OGJ Newsletter
Climate change issues were a major focus at last week's World Petroleum Congress in Beijing. Concerns centered on how environmental initiatives might affect energy markets and national economies.
Speakers pledged allegiance to environmental goals but made pointed remarks about the need for more science and reality in the climate debate to prevent damaging both established and emerging economies.
Lee Raymond, Exxon chairman and CEO, said, "The most pressing environmental problems of the developing nations are related to poverty, not global climate change. Addressing these problems will require economic growth, and that will necessitate increasing, not curtailing, the use of fossil fuels."
Excluding developing nations from efforts to reduce emissions-as most proposals do-does not mean those countries won't be hurt, said Raymond. Exports will suffer as the economies of industrialized nations slow.
Elf CEO Phillipe Jaffre echoed the warning: "Being environmentally friendly does not mean being naive or unrealistic." Industry must be still cleaner, he said, but it must also prevent "excessive or useless regulations that could eventually have a negative impact on the global economy."
API Executive Vice-Pres. William F. O'Keefe suggested several actions the U.S. government might take to insure solutions are rational and cost-effective.
It might expand programs for improving energy efficiency, remove barriers to the turnover of plants and equipment, stimulate investment in climate change research, improve opportunities for technology investment abroad, and better understand the climate.
Oil and gas supply/demand were on the Beijing program as well, including a discussion of Saudi oil policy.
Backup producing capacity is a key element of his country's oil policy, said Saudi Petroleum Minister A* I. Al-Naimi.
Al-Naimi said it is important that the kingdom be able to "bring on stream, very efficiently and without delay, another 2.3 million b/d if needed" (OGJ, Oct. 13, 1997, p. 27).
Saudi Arabia is paying particular attention to gas development and will soon double natural gas production. "We are aggressively searching for more non-associated gas," said Al-Naimi, who believes gas will be the kingdom's "engine of domestic industrial growth."
As to how Saudi Arabia views growing global oil production, Al-Naimi said: "We welcome the development of new fields, but there should be a note of caution. What is needed, rather than maximum production and minimum inventory, is greater cooperation among producers and consumers. This would reduce...the risk of volatility. We see security of oil supply...as a global issue."
On the heels of Total's controversial deal with Iran, Elf says it also is engaged in investment talks with that country.
Jean-Luc Vermeulen, E&P director, said Elf is also thinking of investing in Iraq's oil industry when international sanctions are lifted.
Talks with Iran concern extraction of oil from offshore Dorud field.
Elf's target in Iraq is thought to be Majnoon oil field, on which it has been negotiating for years with Baghdad.
Unlike Total, which recently agreed to sell its U.S. refining/marketing assets, Elf is expanding its U.S. presence and thus far has not been as overt as Total in pursuing deals with nations targeted by U.S. sanctions.
Greenpeace has lost its court battle for a judicial review of the U.K.'s West of Shetland licensing regime but hasn't given up the war.
After a 3-day hearing and 3-week reserved judgment, the High Court has shot down Greenpeace's attempt to question the legality of U.K.'s 17th offshore licensing round.
A Greenpeace official told OGJ the case was lost on a technicality: "The judge said we should have put in our application immediately after the licensing round was announced, rather than after licenses were awarded."
The official said the campaign group will now explore other legal avenues to have Atlantic Frontier E&D stopped. Potential routes include an appeal against the judge's ruling, taking the case to the Europe Court, and repeating the protest in time for the next licensing round.
Peter Melchett, executive director of Greenpeace, said, "Government is determined to protect oil interests from the inconvenience of public and legal debate. They have gagged us inside the court but they cannot gag us outside.
"We will continue to campaign against this futile and dangerous exploration, and we will continue to raise the climate/oil question. Eventually this government will have to answer us: When will it put climate protection ahead of oil interests and stop expanding fossil fuel reserves?"
James May, director-general of U.K. Offshore Operators Association, said, "Industry notes the ruling and is pleased the uncertainties surrounding future exploration in the areas included in the 17th round have now been removed.
"Despite Greenpeace arguing that its application was dismissed on a legal technicality, the industry is confident that its position was a strong one."
After a long wait, Angolan state oil company Sonangol may be close to buying an interest in Petrogal.
Portugal and Angola are expected to sign a letter of intent for the acquisition of a 10% stake in Portugal's state oil company during Portuguese Prime Minister Antonio Guterres's forthcoming visit to Luanda. The move will give Petrogal much needed capital after the recent surprise decision by Saudi Aramco not to acquire a 27.5% stake in the company (OGJ, Sept. 29, 1997, Newsletter).
Sonangol's entry into Petrogal has been in the cards ever since Petrogal was partially privatized 5 years ago.
Energy-starved Pakistan appears to have found a resolution to the much-debated issue of the price of gas shipments through a proposed Turkmenistan-to-Pakistan pipeline (OGJ, Aug. 4, 1997, p. 25).
Pakistan has agreed with a combine of Unocal and Saudi Arabia's Delta Oil Co. on a mutually attractive gas price. Accordingly, the Turkmen gas would land in Pakistan at a cost not exceeding 80-85% of the cost of high-sulfur fuel oil (HSFO) with the same BTU content, say the companies.
Meanwhile, similar talks with Iran and Qatar seem deadlocked.
From Iran and Qatar, Pakistan was seeking a price not exceeding 90% of the cost of HSFO, which was unacceptable to the other countries.
Exxon will conduct studies on a project to supply natural gas from Natuna supergiant gas field off Indonesia to West Java.
The proposed project calls for delivery of 960 MMcfd of gas to fuel new and existing power plants and meet growing industrial, transportation, and domestic demand. Other participants are state oil firm Pertamina, state power and gas companies, and Mobil. Exxon and Mobil are partners in the production-sharing contract for the 46 tcf Natuna field (OGJ, Dec. 2, 1996, Newsletter).
U.S. majors are studying big petrochemical projects in China, where demand for petrochemical products is expected to continue soaring.
Phillips has three under way. Together with Lanzhou Chemical, it is conducting a feasibility study for a 1.3 billion lb/year ethylene cracker in Lanzhou. The complex, to be owned 50-50, would include polymer production facilities.
In Jinshanwei, Phillips and Shanghai Petrochemical are considering a joint venture to build a 100 million lb/year styrene-butadiene copolymer complex with Phillips technology. Phillips and Shanghai Petrochemical also are studying expansion of a polyethylene plant under construction in Jinshanwei.
Exxon and Saudi Aramco are conducting a detailed feasibility study for a world-scale integrated refining/petrochemical complex at Ziaocuo, Fujian. The 50-50 JV would involve expanding an 80,000 b/d refinery to 240,000 b/d and building a 600,000 ton/year ethylene plant and derivatives units.
In Venezuela, Overseas Private Investment Corp. has committed $165 million in project financing for a natural gas injection project being built by WilPro Energy Services, a joint venture of Williams Cos. and Production Operators Corp. The project, to be owned and operated by WilPro, involves injecting gas into one of the country's largest producing oil fields, El Furrial.
It will reduce gas flaring and increase El Furrial production by 130,000 b/d.
Elsewhere in Latin America, Unocal and YPF have agreed to explore and develop two large permits off Argentina.
CGSJM Blocks 1 and 2 cover 7,300 sq miles and include the offshore extension of the San Jorge basin, the onshore portion of which has produced 2.5 billion bbl of oil. Blocks 1 and 2 cover about one third of the basin.
"The offshore blocks were not developed previously because of difficult reservoir conditions," said Unocal, which will hold a 50% interest in the joint venture.
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