Looking ahead

Exploration interest rises in GOM. In the recent Federal OCS lease sale, U.S. operators placed about 60% more bids for oil and gas tracts offshore Louisiana, Mississippi and Alabama, vs. a year earlier. Central Gulf of Mexico Lease Sale 178 netted more than $5 billion in high bids from 90 companies. This annual sale is considered a key barometer of E&P intentions. Strong bidding by independents was a major part of the sale, which attracted 780 bids on 547 tracts, compared with 469 bids on 344 tracts last year. Acting MMS Director Tom Kitsos said 11 first-time bidders participated. The highest bid was about $26.1 million for Mississippi Canyon (NH16-10) Block 912 by Exxon Asset Management Co.

Survey reveals Libya, Iran as top exploration hotspots. OPEC member states are at the top of the world charts for new petroleum exploration ventures. A recent survey of international oil companies by Britain’s Robertson Research showed that Iran has slipped into second place, behind Libya, among the most popular countries for investment in new exploration activities after last year’s oil price boom. Forced to abandon lucrative operations in the two countries due to economic sanctions, U.S. firms nonetheless are still keen to regain ground lost to European energy rivals. Oil companies are spending aggressively, and 72% of firms polled intend to increase their E&P budget. Companies are also planning to diversify exploration, with 56% expected to invest in new regions, such as the Middle East (the top spot), followed by the Far East and Australasia. Saudi Arabia, Kuwait and Mexico were not figured into the poll because they permit little or no foreign upstream investment.

U.S. expected to renew Libya sanctions. Following requests from oil firms to review Libyan sanctions, the U.S. decided to roll over the 1996 Iran-Libya Sanctions Act in a modified form, upon expiration in August. This decision comes as the Libyan National Oil Corp. (NOC) informed the former Oasis Oil of Libya Group (Conoco, Marathon and Amerada Hess) that it is reviewing the status of their concessions. The U.S. firms ceased operations in Libya in June 1986, and NOC wants the companies to clarify when they will be able to resume operating tracts. NOC made it clear to the firms that it may open up some of the unexplored parts of their permits to international (mainly European) oil companies, reported the Middle East Economic Survey. MEES also said that the U.S. firms are eager to continue long-running negotiations that have been taking place in Europe, in an effort to reach a new arrangement before the August deadline.

Middle Eastern countries resolve border dispute. Bahrain and Qatar have resolved their maritime border dispute, and are planning offshore exploration programs in their territorial waters. The International Court of Justice (ICJ) has set up a new maritime border that satisfies both countries, which have subsequently announced a new era of cooperation and friendship. Bahrain will create three or four new exploration blocks in an area extending from east of Muharraq Island and including all of Hawar Island, the largest of the disputed islands to which it gained sovereignty. French company CGG conducted a full 3-D seismic survey of the area in 1999, and several international firms have been assessing the data. Middle East Economic Survey reported that the blocks may be awarded by mid-2001. Qatari Oil Minister Abdullah bin Hamad al-Attiyah said the country would begin exploring potential gas fields adjacent to the vast North field in areas granted to Qatar. The ICJ ruling expands Bahrain’s Block 1 eastward, taking over 75% of Qatar’s exploration Block 13.

Latin America is new source for rig hands. The search for qualified oil field workers has drifted to Mexico and as far south as Colombia. Desperate for experienced roughnecks, Oklahoma’s oil and gas industry has turned to the University of Oklahoma’s Energy Institute of the Americas for help in finding workers for the growing number of drilling rigs across the state. The institute is developing a recruiting program that involves its Latin American contacts and an immigration lawyer, to target experienced workers in Mexico and Colombia. Three unnamed Oklahoma firms reportedly are interested in participating in the program. More than 10 workers already have been identified.

Mexico, Cuba may team up in hunt for oil. Last month, Mexican state firm Pemex sent a technical mission to Cuba, to discuss conducting joint oil exploration activities with Cuba Petroleos (Cupet) in the Gulf of Mexico’s so-called Exclusion Zone. The zone was opened up in March 2000 to exploration by private oil firms. Currently, Spanish-owned Repsol YPF is the only company conducting exploration in the 59-block area, which had been thought to be unfeasible since the 1980s, due to the extreme ocean depths. Recent technology advances have revived exploitation hopes.

Middle Eastern share of Western oil usage may decline. Addressing a conference in Dubai, Shell Group Managing Director Paul Skinner, said Middle Eastern oil producers’ share of Western markets is expected to drop about 10% in the next 10 years. Future global oil price is contingent primarily on Middle Eastern producers’ response to declining market share. Skinner also believes that oil supplies outside OPEC will increase by 600,000 to 700,000 bopd, mostly in the Atlantic basin. Compared with its current 40% share, the Middle East is projected to supply 70% of Asian demand. Global demand will increase to 92 million bopd by 2010, from 76 million bopd, predicts Skinner.