Petroleum Review - May 2012
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Decommissioning relief in 2012 Budget
Judith Aldersey-Williams, Partner, CMS Cameron McKenna
CASPIAN – PIPELINES
A game of diplomatic chess
Although it has been likened to a twenty-first century Silk Road, the ‘Southern Gas Corridor’ is currently making painstaking and troubled progress, inching its way through the political and economic strife that stands between the Caspian Sea and western Europe, writes Mark Rowe. At stake is Europe’s desire to lessen its overreliance on
CASPIAN – KAZAKHSTAN
Kazakhstan is aiming to double its oil production by 2035 following the full development of the Kashagan, Tengiz and Karachaganak fields, writes Chris Pala.
PRODUCTION – COMPANIES
Oil production still falling as gas output stabilises
In terms of production growth, 2011 was not a great year for the main quoted oil companies, with collective oil output 1.1mn b/d below their 2010 levels, reports Chris Skrebowski. Meanwhile, gas output growth slowed, with the main quoted gas companies increasing production by just 0.52%.
INVESTMENT RETURNS – UK COMPANIES
Weathering the financial storm
A recent analysis by Opus Executive Partners of 130 listed companies in the UK oil and gas sector ranked the companies according to their investment returns for the period June 2006 to June 2011, the period during and after the global financial crisis, and assessed how they have ridden that storm. Two out of three companies lost shareholders almost 60% of their investments over the five years, while companies listed on the main market appear to have performed better than those listed on AIM, writes Priscilla Ross.
SUBSEA – E&P
Emergency blow-out response update
When US Secretary of the Interior Ken Salazar lifted the deepwater drilling embargo on 12 October 2010, he warned Gulf of Mexico operators that they would need to demonstrate the ‘availability and adequacy of blow-out containment resources’ before they could gain permission to drill. The Macondo disaster had demonstrated that containment equipment could not only reduce the scale of an oil spill, but also buy time to ensure that a relief well was successful. Jeff Crook reports.
FUEL TESTING – HYDROGEN SULPHIDE
Measuring H2S in marine fuels
In July 2012, a new specification limit comes into force for the maximum amount of hydrogen sulphide (H2S) allowed in marine residual and marine distillate fuels. As a result, the Energy Institute (EI) has developed a new test methodology, designated IP570/12A, to determine H2S concentration in such fuels
REGULATIONS – TRADING
Very big, yet hard to see
Now that commodity markets are captured under a suite of legislative packages, transparency will overcome offmarket trading opaqueness and margining practices will be much improved. However, by applying these regulations it will reveal that the inherent risks inn commodity trading require billions of new capital, which the current banking market cannot support. Gainingnaccess to margin capital could be a life or death scenariom for a commodity trading firm, explains Aily Armour-Biggs, Advisory CEO at Global Energy Advisory.
BUSINESS – RISK MANAGEMENT
Perceptions of risk in the global energy sector
In order to reduce the risk of significant property damage losses, energy businesses need to learn from the sector’s past major loss events, writes Vincent C Marrot, Managing Director and Leader of the Global Energy Engineering and International Energy Construction Engineering Practice at insurance broking and risk management company Marsh.
ENERGY POLICY – CARIBBEAN
Caribbean carrying on
The 15 countries grouped within the Caribbean Community and Common Market (Caricom), extending
from The Bahamas in the north to Suriname and Guyana on the Latin American mainland, have yet to come up with a regional policy in the key area of energy, despite at least a decade of trying, writes David Renwick.
ENERGY POLICY – UK
Budgetary concerns then and now
The UK oil and gas industry saw little benefit from the 2011 Budget. Here, David Hill, Partner in the Oil and Gas Team of Burlingtons Legal LLP, and Kanwal Majeed, Trainee Solicitor, present an overview of the key features of the 2011 Budget and how they were implemented over the course of the past year. They also assess where the industry now stands in light of the 2012 Budget, which was announced on 21 March.
ENERGY POLICY – UK
Infrastructure access and reservoir utilisation
Jeremy Chang, a Director in the Energy Team at law firm McGrigors asks if more needs to be done post-Energy Act 2011 to provide certainty for both owners and users on access to infrastructure in the UKCS. He also looks at what the government is doing to encourage the deployment and commercialisation of carbon capture and storage (CCS), gas storage and other reservoir utilisation
projects in the UK.
ENERGY INSTITUTE – PROFESSIONAL DEVELOPMENT
Snakes and career ladders
This year the Energy Institute (EI) ran a professional development (PD) programme during IP Week, aimed at graduate members of the EI in the early stages of their career in the oil and gas industry. The programme gave participants access to exclusive PD sessions, as well as the main IP Week conferences, and provided delegates with a unique opportunity to meet high level speakers and question them in an informal setting about their career motivations and experiences, explains Kate Dinwiddy, EI Professional Development Manager.
ENERGY INSTITUTE – ENERGY EFFICIENCY
Call for evidence on energy efficiency – the EI response
The Energy Institute (EI) is one of many organisations to respond to the UK Department of Energy and Climate Change’s (DECC) recent call for evidence on energy efficiency. In the article there is an edited version of the summary of the EI response.
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