Iran Courts Indian Companies with More Alluring Oil Contracts

Iran has offered new, more alluring terms to reluctant Indian companies to win the investment it craves for its decaying energy sector suffering from tight Western sanctions.

Iran started offering production sharing contracts (PSCs), long denied to investors, to a group of Indian oil executives visiting Tehran in January, an Indian industry source said on Thursday.

Tehran's insistence, until now, on paying contractors back in oil made projects unattractive to foreign firms even before sanctions made it nearly impossible for most to work there.

Iranian Foreign Minister Ali Akbar Salehi repeated the production sharing offer during an India-Iran Joint Commission meeting with Indian external affairs minister Salman Khurshid in Tehran last weekend, Indian media reported.

Indian firms say the risks of investing large sums in Iran are still too great, even with a more attractive PSC regime.

We expressed our reservations because of international sanctions and non-availability of services and material required for execution projects,'' said a source who was involved in talks with Iran on potential upstream activities in January.

Three Indian companies with stakes in a gas field in Iran - Indian Oil Corp., ONGC Videsh and Oil India - told a U.S. government watchdog late last year that they had no plans to pursue further work on the project.

According to Iranian media reports, the National Iranian Oil Company (NIOC) has been drafting production-sharing contracts in the hope of attracting Asian companies, which are not banned by their governments from operating in Iran, to invest in its rundown industry.

Indian press reports said that the two foreign ministers discussed PSCs on Saturday at their meeting in Tehran.

A statement published by the Indian foreign ministry after the meeting said the two sides agreed to study joint investment prospects in both countries but made no mention of energy agreements.

The two ministers did discuss India working to upgrade Iran's Chahbahar Port near the border with Pakistan to help boost trade with land-locked Afghanistan to the north, according to the Indian statement.

We are determined to explore and use all capacities for economic cooperation,'' Khurshid was quoted as saying in a statement published by the Iranian foreign ministry.

Under Iran's established buy-back system, contractors are supposed to be paid in oil and gas from projects they develop with their own capital but then have to hand back the project to Iranian companies when completed and wait for pay back.

This system has kept oil majors like Italy's Eni waiting for multi-million-dollar payments for projects they completed decades ago, while sanctions make it still more difficult to get the oil from Iran.

Under the new contracts, NIOC plans to transfer development of small oil and gas fields to contractors so that the state-run Iranian oil company plays only a supervisory role, NIOC director Ahmad Qalebani was reported as saying by Fars News in March.

PSC's would only be offered for shared fields, he was quoted as saying during a meeting in Tehran on the development of Iran's contracting system in March.

Iran has been courting Asian and Russian energy companies to develop its vast oil and gas reserves over the last few years, and there are still a number of Chinese and Russian companies working in upstream projects, according to the U.S. government.

Western sanctions have also dampened their appetite for long-term investments in the isolated Islamic Republic, on current contract terms, with Chinese companies slamming the brakes on projects they agreed to develop years ago.

Under pressure from Washington, India and China - two of Iran's biggest oil buyers - have also sharply reduced their imports of Iranian crude over the last year.

Copyright 2013 Thai News Service All Rights Reserved

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Iran Courts Indian Companies with More Alluring Oil Contracts

Iran has offered new, more alluring terms to reluctant Indian companies to win the investment it craves for its decaying energy sector suffering from tight Western sanctions.

Iran started offering production sharing contracts (PSCs), long denied to investors, to a group of Indian oil executives visiting Tehran in January, an Indian industry source said on Thursday.

Tehran's insistence, until now, on paying contractors back in oil made projects unattractive to foreign firms even before sanctions made it nearly impossible for most to work there.

Iranian Foreign Minister Ali Akbar Salehi repeated the production sharing offer during an India-Iran Joint Commission meeting with Indian external affairs minister Salman Khurshid in Tehran last weekend, Indian media reported.

Indian firms say the risks of investing large sums in Iran are still too great, even with a more attractive PSC regime.

We expressed our reservations because of international sanctions and non-availability of services and material required for execution projects,'' said a source who was involved in talks with Iran on potential upstream activities in January.

Three Indian companies with stakes in a gas field in Iran - Indian Oil Corp., ONGC Videsh and Oil India - told a U.S. government watchdog late last year that they had no plans to pursue further work on the project.

According to Iranian media reports, the National Iranian Oil Company (NIOC) has been drafting production-sharing contracts in the hope of attracting Asian companies, which are not banned by their governments from operating in Iran, to invest in its rundown industry.

Indian press reports said that the two foreign ministers discussed PSCs on Saturday at their meeting in Tehran.

A statement published by the Indian foreign ministry after the meeting said the two sides agreed to study joint investment prospects in both countries but made no mention of energy agreements.

The two ministers did discuss India working to upgrade Iran's Chahbahar Port near the border with Pakistan to help boost trade with land-locked Afghanistan to the north, according to the Indian statement.

We are determined to explore and use all capacities for economic cooperation,'' Khurshid was quoted as saying in a statement published by the Iranian foreign ministry.

Under Iran's established buy-back system, contractors are supposed to be paid in oil and gas from projects they develop with their own capital but then have to hand back the project to Iranian companies when completed and wait for pay back.

This system has kept oil majors like Italy's Eni waiting for multi-million-dollar payments for projects they completed decades ago, while sanctions make it still more difficult to get the oil from Iran.

Under the new contracts, NIOC plans to transfer development of small oil and gas fields to contractors so that the state-run Iranian oil company plays only a supervisory role, NIOC director Ahmad Qalebani was reported as saying by Fars News in March.

PSC's would only be offered for shared fields, he was quoted as saying during a meeting in Tehran on the development of Iran's contracting system in March.

Iran has been courting Asian and Russian energy companies to develop its vast oil and gas reserves over the last few years, and there are still a number of Chinese and Russian companies working in upstream projects, according to the U.S. government.

Western sanctions have also dampened their appetite for long-term investments in the isolated Islamic Republic, on current contract terms, with Chinese companies slamming the brakes on projects they agreed to develop years ago.

Under pressure from Washington, India and China - two of Iran's biggest oil buyers - have also sharply reduced their imports of Iranian crude over the last year.

Copyright 2013 Thai News Service All Rights Reserved

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Government Could Broaden Definition of State-Owned Companies

OTTAWA - The federal government is poised to pass Investment Canada amendments that will broaden its definition of "state-owned enterprises" and could subject SOEs' acquisitions of minority stakes in Canadian companies to investment reviews to determine whether they represent a net benefit to Canada.

The measures are contained in a budget omnibus bill, tabled by Minister Jim Flaherty last week, and expected to be passed into law before the Commons recesses for the summer next month.

In a written analysis, lawyers at Osler Hoskin & Harcourt LLP say the amendments will add considerable uncertainty to the foreign investment review process for companies that have close ties to foreign governments--even if they are not state-owned--and go beyond what Ottawa promised last December when it first announced heightened foreign-investment scrutiny for state-owned enterprises.

The budget bill "introduces a new level of uncertainty into the federal government's treatment of proposed investments by SOEs which was not anticipated in December 2012," the Osler lawyers write.

Osler partner Shuli Rodal said the proposed amendments remove "safe harbor" assurances that allow foreign companies to acquire less than one-third of voting shares, or a minority interest in a trust, partnership or joint venture, without triggering Investment Canada review. Companies in the cultural sector already have to demonstrate that they are not gaining de facto control through the purchase of minority shares, and now state-owned enterprises will face that same hurdle, Ms. Rodal said in an interview.

At the same time, Ottawa is giving itself broad discretion to decide who is state controlled.

Prime Minister Stephen Harper announced late last year that Ottawa would not allow additional foreign-government investment in the oil sands, even as he allowed CNOOC Ltd.'s C$15.3 billion acquisition of Calgary-based Nexen Inc. and a C$6 billion takeover of natural gas-rich Progress Energy by Malaysia's Petronas. While insisting Ottawa welcomes investment by state-owned enterprises elsewhere in the Canadian economy, the prime minister signaled a clear preference for their acquisition of minority stakes and said Ottawa would assess whether an investment would leave the Canadian firm under the influence of a foreign government, even if it did not involve a majority interest.

Prior to the Nexen decision, the investment banking community expected a wave of new deals involving state-owned enterprises in Canada, but very few have materialized.

Many critics, including the opposition New Democrats, urged Ottawa to clarify Investment Canada rules so that potential foreign investors would know what hurdles they faced before they attempt to do business in Canada. But the December policy announcement and proposed Investment Canada amendments create more, not less, ministerial discretion and greater uncertainty.

"Until somebody tests it, we won't know for sure how it will be applied," said Paul Boothe, a University of Western Ontario business professor and former senior official at Industry Canada. "So someone who wants to do their deal and thinks they're in good shape will test this, and if it works, then we'll have a little more evidence no how this is being applied. But right now, people are going to be unsure about it."

In determining with an investment by a foreign company should be reviewed under SOE guidelines, the minister can look at whether it has minority government investment, commercial relationships with foreign governments or significant relationships with officials within government. So for example, Brazil's Vale SA is a publicly traded company but the Brazilian government exercises considerable influence and holds a "golden share," so Vale could be considered a state-owned enterprise under the new Investment Canada rules.

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Norway Plans to Raise Taxes on Oil Companies

OSLO - Norwegian Prime Minister Jens Stoltenberg, who faces an election in September, on Sunday laid out plans for a modest tax cut for mainland businesses while increasing taxes on oil companies and multinationals, as the small Nordic nation looks to maintain a competitive business climate.

Mr. Stoltenberg's plan, part of the government budget presentation on Tuesday, includes a reduction in the general corporate tax to 27% from 28% starting in 2014.

The move is expected to shave 2.4 billion kroner ($413 million) off the annual tax bill for mainland industry, as well as NOK500 million annually for those who are self-employed, the government said. Lawmakers will vote on the budget, but Mr. Stoltenberg's ruling coalition has enough votes to pass it.

Neighboring Sweden recently cut its corporate-tax rate to 22%, and Denmark plans to reach the same level by 2016. Finland, meanwhile, is aiming to take its tax rate at 20%.

Norway's oil-and-gas industry has helped keep unemployment low, public finances intact and wages rapidly growing. While this has insulated Norway from much of Europe's economic malaise, it has forced many companies outside the energy sector to be noncompetitive.

"Some sectors are performing very well, pushing prices and salaries higher," Mr. Stoltenberg said at a news conference. "At the same time, businesses that can't increase prices because they depend on global markets are squeezed by high costs and lower demand from abroad."

Norway's wage growth is expected to slow to 3.5% in 2013, but is still high enough to erode the competitiveness of companies in the international market.

Oil companies won't benefit from the tax cut, the government said, because it will be offset by an increase in the special petroleum tax to 51% from 50%.

Mr. Stoltenberg criticized oil companies for cost overruns on big projects, and said they would have to pay a bigger share of the investments from now on.

"We think we give a better signal to the oil companies when they must now bear a bigger share of the investments themselves, not the least because we need more cost awareness in that sector," he said.

The 24 oil projects under development offshore Norway have recorded cost overruns of NOK49 billion, government figures show. Mr. Stoltenberg said "90% of this is paid for by the society."

Oil companies would still be able to deduct most of their investment costs, but slightly less than before. By reducing a tax deduction called the "uplift," oil companies' tax bill was expected to increase by NOK70 billion in current value between 2013 and 2050, the government said, or slightly below NOK3 billion annually.

Norway's dominant oil company, Statoil ASA, wasn't available for comment Sunday.

The Norwegian Oil and Gas Association said it worried the changes could undermine Norway's reputation as a stable environment for oil-company investments, and warned that marginally profitable oil and gas projects could be shelved.

Amid a high oil price, some offshore projects "have a pretty high break-even price," association spokesman Erling Kvadsheim told The Wall Street Journal. "I don't think this measure in itself will necessarily affect those, but some of the more expensive projects to increase the oil recovery [on mature fields] may be impacted."

Some of the bill for the tax cuts would go to big corporations. The government said it planned to reduce multinational companies' ability to shift profit into low-tax countries from Norway through internal loans. Lowering interest deductions on such loans would increase tax revenue by NOK3 billion annually, the government said.

In addition, a higher tax rate on people who own more than one home would increase Norway's tax revenue by an additional 500 million kroner annually, the government said.

Copyright (c) 2013 Dow Jones & Company, Inc.

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Government Could Broaden Definition of State-Owned Companies

OTTAWA - The federal government is poised to pass Investment Canada amendments that will broaden its definition of "state-owned enterprises" and could subject SOEs' acquisitions of minority stakes in Canadian companies to investment reviews to determine whether they represent a net benefit to Canada.

The measures are contained in a budget omnibus bill, tabled by Minister Jim Flaherty last week, and expected to be passed into law before the Commons recesses for the summer next month.

In a written analysis, lawyers at Osler Hoskin & Harcourt LLP say the amendments will add considerable uncertainty to the foreign investment review process for companies that have close ties to foreign governments--even if they are not state-owned--and go beyond what Ottawa promised last December when it first announced heightened foreign-investment scrutiny for state-owned enterprises.

The budget bill "introduces a new level of uncertainty into the federal government's treatment of proposed investments by SOEs which was not anticipated in December 2012," the Osler lawyers write.

Osler partner Shuli Rodal said the proposed amendments remove "safe harbor" assurances that allow foreign companies to acquire less than one-third of voting shares, or a minority interest in a trust, partnership or joint venture, without triggering Investment Canada review. Companies in the cultural sector already have to demonstrate that they are not gaining de facto control through the purchase of minority shares, and now state-owned enterprises will face that same hurdle, Ms. Rodal said in an interview.

At the same time, Ottawa is giving itself broad discretion to decide who is state controlled.

Prime Minister Stephen Harper announced late last year that Ottawa would not allow additional foreign-government investment in the oil sands, even as he allowed CNOOC Ltd.'s C$15.3 billion acquisition of Calgary-based Nexen Inc. and a C$6 billion takeover of natural gas-rich Progress Energy by Malaysia's Petronas. While insisting Ottawa welcomes investment by state-owned enterprises elsewhere in the Canadian economy, the prime minister signaled a clear preference for their acquisition of minority stakes and said Ottawa would assess whether an investment would leave the Canadian firm under the influence of a foreign government, even if it did not involve a majority interest.

Prior to the Nexen decision, the investment banking community expected a wave of new deals involving state-owned enterprises in Canada, but very few have materialized.

Many critics, including the opposition New Democrats, urged Ottawa to clarify Investment Canada rules so that potential foreign investors would know what hurdles they faced before they attempt to do business in Canada. But the December policy announcement and proposed Investment Canada amendments create more, not less, ministerial discretion and greater uncertainty.

"Until somebody tests it, we won't know for sure how it will be applied," said Paul Boothe, a University of Western Ontario business professor and former senior official at Industry Canada. "So someone who wants to do their deal and thinks they're in good shape will test this, and if it works, then we'll have a little more evidence no how this is being applied. But right now, people are going to be unsure about it."

In determining with an investment by a foreign company should be reviewed under SOE guidelines, the minister can look at whether it has minority government investment, commercial relationships with foreign governments or significant relationships with officials within government. So for example, Brazil's Vale SA is a publicly traded company but the Brazilian government exercises considerable influence and holds a "golden share," so Vale could be considered a state-owned enterprise under the new Investment Canada rules.

Copyright (c) 2013 Dow Jones & Company, Inc.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

Norway Plans to Raise Taxes on Oil Companies

OSLO - Norwegian Prime Minister Jens Stoltenberg, who faces an election in September, on Sunday laid out plans for a modest tax cut for mainland businesses while increasing taxes on oil companies and multinationals, as the small Nordic nation looks to maintain a competitive business climate.

Mr. Stoltenberg's plan, part of the government budget presentation on Tuesday, includes a reduction in the general corporate tax to 27% from 28% starting in 2014.

The move is expected to shave 2.4 billion kroner ($413 million) off the annual tax bill for mainland industry, as well as NOK500 million annually for those who are self-employed, the government said. Lawmakers will vote on the budget, but Mr. Stoltenberg's ruling coalition has enough votes to pass it.

Neighboring Sweden recently cut its corporate-tax rate to 22%, and Denmark plans to reach the same level by 2016. Finland, meanwhile, is aiming to take its tax rate at 20%.

Norway's oil-and-gas industry has helped keep unemployment low, public finances intact and wages rapidly growing. While this has insulated Norway from much of Europe's economic malaise, it has forced many companies outside the energy sector to be noncompetitive.

"Some sectors are performing very well, pushing prices and salaries higher," Mr. Stoltenberg said at a news conference. "At the same time, businesses that can't increase prices because they depend on global markets are squeezed by high costs and lower demand from abroad."

Norway's wage growth is expected to slow to 3.5% in 2013, but is still high enough to erode the competitiveness of companies in the international market.

Oil companies won't benefit from the tax cut, the government said, because it will be offset by an increase in the special petroleum tax to 51% from 50%.

Mr. Stoltenberg criticized oil companies for cost overruns on big projects, and said they would have to pay a bigger share of the investments from now on.

"We think we give a better signal to the oil companies when they must now bear a bigger share of the investments themselves, not the least because we need more cost awareness in that sector," he said.

The 24 oil projects under development offshore Norway have recorded cost overruns of NOK49 billion, government figures show. Mr. Stoltenberg said "90% of this is paid for by the society."

Oil companies would still be able to deduct most of their investment costs, but slightly less than before. By reducing a tax deduction called the "uplift," oil companies' tax bill was expected to increase by NOK70 billion in current value between 2013 and 2050, the government said, or slightly below NOK3 billion annually.

Norway's dominant oil company, Statoil ASA, wasn't available for comment Sunday.

The Norwegian Oil and Gas Association said it worried the changes could undermine Norway's reputation as a stable environment for oil-company investments, and warned that marginally profitable oil and gas projects could be shelved.

Amid a high oil price, some offshore projects "have a pretty high break-even price," association spokesman Erling Kvadsheim told The Wall Street Journal. "I don't think this measure in itself will necessarily affect those, but some of the more expensive projects to increase the oil recovery [on mature fields] may be impacted."

Some of the bill for the tax cuts would go to big corporations. The government said it planned to reduce multinational companies' ability to shift profit into low-tax countries from Norway through internal loans. Lowering interest deductions on such loans would increase tax revenue by NOK3 billion annually, the government said.

In addition, a higher tax rate on people who own more than one home would increase Norway's tax revenue by an additional 500 million kroner annually, the government said.

Copyright (c) 2013 Dow Jones & Company, Inc.

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Uganda Reaches Deal With Oil Companies Over Refinery

KAMPALA, Uganda - The Ugandan government has reached an agreement with oil companies operating in its oil-rich Lake Albertine rift basin over the construction of a 30,000 barrels-a-day refinery, ending a nearly two-year deadlock that has largely been blamed for delaying the development of the country's oil fields, the Ugandan presidency said over the weekend.

The refinery agreement brings the two parties closer to a final deal on the basin-wide oil development plan, where companies are expected to invest more than $12 billion to develop the country's nascent oil sector.

A presidential spokeswoman said in a statement the refinery agreement was reached following a meeting on Saturday between President Yoweri Museveni and representatives of companies operating in the country--U.K.-based Tullow Oil PLC, France's Total SA and China's CNOOC Ltd. "The parties agreed to start with the refinery size of 30,000 barrels per day" the spokeswoman said, adding that Mr. Museveni noted that oil production in the country was long overdue because a lot of time has been wasted in negotiations and formulation of oil production documents. "We have wasted too much time. We are now with the issue of oil for seven years. We need to make our final decisions," Mr. Museveni was quoted as saying.

With an estimated 3.5 billion barrels of untapped oil, Uganda is expected to join Nigeria, Angola and Sudan among sub-Saharan Africa's major crude producers. But the government had withheld consent for the development of the fields since last year, due to a spat with oil companies over development plans, chief among them the size of the refinery. While the companies have been pushing for a pipeline to export crude on the open market, government has been insisting on the construction of a large refinery, with the capacity to refine as much as 180,000 barrels-a-day of crude into fuel products, initially for domestic consumption and then for regional export.

Last week, Mr. Museveni said that the two sides were close to agreeing an oil and gas extraction plan that is "optimal" for both government and oil companies. Following the meeting with oil companies, government also agreed to the construction of an export pipeline, the presidency said. In February, Total said that its project in Uganda would stall, unless government approved the construction of a pipeline. Negotiations over the final development plans for the oil basin are continuing and the two sides expect a final deal in the next few weeks, according to government officials. There was no immediate reaction from company officials.

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Uganda: Close to Drilling Deal with International Oil Companies

KAMPALA, Uganda - Uganda is close to an agreement over oil drilling in the Lake Albertine Rift basin, its president said late on Tuesday.

"We are now about to conclude an oil-and-gas extraction plan that will be equitable to Uganda and the oil companies," a presidential spokeswoman quoted President Yoweri Museveni as saying.

"Uganda discovered oil in 2006 but has not been able to start the extraction process owing to a battle...with oil companies."

Uganda has an estimated 3.5 billion barrels in reserves which could see it join Nigeria, Angola and Sudan as a big, sub-Saharan producers.

The government has denied drilling licences unless oil companies agree to build a refinery and process most of the crude in Uganda. The companies are demanding a pipeline be built to the east African coast.

Oil projects worth as much as $12 billion are on hold since the impasse started more than a year ago.

Total S.A. said executives met Mr. Museveni last month but added that it won't start work on its concessions until the pipeline is approved.

Other companies ready to start production in Uganda are Tullow Oil PLC and Cnooc Ltd.

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DIPP Turns Down Oil Companies for Activities in India

Bharat Petroleum Corporation Limited, The Government of India has issued the following news release:

The commerce and industry ministry has rejected the demand of oil exploration firms to be given fiscal incentives such as subsidy for their activities in northeastern India. Oil companies such as ONGC, Oil India, Jubilant Energy and Assam Company urged the government to include exploration and production (E&P) business in the list of industries getting fiscal incentives under the North East Industrial and Investment Promotion policy (NEIIP).

The department of industrial policy and promotion (DIPP) has turned down the proposal saying oil and gas explorers do not manufacture products, government and industry officials said. DIPP said the government had decided not to expand the service sector under NEIIP since subsidies offered by the department was aligned to the national manufacturing policy to boost manufacturing. NEIIP provides subsidies to manufacturing and select service sector enterprises on condition that the beneficiary units should refund subsidies if they stop their activities within five years of commencing commercial production.

"Thus, the proposal to consider grant of subsidy for E&P units, which are not able to make successful discovery in the North East is not in harmony with the objectives of the scheme," the department said in a letter to the oil ministry. The subsidy policy was launched in 2007 to provide 10-year fiscal incentives that included 100% income tax and excise duty exemptions. The policy also provides capital investment and interest subsidies. Its benefits include reimbursement of insurance premium. But industries in the negative list are not eligible for these incentives.

"DIPP has asked the oil ministry to formulate its own scheme to incentivize exploration companies working in the north east," an oil ministry official said. But industry officials defended industry's position. "It is true that petroleum refineries are in the negative list of NEIIP, but refineries should not be confused with E&P," one official said. It appears that the intent of the policy was to exclude oil refinery from availing incentives, an industry official said. But due to the ambiguous language, it is being misinterpreted as to exclude crude oil and natural gas produced by upstream companies, the official said.

The northeastern region has huge hydrocarbons potential and an unambiguous fiscal incentive package would attract investments, executives of oil companies said. According to industry estimates, the region has about 5.75 billion barrels of oil reserves and more than 21 trillion cubic feet gas. The Assam-Arakan basin that covers an area of 116,000 square kilometers is highly prospective.

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Western Energy Alliance wants taxpayers to front $44 billion in handouts to most profitable companies in the U.S. – billion dollar oil and gas industry

The Western Energy Alliance has once again proved that they’ll go to any length to increase the profit margins of the billion-dollar oil & gas industry. Now they’re lobbying for $44 billion dollars in taxpayer-funded handouts over the next 10 years, despite the fact that the oil and gas companies are some of the most profitable in the U.S.

ExxonMobil and Chevron topped the Fortune’s rankings of the world’s most profitable companies in 2012. In fact, four of the top ten companies on the Fortune 500 list were oil and gas companies. And the big five oil companies, BP, Chevron, ConocoPhillips, ExxonMobil and Shell, made a combined profit of $118 billion dollars last year and $137 billion in 2011. 

The oil and gas industry has more than proven that they don’t need these excessive, wasteful subsidies – they’re making billion dollar profits while American taxpayers are paying more at the pump.  

Unfortunately, this is just the latest example of Western Energy Alliance putting profit margins of a billion dollar industry ahead of what’s best for Westerners.

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Companies Detail 800-Mile Alaska Gas Pipeline

Exxon Mobil Corp., ConocoPhillips, BP PLC and TransCanada Corp. said Friday they plan to develop a natural-gas pipeline from Alaska's North Slope to a port where the gas would be prepared for export as part of a project expected to cost $45 billion to $65 billion.

The companies provided some details for the proposed Alaska gas pipeline in a letter to Alaska Gov. Sean Parnell.

Under the companies' plan, or "concept," an 800-mile pipeline would be built with the capacity to ship 3 billion to 3.5 billion cubic feet of gas to an area near a port where the gas would be turned into a liquid. The liquefied natural gas would be stored in tanks and loaded onto tankers from a loading jetty with two berths, according to a plan attached to the letter. In addition to those facilities, a natural-gas treatment facility would be built on the North Slope, near Prudhoe Bay, near where the gas would be produced.

The liquefaction plant would be built on a 400-acre to 600-acre site and be able to process 15 million to 18 million tons of gas a year, executives with the comapnies said in the letter.

"We remain committed to responsibly developing the State's considerable resources and will keep you advised of our progress," read the letter, which was signed by Randy Broiles at Exxon Mobil, Trond-Erik Johansen at ConocoPhillips, Janet Weiss at BP and Tony Palmer at TransCanada.

If built, the gas pipeline and export facility would be one of the largest LNG projects in the world, said Mr. Parnell, who has strongly supported development of Alaska's gas and a pipeline to ship the gas to overseas markets. As part of an agreement with the state, the companies promised to provide periodic updates on their pipeline-development plans.

"I am pleased the companies met the benchmarks," Mr. Parnell said in a statement. "I look forward to working with them as they advance this public-private partnership."

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Companies Detail 800-Mile Alaska Gas Pipeline

Exxon Mobil Corp., ConocoPhillips, BP PLC and TransCanada Corp. said Friday they plan to develop a natural-gas pipeline from Alaska's North Slope to a port where the gas would be prepared for export as part of a project expected to cost $45 billion to $65 billion.

The companies provided some details for the proposed Alaska gas pipeline in a letter to Alaska Gov. Sean Parnell.

Under the companies' plan, or "concept," an 800-mile pipeline would be built with the capacity to ship 3 billion to 3.5 billion cubic feet of gas to an area near a port where the gas would be turned into a liquid. The liquefied natural gas would be stored in tanks and loaded onto tankers from a loading jetty with two berths, according to a plan attached to the letter. In addition to those facilities, a natural-gas treatment facility would be built on the North Slope, near Prudhoe Bay, near where the gas would be produced.

The liquefaction plant would be built on a 400-acre to 600-acre site and be able to process 15 million to 18 million tons of gas a year, executives with the comapnies said in the letter.

"We remain committed to responsibly developing the State's considerable resources and will keep you advised of our progress," read the letter, which was signed by Randy Broiles at Exxon Mobil, Trond-Erik Johansen at ConocoPhillips, Janet Weiss at BP and Tony Palmer at TransCanada.

If built, the gas pipeline and export facility would be one of the largest LNG projects in the world, said Mr. Parnell, who has strongly supported development of Alaska's gas and a pipeline to ship the gas to overseas markets. As part of an agreement with the state, the companies promised to provide periodic updates on their pipeline-development plans.

"I am pleased the companies met the benchmarks," Mr. Parnell said in a statement. "I look forward to working with them as they advance this public-private partnership."

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Argentina's YPF CEO Meets With UAE Oil Companies, Investors

BUENOS AIRES - The head of Argentina's state-run oil company, YPF SA met Wednesday with oil companies and investors in the United Arab Emirates to discuss partnering to produce oil and gas in the South American nation.

YPF CEO Miguel Galuccio met with Abdul Jaleel Al Khalifa, chief executive of Dragon Oil PLC in Dubai. Later in Abu Dhabi, Mr. Galuccio met with Khaldoon Khalifa Al Mubarak, chief executive of Mubadala Development Corporation, the Abu Dhabi government's sovereign-wealth fund.

"In the meetings, the funds and energy companies from the Emirates appeared very interested in having a greater presence in Latin America, and in the case of our country, being able to have investments alongside a company like YPF," a YPF official told Dow Jones Newswires.

Last year, Mubadala said it would invest $2 billion to buy into the sprawling business empire of Brazil's richest man, Eike Batista, a move that seemed set to lead to further investments by the Gulf state in Latin America.

Dragon Oil executives could visit Argentina in a month or so to look closer at developing conventional oil and gas products, the YPF official said.

Mr. Galuccio also plans to meet with executives from Abu Dhabi National Energy Co. PJSC and International Petroleum Investment Company before concluding the trip. Argentine Planning Minister Julio De Vido and Deputy Economy Minister Axel Kicillof, who both oversee energy policy in Argentina, are accompanying Mr. Galuccio on the trip.

Mr. Galuccio, who took over YPF when it was expropriated from Spain's Repsol SA last year, has been courting international partners to boost output and help Argentina reduce its dependence on imported energy.

The YPF boss has also recently held talks with Norway's Statoil ASA, Russia's government-controlled gas company, Gazprom, and Chevron Corp., among others.

In December, YPF inked a deal with a company linked to Argentina's Bulgheroni family to invest $1.5 billion together over the next two years to develop shale-gas and oil resources.

YPF also announced an accord with Chevron that could see the California-based company and YPF spend about $1 billion to drill 100 wells for unconventional energy in Argentina's resource-rich Neuquen Province.

If that plan works, the companies could finalize plans to drill an estimated 2,000 wells for about $15 billion in coming years. But the plan faces an important obstacle.

A $19 billion embargo on the assets of Chevron's local subsidiary, stemming from a decades-old case involving environmental damage claims in Ecuador, has raised questions about Chevron's ability to move forward in Argentina as long as the embargo is still active. Chevron has said it will use all legal means available to reverse the embargo.

Copyright (c) 2012 Dow Jones & Company, Inc.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

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Big Oilfield-Services Companies Are Poised for a Reawakening

HOUSTON - Oilfield services companies had reasons to celebrate throughout the North American drilling boom, then spent much of last year hung over amid stalling U.S. profit margins. Now analysts say a more-muted party could resume as the companies have adapted to new circumstances.

Last year, Schlumberger Ltd., Halliburton Co. and Baker Hughes Inc. were challenged by an oversupplied market for fracking services, a pullback in drilling by producers nervous about commodity prices, and the high cost of some materials.

This year, though, analysts consider these companies are poised for take-off, having grown their businesses offshore and in strong international markets and anticipating that there will be at least some rebound in North America operations. The reason is that domestic exploration and production companies may have pulled back too much at the end of last year, and might have to ramp up drilling to hold on to precious shale acreage in early 2013. Also, rigs are becoming more efficient, allowing more wells to come online that need to be fracked and completed, padding the profits of these large oilfield-services companies.

"The stars are finally aligning both from a macro and fundamental perspective such that you do want to buy the bottoming expectations," said Mike Urban, an analyst with Deutsche Bank. "I think you want to be involved now," Mr. Urban said.

Investors have noticed the potential. So far this year, Schlumberger, the largest global oilfield-services company, is up 13% to $78.47, and runner-up Halliburton is up about 16% to $40.91. Analysts with BMO Capital Markets see room to grow: they have set target prices of $52 for Halliburton and $85 for Schlumberger. Most analysts surveyed by FactSet have buy ratings on these two companies. The view is more mixed on Baker Hughes, the smallest of these three companies. Shares are up more than 9% this year to $44.98, but the company has less international exposure than peers and lagged behind in making the shift from gas to oil drilling in North America last year. BMO analysts give it a target price of $43.

Kyle Wade, a partner with Copia Capital LLC in Chicago, said some investors who had been wary are rushing to buy back into these companies before they become too expensive. "When you look at Schlumberger and Halliburton, that's clearly where people are afraid they're going to miss the cycle," Mr. Wade said. "You've got actual panicked buying" by some funds, he said.

To be sure, the upward path might be long and rocky. All three of the largest oilfield-services companies reported that their profits were down in the fourth quarter from a year earlier. Schlumberger and Baker Hughes said in earnings calls last month that the U.S. onshore market for pressure pumping services, which allow oil and gas producers to fracture tight rock formations by injecting high-pressure jets of water and chemicals, remains oversupplied.

Baker Hughes chief executive Martin Craighead told analysts that the U.S. market has 20% to 25% "too much horsepower," which translates into 125 fracking fleets that are idle or underutilized. Another 300 rigs would have to come back online to get those fleets fully utilized, Mr. Craighead said. Schlumberger, which had previously been insulated from the troubled North American market by its international operations, reported a 3.7% decline in net income.

Sandy Pomeroy, a portfolio manager at Neuberger Berman, said she doesn't think the oilfield-services market will have much in the way of momentum until natural-gas prices reach $4 per million British thermal units. Natural-gas futures recently traded at $3.30 per million BTUs, and haven't risen above $4 since 2011. When the supply glut dries up, Ms. Pomeroy said exploration and production companies will eventually start spending again to levels that would spur oilfield-services companies' revenue and profits, she said, but not soon enough.

"That's on the horizon, but not the investible horizon from my perspective," Ms. Pomeroy said.

However, the companies have predicted some recovery in the first quarter as exploration and production companies start fresh in the new year and ramp up from self-imposed fiscal discipline in the final months of 2012. Halliburton chief executive Dave Lesar said he was calling the bottom for North American margins in the fourth quarter, and Schlumberger said last week that it anticipates 100 to 150 rigs will come online in North America in the first quarter.

Bill Herbert, an analyst with Simmons investment bank, said the North American market is in the process of hitting its bottom.

"It is our belief that in the second half of the year, North American margins are in structural recovery mode," Mr. Herbert said. Though the timing of a pickup in the rig count is unclear, Mr. Herbert said prices for services will hit a bottom by the second quarter of this year.

Also, international and deep-water markets are picking up the slack, with high global oil prices and new projects able to go forward because of government go-aheads and availability of new drilling rigs. The companies that have traditionally worked mostly in onshore North America are working to grow their presence in other parts of the world. Halliburton, the largest provider of fracking services in North America, reported that its international revenue jumped 12% from the third quarter to the fourth.

"International on the margin looks a bit better than what people thought regarding outlook," Mr. Herbert said , with exploration and production companies planning double-digit percentage increases in spending outside the U.S. "As long as the macro economy appears relatively constructive, you've got to think about getting in now."

Copyright (c) 2012 Dow Jones & Company, Inc.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

Big Oilfield-Services Companies Are Poised for a Reawakening

HOUSTON - Oilfield services companies had reasons to celebrate throughout the North American drilling boom, then spent much of last year hung over amid stalling U.S. profit margins. Now analysts say a more-muted party could resume as the companies have adapted to new circumstances.

Last year, Schlumberger Ltd., Halliburton Co. and Baker Hughes Inc. were challenged by an oversupplied market for fracking services, a pullback in drilling by producers nervous about commodity prices, and the high cost of some materials.

This year, though, analysts consider these companies are poised for take-off, having grown their businesses offshore and in strong international markets and anticipating that there will be at least some rebound in North America operations. The reason is that domestic exploration and production companies may have pulled back too much at the end of last year, and might have to ramp up drilling to hold on to precious shale acreage in early 2013. Also, rigs are becoming more efficient, allowing more wells to come online that need to be fracked and completed, padding the profits of these large oilfield-services companies.

"The stars are finally aligning both from a macro and fundamental perspective such that you do want to buy the bottoming expectations," said Mike Urban, an analyst with Deutsche Bank. "I think you want to be involved now," Mr. Urban said.

Investors have noticed the potential. So far this year, Schlumberger, the largest global oilfield-services company, is up 13% to $78.47, and runner-up Halliburton is up about 16% to $40.91. Analysts with BMO Capital Markets see room to grow: they have set target prices of $52 for Halliburton and $85 for Schlumberger. Most analysts surveyed by FactSet have buy ratings on these two companies. The view is more mixed on Baker Hughes, the smallest of these three companies. Shares are up more than 9% this year to $44.98, but the company has less international exposure than peers and lagged behind in making the shift from gas to oil drilling in North America last year. BMO analysts give it a target price of $43.

Kyle Wade, a partner with Copia Capital LLC in Chicago, said some investors who had been wary are rushing to buy back into these companies before they become too expensive. "When you look at Schlumberger and Halliburton, that's clearly where people are afraid they're going to miss the cycle," Mr. Wade said. "You've got actual panicked buying" by some funds, he said.

To be sure, the upward path might be long and rocky. All three of the largest oilfield-services companies reported that their profits were down in the fourth quarter from a year earlier. Schlumberger and Baker Hughes said in earnings calls last month that the U.S. onshore market for pressure pumping services, which allow oil and gas producers to fracture tight rock formations by injecting high-pressure jets of water and chemicals, remains oversupplied.

Baker Hughes chief executive Martin Craighead told analysts that the U.S. market has 20% to 25% "too much horsepower," which translates into 125 fracking fleets that are idle or underutilized. Another 300 rigs would have to come back online to get those fleets fully utilized, Mr. Craighead said. Schlumberger, which had previously been insulated from the troubled North American market by its international operations, reported a 3.7% decline in net income.

Sandy Pomeroy, a portfolio manager at Neuberger Berman, said she doesn't think the oilfield-services market will have much in the way of momentum until natural-gas prices reach $4 per million British thermal units. Natural-gas futures recently traded at $3.30 per million BTUs, and haven't risen above $4 since 2011. When the supply glut dries up, Ms. Pomeroy said exploration and production companies will eventually start spending again to levels that would spur oilfield-services companies' revenue and profits, she said, but not soon enough.

"That's on the horizon, but not the investible horizon from my perspective," Ms. Pomeroy said.

However, the companies have predicted some recovery in the first quarter as exploration and production companies start fresh in the new year and ramp up from self-imposed fiscal discipline in the final months of 2012. Halliburton chief executive Dave Lesar said he was calling the bottom for North American margins in the fourth quarter, and Schlumberger said last week that it anticipates 100 to 150 rigs will come online in North America in the first quarter.

Bill Herbert, an analyst with Simmons investment bank, said the North American market is in the process of hitting its bottom.

"It is our belief that in the second half of the year, North American margins are in structural recovery mode," Mr. Herbert said. Though the timing of a pickup in the rig count is unclear, Mr. Herbert said prices for services will hit a bottom by the second quarter of this year.

Also, international and deep-water markets are picking up the slack, with high global oil prices and new projects able to go forward because of government go-aheads and availability of new drilling rigs. The companies that have traditionally worked mostly in onshore North America are working to grow their presence in other parts of the world. Halliburton, the largest provider of fracking services in North America, reported that its international revenue jumped 12% from the third quarter to the fourth.

"International on the margin looks a bit better than what people thought regarding outlook," Mr. Herbert said , with exploration and production companies planning double-digit percentage increases in spending outside the U.S. "As long as the macro economy appears relatively constructive, you've got to think about getting in now."

Copyright (c) 2012 Dow Jones & Company, Inc.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

Your Questions About Oil Rig Companies

If Scotland get independent is the oil actually there’s?

Well explain because I am confused… If Scotland separates from the UK is the British government really going to give up the oil? because they built the rigs etc with there money and isn’t the oil companies based in London? I just want to know about this oil situation and that the Westminster are just going to give all the oil to Scotland because without the oil I just wondering what else they can survive on.. thanks for you help.

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Your Questions About Oil Well Drilling Companies

Do you remember the oil spill in the Gulf of Mexico?

The one where Pemex Oil, a Mexican oil company, had a blowout while drilling a well. Leaked as much as 30,000 barrels (not gallons) of oil a day for 10 months? The spill covered 162 miles of US beaches with oil. Mexico paid no compensation. Mexico did not stop drilling oil. There was no boycott against Mexico.
http://en.wikipedia.org/wiki/Ixtoc_I_oil_spill

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Your Questions About Offshore Oil Drilling Companies

Why do people think that offshore drilling is helping to lower gas prices?

Oil companies are actually producing less oil because prices are down. Prices drop when demand goes down or supply goes up. In this case, demand has fallen way off because of fear of an economic recession. Oil companies are trying to increase the demand by decreasing supply so they can keep their record profits.

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Your Questions About Oil Rig Companies

Is it possible that Big Oil and the motor companies influence the timing of traffic lights?

I have noticed that traffic lights are meaner to us as pedestrians than as vehicle users, and also that my first question on this topic provoked an early backlash. Is it possible that traffic light signals are time-rigged to suit big business, at the expense of Jo(e) Public?

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Oil and Natural Gas Companies: Betting On America

Who’s doubling down on America? Companies in the U.S. oil and natural gas industry, which owned five of the top 11 spots on the Progressive Policy Institute’s list of the top 25 nonfinancial U.S.-based companies, ranked by their 2011 capital spending inside this country:

Kudos to PPI for compiling this interesting list. ExxonMobil ranked No. 3 with $11.7 billion in U.S. capital expenditures and was joined on the list by No. 6 Occidental Petroleum ($6.2 billion), No. 7 ConocoPhillips ($5.6 billion), No. 9 Chevron ($4.8 billion) and No. 11 Hess ($4.4 billion).

It’s more than a novelty or a talking point. The $136.2 billion in capital spending by these companies was a direct input into the U.S. economy. PPI:

"Domestic business investment generates growth, raises productivity, increases wages and creates jobs for Americans. It can span the gamut from new office buildings to improved production lines to faster communications equipment to deeper natural gas wells."

Indeed. America’s oil and natural gas companies support 9.2 million jobs and contributed $476 billion to the economy in 2010. PPI calls the top 25 companies “Investment Heroes” for plowing dollars into growth and job creation. PPI’s overarching point is that more capital investment is needed to get the economy rolling again. The key is unlocking those private dollars.

Though it has invested a lot already, the oil and natural gas industry is willing to do much more. With greater access to U.S. natural resources, onshore and offshore, the industry could create 1.4 million jobs and generate $800 billion in revenue for governments. This will require policy changes – including a commonsense regulatory structure and a positive, proactive approach to developing America’s energy assets. As PPI notes:

"Multiple layers of regulation, even if well-intentioned, have the impact of discouraging capital investment and innovation."

Former Shell president John Hofmeister talked about that very point at an energy forum this week hosted by the New America Foundation. Hofmeister said government must decide whether it will be an “enabler of prosperity” or a “disabler of markets”:

“I think if I’m heading an American oil company looking at use of capital in America, I would be very careful, I would be selective. And I think that’s what we’re seeing.”

The good news is that despite the current investment climate, America’s oil and natural gas companies are investing in America – and can be an engine that drives the entire economy.

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