 Gustavson
Associates, LLC has provided technical and economic consulting
services in restructuring, promotion and privatization of
international petroleum assets for most of its 30-year history.
This involves training in related topics provided to industry
and government representatives worldwide. A few of these
projects are described below; additional details can be
provided upon request.
PROMOTION IN CHINA
In 1985, the People's Republic of China announced the opening for foreign exploration of ten onshore provinces of south China. Gustavson Associates within a half-year period conducted a thorough literature search, mapped the area in suitable scales and provided a compilation and partial interpretation of the petroleum potential in south China. This compendium was successfully marketed to the industry in association with this opening and presently is used by most large international oil companies as part of their considerations for exploration in China.
In 1987 Gustavson Associates organized and led an early delegation of oil industry officials to China to initiate negotiation for exploration and development contracts. The company's work in China has continued to the present with major projects in the Bohai Gulf, East China Sea, Tarim Basin, Daqing area and elsewhere.
RESTRUCTURING AND PRIVATIZATION OF SEME OIL FIELD IN BENIN
In 1992, Gustavson Associates undertook an audit of the Projet Pétrolier de Sèmè (PPS) in the Republic of Benin, West Africa. The goal was to prepare a report on the complete operation, procedures, personnel and equipment, including recommendations for a massive restructuring of the PPS, which, at that time, was operating at a substantial negative cash flow and was threatened by an imminent shut-down. The restructuring project was supported and financed by The World Bank.
Gustavson Associates sent a three-man team to Benin to conduct a detailed audit. This audit included the following aspects:
* An interview of virtually all the employees of the PPS, from the Director General and other directors and officers of the PPS, to the manual laborers and secretaries. An interview was also conducted with some sub-contractors and with personnel from the Ministry of Energy, Mines and Hydraulics (MEMH) who were in charge of supervising the PPS operation. In total, about 400 people were interviewed, either individually or in groups.
* A physical inventory of the assets were made, including the equipment, production and storage facilities, spare parts, buildings, etc. The hydrocarbon reserves were also substantiated by reviewing various geophysical and geological reports and data to confirm their validity.
* The production, tank farm, tanker loading operations and procedures were reviewed from a technical standpoint and from an administrative standpoint. The marketing of the oil, along with the bidding procedures for the buyers was also audited.
The final report laid out the complete PPS operation in every technical and administrative detail and then made recommendations for a total operation restructuring and administrative reorganization along with an implementation plan.
Following the audit and representation, which was approved by the Ministry and accepted by The World Bank, Gustavson Associates assisted the PPS in implementing the restructuring and reorganization. Gustavson Associates put in-place an organization to run the PPS operation with less than 70 people, instead of the 366 that were previously in-place. In addition, several operational and administrative procedure changes were implemented which greatly increased the efficiency of the overall operation. Excess equipment and spare parts were liquidated by auction sales; extra warehouse space and office space was released to reduce the cost of rent. Sub-contractors no longer needed were terminated. Gustavson Associates especially guided the PPS in how to make such a massive personnel layoff, with a minimal impact. Less than 10 months after the beginning of the restructuring, the PPS was again operating with a positive cash flow.
In 1993, Gustavson Associates assisted the PPS in the liquidation of some major assets such as an offshore drilling platform, and supervised the reprocessing and reinterpretation of seismic data which lead to over 200 MMBO of additional reserves and the addition of several hundred BCF of proven and probable gas reserves. These new gas reserves lead to funding by the U.S. Trade and Development Agency in 1994 for a Feasibility Study for a combustion turbine electric power plant. This Feasibility Study has also been conducted by Gustavson Associates, and once built, this plant will greatly reduce Benin's import of electricity from neighboring countries.
Since then, PPS privatization procedures have commenced and the Ministry of Mines, Energy and Hydraulics has received five proposals from private oil companies to take over the PPS and develop the remaining reserves in a comprehensive manner. Privatization negotiations are presently ongoing.
RESTRUCTURING AND PROMOTION IN CÔTE D'IVOIRE
In 1993, Gustavson Associates was selected by the office of the Prime Minister and by PETROCI, the Côte d'Ivoire National Oil Company, to review the development cost of an offshore oil and gas field (Foxtrot) for an integrated power project.
Gustavson Associates prepared a report, along with engineering figures, showing that the development consortium was overstating the offshore field development cost by about $85 MM. Gustavson Associates assisted the government of Côte d'Ivoire in the negotiation against a U.S-French consortium. Following Gustavson Associates' arguments, a new strategy was implemented separating the gas supply from the power plant, and within a competitive supply process, the government of Côte d'Ivoire saved closed to $100 MM.
Later in 1993 and during 1994, Gustavson Associates did the reinterpretation of various seismic data in Côte d'Ivoire which lead to new projects. Gustavson Associates prepared color brochures and a 10-minute video tape, and implemented an international promotion campaign which resulted in a bidding round, with all the available concessions receiving several favorable bids from international oil companies.
Côte d'Ivoire is now becoming a major oil producer and net exporter in sharp contrast to its dire energy situation only a few years earlier. Gustavson Associates is presently providing additional interpretation on new blocks and will also promote any newly found prospect.
Promotion for Francophone Natural Resources Delegation from Africa
Gustavson Associates has thrice carried out all the necessary local arrangements and organized meetings and presentations for a promotional meeting and orientation visit for the delegations of natural resources industry executives from about 20 African countries. Each delegation presented the potential of their countries in natural resources and investment possibilities, while the U.S. companies presented their technology, services and investment interest in various sectors. This was followed by individual meetings between U.S. companies interested in investing in Africa and the delegation of the concerned individual country or countries. Gustavson Associates was at hand to facilitate the communication and lend technical and commercial support when necessary.
Promotion of Natural Resources in Bolivia
Gustavson Associates recently completed a for the Bolivian Ministry of Mines and Metallurgy. The project consisted of gathering and researching data for some 650 private mines or claims in Bolivia. The data were compiled in an electronic database for ease of search and retrieval of mines, types of deposits, location,, ore grade, reserves, etc. Mine data, along with a report on the economic geology, mining history and mining law, were presented in the Compendium written in both English and Spanish. Mine data were also provided on diskette for computer use. The Compendium served as a promotional and informational document for foreign investors interested in mining in Bolivia.
Oil & Gas Promotion for Romania In 1995 Gustavson Associates, in association with the University of Tulsa, organized, prepared and implemented a promotion of Romania's oil and gas potential in Houston. Over 200 industry executives participated, many of whom commented that it was the most valuable promotional event they had ever attended. The areas of investment opportunity include exploration, enhancement of existing fields, gas storage and downstream projects in manufacturing, refining and distribution. Our efforts introduced the international oil industry to this range of opportunities. Numerous new production sharing contracts are expected to be signed in 1996.
Oil
& Gas Promotion for Romania
In
1995 Gustavson Associates, in association with the University
of Tulsa, organized, prepared and implemented a promotion
of Romania's oil and gas potential in Houston. Over 200
industry executives participated, many of whom commented
that it was the most valuable promotional event they had
ever attended. The areas of investment opportunity include
exploration, enhancement of existing fields, gas storage
and downstream projects in manufacturing, refining and distribution.
Our efforts introduced the international oil industry to
this range of opportunities. Numerous new production sharing
contracts are expected to be signed in 1996.
Promotion and Training Provided to Oil & Gas Officials from Poland
Gustavson Associates organized and implemented a promotional meeting in Houston for Polish Oil & Gas Company. We also provided an orientation to the U.S. oil industry to four executives of the POGC and its affiliates in 1991. This included training and technology transfer in all phases of upstream petroleum operations. Briefings were arranged with major and independent oil companies, laboratories, service companies, consultants and trade organizations. A list of participants can be provided upon request.
Training Provided to Oil & Gas Officials from Hungary
Gustavson Associates has trice provided in-house training to officials of MOL, the Hungarian state oil company, in topics related to privatization, restructuring and promotion. These training projects have taken place in the U.S. and in Hungary. They have included high-level instruction on negotiations, appraisal of oil and gas assets, analysis of petroleum exploration and production agreements, etc. This training was funded by The World Bank and has been enthusiastically recommended by the MOL participants.
Other Training
Gustavson Associates has taught courses directly related to promotion, privatization and restructuring to industry and government participants for the past ten years. Entitled "Appraisal of Oil & Gas Properties" and , these courses are offered through the University of Tulsa four to six times per year. They have been given publicly in the United States and Canada, and in-house at such companies as Chevron and Texaco, in addition to the Polish and Hungarian state oil companies.
We have specifically oriented these highly successful seminars for a group of participants form any international or state-owned oil and gas company. The courses are designed to teach them the key commercial concepts of the international oil industry. The objective is to provide immediate support to senior personnel who are engaged in one or more of the following activities:
* Developing proposals to attract public and private sector investment
* Reorganizing the country's oil and gas sector
* Preparing petroleum legislation
* Revising the petroleum-related tax codes
* Negotiating with foreign oil and gas companies
* Evaluating large petroleum projects and foreign partners
The seminars are designed for senior management, economists, negotiators, petroleum engineers, geoscientists, attorneys, accountants or some combination of the above (and other) specialists. The courses cover the commercial aspects of petroleum evaluations and agreements, and feature numerous international case histories. Legal, technical and economic topics are emphasized in varying degrees, depending on the interests and background of the attendees.
The participants are given the hands-on opportunity to:
* Understand the current investment criteria of the international financial community and oil industry, so that they may prepare promotions accordingly.
* Predict if a foreign oil operator will produce prudently in the long term.
* Assess the economic factors related to a specific investment.
* Determine the management capability of an oil company.
* Arrive at the fairness opinion in an exploration and production transaction.
* Determine fair market values of oil and gas properties using several different methods accepted in the United States and Western Europe.
* Learn how to utilize Western reserves principles, procedures and reports.
* Translate internal rate of return requirements from oil and gas reserves and economic forecasts. |