INTERNATIONAL BITS AND PIECES - PART 1
Chad says no plan to reroute oil pipeline to Libya
Chad's Petroleum and Mines Minister Abdoulaye Lamana has dismissed talk of plans to reroute a $3.5 billion oil pipeline to take Chadian oil for export through Libya instead of via Cameroon.
"I can assure you there will be no rerouting through Libya," Lamana told reporters on Monday night after talks with President Paul Biya in the Cameroon capital Yaounde.
He described press reports in Cameroon of a possible change in plans for the pipeline because of pressure from enviromentalist groups as "gossip."
"As you know very well the project is progressing well. Even if there are some problems posed by certain ecological organisations we are trying to solve these," the minister added.
Cameroonian newspapers have published reports suggesting that because of funding problems with the World Bank due to the strong enviromentalist lobby, Libyan leader Muammar Gaddafi had offered to sponsor the entire project if Chad agreed for the pipeline run through his country.
Lamana acknowledged there had been some problems but said these had been ironed out with the World Bank in talks last month. Both sides were in permanent consultation to deal with any outstanding issues.
Ecologists earlier this month called on the World Bank to shelve loan plans for the pipeline, saying the proposal favours oil companies over the poor and threatens the environment.
The Environmental Defence Fund and Friends of the Earth said the project, which is meant to transport oil from Chad to Cameroon's Atlantic coast for export, was an example of the World Bank's misguided approach to energy funding.
"The World Bank has the ability to take the lead in investing in renewable energy, wind and solar," said Andrea Durbin, Friends of the Earth international programme director.
The World Bank is deciding whether to grant $365 million in loans to secure the construction of the pipeline by a group of oil giants led by U.S.-based Exxon Corp., and partners Royal Dutch/Shell Group and France's Elf-Aquitaine.
The pipeline would pump and pipe Chadian oil to the sea through a 650-mile (1,050-km) pipeline from southern Chad to Cameroon's port of Kribi.
The Chadian minister said the pipeline was of capital importance to the economies of both countries and there was no question of it not running through Cameroon.
Foreign firms call on Saudi to open energy doors
International oil companies' key executives on Tuesday urged Saudi Arabia, the world's largest oil producer and exporter, to open its doors wider to foreign investors and predicted the kingdom's financial constraints would eventually lead to such a move.
"I do think they should. I think the reality is that the Saudis need foreign investment to further develop their oil and gas resources," said Larry Wheeler, vice president-Middle East for Shell Chemicals, an arm of Anglo-Dutch oil conglomerate Royal Dutch/Shell Group <RD.AS><RD.N><SHEL.L>.
"I believe they will. I would expect that the opportunities would not be limited to just U.S. companies. Royal Dutch/Shell certainly wants to be part of that opportunity as well," he told Reuters on the sidelines of an oil and gas conference.
Possible investment openings in Saudi Arabia has been the burning issue in the minds of oil executives since Saudi heir to the throne Crown Prince Abdullah held a rare meeting with U.S. oil executives in the United States last month.
During the meeting, the prince did not promise access to any specific energy projects in Saudi Arabia, though he did ask the executives for ideas on how to improve the kingdom's oil-producing and drilling operations. Analysts and oil company officials think it likely that Saudi Arabia, which currently has two million barrels per day (bpd) of spare production capacity, is more likely to want companies' help in developing natural gas and power projects rather than seek outside involvement in strategically sensitive crude oil.
Saudi Arabia's crude earnings have been hit hard by weak oil prices and allowing more foreign investment in the energy sector would bring in additional funds and free up government spending.
A Saudi oil executive at the conference, who requested anonymity, said he expected soft oil prices to pressure the Saudis to invite more foreign investment. But he predicted it would be limited to U.S. firms.
"I think they are serious about (allowing investment in) oil and gas. Capital is an issue for oil-producing countries, especially in the Gulf (states) because their economy is based on oil," he told Reuters.
"Because they have a long relationship with the Americans, especially in oil, they will probabably stay with the Americans," he added.
Although oil officials at the conference were hopeful that the kingdom would eventually allow investment in its upstream energy sectors, they did not expect a breakthrough soon.
"We are willing to prepare any types of proposals for exploration and production. We are keen to contribute," said Yasuhiko Wada, vice president of Japan National Oil Corp.
"I think it's a very difficult subject for them (the Saudis) to make a consensus within the royal family and the cabinet. It will take some time, I am afraid."
An official from Italian energy firm ENI <ENI.MI> expressed doubt that Saudi Arabia would open up its upstream oil sector to foreign companies for exploration and production . But he was hopeful for opportunities in the upstream gas sector in the kingdom, which said last year its recoverable gas reserves stood at some 204 trillion cubic feet (5.7 trillion cubic metres).
"There is a body of opinion in the kingdom that understands the concept of having greater access to gas and is in favour of doing something...," said Giacomo Luciani, ENI's group vice president for international new ventures and promotion studies.
Speculation about investment opportunities in Saudi Arabia is set against the backdrop of what analysts say is a competition for foreign investment in other Gulf states.
Nigerian Ijaws say oil flowstations will stay shut
Ethnic Ijaw groups disrupting oil production in Nigeria's resource-rich Niger Delta on Tuesday said a "cease-fire" did not mean that oil multinationals would be able to reopen shut flowstations.
"The cease-fire is in respect of aggressive activities," Kennedy Orubebe, spokesman of the Federated Niger Delta Izon Communities, told Reuters. "There should be no more seizing of boats and the issue of holding oil workers hostage will be stopped.
"Opening flowstations can only take place when dialogue has begun and for that, the federal government must meet our demands," Orubebe said.
The commander of Egbusu Boys of Africa, one of the associated militant groups that have shut in more than a quarter of Nigeria's oil output, earlier Tuesday had said the group had declared a "cease-fire" for two months to let military ruler Gen. Abdulsalami Abubakar meet key demands.
"The Ijaw tribe is the fourth largest in the federation, but we don't have a road to call our own," Orubebe said. "Injustice has pervaded our society for too long. What we are struggling for is not secession, we are just fighting injustice."
Royal Dutch/Shell Group <RD.AS><SHEL.L><RD.N>, the biggest victim of attacks that have shut in a total of more than 500,000 barrels per day (bpd), said it had no idea of when it might be able to restore output.
"It's the same old story," a Shell spokesman told Reuters in Lagos.
Both Shell and Italian energy group ENI <ENI.MI> have been forced to declare force majeure at their export terminals and say they cannot guarantee to meet commitments.
Iran says six-month oil income down 39 pct yr/yr
Iran's income from oil exports fell to $5 billion in the six months from March due to a price slump, representing a 39 percent decline year-on-year, a senior Iranian official said on Tuesday.
"The country's oil income in the first six months of the (Iranian) year was $5.025 billion, while this income had been $8.261 last year," said Mohammad Ali Najafi, head of the state Plan and Budget Organisation, quoted by Iran's news agency IRNA.
Najafi was referring to the Iranian year which started on March 21, 1998. He said the amount was $9.2 billion two years ago.
Najafi was speaking to parliament, before deputies passed the outlines of an emergency rescue package to deal with a 19 trillion rial ($6.3 billion) budget deficit, which the government said last week threatened its ability to pay bills and employees.
But the conservative-dominated parliament refused to approve unchanged the bill proposed by the moderate government of President Mohammad Khatami, the daily Kayhan said. Details of the package are due to be debated and passed in coming sessions.
Solutions proposed in the government's package included taking advance payments ahead of oil deliveries, selling $700 million worth of bonds for development projects, obtaining $1 billion in foreign loans and borrowing up to 600 billion rials from the Central Bank.
Iran has said foreign commitments would be paid in time, assuring that the country had strong foreign exchange reserves.
The debate over the bill reflected the sharp tensions between conservatives and moderate backers of Khatami.
Conservatives blasted government economic policies, with a deputy saying Iran's stand in the Organisation of Petroleum Exporting Countries contributed to the oil price slump.
Iran, the world's third largest oil exporter after Saudi Arabia and Norway, relies on petrodollars for around 80 percent of its hard currency earnings. ($1=3,000 rials at the official exchange rate)
Algeria sees no rise in oil, gas exports to Europe
Algerian Energy and Mining Minister Youcef Yousfi said on Tuesday that Algeria, a major supplier of oil and gas to western Europe, did not plan to increase exports to Europe at the moment.
Nor would Algiers try to win market share from competitors like Russia and Norway, Yousfi told Reuters in an interview. But it would seek to raise exports if new reserves were discovered.
"Our exports are dictated by the level of our reserves and our long-term domestic consumption. We have attained the optimal level. But we will increase exports if we discover other reserves," Yousfi said.
Algeria was interested in extending prospecting for hydrocarbons from south eastern Algeria to the south east, the north and offshore fields, he said, adding that foreign investors had already shown interest in all three areas.
Yousfi was in Brussels for a two-day roadshow organised by Algeria's state owned oil and gas monopoly Sonatrach in a bid to woo foreign investors to the country's downstream energy sector.
The roadshow follows a similar event in South Africa and is to be repeated in several other west European countries.
"(Foreign investors) are present in the oil sector. That has been a success. Now we want to go further," Yousfi said, listing refining, petrochemicals, power generation, fertilisers and mining as among the main areas where Algeria sought partners.
Projects under discussion with European entrepreneurs included a new condensate refinery and petrochemicals ventures in Skikda, Jijel, Annaba and Arzew.
Yousfi said he expected the total closure for maintenance of the 310,000 barrels per day Skikda refinery would have a short term effect on shipments to Europe.
Algerian energy officials said the refinery was likely to remain shut for at least another three weeks.
The minister denied reports from commentators in Algiers that an initial public offering of shares in state owned pharmaceutical company Saidal would pave the way for share offerings in other government enterprises including Sonatrach.
"Sonatrach belongs to the state. It is not for sale," he said.
Iraq oil exports hit 2.13 million bpd in week
Iraq exports climbed in the week despite constant warnings that Baghdad may be causing irreversible damage to its oil fields.
The weekly United Nations "oil-for-food" program overseers said that Iraq exported 2.13 million barrels per day (bpd) in the week ending Oct. 9. This is a jump of 100,000 bpd from the previous week.
The four-week average of Iraq oil exports climbed to 1.92 million bpd.
In order to meet its contracted commitments, Iraq will need to export an average of 1.64 million bpd by the end of the current sales phase of the oil-for-food program on Nov. 25.
The price of Iraq's oil dipped to its lowest level in four weeks, to $11.07 per barrel. This is down from last week's $12.68-per-barrel average price.
Iraq's Gen. Amir Muhammad Rasheed last week at the U.N. said that if spare parts equipment reaches Iraq soon, Baghdad will be able to increase its export capacity to about 2.3 million bpd in "a few months." But the type of help Baghdad wants from $300 million in spare parts and equipment may not be the type that will quickly increase production. Rather, it may assist Iraq in keeping its oil infrastructure from falling apart, said a U.N. diplomat.
The United States is holding up contracts that it sees as not helping Iraq increase its oil-exporting capacity in the short term of the oil-for-food program.
Funding for contracts for spare parts and equipment must be approved by the U.N. Security Council's Iraq sanctions committee. That committee during the week ending Oct. 9 placed on hold more contracts, 14, than it approved, 11.
Ten of the 11 approved contracts were for pipeline equipment, with the other for firefighting trucks. The approved contracts were worth $2.5 million. This brings to $57.5 million the amount needed to fund the 42 contracts the committee has approved.
In all, the committee has placed 45 contracts on hold. The value of the contracts placed on hold is about $36.9 million.
The oil-for-food sale is an exemption to eight year old sanctions on Iraq. In it, the U.N. allows Iraq to sell up to $5.25 billion of oil every six months. But Iraq's oil-exporting capacity is limited. That, as well as low world oil prices, have kept Iraq from raising more money in the oil-for-food program.
About two-thirds of the oil sale's proceeds pay for aid and supply efforts for Iraq's 22 million people. Most of the rest, 30 percent, pays for Gulf War reparations.
Texaco calls for multiple Caspian pipeline routes
Multiple pipeline routes should be developed to ensure political stability and cut costs as international companies tap the vast oil and gas riches of the Caspian Sea, a Texaco executive said on Monday.
"I think multiple routes are necessary for the Caspian, both for political stability and to maximise economic value of the oil in the Caspian," said Peter Riches, senior vice president of Texaco International Petroleum Co., part of Texaco Inc. <TX.N>
"I think the issues in the Caspian are often focused on the size of the reserves and the real issues are the ability to transport it to open markets," he told Reuters on the sidelines of an oil and gas conference in Beirut.
"If you have options, then you have the ability to negotiate on transit fees and to reduce the risk, should there be any disturbance on one route," he said.
With estimated reserves of up to 15 billion tonnes of oil equivalent, the Caspian has emerged as a tantalising target for major Western oil companies seeking big profits and a new source of oil and gas to reduce reliance on the Middle East.
But they face a maze of political, legal and economic issues and the players are locked in a battle of opinions over transport routes in the potentially politically unstable area.
Washington is opposed to building a pipeline to Iran, which it accuses of sponsoring international terrorism, a charge denied by Tehran.
The U.S. imposed a blanket trade and investment ban on Iran in 1995, stopping all American investment in its energy sector. A 1996 law passed by Congress imposes sanctions on non-U.S. companies that invest $20 million or more a year in either Iran or Libya's oil and natural gas sectors.
Development of the Caspian is also hampered by deadlock over the legal status of the sea -- bordered by Russia, Azerbaijan, Kazakhstan, Turkmenistan and Iran.
Riches said a pipeline route through Iran would make economic sense because it would mean only one country as a transit site, but he added the fact that American companies could not get involved would be a problem.
On Sunday, The New York Times reported that a U.S. plan to persuade major oil firms to build a Caspian project that would guarantee that the oil passed through countries friendly to U.S. interests seems to be failing.
BP says Black Sea oil, gas search costly but worth it
A joint attempt by British Petroleum <BP.L> and Turkey to search for oil and gas in deep Black Sea waters will be costly but worthwhile, a senior BP official said on Monday.
"The problem is that the Black Sea is a difficult and costly area to explore in and we are in the limits of current technology," said Eric Luttrell, deputy director for BP's new oil businesses development.
"It may be that we shall be disappointed and there is nothing of commercial interest there - but it seems important to find out," he told an oil conference.
BP and Turkey's state oil and gas exploration and production company Turkish Petroleum (TPAO) have been carrying out a seismic work in the eastern Black Sea, where sea depth is more than 2,000 metres (yards).
TPAO officials said it might take at least three years to reach an idea about the actual reserves in the site.
"We think BP can overcome problems with regard to depth. They have experience from the Gulf of Mexico in deep drilling," one TPAO official said.
"Potentially there could be very large volumes of hydrocarbon under the Turkish Black Sea, maybe billion barrels of either oil or gas," Luttrell said.
"If there are indeed such volumes, it would make aq considerable difference to Turkey's energy balance and to the energy politics of the region," he said.
TPAO has two other off-shore exploration projects -- one with U.S. Arco <ARC.N> in western Black Sea and the other with Amoco <AN.N>, which announced a $110-billion merger with BP in August, in Mersin gulf in the eastern Mediterranean.
The Arco deal will begin drilling next year and the Amoco project is in the seismis study phase.
TPAO officials say the scale of reserves in Black Sea would remain unknown until the first wells were drilled.
Turkish President Suleyman Demirel told the conference the government should update Turkey's oil exploration regulations to attract more investors to its oil potential.
Luttrell, who said that an exploration well in the Black Sea project could cost about $40 million, said there were only "a few incentives" for foreign companies in Turkey to undertake high risks from oil exploration.
"Black Sea exploration is very difficult to justify commercially. This is where establishment of the right commercial, tax and royalty conditions can make a big change," he said.
"I believe that if such incentives were created we could see a real upturn in interest in this area," he added.
Turkish Energy Minister Cumhur Ersumer said at the conference that the government had begun work to modify and modernise its oil law which dates back to 1950s, but did not give details.
Turkey insists Caspian oil line plan to go ahead
Turkish President Suleyman Demirel said on Monday he was convinced Turkey's proposal to export the bulk of future Caspian oil deliveries via a pipeline to the Mediterranean would go ahead.
Demirel was speaking after publication of a report by the New York Times suggesting oil companies were losing interest in the U.S.-backed scheme to bring oil from Baku to the Turkish port of Ceyhan.
"Azerbaijan is determined, Georgia and Turkey are determined, and the United States is backing the project," Demirel said in an address to the 12th International Petrol Congress.
Sunday's report, saying high costs were causing oil companies to think again, was widely reproduced by Turkish newspapers.
"A Monica setback for Baku-Ceyhan" ran the headline on mainstream daily Hurriyet, which suggested that a weakened U.S. President Clinton had lost his leverage over U.S. oil firms.
Turkey has campaigned for the pipeline, arguing that its narrow Bosphorus and Dardanelles Straits cannot support the additional tanker traffic a Russian-backed plan to transport the Caspian oil from Black Sea ports would create.
"It is physically impossible for this petrol to pass through the straits. These straits cannot support another 50 million tonnes of petrol," said Demirel, referring to the potential crude oil deliveries.
Energy Minister Cumhur Ersumer told the Ankara conference: "The Baku-Ceyhan is currently the only outlet for which a feasibility study has been conducted. Reports that the Baku- Ceyhan may not be chosen do not reflect reality. The proposal is not a national matter, it is an international matter."
The Bosphorus and the Dardanelles, respectively bisecting the cities of Istanbul and Canakkale, saw over 51,000 vessels in 1997, up from 45,000 just a year ago.
An international $8-billion consortium led by British Petroleum <BP.N> and Statoil <STAT.CN> began oil production in Caspian off-shore fields late last year. Their main output will come on stream at 800,000 barrels per day (40 million tonnes a year) by 2010.
There are several other projects to develop Azeri and Kazakh oilfields near the Caspian Sea, and analysts say the peak annual oil output of the region may exceed 100 million tonnes.
The Azeri International Operation Company (AIOC) consortium is to decide later this month the route for its main oil exports among two other options, which envisage using existing pipelines in Georgia and Russia respectively, with the Black Sea as their outlet.
Turkish officials say there were 82 incidents in Istanbul's Bosphorus, home to 10 million inhabitants, which posed a danger to public and environmental safety last year.
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