MARKET ACTIVITY / TRADING NOTES FOR DAY ENDING THURS., MAY 21 1998 (3)
Countries In The News
UK Offshore Oil Licensing Likely Before Summer End
LONDON, May 21 - A British offshore exploration licensing round delayed for almost a year could finally be launched before the end of the summer, a Department of Trade and Industry (DTI) spokeswoman said on Thursday.
''We are progressively moving slowly towards launching it,'' she said. ''Hopefully, it will happen before the end of the summer term,'' she said, referring to the period when parliament breaks for a summer recess towards the end of July.
The round has been delayed by ''policy technicalities,'' she said, without elaborating.
Last month, a DTI official said the 18th licensing round would take off ''very soon.''
A month later, the oil industry remains in the dark and is not holding its breath that the licencing will happen soon.
.
''We haven't heard anything yet. We're still waiting,'' said one oil company official.
The 18th licencing round, which covers mature areas in the north, central and southern North Sea and the Morecambe and Liverpool Bay areas of the Irish Sea, was held up last year by legal challenges from environmentalists.
''In one sense it's quite good it's been delayed because hopefully it will be launched after the tax consultation paper is published,'' said an official at another company.
''If we're going to be stung by additional taxes and in the current atmosphere of low oil prices, I don't think there will be a great deal of enthusiasm.''
The British government proposed in March imposing new taxes on oil and gas production in the North Sea and this appears to have dampened enthusiasm for the round until the industry pores over the fine print of the new fiscal regime.
A government consultation paper which was due to be published by the end of April has overrun its deadline.
The Treasury (finance ministry) said last month it would be published shortly, but has so far failed to come up with a response when it might be expected.
Oilfield operators in Britain warned British Energy Minister John Battle in a letter in April that the licensing round could be a flop because of the fiscal uncertainties caused by the fiscal review.
The UK Offshore Operators Association (UKOOA), the offshore oil industry's trade body, said on Thursday said Battle has responded that he is convinced fiscal uncertainties will be resolved before the 18th licensing round is launched.
''We've been waiting since April for it (consultation paper on fiscal reform). We must wait and see,'' a UKOOA spokeswoman said.
The government has proposed either extra corporation tax on oil and gas fields or the imposition of Petroleum Revenue Tax on all fields approved after March 1993.
A final decision should be made law in next year's Finance Bill.
Consultants Wood Mackenzie have warned that the proposed tax changes could hack up to three billion pounds off the worth of assets held by companies working in the North Sea.
Blue-chip oil major British Petroleum (UK & Ireland: BP.L), Royal Dutch Shell (Shell)(RD.AS) and Exxon (XON) would top a list of 10 companies most hit by the changes, it said.
Azeris, Foreign Oil Firms Eye $9 Bln In New Deals
Lawrence Sheets
BAKU, May 19 - Azerbaijan may sign more than $9 billion in new contracts with foreign firms this year to develop its Caspian basin oil and gas reserves, an official of the state oil company SOCAR said on Tuesday.
The six possible new deals, all of which cover standard 25-year periods, signal a continuation of the swift pace the former Soviet republic of eight million has set to develop the energy sector, already the mainstay of its economy.
Azerbaijan has already signed nine contracts with foreign companies worth over $30 billion in long-term investment in offshore oil fields since independence in 1991.
Three of the new deals under discussion with firms and consortia also involve sites in the Caspian while three more will exploit on-land sites, Rafig Abdullajev, assistant to SOCAR President Natig Aliyev, said.
''Our people are waiting for the fruits of developing our energy reserves. In 100 years there may be other sources of energy and they won't be worth anything then. We need money today,'' said Abdullajev.
The largest of the new contracts is a proposed $4 billion project between SOCAR and the so-called ''Japanese Consortium'' composed of JNOC (Japan National Oil Corp), Itochu Corp's (8001.T) Itochu Oil Exploration Co Ltd, JAPEX (Japan Petroleum Exploration Co Ltd), Teikoku Oil Co Ltd (1601.T) and Indonesia's INPEX (Indonesia Petroleum Ltd). It involves the Ateshgah, Yanan-tava, and Mugan-daniz fields located in deep water in the Caspian.
The fields are estimated to contain 100 million tonnes of recoverable reserves. No figures as the individual shares of the sides in the deals have been determined.
SOCAR and the consortium last year signed a memorandum of understanding, precursor to a full-fledged production sharing agreement.
Abdullajev said SOCAR was also in talks with Italy's Agip (AGIS.CN) (ENI.MI), Japan's Mitsui & Co Ltd (8031.T) and Turkey's Turkish Petroleum (TPAO) to reach a 2.5 billion deal on the Kurdashi block of fields in the Caspian, estimated to contain 100 million tonnes of crude.
SOCAR would have a 50 percent stake in the project, Agip 25 percent, Mitsui 15 percent, and TPAO five percent. Abdullajev said other firms were now submitting proposals for the remaining five percent stake.
He said SOCAR was in talks with Ramco Energy Plc (UK & Ireland: ROS.L) to develop the Muradkhanli onshore site, located about 200 km west of Baku and worth $1 billion in long-term investment. SOCAR geologists say it also holds at least 100 million tonnes of recoverable reserves.
Another on-site deal involves SOCAR, Canada's Commonwealth Oil and Gas Ltd, a unit of A and B Geoscience Corp (ABG/VSE),and Canada's Commonwealth Oil, and Union Texas Petroleum Holdings Inc (UTH). It would develop the Southwest Gobustan field, 35 km (20 miles) west of Baku and estimated to contain at least 20 million tonnes of recoverable crude and 12 billion cubic metres of natural gas.
''This contract is ready for signing,'' said Abdullajev, adding that total investment is estimated at $700-800 million over the life of the project.
He said another $700 million project, in which SOCAR is negotiating with Frontera Resources, aims to exploit the Kursangi-Garabakhli fields near the town of Ali-Bayramli, about 100 km (60 miles) west of Baku. Recoverable reserves there are estimated at 25 million tonnes.
British Petroleum (UK & Ireland: BP.L) and Norway's Statoil (STAT.CN) are also negotiating with SOCAR on a contract to develop the Abikha block of four deep water fields, located in the central part of the Caspian Sea, near what Azerbaijan considers its sea border with Turkemenistan.
No estimate was given for possible investment or reserves in the block of fields.
Abdullajev added negotiations were just beginning between SOCAR and Germany's VEBA AG (VEBG.F) subsidiary Deminex to explore and possibly develop the Sallahatin field in the central Baku archipelago, off the coast of the capital. He said it was not clear if a deal would be reached this year.
Iran Sets Oil Tender, Spiced By U.S. Shift
By Andrew Mitchell
LONDON, May 21 - Foreign firms are gearing up for mouth-watering opportunities in Iran's energy sector after Tehran on Thursday set an early July launch date for its latest openings.
The tender, to be held at a London conference on 1-3 July, provides energy firms with a swift opportunity to exploit this week's watershed U.S. decision to waive sanctions against a Total SA-(TOTF.PA)-led Iranian gas project.
The relaxation in Washington's stance should release oil firms' pent-up hopes of breaking into Iran's mighty energy industry, which boasts the world's second largest gas reserves and third largest oil exports.
The tender is given added lustre by including the first onshore offerings in Iran's upstream sector since the 1979 Islamic revolution.
''I think Iran is on the verge of an extremely exciting phase its oil and gas development,'' said Mehdi Varzi, head of energy research at Dresdner Kleinwort Benson.
''The U.S. waiver is obviously good news, and I can see the majors coming in a big way,'' he added.
Around 13 onshore projects will be offered out of nearly 30 in total, a senior official at state National Iranian Oil Company (NIOC) said on Thursday.
But the list has yet to be finalised and could involve even more projects, he added. Exploration, development and enhanced oil recovery projects will all be on the table.
The NIOC official confirmed that the onshore Darkhovin field, which contains an enormous 18 billion barrels of recoverable oil, will be among the offerings.
Italy's ENI (ENI.MI), which has already carried out appraisal work at Darkhovin, is considered to be in pole position there.
Projects at the big North Pars and South Pars gas fields will be on offer too, the official said, confirming preliminary indications given at a Dubai conference in March.
But Iran has now dropped plans to offer out projects in the Caspian region, the official said. These are now being organised into a separate tender.
All eyes have been on the launch of the new tender since U.S. President Bill Clinton's Monday announcement that Total, Russia's Gazprom (quote from Yahoo! UK & Ireland: GAZPq.l) and Petronas of Malaysia (PETR.KL) would not be penalised for their contract to develop part of South Pars.
Many believe the decision in effect shelved the 1996 U.S. Iran and Libya Sanctions Act (ILSA) which threatened to punish energy investment in the two countries, and was aimed specifically at strangling Iran's ''buy-back'' plans.
Washington also promised more waivers for European Union companies so long as the EU co-operated with Washington on Iran policy.
Yet some oil executives have cautioned that any future waivers would be tied to specific projects, in effect giving Washington a veto on their business plans.
And the approach of U.S. Congressional elections could encourage the Clinton administration to restore a tough line on ILSA, executives say.
July's conference will be attended by 50 officials from state National Iranian Oil Company. The full list of projects will be unveiled on 2 July.
A presentation will also be held in Tehran two or three weeks after the London launch, the NIOC official said.
The projects will be offered under the buy-back model under which firms finance projects for repayment in production. It is Iran's chosen technique for getting around constitutional opposition to foreign energy participation.
Iran has been forced to court foreign investment as it seeks access to Western technology to stem a slide in production from ageing fields.
The issue has become even more pressing this year as revenues were slashed by sickly oil prices.
And while foreign oil executives had expressed fears that conservatives in Iran's parliament could oppose foreign entry to onshore upstream projects, NIOC says it has now got all necessary parliamentary approval.
Iran's energy riches seem likely to guarantee an enthusiastic turnout for the tender.
But this week's U.S. announcement contained no promises that Russia or other countries would receive similar treatment to EU firms.
The limited size of some projects and middling returns has deterred some international firms from previous buy-back offerings.
Unilateral U.S. trade sanctions exclude American companies from Iranian business.
Analysts also warn that the scale of the tender means Iran must prioritise its projects carefully.
''I don't think Iran can go to international financial markets and get loans for all these projects at the same time,'' said Dresdner Kleinwort Benson's Varzi.
Iran's initial tender, launched in 1995, only succeeded in clinching two foreign groups to new projects -- Total at South Pars, and Canada's Bow Valley at the Balal field (BVX.TSE). Two of Bow Valley's planned partners have already pulled out, jeopardising its plans.
Elf Aquitaine (ELFP.PA) and Agip SpA (AGIS.CN) are understood to be in advanced talks for buy-back development of the $600 million offshore Doroud field.
Oil Strike, Poll Violence Unhinges Colombia
BOGOTA, May 21 - Colombia showed growing signs of becoming unhinged ahead of the May 31 presidential elections as an oil workers' strike threatened to cut fuel supplies to Bogota and politically-motivated violence surged across the country.
In comments, National Planning chief Cecilia Lopez conceded the country was in political turmoil as gunmen of the left and right staged pre-election attacks on government security forces and defenseless civilians.
Meanwhile, Joaquin Gomez, head of state-run oil company Ecopetrol's largest refinery, estimated the on-going strike by the powerful USO oil union had left Bogota with just three days supply of jet fuel and nine days gasoline stocks.
Local media reported fast dwindling fuel supplies in many smaller provincial towns in western Colombia.
''Colombia is living through a political problem of terrible instability. We are seeing terrible (political) cannibalism,'' Lopez told Reuters after a meeting in Bogota.
In the last month, right-wing death squads have massacred more than 50 civilians in attacks across the country. The most recent, over the weekend, left 11 people dead and more than 40 others missing in Colombia's main oil production center of Barrancabermeja, in northeast Santander province.
It was that attack that prompted the Communist-led USO union to join grassroots movements in Barrancabermeja in a citywide strike from Monday. The stoppage was intended to last 48 hours but has been extended indefinitely, USO leaders said Thursday.
Top government officials met with union and social leaders throughout the day but all sides were still huddled in talks by early evening.
Gomez, head of refining operations in Barrancabermeja, said 90,000 barrels per day of gasoline output had been paralyzed by the USO strike. The union had also halted pumping on oil and fuel pipelines leading from the refineries to Bogota and the west of the country.
Mines and Energy Minister Orlando Cabrales issued a call to motorists not to begin panic buying of gasoline. Civil Aviation authorities, meanwhile, said the fuel situation was being carefully monitored but so far airlines had not grounded any flights.
The oil strike also paralyzed Colombia's largest oil pipeline for the first time since it came into operation in the second half of last
year. The Ocensa pipeline serves the 320,000 barrel per day Cusiana-Cupiagua field in eastern Colombia, operated by British Petroleum Co Plc (UK & Ireland: BP.L).
A BP spokesman said the company had limited on-site crude storage capacity and would begin ramping down production at the field Thursday night if the oil strike was not resolved.
The growing disorder coincided with a statement by Moody's Investors' Service that it was downwardly revising its ratings outlook on Colombia.
The agency assigned a negative outlook to Colombia's Baa3 foreign currency ceiling for bonds and notes and to the Ba1 foreign currency ceiling for bank deposits.
It blamed the move on growing concerns related to continued fiscal deterioration, current account inbalances and ''last but not least to the destabilizing consequences of guerrilla activity''.
At least 19 people, including soldiers, policemen and Marxist guerrillas, were killed in fighting across Colombia Thursday. The authorities have predicted violence will in the final days before the May 31 presidential elections.
More On Columbia
Pumping operations along Colombia's Ocensa pipeline, the largest in the country, have been paralyzed as a result of an indefinite strike by the main oil workers' union USO, British Petroleum Co Plc (UK & Ireland: BP.L) said Thursday.
The pipeline serves the giant Cusiana-Cupiagua oil field in eastern Colombia. Field operator BP said production at the 320,000 barrels per day field would have to be ramped down from ''late Thursday'' or early Friday if the strike continued.
''The Ocensa pipeline was shut down as of last night around 9 p.m. (2100 local time/0600 GMT) as a result of the USO strike,'' a BP spokesman told Reuters.
''We have limited on-site storage capacity for about a day and by tomorrow morning or even this evening we would be forced to start ramping down production if the strike continues,'' he added.
The USO launched a strike in the main oil refining center of Barrancabermeja late Monday after a right-wing death squad killed at least 11 people and abducted more than 40 others over the weekend. The union has now voted to continue the stoppage indefinitely and has vowed to halt all crude pumping operations.
The BP spokesman said Ocensa pipeline operators had been barred from entering pumping stations by USO demonstrators but explained that BP had enough crude in storage at the Caribbean coast lifting terminal at Covenas to meet export commitments until June 1.
This is the first time the Ocensa pipeline has been forced to halt crude pumping since it came into full operation in the latter half of last year. It was, however, bombed by leftist rebels on one occasion last year shortly after all the pipework was completed.
Colombia's second largest pipeline, the Cano Limon-Covenas, was operating normally Thursday morning, U.S. oil giant Occidental Petroleum Corp (OXY) said.
END - END - END
|
