Kazakhstan, Agip gas- processing plant location

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Agip KCO international consortium, which drills appraisal wells in the Kazakh sector of the Caspian Sea, will build a gas-processing plant in Karabatan, 30 kilometres from Atyrau. “Documents are being prepared in Atyrau for the assignment of a land lot to Agip for building the gas-processing plant in Karabatan,” Interfax quoted the head of the foreign economic department of the Atyrau regional administration, Lyubov Yevstifeyeva, as saying.


A special commission of the Environment Ministry met the Agip KCO request for assigning the land lot in the middle of September. Land in the Karabatan zone is not used for farming or flooded by the Caspian Sea. There is a motorway and a railway nearby, in addition to the Central Asia – Centre and Tengiz -Novorossiisk pipelines that may export gas the consortium will start producing in 2005.


Yet local non-governmental organisations are strongly against the construction of the plant in Karabatan, Yevstifeyeva said.


They fear a negative impact on the environment and suggest building the plant 200 kilometres away from the regional centre of Atyrau.


Agip KCO made no comments on the choice of the land lot for the construction of the gas-processing plant, but said the consortium needed to gain approval from its partners under the production sharing agreement.


Agip KCO is made up of Eni (the operator), BP, ExxonMobil, Inpex, Phillips Petroleum, Shell and TotalFinaElf. The plant Agip KCO will build will annually process 2.9 billion cubic metres of casing-head gas, 2.1 billion cubic metres of inert gas, 900,000 tonnes of sulfur and liquid oil gas.

Surgutneftegaz output seen at 60 mln tn in 2004-05

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Surgutneftegaz said it plans to reach production of 60 million tonnes in 2004-2005. It is planned to drill not less than 12,000 new wells at fields that that have already been prepared and are already in production or will be brought on-flow over the next two to three years. According to company specialists, this will allow the company to reach production of 60 million tonnes.


Surgutneftegaz plans to increase production 11.7 percent year-on-year to 49.2 million tonnes in 2002, with gas production up 18.5 percent to 13.2 billion cubic metres. Surgutneftegaz will launch 871 new wells in 2002 and will drill 193 side shafts at existing wells, as a result of which it is expected to increase production by an additional 1.5 million tonnes of oil. In September daily Surgutneftegaz production amounted to one million barrels of oil per day.

US may import 1-2 mln tonnes of Russian oil per day

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YUKOS CEO Mikhail Khodorkovsky expected that at an oil and gas summit in Houston last week, the US would establish its position in relation to imports of Russian oil to the US. Khodorkovsky told a press conference in Vilnius that these supplies might amount to one to two million barrels per day.


According to the CEO, the US is interested in preventing oil prices from falling below USD 18-USD 20 per barrel, “which may reduce the differential of energy supplies.” In turn, YUKOS RM First Vice President Mikhail Brudno said that Russia hopes to fill the niche on the US market left by the fact that some Organisation of Petroleum Exporting Countries have redirected supplies to the Chinese and Indian markets. The US, according to analysts, plans to increase supplies of oil from Russia to replenish the national strategic reserve, so as to reduce dependency on supplies from the Middle East.


In turn, Russia tries to boost oil supplies to world markets and help the West cushion risks against world’s oil market volatility. There is a considerable progress not only by the Russian government but also by the US government in supporting the concept that energy dialogue and energy security is an issue of bilateral importance. Russian oil output has grown four years in a row and the country’s oil firms have said they could ship large volumes of crude to the United States, encouraged by political rapprochement between Moscow and Washington after the September 11 attacks in the United States.


The possibility of direct supplies from Russia this year began to be widely discussed after YUKOS sent a first tanker of oil to the United States. According to Bloomberg, YUKOS supplied 3.63 million barrels of oil to the United States in July-August. This year the company’s average exports amount to 670,000 barrels per day and should grow to two million barrels per day by 2010.

ChevronTexaco may invest up to USD 9 billion in Sakhalin-3

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ChevronTexaco, the second largest US oil producer, may invest some USD nine billion to develop Russia’s Kirinsky block under the Sakhalin-3 project over a period of 20 years, Interfax quoted David O’Reilly, chairman of the corporation’s board of directors and CEO, as saying. He underscored the need to conduct seismic reconnaissance and estimate the block’s reserves. The Kirinsky block is currently estimated to hold 500 million tonnes of crude equivalent.


Caspian Sea region would provide up to 10 percent of ChevronTexaco’s global oil output in the near future.


The project will be implemented under a production-sharing agreement (PSA). Therefore, he noted, the Russian state Duma must first adopt an amendment to the Tax Code to introduce regulations for the PSA system. “The main thing is that the PSA legislation is competitive compared with similar regulations in other countries,” the news agency quoted O’Reilly as saying. “Legislation is what may make Russia an attractive region for investment,” he added.


O’Reilly noted that Russia “has made significant progress in reforming the economy and legislation” which will be a guarantee of new investment from the US. The company president said that ChevronTexaco is open to new possibilities in the oil and gas sphere in Russia. “Thanks to a significant improvement in the investment climate in the country, we are confident that we will manage to find these possibilities,” he stressed.
O’Reilly also said that at the energy forum in Houston, which was expected to open on October 1, company Deputy CEO Peter Robertson was due to announce that Russia is “a country favourable for investment.”


ChevronTexaco has put significant investment into the Caspian Sea region, where it is developing the giant Tengiz oilfield and participating in the Karachaganak field in the former Soviet state of Kazakhstan. It is also leading an international consortium which since last year has been operating a 600,000 barrels-per-day pipeline from Tengiz to the Russian port of Novorossiisk – the first private oil pipeline built in either Kazakhstan or Russia.
The ChevronTexaco chief stressed that experience of investment in the Russian economy during the construction of the Caspian Pipeline Consortium pipeline showed that “these investments were successful” and the company plans to continue its activity in Russia.


In Russia, ChevronTexaco inherited Texaco’s 1993 deal with local state firm Rosneft and ExxonMobil to develop the Kirinsk block of the Sakhalin-3 project. While neighbouring Sakhalin projects already produce oil or have completed the exploration stage, Sakhalin-3 has been stuck for almost a decade awaiting more attractive production sharing terms, Neftegaz.ru reported. O’Reilly said he expected work to speed up.

Moscow, Ashgabat to sign gas agreement…

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Russia will import 10 billion cubic metres of Turkmen gas in 2005 and will increase this amount to 20 billion in 2008 over the amounts agreed earlier. The intergovernmental bilateral commission which met in Ashgabat on September 19 agreed to have documents drafted in the last quarter of 2002, Interfax reported, citing a Russian Energy Ministry press release. The Turkmen Oil and Gas Industry and Mineral Resources Ministry and the Russian Energy Ministry will draft and sign in the same period an agreement on cooperation in the gas industry. The transit of Turkmen gas across Russia has been increasing, the parties at the meeting agreed. The meeting discussed Russia’s proposal that oil be supplied to the Seidar refinery and that Russian organisations share in an overhaul of the Pavlodar-Shimkent-Seidi oil pipeline. The energy agencies of the two countries will draft within a few months an agreement on research in supply of Russian oil to the Seidi refinery. The commission is chaired by Russian Energy Minister Igor Yusufov and Turkmen Deputy Prime Minister Yolla Gurbanmuradov. Gazprom deputy board of governors chairmen Alexander Ryazanov and Yuri Komarov and a representative team of experts in fuel, energy, finances and legal issues attended the meeting.

…Gazprom to rebuild pipeline in western Turkmenistan

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Russian gas monopoly Gazprom plans to reconstruct the Central Asia-Centre III gas pipeline in western Turkmenistan. The present-day capacity of the pipeline is about 10 million cubic metres of gas a day. “Turkmenistan and Russia intend to legalise their long-term gas partnership,” Gazprom Deputy CEO Yuri Komarov said after a meeting between a Russian governmental delegation and Turkmen President Saparmurad Niyazov. “This is a matter of rather large supplies of Turkmen gas before 2020. The projects will require sizeable investments and an upgraded inter-state gas pipeline system,” he said. “A potent and widespread network will make it possible to transport Turkmen gas from the Caspian fields, as well,” he added.

LUKoil stake sale to depend on market

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Russia’s government believes that the state of the market will be the main regulator of a planned sale of state interest in Russian oil major LUKoil, Interfax quoted Alexander Braverman, first deputy minister of Property Relations, as telling a news conference in Moscow. He said Russia’s largest oil corporation had become an utterly transparent company and that more information was being provided about it at the London stock exchange that about similar Western companies. Earlier reports put the minimum starting price for the six percent stake, to go on the market this autumn, at USD 660 million. The Property Relations Ministry planned to put derivatives from the stake on sale last year but as the market was down it put off the project till this year. The ministry said at first that the stake might be sold in summer this year, before a “dead season” that usually sets in August. Russia planned to raise more than USD 700 by the sale but in the past two months LUKoil shares have fallen in price by nearly 20 percent because world financial markets were low.

Transneft mulling Kazakh oil transit expansion

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Kazakhstan has asked Russia to consider the possible enlargement of Kazakh oil transit to 16.5 million tonnes a year. Transneft Vice President Sergei Grigoryev said on September 19 that his company had confirmed the technical capacity of the pipelines to carry that amount of Kazakh oil. He said Kazakh oil transit was expected to be discussed at the next session of the governmental commission for main pipelines. Russia and Kazakhstan singed a 15-year intergovernmental agreement in June 2002, stipulating the transportation of no less than 15 million tonnes of Kazakh oil a year through Russia’s main pipelines.

Russia says no to domestic supply quotes for fuel oil

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The Russian government does not yet plan to introduce domestic supply quotas for fuel oil so as to restrict exports in the fall-winter period, Russian Deputy Prime Minister Viktor Khristenko told journalists. He reminded that earlier it was planned to introduce these quotas from September 15. “Monitoring of the situation shows that this need has not yet arisen,” Khristenko said. He also noted that the possibility of using fuel oil supply quotas was expected to be considered at a meeting of the government commission for access to trunk pipelines last week.

Pipeline commission to discuss oil companies’ appeal

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The Russian government commission on the use of trunk pipelines was expected to discuss the possibility of increasing schedules for the transportation of oil, based on the actual amount of crude being supplied into the system, at a meeting last week. A source close to the commission said this issue was included on the agenda for the meeting at the request of Russian Prime Minister Mikhail Kasyanov.


The heads of large Russian oil companies sent a letter to the prime minister in which they accused the commission of violating current legislation. The letter stressed that the government commission decides on changes in the schedule for transporting oil outside of Russian customs territory for oil refining companies “only by reducing it, which contradicts current legislation and is a serious violation of the rights of oil and gas producing organisations to have access to the trunk pipeline system.”


The heads of oil companies asked Kasyanov to order the commission “to act in strict accordance with the law and to change the oil transportation schedule both upwards and downwards, based on the amount of oil being supplied into the system.”


Kasyanov ordered the commission to urgently consider this letter and requested that commission Chairman, Deputy Prime Minister Victor Khristenko, reported his proposals. The commission was also expected to consider the situation with the oil balance in Russia during the meeting of schedules to export and transit oil through Russia in the third quarter and to discuss the same indicators for the fourth quarter.

Baker & McKenzie to advise on LUKoil Murmansk project

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Russian oil major LUKoil plans to invite the consulting company Baker & McKenzie as a consultant in a project to build an oil export complex in Murmansk, company Vice President Leonid Fedun said.


YUKOS, Sibneft and Tyumen Oil Company, who agreed with LUKoil to jointly study this project, asked the company to chose a consultant to prepare technical documents for the project. “We have already met with Baker & McKenzie and, more than likely, this company will become our consultant for the project,” Interfax quoted him as saying.


Fedun noted that the company has prepared three options for the project, the first of which involves exporting 15 million tonnes of oil, produced by LUKoil, through a terminal in Vanandei (Nenets autonomous district). To implement the other options, which involve exports of 50 million tonnes and 100 million tonnes per year respectively, it is necessary to cooperate with oil companies and the state, Fedun said.


If we compare with the Baku-Tbilisi-Ceyhan pipeline, then the Murmansk project will be much more profitable for Russia, as it will be much shorter and cheaper and will take place in other climatic and seismic conditions, the vice president said.


He also added that the Murmansk oil complex would be one of the projects presented by the company at a summit in the United States at the start of October. It is planned that LUKoil President Vagit Alekperov will present a report on prospects for developing new markets for Russian oil. “This will be a new view on Russian oil in general and the company’s role in this process, as LUKoil accounts for almost 25 percent of the market,” the news agency quoted Fedun as saying.


He also noted that during the US summit, LUKoil plans to meet with leading drilling companies to present the upcoming sale of the drilling company LUKoil-Bureniye.

Turkmens, Afghans, Pakistanis deliberate joint gas pipeline

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Turkmenistan, Afghanistan and Pakistan have taken an important step towards implementing an understanding on the construction of a joint gas pipeline, Turkmen Oil and Gas Minister Gurbannazar Nazarov told the press on September 18. He was commenting on the second session of the committee for the intergovernmental pipeline agreement held in Kabul on September 16-17.


The session “discussed documents aimed at creating the legal foundation for the agreement, approved the final version of the order for the feasibility study and the work schedule on the feasibility study,” Interfax quoted Nazarov as saying.


The Kabul meeting also mulled the draft intergovernmental agreement that will have its final discussion at the third meeting of the committee in Ashgabat on October 17-18, he said. The minister named as a key result of the Kabul meeting “the approval of the schedule of accelerated implementation of the project proposed by Turkmenistan and supported by our counterparts in the talks.” What Turkmenistan proposed was that simultaneously with the feasibility study, the sides would discuss the formation of a consortium of companies and draft legislation for the project implementation.


Under the protocol signed in Kabul, the results of market studies in India and Pakistan should be submitted by November 30 that should prompt contracts on gas purchases. Nazarov said that preparations would be conducted soon to sign a intergovernmental agreement regulating the formation of the gas consortium, gas sale and transit, the construction and financing of the pipeline.


The pipeline from Turkmenistan to Pakistan via Afghanistan will be built to transport natural gas from the Dovletbad field containing 1.7 trillion cubic metres of gas. The 1,500-kilometre pipeline will have a throughput capacity of 15 to 30 billion cubic metres. The project cost is estimated at USD 2-2.5 billion.

Too Much Ado

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The case of the EC Chief Accountant Mrs. Marta Adreausen who claims she discovered loops in the bookkeeping system of the European Commission which may leave room for fraud, is taking momentum in Brussels. The Budgetary Committee of the European Parliament decided to listen to the claims of Mrs Adreausen and invited her to testify. This, we feel is rather exaggerated because it only offers opportunities for publicity since a written testimony or a statement before the Petitions Committee would be sufficient.


However, it is not for sure that there will eventually be a testimony because Mrs. Adreausen was asked to present her case in written before she testifies and since she refused so far to put something in writing, no date for the hiring has been set.


If and when the issue will come to the Parliament and if it assumes political dimensions, responsibilities will be certainly attributed to her former boss, Budget Commissioner Mrs. Michaele Schreyer (German, Green) not because she was the one to hire her but on the grounds that she is responsible for the Budget bookkeeping of the Commission and therefore she should have acted since years. In this case, since the bookkeeping is not a collective political responsibility of the Commission but simply the responsibility of one specific Commissioner, this specific Commissioner will have to resign before is sacked by the Parliament.


Such a development, will give the opportunity to German Councelor Gerhard Shroeder, who’s SPD party got practically same number of votes with CDU party, to invite CDU to take the position of the second German Commissioner.


Germany is the only among the big countries with two Commissioners that has both Commissioners coming from the ruling coalition. In all other cases, i.e. UK, France, Italy and Spain, one Commissioner comes from the ruling parties and one from the leading opposition party. (680)

Give Life to LIFE

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LIFE 3 programme will be concluded at the end of 2003 and the European Parliament alone with NGOs and local administrations are keen for a new LIFE 4 to be introduced and are looking forward to the European Commission to make proper proposals to the Council on time.There is no doubt that the Regulation for the new LIFE 4 will be based on conclusions drawn on the experiences of the implementation of the previous programmes and to this effect room for improvement is ample and quite useful. Therefore, there will be no repletion of certain unpleasant situations witnessed in the past.
Indeed, if we draw the line and make an overall evaluation of the three LIFE programmes, they proved extremely useful and beneficial to European citizens and in particular to the various regions of Europe. Therefore, we can understand the interest both of the Parliament and the stakeholders for the introduction of LIFE 4 but we cannot interpret the stance of the Secretariat General, which passed the message that the European Commission should not proceed with proposing LIFE 4. (681)

Euro-allergy: How Far the Truth?

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Since the launch of Euro there have been reports popping now and then about the allergic reactions to some of the Euro coins. Latest to add to the growing list is a German dermatologist who appended his research to mounting evidence that Europe’s new, one- and two-Euro coins cause allergic reactions. Addressing a medical conference in Prague, Dr Volker Grimm said he and his colleagues at the Technical University of Munich determined that a small space between the ring and centre “pill” of the two-part coins play a role in the skin reactions described by a Swiss doctor earlier in the journal Nature.


Dr Frank Nestle of the University of Zurich and a research team discovered that nickel in the coins can trigger outbreaks of contact dermatitis – red, itchy skin – in people allergic to the metal. He said the reaction occurs when human sweat comes in contact with the coins and creates an electrical current that releases nickel ions. Nickel is the most common cause of skin-contact allergic reactions, affecting up to 10 percent of people worldwide. Grimm’s team went a step beyond Nestle’s by describing how nickel can reach sweaty skin. They found that a gap up to 1 millimetre deep between the ring and pill allows sweat to sink into the coin and reach the nickel core, creating a battery-like electrical current, which releases nickel ions. The nickel, in turn, irritates the skin.


Grimm’s team tested the coins on nickel-sensitive patients. Using “patch tests”, patients’ skin was exposed to one- and two-euro coins, a petroleum jelly containing nickel, and the EU’s new 20-cent coins, which are made of nordic gold. Only skin exposed to the 20- cent coins did not break out. Grimm does not think nickel-allergic cashiers and others who handle the new coins for brief periods are at risk of dermatitis. But he said the risks are high for allergic people, such as a child, who accidentally swallow a coin or otherwise experience long-term contact.


As for the possible outcomes under other conditions – for example, when a nickel-allergic man works up a sweat while jogging and has the coins in his pocket – Grimm said, “we just don’t know”. Grimm said he had not told the European Central Bank, which directed the minting of 10 billion of the one- and two-Euro coins with 25 percent nickel, about his findings. However, he said: “The conclusion would be: Never use nickel for a new coin. But they already did, so what can we do?” Will we hear some reactions to this nickel controversy from the corridors of power in Brussels or the ECB in Frankfurt? Earlier the better to dispel any false alarms!(682)

European Environment Awards Bring Fresh Air

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Amid all the din and bustle of environmental non-adherence (see story on page 6 inside: Name, Shame and Fame) there are some silver linings along the horizon of the dark clouds of pollution. A wood research institute based in Braunschweig, Germany was aqwarded one of the top European Award for the Environment for developing a way to recycle wood and fiber waste left from the harvesting of palm oil. The Fraunhofer Institute for Wood Research received the award for international cooperation for the process, which the 13-member jury said would be especially helpful to development in Malaysia. Margot Wallstrom, the European Commissioner for the Environment, said: “Sustainable development and environment protection create opportunity for business. Environmental protection can also have a positive impact on a company’s image and sales.” She added that there were “very few hiding places in today’s information society”. Other awards went to the British oil mammoth BP, the Spanish agricultural cooperative “Caoto”, Austria’s “Integral Environmental and Facility Technology”, the Luxembourg Bofferding brewery and the Dutch insurance firm “Achme”. (683)

Asteroids Threaten World Peace

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As if there wasn’t enough to worry about over geopolitical skirmishes, military strikes, the threat of terrorism, global warming, and imminent war with Iraq … we have now been alerted to the dangers of nature exploding in mid-air. How does this tie in with the above-stated concerns? More than a few times a year, asteroids smash into the Earth’s atmosphere with “an energy release comparable to the Hiroshima burst” – a fact some fear could unnerve some nations to the point of triggering an atomic war. Air Force Brig. Gen. Simon P. Worden says the US is the only country with the detection technology needed to quickly discern whether an atmospheric explosion is natural or manmade. The only country. That means all other nations with nuclear weapons are at risk of mistaking a natural explosion for an attack and subsequently opting for atomic retaliation. In fact, Worden pointed out, that was a very real risk last August when India and Pakistan were at full alert and poised for war. Although the explosion of an asteroid 15-30 feet wide, detected by US satellites over the Mediterranean, received little or no notice, the general believes such an incident could inspire major human conflict and ignite “…a nuclear horror we have avoided for over a half-century.” While this form of nature’s wrath has yet to unleash itself over a populated area, in which case it is estimated that perhaps hundreds of thousands could perish, the threat of such an uninvited upset to the precarious state of world politics is very real. The Air Force is working on an asteroid alert programme that would rapidly send information received from satellites to affected countries. In the mean time, all we can do is wrestle with the wrath and bluntly stated intentions of manmade warfare.(684)

Just a Joke

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It is only a joke but as most jokes is just an exaggerated version of realpolitik


US President George W. Bush and British Prime Minister Tony Blair are in the War Room of the Pentagon over a Middle-east map discussing with the generals the implications of the American attack to Iraq. In this moment French President Jacques Chirac gets into the War Room and the following dialogue takes place:


Chirac: George, what are you talking about, over there?


Bush: We are talking of the coming Anglo-American attack against Iraq.


Chirac: I see but tell me, what collateral damages among civilians will be?


Bush: Roughly, fifteen million Arabs and one web designer.


Chirac: One web designer! Why? (685)

Eurofighters threaten budget, defence ministry steadfast

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Austria’s new fleet of Eurofighter military jets is already shooting holes in the budget before it even arrives, according to local reports. Austria’s Finance Ministry, which was originally against jets at all but was overruled, was said to be pressing for only 18 of the new planes instead of the planned 24. But the Defence Ministry was deaf to its pleas of budget constraint. “We’re conducting negotiations for 24 aircraft,” insisted a spokesman. Originally the tender spoke of 24 aircraft with an option on a further six, Kurier reported. But no one was talking about that any more. There was no budgetary allowance at all for the jet fighters at present. Most recently, Defence Minister Herbert Scheibner put their cost at 260 million Euros per year. It had been settled with the manufacturing company EADS (European Aeronautic Defence and Space Company) that the payments for the Eurofighter “Typhoons” would be stretched over nine years. That would mean, however, the cost of 24 planes would no longer be the 1.8 billion Euros officially announced by the government, but 2.35 billion, exclusive of interest charges and maintenance. Finance Minister Karl-Heinz Grasser is fighting to avoid defeat after his 2001 triumph of balancing the budget with no new debts.

More arrests in FC Tirol scandal

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Three more finance department officials were arrested on July 22 in Innsbruck in a scandal which started with the financial collapse of Austrian football champions, FC Tirol, in early summer. The latest arrests brought to seven the number of finance officials arrested for tax evasion and misuse of office, dpa quoted Innbruck District Court spokesman Hannes Seiser as saying. The head of the auditing department at Innsbruck Finance Department is among the 12 officials, mostly auditors, who are either under arrest or suspended from duty.

Salzburg Festival has new head

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The world-famous Salzburg Festival was expected to open on July 26 with a new director but a programme differing little from those of previous years. After 10 years under Gerard Mortier, it will be the first season for Director Peter Ruzicka, who was also expected to give the traditional opening address.

German Telekom customers overcharged “zillions”

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Troubled German Telekom is on the defensive again following a recent report that the phone giant has overcharged customers “zillions” for years, dpa reported. Telekom board members were aware of the billing discrepancies for a number of years, Die Welt am Sonntag reported recently.
A Telekom spokesman denied the report’s veracity. “We reject these allegations categorically,” ARD television quoted the spokesman as saying. The newspaper report, coming soon after Telekom head Ron Sommer resigned, quoted corporate Communitel subsidiary head Bernd Stoetzel as warning lawsuits were pending.


He reportedly told the paper that Sommer’s successor, new Telekom chief Gerd Tenzer could even face prosecution on suspicion of fraud. Telekom spokesman Ulrich Lissek responded: “We’re planning to sit back and take it in stride.” He added that German Telekom has already initiated legal steps against Stoetzel in connection with a multi- million-dollar amount he allegedly owes the company. Welt am Sonntag quoted Stoetzel as saying Telekom had racked up “zillions” of dollars in overcharge billings over a period of two years. “In analysing 100 million data over two years from 1999 to 2001 we uncovered zillions of marks in billing errors passed on to our customers,” he added. “German Telekom, in particular its board members, have known for a number of years all about the billing errors,” he was quoted as saying.


Meanwhile, Telekom’s new head is planning a strict austerity programme to put the company back on a sound financial footing, Focus reported. Tenzer is looking at massive cutbacks and debt restructuring programmes. “We’re reviewing every line item and will cut everything that isn’t essential,” a Telekom source was quoted as saying.

DaimlerChrysler beats earnings expectations

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Giant trans-Atlantic automaker DaimlerChrysler AG has raised its 2002 earnings forecast, saying it now expected to more than triple full year operating profits after a stronger-than-expected second quarter.


Kicking off the European auto industry quarterly reporting season, dpa quoted DaimlerChrysler as saying second quarter operating profit excluding one off effects came in at 1.9 billion Euros, in part reflecting an improvement in the company’s US operations. This about two and half times the 725 million Euros earnings chalked up for the same period last year and far higher than the 1.3 billion operating profit which was consensus forecast among analysts.


The revised earnings forecast are also sign that the expensive and far-reaching three-year cost-cutting drive launched last year at its US Chrysler operations is starting to pay off.


Indeed, the brighter prospects facing its troubled Chrysler arm have been crucial to the turnaround in the financial fortunes of the DaimlerChrysler group, which is also the world’s fifth largest car maker. “Good progress with restructuring, high-cost savings and efficiency improvements justify DaimlerChrysler’s assumptions that Chrysler should report a positive result in the second half,” said the group, which is also the maker of Mercedes-Benz cars.


After posting a second-quarter loss last year of 148 million Euros, the Chrysler unit recorded an operating profit of 788 million in the current period under review. With the second quarter figures, DaimlerChrysler’s first-half operating profit surged to 4.8 billion Euros, from minus 2.8 billion Euros in the same period last year.


Two years after the merger between Germany’s Daimler-Benz and Chrysler, DaimlerChrysler’s 2000 third quarter profits had plunged by 78 percent as a result of brutal competition which Chrysler faced in the American car market. Since then, DaimlerChrysler has been restructuring the US operations, including slashing 26,000 jobs and closing down plants. DaimlerChrysler said the implementation of the so-called turnaround plan at Chrysler cost 374 million Euros. Including one-off effects, the second-quarter operating profit was 1.7 billion Euros, up 80 percent on the same period last year.


Despite the second improvement in earnings, DaimlerChrysler said it remained cautious about the rest of 2002. It said that signals it “is receiving from its main markets still show a rather growing uncertainty as far as political and economic developments are concerned. “Against this background, the overall results of the first half of 2002 cannot just simply be transposed into the second half of the year,” the news agency quoted the company as saying.

IT industry slump plays havoc on EPCOS, Infineon figures

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Two electronics firms in the Siemens family, EPCOS and Infineon, reported losses in the quarters ending June 30 in the latest evidence of the severity of the information technology industry slump. Electronic components maker EPCOS surprised analysts by reporting a loss for the third quarter of its business year and also warned of losses in the double digit millions of Euros for the full year ending September 30. Dpa quoted Semiconductor company Infineon as saying it lost 107 million Euros in the third quarter, but noted that this was better than the 178 million Euros red-ink in the same period a year ago.


Both companies – erstwhile units of Siemens which have since been launched on the stock markets – fell on the Frankfurt Stock Exchange, whereby EPCOS stocks plunged vertically because the losses came unexpectedly. Infineon’s drop was more moderate. EPCOS said that by its preliminary accounting, it lost 16 million Euros in the third quarter which ended June 30. Revenues, at 329 million Euros, were down three percent from the same quarter last year, while new orders of 316 million Euros were also lower than those a year ago, the news agency quoted EPCOS as saying.
The company said it expected its restructuring efforts to hit earnings by 30 million Euros in the fourth quarter. The company has announced plans to cut 1,000 employees from its 13,400-strong work force. But now the company may have to dismiss even more workers, EPCOS said, without giving a specific number.

ING, Capital Group sign JV contract for Dalian

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ING Insurance International BV (ING Insurance) and Capital Group announced on July 18 that an agreement to establish a joint venture (JV) life insurance company in the City of Dalian, North China. This agreement follows a letter of intent that was signed by ING Insurance and Capital Group on February 8. The new joint venture will be known as ING Capital Life Insurance Company Limited (ING Capital Life).


A milestone for ING, the new joint venture company will be the first foreign-invested insurance provider in Dalian. ING Insurance and Capital Group will own 50 percent of the JV company’s equity respectively, with ING Insurance playing a management role. ING Capital Life will provide whole life and endowment policies, as well as life insurance savings plans. ING Capital Life is expected to commence operations in November 2002. It will have an initial capital base of 24 million Euros.


“Our partnership with Capital Group is very exciting for us at ING Group,” said Patrick Poon, head of Greater China and member of the executive committee ING Asia/Pacific. “We sought out a partner who shared our values, our business goals and our desire to provide China with the best insurance and financial services available. We found that in Capital Group and they have been an excellent partner for us since the beginning,” he added.


The new partnership demonstrates ING’s continuing commitment to the development of China’s insurance and financial services markets. The joint venture in Dalian is the second life insurance operation that ING has established in China, the first being its successful life insurance joint venture Pacific Antai Life Insurance Company (PALIC) set up in Shanghai in 2000.


“Our goal is to bring to China ING’s full portfolio of services,” ING Group Chairman Ewald Kist said in a press release. “The combination of Capital Group’s strong local presence and experience in a wide variety of fields and ING’s global footprint and international product expertise in emerging markets is very powerful. ING’s global strategy is based on a multi-product, multi-channelled approach designed to bring to both our individual and institutional clients a diverse array of services tailored to meet their needs to protect and manage their financial assets,” he added.


ING is combining insurance, banking and asset management globally, and it intends to operate the same platform in China. In ING’s asset management business, ING intends to be among the first foreign companies to apply for a fund management joint venture, building on its existing alliance with China.


In ING’s banking business, ING also operates corporate banking, investment banking and securities investment activities in China through ING Bank NV and expects to receive a local currency renminbi banking license by end-2002.


“Equally important is our desire to help strengthen China’s pension system and bring some of the many lessons we have learned in other emerging markets here,” Kist said. ING is currently cooperating with the Ministry of Labour and Social Security and with several Chinese universities to share information and provide advice on the development of China’s pensions industry.

Philips to sell x-ray business to Spectris

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Royal Philips Electronics and Spectris Plc, a precision instrumentation and controls company, announced late last month that they have reached a preliminary agreement that Philips will sell its x-ray analytical business to Spectris for a total amount of 150 million Euros. Completion of the transaction, which is subject to customary consultation procedures with trade unions and works councils and clearance by the competition authorities, is expected to take place later this year.


“This decision is part of the Philips strategy to continue focusing on our main activities,” Philips Corporate Investments CEO Tom Verbeek said. “We are pleased to have found a buyer for the major part of our analytical business, well suited to exploit the strengths of this business for further growth and expansion into new markets,” he added.

Vodafone Libertel maintains strong position

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Vodafone Libertel NV said that it had a total of 3.264 million customers. The number of postpaid customers increased strongly by 12 percent, while the number of prepaid customers decreased by 9 percent, both compared with June 2001. In the first quarter of the financial year (April to June 2002), the number of postpaid customers increased by 26,000.


As of June 30, Vodafone Libertel NV had 1.209 million postpaid customers. This represents 37 percent of the total number of customers compared with 32 percent a year ago. The number of prepaid customers decreased by 32,000 in the period from April to June. The number of prepaid customers as of June 30 was 2.055 million.


As of June, 92 percent of the total base is active, which is the same as of March. Activity of the postpaid base remained high at 99 percent. Activity of the prepaid base remained unchanged at 88 percent. An active customer is defined as a customer who has made or received a chargeable call in the past three months.


Vodafone is one of the largest mobile telecommunications companies in The Netherlands and is a part of the worldwide Vodafone Group, the world’s largest telecommunications company for mobile telephony. The Vodafone Group has 101 million customers worldwide in 28 countries. Vodafone Libertel NV has been trading on the Euronext Amsterdam Stock Exchange since June 15, 1999.

Virgin Express shows 97% growth in booked revenue

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Despite the downturn in the aviation industry, low cost airline Virgin Express announced on July 22 that the booked revenue in June grew by 97.1 percent (excluding code share revenues) compared with June 2001. On some routes (for example Malaga and Madrid), a growth of over 110 percent was achieved. The Brussels-based airline, which was profitable last year and which forecasts profit again for 2002, has been the largest passenger carrier to and from Brussels Airport since April 2002.


It is clear that the re-organisation and changes to the business model in 2001 have been successful and will allow further growth in the European market, the company said in a press release.


Virgin Express noted that over 90 percent of its flights depart and arrive on time (average during 2002). Moreover, it said that Virgin Express offers ever more destinations and frequencies to the travelling public.


It emphasised that distribution channels have been further developed to allow passengers to buy the Virgin Express value for money product more easily through travel agents, the Internet or directly by phone.


All these efforts have also led to a growth in corporate passengers travelling on Virgin Express. On many routes more than 60 percent of its passengers are on business-related travel, the airline said in the press release.


At present Virgin Express offers flights to 14 major European destinations: Athens, Barcelona, Copenhagen, Faro, Geneva, Gothenburg, Lisbon, London-Heathrow, Madrid, Malaga, Milan, Nice, Rome and Stockholm. The European low fare airline announced recently that it will open a new base at Germany’s Koln-Bonn Airport in December 2002.

KLM, Airbus in A330-200 deal

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Dutch flagship carrier attains purchasing rights for another 18 carriers

KLM Royal Dutch Airlines and Airbus have signed a letter of intent for the purchase of six Airbus A330-200 aircraft, for delivery from early 2005, the two companies announced at the Farnborough Air Show in England. The airline has additionally acquired purchasing rights for a further 18 aircraft of the same type. KLM has assured a high degree of flexibility by combining a firm order with purchasing rights, enabling the carrier to respond adequately to market developments in the coming years.


With this order, KLM has taken a further step towards detailing its intercontinental fleet renewal programme. Earlier this year, the airline announced it would be replacing its currently operated Boeing 747-300 fleet, and two MD-11 aircraft, with ten Boeing 777-200 Extended Range full-passenger airliners and three Boeing 747-400 Extended Range Freighters (ERF). In the second phase of KLM’s fleet programme, planned for 2005 through 2010, the airline will replace its remaining eight MD-11s and twelve Boeing 767-200ERs with a combination of A330-200s and additional Boeing 777-200ER equipment. This announcement was the first step towards implementing this second phase.


“In daily operations, the Airbus A330-200 has proven to be an aircraft providing excellent operational and commercial performance, with high levels of efficiency and flexibility, generating a high degree of passenger appreciation,” KLM chief operating officer Peter Hartman said in a press release. “This aircraft type will also contribute to achieving our goal of minimising the impact of our operations on the environment in the vicinity of airports. I should also point out that the fact that our alliance partner Northwest Airlines has also ordered the A330 opens new perspectives for our alliance in the areas of operations, handling, maintenance, and product specification,” he added.


“Airbus Industrie is very happy to welcome KLM back as customer,” said Airbus President Noel Forgeard. “KLM sets high quality standards for aircraft manufacturers’ products and services. We regard the enthusiasm for the A330 displayed by KLM and its partner Northwest Airlines as major indicators of the quality of this aircraft’s design and technology, and for its added operational and commercial value,” he was quoted as saying. KLM will operate the A330-200 on routes in the 250-seat market.

Domino’s Pizza unit turns a profit in H1

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Domino’s Pizza has reported strong growth in sales and profits in the first six months of the year and announced that its Irish business is now posting a monthly profit. Sales for the first half jumped 26 percent to GBP 26.2 million while pre-tax profit increased by 45 percent to GBP 1.72 million. The pizza franchise group, which has 255 stores overall, is aiming to double that by 2006, including 30 new stores in Ireland. It already has four branches in Dublin, as well as outlets in Limerick, Galway and Waterford. CEO Stephen Hemsley said new store openings in Ireland had helped to pull the Irish operation into profit. “As anticipated, the Irish commissary is now achieving a monthly profit and this is as a direct result of the opening of five new Irish stores,” he was quoted as saying. However, he hinted that the planned expansion of the group, including its Irish business, could be delayed beyond the 2006 target. “Whilst we remain confident that our target of 500 stores by the end of 2006 remains realistic, our strict selection criteria, combined with the ever more stringent planning requirements, make the identification of property one of our key challenges,” the company said in a statement.

Micros to create 180 new jobs

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The Tanaiste, Mary Harney has revealed that the US-based software company Micros Systems is to create 180 new jobs in Co Galway in Ireland. The jobs are to be created over a period of five years in the company’s new facility in Galway, which is expected to provide support for the company’s European, Middle Eastern and African operations. Micros Systems provides information management solutions including software, hardware, enterprise systems integration, consulting and support to restaurants, hotels and the leisure and entertainment industries. It is headquartered in Maryland in the US and employs over 3,500 people worldwide.

Irish Nationwide signs loan

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Irish Nationwide Building Society has signed a 400 million Euro three-year loan facility with a group of 27 international banks. The loan is being provided by banks from Britain, France, Germany, Spain, Italy and Australia and was 200 million Euros oversubscribed. The loan was arranged through UK group Royal Bank of Scotland, Denmark’s Danske Bank and Germany’s Westdeutsche Landesbank, better known as West LB. Irish Nationwide, established in 1873, has a network of over 50 branch offices in Ireland and 100 branch agents.

Change key for Partnership in Ireland

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A new agenda and a new direction is needed for Partnership in Ireland, according to Peter Cassells, the executive chairman of the National Centre for Partnership and Performance. Cassells was commenting on a new study that said that managers, employers and unions must work together to drive organisational change, modernise the workplaces for employees and improve the delivery of public services. A detailed study of four major Irish companies – Aughinish Alumina, Jurys Doyle Hotel Group, Dairygold and Tegral Metal Forming – shows that by working together in partnership, management, workers and unions significantly improved company performance and delivered tangible benefits for employees in each company. The study, Working Together – For Change and a Modern Workplace, is published by the National Centre for Partnership and Performance in association with IBEC and the Irish Congress of Trade Unions. Cassells said the results show that a new direction and a new agenda is now needed for partnership in this country. “We need government, employers and unions to continue to work together at national level to help the country through this period of economic uncertainty. However, as this study shows, if we are to safeguard the jobs and achievements of recent years, we urgently need to move to a new and more mature phase of partnership that will drive organisational change and modernise companies and public sector organisations throughout the country,” he said.

Farnborough Air Show opens amid September 11 sales gloom

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The Farnborough Air Show opened on July 22 amid gloom over orders following a downturn in air travel after September 11, manufacturers attending the show in the south of England said.


Boeing head Phil Condit saw improvements in safety through modern electronics, which could provide dramatic improvements in security, capacity and efficiency, he said. This would require cooperation between governments and airlines, and involve the use of satellite navigation to ensure aircraft did not, for example, fly into mountains. Condit predicted accidents could be halved and said this could be the growth area of the future.
British businessman Richard Branson displayed a new long-version A340-600, which is 4.8 metres longer than any other commercial plane. It boasts a bar, a beauty therapy area and advanced inflight entertainment system. “Our A340-600 order is worth USD 1.9 billion and around half of the aircraft is British-built. That’s why we couldn’t resist writing Mine’s bigger than yours’ on the side,” dpa quoted Branson as saying.

London ambulance service turns to the bike to save time

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London’s troubled ambulance service has hit upon the idea of using bicycles to get to the scene of accidents, dpa quoted officials as saying on July 24 at the launch of the new pedal power service. The Cycle Response Unit – which is led by a former European BMX champion – was formally launched after a successful trial two years ago in the city’s crowded West End.


A team of three ambulance technicians and three paramedics will patrol the streets during the summer on specially adapted mountain bikes to attend non-life threatening 999 calls. The bicycles, fitted with blue lights and sirens, as well as panniers with life-saving equipment, will be sent to answer calls at the same time as normal ambulances.


Trials in the area around Trafalgar Square and Soho found the bikes arrived at 88 percent of calls before normal ambulances and in a third of these cases were able to resolve the difficulty and cancel the ambulance. Former BMX UK and European champion, Tom Lynch, who has been an ambulance technician for nine years, came up with the idea. “The main thing about bicycle ambulances is that they enable us to get to a job very quickly, especially in the heavy traffic of central London. To us every second counts and this can help save lives,” he said.

Reuters posts first loss since listing in 1984

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The Britain-based news company Reuters on July 23 posted its first loss since floating on the bourse in 1984, when it announced a loss for the six months to the end of June. The company predicted difficult conditions ahead, particularly in the United States, but said its core business was resilient.
Pre-tax loss came in at GBP 88 million (USD 138 million) from a profit of GBP 357 million in the same period last year. The results were in line with market forecasts, and Reuters shares rose on the news. Restructuring costs came in at GBP 156 million. The company has announced it is to shed around 10 percent of its staff, with many top and middle managers retrenched. Losses at Instinet, the company’s Internet-based US subsidiary, were GBP five million before restructuring costs. Group revenues fell five percent to GBP 1.8 billion, with Instinet revenues falling almost 40 percent.
Dpa quoted Reuters chief executive Tom Glocer as saying he was pleased with progress six months into the five-year strategy announced in October 2001 and that the group’s core business was performing “resiliently.”


“We have limited the underlying decline in our revenues,” he said. “At Instinet we have taken decisive action to put in place a new management team and support them in aggressively growing their share of Nasdaq trading, reducing their cost base and delivering new products,” he added.
“We expect market conditions to remain challenging, but we are taking the tough actions needed to protect our franchise, improve our competitiveness and position us for profitable growth when markets recover,” Glocer said. He pointed to relatively low group debt of GBP 203 million. “I remain fairly pessimistic about the overall market environment, particularly in the US, but what I am seeing very clearly is a turnaround in Reuters itself,” Glocer said.

Britain better placed than many to weather shares fall – Blair

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British PM Tony Blair has highlighted the fundamental strength of the British economy and said it was better placed than many to survive the sharp falls on world stock markets as the declines continued. “The PM believes in the fundamental strength of the British economy. He believes that that fundamental strength means that this country is better placed than many other countries to survive the ups and downs of the stock market,” Blair’s office said. World stock markets have taken another blow after fresh controversy involving two major US banks. Citigroup and JP Morgan Chase & Co Inc. became the latest giants of the US corporate scene to come under fire. The investigators said they had entered into prepay financings of the sort which allowed bankrupt energy trader Enron to hide debt with at least 10 unidentified companies.