Bre-X hasn't scared Canadian firms
STEPHEN EWART
Calgary Herald
All the negative publicity about Indonesian meddling in the business world during the Bre-X debacle has hardly scared off Canadian energy companies.
The sprawling resource-rich archipelago in southeast Asia is second only to the United States as a destination for Canadian companies heading abroad in the search of oil, natural gas or other riches associated with the energy business.
Twenty-nine energy Canadian companies have operations in Indonesia, says industry analyst Ian Doig in a new report called Canadian Energy Ventures Abroad.
Doig's study found that 128 Canadian exploration, transportation and service companies had international operations around the globe. Not surprisingly, the United States was the most favored nation with about 70 Canadian companies operating there.
The trials and tribulations of Bre-X Minerals Ltd. may have put Indonesia on the map for most Canadians in the last year but the former Dutch colony has long been popular with Canadian energy companies.
In 1961 Asamera Inc. signed the first production-sharing agreement in Indonesia.
"Indonesia has been a good hunting ground for Canadian companies," says Doig. "Canadians know the ground rules. They know the procedures and they've generally made good discoveries, not great ones, they've been able to deal with."
Companies operating in Indonesia include senior producers such as Talisman Energy Inc., Gulf Canada Resources Ltd. and Canadian Occidental Petroleum Ltd.; juniors like Tracer Petroleum Corp.; and a variety of service companies.
TransCanada PipeLines Ltd. has secured a foothold in southeast Asia's booming energy market through the purchase of a stake in a project to build and operate two huge power plants in Indonesia.
The lure is obvious.
Indonesia has been one of the most prolific oil producers in the world since Royal Dutch made a discovery in Sumatra in 1885 which became the base of the Shell empire. Indonesia produces about 1.3 billion barrels of oil a day.
While Bre-X had scandalous problems with political interference and official corruption before its fabled Busang gold deposit was exposed as a fraud, oil companies have generally suffered few such woes.
"The success of the oil industry probably means they've (Indonesian government) taken a more business-like approach on the oil side than may have been evident in the mining side," says Dick Gusella, president of Carmanah Resources Ltd., who has operated in Indonesia since the early 1980s. "From my experience once you sign a contract in Indonesia it's as good as gold."
Gusella says Carmanah has suffered from guilt by geographic association with Bre-X, along with some problems meeting its production forecasts of 4,000 barrels of oil a day. Its share price has fallen from $7.25 to less than $5.
Tracer, a Vancouver-based company, has also felt the Bre-X factor. It says its having difficulty finding partners to farm-in on its oil and natural gas exploration block on Kalimantan near the Busang site.
Gulf Canada, which acquired Asamera in 1988, has had few such problems.
Gulf produces about 25,000 barrels of oil a day in Indonesia expects to be producing 250 million cubic feet of gas a day by fall. It will also start selling shares directly in its Indonesian subsidiary by fall.
"We're continuing to expand aggressively in Indonesia," said Gulf Canada spokesman Dennis Martin. "It's been a really good news story for us." |
