World of Oil

Saipem signs contracts worth $650 million

Saipem was awarded two offshore contracts, in Angola and in Italy, for a total value of approximately US$650 million. Esso Exploration Angola Ltd. awarded Saipem the lump-sum turnkey contracts for the tieback work for the Kizomba Satellites development in Angola Block 15. Saipem will be responsible for the engineering, construction, transport and installation of pipelines, umbilicals, risers and subsea systems connecting Mavacola and Clochas Fields to the existing FPSO units at Kizomba A and B. Offshore operations will be carried out in 2011 by the vessels FDS and Saipem 3000. A portion of the subsea equipment will be fabricated in Angola at Saipem’s Ambriz and Soyo yards. Additionally, Eni has awarded Saipem the lump-sum turnkey contract for offshore work in the Mediterranean Sea.

Anadarko encounters oil in deepwater GOM

Anadarko Petroleum has made a discovery at the Vito exploration well in Mississippi Canyon Block 984. The well encountered more than 250 net ft of oil pay in subsalt Miocene sands. The Vito well was drilled to a total depth of approximately 32,000 ft in 4,038 ft of water. Anadarko operates the Vito well with a 20% working interest. Co-owners in the discovery include Shell Offshore Inc., with a 55% working interest, and StatoilHydro USA E&P Inc., with a 25% working interest. Shell will assume operatorship of Vito after rig release on the current well.

Weatherford, TNK-BP deal official

Weatherford and TNK-BP an-nounced that, following approval by Russia’s Federal Anti-Monopoly Serv-ice, TNK-BP has completed the sale of its Oil Field Services (OFS) enterprises to Weatherford International Ltd. pursu-ant to the sales and purchase agree-ment signed on May 29, 2009. Via this transaction, Weatherford acquired 10 OFS companies providing drilling, well workover and cementing services operating in West Siberia, East Siberia and the Volga-Urals region. The OFS companies employ 6,600 people and generated over $600 million in revenue last year. The business is sold as a going concern.

TNK-BP lines up new Siberian fields

TNK-BP, BP’s 50%-owned Russian venture, will start pumping oil from five new fields in Siberia in 2013 and 2014 to boost production as aging reserves go into decline. The deposits may hold 7.2 billion bbl of oil equivalent, potentially adding 500,000 bpd of crude and gas to TNK-BP’s output capacity, the company said in a presentation posted on its website this week. Some of the five fields, called Suzunskoye, Tagulskoye, Rospan, Messoyakha and Russkoye, are part of the Bolshekhetsky project. TNK-BP, a joint venture with Russian billionaires that accounts for about a quarter of BP’s production, is bringing new projects onstream to counter the depletion of West Siberian fields, according to a Bloomberg report. Russian oil output fell for the first time in a decade last year as taxes slowed investment in new deposits and older fields moved into decline. Two of the new fields, Suzunskoye and Tagulskoye, are located in the Krasnoyarsk region, said Marina Dracheva, a spokeswoman for Moscow-based TNK-BP. Russia has granted exemptions from mineral extraction taxes for initial production from Krasnoyarsk reserves. Russian giant Rosneft owns the neighboring Vankor development, where production will start this quarter after tests are completed on a pipeline to Purpe. Rosneft is targeting peak output of more than 500,000 bpd from the deposit, equal to more than 5% of current Russian output, according to the state-run company. Unlike Vankor, the two TNK-BP fields didn’t appear on the government’s recent list of developments being considered for export-tax relief.

Brazil to increase its stake in Petrobras

By next year, Brazil says it will boost its stake in Petrobras, which is partly owned by private investors, by offering new oil fields in exchange for company shares. The plan is part of President Luiz Inacio Lula da Silva’s proposed regulatory overhaul that would change rules on how companies can access offshore pre-salt reserves that the industry views as a  new frontier for the oil business. Petrobras would issue new shares and give them to the government in exchange for the rights to develop unexplored oil  fields owned by the state, but would assign a conservative value to the assets to ensure that minority shareholders’ stakes are not diluted. The government holds some 55% of voting shares in Petrobras, which was partly privatized in 1997.

Chevron given green light for Gorgon LNG project

Chevron’s Gorgon LNG project on Australia’s Barrow Island has been given the green light to proceed after the national and Western Australian state governments agreed to accept joint liability for storing carbon dioxide generated from the development. To protect the coral adjacent to the estimated $50 billion project, Western Australian Environment Minister Donna Faragher said monitoring would be extended to significant coral reef outcrops outside impact zones. “For the first time, management of light emissions will be required as a project condition,” she said upon granting environmental approval for the project. The project comprises the development of the Gorgon and Io/Jansz Fields, which will be linked by subsea pipelines to Barrow Island, where the three-train LNG plant will be located. The plant is expected to produce upward of 15 million tonnes of LNG per year.

PDVSA picks up Repsol package 

Spain’s Repsol agreed to sell gas and power assets worth $189 million to Venezuela’s PDVSA. The two assets are the Barrancas gas field with a current production of 39 MMcf per day and the related Termobarrancas power plant. Separately, the Venezuelan government said it would transfer the Barua Motaton Field to Petroquiriquire, in which PDVSA holds a 60% share and Repsol a 40% stake. The company intends to increase production to 100,000 bpd, from currently 25,000 bpd. The announcement came during a three-day visit to Venezuela by Spain’s Foreign Minister Miguel Angel Moratinos and a delegation of Spanish business leaders.

Oman’s production higher in first five months 

Oman’s total exports of crude oil stood at 97.77 million barrels during the first five months of 2009, against 90.73 million bbl during the same period of 2008, constituting a 7.8% rise. The monthly statistical bulletin published by the National Economy Ministry showed that the sultanate’s total production of crude oil and condensate stood at 119.26 million bbl by the end of May 2009, against 112.28 million bbl during the same period of 2008, constituting a 6.2% rise. The bulletin showed that the average price of an Omani oil barrel fell by 50.2% during the first five months of 2009 to US$44.84/bbl, against US$90.03/bbl during the same period of 2008. China topped the countries importing Omani oil, taking in 31.50 million bbl during the first five months of 2009. This was 30.9% less than the 45.56 million bbl China imported from Oman during the same period of 2008. Thailand came second, as it imported 14.25 million bbl by the end of May 2009, 19.6% more than the 11.91 million bbl of Omani oil it imported during the same period last year. Korea came third with 11.1 million bbl, against 6.58 million bbl during the same period of 2008, constituting a 68.8% rise.

Thailand makes plans for Block M9 gas

Thailand plans to import natural gas from Block M9 in the Gulf of Martaban off Burma in late 2013, Energy Minister Wannarat Charnnuku said. Thailand’s PTT Exploration & Production (PTTEP) was expected to sign a gas sales agreement with parent company PTT by the fourth quarter of this year, Reuters quoted Charnnuku telling reporters. “The two sides will discuss some details and then propose the issue to governments of both countries for approval,” he said. PTTEP is expected to supply an initial 300 MMcf per day from Block M9, of which 240 MMcfd would be delivered to Thailand and the rest to Burma, Charnnuku said. A PTTEP subsidiary owns 100% of Block M9, which lies about 300 km south of Yangon. It is believed to hold reserves of 1.5 Tcf and needs at least $1 billion for investment, he said.

BP makes giant oil discovery in Gulf of Mexico

BP made a “giant”—generally defined as 1 billion barrels in place or more—discovery on its Tiber prospect in the deepwater Gulf of Mexico on Keathley Canyon Block 102. The Tiber-1 well reached 35,055 ft, which would make it a record in the Gulf, but not the world’s measured depth record of 40,320 ft, held by Mearsk Oil on an extended reach well in Qatar. However, the Tiber well’s true vertical depth set a world oilfield record of 35,050 ft. The company said that it found 800 ft of net pay in several zones. The discovery underscores the importance of the Lower Tertiary (Paleogene) in the Gulf. It’s too early to know what the recoverable amount may be in the unappraised find, but Tiber should turn out to be larger than the 3 billion boe (in place) at BP’s 2006 Kaskida discovery, made some 45 miles to the southeast. BP said that its Gulf production could rise to 650,000 barrels daily from its current 400,000 bpd within the next 15 years thanks to the Kaskida and Tiber wells. BP is operator with a 62% stake and has partners Petrobras America (20%) and ConocoPhillips (18%).

US DOE awards $377 million for energy research centers

The US Department of Energy, in what it terms a major effort to accelerate the scientific breakthroughs needed to build a new 21st-century energy economy, announced $337 million in funding for 46 new multimillion-dollar Energy Frontier Research Centers (EFRCs). The centers will be located at universities, national laboratories, nonprofit organizations and private firms across the nation. Of the $337 million awarded, $227 million comes from funding made available through the Recovery Act with the remaining $100 million from the DOE’s 2009 budget. The 46 EFRCs are being funded at $2–5 million per year for a planned initial five-year period and were selected from a pool of applications received in response to a solicitation issued by the US DOE Office of Science. In total, the EFRC initiative represents a planned DOE commitment of $777 million over five years. EFRC researchers will take advantage of new capabilities in nanotechnology, high-intensity light sources, neutron scattering sources, supercomputing and other advanced instrumentation.

US climate bill worries Alberta

The Alberta provincial government is fretting over a provision in a US climate change bill that would grant US President Barack Obama the power to slap tariffs on imports perceived as having a higher carbon footprint than American-made goods. Such a tariff would directly impact the importation of oil sands crude, which US environmentalists claim is a major contributor to greenhouse gas emissions. Premier Ed Stelmach said the province is keeping a close watch on the Clean Energy and Security Act. The bill was narrowly passed in June by the US House of Representatives, but has not received a full airing in the Senate. “The thing that really bothers me is that they’re giving the president, presently the way it’s written, executive powers of imposing administrative taxes and border adjustment taxes,” Stelmach was quoted as saying. “That is of great concern because we don’t know under what conditions those taxes can be applied and on what goods or services.”

Repsol to invest in Ecuador

Repsol says it may spend upwards of $120 million and drill at least 20 wells in Ecuador next year in an attempt to reverse declining production in the country. The operator said its Ecuadorean oil production will decline by 9,000 bpd this year to about 44,000 bpd. Repsol said last year’s average output was 53,917 bpd. It currently is investing more than $60 million in its production operations in Ecuador and plans to drill three or four new wells this year.

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