Looking ahead

Mexico vying for top position as oil exporter to the U.S. Mexico is positioning itself to become the single-largest crude supplier to the U.S. Mexico’s proximity and steady supply has allowed it, for years, to be named among the top four suppliers, which export more than 1 million bopd, each, to the U.S. In January, according to the U.S Commerce Department, Mexico exported 48.3 million bbl of oil to the U.S., ahead of Saudi Arabia’s 46.7 million bbl and Venezuela’s 44.2 million bbl. The U.S. Energy Information Administration reports that neighboring Mexico was in the second spot in 1997, 1999 and 2001. "Whether Mexico’s number one or two, it’s a strong statement in its timing and substance about its ability to be an ally in addressing North American energy issues," said Mexico Energy Intelligence Director George Baker. The U.S. DOE said that Mexico shipped more oil than any other country in the last three months of 2001.

Shell to acquire Enterprise for $5 billion. Royal Dutch / Shell has agreed to buy British independent Enterprise Oil. Shell will pay £3.5 billion ($5 billion) in cash, and will assume £800 million ($1.14 billion) in debt. The transaction will boost Shell’s productive capacity by about 6% and add 1.5 billion bbl of oil to the reserve base. The deal also opens up new markets for the oil giant in Norway, Italy and Brazil, while complementing its operations in the North Sea. Shell said the acquisition would generate annual cost savings of $300 million, while boosting its earnings, beginning in 2003. The takeover is seen as a defeat to Enterprise Chief Executive Sam Laidlaw, who has struggled to keep the firm independent.

ANP takes the reins on Brazil’s exploration work. Officials with Brazil’s National Petroleum Agency (ANP) said they will spend $430 million for research, including geological data acquisition and seismic prospecting that is normally carried out by Petrobrás. Previously, due to legal impediments, ANP had not used these research funds, said ANP head Sebastiao de Rego Barros. "This year we will start a new drive aimed at opening new prospects, new frontiers via geological studies," said ANP director John Forman while opening a seminar for potential bidders in June’s auction, the fourth since 1999. "There are immense areas with no data available, where Petrobrás has not yet researched." Although Brazil now imports about 400,000 bopd, the country plans to be self-sufficient in oil by 2005. A total of 27 companies, so far, have bought information packages for the latest auction, compared with 38 last year. ANP is offering 40 offshore and 15 onshore areas in 19 basins across Brazil in the fourth round, one area more than in 2001.

Timor Sea treaty to be ratified. Hoping to gain a bigger piece of the oil and gas revenue pie from projects in East Timor, the former Indonesian province plans to open negotiations with Australia and Indonesia to expand its maritime borders. Foreign Minister Jose Ramos Horta, said the treaty with Australia, agreed to last year, will be ratified on, or shortly after, the date that the country gains full independence this month. Despite a potential hindrance by Petro-Timor, which is suing the Australian government and Phillips Petroleum over exploration rights in the Timor Sea, Horta said he does not foresee any problems over the ratification of the treaty, which should be more favorable to East Timor.

Russia itemizes privatization plan. During this year, the Russian government intends to sell 20% of Slavneft and 6% of Lukoil in a partial privatization, geared to give all investors a modest chance to share in the production boom in the country. Although the Lukoil sale is being used to attract foreign investors, the sale will not proceed at less than $12 to $13 per share, said Alexander Braverman, deputy minister in charge of privatization. Stephen O’Sullivan, a Moscow-based analyst with United Financial Group, said the Lukoil sale was expected to take the form of a "level 3" U.S. Depository Receipt issue, a first for a Russian oil firm. Unlike Lukoil, Slavneft (a medium-sized firm with production in western Siberia) is expected to attract more domestic bids.

Shell to develop Egret field. Brunei Shell Petroleum said it is on schedule to proceed with development of the new Egret field this year. The $79-million field, offshore Brunei, is expected to supply gas to the Brunei LNG plant in Lamut, and to meet an anticipated shortfall in the country’s LNG gas demand in the fourth quarter, according to the company’s statement. First production from the field is slated for August 2003.

ChevronTexaco to seek new oil off Angola, Congo. As the two war-torn African countries – Angola and the Republic of Congo – end a border dispute, ChevronTexaco plans to search for oil off their coasts. The U.S oil giant will survey an area on the oil-rich countries’ maritime border under a deal signed in Brazzaville. The zone, on the border between Congolese waters and those of Angola’s Cabinda enclave to the south, has been at the heart of the disagreement between the two otherwise friendly governments. Congolese Oil Minister Jean Baptiste Tati Loutard, said, "We thought the best formula was to exploit it (the disputed zone) together." "This accord is a peaceful way to resolve the problems between the two countries," said Angolan Deputy Oil Minister Desiderio Costa.