OGJ NEWSLETTER

Privatization continues to gather momentum in the world petroleum industry.

Pdvsa's privatization program remains on track despite political heat. The Venezuelan state oil company Nov. 16 will begin a new round of seeking international bids to operate marginal oil fields.

In June, four private companies/combines won the right to operate marginal inactive oil fields in Venezuela (OGJ, June 29, p. 40), the first time private companies have been allowed to produce oil there since nationalization in 1976.

However, only two-Benton Oil and Teikoku-eventually signed production agreements with the government, with Shell and Lingoteras not signing. This time, bidding will include active fields with low production.

Meantime, Trinidad and Tobago has offered to sell Pdvsa one of its refineries, OPEC News Agency (Opecna) reports. Opecna quoted Trinidad and Tobago Prime Minister Patrick Manning as saying the prospect of selling the 80,000 b/d Point Fortin refinery was raised during his visit last month with government and Pdvsa officials. Trinidad and Tobago has begun revamps at both its refineries that would allow increased processing of Venezuelan heavy crudes. Trinidad and Tobago also is interested in participating in Venezuela's $3.6 billion Cristobal Colon offshore LNG project, Manning said. The two nations also are eyeing joint ventures in exploration and refining.

Philippines expects to have state owned refiner/marketer Petron privatized by mid-1993. Agence France Presse (AFP) reports. While not disclosing a value, Finance Sec. Ramon del Rosario said the Petron deal could he bigger than the $370 million sale of Philippine Airlines earlier this year.

Petron is one of three refiner/marketers in the Philippines, competing with units of Caltex and Shell. It had net income of $81 million in 1991 and plans a $1 billion expansion to double refinery capacity to 100,000 b/d, for which it is seeking a partner (OGJ, Sept. 7, Newsletter).

Manila plans to keep 35% of the company, sell 30-35% to the partner and the balance to the public.

Taiwan's Chinese Petroleum Corp. plans to cut its work force of 19,000 by more than 5,000 as the company prepares for privatization.

The company placed a freeze on hiring and will make cuts reportedly through early retirements, resignations, and layoffs. CPC reported pretax profits of more than $880 million in its latest fiscal year.

The semisubmersible floating system is the most viable for Marathon's deepwater developments, Marathon's James F. Saunder told a Society of Petroleum Engineers luncheon in Houston late last month.

In 3,000 ft of water, development costs with a semi are $125 million less than for compliant tower and $175 million less vs. a tension leg platform.

A hypothetical economic prospect in 3,000 ft of water should have 70-100 million bbl of oil, 1.5-3 million bbl/well, and produce about 1,500-3,000 b/d/well, he said.

Conoco's Andrew Hunter said the current cost of deepwater development should be reduced by 50% to ensure project viability.

Conoco is working on a concept of a lightweight, wellhead platform held in place with casing strings in lieu of tendons. Production would be through a semisubmersible moored above the wellhead platform, capable of moving off the platform during severe weather.

Hunter also sees great need to reduce deepwater pipelaying costs that he estimates at as much as $500,000/day. His solution: pipelaying with a redesigned semi for as low as $50,000/day.

Reflecting the runup in natural gas prices since February, the number of rigs under contract in the Gulf of Mexico jumped to 90 in August from 59 in May, Salomon Bros. reports. The rebound has been mainly in jack ups and has boosted day rates by $3,000-5,000/day since early spring. Shallow water jack ups are fetching about $11,000/day and rigs rated to 300 ft bring $14,000-15,000/day. Gulf of Mexico action helped drive up world offshore rig utilization the second consecutive month in August to 74.7%.

Mobil has developed a new family of materials with molecular sieves that has "extraordinarily large pores."

Mobil calls the family MCM-41 and said it looks like a honeycomb under electron microscope. Further, Mobil has developed the materials with a customized system of pores and sizes that can be tailored to dimensions more than 10 times those found in conventional zeolites.

More third quarter 1992 results are in, with companies reporting mixed results compared with third quarter last year.

Quarter on quarter comparisons include Exxon $1.135 billion vs. $1.115 billion, ARCO $332 million vs. a $156 million loss, Phillips $99 million vs. $56 million, Occidental $61 million vs. $171 million, Maxus a $9.2 million loss vs. an $8.2 million loss, LL&E $2.6 million vs. $2.2 million, Snyder Oil $4.5 million vs. $2.7 million, and Questar $6.2 million vs. $1.8 million.

Disruption of Russian natural gas deliveries to western Europe last month may have been caused in part by factors more serious than Ukraine's unusually cold early fall weather (OGJ, Oct. 26, p. 30). Moscow's Izvestia says another reason Ukraine appropriated gas intended for export to Europe was that Russia had reduced gas supplies to Ukraine because of unresolved problems regarding price and volumes "under new conditions."

Moreover, Izvestia said, Valentin Kolomyev, an official of Ukraine's Ukrgazprom concern, cites an existing agreement between Ukraine and Russia whereby any curtailment of gas deliveries by Russia's Gazprom through pipelines crossing Ukraine's territory must be applied proportionately among all customers. Thus, he contends, Ukraine was merely legally using "in its own interests" part of Germany's quota of Russian gas exports.

Izvestia reports representatives of Ruhrgas stationed in Moscow were shocked when Russian gas deliveries to Germany were cut almost 50%. The former Soviet Union had promoted sales of Russian gas to western Europe with assurances that the U.S.S.R. was an especially reliable supplier.

Russia's Kaliningrad Province on the Baltic Sea is counting on a major increase in natural gas supplies to boost its economy.

A new joint stock company named Gazoil, registered in Kaliningrad, plans to finance construction of a second gas pipeline to Kaliningrad's new Yantar free economic zone, build a gas fueled electric power plant, set up compressed natural gas filling stations for cars and trucks, and accelerate use of gas in housing and public facilities.

Founders of Gazoil include Gazprom, St. Petersburg's Lentransgaz, and others in gas production and transportation sectors.

Sabotage may have been a factor in shutting down a gas trunk

line carrying Russian gas from the northern Caucasus region to trans-Caucasian republics including Georgia and Armenia.

Explosion and fire damaged a section of the pipeline in late October in an ethnically divided district of North Ossetia. There were no casualties, and an investigation is under way.

Iran is targeting sustainable oil productive capacity of 4.5 million b/d by the end of March, Middle East Economic Survey reports, about 4 million b/d onshore and the rest offshore.

National Iranian Oil Co. carried out tests Oct. 7-15 to prove sustainable capacity of 4 million b/d. MEES says even if there are delays, Iran is confident of hitting its target by third quarter 1993. Iran's production during August-September averaged 3.5-3.6 million b/d, MEES estimates.

Foreign firms continue to make inroads in China's E&D sector (OGJ, Sept. 28, p. 23). China National Machinery Import & Export Corp. let a $15 million contract to France's Sofregaz to develop natural gas reserves in Szechuan province and expand the gas grid at Chengdu to 52.5 MMcfd.

Signed on behalf of Chengdu Distribution Co., the agreement covers supply of high pressure aboveground storage tanks, gas compression and distribution facilities, pressure reduction stations, Scada systems, and cathodic protection. It also covers technical training with installation of storage tanks and Scada systems.

With help from Gaz de France, Sofregaz also will train Chinese technicians in operating high pressure lines and Scada monitoring.

Meantime, six Japanese firms have agreed to cooperate in building a refinery and petrochemical complex in China's Liaoning province. Japanese partners Itochu, Marubeni, Mitsubishi, Mitsui, Nissho Iwai, and Sumitomo would hold 51% equity interest in the $4 billion project. It would be the largest joint undertaking between China and Japan, AFP reports. Feasibility studies are to begin early next year, with operations to begin in 1999.