Oil country hot line

BP Amoco lawsuit postponed indefinitely
BP Amoco said it believed all of the anti-trust concerns of the Federal Trade Commission (FTC) requirements on competition for West Coast oil and gasoline markets have been satisfied with the sale of ARCO’s North Slope assets for $7 billion to Phillips. The Cushing storage terminal and various pipeline interests will be sold to TEPPCO Partners. Although it was difficult to find a buyer meeting both state and federal regulations and willing to pay the price for the large package needed to satisfy FTC requirements, Phillips acquisition should be closed by the end of this month. Phillips had only small interests in the North Slope. All parties are now seeking adjournment of the FTC lawsuit blocking the merger, which has been postponed indefinitely, and negotiations of the $30 billion merger resumed. The combined firms would form the second largest non-government oil company in the world, behind ExxonMobil. BP Amoco reportedly now has the assets of Vastar in its sights.

Production hikes possible as prices soar
High crude prices have some OPEC members eyeing possible production hikes to stabilize prices. Crude prices peaked at $34/bbl, prices not seen since the Gulf War, but dropped 10% as OPEC members mentioned they would consider an increase in output on April 1. It was not said how much production would be raised. Venezuela’s state oil company president Hector Ciavaldini said that OPEC members were looking for a stabilized price of between $20 to $27. Iranian oil minister Bijan Zanganeh said that any output boost during the second quarter would hurt oil prices. He added, "There has been no change in market fundamentals to justify an output rise for OPEC in the second quarter."

Russia raises duty on crude and gasoline
The Russian government has boosted its crude oil export duty by 33% to $19.10 per metric ton from $14.37. Gasoline was raised to $14.37 per ton from $9.5, said Russian news agency Interfax. Both increases will take effect a month after the resolution is published.

Saudis to open upstream to foreign firms
Following the second meeting of Saudi Arabia’s Supreme Council for Petroleum and Mineral Affairs, King Fahd issued a royal edict to authorize several foreign majors to visit Riyadh to discuss proposals submitted following a 1998 meeting with the King. A committee headed by Foreign Affairs Minister Prince Saud al-Faisal will meet with executives from ExxonMobil, Shell, Texaco, Chevron and TotalFina later this month and in early May. Despite improved terms and conditions for foreign investments in a new draft investment law, concerns and skepticism regarding the timing, or whether the projects will actually materialize, linger. However, the sheer magnitude of the nation’s reserves compel the firms to take part in the process. Direct access and control of oil reserves will remain in Saudi hands.

Congress eyes options to boost production
Concerned by high gasoline and heating oil prices, U.S. lawmakers are studying several ways to ease the burden on consumers and boost U.S. production. Options being studied include temporarily lifting the tax on gasoline, opening the Arctic National Wildlife Refuge (ANWR) to development and increasing the Strategic Petroleum Reserve. One bill offered would require importers, refiners and wholesalers of home heating oil in the Northeast to maintain adequate supplies to meet demand. Senator Frank Murkowski (R-Alaska) said, "We have to change course (on the nation’s energy policy.) We have to recognize our potential for resource development and decrease our dependence on oil from the Middle East."

A buyer finally found for Altura
Occidental Petroleum has agreed to buy Altura Energy, the BP Amoco and Royal Dutch Shell’s Permian basin joint venture (JV) formed in 1997 to save costs from declining production in aging fields. The firm has been searching for a buyer. Oxy said it hopes to stop output decline within a year and maintain flow rates for another decade. Altura’s total reserves are 850 million boe. Altura is the largest producer in the basin with 150,000 boepd in 1999.

Cantarell project delayed
Mexico’s Cantarell oil field project has been delayed due to weather and the difficult nature of the nitrogen-injection project. The company says the effort is only 43% complete at a time it should be 60% complete, but it is still expected to be 71% complete by the end of the year, even with the unavoidable delays and complications.

Japan’s AOC loses rights to Neutral Zone
Following five years of negotiating with Saudi Arabia, Japan’s Arabian Oil Co. (AOC) lost its rights to the drilling concession in the Saudi portion of the Neutral Zone. Loss of the concession will cut Japan’s crude shipments in half to about 78,000 bpd. A concession in Kuwait is its sole remaining offshore crude interest. A subsidiary of state-run Saudi Aramco will take half of AOC’s fixed assets in the area. AOC’s Saudi employees will be transferred to Aramco for Gulf Operations Co. (AGOC). Plans to streamline AOC’s operations include a 45% cut in workforce and closing the Riyadh office, leaving its only overseas office in Kuwait. Kuwaiti Parliament members suggested they could block the renewal of their deal as well, while the Japanese government said it would "watch over Arabian Oil Co.’s negotiations."

Hunt-led consortium wins Camisea bid
A Hunt-led consortium comprising Pluspetrol, Hunt Oil and Korea’s SK Corp. has won the right to produce natural gas from Peru’s Camisea field. Pluspetrol will operate the field. Part of the gas will be reinjected and the rest will be shipped to the coast.