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Vol. 224 No. 8 |
| KURT S. ABRAHAM, MANAGING/INTERNATIONAL EDITOR |
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Iraqi oil sector takes steps toward normalcy
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Within Iraq’s reconstituted oil ministry, the State Oil Marketing Organization (SOMO) has inked several deals with foreign refiners and marketers to supply an average of 725,000 to 750,000 bopd through the balance of 2003. While this amount is far short of the 2-million-bopd exported before last spring’s war, it does represent progress. Until recently, Iraq had sold only two cargoes of oil, and those liftings had been produced before the war and held in storage tanks. According to former Shell Oil Chairman Philip J. Carroll, who is the senior American advisor to the ministry, SOMO expected to sign additional term or spot market sales soon. Furthermore, Carroll predicted that export levels would reach 1.2 million to 1.3 million bopd by the end of the year. What he did not mention is that this level will have to be attained in spite of repeated looting and sabotage of production facilities and pipelines.
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Kuwaiti oilfield upgrade receives three bids
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Three groups of oil companies have submitted bids to upgrade and manage oil fields in northern Kuwait. The first group includes ChevronTexaco (leader, 50%), Total (20%), Petro-Canada (10%), Sibneft (10%) and Sinopec (10%). In the second consortium are BP (leader, 65%), Occidental (25%) and ONGC/Indian Oil Corp. (10%). The third group features Shell (leader), ExxonMobil and ConocoPhillips. So far, these companies have preferred to remain silent on the details of their various bids. As envisioned by Kuwaiti officials, the “Project Kuwait” program will be a $7-billion, 20-year contract. The project will double the combined output from five oil fields to 900,000 bpd from the present 450,000 bpd. The Kuwaiti parliament has opposed the plan, afraid that resources will be put in the hands of foreign ownership.
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Qatar spells out details of master LNG plan
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Qatar will spend $25 billion over the next six years to more than quadruple its LNG export capacity to 63.5 million t annually, said Faisal Mohamed al-Suweidy, vice chairman of Qatar Liquefied Gas Co. (Qatargas). He noted that Qatargas already has heads of agreement signed with ExxonMobil for exporting 15 million t per annum to the UK market and with ConocoPhillips for sending 7.5 million t per year to the US. The country this year is already exporting about 15 million t to Japan, South Korea and Spain, with a small amount to the US. This level will increase to 26 million t of LNG in 2006, when 7.5 million t is sent to India, and Italy begins importing 3.5 million t annually.
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Downstream industry group chides US officials, policies
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In a written statement to a Senate Energy & Natural Resources Committee hearing on rising natural gas prices, the National Petrochemical & Refiners Association warned that policymakers and stakeholders “must act now or accept the responsibility for the ultimate consequences of short supplies, lost US jobs, a worsening trade balance and further loss of US industrial leadership.” NPRA went on to say that “There is no OPEC to blame for this natural gas supply crisis; the US has an abundant supply of domestic gas. Flawed government policies prohibit its development in many areas.” Noting that US gas demand could grow by as much as 60% by 2020, NPRA said it believes that “the current policy of limiting natural gas supply while encouraging gas use because of its environmental benefits has created, and could extend, both higher gas prices and continued volatility. The group called for opening larger areas of the US to exploration and development, to increase gas supplies.
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Alaska will increase oil field inspections
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According to reports from several Alaskan media outlets, the state’s Department of Environmental Conservation (DEC) intends to double the number of field inspections. These visits would cover a wide range of exploration, production and storage facilities. In addition, DEC will expand the amount of oil spill drills and exercises that it conducts. Last spring, the state legislature passed a bill that extended the valid period for spill contingency plans to five years from three years. In exchange, lawmakers instructed DEC to use the resultant savings in time and manpower to beef up field inspections and drills. These instructions reflect legislators’ concerns about aging production infrastructure at Prudhoe Bay (more than 25 years old), as well as in the Cook Inlet (more than 30 years old). Corrosion is a leading concern.
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Vietnam, Malaysia set to inaugurate second phase of field
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Beginning next month, oil will begin flowing from the second phase of development in Block PM3 of the Malay-Tho Chu basin, a zone jointly administered by Malaysia and Vietnam. The 4,000-sq-km field is under development by Petronas and Petrovietnam, with Talisman Energy contracted as operator. Phase 1 output is already onstream, and production averaged 16,800 bopd during first-half 2003. When Phase 2 goes onstream, officials estimate that it will double the field’s output. Meanwhile, Cuu Long Joint Operation Co. (a JV between Petrovietnam and a consortium of ConocoPhillips, France’s Geopetro and South Korea’s KNOC and SK) is set to begin output from Su Tu Den (Black Lion) oil field in November, just two years after its discovery.
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Shipyard asks Petrobrás for more P-50 FPSO cash
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Skyrocketing project costs forced Singapore’s Jurong shipyard to ask Petrobrás for an additional $60 million to cover conversion of the 280,000-t VLCC Felipe Camarao. When completed, the vessel will be renamed P-50 and sent to Brazil’s Albacora Leste oil field in the Campos basin to produce 180,000 bopd and 6 MMcfgd. Jurong said that numerous design changes made by Petrobrás have thrown the conversion a full year behind schedule, and the P-50 will not enter service until 2005. The shipyard wants the extra cash to cover the changes, beyond the original $244-million price.
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Philippines plan tender
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An E&P tender for 46 new exploration contracts covering offshore areas is planned this year by the country’s Energy Department. The areas represent shallow, deep and ultra-deep waters, close to oil discoveries and producing fields in northwestern Palawan, said Undersecretary Eduardo Manalac. In addition, there will be “vast frontier areas” in southeastern and eastern Palawan, Sulu Sea and Reed Bank. Manalac said that the areas’ precise locations and technical details would be announced this month.
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Tomoporo’s capabilities touted by Venezuela
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In the Lake Maracaibo area, Tomoporo oil field is capable of producing 250,000 bpd by 2008, said Deputy Energy Minister Luis Vierma at an industry conference in Caracas. Tomoporo is in the Lake Maracaibo area, and the government plans to allow foreign firms to take up to a 49% development stake. Calling Tomoporo “the jewel of PDVSA in the west of the country,” Vierma said that bidding could complete by April 2004. Total, Statoil, Shell, Repsol, ExxonMobil and ChevronTexaco have all expressed interest in the field.
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Husky says White Rose remains on schedule
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Development of White Rose oil field offshore Canada’s East Coast was on track during second-quarter 2003, said Husky Energy. The turret for the field’s FPSO was tested in Abu Dhabi and delivered to South Korea for installation on the vessel. The FPSO’s hull should arrive at an integration yard in Newfoundland in early 2004. A semisubmersible rig is also set to begin development drilling at the field.
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Marathon hits near Alba
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A gas discovery was drilled to 6,110 ft, MD, on the Bococo prospect offshore Equatorial Guinea, in 238 ft of water. Operator Marathon said the well on Block D found 185 ft of net dry gas pay, 6 mi west of Alba gas/condensate field. The well has been suspended for re-entry at a later date. 
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Opinion
For readers who think that the US has a monopoly on poor energy policy, I offer up the latest goofy investigation into Russia’s oil industry by that country’s central government. This disturbing probe not only threatens one of Russia’s two largest oil companies, Yukos, it also endangers the Russian oil industry’s structure as we know it today.
Back on July 2, one of Yukos’ top shareholders, Platon Lebedev, was arrested by the prosecutor general’s office and charged with defrauding the state in the 1994 privatization of Yukos, as well as tax evasion. This was followed by a police search of Yukos’ records, plus a criminal probe into several murder and attempted murder cases involving businessmen and officials who allegedly had conflicts with the firm. Yukos has denied the charges against it and Lebedev. The firm also filed a complaint in Moscow’s Basmanny court against prosecutors, saying that they failed to produce a search warrant and committed other legal violations
Yukos CEO Mikahil Khodorkovsky (Russia’s richest man) blames the probe on a Kremlin-orchestrated attack that is targeting him and his associates for political activities – he may be right. Khodorkovsky has supported opposition parties and criticized some of President Vladimir Putin’s policies, amidst rumors of infighting within Putin’s administration. Nonetheless, some officials seem eager to play on opinion polls that show most Russians dislike how state assets, particularly oil companies, were privatized. They seem bent on reversing all the oil company privatizations through legal probes and challenges. Yet, this would completely destabilize Russia’s oil industry, just as production and exploration are recovering. Putin is said to be privately worried about the damage being done to the industry and the economy by this probe. However, he has made only vague comments about not fighting economic crimes with “arm-twisting and jail cells.” His aides also maintain that he cannot control prosecutors, because they are independent of the government. That is an incredibly wishy-washy response. Given Russia’s totalitarian legacy, Putin has wide discretion to arm-twist and hog-tie those prosecutors if he so desires. And he had better consider doing it soon, if he hopes to preserve Russia’s improving oil and gas performance, as well as maintain international investors’ confidence.
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