INDIA: Power Finance Corporation floats consultancy arm

Power Finance Corporation (PFC) on Monday floated a wholly-owned consultancy arm—PFC Consulting Limited (PCL)—to advise both Central and state utilities on attracting private investments in generation and transmission projects, including award of ultra mega power projects (UMPP), in particular.

The new venture would take over from Power Finance Corporation services related to UMPPs, including formation of special purpose vehicles, carrying out the bidding and awarding process and obtaining regulatory clearances for the projects, Power Finance Corporation chairman and managing director V K Garg told reporters here.

The consultancy arm of Power Finance Corporation would be an extension of consultancy services group (CSG).

Source: India Economic Times

NORTH AMERICA: Bordeaux commences drilling on Kupcake-1 exploratory well

NORTH AMERICA: Bordeaux commences drilling on Kupcake-1 exploratory wellBordeaux Energy Inc. and its joint venture participant Savant Alaska LLC (Savant) commences drilling of the Kupcake-1 well located on the North Slope of Alaska on March 26th, 2008.

Under its previously agreement with Savant, on drilling the Kupcake-1 well Bordeaux will earn a 30% undivided interest in seven leases (the "Leases") currently held by Savant, located on and offshore the North Slope of Alaska. The Leases are situated 20km from the 13.6 billion barrel Prudhoe Bay oil field and immediately adjacent to the 100 million barrel Liberty Field operated by BP but not yet in production.

Bordeaux anticipates drilling of the Kupcake-1 exploratory well will take approximately 30 days to reach its target depth of 3350 metres. The well is expected to cost a total of approximately US$14 million to drill and log, of which Bordeaux's share is currently estimated to be US$5.6 million.

Source: Scandoil

WESTERN HEMISPHERE: An retired, United States Marine Corps, was nominated to Chevron Board of Directors

WESTERN HEMISPHERE: An retired, United States Marine Corps, was nominated to Chevron Board of DirectorsChevron Corporation says that Gen. James L. Jones (retired, United States Marine Corps) has been nominated for election to Chevron's board of directors. Jones, 64, is currently president and chief executive officer of the Institute for 21st Century Energy, a policy, economic and educational center in affiliation with the United States Chamber of Commerce. Jones will be considered for election to Chevron's board at the company's annual stockholders meeting on May 28. If he is elected, the board will increase from 14 to 15 members, and Jones will serve on the Public Policy Committee and the Board Nominating and Governance Committee.

Jones has been the Institute for 21st Century Energy's president and chief executive officer since March 2007. Prior to the position, Jones served as the Supreme Allied Commander – Europe and Commander of the United States European Command – NATO from January 2003 to February 2007. Previously, Jones served as the 32nd Commandant of the United States Marine Corps from July 1999 to January 2003.

Jones serves on the board of directors of The Boeing Company, Invacare Corporation and Cross Match Technologies. He also chairs the Atlantic Council of the United States, the Armed Forces Benefits Association and the Marine Corps Heritage Foundation. Jones also is a trustee at the Center for Strategic and International Studies.

Jones earned a bachelor's degree in International Relations and was awarded an Honorary Doctorate of Letters from Georgetown University. During his Marine Corps service, Jones was recognized on numerous occasions through high-level national and international awards. He currently is serving as Special Envoy for Middle East Security.

Source: Scandoil

SOUTH AMERICA: Venezuela is rerouting oil in Exxon Mobil dispute

Venezuela is rerouting oil to China that had previously been sent to a U.S. refinery co-owned by its state oil company and Exxon Mobil Corp., Venezuela's oil minister said Friday.

Rafael Ramirez said Exxon Mobil has stopped ordering crude for a refinery in the New Orleans suburb of Chalmette as legal wrangling between the Irving-based company and Petroleos de Venezuela, or PDVSA, continues.

"Everything went to China," Ramirez told reporters.

PDVSA and Exxon Mobil are locked in a fierce legal battle over compensation for the 2007 nationalization of a jointly owned heavy oil project in Venezuela's Orinoco basin.

Ramirez vowed last month that PDVSA would meet its existing contracts with Exxon, including continued shipments to Chalmette. The refinery processes about 190,000 barrels a day, but does not depend exclusively on Venezuelan crude.

PDVSA's profits increased 15 percent last year, jumping to $6.2 billion from $5.4 billion in 2006 as world oil prices reached historic highs, Ramirez said.

Source: Associated Press

AUSTRALIA: Roc reels in cores, points to Cliff Head

Aussie outfit Roc Oil has said “encouraging” and “potentially significant” about the finds of an appraisal well just metres from the Dunsborough find in the offshore Perth Basin, Western Australia.

A No. 2 core was brought to the surface showing oil, as the company looks for contact with water. Two 24-metre cores cut over three days all had “good oil shows” throughout a 48.6 m sampling.

”This latest well appears to point to a potentially significant gross hydrocarbon column both at the Dunsborough-2 well and for the field as a whole,” a statement said.

Shareholders were told it was “to early” to comment on reserves, but said the field could be comparable to the nearby producer Cliff Head and its 16 million barrels.

Source: Scandoil

NORTH AMERICA: Mexico energy bill close, but no risk contracts

Mexico's ruling conservatives are fine-tuning an energy bill with opposition parties but the reform could disappoint investors by keeping profit-sharing contracts illegal, lawmakers said on Wednesday.

President Felipe Calderon's National Action Party, or PAN, which lacks a majority in Congress, has been trying to convince the opposition in recent weeks to revamp energy laws to boost the sagging state-controlled oil industry.

But the PAN is giving up on a core part of its vision for turning around the sector: attracting foreign partners to technologically challenging but potentially huge deepwater oil fields by offering them a share in profits.

"Risk contracts are not in the equation," said PAN lawmaker Juan Bueno, who sits on the Senate energy committee.

Under Mexico's constitution, state monopoly Pemex has sole rights to explore for and produce Mexican oil, and left-wingers bitterly oppose allowing contracts that would have Pemex share risks and profits with outside companies.

Bueno said the PAN was considering a less-extreme proposal that would let Pemex form partnerships with other state-owned energy firms. "That is something we are studying," he said.

He did not say what form such partnerships could take.

Pemex announced another fall in total oil reserves on Wednesday, showing that its fledgling deepwater drilling projects have so far not been able to confirm what seismic tests suggest could be some 30 billion barrels of oil under the Gulf of Mexico seabed in water several kilometers deep. Neither private nor state-run oil companies are expected to sign up for risky deepwater oil projects without contracts that would give them a share in profits.

Cabinet members and PAN lawmakers are meeting opposition legislators all this week to try and reach a consensus on a proposal that could be unveiled within two weeks.

PAN lawmakers said the proposal could also call for reducing state oil company Pemex's heavy tax load and giving the company more freedom to make business decisions.

Mexico is a top supplier of crude to the United States, but decades of underinvestment have left oil reserves and output waning and left Mexico importing 40 percent of its gasoline.

Bueno said the PAN proposal might also include opening up fuel storage and transport to more private investment.

Lawmakers for the centrist Institutional Revolutionary Party, or PRI, another key opposition bloc, plan to meet Calderon's energy minister next week to discuss the proposal, the party's leader in the lower house told reporters.

PAN lawmakers said the government wanted to seal a deal with the opposition before presenting its bill.

"That's where we're at. It wouldn't make sense to present a bill that was destined for failure," said Alonso Lizaola, a PAN lawmaker and secretary on the lower house energy committee.

Source: Reuters| By Jason Lange

NORTH AMERICA: Mexican Party Says Time Running Out for Energy Bill

Mexican lawmakers from the opposition Institutional Revolutionary Party said time is running out to debate and approve an energy bill before Congress recesses April 30.

Senator Manlio Fabio Beltrones, the party leader in the Senate, urged President Felipe Calderon to present as quickly as possible his plan to loosen the state's monopoly on oil, which the government says is the only way Mexico can halt declines in output and reserves.

Calderon's inability to get a bill through Congress would be a failure for his administration, which has made energy reform a top political priority. Calderon needs the support of the opposition party, known as the PRI, to get the bill passed.

``It's not over until the fat lady sings,'' said Armand Peschard-Sverdrup, senior associate at the Center for Strategic and International Studies in Washington. ``But clearly the clock is ticking.''

Beltrones, speaking today in an interview on Radio Formula, said Congress may open an extraordinary session between May and August to debate an energy bill.

Calderon's National Action Party, known as the PAN, has drafted part of the energy reform package. The plan would allow state oil company Petroleos Mexicanos, known as Pemex, to join with private or foreign companies to develop wells that straddle the U.S. border.

Alonso Manuel Lizaola de la Torre, a PAN member in the lower house of Congress, said he had planned to present the initiative yesterday. Hector Larios, his party leader in the lower house, asked him to postpone it.

Border Fields
``To be able to realize contracts and agreements for the joint development of border fields is extremely important for Mexico,'' the proposal says, according to a copy provided to Bloomberg News by Lizaola de la Torre.

Calderon's party postponed presenting the initiative because of recent protests by opponents of the reform, including a rally in Mexico City's main square yesterday led by former presidential candidate Andres Manuel Lopez Obrador, Lizaola de la Torre said.

Lopez Obrador and members of his Party of the Democratic Revolution have promised to hold rallies at congressional buildings, airports and financial institutions to protest reformation of the energy industry.

Mexico's constitution reserves oil to the government, banning any outside investment in exploration or production. The country nationalized most aspects of the oil industry in 1938. Calderon is hoping to change secondary laws to allow private and foreign companies to team up with Pemex, which would retain ownership of the drilling projects.

Broader Initiative
Lawmakers from Calderon's party intend to present the border-well bill along with a larger energy initiative, Lizaola de la Torre said.

Emilio Gamboa Patron, PRI leader in the lower house of Congress, also said today that his party can't be rushed to pass an energy bill and time is running out.

Pemex generates about 40 percent of federal revenue. Crude output may drop by a third by 2016 unless partnerships with other companies gives it access to technology that would allow it to drill deepwater wells, the government has said.

Investment in the industry may help Mexico's economy as exports to the U.S., which buys over 80 percent of Mexican goods sent abroad, are falling. Mexico's central bank in January cut its economic growth forecast for 2008 by half a percentage point, to a range of 2.75 percent to 3.25 percent.

``Mexico is going to have to brace itself for what could be a severe and lengthy recession in the U.S. and the ripple effect on the Mexican economy,'' Peschard-Sverdrup said. ``Energy reform could help to neutralize that.''

Source: Bloomberg| by Adriana Lopez Caraveo & Jens Erik Gould

INDIA: NTPC relaxed from Rs 1,000 cr equity cap for all projects

The government on Thursday exempted NTPC Ltd from the Rs 1,000-crore investment cap in a joint venture or subsidiary set up to bid for power projects, a move that would help the top electricity producer to place competitive bids for the upcoming seven plants it is eyeing.

"We are extremely happy. This will help us in being competitive to a great extent," Company Chairman and Managing Director T Sankaralingam said.

The Cabinet Committee on Economic Affairs gave its nod to waive the ceiling for equity investment by NTPC to establish financial joint ventures and wholly-owned subsidiaries in India or abroad for participating in bidding called by state utilities and distribution licensees, an official spokesperson said.

The approval would facilitate participation of NTPC in bidding for the development of power projects initiated by government utilities and result in greater competition and establishment of more public sector power projects, the spokesperson said after the CCEA meeting.

Being a 'Navratna' company, NTPC's participation in any joint venture for bidding was restricted to Rs 1,000 crore. The company had been seeking a special exemption from the government, particularly to bid for setting up seven coal- based power plants in Maharashtra, Madhya Pradesh, Uttar Pradesh and Karnataka.

The company seeks to become a 50,000-MW company by 2012. It has a total installed capacity of 29,144 MW at present.

Earlier, the company had to wait for a Cabinet clearance for an over Rs 1,000-crore equity participation in a joint venture for participating in bids for a power project. The seven projects, totalling a capacity of more than 10,000 MW, require an investment of up to Rs 1,800 crore each.

Source: India Economic Times

GEOPOLITIC: China may join Iran-Pakistan gas deal. The peace pipeline

GEOPOLITIC: China may join Iran-Pakistan gas deal
China is ready to join the Iran-Pakistan gas pipeline if India drops out of the 7.4 billion dollar project, Pakistani sources have said.

Pakistan had urged Iran earlier this month to finalize the Iran-Pakistan-India natural gas pipeline project by April because of its growing demand for gas, while Tehran was holding final talks with India over the deal, reported UPI on Tuesday.

Tehran informed Islamabad if New Delhi remained reluctant to joint the project under the US pressure, Iran would then invite Beijing to participate in it.

According to the report, the Chinese have told Pakistan's Petroleum Ministry that they are ready to join the so-called "peace pipeline" project.

Pakistan and Iran have finalized a gas purchase agreement, but India is yet to complete modalities largely due to differences with Islamabad over the transit fee to be paid for the fuel carried through Pakistani territory. Islamabad has called on Iran to increase the volume of the natural gas it will supply by 50 percent if India opts out of the deal.

Source: PressTV

GEOPOLITIC: India - Brasil may enhance cooperation in oil sector

GEOPOLITIC: India - Brasil may enhance cooperation in oil sector
Petroleum and Natural Gas Minister Murli Deora on Wednesday emphasised the need for India and Brasil to further enhance cooperation between both countries, especially in the oil and gas sector.

During a meeting with Brazilian Minister for Development, Industry and Foreign Trade, Miguel Jorge, Deora said efforts are afoot in this direction as the two national oil companies of respective countries, Oil and Natural Gas Corporation (ONGC) (India) and Petrobras (Brazil) have entered into an arrangement for exploration and production of hydrocarbons in India and Brazil.

To a suggestion by the Brazilian Minister to enhance ethanol blending Deora informed that Indian Government has already decided to blend ethanol with petrol at 10 per cent against five per cent being blended at present.

Both Ministers expressed satisfaction over the efforts being made to take cooperation between them forward.

Source: India Economic Times

INDIA: Murli Deora, India hopes to resume talks on IPI pipeline soon

India hopes to resume talks on IPI pipeline soon
In a major development that could result in a breakthrough, Pakistan has invited India for talks on finalising the $ 7.4 billion Iran-Pakistan-India (IPI) gas pipeline deal.

"I received an invitation from Pakistan's Energy Minister to visit Islamabad to finalise the transit fee issue so that the IPI pipeline deal could be wrapped up soon," Petroleum and Natural Gas Minister Murli Deora said on Monday, a leading english daily reported here Tuesday.

The Minister was supposed to visit Pakistan in February first week to hold talks on the issue but it was cancelled at the last moment.

Deora said he hoped to resume negotiations on the issue as soon as the new government in Pakistan was installed.

"I will visit Pakistan sometime next month to hold talks and hope to wrap up the issue of transit fee and related matters as soon as possible and sign a formal agreement to make the project happen." The issue of "transportation fee" was sorted out by the two governments and now the focus of the talks would be on the "transit fee" sought to be levied for gas transported from Iran to the India- Pakistan border. India and Pakistan had, in principle, reached an agreement on the transportation charges that New Delhi would be paying to Islamabad.

A point of mutual concern for both nations was the incorporation of a new clause sought to be incorporated by Iran on revision of natural gas price every three years.

Source: Islamic Republic News Agency

NORTH AMERICA: Petro-Canada to weather “volatile” 2008

NORTH AMERICA: Petro-Canada to weather “volatile” 2008Petro-Canada managers expect “a challenging year for the petroleum industry worldwide” in 2008, with volatile energy prices, unpredictable industry inventories, wild weather and unusual political developments.

Company leadership made its predictions in their annual report, in which leadership asserts “concern about a U.S. recesion” has “put a lid on potential further increases in international oil prices”.

“For the first time in several years, questions are being raised about the ability of China to maintain both the extraordinary economic and oil demand growth rates, which have been sustaining the oil price increases of recent years, should its key export markets go into economic decline,” a discussion paper from management read.

Management was leary of more nations hiking royalties and pointed out that lowly gas prices — which made for the cheapest power outside of coal in 2007 — was succeptible to a recession taking hold in North America. Most homes in the company’s Canadian base are heated by natural gas, although Canadians can opt to heat by wood, electricity, oil heating pump.

In their analysis, company managers said they stil saw that lower prices for natural gas would at least attract less liquefied natural gas supplies, keeping Canadian prices buoyant.

Against the backdrop of volatile prices, the company is still underway with a $5.3 billion capital spend targeting production in Libya this year, n 2009 at White Rose off Eastern Canada and by 2010 in Syria, where a front-end engineering study is expected finished within days, the prelude to contract awards at the Ebla gas project.

Source: Scandinavian Oil & Gas

INDIA: Nuclear energy necessary for development of country. Manmohan Singh

INDIA: Nuclear energy necessary for development of country. Manmohan Singh
India's Prime Minister, Dr. Manmohan Singh has stressed the need for the development of nuclear energy as it is the clean source of electricity.

He said that government is committed for further development of nuclear energy as it is environment-friendly source of power and as a means of widening the energy basket. Dr. Manmohan Singh was speaking at the foundation stone laying ceremony of 1500 megawatt gas power project at Bavana in the capital.

He said this project with an investment of over 4000 crore rupees will bridge a major gap in the Delhi's electricity requirements and will also meet the requirement of Commonwealth games in 2010.

He said that government will make Delhi a humane, a green and clean city and a city of joy and hope for millions which the entire nation can be proud of. The Prime Minister emphasised the need to further development of nuclear energy potential.

The prime minister said, "our economy is growing at 8 to 9 per cent per annum with the growing urbanization and raising prosperity, the demand for electricity is outpacing existing sources of supply." He said to meet the challenge of growing electricity demand, government has taken many steps to increase coal production and are also trying to develop hydro-electricity. He appealed to the young people to start new campaign for conservation of energy and exercise restraint in the use of electricity.

Speaking on the occasion Union Power Minister Sushil Kumar Shinde said that the government will provide electricity to every house hold upto 2012. He said in the 11th plan government has targeted to produce eighty thousand megawatt power in the country. Shinde said government will provide uninterrupted power supply to the capital during the forthcoming commonwealth games.

The Delhi Chief Minister Mrs. Shiela Dixit said that Delhi government has started many projects to meet the energy requirement of the capital. She said by 2010, Delhi will become self sufficient and will also supply electricity to other states. She thanked the Union Petroleum and Natural Gas Ministry for providing natural gas for Bawana project.

Source: Islamic Republic News Agency

OPEC: Organization of the Petroleum Exporting Countries, chief sees oil at $80-$110 for rest of 2008

Chakib KhelilPetroleum prices will range between $80 and $110 per barrel for the rest of 2008, Organization of the Petroleum Exporting Countries (OPEC) President Chakib Khelil said on Saturday.

Khelil, who is also Algerian energy and mines minister, told Algerian television Organization of the Petroleum Exporting Countries was under "big pressures" from consuming nations who liked to portray the group as responsible for high oil prices, when in fact the market was responding to U.S. economic problems and the falling dollar. "Prices will continue to be high, and the prices for the rest of the year will be between $80 and $110," he said.

The Organization of the Petroleum Exporting Countries (OPEC) left its output steady at a meeting earlier this month despite calls from consuming countries for more oil to halt the record rally. Oil and other commodities have struck a series of record highs since the beginning of the year as investors fled stock markets and took refuge in dollar-denominated assets.

But U.S. oil prices have eased since hitting a record $111.80 a barrel on Monday as signs of an economic slowdown mount, raising the possibility of a slowdown in world demand for commodities. Khelil has long said Organization of the Petroleum Exporting Countries has played no role in oil's rise in recent months.

"There are big pressures on Organization of the Petroleum Exporting Countries and some consuming nations would like to present Organization of the Petroleum Exporting Countries as being behind current high prices," Khelil said.

"But the truth is that the current prices are linked to the U.S. economic problems as well as to the value of the dollar."

He added Algeria's oil and gas sector would continue to do business in the U.S. dollar.

"We will continue to work with the currency of the international market," he said, referring to the dollar.

Source: Reuters|by Lamine Chikhi;William Maclean and Caroline Drees

FRANCE: Electricite de France plans Scottish Power merger

FRANCE: Electricite de France plans Scottish Power merger
Electricité de France (EDF), the giant French utility, is drawing up plans to merge its British energy subsidiary with Scottish Power if it secures one of Europe's biggest-ever takeover deals.

Scottish Power is owned by Iberdrola, Spain's largest energy supplier by market value, and EDF is hoping to acquire it as part of a €63bn consolidation of the European utility sector.

EDF is in talks about an alliance with Spanish construction group Actividades de Construcción y Servicios (ACS), which would see the duo make simultaneous bids for Iberdrola and Spain's third largest supplier Union Fenosa. Under the deal, ACS would acquire all of Iberdrola, which has a market value of €50bn, and break it up. Scottish Power, worth about €15bn, and other units would be sold to EDF. ACS already holds a 13 per cent stake in Iberdrola.

EDF, meanwhile, would oversee the bid for Unión Fenosa, a company valued at €13bn in which ACS holds a 45 per cent stake.

Iberdrola recently expanded the responsibilities of Scottish Power chief executive and group strategy head José Luis del Valle, and it is unclear whether he retains his leadership of the British company under the new arrangements.

French president Nicolas Sarkozy said last week he was in close contact with the Spanish government to discuss energy issues and that the two nations were trying to find "consensual solutions". The Spanish firms declined to comment.

An EDF spokesperson was reported as saying the French firm was willing to play a role in restructuring Spain's energy sector, but would only do so with the approval of the Spanish authorities. The deal would be Europe's largest cross-border acquisition in the energy sector. EDF, which is owned by the French state, is one of Britain's largest energy suppliers with 5.1m customers.

It is not clear whether EDF would face competition hurdles in Britain if it pursued a takeover of Scottish Power. Scotland's first minister, Alex Salmond, is campaigning against a French takeover of Scottish Power, which was bought by Iberdrola for €15bn in 2006.

The EU has worked to heighten competition and create a single cross-border energy market in an industry still dominated by former or state-owned monopolies. It has allowed a French power producer to set up in Spain and an Austrian company to move into Italy.

Source: The Telegraph |By Mark Kleinman and Juliette Garside

NORTH AMERICA: Mexico´s oil. An anniversary highlights divisive issue of private investment

NORTH AMERICA:  Mexico´s oil. An anniversary highlights divisive issue of private investment
The battle lines over the future of Mexico's oil industry hardened Tuesday — the 70th anniversary of its nationalization.

At a ceremony in the oil state of Tabasco celebrating the takeover, President Felipe Calderon issued a call for more private investment in the national oil company, Pemex. He proclaimed the fate of the company the defining issue of his generation.

Several hours later his leftist rival, Andres Manuel Lopez Obrador, led a huge protest march in the capital against any form of privatization. At stake is the viability of Mexico's oil company, which provides nearly 40 percent of the government's budget and sends 1.4 million barrels a day to the United States through the Houston area.

After nearly two decades of free-market policies that have seen most government-owned industries privatized, communal farms dismantled and labor unions weakened, nationalized oil remains as one of the few economic touchstones of the Mexican Revolution.

In 1938, President Lazaro Cardenas expropriated the oil fields, following months of turmoil involving strikes by Mexican workers.

"The oil is ours!" became a rallying cry for generations of Mexicans. Oil revenue fueled decades of development and other sources of revenue were left untapped.

High world oil prices have assured huge profits for Pemex. But the country's proven reserves and production have declined as the offshore Cantarell field plays out. The field has accounted for two-thirds of Pemex's production over the past three decades.

"To transform Pemex is to strengthen Mexico," Calderon said Tuesday.

Without new proven reserves and increased production, he said, Mexico would cease being an oil exporter in nine years, and cash-strapped Pemex would not rebound without foreign investment and technology.

Calderon and others argue that private participation is necessary to develop the ultradeep-water fields in the northern Gulf of Mexico that will anchor Pemex's future.

But those opposed to private investment insist that Pemex can develop the new fields on its own. They shrug off predictions of Pemex's impending collapse as scare tactics meant to pressure a sale to the Americans and other foreigners.

"This is very sensitive for the Mexicans," said political analyst Alfonso Zarate.

"People in general have a lot of fear about private participation in the oil industry."

Though public unease about Pemex's future has been widespread, opposition to private involvement is spearheaded by Lopez Obrador, the politician who narrowly lost to Calderon in 2006.

Lopez Obrador's campaign against the "privatization" of Pemex — which Calderon and other government officials insist is not on the table — has bolstered the former Mexico City mayor's political fortunes. His prospects were strengthened by last Sunday's internal elections in the Democratic Revolution Party, in which his allies won most leadership posts.

At the same time, Calderon's ability to push his agenda for Pemex in Congress has been weakened by a scandal surrounding Interior Minister Juan Camilo Mouriño, who is accused of influence peddling.

Mouriño has been seen as Calderon's chief negotiator in the ongoing Pemex debate.

"Lopez Obrador demonstrated his astuteness and his capacity to hit hard at the right moment," Zarate said.

"There is a very important political base that supports his arguments."

The most promising replacements for Cantarell lie in the ultradeep seas of the northern Gulf, close to U.S. and Cuban territorial waters. Pemex doesn't have the technological capacity to drill the deepwater wells. Foreign companies are developing deep-water wells in Cuban and U.S. fields.

Mexican proponents of partnering with private companies argue that if Pemex doesn't begin drilling soon, it will lose control of the internationally shared deep-water fields.

Source: Houston Chronicle| By DUDLEY ALTHAUS

NORTH AMERICA: oil sector reform in Mexico?

NORTH AMERICA: oil sector reform in Mexico?
The Mexican government has said that it will put forward legislation to reform the oil sector by the end of March.

A number of recent signals suggest that a bill is imminent, most notably an Energy Ministry report, which showed dramatic increases in output, exports and tax revenues if private – multinational – investment is permitted in exploration for deep water oil reserves in the Gulf of Mexico.

The fact that the government sent out these signals suggest that it is confident Congress would pass reforms. This comes in the wake of two potential setbacks: the election of Alejandro Encinas, who is close to defeated 2006 presidential candidate Andres Manuel Lopez Obrador, as leader of the opposition Party of the Democratic Revolution (PRD); and a recent scandal involving Interior Minster Juan Camilo Mourino, who is President Felipe Calderon’s chief negotiator and closest political ally.

The oil sector is a nationalist sacred cow in Mexico, and any Calderon initiative would stop well short of privatising state oil monopoly, Petroleos Mexicanos. Apparent government confidence suggests that Calderon is close to reaching agreement with Mexico's other main opposition party, the Institutional Revolutionary Party (PRI). This implies that the PRI will not seek to claim Mourino's head over contracts with Pemex, which he signed on behalf of his family's business when he held government posts earlier this decade – which will save Calderon from potential embarrassment and deadlock.

Source: Oxan

UNITED STATES: Broadwater LNG in New York gets nod

UNITED STATES: Broadwater LNG in New York gets nod
The U.S. Federal Energy Regulatory Commission has approved Broadwater Energy LLC’s plan to build and operate the first floating terminal for the storage and delivery of liquefied natural gas, or LNG, to the United States.

Twenty other LNG terminals were considered, but the Broadwater project was picked to meet rising demand in New York and Connecticut, the regulator said in a statement. Broadwater was told it must include 80 safety and security measures against environmental fallout.

Based on all available scientific facts, we approve the Broadwater project today, subject to rigorous conditions, because it can meet the projected energy needs for New York City, Long Island and Connecticut, and can provide the service safely,” a statement said.

Broadwater will bring 1.25 billion cubic feet of natural gas per day to fuel electric generating plants and heat homes. The 1,200 foot long and 200 ft wide floating storage and regasification unit will rise 80 ft above the New York waterline some 20 kilometres offshore.

A yoke mooring system, which will be incorporated in the bow section of Broadwater’s FSRU, will moor the FSRU to a fixed tower and allow the FSRU to pivot, or “weathervane,” around the tower and to withstand events exceeding 100-year storm conditions.

The project would include eight LNG storage tanks capable of storing the equivalent of 8 Bcf of regasified LNG, a regasification plant and a 21.7 mile long pipeline extending from the LNG terminal to a subsea interconnection with the Iroquois Gas Transmission System which will bring the gas onshore.

Source: Scandinavian Oil and Gas

EUROASIA: Investigators Raid BP and TNK-BP

EUROASIA: Investigators Raid BP and TNK-BP
Plainclothes police officers raided the central Moscow offices of BP and TNK-BP on Wednesday, ratcheting up pressure on BP's Russia venture amid market rumors that it has been targeted for state control.

Officers swarmed over BP's new office on Novy Arbat around 7 p.m., hours after a similar raid against TNK-BP headquarters on Arbat in connection with a back tax claim. There was confusion as to who had ordered the raids.

The aggressive move against TNK-BP, 50-50 owned by British oil major BP and three Russian oligarchs, came as the firm continues to wrangle with Gazprom over its future.

"Representatives of law enforcement have visited our offices as part of an investigation," BP spokesman Vladimir Buyanov said by telephone late Wednesday. "We are cooperating fully with the authorities."

Buyanov said he did not know who had sent the officers and said they were still there as of 9:30 p.m.

Earlier Wednesday, three unmarked minivans, two topped with blue lights, parked along the pedestrian street in front of TNK-BP headquarters. The raid began at noon, employees said, and was still underway as of 6 p.m. One van remained at 8 p.m.

"We are not talking about a search; we are talking about the collection of documents," said Irina Dudukina, a spokeswoman for the Interior Ministry's Investigative Committee. She referred further questions to the ministry's economic crimes unit.

Two TNK-BP officials were brought in for questioning on Wednesday, said Andrei Filipchuk, a spokesman for the economic-crimes unit.

"We ... invited two managers from TNK-BP's head office to provide explanations regarding certain questions," he said, declining to identify the officials.

Dudukina said the officers were looking for documents related to an ongoing tax investigation into Sidanco, a mid-sized oil firm that BP originally bought into in 1997, before folding that stake into TNK-BP when the company was formed in early 2003, Interfax reported.

TNK-BP remains an anomaly in an energy sector that has witnessed creeping state control. The firm has come under increasing pressure in recent months, losing its flagship Kovykta gas project to Gazprom last June following pressure from environmental regulators.

Finalization of the deal, in which TNK-BP pledged to sell its 63 percent stake in Kovykta license holder Rusia Petroleum to Gazprom for between $700 million and $900 million, has been postponed several times.

This has prompted market speculation that Gazprom may be hoping to fold Kovykta into a larger deal that would see it buy out the firm's Russian shareholders -- Viktor Vekselberg's Renova, Lev Blavatnik's Access Industries and Mikhail Fridman's Alfa Group.

A clause forbidding the trio from selling their stakes expired late last year.

Gazprom spokesman Sergei Kupriyanov said the Kovykta deal had yet to be sealed "because we haven't agreed on everything yet." He declined to comment further.

President-elect Dmitry Medvedev is chairman of Gazprom's board. The raids at the offices of the British oil major could further strain already poor relations between Moscow and London.

TNK-BP employees flooded from the building starting around 4 p.m., some saying they were unable to work as computer servers had been shut down.

"They shut the doors around lunchtime for about 15 or 20 minutes, so no one could leave," said one TNK-BP employee, who declined to be identified because he was not authorized to speak with the press.

TNK-BP spokeswoman Marina Dracheva declined to comment on the investigation, saying only, "We will be ready to cooperate with the authorities, as we always do."

Several employees said they did not know who was carrying out the raid, and that no announcement had been made. The officers wore no uniforms, they said.

Around 5 p.m., two men exited TNK-BP headquarters and spoke to a man sitting inside one of the unmarked vans.

When asked if they were from the Interior Ministry, one of them, dressed in a dark blue tracksuit, said, "No. We just came to look at Arbat," one of Moscow's most famous streets.

The men then retreated to a gray Lada parked at the end of Arbat on Gogolevsky Bulvar, where they picked up McDonalds bags, before heading back inside TNK-BP headquarters.

It remained unclear who exactly carried out the search of the BP and TNK-BP offices. Dudukina said the Central Federal District's Investigative Committee had carried out the raid. Yet a spokesman for that committee told Interfax that "there is no investigation connected to these companies," referring to TNK-BP and Sidanco.

The committee had not opened a criminal case related to either firm, the spokesman added.

Filipchuk, of the economic crimes unit, stressed that there was no criminal case and said his department had not carried out the raid.

"None of our staff was there [today]," he said, referring to TNK-BP headquarters.

"Maybe there have been some violations or there is suspicion, maybe not -- I do not know," Filipchuk added.

TNK-BP, the country's third-largest oil producer, has faced a slew of back tax claims. In February, police raided the headquarters of Slavneft, a 50-50 joint venture with Gazprom, to seize documents related to a five-year investigation into suspected tax evasion.

Back tax claims were brought against Sidanco most recently in December 2005 and February 2006, relating to taxes for 2002 and 2003.

Source: The Moscow Times|By Miriam Elder and Nikolaus von Twickel

EUROASIA: The Ukrainen Government Rewrote Agreement with Gazprom

Led by Prime Minister Yulia Tymoshenko, Ukrainian government has scrutinized the March 12 gas agreement with Russia. The revised document not only excludes Rosukrenergo from supplies but also strips it of the chance for gas transit to Europe. What’s more, Gazprom’s access to domestic market is limited to this year. The amendments of this kind apparently call for another round of negotiations.

 The Ukrainen Government Rewrote Agreement with Gazprom

Ukrainian cabinet deliberated yesterday on the discrepancy report to the gas agreement inked by Gazprom and Naftogaz chiefs Alexei Miller and Oleg Dubina in Moscow March 12. In new wording, the document actually breaks the agreements reached by those companies.

In the first instance, the item whereby Ukraine was buying Russia’s gas at $315 per a thousand cu meters in January and February was crossed out of the document. But Gazprom viewed exactly that provision as its key victory at negotiations.

 The Ukrainen Government Rewrote Agreement with Gazprom

Besides, the supplying activities of Swiss Rosukrenergo AG (Gazprom owns 50 percent, Dmitry Firtash has 45 percent and Ivan Fursin holds 5 percent) are limited to January through March. Another loss of Rosukrenergo is the ban on the gas transit (11.6 billion cu meters in 2007) to Europe. Tymoshenko said this move will allow not to confirm the 25-year gas transit contracts with the company and the use of Ukrainian storage facilities. What’s more, those contracts will be challenged “as concluded under the economically disadvantageous conditions and cancelled.”

According to Tymoshenko, the direct contract of Gazprom Export and Naftogaz for the gas of Central Asia ($179.5 per a thousand cu meters) will take effect April 1. The provision spelling out that Gazprom Export will directly supply to Ukrainian consumers at least 7.5 billion cu meters in 2008 and proceed with supplies was substituted by the sale of up to 7.5 billion cu meters in 2008 exclusively. Opening Ukrainian domestic market to Gazprom after it will be the highlight of new negotiations.

 The Ukrainen Government Rewrote Agreement with Gazprom

Source: Kommersant

OiL FUTURES: You may feel heat of oil flares soon

Though crude oil has begun to hit new highs with unfailing regularity over the past two months, the rise has not begun to upset our monthly budget thanks largely to government subsidies. This state of bliss may not last for too long.

Considering the pace of price rise in crude oil, its impact is likely to be felt soon. Crude oil prices, which have already breached a level of $110 per barrel are up by nearly 10% since December end, compared to 15-25% fall in major stock indices during the period.

The rising oil prices are building up an underlying inflationary pressure. Though petroleum products' prices are administered in India and there is an incomplete pass-through of the burden to the final consumers. Nearly a fifth of the incremental change in inflation was accounted for by fuel price index for the week ended March 3.

The burden of in most visible in case of aviation turbine fuel (ATF), naphtha and bitumen, which are traded at market-determined prices. There price are up by 27-39% year-on-year for the week-ended March 3. This will impact air travel, power and polymers (plastic products and synthetic material) directly. We need to prepare to pay more for most manufactured products in the future.

A strong demand growth and high profit margins have given India Inc the leeway to absorb a part of input cost hikes in the past. But, as corporate earnings have slowed and economic growth is likely to soften, companies are running out of headroom to absorb further increases in crude oil prices. Most manufacturers are expected to take a price hike and some have done so in last few month. More increases in crude prices or a hike in domestic fuel prices will build up more pressure.

Retail prices of petrol and diesel are unlikely to go up, considering the forthcoming general elections and higher food prices. The government may compensate oil-marketing companies by issuing more oil bonds and this will increase future subsidy burden. This will create more liabilities for the future government and raise fiscal deficit few years down the road. Oil bonds will only delay the pain and will come back to haunt tax-payers in future.

Another fallout of rising oil prices is the depreciation in rupee against dollar. A stronger rupee helps cool domestic inflation by lowering the price of imports, which include crude oil food and many industrial raw material.

However, a weaker rupee adds fuel to the inflationary pressure in the domestic economy. Rupee has depreciated by 2.4% during the month ending March 18. The net import bill (underlying assumption is that domestic consumption will grow at a three-year CAGR of 3.75%) is likely to touch a level of Rs 2,47,580 crore by March 2009 (almost $62 billion at current exchange rate), recording a growth around 19%. Such heavy import bill will account almost 5.5% of GDP further weakening rupee.

In short, rising oil prices weigh heavily on Indian economy. The demand growth is showing signs of moderation especially in interest rate sensitive sectors such as construction, consumer durables and automobiles sector. In order to stimulate the growth, interest rate cut is expected. However, rising oil prices have put RBI in a dilemma.

So far, RBI has fought inflation by cooling off investment lead economic growth and is likely to continue with this policy. But what if GDP growth slips below 7%. It will amount to a severe slowdown in economy coupled with oil induced inflation and may began to hurt all and sundry.

Source: India Economic Times

ASIA: Roc reins in China drilling

ASIA: Roc reins in China drilling
Aussie outfit Roc Oil has decided not to drill a planned well offshore China after a neighbouring well appeared to disappoint company geologists earlier in March.

The Wei 6-12E-1A exploration well was plugged and abandoned as Roc “foreshadowed” in an earlier March annoucement. After a review, operator Roc, Horizon Oil, Petsec Petroleum and Oil Australia decided not to drill Wei-12-2N-1.

Only “minor residual oil shows” were seen at Roc’s Wei 6-12E-1A exploration well.

Source: Scandinavian Oil & Gas

FRANCE: GDF Gaz de France recalled its application for participation in Nabucco gas pipeline project

FRANCE: GDF recalled its application for participation in Nabucco gas pipeline projectGaz de France (GDF) has recalled its application for participation in Nabucco gas pipeline project, French Trade Minister Herve Novelli said in Istanbul.

We have recalled our application because we think that the decision of the Turkish authorizes was dictated by political reasons,” Mr Novelli said.

Earlier, Turkey vetoed participation of Gaz de France in the project due to adoption of French bill penalizing the Armenian Genocide denial.

The Nabucco pipeline is a planned natural gas pipeline that will transport natural gas from Turkey to Austria, via Bulgaria, Romania and Hungary. It will run from Erzurum in Turkey to Baumgarten an der March, a major natural gas hub in Austria. Some consider the pipeline as a diversion from the current methods of importing natural gas solely from Russia.

Nabucco could bring gas supplies from Iran, Azerbaijan, Kazakhstan, Turkmenistan, Egypt and Syria. It will be connected near Erzurum with the Tabriz-Erzurum pipeline, and with the South Caucasus Pipeline, connecting Nabucco Pipeline with the planned Trans-Caspian Gas Pipeline. It will run from Erzurum in Turkey to Baumgarten an der March in Austria with total length of 3,300 kilometres (2,050 mi). In early years after completion the deliveries are expected to be between 4.5 and 13 billion cubic meters (bcm) per annum, of which 2 to 8 bcm goes to Baumgarten. Later, approximately half of the capacity is expected to be delivered to Baumgarten and half of the natural gas is to serve the markets en-route. The transmission volume of around 2020 is expected to reach 25.5 to 31 bcm per annum, of which up to 16 bcm goes to Baumgarten.

Construction of pipeline is expected to begin in 2009 and is planned to be finished in 2012. It estimated to cost around 4.6 billion EUR (5.8 billion USD). The company leading the project is OMV from Austria.

Source: Panarmenian

RUSSIA: Naftogaz and Gazprom finally settle dispute

UkrGazEnergoLeaderships of the Naftogaz of Ukraine and Gazprom Companies during bilateral talks in Moscow on March 12 have signed a joint coordinated decision on eliminating from the market the UkrGazEnergo Company, REGNUM correspondent has cited Ukrainian cabinet's press office, quoting prime minister Yulia Timoshenko.

The sides have agreed that their cooperation requires no new intermediary structures, such as the so-called SP-1 and SP-2. NJSC Naftogaz of Ukraine will independently deal with the customs service and sell Central Asian natural gas in the territory of Ukraine, Yulia Timoshenko commented. “One more decision taken by the sides today: the price of natural gas for Ukraine will not exceed USD179.5 per 1,000 cubic meters,” she said.

Source: REGNUM

INDIA: Haryana to invest Rs 24316.82 cr in power sector in 11th Plan

INDIA: Haryana to invest Rs 24316.82 cr in power sector in 11th Plan To augment power generation and strengthen its distribution system in the state, the Haryana government has prepared a mega investment proposal of Rs 24,316.82 crore during the 11th five year plan.

Out of this, Rs 10,042.01 crore would be spent on power generation, while Rs 7,697.72 crore is earmarked for transmission and Rs 6,577.09 crore is for strengthening of distribution system in the state, Haryana Minister for Forest, Environment and Sports Kiran Choudhry today said here after inaugurating a 33 KV substation at Pataudi village in Bhiwani district.

The 33 KV substation at Pataudi has been constructed by the Dakshin Haryana Bijli Vitran Nigam at a cost of Rs two crore. She also laid foundation stone a 33 KV substation at Bhera village in the district.

Choudhry said a comprehensive plan has been formulated to construct 255 new substations, augment 154 existing ones and construct associated transmission lines at cost of Rs 4020 crore to strengthen the power transmission and distribution system in the state.

She said 70 new sub stations have been commissioned besides augmenting 180 existing sub stations and erecting 1100-km-long transmission lines at a cost of Rs 500 crore after the present government came to power in Haryana. Choudhry said the Dakshin Haryana Bijli Vitran Nigam and the Haryana Vidyut Prasaran Nigam (HVPN) plan to spend Rs 460 crore to strengthen Power transmission and distribution system in Bhiwani district.

Source: India Economic Times

UNITED STATES: As energy costs continue to soar, industry feeling heat in Congress

UNITED STTES: As energy costs continue to soar, industry feeling heat in CongressIt sounds like an oil executive's vision of Nirvana: $4-a-gallon gasoline this summer and $100-a-barrel oil for the foreseeable future.

But mix in a groundswell of consumer outrage and vote-hungry presidential and congressional candidates in tight races in November, and that good dream turns bad as new laws are proposed to battle high prices and penalize the industry.

"It's a problem that's been allowed to fester for too long, and the speed at which it translates from public discord to action in Congress is going to be sudden and faster than many think," said Dave Hamilton, director of global warming and energy programs for the Sierra Club.

Already there are calls for the return of a 1980s relic — windfall taxes on oil companies' profits — including talk last week of adding the measure to a budget resolution.

And the House Select Committee on Energy Independence and Global Warming has summoned CEOs from the big five oil companies to testify on oil prices April 1.

"It's time for these top oil company CEOs to look Americans in the face and tell them why they can't support new solutions," said Rep. Edward J. Markey, D-Mass., in a statement announcing the hearing.

But to many in the oil patch this all sounds like a broken record that no one will dance to.

"It's kind of like 'Here they go again,' " said Dave Pursell, managing director of Tudor Pickering Holt & Co., a Houston research firm and investment bank. Congressional hearings have become a ritual whenever prices climb, he said.

But that doesn't mean anyone in the industry is discounting the passion behind these measures, he says. Gasoline is taking a bigger bite out of consumer wallets; Democrats — historically less friendly to oil companies than their GOP colleagues — are getting better at flexing their muscle in Congress; the presidential race looks close and competitive.

"At some point, people should choose their medicine while they still can," the Sierra Club's Hamilton says.

But others predict long odds against significant energy legislation getting passed this year — be it helpful or harmful to the industry.

"The fact is while there's been a lot of Sturm und Drang on the Hill about $4 gas and $8 natural gas, there's very little they can do about it," said George Baker, a partner with the law firm Williams & Jensen in Washington, D.C., who specializes in natural resources. "The rhetoric won't be matched by any real action."

Spring recess looms
For starters, there's very little time. Lawmakers headed into a spring recess on Friday, come back for a few weeks in April and May and then go into summer recess. In all they have around 50 days to create new laws, Baker said.

That might seem like plenty of time if it weren't for the wide gap between many of the players on the best policy approaches.

The Sierra Club and other environmental groups have been pushing renewable energy sources and efficiency measures for years, says Hamilton.

And typically they get a response from industry along the lines of the 12-point national energy plan that Shell Oil Chairman and CEO John Hofmeister unveiled earlier this year. The first priority: opening up more federal lands to drilling. Energy efficiency was item No. 9.

"That's the main thing you need to do, increase supplies of all energy," said John Felmy, chief economist with the American Petroleum Institute, a major industry trade group. "We need to improve conservation and efficiency too, there's no question about that, but you need market forces to do it."

Felmy said a recent House bill that proposed taking away a tax incentive from a handful of the largest oil companies and using the funds to promote renewables was "divorced from reality."

"There's no way you can argue raising the cost of producing for companies and forcing spending on untried technologies won't hurt consumers," Felmy said.

But Baker said big proposals that seek to change the fundamental supply issues, like expanding exploration off the West and East coasts "have all become political footballs."

"The two sides are really talking past each other. It's all turned into a face-off instead of working toward one common objective."

'It was about nothing'
An energy bill passed in 2005 "was like an episode of Seinfeld, it was about nothing" said Pursell, the Tudor Pickering Holt executive. The bill ultimately accelerated the phase-out of MTBE, a fuel additive that was widely used to help gasoline meet regional air quality standards, because it didn't protect manufacturers from legal liability. Without MTBE the industry had to turn to ethanol, an additive that is more difficult to blend and actually reduces overall vehicle efficiency.

"It actually hurt consumers and was bad policy," Pursell said.

And the energy bill passed last December was watered down from what Democrats wanted initially, although Baker called some of the new efficiency standards in the 2007 bill "a sleeping giant" that could have big impacts in the future.

Michael Cosgrove, president of Amerex Brokers in Sugar Land, said much of the rhetoric threatens legislation that ultimately won't improve the nation's energy outlook.

Price controls like those imposed by the Nixon administration in the early 1970s generally lead to shortages because they discourage investment in new supply, he said. And penalizing profitable oil companies will only cost consumers more and encourage the firms to look elsewhere to do business.

"If you think it's unfair that Exxon makes such a profit, then buy shares of the company and get some of those benefits yourself," Cosgrove said.

Cosgrove favors laws that encourage conservation, such as the new fuel efficiency standards for U.S. vehicles that were passed in December.

But as he looked out his Sugar Land office window last week at the steady stream of SUVs driving by on U.S. 59, he mused about a decidedly non-free market solution.

"We could probably use higher gasoline taxes to get people out of their Escalades and into something more reasonable," he said. "But I'm not a fan of government taxing and then 'wisely spending' that revenue. I don't have a lot of confidence in politicians to make good long-term decisions."

Source: Houston Chronicle|By TOM FOWLER

EUROASIA: Russian duo Evraz, TMK share $2.3B U.S. pipe deal

Russian duo Evraz, TMK share $2.3B U.S. pipe dealRussian steekmaker Evraz has become a large supplier of steel pipe to the U.S. energy sector after a $2.3-billion deal announced Friday to buy the American pipe business of SSAB, Sweden’s biggest steel producer.

Evraz will then sell part of the newly acquired specialist pipe business to compatriot company TMK for $1.7 billion, the Financial Times has reported.

In February, reported Evraz agreed to pay $1.5 billion for 10 percent of China's Delong Holdings and incremental control of the steel-maker. A worlwide shortage of steel has long been felt by the offshore industry, especially by yards building rigs and ships. Steel prices have risen threefold in less than a decade.

While Russia’s steel supply is substantial, it has been underdeveloped as a business. Technical improvements in the country's workshops have, however, included the most advanced cutting technology and a host of other key innovations hurriedly acquired.

Source: Scandinavian Oil & Gas

OPEC: Organization of Petroleum Exporting Countries, Says Refiners May Cut Operating Rates on `Poor' Margins

OPEC: Organization of Petroleum Exporting Countries, Says Refiners May Cut Operating Rates on `Poor' Margins
Refiners around the world may cut operating rates in the coming months, reducing crude oil demand, because of ``poor'' margins, the Organization of Petroleum Exporting Countries said.

``The recent strong builds in gasoline stocks in the U.S. and elsewhere should cause the poor performance of refinery economics and encourage refiners to trim crude demand and refinery throughputs,'' Organization of Petroleum Exporting Countries said today in its monthly report.

Refiners using Brent in their plants in northwest Europe earned 21 cents a barrel yesterday, compared with $4.65 a barrel on Feb. 21, according to data compiled by Bloomberg. The decline in refining margins, or the profit from turning a barrel of oil into fuels such as gasoline and diesel, reflects the failure of product prices to keep pace with rising crude.

``A combination of slowing demand for middle distillates, gasoline stocks building across the globe, especially in the U.S., and high crude oil prices may limit the impact of seasonal refinery turnarounds on refining margins in the coming months,'' analysts including Safar Keramati said in the report.

Brent crude for April settlement climbed to a record $107.88 a barrel yesterday on London's ICE Futures Europe Exchange. Gasoline for immediate loading in the Amsterdam-Rotterdam-Antwerp area rose $9 to $889 a metric ton at 11:39 a.m. U.K. time today, Bloomberg data show. That's $13 below the record $902 a ton reached on March 12.

Future Cuts
``The decline in the refining margins over the last few months negatively affected refining operations around the board, leading to early refinery maintenance, particularly in the Western Hemisphere,'' Organization of Petroleum Exporting Countries said. ``The current circumstances of the product markets and refining margins may encourage further discretionary cuts in the future,'' it said.

Last week, U.S. gasoline stockpiles rose for an 18th week to the highest since 1993, according to the Department of Energy. The refinery utilization rate in the U.S. fell 1.2 percent to 85.6 percent in February, Organization of Petroleum Exporting Countries said. In Europe, it dropped by 1.8 percent to 84.6 percent.

Maintenance in Europe in March is expected to cut 500,000 barrels a day of refining capacity from the European market, according to Vienna-based JBC Energy. That compares with 430,000 barrels in February and an estimated 420,000 barrels and 425,000 barrels in April and May respectively, JBC's Head of Research Ehsan Ul-Haq said Feb. 26.

Source: Bloomberg|By Nidaa Bakhsh

WESTERN HEMISPHERE: Iceland and Mexico to Cooperate on Energy

President of Iceland Ólafur Ragnar Grímsson is currently on an official visit to Mexico, the first official visit to the country by an Icelandic president, where he has sensed great interest to cooperate on harnessing geothermal energy, fishing and scientific research.

Grímsson has discussed such cooperation with President of Mexico Felipe Calderón and in Grímsson’s speech in a reception ceremony on Tuesday he said that his arrival in Mexico marks a turning point for cooperation between the two countries, Fréttabladid reports.

Iceland’s president explained in his speech how a nation can create an economy based on clean energy within a short time span and that it was time for Iceland to offer Mexico their technological expertise and experience in harnessing sustainable energy.

“Our countries can cooperate in other ways too, like by encouraging creative culture, establishing technological and scientific co-operational projects and strengthening the relations between our universities,” Grímsson said in a luncheon later in the day.

Ties between the two countries have been established; Iceland’s Minister of Education Thorgerdur Katrín Gunnarsdóttir, who is accompanying the president, and Mexico’s Minister of Finance Augustin Carstens have already signed an agreement of the abolishment of double taxation.

Yesterday, Gunnarsdóttir was present when an agreement between Reykjavík University and universities in Mexico, which are also connected to American and Canadian universities, on increased cooperation on research, innovation and science.

Source: iceland review

EUROPE: Norway oil companies form $500M rig club

Norway oil companies form $500M rig clubThe Norwegian businesses of Lundin Petroleum, Marathon Oil Corp. and Talisman Energy have hired the semi-submersible rig Transocean Winner for $500 million in order to drill exploration and development wells offshore the Nordic country.

The oil companies will share the rig equally for over three years starting in August 2009, it was understood Friday. The deal follows a similar rig-club deal announced yesterday between oil companies plying offshore Canada.

The first rig-sharing agreements were signed in Norway three years ago in response to rig owners who threatened to leave the North Sea rim for want of sufficient drilling opportunities.

Source: Scandinavian Oil & Gas

OiL FUTURES: The Crude Prices `Not Extreme' Compared to 1980s, Deutsche Bank Says

Prices `Not Extreme' Compared to 1980s, Deutsche Bank Says Crude oil prices aren't yet as ``extreme'' as they were in the 1980s when adjusted for the purchasing power of U.S. consumers, Deutsche Bank AG said.

``Oil prices would need to reach $145 a barrel for it to raise energy expenditures as a percent of U.S. disposable income to the levels that occurred in the early 1980s,'' analysts Adam Sieminski and Michael Lewis said in the bank's weekly commodities report today.

Crude futures rose to a record $111 a barrel in New York yesterday, having risen fourfold in five years. The weakening dollar has spurred investment in oil as commodities become cheaper for foreign-currency buyers. This relationship has played a ``stronger role in the psychology of both traders and OPEC ministers,'' the report said.

The correlation between currency and oil prices over the past year shows that oil prices could rise to $120 a barrel should the U.S. dollar index, a measure of exchange rates against six trading partners, fall to 70, Deutsche said.

The Dollar Index traded on ICE Futures in New York was 71.832 today, up from a record low earlier of 71.578.

``Relative to per capita income, crude oil prices would need to hit $134 a barrel to bring the purchasing power of consumers in the G7 to the level that prevailed in 1981,'' the report said.

When adjusted for U.S. consumer price inflation, they will need to rise to $118 to beat the all-time high level they reached in the early 1980s in real term , the report said.

Source: Bloomberg|By Maher Chmaytelli

CYPRUS: Prosafe shares to yield new company

CYPRUS: Prosafe shares to yield new companyProsafe SE shareholders look set to get the shares of the company’s floating production division as a dividend in kind when the new unit floats on the Oslo Stock Exchange under the name Prosafe Production.

The Prosafe board also proposed letting 10 percent of the new business free float for other investors.

Company leadership aslo resolved in future to pay-out 50 percent of Prosafe SE’s net profit.

The Cyprus-listed Prosafe attained operating profit of $222.2 million in 2007 on the strength of floating production ships and service rigs.

Source: Scandinavian Oil & Gas

OCEANIA: The ExxonMobil, Papua New Guinea Partners Sign LNG Agreement

OCEANIA: The ExxonMobil,  Papua New Guinea Partners Sign LNG Agreement
ExxonMobil Corp., the world's biggest publicly traded oil company, and its partners in a proposed Papua New Guinea liquefied natural gas project signed an agreement that allows initial work on the venture.

The accord includes gas supply arrangements and sets out the partners' current interests in the project,
ExxonMobil said in a statement today. Further agreements are required with the Papua New Guinea government before the venture gets full approval.

The project includes Port Moresby-based Oil Search Ltd. and Santos Ltd. and proposes to commercialize the Hides, Angore and Juha gas fields and deposits in the Kutubu, Agogo, Gobe and Moran oil fields in the Southern Highlands and Western Provinces. Deliveries may begin in late 2013 or early 2014, Peter Botten, Oil Search's managing director, said Feb. 19.

Exxon holds 41.6 percent of the $10 billion venture, it said in today's statement. Oil Search, Papua New Guinea's biggest oil producer, has 34.1 percent, Santos 17.7 percent and AGL Energy 3.6 percent. Nippon Oil Corp. has 1.8 percent and local landowners 1.2 percent.

Oil Search rose as much as 3.7 percent to A$4.52 in Sydney trading. Santos gained 0.9 percent to A$13.14.

The agreement ``paves the way to progress into the front end engineering and design phase of the project'' subject to the completion of a gas accord with the Papua New Guinea government, Botten said in a statement to the Australian Stock Exchange today.

Double GDP
The gas will be treated at a gas conditioning plant at Hides and then transported by pipeline to a 6.3 million-metric-tons-a- year gas liquefaction and storage plant the partners propose building near the capital, Port Moresby.

An economic impact study commissioned by the partners predicts that the project may double Papua New Guinea's gross domestic product and provide 7,500 jobs during construction, with 850 maintained during production operations,
ExxonMobil said.

ExxonMobil is ``optimistic'' about the prospects to develop the LNG venture, Mark Nolan, chairman of Exxon's Australian unit, said March 7. There are still some ``commercial issues'' to agree on with the Papua New Guinea government before the partners can commit to investing more on engineering and design work for the project, he said.

Source: Bloomberg|by John Viljoen

ASIA: Baku reports on firing false

ASIA: Baku reports on firing falseThe situation at the line of contact is still tensed but exchange of fire is not fixed, Armenia’s Foreign Minister Vartan Oskanian told reporters today.

Azerbaijan keeps on circulating false information on ongoing skirmishes and casualties among Azeri servicemen. We do state that there is no exchange of fire presently and that we will refute the information spread by Azerbaijan,” the Minister said.

On March 4 early morning Azeri special forces attacked a position of the NKR Defense Army near Levonarkh settlement of Mardakert region. The attack was rebuffed and status quo restored. A crisis monitoring due on March 7 by request of the NKR MFA was postponed through Azerbaijan’s fault.

Source: Armenian News

CHINA: Roc Oil awards hammer services contract to BJ Tubular

Roc Oil awards hammer services contract to BJ TubularRoc Oil Co. (Bohai) , a wholly owned subsidiary of ROC, reports that the precursor to 2008 development drilling programme has commenced with slot recoveries and well completions. The 2008 drilling programme in the C&D Oil Fields, the C4 Oil Field and the Extended Reach Area will comprise of up to a total of 24 wells being a mix of oil producers and water injectors with the first well expected to commence drilling by early April.

Roc Oil Co. has awarded BJ Tubular Services a contract to provide hydraulic hammer conductor-driving services on two offshore platforms in the Zhao Dong block in Bohai Bay in China.

BJ is manufacturing and supplying a range of deviated and straight drive shoes that will be used during the operation.

The company uses a hydraulic pile-driving system known as the S90 Hydrohammer to drive conductors and pipe into the earth to create a foundation for a new oil or gas well.

The first phase of the program is scheduled to begin in April, followed by the second phase in September 2008. Each phase will last approximately two weeks, with BJ driving a total of 68 conductors. Operations will be supported by BJ Tubular Services' bases in Singapore and Tanggu, with assistance from the BJ Services base in Beijing.

Source: Scandoil

ASIA: Total bolstering Thai flows with $1B

ASIA: Total bolstering Thai flows with $1BTotal in Thailand will invest $1 billion to boost oil and gas flows at the Bongkot field in the Gulf of Thailand, Dow Jones has reported.

Some 350 million extra cubic feet per day is the aim, the news agency reported local Total leadership as saying.

The local unit of the French oil and gas company Total expects to invest approximately US$1 billion in the North Bongkot gas field in the Gulf of Thailand from 2012 to 2023, according to president and general manager Michael Sangster.

Mr Sangster, who took charge of the Bangkok-based Total E&P Thailand operation last year, said the company had a one-third stake in North Bongkot. The other investors are Thailand's PTT and its affiliate PTT Exploration and Production Plc with a combined 44.44%, and British Gas Asia Pacific with 22.22%.

Total's investment would cover the extension period of the field's concession from 2012 to 2023, starting with drilling of new four wells.

''We can't say the exact number right now, because the operation depends on reserves of the field we discover,'' he said in an interview at the Gastech 2008 conference in Bangkok.

Bongkot started production in 1993 and currently pumps 630 million standard cubic feet per day (mmscfd) of natural gas. Further exploration is aimed at maintaining output of the field at current levels beyond 2012.

Total has also set aside $2 billion in capital expenditure for a new gas field, South Bongkot, which is expected to produce at least 350 mmscfd. Construction is expected to start this year with commercial operations starting by 2011.

The group has also entered into a partnership with PTTEP for exploration and production in Bangladesh and Burma, and is in talks for other potential projects.

Total E&P of France has a global capital expenditure budget this year of $17 billion, up from $16.1 billion last year, with 75% going to exploration and production.

Asia and the Far East represented around 11% of the group's investment last year, when it reported adjusted net income growth of 6% to $16.7 billion.

Mr Sangster said the company had set a target of annual production growth of 4% on average from 2006 to 2010.

''We have recorded growth in oil and gas production against a drop by other rivals across the world,'' he noted.

As of 2007, the group had total oil and gas production of 2.39 million barrels of oil equivalent per day (boed) from operations in 40 countries, with overall reserves of 10.4 billion boed.

Mr Sangster said that liquefied natural gas (LNG) would be another main focus for further expansion, given high demand for gas-fired power generation. Total's other business activities in Thailand include gas and power, lubricant oil, chemicals and aviation fuel.

Source: Scandoil