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BP's Browne weighs in on Gulf of Mexico lease renegotiation move
Platts
Washington
Petroleumworld.com 06 16 06
BP's Chief Executive John Browne Thursday peripherally weighed in on the
push by the US Congress to force 56 oil and gas companies, including BP, to
renegotiate existing offshore Gulf of Mexico drilling lease contracts that
allow them to avoid paying royalties despite high prices."We expect the continuity of contracts," Browne told an audience in
Washington, where he was presenting the company's annual statistical review.
Although he would not comment on the specifics of the debate, Browne said that
sanctity of contracts should be expected everywhere in the world, including in
the US.At issue are a series of deepwater leases granted to oil companies by the
US government in 1998 and 1999 that inadvertently omitted clauses that would
require royalty payments if commodity prices rose. Congressional investigators
say the omission could cost the US Treasury as much as $10 billion in lost
revenues.The House of Representatives, in response, recently passed a measure that
would force companies to renegotiate the contracts if they hoped to gain new
offshore leases in the future. The oil industry responded angrily to the
measure, which has to be discussed in the Senate, with the American Petroleum
Institute saying that it would violate the existing contracts and have a
chilling effect on deepwater investment.Browne was among the chiefs of five major oil companies who wrote a
letter to the administration saying that forced renegotiations of leases would
discourage deepwater oil and gas development."We rely upon the sanctity of contracts in everything we do, and any
attempt to diminish the role of contracts in America should be met with
serious concern," said the June 12 letter, also signed by chief executives of
ExxonMobil, Shell, Chevron and ConocoPhillips.While Energy Secretary Samuel Bodman has indicated that the Bush
administration is not in favor of the House measure, Minerals Management
Service Director Johnnie Burton in a hearing Wednesday said that she hoped
companies would be willing to voluntarily renegotiate the contracts.--Cathy Landry, cathy_landry@platts.com
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Platts 15 06 06
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