Category Archives: AUSTRALIA – OCEANIA

Oceania is a region centered on the islands of the tropical Pacific Ocean. Australia

PNG: InterOil Net Profit Climbs

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InterOil said today its net profit for the quarter ended March 31, 2012 was $9.4 million compared with a net profit of $0.7 million for the same period in 2011, an improvement of $8.7 million.

First Quarter 2012 Highlights and Recent Developments

  • As of April 6, 2012, InterOil drilled the Triceratops-2 well in Papua New Guinea through the entire carbonate interval to a total depth of 7,336 feet (2,236 meters). The acquisition of wireline logs was completed on April 14, 2012 and the testing program is ongoing. The logs and DST pressure data indicate two separate, carbonate reservoir intervals with separate pressure systems and potentially separate or stacked hydrocarbon pay. The upper reservoir interval contains gas and condensate which preliminary pressure data indicates is in communication with the gas and condensate tested 3.8 kilometers away in the Bwata-1 well. The deeper zone lies below a 264 feet (80.5 meter) thick marl and argillaceous limestone interval, likely an intra-formational seal, where an independent formation evaluation indicates potential liquid hydrocarbons. The presence of movable hydrocarbons in the lower reservoir interval, at this stage, has not been confirmed with testing. However, a small volume of light oil of condensate composition was recovered.
  • Net profit for the quarter ended March 31, 2012 was $9.4 million. The operating segments of Corporate, Midstream Refining and Downstream collectively derived a net profit for the quarter of $28.6 million, while the investments in the development segments of Upstream and Midstream Liquefaction resulted in a net loss of $19.2 million.
  • Subsequent to quarter end, InterOil signed a binding Heads of Agreement with Pacific Rubiales Energy  to be able to earn a 10.0% net (12.9% gross) participating interest in PPL237, which includes the Triceratops structure. The transaction contemplates staged initial cash payments totaling $116.0 million, an additional carry of 25% of the costs of an agreed exploration work program, and a final resource payment. PRE has paid the initial $20 million of the staged cash payments. Definitive agreements are in the process of being finalized.

InterOil’s Chief Executive Officer Phil Mulacek commented, “We are pleased to report another successful quarter of profitability from our operating business. Additionally, we are excited to welcome Pacific Rubiales as partners in PPL 237, the company brings valuable expertise to our team.”

In regards to the ongoing LNG partnering process, Mr. Mulacek stated “We are continuing to work with our advisors to obtain a strategic partner. We have received conforming and non-conforming bids for the LNG partnering and sell down of an interest in the Elk and Antelope fields that we believe would be accretive to shareholders. We are now set to engage with a shortlist of significant LNG industry participants with a view to concluding discussions and entering into an agreement this quarter. The end result of the partnering process is envisioned to fully satisfy all the terms of the 2009 LNG Project Agreement.”

As to the Triceratops-2 well, Mr. Mulacek noted that, “Despite mechanical difficulties in obtaining a successful drill stem test from zones of interest in the lower hydrocarbon interval, we are very encouraged by gas and liquid hydrocarbon testing ongoing at the Triceratops-2 well. A plan is in place to evaluate the entire drilled interval and would likely include casing the entire interval and perforating zones of interest to obtain definitive results. Our prospect inventory is maturing and we anticipate that it will support our goal of a multi-year, multi-well exploration program. We believe that these achievements, combined with our strong balance sheet, support our continued growth and operational success.”

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Law of the Sea Treaty: A Tool to Combat Iran, China, and Russia? or Redistribution of wealth

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Posted by Doug Bandow

Every few years, the Law of the Sea Treaty rears its head as a one-size-fits-all solution to a host of current maritime problems. This time, Secretary of Defense Leon Panetta and General Martin Dempsey, chairman of the Join Chiefs of Staff, are urging the Senate to ratify the treaty. The officials claim it will act as a tool to deal with aggressive actions by Iran, China, and Russia. But as I have long argued, no matter the current rationale for the treaty, it represents a bad deal for the United States.

Panetta and Dempsey rolled out three hot issues to make their case:

  • Iran is threatening the world economy in the Strait of Hormuz? The Law of the Sea Treaty (LOST) will help solve this.
  • China is threatening the Philippines in the South China Sea? LOST is a crucial tool to prevent war.
  • Russia is claiming land in the Arctic region to extract natural resources? LOST will put the screws to Moscow.

These international controversies will be magically resolved if only the Senate ratifies the convention.

If this sounds too good to be true, it is. It is not clear the treaty would do much at all to alleviate these flashpoints. Especially since the two most important potential antagonists, China and Russia, already have ratified LOST. And it is certainly not the best option policy-wise for the United States with each issue: Iran’s bluster in the Strait of Hormuz may prove its weakness. U.S. policy in the South China Sea suffers from a far more serious flaw: encouraging free-riding by allied states. Russia’s move into the Arctic has nothing to do with Washington’s absence from LOST.

The treaty itself, not substantially altered since 1994, is still plagued by the same problems that have halted its ratification for decades. Primarily, it will cede decisionmaking on seabed and maritime issues to a large, complex, unwieldy bureaucracy that will be funded heavily by—wait for it—the Untied States.

On national security, the U.S. Navy does not need such a treaty to operate freely. Its power relative to all other navies is the ultimate guarantee. Serious maritime challengers do not exist today. Russia’s navy is a rusted relic; China has yet to develop capabilities that come close to matching ours. Moreover, it is doubtful that the United States needs to defend countries such as the Philippines when flashpoints over islands in the region affect no vital American interests.

The average American knows very little about this treaty, and rightly so. It is an unnecessarily complicated and entangling concoction that accomplishes little that the longstanding body of customary international law on the high-seas or the dynamics of markets do not account for. My conclusion in testimony before the Senate Committee on Armed Services in 2004 still holds true:

All in all, the LOST remains captive to its collectivist and redistributionist origins. It is a bad agreement, one that cannot be fixed without abandoning its philosophical presupposition that the seabed is the common heritage of the world’s politicians and their agents, the Authority and Enterprise. The issue is not just abstract philosophical principle, but very real American interests, including national security. For these reasons, the Senate should reject the treaty.

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Oil Wars on the Horizon

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Posted by Michael Klare at 7:42am, May 10, 2012.

There has been much discussion recently about the Obama administration’s “pivot” from the Greater Middle East to Asia: the 250 Marines sent to Darwin, Australia, the littoral combat ships for Singapore, the support for Burmese “democracy,” war games in the Philippines (and a drone strike there as well), and so on.  The U.S. is definitely going offshore in Asian waters, or put another way, after a decade-long hiatus-cum-debacle on the Eurasian continent, the Great Game v. China is back on.

While true, however, the importance of this policy change has been exaggerated.  At the moment, as it happens, the greatest game isn’t in Asia at all; it’s in the Persian Gulf where, off the coast of Iran and in bases around the region, the U.S. is engaged in a staggering build-up of naval and air power.  Most people would have little idea that this was even going on, since it rarely makes its way into the mainstream and even less often onto front pages or into the headlines.  The Washington Times, for instance, has been alone in reporting that, for the U.S. military, “war planning for Iran is now the most pressing scenario.”  It adds that the “U.S. Central Command believes it can destroy or significantly degrade Iran’s conventional armed forces in about three weeks using air and sea strikes.”

Most of the time, however, you have to be a genuine news jockey or read specialist sites to notice the scale of what’s going on, even though the build-up in the Gulf is little short of monumental and evidently not close to finished.  It’s not just the two aircraft carrier task forces now there, but (as the invaluable Danger Room website has reported) the doubling of minesweepers stationed in Bahrain, as well as the addition of minesweeping helicopters and coastal patrol boats that are being retrofitted with Gattling guns and missiles.  Throw in new advanced torpedoes for Gulf waters and mini-drone subs; add in newly outfitted units of F-22s and F-15s heading for bases in the Gulf to make up “the world’s most powerful air-to-air fighting team.”  And don’t forget the major CIA drone surveillance program already in operation over Iran (and undoubtedly still being bolstered).

And then, of course, you would have to add in what we don’t know about, including — you can be sure — the strengthening of special operations activities in the region.  It’s the perfect build-up for a post-presidential-election war season.  After a failed war in Iraq that left that country ever more firmly allied with Iran and another failing war in Afghanistan, you might think that the Pentagon would want to back off.  Well, think again.  To adapt the famed mantra of Bill Clinton’s 1992 presidential run, “It’s the oil heartlands of the planet, stupid.”  And as TomDispatch regular Michael Klare, author of a new, must-read book, The Race for What’s Left: The Global Scramble for the World’s Last Resources, points out, we’re now entering an era when “war” and “oil” may become synonymous. (To catch Timothy MacBain’s latest Tomcast audio interview in which Klare discusses global energy conflicts, click here or download it to your iPod here.) Tom

 

Oil Wars on the Horizon

by MICHAEL T. KLARE

Conflict and intrigue over valuable energy supplies have been features of the international landscape for a long time.  Major wars over oil have been fought every decade or so since World War I, and smaller engagements have erupted every few years; a flare-up or two in 2012, then, would be part of the normal scheme of things.  Instead, what we are now seeing is a whole cluster of oil-related clashes stretching across the globe, involving a dozen or so countries, with more popping up all the time.  Consider these flash-points as signals that we are entering an era of intensified conflict over energy.

Six Recent Clashes and Conflicts on a Planet Heading Into Energy Overdrive

From the Atlantic to the Pacific, Argentina to the Philippines, here are the six areas of conflict — all tied to energy supplies — that have made news in just the first few months of 2012:

* A brewing war between Sudan and South Sudan: On April 10th, forces from the newly independent state of South Sudan occupied the oil center of Heglig, a town granted to Sudan as part of a peace settlement that allowed the southerners to secede in 2011.  The northerners, based in Khartoum, then mobilized their own forces and drove the South Sudanese out of Heglig.  Fighting has since erupted all along the contested border between the two countries, accompanied by air strikes on towns in South Sudan.  Although the fighting has not yet reached the level of a full-scale war, international efforts to negotiate a cease-fire and a peaceful resolution to the dispute have yet to meet with success.

This conflict is being fueled by many factors, including economic disparities between the two Sudans and an abiding animosity between the southerners (who are mostly black Africans and Christians or animists) and the northerners (mostly Arabs and Muslims).  But oil — and the revenues produced by oil — remains at the heart of the matter.  When Sudan was divided in 2011, the most prolific oil fields wound up in the south, while the only pipeline capable of transporting the south’s oil to international markets (and thus generating revenue) remained in the hands of the northerners.  They have been demanding exceptionally high “transit fees” — $32-$36 per barrel compared to the common rate of $1 per barrel — for the privilege of bringing the South’s oil to market.  When the southerners refused to accept such rates, the northerners confiscated money they had already collected from the south’s oil exports, its only significant source of funds.  In response, the southerners stopped producing oil altogether and, it appears, launched their military action against the north.  The situation remains explosive.

* Naval clash in the South China Sea: On April 7th, a Philippine naval warship, the 378-foot Gregorio del Pilar, arrived at Scarborough Shoal, a small island in the South China Sea, and detained eight Chinese fishing boats anchored there, accusing them of illegal fishing activities in Filipino sovereign waters.  China promptly sent two naval vessels of its own to the area, claiming that the Gregorio del Pilar was harassing Chinese ships in Chinese, not Filipino waters.  The fishing boats were eventually allowed to depart without further incident and tensions have eased somewhat.  However, neither side has displayed any inclination to surrender its claim to the island, and both sides continue to deploy warships in the contested area.

As in Sudan, multiple factors are driving this clash, but energy is the dominant motive.  The South China Sea is thought to harbor large deposits of oil and natural gas, and all the countries that encircle it, including China and the Philippines, want to exploit these reserves.  Manila claims a 200-nautical mile “exclusive economic zone” stretching into the South China Sea from its western shores, an area it calls the West Philippine Sea; Filipino companies say they have found large natural gas reserves in this area and have announced plans to begin exploiting them.  Claiming the many small islands that dot the South China Sea (including Scarborough Shoal) as its own, Beijing has asserted sovereignty over the entire region, including the waters claimed by Manila; it, too, has announced plans to drill in the area.  Despite years of talks, no solution has yet been found to the dispute and further clashes are likely.

* Egypt cuts off the natural gas flow to Israel: On April 22nd, the Egyptian General Petroleum Corporation and Egyptian Natural Gas Holding Companyinformed Israeli energy officials that they were “terminating the gas and purchase agreement” under which Egypt had been supplying gas to Israel.  This followed months of demonstrations in Cairo by the youthful protestors who succeeded in deposing autocrat Hosni Mubarak and are now seeking a more independent Egyptian foreign policy — one less beholden to the United States and Israel.  It also followed scores of attacks on the pipelines carrying the gas across the Negev Desert to Israel, which the Egyptian military has seemed powerless to prevent.

Ostensibly, the decision was taken in response to a dispute over Israeli payments for Egyptian gas, but all parties involved have interpreted it as part of a drive by Egypt’s new government to demonstrate greater distance from the ousted Mubarak regime and his (U.S.-encouraged) policy of cooperation with Israel.  The Egyptian-Israeli gas link was one of the most significant outcomes of the 1979 peace treaty between the two countries, and its annulment clearly signals a period of greater discord; it may also cause energy shortages in Israel, especially during peak summer demand periods.  On a larger scale, the cutoff suggests a new inclination to use energy (or its denial) as a form of political warfare and coercion.

* Argentina seizes YPF: On April 16th, Argentina’s president, Cristina Fernández de Kirchner, announced that her government would seize a majority stake in YPF, the nation’s largest oil company.  Under President Kirchner’s plans, which she detailed on national television, the government would take a 51% controlling stake in YPF, which is now majority-owned by Spain’s largest corporation, the energy firm Repsol YPF.  The seizure of its Argentinean subsidiary is seen in Madrid (and other European capitals) as a major threat that must now be combated.  Spain’s foreign minister, José Manuel García Margallo, said that Kirchner’s move “broke the climate of cordiality and friendship that presided over relations between Spain and Argentina.”  Several days later, in what is reported to be only the first of several retaliatory steps, Spain announced that it would stop importing biofuels from Argentina, its principal supplier — a trade worth nearly $1 billion a year to the Argentineans.

As in the other conflicts, this clash is driven by many urges, including a powerful strain of nationalism stretching back to the Peronist era, along with Kirchner’s apparent desire to boost her standing in the polls.  Just as important, however, is Argentina’s urge to derive greater economic and political benefit from its energy reserves, which include the world’s third-largest deposits of shale gas.  While long-term rival Brazil is gaining immense power and prestige from the development of its offshore “pre-salt”petroleum reserves, Argentina has seen its energy production languish.  Repsol may not be to blame for this, but many Argentineans evidently believe that, with YPF under government control, it will now be possible to accelerate development of the country’s energy endowment, possibly in collaboration with a more aggressive foreign partner like BP or ExxonMobil.

* Argentina re-ignites the Falklands crisis: At an April 15th-16th Summit of the Americas in Cartagena, Colombia — the one at which U.S. Secret Service agents were caught fraternizing with prostitutes — Argentina sought fresh hemispheric condemnation of Britain’s continued occupation of the Falkland Islands (called Las Malvinas by the Argentineans).  It won strong support from every country present save (predictably) Canada and the United States.  Argentina, which says the islands are part of its sovereign territory, has been raising this issue ever since it lost a war over the Falklands in 1982, but has recently stepped up its campaign on several fronts — denouncing London in numerous international venues and preventing British cruise ships that visit the Falklands from docking in Argentinean harbors.  The British have responded by beefing up their military forces in the region and warning the Argentineans to avoid any rash moves.

When Argentina and the U.K. fought their war over the Falklands, little was at stake save national pride, the stature of the country’s respective leaders (Prime Minister Margaret Thatcher vs. an unpopular military junta), and a few sparsely populated islands.  Since then, the stakes have risen immeasurably as a result of recent seismic surveys of the waters surrounding the islands that indicated the existence of massive deposits of oil and natural gas.  Several UK-based energy firms, including Desire Petroleum and Rockhopper Exploration, have begun off-shore drilling in the area and have reported promising discoveries.  Desperate to duplicate Brazil’s success in the development of offshore oil and gas, Argentina claims the discoveries lie in its sovereign territory and that the drilling there is illegal; the British, of course, insist that it’s their territory.  No one knows how this simmering potential crisis will unfold, but a replay of the 1982 war — this time over energy — is hardly out of the question.

* U.S. forces mobilize for war with Iran: Throughout the winter and early spring, it appeared that an armed clash of some sort pitting Iran against Israel and/or the United States was almost inevitable.  Neither side seemed prepared to back down on key demands, especially on Iran’s nuclear program, and any talk of a compromise solution was deemed unrealistic.  Today, however, the risk of war has diminished somewhat – at least through this election year in the U.S. — as talks have finally gotten under way between the major powers and Iran, and as both have adopted (slightly) more accommodating stances.  In addition, U.S. officials have been tamping down war talk and figures in the Israeli military and intelligence communities have spoken out against rash military actions.  However, the Iranians continue to enrich uranium, and leaders on all sides say they are fully prepared to employ force if the peace talks fail.

For the Iranians, this means blocking the Strait of Hormuz, the narrow channel through which one-third of the world’s tradable oil passes every day.  The U.S., for its part, has insisted that it will keep the Strait open and, if necessary, eliminate Iranian nuclear capabilities.  Whether to intimidate Iran, prepare for the real thing, or possibly both, the U.S. has been building up its military capabilities in the Persian Gulf area, deploying two aircraft carrier battle groupsin the neighborhood along with an assortment of air and amphibious-assault capabilities.

One can debate the extent to which Washington’s long-running feud with Iran is driven by oil, but there is no question that the current crisis bears heavily on global oil supply prospects, both through Iran’s threats to close the Strait of Hormuz in retaliation for forthcoming sanctions on Iranian oil exports, and the likelihood that any air strikes on Iranian nuclear facilities will lead to the same thing.  Either way, the U.S. military would undoubtedly assume the lead role in destroying Iranian military capabilities and restoring oil traffic through the Strait of Hormuz. This is the energy-driven crisis that just won’t go away.

How Energy Drives the World

All of these disputes have one thing in common: the conviction of ruling elites around the world that the possession of energy assets — especially oil and gas deposits — is essential to prop up national wealth, power, and prestige.

This is hardly a new phenomenon.  Early in the last century, Winston Churchill was perhaps the first prominent leader to appreciate the strategic importance of oil.  As First Lord of the Admiralty, he converted British warships from coal to oil and then persuaded the cabinet to nationalize the Anglo-Persian Oil Company, the forerunner of British Petroleum (now BP).  The pursuit of energy supplies for both industry and war-fighting played a major role in the diplomacy of the period between the World Wars, as well as in the strategic planning of the Axis powers during World War II.  It also explains America’s long-term drive to remain the dominant power in the Persian Gulf that culminated in the first Gulf War of 1990-91 and its inevitable sequel, the 2003 invasion of Iraq.

The years since World War II have seen a variety of changes in the energy industry, including a shift in many areas from private to state ownership of oil and natural gas reserves.  By and large, however, the industry has been able to deliver ever-increasing quantities of fuel to satisfy the ever-growing needs of a globalizing economy and an expanding, rapidly urbanizing world population.  So long as supplies were abundant and prices remained relatively affordable, energy consumers around the world, including most governments, were largely content with the existing system of collaboration among private and state-owned energy leviathans.

But that energy equation is changing ominously as the challenge of fueling the planet grows more difficult.  Many of the giant oil and gas fields that quenched the world’s energy thirst in years past are being depleted at a rapid pace.  The new fields being brought on line to take their place are, on average, smaller and harder to exploit.  Many of the most promising new sources of energy — like Brazil’s “pre-salt” petroleum reserves deep beneath the Atlantic Ocean, Canadian tar sands, and American shale gas – require the utilization of sophisticated and costly technologies.  Though global energy supplies are continuing to grow, they are doing so at a slower pace than in the past and are continually falling short of demand.  All this adds to the upward pressure on prices, causing anxiety among countries lacking adequate domestic reserves (and joy among those with an abundance).

The world has long been bifurcated between energy-surplus and energy-deficit states, with the former deriving enormous political and economic advantages from their privileged condition and the latter struggling mightily to escape their subordinate position.  Now, that bifurcation is looking more like a chasm.  In such a global environment, friction and conflict over oil and gas reserves — leading to energy conflicts of all sorts — is only likely to increase.

Looking, again, at April’s six energy disputes, one can see clear evidence of these underlying forces in every case.  South Sudan is desperate to sell its oil in order to acquire the income needed to kick-start its economy; Sudan, on the other hand, resents the loss of oil revenues it controlled when the nation was still united, and appears no less determined to keep as much of the South’s oil money as it can for itself.  China and the Philippines both want the right to develop oil and gas reserves in the South China Sea, and even if the deposits around Scarborough Shoal prove meager, China is unwilling to back down in any localized dispute that might undermine its claim to sovereignty over the entire region.

Egypt, although not a major energy producer, clearly seeks to employ its oil and gas supplies for maximum political and economic advantage — an approach sure to be copied by other small and mid-sized suppliers.  Israel, heavily dependent on imports for its energy, must now turn elsewhere for vital supplies or accelerate the development of disputed, newly discovered offshore gas fields, a move that could provoke fresh conflict with Lebanon, which says they lie in its own territorial waters.  And Argentina, jealous of Brazil’s growing clout, appears determined to extract greater advantage from its own energy resources, even if this means inflaming tensions with Spain and Great Britain.

And these are just some of the countries involved in significant disputes over energy.  Any clash with Iran — whatever the motivation — is bound to jeopardize the petroleum supply of every oil-importing country, sparking a major international crisis with unforeseeable consequences.  China’s determination to control its offshore hydrocarbon reserves has pushed it into conflict with other countries with offshore claims in the South China Sea, and into a similar dispute with Japan in the East China Sea.  Energy-related disputes of this sort can also be found in the Caspian Sea and in globally warming, increasingly ice-free Arctic regions.

The seeds of energy conflicts and war sprouting in so many places simultaneously suggest that we are entering a new period in which key state actors will be more inclined to employ force — or the threat of force — to gain control over valuable deposits of oil and natural gas.  In other words, we’re now on a planet heading into energy overdrive.

Michael T. Klare is a professor of peace and world security studies at Hampshire College and the author, most recently, of Rising Powers, Shrinking Planet and The Race for What’s Left.

This article originally appeared on TomDispatch.

Ex-Im Bank Provides USD 2.95 Billion Loan to Australia Pacific LNG Project

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The Export-Import Bank of the United States (Ex-Im Bank) has authorized a $2.95 billion direct loan to support U.S. exports to the Australia Pacific liquefied natural gas (LNG) project.

The transaction is Ex-Im’s second-largest single-project financing in history and is also the Bank’s first LNG project in Australia.

The project on Curtis Island in south-central Queensland will produce natural gas from coal-seam wells and will have total capacity of nine million metric tons per year. China Petroleum and Chemical Corp. (Sinopec) and Kansai Electric Power Co. Inc. of Japan will purchase most of the LNG produced. China Ex-Im Bank and commercial lenders are also providing debt financing for the project.

Ex-Im’s financing is expected to support an estimated 11,000 American jobs. Principal U.S. exporters are ConocoPhillips Co. and Bechtel International, both of Houston, Texas. Additional exporters and suppliers include numerous small businesses in Texas, Colorado, Nevada, California, Oregon and Oklahoma.

Our authorization paves the way for U.S. companies to export equipment and services to this major LNG project and, in so doing, to maintain thousands of American jobs across the country,” said Ex-Im Bank Chairman and President Fred P. Hochberg. “This financing also demonstrates how the United States and China can work together for our mutual benefit to foster trade and develop critically needed energy resources.”

The transaction, approved by Ex-Im’s board of directors on May 3, was announced following Chairman Hochberg’s trip to China, where he participated in the fourth round of the Strategic and Economic Development Dialogue (S&ED) with Treasury Secretary Timothy F. Geithner and other officials. The S&ED was held in Beijing on May 3-4.

Bechtel official Jay C. Farrar, who manages the company’s office in Washington, D.C., cited the importance of Ex-Im’s financing for U.S. exporters to large international projects. “Since 1992, Ex-Im Bank has been instrumental in the successful awarding and completion of projects involving Bechtel that have supported thousands of jobs for highly skilled employees at our company. The Bank’s financing also has helped to maintain thousands of additional jobs related to the supply chain for these projects,” Farrar said.

The Australia Pacific LNG project will involve development of coal-seam natural-gas fields, two gas transmission lines to a collection hub, a natural gas liquefaction plant and an adjacent marine shipping export terminal on Curtis Island near the city of Gladstone.

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Atwood Osprey Rig Stays with Chevron in Australia Until 2017

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Chevron Australia Pty Ltd has decided to extend the contract for the semisubmersible rig Atwood Osprey for three more years

The Atwood Osprey, owned by the international drilling contractor Atwood Oceanics, started its first three year drilling services contract with Chevron on May 27, 2011 for operations offshore Australia inclusive of the Greater Gorgon field development project. With this contract extension, the Atwood Osprey is now committed through May 2017.

The operating day rate for the initial three year period remains unchanged. The operating day rate at the start of the extension period is estimated to be approximately $470,000, exclusive of the total cost escalation adjustments which occur during the initial term and will be additive to the operating day rate during the extension period. The contract provisions during the extension period provide for continued annual cost escalation adjustments, enhanced rig equipment maintenance and repair time allowances, and other adjustments to the initial contract’s terms and conditions.

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Australia: Shell Completes Tortilla Survey

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Octanex has been advised by Shell Development (Australia) Pty Ltd (Shell) that it has completed acquisition of the new Tortilla 2D seismic survey in the WA-385-P permit.

The Tortilla survey is a relatively small 783 km 2D marine seismic survey that fulfils the final work commitment for the WA-385-P permit in the current term. It was acquired off the North West Cape of Western Australia, largely within the area of the WA-385-P permit.

The survey also acquired ‘tie lines’ between the planned location for the Palta-1 well (to be drilled in the WA-384-P permit to the north) and previously drilled wells Herdsman-1 and Pendock-1A to the south and Falcone-1A to the north-east.

The acquisition of the Tortilla 2D survey was timed to avoid the humpback whale migration and took place over the last 10 days of March. As part of a range of management measures, Shell elected that the seismic survey would not come within a 10 km buffer zone to the outer boundary of the Ningaloo World Heritage Area.

Shell has committed to drill the Palta-1 exploration well in the WA-384-P permit and has received environmental approval for the drilling operations. The WA-384-P permit is adjacent to WA-385-P where the Tortilla 2D seismic survey was acquired.

Shell has advised that drilling operations on Palta-1 are being planned for Q3 2012, subject to their receiving all required regulatory approvals. The well is to be drilled in water depths of approximately 1350m and to a total depth of 5325m – 5675m. The Octanex Group originally held 100% of the WA-384-P, WA-385-P and WA-394-P permits that are located in the southern Exmouth Sub-basin.

In 2008,  Octanex concluded an agreement with Shell for the disposition of a 100% working interest in each of the three permits. Octanex holds residual rights in each of the permits in the form of discovery payments and a 1% royalty over any production from the permits, as well as rights of re- conveyance.

Source

InterOil Net Profit Climbs (USA)

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InterOil Corporation today said that its 2011 net profit was $17.7 million compared with a net loss of $44.5 million for the same period in 2010.

Fourth Quarter 2011 Highlights and Recent Developments

• During the fourth quarter, InterOil completed two Heads of Agreements (HOA) on long-term LNG supply for its proposed LNG project in Papua New Guinea, bringing the total of its three HOAs to 3.3 to 3.8 million tonnes per annum (mtpa). While not binding, these HOAs set out the basis upon which the parties intend to negotiate and document terms for the purchase and sale of LNG.

Exploration activities continued across our three Petroleum Prospecting Licenses (PPLs) in PNG during the quarter. Seven dip lines were acquired to further delineate the Wahoo and Mako prospects and identify potential drilling locations. Processing and interpretation of the data is ongoing. A third phase of seismic data acquisition, which consists of two dip orientated lines totaling 21 kilometers in length over the Tuna prospect and Wahoo/Mako prospects, commenced on December 22, 2011. Line preparation is currently in progress.

• Net profit for the year ended December 31, 2011 was $17.7 million compared with a net loss of $44.5 million for the same period in 2010, an improvement of $62.2 million. The operating segments of Corporate, Midstream Refining and Downstream collectively returned a net profit for the year of $82.3 million. The development segments of Upstream and Midstream Liquefaction yielded a net loss of $64.6 million.

• Subsequent to the quarter end, on January 17th, 2012, InterOil announced that the Triceratops-2 delineation well had been spudded. The Triceratops-2 well is an appraisal well to test the presence of hydrocarbons and determine whether a potential reefal carbonate reservoir exists in the Triceratops field.

InterOil’s Chief Executive Officer Phil Mulacek commented, “We continue to work with our existing LNG development partners and the PNG government to advance our LNG project towards first production. Simultaneously, our advisors are managing the process of soliciting and evaluating proposals from potential strategic LNG partners. If a strategic partner is selected, we expect that such a partner would assist with accelerating the LNG project’s capacity growth. Our delineation drilling at Triceratops has the potential to add to our substantial resource estimate at Elk and Antelope, and provide back-up supply for increasing LNG capacity. Our prospect inventory is maturing and we anticipate that it will support our goal of a multi-year, multi-well exploration program. We believe that these achievements, combined with our strong balance sheet, support our continued growth and operational success.

INPEX Orders USD 2 bln FPSO from DSME (South Korea)

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The second largest shipbuilder in the world, Daewoo Shipbuilding and Marine Engineering, Co, announces that it has received an order to construct a giant Floating Production Storage and Offloading vessel (FPSO).

The order comes from a Japanese oil giant, INPEX and is a part of the company’s Ichthys project, offshore Australia.

Daewoo made the announcement on the Korea Exchange, saying that the estimated worth of the project is $2 billion.

The FPSO will serve for offshore storage and export of condensate from the Ichthys field. The condensate will be transferred from the CPF to the FPSO and, further, it will be exported from the FPSO via a floating loading hose to offtake tankers.

The vessel will also treat and dispose of produced water. It will be located approximately 2 km from the Central Processing Facilitiy and will contain liquid (condensate and water) treatment facilities, living quarters and associated utilities.

South Korea’s shipbuilders have benefited greatly from the INPEX’s Ichthys project. Samsung Heavy Industries Co Ltd has recently received a $2.71 billion order for the construction of an offshore central processing facility (CPF) for the Ichthys project.

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