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OSLO/MOSCOW — A gap in US sanctions allows Western companies to help Russia develop some of its most technically challenging oil reserves, and risks undermining the broad aim of the measures, a Reuters investigation has found.

When Washington imposed the sanctions on Moscow in 2014 over its annexation of Crimea and role in the Ukraine conflict, the US Treasury said it wanted to "impede Russia's ability to develop so-called frontier or unconventional oil resources".

The restrictions were designed to prevent Russia countering declining output from conventional wells by tapping these hard-to-recover reserves which require newer extraction techniques like fracking, an area where it relies on Western technology.

Three years on, however, Norway's Statoil is helping Kremlin oil giant Rosneft develop unconventional resources while British major BP is considering a similar project.

Statoil is not breaching sanctions, nor would BP be doing so.

The United States, having itself experienced a spike in oil output from tapping shale rock over the past decade, worded the measures to prohibit Western companies from helping Russia develop "shale reservoirs". It did not mention other lesser-known forms of unconventional deposits. 

The EU followed suit by banning cooperation on projects "located in shale formations by way of hydraulic fracturing". 

Rosneft and its Western partners are not targeting shale, but are instead drilling to reach oil reserves known as limestone — deeper reservoirs that lie beneath shale oil. 

Geologists are unanimous that even though shale and limestone formations are different geological structures, they both constitute unconventional oil resources. Both are extracted through hydraulic fracturing, or fracking.

Experts say limestone deposits in Russia's Domanik formation, where Statoil and Rosneft are drilling, could yield billions of barrels of crude. 

Spokesmen for the US Treasury, and for European Commission foreign affairs and security policy, both declined to comment on Russian projects, the wording of the sanctions or if any change was planned to include other unconventional oil resources. 

Statoil changes words

When Statoil and Rosneft agreed to develop 12 blocks in Russia's Samara region in 2013, a year before the sanctions were imposed, they described the venture as a shale project. 

Statoil, in media releases issued in June and December 2013, and its annual report for that year, said the venture would explore "shale oil" opportunities in the Samara region, which is situated on the Volga River.

After sanctions were imposed in 2014, the company amended all the releases on its website to replace "shale" with "limestone", though it did not alter the 2013 annual report. It described the venture as limestone from that point on. 

"In the original press release, and communication following that, we used an imprecise geological term," a Statoil spokesman told Reuters. "We became attentive to this after the introduction of sanctions." 

"We have since corrected it, and now use the precise and correct term — limestone," he added about the project, which saw its first well drilled in January this year. 

"The Domanik formation is a limestone formation and is not covered by European or US sanctions."

Under EU sanctions, which Norway signed up to, companies have to ask for clearance from their governments to enter new Russian oil projects.

Statoil, which is majority owned by the Norwegian government, said it had "applied for and received a pre-authorisation related to the Domanik project by the Norwegian Ministry of Foreign Affairs".

Rosneft also started describing the venture as a limestone project after sanctions were imposed, but has not amended its previous statements which described it as shale.

"It would not be correct to call these sediments shale in the meaning of those being explored in the United States," a Rosneft official told Reuters in emailed comments. 

BP looks to explore

The Moscow Institute of Physics and Technology's Centre for Engineering and Technology for Hard-to-Recover Reserves estimates Russia's Domanik oil deposits are around a tenth the size of the giant Bazhenov shale resources — which themselves could yield over 70 billion barrels of oil, according to the US Energy Information Administration.

In May 2014, just months before the toughest sanctions were imposed on Russia; BP signed a similar agreement with Rosneft to explore in the Domanik formation in the region of Orenburg, about 400km south east of Samara. 

The project has yet to get off the ground but a BP spokesman in Russia said the company remained interested in exploring hard-to-extract resources in the Volga-Urals region. 

He declined to comment further but a BP source said the company was currently seeking an approval from the British government to start work on the project. 

The American shale revolution has seen US firms flood the market with crude since the start of the decade — and Russian oil executives say their country could have shale and other unconventional resources as big as those in the United States.

Such deposits would allow Russia to maintain its output as production from mature, conventional fields in West Siberia is declining.

THE HAGUE — Europe’s biggest oil refinery will remain shut for another couple of weeks after a power station on the site was hit by a huge fire, oil giant Shell said on Tuesday.

It is hoped the Shell Pernis refinery in Rotterdam will be back up and running “at the earliest in the second half of August”, a Shell spokesman told AFP. 

Most of the units on the site have been closed since Monday “for security measures” after the pre-dawn fire broke out overnight on Saturday to Sunday, the company added in a statement.

The refinery covers an area equivalent to 800 football pitches, and its pipework, if laid end to end, would be long enough to circle the Earth four times.

It has 60 factories on-site, making it also one of the largest refineries in the world.

Firefighters brought the blaze under control in the early hours of Sunday. Shell has not confirmed media reports that the fire was started by a short circuit.

But a second incident occurred on Monday during the cleaning of one of the factories when there was a leak of a colourless, highly reactive gas, hydrogen fluoride.

“The source of the leak was detected and it was staunched,” the company said. Both the fire and the leak are now being investigated.

“We expect to restart our operations at the earliest in the second half of August,” the Shell spokesman added.

The power station must also be repaired before the refinery can be go back into service.

“We regret the impact this may cause for our customers, and we are doing everything we can to minimise impact to our customers,” he added, asking not to be named, and also refusing to comment on whether there would be any impact on the oil markets.

The refinery has now ceased flaring off stocks of gas as part of the safety procedures taken during a shutdown.

There will be a new “flareoff when the site is relaunched”, Shell said, adding it would seek to “limit any inconvenience” to those nearby.

The facility, based in the port of Rotterdam, can process more than 400,000 barrels of petroleum products a day.

AMMAN — Jordan Petroleum Refinery Co. (JPRC)  posted JD13.9 million in net profit during the first half of 2017,  according to the JPRC financial statement, the Jordan News Agency, Petra, reported on Tuesday. Oil refining activity and gas cylinder filling  generated around JD6,8 million,  followed by mineral oil manufacturing  at  JD4.5 million while the sale and  marketing of petroleum products accounted for JD2.5 million.

CEO of JPRC Abdul Karim Al Aween said the company is working to develop its production lines and laboratories, in addition to the company’s  marketing activity. Also, other companies debts to the JPRC have been reduced, Petra indicated.

HONG KONG — HSBC said its profits were up in the first half of the year after a turbulent 2016 which saw huge writedowns and restructuring costs as it laid off thousands of staff.

The Asia-focused giant has been on a recovery drive over the past two years, streamlining its operations and exiting unprofitable businesses.

Like many global banks it has struggled to boost profits as China's economy slows and uncertainty caused by Britain's looming exit from the European Union casts a shadow over the sector.

In addition, HSBC has grappled with stricter capital rules, low interest rates and scandals stemming from its own misbehaviour. 

However, Monday's results were an improvement as analysts said its overhaul was bearing fruit. 

Reported pre-tax profit for the six months to June rose 5 per cent to $10.2 billion compared with $9.7 billion for the same period last year.

Shares closed up 2.62 per cent at HK$78.45 ($10.06) in Hong Kong on Monday. 

The half-year results showed operating expenses dropped 12 per cent to $16.4 billion, partly stemming from a sell-off of its Brazil operations. 

Chairman Douglas Flint described the performance as "extremely pleasing".

Flint said there were still uncertainties due to increasing geopolitical tensions and "ambiguous predictions" around Britain's future relationship with the EU post-Brexit, but described HSBC's performance as resilient. 

In his last statement as chairman before stepping down in October, Flint warned over the possible repercussions of the Brexit deal.

"The essential questions that have to be addressed are whether, at the conclusion of the negotiations, the economies of Europe will continue to have access to at least the same amount of financing capacity and related risk management services, and as readily available and similarly priced, as they have enjoyed with the UK as part of the EU," he said in a statement.

Flint also called for more progress on preventing "bad actors" from accessing the financial system. 

"As digitalisation of commercial activity increases, the risks of confidence-threatening disruption and economic loss, not least from cyber attacks, are amplified," Flint said. 

Unacceptable failings 

Analysts said Monday's results had outstripped predictions. 

"HSBC's earnings are definitely better than market expectations," said Dickie Wong of Hong Kong-based Kingston Securities.

He described the firm as in "very good shape" after wide-ranging restructuring programmes following the global financial crisis in 2008.

Net profit for the first half of the year rose 10 per cent to $6.99 billion from $6.36 billion for the same period in 2016.

Pre-tax profits for the second quarter rose $1.7 billion to $5.3 billion year on year, beating Bloomberg analysts' estimates, which had averaged out at a $4.6 billion forecast. 

HSBC also announced a share buyback of up to $2 billion, expected to be completed in the second half of the year.

The bank announced the appointment of a new chairman in March as part of a management overhaul that will also see it choose a new chief executive to replace Stuart Gulliver, following a massive drop in 2016 profits.

British businessman Mark Tucker, currently group chief executive and president of insurance group AIA, will take over from Flint. 

Gulliver has said he will step down in 2018. 

Gulliver and Flint were grilled by British lawmakers in 2015 and apologised for "unacceptable" failings at HSBC's Swiss division following allegations the unit helped rich clients hide billions of dollars from the taxman.

HSBC was one of six major US and European banks that were fined a total of $4.2 billion by global regulators in a November 2014 crackdown for attempted manipulation of the foreign exchange market. 

It was also fined $1.92 billion by US prosecutors in 2012 to settle allegations that it failed to enforce anti-money laundering rules, exposing it to exploitation by drug cartels and terrorist organisations.

FRANKFURT AM MAIN — Germany hosts a debate on the future of diesel engines next week as pressure grows on the government and automakers to curb or ditch a technology tarred by a reputation for pollution and cheating.

The "national diesel forum" takes place in Berlin on Wednesday amid renewed suspicions of emissions-fixing and a clamour for diesel-powered vehicles to be banned from cities to reduce pollution.

Famous for its engineering prowess, its profitability and its role as an employment powerhouse, the car sector traditionally wields massive political clout in Germany.

But both parties in the governing coalition, the centre-left Social Democratic Party led by Martin Schulz and Chancellor Angela Merkel's centre-right Christian

Democratic Union, are keeping the industry at arm's length as September parliamentary elections loom.

"Mrs Merkel is trying to calm things down before the elections, that's the main reason for this summit," Ferdinand Dudenhoeffer of the CAR automobile research centre told ARD public television.

Breaking with a political habit of hewing close to carmakers — who provide more than 800,000 jobs in Germany's largest industrial sector — Environment Minister Barbara Hendricks said Thursday that overfamiliarity had been a mistake, as it allowed company bosses to believe they were untouchable.

Anything but a ban 

Hendricks and Transport Minister Alexander Dobrindt will lead a summit packed with carmakers active in Germany, including VW with its Audi and Porsche subsidiaries, Mercedes-Benz maker Daimler, BMW, Opel and Ford, whose European HQ stands in Cologne.

On Thursday, Dobrindt ordered Porsche to recall 22,000 vehicles across Europe after what he called "illegal" software disguising the true level of emissions had been discovered in its Cayenne and Macan models.

Because the affected models are still being manufactured, the government will also deny any permits for the vehicles "until new software is available", he said.

The VDA auto industry federation, the car importers' association VDIK, powerful trade union IG Metall and the local and regional governments most affected by air pollution are all invited to Wednesday's talks.

Topping the list will be the task of reducing air pollution from diesel technology.

But Dudenhoeffer expects nothing but a "pretend solution" that will not go far enough, and consumer and environmental organisations are incensed that they have been left off the invitation list.

Even so, widening public concern about pollution provides a powerful spur for the auto industry to take a long, cold look at diesel.

Germany has already been warned by the European Commission about its bad air quality. On Friday, a court in Stuttgart, the home of Mercedes

Benz and Porsche, found that a ban on older diesel vehicles would be the most effective way of reducing the pollution and protecting public health.

Such restrictions could be a massive blow to those using the cars, which make up around one-third of the total on German roads.

The Stuttgart ruling also piles pressure on politicians to abandon their support for a voluntary approach by the car industry.

Daimler has said it will recall some three million vehicles for a software upgrade to reduce nitrogen oxide (NOx) emissions and VW has announced almost 1 million more refits, bringing its total to around 4 million. Audi and BMW have each promised smaller numbers of fixes to their cars.

But Hendricks says software updates alone will not fix the problem.

Industry leaders understand that they are "at a crossroads", she said.

Other countries have announced drastic measures — even if implementation remains decades away.

Both Britain and France will stop sales of fossil-fuel vehicles from 2040, but the move appears extremely unlikely in Germany, which has deep historic connections to diesel. The technology can be traced to a German inventor, Rudolf Diesel, in the 1890s.

Part of the problem is that some foreign manufacturers invested heavily on hybrid or all-electric vehicles to reduce carbon dioxide emissions, but Germany's car industry tended to bet on diesel.

The fuel contributes less climate-altering carbon dioxide gas than petrol-burning motors. But it emits more NOx, which contributes to the formation of harmful smog, as well as fine particles that can hurt respiratory and cardiac health.

AMMAN — Arab Bank Group announced its results for the first half of 2017, reporting a net income after tax of $415.2 million compared to $424.9 million for the corresponding period of 2016, according to a bank statement released on Saturday. 

The positive results were driven by growth in its revenues, the statement said. 

Its net operating income before provisions and taxes reached $593.5 million compared to $591.3 million. 

Excluding the effect of the devaluations of several Arab and foreign currencies, the group’s net operating income grew by 7 per cent, according to the statement. 

Customer deposits stood at $33.5 billion while the bank’s loans and advances increased by 4 per cent to reach $24.7 billion.

Sabih Masri, chairman of the board of directors said the strong performance of Arab Bank Group confirms its success in dealing with the challenging operating environment.

Commenting on the results, Nemeh Sabbagh, the bank’s chief executive officer, said despite geopolitical and macro economic uncertainties in the region, the underlying performance of Arab Bank Group for the six months period has been strong, recording solid growth.

AMMAN — The Arab Potash Company (APC) achieved a net profit of JD 42.8 million after tax, provisions and mining royalties in the first half of 2017, according to a company statement. 

Accordingly, the APC recorded a 49 per cent increase in its profit over that of the corresponding period of 2016, when its net profit stood at JD28.7 million, the company’s statement added.

APC Board Chairman Jamal Al Sarayrah said there were signs of improvement in global potash prices after potash prices had dropped to a 10-year low. 

In July, an agreement was reached between buyers in China and the major global producers, regarding potash sales price in the coming contractual period, $ 11 higher per tonne than the previous contract, Sarayrah explained. 

The increase will impact the other markets and will have a positive effect on APC's financial results in the second half of this year, he added.

He indicated that APC achieved considerable improvement in terms of production costs per tonne, as these dropped by 22 per cent in the first half of this year compared to the same period last year. 

Reduced costs were the outcome of an increased production volume, efficiency in cost management, and energy saving solutions implemented at the company, according to the statement. 

Sarayrah also highlighted a “noticeable” increase in the expected payments to the national treasury compared to last year due to the company’s improved financial performance.  

BERLIN  —  Germany on Thursday ordered luxury car brand Porsche to recall 22,000 vehicles across Europe over emissions test cheating amid a widening election-year scandal.
Transport Minister Alexander Dobrindt told reporters that “illegal” software disguising the true level of polluting emissions had been discovered in Porsche’s Cayenne and Macan models, which must now be fixed.

“We will order a legally binding recall for these vehicles, just as we have in other cases,” he said.

Dobrindt said that because the affected models are still being manufactured, Berlin would also deny any permits for the vehicles “until new software is available”.

Porsche is a subsidiary of Volkswagen, which admitted in 2015 to cheating regulatory emissions tests in 11 million diesel vehicles worldwide.
Prosecutors in the southwestern city of Stuttgart, a bastion of Germany’s all-important car industry, had said earlier this month they had opened a probe against persons unknown working for Porsche.

The investigation into “suspicion of fraud and false advertising” stems from “possible manipulation of exhaust treatment in diesel vehicles from Porsche AG”.
Porsche spokesman Christian Weiss told AFP at the time that the company “takes the prosecutors’ investigation very seriously” and would “do the utmost to clear up the issue comprehensively and as quickly as possible”.

Volkswagen, the world’s largest carmaker, has admitted to using so-called “defeat device” software to cheat regulatory nitrogen oxides emissions tests.
The devices allowed the cars to spew up to 40 times the permissible limits of nitrogen oxide during normal driving, but this was hidden during emissions testing.
The issue has gained fresh urgency less than two months before Germany holds a general election in which Chancellor Angela Merkel, a champion of the auto industry, is widely expected to win a fourth term.

FRANKFURT AM MAIN — The world's biggest luxury carmaker Daimler reported strong financial results for the first half on Wednesday, but the performance was shaded by scandals around diesel emissions and a suspected cartel.

"The car industry is indeed making headlines at the moment, and not good ones," Chief Executive Dieter Zetsche said during a conference call early Wednesday.

Weekly Der Spiegel reported on Friday that five German firms — BMW, Daimler, and Volkswagen with its subsidiaries Audi and Porsche — had been collaborating for decades on many aspects of car development, production, sales and logistics, disadvantaging customers and suppliers.

Most sensitive is the claim that manufacturers worked together on diesel exhaust filtration systems, a hot topic in Germany since Volkswagen admitted to cheating regulatory emissions tests on millions of cars in 2015.

The European Commission — which can fine companies up to 10 per cent of their annual revenue to punish anticompetitive behaviour — has said it is looking into the allegations.

"I know many wish for more clarity," Zetsche said on Wednesday. "But we are well-advised not to take part in speculation."

The Daimler boss' silence has been matched by the other carmakers who allegedly took part in the cartel.

On the diesel question, the chief executive would only say that "it is worth it to
fight for diesel".

The engines are prized by carmakers as a way of reaching carbon dioxide emissions targets but produce harmful nitrogen oxides in their exhaust.

Daimler was one of the worst performers on the DAX index of blue-chip German shares on Wednesday morning, losing 0.54 per cent to reach 60.73 euros ($70.7) against a market up 0.36 per cent around (10:30 GMT).

Strong financial results 

That was despite robust financial figures, including a record net profit in the second quarter Wednesday after slight growth over 2016's figure, prompting it to confirm forecasts for the full year.

Net profits for the Mercedes-Benz maker increased 0.4 per cent in the second quarter compared with same period in 2016, reaching 2.44 billion euros ($2.83 billion) — slightly short of predictions from analysts surveyed by Factset.

Revenue grew 7 per cent to reach 41.2 billion euros, while operating, or underlying profit added 15 per cent to reach 3.7 billion euros.

Across the whole first six months, revenues increased 9 per cent compared with 2016, to almost 80 billion euros, while operating profit grew 43 per cent to reach 7.8 billion.

Looking to the group's different divisions, Daimler's flagship Mercedes-Benz cars increased unit sales 9 per cent in the second quarter compared with the same period in 2016, to almost 600,000 vehicles, while revenues increased 7 per cent to 23.6 billion euros.

Operating profit at the unit — which overtook arch-rival BMW as the world's largest luxury carmaker in 2016 — grew 70 per cent to reach 2.4 billion euros.

The group also reported growth in unit sales at its trucks, vans and buses divisions in the second quarter.

But all three units reported double-digit falls in operating profit compared with the same period in 2016.

Nevertheless, Daimler remained confident of meeting its full-year forecasts of "significant" increases in both revenue and operating profits.

A recall of three million vehicles for a software update designed to reduce nitrogen oxide emissions will cost some 220 million euros, which the group plans to book in its third-quarter results.

German federal and local authorities and car manufacturers will meet on August 2 for talks on the future of the fuel in Europe's largest economy — with industry leaders hoping to avert cities from efforts to ban diesel vehicles from roads at times of high pollution.

BRATISLAVA — Central and Eastern Europe faces the end of an economic era.
With employment rates at record highs, and workers demanding wages closer to western levels, the cheap-labour model that has driven growth since the fall of Communism is on the way out.
The challenge that faces governments and companies in the region over the coming years is to find new avenues to growth.
A walkout at the Volkswagen (VW) factory in Bratislava last month, the first strike at a major Slovak car plant, led to a 14 per cent pay hike in what has become the latest and starkest sign of the shifting economic landscape.
VW was one of dozens of big Western manufacturers beating a path to Slovakia, the Czech Republic, Poland and Hungary after the fall of communism in search of cheap labour.

The rush eastwards marked the birth of an economic model that transformed the region. But a quarter of a century down the line, the regional labour market is running dry, with record low unemployment rates of around 3-7 per cent across the region.
As a result, wages are rising faster than in the West — led by Hungary with a 12.8 per cent year-on-year leap in March.
Zoroslav Smolinsky, the VW Slovakia union leader who engineered the strike, had joined the production line in 1992, when the plant had just been taken over by Germany’s VW.
He was paid the equivalent of 75 euros a month at the time. “We could live on it,” he said. “We had to.”

Today Volkswagen’s 12,300 workers in Bratislava earn an average of 1,804 euros a month.
Such rates, however, remain less than half the average Volkswagen pay packet in Germany, and Smolinsky says such huge disparity can no longer be justified. 

“Times have changed,” the 48-year-old said. “We’re in the EU and have to keep up with trends and gradually narrow the gap.”
The strike was resolved with the wage increase phased over more than two years, as well as a 500 euro one-off bonus for each employee and an extra day of holiday. VW is not alone in facing rising labour costs and strife.
French carmaker Peugeot and South Korea’s Kia have both raised pay this year in Slovakia, while Audi and Mercedes have faced strike threats in Hungary.
The moves by the car makers are particularly significant because the auto industry represents the lion’s share of foreign investment in Central and Eastern Europe.

Volkswagen units, for example, are the biggest companies in Slovakia and the Czech Republic, while Slovakia has become the world’s top carmaker per capita, producing more than 1 million a year.

Moscow-based investment banking group Renaissance Capital said foreign investors would not abandon existing projects in the region, but new investments were likely to go elsewhere.
“Never again is Central Europe likely to offer what it did in the 1990s,” it said in a note to investors. 

Companies are taking steps to improve productivity via methods like increased automation in order to offset rising costs, say executives, policymakers and analysts. In the longer-term some could go to other countries instead in search of cheaper labour.
Volkswagen signalled it could steer clear of Slovakia for future investments if faced with another costly showdown with workers.
Another sharp rise in wages would “threaten the stability of jobs”, Lucia Kovarovic Makayova, a spokeswoman for Volkswagen Slovakia, told Reuters. “It could happen that the group gives preference to a factory with lower personnel costs when deciding on sourcing production of the next product.”
Renaissance Capital said investors in search of cheap labour would ultimately look further south and east.

“When European business confidence is high again, we think the next wave of investment expansion will lap the shores of Turkey and the southern Mediterranean,” it added, also singling out Morocco, Tunisia, Egypt and possibly Ukraine and Iran.
Filip Eisenreich, CEO of Czech ventilation and cooling system producer Janka Engineering, a unit of India-based Lloyd Group, said his company was raising wages by 7-8 per cent this year and was “pretty much on the edge” in terms of labour costs.

“Further growth [in wages] without concurrent growth in productivity would not be sustainable for us,” he told Reuters.

While labour productivity has long been lower than in Western Europe, “this difference has so far been compensated for by lower wage costs, but those rise faster every year than in western European countries”, he added.
Radek Spicar, vice president of the Czech Confederation of Industry, said intensifying wage pressures were forcing firms to automate more, something his organisation trains. Seminars “have been packed to the roof”, he said.

The issue of wage disparity is a highly charged one that is pervading society and politics across the region.
It is at the heart of a perception among Poles, Slovaks, Czechs and Hungarians that they are seen by Western Europe as second-class Europeans. Politicians have seized on such grievances and have taken up the call for better pay.
Slovak Prime Minister Robert Fico backed the Volkswagen strikers, while in the Czech Republic the ruling Social Democrats have erected billboards ahead of an October election declaring “The End of Cheap Labour”.
However; political and labour leaders aiming to bring wages in line with the West must find alternative paths to economic success. Crucial to this, most agree, is to move industries up the value chain into higher-margin areas.

Big manufacturers share less of their income with employees in Central and Eastern Europe than they do in Western Europe. In the EU, wages on average accounts for 47.5 per cent of economic output, according to Eurostat — but while that figure reaches 50.9 in Germany it drops to just 40.4 in the Czech Republic.

But workers in Central and Eastern Europe are less financially productive. According to OECD data, an hour of work in Germany produces 52.7 euros of German economic output, but just 19.4 euros in the Czech Republic.
Part of the reason is that many Czech firms produce lower-margin components for global chains rather than the finished products that deliver higher margins and profits. 

“We are not just cheaper-labour economy, but also a low-cost economy,” said Spicar. “We are also a supplier economy, part of global production chains, with low share of final products.”