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News // Oil and gas worldwide

US Interior Sec to Review Oil Cos' Controversial Leases

24 February 2009 , 12:40Ksenia Kochneva807
Salazar, speaking to reporters, also said his department was considering how to recoup billions of dollars in revenues the government believes it's owed by oil companies because of controversial leases in the Gulf of Mexico that were signed in the late 1990s but omitted royalty price thresholds.

Many of the companies have been willing to pay royalties on future production, but some Democratic lawmakers have tried to pass legislation that would prevent the government signing new leases with the firms if they don't again negotiate.

Six companies - including BP PLC, Royal Dutch Shell, ConocoPhillips and Marathon - originally agreed to pay royalties on the leases for production from October 2006. But negotiations have stalled, particularly after a court ruling in favor of the oil industry, and the firms only represented a fraction of the total lease owners.

Around 40 companies representing 80% of the production haven't agreed to re-negotiate the leases, including Exxon Mobil Corp., Total SA, Chevron Corp. and Anadarko Petroleum Corp., according to Interior Department data. Democrats have been seeking royalty payments for all output from the leases.

Salazar has said one of the royalty changes he's considering doing away with is the royalty-in-kind, or RIK, policy and other programs. The RIK allows companies to pay their royalties to the government in oil rather than cash.

Source: Dow Jones Newswires

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