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Vol. 225 No. 12 |
| KURT S. ABRAHAM, MANAGING/INTERNATIONAL EDITOR |
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Brazil's ANP slates round
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State hydrocarbons regulator ANP expects to hold its licensing Round 7 next October. In comments to a regional conference in Santiago, Chile, ANP Chairman Sebastiao do Rego Barros said that the date would mark a change from the traditional practice of holding rounds in August. He said the date would be changed at the request of foreign investors, who cited a conflict with the North American vacation season. Last August, Round 6 resulted in award of 154 blocks to 19 companies.
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Mali awards large tracts
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Australian independent operator, Baraka Mali Ventures Ltd. signed PSAs with Mali's Council of Ministers for five onshore exploration permits in northwestern Mali. Encompassing 193,200 sq km (74,595 sq mi), the blocks represent one of the largest collective permit awards ever granted to the global upstream industry. Blocks 1, 2, 3, 4 and 9 are in the Taoudeni basin. Baraka committed to a $51-million work program over four years.
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Nigeria plans bidding
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A 27-block bidding round is set to be held in first-quarter 2005 by Nigeria's Ministry of Petroleum Resources. The blocks are in deepwater areas, the continental shelf of the Niger Delta and the Chad basin. Presidential energy advisor Edmund Daukoru said that no limit will be placed on the number of blocks that a participant company can apply for. Nigeria's last open round was held in 2000. At that time, 11 of 22 blocks offered were awarded.
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Tierra del Fuego to create its own oil company
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Argentina's Tierra del Fuego will be the second province in the country to submit a plan to the legislature to form its own oil company. To be called Renasa, the firm will be owned by the province, and its purpose is to guarantee legal security for investors. “We are saying, there are clear rules of the game and transparency; join with the province,” said provincial Deputy Governor Hugo Cóccaro. La Pampa province also announced similar plans.
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Pemex has new head, plans hefty spending during 2005
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The president of Mexican state oil firm Pemex, Raul Muñoz, resigned in the wake of several corruption scandals. His replacement was set to be Luis Ramirez Corzo, who had headed the E&P Division, PEP. Newspapers first reported in September that Muñoz had allowed Pemex to shift $40 million in cash to the oil workers union, even as investigations continued into a similar scandal dating back to 2000. Mexican media also reported that Muñoz used company funds to pay for two plastic surgeries on his wife, although Pemex later said that he had reimbursed the money. Last but not least, the magazine Proceso alleged significant “irregularities” in the running of PEP. Meanwhile, Pemex said its capital spending would total $11.2 billion next year, with 85% of that figure going to E&P projects. The company also awarded a 265-well contract to Drillers Technology de Mexico for gas drilling in the Burgos basin.
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Oil prices hit the skids, drop 15% to 18%
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After peaking in mid-October, oil prices on the New York and London commodity markets trended sharply lower. From Oct. 17 to Nov. 12, the price for sweet, light crude in New York fell 14.2%, to $47.32/bbl. In London, Brent crude lost 17.9%, hitting $42.31/bbl. Traders said that they were no longer nervous about an oil workers' strike occurring in OPEC member Nigeria. In addition, US crude oil inventories were perceived to be growing, bringing a bearish attitude to the market. Analysts cautioned that prices could turn and rise if pre-winter weather conditions worsen.
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Devon Energy touts support of North Texas economy
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Natural gas drilling by Devon Energy in the Barnett Shale formation of Wise, Denton and northern Tarrant Counties was responsible for more than $600 million in economic activity, according to a study sponsored by the company. “If you consider that Devon is about half of Barnett Shale operations, then you can pretty safely say that the economic impact could be $1 billion per year,” said Bernard Weinstein, an economist at the University of North Texas, who authored the study with Terry Clower. They noted that 2,536 workers are involved in the mostly drilling operations along the shale, including 310 employed directly by Devon. Along with contractors and vendors, the workers took in $121.7 million, and the related gas fields produced $89.1 million in property and severance taxes.
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Latest UK licensing round pleases officials
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After opening for applications last March and closing in June, Britain's 22nd Offshore Licensing Round was quite successful. Officials offered 97 licenses to 58 companies, including 15 newcomers. The licenses cover 13 offshore areas in the North Sea and west of Shetland. “Our progressive and innovative licensing system is proving a real success in attracting international attention to the North Sea,” said UK Energy Minister Mike O'Brien. “The new Promote licenses improved on the interest of last year and accounted for 58 of the 97 license offers.” Companies must now decide whether to accept the licenses.
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Paperwork filed to gain major Canadian pipeline approval
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An application for the $7 billion Mackenzie Valley Pipeline has been filed with regulators. The consortium behind the planned, natural gas pipeline – Imperial Oil, ConocoPhillips, Shell Canada, ExxonMobil Canada and the Aboriginal Pipeline Group – filed an 8,000-page application with the National Energy Board to begin an environmental and regulatory review process. To tap Mackenzie Delta gas supplies and transport them south into the US, the proposed pipeline will be essential. If logistics proceed smoothly, first gas from these northern Canadian fields could begin flowing by 2009 or 2010.
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MMS issues proposed notice of Eastern GOM sale 197
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MMS officials announced the availability of the Proposed Notice of Sale for Eastern Gulf of Mexico (GOM) Lease Sale 197. Slated for March 16, 2005, it will be the third Eastern GOM OCS lease offering in the last five years. Overall configuration will be the same as for lease sales 181 (December 2001) and 189 (December 2003). The proposed lease sale area totals 124 unleased blocks that cover 714,240 acres. The tracts are 100 to 196 mi offshore in water depths of 1,600 to more than 3,245 m (5,250 to more than 10,645 ft). The proposed sale was sent to governors of the affected states for a 60-day comment period.
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Lukoil and ConocoPhillips gain Russian fields approval
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Lukoil and ConocoPhillips have received permission from the European Commission to set up a JV to develop fields in Russia's Timan-Pechora province. After ConocoPhillips gained control of 7.59% of Lukoil in September, the two firms said that they would set up the JV, which will be owned 70%/30% by Lukoil and Conoco-Phillips, respectively. The new operation should be set up by February and called Rusko, and be based on the Lukoil subsidiary, Naryanmarneftegaz. Assets will include 11 E&P licenses for fields, plus two, pure exploration licenses. To the south, the European Bank for Reconstruction and Development has awarded a $170-million line of credit to Azerbaijani state oil firm SOCAR. The funds will be used to develop Shah Deniz field ($110 million) in the Caspian Sea and build the Bak-Tbilisi-Erzurum pipeline ($60 million). Also in the Caspian region, giant Kashagan oil field operator ENI signed a NOK 1.5 billion ($240.1 million) deal with AkerKvaerner for building, outfitting and testing seven production barges, offshore Kazakhstan. 
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Opinion
Any non-Norwegian operator or service/ supply firm that has done business in Norway knows that the country's government can move agonizingly slow when making decisions of substance. However, as regards tax reform, it appears that officials have finally gotten the message. Proposals announced recently would make Norway's tax regime more competitive in the North Sea. As noted by Derek Leith, head of Oil and Gas Tax at Ernst & Young's UK offices, “The proposed Norwegian tax reform is a clear sign of intent by Norway that it wants to become more competitive in the international marketplace. The general tax measures regarding dividends and capital gains are very similar to existing rules in other European countries, most notably the Netherlands and the UK.”
In examining the proposals, one can say that the capital gains exemption is more favorable than the UK's shareholding regime equivalent. This is due to what appear to be less stringent qualifying criteria. Some observers have argued that Norway is positioning itself to be the regional home country for international companies' overseas operations. However, it seems more likely that the country is more intent on guarding against Norwegian firms pulling up stakes and moving to other nations. Perhaps the most obvious measure aimed at making the Norwegian sector more competitive are the specific shipping industry planks, particularly the tonnage tax regime reforms. There is no doubt that in recent months, Norwegian officials noticed the success enjoyed by the British government after it attracted new operators to the UK Continental Shelf through new licensing and fallow field initiatives. It's unfortunate, however, that it took the example of the UK government to prod Norwegian officials into action.
Over in Canada, governmental silliness is at work. As lamented by the voice of East Coast oil and gas, the Newfoundland Ocean Industries Association (NOIA), the Canadian federal government and Newfoundland and Labrador officials have still not reached agreement on offshore revenues. The dispute centers on the province's contention that it should be able to keep 100% of direct revenues produced from its offshore. Provincial officials say that this still means that the feds would retain more than 50% of total public revenues generated from offshore-related activity. NOIA Chairperson Philip Whelan is concerned by the statement. “Both parties must sit down at the table, to secure an arrangement that reflects these similar perspectives, and respects the intent of the Atlantic Accord that Newfoundland and Labrador would be the principal beneficiary of our offshore resources,” said Whelan. “There was common ground in the early stages. We were assured that Newfoundland and Labrador would receive 100% of the provincial revenues, and that it would honor the intent of the Atlantic Accord. It is imperative that both parties successfully conclude the arrangement.” Given the latest comments, there appears to be almost as slim a chance of solving this impasse soon, as there is of getting the federal government to rapidly open up British Columbia's offshore.
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