OGJ NEWSLETTER
Oil companies are scrambling to deepen their involvement in the Pacific Rim's oil sector to position themselves for the region's expected soaring oil and gas demand growth this decade.
Oil demand in the Asia-Pacific region will leap by 2 million b/d to 13 million b/d by 1995, forecasts Petroleum Association of Japan. PAJ predicts the region's major oil suppliers, including Indonesia, Malaysia, and China, will become net oil importers by 2000 because of rising domestic demand. The region's oil demand jumped to 11 million b/d in 1990 from 9 million b/d in 1987. Australian imports of Mideast oil are expected to rise after that country's oil output sags to 550,000-600,000 b/d by 2000 from a peak of 650,000 b/d in 1995, says PAJ.
That sort of scenario is prompting Middle Eastern oil and gas exporters to boost productive capacity, Pacific Rim importers to seek new oil and gas supplies in the region, and companies to jockey for a bigger piece of the downstream pie there.
Saudi Arabia is pushing ahead with plans to expand sustainable oil production capacity to 10 million b/d from 8.5 million b/d. Ralph M. Parsons, manager for development of southern oil fields, shortlisted nine companies to bid for contracts in the Hawiyah area of Ghawar field. Projects in this area include installation of 1.35 million b/d of seawater injection capacity and expansion of oil/gas separation and wet crude handling capacity to 1.2 million b/d. In the northern area, manager Fluor Daniel invited companies to prequalify for expanding capacity in Marjan and Zuluf offshore fields at a cost of $700 million. A $300 million contract for Marjan calls for increasing overall production capacity by 100,000 b/d to 600,000 b/d, upgrading gas/oil separator plants and gas compression facilities, and constructing new utilities. At Zuluf, Fluor is eyeing a $400 million, 900,000 b/d wet crude handling facility.
Qatar has inaugurated its $1.3 billion North field development project after earlier problems with start-up of the 150 tcf offshore field (OGJ, Aug. 19, Newsletter).
A Bechtel-Technip joint venture completed the project, under way since 1987, within budget. North is the linchpin of Qatari efforts to shift its exports focus to gas from oil, notably LNG shipped to Japan and South Korea. Thailand also entered the Qatari LNG picture recently (OGJ, Aug. 26, p. 21).
Japan may be willing to spend as much as $10 billion to develop oil and gas off the U.S.S.R.'s Sakhalin Island (see story, p. 42), reports Kyodo News Service. Japanese companies seeking development project contracts to be let in October include Mitsui, Idemitsu, JNOC, C. Itoh, Mitsubishi, and Showa Shell.
BP is pursuing a 25% interest in Malaysia's planned $1.4 billion, 100,000-130,000 b/d sour crude Malacca refinery, a joint venture of Petronas and international companies. Caltex and Taiwan's CPC have pulled out of the project (see story, p. 40, and OGJ, July 1, Newsletter), and South Korea's Samsung remains.
Nigeria's oil sector expansion continues apace in an improved investment climate (OGJ, Aug. 26, Newsletter).
Chevron Nigeria plans to spend $280 million on operations in 1992, up 3% from this year, and jump outlays still further to $370 million in 1993. Spending will go to development of eight oil fields east and west of the Niger, seismic surveys, and exploratory wells. The joint venture of Chevron and NNPC produces 312,000 b/d and added oil and gas reserves of more than 370 million bbl and 1 tcf the past 2 years. It also is pressing a 210 MMcfd Escravos associated gas utilization project.
Meantime, construction of third phase of Nigeria's products pipeline grid is to begin soon. Plans include installation of storage facilities at Minna and Yola and laying more feeder lines to the 3,000 km system.
As the developing world's appetite for oil and gas grows, will environmental concerns curb the demand for conventional hydrocarbon fuels in the developed world?
A carbon tax on fossil fuels in the European Community could peak at the equivalent of $10/bbl, according to a report by Data Resources Inc., Paris. A carbon tax has been proposed as part of a campaign to alleviate the postulated greenhouse effect and DRI looked at the overall economic effects of such a measure. DRI's scenario entails introducing such a tax in 1993 and continuing it to 2000. It would vary in relation to thermal coefficient of fuels involved. All fuels were included in the study, even nuclear and renewables, but fossil fuels attracted the highest tax rates. DRI estimates an incremental drop in GNP of the eight leading European countries of 0.06%/year and rise in inflation of 0.2%/year during 1995-2005 as a result of the tax.
However, it would improve those countries' trade balances, air quality, and transportation efficiency, says DRI, advising the tax be phased in and applied to all sectors.
Italy's ENEL will purchase 1 million metric tons/year of Venezuela's Orimulsion--an emulsion of heavy Orinoco crude, water, and surfactant designed to compete with coal as boiler fuel-to produce synthetic gas to back out natural gas in a combined cycle electric power plant. Bitor, a venture of Pdvsa and BP, will supply the fuel to the utility beginning in first half 1994.
The venture has lined up other long term contracts totaling 8.1 million metric tons/year. Bitor says the Orinoco belt by 2000 could supply 2% of the primary energy used to generate electricity in western Europe, eastern North America, and Japan. Bitor is targeting output of 50-60 million tons/year by 2000 with 50% of that earmarked for export to Europe.
Turmoil may be subsiding for one South American state oil company and bubbling over for another. Unconfirmed press reports have Venezuela's President Perez relaxing a recent energy ministry directive that assumes control over much of Pdvsa's operating decisions (see editorial, p. 19, and story, p. 25).
Meanwhile, Petrobras is hunkering down for an expected national oil workers' strike Sept. 11, the second this year (OGJ, Apr. 1, Newsletter). Unions want a 370% wage hike, but the government offered only 35%. Union leaders canceled talks last week. Brazil's refineries are running flat out, and Petrobras has stepped up imports of diesel, LPG, and naphtha.
Petrobras Pres. Alfeu Valenca resigned late last month, reportedly in protest over the government offer. Succeeding him is refining/transportation director Ernesto Teixeira Weber.
Depressed gas prices and low demand for heavy oil will cut previous estimates of 1991 Canadian industry capital spending by 12% to less than $7 billion (Canadian), Canadian Petroleum Association says. CPA earlier had pegged a hike in outlays of as much as $700 million but now says spending will stay at about 1990 levels. The CPA reports the industry upstream sector earned $21.5 billion in 1990, up 17.4% vs. 1989--an increase largely offset by a spending hike of 16.2% to $18.8 billion. CPA projects oil prices at $20-22 (U.S.)/bbl the rest of the year, the recent blip resulting from Soviet chaos notwithstanding.
Nymex plans a series of seminars to educate industry about the sour crude futures contact it expects to launch this winter in Houston, Dallas, Santa Monica, Calif., Singapore, Calgary, New York, Denver, and London.
U.S. cogeneration demand for gas will jump to 1.9 tcf/year by the mid-1990s from about 1 tcf/year currently, says AGA.
AGA pegs gas share of the cogen market at 60% in existing plants and 67% in planned units, with sharp regional differences.
Shell plans to slash its chemical emissions to air, water, and land by about 95% by 1995, a decline of more than 165 million lb. Air emissions are to drop 55%, or 7 million lb. About 88% of that reduction has been achieved, mainly through a halt to injection of hazardous wastes at downstream sites. During 1989-90, Shell cut overall emissions 3% and air emissions 11%. Shell is participating in EPA's voluntary industrial toxics project, with plans to cut emissions of nine target chemicals 55%, or 2.5 million lb. It also eyes cuts of 65%, or 2.9 million lb, for four chemicals not on the EPA list.
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