Canada's petroleum industry watchdog has confirmed a dismal economic year for most companies, with combined losses of $245 million in the first 9 months of 1991.
The Petroleum Monitoring Agency (PMA) said it was the industry's first losing year since 1986 and compared with a profit of $1.6 billion in the first 9 months of 1990.
The agency attributed the losses, concentrated in the refining and retailing sectors, mainly to the effect of the Persian Gulf war and an economic recession. Companies built larger than normal inventories of crude prior to the war and had high priced supplies when the war ended quickly and prices fell. Companies were unable to pass through those costs to consumers because of competition and weak demand.
Canadian industry losses totaled $260 million in first half 1991, and there was a small profit of $15 million in the third quarter.
Despite the losses, PMA said, industry spending on capital projects increased 19% in first half 1991 over the previous year to $4.6 billion. The total includes spending on a major sour gas field development project in Alberta and a heavy oil upgrader in Saskatchewan.
The federal agency said the industry's return on investment has averaged 4.5%/year for the past 5 years, compared with a 9% average return for other nonfinancial industries.
Federal statistics showed direct petroleum industry employment declined 12% to 30,795 workers in 1990 from 35,170 in 1985. The totals do not include oil field service, contracting, and oilsands operations.
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