Nations pressure Big Oil for poverty money

from The El Paso times

TORONTO -- The oil industry is under assault globally by nations and even provinces that want companies like Exxon Mobil, Chevron and Suncor to cough up more royalties they can use to solve problems such as poverty and poor education.

First it was Venezuela. Now, Nigeria is reviewing its relationships with international oil companies, and the oil-rich Canadian province of Alberta is set to announce a decision today on increasing royalties from the energy industry. That move, the industry warns, could devastate Alberta's oil patch.

At least one analyst compared Alberta with Venezuela last month after a government-appointed panel called for the province to boost its total take from the energy industry by 20 percent a year, or roughly $2 billion.

Under President Hugo Chavez, Venezuela raised royalty and tax rates on foreign oil companies, then later took majority control of all oil projects as part of a larger nationalization drive of "strategic" economic sectors.

Chavez says those policies are ensuring that oil benefits Venezuelans instead of foreign corporations and governments.

In recent years, Russia and Bolivia have also asserted greater state control over their oil or natural gas assets.

A report by Alberta's provincial panel says royalties have not kept pace with world energy markets; a barrel of crude oil recently reached record levels of more than $90.

It says all projects in the booming oil region should pay more because "Albertans do not receive their fair share from energy development."

"There's definitely been a trend over the last year or two, a lot of countries looking to nationalize oil reserves," said Kyle Preston, an oil and gas analyst with Salman Partners. "It's a function of higher commodities prices. Oil companies are making more money and governments want a bigger share."

Alberta is home to vast reserves of oil sands, a tarlike bitumen that is extracted using mining techniques. Industry officials estimate that the region will yield as much as 175 billion barrels of oil, making Canada second only to Saudi Arabia in crude oil reserves.

"Chavez is not the kinda guy you want to be compared to. But yes, I could see that comparison since Chavez has increased royalties in his country," Preston said.

Greg Stringham, vice president of the Canadian Association of Petroleum Producers, called increased revenue sharing the biggest economic decision in Canada this year.

"The energy industry has been a phenomenal driver," Stringham said. "It not only affects Alberta ... . It's going to set the direction for where this industry goes and where Alberta goes the next five to 10 years."

In Nigeria, meanwhile, an energy adviser to President Umaru Yar'Adua said Tuesday that his country needs to make the most of its position as Africa's largest oil exporter.

Nigeria, a top supplier of oil for the United States, remains desperately poor due to years of corruption and lack of development.

Nigeria is the fifth-largest supplier of crude to the United States. Despite producing tens of billions of dollars worth of crude every year, few Nigerians have access to clean water or electricity.