INTERNATIONAL BITS AND PIECES - PART 2
Asia Energy Briefing
An executive briefing on energy for Oct 13, 1998
BENZENE PRICES UNLIKELY TO REBOUND QUICKLY
TOKYO - While some industry insiders say benzene prices are nearing the bottom, the room for a price upswing appears limited.
Contract prices between refineries and petrochemicals makers in the US market - which serve as the global benchmark for benzene prices - stabilized at US72 cents per gallon for this month's contracts, unchanged from the previous month.
PAKISTAN GOVT RESCINDS POWER DEAL WITH HUBCO
ISLAMABAD - The Pakistan government has registered a criminal case against the chief executive and other directors of Hubco for fraud and misappropriation in their deal with the government for power supply at fraudulent charges.
The government also rescinded its agreement with Hubco and demanded the repayment of Rs. 17 billion, which the government said was unduly paid to the company by Water and Power Development Authority(WAPDA).
TARIM BASIN SET TO BECOME CHINA'S LARGEST ENERGY SOURCE
BEIJING - A string of recent exploration breakthroughs in the Tarim Basin suggest that the colossal desert area in northwest China will become the country's most significant source of energy supplies in the next century, according to sources here.
The China National Star Petroleum Corp (CNSPC) has recently announced its discovery of an oilfield with geological reserves (proven reserves and controlled reserves combined) of over 100 million tons in the Tarim Basin, in northwest China's Uyger autonomous region. JAPAN MAY
WOODSIDE IMPLIES CHEAP GAS KEY FOR AUSTRALIAN LNG EXPANSION
PERTH, Australia - Woodside Petroleum Ltd (ASX: WPL) managing director John Akehurst has implied that cheaper liquefied natural gas (LNG) is a key factor in encouraging Asian customers to buy more LNG from Australia.
Fresh from talks with power utilities in Japan, Mr Akehurst told journalists after addressing the Asia Pacific Oil and Gas conference here, that driving down the costs of producing gas was now of significant importance for all the proposed LNG projects.
ADNOC KEEN TO PARTNER IOC IN INDIAN REFINERY PROJECT
NEW DELHI - The Abu Dhabi National Oil Company (ADNOC), a United Arab Emirate petro major, is among the four foreign oil companies in race to partner the state-owned Indian Oil Corporation (IOC) for building a 9,000,000-tonne refinery in south India.
ADNOC had shown interest in joining the project, which IOC planned to execute in partnership with another state-owned oil company Madras Refineries Ltd (MRL), IOC chairman M A Pathan told the Press Trust of India.
INDONESIA'S PERTAMINA WAITING FOR OIL FIELD DECREE
JAKARTA - Pertamina is still waiting for a presidential decree giving it rights to manage the Coastal Plain Pekanbaru (CPP) oil field in Riau presently managed by PT Caltex Pacific Indonesia.
Pertamina's exploration and production director Priyambodo Mulyosudirjo said over the weekend that so far, there was no written decision to manage the oil field, except a recommendation from the CPP evaluation team announced by Minister for Mines and EnergyKuntoro Mangkusubroto.
Colombia's Pastrana slams strike, refuses to cede
Colombian President Andres Pastrana flatly refused on Tuesday to bow to striking state workers' demands to scrap government austerity plans and placed security forces on full alert to face the threat of possible union violence.
In a televised speech, Pastrana dubbed the week-old, nationwide stoppage by 700,000 public sector workers "unacceptable and unjustified" -- setting the stage for a bitter face-off with labor leaders.
Union bosses, who had been meeting Labor Minister Hernando Yepes as Pastrana's tough speech was broadcast, immediately broke off talks and pressed ahead with plans for a mass street demonstration, expected to attract some 200,000 protesters, in Bogota on Wednesday. "This strike has gone beyond being a labor conflict and has become a political action," a visibly angry Pastrana said.
The strike was declared illegal on Friday but union chiefs said their members would defy the ban and stay off the job indefinitely. "It's not possible to sit down with a minority to talk about the future of the whole state ... I have no intention of cutting any deals that put the stability of the whole nation at risk," he added.
The strike, which includes doctors, teachers, oilmen, justice officials, airport and telephone workers, is the worst labor unrest since February 1997. It is also the most serious challenge to Pastrana's election pledge to rein back the yawning public sector deficit, currently at around 4.5 percent of gross domestic product, to about 2 percent by the end of 1999.
Labor leaders have submitted a 110-point list of demands including an above inflation wage hike, greater social spending by the government and a series of wide political proposals. "The president has insulted the Colombian working classes. His remarks were completely unacceptable," said Julio Roberto Gomez, head of the General Federation of Colombian Workers (CGTD), the country's second largest labor federation, in response to Pastrana's speech. "We have broken off talks. There's nothing else to do and the strike ... will continue," he added.
State workers' frustration at the government's point-blank refusal to negotiate could come to a head on Wednesday when some 200,000 people are expected to demonstrate in downtown Bogota. Authorities said police and the army had been placed on full alert in the capital and all leave had been canceled to cope with the protest march. Strikers and security force members have already clashed several times around the country since the strike began.
Oil workers scuffled with soldiers on Friday outside a state-run oil refinery in the Caribbean coast resort of Cartagena. Over the weekend employees of the state run rural savings bank Caja Agraria used high pressure water hoses to battle against police firing tear gas in Bogota. Phone workers also clashed with police, firing tear gas and nightsticks, early on Tuesday as authorities tried to dislodge pickets from outside the state phone company Telecom in Bogota.
Ekofisk oil, gas restarts after fire- Phillips Oil and gas production at the Ekofisk centre in the Norwegian North Sea restarted on Wednesday at 4.15 a.m. (0215 GMT) after a fire halted output on Monday, operator Phillips Petroleum <P.N> said.
Iran hints at oil shift, Rushdie flap no threat
Iran may show flexibility in negotiating key aspects of foreign investment in oil and gas development ventures that have proved unpopular with foreign energy companies, an Iranian oil official said on Wednesday.
In remarks indicating a possible easing of Iran's approach to outside energy involvement, he said Iran would be prepared to discuss widening the range of possible repayment models for investors planning to upgrade existing oil and gas fields.
"There is room for flexibility in this regard. It's a question of collecting information and addressing a range of related issues over the next few months," the official, who asked not to be named, told Reuters.
He said investors should not fret over political turbulence such as Iran's rocky ties with neighbouring Afghanistan and fresh statements attacking British author Salman Rushdie, or over oil sector changes such as a planned onshore reshuffle.
"The Salman Rushdie case is over. There are some conservatives who raise this issue but for domestic consumption only. But 70 to 80 percent of those who voted for President Khatami do not subscribe to their views," he said.
On Iran's confrontation with Afghanistan's ruling Taleban Islamic movement, he said: "This should not be a cause for concern. It is being allowed to calm down."
Foreign energy companies are elbowing for position in Iran in an $8 billion oil and gas investment race that has attracted European and Asian firms long starved of Gulf upstream ventures.
The country, which holds the world's second largest gas and fifth largest oil reserves, has offered 43 so-called buy-back ventures where investors are repaid in production under its largest energy opening since the 1979 Islamic revolution.
Iran has already signalled the possibility of easing terms on exploration deals which make up 16 of the offered ventures.
But on development deals on established fields, Iran has so far been determined to restrict the use of so-called alternative oil for repayment in cases where a field's output is insufficient to repay capital recovery and remuneration.
Asked to comment on a demand by some foreign companies to have a right either to raise production or take production from other fields if their own output was inadequate, the official said without elaborating that flexibility was a possibility.
Iranian analysts based in London have said they expect any such flexibility to emerge only in final phases of negotiation -- which for most projects lies months, if not years away.
Asked whether Iran preferred approaches by consortiums, the official said there was no rigid rule but ventures involving several foreign companies were usually able to draw on more resources than those involving only one.
The official added the oil ministry was pressing ahead with plans to reorganise the onshore sector of the National Iranian Oil Company to allow a role for private Iranian companies.
These small, semi-private business units would act as state owned NIOC's prime onshore contractors and would link up with foreign "buy back" partners to develop one or two fields each.
A separate Iranian source said 30 of such firms had been or were being created for both onshore and offshore sectors.
Some foreign firms dislike the development, arguing it could lead to delays and complications if it is carried out in tandem with buy-back negotiations on onshore fields.
But the official said foreign investors should not be deterred, and those foreign companies that had worked with such semi-private companies in the offshore sector would be at an advantage in seeking opportunities onshore. "They can use their experience and contacts built up in their dealings with Iranian private companies," he said.
He said Iranian officials would attend a conference in January in London to review bids. Iran has said it hopes to finalise an "appreciable" amount of the ventures by late March.
Russia steps up efforts to sell gas to China
As international energy companies come to terms with the fact that China is the world's fastest growing energy market, they are starting to outdo themselves with expensive and ambitious plans to supply natural gas.
Russia's vast gas monopoly Gazprom <GAZPq.L> has become the latest to enter the field. Chairman Rem Vyakhirev last week announced plans to lay a gas line from Siberia to Shanghai.
"The most promising route is a line from western Siberia to Shanghai, including an option from the Yamal-Nenets autonomous republic," he said, adding that the 6,500 km (4,000 miles), 30 billion cubic metres (bcm) per year line may go on to Korea.
"We're prepared to start negotiations with our Chinese partners, and our experts received orders to that effect last week," he told a news conference.
He said Gazprom was ready to sign contracts on the basis of supplying that volume of gas for 30 years.
Gazprom has been considering supplying the Asian market for years, but Nikolai Bely, head of Gazprom's foreign relations department, said this was the first time the company had publicly discussed delivering western Siberian gas.
Earlier plans had involved gas from eastern Siberia, much nearer to the Chinese market.
Bely added that in future, gas for China may be taken from Russia's Arctic waters, where reserves are even greater than in the Yamal-Nenets republic.
But Gazprom faces competition from a project far closer to China. Rusia Petroleum, which is 60 percent owned by a joint venture between Russian company SIDANKO <CHGZ.RTS> and British Petroleum <BP.L>, holds a licence to develop the huge Kovykta field in eastern Siberia.
This field, not far from Lake Baikal and the city of Irkutsk, has a distance advantage of thousands of kilometres over the gas source named by Gazprom's Vyakhirev.
A BP spokesman said on Wednesday that although the Chinese gas market was extremely promising he doubted it would grow fast enough to support more than the Kovykta project initially.
One reason was that a pipeline from Kovykta to the Beijing region would run through China's main hydrocarbon region, the Tarim basin, and it appeared inevitable that the line would encourage development of China's domestic gas reserves.
Any future increase in demand was likely to be met more cheaply from the myriad projects under discussion and development in Russia's Pacific island of Sakhalin, either liquefied or delivered by pipeline, than from Siberia, he added.
China's coastal markets were also more likely to see demand growth met by Liquefied Natural Gas (LNG), with potential growth seen from Australia and Indonesia, than by pipeline, he added.
Revision of growth projections for the Chinese economy were also likely to call for a review of expected energy demand growth, further calling into question the market's ability to import more gas.
Yet more competition is also seen from the central Asian republics of Turkmenistan and Kazakhstan. Turkmen President Saparmurat Niyazov visited China last month and construction of a 6,700 km (4,200 miles) gas pipeline was discussed.
But analysts are sceptical that any development of such a vast project could be expected soon.
Kazakhstan has proposed gas lines to China as well but is now concentrating more closely on oil deliveries.
A planned 400,000 barrels per day line from Kazakhstan to western China is due for completion by 2005, an energy conference in the commercial capital, Almaty, heard last week.
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