Monday, July 28, 2008
Russia's LUKoil buys Turkish oil retailer
MOSCOW, July 28 (RIA Novosti) - Russia's second largest oil producer LUKoil has bought 100% in Turkish oil product retailer Akpet, which has a 5% market share, the company said on Monday. LUKoil said the acquisition gives it access to eight oil product terminals, five liquefied natural gas (LNG) storage tanks, three jet fuel terminals, and a motor oil producing plant. The price of the deal was not disclosed. "The acquisition of large retail assets in Turkey expands LUKoil's international retail network by 18%. It is one of the key elements of the company's downstream strategy in the Black Sea and Mediterranean markets, aimed at supply of our products to end users with high added value," LUKoil CEO Vagit Alekperov said. Akpet operates 693 filling stations on the basis of dealer agreements.
Tuesday, July 22, 2008
Stroitransgaz bags Dolphin pipe gig
22 July, 2008 - Upstream OnLine - Russia's Stroitransgaz has won a $418 million contract to build a gas pipeline across the United Arab Emirates, the UAE's Dolphin Energy said in a statement released today. Stroitransgaz beat Italy's oilfield services company Saipem and Greece's Consolidated Contractors International to the contract. Dolphin shortlisted the three companies for the contract to build the 240 kilometre (150 mile) pipeline earlier this month. Work on the pipeline will begin this quarter, Dolphin said. Dolphin imports gas to the UAE from Qatar. The new pipeline will allow it to pump gas from the emirate of Abu Dhabi on the Gulf coast to the east coast emirate of Fujairah on the Gulf of Oman. The gas will feed a new power and water desalination plant in Qidfa, Fujairah. Mubadala Development Company, run by the government of the emirate of Abu Dhabi, owns 51% of Dolphin. France's Total and US independent Occidental Petroleum each hold 24.5% stakes. Dolphin in December awarded a contract worth over $200 million to supply steel for the pipeline to Germany's Salzgitter .
Monday, July 21, 2008
Imperial joy in Siberia, as cup runneth over
Jul 21, 2008 - Scandivnavian Oil-Gas Magazine - U.K.-based Russia explorer Imperial Energy Corp. has struck oil in the Glukovskoye 6 well in Western Siberia and the company expects to produce oil at the field year-end 2009, it was understood Monday. The well found oil across six metres of Jurassic-era rock. An offshoot pipeline will connect the field to Imperial’s Maiskoye-Luginetskoye export line. Elsewhere in the complex of West Siberian fields, the Festivalnoye 218 well encountered “significant showings of hydrocarbons”, but overproduction of mud compelled engineers to “cement back, run casing and side-track the well into the Palaeozoic using substantially greater mud weight”. Festivalnoye flows oil into the Maiskoye-Luganetskoye pipeline. The festival continued for Imperial with news the Ministry of Natural Resources has granted it a production licence until July 2028 for the Golovnoye Field in Block 74. With its cup over running over in the Tomsk region, Imperial managers now also expect first oil from the Kiev Eganskoye field to begin filling one of the company’s recently constructed 150-kilometre pipelines in September 2008.
Wednesday, July 16, 2008
A New Oil Bully in the Caspian?
//Kazakhstan, with an output potential of 1.5 million barrels a day, shows signs of rivaling Russia in strut and swagger
July 14, 2008 - Business Week by S. Adam Cardais - The last thing the world needs right now is another petro bully. But with oil prices continuing their ascent, resource-rich Kazakhstan is doing some troubling strutting. Behind the country's swagger is the Kashagan oil field. Found in 2000, Kashagan is one of the largest fields to be discovered since the 1970s. Its recoverable reserves are estimated at 13 billion barrels, or 1.5 million a day. To put that in perspective, from 2000 to 2007, non-OPEC production rose by only 4 million barrels a day. Kashagan could make the country of 15 million people situated between Europe and Asia among the world's most powerful oil exporters. But its development, managed by the Agip KCO consortium of seven companies that include Eni of Italy and ExxonMobil, has been plagued by production delays and swelling budgets. Kashagan has yet to yield a single barrel of oil. The Kazakhs, practically shaking for the cash windfall of Kashagan, blame the consortium for the complications and are using this as a pretext to muscle-up their stake in the project, first revoking Eni's operating license last year, then demanding a hefty bonus from the consortium and a larger share for national energy company Kazmunaygas in January. The consortium has remained largely quiet, but earlier this month it lashed out. Speaking 1 July, Exxon Chief Executive Rex Tillerson blamed Astana for the delays. "It is time for the government of Kazakhstan to stop delaying the project, [to] be supportive of the consortium, and see the project through to a successful startup," he said. Reality is that both sides share blame, but the early wafts of energy nationalism are nevertheless detectable in Kazakhstan's assertiveness. Many observers see parallels to Russia's tactics in effectively forcing Royal Dutch Shell to sell a controlling stake in Sakhalin 2 to Gazprom in 2006 and its rough handling of BP. "The whole saga [over Kashagan has been seen] in the context of Sakhalin 2 and Venezuela and Bolivia," said Shamil Yenikeyeff of the Oxford Institute for Energy Studies. "This whole case was seen as growing state control in energy-rich countries."
ET TU, BRUTE?
That's alarming considering the size of Kazakhstan's reserves, the price pressure of keeping the oil underground, and U.S. and European hopes that the country—also rich in natural gas—will become a friendlier alternative to Russian and OPEC energy. Yet despite the incipient similarities to petro-authoritarianism elsewhere, signalling the rise of another energy brute in Kazakhstan is premature, and concerns that the government's assertiveness with Agip KCO could escalate into a Putinesque style hijacking are overblown. First, it's important to understand that Kazakhstan's annoyance with the consortium isn't unreasonable. Though Agip KCO faces among the world's most technically challenging oil projects in Kashagan—located in the shallow waters of the Caspian Sea filled with floating ice and crude oil that contains lethal levels of hydrogen sulphide gas—it has repeatedly delayed the initial start-up date of 2005, most recently to 2013, and the budget has tripled to around $150 billion. Every budget overrun lowers the government's take, and the Kazakhs have estimated the added expenditures and delays could cost state coffers $20 billion over a decade. (The consortium reportedly doesn't recognize this figure). Then consider that the petroleum industry accounts for 30 percent of Kazakhstan's GDP and around 60 percent of its export revenues, and the government's agitation over Kashagan's protracted dormancy is understandable. To be fair, the Kazakhs are aggravating the situation. Most recently, the government announced strict new sanctions for further delays, and in November it unnerved the consortium with a law allowing the government to walk away from oil contracts. Fines for environmental damage have also been threatened, reminiscent of Russia's tactics against Royal Dutch Shell at Sakhalin 2. This posturing isn't as menacing as it appears, however. Kazakhstan's leverage is in the world's ravenous demand for its oil largess—and the Kazakhs clearly recognize this. But that's the extent of their leverage. The domestic energy market is weak. Kazmunaygas develops only 6 percent of the country's natural gas, according to Yenikeyeff. So Kazakhstan has neither the financial nor the technological capability to develop Kashagan on its own. Quite simply, it needs the consortium. Furthermore, other potential investors are eyeing how this plays out. At the same time, the Kazakhs realize the value of their reserves in this time of $140-plus oil and supply shortages. Most respected energy analysts say the shortages are the driving force behind higher prices, not the oft-blamed speculators. And they're going to capitalize on it, possibly by continuing to push for a stronger position in Kashagan, Yenikeyeff said. "I think what's going to happen is that Kazmunaygas could take a large stake in the project and could even become the project's operator," he said. "In that respect, they're seeking to use Kazmunaygas as a cash cow." The consortium will certainly resist this—but probably won't manage much of a fight. As Yenikeyeff noted, those are just "the new rules of the game."
July 14, 2008 - Business Week by S. Adam Cardais - The last thing the world needs right now is another petro bully. But with oil prices continuing their ascent, resource-rich Kazakhstan is doing some troubling strutting. Behind the country's swagger is the Kashagan oil field. Found in 2000, Kashagan is one of the largest fields to be discovered since the 1970s. Its recoverable reserves are estimated at 13 billion barrels, or 1.5 million a day. To put that in perspective, from 2000 to 2007, non-OPEC production rose by only 4 million barrels a day. Kashagan could make the country of 15 million people situated between Europe and Asia among the world's most powerful oil exporters. But its development, managed by the Agip KCO consortium of seven companies that include Eni of Italy and ExxonMobil, has been plagued by production delays and swelling budgets. Kashagan has yet to yield a single barrel of oil. The Kazakhs, practically shaking for the cash windfall of Kashagan, blame the consortium for the complications and are using this as a pretext to muscle-up their stake in the project, first revoking Eni's operating license last year, then demanding a hefty bonus from the consortium and a larger share for national energy company Kazmunaygas in January. The consortium has remained largely quiet, but earlier this month it lashed out. Speaking 1 July, Exxon Chief Executive Rex Tillerson blamed Astana for the delays. "It is time for the government of Kazakhstan to stop delaying the project, [to] be supportive of the consortium, and see the project through to a successful startup," he said. Reality is that both sides share blame, but the early wafts of energy nationalism are nevertheless detectable in Kazakhstan's assertiveness. Many observers see parallels to Russia's tactics in effectively forcing Royal Dutch Shell to sell a controlling stake in Sakhalin 2 to Gazprom in 2006 and its rough handling of BP. "The whole saga [over Kashagan has been seen] in the context of Sakhalin 2 and Venezuela and Bolivia," said Shamil Yenikeyeff of the Oxford Institute for Energy Studies. "This whole case was seen as growing state control in energy-rich countries."
ET TU, BRUTE?
That's alarming considering the size of Kazakhstan's reserves, the price pressure of keeping the oil underground, and U.S. and European hopes that the country—also rich in natural gas—will become a friendlier alternative to Russian and OPEC energy. Yet despite the incipient similarities to petro-authoritarianism elsewhere, signalling the rise of another energy brute in Kazakhstan is premature, and concerns that the government's assertiveness with Agip KCO could escalate into a Putinesque style hijacking are overblown. First, it's important to understand that Kazakhstan's annoyance with the consortium isn't unreasonable. Though Agip KCO faces among the world's most technically challenging oil projects in Kashagan—located in the shallow waters of the Caspian Sea filled with floating ice and crude oil that contains lethal levels of hydrogen sulphide gas—it has repeatedly delayed the initial start-up date of 2005, most recently to 2013, and the budget has tripled to around $150 billion. Every budget overrun lowers the government's take, and the Kazakhs have estimated the added expenditures and delays could cost state coffers $20 billion over a decade. (The consortium reportedly doesn't recognize this figure). Then consider that the petroleum industry accounts for 30 percent of Kazakhstan's GDP and around 60 percent of its export revenues, and the government's agitation over Kashagan's protracted dormancy is understandable. To be fair, the Kazakhs are aggravating the situation. Most recently, the government announced strict new sanctions for further delays, and in November it unnerved the consortium with a law allowing the government to walk away from oil contracts. Fines for environmental damage have also been threatened, reminiscent of Russia's tactics against Royal Dutch Shell at Sakhalin 2. This posturing isn't as menacing as it appears, however. Kazakhstan's leverage is in the world's ravenous demand for its oil largess—and the Kazakhs clearly recognize this. But that's the extent of their leverage. The domestic energy market is weak. Kazmunaygas develops only 6 percent of the country's natural gas, according to Yenikeyeff. So Kazakhstan has neither the financial nor the technological capability to develop Kashagan on its own. Quite simply, it needs the consortium. Furthermore, other potential investors are eyeing how this plays out. At the same time, the Kazakhs realize the value of their reserves in this time of $140-plus oil and supply shortages. Most respected energy analysts say the shortages are the driving force behind higher prices, not the oft-blamed speculators. And they're going to capitalize on it, possibly by continuing to push for a stronger position in Kashagan, Yenikeyeff said. "I think what's going to happen is that Kazmunaygas could take a large stake in the project and could even become the project's operator," he said. "In that respect, they're seeking to use Kazmunaygas as a cash cow." The consortium will certainly resist this—but probably won't manage much of a fight. As Yenikeyeff noted, those are just "the new rules of the game."
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