Oil markets have returned to relatively mundane issues after worries over a possible invasion of Kuwait by Iraqi forces began to fade (OGJ, Oct. 17, Newsletter). Brent crude for November delivery closed at $15.81/bbl Oct. 14, having lost $1.12/bbl during the week over concerns that Saddam Hussein's ouster may bring Iraqi oil to market earlier than predicted. But prices increased steadily thereafter, and at close of business Oct. 19, Brent crude for November stood at $16.36/bbl.
London's Centre for Global Energy Studies (CGES) declared Iraq's stance on the Kuwaiti border as counterproductive, since the threat of military action will never persuade the U.N. to end sanctions. But CGES reckons Saddam may have had little choice but to spark a crisis, given Iraq's internal problems.
"The timing of this Iraqi move would suggest that the situation in the country is becoming increasingly untenable," said CGES. "Having survived the embargo for so long, the sudden change in tactics implies that the regime has reached the point where it desperately needs to resume oil exports in order to survive."
The feeling is that increasing unrest in Iraq may lead to an overthrow of Saddam, with a subsequent drag on oil prices as Iraq is welcomed back to the fold of exporters. "Faced with the stranglehold of sanctions on the one hand and military pressure on the other," reasons CGES, "Saddam's future cannot be secure. Instead of receding into the distance, Iraqi oil exports could he around the corner."
Spain's Repsol, Austria's OMV, and France's Total have agreed with Libyan National Oil Corp. (NOC) to develop Block NC 115 in Libya's Murzuk region. The deal includes three oil fields with total reserves pegged as high as 1 billion bbl of 43 gravity oil. First phase includes laying a 400 km, 30 in. pipeline to connect with a line that feeds the Zawia refinery and terminal on the Mediterranean. Production is to start in 1996 and reach 100,000 b/d. Second phase calls for added lifting facilities leading to production of as much as 200,000 b/d.
Mozambique has signed a multimillion dollar deal with Enron to develop Pande gas field in Inhambane province, where proved reserves are pegged at more than 1.4 tcf, reports the country's national resources ministry. Enron notes the deal includes production, processing, transportation, and marketing but says it is too early to talk about potential partners or customers. Plans include a 600 km pipeline to South Africa and another to Maputo, the ministry reports.
Mozambique businessman Artur Vilankulo, who helped broker the deal, told Reuters the project will mean an investment of $800 million-$l billion.
"By integrating natural gas production, the pipeline, and marketing in one agreement with Enron, the Ministry of Natural Resources has simplified the development process and enabled the project to move rapidly on a manageable basis," the ministry said. Mozambique state company ENH and South Africa's Sasol earlier disclosed plans to develop Pande with Argentina's Pluspetrol as field operator (OGJ, Apr. 25, p. 28).
Angola is considering incentives to encourage investment by major oil companies. says David Jouquim, managing director of state company Sonangol. Jouquim says the country is considering new tax concessions and exemption of export taxes on refined products but did not say when the incentives would begin. He expects the end of civil war in Angola to be followed by a sharp jump in economic growth and increased demand for crude oil and products.
The Angolan government and rebel Unita movement are holding protracted peace talks in the Zambian capital, Lusaka.
Thai Petrochemical Industry plans to invest $1.6 billion the next 3 years in a move to establish itself as a fully integrated petrochemical producer. Plans include a 300,000 b/d oil refinery that will supply feedstock to an 800,000 metric ton/year olefins plant. The refinery also will produce unleaded gasoline, diesel, and lube base oil. Thai petrochemical producers have been complaining about low cost imports and pressing the government to help the industry by offering market protection, OPEC News Agency reports.
France has awarded the 25 year operating concession for the Donges-Melun-Metz products pipeline to an Elf Aquitaine group.
Elf holds a 49% stake in the group that includes products trader Ballore, the Nantes-Saint Nazaire Port, and Cie. Generale de Navigation.
The 630 km, 51,700 b/d pipeline extends from Elf's Donges refinery near Saint Nazaire to Worth, Germany, passing 10 km from Elf Atochem's Carling petrochemical site via a connection with the Southeast pipeline from the Mediterranean.
The two Carling crackers thus will have coastal access at the Mediterranean and Atlantic. The pipeline is central to revamping the site. Carling is slated for a 2 year, 500 million franc investment program and will become central to Elf's refinery and petrochemical sectors.
U.S. and Russian officials will participate in a Moscow conference Nov. 14-18 on Russian oil and gas investment laws sponsored by U.S. DOE and the Russian Ministry of Fuel and Energy.
"Russian energy laws are at a crossroads. Many decrees and proposed laws can strengthen Russia's critical energy sector, but Russians understand that their laws and energy institutions must compete in a global market," notes Deputy Energy Sec. Bill White. DOE says Russian policy makers will participate in the conference and have committed to implement recommendations of participants.
Mexico's Pemex Exploracion has put out a tender for bids to domestic and international companies to drill nine wells in Campeche Sound, reports Mexico City daily El Financiero. Contracts will be awarded in two packages. One includes drilling five 4,900 m wells, the other drilling four 5,050 m wells.
Pemex was given a budget of almost $471 million for E&P in 1994, a 26% boost from 1993's budget.
Third quarter 1994 earnings are expected to decline about 5% for U.S. companies Merrill Lynch tracks. While crude prices continued to recover, natural gas prices were down significantly from same time last year. Downstream profit margins continued to suffer, as strong marketing margins in the U.S. and elsewhere were not enough to offset weak refining margins. Downstream profits are lagging last year's effort but have improved from second quarter. Merrill Lynch predicts second and third quarter 1994 will mark the low spots in earnings with prospects for recovery in quarters ahead.
Stronger ethylene margins are expected to help bolster Union Texas' third quarter results. Chairman A. Clark Johnson says for 1994's third quarter, ethylene margins increased to an average of more than 70/lb from 20/lb same time last year due to increased worldwide demand and decreased inventory. The company operates and has a 41.67% stake in the 1.2 billion lb/year Geismar ethylene plant near Baton Rouge. It expects 1994 third quarter earnings to exceed analysts' projections for the company by about 40%.
Canada's Natural Resources Department estimates 1994 domestic oil and gas exploration, development, and production spending will be near $8.86 billion (Canadian), an increase from previous estimates and 15% higher than 1993 spending. Canadian controlled companies plan to increase spending by 26% to $5.67 billion in 1994.
Meantime, Vinland Industries, which is building two wellhead drilling modules and a pipe storage rack for the Hibernia project off Newfoundland, is experiencing schedule delays and cost overruns. Vinland says the work cannot be completed for the $36.3 million (Canadian) original contract amount or by a May 1995 delivery date and proposes September delivery.
Environmentalists can chalk up another victory against Canadian oil and gas companies seeking access for exploration. Alberta's Energy Resources Conservation Board (ERCB) put a hold on drilling licenses for three companies planning wells in or near Dinosaur Provincial Park 100 miles east of Calgary.
The board put on hold licenses granted to Sceptre Resources and Imperial Oil and delayed decisions on nine permits sought by Aberdeen Petroleum.
Alberta Wilderness Association claims 14 wells planned in the gas prone region threaten an area rich in fossils and rare grasslands. The companies say permits in the area are tightly regulated, and multiple wells are drilled from a single site to minimize environmental effects.
ERCB is considering a bid by environmentalists for a public hearing on the projects. Environmentalists claimed a major victory in September when the ERCB ruled against a $1.2 billion (Canadian) drilling project by Amoco Canada in southern Alberta's environmentally sensitive Whaleback area.
