Total Share Discussion Threads

[waldron] 28/10/2006 17:57

Total, Occidental Agree With Bolivia on New Contracts (Update3)

By Matthew Craze and Jeb Blount

Oct. 28 (Bloomberg) -- Total SA, the world's fourth-largest oil company, and Occidental Petroleum Corp. agreed to invest more than $1 billion in Bolivia, where the government is seeking to change contract terms with foreign energy companies to gain more state control.

Petroleo Brasileiro SA, Brazil's state-controlled oil company and the biggest investor in Bolivia's energy industry, has yet to reach an accord with the government, Hydrocarbons Minister Carlos Villegas said on state radio late yesterday.

The announcement ends months of negotiations with international producers after Bolivian President Evo Morales vowed to seize assets from private companies. Bolivia has the second-largest natural gas reserves in South America.

``Here companies have to respect our rules, and our laws,'' Morales said at the signing ceremony in La Paz last night.

Total, based in Paris, will invest $720 million in a gas field it plans to operate and will spend $154 million exploring for gas in the Incahuasi field, Villegas said. A Total spokeswoman in Paris, Patricia Marie, declined to confirm those figures.

Total signed a contract for the Ipati field and expected today to sign agreements for the Aquio field and Bolivia's exploration block 20, with a 50 percent royalty stake on each block, she said. Total hasn't made a final investment decision on any of the projects, she said.

Total

``For the moment, these are only exploration blocks,'' she said. ``We wanted to stay in Bolivia and to be able to develop these reserves.''

Total found as much as 15 trillion cubic feet of gas at Incahuasi, equal to about half the South American country's reserves, the Bolivian government said in 2004. Morales, who campaigned for the rights of coca leaf growers in Bolivia before assuming the presidency in September last year, thanked French President Jacques Chirac's role in helping reach an agreement with Total.

Bolivia also signed an agreement with Vintage Petroleum Inc., which Los Angeles-based Occidental bought in January for $4.1 billion. The agreement says Occidental will explore for gas in the Naranjillo and Chaco Sur gas deposits.

The standoff with Petrobras extends six months of political debate between Bolivia and Brazil.

Brazil

``Brazil is the largest trading partner with Bolivia so souring this relationship has a number of implications for the Bolivian government,'' said Dino Barajas, a Los Angeles-based lawyer for Paul Hastings LLP who was voted the best energy lawyer in 2004 by California Lawyer Magazine. Other energy companies signed the deal to ``salvage their interests,'' Barajas said.

Morales campaigned on a pledge to obtain more revenue from its gas reserves to alleviate poverty in the continent's poorest nation. Rio de Janeiro-based Petrobras' operations in Bolivia accounted for almost a quarter of the Bolivian government's revenue last year, Chief Executive Officer Sergio Gabrielli said.

Since 1994 Petrobras has invested $1.5 billion in Bolivia on oil and gas exploration and production, construction and expansion of pipelines and to renovate the country's two refineries, which Petrobras also operates. The refineries produce all of Bolivia's gasoline and aviation fuel and 70 percent of its diesel oil.

Madrid-based Repsol-YPF, Buenos Aires-based Pan American Energy and London-based BG Group Plc are among companies that have yet to sign an agreement with the government. A deadline to reach agreement with the government expires today at midnight.

Repsol

Repsol reached a preliminary agreement with the government last night, Spain's El Mundo newspaper reported today, without citing anyone.

A spokesman for Repsol didn't immediately return calls from Bloomberg seeking a comment.

Morales, who was elected as Bolivia's first indigenous leader last year, sent soldiers to take over the country's natural gas industry on May 1 and threatened to evict foreign companies if they didn't agree to hand over their assets to Bolivia's state oil company YPF Bolivianos SA within 180 days.

Bolivia delayed investments in its energy infrastructure through state company YPF Bolivianos because it lacks capital, Morales said in a presidential speech earlier this month.

Bolivia agreed with Argentine President Nestor Kirchner on Oct. 19 to almost quadruple natural gas supplies to Argentina, lessening Bolivia's dependence on the Brazilian market.

Bolivia supplies over half of Brazil's gas needs.

To contact the reporter on this story: Matthew Craze in Buenos Aires at [e-mail] To contact the reporter on this story: Jeb Blount in Rio de Janeiro at [e-mail]

Last Updated: October 28, 2006 11:32 EDT

[waldron] 22/10/2006 06:21

Statement re Oil-for-Food

RNS Number:7773K
Total S.A.
20 October 2006


Paris, October 19, 2006 - As often referred to in the press, for over 2 years
the conditions for applying the United Nations sponsored oil-for-food program
have been the subject of different investigations.

On October 19, 2006 Mr. Christophe de Margerie, President Exploration and
Production for the Total Group and member of the Executive Committee, after
being held in custody for 48 hours, has been formally charged within the
framework of the investigation being held in Paris.

The Group would like to reassure Mr. de Margerie of its solidarity.

Total confirms that at no time did the Group circumvent the United Nations
embargo against Iraq and strictly adhered to the rules of the oil-for-food
program organised under the control of the United Nations. All oil acquired by
the company, without exception, was purchased officially with the required
authorisations under UN within the framework of the oil-for-food program put in
place in 1996. The Group has never purchased, either directly or indirectly, oil
that has been smuggled illegally from Iraq.

The Group reaffirms that it exercises its activities while respecting the law
and adhering to its ethical code and values regardless of the difficulty and the
complexity of its different activities.

Total is one of the world's major oil and gas groups, with activities in more
than 130 countries. Its 95,000 employees put their expertise to work in every
part of the industry - exploration and production of oil and natural gas,
refining and marketing, gas trading and electricity. Total is working to keep
the world supplied with energy, both today and tomorrow. The Group is also a
first rank player in chemicals. www.total.com



This information is provided by RNS
The company news service from the London Stock Exchange

END

STRVBLBLQBBFFBL

[waldron] 22/10/2006 06:14

Drilling Report

RNS Number:5677K
Total S.A.
17 October 2006


Confirmation of the Potential of a Fourth Production Zone
With the Orquidea-2 Discovery in Angola's Offshore Block 17

Paris, October 17,2006 - Sociedade Nacional de Combustiveis de Angola (Sanangol)
and Total E&P Angola, a wholly-owned subsidiary of Total, announce that the
Orquidea-2 appraisal well has confirmed and expanded the potential of the
Orquidea discovery in Block 17 offshore Angola.

Located approximately 2 Kilometres from the Orquidea-1 discovery well and
drilled in a water depth of 1,165 metres, Orquidea-2 identified and confirmed
the Miocene objectives encountered by Orquidea-1 and also identified deeper
Oligocene reservoir levels. The Oligocene and Miocene objectives are both oil-
bearing.

The Orquidea structure is located near the Lirio, Cravo and Violeta finds. This
dual drilling success confirms the potential for development of a fourth
production zone in Block 17, for which preliminary design is underway. The
production zone is located in the northwestern area of Block 17 and will
complete the Girassol and Dalia zones, to be followed soon by the Pazflor
production zone,

Sonangol is the Block 17 concessionaire. Total E&P Angola, operator, has a 40%
interest in Block 17, alongside partners Esso Exploration Angola (Block 17)
Limited (20%), BP Exploration (Angola) Ltd. (16.67%), Statoil Angola Block 17 AS
(13,33%) and Norsk Hydro Dezassete a.s. (10%).

Block 17:
Deep-offshore Block 17 is Total's principal producing asset in Angola. It is
composed of three major production zones: Girassol, which is in production,
Dalia, which is under development with production scheduled to begin end 2006,
and Pazflor, where development studies are underway. The possibility of a fourth
major production zone, based on Cravo, Lirio, Violeta and Orquidea discoveries,
is currently being studied.

On the Girassol structure, production from the Girassol field and the Jasmim
field, a satellite to Girassol that came on stream in November 2003, averaged
nearly 250,000 barrels per day of oil over 2005. The Rosa field, developed as a
15 kilometre tie back to the Girassol FPSO (Floating, Production, Storage and
Offloading) facility, was approved in July 2004 and is scheduled to come on
stream in the first half of 2007. It is expected to maintain the production of
the FPSO at its plateau of 250,000 barrels per day over a number of years.

Total is one of the world's major oil and gas groups, with activities in more
than 130 countries. Its 95,000 employees put their expertise to work in every
part of the industry - exploration and production of oil and natural gas,
refining and marketing, gas trading and electricity, Total is working to keep
the world supplied with energy, both today and tomorrow. The Group is also a
first rank player in chemicals. www.total.com





This information is provided by RNS
The company news service from the London Stock Exchange

END

DRLKDLBFQBBLFBK

[waldron] 22/10/2006 06:10

October 22, 2006



Tussle between Baghdad, Kurds over crude resources



By Syed Rashid Husain

DAWN



RIYADH, Oct 21: Temperatures are soaring. And the apples of discord are the energy riches of northern Iraq -– now firmly under Kurdish control. Stakes are getting higher as the issue enters a new, defining phase in the war-torn Iraq.



Already there are reports of a December deadline to the Iraqi government to finalise the oil law. Analysts are pointing out that the law will offer a much higher rate of return to the oil majors than currently offered by any other regional producer. Many say the new draft would lock the oil majors' control over Iraq's 'patrimony' for decades. Little wonder that the major western oil majors, who have been complaining of little access to the oil riches of the region, are expecting to get the best of the option in Iraq.



And this is happening at a point in time when the Iraqi oil industry is beset with issues of all sorts and the battle to gain control over its energy riches is assuming critical dimensions. Marred by decades of neglect and lack of investments, crippled by years of embargo and non-availability of smart technology, the Iraqi energy infrastructure is currently confronted with major insurgency, targeting its oil and energy infrastructure. And compounding the problem is the ongoing tussle between the central government in Baghdad and the Kurdistan regional government (KRG) on the issue of controlling the crude resources of the energy rich region.There is a considerable infighting going on in the corridors of power in Baghdad and Irbil. The situation is holding the future of the Iraqi oil industry to ransom in many ways. The Kurdistan regional government headed by Masoud Barzani is accusing the central government of sabotaging oil investments in the region. "The people of Kurdistan chose to be in a voluntary union with Iraq on the basis of a constitution. If Baghdad ministers refuse to abide by the constituent the people of Kurdistan reserve the right to reconsider the choice," he warned.



Earlier the Iraqi oil minister had argued that all the oil deals signed between the KRG and the international companies needed to be ratified by Baghdad. The KRG has signed production sharing agreements with four consortiums for fields in its autonomous areas and more are in offing.



"Since 2003, IOCs have invested more than $100 million in exploration activities in our region and significant discoveries have been made in our region. Baghdad has done nothing to encourage investment is other parts of Iraq," Barzani argued as the heated debate continues.



Kurdistan is oil rich. With a federal structure, apparently in sight in Iraq, the issue of who controls the oil riches of Iraq is assuming greater importance. The Kurdistan regional government is basing its arguments on the Iraqi constitution, approved in August last year that concedes that Baghdad would not have exclusive control of Iraqi oil and gas reserves.



A new law drafted by the KRG will seal its claim to all oil reserves in the north. KRG has thus proposed to set up five new companies that will operate all the existing fields in the north, explore new ones and market all petroleum produced. The regional government of Kurdistan is also holding direct negotiations for concessions with foreign companies, bypassing the central government in Baghdad.



Iraqi Kurdistan has proven reserves of 25,000 million barrels. Another 20,000 million barrels are in the category of probable reserves. Put statistically, this is about 22.5 per cent of the Iraq's total reserves. Production which is minimal currently is targeted to reach 200,000 barrels per day over the short term and one million barrels a day thereafter, in the comparative longer run. The region also has substantial gas reserves to boast of.



Add to this Kirkuk, Iraq's oil rich northern city, which is today probably the most critical and prized area in determining the future of Iraq. The giant Kirkuk oil field is estimated to have 10,000 million barrels and this is believed to be only a fraction of its true potential. In operation since 1927, it currently pumps about one million barrels per day, almost half of Iraq's total current output.



The ongoing insurgency has also prevented the Iraqi government and international oil companies (IOCs) from undertaking the urgently required development work in many areas. The current Iraqi oil minister earlier in August signalled the race for official deals worth $20 billion would start this autumn. However, in the wake of the prevalent security environment in the country, much exploration activity seems improbable.However, the IOC's are reportedly working behind the scene to collect data and be ready to undertake assignments as soon as the situation on the ground improves. Oil majors Shell, ExxonMobil, BP, Total and Chevron are among the companies eager to get back into Iraq -– as soon situation permits -– for Iraq's oil is 'cheap and easy to produce'.



Over the past three years, scores of international firms have signed up for technical studies and training programmes that granted them regular access to oil ministry officials outside Iraq. Consequently, some of the oil majors have gained and gathered a wealth of information on Iraqi assets. These oil majors have also been reportedly scrutinising data on some of the biggest assets in country, especially in south. Total for instance has been in line for Majnoon and Bin Umar fields, ENI and Repsol have expressed interest in Nassiriyah and Shell was known to be keen on Ratawi.



When fully tapped, these southern fields as well as West Qurna and Halfaya could help boost Iraqi output to three million bpd. Oil majors are also helping to trouble shoot at the North and South Rumaila oilfields, as well as at other problem fields currently ensuring the country's production and exports capacity. A big if indeed!



And in the meantime, Baghdad and Irbil also need to settle issues between them before any major movement could be made. In order to achieve this, KRG will ultimately need to patch up with Baghdad. This will not be only to the benefit of Baghdad but KRG also has reasons for reaching a compromise with the central government in Baghdad on the issue. For the land locked Kurdistan, finding exports outlet is crucial. The existing Ceyhan pipeline to Turkey, according to experts, was not able to sustain any additional crude exports from north. Hence coordination with Baghdad is an imperative for KRG too.



It's a two way process and despite political differences, pure economic reason commands a more mature posture. For the sake of the people of the country, the ongoing tussle needs to be resolved -– one way or the other -– before concrete steps could be taken towards exploiting the energy riches of Iraq.

[waldron] 19/10/2006 07:31

October 18, 2006 - 1:04 PM
Six Swiss companies make European Top 100

The commodities and raw materials group Glencore International was Switzerland's national champion (Keystone)

Switzerland is home to six of Europe's largest companies in terms of turnover – Glencore, Nestlé, Novartis, Roche, ABB and Adecco – according to a business survey.

Some of the most profitable firms in Europe are in the pharmaceutical industry. Novartis, whose sales grew by 21 per cent in 2005, rose from 65th to 56th in the ranking.


The 2005 league table of Europe's biggest companies was published jointly on Wednesday by business information provider Dun & Bradstreet Switzerland and the Swiss business newspaper Handelszeitung.

Two Swiss companies feature in the top 20. The Zug-based company Glencore International, one of the world's largest suppliers of commodities and raw materials, was the national champion, coming sixth overall, with revenue totalling €76 billion (SFr120 billion) – two places up on last year.

The food giant Nestlé, the leading food business ahead of rivals Unilever, Kraft and Danone, came 12th with total revenue of SFr92 billion.

Four other Swiss companies made it into the Top 100, including the pharmaceutical groups Novartis (56th) and Roche (68th).

These two companies both had big jumps in turnover (21 per cent and 19.2 per cent respectively) – even greater than other big industry players, for example 8.4 per cent for GlaxoSmithKline and 7.4 per cent for Aventis.

Novartis and Roche were followed by the ABB engineering group in 82nd position and the employment agency Adecco in 86th. ABB has managed a recent turnaround and successful move back into profit, following a tough period when it nearly went bust.


Domination

Germany dominated the Top-100 business league, with 28 companies represented. This was followed by 24 French, 17 British and six Swiss firms.

Europe's largest company was Royal Dutch Shell (SFr411 billion), with fellow oil companies BP and Total coming second and fourth respectively.

Car manufacturers DaimlerChrysler (third) and Volkswagen (fifth) were also among the leaders, along with German electronics firm Siemens (seventh) and French retail chain Carrefour (eighth).

The survey revealed that 2005 was a very good year for most European companies with 80 per cent enjoying greater sales.

From an industry perspective, European pharmaceutical businesses were extremely profitable last year. Aventis (France), Celesio (Germany), GlaxoSmithKline and AstraZeneca (Britain) all had operating profit margins of around 30 per cent.

swissinfo with agencies




KEY FACTS

2005 Top-100 ranking by turnover (2004 position in brackets)
1 (1) Royal Dutch Shell (Netherlands), €259 billion (SFr411 billion).
2 (2) BP (Britain), €214 billion.
3 (3) DaimlerChrysler (Germany), €149 billion.
4 (4) Total SA (France), €143 billion.
5 (5) Volkswagen (Germany), €95 billion.
6 (8) Glencore International (Switzerland), €76 billion.
12 (11) Nestlé (Switzerland), €58 billion.
56 (65) Novartis (Switzerland), €27 billion.
68 (73) Roche (Switzerland), €22 billion.
82 (85) ABB (Switzerland), €19 billion.
86 (80) Adecco (Switzerland), €18 billion.

RELATED SITES

Handelszeitung newspaper (German) (
Dun & Bradstreet (

--------------------------------------------------------------------------------


URL of this story:

[waldron] 16/10/2006 19:23

Total's 3rd-Qtr Refining Margin Fell 35% as Oil Rose (Update1)

By Tom Cahill

Oct. 16 (Bloomberg) -- Total SA, Europe's largest oil refiner, said profit from converting crude oil into gasoline, diesel and other products fell 35 percent in the third quarter as oil and gas prices rose.

Refining margins in the quarter dropped to $28.7 a ton from $44.3 a year earlier, Paris-based Total said today on its Web site. Brent crude rose 13 percent to $69.5 a barrel in the same period. The sales price of petroleum liquids rose 13 percent to $65.5 a barrel in the quarter and average gas prices rose 20 percent to $5.59 per million British thermal units, Total said.

Total and rivals are preparing to report what may be record third-quarter earnings after oil rose to a record $78.40 a barrel on July 14. The companies get far more of their profits from pumping oil than from turning it into usable products through refining. Refining and marketing in the second quarter earned Total 787 million euros ($985 million) in operating profit, less than a third that from exploration and production.

``These figures indicate another set of concrete results,'' said Salah Seddik, a money manager at Richelieu Finance in Paris, which manages more than $5 billion. Refining margins ``are down from the same period last year when we had the hurricane damage.''

Total is set to release results on Nov. 8.

Refinery Margin

Total and other oil companies had higher refining margins a year earlier after Hurricane Katrina knocked out refineries in the U.S. Gulf Coast. Total boosted shipments of gasoline to the U.S. from Europe to meet shortages as a result of storm damage.

BP Plc on Oct. 4 said its refining global indicator margin, a measure of the profitability of its refineries worldwide, fell to $8.40 a barrel in the third quarter from $12.35 a year earlier. ConocoPhillips said on Oct. 3 margins for its U.S. refineries fell to $14.86 a barrel during the quarter from $18.51 a year earlier.

A lack of refinery investment in Europe and the U.S., where no new plants have been built since 1976, has driven refining margins higher in recent years as economic growth spurred demand for fuel. The third-quarter margins shrank by 25 percent from the second quarter's $38.30 a ton.

Total has invested in its refining operations to take advantage of wide margins, particularly from turning crude oil into diesel in Europe.

New Projects

Total last week started tests on a 550 million-euro distillate hydrocracker unit at its Normandy refinery, the oldest and largest in France. The equipment will produce 1.3 metric tons of sulfur-free diesel annually and is set to be running by the end of the month, Michel Benezit, head of Total's refining and marketing division, said in an Oct. 9 interview.

Total agreed in May to build a $6 billion export refinery in Saudi Arabia with state-run oil company Saudi Aramco. The plant, to be built in Yanbu, will produce 400,000 barrels a day of products to help meet demand from Europe and North America.

Refining margins don't always predict profit. Total's operating profit from refining and marketing rose 7 percent in the second quarter even though refining margins in that period fell 14 percent to $38.3 a ton.

Total shares rose 5 cents, or 0.10 percent, to 52.4 euros. The shares have risen 0.6 percent so far this year, compared with BP's drop of 3.8 percent and Royal Dutch Shell Plc.'s decline of 0.17 percent.

To contact the reporter on this story: Tom Cahill in Paris at [e-mail]

Last Updated: October 16, 2006 05:17 EDT

[grupo guitarlumber] 15/10/2006 06:14

Oil and gas rights: the weapons of a new Cold War

In recent weeks, hardliners in the Kremlin have cancelled or renegotiated deals with Western firms in order to pursue Russia's national interests - but their plans may backfire

Oliver Morgan
Sunday October 15, 2006
The Observer


If there were any doubt about the ruthlessness with which Russia is executing its new nationalist energy policy, it was smashed last week. In an almost cursory announcement, Alexey Miller, chairman of the management committee of the massive Russian energy group Gazprom, told TV channel Russia Today that the state-controlled company would develop the 'supergiant' Shtokman gas field in the Arctic by itself and would not be inviting Western companies to join in.
At a stroke, Miller cut off five hopeful Western oil majors - Conoco and Chevron of the US, Statoil and Norsk Hydro of Norway, and France's Total, from taking a stake in the £10bn project to develop the world's third largest gas field, with 3.2 trillion cubic metres of reserves.

At the same time, Gazprom said it was abandoning plans to use Shtokman, which lies 500km north of the port city of Murmansk, to provide liquefied natural gas for transport by ship to the US, in favour of selling the gas into Europe by pipeline. The move could not have been a firmer snub to the US. It not only cut out two US oil companies from access to precious reserves, but deprived America of a valuable resource from a country that until recently appeared to be a reliable and stable ally.

Andrew Neff, energy analyst at Global Insight in Washington, says: 'There is an emerging demand/supply gap in the US which means that these developments will be seen negatively by US energy policymakers. Liquefied natural gas was going to be a magic bullet and Shtokman was an important part of that.'

The Shtokman decision does not stand on its own. It comes in a year that has already seen Gazprom cut supplies to Ukraine, while government ministers have more recently cast doubt over investments by Western companies in other areas. Shell's involvement in the £11bn Sakhalin-2 oil and gas project off Russia's east coast was thrown up in the air last month, as was US giant Exxon's in sister project Sakhalin-1. Meanwhile, there have been concerns over BP's rights to develop the 1.9 trillion cubic metre Kovykta field in Eastern Siberia, and Total has had similar problems in the Arctic. The main commercial benefactors of these moves are the mighty Gazprom and Rosneft, the state-controlled oil group.

Gazprom's reserves are bigger than those of any country in the world except Saudi Arabia and Iran. Production last year increased by 138 per cent, its profits by 169 per cent. The company is enmeshed into Russian life - it has huge influence over the towns in which it operates, running schools and health services, even operating leisure centres.

It is woven into the political fabric too. Gazprom chairman Dmitry Medvedev is also first Deputy Prime Minister in Putin's government, and board director German Gref is minister for economic development and trade. Miller, who took over the company in 2001, owes his position to Putin's patronage. It should come as little surprise that decisions affecting the company's future are driven as much by political factors as commercial.

Chris Weafer, head of strategy at Moscow-based Alfa bank, says: 'The major decisions with these companies - as happens with, for example, the United Aircraft Corporation - are taken in the Kremlin. That is because they have been identified as national champions - they combine an important economic role with a geopolitical one.'

The Russian government has until recently been content to allow foreign investment in Russian strategic industries as long as Russian entities maintain control. With the Shtokman decision - Gazprom would have taken a 51 per cent share of any venture - this appears to have changed. Why?

The first reason is the one given by Miller: that Gazprom and the Westerners could not agree terms. Despite its huge reserves, Gazprom needs capital and expertise to exploit them. According to Moscow-based Deutsche Bank/UFG, production from existing fields will fall from today's level of about 600 billion cubic metres to some 140 billion cm in 2020, which means that opening up fields like Shtokman and Kovykta is crucial.

In the past, with a low oil and gas price, Russia has signed deals (such as Sakhalin) it now believes are disadvantageous. With today's high prices, the balance may have swung too far the other way. As Stephen O'Sullivan of DB/UFG says: 'Foreign companies may have concluded that the political, technical and financial risks involved in the project were such that they could not offer Gazprom what it wanted to bring them on board as partners.' But, he adds: 'This was a political decision, along the same theme as with Sakhalin and Kovykta.'

Weafer agrees: 'Moscow has got tired of US criticism over a range of issues, most recently Russia's attitude to Georgia. Another sticking point was the US refusal to admit Russia to the World Trade Organisation at the July G8 summit.'

Meanwhile, as relations with the US sour, those with its Western neighbour Germany warm. Putin met Angela Merkel last week. Analysts sense this may explain the timing of Miller's announcement, which was greeted with enthusiasm by Burckhard Bergmann, chairman of E.ON subsidiary Ruhrgas. 'Gazprom's decision is good for the supply of gas to Europe because it improves the production base,' he said. Such enthusiasm is unsurprising - Bergmann is also a board member of Gazprom

Gazprom's plan was to allow access to reserves in return for access to Western markets. But Miller's hints that he would like to take a stake in Centrica, owner of British Gas, earlier this year were greeted with barely disguised hostility by UK ministers, who last week reiterated that such a move would be examined on national interest grounds. And after one of Russia's state banks bought a 5 per cent stake in European aerospace champion EADS, Putin's requests for a Russian seat on the board were rebuffed. Analysts say there are indications that Putin's attempts to balance liberal reformers in his administration, who include Medvedev and Gref, with 'hardliners' may be suffering a reactionary backlash.

Experts point to the influence of Igor Sechin, chairman of state-controlled oil group Rosneft, deputy head of Putin's administration, and one of a group known as the 'Siloviki' with close links to the security services.

There are discussions about restructuring BP's joint-venture with Russian group TNK, which hopes to develop Kovykta. Here, Gazprom would like to buy out the three oligarchs who currently own TNK, but it will have to fight off Rosneft. Meanwhile, it is seeking to improve terms for entry into the Sakhalin-2 project - Rosneft is already involved - in an agreement that was made with Shell last year to swap assets it has on the mainland for a stake.

From where the international oil groups like Chevron, Statoil, BP and Shell are standing, this all looks bad. Together, they now account for only 20 per cent of the world's reserves.

There could be nasty repercussions in Russia, too. Frank Harris, analyst at consultancy Wood Mackenzie Harris, says Gazprom may have abandoned the Shtokman partnership from a position of weakness - it would have cost too much. Costs could spiral as expertise is spread thinly across the growing number of projects around the world.

'Two years ago, liquefaction plants were built at $300-400 per tonne of capacity. Now that is probably $600 and may be even more,' he says.

Neff adds: 'Once they had decided to keep foreign companies out, they could not afford LNG.' This could deprive Russia of one of the key emerging technologies in oil and gas production in future.

The silver lining for the West is that Putin has hinted that companies may be allowed back into Shtokman on a contractual, rather than equity, basis. This would mean oil service operators, such as KBR and Technip of France, moving in.

From Gazprom's point of view these pose less of a short-term threat. But in the long run, it has to develop technical expertise of its own, and doing so through contracts, rather than equity partnerships, may well limit its ability to do so in the future.

[grupo guitarlumber] 14/10/2006 16:43

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