The cold December in the U.S. sent heating fuels prices soaring and crude prices to the highest levels since the historic 1985-86 price crash (see story, p. 24).
WTI futures for February delivery closed Jan. 3 at $23.68/bbl, up almost $2 on the week.
That is the highest since mid-January 1986, when prices were plummeting to about $10/bbl from more than $30/bbl. WTI postings followed to $22.50/bbl, up $1.50 last week.
Heating oil futures climbed 20 on the week to $1.02/gal Dec. 29, the last trading for January deliveries. February delivery heating oil closed Jan. 3 at 78/gal.
Spot propane prices at Mont Belvieu, Tex., closed at as high as 74/gal Jan. 2 before easing Jan. 3 to 60/gal, three times early December prices.
Brent blend, the best indicator of North Sea prices, continued to advance strongly in response to a tight U.S. products market, and low water in the Rhine river slowed barge traffic, retarding European product deliveries.
Brent blend for January delivery topped $22/bbl, the highest in 4 years, and Brent for February delivery advanced to $22.10/bbl.
Dubai crude, on which many Middle East prices are set, also moved ahead of the $18/bbl level many gulf producers have been seeking, to trade at $18.70/bbl.
Amid the price turmoil, Norway partly relaxed its rigidly enforced, across the board crude oil production cuts designed to support world crude prices.
After OPEC's decision in December to raise its production ceiling, Norway's Ministry of Petroleum and Energy recommended the 7.5% restriction be abolished. The Norwegian Foreign Affairs and Finance ministries opposed removal of the restriction.
A compromise 57, cut was introduced for first half 1990, effective Jan. 1, and Norwegian sources believe chances of complete abolition in second half are good. Norway produces about 1.7 million b/d.
British and French oil cleanup crews deployed booms and dispersants to protect sensitive parts of Morocco's Atlantic coast from a 170 sq mile slick that formed when about 452,000 bbl of Iranian light crude leaked from the Iranian tanker Kharg 5.
An explosion blew a large hole in the vessel's side Dec. 19. Whether the oil reaches the coast depends on winds and tides.
Strong winds have helped break up and partly disperse the slick but also moved the remaining oil closer to the shore between Rabat and Safi, where Morocco has a thriving fishing and shellfish industry.
A federal task force sent President Bush options late last week for three controversial offshore lease sales--none of which recommended canceling the sales.
Bush created the group last year to advise him regarding Sale 91 off northern California, Sale 95 off southern California, and the portion of Sale 116 off Everglades National Park (see story, p. 14).
The report gives Bush three options for each sale. It is believed to favor drilling off California under tight environmental controls and off southern Florida with more restrictions.
Bush is expected to decide on the sales late this month or in February.
BHP Petroleum Pty. Ltd. has reached a preliminary agreement with Viet Nam Oil & Gas Co. (Petrovietnam), the Vietnamese national oil company, for a minimum $48.4 million, 5 year exploration program in the South China Sea off Central Viet Nam between Quang Ngai and Qui Nhon.
A final contract is expected to be signed by June 30.
Meanwhile, Geochem Group Ltd., Chester, U.K., will perform a nonproprietary regional geochemical evaluation this year encompassing 18 wells off South Viet Nam under an agreement with Viet Nam Petroleum Institute.
Work continues toward field developments off Canada in the Atlantic.
PetroCanada and Canadian units of Chevron, Gulf, and Mobil formed Hibernia Management & Development Co. Ltd. in Calgary to develop and operate Hibernia oil field off Newfoundland. When organized, the company will move to St. John's, Newf.
Separately, Lasmo Nova Scotia Ltd. applied to develop Cohasset and Panuke oil fields off Nova Scotia with a converted jack up.
Production is estimated at as much as 35 million bbl of oil during 6 years, possibly starting as early as 1992.
Algeria's state owned Sonatrach has formed a 51-49 joint venture with Total to boost production of the country's oil and gas fields.
The venture will start work on Hassi Messaoud oil and gas field and move to other fields later.
Sofregas, Gaz de France's engineering subsidiary, has signed a framework agreement with Kiev Gas Institute to create a joint venture, Soyoz Gas Projeks-Sofregas JV, to become involved in the transport and export of gas, condensates, and LPG and study improvements to Soviet gas networks.
Spain will need to invest about $10 billion, including $3.9 billion in the chemical industry, to enable its industry to comply with European Community environmental standards, according to the Spanish Ministry of Industry and Energy, Claudio Aranzadi.
The pace at which Spain is opening its downstream market to foreign competition may have angered EC, but foreign companies are still finding their way into the country (OGJ, Dec. 18, 1989, Newsletter).
Mobil Corp. is forming a $75 million joint venture with Larios SA of Spain to install and operate 200 gasoline stations by 1995.
BP Espana SA, which planned a $200 million joint venture with Petroleos de Mediterraneo SA to establish a 150 station gasoline network by yearend 1993, has upped the scope of the operation to a 400 station investment worth $400 million.
Petromed plans to spend about $70 million on its own to set up its own retail network under an agreement with Campsa, the state controlled marketing and distribution company, which will lose its downstream monopoly by 1992.
Petroleos Mexicanos is expected to resume talks soon on acquisition of 10% of Spain's state controlled oil company Repsol, which sold 26% of its shares to the public last May.
Previous, long running negotiations foundered because of a price dispute.
The Mexican government's new openness to foreign investment has brightened the outlook because Repsol wants to enter Mexico as part of its overseas expansion.
Repsol aims to secure Mexican crude supplies at satisfactory prices and participate in Pemex downstream projects.
Pemex, Spain's largest crude supplier, delivered an average of 208,000 b/d in first half 1989, with Repsol taking about 100,000 b/d.
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