OGJ NEWSLETTER

Norway's Nopec has agreed with Petrovietnam to conduct the first nonexclusive geophysical survey off Viet Nam. The survey will cover shallow to deep water acreage south of 14 N. Lat. and east of 106 20' E. Long. It will he tied to shallow water wildcats, including the Dai Hung (Big Bear) oil field discovery.

The goal is to aid Petrovietnam's campaign to promote exploration in the area and prepare for a licensing round. Operations are to start in fourth quarter this year, and processing is to he complete in second quarter 1993.

Algeria's open door oil and gas policy will be maintained despite the assassination of head of state Mohamed Boudiaf and resignation of Prime Minister Sid Ahmed Ghozali. The new prime minister, Belaid Abdesselam, is an enthusiastic supporter of the policy, introduced last year, Middle East Economic Survey (MEES) reported. The policy enables foreign operators to form production sharing ventures.

Abdesselam reportedly wants to accelerate the momentum of the policy. He sees efficient management of oil and gas revenues as an answer to Algeria's economic woes. This is good news for 15 companies that submitted bids totaling about $4 billion earlier this year aimed at boosting production in a number of oil fields.

Abdesselam likely will offer the energy portfolio to Nordine Ait-Laoussine, energy minister for the previous government and key figure behind the policy.

Phillips Oil Co. Nigeria Ltd. agreed to supply 175 MMcfd of natural gas for 20 years to Nigeria LNG Ltd. for a proposed plant in Rivers state of Southeast Nigeria. The gas reserves are jointly held by Nigerian National Petroleum Corp. 60%, operator Nigerian Agip Oil Co. 20%, and Phillips 20%. Delivery is to begin in 1997.

Notimex Mexican News Service reports fiscal reforms approved by the Mexican legislature have opened the door to private gasoline imports for the first time in more than 50 years. The reforms allow Mexican nationals and foreign concerns to import gasoline and gives non-Mexicans a 138 day exemption from taxes usually paid by those who work in Mexico while maintaining residence outside the country.

Opponents argue the proposal is a concession to U.S. demands in the North American Free Trade Agreement (Nafta) talks and charge the Mexican administration with trying to privatize key sectors of the petroleum industry. Government spokesmen have said reforms are aimed mainly at decentralizing state oil company Pemex.

Mexico and the U.S. ordered trade negotiators to meet again July 25 in an effort to resolve remaining issues regarding Nafta. Negotiators recently reached an agreement that would allow U.S. and Canadian firms to operate in the Mexican banking, insurance, and stock market sectors. Remaining issues include energy, copyright protection, and tariffs on farm products and manufactured goods.

Sales of Alberta natural gas continued to increase at a record pace in first half 1992, driven mainly by low prices and strong U.S. demand.

Nova Corp. reports it transported 1.7 tcf of gas through its Alberta system the first 6 months, a 10% increase from the same period last year. Nova's system is the main grid in Alberta, and other companies take delivery of Alberta gas at the provincial border for transport to markets.

Total exports of Alberta gas in first half 1992 jumped 13% to 1.4 tcf, while deliveries in the province fell 3% to 281 bcf. Deliveries at the Alberta-British Columbia border fell 6% to 250 bcf. Nova said those volumes, mainly destined for California markets, were down due to Alberta government and regulatory agencies' efforts to prevent interruptible deliveries from displacing long term gas sales at the border. Nova expects its system to operate at record levels throughout 1992.

Merrill Lynch estimates U.S. integrated oil companies will post a 1.1% increase in composite earnings for second quarter 1992 totaling $703.3 million on a reported basis. It predicts adjusted earnings will he down 7% from second quarter 1991.

The company estimates West Texas intermediate averaged $21.08/bbl during the quarter, compared with $20.77/bbl same time last year, and spot gas prices averaged $1.47/Mcf, compared with $1.24/Mcf.

For the remainder of the year Merrill Lynch expects improving quarterly earnings based on expectations that crude oil will hit about $24/bbl in the second half before weakening early in 1993. Refining and marketing profits are expected to be flat with a year ago, and petrochemical earnings are expected to have a "firmer tone" toward the end of the year based on gradual economic growth.

The company's outlook for 1992 average natural gas spot prices is 1.45/Mcf, compared with $1.39/Mcf in 1991.

Iraq has rejected a United Nations plan to allow it to sell $1.6 billion in oil. Diplomats said Iraq refuses to let U.N. weapons inspectors search the Ministry of Agriculture in Baghdad for documents on Iraqi ballistic missile programs. Iraq said the ministry symbolizes the country's sovereignty and is off limits.

The council had authorized a one time oil sale to finance purchase of food and humanitarian supplies, finance the work of U.N. inspectors, and pay victims of Iraq's Kuwait invasion. Iraqi Ambassador Abdul Amir al-Anbari denounced certain conditions of the proposed sale, including use of a Turkish pipeline rather than an Iraqi port, and U.N. approval or supervision of the operation.

OPEC production increased to about 23.73 million b/d in June from 23.69 million b/d in May, MEES reported. Estimated average spot price in June for OPEC oil was about $20.18/bbl, up $1.48/bbl from May's average price.

MEES noted Iran's oil production slipped in June to 3.15 million b/d from 3.37 million b/d in May. Saudi Arabia and Kuwait each increased production by 70,000 b/d in June, Venezuela and Nigeria posted 50,000 h/d gains, and Libya's production increased by 30,000 h/d.

Oil production in Russia averaged 9.5 million b/d in the first half of this year, a 950,000 b/d slide from last year's first 6 months. Yuri Zlotnikov, a senior official in the Russian Fuel and Energy Ministry, told ITAR-Tass current production is near the minimum required to keep the economy going. He warned of possible rationing if the decline continues.

Japan has offered to "swiftly" extend technical aid to Russia and provide it a $1.8 billion export insurance credit line. That includes $1.4 billion in credits to be split evenly between Russia's oil and gas industries. Tokyo's Kyodo News Service said the offer was made by Japan's Ministry of International Trade and Industry Minister Kozo Watanabe at a meeting in Munich with acting Russian Prime Minister Yegor Gaidar.

Asahi News Service reported MITI will cover under the government trade insurance the export of $700 million worth of line pipe produced by a group of Japanese steelmakers led by Nippon Steel.

The C.I.S. has run into more setbacks in its effort to maintain reliable operation of an integrated gas pipeline system, regarded as essential to nationwide economic viability.

In the republic of Moldova, where bloody clashes have occurred between separatist minded Romanians on one side and Russian and Ukrainian citizens on the other, natural gas deliveries to districts controlled by dissidents have been halted. Moldova has insignificant oil and gas production, and the republic's president has charged that the cutoff of gas supplies by Russia and Ukraine is part of an economic blockade to achieve political objectives.

Meanwhile, a rupture, apparently caused by sabotage, recently closed a section of trunk line carrying Russian gas to Georgia and Armenia. With gas deliveries from Azerbaijan already halted by ethnic strife, Armenia had counted on gas supplied by the new pipeline across Georgia to help alleviate its serious fuel shortage.

Making matters worse, repair of the pipeline damage in Georgia was hampered because inhabitants of the district in which the accident occurred are predominately Azerbaijanis. Consequently, Armenian workers were prevented from helping with repairs.