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22 января 2013, 21:58

Obama Wins Praise Abroad For Climate Change Goals

* EU Commission, Australia PM among those praising Obama * Obama may have best chances if he side-steps Congress * New U.N. deal may take effect in 2020, too late for many By Environment Correspondent Alister Doyle OSLO, Jan 22 (Reuters) - U.S. President Barack Obama won praise abroad on Tuesday for his pledge to lead the fight against climate change, which has faltered as nations argue over who should foot the bill to lower carbon emissions. Two decades of summits and resolutions have not stopped mankind pumping growing quantities of greenhouse gases into the atmosphere, despite a wealth of evidence that it is causing more frequent and devastating droughts, storms and floods. Obama devoted a surprisingly long section of Monday's inauguration speech to climate change -- more than a minute out of about 20. He said failure to respond to the threat "would betray our children and future generations." "The path towards sustainable energy sources will be long and sometimes difficult. But America cannot resist this transition; we must lead it," he said. "Great strong words on climate... The U.S. President could not commit stronger to delivering now," Connie Hedegaard, the European Union's climate commissioner, wrote on Twitter. "We have got work to do on climate change and President Obama was very forthright about the need to tackle climate change," Australian Prime Minister Julia Gillard told reporters. A succession of recent natural disasters has put a sharper focus on climate change. Superstorm Sandy struck the United States in October, a typhoon left more than 1,000 people dead or missing in the Philippines in December and this month a searing heatwave caused hundreds of wildfires in Australia. The United States has declared a natural disaster in its central and southern Wheat Belt because of a severe and persistent drought. The global economic slowdown has made the governments of richer nations more reluctant to invest in technology to mitigate climate change, led by a shift from fossil fuels towards clean energies such as wind or solar power. Developing countries whose carbon emissions are rising fastest say they cannot afford the entire cost of shifting to greener technology and that developed nations should help more. In the latest failure of environmental diplomacy, U.N. climate negotiations in Qatar in December ended without a single new pledge to cut pollution from a major emitter. Instead, governments agreed to try again for a binding United Nations pact to limit climate change that would enter into force from 2020, replacing the Kyoto protocol adopted in 1997 that the United States never ratified. Environmental campaigners were dismayed at the decision to wait years before taking concerted action. SIDE-STEP CONGRESS Obama's renewed promises could help. "It really changes the nature, style and substance of the U.S. engagement with the international climate negotiations," said Bill Hare, a scientist who heads Berlin-based Climate Analytics. He said that Washington, even in Obama's first term, had low ambitions for confronting climate change and that had dimmed efforts by other major emitters. China, the United States, India and Russia are the top greenhouse gas emitters. Unlike all of Washington's major allies in developed nations, the U.S. Congress has not legislated caps on domestic greenhouse gas emissions. But Obama can still take the lead with actions that side-step the divided Congress. The administration could impose tougher rules for coal-fired power plants or introduce measures to promote renewables. It also faces a decision on whether to approve TransCanada Corp's planned $5.3 billion Canada-to-Nebraska Keystone XL oil pipeline. "Words in an inauguration speech are one thing... Many are waiting to see what specific actions the president will take," said Samantha Smith, head of the WWF conservation group's climate and energy initiative. She still praised Obama for starting a new U.S. debate about climate change with the speech. She said one measure Obama could take included a phase-out of fossil fuel subsidies. When Obama first came to office he promised to act on climate change in a shift from ex-President George W. Bush who decided against trying to ratify the U.N.'s Kyoto Protocol for limiting emissions by industrialised nations. In 2009, Obama promised to cut U.S. greenhouse gas emissions by 17 percent below 2005 levels by 2020. But the U.S. Senate did not ratify the plan. Kyoto, originally backed by all other major developed nations, has been hit by defections by Russia, Canada and Japan from Jan. 1 this year, leaving only a core group led by the European Union and Canada targeting deeper cuts by 2020. Bush and the U.S. Senate reckoned that Kyoto unfairly omitted targets for emerging nations such as China and India and would mean U.S. jobs moved abroad. On the other hand, Washington risks losing a race to develop clean technologies. A study by the Pew Charitable Trusts last week indicated that worldwide revenue from installing clean energy facilities could total $1.9 trillion from 2012 to 2018. With the right policies, it said the United States could get 14.5 percent of the total. (Additional reporting by Nina Chestney in London; Editing by Tom Pfeiffer)

22 января 2013, 21:58

Obama Wins Praise Abroad For Climate Change Goals

* EU Commission, Australia PM among those praising Obama * Obama may have best chances if he side-steps Congress * New U.N. deal may take effect in 2020, too late for many By Environment Correspondent Alister Doyle OSLO, Jan 22 (Reuters) - U.S. President Barack Obama won praise abroad on Tuesday for his pledge to lead the fight against climate change, which has faltered as nations argue over who should foot the bill to lower carbon emissions. Two decades of summits and resolutions have not stopped mankind pumping growing quantities of greenhouse gases into the atmosphere, despite a wealth of evidence that it is causing more frequent and devastating droughts, storms and floods. Obama devoted a surprisingly long section of Monday's inauguration speech to climate change -- more than a minute out of about 20. He said failure to respond to the threat "would betray our children and future generations." "The path towards sustainable energy sources will be long and sometimes difficult. But America cannot resist this transition; we must lead it," he said. "Great strong words on climate... The U.S. President could not commit stronger to delivering now," Connie Hedegaard, the European Union's climate commissioner, wrote on Twitter. "We have got work to do on climate change and President Obama was very forthright about the need to tackle climate change," Australian Prime Minister Julia Gillard told reporters. A succession of recent natural disasters has put a sharper focus on climate change. Superstorm Sandy struck the United States in October, a typhoon left more than 1,000 people dead or missing in the Philippines in December and this month a searing heatwave caused hundreds of wildfires in Australia. The United States has declared a natural disaster in its central and southern Wheat Belt because of a severe and persistent drought. The global economic slowdown has made the governments of richer nations more reluctant to invest in technology to mitigate climate change, led by a shift from fossil fuels towards clean energies such as wind or solar power. Developing countries whose carbon emissions are rising fastest say they cannot afford the entire cost of shifting to greener technology and that developed nations should help more. In the latest failure of environmental diplomacy, U.N. climate negotiations in Qatar in December ended without a single new pledge to cut pollution from a major emitter. Instead, governments agreed to try again for a binding United Nations pact to limit climate change that would enter into force from 2020, replacing the Kyoto protocol adopted in 1997 that the United States never ratified. Environmental campaigners were dismayed at the decision to wait years before taking concerted action. SIDE-STEP CONGRESS Obama's renewed promises could help. "It really changes the nature, style and substance of the U.S. engagement with the international climate negotiations," said Bill Hare, a scientist who heads Berlin-based Climate Analytics. He said that Washington, even in Obama's first term, had low ambitions for confronting climate change and that had dimmed efforts by other major emitters. China, the United States, India and Russia are the top greenhouse gas emitters. Unlike all of Washington's major allies in developed nations, the U.S. Congress has not legislated caps on domestic greenhouse gas emissions. But Obama can still take the lead with actions that side-step the divided Congress. The administration could impose tougher rules for coal-fired power plants or introduce measures to promote renewables. It also faces a decision on whether to approve TransCanada Corp's planned $5.3 billion Canada-to-Nebraska Keystone XL oil pipeline. "Words in an inauguration speech are one thing... Many are waiting to see what specific actions the president will take," said Samantha Smith, head of the WWF conservation group's climate and energy initiative. She still praised Obama for starting a new U.S. debate about climate change with the speech. She said one measure Obama could take included a phase-out of fossil fuel subsidies. When Obama first came to office he promised to act on climate change in a shift from ex-President George W. Bush who decided against trying to ratify the U.N.'s Kyoto Protocol for limiting emissions by industrialised nations. In 2009, Obama promised to cut U.S. greenhouse gas emissions by 17 percent below 2005 levels by 2020. But the U.S. Senate did not ratify the plan. Kyoto, originally backed by all other major developed nations, has been hit by defections by Russia, Canada and Japan from Jan. 1 this year, leaving only a core group led by the European Union and Canada targeting deeper cuts by 2020. Bush and the U.S. Senate reckoned that Kyoto unfairly omitted targets for emerging nations such as China and India and would mean U.S. jobs moved abroad. On the other hand, Washington risks losing a race to develop clean technologies. A study by the Pew Charitable Trusts last week indicated that worldwide revenue from installing clean energy facilities could total $1.9 trillion from 2012 to 2018. With the right policies, it said the United States could get 14.5 percent of the total. (Additional reporting by Nina Chestney in London; Editing by Tom Pfeiffer)

18 января 2013, 16:47

Frontrunning: January 18

Foreign Hostages Die in Algeria’s Battle With Terrorists (Bloomberg) The latest bank to soon join the currency wars: McCafferty Says BOE Must Keep Open Mind on New Policy Tools (Bloomberg) US debt talks complicated by timing (FT) BOJ eyes open-ended asset buying, agrees new inflation goal (Reuters) AmEx Says U.S. Card Income Fell 42% as Loss Provisions Increased (BBG) Call to raise age for US’s Medicare (FT) Obama Promise to Raise Middle Class Living Already Seen in Peril (BBG) China Exits Slowdown as Quarterly Growth Tops Forecasts (BBG) - actually, as new Politburo says to make it appear that way Britain to drift out of European Union without reforms (Reuters) Republicans weigh interim debt-limit hike (FT) Abe's aide says Japan shouldn't fret if yen falls to 100 vs dlr (Reuters) ... and it was 90 just a few days ago PBOC May Seek More Liquidity Operations (Dow Jones)   Overnight Media Digest WSJ * Former professional cyclist Lance Armstrong told the world Thursday evening that he used performance-enhancing drugs to win seven Tour de France titles. * Algeria's military launched a raid on Thursday to free about 40 foreigners held by militants at a remote natural-gas complex, leaving some hostages dead, surprising and angering several governments and putting leaders across the world at a loss to determine the fate of their citizens. * In his final days as U.S. Treasury secretary, Timothy Geithner reflected on the financial crisis and the response he helped craft, in an interview with The Wall Street Journal. Among other things, he said the government's rescue of the financial system was doomed to be unpopular. * In approving Boeing Co's 787 Deamliner to start carrying passengers in 2011, the Federal Aviation Administration relied extensively on data generated by Boeing that indicated the plane's advanced lithium-ion battery systems -- never used before on a big jetliner -- featured redundant safeguards that were essentially foolproof. * Rio Tinto Chief Executive Tom Albanese agreed to step down on Thursday, the latest in a string of leaders toppled by shifting fortunes at the world's biggest mining companies. * Quarterly earnings reports released on Thursday underscore the lingering illnesses afflicting some of the largest, best-known U.S. banks and the comparatively ruddy health of some smaller regional lenders. * Sony Corp has reached a deal to sell its U.S. headquarters at 550 Madison Avenue for $1.1 billion, the company said on Thursday, a strong price that shows how investors are bidding aggressively for top Manhattan properties. * Toyota Motor Corp has settled what was to be the first in a group of hundreds of pending wrongful death and injury lawsuits involving sudden, unintended acceleration by Toyota vehicles.   FT In a drive for transparency, authorities in the Cayman Islands are planning on creating a public database of funds domiciled in the British territory for the first time. Videogames seller Game Group is interested in acquiring stores from collapsed music retailer HMV, the CEO said. As their mega-merger continues to go through regulatory clearance, Glencore and Xstrata are set to extend the deadline for the deal for a third time. The British banking industry wants a deadline of May 2014 to be imposed for claims from customers who say they were mis-sold payment protection insurance, says one senior executive. Barclays is considering whether it should recoup some or all of the 290 million pounds it was fined for Libor-rate rigging from the bonuses it is due to pay investment bankers in 2012.   NYT * Hours after Algerian forces raided a gas facility, there was still no official word on the number of hostages freed, killed or still held by their Islamist kidnappers. * In a televised interview with Oprah Winfrey, Lance Armstrong admitted to using banned substances but did not say how he did it or who helped him. Thomas Weisel, who bankrolled Lance Armstrong through seven Tour de France wins, said in his first public comment on the matter that he never personally saw an instance of doping on the team. * Most banks have recovered from the recent financial collapse, but two companies, Bank of America and Citigroup have reported continuing effects on earnings. * AT&T warned that it would take a fourth-quarter charge of about $10 billion because of bigger-than-expected pension obligations. * The Chinese economy picked up steam during the last few months of 2012, closely watched data from Beijing on Friday confirmed. But at the same time the figures underlined the view that the pace of future growth is likely to remain well below that seen in recent years. * E*Trade Financial named Paul Idzik, a former executive at Barclays, as its new chief, ending a five-month search for a new leader. * Norwegian Cruise Line Holdings has sold shares in itself at $19 apiece, a person briefed on the matter said, reaping about $446.5 million in proceeds.   Canada CHINA SECURITIES JOURNAL --The State Electricity Regulatory Commission of China (SERC) said China's power consumption could reach above 9 percent in 2013 from 5.5 percent in 2012. CHINA DAILY (www.chinadaily.com.cn) --Fears over intellectual property lawsuits by foreign train technology companies will not derail exports of Chinese bullet trains, Vice Minister of Science and Technology Cao Jianlin said in an interview, dismissing copycat claims by Japan's Kawasaki as "nonsense." --A former Japanese leader visited a memorial site to victims of Japanese wartime aggression, but analysts were quick to reject ay suggestion that Tokyo will change its policies toward China. PEOPLE'S DAILY --China's Railway Ministry said investment in railway could hit 650 billion yuan and that it will set a National Railway Development Fund as soon as possible.   China THE GLOBE AND MAIL * Two class action lawsuits were filed against the federal government in Canada after the human resources and skills development department lost a portable hard drive containing personal information about more than half a million people who took out student loans. The department said last week the device contained data on 583,000 Canada Student Loans Program borrowers from 2000 to 2006. * The federal ethics commissioner wants to talk to Finance Minister Jim Flaherty about his letter to the Canadian Radio-television and Telecommunications Commission (CRTC) after it was revealed that he wrote to the arm's-length broadcast regulator in support of a constituent's bid for a radio licence. Reports in the business section: * More Canadians went online to do their Christmas shopping this year, according to a new report by MasterCard Advisors. Canadian consumers spent C$2.8 billion ($2.84 billion) shopping online in December, up 26 percent over the previous year and representing about 6.6 per cent of the month's total retail sales. NATIONAL POST * Three Quebec City teens have been arrested over charges of planning a shootout at their high school. The three teens, two boys aged 14 and 15 and a 16 year old girl, who have pleaded not guilty, face charges of conspiracy to commit murder and will remain detained until a bail hearing on Monday. FINANCIAL POST * The blowout in price between Alberta's heavy oil and the North American benchmark price is a "longer term issue" with no quick fix, Alberta Investment Management Corp (AIMCo) CEO Leo de Bever said.   Fly On The Wall 7:00 Market Snapshot ANALYST RESEARCH Upgrades Amazon.com (AMZN) upgraded to Outperform from Sector Perform at Pacific CrestCornerstone OnDemand (CSOD) upgraded to Buy from Neutral at GoldmanCredit Suisse (CS) upgraded to Overweight from Equal Weight at Morgan StanleyExpeditors (EXPD) upgraded to Outperform from Neutral at Credit SuisseFabrinet (FN) upgraded to Overweight from Neutral at JPMorganLas Vegas Sands (LVS) upgraded to Outperform from Market Perform at Wells FargoMovado (MOV) upgraded to Buy from Neutral at CitigroupNetflix (NFLX) upgraded to Buy from Neutral at Janney CapitalQlik Technologies (QLIK) upgraded to Buy from Neutral at GoldmanResearch in Motion (RIMM) upgraded to Buy from Hold at JefferiesTyson Foods (TSN) upgraded to Outperform from Market Perform at BMO CapitalWynn Resorts (WYNN) upgraded to Outperform from Market Perform at Wells Fargo Downgrades Alterra Capital (ALTE) downgraded to Neutral from Buy at Sterne AgeeBall Corp. (BLL) downgraded to Hold from Buy at JefferiesCSX (CSX) downgraded to Neutral from Outperform at Credit SuisseCapital One (COF) downgraded to Neutral from Buy at Janney CapitalCarrizo Oil & Gas (CRZO) downgraded to Underperform from Neutral at Credit SuisseClarcor (CLC) downgraded to Market Perform from Outperform at William BlairFinisar (FNSR) downgraded to Underperform from Hold at JefferiesMGM Resorts (MGM) downgraded to Market Perform from Outperform at Wells FargoNetSuite (N) downgraded to Neutral from Conviction Buy at GoldmanUltimate Software (ULTI) downgraded to Neutral from Buy at GoldmanVisa (V) downgraded to Neutral from Outperform at RW BairdWestamerica (WABC) downgraded to Underperform from Market Perform at BMO Capital Initiations Geron (GERN) initiated with an Overweight at Piper JaffrayHalcon Resources (HK) initiated with a Hold at Stifel NicolausHarry Winston (HWD) initiated with a Buy at NomuraInovio Pharma (INO) initiated with an Overweight at Piper JaffrayIntuitive Surgical (ISRG) initiated with a Buy at Janney CapitalMarathon Oil (MRO) initiated with a Buy at Stifel NicolausOncothyreon (ONTY) initiated with an Underweight at Piper JaffrayThreshold Pharmaceuticals (THLD) initiated with a Neutral at Piper JaffrayTronox (TROX) initiated with a Buy at B. Riley CarisZiopharm (ZIOP) initiated with a Neutral at Piper Jaffray HOT STOCKS GE (GE) on target to achieve dougle-digit earnings growth in 2013Said outlook for developed markets remain uncertain Sees growth in China, resource rich countries Weiss family raised American Greetings (AM) offer to $17.50 from $17.18 per shareMoody's changed Rite Aid (RAD) outlook to positive from stable Schlumberger (SLB) said global macroeconomic environment remains uncertainSees 2013 global oil demand similar to 2012 Liberty Media (LMCA) bought 50M shares of Sirius XM (SIRI), control above 50%Intel (INTC) ”excited about strong pipeline of products coming to market”Sees little growth in wireless in 2013 Capital One (COF) sees average quarterly revenue levels in 2013 like Q412Sees reduction in loan balances in 2013Sony Corporation of America (SNE) sold 550 Madison Avenue building for $1.1BAZZ Inc. (AZZ) sees FY14 margins remaining strongONEOK Partners (OKS) announced $465M-$500M project investments through 2015NuPathe's (PATH) Zecuity approved by FDA EARNINGS Companies that beat consensus earnings expectations last night and today include:General Electric (GE), Schlumberger (SLB), Xilinx (XLNX), Bank Mutual (BKMU), Intel (INTC), Wintrust Financial (WTFC) Companies that missed consensus earnings expectations include:Matthews (MATW), People's United (PBCT), Capital One (COF) Companies that matched consensus earnings expectations include:Wipro (WIT), Associated Banc-Corp (ASBC), American Express (AXP) NEWSPAPERS/WEBSITES GE (GE) is the world's top producer of aircraft engines and medical-imaging equipment, but as far as its profits are concerned, it’s very much a bank. GE Capital is expected to account for nearly half the company's 2012 profit, the Wall Street Journal reportsDell’s (DELL) potential $23B leveraged buyout could also be the deal that finally gets the leveraged-buyout machine going again, showering financiers in fees and potentially yielding big returns for investors, the Wall Street Journal reportsAmericans are more confident in the future and are increasingly striking out to set up their own homes, a move that is helping propel the housing recovery, Reuters reportsWhen U.S. natural gas producers release their 2012 annual reports, many companies may have to significantly reduce a key indicator of their financial health: reserves. The SECrequires companies to calculate and report year-end oil and gas reserves using 12-month average prices, Reuters reportsWith the worst flu outbreak since 2009 gripping the U.S., vaccine makers (GSK, AZN) are determined to do better next season. They’re developing powerful vaccines that hold the promise of cutting incidences of flu by the thousands, Bloomberg reportsFranklin Templeton Investments (BEN) reduced its holdings of Apple (AAPL) last year to 4.2% from 7% in 2011 on concern the maker of the iPhone lacks a strategy to sell cheaper smartphones in emerging markets such as China and India, Bloomberg reports SYNDICATE CyrusOne (CONE) 16.5M share IPO priced at $19.00Northern Tier (NTI) Energy 10.7M share Secondary priced at $24.46Norwegian Cruise Line (NCLH) 23.529M share IPO priced at $19.00SunCoke Energy (SXCP) 13.5M share IPO priced at $19.00Trius Therapeutics (TSRX) files to sell common stock

11 января 2013, 17:26

Shell May Have Moved Rig To Avoid Taxes

ANCHORAGE, Alaska/WASHINGTON (Reuters) - Shell may have moved an oil rig that ran aground off Alaska last week partly to avoid millions of dollars in taxes, U.S. Rep. Ed Markey said, raising even more questions about the oil company's decision on the timing of the move. The letter from the top Democrat on the House of Representatives Natural Resources Committee adds to the already-intense political scrutiny of Royal Dutch Shell's ambitious and troubled Arctic drilling foray last year. Shell's 30-year-old Kulluk drillship ran aground on New Year's Eve in what were described as "near hurricane" conditions while it was being towed south for the winter. In a letter to Shell's top U.S. executive, Marvin Odum, Markey said the decision to move the rig "may have been driven, in part, by a desire to avoid...tax liability on the rig." In late December, a Shell spokesman told a local newspaper, the Dutch Harbor Fisherman, that it was "fair to say the current tax structure related to vessels of this type influenced the timing of our departure." But Shell said in response to Markey on Thursday that its decision was guided by safety, not taxes. Markey, an outspoken critic of the oil and gas industry, said his office received information about Shell and taxes from Alaska's revenue department. Shell could have been exposed to a state tax if the rig had remained in the state until January 1, as Alaska law says an annual tax of 2 percent can be assessed on drilling equipment on that date, Markey said in the letter sent on Wednesday. The company spent $292 million on upgrades on the rig since purchasing it in 2005, so the liability could have been about $6 million, he wrote. In total, Shell has spent $4.5 billion since 2005 to develop the Arctic's vast oil reserves. Jim Greeley, Anchorage-based petroleum property assessor for the Alaska Department of Revenue, explained that the tax applies to property used for exploration, production or transportation of oil or natural gas. He could not say whether the Kulluk would have been taxed or whether Shell's actions avoided a tax. The issue was complicated by the fact that Shell's drilling was in federal waters. "There's no tax precedent for that," at least in recent times, Greeley said, adding that department officials were researching the tax practices from two decades ago when there was a flurry of drilling offshore Alaska. The decision would have to be made by the time the state publishes its tax rolls on March 1. CONOCO LOOKS ON Shell's Arctic work has been closely watched by many in the industry and especially by ConocoPhillips ahead of its planned Alaska offshore drilling program slated for 2014. According to the U.S. government, the Beaufort and Chukchi seas hold an estimated 23 billion barrels of recoverable oil - equivalent to a tenth of Saudi Arabia's reserves. A Shell spokeswoman said the plan for the Kulluk this winter was always to move it in December. "While we are aware of the tax environment wherever we operate, the driver for operational decisions is governed by safety." She said an approved tow plan for the rig included weather considerations. Winter transit in northern waters is not unusual for rigs. Just this month, a rig owned by contractor Seadrill was due to arrive in Norway to start work for Statoil, while another was headed to Canada for Exxon Mobil Corp. The Kulluk accident is only Shell's latest problem in Alaska. Its 2012 Arctic drilling season was plagued by delays due to lingering ice and problems getting a mandatory oil spill containment vessel certified by the Coast Guard. Also, the U.S. Environmental Protection Agency said late on Thursday it issued notices of violation for air pollution in 2012 for the Noble Corp-owned Discoverer, Shell's other Arctic rig, and for the Kulluk. The EPA also terminated a temporary, more lenient permit granted to Shell in September for the Discoverer and said Shell's application for a less strict air permit was still under review. The U.S. Department of the Interior said this week it would review Shell's Arctic oil drilling program to assess the challenges it faced and to guide future Arctic permitting. Markey's committee does not have the power to stop drilling. His investigation would focus on why the rig was being towed along the coast down to Washington state in such severe weather and on Shell's safety policies, an aide to Markey said. Any permitting changes or delays resulting from the Interior Department review could threaten Shell's 2013 drilling plans, as the company has a limited drilling window during the summer. The Kulluk, before heading south, had previously been at a private facility in Unalaska/Dutch Harbor operated by Kirkland, Washington-based Offshore Systems Inc, which serves fishing and other vessels in Alaska. Harbormaster Jim Days said it was there for at least a month after completing its Beaufort Sea drilling. The environmental impact of the Kulluk accident is so far limited. The incident response team has located all four survival ships and one rescue ship that were dislodged from the drillship when it ran aground. The survival ships all had 68-gallon-capacity fuel tanks and two had been breached. None of the 155,000 gallons of fuel and other oil products aboard the Kulluk itself had leaked. (Additional reporting by Andrew Callus in London and Braden Reddall in San Francisco; Editing by John Wallace, Jim Marshall, Tim Dobbyn, Dan Grebler, Phil Berlowitz and Matt Driskill)

11 января 2013, 17:26

Shell May Have Moved Rig To Avoid Taxes

ANCHORAGE, Alaska/WASHINGTON (Reuters) - Shell may have moved an oil rig that ran aground off Alaska last week partly to avoid millions of dollars in taxes, U.S. Rep. Ed Markey said, raising even more questions about the oil company's decision on the timing of the move. The letter from the top Democrat on the House of Representatives Natural Resources Committee adds to the already-intense political scrutiny of Royal Dutch Shell's ambitious and troubled Arctic drilling foray last year. Shell's 30-year-old Kulluk drillship ran aground on New Year's Eve in what were described as "near hurricane" conditions while it was being towed south for the winter. In a letter to Shell's top U.S. executive, Marvin Odum, Markey said the decision to move the rig "may have been driven, in part, by a desire to avoid...tax liability on the rig." In late December, a Shell spokesman told a local newspaper, the Dutch Harbor Fisherman, that it was "fair to say the current tax structure related to vessels of this type influenced the timing of our departure." But Shell said in response to Markey on Thursday that its decision was guided by safety, not taxes. Markey, an outspoken critic of the oil and gas industry, said his office received information about Shell and taxes from Alaska's revenue department. Shell could have been exposed to a state tax if the rig had remained in the state until January 1, as Alaska law says an annual tax of 2 percent can be assessed on drilling equipment on that date, Markey said in the letter sent on Wednesday. The company spent $292 million on upgrades on the rig since purchasing it in 2005, so the liability could have been about $6 million, he wrote. In total, Shell has spent $4.5 billion since 2005 to develop the Arctic's vast oil reserves. Jim Greeley, Anchorage-based petroleum property assessor for the Alaska Department of Revenue, explained that the tax applies to property used for exploration, production or transportation of oil or natural gas. He could not say whether the Kulluk would have been taxed or whether Shell's actions avoided a tax. The issue was complicated by the fact that Shell's drilling was in federal waters. "There's no tax precedent for that," at least in recent times, Greeley said, adding that department officials were researching the tax practices from two decades ago when there was a flurry of drilling offshore Alaska. The decision would have to be made by the time the state publishes its tax rolls on March 1. CONOCO LOOKS ON Shell's Arctic work has been closely watched by many in the industry and especially by ConocoPhillips ahead of its planned Alaska offshore drilling program slated for 2014. According to the U.S. government, the Beaufort and Chukchi seas hold an estimated 23 billion barrels of recoverable oil - equivalent to a tenth of Saudi Arabia's reserves. A Shell spokeswoman said the plan for the Kulluk this winter was always to move it in December. "While we are aware of the tax environment wherever we operate, the driver for operational decisions is governed by safety." She said an approved tow plan for the rig included weather considerations. Winter transit in northern waters is not unusual for rigs. Just this month, a rig owned by contractor Seadrill was due to arrive in Norway to start work for Statoil, while another was headed to Canada for Exxon Mobil Corp. The Kulluk accident is only Shell's latest problem in Alaska. Its 2012 Arctic drilling season was plagued by delays due to lingering ice and problems getting a mandatory oil spill containment vessel certified by the Coast Guard. Also, the U.S. Environmental Protection Agency said late on Thursday it issued notices of violation for air pollution in 2012 for the Noble Corp-owned Discoverer, Shell's other Arctic rig, and for the Kulluk. The EPA also terminated a temporary, more lenient permit granted to Shell in September for the Discoverer and said Shell's application for a less strict air permit was still under review. The U.S. Department of the Interior said this week it would review Shell's Arctic oil drilling program to assess the challenges it faced and to guide future Arctic permitting. Markey's committee does not have the power to stop drilling. His investigation would focus on why the rig was being towed along the coast down to Washington state in such severe weather and on Shell's safety policies, an aide to Markey said. Any permitting changes or delays resulting from the Interior Department review could threaten Shell's 2013 drilling plans, as the company has a limited drilling window during the summer. The Kulluk, before heading south, had previously been at a private facility in Unalaska/Dutch Harbor operated by Kirkland, Washington-based Offshore Systems Inc, which serves fishing and other vessels in Alaska. Harbormaster Jim Days said it was there for at least a month after completing its Beaufort Sea drilling. The environmental impact of the Kulluk accident is so far limited. The incident response team has located all four survival ships and one rescue ship that were dislodged from the drillship when it ran aground. The survival ships all had 68-gallon-capacity fuel tanks and two had been breached. None of the 155,000 gallons of fuel and other oil products aboard the Kulluk itself had leaked. (Additional reporting by Andrew Callus in London and Braden Reddall in San Francisco; Editing by John Wallace, Jim Marshall, Tim Dobbyn, Dan Grebler, Phil Berlowitz and Matt Driskill)

11 января 2013, 17:26

Shell May Have Moved Rig To Avoid Taxes

ANCHORAGE, Alaska/WASHINGTON (Reuters) - Shell may have moved an oil rig that ran aground off Alaska last week partly to avoid millions of dollars in taxes, U.S. Rep. Ed Markey said, raising even more questions about the oil company's decision on the timing of the move. The letter from the top Democrat on the House of Representatives Natural Resources Committee adds to the already-intense political scrutiny of Royal Dutch Shell's ambitious and troubled Arctic drilling foray last year. Shell's 30-year-old Kulluk drillship ran aground on New Year's Eve in what were described as "near hurricane" conditions while it was being towed south for the winter. In a letter to Shell's top U.S. executive, Marvin Odum, Markey said the decision to move the rig "may have been driven, in part, by a desire to avoid...tax liability on the rig." In late December, a Shell spokesman told a local newspaper, the Dutch Harbor Fisherman, that it was "fair to say the current tax structure related to vessels of this type influenced the timing of our departure." But Shell said in response to Markey on Thursday that its decision was guided by safety, not taxes. Markey, an outspoken critic of the oil and gas industry, said his office received information about Shell and taxes from Alaska's revenue department. Shell could have been exposed to a state tax if the rig had remained in the state until January 1, as Alaska law says an annual tax of 2 percent can be assessed on drilling equipment on that date, Markey said in the letter sent on Wednesday. The company spent $292 million on upgrades on the rig since purchasing it in 2005, so the liability could have been about $6 million, he wrote. In total, Shell has spent $4.5 billion since 2005 to develop the Arctic's vast oil reserves. Jim Greeley, Anchorage-based petroleum property assessor for the Alaska Department of Revenue, explained that the tax applies to property used for exploration, production or transportation of oil or natural gas. He could not say whether the Kulluk would have been taxed or whether Shell's actions avoided a tax. The issue was complicated by the fact that Shell's drilling was in federal waters. "There's no tax precedent for that," at least in recent times, Greeley said, adding that department officials were researching the tax practices from two decades ago when there was a flurry of drilling offshore Alaska. The decision would have to be made by the time the state publishes its tax rolls on March 1. CONOCO LOOKS ON Shell's Arctic work has been closely watched by many in the industry and especially by ConocoPhillips ahead of its planned Alaska offshore drilling program slated for 2014. According to the U.S. government, the Beaufort and Chukchi seas hold an estimated 23 billion barrels of recoverable oil - equivalent to a tenth of Saudi Arabia's reserves. A Shell spokeswoman said the plan for the Kulluk this winter was always to move it in December. "While we are aware of the tax environment wherever we operate, the driver for operational decisions is governed by safety." She said an approved tow plan for the rig included weather considerations. Winter transit in northern waters is not unusual for rigs. Just this month, a rig owned by contractor Seadrill was due to arrive in Norway to start work for Statoil, while another was headed to Canada for Exxon Mobil Corp. The Kulluk accident is only Shell's latest problem in Alaska. Its 2012 Arctic drilling season was plagued by delays due to lingering ice and problems getting a mandatory oil spill containment vessel certified by the Coast Guard. Also, the U.S. Environmental Protection Agency said late on Thursday it issued notices of violation for air pollution in 2012 for the Noble Corp-owned Discoverer, Shell's other Arctic rig, and for the Kulluk. The EPA also terminated a temporary, more lenient permit granted to Shell in September for the Discoverer and said Shell's application for a less strict air permit was still under review. The U.S. Department of the Interior said this week it would review Shell's Arctic oil drilling program to assess the challenges it faced and to guide future Arctic permitting. Markey's committee does not have the power to stop drilling. His investigation would focus on why the rig was being towed along the coast down to Washington state in such severe weather and on Shell's safety policies, an aide to Markey said. Any permitting changes or delays resulting from the Interior Department review could threaten Shell's 2013 drilling plans, as the company has a limited drilling window during the summer. The Kulluk, before heading south, had previously been at a private facility in Unalaska/Dutch Harbor operated by Kirkland, Washington-based Offshore Systems Inc, which serves fishing and other vessels in Alaska. Harbormaster Jim Days said it was there for at least a month after completing its Beaufort Sea drilling. The environmental impact of the Kulluk accident is so far limited. The incident response team has located all four survival ships and one rescue ship that were dislodged from the drillship when it ran aground. The survival ships all had 68-gallon-capacity fuel tanks and two had been breached. None of the 155,000 gallons of fuel and other oil products aboard the Kulluk itself had leaked. (Additional reporting by Andrew Callus in London and Braden Reddall in San Francisco; Editing by John Wallace, Jim Marshall, Tim Dobbyn, Dan Grebler, Phil Berlowitz and Matt Driskill)