Chavez in China to strengthen ties built on oil

Venezuela’s President Hugo Chavez listens to a question from the media upon his arrival at Beijing airport to start his two-day visit to China, April 7, 2009. Reuters

AFP | Apr8, 2009

BEIJING (AFP) — Venezuelan President Hugo Chavez was due to meet his Chinese counterpart Hu Jintao, on the first full day of a visit to Beijing he said would reinforce a friendship built on oil.

The flamboyant Latin American leader arrived in the Chinese capital late Tuesday stating he would pursue three “concrete objectives of great strategic significance,” all related to energy trade, during his three-day visit.

They include a strengthening of the Chinese presence in the Venezuelan oil sector, the construction of Venezuelan refineries on Chinese soil, and the establishment of an oil transport joint venture, he said.

“In themselves, these projects are more than enough to justify my visit to China,” he told reporters at the start of his sixth visit here since coming to power a decade ago.

China imported 380,000 barrels of oil a day from Venezuela at the end of 2008, Chavez said, adding he wanted to expand this to one million barrels by 2013.

Venezuela is the biggest oil producer in Latin America and fast-modernising China, with its 1.3 billion people, is on a global quest to secure energy supplies.

While oil is the dominant theme in the two nations’ relationship, it has been expanding into other areas during Chavez’s leftist administration.

When Chinese Vice President Xi Jinping visited Venezuela in February, the two nations signed 12 agreements and doubled an investment fund to 12 billion dollars.

Bilateral trade peaked last year at more than 10 billion dollars, according to Venezuelan figures, and corporate China is making inroads into the Latin American country.

In one example of the growing business ties, agreements signed during Xi’s visit stretched from a mobile phone factory to an assembly plant for household appliances and a farm venture.

Last year, Venezuela launched its first geostationary satellite thanks to cooperation with China.

Military ties have also expanded. Venezuela recently purchased a fleet of 18 K-8 reconnaissance and training aircraft from China with delivery expected in January 2010.

Chavez, whose global tour has also taken him to Qatar, Iran and Japan, spoke at the start of the China leg of a “new world order”.

“A new world equilibrium is being born, a new world order, the multi-polar world of which we have long dreamed,” said Chavez, a vocal critic of the US role in international affairs.

“The power of the US empire is at an end… and by contrast other poles of global power are emerging, Beijing, Tokyo, Tehran.”

Meanwhile, his Chinese hosts appeared keen to play down any implications that the developing relationship with Venezuela might have for the United States.

Seeking closer ties with Latin America “aims at no one,” said Wu Guoping, a professor of Latin American Studies at the Chinese Academy of Social Sciences, according to the state-controlled China Daily newspaper.

“In the age of globalisation, a viewpoint like ‘Who is within whose sphere of influence?’ doesn’t stand,” Wu told the paper.

Chavez was due to meet Hu late on Wednesday afternoon, then hold talks with Xi on Thursday.

‘Wise Men’ Kissinger, Baker Visit Moscow as Obama Resets Ties

“Mr. Dodd, all of us here at the policy making level of the foundation have at one time or another served in the OSS or the European Economic Administration, operating under directives from the White House. We operate under those same directives…The substance of the directives under which we operate is that we shall use our grant making power to so alter life in the United States that we can be comfortably merged with the Soviet Union.”

- Rowan Gaither, the President of the Ford Foundation, during a meeting with Norman Dodd, Research Director for the Reece Committee, 1953.

Former US Secretaries of State James Baker (L) and Henry Kissinger (R) attend the ceremonial swearing-in of US Secretary of State Hillary Clinton at the State Department in Washington, February 2, 2009. Reuters Pictures

Kissinger is among a group of U.S. “wise men,” including former Secretary of State George Shultz, ex-Defense Secretary William Perry and former Senator Sam Nunn, who will see Medvedev on March 20, the Kommersant newspaper reported today. They will also meet with Deputy Prime Minister Sergei Ivanov, former Prime Minister Yevgeny Primakov and ex-Chief of General Staff Yury Baluyevsky, Kommersant said.

Bloomberg | Mar 18, 2009

By Lucian Kim

March 18 (Bloomberg) — Henry Kissinger and James Baker, two former U.S. secretaries of state, will fly to Moscow for talks with Russian officials after President Barack Obama pledged to “reset” relations with Russia.

Kissinger, who met with Russian President Dmitry Medvedev in December, is scheduled to return later this week, according to the U.S. Embassy in Moscow. Baker, traveling separately, will hold talks with American investors and address a conference on developing Caspian Sea energy resources.

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“These guys are building the bridge from the real diplomacy of the Bush Sr. administration to Obama,” said Nina Khrushcheva, an international affairs professor at the New School in New York. “Diplomatically inclined Republicans can make a better opening line because they come from successful relations in the past.”

Obama, a Democrat, is seeking to strengthen ties to Russia and win Kremlin support for his policies on Afghanistan, Iran and nuclear arms reduction. Vice President Joe Biden said in February it was time to “reset” relations after they reached a post-Cold War low under former President George W. Bush.

Kissinger is among a group of U.S. “wise men,” including former Secretary of State George Shultz, ex-Defense Secretary William Perry and former Senator Sam Nunn, who will see Medvedev on March 20, the Kommersant newspaper reported today. They will also meet with Deputy Prime Minister Sergei Ivanov, former Prime Minister Yevgeny Primakov and ex-Chief of General Staff Yury Baluyevsky, Kommersant said.

London Meeting

Obama, who is expected to meet Medvedev for the first time in London next month, may visit Russia in July, the Moscow-based newspaper said, citing unidentified Russian government officials. The Kremlin press service declined to comment on the report.

Kissinger, Shultz, Perry and Nunn have co-authored opinion pieces in the Wall Street Journal calling for the reduction and eventual elimination of nuclear weapons. Perry has slammed Senator John McCain’s suggestion that Russia be kicked out of the Group of Eight industrial nations.

Baker served as secretary of state when the Berlin Wall fell in 1989, heralding the disintegration of the Soviet Union two years later.

Last week, former senators Gary Hart and Chuck Hagel led a bipartisan commission to Moscow, meeting with Medvedev and Foreign Minister Sergei Lavrov. In a report published afterwards, the commission recommended the U.S. “significantly improve our understanding of Russian interests as Russians themselves define them.”

‘Very Positive’

“The reception we received in Moscow was very, very positive,” Hart said in Washington at the March 16 presentation of the report. “This was a much, much different kind of exchange, in my experience anyway over 35 years, from what we used to have in the bad, old days.”

Medvedev yesterday said Russia must modernize its armed forces in response to the eastward expansion of the North Atlantic Treaty Organization. President George W. Bush’s administration supported NATO membership bids by former Soviet republics Georgia and Ukraine, exacerbating tensions with Moscow.

Exxon Executive Renews Company’s Call For Carbon Tax

Dow Jones Newswires | Feb 10, 2009

By Susan Daker

HOUSTON -(Dow Jones)- An Exxon Mobil Corp. (XOM) executive renewed his company’s call for a carbon tax in lieu of a cap and trade program aimed at lowering emissions in the U.S.

Michael Dolan, a senior vice president at Exxon, said that governments need to “resist the urge to micromanage.”

Exxon has said before the cap and trade was inefficient. Cap and trade is supported by President Barack Obama’s administration, though how the program would work is still under debate.

The carbon tax allows companies to plan for the cost of emissions, Dolan said Tuesday.

With cap and trade, “the cost floats,” Dolan said during a question and answer period with the audience at CERA Week in Houston.

When asked how much the tax should be, Dolan said that should be left up to the policy makers.

Earlier on Tuesday, BP PLC (BP) Chief Executive Tony Hayward gave his support to the U.S. government’s plan to establish a carbon cap-and-trade system, because it gives “environmental certainty.” Hayward was the keynote speaker Tuesday morning at CERA.

Exxon and Chevron make $6 million an hour amid record profits

Exxon Mobil and Chevron, the two biggest oil companies in the world, made a combined profit of almost $6m (£4.1m) an hour in the final quarter of 2008, despite a 56pc slump in the oil price during the period.

Telegraph | Jan 31, 2009

Exxon’s profits fell by a third during the period to $7.8bn, but the oil group was still able to push full-year net profits on from 2007’s record $40.6bn to $45.2bn – the biggest ever delivered by an American company.

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The oil group was able to report another set of record profits as a result of the oil price soaring to $147 a barrel earlier in the year, despite distraction in the boardroom when shareholders attempted to force chairman and chief executive Rex Tillerson to split his dual role.

Rival Chevron was able to edge its fourth-quarter profits from $4.88bn to $4.9bn with the help of a $600m one-off gain from selling one of its oilfields. However, after stripping out this gain Chevron still managed to beat analysts’ expectations with a 28pc rise in full-year net profts to $23.9bn.

U.S. economy shrinks by nearly 4% as Exxon posts record-breaking $45.2 billion profit

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Daily Mail | Jan 30, 2009

The U.S. economy shrank at a 3.8 per cent pace at the end of 2008, the worst showing in a quarter-century, as the deepening recession forced consumers and businesses to throttle back spending.

But its not all bad news – Exxon Mobil reported a profit of $45.2billion (£31.7billion) for 2008, breaking its own record for a U.S. company, even as its fourth-quarter earnings fell 33 per cent from a year ago.

The previous record for annual profit for a U.S. company was $40.6billion (£28.4billion), which the world’s largest publicly traded oil company set in 2007.

The extraordinary full-year profit wasn’t a surprise given crude’s triple-digit price for much of 2008, peaking near an unheard of $150 a barrel in July.

Since then, however, prices have fallen roughly 70 percent amid a deepening global economic crisis.

In the fourth quarter alone crude tumbled 60 percent, prompting spending and job cuts in an industry that was reporting robust, often record, profits as recently as last summer.

Meanwhile the rate of America’s shrinking economy – while holding up better than economists expected – is likely to be revised even lower in the months ahead, with market-watchers believing the economy is contracting in the current quarter at a pace of around 5 percent.

The current January-March period, they said, will probably turn out to be the worse quarter for the recession.

‘The downturn is intensifying. The fourth quarter is worse than it looks,’ said Mark Zandi, chief economist at Moody’s Economy.com.

The new figure, released Friday by the Commerce Department, showed America’s economy sinking at a much faster clip in the October-December period than the 0.5 per cent decline logged in the prior quarter.

The report provided clear evidence of the economy’s rapid deterioration as the housing, credit and financial crises – the worst since the 1930s – feed on each other.

It’s a vicious cycle that has proven difficult for Washington policymakers to break.

The 3.8 per cent annualised drop marked the weakest quarterly showing since a 6.4 per cent annualised plunge in the first quarter of 1982, when the country was suffering through a severe recession.

For all of 2008, the economy grew by just 1.3 per cent. That was down from a 2 per cent gain in 2007 and marked the slowest growth since the last recession in 2001.

The report tallies gross domestic product, the value of all goods and services produced within the United States. It is considered the broadest barometer of the country’s economic health.

To jolt life back into the economy, President Barack Obama and Congress are racing to enact a multibillion-dollar package of increased government spending that includes big public works projects and tax cuts.

The House passed a $819billion (about £574billion) package on Wednesday and the bill is working its way through the Senate. Economists say the money needs to be quickly pumped into the economy to help stop the free-fall.

The White House was bracing for bad news. On the eve of the report’s release, press secretary Robert Gibbs thought the fourth-quarter results would be ‘fairly staggering’.

A build-up in business inventories – which in calculating GDP adds to economic activity – masked the fourth-quarter’s true weakness. When inventories are stripped out, the economy would have contracted at a 5.1 per cent pace in the fourth quarter, closer to the 5.4 per cent drop that economists expected. Businesses couldn’t cut production fast enough in response to waning customer demand and got stuck with excess inventories, economists explained.

The fourth quarter was by far the weakest three-month period in 2008, and the 3.8 per cent figure is likely to be revised even lower as the government makes new estimates based on more complete data.

The economy will stay very weak for much of this year, analysts predict.

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Chevron set new profit record in 2008

Mercury News | Jan 30, 2009

By George Avalos

SAN RAMON — Chevron Corp. powered to a gusher of record profits in 2008 that totaled $23.9 billion, the company reported Friday, fueled in large measure by sky-high crude oil and gasoline prices for much of last year.

The full-year earnings for 2008 soared 28 percent above the 2007 profits of $18.69 billion — also a record at that time.

Chevron dropped 10 cents to $70.52. The stocks rose more than 2 percent Friday morning before falling along with other U.S. equities.

“We achieved much success in 2008,” said David O’Reilly, Chevron’s chairman and chief executive.

San Ramon-based Chevron, though, quickly drew criticism from a consumer group that believes Chevron is too profitable and is using its cash improperly.

“Chevron’s robust health is no help at all to the rest of the country,” said Judy Dugan, research director with Santa Monica-based Oil Watchdog. “They reached deep into our wallets for these profits. They are using the profits to buy back their stock. They are just sitting on the cash.”

Company officials, though, responded that the company will spend $22.8 billion on capital projects in 2009, roughly the levels of 2008.

“Our earnings reflect the scale of the industry, which is a large industry with large earnings, but also very large expenses,” said Chevron spokesman Lloyd Avram. “We are investing a substantial amount of money in the search for new energy sources.”

2002 through 2008, Chevron earned a cumulative $96 billion, but also spent $96 billion in the search for more crude oil and natural gas, according to Avram.

“We are investing at our full capacity in the United States and internationally,” Avram said. “We are putting all our capital into projects we are involved in.”

The company’s return on revenues is 8.3 percent, Avram said. That compares with an average return on sales of 8.5 percent for the U.S. manufacturing industry.

“What is good for the oil companies is not always good for Americans,” Dugan said.

Chevron will curb efforts, for now, to buy back its own shares. The company had spent about $8 billion in buying its shares, O’Reilly said.

“That program has been suspended in the first quarter of 2009, owing to the need to preserve cash in very difficult economic times,” Avram said. He added, “Our company is very strong financially. We have a healthy underlying business.”

In the fourth quarter, Chevron earned $4.9 billion, or $2.44 a share, up 1 percent from a year-ago profit of $4.88 billion, or $2.32 a share.

Much of the profit was bolstered by a one-time gain of $600 million for a transaction. Still, even excluding the gain on an asset exchange, per-share profits were $2.14. That topped projections from analysts for a per-share profit of $1.82.

To be sure, Chevron has been forced to walk a tightrope that oscillates as crude oil and gasoline prices veer between highs and lows.

Yet the company seems to be balancing challenges in its upstream — exploration, development and production — operations and its downstream — refining and marketing — business, said Robert Sweet, a portfolio manager with Horizon Investment and editor of Dow Theory Forecasts.

“Chevron looks pretty well-positioned,” Sweet said. “They are poised to out-perform expectations.”

The profit picture for Chevron’s refinery and retail business brightened in the October-December period, primarily due to the largest plunge on record for crude oil prices. That helped to swell profit margins for the company’s refineries and sales of gasoline products.

But because oil prices declined and production levels drooped, Chevron’s fourth-quarter earnings dwindled for exploration, production and development.

And production will be a key to Chevron’s profit picture in 2009. Chevron has invested heavily in new oil and natural gas projects overseas and in the U.S. But Chevron hasn’t realized as much return on those investments compared with other oil companies, primarily because many Chevron projects are large and complex, Sweet said.

“Chevron has been promising production growth for years and they haven’t been delivering,” Sweet said.

However, in the final months of 2008, some big new fields came on line. Production from those projects could ramp up. More fields may blossom in 2009.

“I like the trends going forward,” Sweet said. “We are seeing they are delivering more than just promises. There are reasons to be optimistic about Chevron.”

Cuba claims massive oil reserves

The state-owned Cuban oil company says the country may have more than 20bn barrels of oil in its offshore fields – more than double the previous estimate.

If correct, Cuba’s oil reserves would be almost the same as those of the US.

BBC | Oct 17, 2008

Cubapetroleo’s exploration manager said drilling in the offshore wells would begin as early as the middle of 2009.

Such reserves would place Cuba among the top 20 oil producing nations.

Cubapetroleo’s estimates are based on comparisons to known oil reserves found within similar geological structures off the coasts of the US and Mexico.

The company said Cuba had undersea geology “very similar” to that surrounding Mexico’s giant Cantarell and Poza Rica oil fields in the Bay of Campeche.

‘More data’

Cuba’s share of the Gulf of Mexico was established in 1977, when it signed treaties with the US and Mexico.

The US Geological Survey (USGS) recently estimated that as much as 9bn barrels of oil and 21 trillion cubic feet of natural gas could lie within that zone, in the North Cuba Basin.

However, Cubapetroleo exploration manager Rafael Tenreyro Perez said his company’s estimate was higher because it had better information about Cuba’s offshore geology.

“I’m almost certain that if [USGS officials] ask for all the data we have, their estimate is going to grow considerably,” he told a news conference in the capital, Havana.

If correct, Cuba’s oil reserves would be almost the same as those of the US – 21bn barrels, according to the Oil & Gas Journal – and nearly twice the size of Mexico’s – 11.7bn barrels.

It could generate unprecedented wealth for the Communist-run state.

Mr Tenreyro said he expected the first production well to be drilled before the middle of next year by a consortium led by the Spanish oil company, Repsol, and that more wells could be started before 2010.

Cuba currently produces 60,000 barrels of oil a day.

It depends on Venezuela for an additional 93,000 barrels a day, which it receives at preferential rates in exchange for the services of thousands of Cuban doctors working in Venezuela.

‘Maoist’ Chávez strengthens oil ties with China

China’s President Hu Jintao (L) gestures to his Venezuelan counterpart Hugo Chavez while reviewing an honour guard during a welcome ceremony at the Great Hall of the People in Beijing Sepetember 24, 2008.  REUTERS/Alfred Cheng Jin (CHINA)

Financial Times | Sep 25, 2008

By Geoff Dyer in Beijing and Benedict Mander in Caracas

Describing himself as a “Maoist” and predicting the “collapse of global capitalism”, President Hugo Chávez announced yesterday that Venezuela and China would expand their energy ties by building an oil refinery in the Latin American country.

On his fifth visit to China, aimed at deepening cooperation between the two countries, Mr Chávez also announced that a joint investment fund would be doubled in size to $12bn (€8.2bn, £6.5bn).

Mr Chávez, whose anti-US rhetoric has sharpened re-cently, has long hoped that fast-growing China could become an important alternative market for Venezuelan crude and allow him to divert supplies from the US, which has caused unease in Washington. He said exports to China would more than treble to 1m barrels per day by 2012.

Although there remains considerable scepticism within the oil industry about the likelihood of Venezuela selling large volumes of oil to China because of distance and technical obstacles, the visit underlines the two governments’ strengthening relationship.

Bilateral trade is expected to exceed $8bn this year, from less than $200m a decade ago. Some 26 agreements are to be signed during Mr Chávez’s visit, including the construction of four oil tankers and projects in agriculture, telecommunications, electronics and petrochemicals. Before arriving, Mr Chávez said Caracas would buy 24 Chinese military aircraft and also planned to launch its first satellite from China in November.

Mr Chávez’s visit – which comes between stop offs in Cuba and Russia – could cause some difficulties for Beijing, which usually tries to avoid open confrontations with the US and eschews the Venezuelan leader’s outspoken rhetoric. Chinese diplomats have regularly argued that the country’s emergence will not lead to oil supplies being diverted from other countries.

However, China also sees Venezuela, which has substantial undeveloped oil reserves, as an attractive long-term partner to boost its energy security.

“To establish the strategic partnership with Venezuela would help China expand its overseas sources of oil in order to ensure its energy safety,” said Zou Jianhua, a professor at Zhongshan University in Guangzhou.

Some oil industry experts think the plans will not advance quickly. According to Trevor Houser at Rhodium Group in New York, China has announced investments that will expand its refining capacity by 50 per cent in the next three years, well ahead of demand growth. The result is that some of the announced projects will not get built.

David Johnson, analyst at Macquarie Securities in Hong Kong, said that it made sense for Chinese companies to attract partners to invest in building new refining capacity in China. It was less attractive to build refineries in Venezuela.

Oil industry colluding on prices

Mr. McTeague suspects oil industry players of colluding so that there is no price competition and consumers suffer.

National Post  | Sep 12, 2008

By Katie Rook

Motorists in the Toronto area were bewildered on Friday to discover gas prices had risen more than 12¢ overnight.

Liberal MP (Pickering-Scarborough East) Dan McTeague was also dismayed by the spike, but not surprised.

On Thursday evening, Mr. McTeague calculated Friday’s price based on a number of factors including the wholesale price of gasoline, regional gasoline distribution patterns, taxes and the strength of the Canadian dollar.

While he is usually able to predict the following day’s prices, he was so troubled by the increase on Thursday night that he delayed reporting it on his Web site.

“The calculation is based on simply the prices set at the stock exchange or the futures market, followed by the industry itself providing to all of its other competitors the price it’s going to charge,” Mr. McTeague said Friday in an interview.

“It’s not hard to figure these numbers out when you’ve been working on these things for such a long time. I always get it right and the fundamentals never change, but they certainly did [Thursday] night. That’s why I couldn’t post at five o’clock. It took me an extra hour and a half because I was in complete denial.”

Information made publicly available by major oil companies suggest approaching price changes, he said.

“Usually, in Toronto, Imperial Oil leads the pack with what the wholesale price is going to be the following day,” he said.

Mr. McTeague suspects oil industry players of colluding so that there is no price competition and consumers suffer.

“They will simply say: ‘For our clients, for our company and our retail chain, distributors and wholesalers this is the following price.’

“There are a lot of middle men wholesalers who will see that and work it with the other companies and say, ‘This is the wholesale price for Esso, what should our wholesale price be?’ They’ll just follow suit there is never any competition at wholesale.”

Consumers are justified in their cynicism about an apparently ceaseless increase of pump prices, particularly when the price of gasoline increases significantly while the price of diesel does not, said Richard McKnight, a senior petroleum analyst with En-Pro International Inc.

Mr. McKnight believes Friday’s gas price increase is a reflection of gouging. Based on the figures that would typically indicate gasoline price changes, Mr. McKnight is concerned that the prices have been inflated in anticipation of the effects of Hurricane Ike, rather than the actual impact of the storm.

Gas prices in eastern Canada, including parts of Ontario, Quebec and the Maritimes are influenced by prices in the U.S. northeast and Chicago markets that are supplied with a refined product containing gasoline, diesel, furnace oil and jet fuel via pipelines from Houston and New Orleans, he said.

At the time of Thursday’s gasoline price increase, those pipelines had not been damaged.

“My working theory is [the oil industry is] just taking advantage of a highly-publicized, very vicious storm and they’re relying on the public’s awareness of the storm to accept these high prices for gasoline. It is completely and utterly unjustified,” he said.

“I have often been asked to comment on gouging or collusion. I’ve tried to avoid it, but in this case, this is absolute gouging. I wouldn’t mind the fact that gasoline would jump say on Monday or Tuesday, once we assess the damage to the supply infrastructure including refining and pipeline.

He suggested that if the oil companies “were following the rules of the game,” the price of gasoline would have only gone up 2.5¢ a litre Friday morning.

Some analysts blamed the spike on an oil supply already depleted by Hurricane Gustav two weeks ago.

Sex, drugs and oil: corruption scandal rocks US agency

AFP | Sep 10, 2008

WASHINGTON (AFP) — US Department of the Interior employees who handled billions of dollars in oil contracts improperly engaged in sex with energy company employees, a report released Wednesday said.

The report drafted by the department’s inspector general Earl Devaney deplored “a culture of ethical failure” in which regulators received gifts including ski junkets and golf outings.

The investigation uncovered a “culture of substance abuse and promiscuity,” Devaney said in a memo to Interior Secretary Dirk Kempthorne.

The alleged misconduct involved at least 13 current and former employees of the department’s Minerals Management Service (MMS) accused of rigging contracts and accepting gifts and engaging in “illicit sexual encounters” with subordinates and industry representatives, Devaney said.
One of the accused has already pled guilty to a criminal charge, the report said.

Following a two-year, five-million-dollar investigation which included testimony from 233 witnesses and 470,000 pages of documentation, Devaney said the inquiry “revealed… a pervasive culture of exclusivity, exempt from the rules that govern all other employees of the federal government,” Devaney said.

Between 2002 and 2006, nearly one-third of the MMS staff — in Washington and the western city of Denver — received gifts and gratuities from energy companies.

Two of the accused received gifts including dinners, tickets to various shows, and golf outings “on at least 135 occasions from four major oil and gas companies with whom they were doing business,” according to Devaney.

US federal employees are forbidden from receiving gifts valued above 20 dollars.

The explosive accusations focus on the MMS’s Royalty in Kind (RIK) program, which manages commercial oil and gas sales activity and barters that oil and gas to the government in lieu of payments for drilling on federally-owned offshore lands.

One MMS supervisor used cocaine and engaged in sex with subordinates, the reports said.

“Internally, several staff admitted to illegal drug use as well as illicit sexual encounters,” Devaney said.

A memorandum accompanying the report also revealed that several representatives engaged in corruption, including one MMS official who “manipulated the contracting process from the start” on a lucrative MMS deal.

Outrage over the misconduct was immediate.

Danielle Brian, executive director of the non-partisan watchdog Project on Government Oversight, said that “given the billions of dollars at stake, and the number of people involved, this is easily the worst instance of government misconduct that POGO has seen.”

The group said the charges “illustrate the improper relationship between the regulatory agency and the oil and gas industry that it is tasked with overseeing.”

Senator Bill Nelson of Florida on Tuesday said earlier reports in 2007 and 2008 uncovered the MMS officials’ “inappropriate relationships with industry” including allowing companies to change their bids.

“This all shows the oil industry holds shocking sway over the administration and even key federal employees,” said Nelson, who is an opponent of expanded offshore leasing that President George W. Bush has been demanding from Congress.

Congressman Nick Rahall of West Virginia, the Democratic chairman of the House Natural Resources Committee, said the inspector general report “reads like a script from a television miniseries — and one that cannot air during family viewing time.”

Separate investigative reports showed that the RIK unit’s former Denver office director, Gergory Smith is accused of having sex with two subordinatese and accepting 30,000 dollars from a private company for marketing its engineering services to oil companies.