Total warns against oil drilling in Arctic

Πηγή: FT
By Guy Chazan
Sept 25 2012

Total SA says energy companies should not drill for crude in Arctic waters, marking the first time an oil major has publicly spoken out against offshore oil exploration in the region.

Christophe de Margerie, Total’s chief executive, told the Financial Times the risk of an oil spill in such an environmentally sensitive area was simply too high. “Oil on Greenland would be a disaster,” he said in an interview. “A leak would do too much damage to the image of the company”.

Last week, Royal Dutch Shell had to postpone until next year an attempt to drill into oil-bearing rock off the Alaskan coast after a piece of safety equipment was damaged during testing. It has spent $4.5bn and seven years preparing to drill.

ExxonMobil, ENI of Italy and Norway’s Statoil have also signed deals to explore for oil in Russia’s Arctic waters, while others have secured licences to drill off Greenland.

Mr de Margerie emphasised that he was not opposed to Arctic exploration in principle. Total has a number of natural gas ventures in the region, including a stake in the vast Shtokman field in Russia’s Barents Sea. The Total chief executive said gas leaks were easier to deal with than oil spills.

His comments were welcomed by environmental groups that are opposed to Big Oil’s presence in what they see as a near-pristine wilderness.

“The rest of the oil industry should heed his warning,” said Ben Ayliffe, head of Greenpeace’s Arctic campaign. “Given the risks, companies shouldn’t be touching the Arctic with a barge pole.”

Shell declined to comment. It has said in the past that it is well prepared for spills, with round-the-clock response teams on Alaska’s North Slope and a fleet of specialised vessels that will be in place before drilling starts.

According to a 2008 study by the US Geological Survey, the Arctic contains just over a fifth of the world’s undiscovered, recoverable oil and gas resources. The melting of the polar ice cap has made the area more accessible to the majors than ever before.

The region’s challenges are formidable, however, ranging from icebergs the size of cities to storms, darkness and fierce cold. There is also no certainty of success: UK-listed explorer Cairn Energy spent $1bn exploring off Greenland and failed to find commercial volumes of oil.

Total’s Arctic projects are concentrated in Russia. As well as its stake in Shtokman, it has interests in a number of onshore developments, such as a big liquefied natural gas venture in Russia’s far north known as Yamal LNG. It also operates a Siberian oilfield called Kharyaga.

Gazprom announced in August that it was shelving Shtokman due to excessive costs. But Mr de Margerie said as far as he was concerned, it was still on. “Gazprom never told me in writing that the project is over,” he said. “Discussions are not ... as active as I would like. [But] the reserves are still there.”

U.S. oil giant signs deal with Iraqi Kurds, defies central authority

This file photo shows an oil facility in the Kurdistan region of Iraq. The Kurdistan regional government signed an oil deal with Chevron which will search for oil in six areas

Πηγή: Hurriyet Daily News
July 21 2012

Chevron has signed a deal with Kurdish Regional government becoming the second US oil company to secure oil agreements with Kurds in conflict with Baghdad.

U.S. oil giant Chevron announced July 19 that it had signed a deal with Iraqi Kurds to explore for oil in their northern region, defying the Iraqi central government which itself wants to control the area’s oil wealth. Turkey has also developed energy ties with the Kurdistan Regional Government (KRG), straining its relations with Baghdad

The agreement makes Chevron the second U.S. company to secure oil deals with Kurds in conflict with Baghdad, after Exxon Mobil Corp. agreed last October to search for oil in six areas, the Associated Press reported July 20.

Baghdad wants to manage its energy resources nationwide and have the final say on all oil and gas deals. Kurds argue that the constitution allows them to draw up development plans independently and award deals without going through the oil ministry.

Chevron, based in California, said in a statement it would take over India’s Reliance Exploration and Production efforts to explore for oil in the Rovi and Sarta blocks. Chevron will hold 80 percent of the contract while Austria’s OMV AG will hold the rest. The blocks are located north of the regional capital, Arbil, and cover a combined area of approximately 1,124 square kilometers.

Since the 2003 U.S.-led invasion of Iraq, the country’s Kurds have signed over 50 relatively small deals. But the entry of Exxon Mobil and now Chevron may be a game changer leading to de facto policies that the Kurds have long sought.

Iraq’s post-invasion governments have until recently blacklisted energy companies that signed contracts with the KRG to prevent them from working elsewhere in the country or purchasing crude oil. Chevron has no deals with the Baghdad government.

Later on July 19, Iraqi Prime Minister Nouri al-Maliki’s office said it had received a “positive and convincing” letter from President Barack Obama about Exxon Mobil’s oil plans in the Kurdish region, where Baghdad wants it to cease operations.

Al-Maliki’s statement did not directly quote from the letter, and his office did not provide a copy of it. It called on the company to meet “recommendations of the Iraqi government and the recommendations of the U.S. administration regarding this issue.” The statement also implied that Obama would side with Baghdad on the dispute, saying his letter “stressed respect of the constitution, and Iraqi laws, along the same lines the Iraqi government is working.”

Turkey’s energy deals

Meanwhile, Turkey has inked energy deals with the KRG despite harsh criticism from central Iraqi government officials, in a move to offset decreasing crude and gas flow from Iran due to international sanctions imposed on the Islamic republic.

Siyah Kalem, a Turkish engineering and construction company, has bid to transport natural gas from the Kurdish region, which was recently approved by The Energy Ministry and the Foreign Ministry of Turkey. Ankara and Arbil also admitted the beginning of oil trade in early July, a move conducted by the private sector, Turkish Energy Taner Yıldız said, referring to oil refiner Tüpraş.

“Turkey must stop the unauthorized export of oil through its land,” Iraqi spokesman Ali Dabbagh said July 15. Turkey dismissed demands ceasing transfers of crude oil from the KRG, saying that such trade was legal.

However, Turkey and Baghdad have not refrained from closer ties in energy in these tense political circumstances. Iraq signed an initial deal with a Turkey-Kuwait consortium to drill for oil and natural gas on July 16. Another warm step between the two countries was the disclosure of plans to ship oil from Basra, Iraq’s oil and gas rich southern province to Turkey, via a pipeline.

Iraq hints at slapping sanctions on ExxonMobil

Πηγή: The Peninsula
By Reuters
Nov 23 2011

LONDON: Iraq said yesterday that it would slap sanctions on US oil major ExxonMobil for signing a deal with the Kurdish region, which it said came without any approval from either Baghdad or Washington.

“The Iraqi government is considering sanctions, and will inform the company before they make a public announcement,” Deputy Prime Minister for Energy Hussain Al Shahristani told an industry conference here.

“The position of the US government has been that they were unaware of it and if they had been asked, they would have obliged (ExxonMobil) to get approval of the Iraqi government,” he told the audience packed with hundreds of Western executives and consultants.

The comment means ExxonMobil could lose its giant contracts to develop fields in southern Iraq after agreeing to six exploration deals with the northern Kurdish region, which is at loggerheads with the central government in Baghdad over oil and land rights.

ExxonMobil has yet to comment on the deal, which some analysts and industry insiders say could have been a rare miscalculation by the world’s largest publicly traded oil company of political risks in Iraq. US State Department has not yet commented on the deal.

“Everyone was keen to see what Shahristani had to say. And he could not have agreed because fundamentally it would show Baghdad has lost. If he approved the Kurdish deal others would rush and sign similar deal and other regions such as Basrah would ask for more autonomy,” said one risk consultant with clients in Iraq. “Washington must be furious. What can you say when your own company goes and destroys stability in Iraq?,” he added.

Other industry insiders said they believed ExxonMobil might still win the risky game. “I don’t think that Iraq has the right to cancel the existing contract. They can blacklist ExxonMobil from future contracts, but ExxonMobil probably sees better opportunities in Kurdistan,” said one delegate at the conference.

“Maybe ExxonMobil is just playing the long game. Shahristani is the most hawkish in the cabinet, so perhaps Exxon is taking the long view, hoping that he will leave, and that it will get other contracts later. They see that they can get better terms in Kurdistan for now,” he added.

Iraq is one of the world’s biggest holder of oil reserves and presence in the country is key for global majors at a time when their resources are getting depleted. Although the country has repeatedly slashed its ambitious production targets it still plans to more that double its output over the next decade which would allow it to become the world’s No.3 producer after Russia and Saudi Arabia.

Baghdad has said any oil deals signed with the Kurdish Regional Government (KRG) are illegal. “ExxonMobil’s interests in Iraq are large and not to be compared with what was announced from small blocks in the region,” Iraqi Oil Minister Abdul-Kareem Luaibi said last week.

ExxonMobil, with Royal Dutch Shell, has a multi-billion dollar contract with Iraq’s oil ministry to develop the 8.7 billion barrel West Qurna Phase One oilfield in the south, one of many large contracts Iraq hopes will help rebuild its crude industry.

Opec member Iraq has signed scores of deals with foreign oil explorers to develop its oilfields as it recovers from years of war and sanctions more than eight years after the US invasion that toppled Saddam Hussein. But oil majors have until now stayed away from the northern Kurdish region because of the ongoing dispute with Baghdad over who controls disputed territories and the region’s oil resources.

Industry sources have said Shell as well as US oil major Chevron and Italy’s Eni have all considered signing similar deals with Kurdistan but changed their mind at the last minute fearing sanctions from Baghdad.

Exxon Mobil Teams Up With Russia In Arctic Oil Deal

Πηγή: Economy Watch

31 August 2011

Exxon Mobil has signed an Arctic oil exploration deal with Russian state owned oil company, Rosneft, in a strategic move ahead of industry rivals, BP. As part of the deal, Rosneft will be allowed access to oil reserves in the Gulf of Mexico and elsewhere.

The venture seemingly extinguishes any remaining chance of BP reviving its own deal, which lapsed in May, reported the BBC.

The agreement was signed on Tuesday in the presence of Prime Minister Vladimir Putin, a Rosneft spokesman said.

Prime Minister Putin said that it would also allow Rosneft to develop fields in the Gulf of Mexico and Texas, according to local media reports.

"New horizons are opening up. One of the world's leading companies, Exxon Mobil, is starting to work on Russia's strategic shelf and deepwater continental shelf," Putin said.

Under the agreement, the two firms will spend $3.2bn on deep-sea exploration in the East Prinovozemelsky region of the Kara Sea, as well as in the Russian Black Sea.

Exxon described these areas as "among the most promising and least explored offshore areas globally, with high potential for liquids and gas".

The two companies will also co-operate on the development of oil fields in Western Siberia.

Exxon spokesman Alan Jeffers told the BBC:

"(The Russian Arctic) is among the most promising and least explored regions for oil, that is why we are very interested. Exxon Mobil has developed an excellent working relationship with Rosneft (in recent years)."

Analysts agreed that the joint venture would allow both sides to spread the risks of operating in the Arctic and enables Rosneft to benefit from Exxon's superior deepwater drilling expertise.

BP's own Arctic deal with Rosneft - originally agreed in January - was scuppered by a legal challenge from the Russian co-investors in BP's existing Russian joint venture, TNK-BP.

"If this is essentially the BP deal, it is exposure to a pretty significant resource base," said Jason Gammel, energy analyst at Macquarie Research, adding it was a "pretty big win" for Exxon.

"There's a lot of risk that's involved in [the Kara Sea exploration]. BP was looking at several billion dollars of exploration expenditures up there."

Analysts said that Rosneft was known to be keen to push quickly ahead with its Arctic exploration plans after the BP deal fell through, with Shell also thought to have been in the running.