| Russia Oil Tycoon's Trial Is Political - Reuters
The co-defendant in the fraud and tax evasion trial of Russia's richest man and oil magnate said on Friday the case was politically motivated.
Platon Lebedev, like Mikhail Khodorkovsky a big shareholder in oil giant YUKOS, made his blunt declaration a day after prosecutors accused both men of acting in a gang committed to securing shares unlawfully in privatized firms in the 1990s.
"The authorities are prosecuting me for political reasons. The accusations are not true," Lebedev said from the defendants' metal cage, without saying who he thought was behind the trial.
The oil giant, fighting to avert bankruptcy after being served with back tax bills close to $7 billion, hired Credit Suisse First Boston and Renaissance Capital to evaluate its assets after bailiffs began an inventory of its Siberian units.
Current chairman Viktor Gerashchenko, once seen as a figure to reach a settlement with authorities, called for dialogue to avert bankruptcy and said there was no reason for him to quit.
Khodorkovsky's lawyers have said the former central banker has failed in his role as a go-between.
Khodorkovsky and Lebedev are facing up to 10 years in a labor camp if found guilty by the Moscow court.
President Vladimir Putin and other Russian officials deny frequent accusations from critics, media and political analysts that the case had political motivation.
But the first trial of an "oligarch" -- one of a handful of businessmen who made vast fortunes under Putin's predecessor Boris Yeltsin -- is widely seen as part of a Kremlin crusade to stamp out any political ambitions among the super-rich.
Gerashchenko said in a statement YUKOS was riven by internal conflict pitting groups of owners and managers against each other.
"There are groups of influence interested in a protracted conflict with the state in order to resolve their personal, mercantile interests," he said. "A YUKOS board headed by me will oppose these groups by all means."
A YUKOS official told Reuters the company wanted "as many independent evaluations as possible" amid market concerns that bailiffs could sell off YUKOS's assets after it failed last week to meet a deadline on a $3.4 billion back-tax bill for 2000.
The Justice Ministry sent bailiffs to Siberia and the Volga region this week to estimate the value of YUKOS's three core producing units, Yugansk, Tomsk and Samara.
Under Putin, the "oligarchs" have become media targets, accused of plundering industrial wealth during 1990s privatization's and trying to rule Russia from behind the scenes.
Analysts suggest that Khodorkovsky, who funded opposition parties, was picked as a victim for not bowing in time to the Kremlin's demand that "oligarchs" stay out of politics.
Khodorkovsky said he was a scapegoat for others' errors.
"I will prove that what is happening is an awkward attempt to blame me for the faults of the privatisation laws in the 1990s," he told the court.
In a letter from his cell, published in March, he acknowledged privatisation had been unfair and turned millions against market economics. But he denied breaking laws.
On Friday, he cited the example of two successful companies, which he is alleged to have seized in a breach of law in the mid-1990s, to show his ownership ultimately benefited thousands.
Khodorkovsky has offered to give up his stake to save YUKOS from bankruptcy. But officials have shown little willingness to talk to him or management.
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| Oil Rises to Six-Week High on Record Demand, Potential Shortage - Bloomberg
Oil prices rose to a six-week high on concern Saudi Arabia and other producers won't be able to pump enough to meet record demand in the event terrorists disrupt global supplies.
Crude oil for August delivery gained 48 cents, or 1.2 percent, to $41.25 a barrel on the New York Mercantile Exchange, the highest closing price since a record $42.33 on June 1. Prices rallied 3.2 percent on the week, the third consecutive weekly increase.
OPEC is already producing almost as much oil as it can to meet the biggest surge in global demand in 24 years, the International Energy Agency said this week. Economic growth in the U.S. and China is pushing fuel prices higher, boosting costs for railroads, airlines and trucking companies.
``This is going to cost us a few hundred million more than we were hoping to spend,'' said Jeff Glasgow, senior manager of petroleum products at Union Pacific Corp., the largest U.S. railroad by sales and the second-biggest user of diesel after the U.S. Navy.
Oil prices have gained 27 percent this year as economic expansion in North America and China stoked demand and terrorist attacks heightened concern about supply disruptions.
The futures have traded above $40 a barrel just 32 times in the 24-year history of the Nymex contract. Twenty-seven of those sessions were after May 11. The other five were in 1990.
Rising OPEC output since June has reduced the world's spare oil-production capacity by 80 percent to 1 million barrels a day from the 10-year average of 5 million, A.G. Edwards & Sons Inc. analyst Bruce Lanni said yesterday in a note to clients.
The International Energy Agency estimated global surplus capacity that is immediately available at 620,000 barrels a day in a report issued Tuesday in Paris. The estimate excluded Iraq, Nigeria, Indonesia and Venezuela, ``where technical or political factors make boosting production difficult in the short term,'' the agency said.
``The market sets off into the next 18 months with limited spare production and distribution capacity,'' the IEA said in its monthly oil-market report.
New York oil futures ended higher in 31 of the last 54 weeks, or 57 percent of the time, as traders bought contracts to guard against supply disruptions that might occur during the weekend, when exchanges are closed.
Prices soared $2.45, or 6.1 percent, to a record Nymex settlement of $42.33 a barrel on June 1, the first day of trading after a May 29-30 terrorist attack on oil-company offices and housing left 22 dead in Saudi Arabia, the world's biggest crude exporter.
Today in London, Brent crude for September settlement rose 52 cents, or 1.4 percent, to $38 a barrel on the International Petroleum Exchange.
Omaha-based Union Pacific, which uses crude and heating-oil futures to hedge its diesel needs, will recoup ``a good portion'' of the higher costs through fuel surcharges on rail shipments, Glasgow said.
Heating oil for August delivery gained 1.4 percent this week to $1.0959 a gallon on the New York exchange, after reaching a 16- month high of $1.125 during today's session. The futures are up 20 percent this year to levels never before reached in July.
Gasoline futures, the benchmark for wholesale prices, have surged 37 percent this year. Prices today fell 1.97 cents, or 1.5 percent, to $1.3005 a gallon on the Nymex after an Energy Department report on Wednesday showed an increase last week in U.S. production of the fuel.
Daily worldwide oil demand is expected to rise 0.6 percent this quarter from the second quarter to 80.83 million barrels, the IEA said. The increase would be 2.9 percent higher than the third quarter of 2003.
In the U.S., which consumes a fourth of the world's oil, demand this quarter is forecast to reach 20.71 million barrels a day, up 1.1 percent from the second quarter and a 1.9 percent gain on the year-earlier period, the agency said.
``Worldwide demand is such that there's no reason for a dramatic change in prices from these levels,'' said Stan Tamulevich, president of Marketline, a Madison, Wisconsin-based commodity-trading adviser.
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| Watchdog finds weak controls over Iraqi oil funds - Daily Star - Beirut
A United Nations-backed watchdog has reported weak controls over Iraqi oil riches under the US-led coalition, including use of the money for a no-bid Halliburton contract.
The International Advisory and Monitoring Board (IAMB) released a critical private audit of the Development Fund of Iraq, which holds Iraqi oil income and the balance of frozen Iraqi assets and the UN oil-for-food-program.
The audit by accountants KPMG found that from the establishment of the fund in May last year to the end of 2003:
l A lack of "meters" to measure Iraqi oil production, despite repeated requests for them by the IAMB, made it impossible to say how much Iraqi oil had been smuggled out of the country.
l The US-led Coalition Provisional Authority (CPA), which handed over power to an interim Iraqi government on June 28, had inadequate accounting systems and poor record keeping.
l Iraqi spending ministries had insufficient accounting and payroll records, and they strayed from rules requiring open, competitive tenders for contracts funded with oil money.
Known oil proceeds, reported frozen assets and transfers from the UN oil-for-food program had been properly and transparently accounted for by the development fund, the KPMG audit said.
"The single qualification to the opinion was that an unknown quantity of oil was smuggled out of Iraq following the war, resulting in a loss of oil revenue," it said.
A second KPMG audit covering the first half of 2004 is under way. A review of the 2003 audit showed controls over the Iraqi oil industry were insufficient to provide "reasonable assurance" for the completeness of Iraqi oil sales, the IAMB found.
It also was impossible to be sure oil money was spent on the purposes intended, said the IAMB, which has officials from the United Nations, International Monetary Fund, World Bank and Arab Fund for Social and Economic Development.
The board raised particular concern over the use of Iraqi oil money for "sole-sourced contracts," which had not been put out to competitive tender.
The US-led coalition informed the IAMB that oil money had been used for a $1.4-billion, no-bid contract for Halliburton, an oil services company, which was run by US Vice-President Richard Cheney from 1995 to 2000.
Jean-Pierre Halbwachs, who represents the UN on the board, said he wrote to Paul Bremer, then overseer of Iraq, to ask for a copy of the audit into the Halliburton contract, adding that the board also requested a list of all the no-bid contracts paid for with oil money, and access to the relevant audits.
So far, it had heard nothing. "There have been, we are told, other sole-source contracts (besides Halliburton). To whom, and the amount, we are not aware," Halbwachs said. "That is what we are trying to establish."
IAMB officials said they had been told that legal questions had to be resolved before they could receive the documents.
The IAMB also had requested but not yet received a copy of a review of controls in the Iraqi state oil marketing organization, SOMO.
Since the creation of the Development Fund of Iraq, it has raked in Iraqi oil export revenue amounting to $11.1 billion, more than half of the development fund's total cash income of $20.6 billion dollars.
The fund now holds about $7.5 billion. The IAMB said it would consider "over the next few weeks" whether further special audits or investigations were needed.
A UN Security Council resolution endorsing Iraqi "full sovereignty" still subjects oil revenues to the IAMB's oversight.
The draft Iraq budget for 2004, drawn up last October, foresaw oil income of $12.4 billion this year, $19.3 billion in 2005 and $20.1 billion in 2005.
Those forecasts were based on an oil price of $21 a barrel. Iraqi oil exports have been frequently interrupted by sabotage, however. On Thursday, a pipeline connecting the oil fields of the northern Iraqi city of Kirkuk and the Turkish port of Ceyhan was ablaze.
Iraq exported an average of 1.4 million barrels per day (bpd) of crude oil in the first half of July, all from its southern terminals, about 400,000 bpd below their capacity, shipping sources said on Friday.
About 20 million barrels of crude was loaded from the Basra oil terminal and only one million barrels from the smaller Khor al-Amaya, they said. In June, southern exports averaged around 1.2 million bpd due to pipeline sabotage.
Export flows had also been reduced for about three days at the beginning of this month due to attacks on one of the two trunk lines, the third month running that saboteurs have hit southern infrastructure.
Pumping rates had also dipped several times in the past week for unknown reasons, although they recovered to a normal 70,000-80,000 barrels per hour by Friday, shipping sources said. Iraq's northern oil pipeline to Turkey has been idle since late May due to repeated attacks, with hopes fading of restoring stable exports through the 800,000-bpd-capacity line anytime soon, industry sources said.
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| Self-Styled Rebel Seeks Independence for Oil-Producing Niger Delta - UN Integrated Regional Information Networks
The old, colonial buildings dotted around Tombia hark back to its former prosperity in the 19th and early 20th century when this town in the Niger delta was an important stop in the palm oil trade that fed Europe's soap and margarine industries.
But today these one-time glories are scorched and ruined wrecks on the battleground of an increasingly violent struggle for control of Nigeria's current economic lifeblood - crude oil.
The man in charge at Tombia is Asari Dokubo, a self-styled revolutionary who dropped out of university and converted from Christianity to Islam.
Accompanied by scores of heavily-armed gunmen, he cruises through the winding creeks of the densely forested delta in a flotilla of speed boats.
During the past few months, Dokubo's Niger Delta's People Volunteer Force (NDPVF) has battled repeatedly with government forces for control of Tombia and the surrounding area.
Tombia lies just 20 km from Port Harcourt, the main operating centre for Nigeria's oil industry.
Dokubo is a member of the Ijaw tribe, the largest ethnic group in the delta, and he has long been associated with their fight for a better economic deal.
He says he is fighting for the autonomy or independence of the Niger Delta, so that its people can draw greater benefit from the 2.5 million barrels of oil produced each day on their doorstep.
"We want to achieve self-determination and be able to control our oil resources," Dokubo told IRIN in an interview at his stronghold.
"We also want a sovereign national conference for the country so that we can decide if we still want to be part of Nigeria," he added, echoing the demand of many Niger Delta activists before him.
Dokubo's supporters see him as a Robin Hood-style robber hero, taking on the might of Nigeria's federal government on behalf of local people who have derived little benefit from the nation's oil bonanza.
But opponents of the 40-year-old militia commander say he is little more than a gangster who finances his operations by tapping crude oil from the pipelines of multinationals operating in the delta and reselling it on the black market.
Dokubo freely admits helping himself to the crude oil produced by Royal Dutch/Shell, the largest oil company in Nigeria.
"What we know is that the oil belongs to us, we're not stealing it," the portly robber baron said. "It is the Nigerian state stealing our oil from us."
Toting Kalashnikov rifles and rocket-propelled grenades, Dokubo's fighters wage war against the security forces and a rival militia group with alleged links to the government in the mangrove swamps and creeks around Tombia.
Using fast speed-boats with powerful outboard motors, they even make forays into Port Harcourt, the heart of Nigeria's oil industry where all the multinational firms have offices.
Dokubo told IRIN that he has enough weapons at his command to equip a well-armed force of 2,000 men.
"We are very close to international waters and it's very easy to get weapons," he told IRIN. "We have AK 47s, general purpose machine guns and rocket-propelled grenades."
Oil industry experts estimate that up to 10 percent of Nigeria's oil is lost to well armed gangs like Dokubo's that tap into pipelines and fill barges with stolen crude oil for sale to tankers waiting offshore.
This wholesale theft, which deprives the government and oil companies of hundreds of millions of dollars per year, is known as "bunkering."
Over the last two months army, navy and air force personnel have launched repeated raids against armed militants and criminal gangs in Rivers State, of which Port Harcourt is the capital and Dokubo's men have often been their target.
Human rights activists say more than 100 people were killed in one such clash in the town of Ogbakiri in early June. Dokubo said that his group was the target of that raid by a joint task force of soldiers and policemen.
This week more fighting erupted on Tuesday on the outskirts of Port Harcourt. Dokubo said 11 of his fighters died in the Amadi-Ama suburb of the city as they engaged the security forces in a fire-fight which last several hours.
The police commissioner in charge of Port Harcourt denied anyone was killed in the raid, but said 74 people had been arrested in what he called an operation to flush out weapons.
Local residents in Amadi-Ama told IRIN they had seen the bodies of at least 10 people killed in the fighting, including the corpse of 14-year girl killed in the cross fire.
Dokubo is an extreme example of the discontent felt by many of the 126 million people in Nigeria, which is Africa's leading oil producer and the continent's most populous nation.
Until last year, this son of a high court judge, was president of the Ijaw Youths Council (IYC), a group that mostly comprises university-educated activists campaigning for an increased share of Nigeria's oil wealth.
The Ijaws represent the largest single ethnic group in the 70,000 sq km region of mangrove swamps, criss-crossing creeks and dense forests that make up the Niger Delta.
With a population estimated at between six and eight million, mainly dependent on fishing, they are reputed to be the fourth biggest ethnic group in the country of 126 million split among 250 ethnic groups.
Dokubo studied law at the university of Calabar in south-eastern Nigeria, but dropped out in 1988 after converting to Islam and becoming strongly engaged in radical politics. He then spent several years visiting 38 countries around the world, including Egypt and Libya.
Dokubo said he decided to take up arms after witnessing massive fraud in the 2003 elections, which returned President Olusegun Obasanjo and the ruling People's Democratic Party (PDP) to a second term of office.
Opposition groups and independent observers said the elections were marred by large-scale fraud. Dokubo too voiced his condemnation of massive vote-rigging.
"I issued a statement on behalf of the IYC saying there was no election," he said. Dokubo said PDP-sponsored thugs led by rival gang leader Ateke Tom, then tried to assassinate him. This, he said, prompted him to take up arms and fight.
"We are fighting against a government which rigged elections, which doesn't have the mandate of the people," he said. "The oppressed people of Nigeria will rise one day, this is only the beginning," he told IRIN.
A spokesman for the government of Rivers State flatly denied that the authorities had links with Tom's Niger Delta Vigilante Service (NDVS) or any other militia group in the state.
However Dokubo's group has clashed frequently with Tom's. Human rights activists say both groups have links with politicians and financed themselves by bunkering.
"Dokubo and Tom were once allies of the present civilian administration in Rivers State which allegedly armed them in the first place," Chinedu Ukaegbu and Stevyn Obodokwe of the Civil Liberties Organisation said in their recent study of violence in the delta, entitled "When Bullets Begin to Flower."
But while Dokubo had fallen out with the administration of state governor Peter Odili, Tom was a well-known member of the PDP and retained close links with the authorities, they added.
Dokubo's former colleagues from the Ijaw Youths Council have distanced themselves from his declaration of armed struggle, insisting on a peaceful campaign to wrest the oil resources from the federal authorities.
However, Oronto Douglas, a leading activist in the organisation, said heavy-handed repression by the security forces in the delta simply played into the hands of people like Dokubo.
"There is a big debate in the Niger Delta right now about what is the best means of removing the yoke of oppression visited on our people, and the overwhelming position is that non-violent struggle is preferred," Douglas, who is also an environmental lawyer, told IRIN.
"But the government has adopted a very violent strategy of suppression that angers people like Dokubo, who see the strategy of negotiation failing woefully and are crying out for armed struggle," he added.
Angry villagers in the Niger Delta feel deprived of the oil wealth the government and oil multinationals produce on their land and have frequently mounted disruptive protests to press for social amenities.
At the more violent end of the spectrum, armed militants and criminals have attacked or kidnapped foreign oil workers and blockaded oil facilities to press their political demands and demand ransoms.
Tribalism has also reared its ugly head as rival communities vie for control of oil-producing land in order to demand jobs and social amenities such as schools and hospitals, from the oil companies and government.
For several years, Ijaw militia groups have battled rival gunmen from the Itsekiri tribe across the delta as the two communities have fought each other for the spoils of power, although under strong government pressure they signed a peace agreement in the oil town of Warri on 1 June.
This truce is still holding, but international security experts foresee no early end to the wider problem of violence in the Niger Delta.
An expert study commissioned by Shell from international security company WAC Global Services earlier this year estimated that 1,000 people were killed in the Niger Delta every year.
This puts violence in the region on the same scale as that it Colombia and Chechnya, it said, threatening both the oil industry and Nigeria's national security.
"If current conflict trends continue uninterrupted, it would be surprising if SCIN (Shell Companies in Nigeria) is able to continue on-shore resource extraction in the Niger Delta beyond 2008, whilst complying with Shell Business Principles," the survey concluded.
Shell, which accounts for about half of Nigeria's overall oil production and has quarter of its global oil and gas reserves in the country, has formally denied suggestions that it was planning to withdraw from Nigeria.
But the report commissioned by the oil company notes the role of politicians in the violence and predicts increasing problems in the coming years.
"Given the likely illegal oil bunkering links to political campaigns, the run-up to the 2007 presidential elections may see a significant escalation of Niger Delta conflicts which will be difficult to dismantle," it concluded.
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| Venezuela says it has increased oil production capacity since January - Canadian Press
Venezuela has increased its oil production capacity despite the lingering effects of a strike that virtually paralysed the industry last year, an official said Friday.
Venezuela's capacity has increased from 3.4 million barrels of crude a day in January to 3.7 million barrels now, said Felix Rodriguez, vice-president of the state oil monopoly Petroleos de Venezuela S.A.
Rodriguez echoed recent claims that Venezuela, the world's fifth largest oil exporter, is producing 3.1 million barrels of crude a day.
The Paris-based International Energy Agency estimated production this week at closer to 2.5 million barrels daily, citing the impact of the strike and political instability.
President Hugo Chavez fired 18,000 PDVSA employees during a December 2002-February 2003 general strike that failed to oust him. Analysts say a reduced work force and lost expertise have hampered production.
Rodriguez said PDVSA has cut its production costs by 24 per cent since the strike with a current work force of nearly 13,700. PDVSA has 91 wells operating, up 17 per cent from 2001, he added.
PDVSA expects total 2004 revenues of more than $46 billion US and $5.3 billion in internal investment this year, he said.
Oil provides a third of Venezuela's $100-billion gross domestic product, 80 per cent of export earnings and about 40 per cent of government income.
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Venezuela, Caribbean to discuss oil deals - Seattle Post-Intelligencer
Venezuela and 14 Caribbean countries will meet in August to discuss the creation of a new company which will sell oil at cheaper prices in the region, Venezuela's Energy Minister said.
The decision follows a weekend meeting during which Venezuela proposed to its Caribbean neighbors the establishment of PetroCaribe, a company that would distribute crude and refined oil products to the Caribbean at lower prices than other dealers in the area.
Venezuela's Energy Minister Rafael Ramirez discussed the agreement with representatives from Antigua and Barbuda, the Bahamas, Barbados, Belize, Cuba, Dominica, Grenada, Guyana, Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname and Trinidad and Tobago.
A follow-up meeting has been scheduled for Aug. 26-27 in Jamaica to discuss the details of the new agreement, Ramirez said in a statement issued late Tuesday.
The countries have signed previous deals with Venezuela for preferential oil prices. However, Ramirez says that the dealers who distribute oil in the Caribbean place unfair profit margins on the products.
Officials said Saturday that Venezuela will also aid some countries in the development of their own oil industries.
Venezuela, the world's No.5 oil exporter, says it produces more than 3 million barrels of oil a day. Some analysts say the amount is closer to 2.5 million. Venezuela's quota as a member of the Organization of Petroleum Exporting Countries is 2.9 million barrels a day.
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