OGJ Newsleter

The former Soviet Union again is dominating petroleum news.

Russian President Boris Yeltsin signed a decree that allows foreign companies to own 100% stakes in Russian oil companies.

The decree removes all restrictions on ownership by non-Russian companies, says Boris Nemtsov, Russia's Fuel and Energy Minister. It will likely draw fire from the Duma, Russia's lower house of parliament, which opposes foreign owwtsov also vows to protect Gazprom from U.S. sanctions against Iran. Stressing that Gazprom will nonership of oil interests.

Nemtsov also vows to protect Gazprom from penalties resulting from U.S. sanctions against Iran. Stressing that Gazprom will not back out of the South Pars deal, he said, "we are against the sanctions." He added a large dose of irony: "We favor free economy and free competition, and I hope so does the U.S."

Plans for pipelines across former Soviet states continue to proliferate.

Gazprom has launched a project to build a gas pipeline to Turkey.

Gazprom Chairman Rem Vyakhirev said the 1,213-km line, called Blue Stream, would extend from Izobilnoye, Russia, to Ankara. A 396-km section will traverse the Black Sea at a depth of 2,150 m. Start-up is planned for April 2000.

Vyakhirev said Gazprom chose this route because it does not presuppose transit through several countries, and only two sides are involved.

Meanwhile, Turkey is still pushing for a pipeline to import Azeri and Kazakh ooil to its Mediterranean coast. Turkish State Minister Ahat Andican is optimistic about the project's prospects. Andican says Shell and Amoco are ready to participate, while Mobil and Total have already made proposals.

A feasibility report will be completed in February 1998. Gazprom also is negotiating with the Karelia autonomous region in northwest Russia and Finland's Neste about exporting Russian gas to Sweden via Finland. The project would include a pipeline across the Baltic to be completed in 2005.

Turkmen government officials were in Houston last week to promote the republic's oil industry. Asked about the possible oil/gas export pipeline route through Afghanistan (OGJ, Nov. 3, 1997, Newsletter), Oil Minister Batyr Sardjaev said, We're not going to build a pipeline of any kind if we believe it is opposed by any faction. Sardjaev notes the U.S. supported Turkmenistan in its bid for independence and hopes the U.S. will make a reasonable, wise decision with regard to Turkmenistan's export pipelinee options.

President Clinton has filled two long-standing FERC vacancies with the nominations of Curt Hebert Jr. of Mississippi and Linda Key Breathitt of Kentucky. It was unclear whether the Senate would be able to confirm the nominations before the schedadequate competition exists but claims a FERC administrative law judge misinterpreted FERC policy.

According to NGSA, The judge failed to consider whether specific Koch customers had economically viable pipeline alternatives. Instead, the judge decided tthe average Koch customer could theoretically connect and receive comparable service on neighboring pipelines. The judge did not consider factors such as the availability of spare capacity on the neighboring pipelines.

Multinationals working in Colombia have called on the government there to lift exploration restrictions on more than 300,000 sq miles of acreage identified as prospective for hydrocarbons but currently off-limits.

Their lobby, Asociacion Colombiana del Petroleo (ACP), wants to include in that proposal another 7 million acres set aside for Ecopetrol to explore.

ACP representative and Hocol Pres. Douglas Ellenor further urges that fixed royalties be scrapped in favor of variable royalties of 1-20%, fixed terms for association contracts be droopped, and free access be allowed to Ecopetrol's geological database. Ellenor's comments came at a forum held by the Colombian Association of Petroleum Engineers (Acipet). Acipet Pres. Jaime Ortiz said studies suggest Colombia's undiscovered oil potential could top 51 billion bbl.

Harsh ocean conditions aren't the only hazard facing deepwater players-some may miss E&P targets due to a lack of experienced staff.

This is the warning Curtis D. Burton of U.S. contractor Total Offshore Production Systems gave delegates at the Deep Offshore Technology conference in The Hague last week (see related stories, pp. 36, 37).

Burton said massive layoffs in recent years by operators and service companies have squeezed the supply of available, experienced personnel justt as deepwater activity is ramping up. Many operators have not hired new offshore personnel since the late '80s. Hiring bans have been in effect at many operating companies, and most still have a policy of not hiring permanent workers.

He said operators disclosing deepwater E&P targets but unable to deliver promised results are increasingly common: Success in deep water will require personnel, hardware, and drilling capability. All of these are in dramatically short supply. If a company hasn't included these elements in its development strategy, that company is a likely candidate for consumption by one that has.

Majors are finding further exploration success in Australasia.

Shell Australia completed a drill stem test on its big Sunset-1 strike on Timooor Gap Permit ZOCA 95-19 (OGJ, Oct. 27, 1997, Newsletter).

It flowed 44 MMcfd and 1,500 b/d of condensate through an 80/64-in. choke from pay at 2,223-2,241 m. On a second test of pay at 2,193.5-2,155 m, flow through a 72/64-in. choke reached 32.5 MMcfd and 910 b/d.

Mobil has a large gas discovery on the North West Shelf.

The Athena-1 wildcat on Permit WA-28-P flowed 47.4 MMcfd of gas and 2,133 b/d of condensate. Athena-1 is adjacent to Woodside's Perseus field in the adjoining permit, and there is speculation that Athena is an extension of the Perseus structure. Mobil's partner in Athena is Phillips.

India's ONGC is trying to contain what could be shaping up as a major blowout in the offshore Bombay High area. The B-24-2 well had been spewing gas since Oct. 28, and at presstime last week, the crew of the Saga Shakti jack up had been evacuated. ONGC failed three times to kill the well, and the uncontrolled gas plume was 10 m high at last report. Support vessels last week were continuing to douse the well withuled Nov. 17 recess.

In an unusual move, the Natural Gas Supply Association is challenging Koch Gateway Pipeline's request for market-based rates in a case before FERC.

NGSA says it doesn't oppose market-based rates for interstate gas pipelines where ere water, and ONGC at midweek said it hoped to complete final stubbing operations within 15 days. Wild Well Control, Spring, Tex., is on the scene. The well, targeted to 3,167 m TD in 81 m of water, had a gas kick while awaiting production testing. ONGC engas emissions. In 1996, more than 140 participants undertook 967 projects to reduce or offset emissions of greenhouse gases.

Despite such measures-by no means unique to the U.S.-fear is being propagated. Ottawa's Environment Canada says large-scale developmment in Alberta's oilsands is compromising individual project measures to protect wildlife and air quality. An estimated $25 billion in oilsands development covering more than 346,000 acres is planned over the next 25 years.

An Environment Canada report says multimillion-dollar oilsands investments now under way could have serious environmental effects on wildlife, forests, and air quality, including greenhouse gas levels.

Environment Canada believes it is critical that consideration of any future oilsandss development be done on a regional basis, the report said. Mitigation strategies for specific projects may no longer be appropriate.

Suncor says it performs detailed environmental studies that have shown nothing like the federal report. Suncor is invollved in a regional consultation process with communities and has spent more than $200 million to reduce emissions. The Alberta environment department said it was not aware of the federal report and had not been consulted. It stressed that legislation is in place to deal with any potential environmental problem.

Tom Daschle (D-S.D.), a key defender of ethanol tax credits, worries about the proliferation of export-oriented MTBE plants in Saudi Arabia.

He said a recently announced plant would bring the kinnngdom's capacity to more than 90,000 b/d.

Since Saudi Arabia is not a member of international trade organizations, it apparently feels free to artificially establish price discounts that distort the competitive trade balance. Fair trading practice demandss that such abuses be corrected. I will work to establish that balance by whatever legislative means are necessary in the days to come.