TPT November 2008

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Oil & Gas News
63 November 2008 ›
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Metals Technologies
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• Friction saws
• Cold saws
• Tungsten carbide saws
As noted by senior staff writer Paula Dittrick of the Oil & Gas
Journal (8 September), capital spending varied widely by region,
with lower levels of investment in the West offset by gains in
regional spending elsewhere. The review showed Asia-Pacific
investments having risen on China’s increasing natural gas
demand and rising demand for liquefied natural gas (LNG) in
the rest of Asia. Upstream spending in Russia and the Caspian
region soared 58 per cent upon higher acquisition activity and
development spending.
In contrast, conventional oil and gas spending in Canada last year
plunged by nearly $30 billion from 2006. Analysts saw rising royalty
rates in the province of Alberta and new Canadian royalty trust
legislation as contributing to lower overall upstream investment in
Canada by more than 25 per cent. In the US, substantially lower
acquisition activity contributed to a 9 per cent decline in 2007
upstream spending compared with 2006.
“Higher prices drove a 10 per cent increase in revenue to $931
billion [worldwide],” said Robert Gillon, IHS Herold senior vice
president. “But cost pressures have been unrelenting, with lifting
costs rising by 17 per cent and government take up 5 per cent to
$253 billion, or 51 per cent of pre-tax profit. As a result, net income
edged up 2 per cent to $246 billion, which is a record result but is
far from the heady advances of the prior three years.”
Iraq cuts Western oil companies loose,
signs a contract with China’s CNPC
An Iraqi plan to award six contracts to Western oil companies
has been withdrawn, participants in the negotiations said on 10
September. Hussain al-Shahristani, the oil minister of Iraq, told
reporters at a summit meeting of OPEC in Vienna on the previous
day that talks with Exxon Mobil, Chevron, Shell, Total, BP, and
several smaller companies for one-year deals had been broken off.
Finalization of the contracts, which were announced in June, was
said to have dragged on for so long that the companies could not
fulfill the work within the stipulated time frame.
The six no-bid deals, which would have been the first major oil
contracts with the central government in Iraq since the toppling of
Saddam Hussein in 2003, were for work to raise production from
existing oil fields by half a million barrels a day. While not especially
lucrative by industry standards, the contracts were valued for
offering a toehold in Iraq at a time when oil companies are being
shut out of energy-rich countries around the world. The companies
will be eligible to compete for future contracts, but in open bidding.
The award of the contracts had come under sharp criticism from
several US senators on grounds that they could undermine the
efforts of Iraqi Kurds, Sunnis, and Shiites to reach agreement on a
hydrocarbon law and a revenue-sharing agreement. This criticism
was conveyed to Mr Shahristani by the American Embassy in
Baghdad in late June, whereupon the deals were delayed.
A spokesman for the Iraqi Oil Ministry said on 14 September that
Iraq had signed its first major oil deal with a foreign company since
the fall of Saddam Hussein’s regime. The contract, with China
National Petroleum Corp, could be worth up to $3 billion and would
allow CNPC to develop an oil field in southern Iraq’s Wasit province
over about 20 years, Oil Ministry spokesman Assim Jihad said in
Baghdad.