OIL & GAS / International Coverage
Ecuador to Raise Oil Output
QUITO - Ecuador will increase its oil production from 390,000 to 700,000 barrels a day in the next three years, the state-run oil company Petroecuador said on Wednesday.
"This will greatly reactivate the country's economy," said Petroecuador director Ramiro Gordillo.
Ecuador ranks fourth among Latin American oil exporters and is the region's sixth largest producer. Petroecuador currently produces 80 percent of the country's petroleum through its branch company Petroproduction.
Gordillo said that private oil companies producing heavy crude will have to invest about 800 million U.S. dollars to raise their current output from 425,000 to 430,000 barrels a day and send it through the trans-ecuadoran oil duct.
The output increase will be carried out through joint venture contracts that are now allowed under new oil production laws.
Oil is one of Ecuador's main export products, amounting to nearly 50 percent of government revenues.
U.S. govt rejects Iran oil deal, signals tough stance
WASHINGTON, Nov 5 - The U.S. government has rejected one of two requests it was considering from American companies looking for permission to do oil-swap deals with Iran.
The rejection -- together with remarks earlier this week by President Clinton's advisor on Caspian energy policy in which he said such oil-swap deals might detour oil from the U.S.'s preferred trade route via Azerbaijan and Turkey -- suggests the administration's policy is still firmly against allowing U.S. companies to deal with Iran.
According to government and industry sources, the U.S. Treasury Department's Office of Foreign Asset Control has turned down an application from Optimarket Inc., an international trading concern based in Irving, Texas, to swap oil from Kazakhstan to make it easier to bring it to world markets, as there are few pipelines or other routes out of the landlocked Caspian Sea region.
The decision will be particularly disappointing to Mobil Corp. <MOB.N>, the second-largest oil company in the United States, which has been waiting for a decision on its oil-swap request since last April. Mobil's Chairman and Chief Executive Lucio Noto has been among the most vocal in his opposition to the U.S. unilateral trade sanctions against countries like Iran.
Mobil has asked to ship up to three million barrels of oil next year from its nearby fields in Turkmenistan to northern Iran in exchange for oil shipped from the southern part of the Iran.
Ambassador Richard Morningstar, the Clinton administration's coordinator on Caspian energy policy, cast doubt this week on whether any other swap deals will be approved.
He said Tuesday the U.S. government will look unfavorably upon oil-swap deals that result in less oil being shipped over major pipelines in the Caspian region.
"I will say that we will not take any steps by allowing a swap application that will detract from the (oil) volumes that would be available to a Baku-Cehyan pipeline," said Morningstar, referring to the proposed pipeline route favored by the Clinton administration that would stretch from Azerbaijan's capital to Turkey's Meditarranean oil port.
"If companies begin to believe that there can be extended (Iranian) swaps with large (oil) volumes, that can have a detrimental effect on the development of these initial pipelines. And so it's going to be important that we take that into consideration when we consider swaps," he said.
Morningstar also indicated that allowing big oil swaps with Iran would run counter to U.S. policy of ensuring the country doesn't become a major route for oil shipments to western markets.
"It's very important that we send a very consistent signal with respect to our policy on pipelines through Iran," he said.
Santos discovers S. Australia gas field
MELBOURNE, Nov 6 - Santos Ltd <STO.AX> said on Friday a new gas field had been discovered in the South Australian section of the onshore Cooper/Eromanga Basins.
Santos, operator for the Patchawarra East Block Joint Venture Parties, said the exploration well Verona
One flowed gas at 5.25 million cubic feet per day, accompanied by 49.6 degree API condensate at 10.1 barrels per day.
The flow was from reservoir sands in the Early Permian, Epsilon Formation over the interval 2,940 metres to 2,951 metres. The test was run through a half-inch surface choke.
The Verona One well is located six km northeast of the Cuttapirrie Gas Field and about about 110 km north of the Moomba gas plant.
Santos said the discovery well was near existing facilities and would provide an early connection opportunity.
The well will be cased and suspended as a future gas producer.
Other interest holders in the Patchawarra East Block are Exxon Corp's <XON.N> Delhi Petroleum Pty Ltd, Boral Ltd's <BOR.AX> Boral Energy Resources Ltd and Gulf (Australia) Resources NL.
Asian Energy Briefing
KOBE STEEL, PARTNERS RECYCLE COAL ASH INTO GRAVEL
TOKYO - Kobe Steel Ltd. (TSE:5406) and three partners have developed a process that produces gravel from recycled coal ash, company sources said Thursday.
An expected increase in the number of coal-fired electric power plants prompted the major steelmaker and its partners, the Center for Coal Utilization Japan and affiliates of Shikoku Electric Power Co. (TSE:9507) and Chubu Electric Power Co. (TSE:9502), to find ways to recycle coal ash.
GAZ DE FRANCE PROPOSES $1 BLN POWER PROJECT IN INDIA
NEW DELHI - French multinational Gaz De France has submitted a proposal to the Indian government for a US$1 billion mega power project in the western Gujarat state using liquified natural gas (LNG) as fuel.
"We propose to set up a 2,500 MW LNG power project in Gujarat and are talking to another French major Alstom to act as a joint venture partner for the same," Jacques Gautier, assistant vice-president of Gaz De France told Press Trust of India (PTI).
Azeri, Consortium Row Led to Pipeline Delay
BAKU, Nov 6 - Disagreements between Azerbaijan and an $8 billion British Petroleum -led oil consortium are responsible for the latest delay in deciding on a pipeline route for Caspian crude, diplomats and industry officials here say.
Charles Pitman, chairman of Amoco Eurasia, one of 12 consortium members, said on Thursday that a recommendation on the route to Azeri President Haydar Aliyev by AIOC and Azeri state oil company SOCAR was unlikely before December.
AIOC officials have said in the past that they were shooting for a recommendation by the end of October. Increasingly they seem reluctant to name any date at all.
"I really can't tell you when there will be a recommendation on the pipeline. We have never put an exact date on this," said AIOC spokeswoman Pamela Mounter.
"The negotiations are just very complex," she said.
The pipeline tug of war pits AIOC members, who must ultimately pay for most of the pipeline, against the governments of the United States, Turkey and Azerbaijan.
These three want a giant 1,800-km (1,070 mile) pipeline from Baku, through Georgia and on to Turkey's Mediterranean port at Ceyhan, mostly for geopolitical and strategic reasons.
But the route would cost an estimated $4 billion and AIOC members, worried by falling crude prices and the true volume of Caspian reserves, are delicately lobbying Aliyev to settle for a shorter and cheaper line to Georgia's Black Sea outlet at Supsa.
This option would allow for a spur to Ceyhan to be added later, when commercially viable.
"In the end it comes down to money," said a diplomat in Baku. "The AIOC is in a very delicate situation. It does not want to offend the President. So it is trying to show that the Ceyhan option would cost too much at present," he said.
Continuing low crude prices mean Azerbaijan stands to earn significantly less from the "contract of the century," as it was labelled when signed in 1994, than originally thought.
"Given low oil prices, the Azeri income from the contract is less than had once been projected. Baku-Ceyhan's cost will eat up more of the profits," said the diplomat.
Western oil company officials in Baku say the AIOC does not see why it should have to pay for the higher cost associated with Baku-Ceyhan, which it views as basically political.
The U.S. has tried to save the project by offering some financial help, though the amount is likely to be modest in comparison with the total cost.
The continuing insistence on Baku-Ceyhan by the U.S. seems to stem from a desire to strengthen close NATO ally Ankara, suffering from the loss of Iraqi crude exports pumped through its territory, as well as its pro-Western regional friends, Azerbaijan and Georgia.
Azerbaijan would gain by closer links to its ethnic brethren in Turkey, thereby lessening dependence on Russia, and neighbour Iran, with which it has strained ties, to the south.
A buttressed Azeri-Turkish relationship might also lead to more active support for Baku from Ankara in Azerbaijan's long conflict with Armenia over the mountainous Karabakh region.
Aliyev has long tried to use the oil card to bring Western pressure to bear on Armenia, so far without significant success.
Azerbaijan would also gain from exports of Kazakh and other Caspian oil through a Baku-Ceyhan pipeline.
Turkey is against a pipeline to Supsa, arguing it would increase tanker traffic through the Bosporus straits.
Industry officials say AIOC is in little hurry to start building a new pipeline at all. It has years before its peak production of an estimated 700,000-800,000 barrels per day (bpd) will be reached in 2007-2010.
Two smaller pipelines, one to Supsa under renovation and to be completed in 1999, and one already in operation to Russia's port of Novorossisk, are adequate to handle near-term output.
Others say the slow pace also stems from the possibility that improved ties between Iran and the West will later make shipments of oil through it a cheaper alternative.
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