Officials representing northern Iraq's Kurdistan region announced yesterday they reached an agreement with the Iraqi government on a draft plan for the distribution of oil, an oil ministry official told Reuters.
While giving no details of the plan, the official said that the draft had been approved, adding that the parliament could still change it (Steve Negus, Financial Times [subscription required], June 22).
The Kurds have taken issue with the drafting of an Iraqi oil law that essentially cedes control of all of the country's oil assets to a national company. Because they have enjoyed a high degree of independence in the north since 1991, the Kurds want maximum control of their regional oil resources (Greenwire, May 3).
BP's Russian joint venture TNK-BP announced today that that it will sell Gazprom its stake in a natural gas field in East Siberia.
The company said in a statement that it will sell Gazprom its 62.89 percent stake in the Kovykta field and half its stake in the East Siberian Gas Co. for between $700 million and $900 million (Clark/Kim, Bloomberg, June 22).
The sale is part of a broader agreement between Gazprom and TNK-BP to jointly invest in major long-term energy projects.
"We will initially be looking for projects of at least $3 billion, but the potential for further growth could be very significant," BP chief executive Tony Hayward said in a statement, adding the agreement "lays the ground for powerful co-operation between BP, TNK-BP and Gazprom" (Reuters, June 22).
The economy's adaptation to the doubling of oil prices during the past three years is starting to revive demand and could push energy prices even higher, oil industry experts warn.
Oil prices are likely to continue rising through the second half of the year unless either OPEC starts putting more supplies into the market or refineries boost production.
"I wouldn't be surprised to see prices at new highs" this year, said Roger Diwan, an analyst at PFC Energy, a Washington industry-consulting group. "It just needs a trigger to go to $79 a barrel," he said, explaining that the trigger could be anything from a hurricane in the Gulf of Mexico to escalated violence in the Middle East.
World oil demand is rising at twice the rate as last year, when the conflict between Israel and Hezbollah in Lebanon caused oil prices to reach their peak in 2006. "The difference this year is that you are reaching $70 a barrel on fundamentals" of oil supply and demand, said Jan Stuart, energy economist at UBS Securities LLC. "Demand is growing faster. Supply is not keeping up. Inventories are trending lower, not higher" (Bhushan Bahree, Wall Street Journal [subscription required], June 22). -- EB
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