Oil & Gas: World Energy Hot-Spots Named - Lloyds List, August 17
THE Energy Information Administration has released its nine key world areas to watch for future energy investments.
These regions have been chosen by the EIA because of their importance in the energy sector.
The areas have problems that range from guerrilla groups bombing oil pipelines in Colombia to the tightening of government control over the oil industry in Venezuela. The nine regions - Angola, Caspian/Caucasus,Colombia, Indonesia, Iran, Iraq, Libya, Nigeria and Venezuela - were chosen for one or two reasons, according to the EIA.
They are either 'important from an energy perspective' and/or 'experiencing significant economic, political, or other problems which currently (or likely in the short-term) could affect their energy sectors'.
In Angola, the EIA is concerned at the tighter sanctions that were unanimously enforced by the UN Security council in April in response to Angola's violations of three previous sanctions.
Second only to Nigeria in sub-Saharan African oil production, Angola's crude oil production averaged 800,000 bpd during the first five months of 2000.
The Caspian Sea is developing into a significant oil and gas exporting area, and the Caucasus is a potentially major world oil transit center, prompting the EIA to encourage focus on the region.
The Caspian Sea has proven oil reserves of approximately 18bn-35bn barrels, but a problem of geography and geopolitics arise in the transportation of the oil to the world market.
The region has been dogged with problems and deadlocks over negotiations forced Russia to announce that it would build a pipeline that would bypass war-torn Chechnya.
Colombia's status as a significant oil producer has not been forgotten in the face of three decades of disruption from segregate groups, according to the EIA.
'Despite these problems, Colombia's oil production is at an all-time high, up from just over 100,000 bpd in the early 1980s, to an estimated 819,000 bpd during 1999.' However continuing disruptive activity is having a detrimental effect on the energy market and Colombia's government estimates that the bombings of oil pipelines cost the country approximately Dollars 50m each year.
Violent outbreaks in Indonesia have pushed the nation on to the EIA hit-list.
'Indonesia has experienced significant economic and political turbulence over the past few years, which has impacted the country's energy sector,' said the analysts.
Recent developments in East Timor have initiated a rethink on the Timor Gap Treaty - an agreement whereby both Indonesia and Australia agreed to split revenues from oil and gas development in the Timor Gap.
This treaty is now under renegotiation after Indonesia's energy minister revoked it in September 1999.
Also Indonesia has further problems in the oil and gas rich region in Aceh, north Sumatra, while Indonesia's president Wahid has fallen out of favour and handed over supervision of his government to the vice-president on August 10.
Iran has problems with its US economic sanctions and its relations with the west in general, according to the EIA.
Iran has tried to improve its relations with these nations but with little success.
'Continuing points of contention include, 1) Iran's opposition to the Middle East peace process, 2) US accusations of Iranian support for various terrorist groups, 3) Iranian purchases of missiles and other military equipment from North Korea, Russia, and elsewhere and 4) the Iran and Libya Sanctions Act of 1996 (Public Law 104-073), which authorises the imposition of US sanctions against foreign companies investing in Iranian oil or gas projects.' said the EIA.
Iran now produces around 3.65m bpd of oil.
Iraq has been a massive oil and gas exporter but has been subjected to international sanctions since the 1990 invasion of Kuwait.
However, the UNsoftened its sanctions with the introduction of the 'oil-for-food' programme, allowing Iraq to sell oil to raise revenue for humanitarian purposes, war reparations, and UN operations in Iraq.
A further region under the EIA microscope is Libya.
Last year, sanctions were lifted on Libya after the nation extradited two men suspected of the Lockerbie terrorist attack.
There are plenty of oil and gas companies that are keen to either expand operations or re-enter the country, now that the majority of sanctions have been lifted.
Daily disturbances in one of the world's leading oil exporters, Nigeria, have alerted the EIA to problems in the energy sector of the region.
There have been persistent attacks against oil companies by youths protesting the environmental degradation of indigenous homelands and their marginalisation in terms of federal resource allocation.
'The attacks have resulted in disruptions of oil production and exports.' Pipeline explosions, prompted by the act of illegal fuel siphoning, have resulted in many deaths, and estimates state that Dollars 18.8m has been lost during the first five months of 2000 because of vandalism to fuel pipelines.
Venezuela has the largest oil reserves in the western hemisphere and is a major oil exporter, especially to the United States, but there is a cloud over the political and economic state of the nation.
Hugo Chavez, president for the last two years, realises the importance of oil to his nation but is keen to shift the focus from crude oil production to petrochemical, refining, and natural gas production.
'Oil accounts for roughly three-quarters of total exports, about half of government revenues, and about one-third of GDP,' said the EIA.
Venezuela, a member of the Organisation of Petroleum Exporting Countries, used to be the main over-producer, but this looks set to change.
The nation is presently producing 3.1m bpd of oil, and exporting about 2.4m bpd which is in line with its Opec quota.
Despite this, the EIA does not see Mr Chavez' governmental tightening as an immediate threat to foreign investment.
The analysts cite one case at the end of last year when Venezuela's Supreme Court upheld the constitutionality of eight oil exploration contracts with foreign oil companies.
However one warning the EIA is prepared to make is that operations may increase in price to foreign investors under Mr Chavez, as social benefits increase.
'Increased government control is not seen as a positive sign for long-term investment in the Venezuelan oil industry,' said the EIA. |
