June 2007

Petrovietnam, Petronas sign joint exploration deal Posted Wednesday, June 27, 2007 - 1:17 by petromin
Petrovietnam has signed a contract with Malaysia's Petronas Carigali Overseas to drill for oil and natural gas in fields in the Gulf of Tonkin.
The fields lay 100 km offshore and cover nearly 12,000 sq km. They hold collective reserves of 50 billion cu m of gas and 45 million bbl of condensate, Petrovietnam said.
Under terms of the contract, the two companies will invest $57.7 million in exploration during the first 4 years, with Petrovietnam subsidiary Petrovietnam Exploration Group contributing 55%, and Petronas 45%.

Apache tests Exmouth basin well off W. Australia Posted Monday, June 25, 2007 - 9:15 by petromin
Houston independent Apache Corp. has completed a successful test of Theo 3-H, the first horizontal well at the Van Gogh development in the Exmouth basin 1,175 km off Western Australia.
Theo 3-H was drilled in 1,205 ft of water to a MD of 10,598 ft. It cut a 4,554-ft-long horizontal section in the Cretaceous Top Barrow formation.
The well flowed 9,694 b/d of oil on test. Its flow rate was restricted by downhole and surface equipment limitations, Apache said.
The company plans to drill 18 additional long-reach horizontal laterals at Van Gogh later this year, with a target of first production by the end of first quarter 2009. At that time, the field is expected to add 20,000 b/d of oil to the company's net production.
The $500 million Van Gogh development will use a floating production, storage, and offloading vessel with a processing capacity of 63,000 b/d and storage capacity of 620,000 bbl. Apache operates the development and owns 52.5% interest in the project, while Tokyo-based Inpex Corp. owns 47.5%.
"The Van Gogh development is one of six projects in Apache's core growth areas of Australia, Canada, and Egypt that are projected to add aggregate production of 108,000 boe/d over the next 4 years," said Apaches Pres. and Chief Executive G. Steven Farris.

AWE moves into Indonesia through Bulu PSC Posted Monday, June 25, 2007 - 9:13 by petromin
Sydney-based Australian Worldwide Exploration Ltd. has moved into Indonesia for the first time under a farm in deal with Abu Dhabi company Aabar Petroleum Investments Co. PJSC.
AWE will earn a 42.5% stake in the Bulu production-sharing contract, which lies off East Java, by funding as much as $12 million towards the drilling of the first two exploration wells.
The wells, Lisah-1 and Lengo-1, are to be drilled in the third quarter. The Bulu PSC area is 40 km off northeastern East Java in 60 m of water.
AWE said the East Java sedimentary basin is a significant oil and gas-producing region and the area surrounding the Bulu PSC includes a number of discoveries, including in Pangkah, Poleng, and Keopodang fields.
The farmin is consistent with AWE's objective of diversifying its asset base beyond Australia and New Zealand. Elsewhere in Australia, AWE is a partner in Yolla and Casino gas-condensate fields in the Bass Strait (both fields are producing) and the Cliff Head oil field off Western Australia. In New Zealand, AWE serves as operator for Tui oil field, now under development.
APIC will remain operator of the Bulu PSC area with 42.5%. Other participants are PT Satria Energindo 10% and PT Satria Wijaya Kusuma 5%.

Soco plans for 2008 Ca Ngu Vang oil deliveries Posted Saturday, June 23, 2007 - 2:00 by petromin
Soco International plans initial oil deliveries from its Ca Ngu Vang field in Vietnam in the first half of 2008. It is moving ahead with exploration and appraisal and will build infrastructure on Block 9-2, which contains the field.
The appraisal well tested at a maximum combined rate of 7,050 boe/d, with 5,333 b/d of oil and 10.3 MMcfd of gas in 2006.
Soco said Vietnam is a core area and that the Te Giac Den-1X well on Block 16-1 in Vietnam indicated oil and gas shows and an overpressured environment in the Oligocene interval. No testing has been carried out on that well.
In Yemen, Soco plans to delineate the western and southern parameters of Kharir field. Production facilities are being expanded "in anticipation of reaching 70,000 b/d of export capacity," the company added. Soco has acquired three rigs to drill on the block throughout the year, and will focus on development and injector wells to increase basement productivity and production capability.
The company hopes in early 2008 to drill its first exploratory well on the Marine XI block, off Congo (Brazzaville). It expects to select drilling targets for its West African portfolio in the third quarter.
Later this year Soco also will shoot a 2D seismic survey on the Nganzi and Cabinda North blocks in Congo (former Zaire).

Japan, Brunei sign free trade, gas agreement Posted Saturday, June 23, 2007 - 1:54 by petromin
-- Brunei has signed a free trade agreement with Japan, which had sought assurances of a stable supply of natural gas from the Southeast Asian producer.
Japan imports about 10% of its gas from Brunei, which has agreed to give Japan advance notice of any measures that would restrict the gas exports.
The agreement also stipulates the establishment of a government-level subcommittee on energy, provides that the two countries will honor existing energy agreements, and gives consideration to environmental concerns.
The accord within 3 years will eliminate the 20% tariff imposed by Brunei on cars and almost all auto parts from Japan, while Japan will immediately end tariffs on agricultural and fishery products from Brunei.
In 2006, Japan imported some �252.5 billion worth of goods from Brunei, almost all of it gas and crude oil, while some 70% of Japan's exports to Brunei are comprised of cars and auto parts.

Indonesia reneges on part of Sempra LNG supplies Posted Saturday, June 23, 2007 - 1:53 by petromin
-- Indonesia, reversing an earlier decision, is reallocating supplies of Tangguh LNG originally earmarked for Sempra Energy LNG Marketing Corp. in order to boost the amounts available to state-owned utility Perusahaan Listrik Negara (PLN).
PLN power generation director Ali Herman Ibrahim said the decision was made during a June 14 meeting with the upstream oil and gas executive agency BP Migas. Ali said BP Migas will allow PLN to receive a portion of the LNG supply previously allocated to Sempra, but he did not specify the amount.
In March, to obtain higher prices for its LNG exported from Tangguh in Papua New Guinea, Indonesia's Energy and Mineral Resources Minister Purnomo Yusgiantoro said the country wanted to renegotiate LNG contract terms with South Korean buyers and was seeking to divert to Japan supplies contracted for the US West Coast.
In particular, Purnomo said Indonesia was planning to talk to Sempra, with which it had agreed to deliver 3.7 million tonnes/year of LNG from Tangguh for 20 years at $5.90/Mcf. (OGJ Online, Mar. 6, 2007). The Tangguh LNG plant is expected to become operational by fourth quarter 2008.
Recently Indonesian media quoted Purnomo as saying the government is considering the possibility of diverting as much as 50% of Sempra's LNG supply to the Asian market

Hungary seeks LNG from Indonesia Posted Saturday, June 23, 2007 - 1:52 by petromin
The Hungarian government, as part of a wider effort to diversify the country's energy sources away from Russia, has approached Indonesia seeking LNG supply purchases.
Hungarian Economcs and Transport Minister Janos Koka made the request of Indonesia's Trade Minister Mari Elka Pangestu, saying supplies from Indonesia could be shipped to an LNG terminal under development by his country and Croatia.
Koka said the two sides would "touch on this further in October" during his visit to Indonesia. Meanwhile, Mari said she would discuss the request with Jakarta's ministries.
Hungary's request follows earlier efforts to increase gas supplies ahead of pending liberalization of Hungary's gas market.
In May, Hungarian oil and gas company MOL Nyrt said it was considering expanding capacity along the domestic stretch of the 'Friendship' gas pipeline that carries Russian gas to Europe via Ukraine.
According to a report in the daily Nepszabadsag citing MOL Nyrt sources, the expansion would increase capacity to 10 billion cu m by increasing Russia's gas supply until other supply routes come on line by 2015.

Thailand offers 65 onshore, offshore blocks Posted Tuesday, June 12, 2007 - 10:59 by petromin
Thailand has issued an invitation to bid for 65 blocks having a total acreage of 235,606 sq km onshore and in the Gulf of Thailand.
Of the tracts offered in the 20th concession licensing, 56 are onshore, covering a combined area of 211,687 sq km in scattered regions of the country, and 9 blocks totaling 23,919 sq km are offshore.
The Department of Mineral Fuels (DMF) is applying the same procedures as the previous round, with the offer being spread over a 1-year period and monthly submission slots available (OGJ Online, Apr. 23, 2007).
For the new round, submissions can be made to DMF within 1 year, commencing on May 23.
DMF will evaluate the applications submitted each month. The last day of the first submission is July 15.

China National Petroleum Corp have been awarded Pipeline Contract Posted Tuesday, June 12, 2007 - 10:52 by petromin
said Abu Dhabi's International Petroleum Investment Co. has awarded a contract to CNPC's two pipeline engineering and construction units, China Petroleum Pipeline Bureau and China Petroleum Engineering & Construction Corp., to jointly build a 360-km, 48-in. oil pipeline in the UAE. The pipeline will extend from Abu Dhabi's Habshan oil field to an export terminal at Fujairah. Starting and completion dates were not given.
The line will carry 1.5 million b/d of crude oil, about 55% of the Emirates' production. A third of the crude will be transported to a planned $5 billion refinery in Fujairah, while the remainder would be piped to the export terminal, bypassing the Strait of Hormuz.
Under an original 2006 agreement, IPIC and ConocoPhillips were expected to form a 51%-49% joint venture to own and operate the 500,000 b/d Fujairah refinery complex (OGJ, July 24, 2006, Newsletter). In April, 2007, however, ConocoPhilips said rising costs had cast doubts on its participation in the refinery, so IPIC last month said it would revise its plan for the refinery.

Kikeh to begin production by October Posted Friday, June 8, 2007 - 10:48 by petromin
Malaysian state oil firm Petroliam Nasional Bhd (Petronas) expects its first deepwater project, Kikeh, to begin production by October, said president and chief executive officer Mohd Hassan Marican.

Meanwhile, the Gumusut/Kakap project is expected to begin operations in 2011, followed by Malika in 2013, Mohd Hassan said in a speech at the opening of Aker Kvaerner's manufacturing centre delivered by his representative Anuar Ahmad, vice president of Petronas' oil business.

"About 25-30 percent of Malaysia's oil production is expected to come from deepwater fields within the next five years or so," said Mohd Hassan.

Petronas has to-date discovered 1.4 billion barrels of oil reserves and 6.4 trillion standard cubic feet of natural gas reserves from its deepwater areas, he said.

India to double crude output by 2012 Posted Friday, June 8, 2007 - 10:46 by petromin
State-run second explorer Oil India Ltd (OIL) aims to nearly double its crude and gas output by 2012 and further expand its presence in the downstream sector by picking up a stake in a coastal refinery, its head said.

�We are looking for participation in a coastal refinery where we could have a stake but this is subject to due diligence. Synergy wise it will fit in very well as we have a block in east coast, known to be very prospective,� it was said yesterday.

OIL plans to double gas output to 12 million cubic metres a day by 2012 and is looking at marketing compressed natural gas in a tie-up with downstream players in India.

Though it did not specify in which refinery OIL was eyeing a stake, a senior official of state-run refiner Hindustan Petroleum Corp. Ltd earlier said HPCL was considering offering a stake to Oil India in its refinery in southern India. Oil India, which specialises in onshore exploration, has a target to produce 6 million tonne of crude oil by 2012, with 1-1.5 million tonnes from overseas assets. Its current production is 3.2 million tonnes.

Since it was allowed in December 2005 to buy assets abroad, OIL has acquired stakes in 6 blocks and is keen to buy stakes in oil and gas assets in Central Asia and southern Africa, besides strengthening its presence in areas where it already has assets.
During his recent visit to Libya, it was said that it showed interest in taking up reserve enhancement projects for depleting fields and for a stake in exploration.

�We have also taken up a case where we can get exploration blocks in Libya, which has good prospectivity, on negotiation basis like they have given to Shell. Their response was positive,� he said.

OIL has stakes in two blocks in Libya where it plans to begin drilling in 2008.
Pasrija said OIL is looking for a foreign partner for its onshore block in India�s northeastern state of Mizoram and is willing to reduce its stake in another block in the east coast.

�Canada�s Geoglobal Resources Inc. has 10 percent stake and it was decided that we will raise their stake to 25 percent in our onshore block in Krishna Godavari basin in eastern India,� Pasrija said. �Geoglobal has to meet some government norms to raise its stake, otherwise we are ready to reduce our stake� he said.

OIL sold crude to state run refiners at a discount of around $19 a barrel at $45.85 a barrel in 2006-07 and hopes to launch an initial public offer (IPO) in November if government approval is obtained this month, he said.

ONGC has made a substantial gas strike in an acreage north of the Tripura capital, Agartala Posted Friday, June 8, 2007 - 10:44 by petromin
The strike marks the first in the North Tripura prospect, which was given to the state-owned firm without going through the present bidding process.

The test well, Kunjaban, was spudded on December 19 and has flowed gas at the rate of 230,000 cubic metres a day through a 10 mm pipe, called 'bean' by the field crew. The sources declined to give size of the reserve, saying tests were still being carried out. There is also the fear of drawing the wrath of exploration regulator who forbids reserve projections without certification.

Preliminary results indicate the strike to be substantial. "It is not a huge find but it is a good find," is all a senior executive said, refusing to be drawn into the numbers game as it was 'too early'. This is the fourth hydrocarbon strike in the Assam-Arakan basin in recent weeks following Kalyanpur, Disangmukh and Panidihing in the Assam Shelf.

The latest strike will come as a boon for the 750 mw power project ONGC is setting up in the state. ONGC will need around 4.5 million cubic metres a day for the power project and the new strike will help it meet the additional demand.

The company estimates its in-place reserves in the region at around 50 billion cubic metres and expects to be able to pump 60% of this. At present, it produces 4.3 million cubic metres a day from fields in Tripura and has set a target of raising the output to 6 million cubic metres a day.

The company recently reported two gas strikes in the Bay of Bengal - one of which could yet be India's biggest - though an official estimate is yet to be put out.

S. Koreans claim Kamchatka shelf oil find Posted Friday, June 8, 2007 - 10:42 by petromin
A consortium comprised of several South Korean firms�Korea National Oil Co., GS-Caltex Corp., SK Corp., Daewoo International Corp., Kumho Petrochemical, and Hyundai Corp.�said it has confirmed the existence of a large offshore oil deposit in Russia's West Kamchatka region.
The field, 40% owned by the South Korean firms and 60% by Russia's Rosneft, has an estimated 10 billion bbl of crude oil in place, according to KNOC. A spokesman for the state-run firm said the field could provide South Korea�which imported 880 million bbl in 2006�with oil for more than a decade.
No details were immediately available. The southern third of Kamchatka's 1,000-mile west coast is about the same latitude as Russia's Sakhalin Island, 550 miles west across the Sea of Okhotsk.
In 2005, oil prospectors in Russia's West Kamchatka region were reported to be breathing easier after a favorable decision by the Petropavlovsk-Kamchatskiy city court which upheld an appeal by the regional prosecutor's office to cancel an Oct. 23 referendum aimed at preventing oil development on the West Kamchatka shelf
Earlier, in 1999, it was reported that the Kamchatka back-arc basin is a relatively unexplored petroleum region. Similar in many respects to the Sumatra basin of Indonesia, this region of Russia has the promise of becoming a major producing region (see map, OGJ, Aug 30, 1999, p. 98).

Mature Timor Sea oil fields offered for sale Posted Friday, June 8, 2007 - 10:40 by petromin
The Timor Sea Designated Authority (TSDA) has invited bids for several mature oil fields in the Joint Petroleum Development Area (JPDA) between East Timor and Australia following a request by operator ConocoPhillips to stop production.
The fields in question�Elang, Kakatua, and Kakatua North, originally discovered by BHP Petroleum in 1994�have already produced about 96% of the originally estimated reserves of 32.67 million bbl.
TSDA says the fields, which are produced through four subsea wells connected to a floating production, storage, and offloading vessel, may still have potential for redevelopment and enhanced recovery.
Production began in 1998 and was the first oil to come out of the JPDA. Output has dropped from 32,500 b/d, down to just 2,000 b/d which ConocoPhillips and its two partners Santos Ltd. of Adelaide and Inpex of Japan say is not economical.

Inpex plans drilling off Japan in late June Posted Friday, June 8, 2007 - 10:38 by petromin
In the first large-scale gas exploration off Japan in 30 years, Inpex Holdings Inc.'s Tokyo unit, Teikoku Oil Co., in late June will begin drilling for natural gas some 20 km off the northern Ibaraki Prefecture of Japan's Kanto region.
Teikoku will pay 80% of the estimated �3-4 billion in exploration costs, while Japan Energy Corp. will pay 20%.
In April 2006 Teikoku and Inpex Corp. reported a decision to merge their operations under the name of Inpex Holdings Inc. (OGJ Online, Nov. 7, 2005). Originally planned for June 2008, the full merger of the companies is scheduled for completion in October 2008.
The offshore Japan report follows a May 10 announcement by Inpex that the Indonesian government had granted approval for Inpex Offshore Northeast Java Ltd. to acquire a 22% participating interest in the East Sepanjang Block from Total SA.
Inpex said the East Sepanjang Block covers an area of 5,083 sq km in 300-1,400 m of water in the eastern Java Sea off Indonesia.
The block originally was awarded to Indonesia's EASCO in December 2004 through a production-sharing contract. EASCO (operator) will hold a 51% participating interest in the block, while Total will retain 27%.
And in March Venezuela's state-run Petroleos de Venezuela SA (PDVSA) awarded Teikoku a 70% stake in Copa Macoya gas field in the Jose Felix Ribas municipality in Guarico state. The Teikoku-PDVSA joint venture is called Petroguarico. PDVSA said the field has a potential of 120 MMcfd. Under terms of a 20-year exploration and production license, Teikoku will be required to invest 1% of profits from future gas production into social projects, PDVSA said

Aabar reports another Sebuku success Posted Friday, June 1, 2007 - 11:07 by petromin
Aabar Petroleum Investments Company PJSC has completed drilling and testing operations on the Makassar Straits-3 ("MS-3") appraisal well in the Sebuku Production Sharing Contract ("PSC") offshore east Kalimantan, Indonesia.

The MS-3 well was drilled to a total depth of 5,000 feet and encountered 122.5 feet of net gas pay over a gross pay interval of 260 feet. Under testing, the well flowed at a rate of 39.2 million cubic feet per day ("mmcfd") through a 96/64 inch choke. The gas stream comprised mostly methane with less than 0.5% carbon dioxide and minimal condensate. The maximum gas rate was constrained by the available test equipment.

On May 2, 2007, Aabar announced the results of the Makassar Straits-4 ("MS-4") appraisal well, which was drilled to a total depth of 5,367 feet and encountered 318 feet of gross gas pay and 279 feet of net gas pay in a single reservoir pay zone. A total gas column of 618 feet was proven based on the results of MS-4 and the earlier Makassar Straits-1 ("MS-1") well. Two drill stem tests were conducted on MS-4 and flowed at a combined rate of 39 mmcfd.

"This is another encouraging test result confirming that the Upper Berai carbonate has excellent reservoir characteristics over a wide area. We will spend the next few weeks analyzing the results of the two latest appraisal wells along with the two earlier wells with a view to submitting a plan of development to the Indonesian authorities during the third quarter," said Chris Gibson-Robinson, Aabar's Vice President Operations & New Business Development (Southeast Asia).

MS-3 is the third appraisal well drilled by Aabar on Ashland Petroleum's 1974 MS -1 gas discovery and was located 1.65 km south of the original MS-1 well and 2.62 km southeast of MS-4.

The MS-3 well will be plugged and abandoned and the drillship Frontier Duchess will be released. The Sebuku PSC covers 5,920 sq. km. Aabar, through its wholly owned subsidiary, Pearl Oil (Sebuku) Limited ("Pearl Sebuku"), is operator of the Sebuku PSC and holds 50% participating interest.

Subject to the approval of the Indonesian government and oil and gas regulator, Pearl Sebuku will hold 100% participating interest in the Sebuku PSC as it has acquired the remaining 50% from its former joint venture partner.

Aabar is an oil and gas exploration, production and drilling company headquartered in Abu Dhabi and is a public joint stock company listed on the Abu Dhabi Securities Market. Aabar has two divisions, Dalma Energy, which is focused on drilling operations, and Pearl Energy, which is engaged in exploration and production in Southeast Asia. Aabar's net working interest production stands at more 20,000 barrels of oil per day from four fields in Indonesia and Thailand. The group plans to drill 10-15 exploration wells in 2007.

Sinopec strikes oil in Tahe oilfield, Xinjiang Posted Friday, June 1, 2007 - 10:58 by petromin
Just a month after the discovery of the Jidong Nanpu oilfield in Bohai Bay by PetroChina, China Petroleum & Chemical - better known as Sinopec - said it has found an oilfield in northwest China with up to 1.47 billion barrels of oil equivalent in place.
The new field has reserves of between 1.03 billion and 1.47 billion barrels of oil. It covers around 900 square kilometres in block 12 of Tahe oilfield, Xinjiang Autonomous Region, as reported on Wednesday.

Crude output at one of the exploration wells reached 1,018 tonnes or 7,431 barrels on April 11, the highest level seen in Tahe oilfield.

Sinopec plans to drill 90 to 120 wells in block 12 with a total production capacity of 11 million to 14.6 million barrels per annum, the report said.

Market watchers said the new reserve could help relieve China's reliance on oil imports which accounted for 40 percent of total oil consumption in 2006. China imported 3.6 million barrels of oil daily in April, up from the 3.3 million barrels in March.

"If 30 percent of Tahe's deposits turn out to be recoverable, the field's proven reserves may reach 400 million barrels," Qiu Xiaofeng of China Merchants Securities wrote in a report.

"The discovery can increase Sinopec's proven reserves by 12 percent," Qiu wrote, adding it would raise the stock value by 0.4 yuan. The company had a proven reserve of 3.3 billion barrels of oil by the end of 2006.

Meanwhile, Gordon Kwan, head of China oil and gas research at CLSA, expects the discovery could boost Sinopec's oil reserves by 15 percent and raise its net asset value by 5 percent.

But analysts warn investors to treat the data with caution, as the figures may not comply with international standards and may be exaggerated.

More appraisal drilling will be required and must be verified by third- party international audits to meet US Securities and Exchange Commission standards before the volumes can be booked, said analysts. When PetroChina announced its discovery of the Jidong Nanpu oilfield - which claimed to have proven reserves of about three billion barrels - analysts said it usually takes 12 to 15 months of analysis before details of a discovery of this size can be announced.