Dev George Houston The lesson never seems to be learned. Ever since the United States became a major world power following World War II, it has attempted to effect foreign policy by restricting trade if not outright contact with one country or another, or it has camouflaged protectionism with patriotism in an effort to garner a greater share of American and world markets for its own products and services. Sometimes, the difference between the two has been difficult to discern.

Dev George

Trade embargos don't work

The lesson never seems to be learned. Ever since the United States became a major world power following World War II, it has attempted to effect foreign policy by restricting trade if not outright contact with one country or another, or it has camouflaged protectionism with patriotism in an effort to garner a greater share of American and world markets for its own products and services. Sometimes, the difference between the two has been difficult to discern.

Today, despite being a signatory to the 1994 World Trade Treaty and a member of the World Trade Organization, the US government has imposed more restrictions on free trade for political reasons than any other country in the world. As a consequence, American oil companies, service and supply companies are not allowed to participate in exploration, development, and production activities, or even purchase of oil and gas from a diversity of countries:

  • Cuba: The US's longest standing embargo is now ignored by most of the world. The Cuba policy was put in place 30 years ago to bring down the communist government of Fidel Castro, but has not succeeded in doing anything more than imposing hardship on the Cuban people. Sweden's Taurus Petroleum and Brazil's Petrobras are currently exploring for oil offshore, and other interested operators from France, Spain, Australia, and Canada are considering it, but US operators are still left on the sidelines.

  • North Korea: This country is the subject of long-term sanctions and an anti-communist action to isolate Kim Il Sung's authoritarian regime. Despite his death and overtures for better relations, little has changed other than sabre-rattling over their nuclear reactor. All the while, Australia's Claremont Petroleum and Beach Petroleum and Sweden's Taurus Exploration have snapped up the country's best offshore prospects.

  • Libya: The focus of Reagan-era opprobrium, this full trade embargo on Africa's largest oil producer was meant to punish Muammar Qaddafi and force him to give up two citizens to stand trial for the 1988 Pan Am airline bombing. The action has had little or no effect on the country. Instead, non-American operators such as Agip, Saga, Total, OMV, and Repsol buy the oil and hold the concessions. Mostly European companies provide the industry its products and services.

  • Iraq: This is another punishment embargo, intended to depose Saddam Hussein for daring to threaten Kuwaiti and Saudi suzerainty over Persian Gulf oil. Instead, sanctions have hurt Iraqi citizens, whose lives have been lost and health diminished by it. But it has neither forced Hussein from power nor brought democracy to the region. Rather, it is now being defied by profit-minded nations. The looser will be American oil companies.

  • Iran: The US has unilaterally banned US oil companies from buying Iranian oil or doing business in or with Iran to punish the country for its sponsorship of international terrorism. Will it work? No, since other countries worldwide do business with the Islamic Republic. As always, the consequences are that American companies such as Conoco are simply replaced by European or Asian companies. It's business as usual.

Obviously, such policies are damaging only to US companies and their stockholders. According to the East-West Center. "In many cases, these interventions hurt American interests more than the party they are intended to hurt."

Some speculations on political succession

The tenor of contemporary events, undercurrents, and telltale indicators are pointing to strong probabilities in the future of four standing political regimes:

  • Saudi Arabia's line of succession meanders through a roster of some 6,000 princes - sons, nephews, cousins, and other kin of the Kingdom's founder, Abdulaziz al-Saud. However, the anointed is Crown Prince Abdullah bin Abdulaziz al-Saud, a son who has been grooming for the reigns of power for quite some time. Speculation about King Fahd has it that he is ill, thus, if no palace coup occurs, Abdullah will be next on the throne in Riyadh. Definitely not a man of the people, he will, nevertheless, have to deal with a growing discontent from the myriad minorities laboring there. They include Shi'a muslims from the Eastern Province and other Iran-oriented areas, fundamentalists, a disgruntled middle class wanting political power, and a melange of nationalities imported to do menial tasks.

  • Cuba's Fidel Castro is also getting long in the tooth and is rumored to be preparing the country's Minister of Foreign Affairs Roberto Robaina to take his place as supreme leader. Young and sophisticated, Robaina is known to want Cuba to normalize relations with other countries, including the USA, to liberalize the economy, and to establish private businesses and industries in order to improve the country's economy. It is said he has met with over 30 American companies to that end, including oil companies.

  • China's Deng Xiaoping, still clinging to life, deserves great credit for the revolutionary reforms that have swept the country, revitalized it, and brought its economy and society into the modern world. But the patriarch is not long for this life. His successor, despite the jockeying for position in the party and People's Congress, will be Jiang Zemin, China's president and party chief. He will continue the nationalist stance in foreign policy - Spratly Islands, US relations - while continuing, as well Deng's economic transformation of the country into Asia's leading economic and political power. Expect full support of foreign participation in China's petroleum industry.

  • Russia's Boris Yeltsin and the US's Bill Clinton, both opposed by their standing legislatures, are also likely candidates for replacement at the earliest opportunity. Yeltsin will probably be succeeded by Viktor Chernomyrdin, his foreign minister and former head of Gazprom. Long expected to have a positive effect on Russia's petroleum industry, he will probably try to get some of the country's major projects underway, and can be expected to expedite the legal structure for foreign participation.

If one of the revisionist Republicans succeeds Bill Clinton as president of the United States, a major overhaul can be expected of restrictions imposed on oil companies and where they can operate. On the other hand, much of the authority to regulate them will probably be passed to the individual states.

The US Government has imposed more restrictions on free trade for political reasons than any other country in the world.



Nigerian NGO Field discovery by Abacan Resources, which straddles Blocks 237 and 469, flowed 23,070 b/d high grade crude and condensate. Located in the shallow waters of the Niger Delta, the field is expected to begin production at 50,000 b/d in the first quarter of 1996. Schlumberger, Coflexip, and Stena have been contracted to design and produce the production facilities.

Deepwater Angola disillusion, so far, since the rush to get in on its deepwater blocks has not proved all that much prospectivity. Mixed results, at best, have been the outcome of the first three deepwater wells drilled here, even though the fiscal regime was aimed at finding fields of over 400 million bbl. Shells Bengo-1 found just 200 million in Block 16, and that at a waxy 1,780 b/d. Another, 30 miles away in 1,000 meters water was effectively dry. And the last, Elfs Block 17, found gas and condensate, but not enough.

Mobil is shooting 3D off Equatorial Guinea. PGS Exploration's Nordic Explorer has been contracted to acquire 960 sq km of seismic data equivalent to 40,000 CMP km. This in the wake of a recent discovery Mobil believes will prove commercial.

South Africa has had no bids from international oil companies for exploration rights to the just offered 15 blocks off its coast. Soekor, the state-owned oil company, says interest is nevertheless high and expects bids after more time to study the geology.


Turkey's Marmara Sea gas will be drilled in a $35 million joint venture between Turkish Petroleum and Romania's Orizon. Energy Minister Veysel Atasoy says some 2 billion cubic meters of recoverable gas reserves underlie the sea. Three wells will be drilled from a single platform, with production pumped to shore by pipeline. Production starts next year.


Australia's Bass Strait is the site of a near record horizontal drilling program by Esso/BHP to reach remote reserves northwest of the platform. Set for 6.2 km, it will be the longest in the Strait, but still far from the eight km record set in the North Sea.

The Elang Field in the ZOC, Australia and Indonesia's Zone of Cooperation, will be the first field developed there. Completion of the third well will occur this year, then development will proceed. Partners are BHP (operator), Santos, Petroz, and Inpex.

Indonesia's KG/KRA Fields have reached first production. Marathon Petroleum Indonesia brought on the first of the Natuna Sea fields, KG, via a platform installed in March. It is now producing 11,100 b/d oil from the first of three wells. The KRA platform was scheduled for May installation, with drilling to follow. Their combined output is expected to be 40,000 b/d.

Thailand's Tantawan continues to grow. Pogo Producing's new exploratory well Tantawan-9 has encountered hydrocarbons at the far north of the structure in Block B8/32 of the Gulf of Thailand, which are now being evaluated. Current development is on the south side.

Bombay High and Gujarat were the locations of four new discoveries by India's ONGC recently. Two gas finds were made off the Saurashtra coast and about 130 km west of Bombay. And two oil discoveries were made at Nandasan-21 and in the western offshore region at WO-16-1.

New Zealand signs first AFO with Occidental Petroleum. The Acceptable Frontier Offer, for some 20,000 sq km in the Great South Basin, went to Oxy for a staged work program that may or may not include drilling and doesn't require a set expenditure minimum.


Shell to develop at record depth. Mensa, Shell Oil's gas discovery off Louisiana in Mississippi Canyon Block 687, will be producing some 300 million cf/d gas in early 1997 from the world's deepest water depth - more than a mile at 5,400 ft, exceeding current Brazilian records by more than 2,000 ft.

Pemex's director Adrian Lajous has announced that the Mexican state oil company will not expand its risk contract arrangements, which presently allow private companies to participate in oil and gas exploration and production. The company intends to maintain its oil production at present levels, nevertheless.

Canada's Newfoundland aquatory in the Gulf of St. Lawrence and on the Grand Banks has again been opened for exploration licensing. On offer are all available blocks along the northwest coast of Newfoundland and five important blocks near the Hibernia, Terra Nova, Whiterose prospects.


The UK's Erskine Field, a high temperature/high pressure gasfield, has been approved for development by Texaco and BP. The 330 billion cf gas and 75 million bbl condensate reserves will be brought onstream via a $465 million development project utilizing new technology developed in the US Gulf. Production is expected in late 1997.

Conoco's Heidrun platform now has all its tethers. The tether that sank during towout has been recovered and installed along with the other 15. The 270-meter long tethers were being towed by Norwegian Contractors from the construction site to the field on Haltenbanken. They have now been attached to the foundation at a depth of 345 meters.

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