Uganda oil contracts give little cause for optimism
Taimour Lay, The Guardian
The Katine project is providing a compelling case study in the complexity of sustainable development. Genuine progress – when possible within the constraints of a liberal capitalist model – comes from solutions that are local, evidence-based and democratically accountable. There are few quick fixes and no magic wands.
But the exploration and imminent production of oil in western Uganda is being seen as just that – an easy answer to complex problems. Both government and the oil companies involved have been busy painting a roseate picture of bumper revenues and a country transformed. Forget the intricacies of agricultural reform, social ownership and political liberalisation; Uganda, we are told, will be turned into a middle-income country by $2bn a year in hard cash.
But the problems facing Uganda – and Katine – are almost certain to be exacerbated rather than solved by oil. Last month, the campaigning group PLATFORM published three of the production sharing agreements (PSAs) the government has spent years keeping a closely guarded secret. The deals point towards a resource extraction programme designed for profit, not development, and contain a series of provisions that undermine any hope of changing course.
Our analysis reveals that the international oil companies, including Tullow Oil, backed by a $1.4bn loan arranged by the Royal Bank of Scotland, and Heritage, run by former mercenary Tony Buckingham (which had been due to finalise a sale of their licences to Italian firm ENI for $1.6bn, although these may now be bought by Tullow), are set to reap huge sums at Lake Albert – as much as a 35% return on their capital investment. That’s three times what’s internationally recognised as a fair profit…
(18 Jan 2010)
Iraq’s production bonanza may fuel a slide in oil
Nick Hasell, The Times
It is only a matter of days before the last of Iraq’s yet-to-be awarded oil contracts are due to be signed, bringing to a close a two-stage, seven-month process under which Western energy majors have gained access to a country with the planet’s third-largest oil reserves.
Such deals will inevitably be a focus of the UK oil sector’s year-end reporting season, which begins the following week, and the annual round of strategy presentations to investors that starts shortly after.
No more so than for BP, which has a 38 per cent interest in Rumaila, the vast 18 billion-barrel field in southern Iraq that was the biggest single project on offer, and Shell, which has stakes in two other bumper schemes: the first phase of West Qurna, where it is working alongside ExxonMobil, and Majnoon, where it has teamed up with Malaysia’s Petronas.
Indeed, with the exception of Chevron, which failed to secure licences in either round, Iraq is destined to become a significant contributor to the output of the world’s “super major” oil companies for many years to come…
(23 Jan 2010)
Shell faces legal fight over Arctic wells
Nick Mathiason, The Guardian
Royal Dutch Shell’s controversial plans to drill for billions of barrels of oil in the Arctic’s environmentally sensitive frozen waters face a potentially damaging legal challenge.
An alliance of conservation and Alaskan indigenous groups has filed a legal claim to prevent Shell drilling for oil this year in the Arctic Ocean’s Chukchi Sea. Two years ago, Shell paid $2.1bn (£1.3bn) to the US government for 275 oil leases there.
The legal claim accuses the US’s minerals management service, part of the federal interior department, of waving through permission to allow Shell to drill wells on the basis of an “abbreviated and internal review” of the environmental dangers of exploration.
The US portion of the Chukchi Sea, which separates north-western Alaska from north-eastern Siberia, is believed to hold 15bn barrels of recoverable oil and 76tn cubic feet of recoverable natural gas, according to the interior department.
It is also home to endangered bowhead whales, threatened polar bears and rich and varied fish stock. There are further concerns that more drilling in the region will increase warming in the Arctic, which is heating up twice as fast as the rest of the world…
(24 Jan 2010)
Venezuela oil ‘may double Saudi Arabia’
A new US assessment of Venezuela’s oil reserves could give the country double the supplies of Saudi Arabia.
Scientists working for the US Geological Survey say Venezuela’s Orinoco belt region holds twice as much petroleum as previously thought.
The geologists estimate the area could yield more than 500bn barrels of crude oil.
…However, Venezuelan oil geologist and former PDVSA board member Gustavo Coronel was sceptical.
“I doubt the recovery factor could go much higher than 25% and much of that oil would not be economic to produce”, he told Associated Press news agency.
(23 Jan 2010)