UPI Energy Watch

Lukoil halts work in Iran

Lukoil has frozen its Anaran project in Iran because of U.S. sanctions.

Leonid Fedun, vice president of Russia's second-largest oil company, recently spoke to a conference in Moscow on building a stable partnership with the United States.

"We have opened a huge oil field in Iran, but we cannot work there, because of the investments prohibition that can exceed $20 million," he said.

Under the $20 million threshold, U.S. courts can fine companies that do business with Iran that have any assets in the United States, or restrict their business activities with U.S. companies.

Lukoil Overseas holds 25 percent of the Anaran project; Norway's Hydro holds the remaining 75 percent. Norsk Hydro, the Norwegian energy group, held 100 percent of the field, near the border with Iraq, until 2003, when Lukoil acquired its stake. According to estimates, the field holds about 2 billion barrels worth of oil reserves.

Fedun also said he was concerned the United States could place similar sanctions on Venezuela, which would prevent Lukoil from developing its hydrocarbon block there.

Talks still open on CNPC, Rosneft deal

Chinese authorities are expected to issue a license to Russia’s Rosneft to build a refinery in China.

The deal is for the development of a joint venture between Rosneft and China National Petroleum Corp. The Russian oil company will be able to build its first oil refinery in China.

Prices are still being negotiated and an intergovernmental agreement for the construction of the East Siberia Pacific Ocean oil pipeline is being discussed.

"We believe the long stalemate could be resolved if China can agree to cover all construction costs for the pipeline spur from Skovorodino to the Chinese border, while Russia can offer some upstream sweeteners on project JVs," said Gordon Kwan, the head of China energy research at CLSA.

The license will become the first step in partner relationships, on which the companies signed a deal 18 months ago. Multiple agreements could be signed during Chinese Premier Wen Jiabao's visit to Moscow in November.

Possible oil reserves in Indian jungles

The government of the Indian state of Nagaland has signed agreements to look for oil deposits.

A joint venture between Indian company Assam Company Ltd. and Canadian Canoro Resources Ltd. will invest $100 million to explore reservoirs of crude oil and natural gas discovered in the northeastern states of Assam and Nagaland.

An Indian Petroleum Ministry official said ACL and CRL found oil and natural gas at two drilling blocks in Amguri, near Jorhat in Assam, and one at Changpang in Nagaland.

"The two reservoirs could thus yield a total of over 3,100 barrels of oil equivalent a day and this is by far our most successful result to date," said Rob McInnis, vice president of Canoro's corporate affairs department.

According to estimates, the two reservoirs could possibly produce up to 1,200 barrels of oil a day and 12 million cubic feet of gas per day.

--

Closing oil prices, Oct. 22, 3 p.m. London

Brent crude oil: $83.71

West Texas Intermediate crude oil: $87.77

--

(e-mail: energy@upi.com)