Daily Archives: March 17, 2009

Carola Hoyos

Perhaps Europe can now stop worrying quite so much about Russia and Algeria, its two biggest natural gas suppliers, becoming too chummy. When it comes to oil at least, Chakib Khelil, Algeria’s energy minister, made clear the two did not see eye to eye. “Of course we are disappointed,” he said today about Russia’s unwillingness to cut its production voluntarily. “Wouldn’t you be with your neighbour if you were cleaning in front of your house and he was pouring down dirt.” He dismissed Russia’s ideas of closer cooperation through a memorandum of understanding and revealed the true value of an Opec MOU. “We sign MOUs with anyone. In Opec, what counts is membership.”

Kate Mackenzie

On Energy Source today:

Shell strategy update: 2009 dividend, gearing, renewables and more – see also FT.com news story

US hybrid car sales fall faster

Russia’s stick in the eye for Opec

Elsewhere:

Nuclear: A deep, deep storage solution for nuclear waste (WSJ)

Opec: As irrelevant as ever (SeekingAlpha)

Cars: California utility prepares for surge in plug-in cars (USA Today)

Environment: Going green in Amsterdam – public and private investment in smart grids and weatherization; Robert Rapier writes about his year without a car in the city (Der Spiegel/BusinessWeek)

Carbon capture and clean coal: Why the challenges it presents are manageable (Energy Outlook); stimulus money speeds clean coal projects (NY Times)

Infrastructure: The seven most ridiculous roads being built with stimulus money (Infrastructurist)

Emissions: UK carbon targets ‘too weak’, say Tyndall Centre for Climate Change researchers, Stimulus too weak, say MPs (Guardian)

The economy: Daniel Yergin reviews lectures from Larry Summers, Ben Bernanke and Christine Romer at Brookings/CFR

Ed Crooks

Updated – More on gearing, production, renewables and Australian coal bed methane after the jump

Jeroen van der Veer has been setting out his core message: the world is in recession and this is “a difficult financial environment indeed,” but Shell is staying focused on the long term.

It is investing in projects to come on stream over the next few years that will lift Shell’s production by 2-3 per cent per year between now and 2012.

Kate Mackenzie

Despite the US government’s determination to increase efficiency standards and become energy independent, hybrid cars sales in the US are falling at a ‘breakneck pace’ – even faster than overall car sales, reports the LA Times:

Last month, only 15,144 hybrids sold nationwide, down almost two-thirds from April, when the segment’s sales peaked and gas averaged $3.57 a gallon. That’s far larger than the drop in industry sales for the period and scarcely a better showing than January, when hybrid sales were at their lowest since early 2005.

Ed Crooks

Updated: Jeroen van der Veer has been setting out his core message: the world is in recession and this is “a difficult financial environment indeed,” but Shell is staying focused on the long term.
It is investing in projects to come on stream over the next few years that will lift Shell’s production by 2-3 per cent per year between now and 2012.

He highlighted two projects in Qatar, Pearl gas to liquids and QatarGas 4, due to finish construction around the end of 2010, as examples of Shell’s growing portfolio of “long life” assets, that can sustain a production for many years or even decades, rather than declining the way conventional oil fields do.

Where the short term does come inn van der Veer says, is in terms of cash management. Soaring costs and plunging oil prices are squeezing Shell’s cash flow, as they are for all oil companies.

He stressed several times the virtue of a “flexible” balance sheet. In other words, he expects gearing to rise.

Early takes on today’s strategy presentation come from Reuters, which says Jeroen van der Veer, the chief executive, has indicated the dividend will grow by at least 1 per cent this year. BP has warned it will freeze its dividend. Reuters also reports that reserves were flat between 2007 and 2008.

Mr van der Veer suggested the industry was “bouncing along the bottom of the upstream and the downstream cycle in 2009″.

Shares were off almost 2 per cent at the time of writing.

Shell also repeated its warning that it was being investigated under the US Foreign Corrupt Practices Act, which prohibits corporate bribery anywhere in the world by companies operating in the US.

More coming soon from the company’s strategy presentation, which is under way now.

Carola Hoyos

Russia will next month cut by 4.8 per cent its crude oil export duty, Viennese analyst firm JBC Energy quotes an official from the country’s finance ministry as saying. That drops the duty to $15.09 per barrel and is a stick in the eye for Opec. The move to try to stimulate Russian oil exports in order to help its struggling oil companies comes just days after Russian officials gave Opec a long lecture about cooperation. If it wasn’t clear on Sunday that Russia had no intention – depsite its hour-long speech – of voluntarily cutting its oil production to help Opec boost prices, it is now.

James Fontanella-Khan

Energy news from elsewhere:

- Petrobras sees world oil at $40-$50/bbl in 2009 (Reuters)

- Bidding begins on potential UK reactor sites (Platts)

- Colombia’s Ecopetrol buys stake in pipeline for $418m (CnnMoney)

- New generation of nuclear power stations ‘risk terrorist anarchy’ (Guardian)

James Fontanella-Khan

Energy news from the FT:

- Rio shareholder attacks proposed Chinalco deal
Largest institutional investors criticised the mining group $19.5bn deal

- Lombard:Rio and Chinalco dig in for a long war with investors
The only way to wring a compromise from Rio and Chinalco is to keep fighting

- Lex: Oil prices
Higher energy prices could choke off any global economic recovery

- Chinese aluminium group files for liquidation
Battling with foreign investors over a proposed $1.2bn debt restructuring

- RWE Npower to cut electricity bills
Last of the energy giants to cut its bills for UK customers

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