The stakes could not be higher for China, the largest investor in South Sudan's oil sector, as fierce fighting continues between forces loyal to President Salva Kiir and those of his former deputy. Some of the largest oil fields China operates are in areas controlled by fighters backing Riek Machar, the country's vice-president until he was sacked in July.
Oil production has already dropped by 20% since the onset of the conflict three weeks ago and more than 300 Chinese workers have been evacuated. The spectre of their Libyan experience also weighs heavily on the Chinese minds - project after project now lies deserted because of heavy fighting during the Arab Spring uprising of 2011, inflicting huge losses on China.
It is no surprise then that China is putting its full weight behind the peace talks in Addis Ababa. Foreign Minister Wang Yi was in the Ethiopian capital on Monday and made it clear that China wanted both sides to stop fighting and seek a reasonable and rational way out.
According to media reports, he was even willing to mediate personally between the warring sides. It is unclear if Mr Wang has been able to do this, but his message was important, reports the BBC's Emmanuel Igunza from Addis Ababa. It demonstrates how seriously the international community is taking the crisis - with many diplomats present at the talks, he says.
Apart from China's Africa envoy Zhong Jianhua, US special envoy Donald Booth and EU special representative Alexander Rondos are also attending.
Fraught with risk
China invested some $20bn (£12bn) in Sudan before it split into two countries in 2011, according to Chinese media reports. Another $8bn was pledged to President Kiir during his visit to China the year following secession, to be used for infrastructure projects and the oil sector.
The heavy investment seems to have borne fruit, as in the first 10 months of 2013, China imported 1.9 million tonnes of oil (nearly 14 million barrels) from South Sudan, twice as much as China imports from Nigeria each year.
Though amounting to less than 1% of China's total oil imports, it makes up roughly two-thirds of oil exported by the world's youngest nation and is expected to increase.
Two years ago, China suffered heavy losses in its Libyan projects, including infrastructure, telecommunications and oil. Many constructions were halted and sites looted or destroyed during the revolution which toppled long-time leader Muammar Gaddafi.
The total loss was estimated by several Chinese media reports to be in the region of $20bn, although no official figures exist.
Compensation talks with the new Libya government stalled as their priority was very much on nation-building and improving the living conditions of the Libyan people.
Continue reading the main story
Economic boom
Experts point out that China has taken tremendous risks in its search for oil.
This is because the country's economic boom continues to require a great deal of oil - home production is limited and reliance on exports reached 56% in 2012.
But all the known global markets have been dominated by Western companies or have been off-limits because of sanctions, leaving China with little choice but to adopt high-risk strategies.
Nowadays, more than half of China's investment in the overseas oil sector is found in areas which are considered unstable, including Iran, Nigeria, Sudan, South Sudan and Venezuela.
Chinese workers have been caught in the conflicts for control of oil by various forces in Sudan.
In 2008, five Chinese oil workers kidnapped by rebels in Sudan's South Kordofan province were killed during a rescue attempt. Four years later, another 29 Chinese construction workers were abducted in the same province and were only released 11 days later after intense negotiations.
The Sudanese rebels were quoted as saying that they did not want to harm the workers, but they aimed to send a signal to the Chinese government that they did not want them to be involved in the conflict over oil in Sudan.
But what is currently happening in South Sudan seems far more serious than kidnappings.
China must be praying for a quick end to the trouble so life on the oil fields can return to normal.
In the meantime, some experts also predict that China might be forced into re-thinking its high-risk oil strategy
Source: BBC
Showing posts with label Oil. Show all posts
Showing posts with label Oil. Show all posts
Wednesday, January 8, 2014
Friday, April 26, 2013
The Secret of the Seven Sisters
On August 28, 1928, in the Scottish highlands, began the secret story of oil.
Three men had an appointment at Achnacarry Castle - a Dutchman, an American and an Englishman.
The Dutchman was Henry Deterding, a man nicknamed the Napoleon of Oil, having exploited a find in Sumatra. He joined forces with a rich ship owner and painted Shell salesman and together the two men founded Royal Dutch Shell.
The American was Walter C. Teagle and he represents the Standard Oil Company, founded by John D. Rockefeller at the age of 31 - the future Exxon. Oil wells, transport, refining and distribution of oil - everything is controlled by Standard oil.
The Englishman, Sir John Cadman, was the director of the Anglo-Persian oil Company, soon to become BP. On the initiative of a young Winston Churchill, the British government had taken a stake in BP and the Royal Navy switched its fuel from coal to oil. With fuel-hungry ships, planes and tanks, oil became "the blood of every battle".
The new automobile industry was developing fast, and the Ford T was selling by the million. The world was thirsty for oil, and companies were waging a merciless contest but the competition was making the market unstable.
That August night, the three men decided to stop fighting and to start sharing out the world's oil. Their vision was that production zones, transport costs, sales prices - everything would be agreed and shared. And so began a great cartel, whose purpose was to dominate the world, by controlling its oil.
Four others soon joined them, and they came to be known as the Seven Sisters - the biggest oil companies in the world.
EPISODE 1: DESERT STORMS
In the first episode, we travel across the Middle East, through both time and space.
Since that notorious meeting at Achnacarry Castle on August 28, 1928, they have never ceased to plot, to plan and to scheme.
Throughout the region's modern history, since the discovery of oil, the Seven Sisters have sought to control the balance of power.
They have supported monarchies in Iran and Saudi Arabia, opposed the creation of OPEC, profiting from the Iran-Iraq war, leading to the ultimate destruction of Saddam Hussein and Iraq.
The Seven Sisters were always present, and almost always came out on top.
EPISODE 2: THE BLACK EL DORADO
At the end of the 1960s, the Seven Sisters, the major oil companies, controlled 85 percent of the world's oil reserves. Today, they control just 10 percent.
New hunting grounds are therefore required, and the Sisters have turned their gaze towards Africa. With peak oil, wars in the Middle East, and the rise in crude prices, Africa is the oil companies' new battleground.
But the real story, the secret story of oil, begins far from Africa.
In their bid to dominate Africa, the Sisters installed a king in Libya, a dictator in Gabon, fought the nationalisation of oil resources in Algeria, and through corruption, war and assassinations, brought Nigeria to its knees.
Oil may be flowing into the holds of huge tankers, but in Lagos, petrol shortages are chronic.
The country's four refineries are obsolete and the continent's main oil exporter is forced to import refined petrol - a paradox that reaps fortunes for a handful of oil companies.
Encouraged by the companies, corruption has become a system of government - some $50bn are estimated to have 'disappeared' out of the $350bn received since independence.
But new players have now joined the great oil game.
China, with its growing appetite for energy, has found new friends in Sudan, and the Chinese builders have moved in. Sudan's President Omar al-Bashir is proud of his co-operation with China - a dam on the Nile, roads, and stadiums.
In order to export 500,000 barrels of oil a day from the oil fields in the South - China financed and built the Heglig pipeline connected to Port Sudan - now South Sudan's precious oil is shipped through North Sudan to Chinese ports.
In a bid to secure oil supplies out of Libya, the US, the UK and the Seven Sisters made peace with the once shunned Colonel Muammar Gaddafi, until he was killed during the Libyan uprising of 2011, but the flow of Libyan oil remains uninterrupted.
In need of funds for rebuilding, Libya is now back to pumping more than a million barrels of oil per day. And the Sisters are happy to oblige.
EPISODE 3: THE DANCING BEAR
In the Caucasus, the US and Russia are vying for control of the region. The great oil game is in full swing. Whoever controls the Caucasus and its roads, controls the transport of oil from the Caspian Sea.
Tbilisi, Erevan and Baku - the three capitals of the Caucasus. The oil from Baku in Azerbaijan is a strategic priority
for all the major companies.
From the fortunes of the Nobel family to the Russian revolution, to World War II, oil from the Caucasus and the Caspian has played a central role. Lenin fixated on conquering the Azeri capital Baku for its oil, as did Stalin and Hitler.
On his birthday in 1941, Adolf Hitler received a chocolate and cream birthday cake, representing a map. He chose the slice with Baku on it.
On June 22nd 1941, the armies of the Third Reich invaded Russia. The crucial battle of Stalingrad was the key to the road to the Caucasus and Baku’s oil, and would decide the outcome of the war.
Stalin told his troops: "Fighting for one’s oil is fighting for one’s freedom."
After World War II, President Nikita Krushchev would build the Soviet empire and its Red Army with revenues from the USSR’s new-found oil reserves.
Decades later, oil would bring that empire to its knees, when Saudi Arabia and the US would conspire to open up the oil taps, flood the markets, and bring the price of oil down to $13 per barrel. Russian oligarchs would take up the oil mantle, only to be put in their place by their president, Vladimir Putin, who knows that oil is power.
The US and Putin‘s Russia would prop up despots, and exploit regional conflicts to maintain a grip on the oil fields of the Caucusus and the Caspian.
But they would not have counted on the rise of a new, strong and hungry China, with an almost limitless appetite for oil and energy. Today, the US, Russia and China contest the control of the former USSR’s fossil fuel reserves, and the supply routes. A three-handed match, with the world as spectators, between three ferocious beasts – The American eagle, the Russian bear, and the Chinese dragon.
EPISODE 4: A TIME FOR LIES
Peak oil – the point in time at which the highest rate of oil extraction has been reached, and after which world production will start decline. Many geologists and the International Energy Agency say the world's crude oil output reached its peak in 2006.
But while there may be less oil coming out of the ground, the demand for it is definitely on the rise.
The final episode of this series explores what happens when oil becomes more and more inaccessible, while at the same time, new powers like China and India try to fulfill their growing energy needs.
And countries like Iran, while suffering international sanctions, have welcomed these new oil buyers, who put business ahead of lectures on human rights and nuclear ambitions.
At the same time, oil-producing countries have had enough with the Seven Sisters controlling their oil assets. Nationalisation of oil reserves around the world has ushered in a new generation of oil companies all vying for a slice of the oil pie.
These are the new Seven Sisters:
Saudi Arabia's Saudi Aramco, the largest and most sophisticated oil company in the world; Russia's Gazprom, a company that Russia's President Vladimir Putin wrested away from the oligarchs; The China National Petroleum Corporation (CNPC), which, along with its subsidiary, Petrochina, is the world's secnd largest company in terms of market value; The National Iranian Oil Company, which has a monopoly on exploration, extraction, transportation and exportation of crude oil in Iran – OPEC's second largest oil producer after Saudi Arabia; Venezuela's PDVSA, a company the late president Hugo Chavez dismantled and rebuilt into his country's economic engine and part of his diplomatic arsenal; Brazil's Petrobras, a leader in deep water oil production, that pumps out 2 million barrels of crude oil a day; and Malaysia's Petronas - Asia's most profitable company in 2012.
Mainly state-owned, the new Seven Sisters control a third of the world's oil and gas production, and more than a third of the world's reserves. The old Seven Sisters, by comparison, produce a tenth of the world's oil, and control only three percent of the reserves.
The balance has shifted.
Source: Al Jazeera
Three men had an appointment at Achnacarry Castle - a Dutchman, an American and an Englishman.
The Dutchman was Henry Deterding, a man nicknamed the Napoleon of Oil, having exploited a find in Sumatra. He joined forces with a rich ship owner and painted Shell salesman and together the two men founded Royal Dutch Shell.
The American was Walter C. Teagle and he represents the Standard Oil Company, founded by John D. Rockefeller at the age of 31 - the future Exxon. Oil wells, transport, refining and distribution of oil - everything is controlled by Standard oil.
The Englishman, Sir John Cadman, was the director of the Anglo-Persian oil Company, soon to become BP. On the initiative of a young Winston Churchill, the British government had taken a stake in BP and the Royal Navy switched its fuel from coal to oil. With fuel-hungry ships, planes and tanks, oil became "the blood of every battle".
The new automobile industry was developing fast, and the Ford T was selling by the million. The world was thirsty for oil, and companies were waging a merciless contest but the competition was making the market unstable.
That August night, the three men decided to stop fighting and to start sharing out the world's oil. Their vision was that production zones, transport costs, sales prices - everything would be agreed and shared. And so began a great cartel, whose purpose was to dominate the world, by controlling its oil.
Four others soon joined them, and they came to be known as the Seven Sisters - the biggest oil companies in the world.
EPISODE 1: DESERT STORMS
In the first episode, we travel across the Middle East, through both time and space.
We waged the Iran-Iraq war and I say we waged it, because one country had to be used to destroy the other.
- Xavier Houzel, an oil trader
Since that notorious meeting at Achnacarry Castle on August 28, 1928, they have never ceased to plot, to plan and to scheme.
Throughout the region's modern history, since the discovery of oil, the Seven Sisters have sought to control the balance of power.
They have supported monarchies in Iran and Saudi Arabia, opposed the creation of OPEC, profiting from the Iran-Iraq war, leading to the ultimate destruction of Saddam Hussein and Iraq.
The Seven Sisters were always present, and almost always came out on top.
EPISODE 2: THE BLACK EL DORADO
At the end of the 1960s, the Seven Sisters, the major oil companies, controlled 85 percent of the world's oil reserves. Today, they control just 10 percent.
New hunting grounds are therefore required, and the Sisters have turned their gaze towards Africa. With peak oil, wars in the Middle East, and the rise in crude prices, Africa is the oil companies' new battleground.
Everybody thought there could be oil in Sudan but nobody knew anything. It was revealed through exploration by the American company Chevron, towards the end of the 70s. And that was the beginning of the second civil war, which went on until 2002. It lasted for 19 years and cost a million and a half lives and the oil business was at the heart of it.
- Gerard Prunier, a historian
But the real story, the secret story of oil, begins far from Africa.
In their bid to dominate Africa, the Sisters installed a king in Libya, a dictator in Gabon, fought the nationalisation of oil resources in Algeria, and through corruption, war and assassinations, brought Nigeria to its knees.
Oil may be flowing into the holds of huge tankers, but in Lagos, petrol shortages are chronic.
The country's four refineries are obsolete and the continent's main oil exporter is forced to import refined petrol - a paradox that reaps fortunes for a handful of oil companies.
Encouraged by the companies, corruption has become a system of government - some $50bn are estimated to have 'disappeared' out of the $350bn received since independence.
But new players have now joined the great oil game.
China, with its growing appetite for energy, has found new friends in Sudan, and the Chinese builders have moved in. Sudan's President Omar al-Bashir is proud of his co-operation with China - a dam on the Nile, roads, and stadiums.
In order to export 500,000 barrels of oil a day from the oil fields in the South - China financed and built the Heglig pipeline connected to Port Sudan - now South Sudan's precious oil is shipped through North Sudan to Chinese ports.
In a bid to secure oil supplies out of Libya, the US, the UK and the Seven Sisters made peace with the once shunned Colonel Muammar Gaddafi, until he was killed during the Libyan uprising of 2011, but the flow of Libyan oil remains uninterrupted.
In need of funds for rebuilding, Libya is now back to pumping more than a million barrels of oil per day. And the Sisters are happy to oblige.
EPISODE 3: THE DANCING BEAR
In the Caucasus, the US and Russia are vying for control of the region. The great oil game is in full swing. Whoever controls the Caucasus and its roads, controls the transport of oil from the Caspian Sea.
Tbilisi, Erevan and Baku - the three capitals of the Caucasus. The oil from Baku in Azerbaijan is a strategic priority
for all the major companies.
From the fortunes of the Nobel family to the Russian revolution, to World War II, oil from the Caucasus and the Caspian has played a central role. Lenin fixated on conquering the Azeri capital Baku for its oil, as did Stalin and Hitler.
On his birthday in 1941, Adolf Hitler received a chocolate and cream birthday cake, representing a map. He chose the slice with Baku on it.
On June 22nd 1941, the armies of the Third Reich invaded Russia. The crucial battle of Stalingrad was the key to the road to the Caucasus and Baku’s oil, and would decide the outcome of the war.
Stalin told his troops: "Fighting for one’s oil is fighting for one’s freedom."
After World War II, President Nikita Krushchev would build the Soviet empire and its Red Army with revenues from the USSR’s new-found oil reserves.
Decades later, oil would bring that empire to its knees, when Saudi Arabia and the US would conspire to open up the oil taps, flood the markets, and bring the price of oil down to $13 per barrel. Russian oligarchs would take up the oil mantle, only to be put in their place by their president, Vladimir Putin, who knows that oil is power.
The US and Putin‘s Russia would prop up despots, and exploit regional conflicts to maintain a grip on the oil fields of the Caucusus and the Caspian.
But they would not have counted on the rise of a new, strong and hungry China, with an almost limitless appetite for oil and energy. Today, the US, Russia and China contest the control of the former USSR’s fossil fuel reserves, and the supply routes. A three-handed match, with the world as spectators, between three ferocious beasts – The American eagle, the Russian bear, and the Chinese dragon.
EPISODE 4: A TIME FOR LIES
Peak oil – the point in time at which the highest rate of oil extraction has been reached, and after which world production will start decline. Many geologists and the International Energy Agency say the world's crude oil output reached its peak in 2006.
But while there may be less oil coming out of the ground, the demand for it is definitely on the rise.
The final episode of this series explores what happens when oil becomes more and more inaccessible, while at the same time, new powers like China and India try to fulfill their growing energy needs.
And countries like Iran, while suffering international sanctions, have welcomed these new oil buyers, who put business ahead of lectures on human rights and nuclear ambitions.
At the same time, oil-producing countries have had enough with the Seven Sisters controlling their oil assets. Nationalisation of oil reserves around the world has ushered in a new generation of oil companies all vying for a slice of the oil pie.
These are the new Seven Sisters:
Saudi Arabia's Saudi Aramco, the largest and most sophisticated oil company in the world; Russia's Gazprom, a company that Russia's President Vladimir Putin wrested away from the oligarchs; The China National Petroleum Corporation (CNPC), which, along with its subsidiary, Petrochina, is the world's secnd largest company in terms of market value; The National Iranian Oil Company, which has a monopoly on exploration, extraction, transportation and exportation of crude oil in Iran – OPEC's second largest oil producer after Saudi Arabia; Venezuela's PDVSA, a company the late president Hugo Chavez dismantled and rebuilt into his country's economic engine and part of his diplomatic arsenal; Brazil's Petrobras, a leader in deep water oil production, that pumps out 2 million barrels of crude oil a day; and Malaysia's Petronas - Asia's most profitable company in 2012.
Mainly state-owned, the new Seven Sisters control a third of the world's oil and gas production, and more than a third of the world's reserves. The old Seven Sisters, by comparison, produce a tenth of the world's oil, and control only three percent of the reserves.
The balance has shifted.
Source: Al Jazeera
Thursday, December 6, 2012
Corruption Inquiry Focuses on Algerian Pipeline
Italian prosecutors are investigating possible corruption involving a natural gas pipeline project in Algeria by the energy services company Saipem, which is controlled by the Italian oil company Eni.
As the inquiry has heated up, Saipem’s chief executive resigned Wednesday evening, two other Saipem executives were suspended and the chief financial officer of Eni stepped down. None of the executives have been charged with crimes, according to the companies. Eni alluded to the investigation in statements late Wednesday, but provided no details.
But a person close to the investigation said Thursday that prosecutors were focusing on a suspicious payment of $180 million to $200 million in connection with the pipeline project. The person insisted on anonymity because the inquiry is under way.
Saipem, the largest European drilling and engineering contractor for the oil industry, won a $580 million contract to build a 350-kilometer, or 210-mile, pipeline by the state oil company, Sonatrach, in June 2009. The pipeline is known as GK3. It is not yet clear who paid or received the payment at issue, but the person close to the inquiry said the investigation of the inappropriate payment began in 2009 in Algeria and was taken up the following year by Italian prosecutors.
A Saipem spokesman declined to comment.
In statements late Wednesday, Eni said that Saipem’s chief executive, Pietro Franco Tali, was stepping down.
Eni’s chief financial officer, Alessandro Bernini, who held the same position at Saipem until 2008, also resigned Wednesday, although he “considers that his actions were right and proper,” according to an Eni release.
Eni, which holds nearly 43 percent of Saipem’s shares, wrote in its 2011 annual report that it was asked by the Milan Public Prosecutor in February 2011 to supply documentation “in relation to the crime of alleged international corruption” on the GK3 contract, as well as another gas pipeline project called Galsi. The company said it turned over the documents.
An Eni spokeswoman said Thursday that the company had not been aware “of any further development” in the investigation until being notified on Nov. 22 that Saipem had received “a notice of inquiry” from prosecutors. Eni itself is not a subject of the investigation, she said.
Algeria is known as a difficult place to do business. In 2010 most of the top management at Sonatrach, including the chief executive, Mohamed Meziane, departed amid a corruption investigation by the Algerian government.
Algeria, in the 1960s, was the first Middle Eastern country to develop a gas export industry and continues to supply about 10 percent of Europe’s natural gas imports, according to Leila Benali, an analyst at IHS Cera in Paris. Italy is Algeria’s largest customer, mostly through Eni.
Saipem has been key to helping Sonatrach develop the country’s oil and gas infrastructure, over the years working on Algerian oil and gas projects worth billions of dollars. It had about 2,600 employees in the country in 2010.
Rob Mundy, an analyst at Liberum Capital in London, said in a research note that because of the Algeria situation, Saipem’s “ability to competitively bid on future contracts may be affected.”
Trading in Saipem’s shares was suspended in Milan midday Wednesday before Eni publicly disclosed the problems, after being down 4 percent. They resumed trading on Thursday, ending the day down an additional 6.7 percent in heavy volume.
The investigation is a blow to Eni, which under its chief executive, Paolo Scaroni, is working to establish itself as a premier exploration and production company. Earlier on Wednesday, Eni announced a new natural gas discovery off the coast of Mozambique, where the company has become an early leader in staking a position in that country’s promising gas reserves.
Eni’s stake in Saipem has provided the oil company with a steady source of earnings. On Sept. 30, Saipem reported net profits of €722 million for the first nine months of the year, an increase of nearly 9 percent from the comparable period a year earlier.
Saipem also provides Eni with an in-house source of drilling and engineering services, bolstering bidding efforts on oil and gas projects like the proposed South Stream pipeline that will bring gas from Russia to Southern and Central Europe.
Saipem “has certainly been an asset in terms of providing stable and growing earnings in recent years, and it does give them access to all the services it covers,” said Iain Pyle, an analyst at Bernstein Research in London.
“In terms of winning access, it is more likely it is a reason why they are involved in projects like South Stream, as Saipem will most likely lay the pipe for that,” Mr. Pyle said.
Eni is scrambling to limit the damage from the Saipem investigation. The company, based in Milan, held an emergency board meeting Wednesday evening. In a statement, Eni said that in recent days it had urged Saipem “to take immediate remedial actions in managing the situation.”
On Wednesday evening, Saipem’s board named the chief operating officer of Eni’s gas and power division, Umberto Vergine, to replace Mr. Tali as Saipem’s chief.
The company also suspended Pietro Varone, chief operating officer of Saipem’s engineering and construction unit, following a notice of inquiry from the prosecutor related to the same investigation. Saipem’s board also ordered an internal audit using external consultants. The person close to the investigation said that so far it was limited to Mr. Varone and another unnamed executive but could spread to other persons.
“Saipem believes that its business activities have been conducted in compliance with applicable, internal procedures” and its code of ethics, the company said, and has offered its full cooperation to the prosecutor’s office. It also stated that its board “does not believe that the investigation will have a material effect on the company’s economic results.”
Although Eni has emphasized that Saipem is independently managed, the two companies are intertwined. During an interview on Nov. 19, Mr. Scaroni said that while the company was divesting other noncore assets, he considered Saipem “a major asset.”
He said that Saipem was “managed at arm’s length” because Eni was only “one of the customers” of the engineering company. He said Saipem was the top candidate to build the portion of the proposed South Stream natural gas pipeline from Russia to Eastern and Western Europe, under the Black Sea.
Eni, along with Gazprom, is a crucial backer of the project.
Stanley Reed reported from London and Gaia Pianigiani from Rome.
Source: New York Times
As the inquiry has heated up, Saipem’s chief executive resigned Wednesday evening, two other Saipem executives were suspended and the chief financial officer of Eni stepped down. None of the executives have been charged with crimes, according to the companies. Eni alluded to the investigation in statements late Wednesday, but provided no details.
But a person close to the investigation said Thursday that prosecutors were focusing on a suspicious payment of $180 million to $200 million in connection with the pipeline project. The person insisted on anonymity because the inquiry is under way.
Saipem, the largest European drilling and engineering contractor for the oil industry, won a $580 million contract to build a 350-kilometer, or 210-mile, pipeline by the state oil company, Sonatrach, in June 2009. The pipeline is known as GK3. It is not yet clear who paid or received the payment at issue, but the person close to the inquiry said the investigation of the inappropriate payment began in 2009 in Algeria and was taken up the following year by Italian prosecutors.
A Saipem spokesman declined to comment.
In statements late Wednesday, Eni said that Saipem’s chief executive, Pietro Franco Tali, was stepping down.
Eni’s chief financial officer, Alessandro Bernini, who held the same position at Saipem until 2008, also resigned Wednesday, although he “considers that his actions were right and proper,” according to an Eni release.
Eni, which holds nearly 43 percent of Saipem’s shares, wrote in its 2011 annual report that it was asked by the Milan Public Prosecutor in February 2011 to supply documentation “in relation to the crime of alleged international corruption” on the GK3 contract, as well as another gas pipeline project called Galsi. The company said it turned over the documents.
An Eni spokeswoman said Thursday that the company had not been aware “of any further development” in the investigation until being notified on Nov. 22 that Saipem had received “a notice of inquiry” from prosecutors. Eni itself is not a subject of the investigation, she said.
Algeria is known as a difficult place to do business. In 2010 most of the top management at Sonatrach, including the chief executive, Mohamed Meziane, departed amid a corruption investigation by the Algerian government.
Algeria, in the 1960s, was the first Middle Eastern country to develop a gas export industry and continues to supply about 10 percent of Europe’s natural gas imports, according to Leila Benali, an analyst at IHS Cera in Paris. Italy is Algeria’s largest customer, mostly through Eni.
Saipem has been key to helping Sonatrach develop the country’s oil and gas infrastructure, over the years working on Algerian oil and gas projects worth billions of dollars. It had about 2,600 employees in the country in 2010.
Rob Mundy, an analyst at Liberum Capital in London, said in a research note that because of the Algeria situation, Saipem’s “ability to competitively bid on future contracts may be affected.”
Trading in Saipem’s shares was suspended in Milan midday Wednesday before Eni publicly disclosed the problems, after being down 4 percent. They resumed trading on Thursday, ending the day down an additional 6.7 percent in heavy volume.
The investigation is a blow to Eni, which under its chief executive, Paolo Scaroni, is working to establish itself as a premier exploration and production company. Earlier on Wednesday, Eni announced a new natural gas discovery off the coast of Mozambique, where the company has become an early leader in staking a position in that country’s promising gas reserves.
Eni’s stake in Saipem has provided the oil company with a steady source of earnings. On Sept. 30, Saipem reported net profits of €722 million for the first nine months of the year, an increase of nearly 9 percent from the comparable period a year earlier.
Saipem also provides Eni with an in-house source of drilling and engineering services, bolstering bidding efforts on oil and gas projects like the proposed South Stream pipeline that will bring gas from Russia to Southern and Central Europe.
Saipem “has certainly been an asset in terms of providing stable and growing earnings in recent years, and it does give them access to all the services it covers,” said Iain Pyle, an analyst at Bernstein Research in London.
“In terms of winning access, it is more likely it is a reason why they are involved in projects like South Stream, as Saipem will most likely lay the pipe for that,” Mr. Pyle said.
Eni is scrambling to limit the damage from the Saipem investigation. The company, based in Milan, held an emergency board meeting Wednesday evening. In a statement, Eni said that in recent days it had urged Saipem “to take immediate remedial actions in managing the situation.”
On Wednesday evening, Saipem’s board named the chief operating officer of Eni’s gas and power division, Umberto Vergine, to replace Mr. Tali as Saipem’s chief.
The company also suspended Pietro Varone, chief operating officer of Saipem’s engineering and construction unit, following a notice of inquiry from the prosecutor related to the same investigation. Saipem’s board also ordered an internal audit using external consultants. The person close to the investigation said that so far it was limited to Mr. Varone and another unnamed executive but could spread to other persons.
“Saipem believes that its business activities have been conducted in compliance with applicable, internal procedures” and its code of ethics, the company said, and has offered its full cooperation to the prosecutor’s office. It also stated that its board “does not believe that the investigation will have a material effect on the company’s economic results.”
Although Eni has emphasized that Saipem is independently managed, the two companies are intertwined. During an interview on Nov. 19, Mr. Scaroni said that while the company was divesting other noncore assets, he considered Saipem “a major asset.”
He said that Saipem was “managed at arm’s length” because Eni was only “one of the customers” of the engineering company. He said Saipem was the top candidate to build the portion of the proposed South Stream natural gas pipeline from Russia to Eastern and Western Europe, under the Black Sea.
Eni, along with Gazprom, is a crucial backer of the project.
Stanley Reed reported from London and Gaia Pianigiani from Rome.
Source: New York Times
Thursday, August 16, 2012
Africa: Border Disputes Do Not Help Africa
MALAWIAN President Joyce Banda made encouraging remarks at a news conference in Lilongwe. She said that her country will not go to war with Tanzania over the ongoing Lake Nyasa border dispute. She explained that negotiations on the matter are still going on between authorities of Malawi and Tanzania, but noted that even if the ongoing diplomatic efforts fail, other channels will be used exhaustively to resolve the matter.
Ms Banda stressed that the dispute is not a good reason and will never be, for the brothers and sisters of the two countries to go to war. The border dispute erupted last year when Malawi issued a licence to a British firm, Surestream Petroleum, to prospect for hydrocarbons. Tanzania claims a portion of the 29,600 square kilometres lake, but Malawi cites a colonial-era agreement dating from 1890 that stipulates that the border between the two countries lies along the Tanzanian shoreline of the lake.
The dispute between Tanzania and Malawi over Lake Nyasa, which is known as Lake Malawi in Malawi, is yet another of African headache brought about by the colonial division of the continent. In drawing up the boundaries between their "possessions" in Africa there was little precision in the process
Problems with borders are commonplace in Africa. Sources show that the continent has more than 100 border disputes brought about by its former colonial rulers. Arbitrary lines drawn on maps by colonial powers sitting at the Conference of Berlin in 1884 have left countries with meaningless boundaries that are now the source of conflicts.
These have led to countless disputes, some leading to war, others to years of diplomatic and legal wrangling. It is hoped that Tanzania and Malawi are going to give diplomacy the chance in amicable resolution of the dispute over Lake Nyasa and continue living as brothers and sisters.
Both countries have many problems at present including poverty and diseases that need to be overcome as soon as possible. Wars will never take the two countries anywhere and should not be an option since they will make things worse. Let the leaders and experts meet and resolve the dispute.
Source: All Africa
Ms Banda stressed that the dispute is not a good reason and will never be, for the brothers and sisters of the two countries to go to war. The border dispute erupted last year when Malawi issued a licence to a British firm, Surestream Petroleum, to prospect for hydrocarbons. Tanzania claims a portion of the 29,600 square kilometres lake, but Malawi cites a colonial-era agreement dating from 1890 that stipulates that the border between the two countries lies along the Tanzanian shoreline of the lake.
The dispute between Tanzania and Malawi over Lake Nyasa, which is known as Lake Malawi in Malawi, is yet another of African headache brought about by the colonial division of the continent. In drawing up the boundaries between their "possessions" in Africa there was little precision in the process
Problems with borders are commonplace in Africa. Sources show that the continent has more than 100 border disputes brought about by its former colonial rulers. Arbitrary lines drawn on maps by colonial powers sitting at the Conference of Berlin in 1884 have left countries with meaningless boundaries that are now the source of conflicts.
These have led to countless disputes, some leading to war, others to years of diplomatic and legal wrangling. It is hoped that Tanzania and Malawi are going to give diplomacy the chance in amicable resolution of the dispute over Lake Nyasa and continue living as brothers and sisters.
Both countries have many problems at present including poverty and diseases that need to be overcome as soon as possible. Wars will never take the two countries anywhere and should not be an option since they will make things worse. Let the leaders and experts meet and resolve the dispute.
Source: All Africa
Sunday, January 10, 2010
One dead in attack on Togo soccer team
Gunmen opened fire on a bus carrying Togo's national soccer squad to the top African tournament in Angola on Friday, killing the driver and wounding nine others, including two players, a Togo team official said. Togo captain Emmanuel Adebayor, who was on the bus but escaped unharmed, said his team might quit the African Nations Cup, where some of soccer's most valuable stars are due to play.
The bus had just entered the Angolan enclave of Cabinda, where separatists have waged a three-decade long war, when it came under heavy gunfire for several minutes, the team official said. An Angolan minister called the attack in Cabinda, which produces most of Angola's oil, an "act of terrorism". A separatist group, the Front for the Liberation of Enclave of Cabinda (FLEC) claimed responsibility for the attack, which happened two days before the start of the 2010 African Nations Cup, Africa's most-followed sporting event. "This operation is just the start of a series of planned actions that will continue to take place in the whole territory of Cabinda," said the statement seen by Reuters and signed by FLEC's secretary general Rodrigues Mingas. In a statement published on state-owned news agency Angop, the Angolan government said: "The FLEC group that carried out this terrorist action came from the Republic of Congo and that is where it returned to after completing this action."
Cabinda is a small enclave separated from the rest of Angola by a strip of land belonging to the Democratic Republic of Congo. The roots of the conflict between the government and FLEC are deep but one of the main grievances is that Cabindans see few benefits from the oil produced from their land.
Source: mail & Guardian
The bus had just entered the Angolan enclave of Cabinda, where separatists have waged a three-decade long war, when it came under heavy gunfire for several minutes, the team official said. An Angolan minister called the attack in Cabinda, which produces most of Angola's oil, an "act of terrorism". A separatist group, the Front for the Liberation of Enclave of Cabinda (FLEC) claimed responsibility for the attack, which happened two days before the start of the 2010 African Nations Cup, Africa's most-followed sporting event. "This operation is just the start of a series of planned actions that will continue to take place in the whole territory of Cabinda," said the statement seen by Reuters and signed by FLEC's secretary general Rodrigues Mingas. In a statement published on state-owned news agency Angop, the Angolan government said: "The FLEC group that carried out this terrorist action came from the Republic of Congo and that is where it returned to after completing this action."
Cabinda is a small enclave separated from the rest of Angola by a strip of land belonging to the Democratic Republic of Congo. The roots of the conflict between the government and FLEC are deep but one of the main grievances is that Cabindans see few benefits from the oil produced from their land.
Source: mail & Guardian
Monday, May 25, 2009
Rebels destroy Nigeria pipelines
Nigeria’s main rebel group said it destroyed several major oil pipelines in southern Nigeria early on Monday in response to a military offensive.
The Movement for the Emancipation of the Niger Delta (MEND) said it had put "out of operation" a major Chevron oil storage facility by destroying the pipelines and flow stations that feed it. "Fighters from MEND destroyed major trunk lines," the group said in a statement emailed to media. A spokesman for US oil giant Chevron said the company was "assessing the situation."
MEND has staged several attacks on international oil facilities in southern Nigeria as part of its campaign to get what it calls a fairer distribution of the region’s oil wealth to local people.
Source: The Times
The Movement for the Emancipation of the Niger Delta (MEND) said it had put "out of operation" a major Chevron oil storage facility by destroying the pipelines and flow stations that feed it. "Fighters from MEND destroyed major trunk lines," the group said in a statement emailed to media. A spokesman for US oil giant Chevron said the company was "assessing the situation."
MEND has staged several attacks on international oil facilities in southern Nigeria as part of its campaign to get what it calls a fairer distribution of the region’s oil wealth to local people.
Source: The Times
Wednesday, May 20, 2009
Renewables Surge Despite Economic Crisis
The 2008 figures are in from the new REN 21 Renewables Global Status Report: Renewable power capacity (excluding large hydropower) increased a hefty 16 percent last year, which is remarkable given that world oil use actually declined. Growth in some renewable sectors was even more impressive. Biodiesel production increased 34 percent, and solar power took the prize with a 73 percent jump.
Source: Worldwatch Institute
Source: Worldwatch Institute
Friday, March 13, 2009
The arms dealer who flies Zuma
Ivor Ichikowitz, the arms and oil broker who laid on his company jet to ferry Nelson Mandela to a Jacob Zuma election rally in Transkei, has made a career from turning political connections into profit. Last December Ichikowitz flew Zuma in the luxuriously converted Boeing 727 to Lebanon and Kazakhstan for what the Mail & Guardian understands were African National Congress (ANC) fundraising and business meetings.
Ichikowitz confirmed he provided that flight gratis, but said he went along to test recent upgrades to the jet and did not attend the meetings. At its commercial charter rate, $14 000 an hour, a return trip to Kazakhstan would have cost upwards of R5-million.
An M&G probe of Ichikowitz’s relations with the ANC and prominent Zuma backers indicates a man who has made it his business to get close to key power-brokers.
They include:
* Mathews Phosa, who shared a number of company directorships with Ichikowitz before his elevation to ANC treasurer;
* Moeletsi Mbeki, brother of the former president, who opened doors for Ichikowitz into Africa;
* Sandi Majali, former Thabo Mbeki acolyte and business frontman for the ANC and Kgalema Motlanthe in ill-fated oil trades with Saddam Hussein;
* Robert Gumede, owner of IT company GijimaAST and a prominent Zuma backer;
* Pik Botha, former National Party politician and long-time friend of the Ichikowitz family, who provided an entrée to African leaders including former Nigerian president Olusegun Obasanjo.
Ichikowitz (42) made a fortune selling surplus South African armoured vehicles into Africa and the Middle East, and seems to have manoeuvred his way into Zuma’s inner circle. He was prominent among public donors to the ANC at a Zuma fundraiser organised by Gumede in October last year, pledging R6-million.
He told the M&G the business community should "transparently and voluntarily provide both the financial and skills resources political parties need to participate in the democratic process".
He denies direct or indirect business dealings with any political party. But his best-known entanglement with ANC funding occurred via his association with Majali and his Imvume group.
Ichikowitz, who also represents controversial commodities trader Glencore, partnered Majali in his 2001 bid to supply Iraqi crude to South Africa under the controversial oil-for-food programme allowing limited trade with Saddam’s Iraq.
In 2005 the M&G revealed Majali, with official ANC backing, intended setting up an oil trading operation intended to benefit the ANC and Saddam’s Ba’ath party.
Ichikowitz was also Majali’s partner in a contract to supply PetroSA condensate for its Mossel Bay refinery. The M&G exposed how Majali diverted R11-million of state oil money to the ANC before the 2004 election, but Oilgate also strained relations between the partners as Majali's actions created a cash-flow crisis for Ichikowitz's company. Ichikowitz told the M&G he was unaware of the link between Majali's company and the ANC and is no longer in business with Majali.
Moeletsi Mbeki, a key strategist for the Congress of the People, now appears to distance himself from close association with Ichikowitz. He said they were now in only one business together, a cattle feedlot enterprise.
Company records show a number of past African joint ventures, including the agency for Mahindra vehicle sales in South Africa. Ichikowitz said they had been friends "for many years" and went into business together about six years ago. He said he had been friends with Gumede since about 1989 "and [we] worked together in our family business before he started his own businesses". "We have no active business together and remain family friends."
Phosa once served on the boards of several companies with Ichikowitz, notably Vuka Fleet Management and Vuka Municipal Services, joint ventures between Phosa’s Vuka group and TFM, the truck body manufacturer hived off from the armoured vehicle company now owned by BAE-Systems.
Ichikowitz said Phosa had been "a family friend since his return from exile in the 1990s ... I have no interest in Mathews's businesses, nor he in mine." Ichikowitz may have slipped easily from the Mbeki era into the post-Polokwane ANC, but he has also taken advantage of family political connections stretching back to apartheid.
A source close to the family said former apartheid foreign minister Pik Botha was introduced to the Ichikowitzes by the late John Pearce, then the Johannesburg council’s security head. Pearce, embedded in the apartheid security establishment, was fired in 1991 following revelations about military intelligence dirty-tricks operations.
Botha, whom Ichikowitz describes as "a long-standing friend", has been an informal adviser to Ichikowitz and was also said to have promoted Ichikowitz’s other main business: selling reconditioned surplus South African military equipment into Africa and the Middle East. Here too, Ichikowitz appears to have benefited from his ANC associations, with a defence department investigation into his trading activities suppressed before it could produce results.
Source: Mail & Guardian
Ichikowitz confirmed he provided that flight gratis, but said he went along to test recent upgrades to the jet and did not attend the meetings. At its commercial charter rate, $14 000 an hour, a return trip to Kazakhstan would have cost upwards of R5-million.
An M&G probe of Ichikowitz’s relations with the ANC and prominent Zuma backers indicates a man who has made it his business to get close to key power-brokers.
They include:
* Mathews Phosa, who shared a number of company directorships with Ichikowitz before his elevation to ANC treasurer;
* Moeletsi Mbeki, brother of the former president, who opened doors for Ichikowitz into Africa;
* Sandi Majali, former Thabo Mbeki acolyte and business frontman for the ANC and Kgalema Motlanthe in ill-fated oil trades with Saddam Hussein;
* Robert Gumede, owner of IT company GijimaAST and a prominent Zuma backer;
* Pik Botha, former National Party politician and long-time friend of the Ichikowitz family, who provided an entrée to African leaders including former Nigerian president Olusegun Obasanjo.
Ichikowitz (42) made a fortune selling surplus South African armoured vehicles into Africa and the Middle East, and seems to have manoeuvred his way into Zuma’s inner circle. He was prominent among public donors to the ANC at a Zuma fundraiser organised by Gumede in October last year, pledging R6-million.
He told the M&G the business community should "transparently and voluntarily provide both the financial and skills resources political parties need to participate in the democratic process".
He denies direct or indirect business dealings with any political party. But his best-known entanglement with ANC funding occurred via his association with Majali and his Imvume group.
Ichikowitz, who also represents controversial commodities trader Glencore, partnered Majali in his 2001 bid to supply Iraqi crude to South Africa under the controversial oil-for-food programme allowing limited trade with Saddam’s Iraq.
In 2005 the M&G revealed Majali, with official ANC backing, intended setting up an oil trading operation intended to benefit the ANC and Saddam’s Ba’ath party.
Ichikowitz was also Majali’s partner in a contract to supply PetroSA condensate for its Mossel Bay refinery. The M&G exposed how Majali diverted R11-million of state oil money to the ANC before the 2004 election, but Oilgate also strained relations between the partners as Majali's actions created a cash-flow crisis for Ichikowitz's company. Ichikowitz told the M&G he was unaware of the link between Majali's company and the ANC and is no longer in business with Majali.
Moeletsi Mbeki, a key strategist for the Congress of the People, now appears to distance himself from close association with Ichikowitz. He said they were now in only one business together, a cattle feedlot enterprise.
Company records show a number of past African joint ventures, including the agency for Mahindra vehicle sales in South Africa. Ichikowitz said they had been friends "for many years" and went into business together about six years ago. He said he had been friends with Gumede since about 1989 "and [we] worked together in our family business before he started his own businesses". "We have no active business together and remain family friends."
Phosa once served on the boards of several companies with Ichikowitz, notably Vuka Fleet Management and Vuka Municipal Services, joint ventures between Phosa’s Vuka group and TFM, the truck body manufacturer hived off from the armoured vehicle company now owned by BAE-Systems.
Ichikowitz said Phosa had been "a family friend since his return from exile in the 1990s ... I have no interest in Mathews's businesses, nor he in mine." Ichikowitz may have slipped easily from the Mbeki era into the post-Polokwane ANC, but he has also taken advantage of family political connections stretching back to apartheid.
A source close to the family said former apartheid foreign minister Pik Botha was introduced to the Ichikowitzes by the late John Pearce, then the Johannesburg council’s security head. Pearce, embedded in the apartheid security establishment, was fired in 1991 following revelations about military intelligence dirty-tricks operations.
Botha, whom Ichikowitz describes as "a long-standing friend", has been an informal adviser to Ichikowitz and was also said to have promoted Ichikowitz’s other main business: selling reconditioned surplus South African military equipment into Africa and the Middle East. Here too, Ichikowitz appears to have benefited from his ANC associations, with a defence department investigation into his trading activities suppressed before it could produce results.
Source: Mail & Guardian
Friday, September 19, 2008
Trouble in Nigeria? Between an Oil War and a Succession Battle
Even more than is usual for Nigeria, the country currently faces critical challenges. For some time now, Nigeria has been suffering the effects of a multi-layered crisis, the most conspicuous manifestations of which are the oil-related insurgency in the Niger-Delta and recurring concerns about President Yar’Adua’s health, which have given rise to unseemly, and probably premature, speculation and manoeuvring within the country’s political leadership.
Source: Institute for Security Studies
Source: Institute for Security Studies
Friday, May 8, 1970
Banks and Oil Companies Nationalized by Somalia
The Government of Somalia today nationalized all foreign banks and oil companies but said that compensation would be paid.
Source: New York Times
Source: New York Times
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