Stella Zenkovich reports on recent Middle East E&P developments: · Ali Al-Naimi, ...

Stella Zenkovich reports on recent Middle East E&P developments: · Ali Al-Naimi, the Saudi Minister for Petroleum and Mineral Resources, has belatedly announced the discovery of the new Yerbin oil field located 260 km southeast of Riyadh on the southern edge of the large Al-Gnewar oil field, where first drilling began in May, 2002. The field is currently producing 5,100 b/d of light crude and 7.4mn cf of gas. · The Syrian Government, worried by declining gas production, has called a tender for developing the gas fields of the Palmyra region. · The Government of Pakistan is expecting a cash injection of $2.3bn during this fiscal year from the oil and gas sector through licences granted, tax, surcharges and other levies. Middle East E&P/Gas Saudi Arabia has cleared a major obstacle for signing final agreements with international oil majors for two mega gas projects, agreeing terms on associated power plants, Foreign Minister Prince Saud al-Faisal has told reporters, adding that only technical issues remain. The agreements were reached on the first and third projects - Core Venture 1 (CV1) and Core Venture 3 (CV3) - which require investments of about $20bn. ExxonMobil has the lead role in CV1 while Shell has the lead in CV3. Middle East E&P Iraq’s interim oil-industry overseers’ priority is to pump up to 1.5mn b/d within weeks, the team’s Chief Executive, Thamer Abbas Ghadban, told the Washington Post in early May during his first interview since his appointment. No exports are being contemplated yet. If Iraq produces surplus oil, it will be diverted into storage tanks rather than exported, he said. Middle East Pipelines Stella Zenkovich reports on recent developments in the Middle East oil and gas sector: · The Israeli Ministry of National Infrastructures has sent a request to assess the condition of the Mosul-Haifa oil pipeline, which it scrapped in 1948, in a prelude to reopening it and cutting costs by switching from Russian to Iraqi crude after the fall of Saddam Hussein’s regime. The US is considered unlikely to object since the pipeline would transport oil directly to the Mediterranean. However, a state of war is still in force between Israel and Syria, whose territory the pipeline traverses. The existing administration in Damascus is opposed to the plan. · US special operations forces have blown up a main pipeline in north-western Iraq that delivered 250,000 b/d of oil from the Kirkuk field to Syria via two branches, one directly to the energy grid, the other to Banyas port for export, following a warning by US Defence Secretary Donald Rumsfeld for a halt to Syrian military supplies to Baghdad. · Saudi Arabia continues to oppose a proposed pipeline through its territorial waters to supply Kuwait with 30mn cm/d of Qatari gas. Russia & C.Asia E&P/Gas Stella Zenkovich reports on recent Russian & Central Asia E&P developments: · A long-term 2003-2010 plan is being drawn up by the Kazakh Energy and Mineral Resources Ministry, state-run KazMunaiGaz and ExxonMobil Kazakhstan Gas Ventures for starting to develop the country’s gas resources by the third quarter. The research group will assess supply and demand, the infrastructure, the regulatory and legal basis and financing, along with a preliminary analysis of Kazakh gas utilisation projects, classing them according to their priority and how prospective they are. Kazakhstan produced 13.13bn cm of gas in 2002, with production forecast to reach 20.5bn cm in 2005, 35bn cm in 2010 and 45-50bn cm in 2015. · Two new oil and gas deposits are reported to have been discovered in southern Moravia, in the Czech Republic, by local exploration, production and storage company Moravske Naftowy Doly. One find is at Zarosice, near Kijov; the other is in the vicinity of Breclav. The company is planning to start development later this year. · Rosneft is reported to have offered $72m - double the market price - to shareholders of London-based Anglo Siberian Oil Company, which holds licences for the Vankor and North Vankor oil fields in Western Siberia via Russian-based Yeniseyneft, in which it has a 59% interest. Estimated recoverable reserves are put at 906mn barrels of oil and 73tn cm of associated gas at Vankor and 274mn barrels of oil at North Vankor. Cash-rich Rosneft, having acquired Severnasya Neft and its Val Gamburtseva licence for $600mn, converted from a pre-emptive to an official offer in order to prevent TotalFinaElf from raising its earlier $27mn bid for 52% of Yeniseyneft, with an option for a 60% stake in North Vankor. Russia & C.Asia Utilities/Gas/Mtking Stella Zenkovich reports on recent downstream developments in Russia and Central Asia: · A consortium led by Gazprom and including US-based Clement Power Ventures (CPV) and Gazprom-tied Dujoketana has signed an agreement for the 100% acquisition of Kaunas Energija, the second largest power station in Lithuania. Gazprom is to take a 99% stake for $36.7mn, with the remaining 1% split between CPV and Dujoketana. However, CPV is to increase its interest to 25% in due course and is to take charge of plant modernisation, while Djuketana’s stake will increase to 24% and it is to take over plant management. · Gazprom has extended till 2015 a contract to supply 8bn cm/y of Russian gas to Gaz de France, having already supplied the state company with 12bn cm in 2002. Gazprom plans to take advantage of the the EU’s expansion from 15 to 25 members next year, to deliver gas to new EU borders with the Belarus and the Ukraine. Gazprom has also agreed to increase annual gas supplies to Eni from 19bn cm to 28.9bn cm from 2008. Russia & C.Asia Utilities/Gas/Mtking Stella Zenkovich reports on recent industry developments in Russia and Central Asia: · The announcement of a winner for the Croatian Government’s sale of a 25% stake plus one share in INA by the privatisation council, originally set for the first quarter, has slipped to mid-year after the government got bogged down in parliamentary procedures. OMV, Mol and Rosneft are among the bidders. · The EU is pushing Russia to triple its domestic gas prices as an energy reform concession to gain its support for entry to the World Trade Organisation (WTO). However, the Russian Government is unwilling to liberalise its domestic gas market in the build-up to this year’s general elections, with Chief WTO Negotiator Maxim Medvedkov stating that there will be no WTO entry on ‘suicidal terms’. Meanwhile, Boris Fyodorov, former Finance Minister and Independent Director of Gazprom, has declared that internal Russian gas prices are steadily rising and will reach break-even point in two years for gas producers, a situation that will help new producers enter the market. · Vladimir Pashchenko, Director General of Moscow-based Inmortrans, has confirmed Russia’s readiness to invest up to $200mn to revive dormant Moldovan plans for building a Danube port and oil terminal at Giurgiulesti, with a 420,000 b/d handling capacity and a related tanker fleet, thereby creating a much-needed new export outlet for Russian crude. · Ukrainian Fuel and Energy Minister Serhy Yermilov has called on private industry to set up a vertically-integrated oil company. President Leonid Kuchma earlier instructed the government in this respect and a draft decree ensued from the Cabinet of Ministers - but it was never implemented. Now, after a wave of partial privatisations, the state is no longer in a position to take the matter in hand, owning just 50% plus one vote in Ukrnafta, 43.054% in Ukrtatnafta, 25% in Naftokhimik Prykarpatiya and 25% in Halychina oil refinery. Asia-Pacific E&P The Indian Government is to offer 24 oil and gas blocks for bidding under the Fourth Round of New Exploration Licensing Policy (NELP) to be launched on 8 May 2003. Twelve deepwater blocks, one shallow water block and 11 onshore blocks will be offered according to official sources. Asia-Pacific E&P Talisman Malaysia, a wholly owned subsidiary of Talisman Energy, has made an oil discovery in block PM-305 offshore Malaysia. The South Angsi-1 well tested at a combined rate of 11,300 b/d. Proved and probable reserves are estimated at 25mn barrels, with first production anticipated in mid-2005 at a gross rate of between 15,000 b/d and 20,000 b/d. Talisman holds a 60% interest in the block, the remaining 40% interest held by Petronas Carigali, the exploration and production subsidiary of Malaysia’s state-owned Petronas. Africa E&P First Calgary Petroleums reports that proved, probable and possible recoverable gas reserves for the Ledjmet block 405b in Algeria have been put at 5.74tn cfe (cubic feet equivalent). Immediate plans are to drill three additional appraisal wells to further delineate the MLE structure in the block. WesternGeco has also been contracted for the acquisition of 600 sq km of 3D seismic data immediately adjacent to and west of the MLE pool covering two large separate mapped structures. Africa E&P/Gas Stella Zenkovich reports on recent upstream developments in Africa: · Thai PTTEP is bidding $13mn for a 35% stake in North African blocks 433a and 416b located just 50 km from Algeria’s large Hassi Messaoud oil field that is currently producing 400,000 b/d. It is the Thai oil and gas company’s first oil investment in the region. Block partners would be PetroVietnam (40%) and Angola’s state-owned Sonangol (25%). The $13mn bid will also cover the costs for seismic surveys and the drilling of three test wells over a three-year period. · Heritage Oil’s Turaco-1 well in Ugandan block 3 is showing signs of a mature oil source. The Turaco-2 well is expected to be spudded in July 2003. The operator, which holds a 50:50 interest with Energy Africa, is planning two further test wells. · Petronas of Malaysia is currently drilling one appraisal well and three exploration wells in the Ahnet onshore field in Algeria, which are expected to go onstream in 2007. Divided into seven blocks, Ahnet has recoverable reserves of 4.9tn cf of gas and is 45% owned by operator Petronas Carigali Overseas, 25% by Gaz de France and 30% by the state-owned Sonatrach. · Nigeria and Sao Tome have started, after several delays, the licensing round for six of the nine oil blocks in the Gulf of Guinea’s Joint Development Zone. Estimated oil reserves are put at 6bn barrels. Africa Gas/Strategic alliances/Pipelines Stella Zenkovich reports on recent oil and gas developments in Africa: · State-owned Sonangol is hoping to sell a 12% interest, worth $3bn, in its new Angola LNG gas joint venture with ChevronTexaco to Galpenergia of Portugal, according to Sonangol Chairman Manuel Domingos Vicente. · Sonatrach has awarded Groupement Euro-Algerien des Tuberies (GREAT) the $120mn construction contract for the 300-km pipeline linking Algeria’s Hassi R’Mel gas field to Oued Safsaf terminal on the Tunisian border, thereby boosting the capacity of the Algerian-Italian Transmed gas link via Tunisia and Sicily from 24bn to 27bn cm/y. Plans are to eventually increase the pipeline capacity to 32bn cm/y. Africa Gas/Mkting/Fuels Stella Zenkovich reports on recent African downstream developments: · Gas Authority of India Ltd (GAIL) is considering Shell’s offer of equity in two of its Egyptian city gas distribution subsidiaries - 10% in Shell CNG Company and 19% in Fayum Gas Company. · Mobil Oil Sudan’s (MOS) retailing of oil, petrol, diesel, motor fuels, jet and marine fuels, lubricants and other petroleum products - accounting for a 20% share of the country’s product market - have been taken over by Petronas International, a subsidiary of the Malaysian parent, and by Engen of South Africa. MOS has been renamed Petronas Marketing Sudan. Included in the deal are three fuel depots, a refinery and a countrywide network of filling stations. · Zambia’s fuel reserves add up to only two months of supply, Energy Minister George Mpombo has declared, calling for a dismantling of ‘the pipeline of middlemen’, direct stockfeed imports from Iran or Kuwait and an increase of prices at the pumps. · It is reported that the Mugabe Government’s raising of fuel prices by 200% in one go and by 300% within a month at a time when inflation climbed 228% and Zimbabwe was experiencing power cuts is likely to have a ‘disastrous’ effect on the economy. 6 May 2003 UK Government/Fuel prices/Fuel retailing The UK Freight Transport Association (FTA) has welcomed the government’s announcement that road user charging on lorries, to be introduced from 2006, will be accompanied by a compensatory reduction in diesel duty for goods vehicles resulting in there being no net increase in industry’s tax bill. However, it cautions that onboard equipment and billing systems must be interoperable with other equipment and schemes (such as the M6 motorway toll, European tolling schemes, and cab technologies including tachographs), and that the scheme must be easy for industry to administer (pointing out that the costs of administering the London congestion charge programme, for example, are almost equal to the cost of the charges themselves). The FTA also states that, while it fully supports lorry road user charging as a means of part-managing the congested roads infrastructure that costs the nation some £20bn/y, such charges ‘can only be the beginning’ as ‘it is cars that are the primary cause of congestion and the scheme must ultimately apply to them.’ Middle East E&P Anadarko Petroleum (operator, 92.5%) has commissioned a new permanent production facility at the Al Rayyan oil field in block 12 offshore Qatar. The Al Morjan platform, which replaces the Amina temporary early production facility, has the capacity to process up to 45,000 b/d of oil and will allow Anadarko to significantly increase production from the field. In addition to the new platform, the field has a permanently moored tanker - the Pacific Jewel - with a capacity of 1.3mn barrels, that functions as a storage and offloading facility. The company is planning to drill exploration and development wells in the block later this year. Asia-Pacific E&P The Eni-operated (65%) Woollybutt field offshore Australia’s northwest coast has come onstream, with a target plateau rate of 35,000 b/d forecast to be achieved this year. Oil is being produced via two subsea wells linked to a double-hulled FPSO. Partners are ExxonMobil (20%) and TAP (15%).