Unocal: Asia's long-term outlook still good

"There will be no quick fixes" of Asia's economic problems, but long-term growth prospects for Indonesia and other countries in the region are good, contends Roger C. Beach, chairman and CEO of Unocal Corp.

He told the Asia Society/Houston late last month that the U.S. needs to take four steps to help the world's troubled economies:

• It must help stabilize the yen. "A Japanese recovery will be vital to ending Asia's fiscal crisis," said Beach. "Washington should seriously consider intervention to keep the yen from sinking further."
• Congress must "provide adequate financial resources to the International Monetary Fund," Beach said. The decision to defer action on making an $18 billion contribution to IMF "is unfortunateellipseThe IMF is critical to the containment of the Asian financial crisis-especially for the near term."
• U.S. leaders and citizens must be convinced that unilateral sanctions harm U.S. competitiveness and American workers.
• Companies must face the issue of "corporate citizenship." Host countries expect multinational companies to accept more responsibility for the social well-being of the communities where they operate. "The Asia economic crisis has intensified these pressures," said Beach.

He agrees that Japan is a key to Asian economic recovery. "If Japan devalues (its currency), then China will devalue, and Asia will be in deep trouble for a long time to come."

Sanctions

Unocal's faith in engagement is being put to the test in Myanmar. Human rights groups have criticized western companies for continuing to work there, but Unocal has every intention of staying, says Beach, because "I am so convinced that engagement is the answer. I am very proud that we are in (Myanmar)."

ARCO recently pulled out of the country, but Beach said that was not a result of political pressure, but because exploration efforts had not been successful enough.

Exciting prospects

There, Beach said, Unocal has "one of the largest deepwater acreage positions in the world, with a number of very exciting prospects and two recent discoveries."

Beach also voiced enthusiasm about three deepwater production-sharing contracts acquired in 1997 and a fourth added this year.

The Merah Besar No. 6 discovery, disclosed in September 1997, followed six other successful deepwater exploration wells. With partner Mobil Corp., Unocal also has a recent discovery of a "potentially significant new oil field" in the Kutei basin area off East Kalimantan (OGJ, Aug. 31, 1998, p. 31).

Referring to other countries in Asia, Beach said, "China has been exceedingly frustrating. We have had difficulty coming up with projects on which we can agree, and we haven't been able to get through the bureaucracy." As a consequence, Unocal has reduced its presence in China.

Unocal Chairman and CEO Roger Beach