UPI Energy Watch

WASHINGTON, June 28 (UPI) -- Exxon gets offer on Sakhalin-1

Russian gas giant Gazprom has made an offer to Exxon Mobil Corp. for its Sakhalin-1 gas project, Alexander Medvedev, deputy chief executive, said Tuesday.

According to the Moscow Times, Medvedev expressed doubt that Exxon's subsidiary would make a profit from selling the gas to China instead, but Exxon said it would continue to hold talks with China's CNPC.

Gazprom wants to purchase 8 billion cubic meters of gas annually to supply the Far East and east Siberia or liquefy it at its Sakhalin-2 liquefied natural gas plant for exports, the report said.

Under a government plan to free regulated gas prices, local sales would generate profits similar to exports starting in 2011.

"We can offer Exxon terms that could be very, very acceptable from the perspective of sharing the risks they encounter today," Medvedev told reporters.

"What does it mean to sell gas to (China) when you don't have a pipeline? How are they going to ship it?" Exxon building a pipeline would not make economic sense. I can't imagine how a pipeline for 8 bcm of gas can be economically viable," he said.

Sakhalin Energy, the now Gazprom-controlled operator of Sakhalin-2, plans to hold separate talks with Exxon to discuss having Sakhalin Energy liquefy the gas at its plant, where Gazprom wants to boost production after it begins to operate next year, Medvedev said.

Exxon, Conoco depart Venezuela due to constraints

Exxon Mobil Corp. and ConocoPhillips have abandoned their heavy crude oil projects in Venezuela's Orinoco Belt region following the government's decision to seize majority ownership and operating control, Venezuelan officials said Tuesday.

Six foreign owners of four major projects in eastern Venezuela had to agree to terms of turning over their control to Petroleos de Venezuela, or PDVSA, the state-owned oil company by Tuesday.

Venezuelan President Hugo Chavez said he would assume control over the fields whether the firms agreed or not.

The move is in line with Chavez's decision to "re-nationalize" the energy, telecommunications and banking sectors. He already nationalized the country's largest telephone company and the largest power generator in Caracas -- both of which were controlled by U.S. companies.

The companies involved in the projects Petrozuata, a ConocoPhillip subsidiary, Total's Sincord Norway's Statoil, Ameriven by ConocoPhillips and Chevron Corp., and Cerro Negro by Exxon Mobil and BP.

Since the early 1990s, the companies have invested approximately $17 billion in the country's energy sector.

Liquigaz Philippines Corp. buys Chevron's LPG business

Liquigaz Philippines Corp. said it purchased the industrial and commercial liquefied petroleum gas business of Chevron Philippines Inc., Patrick Libihoul, the company's president, said.

Libihoul said the purchase acquisition will increase his company's market share in the local LPG industry to 25.5 percent from 24.8 percent, BusinessWorld reported.

Jun Colingay, Liquigaz vice president for sales and marketing, said the acquisition would boost the company's market share on the industrial and commercial segment to 27 percent from 22 percent.

"This is a consequence of a well-thought strategy to become a major player in the industry ... Caltex (former name of Chevron) business is in good hands. We are here for the long time to serve the needs of the Philippine market," Libihoul said.

The amount of the purchase was not released.

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Closing oil prices, June 28, 3 p.m. London

Brent crude oil: $71.13

West Texas Intermediate crude oil: $69.33

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