Oil country hot line

U.S. job cuts link to weak prices

Slumping oil and gas prices undermined companies’ budgets, prompting the loss of about 4,000 exploration jobs in December, reports the Department of Labor. At the onset of this year, workers in drilling operations stood at 336,000, or 6,000 fewer than the three-year high in both August and September. December’s job cuts represent the steepest loss in drilling jobs since May 1999 – that year 5,000 drilling jobs were lost, due to the crash of late 1998 through early 1999. EnergyJobsNetwork.com President Matt Richards said, "You’re not going to see jobs come back until prices improve."

North Sea find counters regional trend

The Buzzard discovery is Britain’s biggest new oil find in almost 10 years. After two recent appraisal wells, operator PanCanadian upped the field’s recoverable reserves estimate to 400 million bbl. Wood Mackenzie’s North Sea analyst, Mark Hume, said, "It’s fantastic to find these extra reserves, but it doesn’t alter the big picture for the UK Continental Shelf, which has been suffering from declining output that began in 2000 and accelerated last year." Calgary-based PanCanadian is evaluating production concepts and plans to drill at least three more wells in the field.

Gazprom officers jailed, Russian output up

A top executive at Gazprom and the head of Sibur, one of the leading subsidiaries of the Russian gas monopoly, were detained by Russian prosecutors in relation to allegations of asset stripping that totals $85 million. This action marks the first criminal investigation against Gazprom. It is also a strong sign of a new willingness by President Vladimir Putin’s administration to tackle allegations of high-level corruption. Both men were effectively demoted while retaining their board seats last summer after Putin nominated his long-time associate, Alexi Miller, as Gazprom chief executive in May. Miller has gradually appointed his own team at Gazprom and made efforts to recover assets. Meanwhile, Russian oil firms boosted output by a combined 7.7% in 2001, compared to 6% the previous year. Production totaled about 7 million bopd in 2001 and 6.5 million bopd in 2000.

Iraq sends letter on oil pricing to UN

Reportedly, a Western diplomat said that Iraq has sent a letter to the United Nations, protesting its de facto, retroactive crude pricing system. Baghdad claims that the world body’s system of pricing oil after loading is hampering its U.N.-supervised export flows, which normally run at some two million bpd. The state oil marketer has written a letter of complaint that was set to be discussed at the next Security Council meeting. Security Council powers, the U.S. and Britain, have for several months effectively imposed the retroactive pricing method to eradicate alleged illicit payments to Baghdad via oil sales.

Magnum and Prize in $1.2-billion deal

The latest partners to join the merger mania of this era are Magnum Hunter Resources, Inc. and Prize Energy Corp. Magnum Hunter Chairman, President and CEO Gary Evans, said that "The combination of these two Dallas-based companies creates an organization that is stronger and in a better position to compete than either would be independently." The transaction will create a firm with proved reserves of about 1 Tcfge, and net daily production of 232 MMcfge. Also, it will have more than a five-year drilling inventory that includes in excess of 1,000 onshore locations, and a reserve-to-production ratio in excess of 12 years. The combined firm will maintain the Magnum Hunter name and be headquartered in Irving, Texas.

Conoco’s Houston campus is slated to become the world headquarters of the Conoco Phillips combined entity.

FTC stalls Conoco-Phillips deal

The U.S. Federal Trade Commission asked for more information before approving Phillips Petroleum’s plan to purchase Conoco. Analysts had predicted that the FTC would likely scrutinize the two firm’s retailing operations. The transaction would create the largest oil refiner in the country, as well as the third-largest U.S. and the sixth-largest investor-owned oil firm. Meanwhile, Oklahoma Governor Frank Keating was scheduled to meet with Conoco Chief Executive Archie Dunham to plead his case for keeping the headquarters of the merged firm in Oklahoma in spite of Phillips CEO James Mulva’s announcement that the merged company would be headquartered in Houston.

PNG output declines nearly 20%

Papua New Guinea’s oil production declined 17%, to 21.1 million bbl of oil last year, compared to 25.5 million bbl in 2000, reported Department of Petroleum and Energy Secretary Joseph Gabut. He added that the overall decline reflects the natural reduction in the Kutubu and Gobe fields. December’s oil production declined 24%, compared to the previous year.

Angola’s success dwarfed by problems

One must agree with industry experts, who claim that Angola is the North Sea of the South, especially when considering that TotalFinaElf’s Girassol field will reach 200,000 bopd by mid-2002. ExxonMobil’s 250,000-bpd Kizomba, BP’s Greater Plutonio and ChevronTexaco’s Benguela / Belize developments are also scheduled to come onstream in 2004. However, companies are concerned by recent exploration results in the Kwanza basin, a large offshore province which, after a year of deepwater drilling, has yet to produce a viable oilfield. Also, Block 31 in the ultra-deep zone raised eyebrows when BP’s drilling efforts turned up dry.