Oil prices are softening amid surging OPEC output.
OPEC production averaged 25.25 million b/d in October, the highest monthly level in more than a decade, Middle East Economic Survey reports.
Production increased 325,000 b/d from September's level and exceeded the group's ceiling by 1.825 million b/d. Nymex WTI for next month delivery fell to an average closing of $20.55/bbl the week ended Nov. 6 from $22.22 the week ended Oct. 16. Algeria has called for voluntary production restraint, but MEES says Saudi Arabia believes "prices will start strengthening again once the market regains a correct perspective regarding the current fundamentals." OPEC's next meeting is Nov. 25 in Vienna.
Yemen plans to boost crude output to 1 million b/d by by 2000 and will consider joining OPEC, Agence France Presse reports.
Yemen produces about 200,000 b/d and is expected to hit 350,000 b/d by yearend 1993. Yemeni Oil Minister Saleh Abut Bakr Ibn Husseinoon says 26 companies are exploring Yemen, investing nearly $350 million/year.
Yemen plans to build a new refinery and expand its Aden refinery to keep up with increased output. Husseinoon says Yemen has offers from oil companies and banks to participate in the new $300 million, 100,000 b/d refinery at the southern port of Mukalla. The Aden expansion involves first hiking capacity to 200,000 b/d and then 250,000 b/d from 130,000 b/d. First phase will cost about $150 million, the second about $200 million.
There's more progress on resolving territorial disputes in the South China Sea. The Malaysia-Thailand Joint Authority, set up to manage gas development in a region where territorial claims are disputed by both nations, is on stream. The last stumbling block involved appointment of a CEO and choice of headquarters. MTJA, Kuala Lumpur, will be headed by Charu-udom Ruangsuwan, deputy permanent secretary of the Thai Industry Ministry, with a senior Malaysian official to serve as deputy CEO and six senior officials of both nations serving as managing directors.
Both governments also approved a draft of a production sharing contract MTJA will use as the basis for negotiation with Triton Energy, which holds part of the 7,300 sq km disputed tract (OGJ, Jan., 27, p. 40).
Will Malaysia become a net exporter of petroleum products?
Malaysia approved four refinery projects and three other petroleum related projects the first 9 months of this year, calling for $6.53 billion in investments. The petroleum projects make up 65% of total manufacturing investments approved in January-September. Kuala Lumpur estimates the four projects will increase Malaysia's refining capacity to 850,000 b/d from 214,800 b/d, Opecna reports. The refinery projects will cost about $3.9 billion and include a $1.5 billion plant planned by Elf (OGJ, June 15, p. 30).
Russian ultranationalists hope to reduce, if not eliminate, the role of foreign firms in developing huge Shtokmanovskoye gas field in the Barents Sea.
Moscow reports say Russian Company for Shelf Development (Rosshelf) wants to oversee Shtokmanovskoye development, claiming it can do the job for $3 billion less than the Conoco group established for that purpose. The Conoco group is conducting a Shtokmanovskoye feasibility study under an agreement signed with the former Soviet government and is trying to win the development contract. The chairman of the Russian Committee for Geology and Utilization of Mineral Resources expressed confidence the Conoco group will become Moscow's partner in Barents Sea gas development.
But Rosshelf claims its development plan would be of greater benefit to Russia by providing more jobs for Russians and by placing a large part of its equipment orders with domestic enterprises.
Rosshelf says as an offshoot of the military/industrial complex it can place contracts with defense industries for offshore platform construction, which would create 250,000 jobs, Moscow daily Kommersant reports. In addition, Rosshelf would build methanol and LNG facilities and supply fuel to the Kola Peninsula, all without government funds. Shtokmanovskoye's gas reserves are pegged at 106 tcf, and it reportedly could produce as much as 4.8 bcfd.
Meantime, Moscow expects Russian 1992 gas production to be about 22.56 tcf vs. 22.70 tcf in 1991. Russian gas exports to eastern and western Europe this year are estimated at 3.53 3.71 tcf. About 3.53 tcf will be exported by Russia to other former Soviet republics. Russian 1992 gas consumption is placed at slightly more than 14 tcf. Anatoly Shatalov, deputy minister for fuel and energy, says gas exports to Europe can't be increased now because demand is being met. Contracts signed by Russia for 1992 gas exports include delivery of 900 bcf to Germany, 540 bcf to Italy, 505 bcf to Czechoslovakia, 431 bcf to France, 244 bcf to Poland, 177 bcf to Austria, 169 bcf to Yugoslavia, and 166 bcf to Turkey.
Russian President Boris Yeltsin has promised his government will decree no new fuel price hikes before January, Moscow daily Izvestia reports.
The announcement was designed in part to stabilize crude and product prices, which soared on commodity markets in late October following reports Yeltsin signed a decree to transform Russian oil producing and refining enterprises into semiprivate joint stock companies (OGJ, Nov. 9, p. 37).
In Moscow and other Russian cities, rumors of a new jump in unofficial prices for gasoline and other petroleum products make the rounds "at a feverish pace," reports Trud newspaper.
Trud says many motorists are trying to stock up on fuel at present prices "so that they won't have to pay through the nose later on."
Government officials admit unofficial gasoline prices may again rise but caution drivers shouldn't panic. They say demand for gasoline could drop, permitting prices to stabilize or even fall because increasing numbers of motorists can't afford to buy fuel.
Meanwhile, Romania almost doubled gasoline prices recently. Further sharp hikes are anticipated before yearend.
Although the plan to privatize Italy's state owned ENI isn't expected to be unveiled until later this month, some details were leaked to the Italian press.
According to a report by the Italian press agency ADN Kronos, ENI units Nuovo Pignone and Snamprogetti will be sold soon-the former by 1993. In another 3-4 years, plans call for selling Snam Gas, Saipem, and Agip Coal, among other units.
Cuba is still trying to buy Venezuelan crude directly.
Both nations' foreign ministers met in Caracas last week to discuss such a deal, previously stymied by Venezuelan insistence on cash payment. The devastated Cuban economy leaves Castro angling for oil on credit or at preferential prices such as those given to Central American and Caribbean nations under the San Jose accord.
Caracas appears likely to continue the hard line, with Foreign Affairs Minister Fernando Ochoa saying there won't be any sales until the government is sure Havana can pay, and the San Jose accord won't be expanded. Until the breakup of the U.S.S.R., Venezuela supplied 60,000 b/d of crude to Havana in exchange for Soviet delivery of Ural crude to Ruhr Oel, a German joint venture of Pdvsa and Veba. Russia halted that arrangement last year.
Meantime, Pdvsa capital spending in 1992 will be about flat with last year's record outlay of $3.7 billion.
Much of that will go for stemming a 22-23%/year decline in production from older fields and expanding overall productive capacity slightly. Venezuela's crude productive capacity at yearend 1991 was 2.83 million b/d, and total liquids production now stands at slightly more than 2.5 million b/d.
The largest natural gas transmission interconnection between the U.S. and Mexico was dedicated last week in a ceremony at Valero's Penitas compressor station near McAllen, Tex. The 3.5 mile, 24 in. interconnect can carry as much as 400 MMcfd of gas from Valero's 24 in. system in South Texas into Pemex's 42 in. system outside Reynosa, Tamaulipas state.
Gas shipments from Canada to the U.S. Northeast will get a boost by Apr. 1, 1993, as a result of FERC approval of system expansions by Tennessee Gas Pipeline and National Fuel Gas Supply.
TGP will add 3,500 hp of compression at Lockport, N.Y., to expand capacity on its recently completed Niagara spur that extends 49 miles from the border connection with TransCanada PipeLines near Lewiston, N.Y.
National Fuel will receive 68.8 MMcfd and compensate TGP $8.4 million for the station expansion. National Fuel also will spend $4.8 million to add 1,350 hp of compression at its Concord, N.Y., station and 720 hp at its Lamont station near McKean, Pa.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
