Oil and Gas News

Crude oil for November 2009 delivery rose as much as 64¢, or 0.9%, to $71.52 a barrel in electronic trading on the New York Mercantile Exchange

Concerns over the possibility of losing 16 prolific oil mining leases (OMLs) held for over 40 years by the international oil companies (IOCs) has led to intense lobbying and intrigues to delay the passage of the Petroleum Industry Bill (PIB) currently at the National Assembly. The PIB, which has gone through the third reading in both chambers of the National Assembly, will repeal several of the existing oil industry legislations and usher in a revolutionary era in the manner the oil and gas sector operates. But major multinational oil firms - Shell, ChevronTexaco, TotalfinaElf, Agip and Exxon-Mobil - have upped the ante through intensive lobbying in the National Assembly to delay the passage of the PIB until next year and force the hand of the Federal Government to renew their leases under existing terms before they finally expire at the end of this month.

Specifically, the IOCs are concerned that the 16 oil blocks they have held since 1968 under joint venture contracts (JVCs), for which their leases expired between November and December last year and renewed for a year by the Yar’Adua administratiron, may form part of the 23 blocks currently being eyed by the Chinese National Offshore Oil Corporation (CNOOC). CNOOC recently made a $50 billion offer to the Federal Government to acquire a 49 per cent stake, translating to 6 billion barrels in oil reserves in 23 of the oil leases held by the IOCs. In its quest to acquire 6 billion barrels of oil, the CNOOC, acting under the auspices of Sunrise Consortium, applied for 49 per cent equity participation in the following blocks: i. OMLs 67, 68, and 70; ii. OMLs 11 and 13; iii. OMLs 71, 72, 74, 77, 79, 83, 85, 86, 88, 89, 90, 91, 95, 118, 127, 133, 139 and 140. All the blocks are held by the IOCs.

The request is being given consideration as instructions have gone out for the data on the blocks to be released to Sunrise by the Department of Petroleum Resources (DPR). In addition, a negotiating committee has been set up in NNPC to handle discussions with the company. The committee is to consider the request and determine an optimum price for the reserves in the blocks against the backdrop of the offer made by CNOOC. The oil companies had expected the automatic renewal of licences which expired last year. But the Federal Government stalled that move, preferring to renew them for only one year in order to take into account the realities of the present times with the passage of the PIB. However, the IOCs are currently pushing hard to get the 16 expired leases renewed a second time under long-term leases that would carry similar terms and conditions as the subsisting JV leases. But the government has balked at the idea of renewing the expired leases for longer periods because it is conscious of the fact that the PIB would usher in an entirely new regime that would require the incorporation of the JVs and even change the terms for the existing Production Sharing Contracts (PSCs) governing newer leases yet to expire.
Furthermore, a delay of the passage of the bill would stall efforts by the Federal Government to give a stake in the existing oil leases to the oil communities in the Niger Delta as contained in the draft legislation with the parliament as now being proposed. President Umaru Musa Yar’Adua, it was gathered, is eager to see the oil communities get some interest in the oil leases operated under the JVCs, which will be hived out from either the Nigerian National Petroleum Corporation’s (NNPC’s) or the oil major, or both stakes. A clause in the proposed PIB provides for compensation to the oil communities in the Niger Delta by giving them a sense of ownership for natural resources drilled from their backyard. But the companies would prefer that the communities get their share of oil proceeds only through the Federal Government’s stake in the JVs while they keep their 40 per cent of the deal.

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At the Annual General Meetings of the Boards of Governors of the World Bank Group and International Monetary Fund (IMF) in Istanbul, Turkey, the bank’s Group President, Robert B. Zoellick, said:

“This reliance on oil and commodities is a precarious basis upon which to build an economy in a world that is struggling to reduce its reliance on fossil fuels, and in which commodity prices gyrate as investors move in and out of an ‘asset class’.”
Zoellick asked countries, such as Nigeria, Russia, those in the Gulf, Latin America and Africa: “Will countries use these returns wisely – to diversify and build broader–based economic development?
“Prior to the crisis, the growth rates of a number of African countries were achieving impressive levels with consistency. Coming out of the crisis, there could be new opportunities. Some Chinese manufacturing firms are considering shifting their basic production to Africa. China’s African prospects, which include resource development and infrastructure, are likely to be complemented by others. Brazil is interested in sharing its agricultural development experience. India is building railways. These are the early days of a trend that will build.”

IMF Managing Director, Dominique Strauss-Kahn, who also spoke at the opening session, called for a deeper global economic cooperation against the backdrop of the past year.
He said: “A year ago, when we met, the fall of Lehman Brothers had just occurred. Economic activities all over the world started going into free fall, as uncertainty turned to outright panic. People feared the worst, raising the specter of another Great Depression. But as I speak to you today, the world is a different place. Fear has turned to hope. We seem to have pulled back from the brink, and even if it is much too early to declare victory, we have at least stepped onto the road of recovery.”
Strauss-Kahn noted the “profound change” that formal and informal cooperation among nations had brought, adding that in the face of crisis, “countries came together to face common challenges with common solutions, focusing on the global common good”.
He pointed to fiscal stimulus amounting to nearly two per cent of the world gross domestic product last year as a critical factor in staunching the crisis, stating that countries are moving to address key weaknesses in their financial sectors, which will further underpin recovery, if they stay the course on these reforms.
“And now, we stand at a defining moment,” he said, adding: “We know from history that when the nations of the world come together to address common challenges in a spirit of solidarity, we can attain a virtuous cycle of peace and prosperity and avoid a vicious cycle of conflict and stagnation.”
The managing director urged countries to “seize this opportunity to shape the post-crisis world”.
He added that all nations “need to adapt and change” and that the IMF must change too.

His words: “In this modern world, it no longer makes sense for global economic policy to be the concern of just a small group of countries. Reflecting this new reality, one of the great changes over the past year has been the accent of the G-20, a group that includes the dynamic emerging economies. It was the leadership of the G-20 that harnessed the immense policy cooperation throughout the world. And recently in Pittsburgh, G-20 leaders emphasised that the global collective interest must always infuse national policy decisions.
“We must build on this momentum. The G-20 is more representative than the G-7, but there are still many countries left out, especially in Africa. There are 186 countries in our membership. These countries include the low-income countries, home to billions, who still live in poverty, who remain economically marginalised. Their voices too must be heard. They too deserve a stake in the global economy. We need cooperation among all the countries of the world.”
Meanwhile, Nigeria and 10 other African nations are to benefit from a $215 million package unveiled yesterday by the World Bank to boost Africa’s broadband growth has been hamstrung by costly international bandwidth and patchy national infrastructure.
The facility, christened “Central African backbone programme” will bring reliable, high-speed, low-cost internet access to Africa. It is expected to last 10 years.
Three of the beneficiaries, Cameroon, Chad and the Central African Republic would take part in the initial $26.2 million phase.
Others are: Congo-Brazzaville, Equatorial Guinea, the Democratic Republic of Congo, Gabon, Niger, Sao Tome and Principe and Sudan.
The 10-year programme is being supported through a partnership between the World Bank Group and the African Development Bank (AfDB).
“Ultimately, our goal is to develop regional and national broadband backbones and significantly reduce the cost of ICT services in Central Africa,” Mohsen Khalil, Director of Global Information and Communications Technologies at the World Bank Group, said in a statement

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ExxonMobil has agreed to purchase a major stake in the Jubilee oil field off Ghana’s coast from its private equity owners for about $4bn.

The sale was initially mooted in the end of 2008 with several major oil groups including Royal Dutch Shell, BP, CNOOC listed as possible bidders for the oil field, the Financial Times reports.

The private equity owners, Blackstone and Warburg Pincus, made a total investment of $800m in Kosmos Energy, owner of the Jubilee stake, the news service said.

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Al-Sharq Al-’awsat news agency reported Saturday that the jatropha plant is of particular interest to the country’s Ministry of Agriculture. A ministry spokesperson told the agency that the ministry is to plant 84 hectares in Egypt’s Red Sea Hurghada province with jatropha as an initial test project.

Jatropha, a non-food plant crop, grows well on semiarid land and produces oil that can be utilized in the production of bio-diesel fuel, and its ability to grow on land with little water makes it less of a threat to food production than other biofuel feedstocks such as grains and vegetable oils, which require more irrigation

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Agencia EFE SA news agency reported Saturday that Venezuela’s state-owned hydrocarbon company Petroleos De Venezuela, SA announced that it had acquired U.S. energy firm ConocoPhillips’ share in a natural joint gas venture with Chevron Corp.

The offshore natural gas Deltana Platform is located in the Atlantic between the mouth of Venezuela’s Orinoco River and the archipelagic nation Trinidad and Tobago in the southern Caribbean.

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Tags: Agip, ChevronTexaco, CNOOC, exxonmobil, grains, Jatropha, National Assembly, shell, TotalfinaElf, vegetable oils