LONDON (AFX) – Frank Chapman, chief executive of BG Group PLC, said the long-delayed Brindisi liquefied natural gas terminal project in Italy is progressing and is likely to come on stream in 2010.

‘The project is proceeding,’ he told reporters at a briefing after the group’s annual results.

He added BG has already are claimed 80 pct of the land’ it needs for the terminal, located at the Brindisi port on the south-east coast of the country.

The facility is likely to be operational ‘at around 2010’ at an increased budget of about 500 mln eur, he told AFX News after the briefing.

BG originally thought the terminal — the first of its kind in Italy — would only require 390 mln eur to build and would be operational by 2007.

Construction work was delayed by environmental issues raised by the local authorities. Enel SpA, BG’s partner in the project, withdrew in 2005, leaving BG the sole owner of the 6-mln-tonne-a-year plant.

Chapman said the terminal has secured all the required ecological permits and BG has not been informed of the Italian government’s decision to re-open the permitting process for the project.

Even if it turns out to be true, he said the government’s action will have ‘no effect whatsoever on the validity of our existing authorisation.’

‘The project continues to enjoy strong support form the EU,’ he added.

Late last year, the Italian government decided to review the permits after the European Commission, it claimed, found BG’s environmental impact assessment report inadequate.

Turning to Kazakhstan, Chapman said the third phase of the Karachaganak gas project has been expanded and will cost around 8 bln usd in total.

BG and Italian partner ENI are joint operators of the field, each with a 32.5 pct stake, while Chevron Corp holds 20 pct and LukOil 15 pct.

The Karachaganak field is believed to be holding over 2.3 bln barrels of oil equivalent, making it one of the world’s largest gas reservoirs.

The third phase, which will start production in 2012, is targeting gas sales of up to 16 bln cubic metres per annum, added Chapman.

Construction of the fourth train in Karachaganak has been sanctioned by the consortium. The train will need 1 bln usd to build and will be operational in 2009, he said.

The gas from the Karachaganak field will be supplied to Russian gas monopoly Gazprom.

monicca.egoy@thomson.com

mbe/slm

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CAIRO, Egypt (AFX) – Measures to reduce global warming would not be devastating economically, and the United States has been ‘particularly delinquent’ on the issue, Paul Volcker, the former chairman of the U.S. Federal Reserve, said Tuesday.

Speaking to the American Chamber of Commerce in Egypt, Volcker said the argument that taxes on oil or carbon emissions, for example, would ruin an economy was ‘fundamentally false.’

‘First of all, I don’t think (such a step) is going to have that much of an impact on the economy overall. Second of all, if you don’t do it, you can be sure that the economy will go down the drain in the next 30 years,’ Volcker said, referring to the impact forecast by a U.N. report last week.

The Intergovernmental Panel on Climate Change reported that global warming is have ry likely’ caused by mankind and that, if it were not reduced, world temperatures and sea levels would rise, as well as the frequency and severity of catastrophic storms and droughts.

Volcker told some 200 Egyptian and foreign business executives that he had been surprised by the warm winter in New York and the cold weather in Cairo, where temperatures dropped to 48 Fahrenheit on Tuesday. ‘Global warming seems to be catching up with us pretty quickly,’ he commented.

‘What may happen to the dollar, and what may happen to growth in China or whatever,’ he said, raising his voice, ‘pale into insignificance compared with the question of what happens to this planet over the next 30 or 40 years if no action is taken.’

‘The scientists seem pretty well agreed that (global warming) is still potentially manageable if we act decisively, beginning now into the next decade or so, by taking measures that are technically and economically feasible.’

Leadership had to come from the United States, ‘and I don’t see much evidence of that happening at the moment,’ said Volcker, who as Federal Reserve chairman in 1979-87 applied politically unpopular measures that brought U.S. inflation under control.

The United States, which produces about one-quarter of the world’s greenhouse gases, is widely criticized for refusing to ratify the Kyoto Protocol, a 1997 pact that requires industrial nations to cut global-warming gases by an average 5 percent below 1990 levels by 2012.
Volcker said taxes either on emissions or on petroleum could be effective in reducing global warming, although it would be difficult to reach an international consensus on the desired levels.

‘It’s an area where in my view the United States has been particularly delinquent,’ he said, adding it would be wiser to impose a tax on oil, for example, than wait for the market to drive up oil prices. A tax would give the government ‘some leverage that you can use for other things.’
Asked why Americans were so reluctant to act on global warming, Volcker said in an interview afterward that he puzzled over the same question.

‘I think any democracy has difficulty focusing on a problem which is not a crisis today but, with a high degree or probability, is going to be a major problem 10, 15, 20 or 30 years from now.’ This was particularly the case when people feared, exaggeratedly in his opinion, that the immediate effects of tackling the problem would be adverse.

‘A lot of people in the United States haven’t been convinced that it’s a problem. Now I think that is changing. The evidence is becoming so strong that may be we are building a base for a political understanding that hasn’t been there before,’ he said.

Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

HONG KONG (XFN-ASIA) – ConocoPhillips has asked for arbitration in a dispute with China National Offshore Oil Corp (CNOOC) over costs incurred because of Beijing’s windfall tax on oil sales, the Wall Street Journal reported, citing people familiar with the situation.

Under a rule introduced in March 2006, companies that produce oil, both onshore and offshore, to be sold in China are subject to a special tax of 20-40 pct on the portion of the price that is above 40 usd a barrel.

The report was not clear on the arguments put forward by ConocoPhillips in asking for arbitration, but said that under a production contract CNOOC and its foreign partners must agree to amend the contract terms to maintain the foreign partners’ ‘normal economic benefits’ if they are affected by the introduction of a new law.

The report cited a source as saying that ConocoPhillips has activated a clause in its contract with CNOOC that allows its dispute to be heard at the Arbitration Institute of the Stockholm Chamber of Commerce in Sweden.

A spokesman for ConocoPhillips declined to comment when asked whether his company had requested arbitration with CNOOC, tit said.
CNOOC is the parent of Hong Kong-listed CNOOC Ltd.
rc/

SMITHFIELD, Va. (AFX) – Smithfield Foods Inc. said Monday it has complied with a Department of Justice antitrust division request for information related to the pork processor’s acquisition of rival Premium Standard Farms Inc.

Smithfield said it plans to acquire the pork producer for $674 million in cash and stock and assume $117 million in debt.

Smithfield said it hopes the antitrust division can complete its review in enough time for the deal to close in the first quarter of 2007.

A Premium Standard Farms shareholders meeting has been scheduled for Feb. 23 to vote on the deal.

Smithfield Foods shares fell 25 cents to close at $26.13 on the New York Stock Exchange.

Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

TOKYO (AFX) – The Tokyo Stock Exchange is considering listing exchange-traded funds (ETFs) linked to the prices of gold, silver and other precious metals using know-how it will obtain from the New York Stock Exchange, the Nihon Keizai Shimbun reported.

The NYSE will provide the TSE with expertise on how to manage the funds as part of the broad business partnership the two bourses concluded last week, it said.

Currently, the Tokyo exchange offers 11 ETFs, all of which are linked to a stock price index. This will be the first time for the TSE to list financial products linked to precious metals prices.

The new funds may be listed as early as this summer, with the trading commission to be set lower than for other types of investment trusts, the report said.

FRANKFURT (AFX) – Siemens said the Department of Justice has launched an investigation into of possible criminal violations of US law in connection with the company’s 420 mln usd bribery scandal.

In its full first quarter earnings report published late yesterday, the German electronics and engineering conglomerate also said it believes the Securities and Exchange Commission’s enforcement division is conducting an informal inquiry into the embezzlement claims.

newsdesk@afxnews.com

jms

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LONDON (AFX) – Pub group Mitchells & Butlers PLC (M&B;) said like-for-like sales for the 16 weeks to Jan 20 were up 4 pct, in line with company expectations, but warned on the potential ‘dampening effect’ of recent interest rate rises.

The company said like-for-like sales were up 2.4 pct on an un-invested basis. It added pubs in residential areas continued to trade strongly, with like-for-like sales growth of 4.6 pct for the first 16 weeks. Local pubs traded well, while High Street pubs registered like-for-like sales growth of 2.7 pct, with London performing particularly well.

The operator of the Harvester and All Bar One chains said food sales were up 7.2 pct within that period and drinks sales up 2.9 pct, against an on-trade market which saw drinks decline 4.1 pct in the quarter to December. Food and drinks prices were 3 pct higher than the previous year.

Total retail sales were 12 pct ahead of last year but M&B; said, given the recent interest rate rise, that it is uncertain whether consumer demand will continue at current levels.

In an interview with AFX News, chief executive Tim Clarke said it was too early to say if rises have made an impact on sales.

He added: ‘We are watching out very closely for the implications of three rapid increases in quick succession of interest rates. It would be surprising if it didn’t have some dampening effect.’

However, Clarke said the introduction of the smoking ban in Scotland has, thus far, ‘had a less severe negative impact than we might have expected’.

In Scotland, which represents 5 pct of the estate, M&B; said overall like-for-like sales were up 0.4 pct for the 16 weeks, with food up 5 pct, but drinks down 2 pct. Sales in the 10 months since the imposition of the ban are up 1.3 pct, with Clarke hopeful the company will go through a full year with positive growth.

Clarke said: ‘The extent to which we have been able to attract new food customers, to allow for the fact that some of our drinking customers are coming out a little bit later and drinking a little bit less, I think has been very pleasing.’

The company said it is well placed to attract new customers who do not currently use pubs to eat out when the English smoking ban comes in this July, calling the strong food sales growth in the first 16 weeks of the year have ry encouraging’.

However, Clarke was ‘cautious’ that England and Wales will perform better than Scotland in the face of a smoking ban, calling the Scottish experience ‘a hopeful indicator, but no more than that’.

The company added it is making ‘excellent progress’ on the conversion of former Whitbread pubs, with 56 pubs already re-opened under M&B; brands. It said sales uplifts are in line with expectations and on target to be at least 30 pct above the level at which the 239 sites were acquired.

Clarke said M&B; expected to have over half the new estate, around 120 pubs, converted by the time of the interim results. The company indicated at the time of the acquisition in August that it would take two years to work through the conversion, with the 30 pct sales increase forecast to be achieved in the 2008-09 financial year.

‘Obviously we are indicating today that we are going somewhat faster than that,’ said Clarke, adding the company now expects the bulk of the conversions, except those held up by planning permission and other issues, to be complete by Christmas.

The company revealed last Friday Iranian-born entrepreneur Robert Tchenguiz has taken a 15 pct interest in M&B;, made up of a 3 pct stake with voting rights and around 12 pct acquired through contracts for differences.

However, Clarke refused to be drawn on whether the company is concerned Tchenguiz could use his holding to pressure for conversion to the tax-efficient Real Estate Investment Trust structure or to mount another takeover bid for the company.

The company fought off a 550 pence a share takeover bid from Tchenguiz’s R20 investment company in May last year.

‘We very much look to discuss things, as we do on a regular basis, with major shareholders like Robert Tchenguiz,’ he said.

M&B; confirmed the board is still ‘rigorously evaluating the risks and rewards of a REIT structure’ and will update shareholders by the interim results announcement in May.

In a review of the pub sector published this morning, ABN Amro upgraded M&B; to ‘buy’ from ‘hold’.

It said valuations across the sector have fallen some 5 pct in the year-to-date, following a re-rating in the second half of 2006, as REITs appear to be ‘neither imminent nor inevitable’. However, it added demergers were not necessary to release value in property and it sees a potential average upside of 17 pct across the sector in 2007.

Maintaining its ‘buy’ rating and full-year forecasts, Investec Securities noted the performance of the acquired Whitbread pub restaurants and said it expects upgrades at the company’s interims if current trends persist.

At 10.23 am, shares were up 5 pence at 701 pence.

newsdesk@afxnews.com

sjm/ro/sjm/slm

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