Turkey's State Oil Co, ExxonMobil to Develop Oil Projects in Kurdistan

ISTANBUL - Turkey's state-run oil firm has struck an agreement with U.S. oil giant Exxon Mobil Corp. to develop joint projects in Kurdish-administered northern Iraq, Prime Minister Recep Tayyip Erdogan said Tuesday.

Mr. Erdogan also said that Turkey can pursue separate arrangements with the Erbil-based Kurdistan Regional Government, or KRG.

"Countries from various parts of the world are taking steps to explore and produce oil in different parts of Iraq, and then deliver it to world oil markets," he said. "There's nothing more normal, more natural than Turkey, which provides all kinds of support and aid to its next-door neighbor, to take a step that is based on mutual benefit."

The prime minister's statements, made just before he departed for the U.S. to meet with President Barack Obama, could herald an expansion of Turkey's influence in the energy-rich north of Iraq and help it generate enough energy to meet rising demand amid a robustly growing economy.

But Washington has also been cool on ventures that lack Baghdad's approval, fearing that empowering regional players such as the Kurds and Sunnis may push Iraqi Prime Minister Nouri al-Maliki, a Shia, closer to Iran and tip the delicate power balance in the Middle East following the U.S. withdrawal from Iraq, analysts say.

"The U.S. administration has consistently sent the same signals and repeated the same message: 'We want this to be done with Baghdad as part of a win-win-win formula involving Ankara, Erbil and Baghdad.' Obviously, by signing an agreement Turkey and Iraqi Kurds have moved to a certain stage, but whether this happens will depend to a great extent on what happens in Washington," said Bulent Aliriza, director of the Turkey Project at the Center for Strategic & International Studies in Washington.

Exxon Mobil declined to comment on the agreement announced by Turkey's prime minister. The Kurdish regional government couldn't immediately be reached for comment.

"The deal [between Turkey's oil company and Exxon to explore in Iraqi Kurdistan] is illegal and is not in line with the Iraqi constitution. Any agreement signed without the approval of the central government is illegal," said Faisal Abdullah, spokesman for Hussein al-Shahristani, Iraq's deputy prime minister for energy.

Striking an agreement with Ankara offers Iraqi Kurdistan a gateway to export its huge reserves of crude oil directly to world markets via Turkey, after a new pipeline is completed.

The move may also have destabilizing effects, coming at a time when Sunni-Shia tensions in Iraq are mounting and Mr. Maliki is seeking to assert Baghdad's authority across the country.

The Kurdish regional government and the Shia-Arab-led central government dispute control of territory, oilfields and revenue sharing from energy resources in Iraq. A KRG-Turkey deal could also deepen growing rifts between Baghdad and Ankara.

Some analysts said Tuesday's announcement contrasts sharply with a carefully honed policy in Ankara. Turkish officials have consistently called for the territorial integrity of Iraq and reiterated that they won't pursue any deals that would undermine the country's stability.

The Iraqi central government in Baghdad has long opposed the KRG's agreements with oil companies and plans for oil exports to Turkey.

"The regional government in northern Iraq has a constitutional right to 17% of [oil and gas] revenues," Mr. Erdogan said. "Since it has the ability to readily spend that share, it's in its right to use that in exchanges with Turkey.

"It is possible for us to have mutual agreements, there's nothing to prevent that," he told reporters in televised comments from Ankara before boarding his jet.

There is a deep divide between Erbil and Baghdad about the interpretation of Iraq's constitution. The Kurds maintain that it allows them the right to grant new contracts while letting the central government manage existing licenses. Yet Mr. Maliki says all new agreements need to be approved by Baghdad.

To get its energy framework with Iraqi Kurdistan moving, Turkey would have to persuade Washington to back the deal, analysts say.

"This is a step with the regional government in northern Iraq for exploration there. Now, to get results from this move, we need to get done with this trip with good results, our steps will mature accordingly," Mr. Erdogan said ahead of his meeting with Mr. Obama.

Still, that hasn't stopped drilling in northern Iraq by energy giants like Exxon Mobil and Chevron Corp., as well as smaller explorers such as Turkey-based Genel Energy PLC, run by former BP PLC (BP) chief Tony Hayward.

Genel Energy, which is listed in London and has been active in Iraqi Kurdistan since 2002, is already pumping oil and selling mostly to the domestic market. The KRG is using some of Genel's oil in a barter trade with Turkey, which provides the Kurdish government with processed petroleum products such as kerosene and fuel oil.

Hassan Hafidh, Ali Abbas and Tom Fowler contributed to this article.

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Aker Appoints New VP for Subsea Greenfield Projects

Oilfield service provider Aker Solutions reported Tuesday that its UK operation has appointed a new vice president to lead subsea greenfield projects.

Aker said that Bob Shaw's appointment is the latest in a series of new senior management appointments at the firm's subsea business in Aberdeen, Scotland, as the company embarks on the next stage of its growth strategy.

Shaw will lead development of all greenfield projects, focusing on work for key clients who include Statoil, Petrobras, Total, Dana Petroleum and ENI.

Aker Solutions UK Managing Director Matt Corbin commented in a statement:

“This is a key appointment for our subsea business in the UK. We have won a number of major contracts in recent months and Bob will play an important role in realizing our strategy as we look to capitalize on further opportunities going forward."

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Statoil: Proposed Tax Change Threat to Projects

Statoil has warned that a proposed change to tax breaks for investors on the Norwegian Continental Shelf threatens the attractiveness of future projects.

Norway is proposing to reduce the uplift in its petroleum tax system from 7.5 percent to 5.5 percent, which according to a Statoil statement Monday would reduce tax deductions on NCS projects by $38 million for every $1 billion invested.

Statoil said that a predictable and stable fiscal framework is important to secure the attractiveness of continued investment in the NCS.

"The proposed change in the Norwegian petroleum tax reduces the attractiveness of future projects, particularly marginal fields, and raises questions regarding the predictability and stability of the fiscal framework for long-term investments on the Norwegian continental shelf," Statoil CFO Torgrim Reitan said in a statement.

The proposed change is to be included in Norway's Revised National Budget 2013, which will be announced Tuesday.

The reduction in the uplift was designed to bring offshore investment in line with onshore investment in the country, an aide to Norway's Minister of Petroleum and Energy, Ola Borten Moe, currently attending the Offshore Technology Conference show in Houston, told Rigzone Monday.

The Norwegian government has also proposed a transition rule for projects where the Ministry of Petroleum and Energy has received a plan for development and operation (PDO), or a plan for installation and operation (PIO), prior to May 5. For investments covered by this transition rule, the current uplift of 7.5 percent will still apply.

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

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Statoil: Proposed Tax Change Threat to Projects

Statoil has warned that a proposed change to tax breaks for investors on the Norwegian Continental Shelf threatens the attractiveness of future projects.

Norway is proposing to reduce the uplift in its petroleum tax system from 7.5 percent to 5.5 percent, which according to a Statoil statement Monday would reduce tax deductions on NCS projects by $38 million for every $1 billion invested.

Statoil said that a predictable and stable fiscal framework is important to secure the attractiveness of continued investment in the NCS.

"The proposed change in the Norwegian petroleum tax reduces the attractiveness of future projects, particularly marginal fields, and raises questions regarding the predictability and stability of the fiscal framework for long-term investments on the Norwegian continental shelf," Statoil CFO Torgrim Reitan said in a statement.

The proposed change is to be included in Norway's Revised National Budget 2013, which will be announced Tuesday.

The reduction in the uplift was designed to bring offshore investment in line with onshore investment in the country, an aide to Norway's Minister of Petroleum and Energy, Ola Borten Moe, currently attending the Offshore Technology Conference show in Houston, told Rigzone Monday.

The Norwegian government has also proposed a transition rule for projects where the Ministry of Petroleum and Energy has received a plan for development and operation (PDO), or a plan for installation and operation (PIO), prior to May 5. For investments covered by this transition rule, the current uplift of 7.5 percent will still apply.

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

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

Statoil: Proposed Tax Change Threat to Projects

Statoil has warned that a proposed change to tax breaks for investors on the Norwegian Continental Shelf threatens the attractiveness of future projects.

Norway is proposing to reduce the uplift in its petroleum tax system from 7.5 percent to 5.5 percent, which according to a Statoil statement Monday would reduce tax deductions on NCS projects by $38 million for every $1 billion invested.

Statoil said that a predictable and stable fiscal framework is important to secure the attractiveness of continued investment in the NCS.

"The proposed change in the Norwegian petroleum tax reduces the attractiveness of future projects, particularly marginal fields, and raises questions regarding the predictability and stability of the fiscal framework for long-term investments on the Norwegian continental shelf," Statoil CFO Torgrim Reitan said in a statement.

The proposed change is to be included in Norway's Revised National Budget 2013, which will be announced Tuesday.

The reduction in the uplift was designed to bring offshore investment in line with onshore investment in the country, an aide to Norway's Minister of Petroleum and Energy, Ola Borten Moe, currently attending the Offshore Technology Conference show in Houston, told Rigzone Monday.

The Norwegian government has also proposed a transition rule for projects where the Ministry of Petroleum and Energy has received a plan for development and operation (PDO), or a plan for installation and operation (PIO), prior to May 5. For investments covered by this transition rule, the current uplift of 7.5 percent will still apply.

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

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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India Clears Projects Worth Billions of Dollars

NEW DELHI - An Indian ministerial panel on Monday approved 25 oil and gas and 13 power projects involving investments worth billions of dollars as part of its efforts to boost economic growth.

These are among the many projects in India which are facing delays due to bureaucratic red-tape, creating an obstacle to growth in an economy expanding at its weakest pace in a decade. In December, the government set up the Cabinet Committee on Investments, headed by Prime Minister Manmohan Singh, to fast-track industrial and infrastructure projects.

In a meeting held late Monday, the panel approved 25 oil and gas exploration projects. The defense ministry had objected to these projects due to their proximity to naval bases, missile firing ranges and other defense locations.

Fresh investment of $1.9 billion will now be made over the next three to five years in these 25 projects, the government said in a statement. Investments of $2.71 billion have already been made in them, it added.

The panel also reviewed 20 power projects and approved 13 of them involving investments of 330 billion rupees ($6.1 billion), the government said. These include transmission networks as well as hydroelectric and thermal-power projects which needed clearances mainly from the environment ministry.

The remaining seven power projects involving investments of 320 billion rupees still haven't been cleared. These are facing delays over land acquisition, fuel supply and environmental clearances, the minister said.

The Cabinet Committee on Investments has cleared several large projects in recent months, although many more still need urgent attention. Finance Minister P. Chidambaram recently said as many as 215 projects involving investments of 7 trillion rupees were facing delays.

Meanwhile, a separate cabinet panel Monday decided against allowing Coal India Ltd. to blend local and imported coal to meet its supply shortfall.

Blending of local and imported coal would have increased costs for power producers which source the fuel from the state-run monopoly supplier.

Saurabh Chaturvedi also contributed to this article.

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

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India Clears Projects Worth Billions of Dollars

NEW DELHI - An Indian ministerial panel on Monday approved 25 oil and gas and 13 power projects involving investments worth billions of dollars as part of its efforts to boost economic growth.

These are among the many projects in India which are facing delays due to bureaucratic red-tape, creating an obstacle to growth in an economy expanding at its weakest pace in a decade. In December, the government set up the Cabinet Committee on Investments, headed by Prime Minister Manmohan Singh, to fast-track industrial and infrastructure projects.

In a meeting held late Monday, the panel approved 25 oil and gas exploration projects. The defense ministry had objected to these projects due to their proximity to naval bases, missile firing ranges and other defense locations.

Fresh investment of $1.9 billion will now be made over the next three to five years in these 25 projects, the government said in a statement. Investments of $2.71 billion have already been made in them, it added.

The panel also reviewed 20 power projects and approved 13 of them involving investments of 330 billion rupees ($6.1 billion), the government said. These include transmission networks as well as hydroelectric and thermal-power projects which needed clearances mainly from the environment ministry.

The remaining seven power projects involving investments of 320 billion rupees still haven't been cleared. These are facing delays over land acquisition, fuel supply and environmental clearances, the minister said.

The Cabinet Committee on Investments has cleared several large projects in recent months, although many more still need urgent attention. Finance Minister P. Chidambaram recently said as many as 215 projects involving investments of 7 trillion rupees were facing delays.

Meanwhile, a separate cabinet panel Monday decided against allowing Coal India Ltd. to blend local and imported coal to meet its supply shortfall.

Blending of local and imported coal would have increased costs for power producers which source the fuel from the state-run monopoly supplier.

Saurabh Chaturvedi also contributed to this article.

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

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View the original article here

Contractors Feast on Australian Projects

Australia's major resources services contractors targeting the local oil and gas sector are taking advantage of the rapid growth being experienced in the industry.

Major new developments around the country continue to provide a wide range of opportunities for contractors such as Monadelphous, Leighton Contractors, Clough Ltd. and Laing O'Rourke.

Chevron's Gorgon and Wheatstone LNG projects, the Woodside Petroleum Ltd.-operated North West Shelf project, the Browse LNG project joint venture and Royal Dutch Shell plc's Floating LNG project have created a surge in demand in Western Australia for high-scale contracting services.

In Queensland, developments include QGC Pty. Ltd.'s Curtis LNG project, Arrow Energy Ltd.'s LNG plant project, the Australian Pacific LNG joint venture and Santos Ltd.'s Gladstone LNG project, while in the Northern Territory, Inpex Corp. has started development on the Ichthys project.

Monadelphous has experienced a strong run of contract wins on both sides of Australia around these developments, helping the company deliver record revenue and profits.

The Perth-based company has already won almost $1.04 billion (AUD 1 billion) in new contracts or contract extensions this Australian financial year, with a large percentage of those awards in the oil and gas sector.

In particular, Monadelphous has added strength to its positioning as a leading maintenance services provider in the oil and gas market, where it has recently secured two significant LNG contracts.

"With the award of these new contracts Monadelphous is providing long-term maintenance services to all of Australia's existing on-shore LNG plants," Rob Velletri, Monadelphous managing director, said in a conference call.

"The new long-term maintenance and shut-down services contract with Woodside at the Karratha gas plant in WA, the largest onshore LNG plant in Australia, is a strategic milestone for the company.

"Monadelphous also entered into its first long-term LNG maintenance services contract with QGC for its new LNG plant."

In October 2012, the company was awarded the maintenance contract, worth about $156 million (AUD 150 million), at the Karratha gas plant.

The contract, which started in January for an initial term of three years with the option of two one-year extensions, involves the provision of maintenance and shutdown services.

Monadelphous's contract with coal seam gas company QGC at the Curtis LNG plant, worth $83 million (AUD 80 million), started in January for an initial 6.5-year term.

The company will provide multidisciplinary core maintenance and shutdown services to support the operations phase of the plant, currently under construction at Curtis Island.

Monadelphous has also consolidated its relationship with Chevron Australia after signing a one-year extension to its facilities management services contract at the Gorgon project.

Worth about $135 million (AUD 130 million), the contract is for the operation and maintenance of construction facilities and utilities on Barrow Island.

Leighton Contractors' involvement with Australia's major developments has grown through a series of related contracts won at INPEX's Ichthys project.

In January, Leighton, which holds an oil and gas contract portfolio worth in excess of $4.68 billion (AUD 4.5 billion), was awarded a $960 million (AUD 923 million) contract to undertake Ichthys' onshore LNG facilities main civil works.

The project involves delivering the main civil infrastructure required for the LNG facilities, including piling, foundations, trenching for pipes, cable, sewers and drainage, roads, paving, electrical and instrumentation cabling.

This win added to Leighton Contractors' services division being awarded a four-year, $291 million (AUD 280 million) operations and maintenance contract by JKC Australia for the Ichthys temporary site facilities.

In October 2012, Leighton Contractors was also awarded a $131-million (AUD 126-million) engineering, procurement and construction (EPC) contract by JKC for one of the building packages at Ichthys.

At the Chevron Corp.-operated Gorgon project, the value of Leighton Contractors' contract to deliver the civil and underground works package was increased by $1 billion (AUD 975 million) to an estimated value of $1.86 billion (AUD 1.789 billion).

Leighton said the new estimated value reflected an increased and amended scope of works to provide better flexibility to deliver the package in a more efficient and timely way.

Perth-based Clough has grown its portfolio of oil and gas contracts to more than 20 this financial year.

Clough's energy portfolio across Australia features Chevron's Gorgon and Wheatstone projects, INPEX's Ichthys, Santos' Gladstone and QGC's Curtis.

The company's contract wins include an extension worth more than $20.8 million (AUD 20 million) for its Clough AMEC joint venture for the provision of engineering services to Chevron's oil facilities off the north-west of Australia, and a contract for its joint venture with Transfield Services for construction work as part of QGC's Curtis project.

Kevin Gallagher, Clough chief executive officer and managing director, said the company's outlook had never been stronger with a record order book and strong tender pipeline.

He explained that Clough's oil and gas clients were searching for contractors that could provide enhanced productivity.

"Clough is responding with a number of productivity initiatives," Gallagher said in a conference call.

"Our aim is to set the benchmark for productivity - we aim to do this by establishing the metrics and systems to provide real-time reporting on productivity performance and enable early detection and intervention where we have productivity issues."

Laing O'Rourke, a Perth-based privately-own engineering company, secured a major structural engineering and civil works contract with Bechtel Corp. on the Chevron-operated Wheatstone project.

The company said it would provide more than $520 million (AUD 500 million) in civil structural engineering and construction with the contract.

Wheatstone, situated 7.5 miles (12 kilometers) west of Onslow in the Pilbara region, will consist of two LNG trains with a combined capacity of 8.9 million tonnes per annum and a domestic gas plant.

David Stewart, Laing O'Rourke chief executive officer, said the company was "engaged on almost every one of Australia's major oil and gas projects – and can provide self delivered, construction and engineering services at each link of the gas export chain".

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

Contractors Feast on Australian Projects

Australia's major resources services contractors targeting the local oil and gas sector are taking advantage of the rapid growth being experienced in the industry.

Major new developments around the country continue to provide a wide range of opportunities for contractors such as Monadelphous, Leighton Contractors, Clough Ltd. and Laing O'Rourke.

Chevron's Gorgon and Wheatstone LNG projects, the Woodside Petroleum Ltd.-operated North West Shelf project, the Browse LNG project joint venture and Royal Dutch Shell plc's Floating LNG project have created a surge in demand in Western Australia for high-scale contracting services.

In Queensland, developments include QGC Pty. Ltd.'s Curtis LNG project, Arrow Energy Ltd.'s LNG plant project, the Australian Pacific LNG joint venture and Santos Ltd.'s Gladstone LNG project, while in the Northern Territory, Inpex Corp. has started development on the Ichthys project.

Monadelphous has experienced a strong run of contract wins on both sides of Australia around these developments, helping the company deliver record revenue and profits.

The Perth-based company has already won almost $1.04 billion (AUD 1 billion) in new contracts or contract extensions this Australian financial year, with a large percentage of those awards in the oil and gas sector.

In particular, Monadelphous has added strength to its positioning as a leading maintenance services provider in the oil and gas market, where it has recently secured two significant LNG contracts.

"With the award of these new contracts Monadelphous is providing long-term maintenance services to all of Australia's existing on-shore LNG plants," Rob Velletri, Monadelphous managing director, said in a conference call.

"The new long-term maintenance and shut-down services contract with Woodside at the Karratha gas plant in WA, the largest onshore LNG plant in Australia, is a strategic milestone for the company.

"Monadelphous also entered into its first long-term LNG maintenance services contract with QGC for its new LNG plant."

In October 2012, the company was awarded the maintenance contract, worth about $156 million (AUD 150 million), at the Karratha gas plant.

The contract, which started in January for an initial term of three years with the option of two one-year extensions, involves the provision of maintenance and shutdown services.

Monadelphous's contract with coal seam gas company QGC at the Curtis LNG plant, worth $83 million (AUD 80 million), started in January for an initial 6.5-year term.

The company will provide multidisciplinary core maintenance and shutdown services to support the operations phase of the plant, currently under construction at Curtis Island.

Monadelphous has also consolidated its relationship with Chevron Australia after signing a one-year extension to its facilities management services contract at the Gorgon project.

Worth about $135 million (AUD 130 million), the contract is for the operation and maintenance of construction facilities and utilities on Barrow Island.

Leighton Contractors' involvement with Australia's major developments has grown through a series of related contracts won at INPEX's Ichthys project.

In January, Leighton, which holds an oil and gas contract portfolio worth in excess of $4.68 billion (AUD 4.5 billion), was awarded a $960 million (AUD 923 million) contract to undertake Ichthys' onshore LNG facilities main civil works.

The project involves delivering the main civil infrastructure required for the LNG facilities, including piling, foundations, trenching for pipes, cable, sewers and drainage, roads, paving, electrical and instrumentation cabling.

This win added to Leighton Contractors' services division being awarded a four-year, $291 million (AUD 280 million) operations and maintenance contract by JKC Australia for the Ichthys temporary site facilities.

In October 2012, Leighton Contractors was also awarded a $131-million (AUD 126-million) engineering, procurement and construction (EPC) contract by JKC for one of the building packages at Ichthys.

At the Chevron Corp.-operated Gorgon project, the value of Leighton Contractors' contract to deliver the civil and underground works package was increased by $1 billion (AUD 975 million) to an estimated value of $1.86 billion (AUD 1.789 billion).

Leighton said the new estimated value reflected an increased and amended scope of works to provide better flexibility to deliver the package in a more efficient and timely way.

Perth-based Clough has grown its portfolio of oil and gas contracts to more than 20 this financial year.

Clough's energy portfolio across Australia features Chevron's Gorgon and Wheatstone projects, INPEX's Ichthys, Santos' Gladstone and QGC's Curtis.

The company's contract wins include an extension worth more than $20.8 million (AUD 20 million) for its Clough AMEC joint venture for the provision of engineering services to Chevron's oil facilities off the north-west of Australia, and a contract for its joint venture with Transfield Services for construction work as part of QGC's Curtis project.

Kevin Gallagher, Clough chief executive officer and managing director, said the company's outlook had never been stronger with a record order book and strong tender pipeline.

He explained that Clough's oil and gas clients were searching for contractors that could provide enhanced productivity.

"Clough is responding with a number of productivity initiatives," Gallagher said in a conference call.

"Our aim is to set the benchmark for productivity - we aim to do this by establishing the metrics and systems to provide real-time reporting on productivity performance and enable early detection and intervention where we have productivity issues."

Laing O'Rourke, a Perth-based privately-own engineering company, secured a major structural engineering and civil works contract with Bechtel Corp. on the Chevron-operated Wheatstone project.

The company said it would provide more than $520 million (AUD 500 million) in civil structural engineering and construction with the contract.

Wheatstone, situated 7.5 miles (12 kilometers) west of Onslow in the Pilbara region, will consist of two LNG trains with a combined capacity of 8.9 million tonnes per annum and a domestic gas plant.

David Stewart, Laing O'Rourke chief executive officer, said the company was "engaged on almost every one of Australia's major oil and gas projects – and can provide self delivered, construction and engineering services at each link of the gas export chain".

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 May Adjust Planning Guidelines for Oil, Gas Projects

OSLO - Norway will review some oil and gas projects and may change its planning guidelines, the government said Wednesday, after the operator and owner of the unsafe Yme platform agreed to scrap it before it had produced a drop of oil.

The Norwegian Ministry of Petroleum and Energy will ask the country's Petroleum Directorate "to review some bigger development projects that recently have or should have entered production," said ministry state secretary Per Rune Henriksen.

The owner of the Yme platform in the North Sea, Dutch oil service company SBM Offshore NV, said Tuesday it would pay operator Talisman Energy Inc. $470 million to remove Yme, located in the southeastern part of the North Sea. The platform was evacuated last summer when cracks were discovered in its structure. This is the first time in Norway a platform is to be scrapped without producing oil.

The dismantling of Yme platform is an untypical case, but it raises critical issues over the safety and planning of oil and gas projects, and also has serious cost implications for the government. Other recent oil and gas projects in Norway have also been hit by delays, cost overruns and quality concerns.

In total, the 24 ongoing oil and gas developments off Norway are estimated to overrun their initial budgets by 49 billion Norwegian kroner ($8.6 billion), according to the 2013 government budget. The lion's share of the overruns are at the Skarv, Valhall and Yme projects, it said.

The government's revised project cost of the BP PLC-operated Valhall field is now NOK46.7 billion, up 85.7% from BP's initial estimate from 2007. And the Yme project cost was estimated at NOK14.1 billion, up 188.4% from the initial estimate, the government said.

In Norway, oil companies can deduct 78% of their investments from their tax base, which means that the government can incur huge losses in the form of lost tax revenue due to overruns. The government said that in the case of the Yme project taxes would be handled by the appropriate authorities, without giving any figures.

"This is a project that up until now has only had losers. The economic losses have been huge for all the involved parties," said Mr. Henriksen.

The Norwegian government said it may change the planning of oil and gas projects to reduce the risk of repeating past mistakes, but didn't specify what changes it was considering. Such a review would also reduce tax revenue losses.

Based on the directorate's review, the ministry "will consider whether adjustments should be made, for instance in the guidelines for plans for development and operation," said Mr. Henriksen.

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

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Japan to 'Help' With Russian LNG Projects

TOKYO - Liquefied natural gas was on the agenda when the energy ministers of Russia and Japan met on Tuesday, a senior official at Japan's Ministry of Economy, Trade and Industry said.

Japan can help with LNG projects at Vladivostok and Yamal, Russia's Alexander Novak said without elaborating according to METI's Oil and Natural Gas Director Ryo Minami who was present.

Competitive pricing will raise interest from Japanese buyers, Japan's Economy, Trade and Industry Minister Toshimitsu Motegi said according to Mr. Minami. LNG demand in Japan is increasing after the country shifted away from nuclear power.

Russia is looking to sell to new markets because prices in Europe are relatively low. Two Russian companies in February announced plans to export LNG to Asia.

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

Norway May Adjust Planning Guidelines for Oil, Gas Projects

OSLO - Norway will review some oil and gas projects and may change its planning guidelines, the government said Wednesday, after the operator and owner of the unsafe Yme platform agreed to scrap it before it had produced a drop of oil.

The Norwegian Ministry of Petroleum and Energy will ask the country's Petroleum Directorate "to review some bigger development projects that recently have or should have entered production," said ministry state secretary Per Rune Henriksen.

The owner of the Yme platform in the North Sea, Dutch oil service company SBM Offshore NV, said Tuesday it would pay operator Talisman Energy Inc. $470 million to remove Yme, located in the southeastern part of the North Sea. The platform was evacuated last summer when cracks were discovered in its structure. This is the first time in Norway a platform is to be scrapped without producing oil.

The dismantling of Yme platform is an untypical case, but it raises critical issues over the safety and planning of oil and gas projects, and also has serious cost implications for the government. Other recent oil and gas projects in Norway have also been hit by delays, cost overruns and quality concerns.

In total, the 24 ongoing oil and gas developments off Norway are estimated to overrun their initial budgets by 49 billion Norwegian kroner ($8.6 billion), according to the 2013 government budget. The lion's share of the overruns are at the Skarv, Valhall and Yme projects, it said.

The government's revised project cost of the BP PLC-operated Valhall field is now NOK46.7 billion, up 85.7% from BP's initial estimate from 2007. And the Yme project cost was estimated at NOK14.1 billion, up 188.4% from the initial estimate, the government said.

In Norway, oil companies can deduct 78% of their investments from their tax base, which means that the government can incur huge losses in the form of lost tax revenue due to overruns. The government said that in the case of the Yme project taxes would be handled by the appropriate authorities, without giving any figures.

"This is a project that up until now has only had losers. The economic losses have been huge for all the involved parties," said Mr. Henriksen.

The Norwegian government said it may change the planning of oil and gas projects to reduce the risk of repeating past mistakes, but didn't specify what changes it was considering. Such a review would also reduce tax revenue losses.

Based on the directorate's review, the ministry "will consider whether adjustments should be made, for instance in the guidelines for plans for development and operation," said Mr. Henriksen.

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

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Japan to 'Help' With Russian LNG Projects

TOKYO - Liquefied natural gas was on the agenda when the energy ministers of Russia and Japan met on Tuesday, a senior official at Japan's Ministry of Economy, Trade and Industry said.

Japan can help with LNG projects at Vladivostok and Yamal, Russia's Alexander Novak said without elaborating according to METI's Oil and Natural Gas Director Ryo Minami who was present.

Competitive pricing will raise interest from Japanese buyers, Japan's Economy, Trade and Industry Minister Toshimitsu Motegi said according to Mr. Minami. LNG demand in Japan is increasing after the country shifted away from nuclear power.

Russia is looking to sell to new markets because prices in Europe are relatively low. Two Russian companies in February announced plans to export LNG to Asia.

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Further Scrutiny for Australian Coal Seam Gas Projects

SYDNEY - Australian coal seam gas projects or large coal mines that could lower the quality of water resources will now be assessed by federal lawmakers under new laws proposed Tuesday.

It comes as big international oil companies and miners invest billions of dollars developing resources for export to fast-growing Asian economies, while facing opposition from other land users like farmers and horse breeders. The most contentious projects are clustered on the eastern seaboard in Queensland and New South Wales states.

Adding a new layer of approvals is likely to push up costs of projects at a time when returns are coming under increasing pressure. Coal seam gas developments led by BG Group PLC, Origin Energy Ltd. and Santos Ltd. in Queensland have all overrun budgets due to technical challenges and issues ranging from labor shortages to the high Australian dollar.

The impact of coal seam gas and coal mines on water resources is only monitored by state governments at present. Federal lawmakers are able to take account of water issues if they relate to threatened species or internationally significant wetlands.

"The proposed amendments will ensure that coal seam gas and large coal mining developments must be assessed and approved under national environment law, if they are likely to have a significant impact on a water resource," Environment Minister Tony Burke said in a statement.

To comply with the federal approval process, additional information will be required on top of what's needed in the state-based approvals process. Mr. Burke, however, said most of the data would have already been addressed in state-based procedures.

Companies already undergoing an assessment will need to work on providing additional information for the federal approvals process "straight away", Mr. Burke said.

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Petronas Projects Seen Not Affected by Sabah Incursion

With the Sabah crisis still up in the air, the state's massive potential in the oil and gas (O&G) industry may see some reassessment if it turns into a prolonged engagement.

Apart from national oil company Petroliam Nasional Bhd (Petronas), big oil players include ConocoPhilips Co and Royal Dutch Shell plc, their operations are some distance away from the eastern coast of Sabah where the incursion took place.

Petronas officials were not available for comment, but MIDF Research Sdn Bhd analyst Aaron Tan Wei Min said the national oil company is not expected to be affected. Tan also expects foreign oil companies to be unaffected but they will put more thought about future investment in Sabah if the troubles prolong but he added that "it's unlikely that investors would shy away in a significant way."

"After this incident, they will definitely place more emphasis on the location and area they are investing in the state," Tan told The Malaysian Reserve yesterday.

Apart from the ongoing offshore exploration and production activities, Petronas is also developing the Sabah Oil and Gas Terminal (SOGT) in Kimanis and the Sipitang Oil and Gas Industrial Park (SOGIP) where it is partnering Mitsui Co from Japan to build a urea processing plant.

Tan said examples in other hotspots in the world, like Nigeria, showed that global oil majors and services companies do still invest heavily in the region.

He said these companies are investing in the Niger River Delta in Nigeria where certain factions have caused much political and security unrest in the region.

"The reason being, certain calculated risks are worth taking," he said.

To a question on how the current event in Sabah is affecting Petronas with its current business presence and the ones that are in the pipeline for the company, Tan said the volatile Sabah situation should not have a big impact on Petronas because most of its presence is on the other side of the state.

The SOGT is located in Kimanis and SOGIP in Sipitang, both located around three-six hours south-west from Kota Kinabalu.

Also, almost all of its major oil fields are located on the west side and only one major field SB305 (concession holders are Nordic Maritime Pte Ltd and Tanjung Offshore Services Sdn Bhd) is located on the east side of Sabah, fronting Sandakan to the eastern-most tip of Sabah away from the "troubled" south-east areas, he said.

Sabah is being developed as a regional deep water and O&G services hub. Sabah's offshore O&G fields have attracted investment from international O&G companies and many fields have been developed.

The government is also actively wooing more foreign investors to the state with more deep water and other infrastructure projects being planned or underway.

"However, it is important that the current situation is resolved quickly. Militant activities in other oil-rich countries have shown how quickly the O&G industry can be disrupted," said Frost & Sullivan Asia Pacific Energy and Power Systems director Subramanya Bettadapura.

He said if the situation is prolonged or is allowed to spread to other regions in the state, investor confidence will definitely be shaken. Malaysia has been a very peaceful country with no major security concerns for the national oil company.

However, in view of the recent developments, Petronas would have to factor in external threats to its important O&G installations both onshore and offshore, Subramanya said.

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Gulf of Mexico Decommissioning Projects Continue to Rise

With approximately 2,996 production platforms (distinguished from drilling rigs) on the U.S. Outer Continental Shelf (OCS), the Bureau of Safety and Environmental Enforcement (BSEE) records indicate that 813 platforms currently fit the criteria of idle iron or are non-producing in this region.

With such a huge number of platforms for the industry to decommission, it is more important than ever to share best practice approaches, new technological breakthroughs and project case studies to ensure that all projects are completed on time and on budget.

Below is the breakdown from BSEE on the non-producing assets within their jurisdiction:

258 are on Expired/Terminated/Relinquished Leases432 have enough material to be considered under Rigs-to-Reefs: Only 156 are in water depths that would allow for 'Reefing-in-place'6 Permit Applications were denied for Rigs-to-Reefs issues 5 for toppled/damaged facilities with not enough material, too close to existing reef sites, etc.)5 of the 6 Denied Applications were resubmitted for complete removal/disposal on shore386 Structures have actually been reefed since 1973 under a state artificial reef plan9 Removal Applications currently pending with Rigs-to-Reefs proposals.

In October 2010, the Idle Iron NTL came into effect creating a huge boost in decommissioning projects in the Gulf of Mexico. This increase in offshore decommissioning is continuing to accelerate with more and more platforms being removed in the region year after year.

In a decommissioning market valued at $30-$40 billion, this spike presents a vast opportunity for service providers in the Gulf of Mexico. On the flip side, heightened regulatory burden, combined with new technical challenges and increased risks will place heavy demands on both operators and contractors.

To address these issues, leading Gulf of Mexico major & independent operators, Apache, BP, Shell, Taylor Energy, Stone Energy, Chevron, Enbridge Energy and more will meet at DecomWorld's 5th Annual Decommissioning & Abandonment Summit, Gulf of Mexico in Houston, March 19-21 2013, to evaluate decommissioning approaches to improve efficiencies and cut costs whilst reducing offshore liabilities.

Alongside them, leading contractors such as Baker Hughes, Express Energy Services and TETRA Technologies to name a few will be presenting best-in-class; cost-effective decommissioning solutions and up-to-date case studies that will ensure operators can meet compliance challenges safely and efficiently.

With industry support from partners including the American Salvage Association and The Society for Underwater Technology, this year's conference and exhibition will cover all of the key challenges surrounding decommissioning for the offshore industry.

The Decommissioning & Abandonment Summit will take place on March 19-21 in Houston, TX. Over 800 senior offshore industry experts will gather to discuss the future of offshore decommissioning activities in the Gulf of Mexico as well as reflecting on the projects that took place in 2012.

This meeting is recognized as a must attend event for decommissioning professionals in an industry valued between $30 - $40 billion. The Summit, in its fifth blockbusting year, is the only forum for serious decommissioning industry professionals in the Gulf of Mexico that offers these networking and information sharing opportunities.

If you're involved in this industry you can't afford to stay away - DecomWorld's Head of Sector, Dean Murphy, commented, "This is the event to attend for those serious about offshore decommissioning. The D&A Summit has grown year on year with more operator companies in attendance than ever before. This reflects the growth of decommissioning in the Gulf of Mexico and the challenges that still lie ahead'. Dean continued to say, 'the decommissioning stage of offshore operations is crucial for operators. They must continue to align themselves with government regulations, harness the latest technology and partner with the real innovators in the market to ensure costs are kept down whilst ensuring continued safety'.

The conference has received strong feedback from past delegates. David Bowman, Petroleum Engineer at Nexen Petroleum commented, "Great forum. Very beneficial to see how others are handling decommissioning abandonment issues."

Tom Cheatum, Sales & Marketing Manager at Versabar commented, "All of the operators had their decommissioning project managers attending the conference; it gave us an opportunity to discuss projects at a higher level. In addition, it provided an opportunity for us to showcase our newest technology."

Register now to secure your place at the principal decommissioning event where strategies will be mapped, game-changing technologies showcased, and key deals brokered.

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