February 2005

PNG – Queensland gas project: tender call for FEED contract Posted Friday, February 25, 2005 - 4:20 by petromin
The PNG-Queensland gas project moved another step forward with the call for tenders by the AGL-Petronas Consortium (APC).

The consortium comprising the Australian Gas Light company (AGL) and Petronas Australia Pty Ltd— yesterday said they were calling for tenders for the front end engineering and design (FEED) phase of the Australian component of the Papua New Guinea to Queensland gas pipeline.

AGL managing director Greg Martin said, “This call for tenders reflects APC’s confidence with the level of commitment from the ExxonMobil-led PNG gas project participants to successfully implement the gas project.

“This project will be a significant development for both PNG and Australia and highlights APC’s optimism that eastern Australian gas markets will develop in a timely manner to enable the APC consortium, in conjunction with the PNG gas project participants, to reach financial close on the pipeline in 2006.”

He said the PNG pipeline project would also provide strategic value to AGL by introducing new gas supplies from Northern Australia, enabling AGL to increase its participation in the downstream energy sector in markets supplied by the pipeline.
“It also will provide an opportunity for a major new revenue source for AGL’s infrastructure management subsidiary Agility,” Mr Martin said.

APC will call for tenders next month for a $A25 million FEED program which will see work undertaken on engineering design, route selection, regulatory and financial viability assessments and environmental and native title clearance processes.

The project involves the development of a natural gas pipeline linking gas from the PNG Highlands to east coast markets in Australia. The PNG gas project participants are targeting initial gas deliveries to customers from late 2008.

“A final investment decision will be undertaken at the completion of the FEED program, subject to the PNG gas project participants securing sufficient gas sales agreements to enable the project to proceed and APC concluding corresponding gas transportation arrangements with the PNG gas project participants,” Mr Martin said.

The AGL-Petronas Consortium was selected as the preferred developer for the Australian component of the pipeline in April 1998 following an international competitive tender.
In October last year, APC and the PNG gas project participants executed a binding of intent that provides APC with the responsibility for designing, owning and operating the pipeline, as well as securing all project approvals in Australia.

IOC, OIL plan to bid for two blocks in Myanmar Posted Friday, February 25, 2005 - 9:44 by petromin
State-owned refiner Indian Oil Corp and its exploration partner Oil India Ltd plan to bid for two onshore oil and gas exploration blocks in Myanmar.

IOC-OIL combine had late last month bagged an oil block in Libya, the first ever overseas block won by an Indian firm through the competitive bidding route.

IOC-OIL combine, who may possibly also be joined by state-owned gas utility GAIL (India) Ltd, are planning to bid for Blocks RS-5 and RS-9, west of the Irrawaddy River, a top official said.

"We were originally looking at 5 blocks but have now narrowed down to two. We are studying the geological data and will firm up our bid by the next month," he said.

India's flagship ONGC Videsh Ltd, the foreign arm of Oil and Natural Gas Corp and GAIL together hold 30 per cent interest in offshore A-1 and A-3 blocks.

A Petroleum Ministry official said it has been decided that OVL would scout for opportunities in offshore Myanmar while IOC-OIL combine have been mandated to access the onland blocks being offered.

"OIL believes the geology of Myanmar onshore blocks is very similar to that of areas in India's northeast where it is working," the official said.

OVL, which owns stakes in oil and gas blocks/fields in 10 countries across the globe, is looking at data for the eight Myanmar offshore blocks still available.

However, once OVL had decided on the blocks it wished to submit bids for, IOC along with OIL were free to examine and assess the remaining blocks on their own commercial considerations.

"Rather than all companies trying to crowd each other out in the same country, we decided OVL be given exclusive jurisdiction over the offshore area and IOC-OIL combine over the onshore," an official said.

OVL holds 20 per cent stake each in Blocks A-1 and A-3. Four to six trillion cubic feet gas reserves have already been discovered in Korean firm Daewoo-operated Block A-1. GAIL has 10 per cent a piece in the two blocks.

Besides Myanmar, OVL has till date acquired stakes in oil and gas blocks/fields in Australia, Vietnam, Iran, Iraq, Syria, Libya, Russia and Sudan, all of which were either awarded to it on nomination basis or the company bought out an existing partner.

IOC-OIL combine on January 30 won India's first ever block on competitive basis. The two won the onshore Block-086 in the Sirte region of Libya in a global auction where global oil majors like Occidental and ChevronTexaco from US, European firms like Repson of Spain, Italy's Eni, OMV of Austria, British Petroleum and Royal Dutch/Shell also participated. OVL also bid for a block, but was unlucky.

Pertamina sees declining revenue and profit as oil production decreases Posted Wednesday, February 23, 2005 - 6:29 by petromin
State oil and gas company PT Pertamina expects a decline in profit and revenue this year due to declining oil production and higher expenses for its public service obligations (PSOs).

In its 2005 business plan that was recently approved by the government, Pertamina projected a net profit of Rp 6.37 trillion (US$700 million), down from its earlier estimate of Rp 7.31 trillion.
"The decline in Pertamina's net profit is mostly attributable to a decline in its oil production and a higher cost for its PSO activities," said Roes Aryawidjaja, a deputy to the state minister of state enterprises.

The Office of the State Minister of State Enterprises oversees state-owned companies.
Roes refused to elaborate, but according to Pertamina's business plan, revenue from crude oil exports is expected to decline to Rp 487 billion this year from Rp 2.52 trillion last year.

In relation to PSO activities, replacement funds from the government to Pertamina for the processing and distribution of domestic fuel is also estimated to drop to Rp 60.13 trillion this year from Rp 71.45 trillion in 2004

The company's income from other sources of revenue is projected to decrease to Rp 4.16 trillion from Rp 8.88 trillion.
In addition, Pertamina expects revenue from fuel sales to decline slightly to Rp 79.27 trillion from Rp 80.91 trillion. Revenue from fuel exports is also expected to decline to Rp 18.45 trillion from Rp 18.76 trillion.

Overall, the company's operating revenue is projected to reach Rp 197.74 trillion this year, from an estimated Rp 213.52 trillion last year.

To help offset the declines, the Office of the State Minister of State Enterprises had urged Pertamina to boost its revenue from the sale of non-oil products for the domestic market, such as lubricants. In its business plan, Pertamina has projected revenue from non-oil sales to increase to Rp 33.69 trillion this year from Rp 29.33 trillion last year.

"To offset the decline in its oil business, Pertamina has to boost its non-oil businesses and reduce production costs so that it can improve its efficiency," said Roes.

Posted Wednesday, February 23, 2005 - 6:28 by petromin
Pertamina sees declining revenue and profit as oil production decreases
State oil and gas company PT Pertamina expects a decline in profit and revenue this year due to declining oil production and higher expenses for its public service obligations (PSOs).
In its 2005 business plan that was recently approved by the government, Pertamina projected a net profit of Rp 6.37 trillion (US$700 million), down from its earlier estimate of Rp 7.31 trillion.
"The decline in Pertamina's net profit is mostly attributable to a decline in its oil production and a higher cost for its PSO activities," said Roes Aryawidjaja, a deputy to the state minister of state enterprises.
The Office of the State Minister of State Enterprises oversees state-owned companies.
Roes refused to elaborate, but according to Pertamina's business plan, revenue from crude oil exports is expected to decline to Rp 487 billion this year from Rp 2.52 trillion last year.
In relation to PSO activities, replacement funds from the government to Pertamina for the processing and distribution of domestic fuel is also estimated to drop to Rp 60.13 trillion this year from Rp 71.45 trillion in 2004
The company's income from other sources of revenue is projected to decrease to Rp 4.16 trillion from Rp 8.88 trillion.
In addition, Pertamina expects revenue from fuel sales to decline slightly to Rp 79.27 trillion from Rp 80.91 trillion. Revenue from fuel exports is also expected to decline to Rp 18.45 trillion from Rp 18.76 trillion.
Overall, the company's operating revenue is projected to reach Rp 197.74 trillion this year, from an estimated Rp 213.52 trillion last year.
To help offset the declines, the Office of the State Minister of State Enterprises had urged Pertamina to boost its revenue from the sale of non-oil products for the domestic market, such as lubricants. In its business plan, Pertamina has projected revenue from non-oil sales to increase to Rp 33.69 trillion this year from Rp 29.33 trillion last year.
"To offset the decline in its oil business, Pertamina has to boost its non-oil businesses and reduce production costs so that it can improve its efficiency," said Roes.

New Zealand launches seismic survey for petroleum exploration Posted Wednesday, February 23, 2005 - 4:34 by petromin
New Zealand’s Energy Minister Trevor Mallard today launched a major project by the government aimed at attracting oil and gas exploration investment in New Zealand - the first ever seismic survey off the North Island’s East Coast.

“This is an incredibly significant project. We are at a crossroads for exploration in New Zealand. As a “frontier” destination for exploration, competing against well-established petroleum economies in the Middle East and Africa, New Zealand had to take some innovative steps to attract exploration investment," Trevor Mallard said.

“This survey is the first of its kind under the $15 million fund established by the government last year as part of a package of incentives to lift exploration in New Zealand. By commissioning this and other surveys we have a unique opportunity to showcase the oil and gas potential of New Zealand, and to significantly reduce the cost of entry to New Zealand for new explorers.”

The survey will be conducted by Norwegian company, Multiwave Geophysical using the vessel “Pacific Titan” which is due to arrive in Wellington any day now. It will cover 100,000 sq. km off the East Coast, from Wairarapa to Bay of Plenty, and is expected to take four to six weeks, with the data expected to be released in July.
“Feedback from overseas explorers here and from those thinking about investing here suggests we are on the right track with this bold move.

"The East Coast has been chosen as the first petroleum basin to be surveyed because it's considered to be the region with the best potential and also the region which can be developed quickest outside existing production in the Taranaki basin.

“We have spoken with explorers who have come, or are seriously considering coming, to New Zealand and we have no doubt that opening up the frontier basins, supported by freely available seismic data, is the right combination to attract large scale exploration and, in turn, make a real difference to our energy future.

"Of course in the long term, a broader and more sustainable mix of energy options has to be developed to ensure New Zealand’s energy security. However, we must also be practical and ensure that there is continuity of supply during the transition from traditional energy sources, for the good of the economy.

"Domestic gas is a proven, flexible, and relatively efficient and clean energy source which is likely to be a key part of New Zealand’s energy mix for the foreseeable future," Trevor Mallard said.

ChevronTexaco's 2004 Indonesian oil output falls 5% Posted Tuesday, February 22, 2005 - 6:10 by petromin
ChevronTexaco Corp., the second-largest U.S. oil company, said its oil production in Indonesia declined by about 5 percent last year because the company hasn't explored in new areas to replace older fields in Sumatra, a company executive said on Monday.

The company plans to spend as much as US$300 million this year to stem a decline in its production after output fell to 507,000 barrels a day in 2004, said W. Yudiana Ardiwinata, president director of ChevronTexaco's unit, PT Caltex Pacific Indonesia.

"The company expects its production to fall at a slower rate this year," he said. Caltex, the country's biggest oil producer, "will inject chemicals into its fields to stem a production decline."
Indonesia, with the second-lowest output among the Organization of Petroleum Exporting Countries, is struggling to find reserves to replace aging fields and increase output that has fallen by more than 5 percent a year in the past five years.

Caltex produced 100,000 barrels a day last year from its Minas field and 110,000 barrels a day from its Duri field, which are both located in Riau province.

The company's chemical-injection plan will recover as much as 300 million barrels of oil from its Minas field, according to Ardiwinata.
Caltex wants to bid for exploration rights in Indonesia's East Java province and on Sulawesi island, he said, without elaborating.

ExxonMobil raises reserves on projects in Qatar, Africa Posted Monday, February 21, 2005 - 2:49 by petromin
ExxonMobil Corp, the world’s largest publicly traded oil company, more than replaced production last year with added reserves as projects advanced in Qatar, West Africa, Europe and the Caspian region.

Proved reserves of oil and natural gas rose the equivalent of 1.8bn barrels of oil to 22.2bn barrels at year’s end, Irving, Texas-based ExxonMobil said in a statement on Friday. Reserves equivalent to 1.7bn barrels of oil were added in Qatar, where the company is developing a liquefied-natural-gas project.

“They are increasingly going overseas to find reserves,’’ said Gene Pisasale, who helps manage $33bn including 8.8mn ExxonMobil shares at Wilmington Trust Co. “That’s where the large reserves will continue to be found.’’ Proved reserves have a 90% probability of being produced.

Exxon Mobil said it had a replacement ratio of 112%, including property sales, meaning the company added 12% more oil and gas to reserves than it pumped from the ground in 2004. That marked the 11th-straight year in which production was more than replaced by new reserves.

The ratio “definitely appears to be a top quartile number’’ for the industry, said Jacques Rousseau, an analyst at Friedman Billings Ramsey & Co in Arlington, Virginia, who rates ExxonMobil shares “outperform’’ and owns an undisclosed number of them.

Production last year totalled 1.6bn barrels of oil equivalent. At the current pace of production, the company said it would take 14 years to exhaust its reserves.

ExxonMobil is helping to build two LNG plants in Qatar, which has the world’s third-largest proved reserves of natural gas, with a goal of exporting about 16mn tonnes of the fuel a year to the UK.
LNG is created by cooling gas to a liquid state for shipment by refrigerated tankers to distant ports.

“There’s a higher geopolitical risk premium to drilling in these remote, distant lands,’’ Pisasale said. “It takes more effort and costs more to find reserves in those places.’’
The reserve estimate excludes a reclassification of 500mn barrels of reserves at the Cold Lake development, a heavy-oil project in Canada, because of a dip in prices on December 31 for bitumen, a tar-like oil produced from oil sands, ExxonMobil said.

The reserves, which were removed from the proved category on December 31 as calculated under the SEC guidelines, were restored to proved status in January, the company said. US accounting rules require that companies reassess reserve estimates based on year-end energy prices to determine prospects for recovery. “This was a short-term item,’’ Friedman Billings’s Rousseau said.

Myanmar’s gas riches entice Asian Investors Posted Friday, February 18, 2005 - 3:56 by petromin
Politically and economically isolated for more than a decade, Myanmar is being thrown a lifeline by its Asian neighbours, which are jostling to spend billions of dollars to tap the country's energy resources.

Slightly smaller than the US oil state Texas and bordering the Andaman Sea and the Bay of Bengal, little explored Myanmar is estimated to hold 13-15 trillion cubic feet (tcf) of natural gas, 7 per cent of total proven reserves in Southeast Asia.
Aggressive state companies from China, India, Thailand, Malaysia and South Korea, undaunted by US and European sanctions, are looking to invest their big cash piles to develop Myanmar's gas fields and build pipelines and hydropower dams.

"Non-western majors are now able to take significant positions than they might have a decade or more ago as they become more professional and have more financial muscle," said Andrew Symmons, research fellow at the Institute of Southeast Asian Studies in Singapore.
The influx of Asian players picked up steam in 2004 and threatens to eclipse long-standing investments by a handful of Western companies, predominantly France's Total SA and US independent Unocal Corp.

SHELL JOINT VENTURES WIN KOGAS TENDER - SHELL'S LNG LEADERSHIP REINFORCED Posted Friday, February 18, 2005 - 2:40 by petromin
Shell announced today that Kogas, the Korean gas company has selected Shell joint venture projects – Sakhalin II and Malaysia LNG as suppliers of up to four million tonnes per annum (mtpa) of Liquefied Natural Gas (LNG) to Korea over 20 years beginning in 2008. Kogas is the world’s largest buyer of LNG and Korea is the second largest LNG market in the world.

Peter de Wit, President Shell Gas & Power Asia Pacific said: "The selection of two Shell joint ventures in such an important tender underlines Shell's global LNG leadership. It also reflects the strengthening of the Asia Pacific market reflecting an overall increase in global demand for LNG and the value of our diverse portfolio of LNG projects."

The Asia Pacific market is the largest LNG market globally with some 84 mtpa of demand today and a predicted 180 mtpa of demand in 2020. Shell has been a leader in the development of the Asia Pacific LNG market since its inception. Shell joint venture projects currently supply a substantial proportion of Korean LNG demand.

Mr de Wit added: "Shell projects have been consistent and reliable suppliers to customers in Asia - maintaining supply and honouring commitments to established customers for more than 30 years."

Scandpower Petroleum Technology and Knowledge Reservoir to jointly pursue software-based history- matching market Posted Thursday, February 17, 2005 - 6:52 by petromin
Knowledge Reservoir and Scandpower Petroleum Technology (SPT) have signed an agreement to jointly pursue the software-based reservoir simulation history-matching market.

The technical workflow will revolve around the use of the MEPO® software product released last year by SPT. The product enables accurate decision-making and cost effective operations through uncertainty assessment, history matching and reservoir forecasting of reservoir models.

Dag Terje Rian, President of SPT said, “We are very pleased to be partnering with Knowledge Reservoir in our push into the Americas marketplace. We have achieved a very good response with the MEPO product in Europe, and our goal is to make MEPO a market leading software application within uncertainty quantification and history matching in North- and South America.

Dr. Ivor Ellul, CEO of Knowledge Reservoir said, "We feel that the technology incorporated in the MEPO product will provide immediate added value to our consulting workflow. Our aim is to maintain our track record of providing the highest quality consulting services to our clients. The ability to bring new technology to bear clearly falls within this scope.”

PETRONAS awards two Ultra-Deepwater blocks to Shell and PETRONAS Carigali Posted Thursday, February 17, 2005 - 2:57 by petromin
PETRONAS today awarded two Production Sharing Contracts to Shell and PETRONAS Carigali Sdn Bhd for the ultra-deepwater Blocks ND6 and ND7 offshore the east coast of Sabah.

The two blocks are situated in water depths ranging from 200 to 4,000 metres in the Tarakan Basin, between 100km and 180km southeast of Tawau. Block ND6 covers an area of about 8,700 square km, while Block ND7 has an area of about 17,000 square km.

Under the terms of the PSCs, Shell and PETRONAS Carigali will jointly operate both blocks. Shell has 50 percent working interests; split between Sabah Shell Petroleum Co Ltd (40 percent) and Shell Sabah Selatan Sdn Bhd (10 percent). PETRONAS Carigali, the exploration and production arm of PETRONAS, owns the remaining 50percent interests.

For Block ND6, the partners will acquire and process 1700 square km of new 3D seismic data and drill three wildcat wells. The minimum financial commitment for the block is US$37 million.

For Block ND7, the partners will acquire and process 800 square km of new 3D seismic data and drill one wildcat. The minimum financial commitment for the block is US$13 million

PETRONAS had received highly competitive bid proposals for both Blocks ND6 and ND7 from international petroleum companies, reflecting their confidence in the hydrocarbon prospects in the Tarakan Basin as well as in the Malaysian deepwater areas southeast of Sabah.

The PCSs for the two blocks were signed today at the PETRONAS Twin Towers in Kuala Lumpur. PETRONAS was represented by its President & Chief Executive Officer Tan Sri Dato Sri Mohd Hassan Marican; Shell by Chairman of Shell Malaysia and Managing Director of Shell Malaysia E & P Datuk Jonathan Chadwick and PETRONAS Carigali by its Managing Director / CEO Encik Mohamad Johari Dasri.

SembMarine, Keppel Fels win oil rig deals worth US$252m Posted Wednesday, February 16, 2005 - 9:57 by petromin
TWO leading Singapore marine companies, Keppel Fels and SembCorp Marine (SembMarine), have won contracts worth a combined US$252.4 million (S$418 million) to build oil rigs for Norway's Sinvest ASA.
Keppel Fels' contract is the third in a year that it has struck with Sinvest's wholly owned subsidiary, Deep Drilling Invest. Worth US$132.8 million, the deal requires it to deliver a Kfels Super B Class jack-up by mid-2007.

The contract includes an option for the company to build a fourth rig.
Keppel Fels is a wholly owned unit of Singapore-listed Keppel Corp, through Keppel Offshore & Marine. It is one of the largest designers and makers of oil rigs in the world.

Deep Drilling also separately entered into an agreement with SembMarine unit PPL Shipyard for the construction of a Baker Marine Pacific class rig worth US$119.6 million.

The rig is expected to be delivered in the second quarter of 2007.
SembMarine is one of Singapore's biggest shipbuilders.

This is the second rig that Deep Drilling has ordered from PPL Shipyard, and is a result of an option from the first contract signed in January last year.

The contract also includes an option for an additional jack-up rig.

Petronas Carigali joint venture makes significant gas find Posted Monday, February 14, 2005 - 2:49 by petromin
CS Mutiara Petroleum Sdn Bhd, a 50:50 joint venture between Petronas Carigali Sdn Bhd and Shell Exploration and Production Malaysia B.V., has made another significant gas discovery off the northeast coast of Peninsular Malaysia.

The Bunga Anggerik1 well in Block PM301, spudded on Nov 21, 2004, was drilled to a depth of 1,527m and encountered four gas zones. Further technical evaluation is required to determine the reserves.

Bunga Anggerik1 is the third discovery in Block PM301 following the recent exploration successes of Bunga Kamelia and Bunga Zetung.

The latest discovery was located about 6km east of the Bunga Zetung gas field discovered in July 2004, a company statement said yesterday.

CS Mutiara is currently embarking on an appraisal campaign and study on the development of the three discoveries.

CS Mutiara, formed in July 2001, operates Blocks PM301 and PM302 located off the northeast coast of Peninsular Malaysia.