Shell News – 2009

News summaries from Shell company press releases and from unaffiliated news agencies are provided below. The summaries are sorted by month and are further categorized as upstream news, downstream news, and business/finance news.

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January

• Upstream news:

• Downstream news:

• Business/Finance news:

- At 07.00 GMT (08.00 CET and 02.00 EST) on Thursday 29 January, 2009 Royal Dutch Shell plc will release its fourth quarter and full year results and fourth quarter interim dividend announcement for 2008.

- At 07.00 GMT (08.00 CET and 02.00 EST) on Thursday 29 January, 2009 Royal Dutch Shell plc released its fourth quarter and full year results and fourth quarter interim dividend announcement for 2008.

- A sharp drop in oil prices and the global economic crisis led to the first quarterly decline in 10 years for Royal Dutch Shell as the oil giant posted a $2.8 billion loss and warned of “challenging” market conditions ahead. The loss was in contrast to a net profit of $8.47 billion in the fourth quarter a year ago. Shell’s chief executive, Jeroen van der Veer, said in a statement that the company would continue to focus on paying a dividend and added that, given the slump in demand for oil and oil products, “we delivered satisfactory performance” in the fourth quarter. The decline in the fourth quarter meant that net profit for the year of 2008 slipped 16 percent, to $26.28 billion. The last quarterly loss for Shell had been the fourth quarter of 1998. “Our strategy remains to pay competitive and progressive dividends, and to make significant investments in the company for future profitability,” Mr. van der Veer said. “Industry conditions remain challenging, and we are continuing the focus on capital and cost discipline.” After several quarters of record earnings, energy companies are being hit by an oil price that dropped to its lowest level in four years in December. Goldman Sachs analysts said earlier this month that the price would continue to fall until inventories stopped building and demand stopped falling. At the same time, exploration and other costs remain high, forcing companies to delay or cut some investments. Shell postponed an investment decision on the second-phase expansion of an oil sands project in Canada in October. The company said it had still earmarked $31 billion to $32 billion for projects this year. The Canadian oil sands project is part of Shell’s attempt to make up for lost production in other areas and to meet its goal of increasing production levels in the long term. “The two main challenges are the oil price and secondly to keep a credible investment strategy and it’s doing that,” said Jason Kenney, an oil industry analyst at ING in Edinburgh. Shell increased the dividend for the fourth quarter by 11 percent, to 40 cents a share, and said it expected to pay a dividend of 42 cents a share for the first quarter. Shell’s shares remained unchanged. They fell 15 percent last year. A rival, BP, is to report earnings next month while Exxon Mobil and Chevron will announce earnings. ConocoPhillips reported a $31.8 billion loss for the fourth quarter on Wednesday as a slump in energy prices hurt the value of its assets. The company announced plans earlier this month to cut 4 percent of its work force, or about 1,300 jobs. Shell’s fourth-quarter loss meant that net profit for the year of 2008 slipped by 16 percent, to $26.3 billion. Revenue in the fourth quarter fell 24 percent, to $81 billion. Earnings at its refining division dropped 34 percent, to $582 million, in the quarter and profit from exploration and production fell 24 percent, to $3.71 billion.

February

• Upstream news:

• Downstream news:

- The drive is on to make tomorrow's transport fuels and lubricants on a large scale from clean-burning natural gas. Construction of the world's largest gas to liquids (GTL) plant, Pearl GTL in Qatar, is a major step towards meeting the world’s growing demand for cleaner energy. The plant, a joint development by Qatar Petroleum and Shell, will process about three billion barrels-of-oil-equivalent over its lifetime from the world’s largest single non-associated gas field, the North Field, which stretches from Qatar’s coast out into the Gulf. The North Field contains more than 900 trillion cubic feet of gas, about 15% of worldwide gas resources. Pearl GTL will produce cleaner-burning diesel and kerosene, base oils for top-tier lubricants, a chemical feedstock called naphtha, which is used to make plastics, and normal paraffin, which is used to produce detergents. It will produce enough fuel to fill over 160,000 cars a day and enough synthetic base oil each year to make lubricants for more than 225 million cars.

- President Dmitry Medvedev opened Russia’s first liquefied natural gas (LNG) plant built by Sakhalin Energy Investment Company Limited (Sakhalin Energy). The LNG plant is the heart of the Sakhalin II Project, one of the largest integrated oil and gas projects in the world. The innovative and challenging Sakhalin II construction is near completion, and a new major energy source is now coming onstream. The infrastructure includes three offshore platforms, an onshore processing facility, 300 km of offshore pipelines and 1600 kms of onshore pipelines, an oil export facility and the LNG plant. This frontier project lays the foundation for Russia to become a leading energy exporter to the highly competitive energy markets of the Asia-Pacific region. LNG exports are expected to begin shortly. The strategic importance of the Sakhalin II project for the region was reflected in the distinguished guests at the ceremony, which included Taro Aso, the Prime Minister of Japan, Prince Andrew, Duke of York, Maria van der Hoeven, the Minister of Economic Affairs of the Netherlands, other high-ranking officials and guests from Russia and countries that are co-partners in the project (the UK, the Netherlands and Japan). Among the guests of honour - Sakhalin LNG customers, representatives from international financial institutions and senior executives of the Sakhalin Energy shareholders – OAO Gazprom, Royal Dutch Shell plc, Mitsui & Co., Ltd. and Mitsubishi Corporation. Nearly all of the 9.6 million tonne annual production capacity of the LNG plant has already been committed in long-term contracts to supply customers in Japan, Korea and North America. Sakhalin LNG will be the first Russian gas supplied to these regions. It paves the way for Russia to new markets in the Asia-Pacific region and gives the country the status of a global energy power.

• Business/Finance news:

- The British energy giant BP became the latest oil company to report a fourth-quarter loss and warned that demand would probably continue to drop as the global recession deepened. BP, Europe’s second-biggest oil company behind Royal Dutch Shell, had a loss of $3.3 billion, or 18 cents a share — its first quarterly deficit in seven years. BP had a profit of $4.4 billion, or 23 cents a share, in the period a year earlier. The chief executive, Anthony B. Hayward, warned that record earnings might not return for some time. Oil giants like Shell, ConocoPhillips and Total reported declining revenue or losses in the fourth quarter as the price of oil dropped to the lowest level in four years. BP said an oil price of about $60 a barrel was “appropriate” because it would allow the company to invest in projects to guarantee supplies once demand recovers. Oil was trading Tuesday at about $40 a barrel. BP also cited adverse exchange rates, booking a $700 million loss at its Russian joint venture TNK-BP, which is still without a chief executive after an earlier dispute between BP and its Russian billionaire partners. BP shares fell 2.22 percent in London and are down 13 percent in the last 12 months. Shares in other oil companies also declined in the last year as the global recession continued to weigh on oil prices. Shell posted its first quarterly loss in 10 years last week while Total of France reported a 25 percent drop in revenue. BP said it would pay a dividend of 14 cents for the quarter, 3.7 percent more than a year ago. Mr. Hayward said he planned to continue with the cost-cutting program he started when he took over almost two years ago and to improve earnings by adding production, a difficult task given the high costs of new projects.

- Pump prices bumped higher over the last week, a federal report showed, on anxiety over a possible refinery strike that would affect more than half the nation's capacity to turn oil into gasoline, diesel and other products. But oil futures prices fell partly because traders anticipated a labor contract agreement would be reached between refiners and the United Steelworkers union. Negotiations continued, with both sides agreeing to roll the old contract forward another 24 hours each day as long as progress was being made, a union spokeswoman said. That helped push light, sweet crude for March delivery down $1.60 to $40.08 a barrel on the New York Mercantile Exchange. More bad economic news also prompted traders to sell on the assumption that a deeper recession would squelch oil demand. Oil futures are stuck between $38 and $48, analysts said, despite indications that producers were reining in output to try to shore up prices that have plunged from July's record of more than $147 a barrel. The price of a gallon of self-serve regular gasoline climbed 5.4 cents nationally to an average of $1.892, according to the Energy Department's weekly survey of filling stations Monday. At this time last year, the U.S. average was $2.978 a gallon. In California the average rose 1.8 cents to $2.113 a gallon, still far below the year-earlier average of $3.107 a gallon. Prices at the pump tend to lag behind movements in oil prices, which is how refinery labor talks had the opposite effect on gasoline and oil prices. Work toward a new accord between the United Steelworkers and lead negotiator Shell Oil Co. was said to be making slow progress. The biggest points of contention, union spokeswoman Lynne Baker said, were healthcare benefits and health and safety issues. The steelworkers union is negotiating on behalf of about 24,000 unionized refinery and pipeline workers across the United States who say they are prepared to walk off the job if the talks reach an impasse. Energy experts differed on whether workers would strike. Tom Kloza, chief oil analyst for the Oil Price Information Service, could recall only one refinery shutdown from failed labor talks in the 30 years he has followed the fuel industry. "A strike would be very atypical," Kloza said. One labor expert saw evidence that labor was beginning to throw its weight around. UC Santa Barbara labor historian Nelson Lichtenstein pointed to the refinery contract talks, efforts by the International Brotherhood of Teamsters to organize truck drivers at U.S. seaports and the recent strike threat from utility workers who reached a tentative contract agreement Saturday night with Southern California Gas Co. This is happening, Lichtenstein said, because unions perceive a friendlier climate in Washington with a new president, disillusionment with corporate America and a sense that the economic mess wouldn't be so severe had there been better management or more input from workers. Union leaders also believe that labor's voice needs to be raised at a time when hundreds of billions of dollars of economic stimulus money is being negotiated, Lichtenstein said. "The unions are viewing this as a once-in-a-lifetime opportunity to regain some of the ground they lost," he said. "You might think that a recession is the worst time to try to make gains from employers, but there is a general sense that we are here in part because of a lot of corporate greed and corporate incompetence."

- Refiners and union employees reached a tentative contract agreement, averting a strike that would have idled as many as 30,000 workers who produce almost two-thirds of the gasoline, diesel and other fuels made in the U.S. The settlement means there will be no interruption in refinery operations, which would have affected product supply in advance of the gasoline driving season and probably led to higher prices. The union and Royal Dutch Shell, which represented employers, agreed to terms after 12 days of meetings in Austin, Texas, United Steelworkers International Vice President Leo W. Gerard said. The union said it didn't win the safety improvements it sought.

March

• Upstream news:

- As part of its annual review of strategy, Shell said it is continuing with plans to build new upstream and downstream capacity, while managing the near-term challenges of the global economic slowdown. Shell is taking a prudent approach. Long-term oil and gas fundamentals remain positive, but the industry is facing a sharp downturn in energy prices at a time when costs are high by historical standards. Jeroen van der Veer, Royal Dutch Shell’s Chief Executive, commented: “These are testing times in the oil and gas industry. Whilst short-term measures are important, we keep our long-term perspective, and continue to believe that energy needs over the long term provide a positive context for Shell’s investment programmes today.“ The challenge in Upstream is to produce new barrels to offset natural field decline, and to create new growth. In Downstream, we need to balance the continued demand from customers and governments for cleaner products, with the challenges to the industry from the cost of supply.” “The key to success sits with operational excellence, technology, project management and financial capacity, and I am pleased with the capabilities we have built in Shell,” he said. Shell launched very few new projects in 2007-08, to avoid the peak in the cost cycle. This pause, combined with Shell’s global scale, gives new opportunities to reduce supply chain costs ahead of launching new projects. Shell has balance sheet flexibility to maintain investment and grow dividends in the downturn, and to fund future growth projects. Shell makes long-term investments to create long-term shareholder value.

• Downstream news:

- Royal Dutch Shell plc and Codexis, Inc. announced an expanded agreement to develop better enzymes that could accelerate commercialisation of next generation biofuels. Shell also increased its equity stake in Codexis and will take an additional seat on the company’s board. As part of the agreement, Codexis will work closely with Shell and Iogen Energy Corporation to enhance the efficiency of enzymes used in the Iogen cellulosic ethanol production process. The world-leading Iogen demonstration plant in Ottawa, Canada currently produces hundreds of thousands of litres of cellulosic ethanol from agricultural residue, such as wheat straw.

- The first Russian LNG cargo for delivery to Japan has been successfully loaded from the Sakhalin II LNG plant into the Energy Frontier LNG carrier. The Energy Frontier left the Prigorodnoye port on 29 March for the Sodegaura terminal in Tokyo Bay, with a cargo of some 145 thousand cubic metres of LNG intended for two of the Company’s foundation customers - Tokyo Gas and Tokyo Electric. The LNG was loaded through the 805-metre long jetty at the Prigorodnoye port, which was purpose built for the year-round export of liquefied natural gas (LNG) and oil. With the start of LNG production and off-loading and year-round oil deliveries, which began in December 2008, a new major Asian energy source is now on stream. Today Sakhalin LNG is produced at train 1 with train 2 scheduled to come on stream later this year. This year and 2010 will see a gradual ramp-up to full production capacity. The newly built Sakhalin II infrastructure includes three offshore platforms, an onshore processing facility, 300 km of offshore pipelines and 1,600 kilometres of onshore pipelines, an oil export facility and the LNG plant. Practically all of the 9.6 million tonnes of annual production capacity of the LNG trains 1 and 2 has already been committed in long-term contracts to supply customers in Japan, Korea and other markets. Sakhalin LNG is the first Russian gas supplied to these regions and the establishment of the new export route confirms the country’s status of a global energy power.

• Business/Finance news:

- Crude oil reached its highest closing price since January on concern that oil producers might agree to hold back more production when they meet in Vienna. But the cost of a gas tank fill-up still provided a measure of relief in the midst of otherwise gloomy economic news. The average U.S. price of a gallon of self-serve regular gasoline climbed to $1.941, up 0.7 of a cent from the previous Monday, according to the Energy Department's weekly survey of filling stations. A year earlier, that same gallon of gasoline would have cost $3.225. California's average rose by 0.7 of a cent to $2.196 a gallon, far below the year-earlier price of $3.537. Tom Kloza, chief oil analyst for the Oil Price Information Service in New Jersey, said that motorists could expect to see a steady rise in gasoline prices to $2 to $2.20 a gallon nationally over the next few months and to $2.25 to $2.50 a gallon in California because of rising demand and the added expense of producing summer-blend gasolines. In New York futures trading, crude oil for April delivery finished up $1.55 at $47.07 a barrel, the highest close since Jan. 6. The Organization of the Petroleum Exporting Countries was giving out mixed signals during the day, said Phil Flynn, senior market analyst for Alaron Trading Corp. in Chicago, but the gist of the message was less oil production for world markets. Flynn said that probably would come from new reductions or better compliance with the cuts that OPEC announced last year. Upward pressure on the commodity also was coming from two other sources, Flynn said. Nigeria reported that another recent militant attack on a Shell Oil Co. oil pipeline had forced it to halt deliveries to several customers. Nigeria's military also claimed Monday to have thwarted a plot to attack a Chevron Corp. facility and its pipelines in the oil-rich Niger Delta. Nigeria is an important U.S. supplier of light, sweet crude that has already seen its daily production slashed by 600,000 to 2 million barrels a day. In addition, traders were nervous about escalating tensions between U.S. and Chinese ships in the South China Sea, he said. The Defense Department said Monday that five Chinese vessels "shadowed and aggressively maneuvered close" to an unarmed U.S. reconnaissance ship Sunday in the South China Sea, closing to within 25 feet.

- On Tuesday, 17 March 2009 Royal Dutch Shell plc will give an update on the Royal Dutch Shell group strategy. All related materials will be posted on www.shell.com/investor on 17 March 2009.

- The Board of Royal Dutch Shell plc announced that Mr Maarten van den Bergh will be retiring as Non-Executive Director at the Annual General Meeting of Shareholders on 19 May 2009. He has served the Company for 41 years of which the last 9 years as a Non-Executive Director. The Board also announced the proposed election of Mr Jeroen van der Veer as Non-Executive Director, after his retirement as Chief Executive on 30 June 2009. It is intended that Mr Van der Veer becomes a member of the Corporate and Social Responsibility Committee of the Board.

- The Board of Royal Dutch Shell plc announced the appointment with effect from 1 May 2009 of Mr. Simon Henry, currently Executive Vice President Finance in Shell International Exploration and Production, as Chief Financial Officer to succeed Mr. Peter Voser who will become the Chief Executive on 1 July 2009. The Board will propose to the Annual General Meeting on 19 May 2009 that Mr. Henry be appointed as Executive Director with effect from 20 May 2009. Mr. Henry, a UK citizen, joined Shell in 1982 as an engineer at a UK refinery. After qualifying as a member of the Chartered Institute of Management Accountants in 1989, he has held a number of senior finance positions in Europe, the Middle East and Asia Pacific.

- On March 17, 2009 Royal Dutch Shell plc filed its Annual Report on Form 20-F for the year ended December 31, 2008 with the U.S. Securities and Exchange Commission.

April

• Upstream news:

• Downstream news:

- Alexey Miller, Chairman of OAO Gazprom’s Management committee, and Jeroen Van der Veer, Chief Executive Officer of Royal Dutch Shell, met at Gazprom Headquarters in Moscow. During the meeting the parties announced the signing of agreements concerning LNG and pipeline gas supplies. The agreements include the purchase of LNG by both Shell Eastern Trading LTD and Gazprom Global LNG from Sakhalin Energy Investment Company. Deliveries to Gazprom and Shell begin in 2009 and will last until 2028, totaling 1 mtpa each to Gazprom and Shell at plateau. The agreements also include a new pipeline gas agreement for the delivery of an equivalent volume of gas to Shell in Europe. Through this 20-year agreement Shell will be able to strengthen the diversification and flexibility of its supply portfolio and its marketing position in the European gas market. As part of the transaction, Gazprom affiliates, under long-term assignment from Shell, will take capacity in Sempra's Energia Costa Azul LNG import terminal in Baja California, Mexico, and pipeline capacity to enable gas to be transported to Southern California.

• Business/Finance news:

- At 07.00 BST (08.00 CEST and 02.00 DST) on Wednesday 29 April, 2009 Royal Dutch Shell plc will release its first quarter results and first quarter interim dividend announcement for 2009.

- The Obama administration wants to reduce oil consumption, increase renewable energy supplies and cut carbon dioxide emissions in the most ambitious transformation of energy policy in a generation. But the world’s oil giants are not convinced that it will work. Even as Washington goes into a frenzy over energy, many of the oil companies are staying on the sidelines, balking at investing in new technologies favored by the president, or even straying from commitments they had already made. Royal Dutch Shell said last month that it would freeze its research and investments in wind, solar and hydrogen power, and focus its alternative energy efforts on biofuels. The company had already sold much of its solar business and pulled out of a project last year to build the largest offshore wind farm, near London. BP, a company that has spent nine years saying it was moving “beyond petroleum,” has been getting back to petroleum since 2007, paring back its renewable program. And American oil companies, which all along have been more skeptical of alternative energy than their European counterparts, are studiously ignoring the new messages coming from Washington. “In my view, nothing has really changed,” Rex W. Tillerson, the chief executive of Exxon Mobil, said after the election of President Obama. “We don’t oppose alternative energy sources and the development of those. But to hang the future of the country’s energy on those alternatives alone belies reality of their size and scale.” The administration wants to spend $150 billion over the next decade to create what it calls “a clean energy future.” Its plan would aim to diversify the nation’s energy sources by encouraging more renewables, and it would reduce oil consumption and cut carbon emissions from fossil fuels. The oil companies have frequently run advertisements expressing their interest in new forms of energy, but their actual investments have belied the marketing claims. The great bulk of their investments goes to traditional petroleum resources, including carbon-intensive energy sources like tar sands and natural gas from shale, while alternative investments account for a tiny fraction of their spending. So far, that has changed little under the Obama administration. “The scale of their alternative investments is so mind-numbingly small that it’s hard to find them,” said Nathanael Greene, a senior policy analyst at the Natural Resources Defense Council. “These companies don’t feel they have to be on the leading edge of this stuff.” Perhaps not surprisingly, most investments in alternative sources of energy are coming from pockets other than those of the oil companies. In the last 15 years, the top five oil companies have spent around $5 billion to develop sources of renewable energy, according to Michael Eckhart, president of the American Council on Renewable Energy, an industry trade group. This represents only 10 percent of the roughly $50 billion funneled into the clean-energy sector by venture capital funds and corporate investors during that period, he said. “Big Oil does not consider renewable energy to be a mainstream business,” Mr. Eckhart said. “It’s a side business for them.” Shell, for example, said it spent $1.7 billion since 2004 on alternative projects. That amount is dwarfed by the $87 billion it spent over the same period on its oil and gas projects around the world. This year, the company’s overall capital spending is set at $31 billion, most of it for the development of fossil fuels. Industry executives contend that comparing investments in oil and gas projects with their research efforts in the renewable field is misleading. They say that while renewable fuels are needed, they are still at an early stage of development, and petroleum will remain the dominant source of energy for decades. In its long-term forecast, Exxon says that by 2050, hydrocarbons — including oil, gas, and coal — will account for 80 percent of the world’s energy supplies, about the same as today. “Renewable energy is very real,” David J. O’Reilly, the chief executive of Chevron, said in a speech in New York last November. “We need it. It will be an essential part of the future I envision. But it’s not realistic to suppose we can replace conventional energy in a timeframe that some suggest.” Chevron has spent about $3.2 billion since 2002 on “renewable and alternative energy and energy efficiency services,” according to Alexander Yelland, a spokesman. It plans to spend $2.7 billion in the three years through 2011 on a variety of projects, including a business that helps improve energy efficiency for companies and government agencies, he said.

- The oil company Royal Dutch Shell said that it had reached a $5.8 million settlement over claims of air pollution at its Deer Park refinery near Houston. The proposed settlement would require Shell to reduce emissions from air pollutants from its plant by 80 percent within three years, upgrade chemical units and reduce gas flaring. The agreement is subject to review by the Environmental Protection Agency and the Justice Department. It must also be approved by the United States District Court for the Southern District of Texas, where the complaint was filed. Shell was sued last year by Environment Texas Citizen Lobby and the Sierra Club, claiming violations of the Clean Air Act. The suit contended there had been more than a thousand instances of illegal pollution at the plant since 2003, releasing a total of five million pounds of air pollutants into the atmosphere, including toxic chemicals like benzene and 1,3-butadiene, as well as sulfur dioxide and oxides of nitrogen. The agreement focuses on reducing “upset emissions,” which are defined as excess emissions occurring outside of routine operations, like equipment breaking down or malfunctioning, and which are not authorized by permit. Shell said the terms of the settlement were “consistent with Shell Deer Park’s objectives and prior activities to reduce upset emissions at the site.” The Deer Park refinery, a 1,500-acre complex on the Houston Ship Channel, about 20 miles from downtown Houston, is the nation’s eighth-largest oil refinery and one of the world’s largest producers of petrochemicals. The facility is also the third-largest stationary source of air pollution in Harris County, which ranks among the worst in the nation in several measures of air quality, according to the environmental groups. Luke Metzger, director of Environment Texas, said the settlement could provide a new benchmark for operations in the petroleum and refining sector. “Shell will set an example for the rest of the industry that you can control these emissions,” Mr. Metzger said. “We can exert some pressure for the rest of the industry to similarly start to comply.” The penalty will be used to finance environmental, public health and education projects in Harris County, including a project to reduce diesel emissions from school buses, and another to install solar panels on public buildings, according to a copy of the settlement. “We urge other oil and chemical companies in the region to take note of Shell’s willingness to work constructively with us in developing solutions to the problems at the Deer Park facility — problems that are not unique to Shell,” Neil Carman, a clean air specialist at the Sierra Club, said in a statement.

- At 07.00 BST (08.00 CEST and 02.00 DST) on Wednesday 29 April, 2009 Royal Dutch Shell plc released its first quarter results and first quarter interim dividend announcement for 2009. "First quarter 2009 performance was affected by the weaker global economy, with a challenging Upstream and Downstream business environment. As we announced previously, our dividend for first quarter 2009 will be $0.42 per share, an increase of 5%. We continue to make significant investments in the company for future profitability. Industry conditions remain challenging, and our focus is on capital discipline and costs. We are taking a prudent approach to this downturn, focused on sustaining a strong position in the energy landscape. Shell people, operational excellence, good investments and technology are our cornerstones for the future." Jeroen van der Veer, Chief Executive

May

• Upstream news:

- The last major offshore gas well is being completed at the Lunskoye platform in Russia’s sub-Arctic Sea of Okhotsk preparing the way for full production capacity of liquefied natural gas (LNG) at Sakhalin II, one of the world’s largest integrated oil and gas projects. Production at Sakhalin II’s first LNG unit got under way in March 2009 with a flawless start-up programme. Completion of the final gas well - Russia’s largest - is a vital step towards starting operations at its second LNG unit. Full capacity of 9.6 million tonnes a year is expected to be reached in 2010. Sakhalin II is one of the most challenging engineering feats ever achieved. It operates amid some of the world’s harshest conditions in Russia’s far east, an area prone to earthquakes. The project on Sakhalin Island exports LNG and oil to the fast-growing energy markets in the Asia-Pacific region and the west coast of North America. It will meet nearly 8% of Japan’s gas needs and 5% of South Korea’s. The first Sakhalin II LNG cargo delivered arrived in Japan’s Tokyo Bay in April 2009, the first time Russia has exported gas from its eastern borders and the first time it has supplied gas to Japan. Shell is a partner and lead technical adviser to the project’s operator, Sakhalin Energy. Sakhalin II has total resources of some four billion barrels of oil equivalent. At full capacity, the LNG plant would add up to 5% to the world’s current LNG capacity.

- After battling native communities and environmental groups on Alaska’s North Slope over its offshore drilling plans, Royal Dutch Shell said that it was scaling back its exploration program in the Beaufort Sea. The company said it had informed the Minerals Management Service that it was withdrawing its drilling plans for the 2007-2009 period, which expires at the end of the year, and that it plans to file a new, more focused, exploration program soon. In the last year, oil prices have dropped sharply, prompting companies to scale back some of their most expensive drilling programs. And last November, a federal appeals court issued a ruling that blocked Shell’s drilling program after the environmental study conducted by the Minerals Management Service was deemed improper. Environmental groups, including the Alaska Wilderness League, as well as the North Slope Borough, which represents the indigenous Inupiat people, had sued to stop Shell from drilling, claiming that the company’s plans to send icebreakers, drilling ships and an armada of support vessels to conduct seismic surveys might harm bowhead whales, which migrate through the Beaufort Sea twice a year. The decision was seen as a costly setback for Shell, which waged a vigorous campaign to expand offshore exploration in Alaska. The company spent over $2.1 billion to acquire leases in the Chukchi Sea and the Beaufort Sea. Shell said it would soon be filing a new exploration plans for 2010 reflecting the company’s “more focused” drilling plans for Camden Bay. The company said the new plan “specifically addresses concerns articulated by North Slope stakeholders related to the pace of Arctic drilling.” The company said that the new plan would include a one-year drilling program as opposed to the original three-year plan; one drilling rig instead of two; a goal to drill two wells instead of four; and retro-fitting the Frontier Discoverer drilling rig with the best available air-emission technology. The company said that the reduced program would mean fewer jobs and contracting opportunities. “We have listened closely to stakeholders and particularly the concerns around size and pace of exploration plans,” Pete Slaiby, Shell’s general manager for Alaska, said in a statement, “and we have adjusted our plans accordingly.”

• Downstream news:

- The 25th edition of the Shell Eco-marathon Europe has seen a groundbreaking total of seven new records set over the course of the three day event, two of which were beaten the very next day. The records were set in: internal combustion Prototype; internal combustion UrbanConcept overall fuel consumption; lowest CO2 emissions UrbanConcept, and solar energy.

• Business/Finance news:

- The Board of Royal Dutch Shell plc announced that Mrs Linda Cook will resign as Executive Director of the Company on 1st June 2009. She has served the Company for 29 years of which the last 5 years as Executive Director of Gas & Power, Shell Trading, Global Solutions and Technology.

- Shareholders, angered by lofty executive pay in a time of dwindling earnings, turned their wrath on Royal Dutch Shell, voting against compensation packages for senior management, The New York Times’s Julia Werdigier reports from London. The vote at the annual meeting in The Hague of Shell, an oil titan, followed a similar outcome at the general meeting of Royal Bank of Scotland last month. A British shareholder group is urging its members to reject the pay packages of executives of the Lloyds Banking Group at its shareholder meeting next month. Marcus Agius, chairman of the British bank Barclays, also felt the disapproval at the general meeting a month ago when a substantial minority of the company’s shareholders voted against his re-election. Shareholders routinely endorse executive compensation packages for the previous year at annual shareholders’ meetings. The vote is not binding and does not affect what the executives have already earned. But the vote by Shell shareholders against the pay packages for 2008, set by an independent committee, sent a strong message to the company’s executives. “Shareholders are beginning to show their muscles,” said Justin Urquhart Stewart of Seven Investment Management in London. “Their actions may be limited, but they can make a noise and embarrass people, and embarrassment goes a long way in this environment.” Investors holding about 59 percent of Shell’s stock rejected the executive pay plan to protest the payment of bonuses even after the company missed some performance targets. Shell’s profit for last year slipped 16 percent from the year before, to $26.28 billion, after it posted a loss in the fourth quarter because of a sharp drop in oil prices. Shell’s shares fell 13 percent last year, less than the 16 percent drop at rival BP. The Shell chairman, Jorma Ollila, promised to call on shareholders to help review the compensation system. “We as the board take the outcome of this vote very seriously and we will reflect carefully upon it,” he said. Several investor advisory groups, including the Association of British Insurers, has recommended that Shell shareholders consider rejecting the compensation report. Shell justified the pay by saying the targets were missed by only small margins, prompting the company to look at additional criteria to determine executive bonuses. “Shareholders are very wary how executives are paid and are keen to hold remuneration committees to account,” said Erfan Hussain, a spokesman for the Association of British Insurers, which counts Shell investors among its members. After years of approving record bonuses while dividends and earnings climbed, shareholders are now putting pressure on companies across all industries to review their bonus systems. More than a third of BP shareholders voted against the compensation report at the company’s shareholder meeting in April, and 90 percent of investors in Royal Bank of Scotland rejected the pension of the former chief executive, Frederick A. Goodwin. Bellway, the British home builder, had its compensation package rejected by about 59 percent of the shareholders in January. Roger Lawson, communications director of the UK Shareholders’ Association, said that even if it was not binding, a negative vote on pay packages was effective because it happened so infrequently. “If voted against, then directors take notice of that and adjust the pay going forward,” he said.

- Royal Dutch Shell plc ("Shell") announced a series of changes to senior management roles and responsibilities, aimed at sharper focus on operating performance and technology. The changes will be effective as of 1st July 2009. Peter Voser, who takes over from Jeroen van der Veer as Chief Executive Officer on 1st July 2009 said: "This new structure will increase accountability in the company, and improve Shell’s performance on delivering new projects and developing new technologies." He continued: "These changes will increase our focus, accelerate our plans to reduce complexity, corporate overheads and costs, and result in faster decision-making and delivery." Shell’s Upstream activities are currently managed in three separate organizations – Exploration & Production, Gas & Power, and Oil Sands. Upstream will now consist of two businesses: Upstream Americas covering North and South America, and Upstream International covering the rest of the world. Marvin Odum, currently Shell’s Executive Vice President for EP Americas, will become Director for Upstream Americas. Malcolm Brinded, currently Shell’s Executive Director Exploration & Production, will become Executive Director of Upstream International. There will also be changes in Downstream. In addition to the Refining, Marketing and Chemicals businesses, the Downstream portfolio will be expanded to include Trading and Alternative Energy activities in Shell, excluding Wind, which will be part of Upstream. Downstream will continue to be led by Mark Williams as Director. A new business – Projects & Technology – will combine all of Shell’s major project delivery, technical services and technology capability covering both upstream and downstream. It will also oversee Shell’s safety and environment performance. Matthias Bichsel, who is currently Shell’s Executive Vice President for Exploration & Production Technology, will be the Director of this business. Corporate functions will be refocused, with activities reallocated directly into the businesses, or consolidated into the portfolios of the Chief Financial Officer, Simon Henry, and the Human Resources Director (to be re-titled Chief Human Resources & Corporate Officer), Hugh Mitchell. Beat Hess continues as General Counsel, and completes the re-shaped Executive Committee.

- I grew up in a large family in a suburb of Kansas City, Kan. I’m one of six siblings, and we had more than 50 cousins in the community. My grandparents, German immigrants, started a dairy. When I was young, my father and his brother ran the business, and my siblings and I helped out. I learned about business by working there. I did the payroll and worked as a receptionist and in the lab, testing milk. The summer I was 16, I got bored and convinced my father to let me work at a gas station next to the dairy. I pumped gas for the delivery trucks and other customers. I tell people that it was my first job in the oil industry. I was good in math and science and received a scholarship in chemical engineering, unsolicited, from the University of Kansas. After my first year, I realized I wasn’t crazy about the field. Then I took a course in geology and fell in love with the subject. The challenge was to find a major that required geology and had a strong business dimension. I landed on petroleum engineering. I love the industry because it combines technology, economics and a political element. In many countries, the state owns the oil and gas resources and the government controls them. There was only one other woman in my engineering classes. I hung out with the guys and joined them for poker nights. I had learned from growing up in a large family that you have to get along to survive, so being mostly with men was easy for me. In 1980, when I graduated, there was peak demand for petroleum engineers. I had offers from almost every oil company in the country. I joined Shell as a reservoir engineer in the exploration and production area. One of the first requirements is to supervise a process called logging the well on a drilling rig. A crew drills a well and then lowers tools and takes measurements. The data provides information about the rock formations a mile or two below the surface. I was one of the first women to supervise the logging jobs, and was sent to a remote area of Michigan. It was a bit of a shock for both me and the men. The work can take up to three days, and there were no separate accommodations. I slept in the same mud loggers’ trailer as the guys, in one of four bunks. I took the approach that I might not have been comfortable, but the men weren’t either. Today we have separate accommodations for women. My family and I moved to the Netherlands in 1998 for my current position. Having a dual-career family and raising three kids has been one of the hardest things that my husband, Steve, and I have ever done. Once Shell asked me to relocate to California from Houston, so Steve’s company found him a job there, too. Then his company asked him to return to Houston for a promotion, so I asked Shell to accommodate me. The company found a position for me, but a California manager said I needed to recognize this might be the end of my career. That was 20 years ago. Since then, I’ve held a number of executive positions, including C.E.O. of two Shell companies. I redeemed myself in their eyes. I would advise women to keep their options open. Some women may think that they’ll never go back to work after having children, or that they’d never be able to relocate. I would tell them that you just don’t know what curveball life is going to throw you, and your circumstances may change, so don’t close any doors before you have to. I visit the United States about six times a year. I have strong ties to the University of Kansas, and I remain a loyal Jayhawk fan even though I am living overseas. It’s not unusual for me to watch the team’s basketball games on my laptop, at all hours of the night, alone in hotel rooms in the Middle East or Asia.

- Royal Dutch Shell, the largest European oil company, announced a corporate reorganization in a bid to improve its performance before a new chief executive takes the helm. Faced with volatile crude and gas prices, Shell, along with other oil giants, is struggling with the uncertainty of how quickly investments in new projects will pay off. In response, it is cutting costs, speeding up its decision-making and generating new revenue streams. In a statement, Shell said that effective July 1 its “upstream” activities, which cover exploration and production, would become two units: upstream Americas and upstream international. It had previously consisted of three divisions: exploration and production, gas and power, and oil sands. The company would not comment on the number of job reductions it expected from the changes or the expected cost savings. The upstream unit employs 22,000 of Shell’s 102,000 employees in more than 100 countries and territories. Analysts said job losses would probably be limited because some types of engineers and other specialists remain in short supply. Peter Voser will take over from Jeroen van der Veer as chief executive on July 1. “The industry, and Shell, faces considerable challenges, from high costs, volatile energy prices, and competition for new projects,” Mr. Voser said. “We must build on our recent momentum, improve our operating performance and increase the pace of strategy execution, to raise our competitive position.” Marvin Odum, currently Shell’s executive vice president for explorations and production in the Americas, will become director for the upstream Americas unit. Malcolm Brinded, executive director of exploration and production, will become executive director for the international unit. The downstream section, which includes oil refineries, petrochemical plants and petroleum distribution, will be expanded to include trading and alternative energy activities, excluding wind power, which will be part of the upstream unit, Shell said. “I think the plan is mainly aimed to bring some dynamism into the company to better deliver projects over the next 10 to 15 years,” said David G. Stedman, an analyst at Daiwa Securities in London. “With a new person, there’s always new ideas.” In January, Shell posted a $2.8 billion loss for the fourth quarter of 2008, blaming a record drop in oil prices coupled with the global economic crisis. It was the company’s first quarterly loss in 10 years. It returned to profitability in the first quarter, with earnings of $3.49 billion, but that was down from $9.08 billion a year earlier. Shell, like its rivals BP, Exxon and Total, will maintain its investment plans in exploration even though the price of oil remains well below its year-earlier levels, Mr. Stedman said. A strong balance sheet and low debt levels, bolstered by the high crude prices of recent years, has allowed the company to keep up its investments. The reorganization was announced just a day after Linda Cook, one of the most senior women in the global oil industry, said she was stepping down as an executive director of Shell. Ms. Cook, who had headed the group’s gas and power division for the last five years, had been widely seen as a possible successor as chief to Mr. van der Veer.

- Fourteen years after the execution of the Nigerian author and activist Ken Saro-Wiwa by Nigeria’s former military regime, Royal Dutch Shell will appear before a federal court in New York to answer charges of crimes against humanity in connection with his death. The trial will examine allegations that Shell sought the aid of the former Nigerian regime in silencing Mr. Saro-Wiwa, a vociferous critic, in addition to paying soldiers who carried out human rights abuses in the oil-rich but impoverished Niger Delta where it operated. Shell strongly denies the charges. But the trial is the latest in a series of cases aimed at some of the world’s biggest oil companies, asserting misdeeds in developing countries where they were once seen as unassailable. Oil companies are being sued on charges of environmental damage, collusion with repressive governments and contributing to human rights abuses, among others. Chevron, for example, could face up to $27 billion in liability in Ecuador for pollution of the jungle. Exxon Mobil is being sued by Indonesian villagers from the province of Aceh who allege human rights violations committed by soldiers hired to guard a natural gas plant. And these legal challenges are just the latest tests for an industry increasingly hard pressed to find new sources of petroleum. The most prominent case of supposed company complicity — the execution of Mr. Saro-Wiwa and eight other members of the Ogoni tribe — led to fierce protests against Shell, which was already under heavy criticism from environmentalists for its record in the Niger Delta. The event, which ignited worldwide condemnation of Nigeria, prompted changes in Shell’s approach to community relations in Nigeria and elsewhere. While civilian rule has returned to Nigeria, violence in the delta has escalated in recent years, fueled by poverty, corruption and graft. Over the last week, there has been a new round of fighting between government forces and militant rebel groups, which have declared an “all-out war” in the region and threatened the operations of oil companies. The civil suit was brought by relatives of Mr. Saro-Wiwa and other victims of Nigeria’s former military regime, who are taking advantage of a Supreme Court decision that gives foreign victims of human rights abuses a measure of access to American courts. The suit asserts that in the early 1990s, Shell became worried about Mr. Saro-Wiwa’s campaign to protest the impact of oil production throughout the Niger Delta. The suit asserts that Shell feared Mr. Saro-Wiwa’s activities would disrupt its operations and tarnish its image abroad, and “sought to eliminate that threat, through a systematic campaign of human rights violations.” Shell said the allegations were “false and without merit.” In a statement, Stan Mays, a company spokesman, said: “Shell in no way encouraged or advocated any act of violence,” and, in fact, "attempted to persuade that government to grant clemency." The case could have global repercussions for the oil industry, said Arvind Ganesan, the head of the business and human rights practice at Human Rights Watch. In the last decade, oil companies have been under increasing pressure to comply with strict standards of behavior while operating in countries with poor human rights records and few democratic controls. “The lesson here is that these cases aren’t going away,” Mr. Ganesan said. “If a jury found Shell guilty, this would change the behavior of the industry pretty quickly.” The lawsuit was filed by the Center for Constitutional Rights, a New York law firm specializing in human rights, on behalf of Mr. Saro-Wiwa’s son and other plaintiffs who fled Nigeria’s military regime and did not trust they could sue Shell in Nigerian courts even after civilian rule returned in 1999. The current suit was brought under the Alien Tort Claims Act, an arcane law written in 1789 to fight piracy, which is increasingly being used for lawsuits asserting human rights violations that occurred overseas. The Supreme Court ruled 6 to 3 in 2004 that foreigners could use American courts in limited cases, like crimes against humanity or torture. While sovereign states cannot be sued, American courts have accepted that a wide variety of actors, including corporations, can be called to account. So far no corporation has been found guilty under the alien tort law, though human rights lawyers note that several cases are still moving through the court system. In 2004, Unocal, a California oil company accused of using slave labor in the construction of a pipeline in Burma during the 1990s, agreed to compensate villagers there. The terms of the settlement were not made public. Last year, Chevron was cleared of wrongdoing by a jury after being accused of complicity in the shooting of Nigerian villagers who occupied an offshore oil barge in 1998 to protest its environmental record and hiring practices. Shell’s activities in the Niger Delta, a region of mangroves and swamps roughly the size of Maryland where most of Nigeria’s oil is located, have long been criticized by environmentalists. Shell drilled the country’s first successful well in 1956, and has since dominated Nigeria’s oil sector, through decades of civil war, military rule and authoritarian governments. In recent years, protests against government corruption have become more violent. The operations of Shell, in particular, have been come under attack from militant groups seeking a greater share of the country’s oil wealth. For Ken Saro-Wiwa Jr., who returned to Nigeria from exile in 1999, the trial could provide bittersweet vindication of his father’s campaign. “My father always said that one day Shell would be on trial,” said Mr. Saro-Wiwa, who now works as an adviser to the government on community issues. “It’s important for those involved in the conspiracy against my father to be held to account. It’s a communal exorcism, if you like, for Shell to account and bear responsibility for what it did.” The elder Mr. Saro-Wiwa, who founded the Movement for the Survival of the Ogoni Peoples in 1990, was one of the most vocal critics of Shell for the damage done to the delta communities, including gas flaring and the destruction of mangroves to make way for pipelines. According to the lawsuit, a Shell official identified Mr. Saro-Wiwa as being “influential” in organizing the protests and sought the assistance of the Nigerian government to silence him. The company is also accused of paying soldiers who committed human rights abuses and providing them with transportation, including helicopters. During a military raid, one plaintiff, Karalolo Kogbara, was shot by Nigerian troops while she was speaking out against the destruction of crops bulldozed to build a pipeline. “We are not saying that Shell just did business in a bad place,” said Jennie Greene, a lawyer with the Center for Constitutional Rights. “Shell was an actor here. Shell wasn’t just standing by.” Mr. Saro-Wiwa was arrested in 1994 and put on trial before a special military court along with the other Ogoni advocates, on charges that human rights groups and Western governments said were trumped up. Despite international pressure, Shell initially refused to intervene, saying at the time, “the company does not get involved in politics.” The lawsuit charges that Shell bribed at least two crucial witnesses to change their testimony during the trial. It also asserts that Shell’s manager in Nigeria at the time, Brian Anderson, met with Owens Saro-Wiwa, Mr. Saro-Wiwa’s brother and also a plaintiff, and tried to pressure the jailed activist to abandon his struggle in exchange for help in securing his release. Mr. Saro-Wiwa reportedly refused. Shell’s chief executive eventually faxed Gen. Sani Abacha, Nigeria’s military ruler, a request for a pardon after Mr. Saro-Wiwa’s appeal for clemency was denied. By then it was too late: Mr. Saro-Wiwa and the other advocates were hanged on Nov. 10, 1995. Shell denied it had sought to silence Mr. Saro-Wiwa. “Shell attempted to persuade that government to grant clemency; to our deep regret, that appeal — and the appeals of many others — went unheard,” Shell said in its statement. “We were shocked and saddened when we heard the news.”

June

• Upstream news:

- When Iraq puts development rights to some of its largest oil fields up for auction to foreign companies on Monday, the bidding will be a watershed moment, representing the first chance for petroleum giants like ExxonMobil to tap into the resources of a country they were kicked out of almost 40 years ago. Yet, there are widespread doubts about whether Iraq is ready for a sudden infusion of capital from international oil corporations. The country is still not safe. Parliament has not approved a law regulating the oil industry. And oil companies are wary of corruption within Iraq’s Oil Ministry. The oil companies are also somewhat disgruntled, being forced to compete for 20-year service contracts and not the more lucrative production sharing agreements they would prefer. Such agreements would allow them to share directly in the profits from oil production, rather than getting fixed fees. Still, all sides want to move ahead for one simple reason: money. The Iraqi government says that in order to maintain security and pay the salaries of the hundreds of thousands of its employees hired during the past two years, it has to try to exponentially raise oil production, which accounts for about 95 percent of the country’s foreign exchange earnings. Hussain al-Shahristani, Iraq’s oil minister, said his goal was to increase production from the current level of about 2.4 million barrels a day to 6 million barrels in six years. To do that, the government has estimated that its oil sector needs $50 billion in investment on top of the more than $8 billion it has spent during the past several years to try to increase capacity. But production has been declining for years in southern Iraq, which contains about 80 percent of Iraq’s oil. Government officials blame crumbling infrastructure there, while others cite mismanagement. Under the government of Saddam Hussein, many oil-sector employees who held technical jobs were members of the Baath Party. After the American invasion, many of them fled abroad, were arrested or were killed, leaving the ranks severely depleted. Iraqi oil officials acknowledge that as a result of that and mismanagement, oil production and the current bidding process have suffered. Oil corporations have complained quietly about the corruption, mismanagement and continuing violence in Iraq, as well as rules that force them to become partners with Iraqi oil companies. Another contractual requirement dictates that the oil companies that win fields in the auction make payments totaling $2.6 billion to the government. The Iraqi government has described the money as loans that will be paid back once production begins. More ominously for the oil companies, stiff resistance to the coming auction has been building among members of Parliament, oil unions and even officials in the government of Prime Minister Nuri Kamal al-Maliki. Despite the drawbacks, international oil companies see Iraq as critical for business because few other places have as much oil that is untapped and relatively close to the surface, so it can be extracted relatively cheaply. With 115 billion barrels, the country has the world’s third largest proven reserves, trailing only Saudi Arabia and Iran. Indeed, after months of lobbying by Mr. Maliki and other government officials, most of the world’s big oil companies, including ExxonMobil, Royal Dutch Shell, British Petroleum and Chevron, are expected to submit bids. The companies were expelled from Iraq in 1972, after Mr. Hussein nationalized the oil industry. Last year, an Iraqi plan to award six no-bid contracts to Western oil companies was voided amid sharp criticism from several United States senators. In the meantime, the Kurdistan Regional Government signed about 30 contracts of its own with international oil companies, though the central government refuses to recognize them. Each of the six fields open for bidding has more than five billion barrels of oil. Four of the fields are in the south and two are in the northern province of Kirkuk. The auction is scheduled to begin on Monday, and the government hopes to finish subsequent contract negotiations by the end of August.

• Downstream news:

- Customers at a Shell service station will become the first in the world to fill their tanks with gasoline containing advanced biofuel made from wheat straw. For one month starting June 10, the regular gasoline purchased at a Shell service station in Ottawa, Canada will contain 10% cellulosic ethanol. The biofuel is produced locally from non-food raw materials at Iogen Energy Corporation’s demonstration plant, using advanced conversion processes. Iogen and Shell are partners in the plant, which now produces 40,000 litres of fuel per month. Cellulosic ethanol, as an end fuel, is identical to ethanol but it can offer up to 90% less lifecycle CO2 emissions than gasoline. It is a key part of Shell’s strategic investment and development programme in sustainable biofuels.

- Shell is demonstrating its commitment to fuels innovation and the development of sustainable, low-carbon fuels with the blending of 10% cellulosic ethanol into its Shell V-Power race fuel at the 24 Hours of Le Mans race, in France on 13 June, 2009. This will be the first time an advanced biofuel has been used in the gasoline at the 24 Hours of Le Mans race. Cellulosic ethanol, as an end fuel, is identical to ethanol but it can offer up to 90% less lifecycle CO2 emissions than gasoline. The biofuel is produced at Iogen Energy Corporation’s demonstration plant in Ottawa, Canada. Iogen and Shell are partners in the plant.

- Novo-Ogarevo, Open Joint Stock Company ‘Sovcomflot’ and Shell International Trading & Shipping Company Limited (Shell) signed a General Cooperation Agreement. The official signing ceremony was held within the framework of the meeting of Russian Federation Prime Minister, Mr Vladimir Putin, with outgoing Chief Executive Royal Dutch Shell plc, Mr Jeroen van der Veer and his successor from 1st July, Mr Peter Voser. The documents were signed by Mr Sergey Frank, CEO of the Sovcomflot Group of Companies, and Mr Jan Kopernicki, Shell’s Vice President for Shipping. The General Cooperation Agreement covers cooperation between the two companies in potential liquefied natural gas (LNG) shipping projects in Russia, including on the Arctic offshore. The Agreement provides for broadening of cooperation in future Sakhalin II project development, development of joint shipping solutions for natural gas fields on Yamal Peninsula, further improvement of LNG shipping technologies, including in difficult ice conditions, and development of floating storage and regasification units for gasification in remote regions of Russia.

• Business/Finance news:

- Shell agreed to settle a court case in New York related to allegations in connection with the Nigerian military government's execution of Ken Saro-Wiwa and others in 1995, making a humanitarian gesture to set up a trust fund to benefit the Ogoni people. At the same time, the plaintiffs have dismissed all claims made in the litigation against Shell Petroleum NV, Shell Transport and Trading Company Limited and the Shell Petroleum Development Company of Nigeria Limited (SPDC). The settlement and other payments together total $15.5 million, which will provide funding for the trust and a compassionate payment to the plaintiffs and the estates they represent in recognition of the tragic turn of events in Ogoni land, even though Shell had no part in the violence that took place. In addition, they cover plaintiffs’ costs and fees. The trust fund will support initiatives in education, skills development, agriculture, small enterprise development and adult literacy. It will be governed by trustees who will be independent of the plaintiffs and defendants and responsible for delivering the projects. The trust is in addition to the contribution to community development that Shell-run companies make in the Niger Delta (including Ogoni land), which in 2008 totalled more that $240 million (Shell share $82 million). The executions in 1995 of Ken Saro-Wiwa and his eight fellow Ogonis were tragic events and both Shell and SPDC attempted to persuade the government of the day to grant clemency. Malcolm Brinded said: “We hope that this settlement will help the plaintiffs and the people of Ogoni to move forward.”

- Reporting from Johannesburg, South Africa — In Nigeria's oil-rich Niger River Delta, where the Royal Dutch Shell company has a tense relationship with communities, activists today welcomed the company's agreement to pay $15.5 million to settle a lawsuit that accused it of complicity in the 1995 executions of environmental and human rights advocates. But the activists saw it as a starting point, not the end of the struggle of the Ogoni people and other communities in the region for compensation over Shell's activities. Ken Saro-Wiwa, poet, satirist and a founder of MOSOP, and eight other Nigerian activists in the delta region were hanged by the country's military dictatorship. Saro-Wiwa played a central role in MOSOP's 1990 bill of rights for the Ogoni people, which called for independence and the right to protect Ogoniland from environmental harm. In a New York court Monday, Shell settled the case brought on behalf of six of the activists' families, but conceded no blame for their deaths. Shell began operating in the Niger Delta in 1958 and is accused by local activists of destroying the environment and traditional livelihoods like fishing and farming. Critics also accuse the company of working with Nigerian authorities in the 1990s to suppress opposition to its activities, a claim Shell denies. More than 30 million people from dozens of ethnic groups live in the three states of Nigeria's delta area. Since the 1990s, the Ogoni and others in the region have struggled for compensation over environmental damage and for a substantial share of the revenue generated by oil, including billions of dollars that activists say have been plundered or squandered by Nigerian officials over the years. The situation has deteriorated sharply in recent years, with theft of oil and kidnappings of oil workers by militants claiming to represent the communities. Thousands of people have been displaced in Delta state since mid-May in clashes between militants and armed forces. After militants ambushed and killed soldiers from a joint military task force charged with stabilizing the region, the force has attacked and destroyed militants' camps. Mitee said one key issue for MOSOP and other activists in the region was still environmental compensation. Chris Newsom, spokesman for the London-based Stakeholder Democracy Network, a human rights group, said in a phone interview from Port Harcourt that the payment was a limited but important victory. Mitee said a victory for the Ogoni people helped draw attention to issues affecting all people in the region. About two-thirds of the settlement money will go to the families and legal fees. The remaining $5 million will be put into a trust fund to be used to benefit local communities.

- Much fanfare attended the arrival in Ottawa earlier this week of Luis Scoffone, Royal Dutch Shell’s vice president of biofuels. Mr. Scuffone flew in from England and descended, along with John Baird, Canada’s transport minister, on a large Shell station at Merivale Road — an undistinguished avenue of strip malls and big-box stores. It was here, at a single pump, Shell said in a news release, where customers could become “the first in the world to fill their tanks with gasoline containing advanced biofuel made from wheat straw.” That was news to MacEwen Petroleum, however — a small regional service station chain based in Maxville, Ontario. MacEwen apparently beat the multinational giant to the punch almost five years ago at a station in downtown Ottawa. And it did so, it seems, using ethanol from Iogen, a cellulosic ethanol maker also based in Ottawa, which recently became half-owned by Shell. The attraction of cellulosic ethanol is that it’s made from agricultural and forestry waste materials rather than crops grown to produce fuel. That, its promoters hope, will allow it to escape the food-versus-fuel debate which has plagued ethanol made from corn and other crops. Iogen, which also is supplying the ethanol for Shell’s month-long promotion, uses enzymes to break down wheat straw and make about 60,000 liters of ethanol a month at its demonstration plant in Ottawa. In an interview following the Shell news conference, Brian Foody, Iogen’s president and chief executive, acknowledged that some of the production not needed by Iogen in the past for testing has gone into the pool of ethanol used for gasoline blending. MacEwen Petroleum, a small service station operator in Ottawa, said it was selling cellulosic ethanol five years ago. It also said it has been approached by Iogen about supplying ethanol for a MacEwen pump that sells an 85 percent ethanol blend, pictured above. But executives at MacEwen, which was once a major Iogen customer, said they were a bit surprised, and somewhat amused, by the claims from Iogen and Shell. When Ottawa hosted the 2004 Grey Cup, the Canadian Football League’s championship, MacEwen and Iogen offered a weeklong, cellulosic ethanol promotion at a busy station near an expressway in downtown Ottawa. MacEwen was an early promoter in Canada of ethanol-blended gasoline. Marcel Labelle, the company’s vice president of sales and supply, said “we were particularly careful about putting only their product in” the gasoline sold at that station’s ethanol blend pumps during the week preceding the football game. The effort was publicized in a news release, and official Grey Cup vehicles, which were fueled at the MacEwen station, bore photos of wheat straw, the Iogen logo and the slogan: “Fueled with low CO2 cellulose ethanol.” Outside of that promotion, Mr. Labelle said that MacEwen regularly purchased most of Iogen’s production during 2004 and 2005 and blended it, at varying levels, into gasoline. “When we were doing this, the major oil companies wouldn’t touch ethanol,” Mr. Labelle said. “It was taking refined product out of their system. They’ve been caught out. And I’m sure Shell doesn’t want to be embarrassed.” Kirsten Smart, a spokeswoman at Royal Dutch Shell in London, qualified the company’s earlier claim in an e-mail message on Friday: “We believe this is the first customer offering where over a month long period consumers can knowingly purchase gasoline with a 10 percent blend of cellulosic ethanol, and the first time it has been actively marketed.” Phil von Finckenstein, a spokesman for Iogen, said in telephone conversation and by e-mail that MacEwen only offered “a low-level blend” in 2004, not the 10 percent cellulosic mix now on sale at Shell. He added that the pumps were primarily for Grey Cup vehicles. “The public was happenstance if they got the fuel,” Mr. Finckenstein said. Mr. Labelle, after consulting company records, agreed that early customers may have received slightly less than 10 percent cellulosic ethanol because there initially was some residual gasoline blended with corn ethanol in the station’s storage tanks. But that gas station is replenished more than once a week, Mr. Labelle said. So many motorists received gasoline only blended with cellulosic ethanol. Iogen, Mr. Labelle said, has approached MacEwen about supplying ethanol for a pump at the downtown station that sells an 85 percent ethanol blend, which is used mostly by federal government vehicles. If something comes of those talks, Mr. Labelle said he expected the cellulose marketing machinery to kick in again. “Once they are done with us,” he said, “they’ll issue another press release.”

- Washington, DC -- The Global Business Coalition (GBC) announced that Shell Petroleum Development Company (SPDC) has been named the first winner of the annual award for Partnership in Collective Action. GBC recognised SPDC for work in helping to prevent the spread of AIDS in the Niger Delta through its Niger Delta AIDS Response (NiDAR) programme. SPDC, in partnership with Family Health International (FHI), designed the NiDAR programme with the purpose of establishing high-quality comprehensive HIV/AIDS care, treatment and support services. NiDAR provides a national strategic response framework for HIV/AIDS using a de-centralised approach. The programme operates in the southern part of Nigeria, within SPDC-supported healthcare facilities located in five Niger Delta states. NiDAR builds upon the existing infrastructure and human resources of these facilities that serve as primary healthcare level centres. The partnership has so far led to 6,824 individuals - of which 3,789 were female -- being counselled and tested for HIV/AIDS. A total of 1,248 or 18% of those tested - 810 being female - were informed that they were HIV positive. As a result, NiDAR enrolled a total of 1,049 HIV positive individuals - of which 702 were female - into comprehensive HIV services. 1,779 pregnant women also accessed services for Prevention of Mother to Child Transmission (PMTCT). In addition, the programme imparted a total of 244 government healthcare workers at NiDAR facilities with a diverse set of new skills.

- At 07.00 BST (08.00 CEST and 02.00 DST) on Thursday 30 July, 2009 Royal Dutch Shell plc will release its second quarter results and second quarter interim dividend announcement for 2009.

- Nigerian militants said they attacked a Royal Dutch Shell wellhead in the southern Delta state in response to a government operation against them, hours after the nation's president offered them amnesty in exchange for laying down their arms. The militant Movement for the Emancipation of the Niger Delta has been battling for a larger share of the country's oil revenues.

- When Jeroen van der Veer took the helm of Royal Dutch Shell five years ago, the company was mired in an accounting scandal involving its reporting of oil and gas reserves, a flap that nearly ended its century-long independence. Mr. van der Veer revamped Shell’s notoriously complex corporate structure, merged its fractious English and Dutch entities, and eventually restored trust with governments, regulators and investors. But as Mr. van der Veer, 61, retires this week, Shell still faces formidable challenges. Costs have soared throughout the industry in recent years, leading to large overruns on flagship exploration and production projects. More recently, the drop in energy prices from last year’s highs reduced profits and led the company to scale back its investments in renewable energy. And last month, Shell announced a shake-up that could lead to thousands of layoffs. Shell has turned itself around since the somber days of March 2004, when Mr. van der Veer was thrown into the top job to restore confidence in the company. Mr. van der Veer, who started at the company in 1971 and worked his way up, has been credited by most analysts in bringing about a turnaround. The stock price rose more than 20 percent from mid-July 2005 to May 2008, so most shareholders did not question the need for major change. But like most oil companies that benefited hugely from rising oil prices in recent years, Shell was hobbled last year by the sudden economic downturn. Now, the new management will continue the overhaul Mr. van der Veer started by merging some production units, flattening Shell’s unwieldy bureaucracy and reducing costs. That responsibility will fall to Shell’s next chief executive, Peter Voser, the current chief financial officer, once he takes over on Wednesday, said J. Robinson West, the chairman of PFC Energy, a consulting firm. The oil industry is struggling to adapt to a new and increasingly volatile economy. Oil prices rose to record highs last year, then fell steeply in December, and have since doubled to around $70 a barrel. After years of runaway inflation, paring costs has become a top industry priority. In the fourth quarter, Shell lost $2.8 billion. It returned to profitability in the first quarter, but its net income was just $3.49 billion, 62 percent less than the same period a year ago. Shell has staked its future on continuing several large, complex projects in Qatar and Canada that rely on high oil prices. Its capital spending program of more than $30 billion this year is the highest of any oil major, including Exxon Mobil. (A common criticism in the industry is that while BP does not make enough money, Shell spends too much.) The most prominent example of how Shell allowed costs to escalate was at its Sakhalin Island oil and gas exploration and production project in Russia, where expenses ballooned to $22 billion, more than twice the initial predictions. Shell eventually lost control of the Sakhalin 2 project after the Russian government strong-armed the company to let Gazprom take over. Shell received $7.5 billion to cede control, but retains a 27.5 percent stake. In its latest revamping plans, Shell said last month that it was taking steps to address problems in its management structure, which has been viewed as divided and fractious. The company is planning to merge its power and gas division with its exploration business and create two new units — one covering the Western hemisphere, and another the rest of the world. The changes are supposed to make the company more nimble by having fewer layers of bureaucracy. As he prepares to leave, Mr. van der Veer says there is much the company can be proud of. The company is one of the global leaders in the liquefied natural gas industry, a business it helped create. It is also one of the biggest investors in Canada’s tar sands, where Shell is still investing though other producers have cut back because of the drop in oil prices. It also a leader in deepwater drilling, and in Qatar, the company is developing an innovative plant to turn natural gas into transportation fuel. Shell is also well positioned to gain a foothold in Iraq — which is often considered the last great exploration frontier for the oil industry. The company has already signed a large gas contract there, and has been quietly training Iraqi engineers abroad for several years. Mr. van der Veer defended the company’s decision to focus its alternative investments on biofuels, while curtailing most future investments in solar and wind energy. Shell is building one of the largest biofuel operations by buying pioneering biotechnology companies in Canada and Germany. The company Mr. van der Veer is leaving is very different from the one he took control of five years ago. On his first day in the top job, he faced an anxious board as the company faced a hailstorm of criticism after an accounting scandal. Previous management had overstated the company’s oil and gas reserves, forcing the company to cut back its proven reserves estimates by 25 percent. The company’s chairman was ousted, while investors lost confidence and the shares tumbled. Some analysts bet that Shell would be forced to merge with another oil company before the end of that year. Analysts credited Mr. van der Veer for quickly restoring confidence in the company. He abolished the company’s byzantine dual-holding structure — where the company operated as two entities in the Netherlands and Britain — which some analysts said led to lax oversight. In his final message to Shell managers and employees, Mr. van der Veer acknowledged some of Shell’s shortfalls. “We have made progress at changing our culture and the way we behave,” he said. “In the past, the attitude for many senior managers was ‘self-first’ and there was too little attention to the big picture. Today that has largely disappeared.”

- After five years as Royal Dutch Shell’s chief executive officer, Jeroen van der Veer, 61, is stepping down today. I wrote on Monday about some of the challenges that his successor, Peter Voser, now faces at Shell. Last week, I spoke with Mr. van der Veer over the phone about his years at Shell, which he joined in 1971, as well as his thoughts about alternative energy investments and his views about future energy trends. Excerpts from that conversation follow. Shell recently announced it was focusing its alternative investments on biofuels and you’ve been criticized for dropping out of wind and solar energy. Why this change? From hindsight, I think we could have done better. We could have done a better communication job, including myself. But if you look at the world, in every scenario we make, oil and gas and coal, or fossil fuels, will still account for 70 to 80 percent of demand in 30 years. Because of questions of affordability, environmental acceptability, and security, they still score fairly well compared with other forms of energy. A company has to choose their own portfolio in the world. Microsoft is not doing everything in I.T. nor can Shell work in every form of energy. And if we do that, we risk spreading ourselves too thin. We are in oil and gas. Then we try to get at least one renewable business, and we would like to make that a big business. How can the world reduce carbon concentrations in the atmosphere if the oil industry doesn’t invest in alternative fuels? As a company we do advocacy about CCS (carbon capture and sequestration). We think it is a technology with the potential to make a dent into the problem. It can be a material technology to store carbon dioxide, if you do that in a large scale. If you can make it work, CCS can outcompete solar panels for CO2 reductions. If CO2 is the bottleneck problem in the view of society, then the role of a company is to say that if you start at the power generation side then probably you have cheaper CO2 solutions, or more CO2 reduction per dollar, than if you start at the transportation side.CO2 is a problem. It’s not the only challenge of the energy industry. One day, you will come out of this economic recession, and energy use will go up again. The question then is will there be enough supply capacity. If the industry underinvests, then you are basically setting up the next price spike. Your business model, and that of international oil companies (I.O.C.s), has come under stress in recent years, with access to resources being restricted. How do you see that trend developing? The I.O.C.s and a company like Shell can only operate if we do three things well. We need operating excellence. We need reliability at all costs and we need better technology. [And] we need to be able to manage very large projects. If we can manage these three points very well then we can always have a seat at the table. We can always be attractive partners. Then I take three core truths: In 40 years, energy demand will double. Two, classic oil and gas is not enough to supply all this demand. And three, carbon dioxide is a problem for which there is no easy solution. There is no silver bullet. The easy gas and oil will be done by state companies or small companies. But the difficult barrels – the tight gas or the gas-to-liquids, or the unconventional oils or gas, you must be a very strong player to be cost-competitive. I don’t see this as a problem for I.O.C.s. I see that as an opportunity. It means that every future barrel we produce at Shell, I tell the staff, that each barrel must contain more technology. Every future barrel, per barrel, must contain more gray cells. How do you see relations with national oil companies? Aren’t they reducing your field? I think the energy industry is so big, and I see the investment opportunities. I am not concerned. That will not be my bottleneck for the future of Shell. The bottleneck is if we can move rapidly with new tech to find CO2 solution, drill better, drill deeper, explore better. What are your thoughts on the current energy market? At university, I learned that you have supply and demand and the two are at equilibrium by price. That was only partly true. Today you should learn that it is expected demand and expected supply that matter. We don’t know what expected demand will be next year. As for expected supply, you have the investments of the industry and you have OPEC’s behavior. If you add it all up, this becomes difficult to read, and automatically you have volatility in the market. But if you take it on a relative scale history, oil has never been very stable. It’s an interesting point if you look at a graph of oil prices over the past 100 years, you have had many periods of weak or strong oil prices. If you look at history you have to expect more volatility.

July

• Upstream news:

- Shell started production at its multi-field Parque das Conchas project 110 kilometres off Brazil’s south-east coast, where heavy oil resources lie beneath waters nearly two kilometres deep in the Campos Basin. Parque das Conchas is a two-phase project with initial production drawn from three fields: Abalone, Ostra and Argonauta B-West. The first phase, now on-stream, involves nine producing wells and one gas injector well. The second phase will focus on the Argonauta O-North field. Shell executed a host of new and advanced technologies to meet the project’s many challenges, among them water depth and oil viscosity:Electric pumps of 1,500 horsepower drive the oil 1,800 metres up to the surface for processing in a floating, production, storage and offloading vessel (FPSO), Espírito Santo, which is more than 330 metres long. It can process 100 thousand barrels of oil and 50 million cubic feet of natural gas per day and store nearly 1.5 million barrels of oil for shipment to shore by transport tankers

• Downstream news:

- Shell opens its second hydrogen filling station in the greater New York City area. With a third due to open in the area later this month and one already operating there for more than a year, this is Shell’s first cluster of hydrogen filling stations. The station opening at JFK international airport is the result of a partnership between Shell, the Port Authority of New York and New Jersey, the US Department of Energy and General Motors. A third station in the Bronx, due to open late in July, has been developed with the New York City Department of Sanitation. A station has been operating in the City of White Plains, New York, since April 2008. The cluster of stations will provide New York drivers of hydrogen fuel-cell vehicles with greater flexibility and convenience. It is a significant step on from stand-alone, demonstration stations and is part of Shell’s strategy to build expertise in the distribution and dispensing of hydrogen.

- Shell Gas & Power Developments BV (Shell) signed a master agreement with a consortium comprising Technip and Samsung for the design, construction and installation of multiple floating liquefied natural gas (FLNG) facilities over a period of up to fifteen years. Shell and Technip-Samsung also signed a contract for execution of the front end engineering and design (FEED) for Shell's 3.5 million tonne per annum (mtpa) FLNG solution. Shell's FLNG solution has the potential to place gas liquefaction facilities directly over offshore gas fields, thereby precluding the need for long distance pipelines and extensive onshore infrastructure. This innovative alternative to traditional onshore LNG plants provides a commercially attractive and environmentally sensitive approach for monetisation of offshore gas fields.

• Business/Finance news:

- As violence in Nigeria’s oil-rich Niger Delta escalates, Amnesty International released a new report condemning oil companies for wide-scale environmental damages and abuse of impoverished communities along the delta. But Royal Dutch Shell, the Anglo-Dutch oil giant that created the Nigerian oil industry, has reacted testily to the new campaign by the human rights group, saying the report failed to provide a proper picture of what caused violence and degradation in the delta. The report, “Petroleum, pollution and poverty in the Niger Delta,” highlights some well-known and undisputed complaints, particularly among villagers and local activists. Amnesty’s new campaign puts pressure on Shell’s new chief executive, Peter Voser, to make Nigeria one of his top priorities. It also comes just weeks after Shell agreed to settle a high-profile lawsuit in New York brought by relatives of Ken Saro-Wiwa, a slain activist, and other victims of the former military regime in the mid-1990s. The company, which did not admit to any guilt, called the settlement “a humanitarian gesture.” While Shell rejected much of the report’s “unsupported allegations,” it added that it also “shares Amnesty International’s concern that the people of the Niger Delta have not benefited from the extraction of oil and gas as they should.” Since the beginning of the year, members of the Movement for the Emancipation of the Niger Delta, a violent militant group, have declared an “all-out war” against the oil industry after the government of President Yar’ Adua began a large-scale military offensive in the region to root out militants. Violence in the delta, which has been going on for years, has forced many companies, including Shell, to shut down some of their production.

- Even as Jeroen van der Veer was preparing to pass the baton to Peter Voser, who took over as chief executive of the oil giant Royal Dutch Shell, the contentious legacy of the company’s activity in Nigeria was nipping at its heels. Just a few weeks earlier, Shell had agreed to settle a court case stemming from the execution of Ken Saro-Wiwa, a leader of the indigenous Ogoni environmental movement in Nigeria who had protested against Shell’s environmental practices in the oil-rich Niger Delta. On the basis of dubious charges, Mr. Saro-Wiwa and eight other activists were tried and ultimately hanged in 1995 by the country’s military government. Families of six of the victims subsequently filed numerous lawsuits against Shell, one of the oldest and largest companies operating in the region, accusing it of complicity in a variety of human rights abuses, including events that led to the executions. Shell denied having had any part in the matter. Instead, in a June 8 statement, the company said the settlement — totaling $15.5 million — constituted a “compassionate payment to the plaintiffs and the estates they represent in recognition of the tragic turn of events in Ogoni land, even though Shell had no part in the violence that took place.” Then, the largest militant group in the nation, the Movement for the Emancipation of the Niger Delta, announced that it had once again attacked Shell’s oil infrastructure — this time, an offshore platform. It was the latest in a wave of recent attacks on foreign oil operations in the country, and Shell’s communications director for Africa, Olay Lisone, told Reuters that “in the past 10 days we have had five attacks that have reduced our oil production to around 140,000 barrels per day.” That is about half of what production was earlier in the year. None of this, presumably, was a surprise to Amnesty International, which observed the change in executive leadership at Shell with its own assault: a 143-page report that accused Shell and other oil companies of decades of environmental and human rights abuses in the region. The report, titled “Nigeria: Petroleum, Pollution and Poverty in the Niger Delta,” noted that while oil business in the region had generated about $600 billion during the past 50 years, the majority of the 31 million people living in the area remained pitifully impoverished. Amnesty, quoting a U.N. report from 2006, described the region as suffering from “administrative neglect, crumbling social infrastructure and services, high unemployment, social deprivation, abject poverty, filth and squalor, and endemic conflict.” Much of the blame, the group said, lay at the feet of the oil industry generally and, in many cases, Shell specifically. Shell and the Nigerian government vigorously disputed the claims made in Amnesty’s report. “The root causes of the Niger Delta’s humanitarian issues are poverty, corruption, crime, militancy and violence,” Shaun Wiggins, a Shell spokesman, wrote in an e-mail message to my colleague, Jad Mouawad, who reported on the Amnesty report at our Green Inc. blog last week. “This report does not acknowledge these issues to any substantive degree,” Mr. Wiggins continued, “but concentrates on the impact of oil and gas operations in isolation.” “As such,” he added, “its value is limited.” Meanwhile, Levi Ajuonoma, a spokesman for the state-owned Nigerian National Petroleum Corp., told reporters that “pipeline damage is a major cause of pollution,” and that blame for that should be directed at militants and their repeated attacks. Mr. Wiggins echoed that point, suggesting that about 85 percent of the oil spills that occurred in the region last year were attributable to vandalism or other criminal activity. Many of the spills reported by Amnesty, the company added, occurred on Ogoni land, where Shell ceased production operations in 1993 — though its pipelines still crisscross the area. Audrey Gaughran, Amnesty’s head of business and human rights and a co-author of the report, granted that violence played a role in the problems in the delta. But she also suggested that accurate data on oil spills are hard to come by, particularly given that oil companies have the incentive — and the ability under Nigeria’s lax regulatory system — to attribute any spill to sabotage. Oil spills, too, are just one part of an entire tableau of environmental wreckage in the delta, Ms. Gaughran said. Waste dumping, gas flaring, the dredging of rivers, road and canal construction — all have contributed to a decline in soil, water and air quality for a population that relies heavily on fishing and subsistence agriculture. And these problems, Ms. Gaughran said, are not products of recent militancy, but of decades of wanton development by the oil industry. “Shell sees the conflict as something outside of them,” she added, “rather than something they’ve been a part of creating.” Shell said that it shared Amnesty’s concern that the people of the Niger Delta had not benefited from the extraction of oil and natural gas — though in a statement on its Web site, the company appeared to suggest that it had little control over this, either. The Shell Petroleum Development Co. and other Shell companies operating in Nigeria “pay taxes and royalties each year into the federal budget,” the statement reads. “The government then decides how to spend and distribute this money among the states.” Shell has “made its views known,” the company said, “and contributed to debates aimed at improving governance of the allocation of oil revenue to oil-producing communities.” Ms. Gaughran suggests that is simply not good enough and that oil companies are too often using the complex web of competing interests and actors on the ground in Nigeria as a defense — and an excuse. “Complexity has become their stock answer,” she said. “But complexity shouldn’t be an excuse for doing nothing.”

- At 07.00 BST (08.00 CEST and 02.00 EDT) on Thursday 30 July, 2009 Royal Dutch Shell plc will release its second quarter results and second quarter interim dividend announcement for 2009.

- At 07.00 BST (08.00 CEST and 02.00 EDT) on Thursday 30 July, 2009 Royal Dutch Shell plc released its second quarter results and second quarter interim dividend announcement for 2009.

- Royal Dutch Shell reported that its net profit fell 67 percent in the second quarter, to $3.82 billion, from $11.6 billion in the period a year ago. Shell said that it planned to reduce capital spending by more than 10 percent next year to about $28 billion and that it would cut jobs. Earnings at Shell’s exploration and production unit dropped 77 percent, to $1.33 billion, from $5.9 billion a year ago, mostly on lower oil prices. Production declined 6 percent, to 2.9 million barrels of oil and equivalents a day, while prices were $52.62 a barrel, down from $111.92 in the period a year ago. “Our second-quarter results were affected by the weak global economy,” said Peter R. Voser, Shell’s chief executive. “This weakness is creating a difficult environment both in upstream and downstream.”

August

• Upstream news:

• Downstream news:

- Royal Dutch Shell plc said it will build a new hydrodesulphurisation plant at its Pernis Refinery in the Netherlands. The plant, expected to come on stream in the second half of 2011, will increase cleaner-burning, low-sulphur fuels production at the 400 thousand barrels per day refinery. Much of the production from the new plant will be marketed to German households as domestic heating oil, which must comply with strict new sulphur content requirements: The new plant’s energy consumption and emissions will comply with the highest standards, anticipating more stringent European requirements. For instance, the new desulphuriser’s furnace features a specially designed multi-burner system that will reduce nitrogen oxide (NOx) emissions.

- For the third consecutive year, Shell has been named the number one global lubricants supplier – selling more lubricants in 2008 than any other supplier in the world. The research, conducted by Kline & Company1, gives Shell Lubricants 13% of the market by volume, and a two per cent lead over its nearest competitor. The figures show that despite the tough operating environment, Shell outpaced the lubricants market as a whole and continued to increase its market share in key growth countries.

- Shell announced that it is starting construction of a major new lubricants blending plant - the first to be built by an international oil company in Russia. The plant, which is being built in Torzhok in the Tver region, north-west of Moscow, will have a capacity of 200 million liters a year (about 180,000 tons), making it one of the largest in the Shell network worldwide. Commercial operation is expected to begin by the end of 2010. As a leading international supplier of lubricants and greases to Russia, Shell will bring advanced technology to the local market and ensure high quality products through stringent quality control. Bringing world-class production capacity closer to customers will allow Shell to supply a full range of high-quality motor oils, transport oils and industrial lubricants to the Russian market, with the potential to expand distribution to neighboring countries in the future. Large industrial customers will benefit from the bulk delivery of technologically advanced products, speeding up delivery times and reducing storage costs.

• Business/Finance news:

September

• Upstream news:

- The Board of Royal Dutch Shell plc (Shell) has taken the Final Investment Decision on the Gorgon liquefied natural gas (LNG) project, signaling the start of initial construction on one of the world’s largest natural gas developments. Chevron will operate the project, with a 50% stake, with participants Shell and ExxonMobil each holding 25% shares. The project will include construction of a liquefied natural gas facility with an annual capacity of around 15 million tonnes per year on Barrow Island, off Western Australia’s coast. The project plan incorporates stringent environmental standards designed to protect the island’s natural heritage. Plans call for development of the Greater Gorgon gas fields, beginning with the Gorgon and Jansz-Io gas fields – the largest gas discoveries to date in Australia – with development facilities installed directly on the ocean floor, in water up to 1,300 meters deep. Two subsea pipelines with a combined length of 240 kilometers will carry the gas to facilities on Barrow Island. Gorgon is also expected to be a world leader in capturing the naturally occurring carbon dioxide produced alongside natural gas and storing it safely underground, more than two kilometers beneath Barrow Island.

• Downstream news:

- Shell agreed to sell its Downstream businesses in Greece to Motor Oil (Hellas) Corinth Refineries S.A. The deal, which is subject to competition authority clearance, follows a review by Shell of its Downstream businesses in the country and is consistent with the company’s strategy to concentrate its global Downstream portfolio. Under the terms of the deal, Motor Oil (Hellas) Corinth Refineries S.A. will acquire Shell’s shares in Shell Hellas A.E. and Shell Gas A.E.B.E.Y. The agreement includes the sale of Shell’s retail, commercial fuels, bitumen, chemicals, supply and distribution, and Liquefied Petroleum Gas businesses, as well as a lubricants oil blending plant. The retail network, as well as a new aviation joint venture, will be Shell-branded through Trademark Licensing Agreements.

- Shell welcomed the release by ASTM International of a new specification that fully and unconditionally approves the use of Gas-to-Liquids Kerosene blends for powering commercial aircraft. The new specification, ASTM D7566 “Aviation Turbine Fuel Containing Synthesized Hydrocarbons”, approves jet fuel containing up to 50% GTL Kerosene for use in civil aviation. The blends will be known as GTL Jet Fuel. GTL Kerosene is one of five GTL products that will be produced in commercial volumes by the Pearl GTL project, currently under construction by Qatar Petroleum and Shell. The project will produce around one million tonnes of GTL Kerosene per annum, enough to power a typical commercial airliner for half a billon kilometres (equivalent to carrying 250 passengers around the world 4,000 times) when used in a 50% blend to make GTL Jet Fuel. Construction of Pearl GTL is planned to be complete around the end of 2010 with project ramp-up then taking about 12 months. GTL Kerosene is planned to be available from 2012.

• Business/Finance news:

- The Board of Royal Dutch Shell announced that Mr Hans Wijers steps down from the Corporate and Social Responsibility Committee and joins the Remuneration Committee where he will succeed Sir Peter Job as Chairman of that Committee with effect from 1 October 2009. Sir Peter will remain a member of the Committee until his retirement from the Board at the next Annual General Meeting in May 2010, at which time he will have served 9 years as a Non-Executive Director. Lord Kerr of Kinlochard steps down from the Remuneration Committee and joins the Audit Committee to fill the vacancy arising from Mr Lawrence Ricciardi's resignation from the Audit Committee. Mr Lawrence Ricciardi joins the Nomination and Succession Committee until his retirement from the Board at the next Annual General Meeting, at which time he will have served 9 years as a Non-Executive Director. Lord Kerr and Mr Nick Land will in addition to the other Board Committees also join the Corporate and Social Responsibility Committee.

- The Justice Department is investigating whether a former secretary of the interior, Gale A. Norton, violated the law by granting valuable leases to Royal Dutch Shell around the time she was considering going to work for the company after she left office, officials said. The officials said investigators had recently turned up information suggesting that Ms. Norton had had discussions while in office with Royal Dutch Shell about future career opportunities. In early 2006, Ms. Norton’s department awarded three tracts in Colorado to a Shell subsidiary for shale exploration. In December 2006, she joined Shell as the company’s general counsel in the United States for unconventional oils, a company spokeswoman said. The existence of a federal criminal investigation was first reported by The Los Angeles Times. Ms. Norton, 55, was President George W. Bush’s first interior secretary. In that job, she was an ally of Vice President Dick Cheney in the administration’s general approach of opening up more federal lands for energy exploration. The possibility that Ms. Norton violated the law by seeking employment with a company while she was a federal official in a position to benefit the company stemmed from an investigation of many months by the Interior Department’s inspector general. The officials who confirmed the investigation did so on the condition of anonymity, citing the custom to decline to speak publicly on criminal investigations in progress. For more than a year, Interior Department investigators have been looking into Ms. Norton’s dealings with Shell. They interviewed dozens of department officials about the program to lease tracts for shale exploration. The officials from the office of inspector general recently turned over their findings to the Justice Department. The Colorado tracts are part of a program to allow energy companies to experiment with methods of extracting oil from shale, a rocklike substance common in the western United States.

October

• Upstream news:

- Shell announced that it plans to develop its Prelude and Concerto gas discoveries, located in the Browse Basin off the northwest coast of Western Australia, using its innovative Floating Liquefied Natural Gas (FLNG) technology. Shell’s FLNG solution is an important development for the LNG industry, with its ability to process gas ‘in situ’ over an offshore gas field, reducing both project costs and the environmental footprint of an LNG development. Shell is the Operator and 100% equity holder of the WA-371-P permit, containing the Prelude and Concerto fields, which would be developed sequentially. While pending a Final Investment Decision, the Prelude FLNG Project is now in the Front End Engineering and Design (FEED) phase of development. FEED for Prelude is being undertaken as part of Shell’s contract with the Technip-Samsung Heavy Industries consortium for the design, construction and installation of multiple FLNG facilities.

- After years of controversy and delays, a federal agency has given the green light to Royal Dutch Shell to drill for oil and gas in the Arctic Ocean. The decision by the Minerals Management Service clears one of the last big hurdles for the company to drill two exploration wells on two offshore lease areas in the Beaufort Sea. The company plans to do the drilling between July and October 2010 — the next open-water season when the sea-ice melts. The plan has raised considerable opposition both from environmental groups, who point to the risks of pollution in one of the most remote regions of North America, and native villagers, who have sustained themselves for centuries on whaling. The villagers fear that drilling operations will disrupt the seasonal migrations of bowhead whales during the summer. To deal with these concerns, Shell agreed to interrupt its operations halfway through the drilling season to allow for the whaling activity by villagers from Kaktovik and Nuiqsut, according to the federal agency. Shell’s activities will be completely suspended on Aug. 25, 2010, and the company will remove its vessels from the drilling site during the whale hunts. Once the whaling season is over, Shell will be allowed to return until October, if ice and weather conditions permit. Shell has also scaled back the size of its drilling fleet, which its opponents have characterized as an “armada,” and now plans to use just one drill ship instead of two, and fewer support vessels. While the permit brings Shell one step closer to begin drilling, the company still needs an air permit from the Environmental Protection Agency. The government’s leasing policy in Alaska has been mired in court battles for years. In May, a federal court asked the federal government to review its 2007-2012 leasing plan for Alaska. That decision does not affect drilling in Shell’s two Beaufort Sea leases, which it acquired in 2005 and 2007. Shell, which does not produce on the North Slope, has bet heavily on Alaska’s offshore potential. In 2008, it paid $2.1 billion for leases in both the Beaufort and the Chukchi Sea, and now has about 200 offshore leases. Environmental groups said they were disappointed by the decision and criticized the government for endorsing a leasing rush that was sanctioned by the Bush administration. Several groups said that Shell’s drilling would emit tons of air pollutants and water waste, and that it risked damaging the environment. Chuck Clusen, the director for the national parks and Alaska projects at the Natural Resources Defense Council, warned about the risks of an oil spill in Alaska.

• Downstream news:

- His Excellency Abdulla bin Hamad Al-Attiyah, Deputy Prime Minster and Minister of Energy and Industry of the State of Qatar, launched the testing phase of the Pearl Gas to Liquids (GTL) project by inaugurating the massive plant’s central control room. HE Minister Al-Attiyah was accompanied by His Excellency Dr. Mohammed Saleh Al-Sada Minister of State for Energy & Industry Affairs, Qatar Petroleum Directors and members of the Pearl GTL Management Committee. The delegation was hosted by Peter Voser, Chief Executive Officer of Royal Dutch Shell plc. Pearl GTL is being developed by Qatar Petroleum and Shell. Testing, known as ‘commissioning’ to engineers, is the process of systematically checking every piece of equipment in the plant is functioning correctly. This work will be carried out by operators who moved into the control room today, as well as the contractors who have been constructing the project. While testing begins on the many thousands of pieces of equipment that have already been installed in the plant, construction continues and is expected to be complete around the end of 2010. Production ramp-up will then take around 12 months.

- Qatar Airways makes historic journey from London to Gatwick to Doha --- New Gas to Liquids fuel offers diversity of supply and better local air quality to busy airports. A Qatar Airways aircraft completed the world’s first commercial passenger flight powered by a fuel made from natural gas. The historic journey from London Gatwick to Doha took over six hours and was operated with an Airbus A340-600 aircraft using Rolls-Royce Trent 556 engines. Shell developed and produced the 50-50 blend of synthetic Gas to Liquids (GTL) kerosene and conventional oil-based kerosene fuel. The State of Qatar is set to become the world’s leading producer of GTL kerosene when it is put into commercial production from 2012. The fuel, as an alternative to conventional oil-based kerosene, will contribute to diversification of aviation fuel supply. It also burns with lower sulphur dioxide and particulate emissions than pure conventional oil-based kerosene, making it attractive for improving local air quality at busy airports. The blend of conventional kerosene and GTL kerosene will be known as GTL Jet Fuel. The flight was the latest step in over two years of scientific work carried out by a consortium consisting of Airbus, Qatar Airways, Qatar Petroleum, Qatar Science & Technology Park, Rolls-Royce, Shell and WOQOD into the benefits of using GTL Jet Fuel to power commercial aircraft. Much of this work is being undertaken at the Qatar Science & Technology Park in Doha.

• Business/Finance news:

- At 07.00 GMT (08.00 CET and 03.00 EDT) on Thursday 29 October, 2009 Royal Dutch Shell plc will release its third quarter results and third quarter interim dividend announcement for 2009.

- At 07.00 GMT (08.00 CET and 03.00 EDT) on Thursday 29 October, 2009 Royal Dutch Shell plc released its third quarter results and third quarter interim dividend announcement for 2009. Royal Dutch Shell Chief Executive Officer Peter Voser commented: “Our third quarter results were affected by the weak global economy. Upstream and Downstream profitability has been sharply reduced compared to year-ago levels. We see some indications that energy demand and pricing are improving, but the outlook remains very uncertain, and we are not expecting a quick recovery. Despite Shell’s good operating performance in this difficult environment, we have embarked on an ambitious program of stringent measures to further improve our performance.

- The Board of Royal Dutch Shell plc announced the intended timetable for the 2010 quarterly interim dividends.

- Royal Dutch Shell, Europe’s biggest oil company, reported a 62 percent drop in third-quarter profit and said that the outlook remains “very uncertain” as a weak global economy continues to weigh on oil and natural gas prices. Net income fell to $3.25 billion in the three months ending in September from $8.45 billion in the same period last year. Profit excluding one-time items and inventory changes was $2.62 billion. The shares fell 3 percent in London. Like his counterparts at other oil giants, such as BP, Mr. Voser embarked on a cost-cutting program aimed at countering a drop in oil prices after they reached a record last year. BP reported better-than-expected earnings after beating its own cost-reduction targets and increasing output. Exxon Mobil and Chevron will report figures later. Shell is eliminating 5,000 jobs, about 10 percent of its workforce, and has combined units. The company said that as part of its restructuring efforts, 15,000 of its employees are reapplying for jobs. Shell will take a charge in the fourth quarter that may total “several hundred millions of dollars” because of the job cuts, Simon Henry, the company’s chief financial officer, said during a conference call Thursday, Bloomberg News reported. Shell said it had reduced operating costs by about $1 billion in the first nine months of the year. Higher oil prices last year meant oil companies increased investments in more expensive exploration efforts, such as oil sands, to increase production. Shell has invested in the Gorgon LNG gas project led by Chevron in Australia and together with OAO Gazprom is increasing capacity at the Sakhalin-2 liquefied natural gas plant in Russia.

- After posting record profits last year, major oil companies have struggled to adapt to a world of lower prices and slower economic growth. They have slashed costs, shed employees and pared high-cost investments made when prices were rising. As oil prices have fallen, so have corporate earnings. Exxon Mobil, the world’s biggest publicly traded oil company, and Royal Dutch Shell, the top European company, both reported sharp declines in third-quarter earnings. The plunge in profits occurred amid a recovery in oil prices, which had fallen as low as $34 a barrel in December from their peak of $147 a barrel last summer. Oil closed at $79.87 a barrel in New York trading, up $2.41. The rebound has been a relief for producers. While prices remain historically high, the industry has been squeezed because of investment decisions made while oil was rising. Today, few petroleum executives imagine returning to a world where oil trades at $20 a barrel, the average throughout the 1990s. In fact, a level of $65 to $75 a barrel is increasingly viewed as a new minimum for the industry. If prices settle below that range, many oil executives say they will find it difficult to expand production or invest in new exploration projects. While most of its big competitors have been restructuring operations and cutting expenses, Exxon said it would stick with its plans to spend $25 billion to $30 billion a year over the next few years to develop new energy supplies. The company said that its profits in the third quarter declined 68 percent, to $4.73 billion, or 98 cents a share, falling short of analysts’ expectations. That compared with earnings of $14.83 billion a year ago, the company’s best quarter. Exxon became the world’s most profitable corporation in 2008, earning $45 billion as oil averaged $100 a barrel. Exxon’s shares traded down for much of the day after the company’s profit came in below forecasts of $1.06 a share. But the stock ended the day up 12 cents at $73.96. Exxon posted a loss at its American refining business for the second consecutive quarter. The company said that its spending in the quarter fell by 5 percent compared with last year, to $6.5 billion. Its oil and gas production in the period rose by 3 percent. Shell’s net income fell to $3.25 billion from $8.45 billion in the same period last year. In London, Shell shares fell 55 pence, or 2.9 percent, to 1,856 pence. Shell has outlined a sharp cost-cutting program in recent months. It is eliminating 5,000 jobs, about 10 percent of its work force, and merging some units. The company said that as part of its restructuring efforts, it would take a charge in the fourth quarter that might total “several hundred millions of dollars” because of the job cuts. The company said it had reduced operating costs by about $1 billion in the first nine months of the year. Similar efforts are already paying off at BP, the British oil giant. The company reported better-than-expected earnings after beating its own cost-reduction targets and increasing output. Higher oil prices in recent years meant that oil companies increased their spending on more expensive exploration efforts, such as oil sands, to increase production. They were also forced to raise spending as costs throughout the industry doubled from 2004 to 2008. But as prices fell, oil majors as well as independent producers across the country have struggled to adapt. They have capped wells that have become uneconomical, for example, and in Canada, heavy oil projects have been put on hold. While oil prices have dropped 45 percent since their peak last summer, costs have fallen by only 15 to 20 percent since last year’s peak, said Patrick de la Chevardière, chief financial officer of the French oil giant Total. Conoco Phillips, for example, said it would reduce its capital expenses by 12 percent next year, and planned to sell assets worth $10 billion over the next two years. Conoco said that its third-quarter profits fell 71 percent, to $1.5 billion. Eni, the giant Italian oil company, slashed its dividend by 23 percent over the summer, in part to protect its spending program, but the move stunned investors who have long been accustomed to the industry’s policy of paying high dividends. Chevron, the second-largest American oil company, will report earnings. The picture is not entirely grim. Companies have made large discoveries this year. BP announced a major offshore find in the Gulf of Mexico last month, while Anadarko Petroleum and its partners said they had identified a major offshore petroleum basin running from Ghana to Sierra Leone. But oil companies must run faster just to stand still. More than 3.5 million barrels a day of new capacity must be added each year to offset the normal decline of old fields around the world. Some of that can be done by stimulating existing fields to pump more oil; some by investing in new capacity in already-discovered reserves, such as in Saudi Arabia; and some through well-head exploration.

November

• Upstream news:

- The South African Petroleum Authorities confirmed Royal Dutch Shell plc as the successful bidder for exploration rights in the Orange Basin deep-water area, off the country’s west coast. Shell and the government will now negotiate the details of an exploration contract. The exploration area covers approximately 37,000 square kilometres, about the size of the Netherlands. It is located in water between 500 metres and 4,000 metres deep and has so far seen limited exploration activity.

- Shell announced the acquisition of a 33% interest in the Guyane Maritime Permit, approximately 150 kilometres off the coast of French Guiana, from an affiliate of Tullow Oil plc. The permit area covers approximately 32,000 square kilometres situated in water 2,000-3,000 metres deep. The acquisition requires the approval of French authorities. It includes an option to acquire an additional 12% stake at a later date. The partners in the permit area are Tullow Oil plc’s affiliate Hardman Petroleum France SAS (64.5% share and the operator); Shell Exploration and Production France SAS (33% share); and Northpet Investments Ltd (2.5%). The partners are currently conducting a 3-dimensional seismic research program covering 3,000 square kilometres of the permit area.

- The Iraqi government signed a deal with a consortium led by U.S. oil giant Exxon Mobil Corp. to develop a major oil field in southern Iraq, marking the first entry by an American-dominated group into Iraq's oil industry since it was nationalized in 1972. The deal coincides with a flurry of activity this week that suggests major oil companies are finally poised to return to Iraq, more than six years after the U.S.-led military invasion raised firms' hopes of gaining access to some of the world's largest and most underdeveloped oil reserves. This week, a group led by Italy's Eni that includes the U.S. company Occidental Petroleum Corp. initialed a preliminary agreement, and China National Petroleum Corp. and Britain's BP finalized an accord to develop oil fields in the south. The deals are service contracts. That means the consortia will invest money to improve the yields of the fields and receive in return a fixed fee. The agreements came after the oil companies dramatically lowered their fees to match those offered by the Iraqi government at a public auction in June. The Exxon Mobil-led consortium, which includes Royal Dutch Shell, will receive $1.90 per barrel of extra oil produced, down from the $4 it asked for in June. The consortium, 80% controlled by Exxon Mobil, will invest $25 billion to improve the yield of the West Qurna 1 field from 290,000 barrels a day to 2.3 million barrels a day, Oil Minister Hussein Shahristani said at the signing ceremony. Major oil companies have been eyeing Iraq since the U.S.-led invasion in 2003, but the Iraqi government has acted slowly to encourage them. That changed this year as falling oil prices and lagging exports put a squeeze on the national budget. But the June auction fizzled after it emerged that Iraq wasn't willing to pay the fees demanded by the oil firms. Getting the companies to accept lower fees is a major victory for the government, said Peter Kemp of New York-based Energy Intelligence. There are some doubts about the legality of these contracts, because the Iraqi parliament has still not passed new oil legislation. That's a risk the companies appear willing to take to gain access to Iraqi oil, Kemp said.

• Downstream news:

- Qatar Petroleum International and Shell Eastern Petroleum (Pte) Ltd (Shell) signed a series of agreements which will see Qatar Petroleum International take a stake in two Shell Chemicals joint ventures in Singapore. The agreements were signed by His Excellency Abdulla bin Hamad Al-Attiyah, Deputy Prime Minister and Minister of Energy and Industry, and Mr. Peter Voser, Chief Executive Officer of Royal Dutch Shell plc. The signing was witnessed by Mr. S. Iswaran, Singapore Senior Minister of State for Trade & Industry and Education, as well as Mr. Nasser Al-Jaidah, Chief Executive Officer of Qatar Petroleum International and Mr. Ben van Beurden, Executive Vice President Shell Chemicals. The agreements mark the first downstream acquisition by Qatar Petroleum International abroad. Qatar Petroleum International and Shell entered into a strategic partnership in 2007 aimed at identifying and developing international projects of mutual interest throughout the energy value chain. Under the agreements signed, Shell will sell its existing shareholdings in two companies to a new joint venture called QPI and Shell Petrochemicals (Singapore) Pte Ltd (QSPS). Through the new venture, Qatar Petroleum International and Shell will then effectively hold 50 per cent of the Petrochemical Corporation of Singapore (Pte) Ltd (PCS) and 30 per cent of The Polyolefin Company (Singapore) Pte Ltd (TPC). The other shareholders in PCS and TPC are respectively, JSPC and NSPC, both Japanese consortia led by Sumitomo Chemical Company, Limited. Completion of the transaction is in December 2009.

- Shell Chemicals Limited has announced the successful start-up of its new world-scale monoethylene glycol (MEG) unit at the Shell Eastern Petrochemicals Complex in Singapore. The unit started up as initially planned. With a nameplate capacity of 750,000 tonnes of MEG per annum, it is one of the largest in the world, reinforcing Shell’s ambitions to maintain a leading position in the expanding Asian petrochemicals market. The Shell Eastern Petrochemicals Complex also includes a new 800,000 tonnes per annum ethylene cracker, a butadiene plant and modifications to Shell’s Bukom refinery, which are planned to start up in early 2010.

- Royal Dutch Shell plc (Shell) reconfirmed good progress of the Pearl GTL and the Qatargas 4 projects for a group of its shareholders and investment analysts. Shell is partnering in both Pearl GTL and Qatargas 4 with Qatar Petroleum. Pearl GTL will use Shell’s proprietary Gas-to-Liquids (GTL) technology to convert some 1.6 billion cubic feet (bcf/d) of gas per day into high quality, clean-burning oil products such as gasoil, high specification lubricants base oils, and chemicals feedstock. These products are usually produced by oil refineries. Shell will use its leading brand, technology, global supply chain and marketing capabilities to maximize the value of these products in global markets. Pearl GTL is designed to produce 120,000 barrels per day (b/d) of natural gas liquids (NGLs) and ethane, and 140,000 b/d of GTL products. Pearl will be the world’s largest GTL plant, building on over 30 years of Shell experience with these technologies. Shell is funding 100% of the development costs for Pearl GTL, under a profit sharing agreement with the State of Qatar.

- Shell Lubricants announced the start-up of its newest lubricants complex in Asia to meet growing demand in China. With a production capacity of 200 million litres a year, and the potential for a phased development to 400 million litres a year, the complex could become one of Shell’s top three lubricants blending plants worldwide in volume terms. Located in Zhuhai, Guangdong Province, the blending plant will be Shell’s sixth in China and will produce consumer, transport, industrial and marine lubricants, targeted at the Chinese market. In a further development, Shell also announced new investment in a technical facility at the complex. This will offer a range of technical services including a quality control laboratory to provide key customers and original equipment manufacturers (OEMs) in the automotive industry with technical research, marketing and training services related to their lubricants applications.

• Business/Finance news:

December

• Upstream news:

- Production has now hit over one million barrels of oil at the Parque das Conchas fields 120 kilometres off the coast of Brazil, where ultra-deep water and a constant swell makes for tough operating conditions. A series of technology firsts unlocked major new resources beneath water nearly two kilometres deep. Huge technical challenges had to be overcome to bring the fields to production. Remote-controlled submarines operating in massive pressures on the ice-cold sea floor installed the equipment needed to produce the oil from deep beneath the seabed. A vast network of wells and pipelines connect reservoirs scattered up to 20 kilometres apart. In a double technical first, oil and gas are separated on the seabed before powerful electric pumps push the oil upwards from the low-pressure reservoirs to a specially converted production vessel on the surface that stores it for shipping to shore. And kilometres-long umbilical cables stretching out from the vessel channel continuous power and chemicals — vital to prevent frozen solids forming in the oil — to the production machinery far below. As long-term energy demand soars, accessing hard-to-reach resources such as those at Parque das Conchas will be increasingly vital. To develop the fields economically, the reservoirs of Parque das Conchas were connected through a single production process centred on the converted vessel. Production from the fields — currently ramping up — is the latest step in Shell’s strategy of delivering an additional 1 million barrels per day of oil and gas production in the coming years. At the heart of the Parque das Conchas project — formerly known as BC-10 — is a floating production, storage and offloading vessel (FPSO) with the capacity to produce up to 100,000 barrels of oil and 50 million cubic feet of natural gas a day. Shell is the operator with a 50% share with partners Petroleo Brasileiro (Petrobras) holding 35% and India’s ONGC Campos Ltda. 15%.

- The Iraqi Ministry of Oil awarded Shell and Petronas Carigali a contract for technical assistance in developing the Majnoon field, subject to ratification by the Iraqi authorities. Shell will operate the Development and Production Service Contract under the terms of the second licensing round for Iraqi oil and gas contracts. As laid out by the Ministry of Oil those terms call for 25% of the participating interests in all licences to be held by the Iraqi State. Shell will hold a 45% share, with Petronas holding 30%. The consortium bid a plateau production of 1.8 million barrels of oil per day, up from a current level of approximately 45,000 barrels of oil per day. Majnoon is one of the largest oil fields in the world, and Shell and Petronas look forward to developing this world class resource base with its partners.

- Royal Dutch Shell and Petronas of Malaysia won the rights to develop one of the world’s largest remaining untapped oil fields, as Iraq held its second auction of oil contracts since the U.S.-led invasion of the country in 2003. The companies proposed that a fee that Iraq would pay them to develop the Majnoon oil field be set at $1.39 per barrel and they pledged to increase output from the field to 1.8 million barrels per day, more than twice what Iraq had expected. The French oil major Total had joined with China National Petroleum Corp. to bid for the field, which it had sought to develop during Saddam Hussein’s rule. As some consolation, Total had a stake in a C.N.P.C.-led consortium that won the rights to the smaller Halfaya oil field. Iraq is offering 10 oil fields over two days in a rare opportunity for oil companies, from Western majors to Chinese and Indian state-owned giants. Despite the anticipation, no one bid for the 8.1-billion-barrel East Baghdad field, part of which is under the Sadr City slum in the Iraqi capital. Baghdad is still hit by periodic bombings and oil executives considered it unsafe to invest in that field. Mr. Shahristani said the Iraqi Oil Ministry would develop the East Baghdad field on its own. The deals have the potential to lift Iraqi oil output to levels that would rival those of the top oil producers, Saudi Arabia and Russia, and could rattle the geopolitical power balance in the Middle East. Competition had been expected to be fierce as the auction included the last of Iraq’s giant fields, with the Majnoon field holding 12.6 billion barrels. They are among the last untapped fields of their size in the world. Collectively, the fields on offer hold about as much oil as all that held by Libya, which is a member of the Organization of the Petroleum Exporting Countries. Iraqi Army helicopters buzzed overhead while convoys of armored sport utility vehicles carrying oil executives hidden behind tinted windows raced through Baghdad to the auction. Halfaya, with 4.1 billion barrels of reserves, was won by the consortium of C.N.P.C., Total and Petronas. They proposed a fee of $1.40 per barrel and a plateau production target of 535,000 barrels per day. Also on the auction block were a cluster known as the Eastern Fields in Diyala Province and Qayara, a reservoir in the northern province of Nineveh, where Sunni insurgents are active and Kurdish-Arab disputes have led to tension.

- Woodside Petroleum Ltd, an Australian-listed exploration & production company focused on Australian LNG, has announced an entitlement offer of new shares today. At present, Shell Energy Holding Australia Limited (“Shell”) has a 34.27% stake in Woodside. Shell confirms that it has accepted the offer which will cost A$862.5 million, so that it will maintain its 34.27% stake.

- The South African Petroleum Authorities (Petroleum Agency SA) awarded Shell a Technical Cooperation Permit for a one-year study to determine the hydrocarbon potential in parts of the Karoo Basin in central South Africa. The permit covers an area of approximately 185,000 square kilometers. The study will provide a better understanding of the area’s geology and shale gas potential, establishing the scope to pursue natural gas exploration. Shell will have the exclusive right to apply for exploration permits following completion of the study.

- In a move to consolidate its exploration and production portfolio in the North Sea and West Africa, Shell has agreed to acquire Hess Corporation’s entire upstream portfolio in Gabon and its interest in the Clair field, which lies in British waters west of the Shetland Islands. In return, Hess would acquire Shell’s interest in a pair of Norwegian offshore fields, Valhall and Hod. This transaction is a strategic trade and no cash payment is involved. The swap, which is still subject to government approval and other requisite consents, would rearrange the companies’ ownership interests in Gabon, the UK and Norway. Shell’s interest in its Gabonese production licenses would increase from 42.5% to 52.5% in Rabi-Kounga, from 44.3% to 94.3% in Toucan and from 20% to 60% in Atora. Its interest in the Ozigo exploration license would increase from 44.3% to 94.3%. Also, as part of the transaction, Shell’s stake in the Clair field of the UK would increase from 18.7% to 28%. Hess, in turn, would take over Shell’s interests in the Valhall and Hod fields. As a result, Hess’ stake in those fields would double—to 56.2% and 50%, respectively. BP is the operator of Clair as well as of Valhall and Hod.

- Royal Dutch Shell, Europe’s largest oil company, is planning to sell oil fields in Nigeria valued at up to $5 billion, The Sunday Times reported, citing sources linked to companies interested in the assets. The newspaper said the auction comes as Nigeria prepares to impose harsher terms on foreign operators and hand greater control to domestic companies. Royal Dutch, which declined to comment on the report, is the biggest and longest-standing Western oil producer in Nigeria. But production has been hampered by insecurity in the oil-rich Niger Delta, government funding shortfalls and an uncertain regulatory environment. The report coincided with a group led by Shell pledging to spend tens of billions of dollars developing Iraq’s Majnoon giant oil field over the next two decades. The Sunday Times said it understood that Shell recently launched a formal sales process overseen by Ann Pickard, head of Shell Nigeria. The Chinese state-owned oil group Sinopec had requested information, it said, and Nigeria’s independent oil group Oando and the London-listed Afren could also be interested. In Beijing, Sinopec was not immediately available for comment, while its domestic peer CNOOC — reported in September as being in talks with Nigeria to buy large stakes in some of Africa’s richest oil blocks — declined to comment, Reuters said. Shell had switched investment from Nigeria, which supplied 16 percent of its 2008 oil production, in response to growing violence from militants and a souring of relations with the government.

• Downstream news:

• Business/Finance news:

- At 07.00 GMT (08.00 CET and 02.00 EST) on Thursday 4 February, 2010 Royal Dutch Shell plc will release its fourth quarter and full year results and fourth quarter interim dividend announcement for 2009.

- Royal Dutch Shell and its Nigerian unit will face compensation demands in a Dutch court for alleged damage caused by oil spills in Nigeria after the court ruled it was competent to handle the cases. Environmental group Friends of the Earth Netherlands and four Nigerians aim to sue Shell and Nigeria-based Shell Petroleum Development Co. (SPDC) in a district court in The Hague on charges related to incidents of oil spills in Nigeria. Shell had asked for a ruling on whether the Dutch court had jurisdiction over SPDC's Nigerian activities, but the court rejected a claim of incompetence. The plaintiffs, farmers and fishermen in the oil-rich Niger Delta, say that oil leaking from Shell activities has polluted their farmlands and fish ponds, and are demanding that Shell clean up the oil and compensate them. After several failed attempts to address the issue in Nigeria, the plaintiffs decided to bring the cases to the Netherlands as Shell is a partly Dutch firm, said a spokeswoman for Friends of the Earth. Shell has said the spills in question were caused by sabotage. Oil companies active in Nigeria have grappled with militant sabotage activities in recent years which have hit production in the world's eighth-biggest crude oil exporter. Shell will be able to enter a statement of reply to the claims on February 10, the court spokeswoman said. Shell said on Wednesday it was disappointed with the court's ruling, describing the issues as 'purely Nigerian matters'. Friends of the Earth's Dutch arm has said Shell has the authority and the control to ensure oil spills are prevented and are cleaned up. They argue the spills are part of a systematic pattern over decades.