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BP Amoco-ARCO merger stalls

The U.S. Federal Trade Commission (FTC) said Feb. 2 that it would seek a preliminary injunction to block the BP Amoco merger with ARCO. The firms will take the decision to court. While the FTC says the merger would raise prices on the West Coast, BP Amoco claimed combining their operations would, in fact, lower prices by reducing operating costs. Alaska Governor Tony Knowles wants the state to be part of the court proceedings when FTC files. State Attorney General Bruce Botelho said he would seek permission to become a party in the lawsuit on the side of the firms. Meanwhile, Dominion Resources and Consolidated Natural Gas Co. completed their merger, retaining the legal name Dominion Resources Inc., headquartered in Richmond, Virginia. The combined firm has reserves of more than 3 Tcfe in the United States and Canada.

OPEC’s meeting sparks interest

All eyes will be focused on OPEC’s meeting later this month (March 27), when the group will meet to review production cuts and quotas. Venezuelan Energy and Mines Minister Ali Rodriguez said OPEC could extend its production cuts until the end of 2000 "if market conditions warrant it." A Reuters report said that no decision on output policy "had been finalized ahead of the group’s meeting." U.S. Energy Secretary Bill Richardson met with lawmakers to discuss rising heating oil prices and Senator Charles Schumer’s (D-New York) plan to release crude from the nation’s stockpile to lower prices. Richardson said there were no plans to release the oil, and it was "up to the market to establish prices." Both Richardson and OPEC want to maintain "stable and reasonable prices."

Venezuela and oil executives at odds

Despite a surface "air of calm," all is not well in Venezuela where foreign oil company executives are increasingly agitated behind closed doors, and one of them (Conoco) has taken his frustration public. Oil executives have been seething over Venezuela’s President Hugo Chavez’s "peaceful revolution" policies for months. In a speech to an oil industry conference in Caracas, Conoco’s E&P President Gary Merriman expressed the exasperation within Venezuela’s oil community, citing disappointing exploration rounds, many dry holes or disappointingly low flow levels and high taxes and operating costs that create field development problems. Rodriguez replied with a letter to top Conoco executives expressing confusion regarding Merriman’s remarks. While Merriman had said Venezuelan officials were hard to reach, the letter said Rodriguez had recently had a "cordial and long" meeting with Merriman and insisted his government has "scrupulously respected" contracts awarded under its oil opening . . . offering highly favorable terms."

U.S. output, stocks take a plunge

Crude oil and petroleum product stocks decreased more than136 million bbl in the U.S. during 1999, a 12.7% plunge from 1998. Crude oil inventories were down 9.3% at only 293.3 million bbl. Higher crude oil prices, fewer imports and tighter global markets – results of OPEC’s production cuts – drove petroleum stocks down to 939.2 million bbl. Another factor affecting U.S. supplies, as of the end of 1999, was a change in the mix of import sources. Middle Eastern-supplied crude grew by 265,000 bpd, a 10.9% increase over 1998, while oil from Venezuela, Canada and Mexico, constituting half of the U.S. import market, dropped 7.9%. Imported crude from Iraq doubled to 712,000 bpd. Last year’s domestic crude oil production dropped 5.6%, averaging 5.902 million bpd, the largest decline in 10 years. Natural depletion of oil fields and downtime for equipment maintenance reportedly caused Alaska’s output to decline 10.7%, to just over 1 million bpd.

Yukos to develop new oil fields in Samara

Russia’s Yukos is one of few Russian domestic firms able to channel funds into new field developments. Yukos plans to start developing new oil fields in the central region of Samara to boost oil output at its Samaraneftegas subsidiary. A series of new geological surveys are planned.

Chevron resolves claims on royalty

Chevron agreed to pay $95 million to the U.S. government to resolve claims regarding the amount of royalties paid on oil produced from federal leases. Royalties had been paid consistent with a long-standing government practice of accepting Chevron’s pricing as appropriate value for royalties – a practice the government abruptly abandoned and sought to revoke retroactively for a 10-year period. During the 10-year span covered by the agreement, Chevron has paid the government more than $1.5 billion in royalties.

Apache strikes first find in Poland

The first conventional gas discovery by a non-Polish operator in the Republic of Poland is Apache Corp.’s Wilga wildcat located on Block 255 of the Vistula Concession, 25 mi southeast of Warsaw. It tested 16.9 and MMcfgd 570 bcpd from three Carboniferous-age zones between 7,732 ft and 8,550 ft. An appraisal well is planned. Meanwhile, its Stag field’s sustained production surpassed 23,000 bpd from eight wells in 150 ft of water about 37 mi northwest of Dampier, Western Australia.

Triton gets OK for Ceiba field development

The Ministry of Mines and Energy of the Republic of Equatorial Guinea approved Triton Energy’s plan to develop Ceiba field. Plans call for phase one production of 52,000 bopd using an FPSO.

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