MARKET ACTIVITY/TRADING NOTES FOR DAY ENDING MONDAY, JANUARY 12, 1998 (5)
INTERNATIONAL SCENE
COMPANIES
Heartened by drilling results, TRANS-DOMINION ENERGY CORP. has upped its interest in a Trinidadian oil play to 100%. The Calgary-based company said yesterday it has increased to 100% from 71% its working interest in four leases and the Bonasse oilfield on the Cedros Peninsula of Trinidad. The Caribbean island, located off the north coast of Venezuela, has a high hydrocarbon potential, compelling Trans-Dominion to fully acquire Trinidad Exploration and Development Ltd. "Trinidad lies within one of the world's largest oil-producing regions, has a favorable fiscal environment, and is an ideal location for TDE (Trans-Dominion) to develop as a second core area," said Michael Doherty, Trans-Dominion's president and chief executive. Doherty said the Trinidad properties are "on direct geologic trend with the Pedernales oilfield in Venezuela -- and is located between Trinidad's existing oilfields and recent large onshore and offshore discoveries near Pedernales." Trinidad Exploration president Vic Childs has been retained by Trans-Dominion to lead the venture.
Trans-Dominion is considering further expansion in the Caribbean. The company has also been focusing on Turkey, Pakistan and Bulgaria.
COUNTRIES
ALGERIA
Foreign Oil Firms Unmoved In Strife-Torn Algeria
Foreign oil companies are forging full steam with oil and gas projects worth billions of dollars in Algeria despite a rising death toll from massacres which have claimed more than 1,100 lives in the past two weeks.
''As far as we are concerned it's business as usual,'' said an official of one European oil company which operates in Algeria.
More than 65,000 have died in six years of the conflict which erupted after Algerian authorities cancelled a general election in which Islamic fundamentalists had taken a commanding lead.
Oil industry consultants say OPEC member Algeria's attraction to international companies for oil and exploration and production remains largely undiminished.
Companies investing in the country include Atlantic Richfield Co (NYSE:ARC - news; ARCO) and Anadarko Petroleum Corp (NYSE:APC) of the United States, Australia's BHP (BHP.AX), Britain's British Petroleum (UK & Ireland: BP.L) and Lasmo (UK & Ireland: LSMR.L) and Danish Maersk (DSACb.CO).
Others are Italy's Agip (AGIS.CN), France's Total (TOTF.PA), Spain's Repsol (REP.MC) and Malaysia's Petronas, which all operate in agreements with Algeria's state Sonatrach.
Industry consultants say there is no shortage of new foreign companies queueing to come into Algeria for a share of its vast untapped oil and gas reserves.
Algeria came top of the list of attractions for oil firms in a 1996 survey by Swiss-based Petroconsultants.
Austria's OMV (OMVV.VI), for one, is bidding for a gas concession under Algiers' $19 billion five-year oil and gas development plan, industry sources said.
Although foreign oil companies see the violence as a concern and are monitoring developments closely, it has had little direct impact on day-to-day operations.
There has been no indication of any plans among oil firms to pull out of the country and most exploration and production operations are running to plan.
''We feel that we should follow the advice and lead of our governments as well as the rules of the host country,'' said one oil company official. ''But what would we achieve by pulling out? Would it solve Algeria's political problem?''
"A diplomatic solution is what is needed and all companies are working on making a contribution to the country's economy,'' said another.
''There's a lot at stake in Algeria, huge investments. Companies would not have made them if they didn't think there was a future in Algeria,'' he said.
Algeria's proximity to European markets make it an important energy supplier.
''Algeria's importance to the West is its trump card. Its gas supplies to southern Europe are crucial, and Europe can't afford to isolate Algeria,'' said Martin Stone at London-based Control Risks, a political and economic risk assessement company.
Spain depends on Algeria for around 60 percent of its gas imports while Italy relies on it for around 40 percent of its gas. Supplies come through the Transmed gas pipeline linking Algeria to Tunisia and Italy and the Maghreb-Europe line through Morocco to Spain and Portugal.
Crude oil, petroleum products and liquefied petroleum gas are transported into Europe from Algerian ports.
The country's geography acts for oil companies as an important buffer against the killings.
Prime oil and gas territory is located in the remote Sahara desert, several hundred kilometers south of the capital Algiers and its western provinces where the massacres have been taking place.
The Algerian army long ago imposed heavy security on oilfields and surrounding sites and some companies have their own security guards, who coordinate their security measures with the authorities.
Many company officials fly directly to the fields, bypassing Algiers unless they have official business to conduct with Algerian state-owned oil company Sonatrach.
BP two years ago made a commitment of $3.5 billion to develop In-Salah gas region, about 1,200 km south of Algiers. It has completed seismic surveys and is currently drilling wells and has set up a joint European marketing venture with Sonatrach.
The conflict has, however, stopped BP from exploring its concession in the Tellian Atlas mountains near Sour El Ghozlane in the north because of its proximity to the violence, industry sources said.
Algeria is a major plank in U.S. firm ARCO's overseas production portfolio.
It plans to spend $400 million this year in a 25-year production sharing agreement with Sonatrach to develop Rhourde El Baguel field, about 700 kms south of Algiers. ARCO is committed to spending around $1.3 billion during the lifespan of the project.
Industry sources say Algerian oil company workers have received death threats from Moslem rebels in the past. The most recent report of possible disruption came in December when an Algerian court convicted 17 men for plotting to set fire to Algeria's giant Hassi Messaoud oilfield, the country's main crude output source.
Algeria, which depends on oil and gas exports for about 94 percent of its foreign earnings, plans to export60 billion cubic meters a year of gas by the year 2000.
It plans to raise oil output, now 850,000 barrels per (bpd), to above a million bpd.
After a buildup of international pressure in the past week, Algeria has agreed to a European mission to look into ''confronting terrorism'' but it has strongly rejected an international inquiry into the killings because this will cast doubt over the source of the massacres.
The government blames Moslem rebels for the killings.
UNITED KINGDOM
UK Oil Output To Hit New Highs In 1998.
British oil production levels will jump by eight percent to a record 2.84 million barrels per day (bpd) in 1998 after remaining disappointingly flat in 1997, consultants Wood Mackenzie forecast on Monday.
Total North Sea production levels, including output from Norway, the world's second largest crude oil exporter, will also rise by eight percent to a new high of 6.57 million bpd from 1997's average of 6.08 million bpd, Wood Mac said.
Some 22 new oil fields due on stream in waters off the British Isles in the next 12 months should power an impressive rise in crude flows from 1997's average of 2.53 million bpd, the Edinburgh-based analysts said.
They expected production levels to touch three million bpd by the end of the year, including an onshore contribution of some 100,000 bpd, and said the 12-month average could be as high as 2.93 million bpd.
But Wood Mac said it would stick with a more ''cautious'' forecast, given that technical problems which had delayed many new start-ups for months in 1997 could repeat themselves.
The predicted rise in output for 1997 evaporated as the floating production systems now favoured by oil companies suffered teething problems and ambitious development schedules proved too hasty.
Last year's output figures were actually below 1996's 2.57 million bpd, pushed down by delays and heavy summer maintenance schedules that cut June's output to a two-year low of 2.1 million bpd.
With major maintenance work often done on a biennial basis summer platform shutdowns in 1998 should have only a limited effect, although work planned on the Forties system in June will reduce second quarter output signficantly, Wood Mac said.
Norwegian output in the second quarter will be hit by Statfjord A and Gullfaks A and B shutdowns, and will fall further in the third quarter because of Statfjord C, Gullfaks C and Ekofisk maintenance stoppages.
Wood Mac saw new fields in 1998 adding an average of 160,000 bpd to UK output, peaking at an extra 390,000 bpd by December 1998, while start-ups in 1997 added an average of 80,000 bpd to last year's figures.
''A number of new field start-ups late in the year and the completion of a significant level of redevelopment work now provide an excellent platform to which the 22 new developments due onstream in 1998 can add,'' the consultants wrote.
Offshore tanker loading will account for a record 26 percent of British output in 1998 while the Forties and Flotta pipeline systems will increase volumes, with eight new fields due to feed crude to the Forties terminal at Cruden Bay.
British Petroleum (UK & Ireland: BP.L) should bring on six new fields in 1998, Shell Expro (RD.AS.)(UK & Ireland: SHEL.L) five and Phillips Petroleum Co (NYSE:P) should begin production at a further three, Wood Mac said.
The purchase of mature assets by small companies determined to extend their lives will keep the number of oil fields due to bedecommissioned in 1998 down to just one, the TALISMAN ENERGY operated Clyde satellite Leven.
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