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Shell Plans USD 20 bln Investment in Indonesia’s Masela Block

International oil major Shell will invest approximately $20 billion in Masela offshore block, located the Arafura Sea, Indonesia.

According to Reuters, Indonesia’s Chief Economic Minister Hatta Rajasa said yesterday that Shell would gradually invest $20 billion between 2013 and 2019.

In December, 2011, Shell acquired a 30% participating interest in the Masela Block (Abadi project). Inpex is the operator of the project with 60% interest.

The Abadi gas field will be developed in phases and that one FLNG plant will be constructed and utilized for the annual LNG production of 2.5 million ton for the first phase development.

First production from the field is expected to begin in 2018.

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Exclusive: Brazil to cut electricity taxes to boost economy

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By Brian Winter
SAO PAULO | Tue May 15, 2012 9:55am EDT

(Reuters) – President Dilma Rousseff plans to cut and simplify taxes for electricity producers and distributors, two senior officials told Reuters, as part of a strategy to reduce Brazil‘s high business costs and stimulate its struggling economy.

Brazil has been on the brink of recession since mid-2011 as high taxes, an overvalued exchange rate and other structural problems squeeze what had previously been one of the world’s most dynamic emerging economies.

Rousseff has in recent months announced targeted tax cuts for stagnant sectors such as the automotive industry, embracing an incremental approach to reform that has drawn criticism from investors who say more drastic changes are needed.

But the officials, who spoke on condition of anonymity, said the tax reductions for electricity companies would likely be the most far-reaching to date.

They said Rousseff will announce the plans in coming weeks. Brazil has the world’s third-highest power costs so Rousseff is aiming to give relief to consumers as well as companies in energy-intensive areas such as steel and petrochemicals.

Internal government studies suggest that, depending on which taxes are cut, electricity costs could fall by between 3 and 10 percent starting as early as 2013, the officials said.

That would have a measurable impact on inflation, and thus aid Rousseff’s quest to push Brazilian interest rates lower.

“We know that taxes in Brazil are crazy, and we’re trying to do something about it,” one senior official said. “(Electricity) seems like a case where we can make a big difference quickly.”

Rousseff probably will not pass the tax cuts by decree, so she will have to negotiate them with Congress and other groups.

She plans to use her record-high popularity ratings to push through cuts to taxes at both the federal and state level, with a special focus on eliminating levies that overlap or are difficult to calculate, the officials said.

Brazil’s tax code is so complex that an average company spends 2,600 hours a year calculating what it owes, according to the World Bank‘s annual Doing Business study, which compares business practices around the world. That is almost 14 times the time needed to do taxes in the United States, and by far the highest among the 183 countries in the bank’s survey.

“The focus is as much on simplifying taxes as reducing them,” a second official said.

Brazil’s electricity industry includes state-run companies such as Eletrobras (LIPR3.SA) as well as multinationals like AES Corp. (AES.N) and GDF Suez (GSZ.PA). Hydroelectric power supplies about three-quarters of Brazil’s electricity needs, with nuclear, thermal and wind power accounting for the rest.

If the initiative is successful, Rousseff will use a similar blueprint to reduce taxes for other industries in coming months, possibly including telecoms, the officials said.

Specific details such as the size of the tax cuts, which taxes will be targeted, and the timing of the announcement are still being finalized by Rousseff’s team, the officials said. One said the plan would likely be unveiled in late June, before politicians nationwide turn their attention to municipal elections in October.

POWER COSTS A PROBLEM FOR INDUSTRIES

Electricity prices are a big component of the so-called “Brazil cost” – the mix of taxes, high interest rates, labor costs, infrastructure bottlenecks, and other issues that have caused the economy to become less competitive.

After a decade of strong performance, Brazil grew below the Latin American average in 2011 and so far this year.

Brazil’s average electricity cost of $180 per megawatt hour is exceeded only by Italy and Slovakia, the Getulio Vargas Foundation, a private think-tank, said in a 2011 study based on data from the International Energy Agency.

High electricity rates have contributed to stagnant investment and production in energy-intensive industries. Despite Brazil’s bauxite and alumina resources, no new aluminum factories have been built in Brazil since 1985 and two have closed, keeping production levels stagnant, the Getulio Vargas study said. It added that electricity accounts for 35 percent – “an insane proportion” – of the industry’s production costs.

Pittsburgh-based aluminum producer Alcoa (AA.N) said in April it was considering big production cuts at two of its Brazil factories in part because of high electricity costs.

One of the officials who spoke to Reuters said the situation at Alcoa had added urgency to Rousseff’s plan to cut taxes.

All told, taxes account for about half of the cost of electricity in Brazil, studies show. The taxes themselves are roughly evenly split between the federal and state level.

Cutting or simplifying taxes at the federal level will be relatively straightforward for Rousseff. However, she also believes she can push through tax cuts at the state level by using leverage from upcoming debt negotiations.

Several states are asking for lower interest rates on debt they owe the federal government. Rousseff will likely ask the states to simplify or cut their taxes on electricity in return, one of the sources said.

The left-leaning president will also ensure that any tax relief is fully passed along to consumers, the officials said.

Although the electricity sector is partly privately controlled, Rousseff believes she can use the pricing power of state-run companies to effectively push rates lower if needed, they said. An upcoming renegotiation of concessions in the industry could also be an opportunity to push for lower rates.

SHADOWS OF STRATEGY WITH BANKS

Rousseff’s tactics are similar to those she used to cut interest rates in recent months – another pillar of her strategy to reduce the “Brazil cost.”

Her government has frozen billions of dollars in spending, allowing the central bank to slash its benchmark interest rate by 3.5 percentage points since August. When some private-sector banks balked at lowering rates for consumers, Rousseff and senior officials publicly hectored them for having some of the world’s largest spreads.

State-run banks then announced lower interest rates for customers, and the private banks soon yielded and followed suit.

Such tactics have caused friction between Rousseff and some members of the business community, especially banking executives, who privately accuse her of trying to bully the private sector.

Yet the officials said Rousseff is using the best tools available to her to restore Brazil’s competitiveness. Congress blocked attempts at a comprehensive tax reform by her predecessor as president, and Rousseff, herself a former energy minister, believes the only politically viable alternative is to move one sector at a time, they said.

“I’m fully aware that Brazil needs to reduce its tax burden,” Rousseff told reporters while on a visit to India in March. “What I have done is take little measures that, in their totality, create greater tax breaks, which is fundamental for the country to grow.”

(Reporting by Brian Winter; Editing by Kieran Murray and Sofina Mirza-Reid)

USA: Sierra Club Opposes Cameron LNG Export Plans

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The Sierra Club filed a formal protest to the U.S. Department of Energy (DOE) on Tuesday, challenging a proposal to export billions of cubic feet of domestic natural gas from a facility on Lake Charles in Cameron Parish, LA.

The Sierra Club’s protest challenges natural gas companies’ efforts to secure liquefied natural gas (LNG) export licenses without acknowledging its damaging effects. DOE is currently studying the effects of exporting as much as a fifth of the domestic gas supply, and the Sierra Club calls for similar studies of the public health and environmental damage caused by increased fracking.

The Sierra Club’s challenge contends that the Cameron export proposal would lead to increased air and water pollution in Louisiana and Texas and raise domestic natural gas prices. The filing calls for a full Environmental Impact Statement to study the extent of this proposed facility’s environmental damages before DOE makes any final decisions. Weighing these threats is particularly important because the oil and gas industry currently exploits numerous loopholes and exceptions in federal safeguards, putting the health and safety of Americans at risk.

This filing is the fifth protest the Sierra Club has brought before DOE and other regulatory bodies, opposing LNG export facilities. The other challenges were filed against Cove Point, MD, Sabine Pass, LA, Coos Bay, OR, and Freeport, TX.

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USA: Sierra Club Opposes Cove Point LNG Export Plans

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The Sierra Club filed Monday the first formal objection with the U.S. Department of Energy against the export of domestic gas produced from fracking.

This is the third LNG export facility the organization has opposed.

Facilities in Coos Bay, OR, Sabine Pass, LA and Cove Point, MD are the first three challenged by the Sierra Club.

The filing challenges the export of Marcellus shale gas and others from Cove Point, MD facility, citing that exports would raise gas and electricity prices nationally and expand natural gas fracking.

The filing also called for a full Environmental Impact Statement on the effects of increased Marcellus fracking that would be brought on by this export proposal.

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USA: Golden Pass LNG Plans Re-Exports

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The U.S. Golden Pass LNG Terminal (GPLNG) said Wednesday it will seek the necessary authorizations from the U.S. Department of Energy to re-export LNG that has previously been imported into the United States and stored at the terminal.

GPLNG intends to receive foreign-sourced LNG at its terminal facility, store such volumes of LNG temporarily at its terminal, and then send it out of the terminal for export to foreign markets.

The Golden Pass LNG Terminal said in a statement to DOE that the original design of the terminal incorporated the ability for the terminal to load onto ships LNG stored at the terminal.

Therefore, no new facilities and no modifications of existing facilities will be required in order to provide re-export service.

GPLNG will, however, need to modify its existing operating procedures to address the proposed re-export activities, it said in a statement.

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Aker Solutions Plans to Strengthen its Footprint in Northern Norway

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As the chase for oil and gas moves further north, the oil services industry follows. Today Aker Solutions, a Norwegian multinational provider of services related to engineering, construction, maintenance, modification and operation announces plans to establish a large engineering office in Tromsø as part of the company’s northern Norway strategy.

Aker Solutions announces plans to establish a large engineering office in Tromsø.

The new office will gather knowledge and expertise related to the northern region. It will become involved in engineering and maintenance and modification projects on the entire Norwegian continental shelf and abroad, and be an integral part of Aker Solutions’ international competence network.

“We believe in the reserves potential on the Norwegian continental shelf and in the Arctic. If the marked continues to develop positively and we are successful in our efforts to win work with customers in the region, we believe that we will have a substantial engineering hub in the North with 2-300 employees in three to five years,” says executive chairman of Aker Solutions, Øyvind Eriksen.

The establishment of the Tromsø office is part of Aker Solutions’ overall strategy to increase the company’s footprint in the northern regions of Norway, driven by an increasing number of interesting field development opportunities offshore northern Norway and in the Barents Sea.

Aker Solutions have worked closely with suppliers in northern Norway for many years. The Tromsø office will now develop a sourcing strategy for Aker Solutions in northern Norway and further strengthen our relationships with suppliers in the north.

Tromsø  becoming increasingly involved in oil & gas

Tromsø is the largest city in this part of Norway and a regional centre with good connections to other key locations in the north and to other Aker Solutions offices in Norway. The university in Tromsø is becoming increasingly involved in oil and gas related research and education programmes, which is expected to fit well with Aker Solutions’ future competence requirements.

Elsewhere in northern Norway, Aker Solutions is in the process of building up a subsea service base – housing engineers, technical staff and field operators – in Hammerfest to support the Goliat subsea field development. Aker Solutions has also recently acquired the Narvik-based well technology business X3M Invent. Aker Solutions is also considering establishing an engineering office in Sandnessjøen to support the company’s modifications and operations services business.

“In June the Norwegian government announced a petroleum policy that clearly spelt out an expectation to the oil industry that activity at sea should have ripple effects on land through job and value creation. We support this drive because it makes business sense to both us and our customers,” adds Øyvind Eriksen.

Aker Solutions is currently looking for suitable permanent office premises in the city. Recruitment for engineers for the Tromsø office will also start this winter.

Aker Solutions today has offices and operations in the following Norwegian locations: Arendal, Asker, Bergen, Egersund, Fornebu, Hammerfest, Horten, Kristiansand, Kristiansund, Lier, Midsund, Moss, Narvik, Oslo, Porsgrunn, Stavanger, Trondheim and Ågotnes.

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USA: Hornbeck Plans to Build Sixteen New Generation Offshore Supply Vessels

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Hornbeck Offshore ServicesBoard of Directors has approved a new vessel construction program for its wholly-owned subsidiary, Hornbeck Offshore Services, LLC. The Company plans to build sixteen U.S.-flagged 300 class DP-2 new generation offshore supply vessels (OSV) for its Upstream business segment with options to build an additional 16 substantially similar vessels should future market conditions warrant their construction.

This will be the Company’s eighth vessel newbuild program since its inception in 1997, and its fifth newbuild program involving state-of-the-art, technologically advanced new generation OSVs.

The Company expects the aggregate cost of the first 16 vessels under this program to be approximately $720 million, excluding construction period interest. Construction costs will be funded with cash on-hand, projected free cash flow from operations, other external financing and, if necessary, available capacity under the Company’s currently undrawn and recently expanded $300 million revolving credit facility.

Delivery of the first 16 vessels to be constructed under this program is expected to occur on various dates during 2013 and 2014, which should coincide with the delivery of approximately 145 incremental floaters and high-specification jack-up drilling rigs, currently under construction worldwide, during the same timeframe. Upon completion of the first phase of this OSV newbuild program at the end of 2014, the Company projects that the weighted-average age, based on deadweight tons, of its pro forma 67-vessel fleet of new generation OSVs will be seven years. The Company is now in the process of finalizing negotiations with selected domestic shipyards and expects to enter into definitive contracts in the near future.

These new 300 class OSVs are particularly well-suited for the increased demands of deepwater and ultra-deepwater customers for high-specification vessels, while maintaining an overall size that maximizes efficiency from an operating cost perspective. These vessels will be built in the United States, which qualifies them for coastwise trade in the U.S. Gulf of Mexico, or the GoM, under the Jones Act; however, the Company expects them to service the anticipated increase in deepwater and ultra-deepwater drilling activity in all three of the Company’s core geographic markets of the GoM, Brazil and Mexico. The 300 class DP-2 vessel design contemplated by this newbuild program features 6,000 deadweight tons and 20,000 barrels of liquid mud carrying capacity. The length and high load capacity of these OSVs also make them ideal candidates for conversion into deepwater construction service and for subsea inspection, repair and maintenance work. The Company expects these new 300 class vessels to offer double the deadweight tons and more than double the liquid mud capacity of its 240 class OSVs, which should allow the 300 class OSVs to command higher dayrates commensurate with their increased size and capabilities.

Hornbeck Offshore Services, Inc. is a leading provider of technologically advanced, new generation offshore supply vessels primarily in the U.S. Gulf of Mexico and Latin America, and is a leading short-haul transporter of petroleum products through its coastwise fleet of ocean-going tugs and tank barges primarily in the northeastern U.S. and the U.S. Gulf of Mexico. Hornbeck Offshore currently owns a fleet of 80 vessels primarily serving the energy industry.

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USA: TDW Plans to Open Global Pipeline Integrity Center

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T.D. Williamson, Inc. (TDW), a leading provider of pipeline equipment and services, has announced plans for the creation of a Global Pipeline Integrity Center in Salt Lake City, Utah.

Once complete, this world-class showcase facility will combine the TDW inline inspection engineering, manufacturing, operations, service center, and data analysis functions in one location. Situated close to the airport in the Salt Lake International Center, this new site will double the current TDW footprint in Salt Lake City and is indicative of the ongoing TDW investment in inline inspection.

Our goal is to create a Global Pipeline Integrity Center that not only houses our inline inspection capabilities but that also leverages the total breadth of TDW technologies,” says Eric Rogers, Director of Pipeline Integrity Solutions for TDW.

In addition to serving as a global hub for inline inspection, the center will showcase TDW pigging products, including launchers and receivers, and pipeline services, such as cleaning and non-destructive testing.

“This new facility will also enable future growth, including the addition of a data center, customer and employee training facility, and pipeline test equipment for inline inspection tools,” Rogers adds.

TDW offers a wide range of inline inspection technologies. Advanced KALIPER® 360 technology is specifically engineered for use in newly constructed pipelines to provide geometry baseline information. TDW also offers high resolution deformation (DEF) tools for locating, sizing and determining orientation of diameter reductions or expansions. Magnetic flux leakage (MFL) tools provide detection and sizing of internal and external metal loss in liquid lines, and GMFL tools do the same for gas pipeline environments. SpirALL™ MFL (SMFL) technology is designed to detect longitudinal defects in a pipe body or longitudinal weld seam in conjunction with additional technologies available on TDW multiple dataset platforms. XYZ Mapping service provides the precise centerline profile of a pipeline in latitude, longitude and elevation. TDW is also conducting extensive research into Residual Field and Low Field Magnetism technologies for mechanical pipeline damage prioritization.

“Our technologies are constantly evolving and expanding,” says Rogers. “Our ability to combine technologies and generate multiple data sets in a single inspection makes defect discrimination more accurate and efficient than ever before. Our new facility will enable us to continue the proud tradition of TDW innovation.”

Plans call for the new TDW Global Pipeline Integrity Center to open its doors during the first half of 2012.

About T.D. Williamson, Inc.

A world leader in pipeline equipment and services, TDW delivers a comprehensive portfolio of safe integrity pipeline system solutions for onshore and offshore applications, including hot tapping and plugging, pipeline cleaning, integrity inspection, pigging and non-tethered plugging pig technology for any pressurized piping system, anywhere in the world.

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