Editors Notes: ROGTEC Magazine Issue 11
Welcome to issue 11 of ROGTEC Magazine, and our last edition of a very eventful 2007. This year has seen many developments in the global oil and gas sector, most notably the sharp increase in the price of crude oil. 20 years ago, 100 bucks a barrel was the doomsday scenario analysts thought would never happen. However, with new reserves increasingly hard to come by and an energy thirsty world that consumes over 80 million barrels per day of petroleum products, prices were always going to increase exponentially. Indeed, with an ever increasing price for a barrel of oil, more emphasis is being placed on new exploration, specifically in eastern Siberia and the Russian Arctic. With as yet untold reserves of hydrocarbons, and an ever growing domestic and national demand, companies are investing in new exploration technologies in order to exploit this.
Regionally, we have seen an end to the Shtokman partner issue with Total and Statoil Hydro being given 25% and 24% respectively. There is even talk of another partner joining the project which, given the costs and technical/logistical challenges faced, is not a bad move on Gazproms part. With any agreement however, much will depend on the recriprocal arrangement.
Earlier on in the year we saw the Russian Government take a hard line on the environmental issue, which ultimately cost Shell their majority on the Sakhalin 2. This not only came as surprise to many, but started a wave of oil company nationlisation by the Kremlin. Although not overtly obvious, the signs were there and they not only made the international operating companies stand up and take notice, but caused the resignation of some high profile executives from domestic operating companies.. Indeed, it served notice that the Russian bear was recovering its strength following the collapse of the Soviet Union and would not be pushed around, even by the multi billion dollar super majors. Whatever happens on the political level however, will have little or no effect on the multitude of companies servicing the oil patch across the region. Indeed, judging by the responses by some of the market leading service companies in our roundtable on page ??, the market could not be healthier.
So, with increasing oil prices, producing countries are experiencing a boom in oil revenues and Russia and the Caspian countries are no exception. Discussions are on going with Russia´s near and far neighbours to achieve secure energy supplies, either concerning transit fees, the agreed price of gas or production, or supply and partnership rights. Whatever the problem, or indeed solution, the issues and challenges will roll on much further than just next year.
As many people have witnessed this year there has been much speculation in the market place, with some comments being critical and some complimantary. With the complex nature of the energy industry, those organisation who seek partnership in co-operation with the industry have gained the most. Those who fear change and operate in a negative environment will suffer most in the long run. Whilst Shell endured a lot of negative publicity over the Sakhalin project, I doubt that the true story will ever be truly known apart form those closest to the situation, their willingness to continue in a co-operative partnership framework will stand them in good stead for the long term. I expect to see such partnerships solving the issues with the Kashagan project.
In any case, I hope you enjoy reading ROGTEC this quarter. I would also like to urge you all send back those subscription forms if you are not already a qualified subscriber. Remember, subscriptions are free on a regional basis and we will not be beaten on price for international circulation. On the note of circulation – ROGTEC has long boasted a very accurate and targeted circulation to the region, as well as cherry picked international readers. Following 10 succesful issues, we have decided to cement our position as the markets leading and most read O&G publication by applying for an audit with one of the markets leading independent auditing organistaions. This is great news for ROGTEC, our readers and, most importantly, the advertisers who regularly support the publication.