to strengthen the rule of law," the foreign ministry said in a statement.

Moscow's Khamovnichesky court had been due to start reading the verdict on December 15, but unexpectedly postponed the announcement without giving an explanation.

The next day Putin compared Khodorkovsky to US fraudster Bernard Madoff, jailed for 150 years, and observed that a "thief must be in prison".

Khodorkovsky hit back against Putin in a newspaper article on Friday, saying he pitied a man who could only feel love for dogs.

The pursuit of Khodorkovsky has been the most controversial legal action of the post-Soviet era in Russia.

Like many other billionaires, Khodorkovsky made his fortune in controversial loans-for-shares privatization in the 1990s but his supporters say he turned Yukos into Russia's most transparent company.

Wednesday, December 22, 2010

Ghana's first oil


Today marked an important day in the annals of Ghana as it pours its first barrels of oil from the Jubilee wells. Ghana is said to posses about 1.8 billion barrels of crude oil in the Jubilee fields alone, making it the single biggest in Africa and second in the world. This would earn the country about 50% of its national revenue from the oil and gas in 20 years time.

Naturally, expectations of Ghanaians in the oil prospects have gone beyond imaginable limits considering landmarks investments African countries like Nigeria, Libya, Algeria, Egypt and Angola have made from their oil. According to the BP Statistical Energy Survey, Africa had proven oil reserves of nearly 120,000 billion barrels as at the end of 2007 representing 9.49 % of the world’s reserves.

So intense has been the hopes of Ghanaians in the oil find that President Mills recently had to caution against this.

Whatever it is, the remarkable thing is that Ghana has joined the enviable league of oil producing countries. So pragmatic have our policy makers handled the oil find that under the new Petroleum Revenue Management Bill, a clause has been inserted mandating government to use the country’s oil as collateral to secure loans to develop the country. The move is perhaps guided by experiences in other countries where despite their oil resources, the people lives in abject poverty.

Even here in Ghana, what prevails in the Western Region where the bulk of the country’s mineral resources are generated leaves mush to be desired.

Recent agitation by the Chiefs and people for 10% of the oil revenue to be invested in the Western Region is quite instructive as they are not prepared to live in squalor and poverty in the midst of plenty. It is being suggested that instead of handing the region physical cash, an organization along the lines of the Sahara Accelerated Development Authority or the erstwhile Central Regional Development Corporation be set up to coordinate development initiatives in the region. After all, what is good for the goose is equally good for the gander.

Many people speculate the oil find will spell doom for the country rather than be a blessing taking a cue from happenings in neighbouring oil producing countries, especially Nigeria. These people tend to forget that Ghana has always stood tall where others failed.

To protect our oil resources, we need to adequately protect our sea and coastal environment. The capacity of the country’s Navy must be strengthened to confront the challenges of the maritime industry. It is important to improve security in the Western Region to protect the numerous businesses and people who have relocated to the region to provide goods and services for the operation of the oil industry.

The media as key partners need to be appropriately oriented to provide the needed education on the industry. Oil booms throughout the world have been linked to increased conflict, corruption, authoritarianism, loss of control of public spending, exposure to price shocks and neglect of other sectors of the economy.

In Nigeria for example, despite their huge oil potential, their electricity supply is not the best. The oil potential, their electricity Power Authority, NEPA, has been jokingly re-christened Never Expect Power Always. Almost all households have personal generators due to inefficiency in electricity supply. Apart from a few states which have been well developed, majority are not doing well. The same can be said about Gabon and Equatorial Guinea.

Nevertheless Ghanaians have every cause to be expectant in their oil find. If nothing at all, it will provide employment for the teeming unemployed youth and increase investment in the country. As we welcome our august visitor, it is imperative that we resolve to manage it prudently and invest the returns in priority areas. The colour black is perceived as connoting bad luck; let us turn the tide in our favour this time round making the black gold truly golden.

All said and done, the commercialization of the country’s oil deposit is a national feat which all Ghanaians should be proud of. As envisaged by the current government, let us use the resources judiciously in reconstructing our roads and building hospital instead of palatial mansions or enriching the pockets of a few.

Posterity will never forgive the present generation if we fail to take advantage of the opportunity to turn the fortunes of the country around through the oil find.

May the good Lord continue to bless our homeland and make it greater and stronger.


Tuesday, December 21, 2010

Royal Dutch Shell PLC says it has lifted a month-old force majeure on Bonny Light

LAGOS, Nigeria - Royal Dutch Shell PLC says it has lifted a month-old force majeure on Bonny Light imports after stabilizing production in Nigeria's oil-rich southern delta.

A Shell spokesman told The Associated Press on Tuesday that Shell's Nigerian subsidiary had lifted a "force majeure" on its Bonny Light crude shipment on Dec. 14. The term is used when an oil company cannot cover the promised supply from the field.

Tony Okonedo said the decision followed "the repair of the vandalized Trans Niger pipeline and a stabilization of production."

The oil giant declared force majeure on Nov. 19 when the Trans-Niger pipeline was sabotaged at the heels of a military operation that freed 19 hostages.

The Trans Niger pipeline is a major conduit for Shell through Nigeria's oil-rich region.

Chevron halts work in Nigeria

ABUJA, Nigeria,  (UPI) -- U.S. supermajor Chevron announced it halted oil production in Nigeria after a militant group took responsibility for attacking one of its pipelines.

The Niger Delta Liberation Force claimed during the weekend that it attacked a Chevron oil pipeline in the Niger Delta.

Chevron said it was suspending oil production in the region to minimize environmental damage from the damaged pipeline, Nigerian news agency Vanguard reports.

"The breach is being investigated and we are reviewing our operations," the oil company said in a statement.

Nigerian military officials said they seized rocket launchers and other weapons from the Niger Delta Liberation Force in November raids.

Bandits in the Niger Delta accuse the government of misappropriating oil revenue. The Movement for the Emancipation of the Niger Delta, the main militant group, warned the government in recently that it was preparing for more attacks on the country's oil industry.

Exxon Mobil, which had several workers kidnapped by Nigerian militants in November, said that it was able to restart production after attacks on its infrastructure.

"We have restarted 15,000 barrels per day of condensate from the Oso field," the company said in a statement.

Oil spill incidents in Nigeria hit 3,700

• NOSDRA orders oil firms to sit up, partners IMO, IPIECA
Stories by Adeola Yusuf Correspondent, Lagos

The oil spill incidents in Nigeria have hit 3,700 in mid-December 2010 even as the federal government at the weekend commenced the review of national action plan for oil spill preparedness and response.

Director, Department of Oil Spill Detection and Response, National Oil Spill Detection and Response Agency (NOSDRA), Idris Musa, who gave the spill statistics at the national workshop on oil spill trajectory modeling and national dispersant use policy in Lagos, said the figure covered incidents from 2006.

Musa said that the increase did not, however, have much impact on oil spill volume.

But the Minister of Environment, John Odey, disclosed the government’s readiness to review existing national policies on dispersant use in Nigeria.

Odey, who was represented by the acting director general of NOSDRA, Uchendi Okwechime, called on oil and marine companies to also review their oil spill response strategies by obtaining the Environmental Sensitivity Index (ESI) maps.

The ESI map, Musa added, captured sensitivities stretching from Calabar to Badagry and 50 km inwards from the shoreline. In this regard, all oil companies are hereby directed to purchase the ESI maps from NOSDRA and develop their respective tactical/operational maps to aid their oil spill response strategies.

“Furthermore, oil companies should fully integrate and utilise the platform provided by trajectory tolls in their response strategies to marine oil spill, this becomes very relevant, considering the fact that most oil and gas operations in Nigeria is moving offshore,” the minister said.

His view was corroborated by director with NOSDRA, Olufemi Abe, who noted that NOSDRA was prepared to ensure a zero spill incident in 2011.

The project consultant for IPIECA, Antonio Blonce and his counterpart in the IMO, Stephane Grenon ,also disclosed the readiness of their commissions to assist Nigeria to meet its target of zero spill incidents in 2011.

“This forum is aimed at further enhancing our capacity in strategic oil spill preparedness and response; it is truly a welcome initiative from the International Maritime Organisation (IMO) and the International Petroleum Industry Environmental Conservative Association (IPIECA),” Musa who represented NOSDRA DG, said.

NOSDRA has, according to Odey, worked closely with International Maritime Organisation (IMO) and the International Petroleum Industry Environmental Conservative Association (IPIECA) in the review and update of the National Oil spill Contingency Plan (NOSCP) and the development of Environmental Sensitivity Index (ESI) Maps of the Nigerian coastline.

He called on International Oil Companies and local oil firms to purchase the ESI maps for quick and easy response to spill incidents.

Odey stressed the workshop was the third stakeholders meeting that was held in Nigeria within the framework of the International Maritime Organisation (IMO)/International petroleum industry environment conversation association(IPIECA)and GI-WACAF project.

He maintained that the workshop presents all stakeholders in the oil spill management sector in Nigeria and beyond with the opportunity to come up with far reaching decision, especially those agreements that will guide the drafting of an understandable National dispersant use of policy as well as proper utilisation of the National oil spill contingency plan in Nigeria.

“Oil spill incident in the Gulf of Mexico in the United States, and the 16th of June 2010 spill in Xingang port in the Dalian province of China proves the serious concern over the environment to similar incidents. Such spill incidents and the challenges the World had in responding to them should be of help in reminding all stakeholders that no effort should be considered as sufficient in oil spill Management.

The Federal Government, Odey added, is trying his best to make sure it protects the integrity of the environment.

He said; “The inauguration of the sub-committee on clean up and remediation of the Niger Delta region, comprising of all stakeholders in the oil and gas industry and presentation of an environmental sensitivity index maps (ESI) to stakeholders proves that.

“In the course of this workshop, participants are expected to critically review the national action plan for oil spill preparedness and response; and the existing national policy on dispense use in Nigeria.”

Nigeria Drops Bribery Charges Against Cheney, Halliburton After $250M Deal Struck

Nigeria's government has reportedly dropped bribery charges against former Vice President Dick Cheney and Halliburton, the energy firm he once headed, after the company agreed to pay a hefty settlement.

A spokesman with Nigeria's Economic and Financial Crimes Commission told Reuters that the country's government accepted a $250 million offer by Halliburton -- an offer made within days of Nigeria filing a lawsuit against Cheney and Halliburton CEO David Lesar, along with other executives and firms.

The charges stem from a case involving as much as $180 million allegedly paid in bribes to Nigerian officials. Halliburton and other firms were accused of paying the bribes to win a contract to build a $6 billion liquefied natural gas plant in Nigeria's oil-rich southern delta.

Terrence O'Donnell, a lawyer representing Cheney, denied the allegations after the charges were filed. Cheney was the head of Halliburton before he served as vice president from 2001 to 2009.

Calls to Cheney representatives were not returned.

The Halliburton case involves its former subsidiary KBR, a major engineering and construction services firm based in Houston. In February 2009, KBR Inc. pleaded guilty in U.S. federal court to authorizing and paying bribes from 1995 to 2004 for the plant contracts in Nigeria.

KBR, which split from Halliburton in 2007, agreed to pay more than $400 million in fines in the plea deal.

Former KBR CEO Albert "Jack" Stanley pleaded guilty in 2008 to federal bribery charges in the U.S. for his role in the scheme. He is scheduled to be sentenced in federal court on Jan. 19.

The Associated Press contributed to this report.

Exxon restarts some Nigeria Oso condensate output

* Exxon restarts 15,000 bpd Oso condensate output

* Militant raid on Nov. 14 shut in 45,000 bpd

LAGOS, Dec 20 (Reuters) - Exxon Mobil (XOM.N) said on Monday it had restarted 15,000 barrels per day (bpd) of Nigerian Oso condensate production, which was shut in following a militant raid on an offshore platform on November 14.

Nigeria's main militant group, the Movement for the Emancipation of the Niger Delta, said it was behind the November attack in which seven Exxon workers were kidnapped and later rescued. [ID:nLDE6AE188] [ID:nLDE6AG2AF]

Oso is one of Nigeria's biggest condensate fields with about eight platforms whose total output averages about 75,000 bpd.

The attack by armed gang members prompted the U.S. energy firm to shut in 45,000 bpd of condensate and natural gas production, which is now beginning to come back onstream.

"We have restarted 15,000 barrels per day of condensate from the Oso field. No firm time for restart of Natural Gas Liquids (NGL) production is available at this time," Exxon said in a statement.

Nigeria is Africa's largest oil and gas industry but years of attacks on pipelines and oil infrastructure has held back production and investment.

President Goodluck Jonathan brokered an amnesty with militants last August, leading to more than a year without major unrest but there has been a resurgence in violence in the last two months. [ID:nLDE6BJ0BX] (Reporting by Joe Brock; editing by James Jukwey

WikiLeaks Reveals BP's 'Other' Offshore Drilling Disaster

By VIVIENNE WALT Vivienne Walt

A BP offshore oil platform suddenly shows signs of a potentially devastating leak. Bubbles form in the seawater. Alarms sound. Panicked oil workers flee the rig. That may sound like the moments that preceded last April's Deepwater Horizon explosion in the Gulf of Mexico, but it actually describes an event 19 months earlier, in the Caspian Sea waters of tiny Azerbaijan. There are uncanny echoes of the Azerbaijan incident in the Deepwater Horizon tragedy, including the likely cause - a faulty cement job. But there was one marked difference: While the Gulf explosion created an ongoing political firestorm, the Azerbaijan leak remained almost forgotten until last week, when another leak - this time of diplomatic cables, released by WikiLeaks - showed just how close BP had come to a major disaster in the Caspian.

A series of cables by then U.S. Ambassador in Baku, Anne E. Derse, chronicled a growing testiness between BP and the government of Azerbaijan, whose long borders with Russia and Iran and vast Caspian energy reserves give it strategic importance way beyond its small size. BP commands enormous clout in Azerbaijan, having invested $4 billion in gas and oil pipelines from Baku, which travel through Georgia to the Turkish port of Ceyhan, giving energy-hungry Western Europe a supply channel that bypasses Russia. (Explore an interactive graphic of the Gulf oil spill.)

But the partnership with the Azeri state energy company SOCAR was strained to the limit one morning in Sept. 2008, when a blowout in a gas-injection well on BP's Central Azeri platform prompted the emergency evacuation of 212 workers, and shut down large parts of the offshore production in the Caspian's Azeri-Chirag-Guneshli (ACG) field. That accident deprived the Azerbaijan government of revenues of up to $50 million a day during the weeks when production plummeted, according to the leaked cables. "It is possible that BP Azerbaijan 'would never know' the cause of the gas leak," Ambassador Derse wrote to her bosses in Washington on Oct. 8, 2008, citing confidential talks with the American head of BP Azerbaijan, Bill Schrader. "BP is continuing to methodically investigate possible theories." A later cable says BP concluded that "a bad cement job" caused the leak. BP has not said which company was responsible for that cement work, and its 2008 annual report offered few details. The leak is mentioned on page 28 of the report, where it is stated only that production had resumed "following comprehensive investigation and recovery work." (Watch video of oil slick anxiety in Louisiana's bayous.)

The cables, first published in London's Guardian, demonstrate the sharp contrast between the saturation coverage of the Gulf blowout, and the Azerbaijan leak that was barely covered in the local press. "Unless you were on the inside you didn't know how serious it was," says Edward Chow, senior fellow at the Center for Strategic and International Studies in Washington. "It hit the trade press, so if you were reading Platts [a specialist oil newsletter] you would have seen it." BP said in a statement published in the Guardian that the company "enjoys the continued support and goodwill of the government and the people of Azerbaijan," and that its discussions with the government are confidential. (Comment on this story.)

The pipeline project has always had a strong geopolitical undertone. A former aide to President Heydar Aliyev told TIME in an interview in Baku in 2006 that President Bill Clinton had urged the Azeri leader in 1994 to construct the pipeline link with Europe as part of "a very strategic plan" to bypass Russia and Iran. But the primary concern following the Caspian platform leak was less on potential diplomatic consequences in a region at the epicenter of energy-driven strategic contest but on the financial losses Azerbaijan suffered after BP's leak. "Schrader said although the story hadn't caught the press's attention, it had the full focus of the GOAJ [Government of Azerbaijan]," Derse wrote, "which was losing '40 to 50 million dollars' each day."

That loss seems trifling by comparison to the $40 billion or more in cleanup costs and legal liabilities that BP faced over the Gulf disaster, even before last week's Obama Administration decision to sue BP and eight other companies involved in Deepwater Horizon. And the revelations about the Caspian incident may have government lawyers picking over the details in search of a pattern of lax safety on BP platforms. In the Caspian leak, the gas did not ignite, and all the workers made it safely off the rig - a far happier outcome than in the Gulf. In what could be seen in retrospect as another portent of things to come, Ambassador Derse described the Azerbaijan government's annoyance over what they said was BP's secretiveness about the incident - a charge which would be repeated by President Barack Obama less than two years later, when he lashed out at BP for obfuscating over the Gulf blowout. (See photographs of a relief well being drilled in the Gulf.)

Chow also suggests that the suspicion that both accidents were caused by cement work around the wells could suggest a "systemic" problem with regard to BP's wells. "If you look at the larger picture, BP has had safety problems for more than five years now," Chow says. "It has been well documented, even before the Azerbaijan news."

In one cable from the embassy in Baku in October 2008, a U.S. diplomat says "BP has closed off a 'few suspect wells' from which they think a bad cement job caused the leaking gas." That, the diplomat says, "is actually good news, since had it been a reservoir leak the damage would have been potentially non-reparable, whereas now all BP has to do is fix the cement job." The repair work is "hard and expensive ... but preferable to losing the platform." By April 2010, that assessment would read like a gross understatement.

Friday, December 17, 2010

Ecuador May Seek OPEC Investment After Seizing Petrobras, Noble Licenses

Ecuador may seek investments in new oil fields from OPEC nations as they meet in Quito this week after seizing licenses from Petroleo Brasileiro SA, Noble Energy Inc. and other companies that declined to alter contracts.

Ecuadorean laws allowing the government to assign oil licenses to foreign state-owned companies without a bidding process will likely help lure investments from members of the Organization of Petroleum Exporting Countries, said Jose Luis Ziritt, head of the country’s oil industry association.

“OPEC members have the advantage of being state companies and they are able to enter into direct negotiations,” Ziritt, a 57-year old engineer and former oil adviser to the nation’s President Rafael Correa, said yesterday in an interview at his offices in Quito. “There is no Middle Eastern investment here and OPEC members may see Ecuador as an attractive country.”

Ecuador, the smallest member of OPEC, will offer licenses for new oil fields in April after forcing companies including Repsol YPF SA and Eni SpA to switch to service contracts from output-sharing accords. The seizure of four concessions from companies that didn’t agree to switch may discourage investments from non-government producers, Ziritt said.

Ecuador, which aims to boost production by 1.3 percent to 181 million barrels next year, is hosting its first OPEC meeting since returning to the organization in 2007. Oil ministers from the 12-nation group will review its output. The Andean country joined OPEC in 1973 and voluntarily suspended its membership in 1992, according to Vienna-based organization’s website.

OPEC’s 12 members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.

To contact the reporter on this story: Nathan Gill in Quito at

To contact the editor responsible for this story: Dale Crofts at

OPEC expects increased global oil consumption in 2011

A.Badalova /

OPEC forecasts an increase in the global oil consumption by 1.2 million bpd to 87.11 million bpd in 2011.

According to OPEC's monthly report on the oil market, the highest level of demand in 2011 will occur in the fourth quarter at 88.29 million bpd.

Of the total oil consumption, 46 million bpd will fall to OECD. In countries outside the organization, oil consumption will increase in 2011 by one million bpd compared to 2010.

OPEC forecasts that oil demand in China will grow by 0.45 million bpd to 9.26 million bpd.

OPEC expects world oil demand at 85.93 million bpd in 2010, which is more by 1.47 million bpd compared to 2009. Oil demand in OECD countries will make 45.84 million bpd.

World oil supplies

The volume of world oil supplies rose in November to 0.13 million bpd to 87.16 million bpd.

Oil supplies by non-OPEC countries increased by 0.18 million bpd in November, while OPEC's oil production fell by 43,000 bpd.

OPEC's share in total world oil supplies remained unchanged last month - at 34 percent.

Oil supplies by non-OPEC countries

OPEC raised its oil supply forecasts by non-OPEC countries by 0.41 million bpd to 52.62 million bpd.

OPEC expects a drop in the oil supplies of by non-OPEC countries in the second and third quarters of next year to 52.46 and 52.39 million bpd, respectively, and increase in the fourth to 52.99 million bpd. The growth of supply will occur, mainly due to Brazil, Canada, Azerbaijan, Kazakhstan and Colombia. Norway, Britain and Mexico will experience a drop in supplies.

OECD countries will supply 19.73 million bpd and the former Soviet Union will supply 13.43 million bpd in 2011.

In 2010, OPEC forecasts an increase in oil supplies by non-OPEC countries by 1.09 million bpd to 52.21 million bpd. In the fourth quarter, shipments of these countries will amount to 52.74 million bpd compared to 51.91 million in the third quarter.

OECD countries' supply this year is projected to hit 19.86 million bpd and the former Soviet Union - 13.25 million bpd.

Global economy

In 2010, OPEC expects world economic growth at 4.3 percent and at 3.8 percent in 2011. The U.S. economy will increase by 2.8 percent this year and 2.4 percent next year. Economic growth in OECD countries in 2010 and 2011 will amount to 2.6 and 2 percent, respectively. In the euro area OPEC forecasts economic growth at 1.5 percent this year and 1.1 percent - next year.

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Nigerian Oil Union on Strike to Protest Sackings, Nation Reports

Nigeria’s National Union of Petroleum and Natural Gas Workers went on strike today to protest the firing of workers by a fuel marketing company, the Nation reported.

The action will continue until the workers are reinstated, the Lagos-based newspaper said, citing Igwe Achese, the union president.

MRS Oil and Gas Plc fired 2,500 workers in breach of an agreement with the union, Achese said, according to the newspaper.

To contact the reporter on this story: Paul Okolo in Abuja

To contact the editor responsible for this story: Peter Hirschberg at

Nigeria sets $62/b oil price benchmark for 2011 budget

Lagos (Platts)

Nigeria has proposed a budget of Naira 4.2 trillion ($28 billion) for 2011, based on a benchmark oil price of $62/barrel, finance ministry officials said Wednesday.

This compares with a budget of Naira 4.6 trillion approved for the current year, that was based on oil price of $60/b and production of 2.35 million b/d.

Resurgent violence in the main oil producing Niger Delta since October this year forced the government last month to lower its production target for 2011 to 2.3 million b/d, compared with 2.38 million b/d initially.

President Goodluck Jonathan will formally present the 2011 budget proposal to parliament Wednesday for approval, the officials said.

Oil accounts for about 80% of Nigeria's export earnings.


Similar stories appear in Oilgram News. See more information at

For related news, please see Platts Nigerian Oil Production feature at

Turkey to buy oil from Nigeria, Ghana through barter scheme

Turkey will be purchasing oil from at least two African countries through a barter scheme arrangement, State Minster for foreign trade Zafer Çağlayan has announced following a four-day visit to three African countries.

Çağlayan, who had talks in Nigeria, Ghana and Equatorial Guinea during his visit to Africa, proposed a barter scheme to his Nigerian and Ghanaian counterparts.

Officials in these countries have said they would look positively on such a deal, where Turkey will purchase oil from both countries and pay for it by investing in tourism, energy, health and other infrastructure.

The government has plans to realize similar schemes in other countries in Africa.

Çağlayan's meeting with Ghanaian Vice President John Dramani Mahama marks the first official visit from Turkey at a ministerial level to this country in 10 years.

Çağlayan, speaking about his visit to Ghana along with a group of about 100 businessmen, said Mahama had praised Turkey due to its economic success at a time when most European countries are struggling amidst a crisis.

Mahama also said his government was closely monitoring the democratic and political developments in Turkey, expressing his government's desire to make Ghana a good example of a democratic country in Africa.

Mahama also said direct flights between the two countries would contribute significantly to relations, adding that joint projects by businessmen of the two countries would offer great opportunities. Mahama said during the visit: “We don't want Ghana to be an oil-dependant country in the future. We are using petroleum as a resource to invest in and develop other sectors. We have very beautiful beaches. We can make use of this.”

State Minister Çağlayan said Turkey wanted to contribute to the development of Ghana and support its commercial growth, noting that Turkish contractors were extremely interested in the construction sector.

The minister also attended the Ghana-Turkey Business Forum during his visit. In a speech he made there, Çağlayan said Turkey and Ghana had set their common trade volume goal at $1 billion. He also said the demand in Ghana for housing was about 1 million residential units, adding that Turkish businessmen want to enter this sector.

Ghana becomes an oil nation

Ghana starts production from one of the largest recent oil discoveries in West Africa, transforming it into a significant oil-producer, but raising fears over the associated risks.

While the country, seen as a model of democracy in the region, has been counting its blessings because of the riches the oil will bring, it needs only to look to nearby Nigeria to understand the potential dangers.

In Nigeria and other countries, major oil production and the money that flows with it have been accompanied by widespread corruption and the neglect of other industries.

The oil curse, as some call it, could well take hold in Ghana, reversing development and political gains highlighted when US President Barack Obama visited last year.

But other observers argue that if anybody can handle it in the region, Ghana can, precisely because of the development that has taken place. The country is already a major producer of cocoa and gold.

It has produced oil in the past, but only in very small quantities by industry standards. The recent find has set off intense interest from investors, including from China.

"Ghana has the potential to avoid it, but still has a lot to do to avoid the oil curse," said Emmanuel Kuyole, Africa regional coordinator for Revenue Watch Institute, referring to dangers posed by the sudden wealth.

There is concern however that the country has not adapted its legislation quickly enough to cope with the windfall.

Commercial production comes just three years after the discovery of the oil -- and with proposed laws to regulate the industry still under debate in parliament.

"We ought to have better prepared," said Bright Simons, researcher with the IMANI Center for Policy and Education, a Ghanaian think tank.

"The whole programme seem to have been rushed. The rush does not benefit anybody."

Critics also argue that Ghana does not yet have the infrastructure to tap the gas that comes with crude production.

That means gas flaring will inevitably take place, observers say.

The concerns persist, despite the governnent of President John Atta-Mills having declared a policy of zero tolerance on the practice, which is widely viewed as damaging to the environment.

Kofi Ada, an opposition lawmaker and former energy minister in the previous government of John Kufuor, remains apprehensive.

"We have already seen indications of the resource curse... it frightens me," he said.

The oil was discovered in 2007 by US firm Kosmos and is estimated to contain some 1.8 billion barrels, one of the largest finds in West Africa in recent years. It will be pumped from the Jubilee field in the Atlantic Ocean.

Anglo-Irish firm Tullow, the lead operator for the field, says it will produce about 55, 000 barrels a day within the first few months before more than doubling output to 120, 000 bpd.

That would be a considerable output, even if only a fraction of Nigeria's two million barrels per day.

Alex Vines, head of the Africa programme for London-based think tank Chatham House, said decision-making linked to actual oil production would have to be more technocratic than political.

"The politics should be focused on finding the best use of oil windfall revenues," he said.

Another concern involves regulation, with activists fearing the energy ministry was not up to the task and would rely on the state-owned Ghana National Petroleum Company, which itself is an interested player in the sector.

Ghana will also be keen to avoid the unrest that has plagued Nigeria's main oil-producing region, the Niger Delta, where scores of attacks and kidnappings have occurred in recent years. An illegal oil industry has also thrived there.

Traditional chiefs in Ghana are already calling for 10 percent of oil wealth, in keeping with the royalty tradition in the mining sector in Ghana.

Investment in villages close to the oil fields was crucial if Ghana was to avoid a situation like the one in the Niger Delta, warned Kuyole.

Wednesday, December 15, 2010

U.S. Sues BP, Other Firms Over Gulf Oil Spill

The Justice Department on Wednesday sued BP (BP) and eight other companies in the Gulf oil spill disaster in an effort to recover billions of dollars from the largest offshore spill in U.S. history.

The Obama administration's lawsuit asks that the companies be held liable without limitation under the Oil Pollution Act for all removal costs and damages caused by the oil spill, including damages to natural resources. The lawsuit also seeks civil penalties under the Clean Water Act.

"We intend to prove these violations caused or contributed to the massive oil spill," Attorney General Eric Holder told a news conference.

The amount of damages and the extent of injuries sustained by the United States as a result of the Deepwater Horizon Spill are not yet fully known, the lawsuit states.

An explosion that killed 11 workers at BP's Macondo well last April led to oil spewing from the company's undersea well - more than 200 million gallons in all by the government's estimate. BP disputes the figure.

The department filed the suit in federal court in New Orleans.

The other defendants in the case are Anadarko Exploration & Production LP and Anadarko Petroleum Corp.; MOEX Offshore 2007 LLC; Triton Asset Leasing GMBH; Transocean Holdings LLC and Transocean Offshore Deepwater Drilling Inc. and Transocean Deepwater Inc.; and BP's insurer, QBE Underwriting Ltd./Lloyd's Syndicate 1036.

Anadarko and MOEX are minority owners of the well that blew out. Transocean owned the rig that BP was leasing.

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Transocean disputed the allegations, insisting it should not be held liable for the actions of others. "No drilling contractor has ever been held liable for discharges from a well under the Oil Pollution Act of 1990," the company said in a statement e-mailed to The Associated Press. "The responsibility for hydrocarbons discharged from a well lies solely with its owner and operator."

QBE/Lloyd's can be held liable only up to the amount of insurance policy coverage under the Oil Pollution Act and is not being sued under the Clean Water Act.

The lawsuit alleges that safety and operating regulations were violated in the period leading up to April 20.

It says that the defendants failed to keep the Macondo well under control during that period and failed to use the best available and safest drilling technology to monitor the well's conditions. They also failed to maintain continuous surveillance and failed to maintain equipment and material that were available and necessary to ensure the safety and protection of personnel, equipment, natural resources and the environment, the suit charges.

Before Wednesday, potential class-action lawsuits had been filed in the Gulf oil spill by fishing and seafood interests, the tourism industry, restaurants and clubs, property owners losing vacation renters - even vacationers who claim the spill forced them to cancel and lose a deposit. So far, more than 300 suits have been spawned by the spill and consolidated in federal court in New Orleans.

Wednesday's move by the Justice Department follows the Obama administration's decision not to open new areas of the eastern Gulf and Atlantic seaboard to drilling. That marked a reversal from an earlier decision to hunt for oil and gas, an announcement the president himself made last spring three weeks before the spill.

The staff of a presidentially appointed commission looking into the spill has said that the disaster resulted from questionable decisions and management failures by three companies: BP, the well owner and operator; Transocean, the owner of the Deepwater Horizon rig; and Halliburton.

The panel found 11 decisions made by these companies increased risk. Most saved time, and all but one had a safer alternative.

Separately, an administrator is doling out money to Gulf oil spill victims from a $20 billion fund of BP money.

The Justice Department isn't the first government entity to sue BP. Alabama Attorney General Troy King filed federal lawsuits in August on behalf of the state against BP, rig owner Transocean, cement contractor Halliburton Energy Services Inc. and other companies that worked on the ill-fated drilling project.

U.S. District Judge Carl Barbier is presiding over most of the consolidated federal suits. In September, Louisiana Attorney General James "Buddy" Caldwell's office asked Barbier to create a "government case track" to handle government-related suits separately from other claims. The judge hasn't ruled on that request yet.

Other companies that were not targeted by the Justice Department lawsuit could be added later if the department decides that the evidence warrants it.

Among the other companies whose names have emerged in the aftermath of the spill are Halliburton, which handled the cementing of the well; and Cameron International, which made the blowout preventer that apparently failed to stop the gusher after the rig exploded last April 20.

See full article from DailyFinance:

Tuesday, December 14, 2010

Supertanker Market Has 30 to 40 Spare Vessels, DnB NOR Says

DnB NOR Markets analysts Henrik With and Glenn Lodden comment in an e-mailed report today on supply and demand for supertankers to load 2 million-barrel cargoes of Middle East crude oil.

Rental income from very large crude carriers, or VLCCs, shipping Saudi Arabian crude to Japan, the industry’s benchmark route, fell 7 percent to $10,232 a day yesterday, according to the London-based Baltic Exchange.

“With approximately 105 VLCC cargoes now being completed for December-loading in the Middle East, this month’s lifting program should for all practical purposes be close to its end. Although January stems could be seen towards the weekend, we do not foresee any surge in fresh demand this week.” Shipbrokers sometimes refer to cargoes as stems.

“As a result of newbuild deliveries and a lack of floating storage impetus, there appears to be an overhang of 30-40 double-hull VLCCs. Charterers are thus in a very strong bargaining position.”

“VLCC earnings should stay poor, and could possibly drop further this week. Asset values continue to decline, negatively impacting” the net asset values of publicly traded shipowners.

To contact the reporter on this story: Alaric Nightingale in London at

To contact the editor responsible for this story: Claudia Carpenter at

Nigeria mulls $250 mln deal to drop Cheney charges

LAGOS — Nigeria has negotiated a 250 million dollar settlement deal that would see it drop charges against US ex-vice president Dick Cheney and others over a bribery scandal, an official said Tuesday.

The deal reached by officials from Nigeria and energy firm Halliburton, Cheney's former company, must still be approved by the West African country's government, said Femi Babafemi, a spokesman for the anti-graft agency.

"The attorney general of the federation will have to ratify that on behalf of the federal government," he said, adding that a decision would come before the end of the week. The money would be paid "in lieu of prosecution."

Officials told AFP on Monday that the Nigerian government would consider a settlement deal in the case following weekend negotiations in London.

The London talks came after Nigerian authorities charged Cheney and others last week over a bribery scandal linked to construction of a liquefied natural gas plant. Cheney was head of Halliburton before becoming US vice president following 2000 elections.

Babafemi said the 250 million would include some 130 million currently frozen in Switzerland, with the rest paid in fines.

A source close to the case speaking on condition of anonymity confirmed the 250 million total amount, but said 100 million was in Switzerland, while a further 30 million dollars was in Monaco.

Those sums had been paid to an intermediary, but were never passed on as part of the bribery scheme, according to the source.

The case involves an alleged 182 million dollar cash-for-contract scandal over 10 years until 2005 over construction of the liquefied natural gas plant in southern Nigeria.

Others charged included Halliburton CEO David Lesar, as well as Halliburton Inc., its former subsidiary Kellogg Brown and Root (KBR), former KBR head Albert "Jack" Stanley and that firm's current leader William Utt.

Halliburton declined comment, but has previously denied involvement in the allegations. A spokesman for Cheney has dismissed the accusations against him as baseless.

The consortium involved in the gas plant, TSKJ, was also charged. Companies in TSKJ included France's Technip, Snamprogetti (formerly a subsidiary of a company owned by Italy's Eni), KBR and Japan's JGC.

US authorities said last year that Halliburton and KBR had agreed to pay 177 million dollars to settle charges from the Securities and Exchange Commission in the United States over the scandal.

KBR agreed to pay a further 402 million dollars to settle criminal charges brought by the US Justice Department.

Fitch affirms Nigeria's Rivers State at B+/AA-(nga)

Fitch Ratings has affirmed the Nigerian State of Rivers (Rivers) Long-term foreign and local currency ratings at 'B+' and National Long-term rating at 'AA-(nga)'. The Outlooks are Stable.

The rating affirmation reflects prospects of stable operating performance coupled with the administration's commitment to limit cost growth in a context of increasing debt and abating restiveness in the Niger Delta region.

Easing macroeconomic uncertainties, which led to the revision of the Outlook on the Nigerian Federal Government to Negative in October, together with improving operations may trigger an upgrade if the debt burden remains low and the operating margin strong. Conversely, the ratings might be downgraded if the re-escalation of restiveness in the region hits state revenues, or looser cost control leads to a fall in the operating margin.

Rivers State's budgetary performance remains largely in line with Fitch's expectations despite a larger-than-expected (33%; forecast: 25%) fall in oil revenue to about NGN190bn in 2010. Withdrawals from the Excess Crude Account (ECA) helped supplement federal allocations (FA), leading to non-recurrent proceeds of about NGN70bn in 2009 and NGN27bn in 2010. With the ECA reserves depleted, the state's share of FA in 2011-2012 could be more volatile as the account's ability to act as a shock absorber for fluctuations in oil and prices has been reduced.

The large attacks on oil wells disrupting production in 2009 have diminished following the amnesty programme. However, training and integration of former insurgents may prove lengthy and more costly than anticipated. A resumption of insurgency could inflate overheads and other costs, which in 2009 and 2010 were about NGN33bn per year. Risks remain that recurrent spending could edge closer to NGN100bn in 2011-2012, from about NGN83bn in 2010.

Rivers' commitment to curtail cost growth should help maintain the operating surplus above NGN150bn, 65% of the operating revenue, over the medium term. After pay rises awarded in 2008-2009 to re-motivate and re-professionalise staff, doubling personnel spending to NGN48bn, the wage bill is unlikely to increase significantly above NGN50bn in 2011, despite hiring in the education and health sectors to improve service provision to residents.

Fitch takes comfort from the state's commitment to largely calibrate investment to budgetary surpluses. Although the upgrade of roads, health centres and schools continues, capital spending fell to NGN177bn in 2009 from the peak of NGN225bn in 2008. However, debt-funded investment programmes may push back capital spending close to NGN200bn over the medium term.

A 12-month bridge loan of NGN30bn will translate into debt outstanding of NGN26bn at end-2010. Bond issues have been postponed to 2011 and debt remains below Fitch's projections of NGN200bn by 2012. As borrowing grows, Fitch views positively the state's commitment to develop tax revenue. Although the introduction of a 3% service levy in 2011 on both self-employed and employees may not significantly boost Internally Generated Revenue (IGR), it does help spread the participation of residents into the tax system. At the same time, the completion of the taxpayers' registration is likely to push IGR above the NGN50bn being collected in 2010 and likely double it by 2012, almost covering recurrent costs, including interest expenses. Liquidity remains strong.

Rivers is located in the south of Nigeria with a population of 5 million inhabitants (accounting for about 4% of the national total) mainly employed in subsistence farming. However, the state is one of the richest in the country due to the concentration of oil production. Per capita GDP is about NGN600,000 (EUR3,000; USD4,000).

Thursday, December 9, 2010

WikiLeaks Releases More Revelations about Nigeria

•Julius Berger flew Yar’Adua from Germany to S’Arabia •Turai, Tanimu named in oil deals •Fresh allegations against Aondoakaa •How Shell, others tried to subvert oil sector reform bill

From Tokunbo Adedoja in New York with agency reports, 12.09.2010

Construction giant, Julius Berger, made its aircraft available to the late President Umaru Musa Yar’Adua to be flown from Germany to Saudi Arabia in September 2008, the latest diplomatic cables published on the whistle-blowing website, WikiLeaks, revealed yesterday.

The cable, written by former US Ambassador to Nigeria, Dr. Robin Sanders, quoted Shell's regional executive vice-president for Africa Ann Pickard as making the disclosure while discussing Yar’Adua’s health at the time.

The cable read: “Pickard agreed that the President's health is a guessing game. She said that in her recent meetings with Yar'Adua he seems alert but drawn in the face and frail. She reported that a Julius Berger (protect) contact says that the President was not in danger of dying soon but has serious ailments from which he will never fully recover.

“Pickard shared that Berger provides transportation including planes for the President and has reportedly flown in doctors and technicians to attend the President (reftel). She said, for instance, that her Berger contact confided that they flew the President from Germany to Saudi in September 2008. Additionally, the Berger contact thought the President would not return to the Villa offices, as they were moving the President's personal things out of the Villa.”

Other revelations from the latest cables, four of which were published yesterday, are:

•Pickard said a lot of “interesting” people were lifting oil even with no knowledge of the industry, suggesting a series of corrupt practices.

•A businessman and close associate of the late president was accused of smuggling but was said to have been told by Yar’Adua to clean up his act. He was called Yar’Adua’s “Mr. Fix It”.

•International Oil Com-panies (IOCs) have been making moves to influence the contents of the Petroleum Industry Bill (PIB) to suit their purpose.

•Former Attorney-General of the Federation, Chief Michael Aondoakaa, was accused of demanding gratification before signing documents.

Sanders’ dispatch read: “Pickard said that Nigerian entities control the lifting of many oil cargoes and there are some "very interesting" people lifting oil. Oil buyers would pay NNPC GMD Yar'Adua, Chief Economic Advisor Yakubu and the First Lady Turai Yar'Adua large bribes to lift oil. Pickard also reported an instance of the Attorney General Aondoakaa allegedly soliciting a $20 million bribe to sign a document. The International Oil Companies (IOC) are quite concerned about the "very flawed" new petroleum sector energy bill. The IOCs will be asking U.S., Dutch, and U.K. COMs to convey points on the bill to GON policymakers.

“Pickard said that Nigerian entities control the lifting of many oil cargoes and there are some "very interesting" people lifting oil (People, she said that were not even in the industry). As an example she said that oil buyers would pay Nigerian National Petroleum Corporation (NNPC) General Managing Director Yar'Adua, (Note: not related to President Yar'Adua. End Note) Chief Economic Advisor Yakubu, and the First Lady Turai Yar'Adua large bribes, millions of dollars per tanker, to lift oil. The IOCs control the liquefied petroleum gas (LPG) cargos, so GON actors do not have the same opportunity for illicit gain. Pickard also said a former associate of hers (protect) had told her he had been present when Attorney General Aondoakaa had told a visitor that he would sign a document only if the visitor paid $2 million immediately and another $18 million the next day.”

Political Counsellor Walter Pflaumer who worked in the US embassy sent a cable on the alleged close relationship between businessman, Alhaji Dahiru Mangal, and Yar’Adua.

Pflaumer did not disclose the identity of his close, writing: “XXXXXX alleged a close association between President Yar,Adua and Katsina native and rumored smuggler Dahiru Mangal. XXXXX claimed Mangal is the President's "Mr. Fix It," taking care of "anything filthy" Yar'Adua needs done in addition to smuggling items for several wealthy Nigerian businessmen through Niger into Kano. Another Kano business contact corroborated XXXXXX 's allegations, but observed that Mangal no longer deals openly in illicit activity since Yar'Adua named him a special advisor earlier this month.

“Kano real estate entrepreneur and longtime Mission contact XXXXXX told PolOff February 10 that Katsina native Dahiru Mangal, who XXXXXX contends deals in illicit smuggling of goods into Nigeria, is also known as President Yar'Adua's "Mr. Fix It." XXXXX alleged a close association between the President and Mangal, dating to the former's tenure as governor of Katsina, and claimed the latter remains to this day Yar'Adua's "go-to man" to accomplish "anything filthy that Yar'Adua needs done."

“Mangal, XXXXX said, is also the "go-to" for any wealthy Nigerian, who wants to import "just about anything" into Nigeria. He declined to state whether Mangal smuggled weapons, drugs, or persons into Nigeria.”

On October 20, 2009, Deputy Chief of Mission Dundas McCullough wrote: “Pickard said the GON [government of Nigeria] wanted the National Assembly to pass the [PIB] by November 17 in order for the GON to be able to announce it at the upcoming CWC Gulf of Guinea Conference in London November 17-19. She said that if the House passes the PIB in the coming weeks, “we need to move quickly” to obtain any necessary changes before it becomes law. Fortunately, she added,

“We are working with the House and the House appears to want to work with us.” She continued that if the Senate passes the PIB, “We aren’t worried.” Unfortunately, she explained, “We think the Senate will pass a bad bill” but it won’t really matter. She added that she would be at the Nigerian House and Senate later that day and would let the Embassy know if there were any unexpected developments.

“3. (C) The Ambassador asked if Shell had had engagements with the GON outside the National Assembly, such as with the Ministry of Finance and the Central Bank of Nigeria. Pickard said, “We are meeting with them at all levels.” She noted that an IMF team headed by Charles McPherson was in Abuja to look at the PIB and that Shell would be meeting with them as well. In contrast, she said, “We are worried about the World Bank’s political agenda and it is not clear what their agenda is.” She said the World Bank was working on how to make the IJVs “bankable” so that they would be able to go to international and domestic banks for financing.”
Efforts to reach Tanimu and Aondoakaa last night were unsuccessful as calls to their phones were unanswered.

Platts to acquire Oil Price Information Service

NEW YORK (AP) — McGraw-Hill Companies Inc. said Wednesday that its Platts energy and metals division will acquire the Oil Price Information Service from United Communications Group.

Terms of the deal were not released. The acquisition is expected to be completed in the first half of 2011.

The Oil Price Information Service, based in Gaithersburg, Md., monitors wholesale and retail petroleum markets in North America.

McGraw-Hill shares added 17 cents, to $36.08 in midday trading Wednesday.

Tuesday, December 7, 2010

Nigeria Charges Former US VP Cheney Over Bribery

Nigeria's anti-corruption agency on Tuesday charged former U.S. Vice President Dick Cheney over a bribery scheme involving oil services firm Halliburton Co. during time he served as its top official, a spokesman said.

The charges stem from a case involving as much as $180 million allegedly paid in bribes to Nigerian officials, said Femi Babafemi, a spokesman for the Economic and Financial Crimes Commission.

Halliburton and other firms allegedly paid the bribes to win a contract to build a $6 billion liquefied natural gas plant in Nigeria's oil-rich southern delta, he said.

Terrence O'Donnell, a lawyer representing Cheney, denied the allegations.

"The Department of Justice and the Securities and Exchange Commission investigated that joint venture extensively and found no suggestion of any impropriety by Dick Cheney in his role of CEO of Halliburton," O'Donnell's said in a statement sent to The Associated Press. "Any suggestion of misconduct on his part, made now, years later, is entirely baseless."

The Halliburton case involves its former subsidiary KBR, a major engineering and construction services firm based in Houston. In February 2009, KBR Inc. pleaded guilty in U.S. federal court to authorizing and paying bribes from 1995 to 2004 for the plant contracts in Nigeria.

KBR, which split from Halliburton in 2007, agreed to pay more than $400 million in fines in the plea deal.

Halliburton spokeswoman Tara Mullee Agard said the company had not seen the new charges Tuesday, but insisted the company had nothing to do with the project.

Babafemi said Halliburton, its Nigerian subsidiary, Halliburton CEO David J. Lesar, former KBR CEO Albert "Jack" Stanley and current KBR CEO William Utt all face similar charges in the case. The spokesman said each charge in the 16-count indictment carried as much as three years in prison.

Heather L. Browne, a KBR spokeswoman, said in a statement that Utt joined the firm in 2006, two years after prosecutors say the bribery case concluded.

"The actions of the Nigerian government suggest that its officials are wildly and wrongly asserting blame in this matter," Browne's statement read. "KBR will continue to vigorously defend itself and its executives, if necessary, in this matter."

Stanley pleaded guilty in 2008 to federal bribery charges for his role in the scheme. He is scheduled to be sentenced in federal court on Jan. 19.

Nigeria, a major oil supplier to the U.S., long has been considered by analysts and watchdog groups as having one of the world's most corrupt governments. Federal prosecutors in the U.S. have filed a series of charges over the construction of the Bonny Island liquefied natural gas plant under the Foreign Corrupt Practices Act. That law makes it unlawful for companies doing work in the U.S. to bribe foreign government officials or company executives to secure or retain business.

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Cheney resigned as Halliburton's CEO in 2000 to run as former President George W. Bush's vice president. Babafemi declined to comment when asked how likely it was that Cheney would be extradited to Nigeria over the charges.

"We are following the laws of the land. We want to follow the laws and see where it will go," the spokesman said. "We're very convinced by the time the trial commences, we'd make application for appropriate court orders to be issued."

There could be political calculations at play in the new charges. Nigerian President Goodluck Jonathan faces a coming primary election in the nation's ruling party against former Vice President Atiku Abubakar.

Critics have tried to connect Abubakar to this bribery case in the past and the charges come as the election looms. Abubakar has denied any involvement.

OPEC crude output drops in Nov. despite demand staying same

By IB Times Staff Reporter

Crude production from the Organization of the Petroleum Exporting Countries (OPEC) dropped in November by around 70,000 barrels per day (bpd) to 29.1 million bpd, a Platts survey of oil industry officials and analysts showed on Monday.

A Platts analyst said "these numbers are a shocker" as no sign of a decline in demand was visible. “In the fourth quarter, the world traditionally draws inventories, and the rate of inventory decline is going to be accelerated by this unexpected decline from OPEC. This output decline is not coming as a result of any sign of a decline in demand, so it’s fair to say that Platts’ survey estimates this month is one of the most bullish we’ve reported in a long time,” said John Kingston, a Platts global director of news.

Angola, Nigeria, Saudi Arabia, the United Arab Emirates (UAE) and Venezuela saw output decreases totaling 90,000 b/d. This volume was partially offset by a 10,000 b/d increase from Libya, the survey showed.

According to Platts estimate the compliance of production quotas by OPEC members was 55.8 percent in November.

The survey found that excluding Iraq, which does not participate in the production pacts, the 11 members bound by quotas (OPEC-11) pumped an average 26.7 million bpd in November, 80,000 bpd below October levels but 1.855 million bpd above their 24.845 million bpd target.

U.S. crude futures rose on Monday to their highest close in more than two years, boosted by the cold weather in the U.S. northeast and Fed Chairman Ben Bernanke's comment that a third edition of quantitative easing was possible. Crude for January delivery rose to $89.38 a barrel on the New York Mercantile Exchange on Monday.

OPEC does not have an official price target but Saudi Arabia, which is the de facto authority in OPEC pricing, has said it is comfortable with a range of $70-$80 per barrel of crude.

Saturday, December 4, 2010

In Biblical Valley, 'David vs. Goliath' Battle Rages Over Oil Shale

 Happy Hanuka

ELAH VALLEY, Israel (Dec. 4) -- A baron from the prominent Rothschild family is teaming up with media mogul Rupert Murdoch in an attempt to break Israel's foreign oil dependency by mining vast amounts of oil shale in the unspoiled Elah Valley, where the Bible says David fought Goliath.

But their business plan has morphed into a family battle all its own because of some unexpected opposition from Lord Jacob Rothschild's second cousin, a celebrated eco-campaigner.

David de Rothschild gave up the chance to enter his family's multibillion-dollar banking business and instead has emerged as a "green" leader lauded by the United Nations and the World Economic Forum. He describes his cousin's plans to heat up rocks beneath the Judean Hills as "very serious" and has promised to investigate.
David de Rothschild

Oil shale mining involves heating the ground to transform buried, tar-like organic compounds into oil, and then extracting it. But the process is criticized for being an inefficient way of getting energy, because it takes so much energy to heat up the ground and create the oil, and then drill for it. Al Gore has described the practice as "utter insanity."

Such technology is economical only when the price of oil is very high, as is the case right now. And Lord Rothschild has said he believes oil shale mining "could transform the future prospects of Israel, the Middle East and our allies around the world."

His cousin David disagrees. "I as an individual actively discourage environmentally harmful activities," he wrote in a letter to Green Prophet, an environmental website focusing on the Middle East. But he acknowledged that he's "part of a large family with many diverse opinions."

"I cannot be held responsible for other people's actions despite my best efforts, even family members," David de Rothschild wrote.

Aside from concerns about the Rothschild project's energy efficiency, it would also involve bulldozing dozens of deep trenches, each more than two miles long, through some of Israel's most picturesque and archaeologically significant landscape.

The Elah Valley is where tradition holds that the young shepherd boy who would become King David faced off against the Philistine giant Goliath, and vanquished him with a slingshot and a pebble. In addition to disfiguring the biblical site, the oil mining project's trenches would cut through farms, vineyards and a network of 1,000 historic underground caves where the rebels of Bar Kochba hid from the Romans in the first century.

In August, the Israel Union for Environmental Defense filed a petition with the Israeli High Court demanding that the drilling license be revoked, charging that it was issued "without any plan and without any indication of the resulting effect on the environment."

The valley is zoned in the Israeli National Master Plan as green space. But under Israel's 1952 Oil Act, oil companies can bypass planning and other regulations in the hunt for energy resources. Israel's minister for environmental protection, Gilad Erdan, has promised to change the antiquated law.

Hagit Teshler, 44, a college lecturer who lives in the tiny community of Srigim-Li-On at the foot of the valley, was among more than 1,000 residents and campaigners who gathered Friday on a hill overlooking a test-drilling site late last month, to protest the venture.

"The industry that they want to build is an experimental industry that doesn't exist in any other place in the world," Teshler told AOL News. "In the U.S., it's very hard for them to get past the laws, so they come here. We don't know anything about the ramifications of this experiment, what damage it will do. They are heating the ground to very high temperatures. We don't know what gases will come out of this, or what damage will be caused to the air and the water.

"Most of the ministers, except for Gilad Erdan, are very much in favor of the oil industry because they believe that it will free Israel energy-wise from all our neighbors. But the oil that is produced is very low quality that will need a whole other industry to make it available as fuel for cars. Israel doesn't know what it's getting into," she said.

Mining the reserves of shale oil embedded in the rock would require a huge amount of electrical power -- equivalent to half of Israel's entire national supply, plus millions of cubic feet of water in a country entering its worst drought in modern history.

Lord Rothschild, based in London, is one of Israel's largest benefactors. He donates millions of dollars a year to social, educational and cultural projects in Israel through Yad Hanadiv, a family foundation founded by his ancestors. Major gifts include university fellowships, the Supreme Court building and a new National Library currently under construction.

Last month, Lord Rothschild and Murdoch, the American-Australian media tycoon, jointly acquired 11 percent of the Genie Energy Corp. unit Genie Oil and Gas Inc. for $11 million. Genie Energy, a subsidiary of the huge IDT Corp., owns 89 percent of Israel Energy Initiatives, which has an exclusive shale oil exploration and production license from the Israeli government for 238 square miles of the Judean hills southwest of Jerusalem, on the border with the West Bank.

This area, known as the Adullam district, was a major population center in biblical times and boasts a rich variety of significant archaeological sites from the cave network and Roman amphitheater of Bet Guvrin in the south, to the Elah Valley where David fought Goliath in the north. Today, it is an area of pastoral stillness, home to several small rural communities known as moshavim, with vineyards, olive groves, forests and farmland.

Israel Energy Initiatives believes that its shale oil cracking technology can free the world from dependence on Arab oil and turn Israel into an energy powerhouse able to produce 300 billion barrels of non-conventional oil at a cost of up to $40 per barrel.

Effie Eitam, a former minister of national infrastructure who is now president of Israel Energy Initiatives, told Haaretz that Lord Rothschild had "a strong history of supporting the environment. He asked a great many questions on this point, and was persuaded that when the pilot is completed in two years, very few question marks will remain."

But after a series of protests organized by local residents, Tafline Laylin, a Cairo-based analyst with Green Prophet, contacted David de Rothschild, urging him to persuade his cousin to withdraw from a deal that she believes could "unleash a miserable chain of ecological and social reactions."

"The in-situ technology requires that 5-kilometer-long trenches are dug in order to reach the underlying rock. This is then heated to 350 degrees Celsius and in part releases a gas that is converted to sulfur-rich fuel. Three hundred such trenches will be necessary to produce 300,000 barrels of oil (per day). Also, the safety of heating up the rock has yet to be established and could release at least 15 million tons of CO2 into the atmosphere," Laylin warned.

"We urge the Rothschild family, and you as its eco-diplomat, to rescind its shares in what could be one of the most devastating projects to hit Israel's soil," she wrote.

The response from the young Rothschild was swift, setting the stage for a family showdown.

He wrote that he would "continue to write to not only family members but also other individuals and business about how their actions influence the world environmentally in the hope that they will place a greater significance on this area and seek clean alternatives that can help us tread more lightly."

"I do consider the 'Oil Shale Exploration' to be a very serious and pressing matter and something that I will look into further as a priority," de Rothschild wrote. "[I] promise to explore this matter further."