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CEO Mulva pushes energy diversity
By Staff and Wire Reports

Imported oil is important, as are alternative fuels, says the top executive at ConocoPhillips.

The United States should import more crude from the Middle East and other foreign sources while also developing alternative energy sources to diversify supply, ConocoPhillips CEO Jim Mulva said Monday.

"The U.S. needs to encourage diversified sources of energy coming from the Middle East, Africa and Russia as opposed to concentrating on one source of energy from one location," Mulva said in an interview in Abu Dhabi.

A thriving global economy has driven demand for oil and natural gas, leading to a rush for resources by companies and governments alike. The number of drilling rigs operating worldwide reached a 20-year high Aug. 31, while a growing list of projects to refine oil and export natural gas have bolstered engineering and construction costs.

Competition for access has pitted longtime international oil companies like ConocoPhillips, Exxon Mobil Corp. and Royal Dutch Shell PLC against newcomers such as China National Offshore Oil Corp.

Winning refinery or natural-gas projects is a way for companies to develop partnerships with Middle Eastern governments and state-owned companies such as Abu Dhabi National

Oil Co. and Saudi Aramco that control more than 60 percent of the world's oil and gas resources, according to "Statistical Review of World Energy," a report by BP PLC.

"What the big oil companies don't have is access to resources, because the national oil companies have it," said Gene Gillespie, an analyst at Howard Weil Inc. in New Orleans. "But they do have access to markets, which the state-owned companies don't."

ConocoPhillips signed a contract in August to help Saudi Aramco to build a 400,000-barrel-a-day refinery in Yanbu on the Red Sea coast. The $6 billion facility is scheduled to be operational by 2011.

ConocoPhillips also is considering a proposal to build a 500,000-barrel-a-day refinery in the United Arab Emirates. Abu Dhabi-based International Petroleum Investment Co. is planning an oil pipeline to the east coast port of Fujairah, where the refinery would be built in order to bypass the Straits of Hormuz, which is adjacent to Iran.

"Given the resources that are in the Middle East, it's important for companies like ourselves to participate in the region," Mulva said. "When we undertake investment opportunities on the refinery side of the business, such as with Saudi Aramco or Abu Dhabi, those investments stand on their own and we don't look at them as a way to get an upstream opportunity."

ConocoPhillips, which would own 49 percent of the facility, must justify the cost of building both refineries at a time when it is digesting its $35 billion acquisition of U.S. natural-gas producer Burlington Resources Inc. in March, and planning a $10.7 billion oil-sands venture with Calgary, Alberta-based EnCana Corp., announced in October.

The Burlington deal has been positive for Oklahoma, with about 65 jobs being shifted from Fort Worth to Bartlesville.

ConocoPhillips also announced last year it would add about 500 jobs in Bartlesville and followed up last week with a plan to relocate 300 more jobs from Houston.

ConocoPhillips now employs about 2,700 people in Bartlesville



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