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U.S. policies regarding such areas-most notably of late Myanmar and Iran-and the advancement of U.S. economic and other interests abroad need to follow a path that leads to improved conditions for the populations of the countries involved, Beach contends.

The process hinges upon a transfer of skills, values, and business acumen to support development of a strong middle class that ultimately will demand change, he says.

"Change happens from within; it doesn't happen from the imposition of unilateral sanctions by some country against another."

Beach says Unocal has yet to see final language of a sanctions measure against Myanmar being drafted by the U.S. Treasury Department.

"Given what we know about the bill, and the intent of the bill...It will not concern us about the projects that we already have under contract.

"What it eliminates is, of course, any potential of entering into new projects beyond the ones we already have in the mill."

Beach says sanctions on Myanmar will "have absolutely no effect on our (overall) strategy for Southeast and central Asia...that's where the growth and the opportunities are in the energy business. We'll plow ahead as if nothing had happened."

About 350 U.S. companies have banded together in a group called U.S.A. Engage to address the broad issue of unilateral economic sanctions and lobby against the trend toward using them as an instrument of U.S. foreign policy.

Beach notes that, in the last 4 years, 61 unilateral sanctions have been imposed on 35 countries that represent about 19% of the world's gross domestic product. "That equates to the loss of about $15-19 billion worth of U.S. exports, which equates, in turn, to about 200,000 U.S. jobs."

Beach said, "The use of unilateral sanctions has become so prevalent as an instrument of foreign policy that it is really a major issue with respect to the U.S. business community."

Meanwhile, the 15 European Union nations will return their ambassadors to Tehran but will suspend high level diplomatic relations in the wake of a recent German court ruling that implicated senior Iranian officials in the assassination of four Kurds in Berlin in 1992.

EU member nations deplored Iran's alleged support of terrorism.

The U.S. wanted stronger action, but State Department spokesman Nicholas Burns said, "They will go back with this very tough message that it's not going to be business as usual any longer between the EU members and the government of Iran."

The U.S. has been seeking support from EU members to join in a move to isolate the Tehran regime, in an effort to broaden effects of its unilateral oil boycott on Iran in 1995 and economic boycott in 1980.

Meantime, Iran has accused Azerbaijan of allowing the U.S. to interfere in the oil-rich Caspian Sea area. Iran and Russia oppose unilateral exploitation of the area's resources, and concerns persist that the area's natural resources may be unilaterally claimed at some point by one of the other four Caspian littoral states (see editorial, OGJ, Apr. 21, 1997, p. 17).

The positive effects of higher average oil and gas prices are being seen in the industry's 1997 first quarter financials.

Among majors/large companies, Chevron reports 1997 first quarter net income of $831 million was a 35% jump from a year ago.

"We're off to a great start in 1997," said Chairman and CEO Ken Derr.

He says that although prices last quarter were higher than a year ago, they have plunged from yearend 1996 levels, which, however, benefits Chevron's downstream businesses.

Conoco reports its first quarter net of $331 million was an increase of $117 million, or 55%, from last year.

Phillips reports its quarterly numbers represent the fifth consecutive quarter in which its net operating income has exceeded $200 million. After adjusting for a special item, its net totaled $247 million vs. $210 million for the same period in 1996.

A sampling of first quarter profits follows, in millions of dollars, with 1997 results listed first:

Shell 517 vs. 483, Texaco 492 vs. 386 before special benefits, USX-Marathon Group 180 vs. 112 excluding special items, PanEnergy 136.3 vs. 101.8, Coastal 101.2 vs. 82.5 before extraordinary items, Vastar 62.9 vs. 55.6, Apache 52.9 vs. 15.7, Murphy 30.6 vs. 20. 3, Santa Fe Energy 27.9 vs. 12.6, LL&E 21.2 vs. 20.6, Monterey Resources 15.7 vs. 10.3 with 1996 results pro-forma, Belco Oil & Gas 12.0 vs. 11.1 on a pro-forma basis, Newfield Exploration 11.9 vs. 7.9, Cross Timbers Oil 10.7 vs. 4.7, Triton Energy 4.3 vs 3.8 adjusted for special items, and Texas Meridian 2.1 vs. 1.4.

The U.S. service/supply sector also had big earnings increases.

A sampling includes Halliburton 83 vs. 45.5, Energy Ventures 14.3 vs. 2.7, Tuboscope Vetco 8.6 vs. 4.1 on 1996 pro-forma basis, Rowan 4.15 vs. 2.36, and Unit 3.9 vs. 1.2.

Canadian companies had a strong quarter. A sampling of their net income is shown in millions of Canadian dollars: PanCanadian 135 vs. 86, TransCanada PipeLines 105 vs. 92, and Petro-Canada 104 vs. 70.

PanCanadian expects to drill 1,600 operated wells in 1997 vs. about 1,200 in 1996. Of the 1997 total, 60% will seek oil. The company wants to double its daily production by 2002, to more than 440,000 bbl of oil equivalent, via exploration, exploitation, and acquisitions.

The IPAA's supply/demand committee says higher prices, technology gains, and the offshore activity surge will cause U.S. oil production to rebound this year, rising 0.3% to 6.49 million b/d-potentially the first increase in U.S. oil output since 1985.

U.S. gas output is expected to increase 1.5% to 19.3 tcf, spurred by high storage injection rates and overall demand growth. U.S. oil imports are forecast to rise 2.9% to 9.7 million b/d, or nearly 53% of domestic demand.

Longer term, IPAA predicted oil production would increase to 6.58 million b/d by 2000 before beginning to decline again, while gas output is forecast to continue increasing at 1.9%/year through 2000.

AGA's preliminary estimate of 1996 U.S. natural gas reserve additions found producers replaced 75-94% of production.

AGA estimates the U.S. inventory of gas reserves fell to 160.4-164 tcf because production of 18.5 tcf exceeded reserve additions of 13.8-17.4 tcf.

Forty-two U.S. House Democrats want to meet with President Clinton about EPA's smog and soot rule. The proposed regulation, which would set much tighter standards for ozone and particulates, is under widespread attack on Capitol Hill (OGJ, Mar. 24, 1997, p. 14).

In a letter to Clinton, the group says the rule would "transform more than 400 counties around the country into non-attainment areas," even though air quality has been improving steadily.

These counties, which include the vast majority of U.S. urban and suburban areas, "will face an indefinite future of growth restrictions and potential disruption of highway funding, and other sanctions."

The Auto/Oil Air Quality Improvement Research Program has completed a 6-year, $40 million study that found changes in fuels and light-duty vehicles are substantially reducing ozone air pollution.

The program, sponsored by three automakers and 14 oil firms, was launched to develop data to help legislators and regulators draft clean air goals.

Sponsors said the project was the largest and most comprehensive ever undertaken to assess light duty vehicles and fuels as an integrated system.

Enron and Oregon electric utility Portland General have reached a settlement agreement with the Oregon Public Utility Commission covering their planned merger agreement. Among other conditions, the companies will guarantee $141 million in rate cuts for Portland General's retail electricity customers.

A final PUC order has been set for June 4.

Egyptian gas E&D continues to sizzle, presaging more pipeline work.

Apache's Falak West 1-X new field discovery on its Khalda concession flowed 55 MMcfd of gas and 8,974 b/d of liquids from 185 ft of pay in three Jurassic Khatatba zones. The well "adds substance to the need for a second pipeline for the Khalda concession to serve the area's growing gas reserves," said Chairman Ray Plank (OGJ, Apr. 7, 1997, Newsletter).

A 145-mile, 34-in. pipeline is being laid to move gas to Ameriya along the Mediterranean. In all, 16 Khalda concession wells have flowed on test a combined 617 MMcfd of gas and 42,200 b/d of liquids. Two more are to be tested.

Copyright 1997 Oil & Gas Journal. All Rights Reserved.