Australian labor party ready to renegotiate Timor Gap boundary
The Australian Labor Party said it is prepared to support the negotiations and conclusions of a permanent maritime boundary in the Timor Gap, based upon equidistant lines between Australia and East Timor. Shadow Foreign Minister Laurie Brereton said the Labor Party, the country's main federal opposition, believed the gas and petroleum resources of the Timor Gap Zone of Cooperation have the potential to make a major contribution to the economic self-sufficiency and prosperity of East Timor.
Alternatively, should East Timor prefer to continue or modify the existing regime governing the Timor Gap, Labor said it would support the negotiation of a new agreement for the joint development of gas and petroleum resources. The Labor Party said such an agreement should ensure continuity and stability for the companies operating in the Timor Gap and ensure that East Timor receive a greater share of revenue.
Norway's future bright, but tax headed "in the wrong direction"
Statoil CEO Olav Fjell said at ONS (Stavanger, Norway) that the company's future is bright despite potential clouds looming ahead, including new tax regulations. Fjell said changes in offshore taxation recently recommended by an independent commission was "a step in the wrong direction."
The taxation proposals are now under public review and are expected to return to the government by mid-October for further evaluation. The changes are intended to encourage new entrants and prevent erosion in the tax base due to companies exiting the North Sea. However, oil industry executives say the effect may be just the opposite and discourage development of smaller marginal fields that are crucial to the support of North Sea production.
Statoil forecasts that production is likely to peak at 3.56 million b/d in 2002. On the other hand, Statoil also says that oil and gas production on the country's continental shelf has produced only about 21% of the country's total reserves. Fjell said the Norwegian oil industry will spend over NKr1 trillion on the Norwegian continental shelf during the next decade and that Statoil will account for nearly half that amount, or approximately NK475 billion.
Costs associated with operation and maintenance are set to account for a steadily growing proportion of the total expenditure. Statoil's projections for investments in new projects alone on the continental shelf over the next 10 years will total more than NKr350 billion, with Statoil accounting for more than NKr60 billion. Statoil estimates that Norway's gross revenues from oil and gas sales over the next decade will total NKr2-3 trillion, much of which will end up with the government through its tax system.
2001: IEA predicts rising demand, while API cites weakness
The International Energy Agency (IEA) says global oil demand is expected to increase by 2.5% for 2001, a forecast that will keep OPEC in control for setting prices. The IEA said encouraging investment conditions and continued global economic growth will fuel the increase.
The latest forecast from IEA places added significance on OPEC supplies, anticipating that OPEC would pump an additional 4.1% into the market, compared with a 4% growth this year. Non-OPEC supply is expected to grow by 1.6% due to production increased in the former Soviet Union, Mexico, the United States, offshore West Africa, Brazil, Canada and the UK.
API says demand will be 200,000 b/d lower in the third quarter than previously thought, and 300,000 b/d less during the fourth quarter.
Meantime, oil prices rose to a 10-year high in August. Brent Blend futures contract for Sept-ember delivery reached a post-Gulf war high of $32.80 before closing at $32.18 amid worries that that the peak winter demand in the U.S. could be met. However, that was before the API weekly stock report showed that crude supplies the previous week had risen faster than expected, jumping 7.4 million bbl to 286.4 million bbl.
After a meeting of OPEC governors, OPEC Secretary General Rilwanu Lukman said OPEC planned to raise output if oil prices remained above the $28/bbl level through a September 10 OPEC meeting in Venezuela.
Venezuela President Hugo Chavez has been touring OPEC nations drumming up support for the OPEC summit meeting in Caracas. "We don't want prices to drop below the present level," Chavez said. "If that happened we would be passing a death sentence on ourselves and our people."
UK DTI sets platform abandonment guidelines
The UK Department of Trade & Industry (DTI) issued new guidance notes for decommissioning offshore oil and gas installations, putting into practice the Ospar convention, agreed in 1998 following the Brent spar controversy.
UK Energy Minister Helen Liddell said the decommissioning of offshore installations is inevitable but "it must be done in accordance with domestic legislation and all our international commitments.
Offshore oil and gas operators are required to submit decommissioning programs for approval. The presumption is that the vast majority of installations will be returned to shore for dismantling or for re-use opportunities elsewhere. She said the government wants to encourage the re-use of rigs, and she welcomed the recent Inland Revenue announcement extending tax relief to the costs of making installations and pipelines available for re-use.
Shuttle part of giant $20-40 billion cost in future years
Marine Shuttle Operations Norway was awarded a joint industry project covering the Offshore Shuttle, the company's decommissioning concept. The JIP (joint venture project) is an initiative of five oil companies, Elf, Phillips, Shell, BP and Kerr-McGee, to encourage the development of new technology for safe and competitive removal of oil and gas installations offshore.
The objective is to improve the confidence in the technical maturity and robustness of the Offshore Shuttle to safely remove and transfer to shore a platform topsides under North Sea conditions. The JIP will focus on key operations and functions such as stationkeeping, platform modifications, load transfer, transportation and transfer ashore. The JIP is scheduled to be complete by the first quarter 2001.
Marine Shuttle Operations says there are more than 6,500 offshore installations on the continental shelf of 53 countries. It believes that over the next 30 years that most of the installations will have to be decommissioned at a total estimated cost of $20-$40 billion. The company believes that the Offshore Shuttle will be capable of lifting and carrying most of the largest installations without extensive cutting or dismantling.
Norway's environmental goals updated
An updated set of environmental goals for Norway's offshore industry was presented in a final report from Miljosok, the joint industry and authority forum for studying environmental issues. The report sets forth several goals to be met by 2010, including:
- No harmful emissions to the sea
- That Norway's oil and gas operations be acknowledged as a leader in developing and applying environmentally friendly technology
- To work out ways of achieving cost efficiency in environmental measures
- To further develop the technology for recovering and disposing of carbon dioxide at acceptable costs
- To make progress in developing a market for carbon dioxide as an injection gas for reservoirs.
The report also calls for the use of natural gas by domestic industry and proposes that by 2005, firm plans for the industrial use of gas be developed. Virtually all of Norway's gas is presently exported. The report avoids mention of the controversial issue of gas-fired power stations. Miljosok recommends that follow-up work be taken over by the Norwegian Oil Industry Association.