Looking ahead

MMS identifies areas for proposed lease sale in GOM. MMS has classified all possible factors, including mitigating measures, to be considered in the environmental analyses involved with approval of 10 proposed offshore lease sales in the Central and Western Gulf of Mexico. The sales are included in the proposed 2002 – 2007 leasing program. The agency has published a call for information and nominations, and a notice of intent, to prepare a multi-sale Environmental Impact Statement. After the first sale analyzed in the multi-sale EIS is held, MMS will prepare either an EA or supplemental EIS for each proposed sale. The Western GOM Planning Area contains about 22 million unleased acres offshore Texas and deeper waters offshore Louisiana. Blocks in the area range from 9 mi to 220 mi from shore with water depths of 26 ft to 9,840 ft. The Central Planning Area contains about 24 million unleased acres offshore Alabama, Mississippi, Louisiana and Texas.

Yukos to invest $4 billion outside Russia. Mikhail Khodorkovsky, head of Russia’s second-largest oil firm, Yukos, plans to invest up to $4 billion over the next three years in projects outside the country. The firm has allocated $2 billion for cash purchases, and another $2 billion is expected to be raised through financing or joint ventures for investment by 2005. Due to high oil prices during the past three years, the firm achieved a large cash reserve, which is being used to secure new markets via expansion in central and Eastern Europe. Khodorkovsky claims that his plan is to increase the number of oil sales under long-term contracts (in excess of five years) to 70% in the future from the current 40%.

OPIC supports Indonesian projects. After achieving due diligence and final contract arrangements between parties, OPIC will provide financing of up to $350 million for two offshore projects – West Seno I and West Seno II – in Indonesia. State firm Pertamina will participate with Unocal to develop the West Seno fields in the Makassar Straits off East Kalimantan. The projects are sponsored by Unocal and will yield an estimated 145 million bbl of oil. Production from both projects will be sold in Indonesia and throughout general Asian petroleum markets. The first project will receive $300 million and the second $50 million. The projects will generate roughly $200 million in procurement in the country and some $66 million for the same purpose in the U.S. OPIC President and CEO Dr. Peter Watson said the projects "demonstrate U.S. investor confidence in the stability of Indonesia and its reform efforts. OPIC is pleased to support both a U.S. business and Indonesia’s efforts to become oil-independent."

Malaysia attracts steady exploration interest. Offshore Malaysia, firms are scheduled to drill 35 exploration wells this year. Reuters reports that a senior industry analyst said that "Malaysia appears to be maintaining a high drilling rate because of the change in terms to production sharing contracts for deepwater areas." In fact, Royal Dutch / Shell Group plans 10 exploratory wells for deepwater areas. Shell expects to spud one well in Block E offshore Sarawak in east Malaysia and four wells in Block G offshore Sabah, said IHS Energy Group. Murphy Oil plans four wells in Block K and one in Block H. Lundin Oil reportedly is expected to drill four wells in the Malaysian-Vietnamese PM3 commercial agreement area in the Gulf of Thailand. Two wells are slated for this month and April, with another two in June and July.

Concerns stirring over exploration in Utah. An environmental group claims that President George Bush’s administration is attempting to speed up the leasing of federal lands in some of Utah’s most unspoiled country. The Southern Utah Wilderness Alliance obtained a Bureau of Land Management memo that emphasized the importance of leasing lands. The Alliance is alarmed at the memo’s wording, which criticized the bureau’s Utah field offices for deliberate slowdowns of permit approvals. The 13-page memo stated that the administration "has assigned a high priority to oil and gas exploration and production in this country, including increased access to oil and gas resources on public lands and expedited processing of federal drilling permits." The memo further noted that "Utah needs to ensure that existing staff understand that when an oil and gas-lease parcel or when a drilling permit comes in the door that this is their number one priority." Southern Utah Wilderness Alliance issues coordinator and attorney Heidi MaIntosh said, "We’re concerned that wilderness is going to suffer as a result of the Bush administration approach." Roger Zortman, the bureau’s deputy state director of lands and minerals, said the memo does not represent any change in policy, but was just the completion of a normal internal review to see "if we’re using the best business practices."

China unveils $18-billion gas project. China has revealed details of a controversial $18-billion project to extract and deliver gas from its northwestern region to Shanghai, but analysts said doubts remained over the commercial viability of the venture. Trial construction of the 4,167-km (2,589-mi) west-east pipeline, originally scheduled to break ground in April last year, has now begun. Full-scale construction will start in the first half of this year, and first gas could arrive in Shanghai by 2004. The project is led by PetroChina, China’s biggest state-owned firm, which has a 55% equity stake. A consortium of overseas investors will hold the remaining 45% for 45 years.