Oil country hot line

EU okays Texaco, Chevron merger

The European Commission approved Chevron Corp.’s $42-billion acquisition of Texaco, removing one of the hurdles blocking creation of the world’s fourth-largest oil firm. The commission declared the deal compatible with the Common Market and the European Economic Area agreement, because the companies’ overlapped activities were limited, and the overlap accounted for less than 15% of the combined market share. However, the deal has yet to be approved by the Federal Trade Commission, which is known to use tougher measures when deciding large oil mergers. Although the FTC is closely scrutinizing the firms’ U.S. refining and marketing business, sources suggest that there are no major obstacles to hinder the merger. An FTC ruling is expected next month.

Bush presents ANWR proposal

As part of a nearly $2-trillion budget blueprint for fiscal 2002, U.S. President George W. Bush presented Congress with a controversial proposal to open the Arctic National Wildlife Refuge (ANWR) to oil and gas drilling. Environmentalists already have begun to rally against Bush’s plan. Bush’s energy budget estimates that the government will reap $1.2 billion in 2004 from firms that successfully bid to develop oil and gas resources on the federally owned area. A bipartisan group of U.S. lawmakers in the House and Senate introduced legislation to protect ANWR from oil and gas drilling.

   Meanwhile, oil firms have begun exploration at another federal reserve – the National Petroleum Reserve-Alaska – located 120 mi west of ANWR. In fact, BP submitted a plan to the U.S. Bureau of Land Management (BLM) to drill up to two dozen wells over five years. Phillips identified five prospects and plans to conduct additional seismic surveys.

Qatar seeks Iranian support on oil prices

Qatar’s Emir Sheikh Hamad bin Khalifa al-Tahani called on Iranian President Mohammad Khatami to support the oil market and help keep world prices stable. Iran, OPEC’s second-largest producer with a quota of more than 3.6 million bopd, is a major influence in oil price decisions taken by OPEC members. Thus, Khatami’s request – that OPEC members should assist in stabilizing oil prices and avoid a fall in world markets – may very well be granted. OPEC ministers were scheduled to meet last month in Vienna to decide whether additional production cuts were necessary. Analysts suspect a potential price crash is a danger, especially since continued slowing of the U.S. economy, replenished inventories and warmer weather may decrease demand for oil.

Energy security tops Bush foreign policy

President George W. Bush plans to make energy security a priority of U.S. foreign policy. Speaking at a swearing-in ceremony for Energy Secretary Spencer Abraham, Bush said he plans to restore "American credibility with overseas suppliers" and build strong ties with energy-producing nations in the Western Hemisphere. Instead of attempting to just manage the current energy situation, the U.S. aim should be to avoid any crisis in the first instance. For too long, the U.S. has operated with an inadequate energy policy, hence, Americans face high energy costs, Bush said. His energy strategy, in essence, is to ensure a steady supply of affordable energy for Americans, and to work toward energy independence.

Iran awards PSC, signs rig deal

National Iranian Oil Co. formally signed an $800-million production-sharing contract with an Austrian firm. The deal, awarded a year ago, involves a project that will inject gas into Aqajari oil field in Iran’s southwestern province of Khuzestan. Iran opened its oil and gas sector to international tender in July 1998. The country signed about $12 billion worth of buy-back contracts in the past three years.

   Meanwhile, NIOC has signed a $226-million contract with Sweden’s GVA Consultants. GVA will build a state-of-the-art semisubmersible rig that will be used to further Iranian exploration efforts in the Caspian Sea. Construction of the rig at Neka in Mazandaran province should take three years.

PanCanadian starts gas development

PanCanadian Petroleum (100%) began commercial development at its Deep Panuke gas field, offshore Nova Scotia. Startup is expected in early 2005, with a gas production sales plateau estimated at 400 MMcfd. The firm has drilled four wells in the area since 1999. Each well tested at more than 50 MMcfgd. No additional delineation or development wells are planned this year. PanCanadian does plan to file a Development Plan Application with the Canada-Nova Scotia Offshore Petroleum Board in third-quarter 2001.

Sudan: Lundin hits oil, Talisman hangs on

Lundin Oil, along with partners Petronas and Sudapet, discovered oil on Block 5A, onshore Sudan. Thar Jath 1 was drilled to a TD of 5,970 ft. It encountered 207 ft of net pay over two sandstone reservoirs. The well flowed at a cumulative rate of 4,260 bopd from three drillstem tests over both zones. Appraisal drilling will start after the completion of another exploration well.

   Meanwhile, Talisman Energy had been considering selling its oil operations in Sudan. This was because of less-than-favorable stock prices caused by uncertainty due to indirect U.S. sanctions for the firm’s involvement in Sudan. However, CEO Jim Buckee said the firm may reconsider, suspecting a possible loosening of sanctions from the Bush administration.

Shell submits bid for Barrett Resources

Shell Oil Co. proposed a $1.8-billion purchase of Barrett Resources Corp.’s outstanding shares at $55 apiece. The unsolicited bid includes the assumption of about $400 million of Barrett’s debt. Shell’s move is an attempt to gain a presence in the Rocky Mountains gas market. Barrett’s board of directors was scheduled to review the proposal at their regularly scheduled meeting last month, as this issue went to press.