COMPANY NEWS: Gazprom gets 51% of new JV with Lukoil

Nov. 27, 2006
OAO Lukoil Holdings ceded control of a joint venture for new projects to state-controlled OAO Gazprom’s oil subsidiary, Gazprom Neft.

OAO Lukoil Holdings ceded control of a joint venture for new projects to state-controlled OAO Gazprom’s oil subsidiary, Gazprom Neft.

“Gazprom is our big brother; the big brother must have 51%,” Lukoil Chief Executive Vagit Alekperov told reporters during a Nov. 17 news conference in Moscow.

In other recent company news:

  • JED Oil Inc., Calgary, said JMG Exploration Inc., an affiliate incorporated in Nevada, has decided to abandon plans in which JED would have acquired JMG.
  • Isramco Inc., Houston, agreed to buy certain oil and gas properties in Texas and New Mexico from Five States Energy Co. LLC, Dallas, for $100 million. Closing is scheduled for Jan. 20, 2007.
  • Serica Energy PLC and BG Group PLC subsidiary BG International Ltd. have agreed to exchange interests in adjacent exploration licenses in the UK Central North Sea.
  • Petro-Canada plans to divest its interests in five in situ oil sands properties in Alberta so it can focus on other oil sands properties, some of which are scheduled to start in situ bitumen production in 2011.

Gazprom’s new JV

Gazprom’s new JV involves participation in projects in Russia and abroad, Alekperov said. He emphasized that Lukoil would not lose control of its existing upstream assets.

The Lukoil-Gazprom Neft JV is expected to focus on Siberia and northern Russia, including the arctic region of Timan-Pechora.

JED-JMG deal folds

JMG was formed in late 2004 and taken public last year. JED said the acquisition was called off because of changes in both companies and in general market conditions since a letter of intent was signed (OGJ, Apr. 3, 2006, p. 33).

JED has concentrated on development drilling, and JMG on exploration in western Canada and the US, both working closely with Enterra Energy Trust, an oil and gas income trust set up in 2003.

Isramco acquires assets

Isramco’s newly acquired assets include 660 producing oil and gas wells. Net income from the properties during the first 7 months of 2006 was $11 million. Isramco said its share of estimated proved developed reserves include 2 million bbl of oil and 28 bcf of gas.

Isramco explores off Israel through Isramco Negev 2 LP. In the US, Isramco’s wholly owned subsidiary, Jay Petroleum LLC, owns various interests in oil and gas wells in Louisiana, Texas, Oklahoma, and Wyoming.

Serica-BG exchange assets

Serica is operator and 50% interest owner of Block 23/16f, on which it is currently drilling the Columbus prospect. BG has an equity holding in part of the adjacent Block 23/21 (Part Block 23/21) into which Serica believes the Columbus prospect may extend.

Serica and BG have entered into a cross-assignment agreement that provides, in certain specific circumstances, for Serica to exchange with BG a 25% interest in Block 23/16f for a 25% interest in Part Block 23/21, excluding Lomond field. The agreement also allows for BG to participate in the costs of the Columbus well-23/16f-11. The assignments of interest will be subject to regulatory and partner approvals.

Serica Chief Executive Paul Ellis said, “If Columbus is successful, the prospective common interests of Serica and BG in Blocks 23/16f and 23/21 will enable appraisal wells to be drilled and the development of any discovery to be commenced in the most efficient manner.”

Petro-Canada divestiture

Petro-Canada’s properties to be divested are Chard, Stony Mountain, Liege, Thornbury, and Ipiatik. Petro-Canada’s interest in these properties is estimated to cover 1.7 billion bbl of bitumen.

Petro-Canada opened a data room Nov. 20. It hired Harrison Lovegrove, London, to manage the auction.

“Over the next 10 years or so, we’ll be focusing all of our efforts on developing Fort Hills and our in situ properties of MacKay River, Lewis, and Meadow Creek,” said Neil Camarta, Petro-Canada’s senior vice-president, oil sands.

With this sale, Petro-Canada has an estimated 3 billion bbl of total bitumen resource at Syncrude and Fort Hills and more than 5 billion bbl in the in situ properties at MacKay River, Lewis, and Meadow Creek.

The company had earlier reported plans to submit a commercial application for the Fort Hills project by yearend, with a regulatory decision expected by late 2007 to be followed by construction lasting 3 years and oil production starting in 2011.

An expansion at MacKay River, by 2010, will increase production by 40,000 b/d, the company said.

It has evaluated 130 wells on its Lewis lease, as many as eight wells per section in some areas. Canadian sections are 1 mile square.

It also has delineated the Meadow Creek lease with eight wells per section. For both Lewis and Meadow Creek, Petro-Canada has not announced a definite timetable for initiating production (OGJ Online, Sept. 25, 2006).