June 1, 2001
UK Energy Minister Peter Hain announ-ced that environmental regulations for offshore oil and gas activity will be strengthened.


UK Energy Minister Peter Hain announ-ced that environmental regulations for offshore oil and gas activity will be strengthened. The new regulations will reinforce the strict environmental protection framework that currently governs the UK's offshore oil and gas industry, adding protection for animal species and habitats. These regulations will affect licensing of offshore development, including the 19th Offshore Round.

On the merit of a marine risk document supplied to the Department of the Environment Transport, Marathon Oil secured permission to drill a second exploration well for gas in the Dragon Field off the west coast of Wales. Dragon believes that the field contains enough reserves to supply adequate gas to South Wales. The discovery well was drilled seven years ago, and the second well was initially refused because of shipping safety issues.

Central Asia

As more activity takes place in the Caspian Sea, discontent is surfacing among the littoral states. In early May, Turkmenistan re-opened a 10-year-old dispute, calling for Azerbaijan to stop activity on several disputed oil fields and threatening legal action in international court if its demands were ignored. Turkmenistan further appealed to foreign firms to refrain from initiating new projects and to stop those in progress in any of the disputed areas. While Turkmenistan courts more international investors - up to $10 billion projected by year's end - Azerbaijan, denying any wrongdoing, continues to reap the benefit of ongoing projects.

BP Amoco heads an international consortium that is developing the Shah Deniz gas field off Azerbaijan's Caspian Sea coast. The company and its partners are planning to spend $8-9 billion over the next year in two oil-drilling and natural gas projects. The work will include building a new pipeline from the Shah Deniz fields and developing the Azeri-Chirag-Guneshli fields. Details of the engineering and design work will be addressed this month.


Cairn Energy PLC announced that its Bangladesh Sangu gas field is producing on average 145 MMcf/d, up 36% from the same period last year. In addition to increasing production from the Bangladesh field, Cairn Energy plans to drill at least five exploration wells in India this year - four wells in the Krishna-Godavari Basin offshore Eastern India and one onshore in Rajasthan. Development drilling on the offshore Lakshmi field in Block CB-OS/2 could begin as early as October.

Ceylon Petroleum Co. (Ceypetco), Sri Lanka's state-owned oil company, announced that three multinational companies - West-ernGeco, TGS-Nopec, and Veritas DGC - proposed seismic surveys off the island's north- western coast to assess the country's offshore oil prospects. The University of New South Wales School of Petroleum Engineering in Australia was commissioned to record seismic data nearly 15 years ago. If the new surveys are approved, Sri Lanka could begin its move toward becoming self-sufficient in supplying oil and gas. Discussions are still in the preliminary stages.


Exxon Mobil Corporation subsidiary Esso Exploration Angola Limited has made its 11th oil discovery with the Vicango-1 well on Angola Block 15 about 190 miles northwest of Luanda. Transocean Sedco Forex's semisubmersible M G Hulme Jr. drilled the discovery well in 3,199 ft water depth, to a total depth of 6,890 ft. With recoverable hydrocarbon potential greater than 3.5 billion boe, Block 15 is a world-class development opportunity. A number of developments are in the planning stages, with the first due to come on stream in 2004. Partners in Block 15 are Esso (40%), BP Exploration (Angola) Limited (26.67%), Agip Angola Exploration B.V. (20%), and Statoil (13.33%)

Nigeria's Department of Petroleum Resources announced that a number of oil companies could lose their offshore exploration licenses because they have failed to pay acceptance fees for exploration blocks awarded in the country's December 2000 licensing round. The government noted that the fees were due on April 30 and that the blocks will be forfeited if the companies do not make arrangements to pay the now overdue fees. In mid-May, Nigeria offered a 90-day extention. Six of the 14 firms that won licenses in Nigeria's last bidding round were multi-nationals already established in Nigeria. A second round of bidding is planned for third quarter this year.


Gulf Canada Resources announced the completion of drilling on the unsuccessful Bandol-1 well in the French territorial waters off the East Coast of Canada. The well, which was fully funded by Gulf's joint venture participants, is the first well on a large, contiguous block of over 8 million acres covering a significant, untested portion of the Laurentian sub-basin. The next phase of activity will be determined when the drilling data is analyzed.

BP has discovered gas in a Brazilian area of the Amazon estuary. The company plans to drill another well in Block BFZ-2 in the little-explored sedimentary basin known as Foz do Amazonas. Unless BP can establish the presence of hydrocarbons, the right to explore the block will expire in August. If BP proves that hydrocarbons have been detected, Brazil can extend the lease by six years.

Conoco's wholly owned affiliate, Seahorse Shuttling and Technology LLC (Seahorse), formalized an alliance with the Alabama Shipyard of Mobile, Alabama, and Samsung Heavy Industries of Korea to develop a design and construction plan that could have American-built shuttle tankers ready for service in 2004. The company believes the Minerals Management Service (MMS) will approve the shuttling concept in the Gulf of Mexico. On the basis of that belief, Conoco is continuing its program to deploy shuttle tankers to the Gulf as soon as possible. Conoco and Samsung have developed an extensive conceptual design for a new tanker classification, the Gulf of Mexico Maximum Cargo (GOMAXtrademark) shuttle tanker, a double-hulled, dynamically positioned vessel with a capacity of 550,000 bbl of oil. The vessel will comply with the 40-ft draft restrictions of most Gulf of Mexico ports.

Middle East

BG Group PLC (UK) signed a commercial agreement with General Petroleum Corp. (Egypt) and Edison International SPA (Italy) for a proposed plan for an integrated liquefied natural gas export project in Egypt. The proposed project will include developing discovered, uncontracted gas reserves in the West Delta Deep Marine concession in Egypt's Nile Delta and building a $900 million onshore liquefaction plant at Idku on the Mediterranean Sea.

Gupco and BP Amoco announced two new discoveries in the Gulf of Suez with combined proven reserves estimated at 35.5 million bbl. The first discovery well has a capacity of 10,000 b/d with proven reserves of 29 million bbl. The second well has proven reserves of 6.5 million bbl with current capacity of 3,000 b/d. The discoveries are operated jointly by Gupco and BP.