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Vol. 224 No. 12 |
| KURT S. ABRAHAM, MANAGING/INTERNATIONAL EDITOR |
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Putin says Yukos licenses secure after firm’s CEO arrested
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In the latest chapter of a long-running feud between Russian oil giant Yukos and the central government, Russian President Vladimir Putin has rebuked Natural Resources Minister Vitaly Artyukhov for threatening to revoke the firm’s exploration licenses. “I hope that the state will abstain from actions of this kind,” Putin told a Moscow media crowd after his regime arrested principal Yukos shareholder Mikhail Khodorkovsky (26%) on charges of massive fraud, embezzlement and tax evasion. Khodorkovsky was arrested at gunpoint at a Siberian airport and flown back to Moscow on Oct. 26, to jail. His arrest, seen as retaliation for support of Putin’s opponents, was considered a “preemptive strike” before the Dec. 7 parliamentary elections. Khodorkovsky later resigned and was replaced by former Tyumen Oil Co. head Simon Kukes.
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OPEC sees stable prices now, but worries about 2004 levels
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For the remainder of this year, OPEC Secretary General Alvaro Silva Calderon expects oil prices to remain level, but he frets that new supplies coming onstream in 2004 could create a glut. Speaking at an industry conference, Silva said, “The market is more than well-supplied,” even after OPEC’s 900,000-bopd quota cut took effect on Nov. 1. Oil prices have remained at the high end of the cartel’s target range of $22 to $28/bbl, but Silva said, “this level of price doesn’t damage the world economy.” OPEC will reconsider oil price behavior at a meeting in Vienna this month.
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MMS schedules Eastern GOM lease sale as planned
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At press time, the US MMS had issued the Final Notice for its Eastern Gulf of Mexico Sale 189, set to take place on Dec. 10 in New Orleans. “This sale area is the same area as Eastern GOM Sale 181, held in December 2001,” said MMS Regional Director Chris Oynes. “It remains one of great interest, because of the potential oil and gas in the area. There is already production inside the sale area at BP’s Kings Peak project in Desoto Canyon 133, and MMS has received 20 exploration plans for leases in the area.” The sale area comprises 256 blocks in the Eastern GOM Planning Area and covers roughly 1.47 million acres. Available, unleased blocks number 138.
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Nigeria makes moves to tidy up oil sector
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Nigerian President Olusegun Obasanjo prepared last month to issue a new program for greater transparency in the oil sector. His proposal was expected to match closely with the Extractive Industries Transparency Initiative, supported by Britain and the World Bank. This initiative is designed to serve as a template for countries that have significant natural resources but have had problems with corruption and/or murky trails of financial and operational information. Previewing excerpts of Obasanjo’s plan to media in Lagos, presidential advisor Oby Ezekwesili said it would include audits of Nigerian National Petroleum Corp. (NNPC) and details about financial flows between Nigeria and private operators. Obasanjo’s plan follows his appointment of Edmond Daukoru as Presidential Advisor on Petroleum Matters, replacing Rilwanu Lukman. Daukoru is a former group managing director of Shell Nigeria and NNPC.
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Saudi Arabia forms non-associated gas JV
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Saudi officials initialed a deal with Shell and Total to form a new company that will explore, develop and produce non-associated gas in the south Rub’ al-Khali. The project area covers 290,160 sq km, and ratification procedures for the deal were being finalized at press time. Meanwhile, Saudi Aramco has awarded a 2D seismic contract to Fugro-Suhaimi Ltd., a JV between Alsuhaimi Co. and Fugro NV. The project will begin in early 2004, using a dedicated seismic vessel, and last about three months. It will be one of the largest 2D offshore surveys ever undertaken in the Persian Gulf. The data acquired will be applied to Saudi Aramco’s ongoing exploration program.
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Two majors see gas becoming preferred fuel of future
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Executives from Shell and ExxonMobil told the Oil and Money Conference in London that they expect gas to overtake oil as the primary global fuel. As global energy demand grows, gas is increasingly playing a “more significant and strategic role” in satisfying demand, said Malcolm Brindad, managing director of Royal Dutch/Shell. “Between 2020 and 2030, it is set to overtake oil,” he added. Andrew Swiger, chairman of ExxonMobil International Ltd., forecast that gas demand would grow an average 2.4% annually through 2020, compared to overall energy demand growth of 1.7%. He noted that electrical power generation would be a driving force behind greater gas usage. Both men expect a rapid expansion in global LNG trade.
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Winter royalty gas sale draws good bids
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Begun as a pilot program in the late 1990s, MMS’ gas “royalty-in-kind” (RIK) initiative is a strong success. Recently, more than 379 billion btu of RIK gas produced from federal leases in the Gulf of Mexico were sold to seven firms during a winter heating season sale. For the first time, RIK gas was offered from the 8(g) zone offshore Louisiana, for delivery to 10 offshore pipeline systems on five- or 12-month terms. “Competition for this sale was extremely strong,” said MMS Director Johnnie Burton. Nearly 70 bids were submitted for the 10 pipeline-specific sales packages.
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Review praises Texas environmental program
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A comprehensive review of Texas oil and gas environmental regulatory practices conducted by non-profit organization STRONGER has found that “the state’s program is well-managed.” A 10-member team carried out the review and said, “We believe several aspects of the Railroad Commission and its operations merit special recognition and may offer ideas for other state regulatory programs.” The Texas program was cited for its operations in the areas of data management, mapping capabilities and waste minimization. Nevertheless, the team recommended improvement in other operations, including permitting, compliance evaluation, public participation, personnel and funding.
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Ecuador calls for bids
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Energy Ministry officials in Quito have asked for bids on a tender for four oil fields belonging to state firm Petroecuador. Auca, Culebra-Yulebra, Lago Agrio and Shushufindi fields hold combined reserves of 870 million bbl of oil, and they produce 90,000 bpd. Operators can bid for 20-year concessions on one or more fields. Bidding rules cost $200,000, and companies have 60 days to submit bids. The ministry plans to award field contracts in early January, according to a points system.
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Sudan plans output hike
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The regime in Khartoum expects to okay a 25% hike in oil production to 312,000 bpd from 250,000 bpd. Energy and Mining Minister Awad Ahmed Al-Jaz mentioned the increase in remarks to parliament, but he did not give details on how the government will achieve the gain. Sudan began producing oil four years ago, but the nation has been plagued by a 20-year civil war between the Arab, Muslim north and the Christian south.
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Only one bid received for Mexican MSC tract
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Petrobrás and Teikoku offered the sole bid for the second multiple service contract (MSC) to produce gas for Pemex. The firms issued their bid for Cuervito, one of seven blocks of gas reserves being tendered for development in the Burgos region of northeastern Mexico. Bids for the remaining five blocks were slated to be received each Wednesday over a several-week period. Pemex hopes to see total investment in the blocks reach between $6 billion and $8 billion, and add 1 Bcfgd to its production.
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PDVSA plans gas round
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Before the end of first-quarter 2004, Venezuelan firm PDVSA will stage a bidding round for the first of seven natural gas blocks offshore. Speaking at an oil conference in Maracaibo, Deltana Platform manager Carlos Barbieri said that eight to ten foreign companies had been pre-selected as potential developers of the offshore tracts. He predicted that a bidding round would take place by next March. 
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Opinion
As if the Middle East was not stirred up enough, along comes a court ruling that no one is going to like. The International Court of Justice (ICJ) at the Hague ruled on Nov. 6, 14 to 2, that the US was not justified in attacking oil production platforms in three Iranian offshore complexes. However, the court also rejected Iran’s claim for monetary damages. In addition, judges ruled 15 to 1 against a US counter-claim for compensation from Tehran for mine-inflicted damage to a US warship and a missile attack on a Persian Gulf tanker. In essence, the ICJ declared a tie, and neither side is happy. Furthermore, the case should not have taken 11 years to decide, much less leave unanswered questions.
This case dates back to the eight-year, Iran-Iraq war. On Oct. 16, 1987, an Iranian missile hit the US-flagged, Kuwaiti-owned tanker, Sea Isle City, injuring 17 crewmen and the American captain. Three days later, US destroyers shelled two oil platforms in the Reshadat complex. Later, on April 14, 1988, the USS Samuel B. Roberts struck a mine, blowing a 30-by-23-ft hole in its hull. Four days later, the US again retaliated, shelling platforms in the Salman and Nasr field complexes, and justifying the actions as “self defense.” Why it took so long is without explanation, but Iran finally decided to sue the US on Nov. 2, 1992, alleging a violation of a 1955 treaty between the two countries, and seeking compensation. The US counter-sued, again claiming self-defense.
The case dragged on at a snail’s pace, with a couple of preliminary decisions on motions in 1996 and 1998. Finally, on Feb. 17 and March 7, 2003, “public sittings” were held to hear oral arguments and replies. Based on these sessions, justices spent the next eight months hammering out their decisions. So, why did it take the court 11 years to settle the case? Given that the ICJ is the “principal judicial organ” of the UN, and the UN takes forever to make decisions on almost all issues, perhaps it is a shared, attitudinal/ cultural problem. Neither did justices settle the matter of whether oil and gas installations constitute legitimate military targets, and under what conditions. It is also interesting to note that the justices bickered among themselves on the fine details of all the points involved, witness several “separate opinions” and “dissenting opinions” that were written, particularly by the Jordanian, Egyptian and German judges. Everything considered, and given the time involved to reach these results, one has to wonder why the ICJ bothered to hear the case at all.
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