|
ConocoPhillips could boost Lukoil stake
Allen Baker Petroleum News
The Russian Federal Property Fund has set a starting price of $1.928 billion for the sale of the government’s 7.59 percent stake in OAO Lukoil Holdings, the government agency said Aug. 26, with ConocoPhillips the leading contender to win that contest. There is wide speculation in the industry that the government shares are only the beginning for the U.S. oil major’s plans for Russia.
The government shares will be sold at auction Sept. 29. Along with ConocoPhillips, Russian officials say they’ve also received an expression of interest from David Guggenheim, a member of the family behind the Guggenheim art museum.
The government will collect more for the Lukoil shares than it did for any previous sale of state assets. Russia received $1.86 billion for its 75 percent stake in Slavneft in 2002.
For ConocoPhillips, if it wins the bid at the minimum price, it would pay roughly $1.70 for each barrel of reserves, a bit lower than the $1.90 a barrel BP paid for its interest in TNK, according to the International Herald Tribune. Lukoil has the world’s second-largest proven oil reserves.
Should ConocoPhillips prevail, it could quickly launch an effort to buy shares to boost its stake to a much higher percentage of the Russian company, analysts have said.
If ConocoPhillips holds 20 percent of Lukoil, then it could list a share of Lukoil reserves in its financial reports, the Russian newspaper Vedomosti reported. A holding of more than 25 percent of the company would give it limited veto power under Russian law over potential moves by Lukoil management.
The Financial Times reported in June that ConocoPhillips was negotiating to buy a 25 percent Lukoil stake for $5.75 billion. Russia to boost oil exports in 2004 Russian oil exports will reach 255 million tons this year, a gain of 12 percent from 2003’s 228 million tons, Russian President Vladimir Putin told reporters on Aug. 31.
Russia’s total oil output will rise to 450 million tons from 421 million in 2003, the Prime-Tass news agency reported. The total production in 2002 was just 380 million tons, so the upward march remains robust but is slowing a bit.
Putin’s comments may help steady the oil markets, where uncertainty about the Yukos situation has contributed to a rise in world oil prices.
In the first half of this year, output was 224 million tons and exports 110 million tons, according to official Russian figures. BP has contract for Tangguh LNG production BP and its Tangguh partners have signed a $2 billion sales agreement for liquefied natural gas from the Indonesian field that calls for supplying up to 800,000 tons a year for 20 years to affiliated company K Power of South Korea, BP said Aug. 31.
The company has said it plans a decision on whether to go ahead with Tangguh later this year, with costs estimated at $5 billion, but executives say the timetable has already slipped a bit, to 2008 instead of 2007 for initial shipments.
The new LNG contract, a firm 600,000 tons annually and up to 200,000 additional tons annually for the initial years of the deal, will be used to power a new plant that will start generating electricity in South Korea in 2006. K Power is a joint venture in which BP holds 35 percent and SK Corp. the remaining 65 percent.
BP signed a 20-year sales agreement in July that calls for 550,000 tons of LNG to be supplied to Korean steelmaker Posco, starting in 2005. Another deal calls for 2.6 million tons of LNG annually for CNOOC’s Fijian LNG terminal in China.
And, according to BP, the company is close to a deal to supply 3.7 million tons a year for a proposed Sempra Energy terminal in Costa Azul, Mexico. That would cover the planned annual output of more than 7 million tons.
But the Chinese news service Xinhua and other news agencies quote Tangguh project executives as saying that the actual starting date for Tangguh production has slipped to 2008 from 2007, due to problems ranging from government approvals to construction issues.
Tangguh, about 2,000 miles east of Jakarta, has more than 14 trillion cubic feet of proven natural gas reserves. BP is the operator and has a 37 percent stake in the project. Partners are CNOOC Group and LNG Japan, a joint venture of Sumitomo Corp. and Nissho-Nichimen Holdings. Big profit gains for top Chinese oil firms PetroChina Co. and Sinopec had substantial profit gains for the first half of the year, following in the footsteps of their counterparts in the West.
For PetroChina, Asia’s biggest oil firm, profits for the first six months of the year rose to 45.3 billion yuan, or $5.5 billion, a gain of 17 percent from the 2003 period.
Refining led the way for PetroChina, with overall sales rising 21 percent.
Sinopec, which has a bigger concentration in the refining business, saw its net rise 51 percent to 16 billion yuan, or $1.9 billion, with production of 136 million barrels of oil and 100 billion cubic feet of gas for the period.
With China’s booming demand for cars and the products that fuel them, both big Chinese oil firms are boosting their capital budgets. PetroChina plans to spend 57 billion yuan ($6.87 billion) on oil and gas exploration and production this year, up 24 percent from 46.1 billion yuan in 2003.
At Sinopec, capital spending is nearly as large, at 56 billion yuan ($6.75 billion) this year, up 12 percent from 50 billion yuan in 2003. Sinopec will use the money mostly for pipelines, refinery upgrades, and to build more retail stations.
| 