Oil country hot line

OPEC may keep levels but lose premiums

At press time, the results of OPEC’s June meeting were unknown, but UAE Oil Minister Obaid bin Saif Al-Nasseri said there was no reason for OPEC to change its current production ceiling before the scheduled meeting. He said the ministers would review the market situation, and "if the circumstances change . . . [they] will take [necessary] measures." For years, OPEC has oversold a bbl of oil, selling for $20 what it acquired for just $2. But, OPEC’s price premium is now being threatened by Western governments and multinational companies seeking to undermine the system of royalties that forms the backbone of OPEC government income. A new book, entitled Global Oil and the Nation State, and authored by OPEC advisor Bernard Mommer, expounds a new consumer-oriented business model, characterized by low royalties and rapid production growth. The aim is to bring down the cost of oil by allowing more crude to be profitably pumped at lower prices.

   Meanwhile, outgoing OPEC Secretary-General Ali Rodriguez arrived in Tehran to discuss with Iranian officials the oil market situation, his replacement as secretary general, and some environmental issues. He was scheduled to meet with Iran’s president and oil minister.

Alaska, Alberta ink pact to spur development

Alaska and Alberta signed an agreement that could spur a multi-billion-dollar commercial development of Arctic natural gas. Alaskan Gov. Tony Knowles and Alberta Premier Ralph Klein voiced common interest in ensuring that Arctic gas be shipped to distant markets through yet-to-be-built pipelines. Knowles added, "We’re trying to articulate a new approach to the issue of developing, not Alaska gas or Canadian gas, but really, an Arctic energy strategy." Klein said that for the future, Alaska and Alberta can meet the demands of the North American market. The Alaska project, alone, is estimated to cost $17 billion to $20 billion, and to take more than a decade to complete.

French firm is top bidder in NPR-A sale

TotalFinaElf dominated bidding in the National Petroleum Reserve-Alaska lease sale that netted $63.8 million. Proceeds will be split 50 – 50 between Alaska and the federal government. The firm paid more than $10 million, each, for two parcels. It went on to claim 83% of the total winning bids, shelling out $52.9 million for 19 tracts. TotalFinaElf’s representatives at the sale were mum about the firm’s strategy. TotalFinaElf’s surprise participation came as fellow oil giant BP did not place a single bid, although it spent more than $32 million on 25 tracts at the first NPR-A sale in 1999.

Crown Prince Abdullah

Saudi Arabia sets up service company

Attempting to become less directly dependent on its oil production earnings, Saudi Arabia has set up a holding company to work in the areas of oil, natural gas and petrochemical services, the official Saudi Press Agency reported. The agency said the private sector will be a partner in the Company for Petroleum Services, but no further details were released. The decision was made during a meeting of the Higher Investment Council, headed by the kingdom’s defacto ruler, Crown Prince Abdullah. The council’s secretary-general, Abdul-Rahman al-Tuejeri, was quoted as saying that the council had agreed on the strategy of privatization to sell parts of state-owned companies.

Venezuela selects LNG project winners

A Venezuelan Ministry of Energy and Mines spokesman said the South American country has selected Shell, Qatar Petroleum, Mitsubishi Corp. and PDVSA to develop its $2-billion, offshore, North Paria LNG project. ExxonMobil was not included, because its proposal did not match all the initial negotiating guidelines. Final details of the project have yet to be agreed to by the government and its foreign partners. The North Paria project foresees building a liquefaction train of 4.7 million t/yr, to supply LNG to the U.S. East Coast. First shipment is expected in late 2006 or early 2007.

   Meanwhile, PDVSA plans to invest $9 billion during the next five years to develop the country’s natural gas reserves. Details on how the firm intends to finance the investments are not yet known.

Yemen to cancel $5-billlion gas project

Due to what it termed as an often-delayed implementation, Yemen may abrogate a $5-billion LNG project. TotalFinaElf and other shareholders in this venture were given a deadline to implement the project. Last month, Yemeni Foreign Minister Abdul Qadar Bajmal was scheduled to meet with the foreign firms to decide the fate of the proposed LNG plant. Total-FinaElf owns 36% of the project, which supposedly was to have an annual production capacity of 3.5 million t.

Well blowout injures seven in Indonesia

At PT Exspan’s operations in the onshore Tarakan field in East Kalimantan, a well blowout and fire injured seven, said an official from PT Medco Energi International. The blowout did not disrupt gas output levels as the fire occurred at a service well and not a producing well. Exspan, a unit of Medco, produces 24 MMcfgd and 1,100 bopd from the Tarakan production sharing block. Company officials said those injured had been stabilized, and equipment damage and loss from the accident were minor.

Sao Tome, Nigerian presidents discuss rights

Last month, the presidents of Nigeria and Sao Tome and Principe started talks to review an offshore oil rights agreement. The talks were prompted by comments made by Sao Tome President Fradique de Menezes that there were "serious errors" in almost all oil agreements previously signed by Sao Tome government. Sao Tome is not pleased with the talks. A deal signed by the country’s former president, Miguel Trovoada, gave 60% of the revenues to Nigeria and 40% to Sao Tome. Nigeria agreed to help Sao Tome build a refinery and deepwater port in exchange for exploration rights. Sao Tome hopes the oil revenues will generate new wealth.