OGJ NEWSLETTER
More than 100 insurance companies filed a lawsuit against Exxon in U.S. District Court in Manhattan, saying its decision to voluntarily clean up the 1989 Exxon Valdez spill was a public relations gimmick, Associated Press reports.
The insurers, led by Lloyds of London, say Exxon undertook the cleanup and settled criminal and civil cases "solely for the purpose of preserving its corporate image," claiming Exxon was not under legal obligation to clean up the spill. Exxon says the insurers appear to be responding to a suit filed by the oil company in Texas state court in early August in which Exxon is trying to recover some of its expenses and liabilities from the spill.
U.S. natural gas prices for September jumped 280/MMBTU to $2.24/MMBTU on average, Natural Gas Clearinghouse reports. It says the increase is due to higher than expected demand because of hotter than normal weather in August and continued shutdown of several nuclear power plants.
Salomon Bros. notes maintenance work on the Nova system in Alberta also contributed to the price increase. Nova told customers there would be a major outage at the Princess compressor station near the Empress export point on the Alberta-Saskatchewan border during Aug. 22-26, and work was to continue upstream of there through Aug. 30.
IPAA and more than two dozen oil and gas industry associations have asked for a preliminary injunction against the U.S. Department of Interior to stop it from claiming royalty interest on natural gas contract settlements until the court issues a final ruling on the policy's legality.
Last June Interior ordered companies to produce detailed information about contract settlements entered into since 1980. "This demand for data creates a crippling burden which will cause irreparable harm to many companies," says IPAA Pres. Denise Bode. IPAA estimates producers would need to commit more than 10 staff hr/lease to gather the required data. The organization estimates complying with the order could cost industry more than $9 million in accounting expenses. IPAA and other plaintiff associations filed suit Aug. 13 charging Interior's royalty claim violates legal precedent. The government agreed to stay compliance with the order until Oct. 15.
The government of Saskatchewan and Federated Co-operatives Ltd. have reached a tentative agreement to provide an additional $150 million (Canadian) in capital for a heavy oil upgrader at Regina.
There has been a long dispute between the parties over financing of the money losing project in which Federated, the provincial government, and Ottawa are partners (OGJ, June 7, Newsletter). The Saskatchewan government said last month it will pass legislation to impose a unilateral settlement on Federated. Under the agreement, Federated and Sakatchewan will each pay $75 million to reduce debt of the NewGrade upgrader and will split costs of any further losses. The tentative settlement hinges on Ottawa, the third partner, providing an added $100 million or more for the $874 million upgrader. The project has been plagued by operational problems and cost overruns. Federal Energy Minister Bobbie Sparrow says Ottawa cannot promise to provide more funds for the upgrader. Sparrow says the upgrader is not in any risk of default at this time. Ottawa will look at all the terms that have been presented and see what it can do.
The Santa Cruz, Bolivia, to Sao Paulo, Brazil, natural gas pipeline project will get top priority from the government of new Bolivian Pres. Gonzalo Sanchez de Lozada. The president is trying to put together the $2 billion financing package for the project, which is to be complete by 1996 (OGJ, May 11, 1992, p. 30). Yacimientos Petroliferos Fiscales Bolivianos and Brazil's Petrobras signed an agreement earlier this year calling for Bolivia to sell Brazil 280 MMcfd of gas for the first 7 years of a 20 year contract at a fixed price of $0.90/cu m. The volume is expected to double the next 13 years.
Japan-Indonesia LNG contracts are set to be extended another 5-10 years. Contracts between Pertamina and Japanese electric and gas companies and Nippon Steel are to expire during 1999-2000. The five electric power companies, two gas companies, and Nippon are to agree to import a total of 15.33 million tons/year of LNG, Kyodo News Service reports.
Viet Nam's first refinery is one step closer to reality.
The government chose Taiwan's Chinese Petroleum Co. (CPC) and Total to conduct a feasibility study of the proposed $1.2 billion, 130,000 b/d project, which will be in southern Viet Nam. Agence France Presse (AFP) reports CPC, Total, and Viet Nam will each hold 30% stakes in the refinery, with Taiwan investment company Chung Chia holding the remaining share. CPC also expressed interest in producing lubricants in Viet Nam.
CPC and Total are also teamed in a heads of agreement covering possible joint ventures for exploration in Viet Nam (OGJ, Aug. 2, p. 40).
Vietnamese Industry Minister Le Van Triet visited Calgary Aug. 24 for discussions with Canadian companies bidding on a $400 million offshore natural gas project. Triet held talks with Endeco International and Trans-Canada PipeLines Ltd. which are preparing a bid. SNC-Liquigaz, Montreal, is also preparing a bid for the pipeline project to serve Bach Ho field in the South China Sea. The field would produce 100 MMcfd. Triet says submissions will be evaluated on technical expertise, projected life of technology, mutual benefits for Viet Nam and companies, and potential profits.
Abu Dhabi Marine Operating Co. (Adma-Opco) marked the 30th anniversary of commissioning giant Lower Zakum field last month, saying it will continue to produce well into the next century. It is the second largest oil field in the Middle East, OPEC News Agency reports, behind Saudi Arabia's Safaniya field. The field covers an area twice as large as Bahrain.
It also is the gulf region's second largest field in terms of reserves, however Adma-Opco does not disclose its reserves estimate for the field.
Tiny gulf emirate Sharjah may be moving into big oil leagues.
Amoco Sharjah has confirmed its 2 Kahaif discovery of late last year (OGJ, Nov. 2, 1992, p. 26), nearly tripling productive capacity of the field.
AFP reports the 3 and 4 Kahaif increased gas capacity to 219 Mmcfd from 73 Mmcfd and condensate capacity to 4,845 b/d from 1,615 h/d. Plans are under way to expand processing and liquefaction facilities at nearby Sajaa to handle the increased production (OGJ, Aug. 23, p. 21).
The new wells bring Sharjah's total productive capacity to about 42,000 b/d of condensate and 800 MMcfd of gas.
Iran plans to speed privatization of its petrochemical industry. Deputy Oil Minister Ahmad Rahgozar says high costs associated with the sector are pushing Iran toward foreign investment. AFP, quoting official figures, says Iran plans to invest about $7.5 billion in petrochemicals in 1994-99, of which nearly half could he provided through foreign loans and investment.
Rahgozar, however, notes conditions are not exactly ripe for foreign investment, given the absence of investment guarantee laws.
Russia and Poland signed an agreement in Warsaw late last month to build a natural gas pipeline that would supply Poland and western Europe with Siberian natural gas. The project is expected to cost $10 billion, with the Polish segment alone tagged at $3.2 billion.
The agreement has been criticized by two Polish opposition parties that claim the project makes Poland too dependent on Moscow for energy. AFP reports by the turn of the century the line is to carry as much as 6.4 bcfd, of which Poland can buy as much as 1.3 bcfd.
Russian Prime Minister Viktor Chernomyrdin has suggested a way to normalize his country's strained relations with Japan. He says the bitter dispute over ownership of four small islands at the southern end of the Kurile chain could be temporarily set aside, the same way the Japanese quarrel with China regarding sovereignty over the petroleum prone Senkaku island area bordering the East China Sea was placed on the back burner.
During his tour of the Russian Far East prior to visiting Houston in late August Chernomyrdin proposed that the Kurile controversy he calmed by an informal agreement. Soviet troops occupied the southern Kurile islands, very close to Japan's northern island of Hokkaido, at the end of World War H.
The Senkakus lie northeast of Taiwan and near Japan's Ryuku island chain. This is an area where geologists have predicted large hydrocarbon discoveries.
Main problem is that public opinion polls show 77% of Russia's population opposes giving the southern Kurile islands back to Japan. Similarly, 86% of the Japanese people want these islands returned before Tokyo mends relations with Moscow.
Copyright 1993 Oil & Gas Journal. All Rights Reserved.