Shell Nigeria Exploration and Production Company (SNEPCO) announced on Feb. 2 that development costs for the Bonga deep offshore oil field increased by 30 percent to $3.5 billion. The cost of developing the field with an estimated capacity of some 1 billion barrels of oil was originally estimated at $2.7 billion. While the company has lowered its global crude reserves again by 1.4 billion barrels, SNEPCO did not announce any reductions affecting Nigeria's reserves, which currently stand at some 35.5 billion barrels as of 2004. According to Chairman Chris Finlayson of Shell Companies in Nigeria, the company has spent approximately 90 percent of the total investments. Finlayson also mentioned that SNEPCO is looking to begin oil production from the field by middle of 2005. Finlayson said in reference to the Bonga oil field, "Just before (last) Christmas we finished all the sub-sea installation work, and now we are completing the bulk work." Finlayson also noted that the company was increasing the total workforce on the project by more than 200 to almost 1000 in order to meet the new completion schedule.
According to Barmek Azerbaijan Power Grid head, Huseyn Arabul, the company has collected a total of $326,000 in energy fees over the company's three-year activity in the country. Arabul said: "We operated with loss and failed to fully collect fees for the energy purchased from Azerenergy joint-stock company. This can be regarded normal, as it is impossible to properly collect energy fees even in the developed countries." According to Barmek's Chief Engineer Chingiz Ibadov, energy supplies remain unstable. The grid's major challenger is the difference between the purchased and supplied energy, as well as of increase of thefts. Ibadov added: "Ways for resolving the problem will be looked into and urgent measures taken in 2005." Ibadov also noted that power meters would be installed in transformer stations that distribute energy to the regions, which is designed to help determine the amount of energy lost and prevent thefts.
According to President Vagit Alekperov for Russia's Lukoil, the company intends to pursue new oil and gas production operations in the offshore area of the Caspian. Alekperov met with Dmitriy Kozak, President Vladimir Putin's envoy to the southern federal district, to discuss the project. Alekperov noted that gas reserves play a significant role in the Caspian, which could be used to expand polymers production while also creating a Caspian gas-chemical production complex. The development of new oil and gas deposits in the Caspian area will also help create additional jobs in the southern federal district and provide local companies with additional orders.
South Korean oil companies will begin exploring an oil field development project in Uzbekistan. Kim Yong-gu, chairman of the Korea Federation of Small Business (KFSB), met with Rustam Azimov, Uzbekistan's Minister of Economy, during his recent visit to Uzbekistan. Yong-gu said: "The Uzbek minister pledged full support if the KFSB joins an oil development project with an experienced company. We will soon propose Korea National Oil Corp. build a consortium to develop oil fields in the energy rich central Asian country. Once the consortium is organized, we will strive to sign a memorandum of understanding with the Uzbekistan government as soon as possible." Uzbekistan has an estimated reserve capacity of approximately 1.3 billion barrels of oil.
Slovenia's oil and gas companies have demonstrated an interest in purchasing a majority share in Bosnia's oil distributor. Petrol and OMV Adriatik from Koper intend to purchase the Sarajevo Energopetrol, which used to be the largest oil distributor in BiH (Bosnia-Herzegovina). The state commission for choosing the company's strategic partner will look into non-binding letters of intent by Feb. 10 and then decide which company will be officially invited to make a bid. Croatia's Ina, Hungary's MOL, Bulgary's Prista Oil, British S&A Capital and Tuzla Euro Inzenjering are also interested in purchasing a state-owned majority share in the company. Because of serious financial problems within the last few years, Energopetrol is being partially privatized.
Closing oil prices, Feb. 9, 3 p.m. London
Brent crude oil: $43.09
West Texas intermediate crude oil: $45.25