Oil country hot line

OPEC’s cutback affects price, concessions

After OPEC slashed production by another 1 million bopd at its March meeting, oil prices began trading higher. At press time, the price of a barrel of Brent North Sea crude for May delivery had gained 23 cents, to $25.28. So far this year, OPEC has cut output by almost 10% to alleviate oil price drops. The cartel is concerned that prices could slump from the targeted basket price of $25/bbl, as demand wanes with the approach of the Northern Hemispheric summer.

   Meanwhile, OPEC has ruled out any special price concession for India, claiming that the organization does not provide bilateral concessions to countries. India’s proposal included credit period extensions, price discounts and deferred payments. Indian Petroleum Minister Ram Naik said the high level of prices is not affordable for developing countries, with a great probability for an economic slowdown.

Bush further defines U.S. energy policy

Speaking at a White House Energy Policy Task Force meeting, President George W. Bush revealed several main prongs of future U.S. energy policy. He said that searching for more domestic oil and gas is an important part of the U.S. energy program, referring to a controversial plan to open more public lands for exploration. Also, he said the U.S. lacks adequate refining capacity, and he implied that one of the goals of his office will be to boost that capability. Bush seemed to rule out tapping into the Strategic Petroleum Reserve to cool oil prices. In fact, he said the SPR is meant for "a national emergency when it comes to war." Republican Sen. Don Nickles (Oklahoma) said that he expected, by the end of the year, passage of a broad-based energy package designed to help reduce the U.S. dependency on OPEC.

Shell may take bid to Barrett shareholders

Shell Oil Co. expected to take its proposal to acquire Barrett Resources Corp. directly to Barrett shareholders, if the smaller firm refuses to reconsider its position and accept Shell’s offer. At press time, Shell had extended its deadline for another two weeks to April 20, after Barrett had rejected Shell’s acquisition offer of $55/share, claiming the proposal was inadequate.

U.S. rejects Shell appeal in rights case

The U.S. Supreme Court allowed Royal Dutch Petroleum Co. and sister firm Shell Transport and Trading Co. to be sued in New York for allegedly instigating the torture and murder of environmental activists in Nigeria. According to the suit, Royal Dutch / Shell Group provided money, weapons and logistical support to the Nigerian military, and participated in the fabrication of murder charges against Ken Saro-Wiwa and John Kpuinen, two activists who led protests against the oil group’s exploration activities in the Ogoni region. The oil group’s appeal argued that U.S. federal courts lacked jurisdiction over alleged violations of international law that occur abroad. However, the case (dated back to 1996) was filed under a U.S. law that allows lawsuits against firms accused of involvement in human rights violations anywhere in the world. The original lawsuit accused the Nigerian affiliate – Shell Petroleum Development Co. – of taking land for oil development without paying adequate compensation and then polluting the region’s air and water. It further accused the Nigerian affiliate of recruiting the police and military to attack local villages, and suppress organized opposition.

Technical team talks with Iraqi oil officials

A six-man, UN technical team met with Iraqi oil ministry officials in Baghdad to discuss how to manage $564 million allocated to rehabilitate Iraq’s oil industry. The UN Security Council agreed to release up to 600 million euros of Iraq’s oil income in cash, to train and pay maintenance workers in the country’s deteriorating industry. The agreement would allow President Saddam Hussein’s government to manage, for the first time, a small portion of its oil revenues from a tightly-controlled, UN escrow account in New York. UN Secretary General Kofi Annan was asked to ensure that the money would not be diverted for other uses.

China selects BP for LNG project

China has chosen BP as the foreign partner to build and manage a $600-million LNG terminal in Guangdong province. China National Offshore Oil Corp. (CNOOC), along with other partners, will invite BP to sign a cooperation agreement on the project and then conduct joint feasibility studies. BP will hold a 30% stake, while the Chinese and Hong Kong partners will hold the remaining 70%, said CNOOC officials. The project is expected to begin this year.

Nigerian gas policy expected

In an effort to speed up the process of utilizing natural gas for commercial purposes, Nigeria will introduce an official gas policy. Prince Nicholas Ukachukwu, chairman of the country’s House of Representatives, said potential investors, who demand a policy guide before providing funds, are being driven away. Thus, a more definitive gas policy is imperative toward establishing a stable national economy. The committee in charge of developing the new gas policy is also working in conjunction with oil firms to reduce gas flaring in the country. Some firms plan to stop flaring by 2004, while others estimate a later date of 2008.

Russian firms to develop Algerian oil field

Russian oil firms Rosneft and Stroytransgaz signed a production sharing agreement with Algerian state firm Sonatrach for development of the N 245 South prospect. The Russian firms will equally share the exploration work and financial responsibility for the project, which is estimated at about $1 billion. After commercial oil reserves are found and production starts, Sonatrach (40%) will then join the venture. The block’s recoverable reserves are estimated at 47 MMt (350 MMbbl), reported Interfax news agency. Exploration is slated to begin this summer.