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FACTBOX: 10 big U.S. financial scandals of 2009

2009-12-29T18:24:00.001-08:00

FACTBOX: 10 big U.S. financial scandals of 2009

(Reuters) - The year of the Ponzi scheme will be followed by heightened regulation and more aggressive prosecutions, experts say. As 2010 approaches, regulators and prosecutors are scrambling to uncover and pursue more fraudsters, while lawmakers seek to close regulatory gaps and give officials more resources.

Here is a summary of 10 of 2009's notorious financial scandals:

MADOFF: The top headline-grabbing financial scandal in 2009 was Bernard Madoff's breathtaking $65 billion Ponzi scheme. While the fraud came to light in 2008, Madoff was sentenced to 150 years in prison in June. U.S. District Judge Denny Chin described Madoff's crimes as "extraordinarily evil" and said that Madoff's was "not merely a bloodless crime that takes place on paper but one that takes a staggering human toll."

GALLEON & RAJARATNAM: Sri Lankan-born billionaire Raj Rajaratnam was the most prominent of some 20 individuals to face charges in the biggest U.S. hedge fund insider trading case on record. A grand jury accused the Galleon hedge fund founder of using a network of company insiders to tip him off to information that netted $20 million in illegal profits between 2006 and 2009. Rajaratnam pleaded not guilty to the charges in the case, which has ensnared employees of some of America's best-known companies, including IBM.

UBS & TAXES: In February, Swiss banking giant UBS agreed to pay $780 million to settle criminal charges that it helped American clients evade taxes using concealed in offshore accounts. A U.S.-Swiss agreement reached in August forced the disclosure of 4,450 American holders of secret UBS accounts, opening cracks in Switzerland's bank secrecy laws.

STANFORD:

* In June, billionaire Texas financier Allen Stanford was indicted for an alleged $7 billion Ponzi scheme centered on fraudulent certificates of deposit issued by his offshore bank on the Caribbean island of Antigua. He has pleaded not guilty. The Miami Herald reported this week that U.S. authorities are investigating millions of dollars contributed by Stanford and his staff to lawmakers.

PETTERS:

* With Madoff having set the bar so high -- or low -- for Ponzi schemes, a $3.65 billion scam might not sound like a lot. A federal jury found Minnesota businessman Tom Petters guilty this month of using one of his companies to bilk investors who thought he was using their money to buy consumer electronics for resale to retailers such as Costco Wholesale Corp.

BANK OF AMERICA/MERRILL LYNCH:

* Stung by a federal judge's rejection of a $33 million settlement with Bank of America Corp, the Securities and Exchange Commission in October demanded a jury trial on its claims that the bank misled shareholders about $3.6 billion in bonuses paid to Merrill Lynch & Co employees before the companies merged on January 1. U.S. District Judge Jed Rakoff was disturbed that the SEC did not require the bank to disclose the names of executives and lawyers who vetted the bonuses.

MOZILO/COUNTRYWIDE:

* In June, the SEC charged Angelo Mozilo, the former chief executive of mortgage lender Countrywide Financial, and two other former Countrywide executives with fraud for allegedly misleading investors about the quality of Countrywide's loans, including tens of billions of dollars of risky subprime and adjustable-rate mortgages. Countrywide had been the largest U.S. mortgage lender before being sold to Bank of America.

AIG BONUSES:

* The financial products unit of insurance giant American International Group Inc became the poster child for Wall Street crassness when it was revealed in March that its employees were to get $165 million in retention bonuses after taxpayers pledged up to $180 billion to keep AIG afloat. U.S. pay czar Kenneth Feinberg later vowed to limit bonuses at the unit, which caused most of the insurer's losses and threatened the global financial system.

AUCTION RATE SECURITIES:

* Banks continued to strike deals with state securities regulators over their marketing of auction-rate securities as safe and liquid investments. The market for the securities froze in February 2008 following the credit crunch, leaving thousands of investors unable to tap their accounts. The latest to cut a deal was Wells Fargo Investments, a unit of Wells Fargo, which agreed in November to repay clients $1.3 billion.

BEAR STEARNS:

* In November, two former Bear Stearns hedge fund managers were found not guilty of fraud in the first major prosecution stemming from the implosion of a major financial firm. Ralph Cioffi and Matthew Tannin had managed two funds consisting mainly of mortgage-backed securities. When the funds collapsed in 2007, investors lost $1.6 billion. Despite the setback, the SEC said it would proceed with its civil case. (Reporting by Dan Margolies; Editing by Tim Dobbyn)

Petronas likely to give less money to Govt

2009-12-11T00:13:00.001-08:00

Petronas likely to give less money to Govt

By IZWAN IDRIS

( Source : http://biz.thestar.com.my/news/story.asp?file=/2009/12/10/business/5274585&sec=business )

Lower oil prices will limit royalty to Government

PETALING JAYA: Lower crude oil prices that hit Petroliam Nasional Bhd's (Petronas) bottomline hard this year are likely to limit the national oil firm's ability to repeat the huge payout to the Government last year.

Recent official statements indicated that Petronas' petroleum payments to the Government are expected to fall between 14% and 19% in the financial year ending March 31, 2010 (FY10) to between RM60bil and RM64bil.

"We suspect the shortfall will come solely from the petroleum income tax portion, down 35% to RM19bil, while dividend distribution will remain at RM30bil,'' Maybank Investment Bank said in a report yesterday.

Income from Petronas made up a significant chunk of the Govern-ment's annual revenue.

To recap, total income distribution from Petronas to the Government amounted to RM74bil in FY09.

Of the total amount, RM67.8bil went straight to the Government's coffers, while RM6.2bil was for royalty payments to several oil producing states.

The Government's total revenue was estimated at RM162bil in 2009, but is expected decline to RM148bil in 2010.

In the Economic Report 2009/2010 published in October, the Government said its current year revenue from petroleum income tax – assessed on the preceeding year basis – would amount to RM27bil as crude oil had averaged at US$103.69 per barrel in 2008.

This year, the Government is predicting that crude oil price would average at US$65 per barrel. For the first nine months of this year, the Tapis blend – the main type produced in the country – averaged at US$60.70 per barrel.

The oil and gas industry is the Government's biggest source of tax revenue.

Since October, crude oil price in the international market has consistently remained above US$70 per barrel.

The benchmark price for New York light sweet crude oil futures rose to a high of US$81 per barrel in late October and was traded at US$73 per barrel yesterday.

The rising crude oil prices may help shore up Petronas' revenue in the second half of its FY10.

The national oil firm announced on Tuesday that its pre-tax profit fell 51% to RM31.2bil during its first six months ended Sept 30, while revenue declined 37.5% to RM98.2bil.

In FY09, Petronas made a pre-tax profit of RM89.1bil on revenue of RM264bil.

Prime Minister Datuk Seri Najib Tun Razak announced in October that the Government intends to bring down its budget shortfall from a 22-year high of RM51.1bil, or 7.4% of gross domestic product in 2009 to 5.6% next year.

To achieve this, the Government plans to cut down on subsidy spending and lower its operating expenditure.

Petronas boosts E&P

2009-12-10T23:58:00.001-08:00

Petronas boosts E&P

Malaysia's national oil company Petronas raised its first half exploration and production spend by 9.8% from a year ago to 13.7 billion ringgit ($4.02 billion).

Upstream staff Wednesday, 09 December, 2009, 03:01 GMT

First half production to 30 September, however, declined "due to the implementation of reservoir management plan and flaring reduction efforts.''

Total crude output stood at 725,800 barrels per day (bpd), while gas production was 1 million barrels of oil equivalent per day.

More than a third of its outputs or 275,400 bpd of crude and 367,400 boe per day of gas stem from its overseas assets.

Domestic crude production was 658,100 bpd, with Petronas share standing at 450,400 bpd.

Malaysia produced 939,800 bpd of gas during the first half, with Petronas contributing 632,600 bpd.

Published: 09 December 2009 | Last updated: 09 December 2009

Shell, PetroChina To Develop Shale Gas In Sichuan

2009-11-29T19:40:00.001-08:00

Shell, PetroChina To Develop Shale Gas In Sichuan

(Adds Shell China spokeswoman's comments, Shell's Changbei gas project in China)

SHANGHAI (Dow Jones)--China has begun its first joint development project in shale gas, in a bid to tap into an unconventional source of cleaner-burning fuel to meet the nation's rising demand.

Energy major Royal Dutch Shell PLC (RDSB) and China's top listed gas producer PetroChina Co. (PTR) have signed an agreement to jointly develop shale gas resources in southwestern China's Sichuan province, China National Petroleum Corp. said Friday.

The agreement to jointly evaluate shale gas in the Fushun-Yongchuan block was signed Nov. 10 in Beijing, the state-owned parent company of Hong Kong- and Shanghai-listed PetroChina said in a report on its Web site.

Shell China spokeswoman Li Lusha confirmed the agreement, adding it came after PetroChina and Shell had successful cooperation in gas production in the Changbei gas field in Shaanxi province.

This marks the nation's latest effort to tap shale gas resources after the launch of a Sino-US Shale Gas Resource Cooperation Initiative earlier this month during U.S. President Barack Obama's first state visit to China.

The initiative is expected to assess China's shale gas potential through joint technical studies with reference to American experience with shale gas. Development of shale gas in China lags far behind the U.S., where it's a major contributor to the energy mix.

Shale is a sedimentary rock composed of very small particles of clay, mud and sand. It has a low permeability, meaning it releases trapped gas very slowly, and can be expensive to develop.

Developing shale gas resources in the Sichuan basin has much further room for foreign cooperation and could potentially alleviate tight gas supplies faced by China, CNPC said.

Beijing wants natural gas to account for 10% of the nation's energy mix by 2020, up from 3% in 2005.

Low temperatures amid rainy and snowy conditions since early November led to soaring gas demand and severe shortages across the nation, especially in Wuhan and Chongqing in central China and Nanjing and Hangzhou on the east coast.

Shell has a joint venture with PetroChina on the Changbei natural-gas field in northwestern China, which was pumping 10 million cubic meters of gas a day as of September 2008, according to the latest data immediately available.

But Shell, which set up its office in Beijing in 1980, has so far experienced a bumpy road in developing unconventional energy resources in China.

Lim Haw-Kuang, executive chairman of Shell China, said in April that because of the economic downturn, the company had decided to postpone a joint venture with Shenhua Group, China's top coal producer, to turn coal into liquid fuel.

Shell executives have also said they won't pursue a foray in northern China into oil shale, a costly and technologically challenging type of oil to produce, even as the company seeks to develop the technology elsewhere.

-By David Winning and Jing Yang, Dow Jones Newswires; +61-2-82724688; david.winning@dowjones.com

Petronas To Continue Sponsoring Malaysian Journalism Awards

2009-09-03T20:18:00.000-07:00

KUALA LUMPUR, Sept 2 (Bernama) -- Petroleum Nasional Berhad (Petronas) Wednesday inked an agreement with the Malaysian Press Insitute (MPI) to continue sponsoring prizes for the Malaysian MPI-Petronas journalism awards for a period of five years till 2014.According the the agreement, Petronas will provide RM1.5 million, RM300,000 a year, which is some RM100,000 more than the previous years.Petronas was represented by its senior managing director, legal and public relations division, Mohd Azhar Osman Khairuddin while MPI by its chief executive officer, Datuk Chamil Wariya.According to Chamil, the prize money for the top award, the Kajai award, would be increased from RM24,000 previously to RM30,000 this year."We hope with the increase in prize money, it will spur journnalists to produce work of greater quality," he told a press conference after the signing ceremony.-- BERNAMA

Petronas unit: 90pc sales from Primax 95

2009-09-01T19:16:00.000-07:00

Petronas Dagangan Bhd (PDB), the domestic retail arm of Petronas, expects its new Primax 95 petrol to account for 90 per cent of the petroleum sold at the company's kiosks.

Its senior general manager, Mohd Fadzlan Abdul Samad, said Primax 95 now accounted for 80 to 85 per cent of the petrol sold at Petronas stations.

Primax 95, a new petrol with a Research Octane Number (RON) of 95, replaced the older RON 92 fuel as of today.

He was speaking to the reporters after launching Petronas CIMB Islamic MasterCard and Petronas Maybank Islamic Ikhwan Visa cradit cards in Kuala Lumpur.

Mohd Fadzlan said the card is testimony to Petronas' commitment to meet the need of customers, particularly, the increasing demand for Islamic products and services in the country.

Meanwhile, PDB is optimistic credit card sales would grow by double digit next year as the new Islamic credit cards come with no annual fee and offer attractive rebates and reward programmes.

Petronas has a retail network of more than 920 stations nationwide and operates Kedai Mesra, a convenience store, at more than 570 stations which also has the largest number of automated teller machines within the petrol market industry in the country. - Bernama

Shell wins Egypt gas block with BP and Petronas

2009-05-13T19:23:00.001-07:00

CAIRO, May 13 (Reuters) - Royal Dutch Shell (RDSa.L) has won a gas block off Egypt's Mediterranean coast in a consortium with BP (BP.L) and Malaysia's Petronas [PETR.UL] in an EGAS bid round, the Anglo-Dutch company said on Wednesday.

The consortium won the bid for the North Damietta offshore Block 3 in a bidding round launched by Egypt's Natural Gas Holding Company, EGAS, a Shell statement said.

It said the concession covered an area of 1,600 sq km and carries a commitment of drilling four exploratory wells over six years. (Reporting by Maha El Dahan; Writing by Cynthia Johnston; Editing by Keiron Henderson)

Pertamina Develops Iraq Project

2009-05-07T23:16:00.001-07:00

Pertamina Develops Iraq Project

TEMPO Interactive, Jakarta:State-oil company PT Pertamina Upstream Energy plans to develop the western Desert Block oilfield in Iraq, together with China National Petroleum Corporation (CNPC) and Petronas. "We are trying to collaborate with CNPC and Petronas to operate one oil field," said Dwi Martono, international director of Pertamina Upstream Energy, yesterday.

Dwi said Pertamina had discussed the plan with the two companies but there had been no agreement yet. The three companies have yet to discuss share allotments in the consortium.

Dwi said the Iraqi government had opened tender to develop four to five oilfields in the area. Pertamina is one of the companies that made the first stage selection. He also said that his department had not submitted a proposal. "I think the winner of the tender will be announced at the end of this year," he said. The field eyed by Pertamina can produce up to 200.000 barrels of oil per day.

Pertamina plans to invest $2b to boost upstream operations

2009-05-04T03:42:00.001-07:00

Riyadi Suparno , The Jakarta Post ,

After decades of monopoly, state oil and gas company PT Pertamina is trying to beat the rising competition by investing more in the upstream sector, where competition is scarce and returns are higher.

According to Pertamina deputy president director Omar S. Anwar, the company plans to increase its investment by 25 percent to Rp 22 trillion (US$2 billion) this year, 65 percent of which will be used to finance upstream investment projects.

The company plans to double its investment budget to Rp 41 trillion by 2012, again with a focus on upstream projects.

Omar said the company would focus its operation on the upstream sector, including in the oil, gas and geothermal fields, because all the big industry players got their fortunes from their upstream operations.

"The future of the oil and gas industry is in the upstream sector, and we don't want to be left behind; we have to focus on that sector as well," Omar told The Jakarta Post on the sidelines of the Asian Development Bank's (ADB) annual general meeting Saturday.

He added the upstream sector offered higher returns than the downstream sector, which is more competitive, with more market players.

Pertamina's returns from its downstream operation average between 5 and 10 percent, while returns from the upstream industry reach 50 percent.

"Our downstream operations require a lot more work, especially in infrastructure. But the returns are much lower," Omar said.

To reflect its priorities, Pertamina will allocate 60 percent of its investment plan this year and in the future for projects in the upstream sector.

They include the development of existing oil fields, covering an area of 1.2 million hectares, acquisition of oil fields from other operators, development of natural gas, and development of geothermal energy.

"Indonesia has the largest geothermal resources in the world, and this is still underdeveloped because of lack of incentives. We believe that when incentives are right, this sector will pick up, and when that happens, we will already be well-positioned," he noted.

Pertamina, he went on, would not do all its upstream development alone. It would seek outside partners to develop its upstream businesses, joint acquisition, joint management and joint bidding on new areas, including overseas oil and gas fields.

However, Omar noted although Pertamina's future focus would be on the upstream sector, it would continue to maintain downstream operations and keep a market share at the level of around 60 percent.

"There will be a lot of competition and tighter competition in the downstream sector, and we will continue to maintain our presence as part of our public service obligation," he said.

Some major downstream investment projects in the pipeline, and offered up for foreign participation, are the development of oil refineries, liquefied petroleum gas (LPG) depots, as well as new gas stations.

Oil refineries are one of the most attractive ventures offered by Pertamina, considering Indonesia currently still imports about half the country's demand for Premium gasoline of 21 trillion kiloliters annually. LPG stations and depots are another attractive venture, as the country is moving away from kerosene to LPG for household needs.

Pertamina plans to build 45 new gas stations this year, which is also open for investor participation.

Of the total investment needs, Omar said, Pertamina would seek outside financing of up to 40 percent, or Rp 8.8 trillion this year.

Pertamina booked net profit of Rp 32 trillion last year, up from Rp 24 trillion in 2007 and Rp 19 trillion in 2006.

Indonesia offers Natuna role to Petronas -Malaysia's Najib

2009-04-23T18:27:00.001-07:00

JAKARTA, April 23 (Reuters) - Indonesia has offered Malaysian state energy firm Petronas a chance to participate in developing the country's giant Natuna D-Alpha gas field, Malaysian Prime Minister Najib Razak said on Thursday.

Indonesia's government has appointed state oil firm Pertamina as the operator of Natuna, but it does not have the capacity to develop the gas field alone, with an estimated investment of $40 billion required.

Last year, Pertamina named Petronas [PETR.UL] among eight companies that could be potential partners.

The others include Exxon Mobil (XOM.N), Chevron (CVX.N) and France's Total (TOTF.PA), Royal Dutch Shell (RDSa.L), Norway's StatoilHydro (STL.OL), Italy's Eni (ENI.MI), and China National Petroleum Corp.

"I thank the president for the offer to Petronas to participate in the Natuna gas area," Najib, who is on a visit to Indonesia, told reporters following talks with Indonesian President Susilo Bambang Yudhoyono in Jakarta.

Yudhoyono told the same news conference the country would continue to cooperate with Malaysia in the field of electricity, oil and gas and bioenergy, but gave no further details.

Pertamina has said it wants to keep a 40 percent stake in the Natuna D-Alpha gas project with 60 percent to be shared among the partners.

Indonesia has said talks on the offshore gas project with Exxon Mobil, which has controlled the block since the 1990s, had stopped due to disagreements over how to split the gas output.

Another unresolved issue is the length of the U.S. firm's contract. Indonesia says Exxon Mobil's contract giving it a 76 percent share has expired, whereas the energy major has said the contract is valid until 2009.

Exxon Mobil officials could not immediately be reached on Thursday.

The Natuna D-Alpha block has around 222 trillion cubic feet (tcf) of gas reserves, of which about 46 tcf are thought to be commercially recoverable.

The block, which is about 1,100 kilometres (680 miles) north of Jakarta and 200 km east of the West Natuna fields that feed gas to Singapore, accounts for about a quarter of Indonesia's total commercially recoverable gas reserves of 182 tcf.

Energy minister Purnomo Yusgiantoro said previously the price of Natuna gas was still too high, making it expensive to develop and difficult to sell. (Reporting by Muklis Ali; Editing by Clarence Fernandez)

UBS to sell Brazil unit for £1.7 billion

2009-04-21T20:42:00.001-07:00

Swiss banking UBS AG said Monday it plans to sell its Brazilian unit for £1.7 billion or $2.5 billion to BTG investments to boost up its capital in the current economic crisis.

With the sale back to its original owner, UBS hopes to reduce risk and strengthen its balance sheet as it vies to survive after $50 billion in write-downs.

It will also cut its production by up to CHF4 billion in 2010 and slash 11 percent of its workforce to restore UBS' profitability after being hit by credit crisis.

The bank expects wider first quarter losses of CHF2 billion from its CHF3.9 billion write-downs and increase 0.6 percent of about 10.6 percent its capital for the said quarter.

The said sale is made up of cash and the assumption of liabilities and is scheduled to be announced with the complete first quarter earnings on May 5.

Sao Paulo based, BTG Investments, is run by Andre Esteves, the former Pactual partner who has $24 billion in management. Some CHF6 billion is managed by a Brazilian wealth management unit, or private bank.

However shares of UBS fell 65 cents to 5.42% at $11.34 in the New York trading as analyst Matt Clark of Keefe, Bruyette & Woods rated the bank underperform with a CHF12.50 price target.

The Investment case for the Gulf states

2009-04-19T18:53:00.001-07:00

This report is not intended to be a forecast of future events, a guarantee of future results or investment advice. Current market conditions may not continue. Past performance is no guarantee of future results.

Petrodollars spurring reform, Growth

The case for investing in Gulf States equities relies heavily on the region's rich oil reserves and on the sustained strength of oil prices. Many Gulf nations are flush with oil export capital, which is beginning to engender future, non-oil related industries. While no one can predict future trends in the price of oil, there are fundamentals supporting continued growth in the region over the near and long term.

The Persian Gulf and its coastal areas are the world's largest single source of crude oil. The

region possesses 40% of the world's total proven oil reserves and 22% of the world's proven gas reserves.1 Qatar possesses the world's third largest gas reserves, after Russia and Iran, and is the largest exporter globally¹.

Due primarily to global demand for oil and the relative increase in the region's wealth, the Gulf States of Saudi Arabia, Kuwait, Oman, Qatar, Bahrain and the United Arab Emirates have grown at a 7% annual growth rate since 2002 and boast a per-capita income (of $19,000) that is three times that of China².

Further supporting growth for the GCC nations is the cumulative surplus of approximately US$739 billion built over the last five years¹, which affords the region ample financial resources for capital projects and other various investments. Governments in the region have improved management of their wealth and have commenced reform of their economies by attempting to diversify their reliance on oil capital.

While the Gulf States still largely place limits on foreign stock ownership, direct foreign investment in the region is on the rise. Private equity funds investing in the Middle East and North Africa grew to US$5.2 billion in 2006 from US$316 million in 2004³.

Notably, the region has made strides in trying to build regional financial hubs; both Qatar and Dubai have linked to Western exchanges in an effort to become dominant financial centers.and potentially to further open their financial sectors to international capital.

a "mega Project" current

The immense wealth created by crude exports has begun to carry over into the expansion of the Gulf's infrastructure. Countries throughout the region are pushing toward modernization and industrialization. Over US$1.6 trillion in the region is earmarked for "mega-projects" and infrastructure spending; the

IMF is forecasting that US$800 billion will be spent in the next five years, with more than 75% in nonhydrocarbon sector alone.1 Dubai, in particular, has been a trendsetter in reforms and infrastructure spending, including the development of real estate and tourism. Qatar, another good example, is expected to grow at double digit rates through 20097, thanks to its heavy infrastructure investments. Such projects, in turn, are driving earnings forward for construction, real estate and financial firms and are helping to push personal incomes higher.

A key ingredient to the future success of the region lies in its ability to develop a forwardlooking approach. Governments across the region have made political commitments toward longterm economic diversification programs focusing on particular services such as trade, tourism and transportation. Civil infrastructure, such as water, power, education and healthcare, are also targeted areas expected to present private sector investment opportunities.

a modern Generation

The population explosion is yet another trend supporting local businesses and attracting the attention of foreign investors. A young demographic base (64% of the population is under 30) is responding to global urbanization trends and is increasing spending on cell phones, appliances, and other luxury goods. Due to the burgeoning of capital projects, there has been rapid growth in the region's labor force and an influx in the expatriate population.

The World Bank projects population growth for GCC countries of 2.4% per year between 2005-2010 and a 2.0% growth from 2010-2020¹. While rapid population increases in unstable regions of the world can potentially have serious political, economic and health implications, demographic momentum in the Middle East may remain a powerful catalyst for future growth in the region.

obstacles remain

While there are myriad factors supporting continued growth in the Gulf, the region is not without its pitfalls. Softening oil prices would likely lead to a slowdown in nominal GDP growth and negatively impact investor sentiment. Further, the Gulf region is not completely immune from a U.S. slowdown, particularly through the impact of falling energy prices and a falling dollar, to which most Gulf currencies are currently pegged. In addition, rising material costs could threaten real estate projects

as well as negatively impact hydrocarbon output growth. Mounting inflation rates in GCC nations, in extreme cases reaching double digits, also present potential speed bumps for continued growth. In addition, political and social instability in surrounding regions may contribute to volatility as continued controversy and diplomatic ensions rise in regards to the nuclear program of neighboring Iran.

Pioneering Global markets

For investors willing to take a long perspective on a higher risk market, investing in the Gulf States may be very attractive. The Gulf remains relatively under penetrated in terms of investment opportunity and the potential exists for strides on economic fronts. In addition, a relatively low correlation to markets of more developed conomies may make an investment in the Gulf States an attractive diversifi- cation tool.

Economic growth potential
Increasing opportunity for capital investment
Low correlation to developed markets
Complement to existing emerging markets exposure

Sources

Merrill Lynch, Bargains in the Bazaar-Remain Bullish for 2008, February 7, 2008
McClatchy Washington Bureau, Mideast's Own Oil Consumption Helping to Drive Prices Up, April 17, 2008
The New York Times, The Mideast Money Flows, September 27, 2007
The Economist, Briefing: Gulf Economies, How to Spend it, April 26, 2008
IMF, Regional Economic Outlook, Middle East and Central Asia, May 2008
Citi, The MENA Primer: Key Facts of the Equity Markets of the Middle East and North Africa, September 27, 2007
Arab News, Qatar: Fastest Growing Economy in GCC, March 11, 2008

Van Eck Securities Corporation, distributor
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vaneck.com 1.888.mKt.vCtr

UTS Chief Says Total’s Higher Bid Undervalues Company (Update1)

2009-04-14T18:20:00.001-07:00

By Joe Carroll

April 13 (Bloomberg) -- Total SA's C$830 million ($680 million) offer for Canadian oil-sands developer UTS Energy Corp. still is too low, even after an increase of 35 percent, UTS Chief Executive Officer William Roach said.

UTS's largest shareholders have told the company that the offer from the French oil company is inadequate, Roach said today in a telephone interview from Calgary. The bid, which was raised today to C$1.75 a share from C$1.30, is hundreds of millions of dollars less than the company's combined cash balance and the value of its stake in the C$25.3 billion Fort Hills oil-sands project in Alberta, he said.

"This doesn't really reflect the value of the company," Roach said. "It's interesting to note that the C$1.75 offer was lower than where we closed" last week.

Roach said he expects the UTS board to make a formal recommendation to shareholders on the offer by the end of this week.

UTS owns a 20 percent stake in Fort Hills, located in the same region of Alberta where Total plans to spend $10 billion to $15 billion during the next decade on new mines and wells. Western Canada's tar-soaked bogs and river valleys hold an estimated 174 billion barrels of crude, the largest deposit outside of Saudi Arabia, according to the Canadian Association of Petroleum Producers.

Suncor, Petro-Canada

Suncor Energy Inc.'s March 23 agreement to pay about C$19.3 million for Calgary-based Petro-Canada, majority owner of Fort Hills, enhanced the value of UTS and justifies a higher price for it, Roach said.

Suncor's acquisition of Petro-Canada to create the largest Canadian energy company probably will drive down drilling and construction costs, improving the profitability of oil-sands ventures such as Fort Hills, said Roach, who joined UTS in 2004 from Husky Energy Inc.

In addition to the Fort Hills stake, UTS owns a 50 percent interest in leases on oil-soaked land west of the Athabasca River in Alberta covering an area 21 times the size of Manhattan.

UTS, which has never pumped a barrel of crude, more than doubled in the past year, the second-best performance among Canadian oil and gas stocks. Only Toronto-based Pacific Rubiales Energy Corp. rose by more, soaring 161 percent.

UTS rose 1 cent to C$1.81 today on the Toronto Stock Exchange, or 6 cents above Total's bid. The premium indicates investors believe Total isn't done raising its bid, said Satya Das, founder of advisory firm Cambridge Strategies Inc. in Edmonton.

UTS had cash and cash equivalents of C$276 million as of Dec. 31, according to data compiled by Bloomberg. Roach said UTS's so-called earn-in agreement, which yields the company a 20 percent stake in exchange for footing 5 percent of development costs, is worth C$750 million.

Total had 12.32 billion euros ($16.46 billion) of cash reserves at the end of 2008 and shares held in treasury worth about 5 billion euros, according to data compiled by Bloomberg.

To contact the reporters on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net

Talisman Malaysia produces oil from Northern Fields development

2009-04-12T20:15:00.001-07:00

The company expects to drill a total of 16 development wells in the Northern Fields in 2009, with an additional 13 expected in 2010

Talisman Malaysia, a wholly owned subsidiary of Talisman Energy, has commenced oil production from the Northern Fields development on schedule. The development is located in the PM-3 commercial arrangement area offshore Malaysia and Vietnam.

The oil company claimed that production is expected to reach 40,000 barrels of oil equivalent per day (boe/d) to 50,000boe/d by early 2010 with the commissioning of dry gas facilities mid-year.

Talisman Malaysia operates Block PM-3 commercial arrangement area and, together with its affiliate Talisman Malaysia (PM3) holds a 41.44% interest. Petronas Carigali holds a 46.06% interest and PetroVietnam Exploration Production Corp holds a 12.5% interest, said the company.

The project is comprised of over 70 reservoirs, 50 wells, three wellhead riser platforms, a central processing platform, a floating storage and offloading tanker and over 100 kilometres of subsea pipelines.

John Manzoni, president and CEO of Talisman Energy, said: "Southeast Asia continues to be a key area of opportunity and growth for Talisman. We have doubled our production in Asia over the past five years and are positioned to grow at 10% annually over the next few years."

CNPC, Chevron Held Talks On US Oil Field Stake Buy

2009-03-19T23:21:00.001-07:00

BEIJING -(Dow Jones)- China National Petroleum Corp. has spurned a chance to secure a first foothold in the U.S. oil sector following an approach by Chevron Corp. (CVX) to buy a stake in a Gulf of Mexico oil field, a CNPC official said.

San Ramon, California-based Chevron allowed China's biggest state-owned oil company by capacity to review technical data on the Big Foot oil field before a CNPC delegation traveled to the U.S. for initial discussions in the past month.

"Talks with Chevron are currently on hold. We wanted more equity than the 12.5% stake it was proposing to sell," the official said on condition of anonymity.

Chevron has a 60% interest in Big Foot, which is located in deep water around 362 kilometers south of New Orleans. Norway's StatoilHydro ASA (STO) and Royal Dutch Shell PLC (RDSB) have stakes of 27.5% and 12.5%, respectively.

"Chevron is not currently in any discussions on sale or partial sale of Big Foot," said a Chevron spokesman.

CNPC spokesman Liu Weijiang couldn't be reached for comment.

It comes as China's state oil giants step up their hunt for producing oil and gas assets, taking advantage of low valuations triggered by tight credit markets and oil prices falling $100 a barrel from their peak last year. China imports half of the crude oil it uses.

However, oil assets in the U.S. have remained off their radar since Cnooc Ltd. (CEO), China's third-largest oil producer by capacity, abandoned an $18.5 billion takeover campaign for California-based Unocal Corp. in 2005. Cnooc's withdrawal followed criticism of its offer from members of U.S. Congress, and led to Chevron buying Unocal at a lower price than the Chinese side were willing to pay.

China's aggressive deal-making in the resources sector in recent months has triggered an upsurge of protectionist sentiment in target countries like Australia, whose center-left Labor government is calling for a bipartisan Senate inquiry into foreign investment.

Companies backed by the Chinese government are seeking Canberra's approval for more than $22 billion of resources deals, including a planned US$19.5 billion tie-up between Aluminum Corp. of China Ltd., or Chinalco, and Anglo-Australian mining giant Rio Tinto PLC. (RTP).

Opponents point to a lack of reciprocity in China, with foreign firms hard- pressed to clinch M&A deals except in partnership with state-run firms. Critics were given further ammunition Wednesday when China's Ministry of Commerce blocked a $2.4 billion bid by Coca-Cola Co. (KO) for China Huiyuan Juice Group Ltd. (1886.HK) on competition grounds.

The CNPC official said Chevron's willingness to farm out a stake in Big Foot was due to the U.S. company's successful bid in 2007 to develop the Chuandongbei natural gas block in southwestern China's Sichuan province.

Chevron signed a 30-year production sharing contract with CNPC on the area, which is the largest the Chinese company has ever offered to a foreign partner. The 2,000 square-kilometer field has an estimated resource base of 5 trillion cubic feet of gas, equivalent to 142 billion cubic meters.

"Chevron recognized it has to offer something in return. We'll now seek other opportunities for cooperation overseas," the CNPC official said.

Strategic Shift

Analysts say China's oil companies should look to become junior partners of U.S. oil majors if they want to build a position in the U.S. oil sector, as it means they wouldn't appear a threat to domestic firms and could start to build valuable political contacts.

However, CNPC would likely prove a controversial choice of partner for Chevron in any U.S. oil project, given the Chinese company's overseas portfolio also includes sensitive assets in Sudan.

U.S.-based activists have mounted a long-running campaign against PetroChina Co. (PTR), CNPC's listed unit, on the grounds that supporting it with investments supports the Sudanese government in Khartoum. Earlier this month, Sudan's president, Omar Hassan al-Bashir, was indicted by the International Criminal Court for war crimes and crimes against humanity in the Darfur conflict.

Big Foot is one of several promising oil prospects that Chevron has discovered in the U.S. Gulf of Mexico.

Exploration and appraisal wells drilled over the past three years have indicated Big Foot has as much as 90 meters or more of net oil pay.

A presentation by Paul Siegele, vice-president of Deep Water Exploration & Projects, in November 2007 ranked Big Foot as the eighth biggest deepwater oil field discovered in the Gulf of Mexico in which Chevron has an interest.

Citing data from oil and gas consultancy Wood Mackenzie, Siegele said at the time that Big Foot has 200 million barrels of oil equivalent potentially recoverable.

Chevron said last year it was "evaluating a range of production development options for the Big Foot prospect."

Despite the company's size, CNPC has been selective in its M&A targets, and hasn't clinched a major acquisition since buying PetroKazakhstan Inc. for $4.18 billion in 2005.

Earlier this year, CNPC reached a deal worth roughly $400 million to buy the assets of Verenex Energy Inc. (VNX.T), which are mostly in Libya. This deal is in jeopardy as Libya's top oil official said Wednesday Libya will exercise its first right of refusal to buy the assets.

CNPC's domestic rivals have also been active. People familiar with the matter say Cnooc has expressed interest in Kosmos Energy LLC's stakes in the Jubilee oil field offshore Ghana, which could fetch as much as $3 billion.

China Petrochemical Corp., known as Sinopec Group, also succeeded with a $2 billion bid for Canada's Tanganyika Oil Ltd. (TYK.T), which has producing oil fields in Syria.

-By David Winning and Jing Yang, Dow Jones Newswires; 8610-65885848; david.winning@dowjones.com

  (END) Dow Jones Newswires   03-19-09 0314ET   Copyright (c) 2009 Dow Jones & Company, Inc.

PETRONAS Eyes Big EOR Boost

2009-03-18T23:20:00.000-07:00

Oil ends at three-month high above $49 a barrel

2009-03-18T03:50:00.000-07:00

NEW YORK (MarketWatch) -- Oil futures rallied nearly 4% to above $49 a barrel Tuesday, ending at the highest level in more than three months after a report showing a surge in U.S. housing starts offset expectations that data will show U.S. crude inventories rose last week.

The rally came two days after the Organization of Petroleum Exporting Countries kept their production unchanged at a Sunday meeting, but pledged to fully comply with their earlier cuts.
Crude for April delivery closed up $1.81, or 3.8%, at $49.16 a barrel on the New York Mercantile Exchange, the highest closing level for a front-month contract since Dec. 1. It rose as high as $49.82, but also fell nearly 2% earlier to as low as $46.53.

"The economic data and inventories expectations" were moving crude prices, said Phil Flynn, vice president at Alaron Trading. "People also expect OPEC will show better compliance."

The expiration of options on the front-month April futures contract added extra volatility to Tuesday's trading, Flynn added, as traders scrambled to cover their option positions before they expire.
"It's also option expiration madness," he said. "Today is really about finding out what put or call players do to cover and protect their positions."

Put options give holders the right but not the obligation to sell their crude-futures contracts at a certain price, while call options give holders the right but not the obligation to buy futures.
Some investors let their options expire if crude prices don't reach their targets, but others demand crude delivery if prices do meet their targets. As April options expire, Tuesday is the last day options sellers and buyers can adjust their positions.

The April futures contract itself will expire on Friday.
Optimistic news
Oil traders weighed optimistic news on the economy, as well as forecasts of rising crude-oil stockpiles.
The Commerce Department reported U.S. housing starts unexpectedly surged 22% to a seasonally adjusted annual rate of 583,000 in February. Construction of new housing units had plunged 38% in the previous three months before February, and economists had forecast a further drop to 456,000 on the month. See Economic Report on housing starts.

But on the supply side, analysts surveyed by Platts expect data will show a 2-million-barrel increase in U.S. commercial crude stockpiles when the Energy Information Administration releases its closely watched weekly petroleum data at 10:30 a.m. Eastern on Wednesday.

The American Petroleum Institute will release separate data, based on different criteria, on Tuesday afternoon.
Analysts also are projecting a 400,000-barrel increase in distillate inventories as well as a decline of 2.1 million barrels in gasoline stocks, the Platts survey showed. Refinery utilization is expected to remain unchanged at 82.7% of capacity.

"The fundamental picture for oil is looking a little better, largely due to OPEC's efforts, but more still needs to be done to counter the weakening demand and to reduce the glut of crude in storage," said Nimit Khamar, analyst at Sucden Financial Research.

OPEC, which controls about one-third of the world's oil production, decided to keep their production quota steady at a meeting in Vienna. The cartel's official said the compliance with earlier cuts -- totaling 4.2 million barrels a day -- is about 80%.

The cartel "emphasized its commitment to comply fully with its decision" of earlier cuts, OPEC said in a statement after the meeting, "in order to further contribute to market stability."
In other economic news, inflation at the wholesale level rose in February for the second consecutive month, Labor Department data showed. The producer price index rose 0.1%, driven by a 1.3% gain in energy prices. See Economic Report on producer prices.

Also on the Nymex, April reformulated gasoline futures rose 4.1% to $1.4238 a gallon and April heating oil gained 4.5% to $1.2675 a gallon. Natural gas for April delivery fell 0.9% to $3.814 per million British thermal units.
Separately, Royal Dutch Shell (RDS.A: royal dutch shell plc spons adr a News , chart , profile , more
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RDS.A 46.00, +0.37, +0.8%) on Tuesday said it didn't replace last year's production with new reserves, as The Hague, Netherlands-based oil giant said it would distribute $10 billion worth of dividends this year. See full story on Royal Dutch Shell.

Moming Zhou is a MarketWatch reporter based in New York.
Polya Lesova is a New York-based reporter for MarketWatch.

NLNG as catalyst for other LNG projects

2009-03-05T01:54:00.000-08:00

Tuesday, 03 March 2009 00:16 OLUSOLA BELLO

Without a doubt, the renewed interest in Liquefied Natural Gas (LNG) liquefaction projects in Nigeria is hinged on the surge in global LNG energy demand and the success of the nation’s LNG projects in the early part of this decade. In this connection, several projects have been proposed, including a floating LNG project for the Nnwa/Doro fields by a Shell/Statoil partnership and a second Bonny island plant by ExxonMobil. However, there is some amount of scepticism because earlier proposals have so far not evolved into any concrete projects.

That notwithstanding, the NLNG Train 7 expansion project, Brass LNG and OKLNG, are now the major LNG projects under consideration for investment by the various shareholders. Also in progress are LNG projects being floated by Flex LNG and Peak Petroleum, which are however facing financial constraints owing to the global financial crisis.
For this reason, and taking into account the industry’s current cost level, the uncertainties associated with the nation’s gas supply due to upstream funding constraints, among others, there is a need for an in-depth re-evaluation of all existing projects to determine their economic viability and profitability.
The Nigerian LNG in 2007 was 16.4 million tons (MT), equivalent to nearly 10 per cent of the global total, making the country the world’s fifth largest LNG producer after Qatar, Malaysia, Indonesia and Algeria. The current NLNG capacity at Bonny Island is 22MTPA, besides which there is much space for growth.
Interestingly, on the basis of the proposed LNG projects in the country—NLNG Train 7, Brass LNG and OKLNG, there is much potential for a total additional export capacity of 40 mtpa. This would bring Nigeria’s LNG export to 62 mtpa, the equivalent of about 11.5 percent of the estimated world supply requirement. Needless to say, at current pricing regimes, 62 mtpa would represent annual export revenues amounting to $15 billion or thereabouts.
Meanwhile, both government and industry experts have come to an agreement that Nigeria is blessed with over 100 trillion cubic feet of gas (TCF) reserve. On this basis, they are projecting another 180 TCF. The latter number includes stranded gas and gas caps required for oil reservoir management, which may be excluded from the immediate gas availability consideration. With all these indices, the industry would seem to contend that there is an existing adequacy of gas to meet the foreseeable, planned domestic demand for power generation and domestic industrial consumption. Already, the possibility of additional gas exports is being explored for the Nigerian oil and gas province, which is acknowledged to be gas-prone.
Industry observers hope that despite constraints on gas supply, rebalancing the upstream gas pricing will ensure the economic viability of gas supply projects and resolve the crisis in upstream funding, so that upstream development projects (both domestic and export) will proceed.
Although analysts observe that there may be some amount of uncertainty regarding LNG project estimates following the usual market disconnect between what is forecast and what actually happens, the project timetable as published in the most optimistic case predicts that LNG production capacity will increase to a plateau in 2021, at about 540 million tons per annum (MTPA). However, it is felt in some quarters that the projection may be overoptimistic as it does not take into account factors that might delay or prevent projects from materialising, thus reducing the rate of growth.
Moreover, the current deepening global recession will certainly impact capital investment decision plans in the oil and gas industry, both internationally and domestically. Projects which require high prices to surmount investment hurdles will be the first to experience cuts.
There also reports of commensurate falls in drilling rigs’ rates in some oil provinces. Besides, some basic elements like steel, aluminium and cement have declined, but the industry will require a dramatic downward readjustment in the cost of gas development projects, which are currently on the drawing board in Nigeria and elsewhere.
Gratifyingly, the oil industry has weathered recession and energy price dynamics for decades, and the expectation is that through innovations, cost-consciousness and inherent optimism, the industry will be able to forge a sustainable way forward which will eventually be beneficial to all stakeholders.
As things stand, there is robust demand for LNG as the fuel of choice across the world, and the nation rightly requires domestic gas for power generation and other industrial applications like the production of chemical products, both for the domestic and export markets.
There have been and may continue to be opportunities in Nigeria for LNG to grow so that the country can join the ranks of LNG exporters. It has therefore become compelling that appropriate policies for this sector be formulated so as to make the Nigerian market attractive for investment while optimising returns to the nation.

Indonesia Expects 6 Oil and Gas Fields On Stream In 2010

2009-03-05T00:15:00.000-08:00

JAKARTA -(Dow Jones)- Indonesia expects six oil and gas fields to start operations in 2010, and these will likely produce a total of 249 million cubic feet of natural gas a day and 3,785 barrels a day of crude oil, a government official said Thursday.

Raden Priyono, chairman of upstream oil and gas regulator BP Migas, said the fields include the ConocoPhillips (COP) Bukit Tua field in Sumatra, Pearl Oil's Ruby field in Kalimantan, and the South Sembakung field in Kalimantan, which is jointly operated by state-owned PT Pertamina and Medco Energi Internasional ( MEDC.JK).

The other three are the Gajah Baru-Iguana-Naga field in the Natuna Sea operated by Premier Oil (PMO.LN), the Peciko Phase 7 field in East Kalimantan operated by Total S.A. (TOT) and Pertamina's Gundih field in East Java.
The government and parliament have set a target of 960,000 barrels a day of oil for 2009 as output from aging fields declines, and additional production is only expected to be around 5,336 barrels a day. The natural gas output target is 7.53 billion cubic feet a day for 2009.

The government is relying on the Cepu block, which is jointly operated by Pertamina and Exxon Mobil (XOM), to boost crude oil output.

The block started producing a limited amount of crude oil in early December, which is expected to rise to 20,000 barrels a day in June. The peak production of 165,000 barrels a day is expected to be achieved in 2012.

Analysts expect the current slump in oil prices and the global economic downturn will further undermine the government's efforts to boost crude output, as many oil companies are likely to defer their investment plans, especially for marginal fields.

Indonesia withdrew from the Organization of Petroleum Exporting Countries this year as it had stopped being a net oil exporter.

Some 10-15 new oil and gas blocks are planned to be offered for tender this year.
-By Deden Sudrajat; Dow Jones Newswires; 62-21 39831277; I-Made.Sentana@ dowjones.com

Sentry Petroleum Appoints Leading Exploration Professionals

2009-03-03T17:42:00.000-08:00

Oil and gas exploration company Sentry Petroleum Ltd. (OTCBB: SPLM) is pleased to announce the appointment of Dr. Mike Middleton as Exploration Manager and Mr. Sandy Belford as Chief Geophysicist, effective immediately.

President and CEO Dr. Raj Rajeswaran commented, "Dr. Middleton and Mr. Belford have joined the Company to lend their invaluable expertise in continuing the detailed seismic analysis initiated by MBA Petroleum Consultants last fall. To date we have made several important advances on ATP 865 that have significantly increased our confidence in the discovery potential for the permit. We believe that with their exceptional expertise in the region Mike and Sandy are the best people to bring these projects to drillable targets. We are delighted to welcome them to our management team."

Dr. Middleton has 35 years experience in the petroleum industry with such companies as Amoco and ECL (Exploration Consultants Limited), and such organizations as Chalmers University (Nordic Energy Ministry-Scandinavia), and Curtin University of Technology (Australia), both leading oil and gas universities in the world.

Mr. Belford has extensive exploration background accumulating over 20 years of work with such firms as Mobil, Woodside Energy, and Hardman Resources. His primary expertise is 2D and 3D seismic interpretation including exploration prospect generation and evaluation. He has been instrumental in total discoveries of approximately 200 million barrels of oil equivalent from exploration projects throughout the Australasian region.

Dr. Middleton commented, "The opportunity to work with such a dynamic and high calibre management team was something that immediately attracted me to Sentry. The Company has amassed a leading land bank in the commercially proven Adavale basin. They have defined a number of prospects and several of these hold great potential for the commercial discovery of oil and gas. My initial work on the permits has crystallized my beliefs and I am delighted to have this position and the opportunity to create significant shareholder value."
Mr. Belford commented, "I am excited by the potential of the acreage portfolio, and look forward to working with Dr. Middleton and the management team to bring this potential to its full fruition."

CFO Arne Raabe commented on the appointments, "We are seeing strong merger and acquisition activity in the Queensland basins with recent deals valued in the AU$ billion range. Being able to attract two gentlemen with Dr. Middleton and Mr. Belford's expertise, background, and relationships enhances the opportunities available to us. We are very excited about making this announcement on the first day of our fiscal year and feel confident that we will continue to grow our business throughout the next 12 months."

In other company news Mr. Alan Hart has assumed the position of VP of Exploration and Mr. Arne Raabe has assumed the position of Chief Financial Officer. The board of directors wishes to thank Mr. Maheswaran for his counsel during his time on the board of directors and as the CFO of the company. Mr. Maheswaran tendered his resignation as CFO and director of Sentry Petroleum on February 26, 2009 for personal reasons.

About Sentry Petroleum
Sentry Petroleum is a junior oil and gas exploration company focused in Asia. The company's mission is to secure large land positions with drill ready prospects in the regions of the world with the most promise for large scale discovery. The Company will continue to leverage its strengths with a vision to become a premier independent oil and gas company.

Forward-Looking Statements:
This release includes certain statements that may be deemed to be "forward-looking statements" within the meaning of applicable legislation. Other than statements of historical fact, all statements in this release addressing future operations, undiscovered hydrocarbon resource potential, exploration, potential reservoirs, prospects, leads and other contingencies are forward-looking statements. Although management believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance, and actual results may differ materially from those in the forward-looking statements due to factors such as market prices, exploration successes, continued availability of capital and financing, and general economic, market, political or business conditions. Please see our public filings at www.sec.gov and www.sedar.com for further information.

Distributed by Filing Services Canada and retransmitted by MarketwireContact:
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Five oil, gas firms owe $113 million to the state

2009-02-27T15:49:00.000-08:00

THE JAKARTA POST , JAKARTA

Five oil and gas firms, including US energy giant ExxonMobil and Kangean Energy Indonesia, owe the state US$113 million in unpaid income tax bills, according to a document.

The document was a paper presented in a meeting between Finance Minister Sri Mulyani Indrawati and a House of Representatives’ committee on Thursday.

The document said the figures were based on an audit done by the Development Finance Comptroller (BPKP) in 2008 and 2009, although it said also that further clarification was needed to verify the figures.

The five contractors are ExxonMobil Oil Indonesia Inc, Joint Operating Body (JOB) of Pertamina and Golden Spike Raja Blok, Kangean Energy Indonesia Ltd, Santos UK (Kakap 2) Ltd, and JOB Kodeco Energy Co. Ltd.

According to the document, the largest debtor was Kangean Energy Indonesia Ltd with a total debt reaching US$45 million, which included $30.45 million in unpaid tax and $14.61 million in penalties.

Kangean is conducting activities in a production sharing contract (PSC) under the management control of Mitsubishi Corporation (Mitsubishi) and Japan Petroleum Exploration Co., Ltd (Japex), with Energi Mega Persada Tbk. (EMP) as a partner.

EMP, a subsidiary of PT Bakrie & Brothers, a business conglomerate controlled by the family of Coordinating Minister for People’s Welfare Aburizal Bakrie, controls 50 percent of Kangean’s stake.

The second largest is JOB Kodeco Energy Co. Ltd with a total debt at $32.23 million, which includes $21.78 million of unpaid income tax and $10.45 million in penalties.

ExxonMobil is the third debtor with a total debt of $22.82 million. ExxonMobil’s spokeperson Maman Budiman said the unpaid tax bills were still in dispute.

“ExxonMobil always fulfills its tax obligations. The $22 million you mentioned is still being processed by the tribunal court because there are different opinions about it,” Maman said through a short message.

Efforts to get reponses from Pertamina and EMP were unsuccessful.

Santos UK and JOB Pertamina-Golden Spike have debts of $2.39 million and $10.62 million respectively.

Mulyani said the income tax obligations were stipulated in Indonesia’s oil and gas contracts.
Private contractors must pay income tax based on as much as 48 percent of their gross revenue, while Pertamina’s obligation is only 40.5 percent of their gross revenue.

“As stipulated by regulations, the income tax must be paid by the 15th of the following month at the latest. The contractors must pay interest of 2 percent a month if they are late in this payment,” Mulyani said.

Data from the finance ministry shows that the income tax from the oil and gas sector last year reached $7.93 billion last year, up from $3.54 billion in 2007.

On her presentation, Mulyani also told lawmakers the government gained profits of Rp 2.06 trillion from subsidized Premium gasoline sales in January.

The profit was obtained because the retail prices during the month were higher than the pricing benchmark using MOPS (Mean of Platts Singapore daily oil price traded).

Mulyani’s hearing completed the series of testimonies both from government officials and oil and gas industry executives which had been carried out before the inquiry committee.

The team was set up in last June in a bid to uncover wrongdoings in the country’s energy industry.