Oil country hot line

Venezuela offers neighbors low-priced oil

A "separate and bilateral deal," called the Energy Pact of Caracas, was signed last month by the heads of states of the same countries involved in the San Jose Pact. The new deal allows the 10 Caribbean and Central American countries to receive an additional 80,000 bopd at a low cost from Venezuela, by year-end, said President Hugo Chávez. Countries that are a part of the Energy Pact – Haiti, Costa Rica, Panama, Nicaragua, the Dominican Republic, Jamaica, Barbados, Honduras, Guatemala and Belize – will be able to buy crude from Venezuela in the price range of $20 – $30 a bbl at a 2% interest rate. After a two-year grace period, the countries will have 15 years to repay the debt. Chávez assured the countries that goods and services were acceptable alternate payment methods.

Agip hits oil offshore Norway

In the Barents Sea, 50 km southeast of the Snoehvit find, Agip ASA discovered oil in exploration Well 7122/7-1, according to the Norwegian Petroleum Directorate. The find is shared with Phillips Petroleum Co., Enterprise Oil plc and Forem Corp. It has a potential of 160 – 250 MMbbl of recoverable oil reserves that validates the possibility of additional finds in the area.

Iraq needs spare parts to sustain output

Until the Security Council clears industrial supply sanctions, Iraq is unable to bolster its current oil production level. The UN sanctions committee was told that the spare parts and equipment that are the minimum requirements of Iraq’s oil industry have been facing serious obstacles. This statement comes at a time when OPEC is being incessantly pressured to increase oil exports. Reports from the Iraqi oil-for-food program Director Benon Sevan confirm that during the week ending September 15, Iraq exported 16.8 million bbl of oil for revenue, estimated at $490 million. At the oil-for-food program meeting, Sevan reported that "503 import contracts in the oil sector had been placed on hold by the committee, which vets applications from Iraq." He further added that the total value of contracts on hold in all sectors rose from $1.6 billion to $2.0 billion since the end of May.

Canadian oil field sets new production date

Production for the Terra Nova project offshore Newfoundland is now expected in the latter part of the second quarter 2001. Operator Petro-Canada has adjusted its pre-production capital cost, increasing it by nearly $300 million from $2.2 to 2.5 billion. The FPSO hookup and commissioning is underway in Bull Arm, Newfoundland. According to the Canada Newswire, Gary Bruce, Petro-Canada’s Vice President, said "the schedule and cost adjustments arise from a recent internal review of the project plan, and address delays and additional work requirements in both the offshore drilling and marine installation programs, and in the hook up and commissioning of the FPSO." Terra Nova, the second largest oilfield off Canada’s east coast is located on the Grand Banks, 350km east-southeast of St. John’s. It contains recoverable reserves of 370 million bbl of oil. Its initial yearly output is expected to average 49,000 bopd, and by 2002 that average will climb to 129,000 bopd.

Sakhalin 1 appraisal results announced

ExxonMobil appraised a significant oil accumulation on Sakhalin 1 Block. The Chayvo 6 encountered an oil-bearing Miocene reservoir that flowed at a test rate of 6,000 bopd. A large, 340-ft column on the west flank of the discovery was delineated by geoscientists from Russia and Japan. The multinational team led by ExxonMobil used the firm’s 3-D seismic technologies. Chayvo 6 was drilled to a TD of 10,089 ft in 50 ft of water. The well is located roughly 370 mi north of Yuzhno-Sakhalinsk. Key government assurances and additional E&P activities that are necessary for the advancement of the project are in progress. ExxonMobil has established a major position in the northeast Sakhalin shelf and is currently active in pursuing Production Sharing Agreements on the Sakhalin III Kirinskiy, Ayashskiy and East Odoptinskiy license blocks.

GOM sees revolutionary developments

The first-ever floating production facility in the deep water of the Gulf of Mexico will be used to develop the $1.3-billion Na Kika prospect. This 50% joint venture between Shell E&P and BP contains an estimated 300 million boe. The six-field prospect is expected to see first output (from record water depths of 7,000 ft) in mid-2003 from the first five wells. Peak daily production rates should reach 325 MMcfg and 100,000 bbl of oil. The Na Kika production facility is not an FPSO, but rather it is similar to a tension leg platform without the drilling equipment. When tied into the six fields, it will resemble a giant octopus, thus, its name Na Kika, "the octopus god of Kiribath." The reason for this special production facility stems, in part, from the fact that the regulatory-approval process for FPSOs in the GOM is still underway. The final decision is expected in February, according to Debra Winbush, spokeswoman for MMS in New Orleans.

   Meanwhile, Shell has made its 40th deepwater GOM discovery named Princess. Holding an estimated 200 million bbl of oil, it is located on Canyon block 765 in 3,600 ft of water.

Oil giant continues tax protest

Occidental of Elk Hills’ on and off appeal that began back in July has resumed. After purchasing the 38,000-acre Elk Hills field in Kern County from the federal government, OXY is attempting to lower its annual tax bill by asking for a refund of $18 million, said assessor Jim Maples. For the 1999 – 2000 year Oxy was taxed $48.7 million based on a net assessed value of $4.7 billion. Oxy contests that the land should be valued by its known or proven mineral reserves and not on the purchase price. One Oxy attorney, Chris O’Neall, argued that the purchase price should not be considered the fair market value since the firm bought the property at auction, with no bargaining or negotiating to establish market price.