OGJ NEWSLETTER

OPEC resisted the temptation to meddle with its first half production ceiling of 22.1 million b/d or its price target of $18/bbl.

Under pressure, notably from Iraq to press for a $20/bbl crude price, the ministerial monitoring committee meeting in Vienna opted to leave last November's production and pricing pact untouched until the next ministerial meeting May 25.

Although no action was taken, Iraq's proposal for higher prices attracted widespread support. However, the prospect of second quarter price weakness produced a mood of caution.

Main opposition to the Iraqi proposal came from Kuwait, which fears that moves to higher prices will slow the trend toward higher demand for OPEC crude.

Kuwait would like the quota system abolished and market forces to set prices.

Saudi Arabia steered a course between the two positions, and it appears that at the May meeting it will not oppose market forces pushing up the price marginally.

However, the Saudis would probably veto if OPEC proposed to stimulate prices by holding back increases in production.

After the meeting, new OPEC Pres. Saddek Boussena of Algeria said Kuwait claimed quotas are irrelevant in the face of rising demand. Boussena said quotas are still needed in the short term.

European buyers and sellers reacted to the Vienna meeting by trading at lower prices. North Sea Brent blend moved last week at $17.95/bbl, 55 lower than before the meeting.

U.S. purchasers trimmed WTI posted prices 50 to $19/bbl as WTI futures bounced below $20 last week for the first time since November 1989.

Venezuela will supply Nicaragua with oil in April and May in place of an agreement the Soviet Union will allow to expire Mar. 31, a Nicaraguan newspaper reported.

Nicaragua will use $65 million in emergency U.S. aid to maintain oil and gas supplies. Venezuela expects to deliver 38,000 metric tons of crude in two shipments.

The Soviets provided Nicaragua 300,000 metric tons of oil the past 3 years without charge.

British Petroleum Co. plc will cap a major reshaping of the company with a reorganization that will more than halve staff at the London headquarters.

BP will eliminate 1,150 London positions, leaving 1,000 in London and relocating 250 of the eliminated employees.

The London cuts and reorganizations at BP Oil and BP Exploration are expected to save $500 million/year.

The Alberta government hopes to sell its 16.74% interest in the Syncrude tar sands plant near Fort McMurray, Alta.

Alberta Premier Don Getty said the Ontario government, for supply security reasons, is considering a large investment in the proposed $4.1 billion OSLO tar sands project in the Fort McMurray region. The federal government withdrew about $650 million in support last month.

A Canadian government tanker safety review panel set up by Prime Minister Brian Mulroney is expected to recommend tighter control on shipping traffic at the port of Vancouver on Canada's west coast.

Several planned projects, including a chemical export project and pipeline expansion, could boost tanker traffic, a panel spokesman said.

The U.S. Senate energy committee has begun a push to pass its Clean Air Act amendments bill.

The committee took up the legislation after the energy and power subcommittee failed to reach a compromise on acid rain provisions.

Chairman John Dingell (D-Mich.) hopes to pass a bill in April so the full House can debate it in May but doubts Congress will enact legislation until September or October.

Arcadian Corp., Memphis, largest nitrogen producer in the U.S., is moving to coordinate purchases of 240 MMcfd of gas for eight plants that produce 6,500 tons/day of nitrogen.

Arcadian, formed last year by Houston financier Gordon Cain and others, has facilities in the Gulf Coast, southeastern, and Midwestern U.S.

The U.S. Environmental Protection Agency has given the owners of fewer than 100 underground petroleum storage tanks an additional year to meet new insurance requirements.

Regulations were due to take effect Apr. 26 for owners of 13-99 tanks and Oct. 26 for those with 1-12 tanks. Both are 12 month extensions.

EPA Administrator William Reilly said the original deadlines would have created economic hardships for tank owners, and the extra time will allow states to develop insurance funds for them.

Petroleum Marketers Association of America told a Senate committee the delay is a positive step.

PMAA also said Superfund ambiguities need to be clarified because lending institutions, fearing liability, are reluctant to lend to marketers to upgrade tanks.

The Commerce Department has adopted a final rule governing export to Canada of as much as 50,000 b/d of U.S. produced crude as allowed in the U.S.-Canada Free Trade Agreement.

The rule, detailed in the Federal Register Mar. 19, requires exports to be approved every quarter.

Exploration/production companies are still interested in Gulf of Mexico exploration leases.

Ninety-six companies offered $590 million in 840 bids for 538 tracts in the central gulf area-wide sale Mar. 21 in New Orleans. Apparent high bids at Sale 123 totaled $427.4 million.

In last year's central gulf sale, 81 companies exposed $477 million in 821 bids for 591 tracts (OGJ, Mar. 20, 1989, p. 43). Apparent high bids last year amounted to $398 million. The highest bid in last week's sale was about $11 million for Vermilion South Addition Block 395 from a combine of Agip Petroleum Co. Inc. and Union Texas Petroleum Corp.

Interior Sec. Manuel Lujan expects President Bush to decide within 2 weeks whether to hold controversial Florida and California offshore sales.

Lujan conceded the Outer Continental Shelf drilling program "is dead in the water," and the administration needs "some new ideas" to ease opposition to offshore exploration. So he said Interior is considering sharing federal OCS revenues with coastal communities.

"Today, the threat to our environment seems more real to most persons than the threat to our energy supplies. This is a perception driving policy decisions from Washington, D.C., to Washington state and almost everything in between," Lujan said.

"If you think Congress is going to buck this trend and vote the other way and try to educate their constituents later you've got another think coming."

The Alaska Supreme Court has ruled that the state Department of Natural Resources improperly sold Camden Bay leases in 1987 because DNR did not consider the environmental effect of transporting any subsequent production to market.

The court ordered DNR to include the transportation methods in the sale's environmental impact statement.

ARCO Alaska Inc. said the court ruling does not void the leases. ARCO is drilling 1 Stinson in Camden Bay, the first wildcat in state waters off the Arctic National Wildlife Refuge.

Trustees for Alaska, an environmental coalition that filed suit to block the sale, said it will ask the court to invalidate the leases.