QIA fund becomes strategic partner of ROSNEFT

HomeBusiness News Qatari fund becomes strategic partner of Russia’s Rosneft Published time: 7 May, 2018 11:47 Get short URL Qatari fund becomes strategic partner of Russia’s Rosneft Buildings are seen on a coast line in Doha, Qatar © Naseem Zeitoon / Reuters An agreement which provides for the acquisition of an 18.93 percent stake in Russian oil giant Rosneft by Qatar sovereign fund (QIA) is strategic, according to company spokesman Mikhail Leontyev. He told RIA Novosti that QIA will become a major shareholder in Rosneft, along with the British oil company BP. Under the deal which was announced Friday, QIA will own 18.93 percent of Rosneft, becoming the third-largest shareholder after the Russian state, which holds 50 percent and, BP with 19.75 percent. “A very strategically important deal took place... Qatar, represented by the QIA fund, becomes the direct shareholder and strategic partner for Rosneft,” Leontyev said, adding that the Russian company is satisfied with the decision. Read more © Nikolay KorchekovRussia targets strategic Chinese energy market “This is a completely different level of relations and cooperation. The market will see a range of bilateral international projects that we are going to develop together…” He explained that from the investment point of view, QIA is a very good partner with “obvious resources.” In 2016, the consortium of QIA and the Swiss commodity trader Glencore bought a 19.5 percent stake in Rosneft. Later, they announced the sale of 14.16 percent of the shares in that stake to the Chinese energy company CEFC. The value of the transaction was estimated at $9.1 billion. On Friday, the agreement with CEFC has been terminated, with the stake intended for sale to the Chinese firm to be transferred to a subsidiary of QIA. The companies have also announced dissolving the consortium. Glencore will receive €3.7 billion as a result of the transaction and keep the 0.57 percent stake in Rosneft. According to Leontyev, Glencore has successfully completed its participation in the transaction and, as a trader, it has other tasks.

U.S. hits oil giant Rosneft, other firms with toughest Russia sanctions

U.S. hits oil giant Rosneft, other firms with toughest Russia sanctions Wed, Jul 16 23:13 PM EDT image 1 of 2 By Anna Yukhananov and Steve Holland WASHINGTON (Reuters) - President Barack Obama imposed the biggest package of U.S. economic sanctions yet on Russia on Wednesday, hitting Russia's largest oil producer Rosneft and other energy, financial and defense firms, with what he called significant but targeted penalties. Obama's latest round of sanctions came after close consultations with European leaders, who announced a less-ambitious package. The ultimate impact of the U.S. sanctions likely depends on whether the European Union follows suit. The extent of the sanctions against key parts of the Russian energy and financial industry, including Gazprombank, was intended to serve notice to Moscow that its refusal to curb violence in eastern Ukraine has consequences. The targeted companies also include Russia's second-largest gas producer, Novatek, Vnesheconombank, or VEB, a state-owned bank that acts as payment agent for the Russian government, and eight arms firms. The U.S. Treasury Department said the measures effectively closed medium- and long-term dollar funding to the two banks and energy companies. But the sanctions did not freeze those four companies' assets, or otherwise prohibit U.S. firms or companies from doing business with them. It is the first time the United States has imposed such narrowly targeted measures as it seeks the maximum impact on Russia, a huge energy producer, while avoiding any immediate shock to global oil markets or U.S. and EU companies. Russian President Vladimir Putin, speaking in Brasilia, said the sanctions would damage U.S. energy companies, and bring relations with Russia to a "dead end." One analyst said the sanctions remained limited in their scope and were likely to prompt a "war of words" more than anything else. "I think that the impact on oil sales will be negligible," said sanctions expert Douglas Jacobson, attorney at Jacobson Burton in Washington. "It is another classic shot across the bow and a message from the United States that sanctions can be ramped up." Obama said Putin had so far failed to take steps needed to resolve the crisis peacefully. "We have emphasized our preference to resolve this issue diplomatically, but that we have to see concrete actions and not just words that Russia, in fact, is committed to trying to end this conflict along the Russia- Ukraine border," he said. Washington said on Wednesday that up to 12,000 Russian combat forces were back on the border with Ukraine and that weaponry was crossing over to pro-Russian separatists. The increase in the Russian presence occurred several weeks after Moscow had drawn down its forces in the area to about 1,000 troops. POSSIBLE FURTHER SANCTIONS Obama said the United States could impose further sanctions if Russia did not take concrete steps to ease the conflict. The United States has already imposed several rounds of sanctions on Russian and Ukrainian senior officials since the start of the violence, including Rosneft's chief executive, Igor Sechin. But the sanctions have had only a limited impact on the Russian energy industry, a cornerstone of the country's $2 trillion economy. It is not yet clear how large an impact the new measures will have on Rosneft, which had sales of $40 billion in the first quarter, about 8.6 percent of Russia's gross domestic product, or the companies it does business with. Sechin, who like Putin was speaking in Brasilia, said the sanctions would not affect Rosneft's current project with ExxonMobil, but would damage the shareholders of U.S. companies cooperating with Rosneft. The new sanctions would not appear to prevent Rosneft from selling its oil, but may raise questions about the company’s more than $15 billion worth of oil-related finance arrangements with companies including BP, which now owns almost a fifth of Rosneft, and Glencore. Morgan Stanley, which is selling the majority of its global physical oil trading operations to Rosneft, declined to comment. The sanctions stopped short of targeting Russia's Gazprom, the world's largest natural gas producer and provider of much of Europe's energy supplies. Gazprombank is 36 percent-owned by Gazprom. RUNNING OUT OF PATIENCE "These sanctions are significant, but they are also targeted, designed to have the maximum impact on Russia while limiting any spillover effects on American companies or those of our allies," Obama told reporters. The new measures were announced on the same day that EU leaders met in Brussels and agreed to expand their own sanctions on Russia. The new U.S. sanctions also include Feodosiya Enterprises, a shipping facility in Crimea, and senior Russian officials, several of whom had already been targeted by the European Union. The affected senior officials included the deputy head of the State Duma, or parliament, the minister of the Crimea, a commander of the Russian intelligence agency FSB, and a Ukrainian separatist leader. Obama in recent weeks has repeatedly threatened new sanctions, and appears to have run out of patience as fighting continued to rage in eastern Ukraine. The new sanctions were unlikely to please Republican lawmakers, many of whom have been calling for the imposition of sanctions on entire Russian industries, rather than specific companies, as the best way to control Putin. Republican lawmakers said they welcomed the additional sanctions but that Obama should go further. Several lawmakers, Republicans in particular, have called for broader sectoral sanctions targeting important Russian industries like energy and banking. "Until now, the administration's response to Putin’s aggression has given him little reason to change his behavior. Continuing to go after the Russian economy is the way to send the most effective message," Dan Coats, an Indiana Republican, said. For more details on the sanctions, see http://1.usa.gov/1kx0sxT. (Additional reporting by Jeff Mason, Patricia Zengerle and Phil Stewart in Washington, Adrian Croft in Brussels and Josephine Mason, Edward McAllister, and Jonathan Leff in New York; Editing by Peter Cooney)

Qatar: what’s next for the world’s most aggressive deal hunter?

July 4, 2013 8:55 pm Qatar: what’s next for the world’s most aggressive deal hunter? By Camilla Hall, Simeon Kerr, Roula Khalaf, Lionel Barber, Patrick Jenkins and Ed Hammond As the global economy recovers, the nation must grapple with the end of sky-high returns On a visit last year to Qatar Holding’s headquarters, a Gulf banker stepped inside a boardroom, intrigued by what he glimpsed as he walked past. His attention fixed on a set of whiteboards, each scrawled with the names of an array of global companies. This, he suspected, was a shopping list. Some of the companies, including Valentino, the Italian fashion label, had already been bought by other Qatari investors. So had a stake in Germany’s Siemens, which was also on the boards. Printemps, a French department store, would be snapped up months later. “It was as if there was no company that doesn’t interest them,” the banker says. Qatar's LNG exports Volume and global share Qatar lined up for £10bn UK projects fund Investors welcome news of Qatar transition David Gardner Qatar shows how to manage a monarchy Qatar shakes up investment fund Qatar seeks to shake off trophy investor image Qatar fund seeks to soften image Buying up the world How Qatar Holding has put its cash to work since 2007 Qatar eyes IPO for $12bn vehicle Qatar to invest €1bn in Italian groups IN Analysis Russia Imperialism awakes France Hollande’s appeal African banks Fragile dream North Korea Glimmer of hope The wish list illustrates the seemingly unlimited ambition – and resources – of Qatar, a small Arab state that in just a few years has parlayed its enormous gas riches into an extraordinary investment portfolio. For Qatar’s cash-rich sovereign wealth fund, the financial crisis proved to be a buying opportunity. “We have cash,” Ahmad al-Sayed, who on Tuesday was promoted to chief executive of Qatar’s sovereign wealth fund, remarked in 2009. “Cash is king.” Qatar put that cash to work securing some of the biggest deals in recent years, from the multibillion-pound capital-raising of Barclays in 2008 to last year’s $76bn takeover by Glencore, the commodity trading house, of Xstrata, the mining company. And Qatar’s name has popped up as a potential investor in countless other transactions, consummated or not. The state flexed its financial muscle through a wide range of corporate and royal investments. But it is Qatar Holding, the vehicle of its sovereign wealth fund, the Qatar Investment Authority, that has upturned the investment world. As its clout increased, the QIA negotiated alongside some of the world’s most powerful business and political leaders, among them Tony Blair, former UK prime minister, and Nicolas Sarkozy, France’s ex-president, during sensitive transactions. Since 2009, Qatar Holding received $30bn-$40bn a year from the state, lending it such astonishing financial power that normal rules of investing did not apply; losses could be easily absorbed and big gambles taken. It also was able to extract unusually favourable terms. “They were providers of liquidity in an illiquid world. The opportunities for them were different from other institutions,” says a western adviser. “And you don’t take an idea to them without a significant return.” Yet the unique market conditions that allowed the QIA to build its investment portfolio have passed. Stock markets have rebounded strongly since the depths of the crisis and economies have stabilised. As investor confidence returns, the privately negotiated deals, generous terms and big discounts that Qatar demanded and often received may become a thing of the past. “What happens when the world becomes more normalised? You can do deals in higher-risk countries or you have to moderate your return requirements or not spend as much money,” says a western banker. There are momentous changes within Qatar, too. It has a new emir, Sheikh Tamim bin Hamad bin Khalifa al-Thani, who assumed power last week after his father abdicated. And growth in Qatar’s liquefied natural gas exports is slowing. Months before the dynastic transition, Qatar Holding brought in consultants including McKinsey and PwC to conduct an extensive internal review of how it operates. It was led by Mr al-Sayed, the 37-year-old lawyer who has overseen the fund’s growth since 2009. The review appears to be a recognition that the young fund needs to adapt to become a more robust institution – less of an extremely well capitalised start-up and more like the investment arms of established peers in Abu Dhabi and Kuwait. Sheikh Tamim bin Hamad bin Khalifa al-Thani, left, with former prime minister Hammad bin Jassim ©AFP Pedestrians walk past a branch of the Agricultural Bank of China in Beijing. Qatar Holding paid $2.8bn for a 2.1% stake in the Chinese bank in 2010. ©AFPA Sainsbury supermarket in Greenwich, London. In January 2008 Qatar Holding paid $2.2bn for a 17.9% stake in the British retailer. ©PAA pedestrian stands beside a logo for Spain's Banco Santander in London. Qatar Holding bought a 5% stake in the bank for $2.7bn in 2010. ©ReutersA Porsche 911 Black Editionat in Stuttgart. In August 2009 Qatar Holding paid $2.8bn for a 5 per cent stake in the German carmaker. ©BloombergIberdrola, Spain's second-biggest power company. In 2011 Qatar Holding bought a 6.1% stake in the Spanish utility for $2.8bn. ©BloombergThe Barclays headquarters building in London. In June 2008 Qatar Holding paid $4.5bn for a 10% stake in the British bank. In October the same year it paid $6bn for a 6% stake. ©ReutersCredit Suisse's headquarters in Zurich. Qatar Holding paid $4.3bn for a 12.6% stake in the Swiss bank in 2008. ©ReutersLogos badges in a Volkswagen Golf production line in Wolfsburg. In 2009 Qatar Holding bought a 12.5 per cent stake in the German car maker for $7.1bn. ©ReutersThe Harrods department store in London. In 2010 Qatar Holding paid $2.2bn for the upmarket London store. ©AFPA logo on a window above the main atrium of the London Stock Exchange headquarters. Qatar Holding paid $1.3bn for a 20% stake in the exchange. ©Bloomberg BAA is the world's biggest airport operator. In 2012 Qatar Holding paid $1.4bn for a 20% stake in BAA, owner of airports including Heathrow and Stansted ©Bloomberg ‘HBJ’ But the big changes at Qatar Holding have already begun. When Sheikh Hamad bin Khalifa al-Thani handed power to his 33-year-old son, it rattled the investment banking community. But it was not the emir’s abdication that worried the bankers, who have raked in millions from Qatar Holding’s frenzied dealmaking. Instead, they were concerned about the fate of Hamad bin Jassim, the long-time prime minister and foreign minister who resigned at the same time as the emir. They had reason to fret. Within a week, HBJ, as the billionaire is often referred to by foreigners, was out of the QIA. HBJ set the style and tone of Qatar’s investment drive. “Personalities have much more of an impact at the QIA,” says a Gulf banker, comparing the fund with other sovereign vehicles in the region. “When you’re setting up something new, you’re setting the tone, the culture.” The team steering the QIA Sheikh Tamim, 33, is the second son of the former emir and Sheikha Moza. Educated at Sherborne and Sandhurst, the new emir’s career grew from the military into local roles in sports, technology and education. Sheikh Tamim is expected to refocus attention away from international affairs back on to Qatar’s domestic scene. Ahmad al-Sayed, 37, QIA chief executive. The new CEO was promoted to the role after steering Qatar Holding, its direct investment arm, through the financial crisis. He is a technocrat who has ascended the ranks from his role as a legal adviser. Mr al-Sayed studied banking and financial law at Boston University and also has an executive MBA. Sheikh Abdullah bin Hamad bin Khalifa al-Thani, 25, QIA vice-chairman. His appointment marks another promotion for the second son of the former emir’s third wife. Three years after graduating from Georgetown’s Doha campus, the low-profile royal runs the ruler’s court and has taken several board positions, including with Vodafone Qatar. Sheikh Hamad bin Jassim al-Thani, 53, former chief executive of the QIA. He has been the former emir’s right-hand man since aiding the palace coup of 1995. As foreign minister and prime minister, his business acumen and diplomatic savvy raised the country’s profile as a go-to investor and regional mediator. But his interests also stirred disgruntlement. Hussain al-Abdulla, 56, QIA board member. Known as “the Doctor” – a nod to his PhD – he has dedicated his long career to Qatar’s public finances. Gaining a foothold at the QIA as an executive board member under the former chief executive, he came through the government bureaucracy, starting in the economics department of the emir’s office in the early 1980s. Ali Sherif al-Emadi, QIA board member. As chief executive of Qatar National Bank, the US-educated Mr Emadi served as an understudy to Youssef Kamal, the experienced finance minister and QNB chairman. Mr al-Emadi’s brother is also married to Mr Kamal’s daughter, making the transition to a younger generation another family affair. Sheikh Tamim, the new ruler, has long been the chairman of the QIA. His statement last week that he wanted to avoid behaviour that appeared arrogant was taken as a veiled reference to HBJ’s brash style, both in politics and finance. Some bankers worry that HBJ’s departure will mean a slowdown in the pace of external investment. HBJ was the principal generator of deals, using his impressive roster of political, business and banking contacts. (Credit Suisse, in which Qatar Holding has a minority stake, has been used more than most.) Qatar, in fact, has seen “every good deal in the world almost directly”, as one private equity manager puts it. HBJ’s brinkmanship, along with a diplomatic mediation by Mr Blair, clinched Glencore’s takeover of Xstrata, the miner in which Qatar Holding had a stake. But the deal was completed only after Doha squeezed out a higher price. The grandson of a pearl trader, HBJ is a contrarian and a consummate dealmaker. “With HBJ, you have seven minutes to tell him the circumstances of a deal and he’ll give you a reaction in seven seconds,” says a person who has done business with him. “He judges how good a deal is by how far he can push you  . . .  it’s a culture that goes through the organisation. They leave nothing on the table.” At times, he invested personal funds in Qatar Holding deals, an example of the blurring of roles in the autocratic Gulf state. Long-time observers in Doha say that HBJ’s outsized power and his personal wealth – he is thought to be richer than the outgoing emir – made other members of the royal family uncomfortable and hastened the transition to Sheikh Tamim. It is an open secret in Doha that HBJ and Sheikha Moza, the new emir’s mother, have not been on the best of terms. Analysts say that HBJ’s departure was linked to the emir’s abdication, giving the younger ruler the room to assert himself. Even before the dramatic events in Doha last week, HBJ was stepping back from the fund. Although the bankers close to him will be disappointed, his departure clarifies the lines between political leaders and the state’s sovereign wealth fund. This could accelerate the fund’s evolution into a more professional institution. That Mr al-Sayed, a protégé of HBJ, should have replaced him came as a surprise to the financial community in Doha and beyond. It was assumed that another prominent member of the al-Thani family would be handed the job. Like his mentor, Mr al-Sayed is known for a tough negotiating style, often leaving his counterparts guessing about whether he will close a deal until the last minute. But he is also a tireless worker and loyal servant to the al-Thanis, part of a new generation of Qataris now being promoted by the young emir. According to one person who has done business with Qatar Holding, Mr al-Sayed has also played his cards well, helping Sheikh Tamim in some private acquisitions. Mr al-Sayed earned a master's degree in banking and financial law from Boston University. Promoted from legal counsel to chief executive of Qatar Holding in 2009, he came in, as one banker says, “on the ground floor” and rode the recovery cycle. People close to the fund say that it has delivered upward of 17 per cent a year in average returns since 2009. But gauging the success of Qatar Holding’s deals is not straightforward because their financial structures are often not disclosed. Bankers say that a majority of its investments are not the high-profile deals but in undisclosed trading of shares. Some of the fund’s biggest investments have done very well, including its participation in the Barclays cash calls of 2008, which netted about £1.7bn after the staged sale of its warrants in the British bank, according to Reuters estimates. The fund still holds 6.7 per cent of Barclays. Its bet on the merger of Glencore and Xstrata has also paid off. The value of its stake has more than doubled, according to Financial Times calculations. However, some of its other deals do not look so bright. Shares in Iberdrola, the Spanish utility, are down 22 per cent since March 2011 when the fund took a 6.2 per cent stake. Its stake in Hochtief, the German construction group, may have also lost value as the shares have sunk more than 13 per cent since it declared its 9.1 per cent stake in December 2010. Mr al-Sayed’s future is now secure. “He’s the guy who for the last four years has been leading it day-to-day, so his promotion means continuity, no disruption, particularly as Sheikh Tamim has been the chairman of QIA,” says a senior western banker. “Now Ahmad has to go only to Tamim. In a way it will make things smoother.” The Doctor People who have had dealings with the fund say the top job at Qatar Holding was slated to go to Hussein Ali al-Abdullah, a QIA board member in his 50s. In investment circles, he is known simply as “the Doctor” and was also a mentor to Mr al-Sayed. He is considered to be the founder of Qatar’s sovereign wealth fund, arguing for the need for a nest egg for Qatar’s 300,000 nationals – and to prepare for when the gas riches run out. Considered a calm, wise hand, Mr al-Abdullah has preferred to maintain an oversight role rather than thrust himself into the daily management that keeps Mr al-Sayed busy until late into the night. He too is staying on as a board member of the QIA. It was the Doctor who declared last year that the investment strategy of Qatar Holding could be summarised in two words: “No strategy”. The statement encapsulates perfectly the fund’s single-minded pursuit of deals. To a large extent, the fund’s investments have been driven by a simplistic rationale. Qatar Holding made its mark in London in part because it is a market in which the royals feel comfortable. The same could be said for the Volkswagen-Porsche deal in 2009 that put Qatar Holding on the map. Goldman Sachs was the first to suggest that Qatar buy into Porsche in the spring of that year as the car company was engaged in a heated feud with VW. But HBJ’s interest is thought to have already been piqued by a meeting with a member of Porsche’s board. As with London property, there was a personal magnetism at work. HBJ loved Porsche cars, as does Mr al-Sayed, who led the negotiations on the transaction. As the battle between Porsche and VW raged on, Credit Suisse, Qatar Holding’s adviser, suggested a bolder plan: that the two companies merge. The idea captured HBJ’s imagination. He travelled to Germany for high-level talks, including a meeting with Angela Merkel, chancellor, while Mr al-Sayed negotiated with provincial officials and company executives. “They [the Qataris] took a gamble on recovery, and they won – they rode out the storm and are now making money hand over fist,” says a banker who was involved in the deal. In June this year, Qatar Holding sold its 10 per cent stake in Porsche back to the owning families, rounding off the Qatari role in the complex merger. The VW-Porsche deal reflected the image of Qatar that the al-Thanis were looking to project – that Arab hydrocarbons wealth could be deployed shrewdly. It is a matter of national pride that Qatar Holding has taken board seats at big companies, from the owners of Heathrow and Canary Wharf in the UK to Credit Suisse and Volkswagen, making decisions that are relevant to some of the world’s most prominent companies. The board seats are seen as a way to groom the next generation that is now taking over. Hard bargaining Qatar Holding’s hard bargaining worked at a time when there were few other investors looking to take on risk. But the fund has also developed a reputation as a difficult partner that would be best avoided – particularly when it comes to property deals. When the fund bought buildings directly, it was criticised by other property investors for over-negotiating and bullying sellers. “They don’t buy property like anyone else; they treat it like corporate M&A,” says the head of one of the world’s largest property fund managers. “Everyone negotiates hard but there are very few deals when one party literally walks away hoping they never see the other again.” Qatar’s drive for higher yield may also have drawn attention for the wrong reasons. In the UK, the Serious Fraud Office is investigating certain “commercial agreements” between Barclays and Qatar Holding in 2008. (The fund denies any wrongdoing). In France, where it has widespread real estate investments, Qatar’s dealmaking has stirred political controversy. In 2008, Mr Sarkozy, then president, pushed for a law exempting Qatari real estate investments from capital gains taxes, so eager was Paris for more Qatari funding. But when Doha sought to invest in the capital’s suburbs, there was an outcry that the Gulf state was buying influence among France’s restive Muslim youths. The Qataris met their match while haggling over Harrods, one of London’s great brands. The fund spent a year negotiating for the £1.5bn purchase of the luxury retailer from Mohamed al-Fayed, the Egyptian tycoon. This time, it was Mr al-Fayed who threatened to pull out. Mr al-Fayed tried to sell the store without the underlying real estate, a proposal dismissed by the Qataris. He attempted to throw his Fulham Football Club into the mix but the Qataris wanted the Ritz in Paris instead. “The Harrods negotiation was tough and mercurial throughout. They – al-Sayed and Fayed – were both mad as mongeese,” says one banker who was involved in the deal. Even within the oil-rich Gulf, where sovereign wealth funds from Kuwait to Abu Dhabi are powerful international financiers, Qatar Holding and its parent, the QIA, are unusual vehicles. It is now in the midst of the internal review to move on to what a person close to the fund calls “the next stage.” The fund needs to determine exactly what kind of investment group it wants to be. Qatari officials hate being described as having “deep pockets”, saying it insinuates that they are willing to overpay for assets. (Some bankers say this is true in some cases.) Instead, says one former staff member, the objective is to be thought of as a big private equity group, such as a Blackstone or a KKR. There are some similarities. Although Qatar Holding says it had no debt at the end of 2012, bankers say it used debt in some deals to maximise returns and manage liquidity. “Sometimes they use it to hit a mythical returns number. They just like to use other people’s money,” says one banker. Qatar Holding has often asked its bankers to assemble deal structures with ample downside protection, whether through warrants, debt funding from the banks or companies targeted for acquisition or high yielding convertible bonds. The long game Compared with other Gulf funds, the QIA’s size, agility and investment style seem like a private equity group. The Abu Dhabi Investment Authority is a 1,400-strong bureaucracy and invests the bulk of its assets in externally managed index-tracking funds; it acts more like a pension fund. The Kuwait Investment Authority has a staff of about 475 across Kuwait, Beijing and London. In contrast, Qatar Holding is exceedingly thin, with only 40 professional staff even though it has accumulated more than $100bn in assets during the past four years. But Qatar Holding has an advantage over private equity firms. It is, in essence, accountable only to one shareholder – the emir – and it can act as a longer-term investor. Staying lean has worked well for the fund so far. But for all the advantages of not having to get approval for deals through a chain of bureaucracy, as at ADIA, there are signs it is time for Qatar Holding to create a more formal structure. At Qatar Holding, decision making is so centralised that its bankers never call the shots. And like many employees in Qatar their movements in and out of the country are controlled by their employers in an archaic labour system. “You can’t get a piece of paper signed without Ahmad deciding, which creates bottlenecks,” says a senior banker. “But that’s the system, it’s not a democracy,” he adds. Anthony Armstrong, a high-flying American banker at Credit Suisse, was seconded to the fund after advising Qatar Holding on the complex VW-Porsche acquisition. He came to Qatar expecting to oversee some of the biggest deals of the financial crisis. But, according to people close to him, he felt powerless and could not wait for his 18-month stint to finish. Frustrated, Mr Armstrong took a business trip home and never returned. He was not available for comment. But he is one of several people who left the fund in the early stages, reflecting what they said was an internal chaos that undermined the fund’s potential. People close to Mr al-Sayed dismiss such criticism, arguing that he might be a hard-driving manager but that the atmosphere in Qatar Holding is friendly and staff turnover low. But management is waking up to calls for a more institutionalised fund. Qatar Holding is seeking a rating that would bring a measure of transparency. It is also expected to focus more on infrastructure and commodities investments, hoping to generate steady streams of cash flow. The biggest challenge, however, could be a shift in the investment climate. Having dominated the inward investment market for London property since the start of the financial crisis, Qatar has been overtaken in the past six months by a new wave of sovereign wealth interest, most notably from Norway and Malaysia. In banking too, Qatar recently discovered, with its stake in Russia’s VTB, that it is in a different position from a few years ago. The Qataris had hoped to finance all of VTB’s capital needs but their allocation came second to Norges, the Norwegian pension fund. For most investors, navigating through the financial crisis was a struggle for survival. For cash-flush Qatar Holding, it was a once-in-a-lifetime opportunity. Only today, with the combination of a stronger global economy and the waning influence of its dominant figure, HBJ, will it face its real test. But for a small state that realises that the source of its success is finite, there is no question that it will continue to scour the globe for places to put its cash. As one Qatari official once put it: “If we spend all our money in Qatar, every Qatari would have a house on the moon.” The Shard: A vanity project that soars empty above London’s skyline In financing The Shard in 2008, Qatar achieved one of its main goals: recognition. A potent symbol of intent in any market, western Europe’s tallest skyscraper – built in the depths of the financial crisis – became one of the world’s most talked about properties before the first storey was complete. Financed by a consortium of state-backed Qatari funds, it was, many argued, little more than a vanity project; an economically flawed blight on the London skyline. Today, almost a year after completion, The Shard is giving its critics reason to feel vindicated: costing about £1.5bn, the glassy spire rises empty but for a scattering of mostly Qatari-backed tenants. It is because of this, and similar deals that have done more to raise profile than returns, that the tiny state is desperate to shake off its image as a deep-pocketed trophy hunter. The Shard: symbol of intent The push towards commercialisation reflects Qatar’s need to distinguish itself from the wash of sovereign wealth funds that have poured into the property market in the past three years. In 2011 Qatar was the largest overseas investor in UK property, spending more than £1bn on a spread of deals that included buying almost 1,500 apartments used to house athletes during the London Olympics. By the end of 2012, spending just £680m, it had slipped behind the newly aggressive sovereign wealth funds of Norway, Malaysia and China, according to data from Real Capital Analytics. “In their heyday, when the rest of the investment world was lying down, they were a young fund with a lot of ambition and firepower to match,” says a person who has worked on Qatar-funded deals. “They had the market to themselves . . . but the investment case was as much to do with political gain as commercial logic.” Those close to Qatar suggest the slowdown in spending is symptomatic of the peninsula’s transition towards becoming business-minded. Apart from reining in dealmaking, its ruling officials are looking at centralising the property investing process. The move, which would mark a departure from the complex network of investment vehicles it has used to trade property, was given added credence by the announcement this week that Ahmad al-Sayed, the head of Qatar Holding, the state’s direct investment arm, will also run the Qatar Investment Authority, its parent. “They are evolving, but as the world becomes more efficient, they are having to rethink the kind of deals they want to do and the kind of image that they want to present,” says an investment banker close to the QIA.

Move on ENRC would be logical but tricky

-- The author is a Reuters Breakingviews columnist. The opinions expressed are his own --

By Quentin Webb
LONDON, June 13 (Reuters Breakingviews) - It's easy to see why an audacious acquirer like Glencore might want to snap up Eurasian Natural Resources Corporation. A deal between the recently floated commodity trader and the bad boy of the FTSE-100 would be inexpensive, make strategic sense and create an $80 billion-plus resources group. But the timing is bad for Glencore. Nor would buying the scandal-prone ENRC do anything to win over Glencore's sceptics.
Glencore boss Ivan Glasenberg always made it clear that the firm's flotation was about getting an acquisition currency. A weekend newspaper report that he is eyeing up ENRC is consistent with his ambitions. ENRC is a sitting duck. The departure of two independent directors had left the shares trading on 6.1 times forecast earnings, versus Glencore's 7.7 times, before the stock bounced on the suggestion of Glencore's interest.

There wouldn't be many rival bidders, either. The duo operates in Kazakhstan and the Democratic Republic of Congo, areas shunned by some bigger miners. Glencore would move into iron-ore production, and get more output in alumina, ferroalloys, and other metals. It could cut listing and head-office costs, and market ENRC's output through its world-leading trading operation. Paying a premium over ENRC's current $16 billion market value wouldn't be hard to justify.

But it's not an opportune moment to pounce. Glencore would want to pay in paper, yet it has pledged not to issue more shares before November. And investors would need some convincing that a deal this soon made sense, particularly since Glencore shares have drifted lower since listing. That gives ENRC time to address some of its governance problems, potentially reviving its shares.
A deal would also appear to up the risk profile of Glencore's asset base, with more exposure to DR Congo and Kazakhstan. And any transaction would need to negotiate the competing interests of ENRC's owners: copper producer Kazakhmys, with 26 percent; three oligarchs, with nearly 44 percent; the Kazakh state, with nearly 12 percent; and long-suffering independent shareholders. Kazakhstan might balk at having less control in a larger operation, while Glencore's minorities may feel uncomfortable that the big investor blocks in ENRC were joining the register, even if diluted, after recent events.
The business logic is there. But adopting ENRC would only heighten the contrast between Glencore and the mining establishment.

CONTEXT NEWS
-- Glencore is considering a 12 billion pound bid for Eurasia Natural Resources Corporation, the Kazakh mining company, the Sunday Times said on June 12. Quoting a source with knowledge of the discussions, the newspaper said Chief Executive Ivan Glasenberg had held talks in recent weeks with ENRC's founders and key shareholders Alexander Mashkevitch, Patokh Chodiev and Alijan Ibragimov.
-- ENRC shares rose more than 5 percent on Monday.
-- ENRC parted company with four of its non-executive directors on June 8. Richard Sykes, the former chief of GlaxoSmithKline, the pharma giant, and Ken Olisa, who also sits on the board of Thomson Reuters, failed to secure support in a shareholder vote. Two other directors, Abdraman Yedilbayev and Eduard Utepov, withdrew their names from the election at the last minute.
-- In an open letter published on June 8, Olisa wrote: "I explained my view that for companies such as ENRC, there are only two, mutually exclusive governance models -- either the founding shareholders should take a big step back and let the board of ENRC govern the company independently, or they should take a big step forward and play a hands on role in the strategic and operational detail of the business which they created".
-- Johannes Sittard, the ENRC chairman, said the group would undertake "a comprehensive review of its corporate governance". He said the process would take three months.

((quentin.webb@thomsonreuters.com))
(Editing by Chris Hughes and Sarah Bailey)

New Xstrata chairman sends the right message; Fiery CEOs may clash in Glencore-Xstrata talks

-- The author is a Reuters Breakingviews columnist. The opinions expressed are her own --

By Una Galani and Chris Hughes
LONDON, March 7 (Reuters Breakingviews) - John Bond isn't everyone's idea of a shareholder champion. But his coming appointment to the chair of Xstrata sends a welcome signal that the mining group realises it must act in the interests of all its investors, and not just for top shareholder Glencore.
The outgoing chairman of Vodafone and former chief executive of HSBC will take over from Willy Strothotte, who is currently chairman of Glencore and one of two directors that the giant commodities trader nominates to Xstrata's board by virtue of its 34 percent stake.
The question for Xstrata investors is how they might fare in any combination with Glencore following its possible $60 billion initial public offering this year. A merger would generate synergies. But Xstrata, valued at $68 billion, is understandably concerned about how value might be shared. Strothotte would have been conflicted in judging that issue. One reason Glencore is mulling a float is that Xstrata's chief executive, Mick Davis, recognised shareholders' concerns that it should establish a market value before there could be any deal. After all, Glencore's giant and opaque trading business doesn't have any obvious listed peers.
Xstrata shareholders would not want a cosy deal that saw them give away control for no premium.

They would also need satisfying that the changed profile of the enlarged group -- Glencore takes principal risk in its trading operation -- is acceptable. Governance would also be a concern: it's not clear how Davis and Glencore's CEO, Ivan Glasenberg, could both land suitable roles in the company without one becoming chairman in contravention of strict governance best practice.

In turn, this raises the question of whether other M&A options -- Xstrata has pursued a deal with Anglo American before -- offer a better balance of risk and reward. Glencore's blocking stake may make such considerations seem academic. But Bond has a real job defending Xstrata shareholders' interests here.
Fortunately, Bond is both independent and has a reputation to protect. His recent five-year tenure at Vodafone wasn't always the most harmonious but during his time there the mobile operator outperformed rivals to deliver an annual return of around 14 percent. He's had his run-ins with investors. Xstrata could be a chance to show he's really on their side.

CONTEXT NEWS
-- Xstrata announced that Willy Strothotte will retire as chairman at the miner's annual general meeting on May 4 to be replaced by Vodafone chairman Sir John Bond.
-- Strothotte is also chairman of Xstrata's biggest shareholder Glencore. The world's largest commodity trader is considering a possible stock market listing this year that could value it at about $60 billion.
-- Glencore has lined up one-time BP executive Rodney Chase as chairman, the Sunday Times reported at the weekend.
-- Strothotte has chaired Xstrata since 1994 and led the company through its initial public offering (IPO) in London in March 2002. -- Xstrata statement:http://www.xstrata.com/media/news/2011/03/07/0800CET/

((una.galani@thomsonreuters.com))
(Editing by Chris Hughes and David Evans)

=============
Glencore, the Swiss commodity trader, floated in London and Hong Kong in May. Its London-listed shares, which were priced at 530 pence, closed on Oct. 10 at 424.65 pence. The 20 percent fall contrasts with a 33 percent drop over the same period in Xstrata, the miner in which Glencore holds a 34 percent stake.

Credit Suisse highlighted the potential for a merger given Xstrata’s underperformance in a research report on Oct. 10. “We believe Glencore sees strong benefits to a deal and a combination would create an attractive high growth and differentiated major. The longer the relative rating gap exists, the greater the market’s focus on a potential transaction will likely become,” the bank’s mining analysts wrote.

Glencore Chief Executive Ivan Glasenberg told the Financial Times in April that there were “a lot of benefits and synergies” in putting the two companies together but that Xstrata “seems more comfortable for Glencore to go public and get a market price before they may or may not enter into discussions”.

A month earlier, according to an HSBC note, Xstrata Chief Executive Mick Davis told analysts that independent listings for the two companies were “unsustainable in the longer term”.
Mettle and mining
Glencore resilience brings Xstrata deal closer
11 October 2011 | By Quentin Webb

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Mining M&A’s clearest fantasy deal just moved closer to reality. For years, Glencore has coveted full ownership of Xstrata, its mining affiliate with market value of $43 billion. A tie-up has long made sense, and looks easier to pursue after the commodity trader’s shares outperformed in the recent market rout. But Xstrata investors will rightly expect a chunky premium to sell Glencore the 66 percent of the company it doesn’t already own.

Despite lingering 20 percent below its May float price, Glencore’s stock has outpaced its Zug sister’s by about 20 percent, and was a rock compared to global miners in the most recent turmoil. The resilience contrasts with a nasty credit-market wobble in 2009 and has bolstered Glencore’s argument that its business is more stable than pure mining.

The biggest draw of a tie-up would be selling more of Xstrata’s production, especially in copper, coal and zinc, through Glencore’s world-leading trading arm. Synergies after tax could reach $475 million, or about 3 percent of combined 2012 net income, on Credit Suisse estimates. Based on Oct. 5 prices, the Swiss bank reckons those synergies could allow Glencore to pay a 42 percent premium in an all-share deal, without destroying value – although a subsequent Xstrata rebound will have cut this. A partly cash deal could be even richer, and might be more palatable to Xstrata shareholders.

A stock-market re-rating is also possible, but far from certain. Glencore may suffer less of a “conglomerate discount”, but this may be offset by de-rating pressure given the dilution of trading with more exposure to mining. Ivan Glasenberg, the chief executive synonymous with Glencore, would surely keep the helm of an enlarged company. It’s hard to see what other job Xstrata CEO Mick Davis would want, and where he would fit in. But Xstrata’s heavyweight chairman, Sir John Bond, would be useful to retain.

Xstrata shareholders won’t roll over. They know their stock is volatile, with a “beta” far above rivals. That means it has lots of potential for rebounding after hitting two-year lows recently. And they would also be justified in wanting Glencore to have a longer public track record, noting that Glencore’s resilience is also partly thanks to factors such as its small free float and lock-ins that will in time expire. Glasenberg’s negotiating stance has improved – but he doesn’t have the upper hand yet.

===========UPDATE 2-Glencore, Xstrata turn to trusted banking starsThu, Feb 02 12:47 PM EST* Xstrata and Glencore teams may earn up to $70 mln each* Both companies have retained traditional firms* Deal fees lower due to Glencore's existing stakeBy Victoria HowleyLONDON, Feb 2 (Reuters) - An elite club of bankers traditionally close to London's mining companies stand to earn their firms a share of a $140 million fee pot if the proposed merger between Glencore and Xstrata succeeds.Banking teams advising Glencore Chief Executive Ivan Glasenberg and Mick Davis of Xstrata can expect payouts of between $50 million to $70 million, according to estimates from Thomson Reuters and Freeman Consulting, for helping their clients pull off the industry's biggest deal to date.If they fail to gauge a merger premium that will win over Xstrata's full shareholder register, however, they will receive only 10 percent of the potential revenue.Glencore already owns 34 percent of Xstrata, which means less work for the advisers, but has also capped potential fees 20 to 30 percent lower than an average deal of this size.Mining group Xstrata and Glencore, the world's largest diversified commodities trader, are in talks over an all-share deal that would create a group worth 50 billion pounds ($79.10 billion).Both sides have called in tried and tested advisers, who have worked closely with them over the years, sometimes at the expense of lucrative business from the other company.Glasenberg has called on Citigroup and Morgan Stanley , people familiar with the matter said, two of the bank's that led Glencore's $10 billion IPO in May, which yielded about $300 million to $400 million for advisers involved.Credit Suisse, also a top bank on the IPO, may be added to the roll call at a later stage, but does not yet have a role, the people said.Citi's contingent is expected to include David Wormsley, the senior UK banker best known for his court battle with Guy Hands over the private equity firm's controversial purchase of music group EMI.Michel Antakly, who advised Alcan on its 4.3 billion euro ($5.66 billion) takeover of Pechiney in 2003 and worked on Arcelor's defense in 2006 against Mittal, will play a pivotal role at Morgan Stanley.TEAM XSTRATAXstrata's Davis has compensated Deutsche Bank, Goldman Sachs and JP Morgan for missing out on a slice of the Glencore IPO fees last year.All three are major players in equities capital markets but could not take part in Glencore's listing because they were so close to Xstrata.Nomura is also working for Xstrata via a team led by joint investment banking head William Vereker. Vereker advised Brazil's Vale on its failed attempt to buy Xstrata in 2008, when he was with Lehman.Deutsche Bank and JP Morgan are Xstrata's longstanding corporate brokers and have counselled Davis on almost every major deal or fundraising.Ian Hannam is a main contact at JP Morgan, while natural resources head Nigel Robinson will play a key role for Deutsche.Robinson was also one of the bankers involved in the $41 billion deal that created ArcelorMittal, as well as Xstrata's $18 billion dollar acquisition of Falconbridge.He left Goldman Sachs to join Deutsche in 2007, the opposite career path to Brett Olsher, who left Deutsche to become a partner at Goldman in 2010.====================Fiery CEOs may clash in Glencore-Xstrata talksThu, Feb 02 12:07 PM EST* Jostling likely over management in combined firm* CEOs Glasenberg and Davis are competitive South Africans* Men have long relationship punctuated by tensionBy Eric OnstadLONDON, Feb 2 (Reuters) - As a tie-up between trader Glencore and miner Xstrata is hammered out in coming days there is plenty of scope for hard bargaining between the two sides' highly competitive South African bosses.Glencore's Ivan Glasenberg and Xstrata's Mick Davis -- both hard-driven, keen sportsmen who climbed the corporate ladder in the South African coal industry -- have had a close and sometimes tense relationship for more than a decade.Glasenberg hand-picked Davis to run Xstrata 11 years ago. Xstrata floated in 2002, after buying up key Glencore coal assets, leaving the trader with a 34 percent stake."They clearly have a history together, as do Xstrata and Glencore, and I would expect nothing less than that they try to drive the best bargain for their shareholders," said analyst Jeff Largey at investment bank Macquarie in London.One key element of Glencore's move on Xstrata -- which is being billed as a "merger of equals" -- is who gets to run the enlarged trader and miner.The new company will get the bulk of its revenue from mining, leaving Davis as the obvious choice for the top job, while others point out that Glasenberg, who has said he does not plan to sell shares, is unlikely to step aside.This has left some skeptical about whether the two brash characters would be able to work together in a combined company."I don't think both will stay in a fully merged entity. Both have made so much money and I would not be surprised if one of them goes," said a senior investment banker familiar with the mining sector. "Mick is more likely to be the one that moves."Glasenberg is a billionaire, owning 15.8 percent of his company, while Davis regularly heads UK executive pay lists with his multi-million dollar earnings."It's hard to say how it would actually shake out, but both of those gentlemen bring certain skillsets to the table," Macquarie's Largey said. "If I was a shareholder in a combined entity I would like to think that they're both involved for at least a certain period of time."Xstrata Chairman John Bond is expected to play a key role in negotiations and could be brought to chair the new group. Glencore's chairman, Simon Murray, has had a troubled nine months and would not be expected to remain, some analysts say.MUCH IN COMMONGlasenberg and Davis have much in common.Both are in their mid-50s, come from mineral-rich South Africa and have powerful personalities.And both are driven by deals.Davis, however, is nicknamed "Big Mick" for his beefy frame and six-feet two-inch height. Glasenberg by contrast is medium height and wiry.The fact that Davis was hired by Glasenberg has coloured their relationship, said one source who knows the Glencore CEO."There's a sense at Glencore that Mick wouldn't be where is today without Ivan, who chose him ... He owes it all to Ivan," the source said. "At the same time, lots of people at Xstrata felt they were bullied by Glencore."Industry sources and analysts say the two are committed professionals and would not allow any personal tensions to obstruct a deal that would benefit shareholders.On the other hand, both are well known to drive a hard bargain and will not easily give in.The relationship became fraught during the 2009 downturn when a debt-heavy Xstrata launched a rights issue, finding Glencore lacking the cash to take up its portion. Instead it agreed to contribute its prized Columbian coal operations.Negotiations were tough and Davis ended up forcing Glasenberg to sharply lower his valuation for the Prodeco coal assets he contributed.Both men, known for 70-hour work weeks and heavy travel schedules, showed ambition in their early professional lives after training as accountants in their homeland.Glasenberg, known for both his fiery temper and his charm, joined Glencore as a coal trader in South Africa in 1983 and climbed via jobs in Australia, Hong Kong and Beijing before becoming chief executive in 2002.Davis became finance director of South African utility Eskom at 29 but quit when he was overlooked for the CEO post. He was an executive for Billiton before it merged with BHP.Glasenberg is a former South Africa and Israel champion race walker and insists on a daily run or swim to keep fit. Davis is a cricket fan, likely to slip references to the sport into any speech.====================Xstracting a premium02 February 2012 | By Hugo Dixon, Quentin WebbIvan Glasenberg, the Glencore boss, has coveted Xstrata for years. Now the near-$90 billion merger is virtually in his grasp. But how big a premium can he afford to pay and still create value for his own shareholders?================Might work outGlencore-Xstrata would be big, and perhaps better02 February 2012 | By Edward HadasA merger of Glencore and Xstrata might sound like a natural. The two companies are about the same size, are in roughly the same businesses and have an equity tie – the Swiss-headquartered trader-miner Glencore owns 34 percent of the Swiss-headquartered miner Xstrata. They both have outspoken and ambitious South African chief executives, Ivan Glasenberg at Glencore and Mick Davis at Xstrata.There is also some real industrial logic. Glencore’s mines would have added 25 percent to Xstrata’s operating profit in the first half of 2011. The extra bulk might push the combined company firmly into the top league of global miners, along with BHP Billiton, Rio Tinto and Vale. Scale helps in mining: the existing three big global players can more easily afford to take on the risks that come with huge investment projects. Second-tier companies can end up fighting over second-rate assets.Trading, Glencore’s traditional business, would account for about 20 per cent of the combination’s operating profits. It could benefit from the additional supply of raw materials provided by Xstrata, and in turn offer its market insights to a broader mining operation.Still, the case for a divorce – the sale of Glencore’s 34 percent holding of Xstrata – might be as strong as the case for marriage. To start, even if executive roles can be agreed to get a deal done, it will be hard to keep Davis and Glasenberg under one corporate roof - and a shame to lose either of them.There could also be a clash of businesses cultures. Investing in mines requires long-term thinking about many things – politics and the environment as well as geology and prices. Logistics and trading require just as much intelligence, but the timescale is shorter and the mindset is quite different. Few companies have managed to combine the two successfully.In 2009, Xstrata proposed a different merger of equals, with Anglo American. That combination, rejected by Anglo, would have created a bigger miner than the one currently under consideration, and would probably have raised fewer cultural challenges. If Davis didn’t already have Glencore as Xstrata’s biggest shareholder, it’s not obvious he would be so open to its overture.================Merged Glencore, Xstrata would take aim at iron oreFri, Feb 03 11:22 AM ESTBy James ReganSYDNEY (Reuters) - An $80 billion marriage of commodities trader Glencore and miner Xstrata could lead to a new round of takeovers in iron ore, creating a goliath eager to muscle its way onto one of mining's richest and most closely guarded sectors.Glencore and Xstrata, which have yet to reach a deal, would together rank as the world's largest thermal coal exporter, the largest zinc producer and third-largest copper miner - but would remain all but non-existent in iron ore mining.Xstrata wants to get into iron ore, underlined in 2009 by its attempt to buy mining giant AngloAmerican. But it has been thwarted by a scarcity of major new discoveries and a virtual oligopoly(ol·i·gop·o·ly (ŏl'ĭ-gŏp'ə-lē, ō'lĭ-) n., pl., -lies.A market condition in which sellers are so few that the actions of any one of them will materially affect price and have a measurable impact on competitors.) among mining giants Vale, Rio Tinto and BHP Billiton, which have no intention of loosening their grip, say industry players and analysts."With a fortified balance sheet thanks to Glencore, it's a logical move for Xstrata which should light a fire under the others, like Vale," said an Australian mining executive who asked not to be named.Iron ore sells for around $140 a tonne to China, the world's top buyer of the steel-making commodity thanks to the mass urbanization underway there, and only costs about $20-$30 a tonne to mine.Australia alone provides almost half of China's iron ore imports, with BHP Billiton, Rio Tinto and Fortescue Metals Group the main suppliers."There is no doubt Xstrata would like to do more in iron ore but if they want to be big they have to buy a big player," said Macquarie steel and iron ore analyst Colin Hamilton.Xstrata is considering an all-share merger of equals with Glencore, which would leave the new entity with low enough debt to fund a big push into iron ore, including possible acquisitions in competition with the likes of big miners Vale, Rio and BHP."They know they need to bulk up and bulk up real fast to close the gap on the top three. Iron ore is an obvious area," a resources banker said. He declined to be identified as he is not authorized to speak to the media."For starters they don't have a presence, so expect one bolt on to start with, followed by an audacious large one if the markets support one," the banker said.For its part, Glencore's iron ore marketing business has soared since it was launched in 2008 and it has carved out a growing share of the market.Last year was a boom for mining acquisitions - $98 billion worth, the largest since 2007 - but the Glencore-Xstrata deal, valued at $80 billion, would be the biggest since Rio Tinto bought Alcan in 2007.Rio de Janeiro-based Vale failed to buy Xstrata in 2008 for an estimated $90 billion."It makes sense because if you want to hit the industrialized commodity suite, you've really got to be across both the bulks and base metals," said Australia & New Zealand Bank analyst Mark Pervan.In Australia's Pilbara iron belt, the holy grail of iron ore deposits due to its rich lodes, fast-growing miners such as Fortescue, Atlas Iron, BC Iron and Aquila Resources (AQA.AX) may be in their sights.The Pilbara is also closer to China, the world's largest iron-ore consumer, than key sources of high-grade ore in Brazil and Africa, giving it an advantage on shipping costs and times.Steelmakers would certainly welcome a new iron ore player that could challenge Vale, BHP Billiton and Rio Tinto which, they feel, have too much power when it comes to iron ore price.The "big three" together account for about 70 percent of the global seaborne iron ore trade.

In order to become a significant player in the iron ore market however, Xstrata and Glencore would have to move quickly, as the big three are also expanding their iron ore mining activity."They should rely on a combination of takeovers and new projects development," said Meps iron ore analyst Kaye Ayub."New projects are expensive to get going and it takes time to take them to fruition so a mixture of the two would be a better way to expand."

STIFF COMPETITIONXstrata's stiffest competition for iron ore mines could come from Vale, the world's biggest iron ore producer. Vale mines about 300 million tonnes a year in Brazil and accounts for more than a quarter of world sea-borne exports. Australian assets would help it cut shipping costs to China, its main market, and better compete with BHP Billiton and Rio Tinto.Vale already operates in partnership with Aquila in coal mining and has been long-rumored to be interested in Aquila's as-yet undeveloped West Pilbara iron ore project. Aquila holds 50 percent of the project, which will cost an estimated $6 billion to develop. Privately held American Metals and Coal International owns the other 50 percent.Competition may also come from China itself.Steel makers in China have been scouring the globe for their own iron ore mines in South America, Africa and Australia, with third-biggest mill Wuhan Iron and Steel vowing to become self-sufficient by 2015.Under a merged entity, Glencore's mines would have added 25 percent to Xstrata's operating profit in the first half of 2011.The extra bulk might push the combined company firmly into the top league of global miners. Scale helps in mining, making the risks that come with huge investment projects more affordable.If Xstrata's attempt to acquire AngloAmerican in 2009 had succeeded it would have immediately made the Swiss-based company number 5 in the highly profitable seaborne-traded global iron ore market.But the collapse of talks with AngloAmerican left Xstrata with little in the way of iron ore holdings.In 2011 it paid A$532 million for Mauritania iron ore prospector Sphere Minerals and owns 50 percent in the Zanaga iron ore prosect in the Republic of Congo.In June, Xstrata started exporting iron ore concentrate as by-product from a copper mine in Australia at the modest annual rate of 1.2 million tonnes, its only source and a pittance by global standards."Obviously the company (Glencore) must believe strongly that the commodity cycle has bottomed and that China's economy is in for a better-than-expected landing, hence their takeover bid being launched now," said Fat Prophets mining analyst Angus Geddes.Some analysts say it might be risky at this stage to go big on iron ore amid signs Chinese demand growth is slipping."We are seeing early signs of iron ore demand decreasing so it doesn't make sense to engage on greenfield expansion for iron ore right now," said Henry Liu, head of commodity research at Mirae Asset Securities in Hong Kong."From 2003 to 2011, we have seen the demand growth peak in iron ore and with more mines coming onto the market in 2014 or 2015, there may be an oversupply," he said.(Additional reporting by Manolo Serapio in Singapore, Narayanan Somasundaram in Sydney, Jeb Blount in Rio de Janeiro and Silvia Antonioli in London; Editing by Neil Fullick and William Hardy)==================Glencore, Xstrata hammering out final deal detailsSun, Feb 05 09:50 AM ESTBy Clara Ferreira-Marques and Victoria HowleyCAPE TOWN/LONDON, Feb 5 (Reuters) - Top executives at trader Glencore and miner Xstrata are hammering out the final details of an $80 billion tie-up to seal the industry's largest ever takeover, which could be announced as early as Tuesday.Xstrata, in which Glencore already has a 34 percent stake, announced last week it had been approached by the world's largest diversified commodities trader and was in discussions over an all-share "merger of equals", a deal that would be the largest in the sector since Rio Tinto's takeover of Alcan in 2007.The agreement is set to be announced this week, potentially Tuesday, when Xstrata is due to publish 2011 results.One source involved in the proceedings described the mood behind the scenes over the weekend as "constructive", and others said brushed off concerns the latest round of talks would collapse over either of the two hurdles that have tripped them up in the past -- governance and price.The two groups, which restarted discussions before Christmas after years of on-off talks, have reached a preliminary understanding on the structure of the top management, according to sources familiar with the deal, with Xstrata expected to take a majority of seats on the board, to keep its chairman, City heavyweight John Bond, as well as its chief executive, Mick Davis, and its chief financial officer, Trevor Reid.Glencore Chief Executive Ivan Glasenberg, who will be the largest single shareholder in the combined mining and trading entity, is expected to hold a deputy position.Davis, who has been at the helm of Xstrata for a decade, is expected to receive an up to 10 million pound ($16 million)retention package in the event of "change of control", to stay on as chief executive, the Sunday Times reported.In the past, the issue of price and premium and the difficult valuation of Glencore's marketing business has separated the two companies, but the two are this time discussing a percentage premium to Xstrata's share price in the "low single digits" -- effectively a ratio to balance out the value of both companies, according to several of the sources.But Xstrata shareholders, who helped block a deal before Glencore's record listing last May on the grounds that they needed a clearer valuation of the trader, could push for more."John Bond is the chairman, so we will be making very sure that he maximizes value for Xstrata shareholders, which means a nil premium merger is not a runner=(Metallurgy. A channel along which molten metal is poured into a mold; a gate.)," one top-five shareholder said last week.One source familiar with the negotiations, however, pointed to the increase in the companies' valuations -- an almost 11 percent uplift for Xstrata shareholders alone since the close on Wednesday, the day before merger talks were announced: "That is real money, real share value," the source said.The merger is expected to take the form of a scheme of arrangement, which would leave Glencore out of any vote.==================Xstrata confident on shareholder support for Glencore deal-CEOTue, Feb 07 03:29 AM ESTLONDON, Feb 7 (Reuters) - Mining group Xstrata is confident shareholders will support a $90 billion all-share agreed takeover by commodities trader Glencore, announced by the two parties on Tuesday."I have absolutely no doubt that this is something that is going to gain support (from shareholders)," Chief Executive Mick Davis said in an interview with Reuters."I'd be surprised if our shareholders don't find this as compelling as we the management have found in recommending the deal," he added.He said that the combined group would likely be involved in acquisition activity in future and that it would look at the "optimisation" of its assets but that nothing was currently up for sale.===============Fidelity backs Glencore Xstrata deal, wants better termsFri, Feb 10 13:09 PM ESTBy Chris VellacottLONDON, Feb 10 (Reuters) - Fidelity Worldwide Investment, a leading shareholder in both mining company Xstrata and Glencore has said it supports the proposed merger between the two "in principle" but wants improved terms."We are supporters of the deal in principle but we think the terms need to be revisited," said a source at the investment manager who said it holds a 2.3 percent stake in Glencore and 1.5 percent in Xstrata.Glencore's proposed $41 billion takover bid for the mining group has met stiff opposition from some Xstrata investors seeking a better premium from Glencore.


=================

UPDATE 2-Regulatory clock starts as Glencore and Xstrata notify EU
Fri, Feb 24 04:17 AM EST

* Glencore, Xstrata say EU will be notified of merger

* EU has in past considered Glencore, Xstrata as one company

* Glencore, Xstrata do not expect deal to affect competition

* EU competition authority declines to comment

LONDON, Feb 24 (Reuters) - The regulatory clock started ticking on commodities trader Glencore's takeover of mining group Xstrata after the pair said they will notify the European Commission of the proposed $90 billion deal.

Once the notification is acknowledged, the commission will have 25 days to decide whether to approve, reject or begin an in-depth probe into the plan to create the world's fourth-largest natural resource company by market capitalisation in just one of a series of antitrust hurdles the two companies will have to clear.

EU competition authorities have in the past considered the two sides as a single entity as Glencore already owns over 34 percent of Xstrata - enough to exercise control from a competition perspective, and therefore enough to avoid a merger filing and possible probe.

But lawyers and industry sources have said it was unlikely the commission would wave through the largest mining takeover deal to date. Indeed, the Commission notified the parties on Thursday that it required official notification of the merger, implying it will consider the two as separate companies and will examine the deal, instead of leaving it to individual member states.

Glencore and Xstrata said in a statement they would notify the Commission under EU merger regulations.

"The parties expect the merger between Glencore and Xstrata not to result in any negative impact on competition in the commodity markets in which the two companies operate," the two sides said in a statement.

"In fact, the merged firm is expected to be able to offer customers a wider range of products and services and provide improved security of supply to satisfy customer demand."

The office of Competition Commissioner Joaquin Almunia declined to comment.

"We yet have to be notified officially of this operation. Until this is the case, we won't make any comment".

The deal is not expected to face major antitrust issues, but the sheer number of authorities it needs to negotiate with is likely to add to an already lengthy merger timetable.

Glencore and Xstrata combined become the world's largest thermal coal exporter, and the largest producer of both zinc and ferrochrome. But the picture is complex -- in thermal coal, Glencore and Xstrata's export capacity is around 72 million tonnes, but that is less than 10 percent of the global total -- well below the threshold deemed significant by most antitrust authorities.

==============

Talking Gaga
Glencore shouldn't overplay its hand with Xstrata

05 March 2012 | By Christopher Hughes



Ivan Glasenberg’s poker face isn’t convincing. Glencore’s chief executive is under pressure to raise the commodity trader’s all-share offer for mining group Xstrata. His words at the firm’s annual results on March 5 were robust: the existing terms of the proposed $90 billion tie-up are “fair to all shareholders”. That might seem to imply that any rejig would create an unfair, and unrecommendable, deal. More comments like that and the UK Takeover Panel could force him to clarify whether he is willing to increase the offer or not.

To rejigger: "a series of measures to . . . rejig the monetary system" (Christian Science Monitor).

It’s easy to see why Glasenberg is acting like he holds all the cards. He is Glencore’s lead shareholder. His register is dominated by his fellow partners, who face dilution under the present transaction. He is hardly going to be dethroned if the deal falls apart because he wouldn’t improve the financial terms.

Failure for Xstrata would be more ugly - at least in the short run. The shares would drop as it would no longer receive the premium, albeit a small one, on offer. There would probably also be an investor backlash against CEO Mick Davis and Chairman John Bond. Davis should survive as he has been the driving force in Xstrata’s growth. But Bond would be under pressure to go. His job is to look out for minority shareholders, after all.

Now fast forward six months. Glencore would still be sitting on a 34 percent stake in Xstrata. It would struggle to sell that, even if it wanted to. Having publicly set out the reasons for taking full control, Glencore couldn’t credibly claim the status quo was sustainable. But, by then, Xstrata would have refreshed its board and would be on notice from shareholders that it had to act independently. As a result, any renewed offer from Glencore, whether friendly or hostile, would probably have to be pitched higher.

No one would expect Glasenberg to start budging just yet given that the process could last for months. But if Xstrata’s shareholders are still reluctant to accept the offer at the crunch time, it would be more rational for Glencore to pay up a bit more for this bid than be sent back to square one.

============

UPDATE 1-Qatar builds up Xstrata stake ahead of Glencore deal
Mon, Apr 09 06:26 AM EDT

* Fund QIA now holds 5 pct in Xstrata, data shows

* QIA has been raising stake since Glencore merger announcement

* QIA stake valued at around $2.65 bln

By Dinesh Nair

DUBAI, April 9 (Reuters) - Qatar's sovereign wealth fund has increased its stake in Xstrata to just over 5 percent, potentially making it easier for commodities trader Glencore to buy the Anglo-Swiss miner.

The tiny Gulf Arab state, a keen commodities investor, is now Xstrata's third-largest shareholder behind Glencore and asset manager BlackRock Inc N, giving it exposure to a metals powerhouse after missing out on other recent deals.

Glencore is the top Xstrata shareholder with a 33.65-percent stake, followed by BlackRock which has a 5.43 percent ownership in the miner.

Key Xstrata shareholders including Standard Life Investments and Schroders are seeking better terms from Glencore.

Qatar has also bought stakes in luxury goods house LVMH and oil company Total, in a recent spending spree using its natural gas riches to diversify economic risk. It also owns shares in Credit Suisse and the upmarket Harrods department store.

Several major shareholders have opposed Glencore's $41 billion bid for Xstrata but bankers said Qatar would be a passive investor, unlikely to stand in the way. The deal must be backed by 75 percent of shareholders excluding Glencore.

"Getting the Qataris on board will be good for Glencore. They are not activist investors and won't be looking at gaining management influence. But they are opportunistic and won't commit a pound unless they are seeing clear benefits," said a Dubai-based banker.

"This is typical Qatar. They prefer to be the largest minority investors and are not keen on management control. Obviously, they are seeing value in this. Qataris like commodities generally and Glencore shares have fallen off the cliff post its IPO," said the first banker.

Regulatory filings showed that the Qatar Investment Authority (QIA) built up its Xstrata holding, worth $2.65 billion at current prices, through stock market transactions from around 3 percent when Glencore announced its bid.

Bankers said Qatar is likely to keep building its stake.

"The cash stake is about 4.75 percent and it is the derivatives position which has seen the stake go up by 5 percent. It's not normal of Qatar to go above the 5-percent threshold...they could end up owning more," said the banker.

Another banker said that Qatar, among the richest countries in the world per capita, would likely buy more.

"These companies are on top of QIA's shopping list and the sector is very strategic...we wouldn't be surprised if this happens gradually in the coming few months," he said.

TOP OF THE SHOPPING LIST

Qatar's sovereign wealth fund, estimated to have assets of around $100 billion, is widely seen as the most aggressive in the world, ploughing gas dollars into a range of Western assets including automakers, prime real estate and global banks.

It is known to be an enthusiastic investor in commodities. Qatar Holding, the sovereign wealth fund's investment arm, missed out on a $1 billion investment in European Goldfields last year after the company instead agreed on a $2.4 billion takeover by Canadian group Eldorado Gold ELD. TO

Qatar surprised many observers by passing on the Glencore initial public offering last year as rival Abu Dhabi fund Aabar bought into the flotation.

Glencore shares have fallen 22 percent since their listing in May last year, and Xstrata shares have lost 20 percent over the same period, so Qatar's current purchase will give it a sizeable stake in the merged entity at a significant discount.



In recent weeks, the fund has also picked up minority stakes in conglomerate Lagardere as well as LVMH and Total.

Bankers and sovereign wealth fund experts describe the sovereign fund as an opportunistic investor, seeking favorable terms with downside protection for the cash it deploys.


No immediate comment was available from the Qatar fund.

Glencore plans to buy Xstrata in an all-share transaction that could create a combined group worth more than 50 billion pounds ($79 billion), shaking up the industry with its biggest deal to date.



Glencore, the world's largest diversified commodities trader, already owns 34 percent of Xstrata. A tie-up between the two has long been expected as Glencore wants to add more mines to its trading clout.

Under the terms of the transaction, Xstrata shareholders other than Glencore would hold 45 percent of the new company, to be named Glencore Xstrata International, even though Xstrata assets would comprise about 65 percent of the combined group's asset value.

=========

UPDATE 1-Paperwork relating to Glencore/Xstrata deal delayed
Fri, Apr 13 03:39 AM EDT

* Delay allows further pre-notification talks with EC

* Shareholder meetings to approve deal now due early July

LONDON, April 13 - Documentation relating to commodities trader Glencore's $37 billion takeover of miner Xstrata will be sent to shareholders a month later than previously anticipated, the companies said on Friday.

Glencore and Xstrata said they still expected to receive all relevant approvals to enable completion of the merger in the third quarter of 2012 and described discussions with regulatory authorities as constructive.

The delay to the paperwork will give the companies time to hold more extensive talks with European Commission competition regulators prior to an official notification about the proposed $90 billion combination.

That notification, once acknowledged by the Commission, will kick off a 25-day period in which the regulator will decide whether to approve the deal or begin an in-depth probe into the plan to create the world's fourth-largest miner.

The companies said in February that the deal would face European Commission antitrust scrutiny, kicking off a global regulatory process that could take months.

The two firms said then that they had agreed to officially notify the commission about the deal.

Glencore and Xstrata said on Friday that documentation relating to the merger is now anticipated to be distributed to each company's shareholders by the end of May 2012 instead of in April as originally announced in February.

The delay will also allow the companies to put out first quarter updates in May. Xstrata is due to give a first quarter update on May 1 with Glencore due to update on May 9.

The companies said shareholder meetings to approve the merger are now expected to take place in early July 2012.

Shares in Glencore were up 0.9 percent to 408.4 pence at 0820 GMT. Xstrata shares were up 1.3 percent to 1,120 pence.

==========
Xstrata plans big bonus to retain CEO ahead of Glencore merger: FT
LONDON (Reuters) - Xstrata is this week set to reveal a bonus package worth tens of millions of pounds in an effort to retain its chief executive ahead of its merger with Glencore , the Financial Times reported on Monday.

The terms must be backed by Xstrata shareholders as part of the proposed merger, the FT said, adding that the deal would be derailed if shareholders fail to back the pay package.

Mick Davis is expected to receive is up to 50 million pounds ($78.2 million), which will keep him at the mining company for the next three years, rather than a performance linked package, people familiar with the terms are cited as saying by the newspaper.

Glencore will this week move into the final stage of its $30 billion takeover of miner Xstrata as shareholders are sent detailed documents on the long-awaited deal.

The terms of the pay package are set to be revealed in those documents, the FT said.

($1 = 0.6396 British pounds)

(Reporting by Stephen Mangan; Editing by Edwina Gibbs)
========= Just say no Xstrata shareholders should say no 18 June 2012 | By Christopher Hughes Xstrata shareholders should vote down the $45 million three-year retention package awarded to Chief Executive Mick Davis to seal the miner’s tie-up with commodity trader Glencore. Sure, the merger would collapse, but that’s a price worth paying. In 2011, Xstrata paid Davis $14.3 million in salary and bonuses plus a long-term incentive plan (LTIP) that delivers an estimated $9.8 million if the miner meets performance targets. If Xstrata merges with Glencore, the Xstrata board thinks an extra $15 million a year is required to keep Davis loyal, taking his total annual package to around $40 million during the integration phase. This would put Davis’s pay well above his peers. Marius Kloppers at BHP Billiton was paid $7.7 million in 2011, plus a $3.3 million LTIP. Cynthia Carroll at Anglo American got about the same, although more tilted to the LTIP. Rio Tinto’s Tom Albanese got $3.9 million plus a $3 million LTIP. Sure, these figures reflect individual performance, and Albanese waived his annual bonus. But their maximum potential pay was still well below that of their Xstrata counterpart. Davis’s retention is effectively insurance against the damage the merged “Glenstrata” would suffer if he quit. He might well leave. M&A often gives executives itchy feet. And Davis’s job will have some big challenges, like managing Glencore’s powerful CEO, Ivan Glasenberg. Davis has form too - he quit BHP Billiton shortly after its founding merger. And he’ll have made millions on vesting options. It’s also true that the company could suffer without Davis at the top. Squabbles between Glencore and Xstrata staff about the allocation of capital to “their” sides of the business could become toxic, other Xstrata people may leave, and the potential synergy of melding Glencore’s trading nous with Xstrata’s mining assets may be lost. Take the probability-weighted hit to the group’s $78 billion market capitalisation if Davis left and the highest bid in the market for his talents (say, from a Central Asian miner) and somewhere in the middle is where to price this retention “insurance”. But if the claims for the combination are true, the job of running Glenstrata should be at least as attractive as running Xstrata, which was itself clearly more attractive than emerging market miners. Davis has celebrated the “unique opportunity” of the deal. There won’t be many jobs that offer the combination of interest, prestige and Davis’s current pay. What’s more, the company’s loss might not actually be so bad if Davis departed. His talents as an operator are less lauded than his ability to negotiate and execute deals. Those skills are becoming less relevant at Xstrata, which is now quite large, and would be in even less prized if Glencore’s assets were added in. The merger stands or falls with Davis’s package. Losing the deal itself would certainly be a shock. Xstrata shares outperformed the sector after the deal leaked; the gains are now unwinding amid doubts about completion. But with Glencore holding a 34 percent blocking stake in Xstrata, their union would probably only be delayed, not scuppered permanently. And Glencore could still offer good enough terms to satisfy Xstrata’s investors and independent directors. There is also an important gain to consider. Investors would have added to the value of all their holdings by showing they won’t let bosses hold them to ransom. == Take the hindmost Xstrata price fears no reason to vote for "Glenstrata" 21 June 2012 | By Kevin Allison Xstrata’s share price could fall sharply if its $90 billion mega-merger with commodity trader Glencore falls apart. But that would have more to do with short-term market dynamics than permanent damage to Xstrata’s underlying business. What’s more, even if the merger completes, shares in the combined group could be vulnerable for different reasons. Some risk of deal failure already looks priced in. On June 21, a single Xstrata share was worth just over 2.6 times one Glencore share - a 7 percent discount to the exchange ratio of 2.8 set when the deal was unveiled in February. In January, an Xstrata share was worth about 2.5 Glencore shares. The possibility of a transaction is still supporting the shares. After the recent commodity rout, the miner still trades on 8.1 times consensus 2012 earnings, according to Reuters data - a 10 percent premium to the average for London-listed peers BHP Billiton and Rio Tinto. During last year’s euro zone flare-up, Xstrata traded at a 10 percent discount to the sector. A vote against the merger or the retention bonuses on which it depends would cause some short-term disruption, not least because it would probably entail a boardroom shakeup. But the main effects would be technical: the 10 percent stake built up by Qatar’s sovereign wealth fund since the merger announcement would become a stock overhang - even though it’s unlikely Qatar would suddenly exit. But if the peg to Glencore shares is inflating Xstrata’s valuation right now, that may also be for technical factors. Glencore’s forward multiple of 7.7 times consensus 2012 earnings is perhaps flattered by a lack of analyst attention, as much of the sell-side is restricted because so many firms are working on the deal. Glencore’s earnings estimates have barely budged since early spring. Perhaps that explains why the combined company trades at 15 percent premium to diversified mining peers on 2013 earnings multiples, according to Macquarie research. Long-term Xstrata shareholders shouldn’t mind sitting out short-term volatility. They should prepare for it. ============== Xstrata board expected to back Glencore bid next week Thu, Sep 13 11:08 AM EDT 1 of 2 By Clara Ferreira-Marques and Sophie Sassard LONDON (Reuters) - Xstrata's board is expected to recommend Glencore's revised $34 billion bid as early as next week, sources close to the deal say, although it may come with some qualification surrounding such issues as staff retention. Glencore, already Xstrata's biggest shareholder with a 34 percent stake, made its original recommended all-share offer in February but hit trouble in June when the company's second-biggest investor Qatar Holding demanded an improved deal. Detailing the new offer on Monday, Glencore said Xstrata shareholders would now get 3.05 shares for every Xstrata share held, instead of the previous offer of 2.8 shares. However, under the new proposal its own chief executive, Ivan Glasenberg, is to take over the helm of the combined business from Xstrata's chief executive Mick Davis, who would have stayed for at least three years under the original deal. Instead, Davis, who has led Xstrata for over a decade, will leave within six months. "We all agree that 3.05 is better, and that if you were happy with 2.8, you should be happy with 3.05," one source involved in the deal said. "But it is all work in progress. There are a lot of people saying this is a slam dunk, but the board has a duty ... to ensure they are comfortable they have the right construct (and can) retain key operational personnel." It was not clear what changes the Xstrata board could request or demand, but one of the sources said the board could seek guarantees from Glencore for managers it sees as key: "It will take more than just reassurance." A separate source said any changes were likely to come in Xstrata's controversial retention package for more than 70 key executives, though others said that was not likely to change. Operational and management issues are key for Xstrata and at the forefront of concerns for the board, several of the sources said, as the miner shifts from an acquisition-fuelled first decade into a phase of organic growth which the miner hopes will boost volumes by 50 percent by the end of 2014 and cut costs. Xstrata's board has until September 24 to decide whether or not to recommend the revised offer. Hostile bids are unusual in mining, a sector in which many large deals and mega-mergers have failed to materialize for a variety of reasons including political and regulatory issues and a tie-up between Xstrata and Glencore would be the second-biggest deal in the sector to date. MEETINGS CONTINUE Several sources said the board - set to meet this week and next as talks continue between independent directors and shareholders - had not yet taken a final decision on details including changes to the staff retention package, for example, but could reach an agreement before the deadline of September 24. "Meetings are still going on. The board will have a range of views to consider," another source familiar with the deal said. Shareholders have been broadly supportive of the revised offer, though Qatar, which has backed Xstrata's management, has yet to make its decision public. It said earlier this week it was considering its position. Most of the sources said they now expected a deal could be done, however. "We are now far more optimistic than last week. It looks like if there is no deal agreed on Monday, then it will be (a few days later)," one of them said. Xstrata's independent directors are unlikely to rush their approval, having come under fire after recommending the original Glencore deal and the more than 170 million-pound ($274 million) retention package for 73 of the miner's top managers which many shareholders felt was excessive. After Glencore's last-minute revision of its offer last week the directors said in a curt statement that the exchange ratio was "significantly lower than would be expected in a takeover" and warned of "significant risk" if Davis were to be replaced as chief executive and management incentive arrangements altered. In detailing its revised offer on Monday Glencore took a more conciliatory tone than when it first made the proposal on Friday, saying the retention and incentive arrangements would have to be acceptable to shareholders. (Editing by Greg Mahlich) ================= BRIEF-Xstrata announces $4.5bln bond issue Fri, Oct 19 02:08 AM EDT LONDON, Oct 19 (Reuters) - Xstrata PLC : * A US $4.5 bln four-tranche transaction comprising 3 year, 5 year, 10 year and 30 year notes * The transaction covers $1.25 billion 1.8% guaranteed notes due October 2015 * $1.75 billion 2.45% guaranteed notes due October 2017 * $1 billion 4.0% guaranteed notes due October 2022 and $0.5 billion 5.3% guaranteed notes due October 2042. * The net proceeds raised will be used to repay existing debt and for general corporate purposes ============

A year on, Gulf still grapples with BP oil spill :FACTBOX-Key political risks to watch in Iran

The modesty of Dr Mahmoud Ahmedinejad


Mahmoud Ahmedinejad, the current President of Oil-Rich Iran is down to earth humble person and a real Muslim. He wears a Chinese-made grey suit without a tie bought in Tehran Bazar for $35. He has a PhD in civil Engineering majoring in traffic and highways. His first government meeting was held in Meshhad at the Shrine of Imam Reza. He ordered a cheap Persian rug for his office and sent the antique one to the museum. He refuses to be seated in first class on airlines and reluctant to use VIP lounges at airports. This down to earth person is the most hated by the USraelis and are calling for attacking his country. It is not surprising that the Western journalists are not friendly to Ahmedinejad or to Iran as the Iranian President is not ready to spend people’s wealth on bribing the American and European media prostitutes.

At the same time, USraeli darling, Hameed Kharzai of impoverished Afghanistan owns properties in California and in Dubai, wears a green cloak made in France and orders Italian shoes from Bruno Mali, Gucci and Bali.
Adnan Darwash, Iraq Occupation Times



01 Oct 2010 12:30:07 GMT
Source: Reuters
By Parisa Hafezi

TEHRAN, Oct 1 (Reuters) - Iran faces worsening political in-fighting as it battles economic woes and tries to overcome international isolation over its nuclear programme.

President Mahmoud Ahmadinejad, who has belittled the impact of new sanctions targeting Iran's oil and gas sector and the elite Revolutionary Guards, is under pressure from rivals in his hardline camp, gnawing at his legitimacy at home and abroad.

With the backing of Supreme Leader Ayatollah Ali Khamenei and the Guards, Ahmadinejad seems to have the upper hand for now, but his plan to phase out subsidies costing the state up to $100 billion annually may be his Achilles' heel.

Any measure that heightens pressure on the public could arouse unrest, which the leadership is keen to avoid after the turmoil that followed the 2009 presidential poll. The opposition says that vote was rigged; the authorities deny it.

Below is an outline of the main political risks for Iran:

SANCTIONS PRESSURE

Major powers are piling economic and political pressure on Iran to persuade it to suspend nuclear work they suspect is aimed at making bombs. Iran, which says it is only seeking to generate electricity, shows no sign of bowing to such demands.

The sanctions have caused further economic strain for the establishment, psychologically pressuring ordinary Iranians who are burdened with soaring inflation. Many privately blame the government for its uncompromising nuclear policy.

The Oil Ministry faces the tough task of raising the $25 billion it says the energy sector needs in new investment each year to prevent crude exports drying up. Economic growth and foreign exchange earnings will largely depend on the oil price as Iran's economy is 60 percent reliant on petro-dollars.

Khamenei, who has the final say on all state matters, has ruled out any backing down on the nuclear programme. Iran says it could return to "fair" nuclear talks with major powers but wants its right to a full nuclear fuel cycle acknowledged.

Nuclear talks with the major powers may resume this month, Ahmadinejad said in New York.

WHAT TO WATCH:

-- More international firms withdrawing from Iran business

-- Could economic pressure cause social unrest?

-- Renewed talks on Iran's nuclear programme

-- Could further pressure push Iran to halt nuclear work?

-- Further sanctions, limitations

CHANGE OF POWER CHARTER?

The Revolutionary Guards' political and economic influence appears to have grown since Ahmadinejad came to power in 2005, and they helped to quell last year's huge opposition protests.

Some senior clerics accuse Ahmadinejad of shifting power from the clergy to the Guards, undermining the historical role of the clerics, who played a key role in mobilising the masses that led to the 1979 Islamic revolution.

"The institution of the ... Guards has gradually eclipsed the institution of the clergy, in terms of their economic, political, and foreign policy influence," said Karim Sadjadpour, an associate at the Carnegie Endowment in Washington.

"Iran is (now) more a military autocracy."

The growing power of the Guards, branded proliferators of weapons of mass destruction by Washington, has the potential to cause more tension in the leadership, even though they have always been loyal to the Islamic revolution.

WHAT TO WATCH:

-- Any sign of further split within political, military leadership.

-- Which financial activities do the Guards dominate?

-- Will the Guards withdraw from financial activities?

-- Can sanctions push the establishment to end the Guards' predominance over the economy?

MILITARY CONFLICT?

The United States and Israel, Iran's main foes, do not rule out military action if diplomacy fails to end the nuclear row.

Some analysts question the feasibility of striking Iran, saying the potential targets are too distant, dispersed, and well-defended for Israeli warplanes to take on alone.

"It would be extremely difficult...to destroy all relevant facilities to stop a potential Iranian nuclear weapons programme," said researcher Pieter Wezeman of the Stockholm International Peace Research Institute.

However, there are strong indications of a state-sponsored cyber-attack using the Stuxnet computer worm aimed at sabotaging Iranian industrial installations, possibly including the Bushehr nuclear plant and the Natanz uranium enrichment facility.

U.S. military firepower far exceeds that of Iran, but Tehran could retaliate by launching hit-and-run strikes in the Gulf and by closing the Strait of Hormuz. About 40 percent of all traded oil leaves the Gulf region through the strategic waterway. Tehran can also use militant allies such as Hezbollah and Hamas.

WHAT TO WATCH:

-- Israeli statements on the effectiveness of sanctions could provide clues to the thinking on possible military steps.

-- U.S. and Israeli naval movements in the region

-- Signs of Saudi and other Gulf facilities offered for military action.

IS REFORMIST OPPOSITION ALIVE?

Although the authorities succeeded in ending widespread post-election unrest by clamping down hard on the pro-reform opposition, analysts and residents say discontent remains alive among backers of defeated candidate Mirhossein Mousavi.

Last year's vote exposed deep divisions in the establishment, but the ruling hardliners made clear they would not tolerate any further attempts to undermine their position.

Human rights groups such as Amnesty International have accused Iran of a crackdown on dissent involving torture, politically-motivated executions and the imprisonment of journalists, students, activists and clerics. With the Guards ready to swiftly counter any new challenge to Ahmadinejad and Khamenei, opposition hopes of political and social change seem unlikely to be realised any time soon.

WHAT TO WATCH:

-- Opposition attempts to revive anti-government campaign

-- Further violation of human rights

STRUGGLING OIL SECTOR

Iran, which boasts the world's second-largest oil and gas reserves, wants foreign capital and technology to help modernise and expand its all-important energy sector, but U.S. and other sanctions are making investors increasingly wary of the country.

In the latest sign of Western firms stepping back from Iran despite its energy riches, Royal Dutch Shell, BP, Reliance Industries, and Independent Swiss trader Glencore have decided not to enter into new trading agreements with it.

The Economist Intelligence Unit forecasts oil export revenue at $63.4 billion this year from output of 3.82 million barrels per day (bpd), up from $53.9 billion last year, but volumes remain far below the level before the 1979 Islamic revolution.

Iran has started to issue bonds to help finance development of key energy projects, notably the South Pars gas field, and is shifting to firms from China and other energy-hungry Asian countries for investment and supply deals.

But Samuel Ciszuk of IHS Global Insight said virtually all investment into Iran was at a standstill, with Chinese oil firms "refraining from firming up their memoranda of understanding into contracts". However, Iran is used to finding a way out to evade sanctions.

Iran proclaimed on Tuesday that it had started exporting gasoline, although the country has until recently been dependent on imports for 40 percent of its vehicle fuel.

WHAT TO WATCH:

-- More Western companies halting ties with Iran

-- Chinese and other Asian firms replacing them, or not

-- Iran's energy resources will deplete if not developed

(Editing by Paul Taylor)


====

FACTBOX-BP's oil spill cleanup response in numbers
15 Apr 2011 05:00

Source: reuters // Reuters


(For full story on spill anniversary, click [ID:nN14225897])

April 15 (Reuters) - Last year on April 20, BP's deepwater Macondo well ruptured in the Gulf of Mexico, killing 11 workers on the Deepwater Horizon oil rig and spilling more than 4 million barrels (168 million gallons/636 million liters) of crude oil into the sea. It took three months for the company to plug the well and efforts to clean-up the oil continue. Below is a breakdown of the year-long response by the numbers: RESPONSE FACTS: 4.9 million barrels of oil discharged 47,829 responders at peak 9,700 vessels at peak 6,500 government and commercial vessels 3,200 vessels of opportunity 3.8 million feet of hard boom deployed 9.7 million feet of soft boom deployed 1.8 million gallons of dispersants used 411 in-situ burns conducted 127 surveillance aircraft 4 incident command posts 32 equipment staging areas 1 aviation coordination center, Tyndall Air Force Base 1.4 million barrels of liquid waste collected 92 tons of solid waste collected COAST GUARD ASSETS: 7,000 active and reserve personnel 60 cutters deployed to the scene, 24 in one day 22 aircraft, 78 rotary wing, 45 fixed wing INTERNATIONAL OFFERS OF ASSISTANCE: 47 offers accepted (boom and skimmers) Governments providing assistance: Canada, Mexico, Norway, Japan, Germany, France, UK, Tunisia, Belgium, Qatar, Kenya, China, Russia, Netherlands, Sweden and the European Union WHERE IS THE OIL? 4.9 million barrels of oil discharged 800,000 plus barrels oily water recovered 265,000 plus barrels oil removed by in-situ burns 770,000 plus gallons subsea dispersants applied 1.07 million gallons of dispersants applied Source: U.S. Government, http://www.restorethegulf.gov (Reporting by Anna Driver in Houston; Editing by Pascal Fletcher and Philip Barbara)

====

FACTBOX-Oil spill claims paid total $3.8 billion
15 Apr 2011 05:00

Source: reuters // Reuters


(For full story on spill anniversary, click [ID:nN14225897])

April 15 (Reuters) - The Gulf Coast Claims Facility, created to compensate people and businesses for damages related to BP Plc's Gulf of Mexico oil spill, has paid $3.8 billion in claims since the organization took over the process from the oil company on Aug. 23.

BP paid $400 million in claims before facility head Kenneth Feinberg began administering the $20 billion fund set up at the insistence of President Barack Obama.

The April 20, 2010 well rupture killed 11 people and caused the world's worst marine crude oil spill. BP said it permanently sealed the well Sept. 19. Below is a breakdown of payments made through April 13:

Number of claims filed:

Individual 404,795

Businesses 98,561

Total 503,356

Claims paid:

Individual $1.6 billion

Business $2.2 billion

Payments made to real estate

brokers and agents as part

of a separate fund: $60 million

Total $3.86 billion

Claim state of residence:

Louisiana: $1.2 billion

Florida: $1.4 billion

Alabama $616 million

Mississippi: $307 million

Texas: $106 million

Others: $164 million

Claims paid for lost wages or profits, by industry

for businesses and individuals:

Fishing $616 million

Food, beverage, lodging $1.1 billion

Multiple industry $ 44 million

No industry designation $ 23 million

Rental property $377 million

Retail, sales, service $1.3 billion

Seafood processing $199 million

Tourism and recreation $121 million

Source: GCCF data (Reporting by Anna Driver in Houston; Editing by Pascal Fletcher and Philip Barbara)


====

TIMELINE-Gulf oil spill lasted three months
15 Apr 2011 05:00

Source: reuters // Reuters


(For story on spill anniversary, click [ID:nN14225897])

April 15 (Reuters) - Last year's Deepwater Horizon rig accident in the Gulf of Mexico killed 11 workers and unleashed the worst offshore oil spill in U.S. history.

Here is a timeline of the accident and spill saga:

April 20, 2010 - Explosion and fire on the Deepwater Horizon drilling rig kills 11 workers. The rig, owned by Transocean Ltd and licensed to BP , was drilling 42 miles (68 km) southeast of Venice, Louisiana, in 5,000 feet (1,525 metres) of water. The well had reached 13,000 feet (4,000 metres) under the seabed.

April 22 - The rig, valued at more than $560 million, sinks and a 5-mile (8-km) oil slick forms.

April 30 - BP CEO Tony Hayward says the company takes full responsibility and will pay all legitimate claims and the cost of the cleanup. Analysts say containment and cleanup costs could top $3 billion.

May 10 - BP says it has spent $350 million dealing with the leak. Analysts at Exane say BP may have to take a $10 billion provision for the incident. Other analysts estimate the total cost between $5.1 billion and $8.2 billion.

May 11/12 - Executives from BP, Transocean and Halliburton appear at congressional hearings in Washington. The executives blame each other's companies.

June 9 - U.S. Interior Secretary Ken Salazar says BP must pay the salaries of thousands of workers laid off because of the moratorium on deep-sea drilling.

June 16 - Hayward and BP Chairman Carl-Henric Svanberg meet White House officials and announce a deal to set up a $20 billion fund for damage claims from the spill. BP also suspends dividend payments to shareholders; says it will pay $100 million to workers idled by the six-month drilling moratorium.

June 22 - Under fire, Hayward hands day-to-day control of spill operations to managing director Bob Dudley, who had been CEO of BP's Russian joint venture, TNK-BP.

June 25 - BP says it has spent $2.35 billion on the response effort, including $126 million in claims to those affected by the disaster.

July 19 - BP says it has spent $3.95 billion so far on efforts to tackle its well.

July 20 - BP says it has reached a deal to sell $7 billion in assets to Apache Corp as it raises money to cover costs related to the spill. It later says it plans to sell assets worth up to $30 billion over 18 months.

July 27 - BP names Dudley as its next CEO.

Aug. 2 - U.S. government data shows 4.9 million barrels of oil leaked before the well was capped.

Sept. 16 - Relief well intercepts the Macondo well.

Sept. 19 - With a final shot of cement, BP permanently "kills" the leaking well.

Sept. 23 - Researchers put the spill at around 4.4 million barrels. The figure comes from the first independent study of the disaster.

Sept. 26 - Halliburton, the oilfield services company that cemented the blown-out well, says a BP report laying the blame on the cement job offers a questionable account of events and "erroneous conclusions."

Oct. 4 - BP says it is to raise 2 billion euros ($2.7 billion) via a bond issue to help finance its $20 billion compensation fund.

Nov. 2 - BP increases its estimate of the likely cost of the spill to $40 billion from $32 billion.

Nov. 9 - Shares in BP rise after a U.S. presidential panel says it found no evidence that BP deliberately chose to cut corners to save costs.

Dec. 15 - The Obama administration launches a legal battle against BP and its partners by suing them for the oil spill, which could cost the companies billions of dollars.

-- The lawsuit seeks damages from the well owners BP, Anadarko Petroleum Corp and Mitsui & Co Ltd unit MOEX, and well driller Transocean and its insurer QBE Underwriting/Lloyd's Syndicate 1036, part of Lloyds of London, for their roles in the disaster.

Jan. 5 - BP and its partners made a series of cost-cutting decisions that ultimately contributed to an oil spill, the White House oil spill commission says in a report on the causes of the largest offshore oil spill in U.S. history.

-- The commission says BP and its collaborators lacked a system to ensure their actions were safe.
Jan. 11 - The White House oil spill commission, in its final report of the BP drilling disaster, says the U.S. government needs to expand its drilling regulations, as well as set up an independent drilling safety agency, because the regulatory system was unprepared for the disaster.
-- Most of the recommendations require approval from the U.S. Congress, which will be difficult as Republican lawmakers fear extensive new regulations would slow oil drilling. Oil companies expressed similar concerns, saying hampering offshore production with burdensome rules would drive up oil prices. (Writing by David Cutler, London Editorial Reference Unit; Editing by Pascal Fletcher and Philip Barbara);
====================


A year on, Gulf still grapples with BP oil spill

15 Apr 2011 05:00

Source: reuters // Reuters


* Worst predictions of oil spill disaster seen unfounded

* Scientists struggle to gauge full impact of spill

* Spill caused severe, varied damage to environment

* Many coastal businesses hard hit

By Anna Driver and Matthew Bigg

VENICE, La./WAVELAND, Miss., April 15 (Reuters) - When a BP oil rig exploded and sank in the Gulf of Mexico last April, killing 11 workers, authorities first reported that no crude was leaking into the ocean.

They were wrong.

The disaster that captivated the world's attention for 153 days struck at 9:53 p.m. CDT on April 20 (0253 GMT on April 21), when a surge of methane gas known to rig hands as a "kick" sparked an explosion aboard the Deepwater Horizon rig as it was drilling the mile (1.6 km)-deep Macondo 252 well off Louisiana's coast. Two days later, the rig sank.

One year on, oil from the largest spill in U.S. history clogs wetlands, pollutes the ocean and endangers wildlife, not to mention the toll it has inflicted on the coastal economies of Florida, Mississippi, Alabama and especially Louisiana.

It was the biggest ever accidental release of oil into an ocean.

Even so, environmental damage from the ruptured well that spewed more than 4 million barrels of oil (168 million gallons/636 million liters) into the Gulf in three months seems far less dire than the worst predictions, according to some Gulf residents and experts.

"It's a horrible mess but it's not the end of the world," said Edward Overton, professor emeritus of environmental sciences at Louisiana State University in Baton Rouge.

"Some people thought it would be the end of the Gulf for decades and that's not even near the case," Overton said. "None of those predictions were right."

Such considerations are cold comfort to Gulf residents who saw their livelihoods decimated by the spill. More than 500,000 have claimed compensation from a $20 billion fund set up by BP -- at the insistence of President Barack Obama -- and administered by Kenneth Feinberg.

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Graphic on oil-hit shoreline http://r.reuters.com/peh98r

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The mitigated view will also do little to stem the tide of litigation that will take years to make its way through federal court in New Orleans and beyond as plaintiffs seek to extract damages from London-based BP, which owned the Macondo well, and Swiss-based Transocean , which owned the rig.

"Fishermen are still worried that there's oil on the bottom of the Gulf. But we've got no control over that," said Errol Voisin, manager of the Lafitte Frozen Foods plant in Louisiana, who spoke ahead of a new shrimping season.

"INSULT TO INJURY"

The National Wildlife Federation paints a picture of an ocean ecology mauled by the spill and facing a long road to recovery. Thousands of birds and other wildlife died. [ID:nN14218147]

Sea turtles were hit hard. The western population of the bluefin tuna, which breeds only in the northern Gulf, was breeding just as oil spewed from the ocean floor. Contamination may have reduced juvenile tuna production by 20 percent.

In many cases, the slick compounded factors that already threatened the environment. Wetlands, for example, act as a natural barrier against storm surges but for decades oil industry penetration and other factors have eroded them.

Few places illustrate the damage more poignantly than Bay Jimmy, a breeding ground for shrimp, fish and oysters nestled in a labyrinth of waterways south of New Orleans.

Marshland around the bay still bears scars from the oil spill, with some areas ringed by dead grasses. Oil oozes from the ground just as it did last summer.

"When the oil hit, it was like adding insult to injury .... The concern for us is in terms of habitat for the wildlife," said Maura Wood, NWF's senior outreach coordinator.

Yet for all that, assessing the spill's impact presents a puzzle, experts say. Two examples illustrate the challenge.

"OUT OF SIGHT, OUT OF MIND"?

This year, 153 bottle-nosed dolphin carcasses have washed up on Gulf coasts: 65 of those were infants: new born, stillborn or born prematurely, according to figures from the U.S. National Oceanic and Atmospheric Administration (NOAA).

The dolphins were conceived at the time of the spill, said Moby Solangi, president of the Institute for Marine Mammal Studies in Gulfport, Mississippi.

To determine the cause of death requires a necropsy, which Solangi can perform at the institute, as well as toxicological and other forms of analysis.

But in February the government halted all external investigations into dolphin deaths and turned the matter over to NOAA, which is yet to release any findings.

"It is frustrating to any scientist. Certainly we want to get results," Solangi said in an interview.

For Samantha Joye, a marine sciences professor at the University of Georgia, the problem is the slow pace of research into exactly how oil affected the ocean.

Joye first identified so-called undersea oil plumes during the spill and has since found evidence, such as crabs behaving sluggishly that seems to point to damage to the ocean floor. But she acknowledges more work needs to be done.

"I would like to be able to make conclusive statements about the health of the Gulf of Mexico but I can't because there's a lot we don't know," Joye said in an interview.

"There seems to be this 'If we can't see it, it's not going to hurt us' mentality. There's no oil on the surface therefore the problem is solved. That's just not true," she said.

CONFLICTING VIEWS ON ECONOMIC TOLL

One corporate casualty of the spill was BP Chief Executive Tony Hayward, who lost his job last July in a storm of criticism over perceived insensitivity to Gulf coast residents. He was replaced by Bob Dudley.

The oil giant says it has spent over $16 billion on redress and restoration projects, with total spending estimated at $40.9 billion.
BP chairman Carl-Henric Svanberg told shareholders on Thursday the company's response to the spill "was without precedent, and I think, has been recognized as such."

Protesters against the spill, some from the United States, demonstrated at BP's annual shareholder meeting in London. [ID:nNLDE73D214]

The disaster wiped about $70 billion from BP's market value, knocking its share price down from $61 a few days before the explosion to $26.75 in late June. The stock has recovered to close Thursday at $45.54 a share.

BP at least is upbeat about the Gulf's recovery.

"We are absolutely confident that the water is safe. The residents and tourists are telling us that the beaches have never looked better, the seafood is safe and delicious and I hear fishing is excellent right now as well," Mike Utsler, chief operating officer of BP's Gulf Coast Restoration Organization wrote in Facebook comments published this week.

But there are no clear overall estimates of economic damage from the slick as it ripped through sectors as diverse as fishing, tourism, municipal finance, real estate, banking and services.

In fact, there are almost as many conflicting views of the economic toll as there are stakeholders on the coast.

Tom Becker, president of the Charter Boat Captain's Association of Mississippi, said his business was down at least 50 percent because of a perception among potential clients that Gulf waters remain unsafe.

Rene Cross, owner of the Cypress Cove Marina in Venice, Louisiana, canceled his Cajun Canyons Billfish Classic deep sea fishing tournament last year as the government closed Gulf waters to fishing. But he is restarting the event this spring.

"We are getting reports of marlin getting caught, some nice fish. That's a positive sign for us," Cross said.

Many Gulf fishermen said they were waiting for full compensation from fund administrator Feinberg, a financial and psychological hardship among coastal residents who pride themselves on fierce independence.

Darlene Kimball, an oyster buyer at Pass Christian's harbor in Mississippi, opened her receipt books to show that this time last year she was buying up to 1,500 sacks of oysters a day. Last week that figure was down to 47 on some days.

When officials inspected the offshore beds, they found large numbers of dead oysters, so they did not do the dredging necessary for the new season.

Experts are yet to identify the cause of those deaths, though tests show live oysters are clean and Gulf seafood is now the most heavily tested in the world, residents said.

"I can't say for sure what killed the oysters because I'm no marine biologist. But what happened? They (the oysters) were there on April 20. We have not gotten paid (by Feinberg) and our business is nowhere near back to normal, Kimball said. "It's not fair. We didn't ask for this spill." (Additional reporting by Verna Gates in Birmingham, Leigh Coleman in Biloxi, Pascal Fletcher in Miami and Chris Baltimore in Houston, writing by Matthew Bigg; Editing by Philip Barbara)


====

Shell to pay US $2.3 mln for overdue royalties

10 May 2011 22:37

Source: reuters // Reuters

WASHINGTON, May 10 (Reuters) - Royal Dutch Shell Plc will pay the U.S. government nearly $2.3 million to resolve claims that several of its affiliates underpaid royalties due on natural gas produced on federal leases, the Interior Department said on Tuesday.

"We are required to ensure that energy companies accurately report production and pay the required royalties," said Chris Henderson, an acting assistant secretary at the department. "We will continue to pursue any case where companies do not follow the rules."

The settlement with Shell is the result of a lawsuit filed by a whistleblower, Harrold Wright, who accused the company of wrongdoing.

Wright died since the lawsuit was filed, but his heirs will get $572,000 of the settlement under a federal law that allows U.S. citizens to file lawsuits on behalf of the United States and get a share of any fines paid or money recovered.

The Shell settlement is the latest agreement the government has reached with energy companies in recent years over underpayment of oil and gas royalties that brought in $230 million.

(Reporting by Tom Doggett; Editing by David Gregorio)

===

Norway watchdog to inspect BP platform after fire

14 Jul 2011 11:51

Source: reuters // Reuters

* Unclear when 31,000 bpd Valhall field to resume output -BP

* Fire on Wed prompted evacuation, no injuries or spill

(Adds detail from BP)

By Gwladys Fouche

OSLO, July 14 (Reuters) - Investigators for the Norwegian oil safety watchdog said they would fly to the BP-operated Valhall field on Thursday to probe the causes of a fire that forced a total evacuation of workers and halted output.

A BP spokesman said it was still unclear when production would resume at the field, which produces some 31,000 barrels of oil per day according to the Norwegian Petroleum Directorate

"We are going offshore this afternoon to investigate," Oeyvind Tuntland, director for professional competence at the Petroleum Safety Authority Norway, told Reuters. "A fire at an offshore platform is always serious."

New-York listed Hess is the majority owner in the field with a 64 percent share, while operator BP holds the remaining 36 percent.

The fire occurred on Wednesday in a vent pipe, used to evacuate gasses that could ignite, on the production and compression platform of the Valhall installations, according to a preliminary report BP sent to the watchdog, Tuntland said. "How it was ignited, we have no idea," he said. "If any place should burn, it was one of the best places for it to happen. It had no big potential to escalate. But a fire is a fire."

The fire occurred around 1500 GMT and was put out about an hour later, he added.



BP said the damage on the platform was confined to a small area, which was sealed off while inspections are carried out.

"It is too early to say when production can start again," said company spokesman Jan Erik Geirmo.

He said there was no risk of a spill from the incident.

WORKERS SAFE

BP evacuated personnel and all were reported safe. Some 638 people had been working at the site, which is located about 290 km (180 miles) off southern Norway.

The production platform is one of five in a complex serving the oil field.

Valhall's oil production is piped to the offshore Ekofisk Centre and then on to Teeside, England, according to BP's website. Natural gas from the platform is transported by pipeline to Emden, Germany.

The platform also processes oil and gas from a smaller field known as Hod, located some 7 miles south of Valhall and also owned by Hess (62.5 percent) and BP (37.5 percent).

Valhall has pumped oil since the 1980s and is located in 70 metres of water.

BP said on its website that Valhall's infrastructure was being revamped this year to ensure the field can continue to operate until 2050.

(Editing by Jane Baird)

===

BP pipeline leaks oily mixture onto Alaskan tundra

19 Jul 2011 00:56

Source: reuters // Reuters

* Oily water, methanol spill from ruptured pipeline

* Comes as BP tries to rebuild public, investor confidence

* 2,100-4,200 gallons spilled

* 30,000 bpd field remains shut in

* BP shares down (Adds comment from federal pipeline safety regulator)

By Yereth Rosen and Tom Bergin

ANCHORAGE/LONDON, July 18 (Reuters) - BP reported another pipeline leak at its Alaskan oilfields, frustrating the oil company's attempts to rebuild its reputation after last year's disastrous Gulf of Mexico oil spill.

BP said on Monday that a pipeline at its 30,000 barrel-per-day Lisburne field, currently closed for maintenance, had ruptured during testing and spilled a mixture of methanol and oily water onto the tundra.

The London-based company has a history of oil spills at its Alaskan pipelines, including lines servicing Lisburne. The accidents have tarnished BP's public image in the United States, where around 40 percent of its assets are based.

The Alaska Department of Environmental Conservation said the spill occurred on Saturday and amounted to 2,100 to 4,200 gallons, affecting 4,960 square feet of gravel pad and about 2,040 square feet of wet and aquatic tundra.(A treeless area between the icecap and the tree line of Arctic regions, having a permanently frozen subsoil and supporting low-growing vegetation such as lichens, mosses, and stunted shrubs.)

Production from the entire Lisburne field remains shut off while the spill is addressed, Alaska officials said.

A BP spokesman said the cleanup was under way and the company would determine the cause "in due course."

The federal Pipeline and Hazardous Materials Safety Administration, which oversees most U.S. pipelines, said late on Monday that it does not have jurisdiction over the BP pipeline.

However, the federal government may still have a role in the accident through the Environmental Protection Agency because the pipeline spilled fluids into wetlands.

Immediate efforts are focused on containment and cleanup, said Tom DeRuyter, state on-scene coordinator for the Department of Environmental Conservation. Cleanup must be completed before the pipe section is excavated, he added.

"BP has got a goal to have the investigation completed and the line repaired by fall freeze-up," he said. "I do not anticipate the cleanup will take that long."

The pipeline will also have to be dug up to allow for an investigation into why it failed, DeRuyter said.

MAINTENANCE WORK

Lisburne, managed as part of the Greater Prudhoe Bay Unit, has produced no oil since June 18, according to Alaska Oil and Gas Conservation Commission records, suggesting maintenance work requiring a prolonged shutdown.

Dawn Patience, BP Alaska spokeswoman, said there is not yet an estimated time for the Lisburne field to be back in production.

"The planned maintenance is ongoing," she said, adding the leak happened when BP was testing recently installed valves in the piping.

The affected pipeline is an eight-inch diameter line, and the area that leaked runs underground beneath a road, according to the Alaska Department of Environmental Conservation.

BP's blown out Macondo well caused the worst offshore oil spill in U.S. history, spewing almost 5 million barrels of oil into the Gulf and putting BP's future in the U.S. at risk.

Previous problems including leaks from corroded pipelines in Alaska and the fatal Texas City refinery blast in 2005 had already earned the company a poor reputation for safety, something analysts say it needs to address if it is to continue to grow in North America.

In 2009, a crack in a flow line that serves Lisburne spilled around 46,000 gallons of a mixture of oil and water on to the snowy tundra. BP in May agreed to pay a $25 million civil penalty and spend $60 million on enhanced safety measures, to settle a federal probe of a pipeline oil spill on Alaska's North Slope in 2006.

New York-listed shares in BP were down 0.2 percent, or 9 cents, to $44.20 per share in late afternoon trading. (additional reporting by Tom Doggett in Washington; Editing by David Gregorio)

===================


BP drops the ball again
BP making a habit of botched M&A
07 November 2011 | By Fiona Maharg-Bravo, Christopher Swann

It’s unusual for big energy deals to fall apart between announcement and closing, but BP has managed two in one year. The failure of January’s exploration agreement with Russian oil and gas rival Rosneft was pretty spectacular. And that’s an inconvenient backdrop for this weekend’s collapse of the $7 billion sale of BP’s 60 percent stake in Pan American Energy, Argentina’s second largest oil company. Closing this transaction may not be as imperative((Having the power or authority to command or control.)) today as it was a year ago, but BP Chief Executive Bob Dudley appears to be making a habit out of botched deals.

The circumstances behind the latest debacle aren’t clear. Relations between BP and the buyer, Bridas, are as sour as a divorcing couple that can’t even agree on the terms of separation, says one person familiar with the situation.

Bridas, which is jointly owned by the family of Argentinean tycoon Carlos Bulgheroni and Chinese company CNOOC, has blamed legal issues and BP’s “behaviour”. For its part, BP says the killer issues – antitrust in Argentina and regulatory approvals – were solely the responsibility of Bridas, which owns the other 40 percent of PAE.

BP can afford to say it is “happy” to be keeping the assets now. It was in a far weaker position back in Nov. 2010 when it signed the deal, priced at a discount to the implied valuation paid by the Chinese for their Bridas stake a few months earlier. Uncertainties over financial fallout from the Gulf of Mexico disaster are narrowing. BP has already sold $19 billion in other assets. It must repay a $3.53 billion deposit on the PAE deal, but this shouldn’t affect its ability to up the dividend next year.

Still, everyone is now worse off. The Chinese are left with only a 20 percent indirect economic interest in PAE via their half share in Bridas; BP is stuck with an uncomfortable partner in a country that is looking like a more difficult place to do business.

The PAE setback may not be as mortifying ((To cause to experience shame, humiliation, or wounded pride; humiliate))as the failed joint venture with Rosneft, which was hailed as a big strategic step forward that could potentially boost BP’s production capacity. But it is still disappointing. Dudley cannot afford many more mishaps.

Context News
BP’s $7 billion deal to sell its stake in South America’s Pan American Energy collapsed, the prospective Chinese and Argentine buyers said on Nov. 6.

China’s biggest offshore oil producer CNOOC and Argentina’s Bridas, which is half-owned by CNOOC, had agreed a year ago to buy BP’s 60 percent stake in the oil and gas group.

Bridas cancelled the deal after a Nov. 1 deadline for completion was missed. It blamed “legal issues and the way BP handled the transaction”.

BP said the deal hinged on Bridas obtaining Argentine anti-trust and Chinese regulatory approvals and that those permissions had not been won.

“Securing these approvals was the sole responsibility of Bridas,” BP said. “For reasons known only to them, Bridas has now chosen to terminate the transaction,” BP added.

Bridas owns 40 percent of PAE, Argentina’s second-largest producer of oil and gas. BP will have to repay a $3.53 billion deposit received from Bridas and held on its balance sheet as short-term debt.

BP will separately make a payment of $700 million to Bridas to settle claims and certain costs.
==============================BP announces further Gulf of Mexico settlementBy Fiona Bond | Fri, 16/12/2011 - 12:59British oil giant BP () has reached an agreement with contractor Cameron International () over the catastrophic Gulf of Mexico spill last year.Cameron said BP has agreed to indemnify it for current and future compensatory claims associated with the Deepwater Horizon incident in return for a $250 million (c£160 million) payment.The money will be placed into the $20 billion trust set up by BP for victims of the disaster."BP and Cameron have concluded that the settlement is in their mutual best interests, and the agreement is not an admission of liability by either party," the FTSE 100-listed giant said in a statement.It said that today's settlement allows the pair to put its legal issues behind them and move forward to improve drilling in the safety industry.Cameron marks the fourth company to settle with BP and contribute to economic and environmental restoration efforts in the Gulf. It follows agreements with MOEX and Anadarko Petroleum (), BP's partners in the Macondo well, and Weatherford International (), the maker of the float collar used at the well. However, it added that "unfortunately other companies persist in refusing to accept responsibility for their roles in the accident".BP added that both it and Cameron acknowledge that the Deepwater Horizon accident resulted from complex and interlinked causes involving multiple parties.Richard Griffith, analyst at Evolution Securities, said: "Although the figure is relatively modest, it is an acknowledgement from another party that the accident was multifaceted with multiple partners to share the blame. This adds further weight to the case against two of the key protagonists; Haliburton () and Transocean (), although given the scale of the claims against them they are likely to go on resisting a settlement."Our target price of 510p is the lower end of a valuation range where the upside if 771p per share. Maintain buy."Share dealing with Interactive Investor. Trade shares, investment trusts and ETFs with our investment account, and benefit from multiple order types and no trading inactivity fees.================BP seen agreeing $20-25bln oil spill deal with DoJ19 Jan 2012 07:23Source: Reuters // ReutersLONDON, Jan 19 (Reuters) - Oil giant BP will likely agree to pay the U.S. Department of Justice $20-$25 billion next month to settle all civil and criminal charges around the Deepwater Horizon rig blast and Gulf of Mexico oil spill, a leading industry analyst predicted on Thursday.Martijn Rats, head of European oil research at Morgan Stanley said in a research note that he saw a 70-80 percent chance that the two sides would agree a deal sometime between BP's full year results on Feb. 7, and the scheduled start of legal hearings in New Orleans on Feb. 27.BP sources have told Reuters that talks are ongoing with the Department of Justice about a possible settlement and that the London-based company's board has shifted to weekly meetings to discuss progress.Chief Executive Bob Dudley has previously said BP would like to settle, although not at any price. When asked about the matter by reporters on Wednesday, he declined to make any comment, saying it was a sensitive time to be discussing it. (Reporting by Tom Bergin; Editing by Hans-Juergen Peters

==========================

BP, Anadarko liable for U.S. spill damages

23 Feb 2012 01:45

Source: reuters // Reuters

* US raised Clean Water Act, Oil Pollution Act claims

* BP, Anadarko owned 90 percent of Macondo well

* Trial scheduled to begin Feb. 27 (Edits first paragraph; adds BP, Transocean comments)

By Jonathan Stempel

Feb 22 (Reuters) - BP Plc and Anadarko Petroleum Corp are liable for civil damages under federal pollution laws over the 2010 Gulf of Mexico oil spill, a U.S. judge ruled, exposing them to billions of dollars in potential fines.

Wednesday's decision by U.S. District Judge Carl Barbier in New Orleans allows the U.S. government to pursue civil penalties at a trial he is scheduled to oversee beginning on Feb. 27.

BP spokesman Daren Beaudo said in a statement the oil company has paid out more than $8 billion in claims, and repeated its commitment to pay "all legitimate claims" and help economic and environmental restoration along the Gulf coast.

Anadarko did not immediately respond to a request for comment.

Barbier also said Transocean Ltd may be liable for some cleanup costs, but the owner of the exploded Deepwater Horizon drilling rig called the decision a "vital win" that limited its potential liability.

In his decision, Barbier said BP and Anadarko are liable under the Clean Water Act for oil discharged beneath the water surface because they owned a respective 65 percent and 25 percent of the Macondo well that blew out.

The judge ruled that BP and Anadarko are also liable under the Oil Pollution Act for oil removal costs and damages. He said their liability under both laws is "joint and several," meaning that each could be responsible for the entire amount owed.

"Anadarko and BP were the ones directly engaged in the enterprise which caused the spill," Barbier wrote.

"If Congress envisioned that the owner of the offshore facility would have to respond to an oil spill such as this one, then it is logical that they would also be the party upon whom the civil penalty is imposed," he added.

Barbier also said Transocean may qualify under the Clean Water Act as an "operator" of an offshore facility, but there were "disputed facts" as to whether it did. He also said Transocean may be liable under the Oil Pollution Act for oil removal costs, but not the subsurface discharge of oil.

Transocean spokesman Brian Kennedy in a statement called the decision "a vital win for Transocean and for the long-term viability of the industry's operator-contractor model."

Wyn Hornbuckle, a spokesman for the U.S. Department of Justice, said that agency is reviewing the decision.

Anadarko agreed in October to pay BP $4 billion to settle claims between the companies over the spill.

In exchange, BP agreed to indemnify Anadarko for most spill-related costs, though Anadarko remained liable for its share of fines payable to the government.

The Clean Water Act lets the government seek fines of up to $1,100 per barrel of oil spilled, or $4,300 per barrel if gross negligence or willful misconduct is found.

Assuming 4.1 million barrels were spilled as the government contends, that could result in a penalty of $4.5 billion, and potentially $17.6 billion if there were gross negligence.

Barbier declined to rule that BP and Anadarko could face unlimited liability under the Oil Pollution Act, as the government requested.

The April 20, 2010 rig explosion caused 11 deaths, and led to the largest offshore oil spill in U.S. history.

BP is based in London; Anadarko in The Woodlands, Texas; and Transocean in Vernier, Switzerland.

The case is In re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179. (Reporting By Jonathan Stempel; Editing by Richard Chang and Richard Pullin)

============

BP oil spill trial delayed for settlement talks
Mon, Feb 27 01:57 AM EST
image

By Tom Bergin and Jonathan Stempel

LONDON/NEW ORLEANS (Reuters) - The trial to decide who should pay for the 2010 Gulf of Mexico oil spill has been delayed by a week, to allow BP Plc to try to cut a deal with tens of thousands of businesses and individuals affected by the disaster.

Less than 24 hours before the case was set to start in a New Orleans federal court, U.S. District Judge Carl Barbier pushed back the date to March 5 from February 27.

The delay allows further talks between BP and the Plaintiffs' Steering Committee (PSC), which represents condominium owners, fishermen, hoteliers, restaurateurs and others who say their livelihoods were damaged by the April 20, 2010, explosion of the Deepwater Horizon drilling rig and subsequent oil spill.

Eleven people were killed, and 4.9 million barrels of oil spewed from the mile-deep Macondo oil well, in by far the worst offshore U.S. oil spill.

"BP and the PSC are working to reach agreement to fairly compensate people and businesses affected by the Deepwater Horizon accident and oil spill," BP said in a statement.

The London-based oil company said there was no assurance that the talks would lead to a settlement.

Bloomberg news agency reported on Monday that BP and the plaintiffs were discussing a $14 billion settlement that was nearing completion. It cited three people familiar with the talks.

A settlement between BP and the businesses would remove a significant portion of the complex litigation, the trial of which was expected to take nearly a year. It could also be a key step toward reaching a global settlement with its drilling partners, and with federal and state governments.

Much work would remain. The U.S. government has sued BP and others for violating the Clean Water Act and other laws, which could result in fines totaling tens of billions of dollars. Gulf states are also seeking compensation for their losses. BP is also suing and being sued by its drilling partners.

"Before today, I had almost given up on the possibility of a global settlement before a trial began," said Edward Sherman, a professor at Tulane University Law School and specialist in complex litigation. "Now, with an extra week, it seems to improve the chances."

Barbier, meanwhile, has kept the highly complex case moving forward, and had not changed the trial date since it was first set more than a year ago.

"Judge Barbier would not have delayed (the) trial unless (a) settlement was within reach," said David Uhlmann, a University of Michigan law professor and former chief of the Justice Department's environmental crimes section, in an email.

In an order dated Sunday, Barbier said the delay made sense "for reasons of judicial efficiency and to allow the parties to make further progress in their settlement discussions." He did not specify which parties he was referring to.

REASONABLE SETTLEMENTS SOUGHT

Apart from BP, which owned 65 percent of the Macondo well, the main corporate defendants are Vernier, Switzerland-based Transocean Ltd, which owned the Deepwater Horizon rig, and Houston-based Halliburton Co, which provided cementing services for the well. They are also suing each other. Several other companies are also involved in the trial.

A BP spokeswoman declined to comment further on the talks.

Transocean spokesman Lou Colasuonno said BP's talks with the PSC "doesn't change the facts of the case," and that Transocean remains prepared for trial.

A spokeswoman for the U.S. Department of Justice declined to comment. The offices of Alabama Attorney General Luther Strange and Louisiana Attorney General James "Buddy" Caldwell, which are coordinating the states' case, did not immediately respond to requests for comment. Halliburton also did not immediately respond to a request for comment.

BP has accepted responsibility for the disaster, and estimated its legal and cleanup costs for the spill will total $43 billion. Some analysts have said that figure could top $60 billion, especially if there were a finding that its activities at the project were "grossly negligent."

Earlier this month, BP said it had set aside $6.1 billion to cover claims by businesses. Lawyers for those plaintiffs said the amount was too low, and that BP should also award punitive damages, which the oil company says are not warranted.

Many industry analysts and experts say a quick settlement is in BP's best interest.

Chief Executive Robert Dudley has said BP is willing to settle for reasonable terms, and on Sunday told The Sunday Telegraph in an interview that he hoped to reach "some agreements" and perhaps avoid litigation.

Other companies in the case are Anadarko Petroleum Corp, which owned 25 percent of the well; Mitsui & Co's MOEX USA unit, which owned 10 percent of the well; Cameron International Corp, which made a blowout preventer, and Schlumberger NV's M-I Swaco venture, which provided mud services. All have settled with BP. MOEX has settled with the government.

The case is In re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179.

(Reporting by Tom Bergin in London and Jonathan Stempel in New Orleans; Additional reporting by Chris Baltimore in Houston, Ransdell Pierson in New York and Jeremy Pelofsky in Washington, D.C.; Editing by Marguerita Choy and Elizabeth Piper)

===

BP seeks settlement with oil spill plaintiffs group
Tue, Feb 28 17:43 PM EST

By Kathy Finn

NEW ORLEANS (Reuters) - BP Plc is seeking to settle a lawsuit over the massive 2010 Gulf of Mexico oil spill by tapping a $14 billion fund it set aside to compensate fishermen and businesses harmed by the disaster, lawyers familiar with the talks said.

In exchange, the claimants, represented by a group called the Plaintiffs' Steering Committee, would drop their lawsuit in a court case scheduled to start in New Orleans on March 5.

U.S. District Judge Carl Barbier delayed the trial by a week on Sunday to allow talks between BP and the PSC, which represents fishermen, oystermen, hoteliers and restaurateurs who say their livelihoods were damaged by the April 20, 2010, explosion of the Deepwater Horizon drilling rig and subsequent oil spill.

The settlement would tap the Gulf Coast Claims Facility (GCCF), a $20 billion fund BP set up in August 2010 to compensate victims. The fund, overseen by Kenneth Feinberg, has already paid out about $6.1 billion to compensate about 200,000 individuals and businesses, leaving about $14 billion in available funds.

"The discussions are ongoing," said Brent Coon, a Houston lawyer who represents about 8,000 clients who have filed claims with the Gulf Coast Claims Facility. "There is an effort to shift the center of gravity of the claims process over to the (oil spill case) and away from the GCCF."

A deal could be announced this week, said another source familiar with the discussions, who spoke on condition of anonymity.

Spokesmen for BP and the plaintiffs group declined to comment.

Transition to a new funding mechanism from the GCCF could be complicated, lawyers say, because of the potential for thousands of unfiled claims that have yet to enter the system.

An important provision in any settlement could be an opt-in mechanism that would allow plaintiffs to review the terms of the settlement and decide if they want to participate.

"I'd expect there will be an opportunity for people to opt out if they are not satisfied," said Blake Jones, a New Orleans lawyer whose clients in the case include an owner of oyster leases in Gulf waters.

Judge Barbier would assume a key role in approving the settlement and possibly reviewing claims to be paid and legal fees charged by lawyers, said Carl Tobias, a law professor at the University of Richmond.

Eleven people were killed on the oil rig and 4.9 million barrels of oil escaped from the mile-deep Macondo well in what is by far the worst offshore U.S. oil spill.

A settlement would remove a significant portion of the complex litigation in the trial, which is expected to take nearly a year. It could also be a key step toward reaching a global settlement with BP's drilling partners, and with federal and state governments.

Much work would remain. The U.S. government has sued BP and others for violating the Clean Water Act and other laws, which could result in fines totaling tens of billions of dollars.

U.S. Attorney General Eric Holder told U.S. lawmakers on Tuesday the Justice Department is prepared to go to trial.

BP has been negotiating a possible settlement with the U.S. government regarding violations of U.S. environmental law, but there are no signs a deal is close. Gulf states also want compensation and BP is suing and being sued by its drilling partners.

Garret Graves, an aide to Louisiana Governor Bobby Jindal, dismissed, as too low, estimates recently floated by company analysts that peg BP's ecological cleanup liability at $20 billion to $25 billion.

"If a reasonable number was put on the table we certainly would give it every bit of consideration," Graves told Reuters. "Provided that they continue floating these numbers that are outside the realm of reality, we are going to be in court for years."

Apart from BP, which owned 65 percent of the Macondo well, the main corporate defendants are Switzerland-based Transocean Ltd, which owned the Deepwater Horizon, and Houston-based Halliburton Co, which provided cementing services for the well. They are also suing each other. Several other companies are also involved in the trial.

On Monday, Transocean took a $1 billion charge related to the spill, the clearest indication yet the contract driller is preparing to settle.

The case is In re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179.

(Writing by Chris Baltimore; Additional reporting by Jeremy Pelofsky in Washington, D.C. and Jonathan Stempel in New York; Editing by Andre Grenon and Steve Orlofsky)

=======

UPDATE 2-Transocean says may face $473 mln U.S. tax bill
Wed, Feb 29 19:45 PM EST

* New tax assessment for 2008-09 of $473 mln

* Company cleared of 2004 tax case, expert calls a "win"

* JV partner in two Indian rigs exercises sale option

By Braden Reddall

Feb 29 (Reuters) - Transocean Ltd may face $473 million in U.S. back taxes, according to its annual filing, though it also said it was cleared in a similar dispute dating back eight years, which may give its lawyers a useful precedent.

Transocean, owner of the world's largest offshore oil rig fleet, said the latest assessment received this month for 2008 and 2009 related to accounting between subsidiaries, for both engineering services performed between them and transfer pricing for rig charters.

"If the authorities were to continue to pursue these positions with respect to subsequent years and were successful in such assertions, our effective tax rate on worldwide earnings with respect to years following 2009 could increase substantially," said Transocean, which booked an overall 2011 income tax expense of $395 million.

The $473 million of proposed adjustments exclude interest, but the company said in the filing released this week that it believed its tax returns were correct and planned to defend against the claims.

The company declined to comment further on Wednesday.

Problems with transfer pricing, generally, have grown with globalization of the world economy. The issue involves how to tax the earnings of foreign affiliates that transfer goods and services between themselves.

By setting internal transfer prices higher or lower than market value, foreign affiliates can shift profits from high-tax countries to low-tax countries, reducing the parent company's overall tax burden with the Internal Revenue Service (IRS).

"You can be a reasonable pig, but when you turn into a hog, the IRS comes after you," said Larry Langdon, a former IRS commissioner for large & mid-size business who is now at law firm Mayer Brown.

This is an especially important issue for rig contractors, since most of their assets are not fixed in one place.

Following President Barack Obama's 2008 election, Transocean moved to Switzerland from the Cayman Islands to secure a low-tax domicile. Noble Corp made the same shift soon after, and Ensco Plc then went to Britain in a move that Rowan Cos Inc said on Tuesday it would mimic.

In Norway last year, authorities indicted two Transocean-owned companies and some advisers over suspicions of tax fraud, alleging underpaid taxes of up to $1.8 billion.

The company has also faced other U.S. tax disputes in the past, including claims related to transfer pricing in 2004, though Transocean said a U.S. tax judge ruled in its favor on Jan. 12 in that case and the adjustments were withdrawn.

The U.S. tax authorities also withdrew previously proposed adjustments for 2005, apart from about $50 million related to rig charter transfer pricing between its subsidiaries.

Langdon of Mayer Brown described that as a "win" for Transocean. "It established what the rules should be for them going forward," he said.

The company is still fighting a 2010 U.S. tax assessment of $278 million for 2006 and 2007 involving accounting between units, $295 million related to capital gains adjustments for 2006 to 2009 and a total of $248 million more for witholding taxes and penalties.

Transocean had enjoyed a good start to this week after reporting better-than-expected results and booking a lower-than-expected $1 billion charge related to the 2010 Gulf of Mexico disaster that destroyed one of its rigs.

Separately, Transocean said that Quantum, its partner in the joint venture which owns two ultra-deepwater rigs working for Reliance Industries off India, had exercised its option to exchange its stake for cash or Transocean shares.

The price will be negotiated for half of the JV, which has debts of $978 million, and Quantum must choose by March 29 whether to receive cash or shares, the latter based on a price of $49.69 each, Transocean said in a statement on Wednesday.

=======

BP reaches deal with plaintiffs over Gulf of Mexico spill

03 Mar 2012 05:12

Source: reuters // Reuters

NEW YORK, March 2 (Reuters) - BP PLC has reached a $7.8 billion agreement with plaintiffs suing over the massive 2010 Gulf of Mexico oil spill, according to a court order on Friday, but the company still faces claims by the U.S. government and drilling partners.

BP said the cost of the proposed settlement would be around $7.8 billion, including a BP commitment of $2.3 billion to help resolve loss claims related to the Gulf seafood industry.

It said the proposed settlment was not an admission of liability by the company. (Reporting by Andrew Longstreth; additional reporting by Andrea Shalal-Esa in Washington; Editing by Nick Macfie)

====

BP, plaintiffs reach Gulf oil spill settlement
By HARRY R. WEBER and MICHAEL KUNZELMAN | Associated Press – 1 hr 14 mins ago


NEW ORLEANS (AP) — BP PLC reached a settlement late Friday night with a committee representing the largest group of plaintiffs suing over the 2010 Gulf oil spill, a federal judge said. Specific terms have not been released.

There was no mention in the order by Judge Carl Barbier of the status of BP's talks with the federal government, involved states or individual plaintiffs not represented by the committee.

Phone messages left for representatives with BP or the plaintiff's steering committee were not immediately returned Friday night.

As a result of the settlement that will be filed with the court for approval, the trial that was scheduled to begin Monday has been postponed for a second time, Barbier said. No new date was immediately set.

The settlement will require substantial changes to the current trial plan but he didn't elaborate, the judge said.

The Deepwater Horizon rig exploded in the Gulf of Mexico off Louisiana in April 2010, killing 11 workers and spewing more than 200 million gallons of oil from an undersea well owned by BP. The rig, owned by Transocean Ltd., sank two days later.

Transocean and cement contractor Halliburton Co. have rejected recent overtures to settle their claims with BP and pay billions of dollars, according to two people close to the case who spoke on condition of anonymity because the talks are confidential.

"Delays or deals made by other players do not change the facts of this case and we are fully prepared to argue the merits of our case based on those facts," Transocean said in a statement.

The spill soiled sensitive tidal estuaries and beaches, killing wildlife and shutting vast areas of the Gulf to commercial fishing. Barbier, in New Orleans, was assigned to oversee nearly all of the federal claims spawned by the Deepwater Horizon rig explosion.

After several attempts to cap the well failed, engineers finally were successful on July 15, halting the flow of oil into the Gulf of Mexico after more than 85 days.

The main targets of litigation resulting from the explosion and spill were BP, Transocean, Halliburton and Cameron International, maker of the well's failed blowout preventer. BP, the majority owner of the well that blew out, was leasing the rig from Transocean.

The Justice Department sued some of the companies involved in the ill-fated drilling project, seeking to recover billions of dollars for economic and environmental damage. The department opened a separate criminal investigation, but that probe hasn't resulted in any charges.

The companies also sued each other, although some of those cases were settled last year. In one of the pending lawsuits, BP has sued Transocean for at least $40 billion in damages.

Trial preparations have produced a staggering 72 million pages of documents and included depositions of more than 300 witnesses. The trial also is designed to determine whether Transocean can limit what it pays those making claims under maritime law.

A series of government investigations have spread blame for the disaster.

In January 2011, a presidential commission found that the spill was caused by time-saving and money-saving decisions by BP, Halliburton and Transocean that created unacceptable risk. But the panel also concluded that the mistakes were the result of systemic problems, not necessarily the fault of any one individual.

In September 2011, however, a team of Coast Guard officials and federal regulators issued a report that concluded BP bears ultimate responsibility for the spill. The report found BP violated federal regulations, ignored crucial warnings and made bad decisions during the cementing of the well a mile beneath the Gulf of Mexico.

BP has repeatedly said it accepts some responsibility for the spill and will pay what it owes, while urging other companies to pay their share.

BP established a $20 billion claims fund to resolve many claims out of court. As of Jan. 17, the Gulf Coast Claims Facility has paid out nearly $6 billion from the fund to more than 569,000 individuals and businesses.

BP waived a $75 million cap on its liability for certain economic damage claims under the 1990 Oil Pollution Act, though it denied any gross negligence.

===

BP boosted by oil spill settlement
Mon, Mar 05 03:46 AM EST
image

By Tom Bergin

LONDON (Reuters) - Shares in BP rose over 2 percent on Monday after the oil giant reached a settlement with businesses and individuals impacted by the Gulf of Mexico oil spill worth an estimated $7.8 billion.

Some analysts said the expected payout was less than they had forecast, reduced legal uncertainty and suggested the final settlement with BP's biggest opponent - the U.S. government - would be much lower than the worst case scenario.

Predictions were that BP's shares could benefit even more than Monday's initial boost.

"On a trading basis we see a potentially quite positive reaction ... BP moving to the 530-550 pence range near term (if not higher), and possibly higher thereafter," said Jason Kenny, oil analyst at Santander.

BP shares were up 2.3 percent at 508 pence by 0807 GMT, outperforming a flat STOXX Europe 600 oil and gas index.

Analysts had given a wide range of forecasts for how much BP would have to pay out to compensate fishermen, condominium owners and hoteliers, with many predicting a figure of $14 billion, although BP had taken a provision of just $6.1 billion.

The company has also taken a $3.5 billion provision for expected government fines but the maximum possible level of penalty could be over $20 billion, if BP is found to have been grossly negligent.

Analysts said the agreement boosted the chances of a settlement with the government.

"What this agreement does, if it is implemented, is to give the management of BP further encouragement to try and reach a settlement out of court (with the U.S. Department of Justice)," said Iain Armstrong, oil analyst with Brewin Dolphin, via email.

Fadel Gheit, oil analyst at Oppenheimer in New York, said BP's hand had been strengthened by the deal.

"I think the settlement further weakens the government claim of gross negligence," he said.

Analysts at Morgan Stanley predicted the agreement would allow BP to continue raising its dividend, which was cut at the height of the oil spill - the worst in U.S. history.

"We believe the path towards free cash flow of $8.7 billion and a dividend of 39 cents per share by 2014 remains intact," the bank said in a research note.

BP paid a dividend of 29 cents per share for 2011. Some investors had feared BP's ability to grow the dividend could be limited by the legal uncertainty.

Nontheless, even the most optimistic forecasts suggest BP will remain well below its pre-spill payout of 14 cents per share per quarter for years to come.

In addition to the U.S. federal government's claims, BP faces lawsuits from the states affected by the spill, which came after a blast on a drilling rig that killed 11 men.

Analysts at Citigroup said they expected BP to have to pay another $1-2 billion to settle these claims.

(Editing by Mark Potter)
======

FEATURE-Oil spill aftermath: A tale of three plaintiffs

11 Mar 2012 11:59

Source: reuters // Reuters

By Kathy Finn

VENICE, Louisiana, March 11 (Reuters) - The phone at Joan Strohmeyer's fishing lodge has been ringing steadily since 2010, but not many of the calls are from customers who want to go fishing. Mainly, they are from lawyers who want her to sue British oil company BP Plc.

The tidy, 62-room Lighthouse Lodge is perched near the Gulf of Mexico on Highway 23, in the marshlands between Breton Sound to the east and Bataria Bay to the west, an easy jumping off point for what used to be some of America's most prized commercial and sport fishing waters.

That was before an explosion on April 20, 2010, on the Deepwater Horizon drilling rig, which killed 11 workers and spewed oil for 87 straight days. It soaked hundreds of miles of Gulf Coast shoreline in caramel-colored oil and sent Strohmeyer's clients fleeing to less troubled waters.

Now, Strohmeyer faces a dilemma. She can sign onto a $7.8 billion settlement struck between BP and lawyers representing people who, like her, have lost money because of the worst oil spill in U.S. history. Or she can take her chances and try to strike a better deal on her own.

All along the Gulf Coast, in a tight-knit community that stakes its reputation on the size of the catch, business owners are wrestling with questions of compensation. Some have accepted a settlement and wonder whether they should have held out for more. Some are angling for an offer. And some, like Strohmeyer, are still pondering their options.

At 80 years old, she has already been through one disaster -- Hurricane Katrina flattened her lodge in 2005, forcing her to rebuild it.

She said she has avoided filing a claim so far in part because her lodge got a boost in the weeks after the spill, when cleanup workers filled the guest rooms and slept on the couches in the lobby.

"I've never sued anybody in my life," she said. "I hate to start now."

But, since the beginning of the spill, even before she lost any money, lawyers have been urging her to file a claim.

"Even before the cleanup workers started coming, hell, I had lawyers from Houston calling me," Strohmeyer said. "I have been told that I really ought to file a claim, and I'm looking at it."

NOT "CHUMP CHANGE"

Down the road, in Venice, Louisiana, Raymond Schmitt wonders if he got short-changed.

Schmitt is co-owner of Saltgrass Lodge, a three-story, eight-room, antebellum-style lodge. He and his partners settled last year with the Gulf Coast Claims Facility, a $20 billion trust set aside by BP in the weeks following the spill and overseen by Washington lawyer Kenneth Feinberg.

"My partners wanted to settle, and so we did," said Schmitt, a longtime charter fishing boat captain. "I don't know if we settled for enough or not."

Schmitt declined to disclose the amount of the payment, and said it covered roughly two years of lost revenue. "It was not a great amount of money but it wasn't chump change either," he said.

Feinberg's fund paid out $6.1 billion on about 225,000 claims, an average of about $27,000 per claim.

Schmitt summed up the dilemma he faced like this: "Do we take this now and survive the next two years and try to keep going, or do we try to fight 'em and go bankrupt in the meantime?"

Schmitt and his partners filed their claim without the help of a lawyer, to avoid potential fees. "We felt if we did get an attorney and had to fight them, it would take a year and we'd probably end up with the same amount after the lawyers got everything else," he said.

Pressure to keep the business afloat helped the partners make up their minds. "We took the money and we've got our fingers crossed," said Schmitt, who has been spending heavily on advertising to draw bookings for the spring fishing season.

A LOT OF TALKING

In Boothville, just north of Venice, Brooke Andry is still waiting for a deal, as her business sags.

"When the fishing industry bottoms out, the lodging business is gone," said Andry, who owns the Kingfish Lodges and Venice Palms Lodge. Andry said she filed claims with Feinberg, but has seen no action.

"I think Feinberg and his group did a lot of talking and not a lot of action," Andry said. When she met with Feinberg's representatives, she was required to bring extensive documentation of her losses, but Feinberg's team was never prepared. "They'd just put us off and say 'We'll see you in another 30 days,'" she said.

A spokeswoman for Feinberg declined to comment for this story. "I believe the GCCF has successfully fulfilled its mandate," Feinberg said in a statement on March 2.

Andry said she will decide whether to sign onto the $7.8 billion settlement with BP after looking over the details with her brother, an attorney who has advised her so far. She said she hasn't decided whether to resubmit her claim or pursue a lawsuit on her own.

"People come from all over the world to come fishing," Andry said. "But if they're only going to catch two fish instead of ten, they figure they might as well go to Destin," a beach resort in Florida.

For now, Andry is stuck in limbo between the old claims processing regime run by Feinberg and a new one to be established under the settlement between BP and plaintiffs' lawyers, which won't be operational for several weeks.

The new claims facility, which still must be approved by U.S. District Judge Carl Barbier in New Orleans, will offer settlements to business owners who lost profits from the spill, as well as home owners and individuals, based on set formulas for lost revenues.

BP estimated the total cost of settling with plaintiffs at $7.8 billion, but the amount could rise and is not subject to a cap, plaintiffs' lawyers say. BP and the plaintiffs' group have declined to estimate the number of potential claimants.

Both the old and the new claims methods have their detractors. Feinberg has been criticized for slow-walking the claims process and applying over-rigid terms that excluded some legitimate claims.

Critics of the new fund, primarily lawyers who represented clients before Feinberg's fund, warn that it could allow lawyers representing clients who haven't settled yet to collect exorbitant fees.

Houston lawyer Tony Buzbee, one such lawyer, said big fees to the plaintiffs' group, called the Plaintiffs' Steering Committee, could eat up funds that should go to individuals and businesses.

For plaintiff lawyers, potential fees are enticing. If the settlement is worth $7.8 billion, as BP claims, that could yield $468 million in legal fees, calculated at 6 percent.

BP declined to comment on the claims process for this story.

DOING WITHOUT

Robert Wiygul, an attorney in Ocean Springs, Mississippi, who represents about 1,000 clients who had been seeking payment from Feinberg's GCCF, said he was optimistic that the new settlement process would resolve his clients' concerns.

"The amount that's available looks like it's going to be something that's going to protect people adequately from the future risks of this oil spill," said Wiygul, an environmental attorney who represents a wide range of clients from shrimpers and crabbers to other business owners.

Another option for victims is also on the table: opting out of the settlement and suing BP directly.

Opting out could yield the highest potential payout, because it could include punitive damages if Barbier rules in a coming trial that there was gross negligence on the part of BP or its well partners, said Blaine LeCesne, a law professor at Loyola University in New Orleans. BP vigorously contests any claim to gross negligence.

LeCesne said plaintiffs who sign onto the settlement could leave billions of dollars on the table in potential future punitive damages. Those who opt out "will have extraordinary leverage in negotiating a very generous settlement that will include anticipated punitive damages," he said.

===============

UPDATE 1-Anadarko sees "reasonable" U.S. Gulf spill fine
Tue, Mar 13 14:37 PM EDT

* Agrees to sell 23 pct stake in Salt Creek EOR project

* Sees rebound in U.S. Gulf activity

* To cut dry gas output by 3 mmboe

March 13 (Reuters) - Anadarko Petroleum Corp expects any fine or penalty it may have to pay for the 2010 Gulf of Mexico oil spill to be a "reasonable one," and said activity in the region will rebound to levels seen before the accident.

The independent oil and gas company owned 25 percent of the Macondo well that ruptured and caused the world's worst marine oil spill, leading to months-long drilling moratorium in the area.

Last month, a U.S. judge ruled that Anadarko and BP Plc -- which owned 65 percent of the well -- were liable for civil damages under federal pollution laws, exposing them to billions of dollars in potential fines.

In an investor conference on Tuesday, Anadarko said any possible penalty would not be "outlandish as reported in the media".

"It's not a big issue for us," said Bobby Reeves, a senior vice president at the company.

Anadarko had agreed in October to pay BP $4 billion to settle claims between the companies over the spill. In exchange, BP agreed to indemnify Anadarko for most spill-related costs, though Anadarko remained liable for its share of fines payable to the government.

The company's shares, which have gained about 11 percent of their value so far this year, were down a percent at $83.90 in afternoon trade on the New York Stock Exchange.

JV, LIQUIDS SPENDING

Anadarko now expects activity in the U.S. Gulf to return to pre-moratorium levels this year, and plans to drill six to eight exploration and appraisal wells there. It will spend 10 percent of its 2012 budget of $6.6 billion to $6.9 billion in the area.

Anadarko said it had entered into a deal to sell a 23 percent stake in the Salt Creek enhanced oil recovery project in Wyoming, where carbon dioxide is used to stimulate oil production from a 100-year-old field. The company did not disclose more details of the deal citing a confidentiality agreement.

The company also said it was considering joint venture deals for its liquids-rich Denver-Julesburg Basin assets, outside its core Wattenberg property.

"We do intend to pursue joint ventures. We may not be able to find a structure that we find satisfactory... It's under consideration," Chief Financial Officer Bob Gwin said.

Senior Vice President Chuck Meloy said Anadarko will curtail "dry" gas production by 3 million barrels of oil equivalent (mmboe). The company expects oil and gas production for the year to range from 256 mmboe to 260 mmboe.

It will pull back rigs from natural gas-rich areas such as the Marcellus shale and direct capital towards "high-return areas".

NAT GAS REBOUND?

Chief Executive Jim Hackett -- who is handing over the reins to Chief Operating Officer Al Walker in May -- said in a presentation that natural gas prices were "bound to rebound".

Anadarko expects natural gas prices, which are trading at near decade lows of $2.22 per million British thermal units, to touch $4 by 2014.

Weak demand during one of the mildest winters on record has kept gas prices hovering near the 10-year low hit in January. Abundant supply from shale rock fields have also forced companies such as Chesapeake Energy and Encana Corp to cut their gas output.

But Hackett said demand from power generation will help ease the oversupply. Clean-burning natural gas, whose prices have plunged to their cheapest relative to coal since 2009, is fast emerging as a replacement to coal for power generation.

A number of power producers, including FirstEnergy Corp , American Electric Power and Duke Energy, are shutting down many of their coal-fired plants.

======

Chevron, Transocean charged in Brazilian oil spill
Thu, Mar 22 11:14 AM EDT
image
1 of 7

By Jeb Blount and Joshua Schneyer

RIO DE JANEIRO/NEW YORK (Reuters) - A Brazilian federal prosecutor filed criminal charges on Wednesday against Chevron and drill-rig operator Transocean for a November oil spill, raising the stakes in a legal saga that has added to Chevron's woes in Latin America and could slow Brazil's offshore oil boom.

Prosecutor Eduardo Santos de Oliveira also filed criminal charges against 17 local executives and employees at Chevron and Transocean, owner of the world's largest oil rig fleet. Among the defendants is George Buck, 46, a U.S. national in charge of Chevron's operations in Brazil, the prosecutor's office said in a statement.

"The spilling of oil affected the entire maritime ecosystem, possibly pushing some species to extinction, and caused impacts on economic activity in the region," Santos de Oliveira, a prosecutor in the oil district of Campos de Goytacazes, said in the filing. "The employees of Chevron and Transocean caused a contamination time bomb of prolonged effect."

The charges stem from a 3,000-barrel leak in the Frade field, about 120 km (75 miles) off the coast of Rio de Janeiro state. They include: failure to realize protocols to contain the leak; failure to take steps to kill the well and stop the drilling process; breach of licenses, legal norms and regulation, including altering documents; and failure to meet legal and contractual duties.

Chevron and Transocean strongly disputed the charges.

"These charges are outrageous and without merit," Chevron said in a statement. "Once all the facts are fully examined, they will demonstrate that Chevron and its employees responded appropriately and responsibly to the incident."

Transocean "strongly disagrees with the indictments," said spokesman Guy Cantwell.

Chevron said it stopped the leak in four days. None of the oil that leaked into the Atlantic reached shore or interfered with marine life, it said.

In November, the same prosecutor filed an $11 billion civil lawsuit over the spill, the largest environmental suit in Brazil's history. Chevron has already been fined around 200 million reais in fines ($110 million) for the spill by environmental and oil regulators.

Chevron's shares dropped 1.1 percent to $107.91 on Wednesday, to their lowest in nearly a month. Transocean's US-traded shares dropped 1.1 percent to $56.77.

Observers warned that the criminal charges could spook foreign companies attracted to Brazil's offshore oil boom and slow development of more than 50 billion barrels of reserves discovered here since 2007.

"These charges are being used by those who want to shut out foreign investment and vilify foreign companies," said Adriano Pires, head of energy think tank Brazilian Infrastructure Institute, and a former oil regulator.

The Chevron leak was less than 0.1 percent of the size of the 4 million-barrel BP oil disaster in the Gulf of Mexico in 2010. Transocean also owned the rig in that spill. Past Brazilian oil spills by state-run Petrobras, including some larger ones, have never prompted criminal charges.

Chevron's troubles in Brazil could force it to rethink its Latin American strategies. A shortage of trained workers, engineers and equipment have driven up costs in Brazil and Chevron faces an $18 billion environmental verdict in Ecuador.

Oliveira's filings allege that Transocean's Sedco 706 rig, which drilled the well that leaked, had "grave" equipment failures that were detected by Brazil's national petroleum agency, the ANP.

In addition to Buck, prosecutors leveled criminal charges against other Chevron and Transocean employees, including five other Americans, five Brazilians, two Frenchmen, two Australians, a Canadian and a Briton. Among them was Guilherme Dantas Rocha Coelho, 38, the Brazilian head of Transocean's operations in the country.

All were ordered to turn in their passports last Saturday and remain in the country. Each individual will be required to post 1 million reais ($550,000) bail and each company 10 million reais ($5.5 million) to ensure payment of future fines.

JAIL TIME UNLIKELY

Prison sentences could be as lengthy as 31 years, the filings said. Oliveira told Reuters in January that jail terms for the oil workers would be unlikely and a "last resort." On Wednesday, however, he said the executives should be jailed.

"Yes, I want them to serve the full time and if they don't it won't be for any lack of effort by the Federal Prosecutors' Office," he said at a news conference in Rio de Janeiro.

Under Brazilian law, a judge must examine the charges and determine whether to proceed with formal indictments, a process that could take days or weeks. Either way, Chevron and Transocean likely face years of legal action in Brazil, one of the world's most promising oil frontiers.

Few individuals or companies have ever been convicted of environmental crimes in Brazil, and fewer have gone to jail.

ROUSSEFF WARNS OIL COMPANIES

The charges come less than a week after Chevron asked for and received permission to temporarily stop production at Frade after finding new seeps on the sea floor. It was producing 61,500 barrels a day, down from about 80,000 before the November spill.

Chevron has spent more than $2 billion developing Frade, Brazil's largest foreign-operated field in which the No. 2 U.S. oil company owns a 52 percent stake. Brazil's Petrobras owns 30 percent and a Japanese group led by Inpex and Sojitz owns 18 percent.

The prosecutor alleges that Chevron and Transocean ignored signs that their drilling could blast through rock and the seabed as they tapped into a high-pressure reservoir in an area whose faults and fissures made it prone to an underground blowout. Chevron has said it encountered reservoir pressure levels far above those in previous wells.

Chevron has downplayed the potential for further environmental damage from the Frade incident, but has pledged to carry out a study of the field's geology before asking regulators to resume production. Prosecutors said there could be further leakage, citing evidence of damage to the oil reservoir. A technical report by ANP has not been made public.

Chevron said on Wednesday that oil from the new seabed seep differs chemically from crude spilled in November, and that the two leaks are unrelated. Prosecutors allege the newest leak, measured at less than a barrel of oil, is a worrisome complication of the earlier spill. Brazilian President Dilma Rousseff, a former energy minister who also served as chairwoman of the Petrobras board, warned oil companies on Wednesday that they must strictly follow security procedures in Brazil. "On this question there can be no exceptions to being within safety limits and knowing them, to never test them and never go beyond them," she said in Rio at the swearing in ceremony for the new head of oil regulator ANP.

($1 = 1.82 reais)

(Editing by Todd Benson, Bill Trott and David Gregorio)

======
(Reuters) - BP Plc has accused the U.S. government of withholding evidence that may show the 2010 Deepwater Horizon oil spill in the Gulf of Mexico was smaller than federal officials claimed, a key issue in determining the oil company's liability.

A reduction in the size of the spill would lower the maximum civil fine BP could be forced to pay under the U.S. Clean Water Act, a sum now estimated as high as $17.6 billion.

The government is one of many plaintiffs suing BP over the April 20, 2010 explosion of the Deepwater Horizon drilling rig, which killed 11 workers and triggered the largest U.S. offshore oil spill.

In a filing late on Thursday with the U.S. district court in New Orleans, BP said more than 10,000 documents the government is refusing to turn over "appear to relate to flow rate issues" at the company's ruptured Macondo well.

BP said the documents, which the government considers privileged because they reflect policy deliberations, may show that an August 2010 estimate that 4.9 million barrels of oil spilled from the well is too high.

"The United States' invocation of the deliberative process privilege here sweeps too broadly," because it shields evidence concerning "a factual issue, namely, the amount of oil discharged," wrote Don Haycraft, a lawyer for BP.

"Fundamental fairness" requires that BP get access to this evidence for its defense, he added.

Wyn Hornbuckle, a U.S. Department of Justice spokesman, declined to comment.

In an order dated Friday, U.S. Magistrate Judge Sally Shushan directed BP and the government to meet over the next couple of weeks to try to resolve disagreements over some of the challenged evidence.

The Clean Water Act calls for maximum fines of $1,100 per barrel of oil spilled or $4,300 if there were gross negligence.

Assuming 4.1 million barrels were spilled and not cleaned up as the government contends, BP could face a maximum $17.6 billion fine if there was gross negligence.

BP agreed in principle on March 2 to pay $7.8 billion to settle claims by more than 100,000 private plaintiffs for economic, property and other damages.

It still faces claims from the government, Gulf Coast states and drilling partners Transocean Ltd and Halliburton Co .

BP has calculated its legal and cleanup costs to be roughly $43 billion. The company is based in London.

The settlement with private plaintiffs put a potentially year-long trial over the spill on indefinite hold. The size of the spill was among the issues to be determined.

U.S. District Judge Carl Barbier has scheduled a May 3 meeting with lawyers to discuss how the case should proceed.

The case is In re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179.

(Reporting By Jonathan Stempel in New York; Editing by Andre Grenon and Steve Orlofsky)
==============

BP, private plaintiffs settle over Gulf oil spill

18 Apr 2012 14:29

Source: reuters // Reuters

April 18 (Reuters) - BP Plc on Wednesday said it has reached definitive agreements with well over 100,000 private plaintiffs to resolve claims for economic, property and medical damages resulting from the 2010 Gulf of Mexico oil spill.

The London-based oil company said it still believes the cost of the settlement will be $7.8 billion, to be paid from a $20 billion trust it had previously set aside.

This coming Friday is the two-year anniversary of the explosion of the Deepwater Horizon drilling rig, which killed 11 workers and triggered the largest U.S. offshore oil spill, after BP's Macondo well ruptured.

"BP made a commitment to help economic and environmental restoration efforts in the Gulf Coast," Chief Executive Bob Dudley said in a statement. "This settlement provides the framework for us to continue delivering on that promise, offering those affected full and fair compensation, without waiting for the outcome of a lengthy trial process." (Reporting By Jonathan Stempel in New York; Editing by Gerald E. McCormick)

=========

US, Alabama urge no delay in BP oil spill trial

02 May 2012 00:26

Source: reuters // Reuters

* US, Alabama say delay beyond November hearing not needed

* BP seeks OK of accord with private claimants before trial (Recasts first paragraph; adds U.S. Government filing, BP position, byline)

By Jonathan Stempel

May 1 (Reuters) - The U.S. government said a trial to assign blame and damages among BP Plc and others over the 2010 Gulf of Mexico oil spill should not be delayed until after a hearing over a $7.8 billion settlement of private party claims.

BP has asked U.S. District Judge Carl Barbier in New Orleans to delay any trial over the spill until after he holds a Nov. 8 fairness hearing over the settlement of more than 125,000 economic, property and medical claims.

A trial on those claims, as well as on claims by the federal government and Gulf Coast states, was originally scheduled for Feb. 27 before being put on indefinite hold. BP's request could push the start date at least into 2013.

But in separate court filings on Tuesday, the U.S. Government and Alabama Attorney General Luther Strange, who coordinates state interests with his Louisiana colleague James "Buddy" Caldwell, said BP's requested delay is unfair to residents, and that any trial should begin this summer.

The proposed settlement should not "impede trial and resolution of the broader public interests represented by the United States and the states," the federal government said.

Strange said that granting a delay could cause the trial to be pushed back even further, perhaps as late as 2015.

"BP's motion sets the groundwork to avoid a trial versus the governments for years to come," Strange said. "The governments deserve our day in court." He proposed a trial date of July 16.

In a court filing last month, BP said delaying any trial until after a fairness hearing would help ensure that any "overlapping or parallel actions" would not distract the court from administering a settlement.

A $7.8 billion accord by BP with private plaintiffs would be one of the largest class-action settlements in U.S. history. There is no cap, and the ultimate payout may be higher or lower.

The April 20, 2010 explosion of the Deepwater Horizon drilling rig killed 11 workers and triggered the largest U.S. offshore oil spill from BP's ruptured Macondo well.

About 4.1 million barrels of oil were spilled and not cleaned up, the U.S. Government has estimated. BP still faces claims from the U.S. Government; Gulf states; and drilling partners Transocean Ltd, which owned the rig, and Halliburton Co, which provided cementing services.

Barbier has said he plans to meet privately with the parties on May 3 to discuss scheduling and other matters.

Earlier Tuesday, BP reported lower-than-expected quarterly profit, in part because of spill-related costs.

The case is In re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179. (Reporting By Jonathan Stempel in New York; Editing by Marguerita Choy and Eric Meijer)
===============

UPDATE 1-BP plans to add 3 Gulf of Mexico rigs in 2012-exec
Mon, Apr 30 12:36 PM EDT

HOUSTON, April 30 (Reuters) - BP Plc has five drilling rigs running in the Gulf of Mexico two years after its Macondo oil spill and plans to add three more by the end of 2012, the company's head of development said on Monday.

Bernard Looney, executive vice president of development at BP's London headquarters, told executives at the annual Offshore Technology Conference in Houston that the drilling will include exploratory, appraisal and production wells.

Last October, U.S. regulators granted BP its first permit to drill a new well since the largest offshore spill in U.S. history, which spewed more than 4 million barrels of crude into the basin in 2010.

The spill gushed after the Macondo well blew out, causing explosions aboard the Transocean's Deepwater Horizon rig that killed 11 men.

The permit for a well in BP's Kaskida field came after regulators were satisfied that BP's well design and safety practices met more stringent post-spill standards.

Kaskida was a 2006 discovery that could hold up to 3 billion barrels of oil. The other permits are split between BP's established Thunder Horse and Atlantis fields.

Last week, ConocoPhillips Chief Financial Officer Jeff Sheets told analysts that the operator of the Tiber field -- which is BP -- was "anticipating" an appraisal well this year. ConocoPhillips is a minority partner in Tiber.

However, Looney said on Monday that a Tiber appraisal well "will probably be next year rather than this year" as BP spends 2012 focusing on its main hubs -- Thunder Horse, Atlantis, Na Kika and Mad Dog.

BP described the Tiber discovery in late 2009 as "giant" and said it could be comparable to Kaskida. The company had aimed to drill an appraisal well in Tiber in 2010, but a months-long ban on drilling after the Macondo spill blocked that plan.

======

BP wins delay of Gulf spill trial until 2013
Thu, May 03 17:33 PM EDT
image

By Jonathan Stempel

(Reuters) - A trial to assign blame and damages that could total tens of billions of dollars for the 2010 Gulf of Mexico oil spill has been put off until January, in a setback for the U.S. government, which wanted to try its case this summer.

U.S. District Judge Carl Barbier in New Orleans on Thursday scheduled a trial for January 14, 2013, more than 10 months after it had originally been scheduled.

The decision means the federal government and Gulf Coast states, which also wanted a summer trial, may have to wait longer to recover money from BP Plc and its drilling partners.

It is unclear how the new timetable will affect strategy, or whether it might spur the federal government to press harder for settlements and help local residents seeking money for cleanup or restoration.

"This may spur the government to settle," said Edward Sherman, a professor at Tulane University Law School in New Orleans. "The Obama administration may want to show its stuff before the November elections."

However, Carl Tobias, a University of Richmond law professor specializing in product liability, said the delay might make it harder for governments to reach acceptable settlements.

"A delay could give the governments more time to strengthen their bargaining positions, but they lose leverage that comes with having a trial scheduled in the near term," he said.

$7.8 BILLION SETTLEMENT WINS INITIAL OK

A comprehensive trial to resolve claims involving BP, drilling partners Transocean Ltd and Halliburton Co, federal and state governments, private plaintiffs and others had been scheduled for February 27. It was put on hold while BP negotiated with the private plaintiffs.

Barbier's order came one day after he granted preliminary approval to BP's estimated $7.8 billion settlement to resolve economic, property and medical claims by 125,000 individuals and businesses harmed by the spill. He set a November 8 fairness hearing to consider objections before granting final approval.

The April 20, 2010 explosion of the Deepwater Horizon drilling rig killed 11 workers and triggered the largest U.S. offshore oil spill from the ruptured Macondo well, in which BP held a 65 percent stake.

Transocean owned the rig, and Halliburton provided cementing services. About 4.1 million barrels of oil were spilled and not cleaned up, the U.S. government has estimated.

U.S. Department of Justice spokesman Wyn Hornbuckle declined to comment. The offices of Alabama Attorney General Luther Strange and Louisiana Attorney General James "Buddy" Caldwell had no immediate comment.

Ellen Moskowitz, a BP spokeswoman, declined to comment.

Transocean spokesman Lou Colasuonno said that company has "utmost confidence" in its case. Halliburton spokeswoman Beverly Stafford did not respond to a request for comment.

WILL TRIAL REALLY HAPPEN?

BP had urged that a trial on remaining Gulf spill issues be delayed until after the November 8 fairness hearing, to help ensure that any "overlapping or parallel actions" would not distract from administering the settlement with private plaintiffs.

But the governments objected, saying such a delay would be unfair to residents and the broader public interest.

BP previously took a roughly $37.2 billion charge for the spill. The London-based company's potential liability for violating the federal Clean Water Act alone could reach $17.6 billion if it were found to have acted with gross negligence.

Other companies in the case are Anadarko Petroleum Corp, which owned 25 percent of the Macondo well; Cameron International Corp, which made a blowout preventer, and Schlumberger NV's M-I Swaco venture, which provided mud services. All have settled with BP.

Mitsui & Co's MOEX USA unit, which owned 10 percent of the well, has also settled with BP, and in February agreed to pay $90 million to settle with the federal government.

About 311 witnesses have been deposed and 90 million pages of documents have been produced in the case, court papers show.

"You wonder whether there will ever be a trial," said Tobias, the University of Richmond law professor. "The farther we move past the actual event, it may complicate matters for all sides. Memories fade and evidence could grow stale."

The case is In re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179.

(Reporting by Jonathan Stempel in New York; Additional reporting by Jeremy Pelofsky in Washington, D.C.; Editing by Martha Graybow and David Gregorio)

======== Oil’s not well BP pain extends well beyond Gulf of Mexico 31 July 2012 | By Kevin Allison Print Email Save . What a clanger. BP’s second-quarter earnings miss looks like the crowning disappointment of a tough reporting season for the world’s oil majors. Hobbled production in BP’s core Gulf of Mexico business contributed to a $1.4 billion net loss for the period. But the UK group also struggled in Russia and took big write-downs on U.S. shale, refining and an abandoned Alaska project. Even though these are mostly one-offs, the investment case looks challenged. The scale and scope of the shortfall are damaging to BP’s attempt to regain credibility with investors after the 2010 Macondo disaster. Excluding $5 billion of one-off charges, underlying pre-tax profit on the industry’s preferred measure fell well short of estimates. Performance was weak across the business. Not all the bad numbers should have been a surprise. BP’s 50 percent-owned Russia joint venture, TNK-BP, missed analyst predictions last week. A bigger-than-expected hit from planned maintenance in the Gulf of Mexico, where BP gets some of its most profitable barrels, mirrored an earlier disappointment by Shell. The miss came despite planned overhauls being well-telegraphed by both companies. That suggests forecasters are having trouble modelling offshore maintenance properly. BP insists it is still on track for a 50 percent improvement operating cash flow between 2011 and 2014, with earnings momentum returning from 2013. But investors have precious little to cling to in the meantime. -down on the abandoned Liberty project off Alaska’s North Slope highlights the difficulty of pursuing technically challenging growth projects in hard-to-reach places. BP even took an $847 million pre-tax provision for Macondo-related costs in the period, underscoring the lingering uncertainty about the final cost of the 2010 Gulf of Mexico disaster. BP isn’t the only oil major to miss consensus estimates, or to take big write-downs on struggling assets. But with Macondo still hanging over its head and its future in Russia uncertain, no other oil major has quite so much to prove. ============= BP says Gulf spill well sealed despite surface oil sheen Thu, 18 Oct 2012 20:25 GMT Source: reuters // Reuters HOUSTON, Oct 18 (Reuters) - BP Plc. on Thursday said its ill-fated Macondo well remains sealed and that an oil sheen spotted on the Gulf of Mexico near the site of the sunken Deepwater Horizon is likely from a cofferdam used in an attempt to cap the runaway well in 2010. London-based BP reported a sheen on Sept. 16 in block 252 of the Mississippi Canyon, about 50 miles (80 km) off the Louisiana coast. The U.S. Coast Guard said last week test samples indicated that the sheen matched the type of oil from the mile-deep Macondo well.

BP said an inspection of the sea floor around the Macondo well by remotely operated vehicles was "successful in identifying the cofferdam, a piece of containment equipment used during the Deepwater Horizon response, as the probable source of the surface sheen." BP said no oil was leaking from the Macondo well itself, and the Coast Guard has said that the surface sheen poses no shoreline risks.

Swiss-based Transocean Ltd owned the Deepwater Horizon drilling rig and BP was the operator of the Macondo well, which ruptured on April 20, 2010, killing 11 workers and creating the worst U.S. offshore oil spill. On Oct. 17, a survey by undersea vehicles found "intermittent drops of oil" coming from an 86-ton metal cofferdam that BP attempted to lower onto the Macondo well in May 2010 to funnel the oil to the surface. BP engineers aborted the plan after methane hydrates, a flammable form of frozen natural gas, began collecting on the cofferdam. The cofferdam was abandoned on the ocean floor. "Samples of the droplets have been collected from the opening at the top, known as the stovepipe, and will be analyzed to confirm a match with the sheen," BP said in a release. "Droplets were also observed coming out of a small connection port on one side of the cofferdam." Two and a half years ago, the well spewed 4.9 million barrels of oil into the Gulf of Mexico for 87 straight days. The torrent of oil fouled the shorelines of four Gulf Coast states and eclipsed the 1989 Exxon Valdez spill in Alaska in severity. The well was capped with cement on Sept. 19, 2010, which U.S. officials said had "killed" the leaking well for good. ============ BP spill trial delayed until February 2013 Fri, Oct 26 13:11 PM EDT HOUSTON (Reuters) - A federal judge on Friday delayed until February 2013 the start of a massive trial to determine liability from the 2010 Deepwater Horizon oil spill, citing tourist events that will keep New Orleans' hotels booked. U.S. District Judge Carl Barbier in New Orleans, who is presiding over a massive three-part hearing to decide liability for BP Plc.'s 2010 Gulf of Mexico spill, said the trial will begin on February 25, 2013. That trial, which had been delayed by nearly a year already due to a pending $7.8 billion settlement with private plaintiffs, had been set to get underway on January 14. At a hearing on Friday, Barbier cited lodging difficulties arising from two huge events to be hosted in New Orleans in early 2013 -- the NFL's Super Bowl on February 3, and the Mardi Gras festival set for February 12. Barbier declined to delay a hearing set for November 8 on a settlement BP reached with private plaintiffs in March for about $7.8 billion. The April 20, 2010, explosion aboard the Deepwater Horizon killed 11 rig workers and unleashed a torrent of oil from the Macondo well. About 4.9 million barrels of oil spewed into the Gulf of Mexico over 87 straight days. That oil fouled the shorelines of four Gulf Coast states and eclipsed the 1989 Exxon Valdez spill in Alaska in severity. (Reporting by Chris Baltimore; Editing by Bob Burgdorfer) ================ Plaintiffs, BP urge judge to approve $7.8 billion spill settlement Thu, Nov 08 20:16 PM EST By Chris Baltimore NEW ORLEANS (Reuters) - BP Plc and lawyers representing over 100,000 individuals and businesses claiming economic and medical damages from the 2010 Gulf of Mexico oil spill on Thursday urged a U.S. judge to approve a proposed $7.8 billion class-action settlement. U.S. District Judge Carl Barbier initially approved the deal in May, but called the "fairness hearing" to weigh objections from about 13,000 claimants challenging the settlement to resolve some of BP's liability for the worst offshore oil spill in U.S. history. BP still faces civil and potential criminal liability charges brought by the U.S. government and U.S. states. Barbier did not issue a final ruling at Thursday's hearing in a New Orleans court, but he appears poised to grant final approval to the deal in the coming days, legal experts said. "We shouldn't lose sight of the forest for the trees," Barbier said at the end of the hearing, saying that some objections "were not frankly made in good faith and bordered on being frivolous." London-based BP's Macondo well spewed 4.9 million barrels of oil into the Gulf of Mexico over a period of 87 days. The torrent fouled shorelines from Texas to Alabama and eclipsed the 1989 Exxon Valdez spill in Alaska in severity. Lawyers for some affected parties say they will "opt out" of the deal, reached in March between BP and lawyers representing plaintiffs ranging from restaurateurs, hoteliers, and oyster men who lost money from the spill to recovery workers and coastal residents claiming medical damages from the cleanup. "The settlement zones are inherently unfair," said Stuart Smith, a lawyer for Florida business owners, referring to boundaries set by the deal which are meant to compensate businesses and homeowners based on their proximity to the spill. Barbier said he had no authority to tweak the deal as written, but merely to approve or reject it. "It sounds to me that maybe your gripe is that you weren't in the room and that you would have done things differently," Barbier told one of the objectors' lawyers. "I don't think there is such a thing as a perfect settlement." Jim Roy, a lead plaintiffs' attorney, said the deal would resolve "well in excess of 100,000 claims." BP in March estimated the deal's cost at $7.8 billion, but damages are uncapped and could rise to far exceed that, Roy said. "This is not a bunch of insurance adjustors trying to save money for BP," Roy said of the deal, but rather "a way to quickly get a fair and objectively determined settlement and to avoid litigating for potentially 20 or more years such as what happened in the Exxon Valdez." Rick Godfrey, an attorney for BP, said the settlement should not be delayed by the "miniscule" number of objectors. "BP has no intent of allowing justice to be delayed, much less denied, as a result of this tragic event," he said. Barbier is likely to approve the settlement in coming days, said Blaine LeCesne, a law professor at Loyola University, citing the judge's initial approval of the deal as the strongest signal of its eventual fate. "It's inevitably going to leave some people unsatisfied," LeCesne said. "But it casts a very wide net and includes a remarkably high number of potential claimants." BP has been locked in a year-long legal battle with the U.S. government and Gulf Coast states to settle billions of dollars in civil and potential criminal liability from the explosion aboard the Deepwater Horizon rig that killed 11 workers and caused the massive spill that soiled the shorelines of four Gulf Coast states. Absent a far-reaching settlement, Barbier will preside over a sprawling three-part non-jury hearing to decide BP's liability for the spill, now set to begin on February 25, 2013. (Additional reporting By Kathy Finn; editing by Jim Marshall) ======== An explosion and fire ripped through a Gulf oil platform Friday as workers used a cutting torch, sending four people to a hospital with critical burns and leaving two missing in waters off Louisiana. (Nov. 16) BP agrees to record criminal penalties for U.S. oil spill Fri, Nov 16 04:09 AM EST 1 of 6 By Kathy Finn and David Ingram NEW ORLEANS/WASHINGTON (Reuters) - BP Plc will pay $4.5 billion in penalties and plead guilty to criminal misconduct in the Deepwater Horizon disaster, which caused the worst U.S. offshore oil spill ever. U.S. Attorney General Eric Holder called the deal a "critical step forward" but was adamant that it did not end the criminal investigation of the 2010 spill. The settlement announced on Thursday includes a $1.256 billion criminal fine, the largest such levy in U.S. history. It was not, however, the "global" settlement some had hoped for, which would have also resolved the considerable federal civil claims against the company at the same time. "BP lied to me. They lied to the people of the Gulf. And they lied to their shareholders, and they lied to all Americans," said Representative Ed Markey, the top Democrat on the House Natural Resources Committee who led investigations at the time of the spill. The government also indicted the two highest-ranking BP supervisors aboard the Deepwater Horizon during the disaster, charging them with 23 criminal counts including manslaughter. One man's lawyer said his client was being turned into a scapegoat for the disaster. The April 2010 explosion on the rig in the Gulf of Mexico killed 11 workers. The mile-deep Macondo oil well then spewed 4.9 million barrels of oil into the Gulf over 87 days, fouling shorelines from Texas to Florida and eclipsing in severity the 1989 Exxon Valdez spill in Alaska. The company said it would plead guilty to 11 felony counts related to the workers' deaths, a felony related to obstruction of Congress and two misdemeanors. It also faces five years' probation and the imposition of two monitors who will oversee its safety and ethics for the next four years. Wall Street analysts said the deal will allow BP to focus again on oil production, while one U.S. senator from Louisiana said he hoped the settlement would not prevent his state and others from collecting civil penalties. Investors shrugged off the news, and BP shares listed in New York and London were little changed on the day. "It certainly is an encouraging step," said Pavel Molchanov, oil company analyst with Raymond James. "By eliminating the overhang of the criminal litigation, it is another step in clearing up BP's legal framework as it relates to Macondo." The disaster has dragged BP from second to a distant fourth in the ranking of top Western oil companies by value. 'CRIMINAL SCALP' "With these unprecedented criminal penalties assessed, I urge the Obama administration to be equally aggressive in securing civil monies that can help save our Louisiana coast" through other avenues, Louisiana Senator David Vitter said in a statement. "I certainly hope they didn't trade any of those monies away just to nail this criminal scalp to the wall." Larry Schweiger, president of the National Wildlife Federation, called the settlement a "good down payment" on what BP should ultimately pay, which the environmental group argues is tens of billions of dollars more. BP said the payments would be spread over six years, and that it expected to be able to handle the payments "within BP's current financial framework." The company has sold $35 billion worth of assets to fund the costs of the spill. Matching that, it has paid $23 billion already in clean-up costs and claims, and has a further $12 billion earmarked for payment in its spill trust fund. The oil company said it has not been advised of any government authority that intends to debar BP from federal contracting activities as a result of the deal. 'RECKLESS MANAGEMENT' The lawyers for Bob Kaluza, the BP well manager aboard the rig who faces manslaughter charges, condemned the case against the four-decade oilfield veteran. "Bob was not an executive or high-level BP official. He was a dedicated rig worker who mourns his fallen co-workers every day," Shaun Clarke and David Gerger said in a statement. Kaluza faces two kinds of charges related to the workers' deaths: Involuntary manslaughter, a broad statute covering individuals whose reckless disregard leads directly to loss of life; and seaman's manslaughter, reserved for those employed on ships whose misconduct results in death. "No one should take any satisfaction in this indictment of an innocent man. This is not justice," Kaluza's lawyers said. As for BP, its settlement does not resolve civil litigation brought by the U.S. government and U.S. Gulf Coast states, which could be considered when the case convenes in February 2013. Alabama Attorney General Luther Strange, who represents other spill-hit states in the case, said he intends to prove that BP's actions were grossly negligent - a charge that would bring billions of dollars in extra liability if upheld. Louisiana Governor Bobby Jindal agreed in a statement. "The majority of BP's liability remains outstanding and we will hold them fully accountable," he said. Holder said at a news conference to discuss the criminal settlement that while the government and BP had held talks to resolve the civil claims, the sides had not been able to agree on a "satisfactory" number. He said a deal was still possible but the government was moving ahead to the February trial. Negligence is a key issue. A gross negligence finding could nearly quadruple civil damages owed by BP under the Clean Water Act to $21 billion. Chief Financial Officer Brian Gilvary said the company's provisions should be enough to cover liabilities, provided it avoids a conviction for gross negligence, and that it had shareholder support to fight the case should that happen. "I can boldly defend where we are in the provisions today. If something were to happen in the trial that read across to gross negligence ... then we would certainly take that to appeal," he said on a conference call with analysts. Still unresolved is potential liability faced by Swiss-based Transocean Ltd, owner of the Deepwater Horizon vessel, and Halliburton Co, which provided cementing work on the well that U.S. investigators say was flawed. Halliburton said it "remains confident that all the work it performed with respect to the Macondo well was completed in accordance with BP's specifications for its well construction plan and instructions. Halliburton has cooperated with the DOJ's investigation." Transocean was not available for comment. According to the Justice Department, errors made by BP and Transocean in deciphering a pressure test of the Macondo well are a clear indication of gross negligence. Transocean disclosed in September that it is in discussions with the Justice Department to pay $1.5 billion to resolve civil and criminal claims. BP has already announced an uncapped class-action settlement with private plaintiffs that the company estimates will cost $7.8 billion to resolve litigation brought by over 100,000 individuals and businesses claiming economic and medical damages from the spill. (Additional reporting by Chris Baltimore and Anna Driver in Houston, Braden Reddall in San Francisco, Roberta Rampton in Washington, Verna Gates in Birmingham, Ala. and Andrew Callus in London; writing by Ben Berkowitz; editing by Edward Tobin, David Gregorio, Richard Chang, Tim Dobbyn and Philippa Fletcher) =====================