Market News

(Contributed by XJBEI’s senior member Mr Raghavendra Sharma)

MIDDLE EAST, INDIA & CASPIAN

Qatar
Qatar Petroleum has postponed the award of a $450 million turnkey project for Bul Hanine Arab C gas recycling project. Sources said the projects had been re-engineered to make them more aligned with the operators’ budgets, but rising steel prices probably made them even more expensive. McDermott together with SMOE were the frontrunners after the initial tender but a commercial agreement could not be reached. Technip with Abu Dhabi’s NPCC, and Spain’s Dragados with Italy’s Saipem had also placed price bids (Upstream Nov 26, 04) D5642

AES Corp, the parent company of the AES Ras Laffan Holdings, which has 55% stake in the Ras Laffan Power Company has described the Ras Laffan A Power and Water Plant as a milestone for his company. Italian Enelpower and Fisia constructed the power generation side and desalination plant of the project respectively (QTimes Nov 30, 04)

Shell said it will spend $6 billion on a GTL plant due to start in two stages with first onstream in 2008-2009 and the second two years later (QT/Reuters Dec 7, 04) D5528

Hydro Alcoa and Qatar petroleum signed a deal to build at Mesaieed one of world’s largest aluminium plants in the Gulf state at a cost of $3 billion (QT Dec 6, 04)

Saudi Arabia

KJO has postponed its $200 million Khafji oil development. Sources said the projects had been re-engineered to make them more aligned with the operators’ budgets, but rising steel prices probably made them even more expensive. A trio that placed bids originally were Technip with McDermott, JGC with NPCC, and Stolt with Sime SembCorp (Upstream Nov 26, 04) D4287

Aramco is more than 3 years away from reaching its production target of 12.5 million bpd as its first major onshore project Khursaniya is expected by end of 2007 (QT Dec 7, 04)

UAE

BP Sharjah is pioneering unique technology to improve ultimate recovery to extend the working life of Sajaa mature gas fields. The global first is based on coiled tubing drilling technology used by BP in Alaska (AME Nov 30, 04)

Kuwait

Kuwait Petroleum Corp said it plans to invest up to $40 billion over the next 15 years to modernize its outdated oil facilities and boost capacity to 4m bpd and that they need the help of international companies. Also that the building of a fourth refinery has been approved (QT/AFP Dec 6, 04)

Oman

Reliance of India has been awarded the offshore deepwater block 18 exploration block. Reliance had earlier submitted bids for three blocks in the Gulf of Oman. The block was with Shell for some years which was returned after encountering two dry holes (Upstream Dec 3, 04)

India

Reliance ownership family battle between the two brothers intensified after six directors of Reliance Energy quit bringing its shares down. The family owns 34% of the Reliance empire, which in turn holds up to 50 per cent of subsidiaries such as Reliance Infocomm and Reliance Energy (AFP Nov 25, 04). The discord between the two brothers was that the board approved to redefine the powers of various committees, executives, the Chairman & MD (older brother), Vice Chairman & MD (younger brother) and other executive directors without prior notice (ETimes Nov 26, 04)

Reliance is targeting August 2007 for first gas from Dhirubhai 1 & 3 discoveries in the deepwater KG-DWN-98/3 in Krishna Godavari. The schedule represents a delay from the original target of Oct 2006 (Upstream Nov 26, 04) D4754C

India and Iran have failed to reach an agreement on LNG production and supplies after India said that the price that Iran was quoting for its LNG was too high, much higher than LNG from Qatar (Upstream Nov 26, 04)

British Gas David Wollsclegal will depart to Kazhakstan and Kapil Garg will be the new Managing Director of British Gas in Mumbai. Kapil Garg formerly worked with ONGC and then moved over to Enron and BG. Prior to this appointment Garg was the Operations Director of BG in Mumbai (ASen Nov 28, 04)

IOC’s current Chairman Mr Ramachandran will retire on Feb 05 and Mr S. Behuria has been selected as the successor. His appointment will be formally announced after the approval process is completed (ASen Nov 28, 04)

IOC is set to sign a joint oil and gas exploration agreement with Indian exploration company Oil India (Upstream Dec 3, 04)

The Petroleum Minister feels that India should concentrate less on oil and more on gas, to meet its energy requirements. Foreign experts are being called in to look for gas reserves in the bed of the mighty Brahmaputra river. The 2,906km long Brahmaputra is one of Asia’s largest and most turbulent rivers, traversing its first stretch of 1,625km in China’s Tibet region, the next 918 km in India and the remaining 363km through Bangladesh before terminating into the Bay of Bengal. Oil India Limited (OIL) is bringing in six geo-physical contractors from the US, France, Poland and Britain next week for an on-the-spot survey of the Brahmaputra river. The entire operation, overseen by OIL is expected to cost about $22.1 million (PTimes Nov 29, 04)

ONGC has extended the drilling and well completion schedule in G-1 and GS-15 fields in KG offshore to April 2006 instead of earlier date of October 2005. The G-1 field is to be completed in 168 days and duration for completion of GS-15 is 100 days (PTimes Nov 29, 04) D5591

ONGC committee has finally come up with some recommendations based on their study of the issues raised at the 2nd Vendor’s meet that was held in June 2004. The committee accepted Clough’s recommendations that the contractors should not be held liable for lack of progress or slow rate of progress in a project in case the delays are attributable to ONGC. Also that performance guarantee during the warranty period be reduced from 10% to 5% of the contract value with respect to tenders for turnkey projects. The committee endorsed a suggestion from Great Eastern Shipping Co. Ltd. (GESCO) for exempting Indian companies from being put on “holiday” or blacklisted for failure to mobilize equipment on time. On “holiday” applies only in case of default in two consecutive contracts. The committee agreed to Mazagon Docks suggestion that the cost impact on change orders should be firmed up within 30 days of submission of claim. The committee also felt that a contract period should be extended till the end of the monsoon period, (if needed) if a contract ends during the monsoon period when demobilization of equipment is not allowed by stipulation. The committee has also in agreement with the recommendation from Baker Oil Tools India that the tender documents should incorporate the condition that bid bonds for non-successful bidders be released within 7 days from date of issue of LOI to the successful bidder (PTimes Nov 29, 04)

ONGC has offered Statoil a technical collaboration agreement for the ongoing deepwater exploration work on the east and west coast of India. The offer was made to the Norwegian delegation at the first meeting of the indo-Norwegian Joint Working Group (INJWG) on cooperation in the hydrocarbon sector (News ASen Dec 7, 04)

Iran

IOC will develop a gas block in the South Pars offshore field along with Petropars of Iran to produce liquefied natural gas at an estimated $3 billion, according to India’s Petroleum secretary. National Petrochemical Company of Iran has offered IOC participation in its 12th Olefin Complex at Bandar Assaluyah, which is under planning and scheduled to go on stream by 2007-08 (TNews Nov 25, 04)

Iran Inaugurated a new phase of South Pars Phase 1 Gas Plant. Thirty Phases are due to be developed over 25 years. Phase 2 & 3 developed by total, Gasprom and Petronas. Phase 1, 6, 7 & 8 have been awarded to Petropars. Agip has won Phases 4 & 5 along with Petropars which are more than 85% complete. Phase 9 & 10 were awarded to South Korea Lucky Goldstar. Phase 11 & 12 were offered for bid. Phase 14 is considered for GTL. Phase 15 & 16 is being bid by at least six foreign companies including Hyundai and LG, Foster Wheeler, Technip, Aker Kvaerner and ABB (BBC Nov 22, 04) D4290

Caspian

Russian Sector

ONGC have discussed bidding for Yukos assets at a very preliminary level. “It is a good idea and we have asked them to go ahead,” petroleum secretary said. Also added that ONGC may, in all probability, look at tying up with foreign firms like Gazprom due to the size of investment required. ONGC chairman said “If they de-merge and sell assets separately, then we will definitely look at Yukos.” (TNews Nov 25, 04)

AFRICA & EUROPE

Africa

Angola

BP is planning a major floater based expansion that could see another three units in Block 18 & 31 in addition to its FPSO at Greater Plutonio. One floater is already planned for a four field project (Saturno, Mars, Plutao and Venus) in NE of Block 31 and an option for another for three discoveries (Chumbo, Cesio and Platina ) in Block 18. A third could be or southern Block 31 (Upstream Nov 26, 04) D5143/44/ D5107/ D5592

ExxonMobil race for new floater units for Africa is expected to be headed by SBM that supplied three previous generic floaters. Bluewater or Saipem may be competing for the 2QTR05 award. Either two or three vessels will be needed (Upstream Nov 26, 04)

W. Africa – Others

South Africa

Forest Oil has relinquished its Block 1 license which lies just south of the boundary with Namibia. Forest has retained block 2c south of block 1 in deeper waters (Upstream Nov 26, 04)

Mediterranean

Including North Africa and Southern Europe

Algeria

Galsi has received prequals from subsea engineering contractors for the proposed Algeria to Italy gas pipeline pre-front-end engineering and design contract. JPKenny, Snam and KBR will probably be in the forefront of the final stages of the bidding (Upstream Dec 3, 04) D5571

Egypt

The ministry of Petroleum will hold an international bid round this year. Nine blocks will be on offer, seven in the Med. N.Ras El Hekma, N. Sidi Kerir Deep, N. El Amyria, El Bougaz, N. El Bougaz, North el Temsah Deep and N. Sinai Deep lie north of the Western Desert to NE of Nile Delta (Offshore Oct 2004)

Italy

Italy expects at least three new liquefied natural gas terminals may be built or under construction in the country by 2010 to meet growing domestic demand. The need for import terminals partly depends on Italy becoming a transit country for LNG to countries such as Austria, Switzerland and Hungary. Edison and partner ExxonMobil and Qatar Petroleum expect to begin construction of a terminal at Rovigo near Venice early next year. Eight other terminals have been proposed and the government is close to approving one of two competing terminals within 20 km of each other on the Tuscan coast (QT/Bloomberg Dec 5, 04) D5573

Libya

Libya is gearing up for a bidding round, the first since the US lifted sanctions. Onshore and offshore blocks will be offered and will close in January 2005 with awards made the same month (Offshore Oct 2004)

Europe

UK Sector

Shell has agreed with its prime offshore contractors in the UK sector of the North Sea that they should provide an extra two weeks annual leave for all eligible contractor staff from the ?rst half of 2005. Platform contract personnel will each receive a minimum of 14 days leave from platform duty. This means they will work 168 days per annum in a cycle of two weeks on and two weeks off without affecting their annual pay (Upstream Nov 26, 04)

ConocoPhillips is evaluating commercial bids from six contractors to fabricate the 3800 tonnes topsides for Britsats. Bidders include four UK bidders -BiFab, Heerema, McNulty and SLP – up against Aker- Kvaerner from Norway and Spain’s Dragados. One well-placed source said SLP is in a strong position after submitting the “best price” but not the lowest (Upstream Nov 26, 04)

Norwegian Sector

Marathon’s Alvheim 8,000 tonnes topsides is emerging with two horse race between McNulty Offshore Contractors and Vetco Aibel. Both contractors who were shortlisted from a list of five will now enter a validation and critical path engineering phase (VCPE) scheduled for award on Jan 31. Marathon has already bought the multi-purpose shuttle tanker Odin from Statoil and aims to convert it into an FPSO (Upstream Nov 26, 04) D5606

Norsk says it is evaluating development of its Fram East field as subsea tieback to its Troll-C platform most likely between 2006 and 2008. Technip did the subsea construction for Hydro on earlier Fram West development (FHand Nov 24, 04)

Ministry of Petroleum said that a high level of development activity on the Norwegian Shelf is expected. Seven plans for operation and development are expected to be delivered during the next six months (NPD Dec 4, 04)

GULF OF MEXICO (Partial)

Occidental announced that its board of directors adopted a corporate wide human right policy, including human rights provisions outside the US, the inclusion of human rights provision in foreign contracts, human rights training programs for employees and security contractors (Oxy Dec 8, 04)

ConocoPhillips has named President and CEO James J. Mulva to the additional post of chairman (Offshore Oct 04)

FAR EAST & AUSTRALASIA

Australia & New Zealand

ChevronTexaco has started off the development of the Wheatstone gas ?eld off Western Australia with contractors waiting for the award of an engineering study. Offshore engineering companies including KBR, Technip, Intec, Frontier and Worley have submitted proposals. The favoured concept is thought to be all subsea (Upstream Nov 26, 04)

BHP Billiton has enlisted four companies to perform engineering support work for the Stybarrow oil development. Intec with Worley, and Frontier with JP Kenny are performing similar function for BHP Pyrenees. It is thought that Woodside wants Stybarrow tied back to Enfield FPSO (Upstream Nov 26, 04) R2628

BHP Billiton and ExxonMobil disagreement over the Scarborough gas field is threatening to sever the partnership. ExxonMobil says the field is not commercially viable (QT/Reuters Dec 5, 04) R2627

China

PetroChina has made its biggest oil find of 2004 and is already working on a development scheme. Exploration at the beach area of the Jidong oil?eld, located in northern China’s Bohai Bay, started back in 2002, but PetroChina’s ?rst breakthrough did not come until late September this year when three exploration wells ?owed crude (Upstream Nov 26, 04)

KerMcGee is looking at the possibility of standalone developments of three oil fields CFD 12-1/12-1S and 11-6 at the Caofeidian CFD complex in Bohai Bay rather than tying them into the existing FPSO about 20 km away. Sources indicated that it could look something like Apache development at Zhao Dong field (Upstream Dec 3, 04)

Indonesia

Santos announced it has entered into agreement with Total and Inpex to obtain both companies entire equity interests in the offshore Donggala Production Sharing Contract (PSC) in the Kutei Basin. The transactions are subject to the approval of the Indonesian regulatory authority BPMIGAS (Newswire Nov 28, 04)

Philippines

PNOC intends to develop the Malampaya field oil rim by 2006. PNOC is looking to team up with private investors to exploit the oil rim of the deep water field NW Palawan in 850 meters of water (Upstream Nov 26, 04) R2282

Vietnam

PTSC general directors Nguyen Quoc Tuan has died of cancer at the age of 39 (Upstream Dec 3, 04)

Russia – Sakhalin & East

The Indian cabinet has agreed to let ONGC invest in the ExxonMobil-led Sakhalin-1 oil project thru ONGC Videsh Ltd. US$1.1 billion has been approved by the cabinet for the project. OVL currently holds a 20% stake in Sakhalin-1 from a US$1.7 billion buy-in in 2001 (IPress Nov 26, 04)

OTHER RELATED NEWS

Middle East, India & Caspian

SLP Engineering led consortium has been awarded a contract by PetroIran Development Company for two packages for offshore facilities and pipelines for Iran’s Forouzan/Esfandiar offshore oilfield upgrade worth about $300 million. The losing group is made up of JPKenny and local Sadra. SLP group includes Iranian Offshore Engineering & Construction IOEC and local Amid. Facilities include platforms for processing, LQ and drilling plus 200km of various pipelines (Upstream Nov 26, 04) D4357

Mitsubishi lead consortium has been awarded by Rasgas a $40 million contract to build a liquid gas reservoir in Qatar. French Vinci is a member of the consortium. Work would be completed in April 2007 (Upstream Nov 26, 04)

SK Engineering & Construction of South Korea and Sharjah based Petrofac are the low bidders for the two EPC contracts for Kuwait Oil Company facilities upgrade and onshore flowlines replacement. Petrofac scored low bidder $686 million for first package and $1,231 million for the second package (MEED Dec 2, 04)

Technip and Abu Dhabi Al Jaber Energy Services has been awarded by Dolphin Energy the EPC $60 million contract to build the Taweelah terminal which will receive the Dolphin gas. One major EPC contract is left pending by DE for the award of the umbilicals (MEED Dec 2, 04) D4988

Technip and its partner Chiyoda submitted the lowest bid for a $2 billion project to build a natural gas plant in Qatar, competing with JGC Corp and KBR (QT/Bloomberg Dec 7, 04)

L&T and Valdel have signed their shareholders agreement for 50:50 share-holding for a new Upstream engineering company based in New Delhi . Valdel’s present CEO, Satyanarayana will become advisor and L&T’s nominee Bhaskar Dutta Gupta will take over as CEO (ASen Dec 1, 04)

Clough has been confirmed that award of ONGC G-1 and GS-15 project for $218 million off India in 400 meters of water. Clough was the sole qualified bidder (Upstream Dec 3, 04). Clough finally received the LOI from ONGC for $215.35 million (F.Express/ASen Dec 1, 04) D5591

Clough intends to set up engineering execution hub in India, similar to centers in Thailand and Indonesia, following its award of the $131 million BG Panna and Tapti project (News ASen Nov 29, 04)

Far East & Australasia

Keppel Shipyard secured a conversion and upgrade contract from Bergesen Offshore for the FPSO Berge Helene. Work will start in December for redelivery August 2005. The vessel will be deployed at the Woodside’s Chinguetti Field off Mauritania (RZ /Keppel Nov 24, 04)

SembCorp’s appeal against a key decision in its legal case with Allseas has been dismissed by the High Court of England. As a result, the net exposure to Sembawang in the ongoing arbitration is expected to increase another S$200 million in addition to the S$150 million old provision for the ongoing legal dispute with Allseas regarding the conversion job of the pipelay vessel Solitaire (Upstream Nov 26, 04) D5288

Clough has established a new oil and gas fabrication facility in Thailand through a joint venture with a company of the Sino Thai Group. Clough has been on the look-out for Thai facility since its exit from the “UCU Alliance”. Clough said the new yard would be developed within the existing infrastructure of the Sattahip Port area, close to Thailand’s Eastern seaboard petrochemical complex (Upstream Nov 26, 04). Clough has set up the new facilities where it intends to build and ship from there the BG Panna and Tapti wellheads (News ASen Nov 29, 04)

Clough has been disappointed by Origin Energy for cashing a $15 million performance bond provided by Clough on the delayed BassGas project off Australia after Clough had failed or refused to perform significant work that is required under the contract. Clough had said that Origin has rebuffed arbitration approaches so far (Upstream Dec 3, 04) R2198

Petroleum Technical Services Company (PTSC) and its offshore drilling sister PV Drilling of Vietnam are scheduled for equitisation in 2005 and 2006. The divested shares will likely be offered to locally and internationally with a foreign ownership ceiling set at 30% (Upstream Nov 26, 04)

Malaysia Shipyard & Engineering (MSE) is moving to new business opportunities by providing repair services for LNG carrier owners and operators. MSE Managing Director said that MSE wants to be a global player in the LNG ship repair business starting with the success of dry-docking and repair of Pouteri Firus which took 16 days to complete (Upstream Nov 26, 04)

SapuraCrest Petroleum of Malaysia won a $37.8 million oil and gas services contract from Shell Brunei. During the one year contract, it will install an offshore oil drilling platform, three pipelines totaling 37 km and power cable for the Champion West Phase 3 and the Egret project. The company said that it was looking at the acquisition of assets such as a newbuild dynamically-positioned heavy-lift derrick lay vessel worth about $150 million and other deep-water assets to boost its offshore operations (Upstream Dec 3, 04) R2361

Global has an edge on its two main rivals for a major subsea gas pipelay $150 to $175 million contract from CNOOC Ltd’s Panyu field complex in the South China Sea. Five companies bought the bid document for the installation contract Saipem, Allseas, Hyundai, McDermott and Global but that Hyundai and Saipem made commercial bids. Global bid aggressively to bring in a barge from outside Asia Pacific (Upstream Dec 3, 04) R2619

L&T of India is contemplating buying out the entire stake of its two partners in Singapore. International Seaports Pte Ltd to have a free hand to bid port projects in other Asian countries (FExpress Nov 26, 04)

World Trade Organization is set to clear South Korea of European Union allegations that it provided illegal subsidies to its shipyards. The WTO interim report said that loans provided by state-run banks to the yards, which fabricate craft including FPSOs and other structures for the oil and gas industry, did not amount to unfair subsidies (Upstream Dec 3, 04)

Europe & Mediterranean

Grenland Group of Norway is close to buying Heerema’s Tonsberg yard on Norway’s east coast to enlarge its group among the offshore contractors in the North Sea. One source said Tonsberg has very good facilities for steel fabrication, with large indoor fabrication halls. Tonsberg is currently producing the steel templates for FMC for Norsk Ormen Lange. Grenland Gruppen already has facilities in Langesund on Norway’s east coast (Upstream Nov 26, 04)

FMC Technologies has fallen behind schedule again in Algeria’s offshore oil loading project following what contractor described as severe storms. Costs have risen by $15 million as a result. FMC officials said tat Sonatrach agreed in August to revise the contract value from $224 million to $252 million to account for additional work (Upstream Nov 26, 04)

Technip has sold a 75% stake in its Italian engineering unit Technip KTI thru a management buy out as part of restructuring (Upstream Nov 26, 04)

Heerema won a contract from Petro Canada to fabricate and install the 4300-tonne integrated deck IPD and the 12,500-tonne dry weight gravity based structure GBS for the De Ruyter development project in the Dutch North Sea (Upstream Dec 3, 04)

Africa

Global is bidding Hercules for deepwater in West Africa where it is predicting major business growth from 4QTR next year and into 2006/7. It says it has $500 million of West Africa bids outstanding, and it estimates there is the same amount again in the market that it has not bid for, had zero utilisation for its regionally-based Cheyenne, Comanche and Navaho barges. Cheyenne has now entered drydock in Tema, and it is planning to relocate the Navaho to Middle East area (FHand Nov 24, 04)

Daewoo Shipbuilding & Marine Engineering, the front runner to build a $950 million FPSO for Agbami off Nigeria is set to appoint KBR as its topside detailed design contractor. Fabrication is likely to start early next year. The FPSO bids from Daewoo, Hyundai and Technip are all valid until 1 April (Upstream Dec 3, 04) D5000

Samsung is one of the companies hoping to win work on Total Akpo FPSO in Nigeria. Total has requested bidders Hyundai, Saipem/Dalian and Amec/Samsung to extend the validity of their bids to mid January. Sources attribute the delays to the ongoing dispute between South Atlantic Petroleum and the government (Upstream Dec 3, 04) D5122

Stolt Seaway Polaris has completed installation of all steel catenary risers on shell Bonga FPSO off Nigeria in 3,609 FSW. Stolt has also placed a reported $40 million contract with Huisman for a new and improved J-Lay tower with tensioning capacity to 750 metric tonnes from 530 metric tonnes for ultra deepwater and larger diameter applications including BP’s Greater Plutonio development in Block 18 offshore Angola in up to 4,397 FSW. Stolt indicates that engineering studies are still underway towards a final concept selection of this innovative J-Lay tower (Quest Dec 6, 04) D5515

America – (Partial News)

Paragon Engineering Services said that offshore projects get bigger as well as fewer in number and it would be difficult for big engineering houses to keep large number of employees devoted to offshore engineering. US based engineering contractors will have to specialize in conceptual and FEED studies in order to survive as more detailed design work drifts to low cost engineering workshops in Asia. Asia may continue to be the preferred location for low cost engineering houses because of its acceptance of English as the standard language (Upstream Nov 26, 04)

FMC Technologies has confirmed net proceeds of $77 million in cash and shares from Modec thru the conversion of its investment in Modec’s US business (Upstream Nov 26, 04)

KBR announced that the U.S. courts have issued orders approving final insurance settlement agreements. Said that this approval removes a dark cloud from their business and brings them one step closer to a final resolution of their asbestos liabilities and their exit from bankruptcy, possibly as soon as the end of December. Also that they have exited the fixed price offshore EPIC contracting business referencing projects such as Barracuda and Caratinga which have caused significant financial losses for the company (KBR Nov 30, 04). KBR engineering and construction unit has reorganized its deepwater technology group, shifting business under the Granherne consultancy division to emphasize early conceptual services to be headed by Richard D’Souza(Upstream Dec 3, 04)

Halliburton said it named a new Chief Operating Officer as part of a management restructuring under which it will no longer have chief executives at each of its business units. Also that the KBR engineering and construction unit would be reorganized from five product lines to two divisions, focusing on energy and chemicals, and government and infrastructure (Halliburton Dec 2, 04)

BP’s 59,500 tonnes Thunder Horse built in Korea by Daewoo Shipbuilding, to be integrated at Kiewit Offshore Services yard on the Texas. Left picture – Dockwise Blue Marlin almost fully submerged (JET Nov 2, 04)