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Vol. 227 No. 2 |
| KURT S. ABRAHAM, MANAGING/INTERNATIONAL EDITOR |
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OPEC keeps output ceiling unchanged
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OPEC ministers agreed to retain their crude oil output ceiling, unchanged at 28 million bpd. This is near maximum capacity during a time of ultra-high oil prices and geopolitical unrest. Saudi Oil Minister Ali Naimi said the decision was unanimous. Libyan Oil Minister Fathi bin Shatwan said the group would meet again on March 8, in Vienna, and will carefully monitor the market’s behavior. Before the meeting, Iranian Oil Minister Kazem Vaziri Hamaneh said his country had no reason to stop its oil exports, and noted that there was no link between exports and Iran’s nuclear program. Naimi told reporters that there was no discussion of the Iran nuclear issue during the OPEC meeting. “Of course OPEC cannot do anything about this,” said Naimi, who emphasized that the producers group could try to reduce volatility in the oil market. Naimi and other ministers also denied media reports that Iran had called for an output cut before or during the closed door session, saying that this was “completely not true.” Added Naimi, “I did not hear the (Iranian) minister say anything, either before, during or after” the meeting.
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Bush emphasizes energy problem in major speech
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US President George W. Bush’s State of the Union message touted several themes, and one of the major subjects was his plan to increase American economic competitiveness and to cut US dependence on imported oil. Although his speech touched on foreign and domestic subjects, Bush described what he believes to be a national Achilles’ heel that affects most Americans. “Here we have a serious problem,” said Bush. “America is addicted to oil, which is often imported from unstable parts of the world. Tonight, I announce the Advanced Energy Initiative, a 22% increase in clean energy research at the Department of Energy, to push for breakthroughs in two vital areas. To change how we power our homes and offices, we will invest more in zero-emission, coal-fired plants; revolutionary solar and wind technologies; and clean, safe nuclear energy. We will increase our research in better batteries for hybrid and electric cars, and in pollution-free cars that run on hydrogen.” Sen. John McCain (Republican - Arizona) said he liked the address. “We are very vulnerable to, quote, oil shocks,” said McCain. “And we’ve got to get independence from it, and I think the president’s note of urgency is very, very appropriate.”
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Gazprom set to award Shtokman development in March
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Gazprom chief Alexei Miller assured Norwegian Oil and Energy Minister Odd Roger Enoksen that his company plans to announce the final stakeholders in its 3.2- Tcm Shtokman field project in March. According to the Norwegian Oil and Energy Ministry, Norway’s 71% state-owned Statoil and 44% state-owned Norsk Hydro are two of the five companies shortlisted to win a share in the world’s biggest offshore gas field project. Miller told Enoksen that his company was seeking firms that can provide technological experience applicable to the project. Both Statoil and Hydro have said that their experience with developing subsea, harsh-environment gas projects on the Norwegian Continental Shelf should give them a competitive edge. Hydro has touted its work on Ormen Lange field, while Statoil has promoted its operations at the Snoehvit LNG project. Chevron, Total and ConocoPhillips are also shortlisted.
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Canadian oil trusts want loosening of ownership restrictions
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Opening up the income trust market to more foreign investment is a major wish of some Canadian firms for the new Conservative government. Noting a need to access deeper capital pools than Canada can provide, large trusts like Canadian Oil Sands say restrictions that bar non-Canadians from owning more than 49% of a trust’s units should be relaxed. “We really need to take away whatever restrictions there are on foreign ownership,” said Marcel Coutu, president and CEO of Canadian Oil Sands. “(We would) have the ability to raise capital and continue to grow and not be at a disadvantage to foreign investors or even corporate structures here in Canada.”
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Mexican frontrunner says no to privatization
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The leftist front-runner in Mexico’s presidential race says that if elected, he will not open the state-controlled energy sector to private investment. Furthermore, his top economic adviser warned that Mexico’s new-found economic stability could be at risk if global oil prices collapse. “There’s no reason to privatize Pemex (the state-owned oil company) or the electric industry,” said former Mexico City Mayor Andres Manuel Lopez Obrador in an interview with Televisa television. Lopez Obrador describes himself as a democrat and a crusader for social justice. He denied that he politically resembles the leftist president of Venezuela, Hugo Chavez.
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Alaska may reduce royalties for smaller operators
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While Gov. Frank Murkowski negotiates with BP, ConocoPhillips and ExxonMobil on possible increased oil taxes, his administration is considering financial breaks for less prominent Alaskan drillers looking to develop small North Slope fields. One company, Pioneer Natural Resources, already has won preliminary approval for a reduction in the royalty rate on a proposed offshore oil field. The deal is still subject to final approval from Natural Resources Commissioner Mike Menge, but it would trim the royalty to 5% of production on leases that otherwise require a payment of up to 16.7% of the oil. It would help Pioneer’s project substantially while reducing state oil revenue by $68 million. Menge gave preliminary approval, because Pioneer made “a clear and convincing showing” that its Oooguruk oil field would not otherwise be economically feasible.
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Gas efforts easier than large GOM expansion
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Despite persistently high natural gas costs, U.S. legislators may have to limit efforts to win wider offshore energy leasing this year to the eastern Gulf of Mexico region. Even that effort faces substantial hurdles, say Capitol Hill observers. Lawmakers’ staffers and other personnel say that election-year politics, the election-shortened session and other factors make enactment of a broad offshore bill unlikely. Thus, the more ambitious plans introduced, principally allowing coastal states to opt-out of the coastal leasing bans, may have trouble getting off the ground. As one staffer noted, floor time is at a premium, and this is an election year, so quite a few senators want to spend as much time as they are able in their home states. Sen. Pete Domenici (Rep.-New Mexico), the chairman of the Senate Energy and Natural Resources Committee, said he hoped to move quickly on a gas-targeted plan that focuses on the Gulf’s Lease Sale 181 area. Most of the area has been withheld from leasing, but it is not under formal leasing bans.
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East Timor, Australia agree to oil pact
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The foreign ministers of Australia and East Timor signed a treaty that allows their countries to share billions of dollars in oil and gas revenue. Australian Foreign Minister Alexander Downer said the pact would allow progress of a multi-billion-dollar development project called Greater Sunrise. It will bring revenues of as much as $4 billion to East Timor over the LNG project’s life, and up to $14.5 billion over 20 years. Woodside Petroleum oversees Sunrise gas field, estimated to be the richest in the Timor Sea. Its partners stopped work on the project at the end of 2004 because of the absence of a governmental agreement on administering the field. “Exploitation of the Greater Sunrise reservoirs and the additional revenue provided for under this treaty will assist in securing East Timor’s development and prosperity,” said Downer.
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China undertakes drafting of energy law
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China has set up a taskforce to draft a law on energy, said government spokesmen. The taskforce includes officials from 15 government departments or the national legislature, and is headed by Ma Kai, minister in charge of the National Development and Reform Commission , and director of the newly created National Energy Office. A group of experts specialized in energy, law, economics and public management is working for the taskforce as advisors. Problems stemming from past decades have begun to impact the energy sector, due to increasing demand for energy to power the country’s fast-growing economy, said the spokesmen. “The complicated and changing international environment poses new challenges to the country’s energy and economic security,” said the taskforce in a statement.
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New law may hurt Venezuelan E&P work
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A new environmental law designed to protect Venezuela’s peoples and communities from negative impacts of oil and gas exploration could become an obstacle for new E&P projects. The law was passed by the national assembly on Dec. 27, 2005, and establishes a series of much stricter measures, including restrictions on storage and disposal of toxic substances. The law also mandates reparations and/or compensation for environmental damages. Existing projects have two years to adapt their operations to the new requirements.
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CNOOC to hike output
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CNOOC Limited’s total budgeted net production volume in 2006 is about 168 million to 170 million boe, about a 9% year-on-year increase over the estimated 153 million to 157 million boe in 2005. During the year, 10 projects offshore China are expected to come onstream, two of which are ready for production. Overall, for 2006 and 2007, 16 projects will be completed by CNOOC.
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Chevron opens the taps
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Chevron Corp. subsidiary, Cabinda Gulf Oil Co. Ltd. (CABGOC), began oil production from Belize field, in deepwater Block 14 offshore Angola. The Benguela, Belize, Lobito and Tomboco fields form the BBLT Development, one of Chevron’s “Big 5” projects. BBLT is the first of the Big 5 projects to reach this significant production milestone. In December 2005, the Benguela Belize drilling and production platform in Angola was awarded “Project of the Year” by the Offshore Energy Association. “The project team successfully managed the engineering challenges within budget, ahead of schedule and, most importantly, in a safe manner,” said John Watson, president of Chevron International Expl. and Prod. Co.
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New YPFB head picked
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Bolivian President Evo Morales has appointed Jorge Alvarado as president of state oil company YPFB, said government spokesmen. Alvarado is an engineer with a PhD in oil geology. He has worked as a geological engineer for YPFB, as well as a professor and consultant. Alvarado promised to make YPFB a “real company” within two years, without corruption. With Alvarado as president, YPFB will “raise itself from the ashes to found a company similar to Petrobras or PDVSA,” said Hydrocarbons Minister Andres Soliz Rada.
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Eni attacked
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Italy’s Eni said that nine people were killed as gunmen attacked its base in the southern Nigerian state of Rivers. “The armed gang exchanged fire with the local security forces and made their way to a banking facility which is located on the base,” said an Eni statement. “Subsequently, after a brief occupation of the premises, the gang vacated the bank and left the base.” No Italian citizens were killed or injured. 
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