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US: Exxon unveils 20 projects for next three years

by Sheila McNultyFinancial Times
March 7th, 2007

ExxonMobil, the world's biggest listed oil company, said on Wednesday the company will start more than 20 new global projects in the next three years that should add 1m oil equivalent barrels per day to Exxon's base volumes.

The net result is that Exxon is going to move from just over 4m oil equivalent barrels per day to close to 5m, growing volumes at more than double the rate of the competition.

Against that backdrop, it is clear how the possibility of having to abandon efforts to grow volumes in Venezuela are not going to put Exxon's portfolio at risk.

Indeed, Rex Tillerson, Exxon's chairman and chief executives, said at the company's annual analyst meeting on Wednesday that, given conditions in that Latin American country, "We are not contemplating any new investment in Venezuela." Indeed, he added, the very bases for new investment there is changing.

Energy nationalism in places such as Venezuela and Russia has hit the big oil companies, who are finding it increasingly difficult to grow reserves given the limited number of new pockets of easily accessible resources.

With regard to Russia, Mr Tillerson said Exxon understood that the country was sorting through its own energy future. He expected there was a strong recognition in the Kremlin that Russia would have to develop its offshore resources in a more timely or "perhaps more aggressive way".

Through that sorting process, Exxon, was content to continue work on the Sakhalin project. Indeed, he hoped Exxon's work on Sakhalin will be enough to convince Russia the company is worth pulling into other projects: "Let them see it on the ground; this is what our involvement brings."

In the meantime, Mr Tillerson is not pushing the government to access anything else. He said Exxon has told Russia, "You are going to have to tell us when is the right time."

Foreign countries are not the only ones standing in the way of growth opportunities for Exxon. He noted that the US state of Alaska has changed its fiscal terms 13 times in recent decades, even as Exxon has been evaluating probably every possible means of commercializing Alaskan gas.

While Exxon can take risks with energy prices, and so on, "We can't take fiscal-terms-changing-on-us risk," Mr Tillerson said. "The state of Alaska does not have a good track record."




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