Oil country hot line

Iraqi oil exports halted, still no UN agreement

Iraq has suspended its oil exports in what appears to be an attempt to circumvent UN sanctions that were imposed as a safeguard to prevent Iraq from using its oil revenues to rebuild its military resources after the 1991 Gulf War. The third largest OPEC producer is demanding UN approval to sell oil for 50 cents/bbl below world price and then charge a 50 cent surcharge for an Iraqi-controlled account that will allow the country greater control of its oil revenues. At press time, the UN still had not agreed to Iraq’s oil price formula. However, discussions on the pricing dispute continue.

Two oil giants gain deepwater success

Conoco confirmed that its deepwater oil prospect Magnolia is commercially viable. The discovery made in May 1999 offshore western Louisiana has an estimated 150 MMboe. Conoco (75%) is operator of the two-block unit. The 6,000-foot, step-out, appraisal well was drilled to a depth of 17,435 ft. It encountered oil-bearing sand in excess of 400 ft net pay, with 300 ft net pay in one continuous unit. The well was sidetracked 3,000 ft and achieved an additional 400 ft net pay of oil-bearing sand.

   Meanwhile, ExxonMobil’s Angolan affiliate hit its ninth oil find on Angola Block 15, northwest of Luanda. Batuque 1 encountered an oil-bearing reservoir with 5,200 bpd flowrate. It was drilled in 2,400 ft of water and drilled to a TD of 12,400 ft.

PDVSA predicts its 2000 income at $6 billion

Considering the soaring oil prices last year, Venezuelan state oil company, Petroleos de Venezuela SA, expected its 2000 net income to more than double, and it did. Net income for 2000 rose $6 billion from about $2.6 billion in 1999, said PDVSA’s president Guaicaipuro Lameda. The firm reported first-half earnings of $3.89 billion, up from $558 million during the same period in 1999. Lameda also said that PDVSA will continue its corporate restructuring that has allowed improved productivity and lower administrative and operating costs. The firm forecasts a $3.3-billion dividend payment to the government in March.

Global Warming talks flop: to reconvene

About 170 industrialized countries met at The Hague to translate the 1997 Kyoto Accord into detailed, enforceable rules. The Kyoto agreement commits the countries to cut their combined greenhouse gas emissions to 5% below 1990’s level by 2012. However, talks collapsed due mainly to disagreement on how much credit should be given for trees (one of several ways the nations are allowed to meet their targets), and overall failure to compromise. The U.S., being the biggest greenhouse gas producer, faces a great challenge to ensure continued diplomacy; thus, this places increased pressure on the next American president. Environmentalists fear the appointment of Gov. George W. Bush who opposes the Kyoto treaty, but views Vice President Al Gore more suitable to the task, due to his participation in creating the plan. Analysts say, despite the disagreements, there were enough meaningful discussions to warrant another try in May 2001.

California oilfields under regulators’ eye

After a wildcat well flared up for six months in 1998, California state regulators have begun to set limits on where companies can explore for oil and gas in a 17-sq-mi area northwest of Bakersfield. Experts had reported that no hydrocarbons existed in commercial quantities in the East Lost Hills area. However, the fire eruption instigated ardent drilling interest and skyrocketed development cost into the tens of millions. Regulators are proposing the establishment of a 160-acre minimum for new wells and also a minimum 660-ft spacing boundary. Companies vying for a drilling position are protesting the regulators’ plans. The Division of Oil, Gas and Geothermal Resources’ deputy supervisor Hal Bopp said that their goal is to develop a plan that is fair to all concerned parties. The idea is to follow state public resource law and adopt a plan that protects the environment and property rights, Bopp said. A public hearing was held last month to quell various grievances.

Petrobrás, partners to develop oil field

Brazil’s oil firm, Petrobrás, has reached an agreement with Nissho Iwai Corp. and Indonesia Petroleum Ltd. to develop an oil field offshore Rio de Janeiro. The combined purchase total will cost the companies $173 million for the drilling rights. The field is expected to produce 20 million bbl of oil until June 2009. The project will be financed by the two companies, Bank of Tokyo-Mitsubishi Ltd., Industrial Bank of Japan and Japan Bank for International Cooperation.

Afghanistan oil field tops revenue goal

The Agnot oil field with its significant crude reserves was the place of attention for Afghani deputy minister of mines and industries, and also other officials of the northern zone, who recently visited the 46-year old, still-operating field. As reported by the Bakhtar Information Agency, the deputy minister gave specific instructions regarding the proper utilization of oil exploration equipment, the correct extraction of oil and gas and the prevention of losses by the engineers and skilled workers of the oilfield authority.

Retirement program creates job cuts

Along with Marathon Oil’s reorganization of its oil and gas exploration and production operation, implementation of a new early retirement program eliminated more than 500 positions; and a further 250 employees will be released. President Clarence Cazalot, remarking on the firm’s intention to instigate $150 million of annual repeatable efficiencies by the end of this year, told analysts that "We are on track to deliver a $75-million reduction in above-the-field costs, and we have made substantial progress toward cutting exploration expenses by $50 million. As we also realize annual savings of $25 million through global procurement, we are well on our way to meet our ambitious overall target."