eNergy STOCKS: Oil and gas stocks outpaced gains in the broader sector
Published | 05-Sep-2007
An upgrade of oil giant Royal Dutch Shell (RDSA: 79.80, +2.45, +3.2%) (RDSB:80.22, +2.41, +3.1%) as a longer-term investment play also helped provide an early lift for the sector. The Amex Oil Index (XOI:1,391.22, +25.46, +1.9%) rose 1.8% to close at 1,391, with U.S.-listed shares of Royal Dutch Shell up 3.2% at $79.80.
UBS upgraded Royal Dutch Shell to buy from neutral, citing valuation. "Weaker markets have impacted the Royal Dutch Shell share price and hence we now see attractive upside," the broker said.
Meanwhile, ING upped ratings on Statoil (STO: 29.88, +1.10, +3.8%) and Norsk Hydro (NHY: 38.15, +1.38, +3.8%) . Shares of the Norwegian energy providers each rose nearly 4%.
Hurricane Felix, after slamming ashore on Nicaragua's Miskito coast as a dangerous Category 5 storm, weakened significantly as it moved inland, drenching northern Nicaragua, El Salvador and Honduras. The National Hurricane Center in Miami downgraded Felix to a Category 1 storm late Tuesday, with sustained winds down to 75 miles per hour.
Rounding out the action in sector benchmarks, the Amex Natural Gas Index (XNG: 489.06, +11.86, +2.5%) rose 2.5% to 489.1 and the Philadelphia Oil Service Index ($OSX: 281.51, +7.44, +2.7%) rose 2.7% to 281.5 points. Legacy Reserves (LGCY: 23.81, +0.60, +2.6%) rose 2.6% to $23.81 a share after the Midland, Texas energy partnership set plans to buy oil and natural gas producing properties in the Texas panhandle from private parties for $60.5 million.
by Steve Gelsi
NORWAY: StatoilHydro elects “mixed” board
Published | 23-Aug-2007StatoilHydro becomes one company from Oct. 1st, 2007, and includes the oil and gas assets of the former Norsk Hydro.
Elisabeth Grieg, Grace Reksten Skaugen, Kjell Bjørndalen, Roy Franklin and Kurt Anker Nielsen fill out the board as members until 2010.
Together, they’re two chief execs, a lawyer, two trade-union leaders, a former Paladin Resources chief executive, a CFO, a consultant, a chemistry Ph.D and a process engineer.In a nod to the Norwegian way of doing things, labour is represented on the board by three employee-elected reps of the former Statoil board.
EUROASIA: Total to Get Reserves Under Shtokman Deal
Published | 16-Jul-2007Total CEO Christophe de Margerie and Gazprom deputy CEO Alexander Ananenkov signed a 25-year deal to develop the first phase of Shtokman, a field set to supply huge amounts of gas to Europe and North America when it comes on line within the next decade.
Gazprom CEO Alexei Miller, who remains ill with a kidney ailment, did not attend the signing at Gazprom headquarters, but announced the surprise deal in a statement Thursday.
Total, which had been seeking entry into Shtokman for years, will take a 25 percent stake in the field's operating company. Gazprom has reserved the right to sell a further 24 percent to one or two of the companies still hoping to join the project, but will maintain a 51 percent controlling stake.
It will also hold full control of license holder Sevmorneftegaz and "be the owner of the whole amount of hydrocarbons to be extracted," Miller said in Thursday's statement.
Gazprom and Total provided further details of the deal on Friday, fulfilling analysts' predictions that the French firm would be allowed to book some of the field's reserves in exchange for the huge financial commitment and risk it would undertake during the project's difficult development.
"It's a technicality, but yes, we can book reserves," de Margerie said after the signing, news agencies reported. "In as far as we are taking risks, and when you take risks you can book reserves."
A Gazprom spokesman confirmed that Total would be able to book part of the field's estimated 3.7 trillion cubic meters of gas reserves, but said the exact amount had yet to be decided.
"Total will have a 25 percent stake, but it would be more accurate to say it will be able to book up to 25 percent of the reserves," the spokesman said, declining to be identified in line with company policy. The details of the deal were still being worked out, he added.
Gazprom set up a special purpose vehicle in order to operate the field, allowing it to maintain 100 percent control over license holder Sevmorneftegaz. Sevmorneftegaz general director Yury Komarov also attended the signing. 
The special purpose vehicle, which will organize the design, financing, construction and operation of Shtokman's first phase, will govern the project for 25 years, Total said in a statement after the signing of the framework agreement.
The agreement foresaw the start of "joint project implementation activities" in July 2007, the statement said, without providing further details.
Shtokman, located some 550 kilometers offshore and deep under the Barents Sea, is one the world's largest -- and most difficult -- gas fields.
Analysts had predicted that Gazprom would be forced to reverse its decision in October, when it halted talks on participation by foreign oil companies.
Gazprom insisted afterward that it would only bring in foreign firms as contractors, preventing them from booking reserves -- a key indicator for shareholders.
Norway's Statoil and Norsk Hydro, which are due to be merged Oct. 1, and U.S. firm ConocoPhillips remain in the running for the 24 percent stake that Gazprom could still dole out.
Charlie Rowton, a spokesman for ConocoPhillips, said the company remained interested in participating in the project. "We maintain a steady dialogue with Gazprom, but can provide no further detail," Rowton said in an e-mailed response.
A senior executive at one of the Norwegian firms told Reuters on condition of anonymity Friday that the merging group was optimistic that it could strike a deal.
Analysts say Gazprom's timeline for the project, of gas production by 2013 and LNG production by 2014, is ambitious.
Tags: Sevmorneftegaz,Gazprom,Statoil
RUSSIA: Taps Total for Shtokman. GAZPROM
Published | 13-Jul-2007Gazprom on Thursday invited French energy major Total to help develop the Shtokman project, ending years of wrangling over whether foreign companies would take part in developing one of the world's largest and most difficult gas fields.
The state-run gas company gave Total a 25 percent stake in the field's operating company, Gazprom CEO Alexei Miller said in a statement. A further 24 percent stake could be doled out to one or more foreign companies, but Gazprom would retain a majority 51 percent stake in the project, the statement said.
Norway's Statoil and Norsk Hydro, which are due to be merged in October, and U.S. oil firm ConocoPhillips are the players that remain in the running for the stake.
Total's entry into the project marks an admission by Gazprom that it would be unable to develop Shtokman, a huge field located in the harsh environs of the Arctic Barents Sea, on its own. The field is estimated to hold 3.7 billion cubic meters of gas.
No financial details were disclosed, but the project is believed to cost $20 billion to $30 billion.
Total CEO Christophe de Margerie was due to fly to Moscow for a one-day visit Friday to sign the deal with Gazprom deputy CEO Alexander Medvedev, Total spokeswoman Patricia Marie said by telephone from Paris.
Miller's statement said Gazprom had set up a "special-purpose vehicle" to allow foreign partners into the project. Gazprom would retain full control of license holder Sevmorneftegaz "and will also be the owner of the whole amount of hydrocarbons to be extracted," the statement said.
All the foreign firms short-listed earlier said they would only enter the project with an equity stake that would allow them to book reserves.
Jonathan Stern, director of gas research at the Oxford Institute for Energy Studies, said the new contract format would likely allow the foreign firm to book reserves.
"It is clear they will be compensated, but how they are going to be compensated is unclear," he said. One possibility would see Gazprom selling gas to Total and any future foreign partner through the operating company.
Gazprom unexpectedly shut down bidding for the project in October, after years of negotiations. The final short-listed firms were Total, ConocoPhillips, Norsk Hydro, Statoil and Chevron. Chevron said in March that it was no longer interested.
Spokesmen for Norsk Hydro and Statoil said they were still in discussions with Gazprom on their entry into the project, but declined to provide details.
The two firms are carrying out negotiations with Gazprom together, Statoil spokesman Ola Morten Aanestad said.
"We are looking at this together with Norsk Hydro since we will be a merged company on October 1," he said by telephone from Oslo.
The new firm, provisionally named StatoilHydro, will be 62.5 percent owned by the Norwegian state, a figure due to rise eventually to 75 percent.
The announcement of Total's entry into Shtokman came one day after Putin held telephone talks with French President Nicolas Sarkozy.
The two men "discussed trade and economic cooperation projects, including in the fuel and energy sector" during their talks Wednesday, a statement on the Kremlin web site said.
Analysts said it was unclear what Total's entry into the project would bring the French energy firm.
It has come under fire for purported environmental violations at the northern Kharyaga oil field, which it runs under a production sharing agreement, or PSA, with the government. It owns 50 percent of the project, while Norsk Hydro holds 40 percent and the Yamal-Nenets regional government holds the rest.
With oil prices surging above $70 per barrel, Putin has expressed his displeasure with PSAs that were signed in the 1990s to invite foreign participation in the unstable Russian economy.
The state also holds PSAs with ExxonMobil at Sakhalin-1 and with Shell at Sakhalin-2, which Gazprom joined as a majority partner last December after months of pressure from environmental authorities.
A Gazprom spokesman, who requested anonymity in line with company policy, said KharyagaShtokman talks. was not discussed as part of the
In May, Rosneft CEO Sergei Bogdanchikov said the company was seeking to boost its cooperation with Total in and outside Russia. The two companies previously fell out over Rosneft's decision to boot the French company out from developing the Vankor fields in east Siberia.
Valery Nesterov, an oil and gas analyst at Troika Dialog, said Gazprom had chosen Total because of its experience with liquefied natural gas and of working deep offshore both in the North Sea and West Africa.
Gazprom plans to produce 23.7 bcm of gas from Shtokman for pipelines to Europe by 2013, with LNG production likely aimed at the North American market starting the next year.
"Total controls 40 percent of global LNG capacity," Nesterov said. "And it's a company with very important experience in the offshore business and working in harsh environments."
The French company owns six regasification plants around the world and owns capacity rights to an LNG plant in Louisiana, said Marie, the Total spokeswoman.
Despite the Kremlin's uneven relations with Washington, ConocoPhillips, which owns a 20 percent stake in LUKoil, could still be offered a stake in the project.
"Conoco has a chance to participate," Nesterov said. "It would be slim if Gazprom opted for just one more partner -- then it would be the Norwegians."
On Wednesday, Russia and Norway signed a deal demarcating their border in the Barents Sea, an area believed to be rich in hydrocarbons.
The only development in the region for now is Statoil's Snoehvit project, which is due to come online this fall to supply LNG to the United States. That development, smaller and located in conditions less harsh than those found at Shtokman, has already been delayed by at least one year.
Gazprom has been aggressively seeking to break into the LNG market, with its move into Sakhalin-2 and its decision to retain 100 percent ownership of Shtokman's reserves.
Yet analysts said Gazprom's proposed schedule for Shtokman appeared ambitious.
"If they get the first gas by 2015, it would be a miracle," said Stern of the Oxford Energy Institute.
Via: The Moscow Times
by
Blogalaxia Tags: Statoil,Oxford,Total
ALASKA: Huge Shell drilling programme heralds scramble for the Arctic
Published | 07-Jul-2007Shell is preparing its biggest exploration programme in the Arctic Ocean off Alaska for more than a decade, a move that could establish a new frontier for the oil and gas industry.
The Anglo-Dutch energy giant expects to start a controversial three-year programme next month with a small armada of ships drilling a dozen wells in the Beaufort Sea 30 miles off the Alaskan coast.
Industry experts have claimed that it could spark a rush into one of the world’s biggest untapped energy reserves. Authorities believe that the Beaufort Sea contains eight billion barrels of oil and nearly 30 trillion cubic feet of gas. Despite fierce opposition from local communities and environmentalists, the US Minerals Management Service gave Shell the green light for the venture in February.
It is understood that Repsol of Spain, Norsk Hydro of Norway and Conoco-Phillips of the US are ready to follow Shell if the drilling proves successful. BP already operates the North Star field on the coastline of Alaska’s North Slope but Shell’s exploration activity is 20 to 30 miles closer to the Arctic fringe.
Malcolm Brinded, Shell’s chief executive of exploration and production, said: “There has been drilling there, there has been exploration there, but this is a return to make a new charge at it. Some people say that 25 per cent of the world’s undiscovered hydrocarbons sit in the Arctic. I think that may be optimistic but if it’s half right then it’s worth exploring. It has the right ingredients to be a good energy play and the world needs some new energy plays.”
Shell highlighted the huge potential of Alaska’s Arctic waters at a results presentation earlier this year. Super-majors such as Shell left the region in the 1990s after exploration in the Beaufort and Chukchi Seas but near-record oil and gas prices and the availability of new technologies mean it is now economical to return.
One of Shell’s first priorities will be to gauge the potential of the Sivulliq prospect, the new name for the Hammerhead discovery made by the group and Unocal in 1986. The campaign reflects a growing emphasis at Shell to differentiate itself from rivals by using technical knowhow to discover new hydrocarbon regions, given increased competition for “easy barrels” in mature provinces such as the North Sea.
After the reserves scandal three years ago, when Shell admitted overstating the proven reserves on its books by 20 per cent, the group has increased its exploration budget to £1 billion a year and halved the number of countries on its list of prospects. It is spending nearly £500 million a year on researching new seismic and production techniques such as gas injection. The group believes that its experience at the Sakhalin offshore field in the far east of Russia has given it vital experience in dealing with ice flows and Arctic conditions.
Shell also fine-tuned soundproofing critical in allowing it to drill at Sakhalin, which is a major feeding ground for endangered whales. That is also a key problem in the Beaufort Sea.
The group still faces major hurdles in Alaska. Local authorities have threatened litigation and the group has yet to reach a Conflict Avoidance Agreement with the local Inupiat Inuit people. Whalers have requested that Shell cease operations for up to 30 days in September, the time that bowhead whales migrate along the Northern Alaskan coast.
However, Mr Brinded insisted that Shell was doing all it could to address the concerns. “We have spent a huge amount of effort on environmental management and engaging with local communities,” he said. “We have really prepared for this summer.”
Arctic Ocean, 
Alaska, 
Shell, 
GroupAMERICA: Oil Deals and Debacles
Published | 19-May-2007Matrix,Gulf of Mexico,Nigeria
Read more | Digg story
by Kurt Wulff (McDep Associates)
Statoil (STO), the pending partial acquirer of buy-recommended Norsk Hydro (NHY) is buying leases in Alberta thought to contain two billion barrels of bitumen (extra heavy oil), recoverable by steam injection. A dozen of our buy-recommendations have exposure to the upside of Canadian oil sands.
European major ENI (E) is buying the offshore oil and gas assets of utility Dominion Resources (D) for $4.90 a thousand cubic feet (mcf) of proven reserves compared to our estimate of $4.80 an mcf of present value in buy-recommended offshore producer Energy Partners (EPL). A debacle for Bank of Montreal in futures trading following Amaranth last year reinforces our comfort in not trying to outguess the futures market in anticipating short-term natural gas price.
Yet, we believe there is an investment opportunity in buying and holding longer-term natural gas futures as well as in buy-recommended natural gas stocks because the discount to oil looks too wide to us.