OIL & GAS / International Coverage
UK North Sea Oil Operators Oppose Energy Tax
LONDON, Nov 4 - Britain's North Sea oil industry said it opposes an energy tax which a government-commissioned report says would help meet global greenhouse gas emissions targets.
"We are not happy with the tax in principle," James May, director-general of the UK Offshore Operators' Association, told Reuters on Wednesday.
"Any additional (tax burden) is likely to shift investment away from the UK - this industry in particular is one that is able to transfer its activities and investment around the world."
The report, by the former chairman of the Confederation of British Industry Lord Marshall, was published on Tuesday and coincides with a United Nations conference in Buenos Aires on global greenhouse gas emissions and climate change.
The UK's Chancellor of the Exchequer Gordon Brown said the British government would give the report "full consideration".
The study said there was "probably a role" for a tax to make businesses contribute to improved energy efficiency, with the leading option a tax on the final use of energy by industrial and commercial consumers.
May said that any tax on North Sea oil and gas operations would run counter to conclusions drawn from a year-long review carried out jointly by oil companies and the government.
"We've just been through a 12-month review where the government accepted in the end that there is no additional taxable capacity in the North Sea," May said.
He added that passing the tax on to commercial consumers would also be damaging.
"Any additional (tax burden) on industry and commerce is likely to damage competitiveness in terms of the cost of production and export prices," he said.
He added that the government should concentrate on incentives for companies to improve their energy efficiency.
"My quick reading of the Marshall summary suggests small businesses are one area where there are perhaps some real opportunities to improve energy efficiency and use," he said.
"People probably respond better to carrots than to sticks."
Growing Against the Odds, Caspian Oil Industry Achieves 'Critical
<CHV.N>
Growing Against the Odds, Caspian Oil Industry Achieves 'Critical Commercial Mass,' Chevron Executive Tells Forum
LONDON, Nov. 4 - The headlines of 1998 have painted the Caspian oil industry as paralyzed by pipeline problems, hamstrung by government wrangling and plagued by poor exploration results.
But a closer look reveals an industry achieving "critical commercial mass," a regional force now showing the potential to "drive geopolitical events, rather than be driven by them," Richard H. Matzke, president of Chevron Overseas Petroleum and a director of Chevron Corp., told a Caspian oil conference.
In a wide-ranging speech today, Matzke reaffirmed that the long-awaited approval of the $2.2 billion Caspian Pipeline project by the Russian federal government is imminent.
The report was underscored by Viktor Fedotov, director general of the Caspian Pipeline Consortium, who joined Matkze at the podium and said, "All technical issues have now been settled with the expert review bodies."
Dismissing early reports of Caspian exploration failures, Matzke cited a serious shortage of offshore drilling rigs and said, "The oil industry has barely begun to explore the Caspian. The eager outside world will have to accept that it's going to take quite a while to find out what's down there. None of the prime offshore areas of the world have revealed their oil and gas treasures in just a few years or a few wells."
Premature judgments on exploration, said Matzke, can be blamed partly on widely publicized estimates of Caspian oil reserves in the hundreds of billions of barrels. The same estimates also fanned the flames of speculation about big new regional pipelines, he said: "Although multiple pipelines are needed, now that times are tougher in the oil business, any pipeline that can't be commercially justified is going to have a hard time finding friends with money. We're very pleased that CPC will be the next pipeline in the logical development of the region's infrastructure."
Low oil prices are a "serious situation," said Matzke. But he added, "It's essential to recognize that in 1998, for the first time, oil prices became as important as oil politics in the Caspian. And in fact, this has helped the industry to re-focus on fundamentals. Isolation on the world map can not provide insulation from world oil market trends or global investment requirements. During the year, as the value of barrels dropped in the Caspian, the value of efficient operations increased.
"Personally, I think it's healthy that the Caspian oil industry is coming back to fundamentals and focusing on the serious commercial priorities of the next two to three years. We need to cooperate regionally to build an industry which will be competitive globally in the long term."
Matzke's speech, "Caspian Oil: Cooperation or Competition?" is available on line in the Newsroom area of Chevron's web site at www.chevron.com.
Kazakhstan CPC at last nears starting gate
LONDON, Nov 4 - Kazakhstan's Caspian Pipeline Consortium (CPC) is within days of getting its long-awaited go-ahead from the Russian government, Richard Matzke, President of Chevron Overseas <CHV.N> told Reuters in an interview on Wednesday.
Moscow's green light should finally allow Chevron's CPC group to start construction on its much delayed $2.2 billion oil line from Kazakhstan to Russia's Black Sea coast.
"The stumbling blocks are all behind us," said Matzke. "We now have all the permits from the Russian regional review agencies."
The 560,000 barrels per day (bpd) CPC line is crucial to unlock the energy riches of landlocked Kazakhstan's huge Tengiz field, where Chevron's current production of some 210,000 bpd is well below potential capacity.
The receipt of Russian permits will allow CPC and the central government to complete final legal documents in the next few days, Matzke said.
This will clear the way for the international consortium to complete all the necessary land purchases over the next month, he added. CPC has already secured land guarantees for the whole 1,500 km pipeline route.
"The consortium plans to start ordering pipe from the Russian mills as soon as we have a clear and final federal approval of the project," Matzke earlier told an industry conference in London.
The CPC project has endured a tortuous gestation period since first launched by Russia, Kazakhstan and Oman nearly five years ago. The group, which now includes nine international energy firms, should start pumping in 2001.
Matzke insisted that this year's oil price slide had neither made CPC exports uneconomic, nor jeopardised the line's eventual expansion from an initial 560,000 bpd to 1.34 million bpd.
"There's no doubt whatsoever that the CPC will be expanded. The only question is the rate we'll get there. You don't build an oil pipeline until you've got oil to put in it," he told Reuters.
Matzke was convinced that another regional line to the Mediterranean would eventually be built, even though poor Caspian drilling results and low oil prices were likely to deter Azerbaijan International Operating Company (AIOC) from pressing on with a U.S-backed line to Turkey's Mediterranean port of Ceyhan.
"The Baku-Ceyhan link is vital, it will undoubtedly happen, and it will happen next. It meets everyone's needs," he said.
"It gives an outlet to Caspian and Russian producers, which are both lacking in export facilities, it meets Turkey's concerns and it allows large ships to be loaded into the Mediterranean."
Matzke acknowledged Turkish concerns that Kazakh and Azeri exports would mean a dangerous surge in shipments through Istanbul's Mediterranean gateway, the Bosporous Straits.
Chevron had been in talks with developers of a possible bypass pipeline through Greece and Bulgaria and was exploring sales in the Black Sea, he said.
Matzke denied that the political thaw between Washington and Tehran could allow a trans-Iranian route to usurp the CPC plan as a preferred way out of Kazakhstan.
"It doesn't make sense to send more oil into that part of the world. Saudi Arabia and Kuwait are already holding in large amounts of production capacity," he said.
"If the Iranian route is as logical as people say it is, why don't the Iranians just go ahead and build it."
Matzke also countered claims made in July by Kazakh President Nurlan Balgimbayev that CPC costs could rise to $3.7 billion, underlining that the group would stick to its $2.236 billion budget.
Chevron has already poured some $1.5 billion into the Tengiz development but its reliance on costly railcar transit has dented its profits.
Chevron holds 15 percent in the current consortium, Russia's LUKoil <LKOH.RTS> in partnership with ARCO <ARC.N> holds 12.5 percent, Russian Rosneft <PFGS.RTS> and Shell <SHEL.L> <RD.AS> have seven percent and Mobil <MOB.N> has 7.5 percent.
Britain's BG Plc <BG.L> and Italy's Agip <AGIS.CN> hold two percent each. Oryx energy Company <ORX.N> and Kazakhstan's Munaigaz have 1.75 percent each.
The remaining 50 percent is divided between founder members Russia, with 24 percent, Kazakhstan -- 19 percent -- and Oman with seven percent.
DIARY - Today In The Energy Markets - Nov 5th
BONN - German Association of Industrial Energy and Power Companies (VIK) annual news conference 0930 GMT.
KOENIGSWINTER, Germany - Nuclear technology corporation conference on a new reactor concept 0800 GMT, followed by news conference 1215 GMT.
BEIJING - Second Chinese Petroleum and Gas Conference (Second day).
LONDON - Caspian Oil and Gas Summit (Second day).
BUENOS AIRES - International conference on climate change (Fourth day).
BRUGGE, Belgium - 13th Annual European Autumn Gas conference (Final day).
Alliance Plans To Boost PNG-Australia Gas Pipeline
MELBOURNE, Nov 5 - Supplying natural gas from the Papua New Guinea to Queensland pipeline into Brisbane would be one opportunity to be explored by a business alliance announced on Thursday.
Oil Search Ltd <OSH.AX>, Queensland state-owned Ergon Energy and NRG Asia-Pacific Ltd, a unit of U.S. company Northern States Power <NSP.N> said they would explore business opportunities arising from the proposed A$3.5 billion pipeline.
The companies said other options to be investigated would include formation of a company to trade and market gas and establishment of gas fired power generation.
Oil Search managing director Peter Botten said in a statement the alliance would help provide a feasible commercial platform for the PNG gas project.
"The alliance members believe their activities will dovetail with the PNG gas project, helping it move forward in a timely way," he said.
Oil Search has major interests in the Chevron Corp <CHV.N> operated PNG gas fields that would supply the proposed pipeline linking the Southern Pipelines to Gladstone in Queensland.
The Australian section of the pipeline is being developed by the Australian Gas Light Co <AGL.AX> and Malaysian state-owned Petronas. Ergon Energy chief executive officer Kim Griffith said the alliance members believed there was strong and increasing demand in Queensland for competitively-priced gas.
Ergon currently is an electricity retailer in Queensland, supplying more than 500,000 customers.
NRG Asia/Pacific announced in August that it planned to build a new 368 megawatt gas-fired power station at Gladstone, and had signed an agreement to receive supplies from the PNG project.
Turks Hold Secret Caspian Oil Pipeline Talks With AIOC
ANKARA, Nov 5 - Turkey's energy ministry officials on Thursday met Caspian oil officials to boost chances of a pipeline route that will carry Caspian oil to world markets, officials said.
"The meeting is being held at a secret state building in Istanbul," said one energy official, who declined to be identified.
"Its contents cover all recent issues involved," the official said, without elaborating.
Azeri and Georgian officials as well as officials from the Azerbaijan International Operating Consortium (AIOC) of oil companies participated in the meeting, expected to focus on Turkey's offering of easier terms for the Baku-Ceyhan pipeline, proposed to carry oil from the Caspian fields.
Turkey was said last week to have offered a package of incentives to AIOC companies producing Caspian oil since November, 1997.
The package, which U.S. officials said included tax holidays as well as right of way and guarantees that transit fees would be non-profit making, is aimed at raising the chances of the Baku-Ceyhan line among its rivals.
The Istanbul meeting coincided with comments made in London by a senior Amoco <AN.N> official who said AIOC delayed a key meeting, originally scheduled for November 12, to early December to decide their recommendation for the pipeline route.
Charles Pitman, chairman of Amoco Eurasia said they agreed with Azeri state oil company SOCAR that they needed more time for their decision.
The pipeline project, the most expensive of the three options being considered by AIOC as the eventual main oil route, envisages a 1,730-km (1,080-mile) pipeline from Baku to Turkey's Mediterranean terminal of Ceyhan.
The other options are pipelines to the Georgian port of Supsa and to Russia's Novorossiisk terminal -- both requiring an increased tanker traffic through Turkey's busy straits, the Black Sea's only outlet to the Mediterranean.
Most of the companies making up AIOC favour the Baku-Supsa pipeline option, estimated to cost $1 billion less than the Baku-Ceyhan line which has a price tag of up to $4 billion.
Turkey, citing environmental risks for people living around the straits, opposes any increase in tanker traffic through the them. About 60 million tonnes of oil was shipped through the waterways last year.
The Baku-Ceyhan project has backing from the United States and Azerbaijan. Turkish President Suleyman Demirel last week signed a symbolic declaration with presidents of Azerbaijan, Georgia, Uzbekistan and Kazakhstan to support the project.
|
