U.S Industry Scoreboard 11/13 (71679 bytes)
OPEC is likely to agree on a rollover of its current 24.52 million b/d production ceiling when ministers meet in Vienna Nov. 21 (see related stories, pp. 34 and 42).
An official of Venezuela's Energy and Mines Ministry told OGJ high oil stocks and what appears to be a mild winter will keep world oil demand more or less at current levels. Meantime, Venezuelan Energy Minister Erwin Arrieta is whistlestopping this week in the Middle East and Norway to discuss current world oil markets. Arrieta, also OPEC conference president, says OPEC will analyze three market scenarios: a rollover, a production increase, and a price war resulting from abandonment of quotas. Arrieta also denied news reports his country has been violating its quota by 400,000 b/d, claiming the reports come from "secondary and ghost sources" and saying Venezuela had received no complaints from OPEC partners about quota violations. He claims Venezuela is in compliance and has been buying an added 250,000-400,000 b/d of crude on the open market to supply its refineries in Germany, Sweden, and the U.S.
Waiting for non-OPEC producers to run out of steam no longer looks like a viable strategy for OPEC, warns London's Centre for Global Energy Studies (CGES). It says OPEC's future now depends on developing a fresh, cooperative, nonconfrontational approach to developing its huge oil reserves.
"Unless (OPEC) is able to attract the incremental investment dollar today, it will not be able to supply the incremental barrel tomorrow," CGES said.
With non-OPEC output expected to rise by 1.5 million b/d in 1996, the best OPEC can hope for is an unchanged call on its crude - with the most likely outcome a further decline of about 300,000 b/d, CGES said.
Meantime, world oil demand will rise by 8 million bid by 2000 from the current 67 million b/d, says Organization of Arab Petroleum Exporting Countries (Oapec). Arab countries must invest about $10 billion/year to meet this incremental demand, says Oapec.
Conoco and Maraven were expected late last week to sign a $1.5-1.7 billion deal to produce and upgrade about 120,000 bid of 9 gravity crude from Venezuela's Orinoco oil belt. The crude will be upgraded to 21 gravity syncrude for processing at Conoco's Lake Charles, La., refinery. The deal calls for forming a company to oversee the project, held 49.9% each by Conoco and Maraven, with an undisclosed third partner holding the remainder.
EIA predicts U.S. distillate heating fuel and gas demand will be higher this winter as temperatures return to normal. EIA said, "We expect supplies of heating oil and natural gas to be adequate to meet the increased demand, despite stock levels somewhat below those of previous years."
EIA pegs the average world oil price and the average cost of imported crude for U.S. refiners in 1996 near the current level of about $16/bbl.
It contends despite the continued rise in world oil demand in 1996, expected to exceed 1 million b/d, increases in world oil productive capacity should accommodate demand growth, keeping average prices relatively flat.
Meanwhile, EIA will meet with U.S. gas industry representatives to discuss ways to improve its data collection.
It says FERC's effort to unbundle rates and restructure the industry has led to less reporting. "For example, EIA's published industrial gas price for 1994 represents 23% of the industrial gas market. In addition, new institutions and practices have developed in the industry for which EIA collects no data at all."
Environmental/health concerns top the week's news for U.S. refiners.
EPA soon will propose a rule to list only three of 14 petroleum refining residuals as hazardous wastes subject to Cercla regulation.
They are hydrotreating catalyst, hydrorefining catalyst, and clarified slurry oil sediment. The rule also will change the definition of solid wastes to allow refineries to reinsert oil bearing materials into the refining process.
A physician and a researcher have urged the government to conduct more research on the health effects of MTBE.
Nachman Brautbar of the Southern California School of Medicine has studied 20 patients with a history of exposure to MTBE and believes their immune systems were weakened by MTBE and formaldehyde. Myron Mehlman, a Princeton, N.J., researcher, said clinical studies show that "when you mix MTBE and gasoline, something happens." Acting on behalf of the Oil, Chemical & Atomic Workers Union, he has urged the government to release an EPA report on MTBE.
Weak gas and petrochemical prices have hit third quarter profits for senior Canadian producers.
Amoco Canada lost $136 million (Canadian) in the third quarter compared with a loss of $27 million for the same period in 1994.
The losses will force it to consider laying off as many as 50 staff by yearend and to continue with a cost cutting program. Amoco blames debt costs related to its 1988 takeover of Dome and low oil and gas prices.
Talisman's third quarter earnings also were crimped by low gas prices and the cost of a recent takeover. It reported third quarter profits of $3.4 million vs. $15.2 million a year ago. Expenses related to a $1.8 billion takeover of Bow Valley in 1994 were a factor, as was a drop in average gas prices to $1.43/Mcf from $1.87/Mcf a year ago.
NOVA's third quarter earnings were squeezed by softening petrochemical prices. Its net income for the third quarter was $163 million, up $29 million from the same quarter in 1994 but down $57 million from the second quarter because of a drop of $68 million in petrochemical earnings.
NOVA cited weaker North American and Chinese demand for polyethylene and a decline in prices for styrenics.
There are new petrochemical opportunities in Canada tied to an Alberta NGL surplus expected to triple to 77,000 b/d in the next decade.
Canadian Energy Research Institute (CERI) notes Alberta produces about 210,000 b/d of NGL, of which 175,000 b/d is consumed domestically and 27,500 b/d is exported. CERI contends the best opportunity for selling ethane is to build an ethylene plant in Alberta and says a supply of 43,000 b/d will support a world scale plant. NOVA is considering expanding its Alberta petrochemical operations, and Union Carbide also has discussed an Alberta plant.
CERI says current ethane prices of 16/gal make the economics of a pipeline to ship surplus ethane to the Texas market questionable.
Continued privatization of Hungary's state owned petroleum giant MOL may be undermined by retrenched forecasts of its profits.
A Deloitte & Touche audit of MOL accounts has slashed overly optimistic forecasts for first half pretax profits in 1995. The 88% state owned MOL, facing privatization of another 39% - 34% to be sold, 5% to be transferred to two state welfare asset funds - had predicted profits of almost $41 million in first half 1995, but this has been cut to $28.6 million. Industry analysts now have full year 1995 predictions for MOL profits of $50-100 million. Confused paperwork and double counting of sales is blamed for the wide gap in estimates. Three versions of MOL 1994 profits have been published, and a fourth set of figures meeting international accounting standards is still not out but may appear in late December MOL is almost the same size as Austria's OMV but employs twice as many workers.
Crude oil tanker tolls on the Suez Canal will drop by 20% effective Jan. 1. The canal authority is trying to reverse a steep drop in traffic. The discount applies to empty as well as loaded tankers. Tolls on all other vessels will be frozen a second year. Last year, Suez traffic fell by almost 1,000 vessels to 16,370, the least since 1976. Crude oil shipments via the canal plunged to less than 248 million bbl last year from 307 million bbl in 1993 amid increasing competition from the Sumed pipeline and the Cape Horn route. The canal authority also is setting a toll ceiling at about $340,000/tanker to attract more 160,000-170,000 metric ton cargo vessels and supertankers with lighter loads
A fire that shut down Indonesia's biggest oil refinery (OGJ, Nov. 6, p. 25) has renewed debate over ending Pertamina's near- monopoly on refining/marketing in the country. Shortfalls of refined products are expected while Indonesians await the return to full operations in 3 months of the 300,000 b/d Cilacap refinery on Java, which provides about one third of the country's refined products. Most other Indonesian refineries are running near capacity.
Although 10 private companies have obtained government permission to build refineries in Indonesia, local sources say none is likely to be built until Indonesia's downstream sector is deregulated.
Domestic consumption of refined products is expected to climb to about 727,000 b/d in fiscal 1995-96 from about 691,000 b/d in fiscal 1994-95 and as much as 1.4 million b/d in 2004-05. Indonesia's crude oil production is 1.3 million b/d.
At least 250,000 b/d of added refining capacity is needed in the short term, another 250,000 b/d later. Pertamina estimates fiscal 1995-96 oil product imports at more than 115,000 b/d vs. 116,000 b/d the previous fiscal year.
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