Thomko Petro Chemical Blog

CARACAS, Venezuela: Venezuela is rerouting oil to China that had previously been sent to a U.S. refinery co-owned by its state oil company and Exxon Mobil Corp., Venezuela's oil minister said Friday.

Rafael Ramirez said Exxon has stopped ordering crude for a refinery in the New Orleans suburb of Chalmette as legal wrangling between the Irving, Texas-based company and Petroleos de Venezuela S.A., or PDVSA, continues.

"Everything went to China," Ramirez told reporters.

PDVSA and Exxon are locked in a fierce legal battle over compensation for the 2007 nationalization of a jointly owned heavy oil project in Venezuela's Orinoco basin.

Ramirez vowed last month that PDVSA would meet its existing contracts with Exxon, including continued shipments to Chalmette. The refinery processes about 190,000 barrels a day, but does not depend exclusively on Venezuelan crude.

International Herald Tribune

In a mode that could clearly say: “I told you so”, critics of America’s involvement in Iraq are now saying that the U.S. Administration sent the troopers there for one primary reason.

To shore up a reliable source of crude oil that would keep flowing into American storage facilities, and hence into American citizens gas tanks for at least another 15 to 20 years.

With Iraqi petroleum reserves estimated to be at least 10% to total world supply, and if major American oil companies like .Exxon-Mobil and Amoco controlling the pumping of oil in most of Iraq, then it would be a win-win situation

Unfortunately,  things didn’t work out the way we wanted them to. Now that Iraqi and US forces are staging an operation against Shiite militiamen in the oil rich Iraqi city of Basra.

Maybe this explains why so many top American officials have made so many “surprise visits” to Iraq in this 2008 election year.

Ever since the invasion of March, 2003, production and exports of Iraqi crude oil have been beset by a combination of old production equipment in bad repair, as well as countless incidents of sabotage by Iraqi insurgents and foreign elements who simply do not want Iraqi oil to fall into the hands of “The Great Satan”,

Five years later and 4,000 American soldiers lay dead, this precious resource seems even more distant from American and other Western automobile gas tanks.

Israel, who once feared possible attacks from Iraq with weapons of mass destruction, called WMD’s for short, now fear another oil rich country, Iran,

Mahmoud Ahmadinejad, has often called for Israel to be “wiped off the face of the map”.

Oil is now fetching more than $100 a barrel, and the U.S. Dollar is even weaker than currencies like the Israeli Shekel.

It appears that the time has come for some serious stock-taking in regards to just why American forces went into Iraq in the first place, instead of simply letting Saddam Hussein and his cronies remain there as a possible buffer against the real world enemy – .

http://www.onejerusalem.com/2008/03/26/the-oil-war/

Venezuela's state-run oil company has announced it is cutting crude sales to ExxonMobil, the largest U.S. oil company, because of Exxon's efforts to seize Venezuelan assets.

Petroleos de Venezuela said in a statement Tuesday its move is retaliation for what it calls ExxonMobil's economic harassment. ExxonMobil has not yet responded to Venezuela's decision.

British and Dutch courts last week granted ExxonMobil's demand to freeze as much as $12 billion in Venezuelan oil assets.

The company is challenging Venezuela's decision to nationalize a large oil project in which ExxonMobil had a large financial stake.

Venezuelan President Hugo Chavez has threatened to cut off oil sales to the U.S. if the court decision freezing the assets is upheld on appeal.

But a senior Venezuelan oil official said Tuesday Chavez is unlikely to carry out his threat, saying it would be costly for both countries, and the U.S. is Venezuela's biggest crude oil customer.

Source: VOA News

The world's largest oil company recently broke its own industry record for the longest "extended-reach" oil well. Such wells begin vertically on land and then curve to bore through layers of rock under the seabed to offshore reservoirs.

Exxon Mobil Corp.'s reach now stretches farther than anyone else's, more than seven miles from the frigid shores of Sakhalin Island off Russia's east coast, where the Chayvo oil field holds potentially a billion barrels of oil.

The well is 8,350 feet beneath the Sea of Okhotsk and 38,322 feet from shore to reservoir - about the length of 125 football fields. It blows past Exxon's previous record of 37,016 feet.

"It's almost an underground pipeline," said Joel Kiker, vice president of drilling for Exxon Mobil's development arm.

The 230-foot-tall Yastreb rig on the Chayvo project, operated by Houston-based Parker Drilling, also holds a title — the world's most powerful land drilling rig.

Read full story at Chron

BP is in talks with the Iraqi Government about a plan to boost oil production at the huge Rumaila field on the border with Kuwait.

Among other potential projects in Iraq, BP's interest is understood to include the Rumaila field, one of Iraq's largest, which is believed to contain about 18 billion barrels of oil.

BP undertook a study of the field for the Iraqi Government about two years ago. It already has a small Iraq team based in the Middle East and is one of a number of big oil companies discussing agreements designed to increase rapidly the country's output to 2.6 million barrels per day by the end of this year.
    
These effectively would be service contracts to provide training, expertise and equipment, for which the companies would be paid in oil. A BP spokesman said that it was too early to consider putting in expatriate staff because of the security situation.

BP,Total, Shell, ExxonMobil, Chevron and ConocoPhillips attended talks with the Iraqi Government in Amman, Jordan, last month to help to fix the terms of the contracts. Shell is interested in a gasfield in western Iraq.

BP was involved in Iraq until 1975, when the country's oil industry was nationalized.

Source: Business Times Online

Venezuela will open a bid round for private companies to develop a block of the nation's Orinoco heavy crude belt.

This announcement comes only months after President Hugo Chavez took over four multi-billion-dollar Orinoco projects, pushing out Exxon Mobil and ConocoPhillips in the process.

Brazilian energy giant Petrobras has worked with Venezuela's state oil company PDVSA to certify the Orinoco oil reserves, which are estimated to be close to 10 billion barrels.

Venezuela has also signed a deal with France's Total to certify reserves in a block of the Junin area of the vast Orinoco reserve.

The Orinoco belt is a reserve in southeastern Venezuela that holds billions of barrels of heavy, tar-like oil that can be upgraded into lighter, more valuable crude.

Source: Reuters UK
http://uk.reuters.com/article/oilRpt/idUKN0252168620080202

Iraq will pay with oil instead of cash to oil majors that sign special technical service agreements aimed at short-term increases in oil production, according to a UPI report.

ExxonMobil, Chevron, ConocoPhillips and Shell are firms targeted for the deals, The Times of London reports. In exchange for the oil, the companies would direct training of Iraqi workers and equipment to Iraq’s largest oil and gas fields. The decision, which is politically highly charged in Iraq, would involve the oil majors taking on the role of special contractors to the Government.

The agreements would cover a variety of oil and gasfields in western, southern, central and northern Iraq.

Shell, for example, is interested in the Akkas gasfield in Anbar and another gasfield in the south of the country.

Iraq's Oil Ministry has announced that all oil companies interested in winning oil contracts need to register with the government as time gets closer to its first tenders of oil fields. Foreign oil companies have to file application forms and submit the documents before the end of January 2008.

Nothing is ever clear cut in Iraq, and it is not clear whether these fields will be open to bidding, or if the oil ministry will negotiate with some of the oil majors. Another big issues is since the supposed oil law has not been concluded, the "type" of contract has also not been specified by the oil ministry.

Now, the major oil companies have already conducted studies, along with providing training to the oil ministry staff. But many foreign companies have stayed out of Iraqi deals because of the legal uncertainty of the oil law, along with security issues.

This month end deadline announcement comes as the Iraqi government and the Kurdish Regional Government both are accusing each other of stalling the oil sector process.

The Kurdish Regional Government has its own regional oil law, and KRG has already signed approximately 20 exploration and production contracts with foreign firms. This move by the Kurds has angered Baghdad, but the Iraqi government has angered the Kurds by selling oil that is deemd to be theirs.

One such argument between the two governments in Iraq is the purchase of 730,000 of Kurdish oil by Exxon Mobil from the government of Iraq. While Exxon Mobile already pumps oil from Kirkuk under an existingt contract, at issue is the fact that Exxon Mobile and Baghdad bypassed the Kurdish Regional Government. And it appears Exxon will purchase even more oil by the end of this month.

Let's see what we have here . . . A war going on in a country with two different governments in the same country, which are at odds, and back stabbing each other. One government is oil rich and already has signed contracts with foreign firms to sell their own oil. The larger dual government plans to sell their oil, and also bypass the other to sell their oil too. Oil companies are lined up in anticipation of the filing deadline, and plan to proceed to sign fuzzy contracts under an oil law that is still being contested - But oil will be sold.

This is a complicated mess, but there are other issues. Iran is also looking at those Iraqi oil fields.

The recent confrontation between Iran's Revolutionary Guards and the U.S. Navy in the Persian Gulf last week only serves to show that these waters are crucial for oil and power. Sixty per cent of the world's reserves sit underneath its shores, and 17 million barrels of crude oil exports pass daily through the Strait of Hormuz.

In 2008 Iraq's overall strategy is to increase oil production beyond 3 million barrels per day.

On Tuesday, ExxonMobil began building the world's largest petrochemical complex in Singapore, which is expected to be ready by 2011.

The petrochemical complex, which will be ExxonMobil's second plant in the city-state, would be capable of producing one million tons of ethylene and 1.3 million tons of polyethylene annually.

It is also capable of producing 450,000 tons of polypropylene and 300,000 tons of specialty elastomers, the company said.

ExxonMobil executives declined to say how much was invested in the petrochemical plant, but industry experts estimate that a project of such size could require investments of 2.0 billion US dollars.

Source: AFP

The Supreme Court agreed yesterday to review some aspects of the worst oil spill in United States history - the 1989 Exxon Valdez disaster that fouled hundreds of miles of Alaska’s shoreline.

The justices will consider the case on grounds that are narrow but nevertheless of great importance: whether maritime law allows for the imposition of punitive damages, an issue on which lower federal courts are divided. The issue is worth $2.5 billion to the ExxonMobil Corporation. Justice Samuel A. Alito Jr., who owns a substantial amount of ExxonMobil stock, will not take part in the case.

Since the early morning of March 24, 1989, when the supertanker Exxon Valdez ran aground on Bligh Reef in Prince William Sound, the Exxon Valdez episode has been debated and agonized over in courtrooms, boardrooms and environmental circles.

The tanker leaked some 11 million gallons of crude oil, spoiling some 1,500 miles of coastline and decimating the fish and wildlife populations for years afterward. Hundreds of bald eagles and otters, scores of killer whales and thousands of birds of other species perished, as did untold numbers of salmon, herring, clams, mussels and other forms of aquatic life.

The spill caused personal tragedy and hardship as well as environmental damage. The livelihoods of Alaska fishermen were threatened, and a decade after the disaster the shoreline was still not back to its pre-spill condition. And the ship’s skipper, Joseph Hazelwood, became a reviled figure among many environmentalists, even though the calamity that occurred under his command was indisputably an accident.

But an accident that was waiting to happen, those who sued Exxon have argued for years. “Hazelwood was the only captain and the only officer on board licensed to navigate the tanker through the critical parts of Prince William Sound,” some of the many plaintiffs said in one court filing. “Predictably, he was also drunk.”

Still feeling the effects of at least five double-strength whiskeys he had downed in waterfront bars, Captain Hazelwood was resting in his cabin as the tanker and its 53 million gallons of oil ran aground while a tired third mate was on the bridge, the plaintiffs maintained.

A federal court jury found in 1994 that ExxonMobil and its captain were reckless and negligent, and ordered the corporation to pay $5 billion in punitive damages.

Eventually, the award was reduced on appeal to $2.5 billion by a panel of the United States Court of Appeals for the Ninth Circuit, which held that, while the oil company had committed “reckless misconduct” in placing a known relapsed alcoholic at the helm of the tanker, its misconduct was not so egregious as to warrant the higher punishment figure.

The company says it paid $300 million immediately to more than 11,000 Alaskan individuals and businesses affected by the spill, another $2.2 billion for a cleanup from 1989 to 1992 and a further $1 billion to settle claims by the state and federal government.

The $2.5 billion was the biggest punitive damages award ever ordered by a federal appeals court, and it represented five times the estimated $500 million in economic damages suffered by the roughly 32,000 plaintiffs.

Lawyers for the many plaintiffs in the case against ExxonMobil have argued for years that the billions already paid by the company amount to just a few weeks’ profits and that it takes an immense judgment to effectively punish such an immense company.

The Exxon Valdez disaster prompted Congress to enact stricter rules for oil tankers. Now, 18 years after the event, the Maritime Law Association, composed of some 3,200 legal professionals and others interested in maritime law, says it is time for the Supreme Court to clarify the question of punitive damages.

Source: New York Times 

ExxonMobil Chemical Company, a petrochemical company, and part of ExxonMobil announced it has created a new speciality compounds and composites business.

The chemical company will focus on the development, production and marketing of engineered polyolefin compounds for automotive applications. The products range from soft and flexible compounds to reinforced composites, using ExxonMobil's polypropylene, polyethylene, and elastomer base polymers which can be produced globally. 

The new Iraqi Sharing Oil Law is expected to pass next month - under lots of pressure from the U.S. government.

The world oil giants have been waiting for this day. All the major players - and a NEW CARTEL are lined up to attend next month's conference in Dubai. The purpose of the conference is to develop the framework for investing in, and dividing up Iraq's oil sector business.

BP, Shell, Exxon Mobile and Chevron are all geared up to do business in the one place in the world where there is a chance for large oil discoveries.  115 billion barrels of oil have been discovered in Iraq, however only 40 billion have been developed - and there are many unexplored parts that could hold more billions.

Russia has made a bold move in setting up an energy cartel to rival OPEC, and the cartel includes the country that is becoming the biggest consumer of oil - no guess as to who that is - China! And Iran has also made it clear they will have a place at the table in Dubai.  

September is the big month. The General's war progress report is due in Washington, the oil law is expected to pass, and all the major players are set to make a fortune.

The backdrop to all this is our American soldiers who are bravely fighting to stay alive and return home, the soldiers who have returned home badly injured, and the weekly death toll of Iraqi citizens. I heard somewhere that over a million Iraqi's have been killed - but no one seems to know the exact number - and it appears few even care.

I posted about the Brooklyn oil spill back in June, 2006, and it's still ongoing in the courts, and the lives of people living in the area . . . CT

Another lawsuit has been filed by the New York State attorney general’s office against Exxon Mobil and four other companies to force them to clean up a 57-year-old oil spill that has polluted the soil beneath Greenpoint, Brooklyn, and left traces of toxic chemicals in nearby Newtown Creek.

The spill occured back in 1950 from an industrial explosion, and went undiscovered until 1978 when the Coast Guard discovered a subterranean pool containing 17 million gallons of oil products.

This is even larger than the Exxon Valdez spill which dumped 11 million gallons of oil off Alaska! 

A 1990 agreement between state environmental officials and Mobil Oil, which eventually merged with Exxon in 1999, required the company to recover the spill, but there was no deadline - so years later the lawsuits still continue.

Eight million gallons of oil and petroleum byproducts, including benzene, arsenic and lead, are believed to remain underground, and testing revealed that there are toxic toxic vapors in the neighborhood community. For decades oil has been seeping into the Newtown Creek, which feeds into the East River.

Exxon Mobil said that it has helped to recover more than 9.3 million gallons of oil and oil byproducts from the spill and that it takes its responsibilities seriously under the 1990 agreement with the state.

Today a 476 page report was released in Washington entitled “Facing the Hard Truths About Energy”

This extensive report involved 350 participants, suggestions from over 1,000 people, submissions by 19 foreign governments from Australia to Saudi Arabia, and dozens of subcommittees.

The list of contributors to the report is a roster of top industry leaders and consultants, including senior executives from Exxon and Chevron. Private think tanks, academic institutions, banks, governmental agencies and a handful of nongovernmental groups, including the Alliance to Save Energy and Resources for the Future were also enlisted to contribute to the report.

Because the world’s population is growing and living standards are rising worldwide, energy consumption globally is expected to rise by more than 50% over the next 25 years. But finding supplies to match that growth is going to be increasingly tough, and will require vast new investments in coming decades.

The council’s report warns of “accumulating risks” to energy production, including rising geopolitical barriers, inflation in costs, dwindling petroleum engineers, and growing constraints on carbon dioxide emissions.

Although it does not say so explicitly, the subtext of the council’s study suggests that high energy prices might be here to stay.

Read entire article at The New York Times

Countries like Venezuela, Iran and Russia are intent on building up their domestic oil industries, while reducing reliance on foreign oil companies. This obviously serves their best interests, but for consumers in the U.S. it means a growing dependence on more countries that don't share our best interests - CT

On Tuesday Exxon Mobile and ConocoPhillips were not in attendance at the signing under the new terms for Venezuela's Orinoco River basin. Back in May the Venezuelan government took a majority control of the oil projects held by foreign oil companies, and Tuesday was the deadline date for foreign oil companies to agree to the new terms.

Four of the major oil companies, Chevron, BP, France's Total and Norway's Statoil decided to accept the Chavez governments new terms as junior partners.

Although Exxon Mobile refused to sign the new terms, company officials stated they will continue discussions with the Venezuelan government.  And ConocoPhillips said it would reserve the right for international arbitration if their future talks with Venezuela falls apart.

Analysts said this will not have a major effect on higher prices at U.S. pumps because production by the two companies will shift to other producers who agreed to the pacts.

Venezuela is not alone with oil reserves being controlled by the government. Three-quarters of the world's proven reserves are controlled by state monopolies that bar private participation completely.

See Previous Posts:

Venezuela Seeking to Become Petroleum Regime

Planets Largest Oil Supply

Venezuela Raising Tax Royalty Rates

Venezuela Seizes Foreign Oil Fields

Exxon Mobile Not Welcome

Senate Democrats need big bucks to help pay for a big increase in renewable fuels production, which could spell big trouble this week for Big Oil.

Much of the tab for the new efforts would land in the lap of large, integrated oil companies like ExxonMobil, Conoco Phillips and BP.

Senate tax writers are considering a package that may offer as much as $25 billion in tax breaks and other financial incentives to encourage production of renewable fuels and additional efforts designed to reduce greenhouse gas emissions.

Big oil companies facing prospect of heavy tax hit
http://thehill.com/leading-the-news/big-oil-companies-facing-prospect-of-heavy-tax-hit-2007-06-19.html

Colorado and Utah have as much oil as Saudi Arabia, Iran, Iraq, Venezuela, Nigeria, Kuwait, Libya, Angola, Algeria, Indonesia, Qatar and United Arab Emirates combined.

Trapped in limestone up to 200 feet thick in the two Rocky Mountain states is enough so-called shale oil to rival OPEC and supply the United States for a century.

Exxon Mobil and Chevron, the two biggest U.S. energy companies, and Royal Dutch Shell Plc are spending $100 million a year testing methods to separate the oil from the stone for as little as $30 a barrel. A growing number of industry executives and analysts say new technology and persistently high prices make the idea feasible.

Read full story at the Arizona Republic

A proposed new Iraqi oil and gas law began circulating last week among that country's top government leaders and was quickly leaked to various Internet sites - before it has even been presented to the Iraqi parliament.

Under the proposed law, Iraq's immense oil reserves would not simply be opened to foreign oil exploration, as many had expected. Amazingly, executives from those companies would actually be given seats on a new Federal Oil and Gas Council that would control all of Iraq's reserves.

In other words, Chevron, ExxonMobil, British Petroleum and the other Western oil giants could end up on the board of directors of the Iraqi Federal Oil and Gas Council, while Iraq's own national oil company would become just another competitor.

Read the rest of this article at the New York Daily News

Also, check this article from the UK which is about the reconstruction of Iraq

President Bush wanted the 'right' people in charge of the reconstruction of Iraq. Unfortunately for the country, that meant loyalty to the president rather than expertise - including a 24-year-old estate agent put in charge of the stock exchange, writes Rajiv Chandrasekaran in the second exclusive extract from his new book - Read this article at Guardian UK

The world's largest oil companies are talking more than ever about taking action on global warming, but their actual investments in alternative energy still pale alongside their multi-billion dollar budgets for conventional energy. 

At the Cambridge Energy Research Associates conference, executives at the world's largest oil companies acknowledged that global warming is a problem but insisted that their main - and in some cases only - business would continue to be the production of hydrocarbons. 

The appearance Tuesday by Exxon Mobil Chief Executive Rex Tillerson made it clear that while the company is talking more than ever about the importance of cutting greenhouse gases, it continues to view alternative energy as a bad investment choice. Tillerson didn't preclude future alternative energy investments, but he said ExxonMobil would be "very selective" about its choices. 

"We are a petroleum and petrochemical company. We have been for more than 100 years," Tillerson said. "That's what we know how to do." 

Wait a minute, I just posted an interview Exxon Mobile Execs did with an European media outlet, and Exxon says in the interview that its position on climate change is "misunderstood" - Perhaps the European's are more open to climate change than the Houston oil audience - CT 

Chevron Corp also believes that its main business will be oil production and refining, despite the rise of ethanol and other biofuels. "The world is going to need every molecule of energy it can find," said Mike Wirth, Chevron's executive vice president for refining and marketing. 

Jeers From Some Quarters 

ExxonMobil and Chevron have a higher profile at this year's conference than peers like BP and Royal Dutch Shell. While the two European giants have been more aggressive with alternative energy investments, the vast majority of their spending also remains in conventional oil and gas. 

Big Oil's embrace of the environmental debate has drawn jeers from some quarters. "Big Oil CEO's are meeting in Houston this week to develop a message on making their energy look better - greener and more committed to energy efficiency," said the California-based Foundation for Taxpayer and Consumer Rights, headlined "Big Oil's Hot Air in Houston." "But their underlying business strategy hasn't changed a bit." 

Industry experts say part of the problem for the oil companies is commercial technologies to cut oil-based greenhouse gas emissions don't exist. The other option is cars that would consume much less gasoline or run solely on electricity - a step that would leave the oil industry out in the cold. 

Beyond technological hurdles, the companies say they also face regulatory difficulties. Without an overarching federal policy controlling the development of ethanol and other biofuels, each state will develop its own regulations, making it difficult for businesses with a nation-wide presence to comply.

Lobbying For Access 

That's left the industry continuing to lobby for greater access to U.S. domestic oil and gas resources as a means of bolstering energy security and reducing U.S. dependence on Middle East oil. Senior executives in the industry have pointed to long-term investment in boosting production capacity elsewhere around the world, a point Big Oil elite like Exxon and Chevron are raising in high-profile advertisements that in some cases also highlight their work on global warming. 

Source: Matthew Dalton; Dow Jones Newswires