TPT September 2007

ConocoPhillips said they had decided against commitments to stay in four multi-billion dollar heavy-crude upgrading projects that are being nationalized. The government of President Hugo Chávez had proposed deals under which Venezuela would take at least a 60 per cnet stake in projects valued above $30 billion with the capability of producing 600,000 barrels per day. While four other companies (Chevron Corp, also US; Norway’s Statoil; Britain’s BP Plc; and Total, of France) continued working toward an accord that would keep them involved in the projects, the New York Times ran an interview with James J Mulva, chairman and chief executive of ConocoPhillips. It indicates that his concerns go well beyond Venezuela, where the third-largest American integrated energy company was poised for a pull-out and a $4.5 billion write-off. Following are excerpts from Mr Mulva’s interview with the Times ’s Clifford Krauss ( ‘Oil Giant Sees Some Strains in the System,’ June 30): Q : You have announced support for a national mandatory framework to address greenhouse gas emissions. Is this a new day for ConocoPhillips and the oil industry – or simply green marketing? A : Neither. The science is quite compelling. Climate is changing. We are concerned with greenhouse gas emissions. As a company and as an industry we need to participate in the development of a national policy and framework to address climate change. Q : According to the Department of Energy, the US will consume 28 per cent more oil and 19 per cent more natural gas in 2030 than it did in 2005. Where will we find all that oil and gas? A : I question whether the supply will be developed to meet those demand expectations. I believe demand is going to be constrained by supply. Q : What would you like to see in the new federal energy legislation that Congress is working on? A : The legislation under consideration does nothing to add supply, or to encourage investment or conservation or efficient use of energy. Effectively, in a somewhat punitive way, it is adding taxation with the unrealistic expectation that we can increase the fiscal take, lower the price of energy, and encourage investment to add supply. I would promote more access, by the oil and gas companies, to a substantial amount of acreage onshore and offshore that is not available for drilling. [Right now] we have no real incentives to make infrastructure investment to add pipelines, transportation, terminals, and refining capacity. Q : You have a noncontrolling stake in [Russia’s largest oil company] Lukoil at a time when Russia has not been the most friendly country to the US and market reforms there have been uneven. How are your operations going in Russia? A : It’s unfortunate that energy development between Russia and the US has not [advanced] more quickly. For ConocoPhillips, our experience as a 20 per cent owner of Lukoil has been very good. Everything that Lukoil and the Russian government indicated they would do, when we made the investment, has come to pass exactly as indicated. We look for opportunities to invest more with Lukoil and with Russian companies inside and outside of Russia, both upstream and downstream.

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S eptember /O ctober 2007