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Thursday, February 28, 2008

Tengizchevroil eyes output bonanza

Tengiz oilfield in Kazakhstan27 February 2008 - Upstream OnLine - The Chevron-led Tengizchevroil group, which operates the giant Tengiz oilfield in Kazakhstan, plans to increase its output sharply this year after new production facilities start up. Chevron has a 50% stake in Tengizchevroil. Its partners include ExxonMobil, Lukoil and Kazakhstan's state-run player kazMunaiGaz. "We will have the capacity to produce 540,000 barrels of oil per day by the middle of 2008," Linsi Crain, a Tengizchevroil spokeswoman, said in a written response to Reuters' questions. "We plan to produce 18 million tonnes of crude in 2008." Tengizchevroil produced 13.9 million tonnes of crude (about 320,000 bpd) last year. This year's output boost will come from a new oil processing plant and a gas injection facility, due to come on stream later this year. The company exported most of its 2007 output - 12.8 million tonnes - through the Caspian Pipeline Consortium (CPC) and shipped another 1 million tonnes by rail. The CPC, however, is running close to full capacity and Russia has been blocking plans for its expansion demanding a higher payout. CPC shareholders, also led by Chevron, made concessions to Russia last year, but its actual expansion is yet to begin. Environmental concerns pose a further problem. The Kazakh government has accused Tengizchevroil of not doing enough to deal with its sulphur stocks. The company says it is doing everything to reduce them by selling the by-product on new markets. The oil from Tengiz contains toxic hydrogen sulphide which is processed into huge piles of inert yellow sulphur and stored near the oil wells before the crude is transported by pipeline. "Sulphur being placed in storage is declining and sulphur pads were reduced five percent (by 457,000 tonnes) in 2007," Crain said. She added the company sold a record 2 million tonnes of the product in 2007, surpassing its 2006 record. "We sold 126% of 2007 production and 24% more than in 2006," Crain said. A Kazakh court slapped a 74 billion tenge ($609 million) fine on Tengizchevroil last year but the fine was later halved. The company has said it may appeal against the decision this year.

Wednesday, February 27, 2008

How to Use Iraq's Extra Oil Revenue?

26.02.2008 - [Neftegaz.RU] - Iraq could get an extra $15bn from its oil production in 2008, which makes up about 84% of Iraq's national revenue, special inspector general Stuart W Bowen Jnr said. Iraq's oil production averaged 2.38 million barrels a day in the last three months of 2007, the report said, the highest level since the US-led invasion in 2003, but below pre-war levels. "The possible rise in Iraq's revenue emphasises the need for the government of Iraq to pursue its fight against corruption with renewed vigour," the report added.

Wednesday, February 20, 2008

Astana turns screws on Tengizchevroil

20 February 2008 - Upstream OnLine - Kazakhstan's Environmental Protection Ministry kept up pressure on a Chevron-led Tengizchevroil consortium, urging the company to come up with a quick plan to utilise its sulphur stocks. The authorities have long accused the project of making slow progress in removing open air sulphur stocks at the Tengiz oilfield. A court slapped a 74 billion tenge ($609 million) fine on Tengizchevroil last year but the fine was later halved. Environmental Protection Minister Nurlan Iskakov met Tengizchevroil's top management earlier this week for the last round of talks surrounding the matter, the ministry said. "(The company) was tasked with mapping out measures to decrease associated gas flaring as well as a programme of sulphur utilisation aimed at a complete utilisation of entire sulphur stocks at the earliest stage," Reuters quoted a ministry statement as saying. A Tengizchevroil spokeswoman denied the venture was breaking any laws, telling Reuters it was doing everything possible to utilise the stocks. She added the company had yet to decide whether it would appeal against the court decision this year. The oil from Tengiz contains toxic hydrogen sulphide which is processed into huge piles of inert yellow sulphur and stored near the oil wells before the crude is transported by pipeline. The Tengiz venture also includes ExxonMobil, Lukoil and Kazakhstan's KazMunaiGaz.

ExxonMobil and Chinese Petroleum negotiate gas deal

ExxonMobil and Chinese Petroleum negotiate gas deal February 19, 2008 - Russia Today - ExxonMobil is in talks with the China National Petroleum Cooperation to provide the country with gas from its Sakhalin-1 energy project in Russia's Far East. Gazprom is against Exxon exporting the gas saying it’s needed for the domestic market. In 2006 ExxonMobil signed a preliminary agreement to sell gas to China. But last summer Gazprom asked the government to block Exxon's selling Sakhalin gas to Asia, saying it's needed in Russia. Exxon, however, says the local Russian market isn't large enough to absorb all the gas it expects to produce.

Baghdad weighs up Russia deals

12 February 2008 - Upstream OnLine - Iraq is ready to study the possibility of reviving old deals, including in the oil sector, which were signed between Russian companies and the government of Saddam Hussein, Foreign Minister Hoshiyar Zebari said today. "We are not hiding from existing problems, such as the old contracts," Reuters quoted Zebari telling a news conference, speaking through an interpreter. Yesterday Zebari and Russia's Finance Minister Alexei Kudrin agreed to write off most of Iraq's $12.9 billion debt and signed a separate deal opening up Iraq for $4 billion in investment from Russian companies, including Lukoil. Lukoil hopes to revive its $3.7 billion deal to develop the West Qurna, oilfield. Zebari said Russia and Iraq will set up a working group to study the old projects. But he also repeated a standard Iraqi government line that all companies will be treated equally and there will be no special treatment to anyone. "Doors are open to Russian companies in all areas but only on equal conditions," said Zebari. Kudrin said yesterday the debt write-off became possible after Iraq agreed to sign a memorandum promising good treatment of Russian companies, although he added the memorandum had no legal force. The memorandum marked years of attempts by Moscow to revive Saddam-era deals since the US-led invasion toppled the dictator in 2003. Lukoil said yesterday it would be ready to start works on West Qurna within three to five years after getting all permissions from the Iraqi government. Analysts had long been sceptical about Lukoil's chances of returning to West Qurna given the heavy US influence over Iraq's government. In 2004, US supermajor ConocoPhillips became a strategic partner in Lukoil as it took a 20% stake and agreed to work together with Lukoil in Iraq in a move boosting the market sentiment about the prospects of the deal revival. Lukoil said the field can produce 600,000 barrels per day within a few years from its launch. The world's top oil companies have been manoeuvring to win a stake in oilfields in Iraq despite huge damage to the country's infrastructure from decades of wars and sanctions. Moscow had already forgiven Iraq the bulk of its debt under a deal with Paris Club group of creditors, under which Russia and other states agreed to forgive 80% of Iraq's debt following the US-led invasion. The remaining $12.9 billion dated back to Soviet-era supplies of military equipment.

Ashgabat draws 2008 oil and gas bead

Berdymukhammedov11 February 2008 - Upstream OnLine - Turkmenistan, Central Asia's top natural gas exporter, plans to produce 73 billion cubic metres of gas this year and 10.8 million tonnes of crude, the state natural gas producer said. Turkmenistan has yet to publish production figures for 2007. Last year it said it planned to raise gas production by 20% to 80 billion cubic metres in 2007. A Turkmengas official said in televised remarks late yesterday that gas production was expected to rise 2.1% in 2008 compared to 2007, while oil output would be 11.2% higher than last year, Reuters reported. Locked away under Soviet rule and then the 21-year reign of former present Saparmurat Niyazov, Turkmenistan is now opening up to new energy projects under its more reformist leader, Kurbanguly Berdymukhamedov, who came to power a year ago. Turkmenistan has yet to publish its total natural gas reserves. According to BP's annual statistical review, its proved natural gas reserves stood at 2.9 trillion cubic metres at the end of 2006. The Caspian nation sells most of its gas through Russian gas monopoly Gazprom. At the end of last year Turkmenistan halted supplies of up to 23 million cubic metres to Iran, citing technical issues. Turkmenistan has not commented on its actions since and it remains unclear when exports might resume.

LUKoil hopes to salvage Qurna deal after Iraqi debt write-off

IraqMOSCOW, February 12 (RIA Novosti) - LUKoil [RTS: LKOH] hopes to regain the right to develop Iraq's giant West Qurna-2 oil field following the Russian government's cancellation of most of Iraq's debt, the company said on Tuesday. Moscow wrote off $12 billion, or 93%, of Iraq's debt to Russia on Monday, a move widely rumored to be aimed at securing lucrative oil contracts. The deal on the debt cancellation was signed during a visit by Iraq's Foreign Minister Hoshyar Zebari to Moscow. "The meeting of an Iraqi representative with the Russian government and the negotiations held between the parties give rise to optimism. We hope that the debt write-off will contribute to the promotion of our contract," LUKoil spokesman Vladimir Semakov said. Russia's largest independent crude producer LUKoil operated the first phase of West Qurna and is looking to develop West Qurna-2 in southern Iraq. The deal for both phases was signed for 23 years in 1997 under Saddam Hussein but frozen in 2002. During his meeting with the Russian government in Moscow, Zebari said a bilateral commission will be established to look into contracts suspended since the fall of Hussein's regime, which he said would demonstrate that his country is not trying to avoid issues "originating from former obligations." "The commission will also consider contracts with LUKoil and other Russian companies," he said.

Astana fires warning shot

07 February 2008 - Upstream OnLine - Kazakhstan fired a warning shot at foreign producers today, saying the government would repeat tactics used during a row over the huge Kashagan oilfield if they violated their contracts. The Central Asian state's new-found assertiveness in energy diplomacy has alarmed foreign investors who see its actions as part of the growing global trend of resource nationalism. Astana reinforced the view last month when it doubled its stake in Kashagan and stripped Italy's Eni of operatorship of the AgipKCO consortium, which is developing the giant Kashagan field, after months of tense negotiations. Prime Minister Karim Masimov, speaking at an energy ministry meeting, said foreign companies needed to show willingness to abide by Kazakh laws if they wanted to press ahead with their work. "All existing contracts with foreign investors will be respected by the Kazakh side and will not change if investors are fulfilling all their contractual obligations," Reuters quoted him as saying. "But if he (investor) is not fulfilling them, then we will hold friendly talks, just like with Kashagan." Masimov did not say whether he was unhappy with certain specific sectors or projects. Foreign producers have grown increasingly jittery as Kazakhstan, emboldened by booming global energy prices, took action to boost its weight in the strategic industry. It set alarm bells ringing further last year by passing legislation empowering the government to break oil contracts with foreign and Kazakh natural resource producers if it judged they posed a threat to its national security. Separately, Masimov urged state-run KazMunaiGaz to hold off any talks with investors on new projects until a new tax code comes into effect later this year. The code, due to be submitted to parliament by September, cuts taxes for companies operating outside the natural resources sector but raises some of the burden for oil and gas players. Its exact details are being mapped out by the government. KazMunaiGaz, which has a London-listed upstream subsidiary, by Kazakh law has the right to buy any oil assets before they are offered on the market. Mynbayev told the same meeting that Kazakhstan will produce between 69 million and 70 million tonnes of oil this year, slightly above last year's 67.5 million tonnes.

Shell, ExxonMobil, BP, Chevron to Support Iraqi Oil Sector

14.02.2008 - [Neftegaz.RU] - Iraq's legal framework is still uncertain, Big Oil firms say, though negotiations on oil and gas deals are ongoing and could wrap up by next month. World oil majors Shell, ExxonMobil, BP and Chevron are in discussions with Iraq's Oil Ministry for special technical support contracts to develop Iraqi energy sector. The technical support contracts would direct expertise, training and equipment from the firms to specific fields from which Iraq wants to boost production. These would be short term, about two years. Bidding rounds for more fields are expected later this year and next. Shell is in talks for the Kirkuk field in Iraq's north as well as fields in southern Missan province. It's also interested in developing the Akkas gas field near the Syrian border and associated gas in the south.

Russia Writes Off Major Part Of Iraq's Debt

russiaIraq12.02.2008 - [Neftegaz.RU] - Russia signed an agreement with Iraq to write off the part of Iraqi debt, amounting $13 billion, Iraqi foreign minister Hoshiar Al Zibari said. As per the agreement signed by officials of both the countries in Moscow on Monday, Russia will write off 93 per cent or 12.9 billion dollars of Iraq's debt to Moscow, Interfax news agency reported, quoting Russian finance minister Alexei Kudrin. Russia is expected to benefit considerably by this agreement, Kudrin said, as "its companies in Iraq have the scope to invest up to 4 billion dollars." Lavrov said Russia is committed to help Iraq in its post-war reconstruction, placing special emphasis on the two countries' traditional area of cooperation, the energy sector.

Russia writes off 93% of Iraq's multi-billion dollar debt

MOSCOW, February 11 (RIA Novosti) - Moscow has cancelled $12 billion of Iraq's debt, or 93% of the total sum owed by the Middle East state, Russian Finance Minister Alexei Kudrin said on Monday. Kudrin and the Iraqi Foreign Minister, Hoshyar Zebari, signed an agreement on the cancellation of the debt in Moscow. Iraq's debt to Russia stood at $12.9 billion. Kudrin said the debt will be cancelled in several stages. In the first stage, 65% of the debt will be written off. The remaining $4.5 billion will be cancelled in two stages, subject to further negotiations. Recent reports quoted Russia's Finance Ministry as saying that Iraq would be expected to pay off the remaining 7% of the debt that stands at around $1.13 billion, including the capitalization of interest for 2005-2008, in early 2009. "Iraq's remaining debt to Russia to be paid in 2011-2028 will stand at around $1.13 billion, including the capitalization of interest for 2005-2008. Iraq is expected to make the first payment in early 2009," the ministry said in a press release. Earlier in the day, Russian Foreign Minister Sergei Lavrov and Zebari signed a memorandum of cooperation in the trade, economic, scientific and technical spheres. "The memorandum which we have just signed will open doors to Russia for fully fledged participation in all projects and tenders to be held in Iraq," Zebari said. Lavrov said Russian companies plan to become actively involved in the reconstruction efforts in Iraq. "We are counting on long-term joint projects in the oil and natural gas and energy sectors," he said. Russia could invest as much as $4 billion in Iraq, Kudrin went on. The Iraqi government expected the intergovernmental deal to be signed before the end of 2007. Some media said the delay was due to Iraq's cancelation of a 1997 contract with Russian oil company LUKoil on the West Qurna-2 oil field, one of Iraq's richest. But both countries' authorities dismissed the allegations. Zebari said last September that his country could offer Russian oil and gas companies considerable advantages regarding operations in Iraq, but ruled out that this was linked to the debt settlement issue.

BP Eyes Iraqi Oil Agter 5 Years of Invasion

Iraq05.02.2008 [Neftegaz.RU] - British oil and gas giant BP holds talks with Iraqi oil ministers in order to reenter the one of the biggest oil markets in the world. BP said it was "possible" some of its executives might meet the Iraqi oil minister, Hussain al-Shahristani, today at a Royal Institute of International Affairs conference in London. A spokesman for BP, which will report annual profits of about $18bn, confirmed managers met Iraqi oil officials last week in Jordan and talked about providing technical assistance. Iraq has more than 115bn barrels of recoverable reserves, an attraction for oil groups at a time when easily recoverable reserves are becoming more difficult to secure.

Iraq Signed Oil Contracts of $600

15.01.2008 - [Neftegaz.RU] - The Iraqi government in Baghdad signed some $558.3 million worth of contracts with international companies to upgrade its downstream and upstream oil facilities. The oil ministry also said only 18.5% of the money allocated by the national budget as capital investment in the oil and gas sector was spent between January and the end of October 2007. The ten contracts listed by the ministry covered work to upgrade Baghdad and Basra refineries, drilling and rehabilitation of 180 wells in West Qurana and North Rumaila oil fields in southern Iraq, the site said. The value of the two contracts to upgrade Baghdad and Basra refineries were $133 million. Contracts to drill new wells and rehabilitate others were valued at $115 million. A $65 million contract was signed to purchase three oil tankers for the Basra-based Iraqi oil tankers company.

Iran hits record high in crude oil output

IranMOSCOW, February 6 (RIA Novosti) - Iran's crude production has reached its highest level since the 1979 Islamic Revolution, the country's oil minister said on Wednesday. Iran produced 4.184 million barrels of crude on Tuesday, Gholam-Hossein Nozari said. He added that the Islamic Republic intends to reach production levels of 4.2 million barrels a day by March 20, the end of the year according to the Iranian calendar. Iran ranks fourth in terms of crude reserves after Saudi Arabia, Iraq and Kuwait, as well as fourth in terms of oil production after Saudi Arabia, the United States and Russia. Tehran exports the majority of crude produced in the country.

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