OGJ NEWSLETTER
The outlook for expanded world LNG trade continues to brighten, with green lights for two major projects and the prospect for a third.
Taiwan's Ministry of Economic Affairs approved plans by state owned Chinese Petroleum Corp. and Taiwan Power Co. to build a $5.7-6 billion, 4 million kw, gas fired power plant and LNG receiving terminal in Taoyuan County in northern Taiwan. The terminal will have initial capacity of 3.25 million metric tons/year to be expanded in phases to 6 million tons/year. The project is expected to boost Taiwan's use of gas to more than 10 million tons/year and hike the gas share of the electric power market there to 24%. Work is to start in 1995 and be complete in 2003. The other green light is for Venezuela's LNG export project (see story, p. 34).
Meantime, Gaz de France and state owned National Iranian Gas Co. have set up a 50-50 venture, Iranian French Gas Co. (IFG), to spearhead efforts at shipping Iranian gas to Europe via sea and/or land. Initially set up to cooperate on gas technology, IFG, based in Jersey, Channel Islands, will try to form a group of gas companies in Germany, Austria, Spain, France, Slovakia, and the Czech republic to import Iranian gas.
In the Far East, LNG buyers and sellers are trying to line up supply contracts. South Korea's Korea Gas Corp. expects to sign a term contract this year with Malaysia to import 2 million tons/year of LNG beginning in 1995. South Korea buys 90% of its LNG from Indonesia and wants to diversify supply sources. South Korea, building a $1 billion receiving terminal at Inchon, expects to import 14 million tons/year by 2006 vs. 4.3 million tons this year from Indonesia and Malaysia. And Brunei Shell still is trying to renew a 20 year LNG supply contract with Japanese utilities that was to expire in March. Negotiations began early last year on renewing the contract, which involves supply of 5.3 million tons/year.
OPEC exporters are the focus of renewed geopolitical concerns.
The U.N. Security Council renewed the trade embargo blocking Iraqi oil exports. The ban, imposed after Iraq's invasion of Kuwait in 1990, will remain in effect until Iraq agrees to stop development of weapons of mass destruction. Meanwhile, the Clinton administration protested to Iran about its apparent importation of Iraqi oil via tanker truck. Tensions between Iran and the U.S. are rising, with Iran opposing U.S. sponsorship of Arab/Israeli peace talks and the U.S. declaring Iran to be the world's main sponsor of "state terrorism." And the Clinton administration says the U.S. may seek a U.N. boycott of Libyan oil because that country has not surrendered two intelligence agents accused of bombing a Pan Am airplane in 1988 over Scotland. Secretary of State Warren Christopher told a Senate panel, "I think the time has come to stiffen the embargo against Libya."
Kuwaiti Oil Minister Ali al-Baghli says his country will stick to its OPEC quota of 1.6 million b/d. OPEC's secretariat pegged March output at 24-24.3 million b/d, above the 23.58 million b/d ceiling agreed to in February but down from February's 24.6 million b/d output.
China will buy as much as $200 million in oil and gas equipment and services in the U.S. Included is a 10 year agreement Halliburton expects to sign with China National Petroleum Corp. to provide services and equipment for oil and gas field development in China.
A delegation headed by CNPC General Manager Wang Tao was to sign contracts last week on a visit to Houston, where China is trying to drum up interest in its newly opened interior basins. At least 48 companies from 15 countries have entered bids for a 28,000 sq mile area of the Tarim basin, a highly prospective, remote desert basin that recently became available for foreign participation. Bid results will be announced at the end of October.
Meantime, Texaco signed an agreement with Shanghai Petroleum Corp. to jointly develop Pinghu oil and gas field in the East China Sea. Gas is to be delivered to China's Pudong region by 1996.
European Bank for Reconstruction and Development (EBRD), London, will fund an $8 million study on revamping Russia's gas pipeline network.
Bank officials told a Moscow press conference the study, to focus on leaks and low pressure operations that account for a 15% loss in Russian throughput, will be followed by contract awards to carry out required work. To date, EBRD has sanctioned five loans to Russia's oil and gas sector worth a total $420 million, said London's Financial Times, although guarantees are still to be worked out with Russian authorities.
Moldova has a program to explore for oil and gas through 2010.
Four small gas fields and one oil field were discovered in the former Soviet republic during the 1960s. Geologists believe Moldova may have significant oil potential but exploration is likely to be delayed because funds are scarce. Meanwhile, Moldova wants to import more oil from western Siberia in payment for building housing for Tyumen oil workers.
Phillips Norway plans modifications to three outlying Ekofisk platforms to combat seabed subsidence.
Their slower subsidence rates allowed Phillips to delay jack up work when other facilities were jacked up in 1987. Platforms 2/4A and 2/4B were to begin jacking preparations this summer, but Phillips delayed the work to study other options. At 2/4A, Phillips now plans to open the cellar deck and relocate equipment as well as upgrade its drilling rig. At 2/4B, jacking is still preferred but can be delayed until 1995, at which time it may decide to replace the platform. Phillips plans to modify Platform 2/4D for remote operation in the late 1990s. It last year faced Oslo's threat to shut down Ekofisk over long term safety concerns and is studying options for moving transportation and processing facilities (OGJ, Jan. 11, p. 28).
Deadline for Ireland's frontier licensing round has been postponed to Dec. 15 from June 30 to allow Irish offshore operators more time to acquire and process seismic. The frontier round covers 128 blocks in the Erris and Slyne troughs about 45 miles off Ireland's western coast.
New licensing terms and tax measures were announced last year in a hid to boost exploration off Ireland (OGJ, Nov. 23, 1992, p. 35).
Western Gas Marketing (WGM) aims to jump its share of the North American gas market to 9% by 1996 from about 6% today.
The TransCanada marketing unit moved 1.2 tcf of natural gas in 1992, including 480 bcf to the U.S. WGM has shipping capacity of 3.5 bcfd from western Canada and is selling 700 MMcfd from U.S. sources. A supply pool of 720 producers has committed reserves of 18 tcf to Western but has contract options to reduce that committed volume by about 50% in 1994.
WGM Pres. Scott Frew says notices from producers received since 1990 indicate the pool of committed gas will drop by 12% or less by that time. WGM plans to expand in the U. S. but says it can't and won't do that at the expense of producers in its Canadian supply pool.
AGA predicts natural gas will increase its current share of the U.S. energy market by 25-33% by 2010. Supply and demand will increase to 26.4-28.3 quadrillion BTU by 2010, a 30-40% increase from 1990 levels.
Domestic gas production will account for 85% or more of U.S. gas supply through 2010, down from the current 90%.
The first U.S. Clean Air Act oxygenated gasoline season was a big disappointment to MTBE producers, says Pace Consultants.
Oxygenated gasolines trading on the U.S. Gulf Coast has virtually stopped. The New York market-required to use oxygenated gasoline through Apr. 30-is very thin, with prices at least 1ct under futures.
MTBE prices on the gulf declined to 700/gal from the 970/gal high of July 1992, when expectations for MTBE demand were also high.
More scientists are offering contrary views on the effectiveness and even safety of the U.S. program to require oxygenated fuels in 39 urban areas (OGJ, Mar. 15, Newsletter). Results of test programs in Colorado, New Mexico, and Brazil, disclosed at the American Chemical Society annual meeting in Denver last week, show no statistically significant effect of oxygenates use on air quality. Larry Anderson, a chemistry professor at the University of Colorado at Denver, said carbon monoxide levels have been dropping the past 10 years, which may stem from increased use of unleaded gasoline and vehicle fleet turnover. EPA claims oxygenates use sharply cut CO levels this winter (OGJ, Mar. 22, p. 32). Daniel Grosjean, with DGA Inc., Ventura, Calif., studied Brazil's fuel ethanol program and found incomplete combustion of ethanol results in emissions of acetaldehyde, related to formaldehyde, which EPA lists as a carcinogen. Formaldehyde emissions also have been linked to methanol fuels. Reuters quoted an EPA official as saying the reduced CO level was worth the added moderate emissions of formaldehyde.
Copyright 1993 Oil & Gas Journal. All Rights Reserved.