Looking ahead

North Sea oil tax to remain unchanged in UK budget. Although the British North Sea played a major role in allowing oil firms to gain record profits last year, analysts and economists believe that no additional taxation will be made in the area. This prediction stems from the notion that UK officials wish to preserve the aging, yet prolific, territory. Williams de Broe’s oil analyst, Peter Hitchens, bluntly said that if the UK began boosting North Sea taxation, oil giants may utilize their option of investing in other areas, such as the Gulf of Mexico or Africa. In a recent survey of economists, the majority of respondents did not expect a windfall tax on British firms, nor do they expect any extra Petroleum Revenue Tax – a levy charged on some North Sea fields, but invalid on post-1993 developments. A windfall tax would only affect UK-registered oil groups, creating a disadvantage for such firms on the global stage. In 1998, oil giants were able to persuade against a tax increase. Chancellor of the Exchequer Gordon Brown said he was "determined not to make short-term decisions based on short-term factors," referring to last year’s record-high oil prices.

Bush waits 60 days for energy policy suggestions. U.S. Energy Secretary Spencer Abraham said that it would be 60 days before a special White House task force presents its proposal for a new national energy strategy to President George W. Bush. The task force is expected to make recommendations primarily on ways to boost U.S. energy supplies. Abraham assured reporters that the Bush administration will act quickly to implement the task force’s suggestions. Vice President Dick Cheney, who heads the White House energy task force, said (in January) that the plans would be ready within 45 to 60 days.

Pan American Energy will invest heavily in Argentina. This year, Pan American Energy plans to invest $400 million in Argentina. Senior Vice President Adrian Peres said, "These are essential investments to develop oil production, (to commence) exploration and development of gas fields, (to build) infrastructure to put the gas operations in production and (develop) some minor electrical power generation projects." The firm, which is a joint venture between BP and Argentina’s Bridas, is attempting to shift its operations from oil toward natural gas. Pan American Energy controls up to 35% of Argentina’s gas reserves and operates 10%. Peres said the firm’s objective is to increase its gas sales abroad and create a regional gas market. Pan American recently signed a deal with an Uruguayan consortium to provide gas via a pipeline crossing the River Plate that separates Argentina and Uruguay.

Corrib field development boosts Irish hopes. Enterprise Oil approved a £400-million ($580-million) development of Corrib gas field – the first offshore development in Ireland in two decades. Corrib has reserves of around 1 Tcf, equivalent to about 170 million bbl of oil. The firm’s decision is exciting for Ireland, because a gas shortage is predicted for the country within the next few years, as its gas demand rises. The situation is compounded by the fact that Kinsale – the country’s primary offshore field – has a limited production life. Enterprise Energy Ireland’s Managing Director, Brian O’Cathain, said that first gas from Corrib is expected by summer 2003. This is the second field that this UK-based independent has operated outside of the North Sea.

U.S. may revise its position on climate change. Before re-opening talks on the Kyoto environmental pact to handle global climate change, the U.S. will review its stance on the issue. EPA head Christine Todd Whitman, a former New Jersey governor, said that it is the new administration’s right to revisit the issues concerning global warming and climate change. She said, "The U.S. is committed to ensuring that global environmental issues are addressed." But Whitman said the Bush administration may not accept discussions from the recent meeting at The Hague and move forward from that point. In fact, President George W. Bush reportedly has called the 1997 agreement "unfair to America."

Petro-Canada considers new oil sands projects. Petro-Canada is attempting to produce 150,000 bopd within five years from the Athabasca oil sands in northeastern Alberta. The firm has ordered economic feasibility studies for two new projects. Petro-Canada expects each new venture to yield 60,000 bopd. Already, the firm has a C$290-million (US$185-million) construction project underway at MacKay River, which is expected to come online in late 2002. This project promises output of about 30,000 bopd. The firm is utilizing steam-assisted, gravity drainage technology on all three projects, to ensure it reaches its goal.

Polish shipyard expands services to upstream industry. Poland is the world’s fourth-leading ship builder, with a $4-billion order portfolio. Gdansk Repair Yard (GSR) is one of several Polish shipyards known for producing high-quality ships. GSR said that it intends to branch out into oil platform repairs to enhance its business. It recently rebuilt the Glomar Arctic IV semisubmersible for U.S.-based Global Marine Inc. Analysts say that Poland, which is used to pure market conditions, will have a definite advantage in the shipbuilding market in the near future as the world’s shipbuilding countries plan to end state subsidies. The European Union (EU) also promises to phase out state aid to yards by 2004.