Gazprom Neft service
to construction customer
Moscow, June 16, 2006
OJSC Gazprom Neft has acquired a 100 percent equity stake in LLC
Zarubezhneftegazstroy to become a platform for setting up a service of
the united construction customer, which will allow the company to focus
all the activities of the construction customer within a sole juridical
person's competence.
In view of setting up a department of capital construction within
Gazprom Neft's structure the company administration has issued the
challenge of founding a service of the united construction customer in
the shortest time possible. The service activities are to start on July
1, 2006.
Zarubezhneftegazstroy branch offices are to be settled in Noyabrsk,
Khanty-Mansiysk, Omsk and Tomsk. The staff for Zarubezhneftegazstroy
and its branch offices will be integrated by way of a partial transfer
of the employees of capital construction services from Gazprom Neft
subsidiaries.
LLC Zarubezhgazpromneft is an engineering company holding all necessary
licenses for arranging of project construction with activities
satisfying international quality and safety standards.
|
Iran Says Exploration
Block 6 Caspian Sea Priority
6/15/2006
Executive director of Khazar Exploration and Production Company
Mohammad Hossein Dana said that exploration of Block 6 in the Iranian
waters of the Caspian Sea was a priority. "The timely delivery of
the Alborz rig and the supporting vessels may accelerate the project,"
he said, commenting that completion of the plan would be a stepping
stone to solve the problems of Caspian Sea's legal regime.
SADRA Company was expected to deliver the platform to North Drilling
Company last February, but delivery has been delayed. A member of
SADRA's board of directors stated that Alborz is still undergoing final
outfitting in Caspian Sea and the two tugboats needed for the operation
are still under construction. "Nevertheless, the delivery is
anticipated to take place in summer," the board member responded.
|
Russian State Oil
Giant Rosneft Huge Regional Shadow
by Nick Allen, dpa Deutsche Presse-Agentur (dpa) 6/15/2006
With the looming emission of billions of shares in Russia's Rosneft
state oil company, a new energy giant is emerging from the Siberian
swamps to bolster the Kremlin.
Rosneft's fortunes should theoretically also dovetail with growing
national clout in energy supply - a possible replay of the Gazprom
story, where the stock market value of the state-controlled gas
monopoly soared as exports to Europe swelled, making it a frontline
player in Russian foreign policy.
Tellingly, Rosneft's initial public offering first planned for mid-July
would have directly preceded the summit of leaders from the Group of
Eight (G8) industrial nations scheduled for July 15 to 17 in St
Petersburg.
President Vladimir Putin will likely use the summit to convey demands
for greater concessions - such as direct access to customers in Europe
- in return for guaranteed supplies of Russian oil and gas to the EU.
He is also expected to stand up to calls to liberalize the Russian
energy market.
Due to organizational hitches, however, the Rosneft listing may now be
delayed for several weeks, industry sources said.
Nonetheless, Rosneft is growing "faster than any other Russian company
at the moment," says Vice-President Peter O'Brien, an American IPO
expert who was recently hired as the company moved to internationalize
its face. With his help, the listing is expected to raise at least 8
billion US dollars.
The fly in the ointment is the way Rosneft managed to move from being
merely the seventh-ranked Russian oil producer to the second largest in
just two years. Today it is hard on the heels of private company Lukoil
for the number one spot.
In Rosneft's northern Russian heartland, officials are loath to discuss
the 2004 dismemberment of the Yukos oil company of jailed billionaire
Mikhail Khodorkovsky and the acquisition by the state of its prize
assets.
"It was an economic war, one side won, the other lost, that's all there
is to it," said an oil worker who did not wish to be named.
"Two years ago we were all talking about this, now it's just boring,"
added another.
Rosneft's staff includes many specialists who worked for Khodorkovsky.
The fallen oligarch is now serving an 8-year jail sentence in Siberia
for tax fraud after a trial that many view as having been engineered by
the Kremlin to crush an ambitious rival.
Some 70 per cent of Rosneft's output now comes from Yukos' former main
subsidiary Yuganskneftegaz, which was sold off in December 2004 at
compulsory auction for 9.3 billion dollars to cover back taxes.
Even Putin's chief economic adviser at the time, Andrei Illarionov,
called the sale to the state through intermediaries the "scam of the
year".
Unfazed, the enlarged state company is pressing on with plans to boost
production of crude by one third to two million barrels a day by the
end of the decade.
"We feel 100 million tons (a year) by 2010 is a realistic target," said
O'Brien. Production in 2005 was 70 million tonnes.
Rosneft's history presents investors with a dilemma: how wise is it to
buy into a company close to authorities that so ruthlessly dismembered
Yukos in a highly politicized case? Will this protect investments in
future or render them more vulnerable to changes in the line-up and
policies of the leadership?
For now though, the reappointment this month of the deputy head of
Putin's administration, Igor Sechin, as chairman of the Rosneft board
of directors is expected to bring marked benefits.
And reservations about the IPO will likely be eclipsed by the
anticipated dividends. Petrodollars continue to swill around Russia as
its oil fetches up to 70 dollars a barrel compared to the 27 dollars
per barrel calculated into the state budget.
This oil and gas muscle became a major issue in international
relations. US Vice President Dick Cheney recently accused Russia of
using its energy wealth to intimidate other countries.
Ukraine, Moldova and Georgia had their gas cut off by their powerful
neighbour last winter amid pricing disputes. And as hopes fade for a
unification of Russia with Belarus, subsidized energy prices for Minsk
are also expected to be hiked in 2007.
While there is much speculation about who will replace Putin when he is
due to step down in 2008, the Kremlin boss staunchly defends the
renationalizations in the oil and gas sector. These included the
state's purchase of a controlling stake in Gazprom last year. Nor
should Europe expect a U-turn in policy that will clear the way for
foreign companies to snap up large swathes of the industry, he
indicated at a June meeting with foreign news agency heads. "I
would stress that these are our energy systems, Russian money paid for
the transport facilities and the (oil and gas-holding) depths of the
earth belong to the Russian people," he said.
But despite growls by energy officials that Moscow is dissatisfied over
supply terms to the West and that resources will gradually be turned
east, Putin assures Russia will remain a reliable partner. "For
40 years Russia has supplied energy resources to Europe," he told
Deutsche Presse-Agentur dpa. "Not for one day, not for one hour was
there a breakdown," he added, noting that shortages experienced in many
countries in January were caused by Ukrainian pilfering of gas exports
to Europe rather than by Russia failing its customers.
|
Ecuador Declares
Emergency State on Oxy
BNAmericas 6/15/2006
Ecuador's President Alfredo Palacio has declared a state of emergency
on block 15 and other assets formerly operated by US oil company
Occidental (NYSE: OXY), the presidential website reported. The
state of emergency will allow state oil company Petroecuador to avoid
the paperwork associated with public company operations - for example,
tender processes - and concentrate on operating the assets, a
Petroecuador spokesperson told BNamericas, confirming local press
reports.
Production levels remain roughly at the normal 100,000 barrel-a-day
level.
Ecuador expropriated Oxy's assets alleging the US company transferred a
40% stake in block 15 to Canadian oil firm EnCana (NYSE: ENC) in 2000
without government permission, overproduced some wells and did not
comply with the block's investment plan. Oxy responded by filing an
arbitration claim with the International Center for Settlement of
Investment Disputes (ICSID).
The company will operate under the state of emergency until a special
committee selects a state-owned company to operate the assets, the
spokesperson said. The committee was appointed by presidential decree
on Monday.
Chile's state oil company Enap, Brazil's Petrobras (NYSE: PBR) and
China's Sinopec as well as Indian and Russian state-owned companies
have expressed interest in the block, with Colombia's Ecopetrol
interested in providing technical assistance, the spokesperson said.
|
Lukoil and PDVSA Junin-3
Reserve Estimate
Lukoil 6/15/2006
 Specialists from
LUKOIL Overseas and the Intevep technological institute (a unit of
PDVSA) have completed the first phase of joint studies to produce a
quantitative estimate of hydrocarbon reserves of the Junin-3 block,
which has an area of 678 square kilometers and is located in the
Orinoco extra heavy oil belt.
The estimation and certification program is being carried out under the
agreement between LUKOIL Overseas and CVP (PDVSA's subsidiary in charge
of international cooperation) signed on October 12, 2005.
Reports on the geological, hydrodynamic, seismic and petrophysical
sections were delivered by experts from both countries during the
presentation of the first phase of the project. As result, the work
provided comprehensive substantiation of the potential of Junin-3 was
provided as one of the key blocks of a vast and as yet undeveloped
petroleum province.
The results of the work were unanimously accepted and approved. The
steering committee of the project extended its gratitude to the Russian
and Venezuelan specialists who prepared the detailed information on the
issue. It was noted that the Russian-Venezuelan group was the first of
the international teams invited to the region to complete the starting
phase.
The second phase of the Junin-3 projects is next. Its objective is to
jointly clarify the geological model based on new seismic data and
drilled wells and compare this data with the results obtained on
neighboring blocks. Certification of reserves in the region by an
independent expert commission is planned for the first quarter of 2007.
|
FERC Approves Five LNG Receiving
Terminal Projects
by Cassandra Sweet Dow Jones 6/15/2006
 Federal regulators
approved permits Thursday for the development and construction of five
new or expanded U.S. facilities to receive imports of liquefied natural
gas. The permits, approved unanimously by the Federal Energy Regulatory
Commission during its regular meeting, will allow for the import of
between 8.2 billion cubic feet per day of gas and 9.7 bcf/day of gas.
FERC Chairman Joseph Kelliher noted that the added capacity from the
five new projects is twice the capacity of the proposed Alaskan natural
gas pipeline.
The new LNG terminals include BP PLC's (BP) Crown Landing LNG project
to be built in Logan Township, N.J., on the Delaware River; Cheniere
Energy Inc.'s (LNG) Creole Trail LNG facility planned for Cameron
Parish, La., about 3.2 miles inland of the Gulf of Mexico; and Sempra
Energy's (SRE) Port Arthur LNG terminal set for Jefferson County, Texas.
The commission also approved proposals by Cheniere to expand its
existing Sabine Pass LNG facility in Cameron Parish, and by Dominion
Resources Inc. (D) to expand its Dominion Cove Point LNG terminal in
Cove Point, Md. "It really is a significant source of new supply,"
Kelliher said.
The Crown Landing terminal would be able to store up to 9.2 Bcf of gas
and send out up to 1.2 Bcf a day.
The Creole Trail project, which includes a pipeline, would be able to
deliver 3.3 Bcf of gas a day and have four new LNG storage terminals.
The Port Arthur project is designed to handle between 1.5 Bcf and 3 Bcf
of gas to supplement supplies to existing pipelines in Texas and
Louisiana.
Dominion plans to beef up storage capacity at its Cove Point terminal
to 14.5 Bcf, from its current 7.8 Bcf, and increase its send-out
capacity to 1.8 Bcf from the current 1 Bcf. The project is expected to
boost urgently needed gas supplies in the Mid-Atlantic and Northeast
regions, according to the company.
Cheniere plans to expand the Sabine Pass facility to increase its
send-out capacity to 4 Bcf of gas a day, from 2.6 Bcf.
|
Serica Energy to Go Ahead with
Kambuna Field Development
Serica Energy PLC 6/15/2006
At the Serica Energy AGM today Antony Craven Walker, Chairman, made the
following comments:
 "Serica made great
progress in 2005, achieving one hundred percent success with the drill
bit and a successful listing on London's AIM market, giving it
investment community support in Europe and Canada and a strong
financial position.
Serica's Board expects to give full project sanction for development of
the Kambuna Field, offshore North Sumatra, Indonesia in the near
future. Serica is operator of the Kambuna Field, holding a 65%
interest, and this development is integral to the Company's plan to
move its operated assets in Indonesia into the production phase and
satisfy a growing market in the region. The field is expected to come
onstream in 2008 at an initial rate of 50 million cubic feet of gas per
day and 5,000 barrels per day of condensate. The full extent of the
Kambuna Field has yet to be defined and the Company will carry out a 3D
seismic survey in 2006 to identify further extensions. This is a major
step forward for Serica and has the potential to be a material
producing asset in the medium to long term.
As part of the development plan we intend to fast track the development
of the field using 'dry' wellheads and a Floating Production Storage
and Offtake vessel ("FPSO"), which offers significantly lower drilling
and production costs than a subsea solution.
We also plan to construct the infrastructure to deliver the gas to
market, and the terms of the gas sales contract are under negotiation.
We estimate there will be a gas market shortfall in North Sumatra of
around 100 to 200 mmscfd by 2010. In addition to the Kambuna field
development Serica has also submitted a Plan of Development for the
Tanjung Perling field in the neighbouring Asahan Block which Serica
also operates. We will continue to explore for additional gas supplies
to add to the Kambuna and Tanjung Perling developments with nine
prospects and leads already identified.
With a high impact exploration programme across Indonesia and the UK
due to commence shortly and near term development in Indonesia on track
for first gas in 2008 Serica is well placed to generate growth for
shareholders."
|
South China Sea Husky
Significant Gas Discovery
Husky Energy Inc. 6/15/2006
URL: http://www.rigzone.com/news/article.asp?a_id=33155
Mr. John C.S. Lau, President & Chief Executive Officer of Husky
Energy Inc., reports that Husky Oil China Ltd., a wholly owned
subsidiary of Husky Energy, has made a significant hydrocarbon
discovery at Liwan 3-1-1, Block 29/26, in the South China Sea.
 Liwan 3-1-1 was
drilled in a water depth of 1,500 meters on Block 29/26 in the Pearl
River Mouth Basin and is the first deep water discovery made offshore
China. The well was drilled by Transocean's drillshp, Discoverer 534.
The block is located approximately 250 kilometers south of Hong Kong.
The well was drilled on existing 2-D seismic data to a total depth of
3,843 meters on a large structure with 60 square kilometers of closure
and encountered 56 meters of net gas pay on logs over two zones. The
2-D seismic interpretation prior to drilling the well indicated a
direct hydrocarbon response at the Liwan 3-1-1 location, which Husky's
analysis indicates is present over a majority of the 60 square
kilometer closure currently mapped. The porosity encountered in the pay
zones averaged approximately 20 percent, based on Husky's petrophysical
interpretation. Liwan 3-1-1, which is the deepest water well drilled
offshore China, confirms the existence of a new hydrocarbon province.
The Liwan 3-1-1 well will be sidetracked for further evaluation of the
pay zone and Husky currently plans a 3-D seismic survey in the near
future to assess a number of similar structures which have been
identified on 2-D seismic data. Further drilling on the block will
follow after the evaluation of the 3-D data. Based on our current
interpretation of the 2-D seismic and the Liwan 3-1-1 well results, the
discovery could contain a potential recoverable resource of four to six
trillion cubic feet of natural gas and as such, would be one of the
largest natural gas discoveries offshore China.
"We are very pleased with our exploration results and this discovery
confirms our confidence in the significant undiscovered hydrocarbon
potential in the South China Sea," said Mr. Lau. "We look forward to
evaluating this discovery and continuing our exploration efforts in
China."
Husky has been actively exploring offshore China, in collaboration with
CNOOC (China National Offshore Oil Corporation) since 2002. Husky
signed the Production Sharing Agreement for Block 29/26 in August 2004,
with a commencement date of October 2004. Block 29/26 is 3,965 square
kilometers in area and one of three exploration blocks currently held
by Husky in the South China Sea. CNOOC has the right to participate in
the development of any discovery for up to 51 percent working interest.
|
Sakhalin Energy Kicks Off
Summer Drilling Program
by ITAR-TASS Moscow, in Russian 14 Jun 2006
 The Molikpaq
offshore oil production platform on Wednesday launched another summer
oil extraction season, said the press service of the Sakhalin Energy
company that owns the Molikpaq platform. The press service
reported that the platform is expected to produce 12 million barrels of
crude during the period. Since 1999, Molikpaq has produced 70
million barrels (approximately 10
million tonnes) of oil that were dispatched to Asia and Pacific as well
as the U.S.
The Sea of Okhotsk has become ice-free, enabling the floating berth to
be lifted from the sea bottom and supply crude to the docked Okha
supertanker, which will provide storage for the summer season.
The coastal drilling and oil production Yastreb platform also extracts
hydrocarbon fuel on the Sakhalin shelf. Ten inclined wells were drilled
from it to the oil deposits under the bed of the Sea of Okhotsk.
Another sea platform, Orlan, will be put in operation this year. As of
2007, a total of five sea platforms will work on the Sakhalin shelf
producing 2 million tonnes of oil per year.
|
Russia: Questions
about Gas Reserves Rise
Dr. Joe Duarte 6/14/2006
URL: http://www.rigzone.com/news/article.asp?a_id=33112
The Kremlin Tightens Screws On Foreign Oil
With natural gas prices at twelve month lows, serious questions are
being raised about Russia's natural gas supplies and Gazprom's ability
to meet steadily increasing demand, while the latest round of Kremlin
tightening moves on foreign energy companies is complicating an already
complex picture.
Taking a page from the Venezuelan operations handbook, the Kremlin has
made it clear that it will allow only "junior partner" status for
foreign oil firms in Russia.
The development is the latest in a series of strong handed moves from
Russia as the government continues to take control of its natural
resources and is increasingly making use of them as political weapons.
According to the Wall Street Journal: "Senior Russian officials
confirmed fears that the Kremlin will restrict foreign energy companies
to the role of junior partners in all but the country's smallest oil
and gas fields, keeping the richest reserves for newly assertive
domestic companies. Speaking at a forum highlighting Russia's growing
economic power and prospects, top government officials said the
government isn't closing the door to foreign investors but wants to
make sure control of key projects remains in local hands."
Yuri Trutnev, minister of natural resources "noted that Russia remains
eager for foreign companies to invest together with Russian ones,"
adding that "the restrictions are included in a draft law on subsoil
resources due to go to Parliament for approval soon. The rules would
ban companies in which foreigners own more than 49% from winning
development rights to deposits deemed strategic. That definition has
broadened significantly since the idea of the restrictions was broached
more than a year ago."
Questions Arise About Russian Natural Gas Supplies
The timing of the Kremlin's latest move may be as much a distraction as
a policy move, given rising fears in Europe about Gazprom's ability to
deliver on its contracts to the continent.
According to The Moscow Times, in an article penned by the well
connected investigative reporter Catherine Belton: "Gazprom on Tuesday
rebuffed fears over its growth strategy and said it was on track to
bring major new gas fields on line, even as concerns mounted in Europe
about its ability to meet growing demand."
Gazprom was responding to questions raised recently by the
International Energy Agency about its ability to deliver enough natural
gas to Europe.
According to Belton's report: Gazprom deputy CEO Alexander Ananenkov
"told reporters that Gazprom's proven gas reserves of 29 trillion cubic
meters, the largest in the world, meant that Gazprom could produce as
much as 900 billion cubic meters per year, over 60 percent more than
its output last year of 548 bcm. The only thing stopping it was market
demand, he said."
Previously Claude Mandil the IEA Chief had noted in the IEA's first
Natural Gas Report that Gazprom "might not be able to meet supply
contracts in Europe by 2010 because of a lack of investment in boosting
production."
Indeed, the IEA and Gazprom have widely divergent views of the
situation.
According to Belton: "IEA gas supply expert Daniel Simmons said Tuesday
that Gazprom had still failed to make it clear how it would meet
growing demand over the next four years, even if it would be able to
start production at major new fields after 2010."
Yet, Ananenkov maintains that "Gazprom was on track to bring the next
generation of major new fields on the Arctic Yamal peninsula on stream
by 2011."
Three points are crucial in Belton's article:
1. "Europe has been dogged by concerns about being overly dependent on
Gazprom since January, when Russia cut off supplies to Ukraine, which
handles 80 percent of exports from Russia to Europe. Fears over the
cutoff were exacerbated by an extreme cold snap in Russia and Europe
weeks later, which forced Gazprom to lower supplies to Europe for the
first time in four decades."
2. "As Europe woke up to the fact that gas supplies from Russia might
not be endless, EU officials have been calling on Gazprom to break up
its monopoly on exports and allow greater access to its pipelines for
independent producers."
3. "Gazprom has steadfastly resisted such calls and President Vladimir
Putin on Tuesday once again reiterated that the government would
maintain its monopoly over natural gas exports through Gazprom."
Conflicts Likely
Russia's record on consistency regarding its foreign investment policy
in energy, and its dealings with its clients is spotty at best. The
rules change on a regular basis, and interpretation of any written
rules or laws is highly unpredictable.
In February 2004, Moscow threatened to end a deal with Exxon Mobil with
regard to exploration of the Sakhalin 3 field. At the time, Exxon had
been operating under a 1993 deal and had paid $60 million to Russia for
the rights, but the Kremlin decided that it wanted a billion dollars
instead of the already negotiated fee.
More recently, according to Catherine Belton's recent report: "the
government has recently repeatedly delayed major new projects, such as
the creation of a consortium to develop the vast Shtokman field in the
Barents Sea. Gazprom has been spending more on acquiring assets outside
of the gas sector -- such as its $13 billion acquisition of oil major
Sibneft last year and recent forays into the electricity sector -- than
it has on investments into gas production."
But there are rising questions about Gazprom's ability to keep up with
demand: "Gazprom began production at a major new block, the
Zapolyarnoye fields, in 2001 to combat an alarming decline in
production at its existing fields. But analysts say that Zapolyarnoye
has so far only managed to make up for the shortfall at existing
fields. Gazprom's output grew 1 percent last year."
In other words, this latest move is part of a pattern, with the goal of
strengthening Russia's state owned energy firms Gazprom and Rosneft.
According to the Journal: "The new rules likely will reinforce the
dominance of Russia's state-owned energy giants OAO Gazprom, the
natural-gas monopoly, and oil company OAO Rosneft, which have emerged
as powerful instruments of Kremlin policy in the energy sector."
Yet, there seems to be a disconnect in the policy, as in Venezuela, as
"Russia has the world's biggest reserves of natural gas and the
seventh-largest reserves of crude oil, but needs tens of billions of
dollars for investment to bring new projects to market."
In fact, Russia has done a great deal of talking along the way,
especially on and off talks with the United States about using the
Siberian port of Murmansk as a launching pad for tanker traffic to
Alaska, as well as about the development of liquefied natural gas
operations involving Gazprom, with little to show for it.
For now reaction is muted with executives from ExxonMobil,
ConocoPhillips, and BP, all of which have joint ventures with Russian
energy firms being cautious.
Still, having been burned before, many companies, and Russia's main
client, the European Union are likely to be quietly apprehensive.
Conclusion
There are two major issues at hand. First is whether Russia has enough
natural gas available to meet both internal demand and the demand of
its customers.
Second, if there is enough supply, can Russia's helter-skelter policy
making apparatus, driven mostly by remnants of Cold War ideology and
mistrust work in an increasingly contentious and capitalist world?
Russia continues to maximize its strengths and attempt to manage its
weaknesses. The former of course is energy, with the latter being
clumsy development and implementation of policy. Over the last
several years, though, the Putin government has taken care of its major
opposition, the oligarchs, and is now in the driver's seat, at least of
how it does business and with whom.
What makes life difficult for anyone doing business with Russia,
though, is the fact that actions and reactions from the Kremlin, are
highly unpredictable, and that once a deal is struck, there is no
guarantee that it will actually bear any fruit, or that it won't be
changed on a whim from a bureaucrat or even Mr. Putin.
The struggles within the Kremlin remain a key factor, and continue to
color the Chaotic nature of policy emanating from the Putin government.
Yet, the real key is whether Russia's reserve data can be trusted. The
IEA seems to have its doubts.
Dr. Joe Duarte's Market IQ appears daily at Joe Duarte. Dr. Duarte is
author of the book "Futures And Options For Dummies," which is
available at the Rigzone Book Store.
|
Mexico Stands at a
Crossroads on Energy
AFX News Limited 6/12/2006
"The current organization and
course of the oil industry in Mexico are
unsustainable,"
George Baker, an industry analyst with energia.com,
wrote in a research report.
In the midst of Mexico's biggest oil boom since the 1970s, the nation's
top two presidential candidates are debating whether to turn outward
and open oil to private investors -- or inward by exporting less crude
and giving Mexicans subsidized gasoline.
The question revolves around nationalist pride as well as pump prices,
but the real challenge lies elsewhere: finding new deposits to replace
Mexico's rapidly declining Cantarell field off the Gulf Coast. If
Mexico doesn't act quickly, the question of what to do with the oil
wealth may be moot--in a decade, there may not be enough oil left to
supply the economy.
The best hope for new discoveries appears to be in deepwater
exploration in the Gulf, but the state-owned Petroleos Mexicanos, or
Pemex, oil company has little experience in such projects. Mexican law
has long prohibited private investment in anything other than minor
subcontracts, a role that doesn't interest most major energy companies.
Conservative Felipe Calderon, President Vicente Fox's former energy
minister, and the third major candidate, Roberto Madrazo, propose
loosening the rules and allowing private companies to explore deep
waters through joint ventures with Pemex.
Leftist Andres Manuel Lopez Obrador, running about even with Calderon
in the polls, opposes private investment and isn't very interested in
deepwater exploration.
One of his advisers, Rogelio Ramirez, calls it "beyond our reach" and
prefers onshore projects.
Lopez Obrador feels too much emphasis has been placed on exports and
wants to focus instead on channeling more of the windfall oil profits
into building new refineries and petrochemical plants in Mexico.
Lopez Obrador, a native of the oil-rich Gulf coast state of Tabasco,
also promises to make the energy sector "the pillar for promoting
industrialization and development," a phrase that recalls the oil-boom
rhetoric of the 1970s.
Back then, average Mexicans benefited from the nation's oil riches,
albeit largely in the form of splashy, ill-conceived government
projects and government jobs.
This time around, the windfall is being more conservatively managed,
and Mexicans are seeing the fruits of historically high oil prices only
indirectly, in the form low interest rates fueled by the government's
booming foreign currency reserves. "In the old days, the money
was spent in a different way," said political analyst Federico Estevez.
"In a sense, the less the you see of it, the better ... the less money
they (officials) have to spend on white elephants."
Lopez Obrador wants to make the benefits of high oil prices tangible to
the nation's poor by lowering gas prices and fueling an economic boom.
Mexicans now pay about $2.50 a gallon at the pump.
But Mexico doesn't have the huge oil reserves that have allowed
Venezuelan President Hugo Chavez to deliver new benefits to his
supporters and increase his regional influence, or even the substantial
natural gas production that Bolivia's Evo Morales has nationalized in
hopes of improving the lives of his impoverished Indian population.
With Mexico's domestic consumption approaching 1.7 million barrels, and
Lopez Obrador's plan to use more of Mexico's crude to supply domestic
refineries and petrochemical plants, that would leave a lot less for
export.
Calderon espouses more focused subsidies, like helping poor families or
communities with their energy bills. "Whoever wins the election
will probably put a radical imprint on energy policy," said Mexico
City-based industry analyst David Shields. "This election is about
ideology. You're voting for someone who's way on the left, or someone
who's way on the right."
Lopez Obrador criticizes Fox's administration, saying "the only thing
that matters to them is selling more and more crude to foreigners,
neglecting exploration and new reserves and above all, abandoning
refining and petrochemicals."
One thing that's clear: Business as usual isn't an option
anymore. Shields predicts Mexican oil production could fall from
3.35 million barrels per day to as little as 2.8 million barrels per
day within two or three years, if nothing is done. "The current
organization and course of the oil industry in Mexico are
unsustainable," George Baker, an industry analyst with energia.com,
wrote in a research report.
|
Global Energy
Crisis oil and natural gas scarcity
Deutsche Presse-Agentur (dpa) 6/14/2006
The growing scarcity of oil and natural gas has provoked worldwide
political conflict and a mad rush for renewable resources. Like a
volcano before it erupts, the crisis has heated up for decades, out of
sight of oil-heated homes and petrol-powered cars. But the signs
of trouble are now evident, and not only at the pump, where
$70-a-barrel prices eat into the pocketbook.
War in Iraq, tensions over Iran's nuclear plans, the international
standoff over genocide in Sudan, kidnappings and killings in Nigeria's
oil fields--all give frenzied expression to the world's rocketing,
insatiable thirst for oil.
German media talk of a "new" Cold War. U.S. columnist Thomas Friedman
regularly warns New York Times readers that America's appetite for fuel
supports the very movements intent on its destruction.
At the upcoming G8 summit in St. Petersburg in July, energy issues are
expected to dominate. With just weeks to spare beforehand, the European
Union--which has haggled for years over a unified strategy --is
expected to agree later this month to nail down an energy cooperation
deal with Moscow and start talking to China.
Russia, Europe's second-biggest oil supplier and source of 25 percent
of its gas, flexed its energy muscle this past winter, when supplies to
Western Europe were disrupted during a price dispute with Ukraine. The
January explosion of gas lines into Georgia left Tbilisi in freezing
darkness and ratcheted up political tensions with Moscow.
World energy demand is projected to increase 50 to 60 percent by 2030
and may triple by 2050, according to the Paris-based International
Energy Agency and the U.S. Army Corps of Engineers.
Booming economic progress in places like China and India is a key
factor, but the U.S. still sucks up one-quarter of the 80 million
barrels of oil consumed every day by the world.
As pressure has grown, so have opportunistic political alliances.
The U.S., where imports make up 60 percent of consumption, gave full
official backing to the $3.6-billion, 1,800-kilometer Trans-Caucasus
oil line from the Caspian to the Mediterranean last year--even though
the project originates in Azerbaijan, targeted by the U.S. for its
human rights violations. The U.S. hopes the Baku-to- Ceyhan, Turkey
line, which bypasses Russia, will undermine the region's dependence on
Iranian oil.
China has vigorously cultivated ties to Africa and Venezuela for energy
resources, and it has drawn criticism for taking a softer line on Sudan
and Iran by opposing sanctions and ultimatums at the U.N. Security
Council.
India's about-face on Myanmar, where it has dropped its support for the
democracy movement and now courts the military junta, has provoked
outcries at home from democracy activists. Investments by the state-run
ONGC Videsh, Ltd. (OVL) in Sudan, where the government has been charged
with genocide in the rebellious Darfur region, have also drawn fire.
The looming specter of "peak oil production"--the point at which oil
production is expected to drop because reserves are too difficult to
pump out--has combined with high prices and increasing political
insecurity to boost the search for renewable energy sources. Oil
experts say peak oil could come as early as 2010 or as late as 2047.
Long-simmering warnings by environmentalists over global warming from
carbon emissions were on their own not enough to provoke serious
consideration of energy alternatives such as wind, solar, methane from
bio-mass, bio-diesel from palm and coco oils, and ethanol from grasses,
sugarcane, and corn.
But last year's Hurricane Katrina, which produced the world's first
"climate refugees," went a long way to helping convince the general
public of the need for change, said Lester Brown, head of the Earth
Policy Institute environmental pressure group.
"Two years ago, most persons wouldn't have known the price of a barrel
of oil," Brown said in a telephone interview. "Now, there's insecurity
both on the oil front and on the climate front, and it's beginning to
affect people's thinking."
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Nordics ponder green
fuel, black gold, yellow cake
Jun 16 2006 The Guardian
As the boat approaches Hammerfest, a Norwegian port perched on Europe's
northernmost tip, the view is dominated by a huge construction site. A
gas plant is slowly rising from the ground, already dwarfing the
two-storey wooden houses in a town centre where reindeer often roam the
streets.
From next year, this place will process gas from an offshore field
140kilometres north, deep under the Barents Sea. Norway believes that
projects like this hold the solution to the energy crisis. The thinking
is that if the world is consuming increasing amounts of oil and gas,
then more must be found. But Norway's approach is only one of four
different strategies chosen by the Nordic countries; Sweden, Iceland
and Finland have their own solutions. They, like all industrialised
nations, are trying to cut down on carbon dioxide emissions that cause
global warming while trying to supply enough energy.
While Norway believes the answer is more fossil fuels, Sweden is
attempting to become free of fossil fuel. Iceland is harnessing its
unique energy resources. And, to the east, Finland is building its
first reactor in more than 30 years.
The Norwegian approach typifies the scramble to find new fossil fuels.
Thanks to the North Sea, Norway has become the world's third-largest
exporter of oil - making it one of the world's wealthiest economies. It
exports nearly all its fossil fuels. For power for its 4.6million
people, the mountainous country relies on hydro-electricity.
But this situation is changing fast. Oil and gas from the North Sea are
expected to run out within 30years. So Norway is looking north, to the
Arctic - a region that it is hoped holds a quarter of the world's
untapped oil. The plant at Hammerfest is the first major Arctic project
to see the light of day. Oil companies have already drilled about 60
wells in the Barents Sea, searching for oil and gas.
"There's an 80 to 90per cent chance of hitting a dry well," says Oerjan
Birkeland, a geologist for the Statoil petroleum company.
But this hunt for black gold has been extremely controversial. "The
Arctic is a huge ecosystem that groups a lot of smaller ones," says
Frederic Hauge, head of the environmentalist group Bellona. "It seems
to be robust and that it can cope with many things, but because of
global warming it faces dramatic changes. We are a nation of
petroholics. We export fossil fuels that are equivalent, if burned, to
2.7per cent of global CO2 emissions."
The controversy has even split the ruling coalition in Norway. When the
Labour-led government opened new sections of the Barents Sea, no-go
zones were established on the northern coast as a result of pressure
from its government partner, the Socialist Left. Since the Barents Sea
is where Arctic cod spawn, there were concerns that oil
exploitation would harm the profitable fisheries.
Increased petroleum production is not helping Norway cut its CO2
emissions. The country spends a lot of money researching ways to get
rid of excess CO2. Among the solutions proposed is injecting carbon
dioxide under the North Sea into the emptying oil and gas fields, thus
preventing it from contaminating the atmosphere. Norway hopes the
technique, which is also attracting interest from Britain, will also
help squeeze more oil and gas out of the North Sea.
While Norway focuses on its fossil fuel riches, next door in Sweden,
things could not be more different. Last October, its government
announced the most ambitious energy initiative by an advanced
industrialised nation: attempting to wean itself off oil entirely
within 15 years.
"A Sweden free of fossil fuels would give us enormous advantages, not
least by reducing the impact from fluctuation in oil prices," argues
Mona Sahlin, Minister for Sustainable Development. Unlike Norway,
Sweden has no oil or gas, and so must import both. Sahlin explains that
the government's aim is that by 2020 "no home will need oil for
heating. By then, no motorist will be obliged to use petrol as the sole
option available. By then, there will always be better alternatives to
oil."
A committee, led by Prime Minster Goran Persson and including
scientists, business leaders and environmentalists, is investigating
how the country can get rid of fossil fuels entirely. Sweden has cut
its dependence on fossil fuels drastically since it peaked in the
1970s. For electricity, Swedes rely on nuclear and hydro-electric
power. Alternative energy sources, such as geothermal energy or waste
heat, are being encouraged. Fossil fuels, which account for 32per cent
of Sweden's energy needs, are mainly used for transport.
The oil committee is expected to unveil its proposals this month.
Broadly, the strategy will be to replace fossil fuels with renewable
energy and to improve energy efficiency, such as by encouraging use of
public transport. Stockholm is already testing a scheme similar to
Britain's congestion charge. There are also discussions about the
possibility of producing cars that consume less petrol or that use
ethanol and other biofuels.
"Alternative fuels are costly," says committee member Christian Azar, a
climate-change expert. "Tax cuts and subsidies can help, but
alternative fuels need to make economic sense on their own."
The Swedish government has promised to increase the funding for energy
research by 815million kronor ($150million) a year. It says it will
also give subsidies or tax breaks to homeowners who replace their oil
boilers (10per cent still use them), and to industries that switch from
fossil fuels. The country's 9million inhabitants appear supportive of
their government's policies. According to recent research, the majority
want to see more use of renewable energy, such as wind power and solar
energy.
But can Sweden kick the habit? Experts are cautiously optimistic. "By
2020, I think no oil will be used for heating, and industries will have
cut their consumption substantially," says Azar. "But I don't think we
will be able to phase out oil as a whole. There is not enough time."
Meanwhile, far into the Atlantic Ocean, Iceland is living the green
dream. If there's a paradise for environmentalists, this must be it. It
is the world's most energy-efficient country, and 70per cent of its
needs are covered by domestically produced renewables. The volcanic
island and its 300,000 inhabitants are blessed with natural hot springs
and geysers. All of the island's electricity is produced cleanly -
84per cent through hydro-electricity, while the rest comes from
geothermal energy from the earth (90per cent of homes already get their
heating this way).
Fossil fuels are used only for transport, but Iceland is determined to
get rid of them completely. In 1998, the government decided to replace
oil and gas with hydrogen as soon as possible. Three years ago, it
opened the world's first hydrogen station and started a trial of three
buses powered by hydrogen.
But it was not always like this. Iceland used to rely on imports of
fossil fuels for everything. That is, until the 1973 oil shock, when
OPEC quadrupled prices.
"This was a trigger to reduce our dependency," explains Ragnheidur
Thorarinsdottir, deputy director of the National Energy Authority. "We
started converting houses to geothermal heating. Now the aim is to use
our clean energy to 100per cent." Renewable energy gave Iceland an
economic advantage, she says. "Geothermal energy is very cheap. It
costs less than fossil fuels."
There have been attempts to export Iceland's green riches. "We have
done studies on trying to send electricity through cables to Scotland
and the Faroe Islands, but it's not economical. If energy prices
continue to go up and the price of the technology comes down, then
something could be done about it."
But there's more to come. Iceland is looking at how to exploit its
resources more efficiently, as it is estimated that it uses only 15per
cent of its energy resources. If exploited to the full, the energy
could supply all the electricity of a country the size of Scotland.
Back on mainland Europe, Finland, which has a population of 5.2million,
is taking the nuclear path. It imports 70per cent of its energy,
including all its gas, from neighbouring Russia. This makes it
dependent on what happens next door.
"During the coldest days this winter, we've had problems with
electricity supply from Russia," explains Jorma Aurela, senior engineer
at the department of trade and industry. "[Russia] was having problems
itself supplying electricity to StPetersburg. Secure supplies are very
important to us. That's why we need a mix of different energy sources."
Nuclear power accounts for 26per cent of Finland's electricity. After
the Olkiluoto reactor is completed in 2009-10, this will rise to 33per
cent, and become the most important source for the country's
electricity.
But increasing nuclear power has been controversial. Successive
governments had tried to push for a new reactor since the 1980s.
"Nuclear power is not safe, as Chernobyl proved, and there is also the
risk of a terrorist attack," says Jaana Reijonaho, from the Green
League.
"If we invest in nuclear power, this means renewable energies do not
have a market to develop in. There's also the problem of uranium
mining. If the world starts building more nuclear plants, we will have
to use more uranium - and we come back to the same problem we have with
oil. One day it will run out."
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Australian Gov propose
nuclear power debate
Ken Matts Thursday, 15 June 2006
O'CONNOR MHR Wilson Tuckey has hit back at critics of the Australian
Government's proposal to introduce nuclear power stations to the
country. He has been especially scathing of Albany MLA Peter
Watson, claiming he ran a fear campaign which may restrict industry
development in the region.
But some of the political weight was taken out of the debate on Tuesday
by Western Power Network managing director Doug Aberle who poured cold
water on the nuclear power plant debate. Mr Aberle said the chances of
building a nuclear power plant in WA were "next to nothing", as the
State's peak usage was not big enough to sustain it. "The physical
limitation of the system is such that it is highly unlikely that
nuclear power would be introduced here," he said. "The minimum nuclear
plant is about 1,000Mw.
"Even if you say technology is improved, you don't want a machine in
the system that is bigger than 10 per cent of the load, just for
managing the system." He said the baseload plant would continue to be
coal.
Last year, Mr Watson called on the Albany City Council to develop a
policy against nuclear material being transported through the region.
He said it was important for the views of Albany people to be known
before the city was faced with a potential problem. But it was rejected
by Council which claimed any decision it made would not have any
influence on Government decisions.
Mr Tuckey said he had no fears for his constituents' wellbeing if a
nuclear power station was proposed for the O'Connor electorate.
"Any MP with half an ounce of intellect would know that Albany, for
instance, would need a population of approximately one million people
for such a facility to be warranted in the near vicinity," he said.
"Nuclear generators typically provide 1,000 megawatts of electricity,
which is three times the size of the largest station in Collie.
"Mr Watson should also know that areas suitable for nuclear waste
storage are far to the north and east of Albany, which would not be a
suitable port of entry in any case."
Mr Tuckey said his own long-term solution to greenhouse issues was to
convert vehicle fleets to use hydrogen-powered engines.
"I also advocate the use of the massive tides of the Kimberley to
produce renewable electricity for such purposes as powering our natural
gas liquefaction industry," Mr Tuckey said. "And to electrolyse water
into hydrogen and oxygen, both of which will assist in reducing
greenhouse emissions from our vehicle fleet and coal fired electrical
generators. "Mr Watson might be interested to know that I raised this
matter with Alan Carpenter a year ago. "Yet he seems more intent on
exploiting a fear campaign than promoting WA's best reason not to need
nuclear generators, whilst reducing Australia's dependence on Middle
East oil and thus also reducing vehicle operating costs."
Mr Tuckey said Mr Carpenter's call to use more natural gas ignored the
fact that it was also a greenhouse emitter and unlike the tides, was
not renewable and unable to guarantee energy for future generations.
"Mr Watson might also make sure that the future mineral exports that
might travel to the port of Albany would not be blocked by his
anti-radiation policy," he said. Radiation is not restricted to
uranium."
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Middle East Order Alfa
Laval heat exchangers
15.06.2006
Alfa Laval - a world leader in heat transfer,centrifugal separation and
fluid handling - has received an order for the supply of plate heat
exchangers to a liquid natural gas (LNG) plant in the Middle East. The
order is valued at around SEK 80 million and final delivery will take
place during 2007.
The order consists of around 50 all stainless steel process plateheat
exchangers of different capacities. The heat exchangers will be used on
the process side in one of the world's largest LNG facilities.
In the past ten months Alfa Laval has received major contracts to the
LNG market worth more than SEK 500 million, for delivery between 2006
and 2008. Among others Alfa Laval heat exchangers are used in gas
treatment processes as well as for central cooling.
This project is dedicated to deliver liquid natural gas to the US
market, with start in 2009. Natural gas accounts for almost one-fourth
of all energy consumed in the United States. Today 40 percent of
natural gas consumption is for industrial activities; 22 percent is for
residential uses; 15 percent is accounted for the business sector; and
14 percent is used for electricity generation. Currently there are six
LNG terminals in operation in North America. Another 18 LNG
terminal projects have been approved and an additional 28 projects are
proposed Source: US Federal Energy Regulatory Commission (FERC).
Large demand in Liquid Natural Gas
Natural gas is a long lasting and environmentally friendly fossil fuel
source. The demand of natural gas is continuously increasing,
particularly in countries with strong economic expansion like China and
India.
However, there is a geographical imbalance between supply and demand of
natural gas. The largest gas reserves are located in the Middle East
and Russia while the largest demands are found in North America, Europe
and Asia. Therefore, natural gas has to be exported and transported,
often long distances. This can be done in pipelines or, in liquid form,
in transport carriers.
Transporting LNG
The pipeline exports still account for the largest part, but Liquid
Natural Gas (LNG) chains are increasing rapidly. The LNG demand is
expected to increase fivefold between 2000 and 2030. In the LNG chain
the gas is transported from the offshore platforms to a gas treatment
and liquefaction plant. Here it is transformed into a liquid phase,
before it is transported - with a temperature of minus 160 degrees
Celsius - in a LNG ship. At the reception terminal, the liquid is
transformed into gasagain in a regasification plant. There are
currently around 140 ships which transport more than 120 million metric
tons of LNG every year. Alfa Laval supplies plate heat exchangers to
LNG facilities which enable cooling of fresh water by means of seawater.
Where is LNG used?
LNG is normally warmed to make natural gas to be used in heatingand
cooking as well as electricity generation and other industrialuses. LNG
can also be kept as a liquid to be used as an alternativetransportation
fuel.
About Alfa Laval
Alfa Laval is a leading global provider of specialized productsand
engineering solutions based on its key technologies of heattransfer,
separation and fluid handling. The company's equipment,systems and
services are dedicated to assisting customers inoptimizing the
performance of their processes. The solutions help themto heat, cool,
separate and transport products in industries thatproduce food and
beverages, chemicals and petrochemicals,pharmaceuticals, starch, sugar
and ethanol. Alfa Laval's products arealso used in power plants, aboard
ships, in the mechanical engineeringindustry, in the mining industry
and for wastewater treatment, as wellas for comfort climate and
refrigeration applications.
Alfa Laval's worldwide organization works closely with customersin
nearly 100 countries to help them stay ahead in the global arena.
Alfa Laval is listed on the Stockholm Exchange and, in 2005,posted
annual sales of about SEK 16.5 billion (approx. 1.8 billioneuros). The
company has some 9,800 employees.
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Thailand Gov supports
CNG
Friday June 16, 2006
Consistently inconsistent
Nothing changes direction as quickly as this government. There was a
time Thai authorities explored the feasibility of a second backbone to
the automotive industry in the guise of the EcoCar. The project roused
the interest of several car companies that came calling with schemes to
invest schemes in the country.
But after much bickering about what the rules should be and its
implications on the local pick-up industry, the project was scrapped
last year. Which reportedly drove Honda to India where city cars are
considered a good investment, while Mitsubishi chose to renew its links
with Proton, Malaysia's national car brand.
Then there was the hype about gasohol. The government wanted to promote
E10, a mixture of 10% ethanol and 90% gasoline. And to encourage
carmakers to churn out vehicles that rely less on imported MBTE, a
special excise rate of 20% was offered to E20-capable cars. Ford
became the first maker to come out with an E20-friendly car, the Focus,
only to run into opposition. This specific privilege has now been
deferred until 2009.
The government has now shifted its focus to CNG (compressed natural
gas) or NGV (natural gas for vehicle), as it is also called in Thailand.
''It's simply amazing how the government shifts its standpoint so
quickly,'' noted one top executive of a not-too-large Japanese car
company. ''We can't constantly change proposals we send to our parent
company [in Japan] for specific engines.''
So who's in it for CNG? ''We have drawn up NGV tax privileges
independently,'' a state official confided to Motoring. ''It should
please everybody...well, of course not Honda which doesn't want to see
its cars operating as taxis.'' The 20% excise tax rate is
applicable to manufacturers rolling out cars with factory-equipped CNG
systems, while retro-fitted versions will only enjoy the rate until the
end of 2008.
One model that will obviously benefit from this subsidised fuel
concession is the next-generation Toyota Corolla due next year. It is
immensely popular among cabbies. On a smaller scale are the new
Mitsubishi Lancer due 2007 and the likes of it.
The only model so far to come with a factory-issue CNG set-up is the
Mercedes-Benz E200 NGT. The next vehicle with a bi-fuel powertrain will
be the Chevrolet Colorado.
Although the Thai Chevrolet office refused to comment on the country's
first pick-up running on diesel-CNG power, the US Energy Initiative
confirmed that GM Thailand had been selected for the project.
That shouldn't come as a surprise as GM has always been eager to make
cars in Thailand that can run on CNG. It once envisaged a CNG-powered
Optra Estate for a government-initiated taxi project, and there is no
reason why the plan couldn't be revived again.
''While policies do change quickly which is typical of this government,
many car companies have proved equally quick in adapting to changes in
energy policy,'' added the state official.
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