Looking ahead

U.S. to fund study of Russia’s potential oilfields. U.S. Energy Secretary Spencer Abraham said his department would fund an analysis of potential offshore fields in the Russian Arctic, and that the project could contribute to global energy security. The analysis of the Eastern Siberian offshore basins is part of the U.S. Geological Survey Arctic Resource Assessment. This ongoing study will assess four unexplored Russian geological basins, thus helping to identify the areas offering greater opportunity for development. The exploration of new energy resources will be vital for long-term stability. "The more diverse (our) sources of energy are, the less likely it is that a disruption in supply anywhere on the planet can severely affect any of the consumers of the world," said Abraham. Russian Energy Minister Igor Yusufov has asked Abraham for technical advice on building Russia’s strategic oil reserves, similar to those of the U.S. Abraham said, "We have quite a bit of expertise in that process and are glad to support Russia’s efforts along these lines."

President Bush may approve energy bill without Alaska drilling. The Bush administration may accept an energy bill that prevents drilling in the Arctic National Wildlife Refuge (ANWR), as long as the final legislation increases overall U.S. production, said an Energy Department official. The statement was the first public acknowledgment by a senior administration official, that if the White House wants an energy bill passed by Congress this year, it may have to give up its demand to allow drilling in ANWR. The Democratic-led Senate has vowed to reject any final energy bill that opened the refuge to drilling. Senate and House negotiators are attempting to reconcile sharply different versions of energy bills, each of which aim to boost energy production and conservation. The Bush administration prefers the final bill to include drilling in the refuge, but is making it clear that the President’s goal is to approve a bill that increases overall U.S. production.

Nigeria to increase production as reserves climb to 30 billion bbl. Rilwanu Lukman, presidential adviser on petroleum, said Nigeria will push for eventual production growth that will benefit from increased future world demand. He also reassured the industry about the country’s intent to remain with OPEC. "It is in the best interest of Nigeria to stay in OPEC, and it is in the interest of others to stay. . . otherwise we will all lose," he said. Lukman believes that the organization would collapse, world supply would immediately skyrocket, and the price of oil could plummet to as low as $10/bbl from $25/bbl in recent months. Speaking about Nigeria’s production plans, he added that "at an appropriate time, [the country] shall present facts and data to the organization to justify [its] quest for an increased production quota." Nonetheless, Gulf state producers, Saudi Arabia and Kuwait, are expected to dismiss the country’s request, believed to be on the agenda for this month’s scheduled OPEC meeting. Meanwhile, the West African country’s reserves stand at 30 billion bbl, an accomplishment that was not planned for until 2003. Lukman said that "as the country progresses toward its aspiration of attaining oil reserves of 40 billion bbl and a production rate of 4 million bopd by 2010, gas production may increase to 7.1 MMcfd." Current gas production is 3.8 Bcfd.

Canada’s Hibernia owners may jettison operating firm. Partners in Canada’s Hibernia project may dismantle its joint operating company and appoint ExxonMobil operator to boost efficiency and cut costs, said PetroCanada CEO Ron Brenneman. The project, located offshore Newfoundland in the North Atlantic, has been operated by Hibernia Management & Development Co. (HMDC), an entity jointly owned by the project’s six partners, since late 1997. Brenneman said, "A single operator in that particular case would probably suit the owners better than the HMDC organization that we have had." ExxonMobil is Hibernia’s biggest owner, with about 33% interest. The other partners are ChevronTexaco (27%), Murphy Oil (7%), Norsk Hydro (5%), and the government of Canada’s Canada Hibernia Holding Corp. (9%).

Taiwan may ink new exploration deal with China. Taiwan’s state-owned firm, Chinese Petroleum Corp., is contemplating a new deal to jointly explore oil and gas with CNOOC. Chinese Petroleum is studying geological data on the Nanri Dao basin, located off the coast of China’s Fujian Province. It is considering jointly exploring the area with CNOOC, said a CPC official. CPC is "in the preliminary stage" of studying data about the region. Many details have yet to be mapped out. If there are signs of oil and gas reserves, CPC may follow a previous model that both firms used to explore the Tainan basin, in the southern part of the Taiwan Strait, earlier this year. The model basically included a 50/50 joint venture that is getting ready to drill exploration wells, said the CPC official. Joint exploration in the Taiwan Strait is one of the rare cases, where political rivals have been able to put aside their differences and cooperate.

Brazil’s Petrobras to buy Argentine firm. Petrobras has reached a preliminary agreement to acquire Argentine firm Perez Companc SA for more than $1 billion. Petrobras will pay $755 million in cash and $371 million in seven-year bonds for 58.6% of Perez Companc’s total capital. The agreement also includes a deal to buy 47.1% of the Petrolera Perez Companc for $57 million in cash. The deals are still subject to several conditions, including a debt swap operation in bonds of Perez Companc subsidiary Pecom Energia SA and a refinancing of Pecom’s bank debt. Petrobras said the acquisition was "inline with its declared international strategy aimed at making the company a top integrated energy player in South America."