WOOD MACKENZIE SEES DECLINE IN NETHERLANDS OFFSHORE OIL FLOW

Operating expenditures off Netherlands will fall about 10% during 1995-99.

Oil and gas production in the same period will fall 14% because few new fields are being lined up for development.

Those are the findings of Wood Mackenzie Consultants Ltd., Edinburgh, which reckons Dutch offshore operators will spend $670 million next year.

Meanwhile, Dutch offshore oil and gas production is expected to average 168,000 b/d of oil equivalent in 1995 and only 145,000 b/d near the end of the 1990s. This will cause a rise in weighted average operating costs.

"As a result," Wood Mackenzie said, "weighted average operating costs are expected to rise steadily in real terms from $4/bbl of oil equivalent (BOE) in 1995 to $4.30 in 1998 before declining to $4.20 in 1999 when Kotter and Logger fields are abandoned."

EXAMPLES

The analyst predicts Amoco Netherlands Petroleum Co. will book the lowest unit operating costs off Netherlands during the period. New gas production from P15 P/18 field development is expected to bring Amoco's operating costs down to $1.80/BOE in 1994 from an extremely high $9.90 in 1993.

"Prior to October 1993, the company's operated offshore portfolio had been restricted to production from the mature Rijn oil field," Wood Mackenzie said.

Unocal Netherlands BV is expected to have the highest operating costs off Netherlands next year: $10.10/BOE.

Wood Mackenzie said, "Although Unocal has recently benefitted from new production from Horizon field, which was brought on stream in August 1993, total output from its operated fields is expected to begin to decline from 1995. As a result, average weighted operating costs are expected to rise in the medium term."

Falling production overall reflects maturity of the Dutch offshore sector, while the current exploration hiatus means fewer new discoveries can be brought into production.

However, Wood Mackenzie said, Dutch operating costs are generally competitive with other sectors of the North Sea.

"The average 1994 Dutch offshore figure of $3.90/BOE compares with around $4.50 in the Norwegian sector, $4 in the U.K. sector, and around $3.6 for Denmark. However, in Denmark there is no tariff paid to bring gas to shore."