BP plc (NYSE: BP) killed a joint venture with Rosneft late last year, but the Russian company still has deals working with Royal Dutch Shell plc (NYSE: RDS-A). Norway’s Statoil ASA (NYSE: STO) recently announced discovery the company estimates at 300 million recoverable barrels in the Barents Sea, which is adjacent to the Kara Sea where Exxon and Rosneft will be conducting exploration.

Rosneft will also receive 30% of some Exxon projects in the Canadian oil sands, Texas, and the Gulf of Mexico. The two companies will also evaluate developing “tight oil” resources in Western Siberia.

Alekperov said, “State companies take the licences and do nothing with them.” What he hopes for, and what Russian President Vladimir Putin also hopes for, is that they can lure the expertise of companies like Exxon Mobil Corp. (NYSE: XOM), BP plc (NYSE: BP), and Norway’s Statoil ASA (NYSE: STO) back to Russia with the promise of advantageous tax laws and royalty agreements.

Whether or not the plan works depends to a large extent on the size of the bait. Exxon has been stifled by Gazprom at attempts to build a pipeline from its Sakhalin project to China and BP’s joint venture with TNK was effectively broken up by the Putin government. Luring the big oil companies back will require something more effective than a promise that the companies will eventually get paid.

Russia needs these foreign companies both to finance what are sure to be massively expensive work and to develop the technology to recover the resources. Russia’s Arctic could well offer the most inhospitable climate on earth, along with as much as 20% of the world’s undiscovered oil and gas resources. Exxon last year formed a partnership with Rosneft to explore a part of the region, but results could be years away.

And that is the nub of Russia’s problem. The country is committed to producing 10 million barrels/day of liquids through 2020, and the only way that can happen is if the country can bring new fields into production.

Lukoil’s chief is unhappy that Russian law prohibits his company from bidding on or participating in licenses to the Arctic. He also supports a change to the country’s tax law on oil, which currently taxes production not profit. Russia is looking at a variable-rate tax law that would overcome his objections, and Alekperov claims that the proposed law has Putin’s support.

Russia needs crude oil prices of around $117/barrel to balance its government spending — and even if the country can achieve that, the revenue cannot be reduced by the capital spending required to explore and develop the Arctic. Cash and technology are what Exxon, BP, Statoil, and others will be expected to provide. Russia only wants the lion’s share of the profits.

Paul Ausick

The US Energy Information Administration estimates the China sits on top of about 1,275 trillion cubic feet of shale gas, which is about 50% more than the agency’s estimate for US deposits. The Chinese companies are looking for partners to develop the shale gas resources, and the expertise is in the foreign major integrated oil companies, the oil field services companies, and the drillers.

Royal Dutch Shell plc (NYSE: RDS-A) has signed a deal with a small Chinese gas company to explore, making it the first of the major integrated companies to get a toehold in exploration for shale gas in China. PetroChina has also formed a partnership with Shell and both Chevron Corp. (NYSE: CVX) and BP plc (NYSE: BP) are reportedly talking with Sinopec to create exploration joint ventures, and Norway’s Statoil ASA (NYSE: STO) is also seeking shale-gas assets in China.

The start of a boom in exploration for shale gas inevitably begins with the majors because that is their basic business. But it’s difficult to imagine that these companies will get any sort of participatory deal in the production of the gas. More likely is a fee-based deal where the companies are paid their expenses plus a defined amount for every cubic foot produced.

More likely to see bigger profits are the services companies like Halliburton Co. (NYSE: HAL) and Schlumberger Ltd. (NYSE: SLB) and the drillers like Baker Hughes Inc. (NYSE: BHI) and National Oilwell Varco, Inc. (NYSE: NOV) with extensive onshore experience. It is unlikely that US producers like Devon Energy Corp. (NYSE: DEV) or Chesapeake Energy Corp. (NYSE: CHK) will derive much benefit from the Chinese push into shale gas development, but if one of the producers does some creative thinking it’s possible.

The good news is likely to last a relatively short time however. Sinopec’s chairman has said that he expects unconventional gas like shale gas and coal-bed methane to drive growth for the company in the future. And getting Sinopec and the others to the point where they are self-sufficient could take up to four years.

And the Chinese certainly intend only to rent the technology they need now and to demand a transfer of technology from its partners so that the partners can be cut loose eventually. This pattern has been played out in solar PV development, wind turbine development, and virtually every sort of information technology development in China.

It’s still very early days in the Chinese shale gas industry. But the broad outline is well-established and well-rehearsed. There’s no reason to expect shale gas development to follow a different script.

Paul Ausick

Twelve of the thirteen companies or their subsidiaries are publicly traded: Anadarko Petroleum Corp. (NYSE: APC), ATP Oil & Gas Corp. (NASDAQ: ATPG), BHP Billiton plc (NYSE: BHP), Chevron Corp. (NYSE: CVX), Cobalt International Energy, Inc. (NYSE: CIE), ENI SpA (NYSE: E), Hess Corp. (NYSE: HES), Marathon Oil Corp. (NYSE: MRO), Murphy Oil Corp. (NYSE: MUR), Noble Energy Inc. (NYSE: NBL), Royal Dutch Shell plc (NYSE: RDS-A), and Statoil ASA (NYSE: STO).

There are 16 drilling projects covered by the agency’s ruling and drilling could resume within a few weeks. Any resumption would require the driller to comply with requirements issued in December that aim to ensure that drillers have a approved plan for containing the oil in the event of a blowout. It’s not clear that all 16 projects meet that requirement or how long it will take for the requirement to be met.

US crude production will lose about 220,000 barrels/day in 2011 as a result of the Gulf disaster, about 13% of offshore production. For the US economy, that means more imports at higher prices. For the economy of the Gulf coast states, the temporary loss of 8,000-12,000 jobs just goes on and on.

Drillers have been holding idle rigs in the Gulf, waiting for permits to go ahead with their projects. But that can’t continue indefinitely at costs of hundreds of thousands of dollars a day. Smaller companies, like ATP Oil & Gas, can afford to wait even less than the majors like Chevron and Shell. Permits that once took just days to get approved, can now take up to five months.

For its part, the BOEMRE says it has approved some permits for modifications to existing wells, but that the agency’s priority remains safe and environmentally responsible development.

While Gulf production is stalled, the missing 220,000 barrels/day add to the volatility of the crude market. If crude rises above $100/barrel this year, the federal government will take some serious heat for the increase. The heat will turn to flames if gasoline prices rise to $4/gallon.

Paul Ausick

Apple Inc. (NASDAQ: AAPL) Started as Outperform with $410 at Baird (expanded details).
Boston Scientific Corporation (NYSE: BSX) Started as Buy at Collins Stewart.
Capella Education Co. (NASDAQ: CPLA) Cut to Neutral at Baird.
Corinthian Colleges Inc. (NASDAQ: COCO) Cut to Sell at UBS.
Grand Canyon Education, Inc. (NASDAQ: LOPE) Cut to Neutral at Baird.
Logitech International (NASDAQ: LOGI) Cut to Sell at Citigroup.
Medtronic, Inc. (NYSE: MDT) Started as Neutral at Collins Stewart.
Monolithic Power Systems Inc. (NASDAQ: MPWR) Cut to Neutral at Gleacher & Company.
Portugal Telecom SGPS SA (NYSE: PT) Cut to Hold at Deutsche Bank.
PulteGroup, Inc. (NYSE: PHM) Raised to Neutral at Credit Suisse.
Statoil ASA (NYSE: STO) Cut to Hold at Societe Generale.
Syniverse Holdings Inc. (NYSE: SVR) Cut to Hold at Jefferies.

You can join our free daily email distribution list to hear more about dividend trends, analyst upgrades and downgrades, top day trader and active trader alerts, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Two other Chinese companies, China Petroleum & Chemical Corp. (NYSE: SNP), or Sinopec, and Cnooc Ltd. (NYSE: CEO) were the other bidders for the stake in the Peregrino field. Earlier this year, Sinopec bought stakes in two offshore projects in Brazil from Petroleo Brasileiro S.A. (NYSE: PBR), Petrobras.

The China Development Bank also agreed in 2009 to lend Petrobras $10 billion over ten years in return for a 150,000 b/d of oil in 2010, and 200,000 b/d for the next nine years. China does not receive any stake in any Brazilian oil field or any contracts for providing services in the oil fields. The loan carries an interest rate of 6.5% and will be repaid in cash, not oil. Sinopec will end up paying for the oil in cash too.

Chinese oil companies have spent large amounts of cash for stakes in oil projects around the world. The Peregrino field is located about 50 miles offshore in Brazil’s Campos basin under about 350 feet of water. Sinopec’s projects are in the much deeper water and face all the risks that came home to roost on BP plc (NYSE:BP) in the ongoing Gulf of Mexico disaster.

Statoil paid about $7.20/b for the Peregrino field reserves in 2008 and sold the stake to Sinochem for about $15.40/b. The sale to Sinochem reduces Statoil’s equity production guidance for 2012 by 40,000 b/d, putting it in a range of 2.06-2.16 million b/d.

Statoil recently fought off a shareholder resolution to divest the company’s stake in the Canadian oil sands. In 2007 Statoil paid $2 billion for the stake.

The Norwegian company, which is 67% owned by the government, has dwindling North Sea production and it seems a bit odd that it would sell off the projected production from the Peregrino field. But the company also needs cash to get its oil sands project up and running by the end of 2010 and to help meet the costs of its other deepwater projects offshore Norway.

A Chinese company was the obvious buyer, given the developing relationship between China and Brazil. Statoil’s shares are up more than 1% this morning on heavy volume.

Paul Ausick

Since 2002, Greenland has issued 13 licenses to explore its onshore and offshore areas for oil and gas. Among the licensees are Exxon Mobil Corp. (NYSE: XOM), Chevron Corp. (NYSE: CVX), Encana Corp. (NYSE: ECA), Britain’s Cairn Energy, Canada’s Husky Energy, and both Danish and Greenlander national oil companies. Statoil ASA (NYSE: STO) drilled a dry well in 2000, one of seven failures to find oil over the past 30 years.

Greenland, which is a dominion of Denmark and receives more than $10,000 per person from the Danish government for each of its 56,000 inhabitants, has long been thought to hold significant amounts of oil off its shores. The land mass itself is virtually covered by ice, as the following map shows.

The US Geological Survey estimated in 2009 that there are 50 billion barrels of oil in Greenland. Prior to that, the USGS had estimated the total reserves to be between 40-160 billion barrels. USGS reserves estimates are notoriously high because they are typically based on very little hard evidence, which to be fair is rarely available. What is probably safe to say is that there are no more than 160 billion barrels of reserves in Greenland.

Knowledge of Greenland’s reserves is sure to grow this year as Cairn Energy begins a systematic geological mapping of the potential fields and drills four exploratory wells in the offshore West Disko field, with the first expected in late July. Disko is the largish island about midway up the west coast of Greenland.

The new flurry of activity in Greenland is the result of warming temperatures that are melting the country’s ice cap and moderating the severe winters that usually freeze the surrounding ocean to a depth of more than three feet. As the region becomes more accessible, more surveying and exploration will occur.

Of course the recent disaster in the Gulf of Mexico involving BP plc (NYSE: BP) and its contracted driller Transocean Ltd. (NYSE: RIG) focuses attention on the fragility of the Greenland ocean environment which is the home to whales and walruses. The country also hosts a thriving fishing business which fisherman are naturally reluctant to endanger.

Those concerns, though, might be trumped by the desire of Greenlanders to gain full independence from Denmark. Oil revenues would play a big part in that, so the locals are heavily in favor of development. Greenland is auctioning 14 blocks (about 90,000 square miles) in Baffin Bay this August, in an area where onshore rocks have been observed seeping oil. The government expects to claim more than 50% of all revenues through taxes, royalties, and participation by the country’s national oil company. One big producing field would easily replace the $600 million or so the country now gets from Denmark.

That still leaves more than 40% for the companies that do the work, and there is no better deal available anywhere else in the world. In Iraq, for example, oil companies are not being allowed to share in production, but are being paid a flat per barrel fee above costs. And the per barrel fees are not hefty, ranging from about $1.40-$2.30 per barrel.

Other political issues could arise from claims made by Russia, Norway, Canada, and the US on the seafloor inside the Arctic Circle. In 2007 Russia even sent a submarine to plant the country’s flag on the seafloor. If further exploration of the area delivers on its promise, it is inevitable that tensions among the competing nations will rise.

Currently, Greenland’s state oil company, Nuna Oil, employs just seven people, only one of whom is a geologist. If further surveys and exploration validate the reserves estimate of 50 billion barrels (more than all the oil extracted from the North Sea in the past 40 years), Nuna Oil will be hiring a few more people.

Paul Ausick

Tonight’s picks for “going global” were for 20% of your portfolio and meant to be a hedge for protection against Nancy Pelosi.  Brief explanations are below for the developing nations picks and for the developed country picks, although with most at or close to 52-week highs Cramer noted you might want to buy some now and wait or hope for a pullback.

In developing nations, Cramer picked Brazil, China, and Peru.  Brazil’s economy is very insulated, growing, and has Vale S.A. (NYSE: VALE) is his pick for mining and construction with nickel and copper reserves and has double-digit growth. Banco Santander S.A. (NYSE: STD) is the parent of the huge Santander IPO last year. China is replacing America and Cramer noted that China Unicom (NYSE: CHU) is one of the largest phone players in China and has the exclusive on the iPhone with 21% of the wireless market and a chance to grow market share.  Peru has one big thing despite being on a tear and having its debt upgraded, and that is Southern Copper (NYSE: PCU) in natural resources.  It is number five on the planet for copper and China can’t get enough of it.

In developed countries with pro-business policies and low taxes, Cramer wanted to look at the nations of Norway, Australia, and Canada.  Norway’s economy picks is for the strong currency and for its natural resources and that it exited the recession first and tightened its lending.  Nordic American Tanker Shipping (NYSE: NAT) for transport shipping and Statoil (NYSE: STO) is the pick as the sixth largest European oil player.  In Australia, Cramer likes the resource-driven economy and it effectively  BHP Billiton (NYSE: BHP) is into all the major natural resources that is a one-stop shop for everything coming out of the ground.  In Canada, it is also resource-driven and has very strict bank regulation that allowed the Canadians to miss out on the bank crisis.  His pick for Canada is a bank: The Bank Of Nova Scotia (NYSE: BNS) even though analysts are against it.  On the Lightning Round he endorsed JDS Uniphase (NASDAQ: JDSU) as being back and in the right spot, and he said “I invite management to appear on the show” because he wants to get deeper on that one.

I would like to personally invite you to join our free daily email distribution list from 24/7 Wall St. to hear about ongoing day trader and options trader alerts, analyst upgrades and downgrades, stock and market rumors, Buffett and guru investor news, M&A and IPOs, and more.

• Cramer’s counter-terrorism and homeland security theme picks for 2010
• Cramer’s Energy shortage stock picks theme for 2010.

JON C. OGG
JANUARY 6, 2010

You might even think of this as the Nordic-Dow.  Some of the key ADR stocks in the index that you will easily recognize are LM Ericsson Telephone Co. (NASDAQ: ERIC), Nokia Corp. (NYSE: NOK), Norsk Hydro (NYSE: NHY), Novo-Nordisk (NYSE: NVO), and StatoilHydro ASA (NYSE: STO).

Here is a full list of the 30 constituents.

JON C. OGG
AUGUST 20, 2009

Anadarko Petroleum (APC) Raised to Buy at BofA/Merrill Lynch.
Annaly Mortgage (NLY) STarted as Overweight at Barclays.
CenturyTel (CTL) Raised to Buy at UBS.
KeyCorp (KEY) Raised to Outperform at KBW.
Intel (INTC) Raised to Neutral at BofA/Merrill Lynch.
LSI Corp. (LSI) Raised to Buy at BofA/Merrill Lynch.
3M (MMM) Started as Buy at Jefferies.
Marvell Tech (MRVL) Raised to Buy at BofA/Merrill Lynch.
StatoilHydro (STO) Raised to Buy at BofA/Merrill Lynch.
Steel Dynamics (STLD) Raised to Buy at BofA/Merrill Lynch.

JON C. OGG