TPT May 2007

From the AmericaS

The failure of the mediation effort is a blow to the Bush administration. The government already stands to lose $10 billion in royalties deriving from a technical error on a number of oil leases signed during the Clinton administration.

14 per cent to 20 per cent and to guarantee that jobs will not be lost in outsourcing to subcontractors, according to Aleksei V Etmanov, the union president. Russia has done very well by Ford, which made 60,000 of its Focus models there last year. It plans to produce 75,000 this year. › Tenaris, the Luxembourg-based global supplier of pipe for the oil and gas industry, has agreed to buy Hydril Co (Houston, Texas) for $2.16 billion to expand in valves and pressure control products. The Hydril deal will be Tenaris’s second purchase in the US since June 2006, when it bought OCTG maker Maverick Tube Corp (Chesterfield, Missouri). Tenaris, which is controlled by the Argentine conglomerate Techint, is paying a premium of about 17 per cent to Hydril’s February 12 share price. › The Carlyle Group, the Washington DC-based global private equity firm, announced that John Maneely Co, parent company of Wheatland Tube Co and Atlas Tube Inc, has signed a definitive agreement to acquire Sharon Tube Co (Sharon, Pennsylvania). Sharon is to be integrated into the Wheatland Tube division of John Maneely. John Maneely was acquired by Carlyle in March 2006 and merged with Atlas Tube, a Canadian manufacturer of structural tubing, in December. The latest merger will make Carlyle the parent of the largest North American maker of steel tubing, with sales in excess of $2 billion, the companies say.

US government report on unpaid oil royalties is a broad indictment of lapses in oversight As vexed as it is, the developing battle over oil royalties as outlined above is not as bad as it gets. An eight-month investigation by the Department of the Interior concluded late last year found widespread problems in the government’s own program for ensuring that companies pay the royalties they owe on oil and gas pumped on federal land and coastal waters. In a scathing report to Congress, the department’s inspector general, Earl E Devaney, asserted weaknesses in oversight that Interior officials acknowledge could cost the American government billions over the next five years. The report, delivered on December 6, refuted claims by top Interior officials that the department is aggressively pursuing underpayments and outright cheating by companies that drill on property owned by the American public. It also supports complaints by critics, from auditors within the agency to lawmakers of both the Republican party of President George W Bush and the opposition Democratic party, who say that enforcement has become superficial, inclined to error, and overly deferential to oil companies. These are among the inspector general’s findings on the monitoring of oil leases: › Since 2000, the number of audits has declined by 22 per cent and the number of auditors has been reduced by 15 per cent, even though soaring energy prices have doubled the total amount of money at stake, to about $10 billion a year › Although the Interior Department says it has ‘reviewed’ about 72 per cent of all revenues from federal leases, it actually examined only 9 per cent of all properties and 20 per cent of all companies › The department’s ‘compliance review’ system, a computerised form of fact-checking that has increasingly replaced audits, essentially relies on the word of the oil companies being monitored. Officials conducting such reviews do not ask companies to produce their actual records › Government data is incomplete and often inaccurate, making it almost impossible for enforcement officials to develop strategies for selecting companies for special scrutiny. The report is the result of an investigation that began in March 2006 in response to questions posed by the Senate Energy Committee after Edmund L Andrews of the New York Times reported that royalties for natural gas had climbed far more slowly than market prices, and that both federal and state auditors were complaining that the new system was inadequate. Company news . . . › Ford Motor Co on March 2 signed a collective bargaining agreement with the union representing its Russian employees, thus averting a strike. The Detroit automaker agreed to raise wages

Dorothy Fabian , features editor (USA)

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M ay /J une 2007