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Gold/Mining/Energy : American International Petroleum Corp -- Ignore unavailable to you. Want to Upgrade?

To: DRRISK who wrote (9525)	2/24/1999 2:38:00 AM
From: DEER HUNTER	Read Replies (1) \| Respond to of 11888

The cost to transport oil from the region is squeezing what is left of the profit margin. Low oil prices are hurting many companies at the moment. Monday February 22, 6:25 pm Eastern Time biz.yahoo.com Chevron seeks deeper Caspian oil-transit fee cut WASHINGTON, Feb 22 (Reuters) - Chevron Corp. (NYSE:CHV - news) expects to resume shipments of crude oil from its huge Tengiz oil field in Kazakhstan in about a week, as long as other countries in the Caspian region follow Georgia's lead and cut their transit fees, too, a top Chevron official said on Monday. Chevron is a seeking an overall 20 percent cut in transport fees imposed by Georgia, Azerbaijan and Kazakhstan, before it will resume shipments of crude oil stopped earlier this month from the Tengiz oil field. While Georgia has agreed to lower the tariff paid by Chevron for shipping Caspian crude oil by train, other countries in the region must also cut their transit fees before the company will resume transporting oil. ''We are very hopeful that we will reach an agreement within a week or so, and then we'll restart (the oil flowing through) the corridor,'' Nick Zana, the president of Chevron's Eurasia office, told Reuters in an interview. In early February, Georgia said it would cut its transport fee to $5 a ton from $7.50 per ton. But that's not enough to lower the overall shipping costs sought by Chevron, according to Zana. ''So Georgia has agreed to reduce the cost,'' Zana said. ''But Georgia is just one element on a huge chain. If the entire (route) is not cost competitive, then it's very difficult for us to send (oil) through the corridor.'' Zana said Chevron has made progress in its talks with Azerbaijan and Kazakhstan to lower their shipping tariffs. ''We're not quite there, (but) we're getting closer and closer,'' he said. ''We hope that we'll reach an agreement very soon.'' The cut in transport fees is necessary, Zana said, to offset the drop in world crude oil prices, which are at their lowest levels in 12 years. The rail shipping costs alone to transport oil from Kazakhstan's Tengiz oil field to Georgia's Black Sea port of Batumi is about $5 a barrel, according to Zana. ''When you add another $2 for the cost of producing the oil, there is not much room to squeeze out a profit,'' he said. Because shipping costs are the largest expense incurred by oil companies in the energy-rich Caspian Sea region, Zana said it is in the best interest of the three countries to lower their tariffs to keep the crude flowing. ''The best thing the governments can do is really...lower the costs of transportation and make the administration process easier, a lot more friendly to investors,'' he said. However, Zana said he understands the countries might be reluctant to cut their transit fees because they depend on the revenue. Still, he agreed that lowering tariffs would make it more cost-effective for Chevron to ship more oil, which could bring in the same amount, and possibly more, transit revenue for the countries from the increased oil volumes being shipped. On Monday afternoon, Chevron's stock was up 3/4 to 77-11/16 a share in composite New York Stock Exchange trading.