TPT May 2007

Oil & Gas News

Russia explores an OPEC-like gas cartel with Qatar In January, the supreme leader of Iran, Ayatollah Ali Khamenei, suggested that his country and Russia team up to form a gas cartel. Russian President Vladimir Putin addressed the concept at his wide-ranging annual news conference on February 1. “We will think about it,” Mr Putin said. And he did – very promptly, it seems. In the Middle East a scant two weeks later, President Putin discussed the possibility of an OPEC-like natural gas cartel with leaders in Qatar, which commands the world’s third-largest natural gas reserves and is global leader in the production of liquefied natural gas (LNG). Apparently encouraged by what he heard, Mr Putin lost little time in turning an idea into something more. On his return to Moscow he said he would dispatch a team of experts to the Qatari capital, Doha, in April to explore a gas alliance. Such a prospect is bracing to contemplate. Russia has the world’s largest reserves of natural gas, with an estimated 1,680 trillion cubic feet of gas buried deep beneath the vast tundra and taiga of Siberia. It is also feasible, at least in concept. LNG lends itself well to a gas cartel because it can be shipped and traded in much the same way as oil. What a Russian-Qatari cartel might mean for European nations reliant on Russian gas is uncertain. In January, European leaders reacted warily after executives from Russia’s state-owned gas monopoly, Gazprom, met with Algerian leaders to discuss joint strategies for marketing gas to Europe and the possible formation of an alliance of gas exporters. Algeria supplies Europe with 10 per cent of its natural gas.

Inter Pipeline partnership set to become largest oil sands shipper in Canada

The Inter Pipeline Fund has agreed to buy the Corridor pipeline system in Alberta from energy shipping giant Kinder Morgan Inc (Houston, Texas) for US$233 million, to become the largest gatherer of bitumen from the province’s oil sands. The Corridor system transports bitumen, a tar-like heavy oil, in dilute form from the Athabasca oil sands project near Fort McMurray to a Shell Canada Ltd processing plant near Edmonton. Athabasca is a joint venture of Shell, Western Oil Sands Inc (also Canadian), and Chevron, USA. According to Canadian Press (March 6), Corridor currently transports about 280,000 barrels of oil equivalent (boe) per day and is set to expand that to 465,000 boe by 2012. The company, which began commercial operations in May 2003, commands about 1,000km of pipeline and more than two million barrels of storage. Calgary-based Inter Pipeline – which ships oil, stores liquid gas, and operates natural gas processing businesses – has energy infrastructure assets in Western Canada, the UK, Germany, and Ireland. The fund is also operator and 85 per cent owner of the Cold Lake oil sands pipeline system in east-central Alberta, which ships 330,000 boe under long-term contracts with Canadian customers Imperial Oil, EnCana, and Canadian Natural Resources Ltd. Corridor’s seller, Kinder Morgan (Houston, Texas), is one of the largest energy companies in North America, with approximately 43,000 miles of pipelines that transport primarily natural gas, crude oil and petroleum products; plus some 150 terminals for storage and handling. In Canada, the company is constructing its first major merchant terminal in Edmonton and has in hand several other pipeline and terminal projects. Angola is expecting US$50 billion in investments in its oil industry over the next six years, according to the head of the state-owned oil company Sonangol. Chairman Manuel Vicente made this prediction on March 7 despite the collapse of two major international energy deals and the possibility of renewed political tension in the country. Sonangol has ended talks with China’s Sinopec on plans for a US$3 billion Chinese investment in an oil refinery in Angola. Chinese companies have played a major role in the oil-driven reconstruction boom that Angola has enjoyed since it emerged from a 27-year civil war in 2002. It has since become China’s biggest supplier of crude. Mr Vicente asserted that Angolan companies would be encouraged to take advantage of growth in the industry, which is fueling an economic boom in sub-Saharan Africa’s second largest oil producer after Nigeria. Now a member of the Organization of the Petroleum Exporting Countries (OPEC), Angola is pumping more than one million barrels per day (bpd), and production is projected to reach at least two million bpd by 2008 as new fields come onstream. But in another blow to the Angolan vision of substantial oil investment, US oil major Exxon Mobil Corp has transferred its minority stake in a planned multibillion-dollar liquefied natural gas (LNG) plant to Sonangol. Angola’s Sonangol sees an investment bonanza just ahead

In the Chicago Tribune , foreign correspondent Alex Rodriguez reflected on what might spring to the minds of American energy officials. He wrote, “Right now, such a cartel would not affect the United States, which

Natural gas consumption in the US is projected to jump by nearly half in 20 years

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relies on domestic sources and on imports from Canada and the Caribbean for its natural gas. However, natural gas consumption in the US is projected to jump by nearly half in 20 years, and the US is expected to look to LNG to fill the gap.” ( ‘Russia Pursues Gas Cartel,’ March 9).

Tyco Thermal Controls

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M ay /J une 2007