Friday, September 26, 2008
Occidental Buy Other Half of Plains
26.09.2008 - [Neftegaz.RU] - Oil giant Occidental Petroleum Corp. have said it will buy out a partner's stakes in two jointly operated oil and gas fields in U.S. Midwest for 1.25 billion U.S. dollars. Occidental will take full ownership of several U.S. oil and natural gas properties, shoring up its domestic production at a time when the welcome mat is being withdrawn in more countries overseas. Plains Exploration & Production Co. agreed to sell its 50% interest in oil and natural gas projects in western Texas, New Mexico and Colorado to the Westwood-based energy company. Occidental, which paid $1.55 billion for its existing 50% stake in those projects early this year, now is the sole owner. The fields produce about 13,000 barrels of oil equivalent per day, and have about 92 million barrels in proved reserves, said the Los Angeles-based company in a statement. Occidental currently operates the two fields jointly with Plains Exploration and Production Co. "This is just buying the other half of what we bought earlier . . . so this wasn't exactly rocket science for us," said Stephen Chazen, Occidental's chief financial officer. The move by Occidental reinforces its commitment to domestic operations in California, the Rockies and West Texas, areas where the oil company has strengthened its position through acquisitions. "We have economies of scale . . . we have infrastructure there, and we can spread the costs over more properties," Chazen said. There are willing sellers in those regions, he added, "so we continue to grow in those areas and will continue to grow for a very long time." The acquisition, which is expected to close later this year, follows deals last December in which Occidental paid 1.55 billion dollars for 50 percent stakes in the Permian Basin of West Texas and New Mexico and Piceance Basin of Colorado. In the deal, Occidental gains 4,300 barrels a day of oil production and 52 million cubic feet of daily natural gas output - a total that's equivalent to 13,000 barrels of oil a day. The western Texas and New Mexico sites are within a geologic formation known as the Permian Basin; the Colorado site is within the Piceance Basin. Together they add the equivalent of about 92 million barrels of oil in proven reserves, with about 70% of that as natural gas. Occidental is already a major player in both regions through some of its other properties. In the Piceance Basin, the company said, it produced more than 50 million cubic feet of natural gas a day for the first half of this year, a figure the company expects to increase to at least 200 million cubic feet a day by 2010. The deal is subject to government approvals and is expected to be completed in the fourth quarter. The oil company's overseas operations are clustered in Latin America, the Middle East and North Africa. The international side of the business has landed deals in Libya, Qatar and other locales. But in 2006, the company lost its investment in an Ecuadorean project when the government took it over in a still-contested seizure. As oil prices moved higher in recent years, other oil companies have struggled to find their footing in countries that want to renegotiate existing deals or take back ownership of their oil and natural gas resources. Fadel Gheit, an oil analyst at Oppenheimer & Co., said in a note that Occidental's latest acquisition "will add scale and improve operating efficiency and investment returns." Gheit rates Occidental "outperform," with a price target of $96. The company's shares, which traded above $100 this year, rose $1.23 to $77.88. The sale will reduce Plains' corporate debt by at least 1 billion dollars and allow it to cut next year's capital spending to 1.35 billion dollars, according to Houston-based Plains Exploration.
Shell sign estimated $4b with Iraq
24.09.2008 - [Neftegaz.RU] - Shell has become the first western oil company since the 1970s, to win significant access to the energy sector in Iraq. The move could bring liquefied natural gas (LNG) to Britain. Anti-war campaigners and senior Iraqi figures have been angered by the estimated $4bn deal claiming there was no competitive tendering for the contract. The Anglo-Dutch company said it had signed an agreement with the oil ministry in Baghdad to establish a joint venture with the South Gas Company in the Basra district of southern Iraq to process and market natural gas extracted on 19,000 sq km (7,300 sq miles) of land. "Iraq has one of the world's largest natural gas resource bases and I am delighted that the Iraqi government, including the ministry of oil, have supported Shell as the partner for joint venture with the South Gas Company," said Linda Cook, executive director of Shell. Last week, Oil Minister Hussein al-Shahristani told AFP Iraq's stake in the venture would be the facilities and equipment already in place and that a cash injection would come from Shell. "These (existing facilities and services) will be valued by an independent third party," Shahristani said. The company will own 49% of the new Iraqi business which will collect some of the 700m cubic feet a day of gas produced by oil suppliers and "flared off" into the atmosphere - a practice condemned by environmentalists as contributing to global warming. Shell claim that by providing the gas as a domestic power source, its actions in Iraq would reduce greenhouse gas emissions and create value for the economy. The combined operation, which will make use of the South Gas Company's 3,500 staff, would initially focus on local markets but Shell added that "in the future the [joint venture] could develop a liquefied natural gas facility to export natural gas not needed for local domestic use". Shell will not put a value on the deal but industry experts believe it could be worth $4bn in the short term at least. LNG would be shipped to markets in the Mediterranean and further west, possibly Britain. The first big contract signed by a western oil company since the invasion of Iraq was condemned by Platform, a British-based organisation which monitors oil companies and Iraq in particular. "The big issue here is that the whole thing has been done in secret. We are not being told what the terms of the deal are - such as are there extension rights [for Shell to gain Iraqi reserves] and why has there been no competitive bidding process," said Greg Muttitt of Platform. "What has definitely happened here is that a country under occupation has introduced an oil policy that is favourable to western oil companies. The [US] state department has already admitted that it has advisers working on oil policy and there is a likelihood they may have drafted the Shell contract." His views were reinforced by Issam al-Chalabi, Iraq's oil minister between 1987 and 1990, who questioned the lack of competitive tendering for the gas gathering contract and claimed it had gone to Shell as the spoils of war. "Why choose Shell when you could have chosen ExxonMobil, Chevron, BG or Gazprom? Shell appears to be paying $4bn to get hold of assets that in 20 years could be worth $40bn. Iraq is giving away half its gas wealth and yet this work could have been done by Iraq itself," Chalabi said. He claims that his country spent $2bn in the 1980s putting a South Gas gathering project in place which was fully operational by 1990. A British vessel was loaded with LPG, he said, but the infrastructure was damaged in the first Gulf war and sanctions made it difficult to mend. "Since 2003 nothing has been done to repair or replace compressor stations that were damaged. There were studies financed by Japan that showed how it could be done for a few hundred million dollars," Chalabi argued. Shell, BP and other oil majors are lining up for other big deals in Iraq with the oil ministry holding a meeting in London on October 13.
25.8% Manned platforms were destroyed by Hurricane Ike in Gulf of Mexico
26.09.2008 - [Neftegaz.RU] - The Minerals Management Service (MMS) have recalculated the number of manned platforms in the Gulf of Mexico since 23 manned platforms have been confirmed destroyed from Hurricane Ike. The new figure of 694 manned platforms was used to calculate the percentage of manned platforms evacuated. Based on data from offshore operator reports submitted as of 11:30 a.m. CDT today, personnel are evacuated from a total of 179 production platforms, equivalent to 25.8% of the 694 manned platforms in the Gulf of Mexico. The total number of rigs currently operating in the Gulf of Mexico has been recalculated to allow for the number of rigs destroyed or severely damaged as a result of Hurricane Ike. The recalculated figure is 116 rigs. This number was used in calculating today's percentage of rigs evacuated. Personnel from 3 rigs are evacuated; this is equivalent to 2.6% of the 116 rigs currently operating in the Gulf. From the operators' reports, it is estimated that approximately 59.3% of the oil production in the Gulf is shut-in. As of June 2008, estimated oil production from the Gulf of Mexico is 1.3 million barrels of oil per day. It is also estimated that approximately 56.4% of the natural gas production in the Gulf is shut-in. As of June 2008, estimated natural gas production from the Gulf of Mexico was 7.0 billion cubic feet of gas per day. Since that time, gas production from the Independence Hub facility has increased and current gas production from the Gulf is estimated at 7.4 billion cubic feet of gas per day. To date, MMS has received reports of six gas transmission pipeline systems with damage. Analysis of the impact that this damage may have on resuming production is underway. Operators have begun to test and inspect other pipeline systems to evaluate the full extent of any damage. Considering the large impacted area, this will take some time to complete the inspections.
Thursday, September 25, 2008
Chevron primes Tengiz booster
25 September, 2008 - Upstream OnLine - The Chevron-led Tengizchevroil consortium is set to almost double output capacity at Tengiz after finishing work on a major expansion at the Kazakhstan field. The expansion brings Tengizchevroil’s crude production capacity to 540,000 barrels of oil per day. The first phase of expansion, finished earlier this year, boosted capacity from about 310,000 bpd to 400,000 bpd. Chevron said sour gas injection (SGI) operations and the crude processing portion of the second generation plant (SGP) have been in service for several months, while the natural gas and sulphur processing portions of SGP were being completed and commissioned. The SGP’s full facilities now stabilise and sweeten crude, as well as separate and process natural gas into gas products and elemental sulphur. One-third of the produced sour gas is reinjected into the reservoir at high pressures to help preserve reservoir pressure. Chevron has a 50% sytake in Tengizchevroil. Its partners are KazMunaiGaz (20%), ExxonMobil (25%) and LUKArco (5%).
Tuesday, September 23, 2008
Iraq and Shell are to create a joint venture
23.09.2008 - [Neftegaz.RU] - According to this agreement Iraq will hold 51 percent in the venture and Shell 49 percent. Oil Minister Hussain Al-Shahristani gave very obscure details of the deal. The only thnig clear is that it is expected to include the capture of natural gas released as a by-product of crude oil extraction. Shell is also expected to produce dry gas as well - gas which is not a by-product of oil. This will allow to make liquefied natural gas (LNG), thus Iraq may become one of the world's key LNG exporting countries. Shell's proposals include plans to supply the local market and export through Iraq's southern ports or through a pipeline. Iraq, which has the world's third largest proven oil reserves, has said it wants to focus on development of its southern gas fields and could become a major supplier to Europe. Iraq recently agreed a $3 billion oil service contract with China, the country's first major oil deal with a foreign firm since the fall of Saddam Hussein more than five years ago. Iraq needs huge amounts of investment to boost oil output and rebuild itself after years of sanctions and war. That's why Shahristani will meet energy firms bidding for those oil and gas service contracts in London next month to discuss details of the fields on offer as well as contract terms, the Oil Ministry has said. ]
Monday, September 22, 2008
Southeast Asian nations ‘too reliant on gas’
22.09.2008 - [Neftegaz.RU] - The International Energy Agency (IEA) has said that Southeast Asian nations rely too heavily on natural gas and must diversify their power generation to ensure long-term fuel supply. Dr Twarath Sutabutr, director of the Energy Ministry's policy and strategy co-ordination office, said the agency had been advising policy planners and energy operators in the region that energy shortages could be caused by too much dependence on one fuel. "Most fuel reserves here [Southeast Asia] are natural gas, therefore the countries here mostly rely on what they have, but it will run dry very quickly since demand is growing but few new reserves are being discovered," Dr Twarath reported an IEA representative as saying. Indonesia, Malaysia, Thailand and Vietnam are all heavy dependent on natural gas to fuel their electricity generation. Thailand is 67% reliant on gas and Malaysia is more than 70% dependent on the fuel. The IEA, in collaboration with Southeast Asian countries, will hold a workshop on the joint development of fuel diversification in Bangkok next week. Dr Twarath said participants will discuss appropriate proportions of fuel use for securing future fuel supply, an issue that follows last year's workshop on the region's oil-emergency preparedness. The workshop will also discuss nuclear power, clean-coal technology, renewable energy and demand-side power management. "We will see what international energy policies have been developed, as well as their effects in practice, in order to adapt them to our region," he said. The factors Asean members will consider in adjusting their fuel usage will relate to production costs, the size of reserves and different fuels' long-term carbon dioxide emissions. On average, power in the region's 10 member states is generated 40.8% from gas, 24.9% from coal, 18.8% from hydro power and 12.3% from oil. As well as diversifying fuel use, the workshop will consider reducing oil use and replacing it with renewable energy - which currently contributes only 0.3% to power generation but is targeted to provide 15-20%.
Friday, September 19, 2008
Eni targets Kashagan oil in 2012
18 September, 2008 - Upstream OnLine - Italian giant Eni is aiming to start production at the Kashagan oilfield, in Kazakhstan in 2012, despite agreeing with the Kazakh government that start-up could be delayed until 2013. Jason Kenney, an oil analyst with ING who is part of an analysts' field trip to Kazakhstan organised by Eni, said in an email to Reuters that presentation material said Eni was "committed to 2012 first oil from Kashagan". An Eni spokeswoman confirmed the report, telling UpstreamOnline.com: "This is correct." Eni heads the AgipKCO consortium, which is developing the field, in the Kazkh sector of the Caspian Sea. The field, discovered in 2000, was originally due on stream in 2005. But the consortium and the government agreed to move the launch to 2008 and then 2010 due to technical difficulties. The AgipKCO consortium comprises Eni, Shell, ExxonMobil, Total, ConocoPhillips, KazMunaiGas and Japan's Inpex Holdings.
49 oil platforms in Gulf of Mexico destroyed by Hurricane Ike
19.09.2008 - [Neftegaz.RU] - At least 49 of the 3,800 offshore oil and gas production platform, were destroyed by Hurricane Ike as it rampaged across the Gulf of Mexico. Most remain shut down whilst some may not be rebuilt, the Interior Department said Thursday. It said in the latest hurricane damage assessment that the platforms altogether accounted for 13,000 barrels of oil and 84 million cubic feet of natural gas a day. There are more than 3,800 production platforms in the Gulf producing 1.3 million barrels of oil and 7 billion cubic feet of gas each day. Additional damage reported includes three jackup and four oil drilling rigs had been destroyed and another extensively damaged. The report by Interior's Minerals Management Service (MMS) said the agency was conducting helicopter flyovers of the Gulf waters to investigate unconfirmed reports of oil spills and oil sheens, but that it was too early to issue any definitive findings. "There are no reports of oil impacting the shoreline or affecting birds and wildlife from releases in the Gulf of Mexico federal waters," said the agency. On-going reports indicate that there are five gas transmission pipeline systems with damage. The full extent of damage will not be available until operators are able to test the systems. MMS is analyzing the impact that this may have on resuming production. Meanwhile, the Energy Department reported that as of mid-afternoon Thursday, 12 of 31 refineries in Texas and Louisiana, with a total production capacity of 3 million barrels a day, remained shut down as a result of the hurricane that swept through the region on Sept. 13. A number of the others are operating at reduced runs. More than 2.3 million electricity customers in six states as far away as Pennsylvania remain without power as a result of the hurricane and its aftermath of heavy rain, said the department. Of those, 1.6 million customers are in Texas. Other states affected are Louisiana (18,804 customers), Kentucky (167,740), Indiana (36,800), Ohio (488,900) and Pennsylvania (16,730), according to the department. About 93 percent of the Gulf's crude oil production remains shut down as does 77.6 percent of its natural gas production, said the Minerals Management Service. The Energy Department said 10 of 39 natural gas processing facilities also were still closed as a result of the Hurricane Ike and Hurricane Gustav which hit two weeks earlier, giving the Gulf's energy infrastructure a glancing blow. The Gulf region accounts for 25 percent of the country's domestic oil production, or about 1.3 million barrels a day, and 15 percent of its natural gas supplies, or about 7 billion cubic feet of gas a day. MMS has been conducting helicopter fly-overs to investigate reports of oil spills/sheens. While it is too early for definitive reports, there are no reports of oil impacting the shoreline or affecting birds and wildlife from releases in the GoM federal waters, according to MMS.
Thursday, September 18, 2008
Iraq seeks British help in oil industry
09–18–2008 – BAGHDAD – AFP - Iraq asked Britain on Thursday for technical support in its oil industry, Prime Minister Nuri al-Maliki's office said. In talks with the visiting minister of state for energy, Malcolm Wicks, the premier also sought closer bilateral economic ties, including greater British investment, a statement said. "The prime minister invited British companies to invest and get involved in rebuilding projects and provide technical help in oil fields," it said. Maliki said his government was working on market stabilisation following an improvement in security in the troubled country. Wicks renewed Britain's support for Iraq and pledged to back efforts to improve security as well as reconstruction. His visit came nine days after Baghdad said it will form a gas venture with Royal Dutch Shell next month in a deal worth up to four billion dollars. Shell is set to become the first Western oil major to do a deal with Baghdad since the 2003 invasion. Iraq has the world's third-largest oil reserves. Its natural gas reserves are also huge and almost completely untapped. According to US-based industry report the Oil and Gas Journal, Iraq holds 112 trillion cubic feet (3.36 trillion cubic metres) of proven gas reserves, the world's 10th largest. Iraq's energy industry is in dire need of modern equipment and technology. Production facilities went into decline during the decade of crippling UN sanctions that followed the 1991 Gulf War, and instability since the 2003 invasion has prevented any major improvements.
OPEC Lower Predictions for Oil Demand
18.09.2008 - [Neftegaz.RU] - In its latest monthly report, OPEC have lowered its forecast for 2009 world oil demand to 0.9 million barrels a day (b/d), that is 1.00 per cent, compared with 1.03 per cent, as was the previous estimate. Oil consumption next year OPEC forecasts will average 87.7 million b/d. The basic reason for the lowering of the forecast is falling demand in the United States which is the largest consumer in the world The oil cartel expects that all the additional demand will come from non-OECD countries, while demand form industrial countries will decline. OPEC also cut its oil demand forecast this year by 120.000 b/d. "Jet fuel has been declining by more than 3.5 per cent in the US, and Europe's annual growth is expected to lose one third of its forecast in the near future," OPEC monthly report said. It should be noted that OPEC's basket price currently is around $91 a barrel, a 30 per cent fall from its record high of $141 at the beginning of July.
Wednesday, September 17, 2008
US House approves offshore drilling
WASHINGTON, Sept 16 - The US House of Representatives passed legislation on Tuesday that lifts a longstanding ban on offshore oil drilling, opening most of the US coastline to exploration. The package proposed by Democrats would give states the option to allow drilling between 50 and 100 miles (80 and 160 km) off their shores. Areas more than 100 miles from the coast would be completely open to oil exploration and drilling. The House voted 236 to 189 in favor of the package. Until recently, Democratic leaders in Congress strongly opposed lifting the moratorium on offshore drilling, saying drilling would have only a small impact on gasoline prices in the immediate future. But as gasoline prices rose to levels above $4 a gallon this summer, public opinion shifted in favor of offshore drilling. Republicans made removing the ban on drilling a key campaign issue for their party in this election year. With the moratorium facing expiration on Sept. 30 and voter sentiment changing, Democrats supported repealing the ban as part of a larger energy package. House Republicans, however, strongly protested the Democrats’ package, calling the bill a ”sham” and a ”hoax.” The bill faces a possible veto from the White House. ”At a time when American families are in need of genuine relief from the effects of high fuel prices, this bill purports to open access to American energy sources while in reality taking actions to stifle development,” the White House said in a statement. Opponents of the bill say since the bill does not include a revenue sharing plan, states will not have an incentive to open their coasts to exploration. Another complaint is that the requirement that drilling occur at least 50 miles away from the US coast closes a great deal of the outer continental shelf where oil may be located. Democrats countered that their package would open 319 million acres (129 million hectares) to 404 million acres (164 million hectares) off the Atlantic and Pacific coasts to drilling. ”This legislation is a result of reasonable compromise that will put us on a path to energy independence by expanding domestic supply,” said House Speaker Nancy Pelosi. Conservation groups blasted the House bill, however, for not protecting the environment. ”As it stands, the clean energy provisions in this bill are dwarfed by the push for outdated, dirty and expensive energy,” said Natural Resources Defense Council President Frances Beinecke. Later this week, the Senate is expected to take up energy legislation that would expand offshore drilling, but not as much as the House. Both chambers would have to reconcile differences between their bills before a final energy package could be sent to the White House to be signed into law. Time is running out for lawmakers to pass legislation as Congress is scheduled to adjourn on Sept. 26. Other provisions in the House energy package include: Selling 70 million barrels of light crude oil from the Strategic Petroleum Reserve, to be replaced with heavy crude oil. Offering renewable energy and efficiency tax credits that would be funded by repealing some tax breaks for the oil industry. Allowing oil shale development in some western states, if the states approve.
Monday, September 15, 2008
Oil Prices Continue to Slip
15.09.2008 - [Neftegaz.RU] - The price of oil has fallen to a seven month low of less than $97 today, as refineries along the Gulf of Mexico coast escaped major damage from Hurricane Ike and Lehman Brothers Holdings Inc. filed for bankruptcy. Refiners reported no major damage after Ike struck the Houston area, home to more than 20 percent of U.S. refining capacity, and said preparations are under way to restart plants. Investment bank Lehman Brothers Holdings Inc. filed for bankruptcy, raising concern a worsening credit crisis will slow the economy and cut fuel demand. ICE Futures, the exchange for Brent oil, suspended Lehman's access to the exchange. "The oil sector has escaped a nightmare scenario here,'' said Rob Laughlin, senior broker at MF Global Ltd. in London. "There has been very little structural damage to onshore oil operations and I expect production to start cranking up during the week.'' Crude oil for October delivery fell as much as $4.87, or 4.8 percent, to $96.31 a barrel in electronic trading on the New York Mercantile Exchange, the lowest since Jan. 22. The contract was at $96.80 at 10:56 a.m. in London. Crude has declined 33 percent from a record $147.27 a barrel on July 11 as high prices and slowing global economic growth reduce energy demand. A total of 14 Texas and Louisiana refineries, with combined crude processing capacity of 3.57 million barrels a day, are shut because of Ike. Brent crude oil for October settlement fell as much as $4.74, or 4.9 percent, to $92.84 a barrel on London's ICE Futures Europe exchange. It was trading at $93.37 a barrel at 10:47 a.m. in London. Prices have tumbled 13 straight days. Valero Energy Corp, the largest U.S. refiner, said it found no significant structural damage at three Houston-area refineries shut before the storm. Exxon Mobil Corp. said its Baytown refinery, the largest in the U.S., has power and damage appears "limited,'' while it is checking its Beaumont, Texas, plant, which is without power. Royal Dutch Shell Plc said it was assessing its Texas plants and it was too early to say when they will restart. ConocoPhillips said its Sweeny, Texas refinery has power and its condition is being assessed. LyondellBasell Industries' Houston refinery will be down for at least several days,'' said David Harpole, a company spokesman. Marathon Oil Corp. and Motiva Enterprises LLC said they were evaluating their plants. Hedge-fund managers and other large speculators cut their net-long position in New York crude-oil futures in the week ended Sept. 9, according to U.S. Commodity Futures Trading Commission data. Speculative long positions, or bets prices will rise, outnumbered short positions by 6,336 contracts on the New York Mercantile Exchange, the Washington-based commission said in its Commitments of Traders report. Net-long positions fell by 7,995 contracts, or 56 percent, from a week earlier.
Iraq cancels 6 no-bid oil contracts that drew criticism in the U.S.
September 11, 2008 - IHT by Andrew E. Kramer and Campbell Robertson - An Iraqi plan to award six no-bid contracts to Western oil companies, which drew sharp criticism from several U.S. senators this summer, has been withdrawn, participants in the negotiations said. The companies confirmed Wednesday that the deals had been canceled. This was one day after the Iraq oil minister, Hussain al-Shahristani, said at an OPEC meeting in Vienna that the talks had dragged on for so long that the companies could not do the work on schedule. The contracts, with Exxon Mobil, Chevron, Royal Dutch Shell, Total, BP and several smaller companies for one-year deals, were announced in June and then delayed. While not particularly lucrative by industry standards, the contracts were valued for providing a foothold in Iraq at a time when oil companies were being shut out of energy-rich countries around the world. The companies will still be eligible to compete for other contracts in Iraq. The six no-bid deals were for work to increase Iraqi oil production from existing oil fields by half a million barrels a day - the same amount by which the Organization of Petroleum Exporting Countries agreed to reduce output at its meeting Tuesday. After its cancellation of the deals, Iraq reduced by 200,000 barrels a day its goal of producing 2.9 million barrels a day by the end of the year. The contracts would have been the first major oil agreements with the central government since the toppling of Saddam Hussein in 2003, though the Kurdistan region has separately signed more than 20 contracts. Recently, however, Iraq's central government has moved on with other energy deals. The Oil Ministry in August signed its first major post-Saddam-era contract with China National Petroleum. On Sunday, the Iraqi cabinet approved a deal with Shell to process natural gas in southern Iraq. The ministry informed the oil companies of the cancellation Sept. 3, according to a statement from Shell. In Vienna, Shahristani said the ministry would now invite bids on the contracts. Shell said the Iraqi side had broken off negotiations. This summer, a group of Democratic senators led by Charles Schumer of New York appealed to Secretary of State Condoleezza Rice to block the deals, contending that they could undermine the efforts of Kurds, Sunnis and Shiites to reach an agreement on a hydrocarbon law and a revenue-sharing deal. This criticism was conveyed to Shahristani by the U.S. Embassy in Baghdad in June, and the deals were subsequently delayed. "I'm glad the Iraqis heard our plea that to do this now would be bad for Iraq and bad for Iraqi-American relations," Schumer said by telephone Wednesday. "It's a good first step." "Now let's make progress on the long-term" goal of passing an oil law, he said. The State Department had responded that the contracts were an Iraqi affair, though American advisers had helped draft them. Meanwhile, the ministry has said it intends to go forward with new oil deals, whether or not Parliament passes a hydrocarbon law. Schumer said he would propose an amendment to the military appropriation bill in Congress that would specify that should Iraq sign any petroleum contracts before passing the law, profits from those deals would be used to help defray U.S. reconstruction costs in Iraq.
Saudi Arabia okays Chevron oil concession extension
11.09.2008 - Reuters - Neftegaz.RU - The concession is the only oil production deal that survived the Saudi nationalization of the oil industry in the 1970s. The 60-year deal was first granted in 1949 to a company founded by US industrialist Jean Paul Getty, helping make him the richest man in the United States. The council of ministers has decided to approve the extension and amendment agreement between ... Saudi Arabia and Chevron Saudi Arabia at the Neutral Zone," Saudi state news agency SPA reported yesterday. SPA gave no further details on the extension or amendment. In July, the Saudi cabinet authorized the oil minister to sign an extension. Saudi Arabia and Kuwait share the estimated 550,000 barrels per day (bpd) output from the Neutral Zone. The zone is a region between Saudi Arabia and Kuwait that dates back to 1920s treaties to establish regional borders. Chevron acquired the concession when it bought Texaco in 2001. Texaco had acquired it from Getty Oil in 1984. Since the nationalization of the Saudi oil industry, the world's largest oil reserves have been off limits to international oil companies. Saudi Arabia holds around 264 billion barrels, over a fifth of the world's proven reserves, and is the world's top oil exporter. -
Shell signs up to $4bn Iraq gas deal
11.09.2008 - [Neftegaz.RU] - Anglo-Dutch energy giant Royal Dutch Shell has agreed a gas joint venture with Iraq worth up to $4 billion, the Iraqi oil ministry said. The deal, which will see the gas extracted from Iraqi fields being both sold in Iraq and abroad, will be signed next month, ministry spokesman Assem Jihad told AFP. Shell will become the first Western oil group to sign a deal with Baghdad since the US-led invasion of 2003, with a venture the FT estimated to be worth about $4 billion.
Wednesday, September 10, 2008
U.S., Australian energy giants form liquefied natural gas JV
NEW YORK, September 8 (RIA Novosti) - ConocoPhillips, the second-largest U.S. oil refiner, will pay $8 billion to Origin Energy Ltd., Australia's largest coal-seam gas producer, to set up a joint venture, the U.S. company said on its website. The equally shared JV to be located in Queensland, northeast Australia, will liquefy coal-seam gas, mainly for export to Asia. ConocoPhillips will lead the marketing part of the venture for the first 10 years. "With this investment, ConocoPhillips has gained access to the leading coal bed methane resource in Australia, comprising 8.1 million net acres. Moreover, the company has enhanced its LNG [liquefied natural gas] position with the creation of an additional Australian LNG hub serving Asia-Pacific markets," said Jim Mulva, ConocoPhillips' chairman and CEO. After the Australian company agreed to the proposal - analysts say to offset an $11 billion bid from BG Group of Britain - the Origin Energy' shares gained nearly 28% on Monday. The JV will initially have two LNG processing trains with a capacity of about 3.5 million metric tons a year each with production launched in 2014. Then the companies aim to build another two or more trains.
Russia 'cornering energy markets'
08 September, 2008 - Upstream OnLine - Russia aims to extend its control over energy deliveries to the West and it is important that European countries push forward on efforts to diversify routes for oil and gas supplies, a senior US official claimed today. As Vice President Dick Cheney visited Italy to seek support for Georgia after its brief war with Russia, the official, who asked to remain anonymous, told Reuters: "The fact is Russia has worked hard to try to corner the market, so to speak, and is working to foreclose options to transit for those energy products across Russia. "They want everything to come out through Russia and a lot of us think it's more important that there be diverse means of gaining access to those resources," he added. "No one country ought to be able to totally dominate those deliveries." Italy was the last stop on a week-long trip for Cheney that began with Azerbaijan, Georgia and Ukraine to reinforce US support for the former Soviet states after the conflict between Tbilisi and Moscow. The crisis erupted in early August when Georgia tried to retake the breakaway region of South Ossetia and Russia responded with overwhelming force. Cheney, in a weekend speech in Cernobbio, Italy, called Moscow's actions "brutality against a neighbour". In those remarks, he also accused Russia, the world's second largest oil producer, of using "energy as a tool of force and manipulation" in Central Asia, the Caucasus and elsewhere by threatening to interrupt the flow of oil or natural gas. Europe and the US are concerned about transit routes for oil and gas through eastern European countries which are seen as alternatives to Russian supplies. "We think diversity of supply is important," the US official told reporters travelling with Cheney. Azerbaijan and Georgia are links in a Western-backed energy corridor that bypasses Russia, which the West fears could be in jeopardy following Moscow's military actions on Georgia. In discussions with private sector representatives and public officials, "there were concerns expressed that one of the things that happened as a result of the Russian military operations in Georgia was to raise questions about the security of that trans-Georgian corridor for moving Caspian energy resources out to the West," the official said. Europe is interested in finding ways to move forward with projects like the Nabucco pipeline project, the official said of a US- and EU-backed project that would take Azeri gas to Europe through Georgia and Turkey. But concern about instability in the Caucasus has been scaring off investors. Europe also wants to ensure that the Baku-Tbilisi-Ceyhan pipeline, which ships 850,000 barrels per day of high quality Azeri crude from the Caspian to the Mediterranean, remains open and functioning, the official said.
Key to the cartel: Opec's leading figures
September 6 2008 - The Guardian by Kathryn Hopkins - Opec, the producers' cartel, includes 13 nations, but there are essentially three leading figures who dictate the direction of oil prices: Ali al-Naimi Minister of petroleum and mineral resources in Saudi Arabia A former shepherd, this modest man also keeps his comments in front of the media short, earning himself the sobriquet The Silent Saudi. He is aware that any slip of the tongue could add or subtract billions of dollars in investments on the oil markets. But behind the scenes, the Saudi technocrat is expansive, keen to use his enormous knowledge and expertise to guide members of Opec or other groups to sensible and relatively conservative solutions. Saudi Arabia might have the strength of being the biggest oil producer, but it takes skills to negotiate a position that will help the west when dealing with Opec members that include Venezuela and Iran. He has often supported an increase in oil supply to placate important friends in the west. Saudi Arabia is currently pumping flat out, adding 200,000 barrels of oil a day in June with a view to increasing capacity to 12.5m a day by the end of next year. Hugo Navarro, a specialist on international oil markets at consultants Capital Economics, said: "Opec's most powerful member, Saudi Arabia, is sensitive to western public opinion and will not want to be seen putting renewed upward pressure on oil prices at a time when global economic growth is slowing." Gholam Hossein Nozari Iran's minister of petroleum Iran is the most hawkish member of Opec. It often calls for production cuts when other countries are more reluctant. Nozari recently said pumping more oil would do nothing to stop the surge in prices, after Saudi Arabia revealed that it may be increasing its production again. "Increased oil production does not have such an impact that it would decrease prices, because enough oil exists in the global market," he said. "Just compare 300,000 barrels per day with about 86m, which the markets need. What would be the effect?" Rafael Ramirez Venezuela's oil minister Venezuela is another hawkish member that often demands cuts in production to boost the price. Ramirez believes that Opec does not need to increase its supply. "We don't see a need to increase oil production ... The market is well supplied," he said.
Gaz de France bags Yalama stake
03 September, 2008 - Upstream OnLine - Russian oil company Lukoil has sold Gaz de France a 15% stake in the Yalama exploration project in Azerbaijan's sector of the Caspian Sea. The deal has been approved by the project's other shareholder, Azeri national oil company Socar, Lukoil said in a statement. The contract area covers 3037 square kilometres on the D-222 block where a production sharing contract was signed by Lukoil and Socar in July 1997. The exploration period on the licence will expire at the end of 2011. The duration of the development and production period will be 25 years with a possibility to extend that by five years. The minimal exploration programme for D-222 includes 2D and 3D seismic and the drilling of two exploration wells. A seismic survey was completed in 2004 and the first well was drilled using the ‘Heydar Aliyev’ drilling rig in 2005. The well, which was drilled to a depth of 4500 meters showed some signs of gas but no commercial hydrocarbon reserves were discovered. Drilling of the second exploration well is scheduled for November this year.
E.ON Ruhrgas in pricy Norway to lower gas prices
Aug 27, 2008 - Scan Oil&Gas - German gas companies E.ON Ruhrgas and Verbundnetzgaz are growing their offshore field stakes in Norway despite the €60-million ($88 million) price tag of some deepwater wells and buyers back home saying “No” to gas deliveries. Soaring gas prices have driven some of Germany’s 400-odd gas companies to start rejecting gas supplies, a German source told Scandoil.com at the ONS 2008 tradeshow in Stavanger. Yet, diversifying supplies is the stated goal of both German gas companies, and Norway has grown in importance as a supplier. The oil-rich country vies with Russia to deliver about half of E.ON Ruhrgas’s supplies. “Every year, there is a narrow race between the two, and sometimes it’s just how we optimize the contracts that decides who’s No. 1,” E.ON chief executive, Dr. Berønhard Reutersberg said. Germany is Norway and Russia’s largest gas buyer, and E.ON Ruhrgas is their largest customer. Reutersberg said security of supply was his company’s top issue, although more gas for Germany could lower prices for the company’s domestic customers. Gas rival Verbundnetzgaz is also keen to enlarge its own supply of Norwegian gas, and despite the prohibitive cost of drilling, the company is sharing the cost of its first four exploration wells off Norway in 2009 with operators Total, Endeavour and oil company Det Norske Oljeselskapet. “It’s cheaper in the short term than paying $100 million to get in on a producing license,” the source said. Both German companies riled by European Union rules aimed at liberalizing gas markets which are aimed at countries with traditions of large stately gas companies. Germany has hundreds, and pipelines are run by regional entities with diverse ownership structures. Dr. Reutersberg, meanwhile, said falling central European production will keep him focused on Norway. His target for E.ON Ruhrgas E&P in Norway is 10 billion cubic metres per year. “We are very keen to grow in Norway,” Reutersberg said. He said investments in the Nordic country were growing and the company expects over 1.8 Bcm this year from eight field stakes, including four field assets it operates. Reutersberg said he was grateful Norway changed its rules five years ago to let powerful integrated energy companies onto the Norwegiean continental shelf. But he said the policy “might have been too successful”. “Not all of the 50 newcomers to Norway have been successful,” he said.
ONGC hits wall over Imperial bid
25 August, 2008 - Upstream OnLine - Indian state-run outfit Oil & Natural Gas Corporation’s (ONGC's) advances to buy UK-listed Imperial Energy for around $2.8 billion may hit a stumbling block as it has already exhausted its investment limit under India’s regulations. The hitch in the closely watched bid could open the door to other suitors for Imperial, a report published in India's Economic times said. According to Indian government rules, so-called "Navratna" state-owned companies are not allowed to invest more than 15% of net worth in one project up to a maximum of $2.3 billion. Total investment in all projects put together is also capped at 30% of the company's total net worth. Company sources told the paper that ONGC’s equity investments in its foreign investment arm, ONGC Videsh (OVL), which is leading the Imperial bid, are well beyond the limit. Navratna refers to nine government-identified public sector enterprises that in 1997 were given enhanced autonomy and increased power over finances and strategic ventures. OVL is hopeful that the Cabinet committee on economic affairs will make an exception in the interest of the country’s energy security. OVL plans to buy Imperial, which has assets in Russia and Kazakhstan, through an investment vehicle and fund the deal through equity and debt. “The company has asked the government to relax the 30% investment limit (of ONGC) in this case, but we are not seeking any budgetary support,” an OVL official was quoted as saying. Besides ONGC, China’s Sinopec and South Korea's Korea National Oil Corporation (KNOC), have also reportedly expressed an interest in Imperial. But a KNOC source close to M&A operations said today that the state-run outfit has never expressed interest in buying Imperial. "We have never been approached, nor have we considered buying Imperial Energy," the official told Reuters. “China is known to be aggressive and is waiting for ONGC to open its cards. We expect Sinopec to offer a bid that is at least around 15% higher than OVL's improved bid,” the Economic Times reported a market source saying. However, one investment banker cast doubt on Sinopec’s chances and touted ONGC as the likely winner. “What we’ve heard from the market is that Sinopec looked at it but they didn’t really go through with it in any serious form. The talk in the market about Sinopec is overblown.” ONGC was reported to be prepared to pay up to $3.5 billion for Imperial. Industry analysts believe that the latest interest is part of efforts from Imperial’s directors to attract competitive bids to increase the price that might finally be paid for the company. They add that any bidding contest will be limited in terms of valuation premiums as the potential winner is likely to have to sell an option for a sizable stake in Imperial to either Russian state-controlled gas monopoly Gazprom or to Rosneft, which in turn might be unwilling to pay a high premium for it.