Oil country hot line

OPEC mum but expected to maintain output

OPEC President Rilwanu Lukman said in April that it was too early for producers to judge whether or not to increase output. However, at the end of this month at their regularly scheduled meeting, OPEC members will decide whether to uphold or renege on their pledge to keep prices within the target range of $22 – $28/bbl. Lukman said, "We have a situation now, where the market is good, fundamentals are moving in the right direction, but we still have the Middle East situation and Iraq situation, so it’s not normal." Several OPEC ministers said that they expect the group to keep production levels steady. Asked if OPEC intends to increase output this year, Lukman said, "It depends what happens in the international economy."

Chavez appoints new PdVSA directors

Venezuelan President Hugo Chavez named a new board of directors at state firm PdVSA to appease dissident executives, whose revolt (over directors’ appointments that were based on politics rather than merit) snowballed into a national crisis that briefly overthrew the Venezuelan leader. The new board of directors includes Jose Rafael Paz, director of PdVSA’s Pequiven petrochemicals unit; Ludovico Nicklas, an executive in the production and refining department; Clara Coro, adviser to the oil ministry; and Hugo Hernandez Rafalli, head of the local Petroleum Chamber. Two of the old directors were kept on – Arnoldo Rodriquez and Jorge Kamkoff. "This team is of the highest quality, and meritocracy has been respected," said Ali Rodriguez, the new president of PdVSA. Rodriguez resigned as OPEC secretary general to head the state-owned monopoly. Managers have welcomed Chavez’s decision to replace the board and were working to restore production that had been severely curtailed during the five-week work slowdown.

Canadian firm helps set lease record

Setting a record for the most acres leased in a single sale in Alaska, Petro-Canada was high bidder on all 179 tracts it bid on at the Alaska North Slope Foothills, area-wide lease sale. The firm bid $8.5 million on about 1 million acres. "Obviously we’re keen on the area," said Petro-Canada spokesman Chris Dawson. The North Slope Foothills area contains about 7.7 million acres lying between the Arctic National Wildlife Refuge and the National Petroleum Reserve. Alaska Gov. Tony Knowles said, "Since the geology of the Foothills area indicates that the region has predominantly gas potential, (the) sale shows that the industry is serious about gas development."

IEA pushes U.S. to increase production

The International Energy Agency reported that the U.S. must boost production, if the country is to meet its future energy demand growth and reduce its dependence on imports. The Paris-based agency said, last month, that the current domestic gas production – which is growing at a rate of 4% a year – was not enough to meet growing demand. The agency urges the U.S. to optimize drilling in new areas onshore and offshore. IEA Executive Director Robert Priddle said, "We’d like to see an opening up of the Arctic reserves in an environmentally sensitive way because the U.S. needs new supply sources."

Drilling ban on BC coast panned

A newly released study by the British Columbian government claims that there is no scientific basis for maintaining a ban on drilling off Canada’s Pacific coast. The panel said that before any exploration was allowed, more information is needed on scientific, research and government-policy issues, including sea bottom conditions in the main target area near the Queen Charlotte Islands. The Geological Survey of Canada estimates that the region has reserves of 9.8 billion bbl of oil and 25.9 Tcfg. Petro-Canada spokesman Chris Dawson said the province and Ottawa needed to create a single regulatory framework, and that Indian land claims and environmental protection rules all had to be finalized before any exploration could begin.

FSU countries reach accord on oil fields

In the latest effort to resolve territorial issues in the Caspian Sea, Russia and Kazakhstan have agreed to develop, jointly, three fields in the area. The two countries will sign an agreement by this summer, to cover development of the Kurmengaz, Tsentralnoye and Khvalynskoye fields, said Victor Khristenko, a Russian deputy prime minister. Khristenko’s statement comes after talks failed concerning the division of the resource-rich area between countries bordering the Caspian Sea. The talks failure will slow development of the region’s mineral resources.

Iran repeats call for sanctions

Repeating a call he made last month, Iran’s supreme leader Ayatollah Ali Khamanei said Islamic nations should agree to impose a one-month cut in supplies. "A one-month cut will demonstrate that the Islamic nations have the capability to confront international dictatorship," said Khamanei. Iran has advocated the use of oil as a weapon against Israel and its Western supporters, in a bid to force them to compromise on the Palestinian issue and withdraw from the region. Tehran wants producers like Saudi Arabia and Kuwait to join the embargo before it turns off its own supplies. Saudi Arabia, however, has dismissed the sanctions notion.

Devon sells Indonesian operations

Devon Energy has agreed to sell its Indonesian operations to PetroChina for $262 million, including working capital. Devon will receive about $250 million upon closing, plus an additional $12 million upon successful completion of certain events. As of last year, the properties had estimated proven reserves of about 80 million boe. "With the sale of the Indonesian operations, we have now largely accomplished our goal of bringing focus to Devon’s asset base by eliminating non-core properties," said Chairman, President and CEO J. Larry Nichols.