OGJ NEWSLETTER
The push to end gas monopolies continues to spread across Europe.
After a year's study, Britain's Monopolies & Mergers Commission has recommended British Gas' gas transportation and merchant functions be split. MMC recommends BG's domestic supply monopoly be reduced by 1997 and total free market competition be in place by 2002, with merchant functions spun off as a separate company by Mar. 31, 1997.
In reducing the monopoly, it would be restricted to users of 150 MMBTU/Year vs. the current 250 MMBTU/year. Price ceilings would be relaxed to compensate for the loss of business. BG CEO Cedric Brown claims the move will cost 20,000 jobs in 3 years, although U.K. analysts see the MMC report as less stringent than expected. Industry watchdog Ofgas welcomes the MMC report, but the Gas Consumers Council contends relaxing tariffs would cost consumers an added L300 million in 1994-97.
France's government is inching toward deregulation of its natural gas and electric power sectors. The government commissioned Claude Mandil, general manager of energy and raw materials at the Ministry of Industry, to study how France could introduce more flexibility into the monopolies of Gaz de France and Elecricite de France in line with European Community deregulation policy. This involves scrapping GDF's and EDF's import/export monopolies, opening distribution to third party access, and introducing unbundling of production, transportation, and distribution functions. Mandil must determine how flexibility can be introduced while maintaining supply security and equalized regional tariffs.
Total and Croatia's state oil company INA are pressing a proposed $1 billion LNG receiving terminal on the island of Krk in the northern Adriatic Sea off Croatia. Total Manager for Central Europe Alain Heilbronn said a feasibility study of the project, under discussion for years, has been commissioned and should he complete by yearend. Total would lead a group to build the terminal and a gas distribution network in Croatia with pipeline links to Slovenia, Hungary, Czech Republic, and Slovakia.
Exxon has asked Indonesia to resume negotiations on a multibillion dollar project to develop supergiant Natuna Island gas field in the South China Sea. Indonesia called off talks last month because of disputes over production sharing, taxes, and legal issues. Government officials said Exxon sought certain assurances on project safety in the event of political upheaval, wanted a 40% vs. 48% tax take, and opposed a 70-30 ownership split favoring Pertamina. The government also cited poor project economics - with a capital outlay it pegs at $17.5 billion - and Exxon's demand to use courts to settle future problems. Natuna's estimated 210 tcf resource is said to be about 70% CO2. Pertamina claims it can meet commitments to supply LNG to Japan, South Korea, and Taiwan for 20 years without Natuna gas.
China National Petroleum Corp. plans to slash its work force of 1.5 million by one third, Beijing's official China Daily reported. The state oil company has shifted 150,000 workers to service industry jobs, with the remainder to be relocated by 1995, and its management is being restructured.
Communist Cuba's first oil and gas licensing round, with an August deadline, appears to be a bust, says Latin America Weekly Report.
Many firms initially expressing interest have withdrawn, and barring a last minute rush, there likely will he only one or two firm bids for the eight onshore and three offshore blocks on offer. One major said none of the blocks meets its screening criteria, and added to the political risks, commercial terms and geology are not attractive enough.
Philippine President Fidel Ramos approved a plan to privatize state petroleum company Petron Corp. by selling as much as a 60% interest. Manila likely will sell a 40% stake to a partner by yearend and another 20% early in 1994 through public offering and employee stock option plans.
Two Philippine companies have acquired from Ireland's Dragon Oil plc interests in blocks scheduled for exploratory drilling soon off South Korea, Thailand, and Philippines. Basic Petroleum & Minerals Inc. and Palawan Oil & Gas Exploration Inc. acquired a 10% stake in Block Y 200 km south of South Korea, scheduled for an October spud date, with Dragon retaining 40% and South Korea's Pedco 50%. Basic/Palawan also acquired 7.5% in a block in the western Malay basin in the Gulf of Thailand, where state owned PTT holds 70% and Dragon 22.5%. The two Philippine firms also plan to take as much as 10% in a Dragon prospect off Mindoro Island in exchange for Dragon acquiring a 13.75% interest in a block 280 km southwest of Manila, where Basic/Palawan plan to spud a well in first quarter 1994.
A Brunei company controlled by the younger brother of the country's sultan said it has won approval to invest $9 billion in Vietnamese petroleum projects that could include U.S. companies once that country's embargo of trade with Viet Nam is lifted, probably next month.
Primal Corp. Sdn. Bhd., headed by Prince Sufri Bolkiah, said Hanoi approved 19 projects, mostly in oil and gas exploration and including a petrochemical plant and infrastructure development. The agreement, covering at least 20 years with options to extend, was signed with the Viet Nam State Committee for Cooperation and Investment. No other details are available, but western diplomats say the deal would be Brunei's biggest investment in Indochina. Joining Primal is Singapore trading firm Asia Pacific Resources Ltd. Amoco and Integra International Corp. reportedly are interested in joining the combine, likely to he based in Singapore, as is Mitsui.
U.S. Minerals Management Service will help Russian officials develop a regulatory program for private companies developing oil resources.
MMS assistance, through the U.S. Agency for International Development, will be provided in phases the next several years, with training given in both countries. The MMS training program includes assessing environmental information, evaluating mineral resources, conveying exploration and development rights, and managing operations, revenues, and information.
More headaches are in store for Alyeska Pipeline.
Alaska and federal regulators have ordered an audit of the Alyeska operated Trans-Alaska Pipeline System's quality assurance after severe vibration shook TAPS' Yukon River crossing pump station Aug. 11. The Joint Pipeline Office, which oversees TAPS, said the shaking damaged supports and may have damaged the pipeline. Alyeska must provide an initial finding within 14 days and a formal report in 30 days of its investigation of operating procedures for surge conditions. The vibration occurred as an ultrasonic pig was making a scheduled run through the main line, damaging a 4 in. drain pipe and a support, with no oil spilled. Alyeska blamed the shaking on secondary piping inadequately fixed to a wall.
An imminent surge of about 100,000 b/d of added crude productive capacity off California may be what finally pulls Goodyear's All-American Pipeline Co. (AAPL) out of its long financial doldrums.
AAPL, built in the mid-1980s for $900 million mainly to transport crude to Texas from big oil finds made in the late 1970s-early 1980s off California, has reached agreement with three producers on tariffs and rate structure covering transport of California OCS crude in and outside California during January 1996-August 2007. Notably absent is a throughput agreement.
AAPL has languished for years with throughput at a fraction of what had been projected, mainly because of years of opposition that blocked or delayed offshore development plans. Point Arguello expanded production - enabled by a temporary tanker permit - and expected start-up this year of added capacity in Exxon's Santa Ynez Unit could boost AAPL throughput to more than 300,000 b/d in 1996, when Point Arguello partners must halt tankering. AAPL's agreements are with Exxon, Chevron, and Texaco. Combined output is expected to jump to 170,000-175,000 b/d.
Dogged by the prospect of diesel shortages in California, the California Air Resources Board has granted variances that effectively waive three refiners from complying with the state's tough new diesel fuel specs until next year. CARB granted Chevron, Unocal, and Ultramar-with 89,000 b/d of the state's total 167,000 h/d of diesel capacity-variances because the three need more time to complete refinery upgrades. The three will begin phasing in spec diesel Jan. 1, 1994, and all three must be in full compliance Oct. 1, 1994. In the interim, CARB is assessing the three a 5-60/gal fee for nonspec diesel produced to keep competition on an even keel.
Shell and Mobil haven't said to what extent they'll remain in the state's diesel market, but CARB says it has enough commitments from other refiners to cover demand for new spec diesel projected at 155,000 b/d.
Copyright 1993 Oil & Gas Journal. All Rights Reserved.