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To: upanddown who wrote (28056)	8/20/1998 5:29:00 PM
From: Douglas V. Fant	Read Replies (1) \| Respond to of 95453

John, Yup 5mm bbls/day of additional capacity in the Middle East, and that excess capacity will grow through the year 2003 based upon current e&p projects that are scheduled in the Middle East... So OPEC discipline is necessary, but when Asia demand/growth resumes, that too will help make the "discipline" a whole lot easier... Sincerely, Doug F.

To: upanddown who wrote (28056)	8/21/1998 12:20:00 PM
From: Mike from La.	Respond to of 95453

John, What you point out is accurate, the Chinese cuts are about 60,000 bbls per day, and most of the shut in are low out-put wells. but consider two things. First is the market reactions. When it was announced that Venezuela was 50000 bbls behind in meeting its quota cut, the reaction was very negative, like "oh no! the glut will go on forever now." But zero reaction to the China cuts. Also, although these are low out-put wells the add up. In the US, according to different sources, the amount of shut-in equals 15-25% of US production. US production is 4.89 million. Using the lower 15%, that equals 975,000 barrels. Although none of the numbers are blow away numbers they add up, especially on a world wide basis. My point is that they are not being factored into the production cuts. Maybe it's because there is such a time lag, China just now reporting 1st quarter. It is a positive, but I agree, no one knows how big the numbers are. I still believe that when the total effects of all the cuts become felt, it will have a stronger effect on prices than seems to be anticipated. But, admittedly, still speculation, until numbers are clear. Mike from La.