International Energy Projects & Contracts
December 24, 1998
By David J. Knott, Senior Editor, Oil & Gas Journal
Brazil offers offshore E&P projects to foreign companies
Latin America's opening up to foreign petroleum companies continues with news that Brazil's Agencia Nacional do Petroleo (ANP) formally opened the country's first oil and gas licensing round.
On Dec. 18 David Zylbersztajn, director general of ANP, said ,"Today we will be sending announcement letters to the international oil and gas community and inviting them to attend one of the industry presentations scheduled for this coming January."
Zylbersztajn said Brazil has enjoyed extraordinary success in the E&P sector: since 1982 oil production has increased by a factor of four to more than 1 million b/d and current plans are to reach 2 million b/d by 2005.
"Some 8.5 million sq km onshore and 8,000 km of coastline comprise a massive amount of un-explored and under-explored exploration potential," said Zylbersztajn.
"The areas being offered in this round are very large by most standards, averaging 5,000 sq km - about the same as 250 Gulf of Mexico blocks - and have exploration periods lasting up to 9 years."
The first round will comprise 27 blocks, including 23 in seven offshore basins of which 12 are in the Campos and Santos basins: "The areas also present different types and scales of business opportunities, ranging from deep waters in frontier and proven basins to shallow water gas plays as well as onshore gas plays in the largely unexplored Parana basin and low-risk exploration in the onshore Potiguar basin."
Saudi petrochem giant plans further expansion
Petrochemicals giant Saudi Basis Industries Corp. (Sabic) has plans for further growth. Mohamed H. Al-Mady, Sabic's vice chairman and managing director, said the company is considering boosting its polyester capacity by 250,000 metric tons/year by 2001/2, and intends to line up adequate supply of purified terephthalic acid and ethylene glycol feedstocks by 2000.
Al-Mady said much of the new polyester capacity would be devoted to polyethylene terephthalate resins, in which Sabic aims to become a global supplier: "We are already a global player in petrochemicals, polymers, and fertilizers. We believe that we have the resources to extend that success to polyesters, although the details of the proposed project are yet to be worked out."
New projects
BP Chemicals Ltd. formed a construction alliance with Murphy Pipelines Ltd. and Penspen Ltd., London, to build a 151 km ethylene pipeline from in northeast England from Teesside to Hull.
The new pipeline will link a trunkline which brings ethylene from BP's Grangemouth petrochemicals complex near Edinburgh to its Saltend plant.
The pipeline is slated for completion by the end of 2000 to supply ethylene feedstock to new plants BP is building at the Hull site (OGJ, Nov. 23, 1998, p. 32).
Saga Petroleum AS, Total Oil Marine plc, and Anadarko Petroleum Corp. agreed to cooperate on exploration and production in the British and Faroese regions of the Atlantic Margin.
Saga will operate on behalf of the group in forthcoming bidding for an offshore licensing round planned by the Faroe Islands authorities. In preparation for the round, Saga became the first operator to open an office in Tórshavn, the Faroese capital, early this year.
The agreement builds on an existing deal between Saga and Total for the Atlantic margin. The companies anticipate benefits from pooling their resources in deepwater exploration and development.
Shell Chemicals Ltd. and BASF Aktiengesellschaft signed a letter of intent to form a 50:50 joint venture to produce styrene monomer (SM) and propylene oxide (PO) in Singapore.
The companies plan to build a new production plant at Seraya where Shell already has an SM/PO plant in a joint venture with Mitsubishi Chemical Corp.
The new plant would have capacity to produce 550,000 metric tons/year of SM and 250,000 tons/year of PO and is due on stream at the end of 2001. Shell and BASF are building a similar plant at Moerdijk, the Netherlands, which is expected on stream in 1999.
Contracts news
Esso Norge AS let a 150 million kroner/year ($20 million/year) contract to Aker Maritime AS, Oslo, for maintenance on Jotun and Balder field installations.
The contract is initially for 3 years but has options for extension by up to 14 years. The contract involves 150-200 work-years of engineering services and technical support in Jotun and Balder, and includes maintenance and planning, pre-fabrication and installation in connections with anticipated modifications to the installations.
India's Oil & Natural Gas Corp. (ONGC) let a $1 million contract for detailed engineering and technical assistance for procurement to Kvaerner AS, Oslo. ONGC is revamping the BHN, BHF, NA and SA platforms in its Bombay High field off the west coast of India.
The state-owned Mazagon Dock Ltd., Mumbai, is the main contractor for the project. Kvaerner said the work will be carried out at its Bangalore office with completion due in mid-1999.
Qatar Vinyl Co. (QVC) let a $430 million contract to Krupp Uhde, Essen, and Technip SA, Paris, for design and construction of a petrochemicals complex at Umm Said, Qatar.
The plant is due for completion in the summer of 2001 and will have capacity to produce 175,000 tons/year of ethylene dichloride, 230,000 tons/year of vinyl chloride monomer, and 290,000 tons/year of caustic soda. It will incorporate a 160 MW power plant.
The plant's ethylene feedstock will come from a neighboring plant owned by Qatar Petrochemical Co., a shareholder in QVC along with Qatar General Petroleum Corp., Norsk Hydro AS and Elf Atochem SA.
Project Focus: Analyst shows allure of Latin American gas
Latin America is seen by international investors as the most attractive region in the worldwide gas market, according to Datamonitor plc, London.
A survey by the analyst of leading international gas players revealed that Latin America will require $100 billion in energy project financing up to 2005, of which $50 billion is expected to be spent on pipelines.
Datamonitor said that foreign companies are the leading source of investment in Latin America, and that Brazil and Argentina are the most attractive countries for investment and are expected to remain so.
The allure of Latin America was attributed to the region's rapidly growing electricity demand and the increasing liberalization of regional hydrocarbons industries.
"Independent estimates as to future energy requirements in the region," said Datamonitor, "predict that an increase of about 60% is expected to 2010, 50% of which will be needed by Brazil and Mexico, with another 25% by Argentina, Colombia, and Venezuela.
"The supply and replacement of traditional fuels is also taking place as natural gas makes up an increasing proportion of power generation in the region.
"In 1997 natural gas was responsible for 11% of the region's power capacity, and is expected to rise by 2010 to 17%, with a corresponding decline in oil and hydroelectric power."
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News and progress reports on major projects outside the U.S., with brief details of contracts awarded and contracts due for tender is prepared by David Knott, Oil & Gas Journal Senior Editor. International Energy Projects & Contracts is updated every Thursday.
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