Some key petroleum privatization efforts in Asia have marked milestones.
Iran may break a state monopoly and allow private investment in grassroots refinery construction.
An Iranian newspaper reports that privately funded refineries will be built in areas where the population has difficulty obtaining oil products.
In areas closer to oil reserves and transportation infrastructure, private investment will be allowed in export refineries only.
State-owned NIOC will furnish crude at international market prices.
Thailand is resorting to selling state holdings in several energy businesses to raise 480 billion baht ($13.71 billion) to help bail the country out of its economic woes.
The companies include Electricity Generating Authority of Thailand (EGAT), Esso Thailand, Petroleum Authority of Thailand's (PTT) E&P unit, and Thai Oil.
At the same time, EGAT and PTT will begin privatizing. The National Energy Policy Office (NEPO) aims to complete sales in 2000.
"The idea is to privatize the energy sector by reducing government's stake to as low as 20%," said a senior NEPO official.
Deputy Prime Minister and NEPO Chairman Korn Dabbaransi has asked Exxon to buy the Finance Ministry's 12.5% share in Esso Thailand.
NEPO also has told PTT to come up with a definite privatization program in the next 3 months.
In another move toward reducing government participation in the oil industry, Thailand will end a 3 baht/kg subsidy of household LPG. Thailand will begin to float LPG's price following depletion of the subsidy fund, expected by the end of September.
The fund was depleting faster than expected because the more than 30% depreciation of the baht since early July has boosted domestic LPG prices and thus increased subsidies. Aside from depletion of the subsidy fund, Thailand is being forced to end LPG subsidies under rules set by the International Monetary Fund, which is providing $17 billion in aid to salvage the battered Thai economy.
Ostensibly going against its privatization plans, Pakistan has acquired for $5.75 million 64% of Burmah Castrol's shares in Pakistan Petroleum Ltd. (PPL), giving the government a 93.5% interest in PPL.
Anwer Saifullah Khan, former petroleum minister under Benazir Bhutto, responded by calling the move "a retrogressive step, contrary to the policy of privatization adopted by successive governments." Pakistan Privatization Commission Chairman K.M. Asif says the government will resell its stake in PPL.
At presstime, U.K. oil companies were awaiting a High Court decision on whether Greenpeace had won its demand for a judicial review of frontier licensing procedures.
During the hearing, Greenpeace lawyers claimed government tactics were designed to prevent airing of the issue of Atlantic Frontier oil exploration.
Meanwhile, the U.K.'s most apparently environmentally conscious oil companies-which coincidentally are those hardest hit by Greenpeace's recent guerrilla warfare-style protests-have been speaking out as the case proceeds.
In an interview with the Financial Times, BP CEO John Browne called for new taxes to curb energy waste and guard against climate change.
Browne envisions a tax that promotes greater energy efficiency without discriminating against specific sectors such as transportation, rather than a blanket carbon tax, as promoted without success by the European Commission.
Conoco U.K. Chairman George Watkins told a London conference that Greenpeace's claims that Atlantic Frontier development must be halted to stop CO2 emissions had been "almost universally rejected by powerful argument, substantiated and supported from every direction by the most impeccable sources."
Royal Dutch/Shell Managing Director Phil Watts told a staff health, safety, and environment conference in the Netherlands that industry must take precautionary measures against global warming now.
"Working in the oil and gas industry does not prevent us from sharing society's concerns and aspirations," said Watts. "Despite scientific uncertainty about the nature and impact of global warming, we know that the consequences could be damaging and, possibly, irreversible."
Shell predicts that, by 2020, renewable resources could provide 5-10% of the world's energy and maybe 50% by 2050.
Although greater energy efficiency will have curtailed demand in the developed world, overall consumption will grow 33-75% because of increasing demand in developing countries.
A joint venture of BASF and Fina is planning the world's largest single-train liquids cracker. The 820,000 metric ton/year ethylene plant will be built for $800 million at Fina's Port Arthur, Tex., refinery.
BASF will operate the plant, which will use a technology that enhances propylene production to give it a whopping 880,000 tons/year of propylene capacity. Start-up is scheduled for yearend 2000.
Saudi Aramco has pulled out of talks with Petrogal over the acquisition of a stake in the Portuguese state oil firm, citing a change in its strategy away from Europe and towards southern and eastern Asia.
The announcement took Petrogal by surprise, as the two were expected to sign a deal on Aramco's acquisition of a 27.5% stake in Petrogal soon.
"The news clearly comes as a blow for us, particularly since Saudi Aramco had insisted on exclusive negotiating rights.
This means that we will have to start again from scratch at finding a new strategic partner," said a Petrogal official.
"Meanwhile, we now want to concentrate our efforts in the field of natural gas. We are very interested in the proposed privatization of Gas de Portugal and are considering upping our stakes in high-pressure gas pipeline operator Transgas," the official added.
The U.S. Senate has approved an Interior appropriations bill amendment that could block future non-emergency sales of oil from the Strategic Petroleum Reserve.
Like a House bill, the Senate bill had proposed selling $209 million worth of SPR oil in fiscal 1998 to fund SPR operations. Instead, Sens. Frank Murkowski (R-Alas.) and Jeff Bingaman (D-N.M.) persuaded the Senate to earmark for the SPR all income over $2 billion that the government receives from the expected sale of its interest in the Elk Hills Naval Petroleum Reserve in California next year (OGJ, Apr. 21, 1997, p. 24).
Texaco has pulled out of Yetagun gas field project off Myanmar, following U.S. sanctions against the country's military regime.
Texaco's 42.9% stake and operatorship will be divided between Premier Oil-which will take on 6.6% and operatorship to raise its interest to 32.3%-and Malaysian state firm Petronas. While Texaco says the decision followed an asset review, Premier sees the deal as a means of strengthening its blossoming Asian gas portfolio (OGJ, Sept. 8, 1997, p. 37).
India will have to increase product imports to meet a supply shortfall caused by a deadly accident at Hindustan Petroleum's Vishakhapatnam, India, refinery (OGJ, Sept. 22, 1997, p. 42).
The refinery is not expected to restart for at least 18 months.
Investigators say leaking LPG at the refinery was ignited by a spark in a staff building, starting the fire that killed 56, reports the Times of India.
The LPG had entered refinery buildings through air conditioning ducts.
The fire gutted nine LPG and kerosine tanks and demolished a two-story office block. Damage has been estimated at about $400 million.
Two new breakthrough energy technologies have been announced.
Gas Authority of India Ltd. (GAIL) plans to build a plant that will use a process that can convert the country's excess naphtha and NGL to LPG and gasoline. The technology, developed by the Indian Institute of Petroleum (IIP), uses zeolite catalysts.
IIP Chief Prasad Rao said the technology was licensed for 2.5 million rupees ($70,000) to GAIL, which will build a 30,000 metric ton/year pilot plant at Vagodia, Gujarat. If the pilot is successful, GAIL and IIP will jointly license the process to third parties. Rao says such negotiations have already begun.
The technology would be particularly useful to large Persian Gulf producers of naphtha that sell it as low-cost power plant fuel.
Mitsubishi and Tepco have developed a process that uses green algae to produce fuel ethanol from CO2. Mitsubishi plans to build a large plant to convert CO2 from a thermal power station to fuel by 2010.
The Red Sea algae contain an enzyme capable of changing a starch produced from CO2 through photosynthesis to ethanol at 40% efficiency. The firms hope to improve efficiency to more than 90% through genetic manipulation.
Copyright 1997 Oil & Gas Journal. All Rights Reserved.
