Bush Admin. Urges Oil Lease Renegotiation

Bloomberg has reported that the Bush administration wants Marathon Oil Corp., Kerr-McGee Corp. and 54 other oil and gas producers to renegotiate Gulf of Mexico drilling leases that let them avoid paying as much as $10 billion in government fees. The Interior Department may ask the companies to voluntarily rewrite contracts from 1998 and 1999 to add a provision for royalty payments when oil and gas prices are high, said Johnnie Burton, head of the department's Minerals Management Service. Price thresholds for relief from royalty fees were accidentally omitted in those years and were included in 1996, 1997 and 2000. The U.S. House of Representatives last month approved a measure that would bar companies from any new U.S. leases until they agreed to fix the contracts from 1998 and 1999. The American Petroleum Institute, representing oil companies, said earlier this week that the leases are valid contracts that cannot be revisited. The bill still has to pass the Senate. Source: Bloombergg