Newsletter

U.S. Industry Scoreboard 1/12 [9602 bytes]

U.K. Deputy PM John Prescott sees the U.K.'s 6-month European Union (EU) presidency as a chance to build on the recent Kyoto agreement.

The U.N. climate change conference in Kyoto in early December came to a grudging agreement to reduce emissions of six greenhouse gases by an average 5.2% by 2010 (OGJ, Dec. 22, 1997, p. 17). In an article in London's Financial Times on Jan. 7, Prescott promised shortly to unveil comprehensive environmental measures that the U.K. would pilot through the EU before July.

"What we started in Japan has to be seen through," said Prescott. "It falls to us to lead the EU in implementing the outcomes of the summit. For example, we have to reach agreement on how member states share the EU's obligation to achieve an 8% cut by 2008-12 in emissions of greenhouse gases."

Prescott said another priority would be improving the standard of air quality across Europe (see Watching the World, p. 21).

"We want to see lower emission standards for goods vehicles and lower levels of sulfur dioxide, nitrogen dioxide, lead, and particulates," said Prescott. "We'll be looking to initiate and progress legislation on these issues.

"We will be moving at all levels across all transport modes, including looking at emissions from aircraft. We know that we can make a massive contribution to reducing acid rain by reducing sulfur levels in heavy fuel oils."

The U.K. is kicking off its EU presidency with plans to send an EU delegation to Algeria to investigate violence there. The news will be welcomed by oil firms operating in the country, even though no oil workers have been killed in the most recent round of violence there.

The latest press reports describe the killing of hundreds of villagers in western Algeria. The vast majority have taken place near the capital.

Algeria is coming under increased pressure to halt the killings. Oil companies have contacted human rights organizations, which have been unable to act because it is difficult to gain access to the country.

The main foreign petroleum operations-a BP-led gas fields development and Anadarko's oil E&D program-are, respectively, 750 and 400 miles south of Algiers and remote from the horrific slayings.

BP is operating two drilling rigs in the Sahara desert about 1,200 km south of the capital. Both crews are Algerian, and they apparently see hardly anybody in their daily work. Exploration crews are flown into the oil town of Hassi Messaoud in central Algeria, avoiding entry via the main airport in Algiers.

EU pressure on Algeria is unlikely to take the form of sanctions: about 90% of Algeria's oil and gas exports go to Europe, particularly Italy, Germany, and France.

And now for the good news: whatever else is going on in the world, the international E&P industry is becoming safer.

London-based Oil Industry International Exploration & Production Forum reports that the number of lost-time injuries worldwide in the upstream oil industry continues to fall significantly.

"The lost time injury frequency (LTIF) for 1996 was 2.7 injuries/million man-hr," said E&P Forum, "a significant fall of 19% on the 1995 figure of 3.3 and of 50% over the last 10 years.

"As in 1995, the major part of this improvement was due to improved contractor performance; their LTIF decreasing from 3.9 in 1995 to 3.1 in 1996. Oil companies' LTIF fell from 2.6 in 1995 to 2.0 in 1996."

The group said, however, that there were 74 deaths on the job in the upstream industry in 1996, three fewer than in 1995: "Vehicle accidents and workers being struck by moving objects or equipment were the main causes of fatalities. Five deaths were caused by shootings or terrorist activity."

Iranian President Mohammad Khatami has sent another signal that he wants a thaw in U.S.-Iranian relations.

In an interview last week, he praised American culture-a reversal of Iran's policy of vilifying the U.S.-and proposed that the two nations open an informal dialogue to improve communications (see Editorial, p. 15).

Khatami suggested an "exchange of professors, writers, scholars, artists, journalists, and tourists." He stopped short of proposing that diplomatic relations be restored, saying Iran has no need for political ties with the U.S.

A U.S. State Department spokesman responded, "We welcome the fact that he wants a dialogue with the American people and welcome his appreciation of the fundamental principles that form the foundation of our nation.

"We continue to believe the way to address the issues between us is for our two governments to talk directly. A dialogue between the U.S. and Iran must be an authorized dialogue, one that is openly acknowledged."

Italy and Nigeria have resolved a year-old dispute over deliveries of Nigerian LNG.

Italian electric utility ENEL had tried to renege on a sales contract late in 1996 but last September preliminarily agreed not to cancel its contract with Nigeria LNG (OGJ, Oct. 6, 1997, p. 32). The turnabout came after Gaz de France agreed last month to regasify the LNG and ship an equivalent amount of gas to Italy. ENEL's plans for a regasification unit on Italy's coast were thwarted by public opposition. The parties have reportedly agreed to delivery of 3.5 billion cu m/year beginning in fall 1999.

Texaco has agreed to invest $500 million to develop coalbed methane in China. Texaco and China United Coal-bed Methane will jointly develop the Huabei coal and gas field in Anhui province, with Texaco taking a majority stake, according to press reports. Planned are 300 wells and production of 17.5 bcf/year of gas. Huabei contains about 2.1 tcf of gas.

Surprising many observers, Afghanistan's Taliban Islamic militia has approved the CentGas pipeline.

The Taliban is reportedly prepared to sign an agreement to allow a planned $2.4 billion gas pipeline from Turkmenistan to Pakistan to pass through Afghanistan (OGJ, Nov. 3, 1997, p. 31).

Meanwhile, Turkmen gas is flowing to Iran, and a gas pipeline from Turkmenistan to Europe through Iran and Turkey is planned (see Watching Government, p. 26).

Pakistan is furthering plans to restructure its mostly state-run oil industry. Nisar A* Khan, Minister for Petroleum and Natural Resources, said Pakistan State Oil's (PSO) share in national products markets will be reduced.

"We will soon appoint a consultant to analyze the market share of PSO," said Nisar, adding that the ministry had decided in principle to reduce PSO's market share-currently about 70%. "Prices of petroleum products will come down in the country," he predicted.

The minister said a year-long inspection program of PSO-supplied retail outlets throughout Pakistan would start this month to ensure that products are of proper quality. Initially, the program will be launched in seven large cities.

India's midterm elections are stalling petroleum reforms there.

Pushed to the wall by an imminent oil supply crisis caused by a cash crunch, the government decided to open up the petroleum sector last year (OGJ, Dec. 8, 1997, Newsletter; Dec. 1, 1997, Newsletter). The move ostensibly made 1997 a watershed year for this heavily controlled sector.

The fast-paced reforms have been slowed, however, by the sudden dissolution of parliament and the presidential order for fresh elections. Reforms will remain suspended until a new government is established in mid-March.

Uncertainty is also looming over the fate of $5.2 billion in bonds that were to be issued to oil companies to rectify the massive oil deficit.

Ultramar Diamond Shamrock has struck a deal with Petro-Canada to form a refining and marketing joint venture in Canada and the northern U.S.

The new company will operate as a Canadian general partnership. It will be owned 51% by Petro-Canada and 49% by UDS.

Petro-Canada will contribute its refineries at Edmonton, Montreal, and Oakville, Ont.; a nationwide marketing network; a lubes plant at Mississauga, Ont.; and some pipeline interests. UDS will chip in its refineries at St. Romuald, Que., and Alma, Mich., plus about 1,700 marketing outlets.

The JV will have about 500,000 b/d of refining capacity and about 3,500 retail outlets. Products will carry primarily the Petro-Canada brand.

The companies expect the combination to result in about $625 million (Canadian) in cost savings, after taxes.

Partners in another refining JV soon will realize $6 million/year in savings as a result of joining forces. It will do so by cutting jobs, however.

Lyondell-Citgo, a JV of Lyondell Petrochemical and Citgo Petroleum, will trim 100 administrative jobs at its Houston refinery this year. About 40 of these jobs will shift to the respective companies' staffs.