International Focus

Aug. 1, 1996
Dev George Houston The China-Taiwan JD area lies at the center of the Taiwan Strait. [31462 bytes]
Dev George

Chinese sabres scabbarded

Sabre-rattling is an well honed Chinese skill. In the Spring of this year, Taiwan began the runup to its presidential election with a round of public relations tours and events and well placed advertisements in the world's leading media extolling its democratic system and market economy, among other things, this being their first true presidential election and their economy being controlled by an oligarchy and its foreign partners, notwithstanding. Taiwan's President Lee Teng-hu has undertaken a program over the past few months to upset the "One China" policy that has been the foundation of relations between Beijing and its estranged province. He has campaigned with fiery rhetoric about independence from the People's Republic of China, and painted dire pictures of what it would be like if the PRC re-incorporates Taiwan.

China does not recognize Taiwan independence and has campaigned energetically against such efforts as United Nations membership for Taiwan, high-level meetings with Lee in the US and other countries, and independent negotiations by Taiwan with foreign oil companies for concessions in Taiwanese waters.

All this hubbub quite naturally precipitated a war of words between the two that escalated into bristling military bravado, and that brought out the fear-mongers, led by ex-US Defense Department official Charles W. Freeman, who all but predicted missiles raining down on Taiwan and the American interests there.

As political pundits and so-called China-watchers speculated on just how far China would go, the Chinese on both sides of the Taiwan Strait really knew better. While all this posturing was transpiring, they were ironing out an agreement for the mutual development of Pearl River Basin petroleum reserves that lay between them. China National Offshore Oil Corp. and Taiwan's China Petroleum Corp. were meeting quietly to determine the acreage that they would jointly develop and formulating an agreement of cooperation.

Chosen was a site in the Pearl River Mouth Basin some 200 km west of the Taiwan town of Kaohsiung. CNOOC and CPC had already completed evaluation of geological data, thus all that was lacking was the signature. That, it was determined, would be signed in Beijing next month when CPC's chairman Chang Tzu-yuan arrives to take part in the second cross-Strait petroleum technology seminar.

This is far from the first such negotiations. For more than three years, China's offshore petroleum industry officials have been in contact with their counterparts in Taiwan. Several technology exchange agreements have been reached and put into effect, a number of visits by Taiwanese petroleum engineers to Chinese research and development centers have taken place, and Taiwanese money has made its way into quite a number of Chinese projects.

Disastrous Nigerian downsizing

Most of the major oil producers operating in Nigeria want to increase their investments in Nigeria's petroleum industry, but are limited by the government's own decreased investment level. As a consequence, investments in Nigeria's oil sector have been dropping recently, and now, to all its other woes, the country must add the consequences of poor decision-making on the part of the powers that be at state-owned Nigerian National Petroleum Corporation or in the government itself. NNPC is a 57% participant in joint ventures in the country's oil industry, joint ventures for which the Abacha government had allocated $4.4 billion as its 1996 share in financing these industry operations. But now come cuts in the country's oil industry budget amounting to 30% this year alone, cuts that the Financial Times says will drastically affect foreign company operations in Nigeria.

"Refurbishment of Shell's two terminals at Forcados and Bonny, which account for half of Nigeria's exports, may be delayed and a further cut in drilling, already at a very low level, threatens to drop further output," said the Financial Times.

To sustain oil production levels at 2 million b/d as well as improve the environmental conditions, oil companies have been calling for government investment of at least $5 billion. The $4.4 billion allocated at the first of the year was not considered sufficient, but a good attempt at approximating the needed funds. In June, however, the Finance Ministry cut that figure to $3 billion, despite earnings so far this year of over a billion dollars more than was originally forecast in the government budget. No reason was given.

Homepageless no more

There is an awful lot of hype these days about how important it is to be accessible via the Internet and the World Wide Web, but until quite recently corporate prestige was about the only reason to have a homepage. For the most part, the Net/Web are still an American and European dominated medium, lacking enormously in Asian, Latin American, and African gateways, homepages, and even users. The number is slowly growing, however, and will, undoubtedly, soon make the Web a truly international tool of communication.

Many companies in the oil industry have leapt onto the bandwagon with generally inconsequential homepages, while other industry servers have tried to capitalize on the Net's and Web's potential, mostly without success.

Today, about the best use of this new medium is the instant communications capability it provides via e-mail, and that is no small contribution to the often impossible telephone/fax internationally. There is no comparison, of course, to soon-to-be-outdated surface and air mail.

Now, comes IBM and others with a plethora of online services accessible via Internet, services that speak directly to the needs of the worldwide petroleum industry. IBM, for example, has just introduced its PetroConnect service, which not only allows the usual browsing, chatting, and news searches, but permits users to download petroleum databases, purchase technical and research reports, acquire map, well log, seismic, and other petrotechnical data, carry out private worldwide conferences (video and otherwise), and use of accessible data repositories, among a wealth of other services.

Now there's a real reason to get on the Net.

Briefs. . .

Sakhalin I fields to be tested this summer [50221 bytes]

Newfoundland's west coast acreage. [25027 bytes]


OPEC has raised its production level for the first time in three years. The cartel's new ceiling is set at 25.033 million b/d in oil production, up from the prior level of 24.52 million b/d. This increase provides for 800,000 b/d in Iraqi production as it moves back into the market, and the elimination of 287,000 b/d in Gabonese production, since Gabon has resigned OPEC membership.


Senegal offering E&P blocks. Senegal's Minister of Energy, Mines, and Industry, Magued Diouf, has announced that the State oil company Petrosen has opened up frontier exploration in Senegalese waters to foreign participation. On offer are nine offshore blocks, for which Petrosen is hoping to establish E&P partnerships. Seismic is needed.

Eritrea is in the market for foreign E&P companies interested in exploring its Red Sea blocks. Anadarko is doing a seismic survey over its Zula Block later this year and next. Other companies will have to negotiate directly with the Ministry of Energy, Mines, & Water Resources for concessions.

Nigeria's Babatunde Bakare, of the Nigerian Gas Co., has said that the country has an estimated 106 tcf of proven gas and another 45 tcf in recoverable gas reserves, making it the world's ninth largest in gas reserves. Nigerian Gas Company has been made responsible for gas gathering, treatment, and transmission.


Iran is giving priority to development of previously discovered offshore oil and gas fields, especially five fields in the Strait of Hormuz with recoverable reserves of 300-500 million bbl and a production level of approximately 80,000 b/d. These, in addition to the 20 tcf G Field and further development of the massive South Pars gas field, will soon be offered to foreign companies, according to National Iranian Oil Co. exploration director, Mehdi Hosseini.


Sakhalin I is about to kick off. Exxon and its consortium partners have received last PSC approvals and are set to begin the $15 billion project by drilling the first wells and undertaking a 3D survey of the area right away. The fields, Odoptu, Arkutun-Dagi, and Chayvo are in water depths of 165 ft, 15 miles off the northeast coast of Sakhalin. At stake: 2.5 billion bbl oil and 15 tcf gas.

Mobil has completed its acquisition of Australia's Ampolex, a leading exploration and production company operating primarily on the country's Northwest Shelf. The international major now controls 93% of Ampolex voting shares and has placed its own executives on Ampolex's board of directors.

Indonesia will sign 20 oil exploration contracts by yearend - four PSCs, 10 technical assistance contracts, a joint operation agreement, and an arrangement for enhanced oil recovery. Latest have been PSCs with Caltex and Santa Fe, for blocks off Sibolga northwest Sumatra and off eastern Irian Jaya, respectively.


Canada's Newfoundland west coast frontier hoopla may be unwarranted. The Talisman Long Range A-09 wildcat which had whipped up speculation of a major discovery of more than 500 million bbl oil in place, appears to be a dud. It has been abandoned as non-commercial after several DSTs.

Gemini is commercial. Texaco's major subsalt discover in the deepwater Gulf of Mexico in Mississippi Canyon Block 292, 90 miles south of New Orleans, tested at a combined rate of 54 million cf/d gas and 4,405 b/d condensate. Appraisal drilling starts early next year. Texaco drilled through 2,908 ft of salt to a TD of 17,976 ft.

A third deepwater Gulf pipeline will be built during the 1996-97 season. The latest, with a 600 million cf/d capacity, is an 87-mile, 30-inch gasline called Nautilus, to be constructed by Shell, Marathon, and Leviathan Gas Pipeline Partners, linking the latter's Manta Ray gathering system to the Louisiana shore. The other two lines, the 200-mile-long Poseidon oil pipeline and Texaco's 130-mile-long gasline, will both link the new subsalt and deepwater production areas with Louisiana as well.

Deepwater Genesis Field is to be developed by Chevron for production in late 1998 using a floating spar production facility. The cost of development of the oil and gas field is set at $750 million. The field, formerly the Green Canyon 205, lies at a 2,600 ft water depth 150 miles south of New Orleans.


Ireland's Connemara Field, acquired by Statoil in its takeover of Aran Energy last year, is the site of a $60 million exploration program over the next two years. It's already begun with a seismic survey underway. Drilling and testing are to follow. Statoil predicts oil will be flowing by the end of 1997.

Malta is returning to the field with a new licensing round for its aquatory under better terms. Offered now is an increase in production share to 75% and a lowering of income taxes from 50% to 35%.

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