Escalation of Middle East violence related to the Palestinian-Israeli conflict earlier this month triggered a near 10-year high in some international oil futures prices amid new fears of possible disruptions of oil supplies. At presstime, however, Israe* Prime Minister Ehud Barak and Palestinian leader Yasser Arafat had agreed to take "immediate concrete measures" to end the conflict, which left more than 100 people dead, according to Associated Press reports.
During the height of the conflict, a spot check of some oil companies active in those areas indicated that there was no immediate threat to operations.
In trading Oct. 13, the November contract for North Sea Brent oil jumped by $3.51 to a temporary peak of $35.30/bbl on the International Petroleum Exchange in London, and US light, sweet crude was trading at $35.35/bbl on the New York Mercantile Exchange, up $2.10 from its opening, after Israe* helicopter gunships attacked targets in Gaza and the West Bank city of Ramallah.
Those attacks on a police station and near Arafat's Ramallah headquarters were to avenge two Israe* soldiers earlier stabbed to death by a Palestinian mob at the police station.
In another incident, 17 individuals were killed and many others injured Oct. 12 in a suspected suicide bombing of a US destroyer in the port of Aden, Yemen.
The USS Cole, an Aegis class destroyer, was in port for routine refueling when a small boat loaded with explosives rammed it. The resulting explosion blew a 20-by-40-ft hole in the ship's hull, officials reported.
Company reactions
Industry representatives said that they saw no immediate impact on oil and gas operations in the Middle East, although they deplored the spread of violence and the additional deaths and injuries.
"We've always known that there were chances of things happening in Israel and that we would have to work in and around them," said Rick Palmer, director of investor relations for Ness Energy International Inc. He reiterated the company's determination to continue its work in the area.
Headquartered near Dallas, independent Ness Energy is exploring for oil in Israel on the basis of biblical interpretations by its president, Harold "Hayseed" Stephens. The company and its partner, Israel Oil Co., recently awarded a contract to Lapidoth Israel Oil Prospectors Corp. Ltd., a drilling contractor, to reenter and deepen the Har-Sedom No. 1 well that was drilled to 5,800 ft about 15 years ago (OGJ Online, Oct. 11, 2000). Drilling is expected to begin by Dec. 25.
A Houston employee with another independent, Isramco Inc., said that the company recently completed work on the Nir-1 well it was drilling off Israel and, pending further developments, is now working on a joint venture project in which it has a 50% stake off the Congo.
"Our people are exercising an appropriate level of caution," said a spokesman for Noble Affiliates Inc. Samedan Oil Corp., a wholly owned indirect affiliate of Noble Affiliates, holds a 47% interest in an exploration agreement covering 11 permit areas encompassing more than 1 million acres off Israel.
Noble has reported four wells confirmed recoverable reserves totaling more than 1.3 tcf of gas. (OGJ Online, May 22, 2000). The company expects to receive a rig in December to continue appraisal drilling.
Officials at Apache Corp. said their core operation in Egypt is not threatened by the conflict between the Israelis and Palestinians. "We're concerned about the loss of lives in the Middle East," said Tony Lentini, vice-president. "But Egypt is a stable country and a good place to work. There is no reason to fear any effect on our operations there."