Major Developments
In this section, you will find information on Major Developments in the Oil and Gas Industry Worldwide.
>>The North Sea is set for a second oil boom as record prices open up reserves previously regarded as too expensive to exploit.
Aberdeen is set to be the new Dallas as the second North Sea oil boom gets underway, Oil & Gas UK (O&GUK), which represents North Sea operators, estimates that there are still about 25bn barrels of crude under the seabed, paving the way for producers to earn billions of pounds in profit.
In the 35 years since crude was first recovered from the North Sea, about 37bn barrels of oil and gas have come ashore, giving the UK self-sufficiency in energy and making the industry the biggest single contributor to tax revenues.
Matthew Farrow, head of energy and environment at the CBI, said: “Our members keep saying that there is still plenty of stuff out there. The tricky thing is that they’ve got all the easy stuff. But how do they get to the hard stuff?”
To make the exploration and production economical, the industry needs a high oil price. And it has certainly got that. At $130 a barrel a number of projects became worthwhile, sparking a surge in activity.
O&GUK’s Sally Fraser: said “You can’t get a hotel room in Aberdeen these days. You have to book far in advance.”
But it could take a further rise in the oil price to make some of the more complicated projects profitable.
Ms Fraser said: “There is already a lot of technology around to get into difficult places, but it is used onshore. The problem is trying to utilise this technology in the North Sea, where the technical challenge is far more difficult.”
The organisation estimates that about £30bn of investment in the North Sea is needed over the next 10 years to satisfy the oil and gas industry’s existing plans for exploration and production.
Along with rises in the oil price, the cost of support services is soaring. The major oil companies have suffered a surge in equipment and labour costs.
For a North Sea operator, the cost of hiring a semi-submersible rig in 2005 was $13,000 a day. The costs this year are averaging $435,000 a day.
Analysts say that if the Government wants to encourage the North Sea operators to exploit the remaining reserves, it must do more to cushion these rising costs. And that means changing the tax regime.
The Treasury takes about 75p in the £1 off the oil companies operating on most fields. Petroleum Revenue Tax is 50 per cent, leaving firms with 50p. On this they are charging 30 per cent in corporation tax and a 20 per cent supplementary charge. The Government has already altered the tax structure to encourage investment in new fields. But it will not be enough to make it worthwhile to exploit a lot of the remaining oil.
Fraser said that a lot of the current oil wells are abandoned once about 50 per cent-60 per cent of the crude has been pumped. “A bit more technology and a bit more incentive, and these wells might still have life.”
Professor Peter Odell, of Erasmus University in the Netherlands, believes that there could be 300 fields that remain undeveloped in the North Sea.
His most optimistic assessment is that these will contain 30bn barrels, a higher estimate than O&GUK. “There are still parts of UK continental shelf that have never been examined at all in any great depth,” said the professor.
But for analysts, dealing in the day to day realities of the oil price, speculation about what “could be” are irrelevant. News that there could more oil left in the North Sea than first thought will have no impact on the market.
Damian Cox, senior energy analyst said: “The oil is out there, but is it really likely they can pump it at a profit? I’ll believe it when I see it.”
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/08/cnboom108.xml
>> China’s April crude oil imports fell by 3.9% from a year ago to 3.47 million barrels per day, and were also down from the record of 4.07 million bpd in March, official Chinese data showed.
The market has kept a close watch on oil demand in China and India, whose economic booms have helped send prices up six-fold since 2002.
US light crude for June delivery lost 83 cents at $123.40 a barrel by 0701 GMT, after earlier falling to as low as $123.10. It had settled down a hefty $1.73 yesterday after striking a new intraday record high of $126.40.
London Brent crude fell 73 cents to $122.18.
World demand for biofuels will expand at a nearly 20 percent annual pace to 92 million metric tons in 2011, despite recent concerns about the impact of biofuels on the environment and food supplies, according to Freedonia Research.
http://seekingalpha.com/article/76991-world-market-for-biofuels-expected-to-double?source=d_email
>> EIA estimates that members of the Organization of the Petroleum Exporting Countries (OPEC) earned $674 billion in net oil export revenues in 2007, a 10 percent increase from 2006. Saudi Arabia earned the largest share of these earnings, $194 billion, representing 29 percent of total OPEC revenues. On a per-capita basis, OPEC net oil export earning reached $1,143, a 8 percent increase from 2006. Based on projections from the EIA May 2008 Short Term Energy Outlook (STEO), OPEC net oil export revenues could be $1,060 billion in 2008 and $990 billion in 2009.
OPEC Net Oil Export Revenues
Country Nominal ($B) Real (2000$B)
2007 2008 2009 2007 2008 2009
Algeria $50 NA NA $50 NA NA
Angola $44 NA NA $44 NA NA
Ecuador $8 NA NA $8 NA NA
Indonesia -$4 NA NA -$4 NA NA
Iran $57 NA NA $57 NA NA
Iraq $38 NA NA $38 NA NA
Kuwait $55 NA NA $55 NA NA
Libya $41 NA NA $41 NA NA
Nigeria $56 NA NA $56 NA NA
Qatar $26 NA NA $26 NA NA
Saudi Arabia $194 NA NA $194 NA NA
UAE $63 NA NA $63 NA NA
Venezuela $48 NA NA $48 NA NA
OPEC $674 $1,060 $990 $558 $861 $788
http://www.eia.doe.gov/emeu/cabs/OPEC_Revenues/Factsheet.html
>>LAGOS (Reuters) - Royal Dutch Shell shut down more of its production in Nigeria after a fresh militant attack on Saturday on a flowstation in the restive Niger Delta, where local militants have stepped up a campaign of violence.
The bombing of the Shell facilities in Nigeria’s southern Bayelsa state, the fifth militant attack in just over a month, came a day after a federal court ruled that one of the leaders of the rebel Movement for the Emancipation of the Niger Delta (MEND), Henry Okah, should be tried in secret.
The ruling prompted a threat of reprisals from MEND, which has already knocked 164,000 barrels a day off Shell’s production in Nigeria with a pipeline bombing last month.
“A few oil delivery lines are affected and some oil has spilled into the environment,” a Shell spokesman said. “We are mobilizing containment booms to stop the spread of oil and have also shut in some production volumes.”
Security sources said that three wells had been blown up in the attack, as well as other equipment.
The MEND attacks and an eight-day strike by Exxon Mobil workers which ended on Thursday had temporarily halved oil production from Nigeria — the world’s eighth largest exporter — helping to push prices to record highs on Monday around $120 a barrel.
Exxon Mobil is returning production to normal levels of around 800,000 bpd, but has not yet announced the end of a force majeure declared on Monday.
For full Reuters Africa coverage and to have your say on the top issues, visit: africa.reuters.com
Rebels in Nigeria’s oil-rich Niger Delta blew up three oil wells operated by Royal Dutch Shell on Saturday, their fifth attack in recent weeks against the petroleum industry, security sources said
LAGOS (AFP) — Niger Delta militants on Saturday attacked facilities belonging to Anglo-Dutch oil group Shell in southern Bayelsa state leading to a cut in output, company and security sources said.
The anonymous security source said the attack by a previously unknown armed gang led by a “Commander Douglas” affected Shell oil wells and the Diebu creek flowstation at Peremabiri in southern Ijaw area of Bayelsa.
The security source said the oil wells and the inlet manifold and delivery lines of the flowstation were blown up during the attack.
Shell confirmed the attack, the latest to hit Nigeria’s largest oil operator in recent weeks. It however said the incident happened Friday night.
“A few oil delivery lines are affected and some oil has spilled into the environment,” Shell spokesman Precious Okolobo told AFP, adding that the company was mobilising its workers to control the spillage.
Shell, which accounts for around half of Nigeria’s 2.1 million barrels per day output, has been forced to cut production because of an upsurge in militant attacks on its facilities.
Niger delta militant groups, the most prominent among which is the Movement for the Emancipation of the Niger Delta (MEND) has sabotaged several supply pipelines owned by Shell and other oil operators in the restive region.
MEND has also promised more attacks on oil targets in the restive region.
The group emerged in early 2006 as the leading group calling for a greater share of Nigeria’s oil revenue for the producer region. As well as attacks on facilities it has been responsible for the seizure of local and expatriate workers as hostages.
Overall, violence in the Niger Delta has reduced Nigeria’s total production by a quarter in the past two years.
http://afp.google.com/article/ALeqM5iKEiq3QMNgyDd9DTJhPyrDX04h5g
>> Wednesday, April 30, 2008 Iran Dumps U.S. Dollars in Oil Transactions
Iran had totally removed U.S. dollars in the country’s oil transactions, an Oil Ministry official said on Wednesday.
“The dollar has completely been removed from our oil trade…. Crude oil customers have agreed with us to use other currencies (in the trade),” Oil Ministry official Hojjatollah Ghanimifard was quoted as saying by the state television.
“We make our transactions with euros in Europe, but yen in Asia, ” he added.
Due to the tensions with Washington in the past years over the nuclear disputes and the latest depreciation of dollars, Iran has vowed to decrease the greenback in its foreign trade. Iran central bank also has reduced dollars in the country’s foreign reserves.
In last November’s summit of the Organization of Petroleum Exporting Countries (OPEC) in Saudi Arabia, Iran proposed that it was necessary to replace the U.S. dollar with other major hard currencies in oil trading.
But some Arab allies of the United States showed few support to Tehran’s advice.
However, Iran’s Oil Minister Gholam Hossein Nozari has already declared in last December that Tehran had completely stopped selling its oil in dollars, according a report by the semi- official ISNA news agency at that time.
“In line with the policy of selling crude oil in nondollar currencies, currently selling our country’s oil in U.S. dollars has been completely stopped,” Nozari was then quoted as saying.
Right now it’s not clear why there seems to be a contradiction between comments by the two officials over the exact time to stop dollars in Iran’s oil trade.
Copyright 2008 XINHUA NEWS AGENCY.
>> 30/04/2008 UAE to sign US$10bn gas deal
A long delayed contract to develop big new natural gas reserves will be signed within a week, according to a senior official from the Abu Dhabi National Oil Company (Adnoc). The US$10bn (Dh37bn) Shah gas project, which is key to providing new fuel needed for power plants to meet soaring domestic electricity demand, has been in limbo for eight months.
“There are no delays, no problems,” said Omair Suwaina, a senior Adnoc official, who was speaking yesterday while attending an industry conference in Abu Dhabi. “We expect to sign within a week,” he told the Reuters news agency. Suwaina declined to confirm the identity of the contract winner, widely expected to be ConocoPhillips, the US energy company. Once under way, the project will produce up to one billion cubic feet a day of gas at the Shah field near Abu Dhabi’s southern border with Saudi Arabia. This will be the first of a series of similar projects that the Government wants to undertake.
The Shah project is scheduled to start in 2012. It was first tendered in April 2007 as part of a larger project, but no winning bidder was selected. Adnoc invited four foreign companies including ConocoPhillips to bid again on the Shah development in July of that year. It has since been evaluating the bids.
Deborah Algosaibi, a ConocoPhillips external affairs co-ordinator said Adnoc’s long delay in formally announcing the development could be related to smoothing out contract details. “Perhaps they are dotting an ‘i’,” she said.
Craig McMahon, an analyst with Wood Mackenzie, a British research and consulting company, suggested the delay could be related to the size and complexity of the project, which could involve the parties crafting a detailed commercial agreement. “The devil is always in the details,” he said.
The Shah project is the largest Abu Dhabi upstream development in the past year open to bids by international companies. The gas involved is known as “sour gas” because it contains high levels of acidic and toxic hydrogen sulphide, which makes the project costly and dangerous. Cost projections by analysts have doubled within a year in line with global inflation in the industry. Last April, when Adnoc was proposing the simultaneous development of Shah and Bab, another sour gas field, they pegged the cost for both developments at US$10bn.
Suwaina, who declined to disclose Adnoc’s cost projection for Shah, told the conference that rising costs for energy development worldwide had pushed up the investment required for sour gas projects. He said the UAE would go ahead with plans to develop several sour gas fields to supply its power needs. “There will be more developments. It is necessary and we have to do it,” he said.
However, sensitivities surround the proposed Bab field and are more pronounced than that of Shah because the toxic gas deposit is close to residential settlements. Bab, and the offshore Hail sour gas field, are next in line for development.
While costs for Abu Dhabi’s technically challenging sour gas projects could be four or five times higher than the emirate has traditionally paid for gas, the rising price of sulphur could sweeten the deal. Hydrogen sulphide stripped out of the gas stream can either be pumped back into the ground for storage or, with favourable economics, processed to yield sulphur. This month, the price of sulphur exported from Abu Dhabi surpassed US$600 a tonne, a stunning increase from about US$20 a tonne just a few years ago. Suwaina said estimates for sulphur contracts were based on spot prices of US$700 to $800 a tonne.
The UAE holds the world’s fifth-largest gas reserves at nearly 214 trillion cubic feet, much of it “ultra-sour” with a hydrogen sulphide content of 30 per cent or higher. Although deposits with a similar composition have been developed in other countries, safety concerns, technical challenges and rising costs have held back exploitation here.
Source: – The National
April 29th > > In the UK record petrol prices have driven record profits for BP and Shell…
BP and Shell made an eye-watering combined profit of £7.2bn in the first three months of the year, as the surging cost of oil drove petrol prices to almost £5 per gallon Shell’s profits were up 12% to a record £3.9bn, while BP’s profits were up 48% to £3.3bn – both well above market expectations. They’re now planning to ramp up their dividends to shareholders (by 11% and 31% respectively).
It’s certainly been a good time to be in the oil business. The price of oil broke through the $100-a-barrel mark in January and has kept on climbing – it nearly hit $120 yesterday due to supply concerns following the Grangemouth strike and unrest in Nigeria (OPEC boss Chakib Khelil now thinks it might eventually top $200). And for beleaguered drivers across the country, that means that every time we get to the pumps, the price seems to have ticked up a little further.
All of which is handy if your name’s Tony Hayward. The new BP CEO has been busy overhauling the organisation since taking over from Lord Browne last year, cutting costs and stripping out management layers – so he’ll probably be grateful that margins are shooting up without any input from him (the profitability of BP’s North Sea operations has rocketed by a quarter, for example). Of course he’s been playing down the impact of his reforms today, suggesting that they’re unlikely to bear fruit until the end of this year. But one thing’s for sure: the oil price is making his overhaul a lot easier than it could have been….
It’s fair to say that a four-year-old could probably make money running an oil company at the moment. But there were some encouraging signs from two of our biggest corporate behemoths (albeit we have to share Shell with the Dutch). Hayward is starting to see margins improve at BP’s US refineries, while Shell is seeing an increase in new production – it’s now churning out the equivalent of 3.52m barrels a day, up from 3.51m last year.
Naturally, there’s bound to be outrage about the oil companies posting massive profits when we’re paying record prices. But at least BP and Shell shareholders are raking it in, right?
Source: www.managementtoday.co.uk
April 24, 2008>> New legislation for major oil firms in Nigeria
Nigeria is planning legislation to oblige international oil companies to refine a proportion of their crude in the, a Nigerian state oil official said on Wednesday. “Everybody producing in the country will be mandated to refine a percentage in Nigeria,” said Sola Alabi, Group General Manager for refinery projects at the Nigerian National Petroleum Corp. (NNPC). Alabi said the legislation had been under discussion for two years and was due for approval soon. Nigeria is proposing the move as a way to reduce its dependence on imported fuel.
The country’s four state-owned refineries have frequent production problems and proposals to award investors oil blocks if they build refineries have failed to lead to the construction of new plants. Speaking at a refinery conference in Barcelona, Alabi said there would be no direct requirement for oil majors to take a stake in the new refineries as a condition for upstream activity.
NNPC hopes to build two new refineries, each with a capacity of 200,000-300,000 barrels per day (bpd) to narrow a gap between output and demand for products, which is expected to widen with projected annual economic growth of 5-10 percent a year through 2020. The corporation plans to take a stake of 30-49 percent in each refinery, and hopes oil majors will take 21-30 percent. One of the fiscal incentives to be offered will be pricing crude at international market levels, Alabi said. Alabi said Nigeria can only produce 445,000 bpd of crude equivalent in products while demand is currently 600,000. In Nigeria, the world’s eight-biggest crude oil exporter.
April 23 08>> Downturn in market capitalization at the stock market
Market capitalization on the floor of the Nigerian Stock Exchange (NSE) dropped Tuesday to 11.810 trillion naira from the previous day’s figure of 11.854 trillion naira. Similarly, the All-Share Index dropped from 61,478.46 recorded Monday to 61,249 85 points at the close of transactions Tuesday. In all, investors staked 12.5 billion naira on 634.6 million shares in 18,164 deals. On Monday they placed a total of 7.23 billion naira on 398.1 million shares in 12,730 deals. The banking subsector came first on the activity chart, measured in turnover volume, with 287.1 million shares worth 8.26 billion naira traded in 8,377 deals. PlatinumHabib Bank Plc, Access Bank Plc and Intercontinental Bank Plc shares boosted the activity in the subsector.
Insurance subsector which led the activity chart Monday came second with 189.0 million shares valued at 895.25 million naira traded in 3,581 deals. The shares of Universal Insurance Company Plc, N.E.M. Insurance Co. (NIG) Plc and Goldlink Insurance Plc boosted the activity in the subsector. Food/Beverages and Tobacco subsector followed on the activity chart with a turno ver of 45.7 million shares worth 812.14 million naira in 996 deals. Big Treat Plc, Dangote Sugar Refinery Plc and Dangote Flour Mills Plc were most traded stocks which boosted the activity of the subsector. PlatinumHabib Bank Plc led the gainers’ table with N1.46 to close at N30.68, Bet a Glass Nig Plc followed with a gain of N1.25 closing at N26.25 and LongMan Publ i shing Co. Plc with N1.19 to close at N25.18. On the losers’ side, Mobil Nig Plc lost N9.99 to close at N270.00, Nestle Nig Plc followed with a loss of N7.24 closing at N230.00 and Oando Plc closed at N228.00 losing N2.91 in the process.
April 21 08 >> Abu Dhabi Customs records 37 per cent growth in non-oil external trade
Abu Dhabi Department of Finance (DoF) Customs Administration has recorded an increase in non-oil sector external trade by 37.5 per cent in 2007 compared to 2006. The export, re-export and import volume grew to AED 74. 763 billion in 2007 from Dh54. 366 billion in 2006. “The growth in external trade reflects the developmental dynamic of Abu Dhabi,” said Saeed Al Muhairi, vice director of the Abu Dhabi Customs Administration He added that the accurate figures presented with clarity will be a valuable source of reference for governmental institutions, private establishments, economic research centres and individuals, who are interested in external trade figures of Abu Dhabi. Al Muhairi noted that the initiative to compile the CD featuring all statistics pertaining to external trade is in line with the UAE leadership’s instructions to employ the latest technologies and create a robust economic database, adding that the CD had been prepared through using the latest IT systems and standards, and would greatly assist researchers by offering customised search and documentation. –
Source: Emirates News Agency, WAM
April 08 >> China, India to build Nigeria oil refineries
China and India have agreed to build oil refineries in Nigeria rather than buying crude from it for export, a Nigerian official said on Tuesday 15th April.
“What we have agreed with the Chinese is that we will now have a greenfield refinery located in the Niger delta,” head of Nigeria’s Department of Petroleum Resources, Tony Chukwuemeke, said in the federal capital Abuja according to reports by AFP.
Three prominent Chinese companies operating in Nigeria — CNPC, Sinopec and CNOOC — “have together committed themselves to make available a refinery” in the southern delta region, Chukwuemeke said.
“I cannot tell you its capacity but it’s in the neighbourhood of 450,000 barrels per day,” he said. “We are just beginning a discussion.”
Chukwuemeke said Nigeria has a similar cooperation agreement with India to establish another export-oriented refinery.
Indian oil and gas group ONGC, teamed with steel giant Mittal, “have some oil blocks from Nigeria in the deep offshore and for that they have committed to build a refinery in Nigeria,” Chukwuemeka said.
“Why will the Indians, renowned for having the best refinery in the world, not be happy to replicate the same thing here rather than asking us to give them crude oil to take to India to refine there?” Chukwuemeka said.
Nigeria currently has four refineries which recently resumed operations after a year of closure, but are still inadequate to meet the demands of the domestic market.
The Nigerian government licensed 18 new investors two years ago to build more refineries but virtually all of them have been reluctant to commit their resources to the projects for fear of running at a loss.
Nigeria, with a population of about 140 million, ranks as Africa’s largest oil producer but depends on imports for her domestic fuel consumption.
AFP
>>>> 19/3/08 Switzerland Iran deal condemed by Israel
Israel on Wednesday slammed Switzerland for signing a deal with Iran’s state gas firm, branding the move an “unfriendly act” hampering efforts to halt its arch foe’s nuclear programme.
The foreign ministry summoned the new Swiss ambassador, Walter Haffner, on the same day he presented his credentials, to express the Jewish state’s “regret” over the deal, it said in a statement according to AFP
“Switzerland and the international community are aware of the danger from Iran. Israel expects Switzerland to adhere to the international efforts on this issue,” the ministry said.
“While the international community works to make Iran abandon its nuclear programme, Israel believes this is not the right moment for economic deals with Iran.”
Swiss Foreign Minister Micheline Calmy-Rey signed the agreement with her Iranian counterpart Manouchehr Mottaki in Tehran on Monday.
Financial details were not disclosed but the contract between Iran’s state gas firm and Switzerland’s Elektrizitaets-Gesellschaft Laufenburg reportedly envisages Iran supplying 5.5 billion cubic metres (194 trillion cubic feet) of gas annually from 2011.
>>> RUSSIA: A gas cartel similar to the Organisation of Petroleum Exporting Countries (OPEC) could form as soon as June, Russian daily newspaper Kommersant reported.
A meeting of the Gas Exporting Countries Forum will take place in Moscow that month and could pave the way for the organisation to become a cartel, with a charter akin to that of OPEC. Among its members would be Algeria, Bolivia, Brunei, Egypt, Equatorial Guinea, Indonesia, Iran, Libya, Malaysia, Nigeria, Oman, Qatar, Russia, Trinidad and Tobago, the United Arab Emirates and Venezuela, if all current forum members sign up. Norway has been a keen observer of the gas forum in the past, while Turkmenistan has taken part in some meetings of the group, which was first formed in 2001.
At present the forum does nothing more than act as a go between for producers, consumers, governments and others energy sector bodies. If the Iran-spearheaded change goes ahead, then it would grasp control of supply and pricing. Both the European Union and the United States will strongly oppose such a cartel, with the possibility that political repercussions could be threatened.
The exact date of the June meeting has not been set, but members agreed to the month when they met in Cairo earlier this week.
source: www.energycurrent.com
Nigeria Briefs:
Federal government warns on oil contracts
Nigeria has warned energy companies it wants to complete its planned renegotiation of contracts covering offshore oilfields in the next three months, saying record prices mean western groups are having “a ball”. It is the first time Nigeria has come up with a timeframe for renegotiating the complex agreements, which the government signalled it would review late last year in an effort to secure a greater share of profits from offshore production. The urgency will put the oil majors under greater pressure. The Nigerian move reinforces a global trend of oil-exporting countries demanding better terms to reflect surging prices. Oil executives say the government’s decision to follow the example of countries such as Russia, Algeria and Venezuela could deter investment in Nigeria, where militant violence has shut in a fifth of output since 2006.
But Emmanuel Egbogah, special adviser on oil to President Umaru Yar’Adua, said it was only fair that the government wanted to renegotiate contracts signed when prices were a fifth of the record levels of $100 a barrel touched last month. “We don’t intend to sit around, we’re settling to business, and therefore we’re going to deliver on this as quickly as possible,” Mr Egbogah said. “It is really a ball for the oil companies … There’s a lot of room for everyone to share, and the Nigerian government is not the exception.” The review forms part of wide-ranging reforms for the energy sector in Nigeria, Africa’s biggest crude exporter, launched by Mr Yar’Adua after he came to power last May. Nigerian officials say they are hoping to hold preliminary discussions with oil companies in the next few weeks to begin renegotiating deals known as production sharing contracts signed in 1993 and 2000.
The PSCs cover giant offshore fields being developed by companies such as Royal Dutch Shell, Chevron, ExxonMobil and Total. “There’s a wide margin of areas that we could look for adjustment,” Mr Egbogah said. “With the price of oil as it is today, I think everyone will end up a winner.” Mr Egbogah said he aimed to conclude renegotiations within three months, though some analysts say the complex process may take longer. “We’re going to negotiate in a very friendly mood, only for the best interests of one another,” he said. Shell said it was aware of the planned review but did not want to comment ahead of discussions. ExxonMobil and Total both said they had not yet been invited for talks. Chevron declined to comment. Industry insiders say companies accept that they will have to cede a degree of the profits from offshore fields, which operate under more favourable terms than the joint-venture arrangements covering production in the Niger Delta. But they will be reluctant to make big concessions given the high costs of operating in Nigeria. Nigerian officials revealed last month that Gazprom, the Russian state-owned energy giant, had offered to build a gas gathering system to generate electricity. Mr Egbogah said Gazprom was considering a project worth a “significant num-ber” of billions of dollars.
>>Armed police threatens Statoil officials in Lagos
Norway’s biggest oil company felt it was forced to pay a disputed tax claim on its Nigerian operations last week, after local officials trooped into StatoilHydro’s offices in Lagos escorted by armed police. “It was a special situation,” StatoilHydro spokeswoman Kjersti T Morstøl told newspaper Dagens Næringsliv on Monday. The armed police action climaxed a lengthy tax dispute between the Norwegian company and officials in Nigeria, a country known for corruption, internal strife and huge discrepancies between the poor and the affluent. StatoilHydro officials in Lagos felt they had no choice but to write checks totalling around USD 800,000, after being confronted by as many as 20 Nigerians inside the company’s office and residential complex.
Morstøl said the tax dispute concerns assessments on company real estate and employees in Lagos for the years 2003-2005. StatoilHydro has objected to the amount the Nigerians claim is due, but decided to pay the Nigerians’ demands when they found themselves staring down the barrels of guns. Dagens Næringsliv reported that the incident last week has raised concerns within the international oil community in Lagos. Statoil has conducted operations in Nigeria for 15 years but this year is expected to be the first year that the Norwegian firm will generate any revenues there. Statoil, which took over Norsk Hydro’s oil and gas operations late last year, is involved in the large Agbami Field, which will finally go into production. Morstøl said the tax dispute and armed confrontation last week won’t affect StatoilHydro’s engagement in Nigeria, and said the company hadn’t sought help or support from the Norwegian Foreign Ministry..
>>Pipeline fire, tanker blast in Rivers State
A major oil pipeline belonging to Italian oil company Agip caught fire and a tanker truck exploded in separate incidents Monday in Rivers State, military and industry sources said. The oil pipeline at Omoku in Rivers state had been ruptured before it caught fire early Monday, the sources said. It was not immediately clear if anyone was hurt in the incident. Firefighters from Agip had put out the blaze. Meanwhile a fuel tanker exploded Monday morning near Port Harcourt’s main oil refinery, military spokesman Major Musa Sagir told reporters. The cause of the blast was unknown.
The two incidents came barely one week after the most prominent militant group in the restive Niger Delta claimed responsibility for a series of attacks. Last week, the Movement for the Emancipation of the Niger Delta (MEND) said it planted an explosive device that set a tanker ship on fire in Port Harcourt. It also claimed responsibility for an attack on a senior port official in the oil city and vowed further operations against the oil industry and related sectors. MEND shot to prominence early last year with a string of kidnappings of foreign oil workers as well as attacks on oil company property. The group says that, contrary to criminal gangs operating in the Niger Delta, it is working to improve the lot of the ordinary people of the region.
>>Shell writes parliament on Niger Delta
Energy group Shell said Monday it has complained in a letter to the Nigerian parliament that the activities of oil thieves and vandals are hampering its operations in the country. “The letter in question was to inform the Federal Legislature on the challenges posed to our operations by illegal bunkering and crude oil theft,” company spokeswoman Caroline Wittgen said. “We remain concerned about the effects of these illegal activities on the Nigerian economy and appeal for concerted efforts to stop them,” she said. Wittgen did not go into detail on the contents of the letter, written by Shell’s managing director in Nigeria Basil Omiyi, which said Shell has lost millions of barrels of crude to thieves and vandals since 2003. “Our records show that on the average, we lose to illegal bunkering activities some 60,000 barrels per day of oil in 2003, rising to about 80,000 per day in 2004, falling to 40,000 per day in 2005 and 20,000 in 2006,” the Guardian newspaper quoted the letter as saying.
Another Shell official said the letter was never supposed to have been made public. Still according to the Guardian, the letter said virtually all Shell’s oil pipelines in the Niger Delta had been vandalised by oil thieves, causing spills in the environment. “More importantly, these incidents, which are ongoing, at an alarming rate, are happening at a time when the fragile security situation in the Niger Delta is not allowing us guaranteed access to respond to, contain and clean up the resultant spills and pollution,” the firm said. It regretted that the efforts of the federal and state governments to help it to check the menace had not yielded the desired results. Last week, Shell declared force majeure on exports from its main Forcados export terminal in southern Nigeria because of a major damage to its supply pipelines. Force majeure allows companies to suspend contractual obligations such as deliveries of oil and gas following unforseen events without incurring penalties.
Nigeria’s position as the eighth largest producer of crude oil and possessor of the world’s fifth largest reserves of natural gas is almost entirely dependent on resources existing in the Niger Delta where the mere whisper of unrest sends world oil prices spiralling upwards. The Delta is where the core of the Nigerian economy rests, but on a foundation of volatile uncertainty. In this report, Lindsay Barrett looks at what the future holds for the Delta and global oil prices as aggrieved militants in the region threaten Nigeria’s oil production.
Niger Delta
The Niger Delta is a vast system of wetlands and forests, and low lying alluvial islands and barrier reefs that sprawl across Nigeria’s southernmost reaches. It serves as the discharge basin for the mighty Niger River into the Atlantic Ocean. That, at least, is the geographic definition. Today, however, the Niger Delta is more widely referred to as a political entity because of its central role in sustaining the economy of Nigeria and its relationship with the rest of the world via oil (or to be precise oil production). This is the territory where the mere whisper of unrest sends global oil prices spiralling upwards. It is where the core of the Nigerian economy rests on a foundation of volatile uncertainty.
Oil and gas are the basic ingredients of this economic volatility. Nigeria’s position as the eighth largest producer of crude oil and possessor of the world’s fifth largest reserves of natural gas is almost entirely dependent on resources existing in the Niger Delta or in deposits off the Delta’s coastline. Nine states make up the Niger Delta. They are Abia, Akwa-Ibom, Bayelsa, Cross River, Delta, Edo, Imo, Ondo and Rivers. However, the core Niger Delta is made up of Delta, Bayelsa and Rivers states, with its eastern and western outreaches in Akwa Ibom, Cross River and Ondo states. The whole territory is now served by the newly constituted Niger Delta Development Commission (NDDC). source: http://www.africasia.co.uk/newafrican/na.php?ID=1568
Interesting >>>Aberdeen is now home to more multi-millionaires than any UK city outside London according to new research as reported by Management Today magazine (www.managementtoday.co.uk).
If someone asked you to name Britain’s second city, what would you go for? Birmingham? Edinburgh? Manchester? Glasgow? It’s unlikely that Aberdeen would get many votes – but according to online news service Wealth-Bulletin, the third biggest city in Scotland is now the second wealthiest city in the UK.
A whopping 0.021 percent of the Granite City’s 200,000 inhabitants have more than £20m in the bank, which is more than twice as many as in Cheshire and North Yorkshire, for example. The richest 50 families have amassed a total fortune of £3.4bn, and this isn’t family money we’re talking about here – about 90% of these multi-millionaires are self-made (the highest proportion in the UK).
As you’d expect, about 80% of this wealth comes from Aberdeen’s most important industry: black gold. Of course, this begs the question: what happens when the oil runs out, as it soon will? Will the city sink into obscurity? But for now, with the oil price soaring, these rich Aberdonians are getting richer. ‘As a barrel of oil has now reached $100 and is likely to move further upwards, the wealth of many of these individuals is set to rise throughout 2008,’ says Wealth-Bulletin.
Top of the list is Sir Ian Wood, head of the John Wood Group and the biggest fish in North Sea oil (so to speak). His company has doubled in value since flotation, and Sir Ian’s stake – plus his fishing business – apparently gives him a net worth of £679m. Abbot Group chairman Alasdair Locke and shipping family the Craig Group also feature in the top five. Though not all of the biggest hitters are oilmen: Stewart Milne, head of the construction group of the same name,
is in second place with a £400m fortune, while Grampian Foods boss Fred Duncan lies third with £280m in the bank.
So what do you do with a nine figure bank balance in Aberdeen? According to the council, you’re spoilt for choice – apparently the city is blessed with ‘bustling shopping malls, a wide variety of entertainment and leisure amenities, and a vibrant arts scene.’ You could even buy the local football club, as Stewart Milne did with Aberdeen FC. And of course if your idea of fun is playing golf while being sand-blasted by a howling sea breeze, you’re in for a treat.
True, Aberdeen isn’t quite the international metropolis that London is (although it’s so far north that most people down South probably remain ignorant of its charms). But as a breeding ground for the super-rich, it’s clearly second to none - for now…
>> ConocoPhillips (COP) and Marathon Oil Corp. (MRO) have agreed to drill for natural gas in exchange for the state of Alaska’s support of the companies’ application to keep exporting Cook Inlet natural gas to Japan or other countries, The Anchorage Daily News reported on its Web site Friday.
www.oilandgaspress.com - The ‘one stop shop’ for global Oil and gas press releases!!!
>>> Shell Nigeria West Production level Drops
THE west base operations of the Anglo Dutch Shell Petroleum Development Company (SPDC) which covers Delta State has suffered a drop of about 80,000 barrels per day in its maximum output, just as the company announces cost cutting measures to enable it remain afloat as the Niger Delta crisis takes toll on its operations.
An official of the organisation who spoke under condition of anonymity hinted that the company is experiencing a lull in its activities in Delta and Rivers states, where several of its installations had been vandalised and out of use.
From its one million barrel per day production capacity, Shell is said to be producing only half of the total output.
Vanguard gathered that Shell has closed virtually all its wells in the Niger Delta and now focuses on its offshore blocks to sustain its operations.
The offshore section reportedly accounts for 70 per cent of its output and revenue profile.
A senior official, who confirmed the restructuring exercise, said Shell introduced austere measures due to its poor finances, especially on the joint venture operations.
“We are operating a lean budget and at the same time repositioning for efficiency in future,” he said.
According to him, Shell is more interested in things that will deliver value for money. So, there is a wage freeze on some items, no hampers, no gifts, no end-of-year party,” he declared.
Giving details of the development, a source close to the company, said the crisis has made it difficult for Shell to meet some of its financial obligations.
He admitted that due to the shortfall in funds, the firm has told the employees not to expect the 2007 end-of -year party, which hitherto was a yearly event, The company recently merged some services among its subsidiaries in Nigeria as well as the organisational structure to reflect the cost-reduction drive.
Besides, the source said that some of the company’s contract workers, such as cleaners and drivers at its Warri, Delta State office recently embarked on a strike to protest what they called the late payment of certain welfare packages.
He said that the multinational noted for its undergraduate and graduate training programmes in oil and gas-related fields has been having problems paying the allowances of the beneficiaries at its Warri training school.
The students, according to him, no longer get their stipends as at when due as the money comes two weeks into the new month.
“Most of the wells and flow stations the company has in Delta State, which falls under Shell West have been lying fallow due to the crisis in the Niger Delta, which translates into losing about 500,000 barrels of oil daily.”
“This is about 50 per cent of the one million barrels Shell is expected to produce daily, but Shell
West is just struggling to produce between 75,000 to 80,000 barrels per day.
The situation is not different in the Eastern operations, which falls under Port Harcourt as the issue of militancy is equally affecting its operations there.
The only place Shell is working at full capacity now is offshore that is, products from the FPSO “Bonga,” which is now responsible for 70 per cent of Shell’s output.
Production from this alone can’t cover the cost of running the company thereby making meeting some financial obligations difficult for it.
“In fact, due to this financial stress, the Managing Director said Shell would not be able to organise this year’s end of year party for the workers,” the source said.
He further explained that the issue of vandalism was also part of the constraints the company is facing as it had been spending so much to repair damaged lines since the crisis in the region escalated.
Besides, the source said the estimated cost of its re-entry programme into most of its abandoned sites was eating deep into the company’s finances.
He was however optimistic that Shell would be back on its feet by the second quarter of next year.
“Shell is presently trying to correct some anomalies in its operations vis-à-vis its relationships with host communities and it is expected that things would get better after all these corrections are made.
For instance, Shell has signed a cease-fire accord with some of the militant groups and also embarked on community relations drive to ensure that it helps train people from such areas.
“If things work out as planned, Shell should be able to find its feet in the country by second quarter of next year,” he stressed.
Vanguard (Lagos)
Posted to the web 1 January 2008
Yemie Adeoye
Lagos
http://allafrica.com/stories/200801010030.html
>>Crude oil
prices above $96
Oil rose above $96 today, bolstered by expectations U.S. government data would show crude stocks falling for the seventh consecutive week, and as fresh violence in major oil exporter Nigeria revived supply concerns. U.S. light crude for February delivery rose 47 cents to $96.45 a barrel by 0222 GMT, while London Brent crude rose 49 cents to $94.34 a barrel. Oil prices rose nearly 58 percent last year, the biggest annual gain this decade, rallying strongly in the fourth quarter to touch a record high $99.29 a barrel on Nov. 21 as the U.S. dollar fell and swollen U.S. oil stockpiles thinned. “After last week’s report, the market will be quite sensitive to another decline in crude stocks, so another draw this week will definitely put some upward pressure on prices,” said David Moore, a resource analyst at the Commonwealth Bank of Australia.
>>>Hardy Begins Indian Exploration Well,
Boasts Top Test Results in Nigeria
Hardy Oil and Gas, the oil and gas exploration and production company with assets in India and Nigeria is pleased to announce the spudding of its first exploration well KGV-D3-A1 on the KG-DWN-2003/1 (D3) exploration license on the East coast Krishna-Godavari deepwater basin in India, and the successful well test on the Company’s Oza field in Nigeria. The exploratory well KGV-D3-A1 was spudded at a water depth of 720 meters with the semi-submersible drilling rig “C Kirk Rhein” on Drilling Technology for the Man on the Rig Dec.28 2007. The well is targeted to drill to 2,959m MDRT to explore hydrocarbon prospectivity within the Pleistocene and Miocene formations. The Pleistocene target is a deepwater fan complex and the Miocene target is an unconformity trap.
Hardy, through its wholly owned subsidiary Hardy Exploration & Production (India) Inc., holds a 10% participating interest (PI) in the D3 exploration license. Reliance Industries Limited is the operator and holds a 90% PI in the block. The D3 exploration license is in phase one which provides for the drilling of six exploration wells. Hardy is also pleased to announce the completion of a successful well test on its Oza field in Nigeria. The well test comprised the running of multi rate tests, a gradient survey, and collecting PVT samples. The flow rates averaged 606bbls/d with an average GOR of 5,466scf/stb. The Oza joint venture will utilize the results of the well test for the planning of future field development activities. The test was carried out by Millenium Oil and Gas Company Limited, operator of the Oza field. Hardy, through its wholly owned subsidiary Hardy Oil Nigeria Limited, holds a 40% working interest in the Oza field and is the designated technical partner. The Oza field is located in OML 11 onshore block, about 35km northeast of the city of Port Harcourt in Abia State, Nigeria.
>>>Basil Omiyi takes up
position as Shell chairman
Shell has announced management changes in its Nigerian operations. Reports said the changes affected virtually all of its units in Nigeria. Ann Pickard, the executive vice-president, exploration and production now heads Shell in Nigeria, but will continue her role as the executive vice-president, Shell exploration and production in Africa. Basil Omiyi, managing director and country chairman of Shell in Nigeria, is now the full-time country chairman with effect from yesterday January 1.
”The appointment of a full-time chairman for Shell reflects the importance of Shell Nigeria to the Shell Group, and the growing importance of our interfaces with the executive, legislative and judicial arms of government,” Shell said. Production director Mutiu Sunmonu is the new managing director for Shell Petroleum Development Co. and vice-president, production, across Africa. Chima Ibeneche, managing director of Shell Nigeria Exploration and Production Company of Nigeria Ltd. Is managing director, Nigeria LNG (NLNG) Ltd. Shell has shut some oil fields in the Niger Delta following violent attacks in the region recently. Reports say this had forced the company to reorganize its Nigerian activities.
>>>>Royal Dutch Shell PLC (RDSB.LN) in 2008 is due to finalize elements of a multi-pronged reorganization, paralleling a similar move by its rival BP PLC (BP), as the side effects of sky high oil prices challenge oil majors’ profits instead of boosting them.
The changes include outsourcing 3,000 computing staff, cuts to finance positions, reshaping expatriates’ packages and a restructuring in its Nigeria ventures, according to announcements and company insiders.
>>>Jan. 2 (Bloomberg) — Royal Dutch Shell Plc intends to cut costs by reducing finance jobs, changing some expatriate packages and reorganizing its Nigerian ventures, the Wall Street Journal reported.
There’s also a plan to transfer 3,000 information technology jobs to outsourcing companies, the newspaper said, citing a Shell newsletter obtained by Royaldutchshellplc.com, a Web site critical of the company. An unidentified spokesman said the London-based oil company may contract out IT systems to three suppliers, the Journal reported.
The spokesman said staff may be cut in finance and human resources, though that won’t be done “in a top-down, prescriptive way,’’ the newspaper reported.
Changes in Nigeria will become effective in April, the Journal added.
To contact the reporter on this story: David Altaner in London at daltaner@bloomberg.net
http://www.bloomberg.com/apps/news?pid=20601102&sid=aLL9hI6OvCiU&refer=uk
>>>Gambia set for oil drilling
The Gambia’s dreams of drilling oil could be realised in two years time, the Chairman of Buried Hill Energy, confirmed. Roger Haines said his company would start drilling the country’s oil in early 2009. Haines disclosed the news while he was briefing Gambian President, Yahya Jammeh, on Buried Hill Energy’s latest work on the oil exploration of The Gambia. He said drilling would start as soon as his company completes identifying the best sites for establishing drilling rigs. Chairman Haines Buried Hill Energy had identified five distrinct plates with 26 prospects of oil production, which clearly proved that The Gambia has more oil potentials than expected. Haines told President Jammeh that the his company’s idepth technical work results would easily convince the world about the tiny country’s oil production potentials. President Yahya Jammeh opened a stormy debated in 2003 when he had announced the discovery of oil in many parts of the country. While his supporters hailed the disclosure, opposition downplayed the issue, describing it as a political tactic.
>>>Hindustan Petroleum
Billionaire Indian businessman Lakshmi Mittal plans to set up refineries in two African countries jointly with India’s Hindustan Petroleum Corp, the Press Trust of India reported, citing officials it didn’t identify. Mittal intends to start a 10 million ton refinery in Nigeria with Nigerian National Petroleum Corp. and expand the capacity of a 1 million ton refinery in Point Noire in the Republic of Congo, the report said yesterday. Congo’s national oil company has also invited Mittal to acquire a stake in an offshore oil block, the newspaper said.
>>>Ghana Oil Reserves at 3 Billion Barrels
Ghana’s president said Saturday that offshore oil reserves discovered in the West African country’s waters total 3 billion barrels. “Ghana has struck oil in commercial quantities,” President John Kufuor said, speaking at a ruling party congress in the capital, Accra. “This is only the beginning. The future is very bright indeed.” British-based oil explorer Tullow Oil PLC announced over the summer that it had had success with a well off the coast of Ghana. It gave no details at the time, saying only that it had discovered “a significant light oil accumulation” and was appraising it. Tullow operates the Deepwater Tano license that covers the new stake, holding a 50 percent stake. Its partners are Kosmos Energy and a subsidiary of Anadarko Petroleum Corp., Sabre Oil & Gas and the Ghana National Petroleum Corp. Tullow also holds a 23 percent stake in the West Cape Three Points license, off Ghana. Kufuor gave no other details. Energy Minister Kofi Adda also declined to comment on the announcement, but told the media that the find was part of the ongoing explorations involving Tullow in western Ghana.
>>>>Royal Dutch Shell: Voting Rights and Capital
Royal Dutch Shell Friday, December 28, 2007
In conformity with the Disclosure and Transparency Rules, we hereby notify the market of the following:
Royal Dutch Shell plc’s capital consists of 3,583,505,000 A shares and 2,759,360,000 B shares, each with voting rights. Royal Dutch Shell plc holds no ordinary shares in Treasury.
The above figures may be used by shareholders as the denominators for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, Royal Dutch Shell plc under the FSA’s Disclosure and Transparency Rules.
>> Qatar has won its bid to host the 20th World Petroleum Congress to be held in 2011, widely recognized as the “Olympics” of the oil and gas industry. Turkey and the United Kingdom were the two other contenders to host the event.
>>>>>China Marches On.
China National Petroleum, signed an agreement to expand cooperation with Royal Dutch Shell.
The companies will “deepen” the work they do in oil and gas, China National, the parent of PetroChina, said in a statement on its Web site on Thursday.
The pact with the biggest oil company in Europe follows alliances China National has forged this year with Chevron and StatoilHydro as it seeks to unlock less accessible reserves. PetroChina and Shell started joint gas output from the Changbei field in northern China in March.
The pact signals that “strategic cooperation has entered a new phase of development” between Shell and China National, Jiang Jiemin, the president of the Chinese company, said in the statement. Jiang and Shell’s chief executive officer, Jeroen van der Veer, signed the “framework cooperation agreement” in Beijing on Wednesday.
China National also signed a 30-year accord with Chevron, the second- largest U.S. oil company, in Beijing earlier to jointly produce gas from the Chuandongbei field in southwestern China. Chevron, the operator of the project, will have a 49 percent stake, the U.S. company said.
China National and StatoilHydro, the biggest oil producer in Norway, signed an agreement on “strategic cooperation” in March.
StatoilHydro is looking at opportunities, including both onshore and offshore exploration and production, research and development and possible investments in the natural gas market in China, Ole- Johan Lydersen, the vice president of StatoilHydro’s exploration and production strategy unit, said March 22.
PetroChina, the largest oil company in the world by market value, agreed Sept. 4 to buy one million tons a year of liquefied natural gas for 20 years from Shell’s Gorgon project in Australia.
>>>>> Nigeria to Renegotiate Oil Contracts
Nigeria is beginning the deepest overhaul of its petroleum industry in decades, a move expected to make it tougher for big operators such as Royal Dutch Shell PLC to profit from tapping Africa’s biggest oil-producing country.
Since coming to power in May, Nigerian President Umaru Yar’Adua has proposed changes such as creating a national oil company that he expects will
help the state manage its oil and natural-gas resources better and pare the historical dominance of foreign oil companies in the country. Nigeria pumps about 2.1 million barrels a day, or about 2.5% of the world’s daily oil needs.
The planned changes are also about “rebalancing the relationship” between the state and foreign energy companies, according to Nigerian oil minister Odein Ajumogobia. That is code for handing over more oil profits, analysts say.
The government is in the early stages of renegotiating billions of dollars worth of offshore exploration deals signed in the 1990s with companies such as Chevron Corp., Exxon Mobil Corp., Shell and Total SA. The contracts, up for renewal, were signed when oil traded at about $20 a barrel. Crude-oil futures in New York finished yesterday at $94.39 a barrel.
>>>> Nigerian 100,000 B/D Refinery
Building To Start next year
Construction of a new 180 billion naira (1.55 billion) oil refinery is to begin in the first quarter of 2008 at the Onne Oil and Gas Free Zone in the oil city of Port Harcourt in southern Nigeria, a local newspaper reports Friday. Reports said the Starex Petroleum Nigeria Ltd. refinery will process 100, 000 barrels of crude a day and employ 25,000 workers when it reaches full production.
Dandyson Chujor, chief executive of Starex, said the government through Nigerian National Petroleum Corp., which gave the company sovereign guarantee for crude oil, has 15% equity stake in the project. Indigenous stakeholders own 25%, while unnamed “core investors” retain 60%.Chujor said the company would have mobilized its engineers to the site long ago, but for the activities of militants across the Niger Delta region, which scared away its initial foreign investors.
>>>>>> Helix Oil International, Greece, in conjunction with Visor Capital and the Barrington Group of the United States, is planning to spend $6 billion on the construction of a 300,000 barrels per day refinery in Nigeria. Managing Director of Helix Oil International Nigeria Ltd, Mr. Ronald Enang, said the company had already commenced the process of getting approval for the establishment of the refinery from the Department of Petroleum Resources (DPR). Nigeria currently has four refineries with a total refining capacity of 445,000 barrels per day.
