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Gold/Mining/Energy : TLM.TSE Talisman Energy -- Ignore unavailable to you. Want to Upgrade?

To: Aggie who wrote (592)	11/21/1999 8:53:00 PM
From: Tomas	Read Replies (1) \| Respond to of 1713

Production cost of Sudan oil key for Talisman - Company gets to keep about $19.49 a barrel Claudia Cattaneo Financial Post, November 20 KHARTOUM - On the surface, it's obvious why Talisman Energy Inc. is committed to development of this country's energy resources. Five oil fields are producing 160,000 barrels a day for the Greater Nile Oil Project, of which Talisman is a 25% partner, and the basin's exploration potential is promising. Production is already scheduled to rise to 200,000 barrels a day by 2002 at low incremental cost, as the infrastructure to develop it is already in place. The project is booking close to 800 million barrels in proven and probable oil reserves -- that's roughly the size of the giant Hibernia oil project offshore Newfoundland, which cost $6-billion to develop. More importantly, the cost of producing Sudan oil is better than anywhere else the company is active: Talisman gets to keep about $19.49 a barrel for Sudan crude after royalties and operating costs, compared with $15.31 in Canada, $19.35 in the North Sea and $10.73 in Indonesia. Talisman's presence in the country is the largest of any Western company, but others are active in the region. Subcontractors to the Greater Nile consortium include Schlumberger, the international oil services company, and Roll'n Oilfield Industries Ltd. of Red Deer, Alta., which operates two drilling rigs. "I think it's more positive to work within the system than to withdraw from the system and not be in a position to have any influence. I think our role has been positive," says Dennis Sykora, president of a Bahamas-based affiliate of Roll'n Oilfield Industries, which has provided well drilling and servicing services in Sudan since 1994. Total, the French oil company, is exploring nearby, along with Sweden's Lundin Oil AB. The company is associated with Vancouver's Lundin family, which used to own 8.2% of the stock of Arakis Energy Corp., the company whose purchase introduced Talisman to Sudan last year. A new group of Canadian investors represented by John McLeod, the former president and chief executive of Arakis, is also looking for opportunities in the country. There are gasoline stations here bearing the Agip, Mobil and Shell signs. Sudan's oil was discovered by Chevron Overseas Petroleum Inc. around 1975. Shell International Petroleum Co. farmed into Chevron's concession in 1984, earning 25% interest. The two companies were active in the country between 1974 and 1992, but reduced their activities starting in 1984 after rebels attacked a Chevron base, killing three oil workers. The partners pulled out soon after having spent $1-billion (US) to shoot seismic and drilling oil wells. The well bores drilled and the data obtained by the two firms were acquired by State Energy Corp., a company incorporated in the Bahamas, which in turn was acquired by Arakis in 1994. Two years later, strapped for funds and looking for technical help, Arakis invited energy companies from around the world to bid for a stake in the project. The Chinese state oil company, China National Petroleum Corp. acquired a 40% interest; Petronas of Malaysia took 30% and the Sudanese government became a 5% partner through Sudapet Ltd., a company it incorporated specifically to participate in the project. Control of the project moved to the consortium. Arakis sold its 25% interest to Talisman because it was unable to find $350-million (US) to pay for its share of development costs. nationalpost.com