SPANISH OUTLAYS TO SHOW DOWNSTREAM ACCENT

Oct. 22, 1990
Spain's oil and gas industry will spend more than $9 billion during 1991-94 to expand and upgrade its operations, predicts a study by the Spanish Ministry of Industry and Energy. Most of the spending will occur downstream in a program that is designed to strengthen the ability to compete in domestic and European markets. Under terms of Spain's entry into the European Community, the country's highly protected oil products market must be fully opened to competition in 1992.

Spain's oil and gas industry will spend more than $9 billion during 1991-94 to expand and upgrade its operations, predicts a study by the Spanish Ministry of Industry and Energy.

Most of the spending will occur downstream in a program that is designed to strengthen the ability to compete in domestic and European markets.

Under terms of Spain's entry into the European Community, the country's highly protected oil products market must be fully opened to competition in 1992.

In another report, the ministry said Spain will need to increase production and imports of gas to meet growing demand during the next decade.

Gas use is expected to grow 25% to 221 bcf in 1993 from 177 bcf in 1989. And by the end of the decade demand could rise to 259 bcf.

SPENDING PROGRAM

The Ministry of Industry and Energy said outlays by state controlled Repsol SA will account for about 60% of total oil and gas spending during the next 4 years, or about $5.5 billion.

Lack of significant discoveries in Spain in recent years has trimmed spending for exploration and production. Activity in this field by Spanish and foreign operators has fallen substantially in the last few years.

Major outlays are expected in refining to increase capacity for light fuels and improve product quality. In product distribution and marketing, spending will include construction of pipelines, new sales outlets, and addition of convenience stores at service stations.

In petrochemicals, the goal is to hike production of base materials, plastics, and some advanced, higher value added products.

Main outlays in gas operations will expand the country's pipeline network, build storage facilities, and promote gas use by industrial and residential customers.

UPSTREAM EMPHASIS

Emphasis upstream will center on the Cantabrian Sea and onshore areas. Activity in the Spanish Mediterranean will remain low.

Last year operators drilled 11 wildcats in Spain, all dry, vs. 12 in the previous year.

Four of the wildcats were drilled onshore and seven offshore, four in the Cantabrian Sea and three in the Mediterranean. Footage edged up to 86,060 ft from 84,640 ft.

The number of wells drilled has steadily declined from the peak of 31 in 1985.

The most active operator in 1989 was Repsol Exploracion SA, which drilled six wildcats, four onshore and two offshore. Shell Espana NV drilled three wells offshore, and Chevron Oil Co. of Spain and Conoco Spain Ltd. each drilled one offshore well.

The year was marked by the withdrawal of Amoco Espana Exploration Co. from Spanish upstream operations. The company said market conditions no longer justified its presence in Spain, where results had been very disappointing. Amoco sold its holdings to Petro-Canada Espanola SA and Shell.

Spain's oil production fell 30% to 20,770 b/d in 1989, of which 17,510 b/d came from Casablanca field.

Gas production increased 70% to 56 bcf. Gaviota field in the Cantabrian Sea with 55.6 bcf accounted for most of the production. The remainder came from onshore Serrablo field, which is in decline.

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