TPT May 2007

Oil & Gas News

The law also grants regional oil companies or governments the power to sign contracts with foreign companies for exploration and development of fields, opening the door for investment by overseas companies in a country whose oil reserves rank among the world’s largest. Iraqi officials say dozens of major foreign companies, including some based in Russia, the US, and China, have expressed strong interest in developing fields. The national oil law would allow regions to enter into production- sharing agreements with foreign companies. ■ To help secure its fuel supplies China plans to begin filling the tanks at its third strategic oil reserve, in Shandong Province in the east, by mid-year. As reported by the central media agency Xinhua , Petroleum and Chemical Corp (Sinopec) is completing the Huangdao base in Shandong, where capacity is expected to reach 19 million barrels. China in 2004 began building four oil reserves, two of them now operational in Zhejiang Province. The others are in Liaoning Province, in the northeast (not yet completed) and Shandong. Some US$775 million has been invested to secure oil reserves of 10 million tons at the four sites. China imported 138.8 million tons of crude oil in 2006, up 16.9 per cent from 2005. Imports that year accounted for 47 per cent of the country’s consumption. Industry observers have warned that, within a year or two, China will likely need to import more than 50 per cent of its petroleum needs. ■ Japan and India, the world’s fourth- and fifth-biggest energy users, reportedly plan talks that may lead to joint investment

in oil and gas projects. The two countries face increasing competition from China to secure future global oil supplies. India imports about 75 per cent of its oil needs, while Japan depends on imports for almost all its oil requirements. According to Bloomberg News (March 8), the Japanese government wants companies such as Inpex Holdings Inc, the nation’s biggest oil explorer, to help boost production from Japan’s overseas assets from 15 per cent to 40 per cent of imports by 2030, as per national energy policy. Inpex needs to find new projects after last year giving up a controlling stake in the Azadegan oil field in Iran, that country’s largest discovery in 30 years. ■ After two rough decades for the refining industry, the market for refineries strengthened as margins improved. But now some major oil companies, including BP and Chevron, are shedding refineries, an indication that they think the palmy two-year interlude is coming to an end. Royal Dutch Shell, which had already announced it would sell its three French refineries and another one in the Dominican Republic, has decided to sell its Los Angeles refinery and related assets to Tesoro Corp (San Antonio, Texas) for $1.63 billion plus the value of oil inventory. Tesoro, a Fortune 500 company, is an independent refiner and marketer of petroleum products, operating six refineries in the West of the US with a combined rated crude oil capacity of nearly 560,000 barrels per day. ■ India Times (March 9) reported that Reliance Industries Ltd, the oil and petrochemicals giant, has combined its overseas oil and gas projects into a separate wholly-owned company based in Dubai and is considering a tie-in with ONGC Videsh Ltd, also

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M ay /J une 2007