Asian petroleum companies could revise contract terms for deepwater drilling, analysts predict
Global petroleum company BP Plc had its credit risk rating downgraded last week to effectively junk status after seeing its share price halve in the two months since its Deepwater Horizon drill rig exploded in the Gulf of Mexico on April 20, killing 11 people.
The environmental disaster has had a ripple effect on petroleum companies worldwide, but some see opportunity for Asia.
The oil giant was given a six-notch credit downgrade to “BBB” by credit rating agency Fitch on June 15 on concerns that the company’s liabilities were “skewed much more heavily toward the near term than previously anticipated”, Fitch said in a released statement. The company share price hit US$29.90 on the day.
The price rallied on Wednesday following news BP had agreed to fund a $20 billion compensation fund controlled by the US government – the market had expected the government to push for more money – and closed the week at $31.76, about 48 percent lower than its April 20 close of $60.48.
PetroVietnam Drilling’s parent company, Vietnam Oil & Gas Group, which also has subsidiaries in Cambodia, said in 2006 that its strategy was to prioritise exploration in deepwater and remote offshore areas as output from existing production in shallow waters slows, Bloomberg reported on Friday.
With the US banning deepwater drilling for at least six months and other regions following, eyes are turning to Asia.
The International Energy Agency plans to hold its first meeting with ASEAN and APEC next year to discuss measures to deal with emergency supply disruptions after Norway followed the US ban and Russia suggested it could tighten its rules, according to Bloomberg.
Australia, meanwhile, has ruled out suspending exploration, despite pressure, instead offering 31 drilling areas in waters more than twice the depth of BP’s leaking well, according to Bloomberg.
Chevron Corp, Royal Dutch Shell Plc and ConocoPhillips, who all have interests in Cambodia, are among the companies tilting to tap into more than $185 billion of Australia’s planned oil and gas projects.
But Total SA, Total Cambodge’s parent company, was reported as being sceptical the deepwater moratorium would last long, Bloomberg reported Friday.