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San Diego Union Tribune: Shell warns oil producers on Chinese, Indian deals ( 21 April 05


By Tom Bergin


April 21, 2005


PARIS Royal Dutch/Shell advised oil producing countries to be wary of signing deals with Chinese and Indian national oil companies (NOCs), saying to do so could expose them to interference from these governments.


Shell Chief Executive Jeroen van der Veer said oil producing nations should do deals with international oil companies (IOCs) because unlike NOCs, the IOCs are only concerned with extracting oil for profit and have no political agenda.


"You see a trend of NOCs trying to do government-to-government deals," van der Veer told an oil conference in Paris on Thursday, referring to Indian and Chinese companies.


"It is to the advantage of governments to work with IOCs.... Our only purpose is that we deliver. Government-to-government deals introduce a dependence (on the consuming nation government) and that government has its own agenda."


The comments will be seen by analysts as a sign of the threat IOCs like Shell feel from state-controlled Chinese and Indian oil firms such as Sinopec and ONGC.


Shell and the other supermajors, BP and ExxonMobil, face intense competition from their Asian rivals in bidding for oil and gas resources around the world.


The Chinese and Indian governments are eager to secure energy supplies for their booming economies and have engaged in political lobbying to help their state oil firms to participate in major oil and gas projects, such as the massive Sakhalin field off Russia's eastern coast. Such projects were traditionally the preserve of the western oil majors.


However, recent deals involving Middle Eastern oil producers and India and China suggest the former are not too concerned about the threat of foreign governmental interference.


"This should not necessarily be a risk. It is a national oil company and we have national oil companies .... We are not averse to dealing with national oil companies from the consuming countries," OPEC acting secretary general Mr. Adnan Shihab-Eldin told reporters at the sidelines of the same conference, adding that the greatest growth in demand was coming from Asia.


Access to energy resources is a key worry for the IOCs. The world's biggest oil reserves are controlled by countries which restrict or preclude foreign companies from pumping their oil.


At the same conference, French minister delegate for industry Patrick Devedjian and Norwegian Minister of Petroleum and Energy Thorhild Widvey both encouraged OPEC members to open their oil sectors to foreign firms. Norwegian and French oil firms are keen to gain or expand production in OPEC member countries.


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