TPT May 2007

Oil & Gas News

Highly profitable Exxon plans to raise output by a million barrels a day Due to oil prices which averaged more than US$65 a barrel last year, oil companies have posted record earnings – notably ExxonMobil (Irving, Texas), which earned a record US $39.5 billion in 2006. For the second year in a row, the world’s biggest publicly traded oil company reported the largest profit of any US corporation. Accordingly, Exxon’s chairman and chief executive, Rex W Tillerson, told an analysts’ meeting March 7 in New York that Exxon will be increasing its investment in oil and natural gas projects. In 2006, Exxon’s spending on exploration and development projects was US$19.9 billion, 12 per cent higher than in 2005. The company expects that figure to average more than US$20 billion from 2008 to 2011. Mr Tillerson said Exxon expects to add one million barrels a day of oil and gas to its current production as the company launches more than 20 projects over the next three years. These include liquefied natural gas projects in Qatar, deepwater fields in Angola and the Gulf of Mexico, and oil fields in the North Sea. Like much of the rest of the industry, Exxon is facing sharply higher costs because of increased energy prices and a more active oil and gas sector. The energy consultancy Cambridge Energy Research Associates (Cambridge, Massachusetts) estimates that the cost of finding and pumping oil has gone up more than 50 per cent since 2004. Exxon, a famously efficient operator, said its capital expenses have risen more than 30 per cent since 2002. Elsewhere in oil and gas . . . ■ As of next year, Russia will no longer predicate the national budget solely on oil and gas revenues. According to the news agency Interfax , Finance Minister Alexei Kudrin told reporters in Moscow on March 9 that his agency would submit amendments to the nation’s budget code sometime in the ensuing two weeks. Mr Kudrin said, “This means that revenue will be separated according to oil and gas and non-oil and gas starting in 2008 (and that) oil and gas transfers will be set in percentages against GDP (gross domestic product) and will remain for a long period, for 20 years at least, at a constant size.” On the same day that Mr Kudrin spoke it was posted on the government website that Russia’s state debt had dropped to 9 per cent of GDP by the end of 2006. In his budget message for the period 2008-2010, President Vladimir Putin noted that the state debt, including outlays for its servicing, exceeded 100 per cent of GDP at the end of 1999. ■ On February 27 the cabinet of the government of Iraq approved a draft of a law that would set guidelines for nationwide distribution of oil revenues and allow for foreign investment in the immense Iraqi oil industry. The announcement reflected agreement among the country’s various blocs on one of Iraq’s most divisive issues. The draft law allows the central government to distribute oil revenues to the provinces or regions based on population, which could allay the economic concerns of minority groups.

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M ay /J une 2007