India OKs Reliance Industries' $7.2B Asset Sale to BP

- India OKs Reliance Industries' $7.2B Asset Sale to BP

Friday, July 22, 2011
Dow Jones Newswires
NEW DELHI
by Rakesh Sharma

India approved Reliance's proposed $7.2 billion asset sale to BP, paving the way for the U.K. oil giant's largest venture in the South Asian nation.

The companies have been waiting for approval from the federal government since February when Reliance, controlled by billionaire Mukesh Ambani, agreed to sell a 30% stake to BP in 23 oil and gas blocks for $7.2 billion plus another $1.8 billion linked to exploration success. The deal includes the D6 block in the Krishna-Godavari basin, India's richest gas find so far, and Reliance has already received $2 billion from BP.

Oil Minister Jaipal Reddy said his ministry recommended the Cabinet Committee on Economic Affairs to approve the deal for 21 blocks as there were some technical issues over two non-producing blocks. The ministry may in future grant or refuse consent on the two blocks, he added.

"This is one of the major foreign investments in the history of India," Reddy said. "This transaction will not only mean investment of $7.2 billion by a foreign company in India, it will also mean induction of vast technical expertise to India's hydrocarbon sector."

Under the February agreement, BP and Reliance will also establish an equally owned joint venture for the sourcing and marketing of natural gas in India. That venture doesn't require government approval.

BP's chief executive, Robert Dudley, said the energy giant hopes to complete the deal in a matter of weeks.

Reliance didn't immediately comment on the announcement.

Future investments to develop Indian assets could bring its total payments to $20 billion, BP had said previously.

The deal gives BP access to new hydrocarbon resources and markets, in line with its strategy of continuing to increase exploration and access new exploration acreage, especially as it is yet to resume drilling operations in the Gulf of Mexico following last year's oil spill there.

Reliance is expected to gain from BP's deepwater drilling expertise to increase gas production. The company's D6 block is expected to boost India's gas supply, but several technical and geological issues have resulted in output from the field off the eastern coast falling below 50 million metric standard cubic meter per day from 60 MMSCMD last year.

Reliance's market valuation has taken a hit due to issued including the decline in gas production. Its shares closed 1.5% up at INR873.60 ahead of the announcement on the Bombay Stock Exchange, where the benchmark index closed up 1.6%.

Copyright (c) 2011 Dow Jones & Company, Inc.

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Eni Signs Memorandum Of Understanding With Sinopec

- Eni Signs Memorandum Of Understanding With Sinopec

Friday, July 22, 2011
Dow Jones Newswires
ROME
by Liam Moloney

Eni confirmed it signed a memorandum of understanding with China Petroleum & Chemical Corp., or Sinopec, as Italy's biggest oil and natural gas company strengthens its ties with Chinese hydrocarbon firms.

Eni confirmed an earlier report from Italian newswire ANSA on the accord.

Eni is particularly interested in the development of shale gas in China, said Chief Executive Paolo Scaroni, according to ANSA.

The deal "signed today allows us to analyze together a series of opportunities in China and outside China," said Scaroni, according to ANSA. "I believe that if shale gas is found in China, its development will be strong."

ANSA wrote details of the deal will be announced in the coming days.

Once the companies move from assessing the situation to an operational phase in China, Eni will sign deals in which it become the owner of gas produced, said Scaroni, wrote ANSA.

Chinese companies are interested in expanding abroad through deals with Eni, especially in Africa, said Scaroni, according to ANSA.

Eni and Sinopec are no strangers as they have some joint deals, such as Angola's 15/06 block.

Eni, which entered the Chinese market in 1984, is a small player is the world's number two economy with a daily output of 12,000 barrels of oil equivalent, according to figures released earlier this year.

The Italian company is seeking to tap into China's gas market, which is still in its infancy when compared with coal. At the start of the year, Eni signed a deal with China National Petroleum Corp., or CNPC, as part of this strategy.

Copyright (c) 2011 Dow Jones & Company, Inc.

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Circle Oil Completes Al Amir Water Injector Well

- Circle Oil Completes Al Amir Water Injector Well

Friday, July 22, 2011
Circle Oil plc

Circle Oil announced the following update regarding the Al Amir SE-8X water injection well together with details on the imminent drilling of Geyad-5X, a water injector, to support production in the Geyad Field.

Al Amir SE-8X

Al Amir SE-8X, located to the south-west of the Al Amir SE-1X ST discovery well in the Al Amir Development Lease, was drilled to 10,750 ft MD in the Upper Rudeis. The main objective for this well was to appraise the Shagar and Rahmi sandstones of the Kareem Formation in a downdip location and to provide water injection to support oil production from the updip Al Amir SE field wells.The Shagar sands were encountered from 10,329 to 10,353 ft MD with 24 ft MD of net reservoir and up to 15% porosity. The Rahmi sands were encountered from 10,404 to 10,432 ft MD with 8 ft MD of net reservoir and up to 10% porosity. Both sands were found to be water bearing, below the field oil-water contact. Interpretation of formation pressure test results from both sands indicates communication with the updip producers and good potential for successful water injection. The well has been completed as an injector in the Rahmi sands, with the option to add the Shagar injection under a rigless operation at a later date.

Geyad-5X

The rig has now been mobilized to drill the water injector well Geyad-5X, located on the western flank of the Geyad field, downdip of the Geyad - 3X and Geyad-1XST producers. The well is planned to appraise both the Shagar and Rahmi sands for injection.

The NW Gemsa Concession, containing the Al Amir and Geyad Development Leases, covering an area of over 260 square kilometers, lies about 300 kilometers southeast of Cairo in a partially unexplored area of the Gulf of Suez Basin. The concession agreement includes the right of conversion to a production license of 20 years, plus extensions, in the event of commercial discoveries. The NW Gemsa Concession partners include: Vegas Oil and Gas (50% interest and operator); Circle Oil Plc (40% interest); and Sea Dragon Energy (10% interest).

Prof Chris Green, CEO, said, "I am pleased to report another successful result as the partnership's plans in NW Gemsa remain on schedule. The rig now has now moved to start drilling the first injector well on the Geyad field as part of the development plan to increase production rates for the medium and long term."

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KOV Spuds Well in Syria

- KOV Spuds Well in Syria

Friday, July 22, 2011
Kulczyk Oil Ventures Inc.

Kulczyk Oil announced the spud of Itheria-1, the first exploration well being drilled by KOV and its joint venture partners on Block 9, Syria.

The planned total depth of the well is 3,256 meters and it is expected to take 80 days to drill, on a dry hole basis. The well will test a large structure with four-way dip closure defined by 3D seismic in an area approximately 200 kilometers due east of the City of Latakia. Primary targets are sandstones of Ordivician age.

Itheria-1 is being operated by Loon Latakia Limited ("Loon Latakia"), an indirect wholly-owned subsidiary of Kulczyk Oil. Loon Latakia holds a participating interest of 50% in the Block 9 production sharing contract which provides the right to explore for and, upon fulfillment of certain conditions, to produce oil and gas from Block 9, a 10,032 square kilometer (2.48 million acre) area in northwest Syria. Loon Latakia has an agreement to assign a 5% ownership interest to a third party which is subject to the approval of Syrian authorities, and which, if approved, would leave Loon Latakia with a remaining effective interest of 45% in Block 9.

Pursuant to a farmout agreement announced by KOV on 6 September 2010, MENA Hydrocarbons (Syria) Ltd., an indirect wholly-owned subsidiary of MENA Hydrocarbons Inc. ("MENA") will fund 60% of the costs for the drilling of Itheria-1. Accordingly, the costs of drilling Itheria-1 will be shared as follows: MENA: 60%, Triton Petroleum Pte Ltd.: 20% and Kulczyk Oil: 20%.

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