INTERNATIONAL BITS AND PIECES - FRIDAY A.M. 10/23/98
Restart of N.Sea Sleipner field seen after weekend
OSLO, Oct 23 - The Sleipner A gas and condensate platform in the North Sea will probably resume production "immediately" after the weekend, operator Statoil [STAT.CN] said on Friday.
The platform was closed last Sunday following a fire caused by a leakage of diesel fuel. It was one of the worst blzes since oil and gas production began off Norway in 1971.
Statoil said that extensive repairs were needed but they were "of a nature which makes it possible to come back onstream before they are fully completed".
The Sleipner area pumps around 165,000 barrels per day of condensate and delivers 24 million cubic metres per day of gas to continental Europe.
Gas from the Troll and Statfjord fields are making up gas supplies to Europe while Sleipner is down.
Low oil gets Saudi banks better business, for now
DUBAI, Oct 22 - Plummeting oil prices have tightened liquidity in Saudi Arabia, but the resulting demand for corporate credit and higher lending rates have helped boost bank profits, bankers in the kingdom say. Eight of the nine banks which announced results this month for the third quarter lifted profits. But bankers said if low prices persist they would find it tougher to improve earnings in the new year.
Third-quarter net profits for the nine banks rose 13.3 percent to a total of 3.95 billion riyals ($1.1 billion) compared with a year ago, figures released by the banks showed.
In the same period, crude prices have slumped to 10-year lows, slashing the government's main source of revenues and prompting a 10 percent cut in spending by the state, which dominates the economy.
"The less liquidity there is in the market, the bigger the role for banks," the general manager of one of the kingdom's 11 commercial banks told Reuters. Bankers said the squeeze has created lending opportunities, often to corporate customers facing payment delays and seeking to fill the cash flow gap.
This, they said, helps explain the 20.9 percent growth in the combined loan portfolios of the nine banks to 113.3 billion riyals by the end of September compared with a year ago.
Banks have also been able to push up loan rates. "In a tight situation, banks usually have the upper hand and are able to increase their pricing," the general manager said.
In addition, banking revenues may still be benefiting from deals done in 1997 when oil prices were buoyant, bankers said.
United Saudi Bank <1120.SE> topped the rises with net profit increasing 57 percent to 439.1 million riyals. Al-Rajhi Banking and Investment Corp <1110.SE>, run on Islamic sharia principles, reported the biggest profit at 1,103.4 million riyals.
Only Arab National Bank <1080.SE> reported lower income, with its net profit down 22.9 percent to 301.9 million riyals.
Riyad Bank <1010.SE> and privately owned National Commercial Bank, the biggest institutions, have not announced results.
"There is a range where low oil prices create opportunities for banks," said one treasury manager, who like others in the publicity-shy kingdom asked not to be named.
But, he said, sustained low oil prices would hit profits. "I think next year, you could see flat earnings," he said.
Analysts said banks were in a better shape, thanks to improved credit controls and provisions, to cope with a downturn compared to the 1980s when low oil prices left a heavy load of non-performing loans which stayed on their books for years.
In mid-October, Moody's Investors Service revised to stable from positive its outlook for Saudi Arabia's foreign currency ceilings for bonds, notes and bank deposits.
It said the change was due to this year's oil slide and expectations that low levels would persist for the next two years. "During the next year and beyond, low oil prices will require more concerted measures than what has been attempted in the past to reduce the fiscal and balance of payments deficits."
An economist in the kingdom said the economy could contract in 1998, dragged down by the oil industry, although the non-oil sector would be less affected initially.
"There is a time lag of 18 to 24 months before the private sector really starts to feel the impact of low oil prices," he said.
Saudi's Naimi evasive on oil drilling rights
TOKYO, Oct 22 - Saudi Arabia's Oil Minister Ali al-Naimi on Thursday came up short of endorsing the renewal of Japan's drilling rights in the Neutral Zone at a meeting with the Japanese trade minister, a ministry official said.
Japan's largest oil producer Arabian Oil Co Ltd (AOC) <1603.T> holds a concession in the Neutral Zone shared by Saudi Arabia and Kuwait.
The Saudi portion of AOC's drilling rights are due to expire in 2000, and AOC is currently negotiating for the renewal of the rights.
At the Thursday morning meeting, Naimi said Arabian Oil was like a bridge between the two countries and he hoped for a fruitful conclusion of the negotiations, but did not give his assurance that the AOC's rights would be renewed, the trade ministry official said in response to a query by Reuters.
Trade Minister Kaoru Yosano was quoted by the official as telling Naimi: "Arabian Oil is a symbol of friendship between Japan and Saudi Arabia. I hope the negotiations will be successful."
Naimi's comments on Thursday were largely an echo of Saudi Arabian Crown Prince Abdullah's remarks the previous day at a meeting with Japanese Prime Minister Keizo Obuchi.
Prince Abdullah fell short of giving Obuchi his endorsement to the rights renewal.
The Crown Prince arrived in Japan on Wednesday afternoon with his delegation for a three-day visit.
The offshore concession represents Japan's most significant upstream oil interest, with daily crude output of 300,000 barrels.
Japan relies almost entirely on imports for its oil needs.
The Crown Prince and Naimi, along with other members of the delegation, attended a luncheon held by Japanese business leaders on Thursday.
In a speech at the luncheon, Prince Abdullah stressed the importance of bilateral relations between Saudi Arabia and Japan, but did not touch any issues related to oil, such as the renewal of AOC's drilling rights or global oil prices.
Saudi Foreign Minister Prince Saud al-Faisal also skirted the oil issue in discussions with Japanese Foreign Minister Masahiko Komura, a Japanese Foreign Ministry spokesman said.
"No discussion was made of economic or oil issues," he said.
Instead, talk centred on regional issues such as Saudi Arabia's relationship with Iran and its recognition of the Taleban regime in Afghanistan, the spokesman said.
Prince Saud said that because the Taleban control the Afghani capital Kabul, his government decided to recognise them because they would be most able to control the whole country as a result, the spokesman said.
He told Komura that this does not mean that Saudi Arabia supports all Taleban positions, but rather that a political vacuum in Afghanistan should be avoided at all costs and that international isolation of the Taleban regime would be harmful, the spokesman added.
Prince Saud also said relations between his country and Iran appeared to be improving.
Russian companies could play larger role in Caspian
WASHINGTON, October 23 (Itar-Tass) - Russian petroleum companies could
play a more active role in developing Caspian energy sources, specifically, take part in building a pipeline stretching from the Azeri capital Baku to the Turkish port Ceyhan in the Mediterranean.
This does not run counter to the United States interests, and the US is prepared to recommend Russian partners to expand cooperation in the region. In an interview with Itar-Tass an executive staffer of the US Department of State, dealing with problems of Caspian energy said this view was stated at a meeting between high-ranking officials of the US administration and US business leaders in the White House of Thursday.
Representatives of major US petroleum companies Amoco, Chevron, Exxon, Unocal, Pennsoil, Texaco, and Conoco attended the conference.
Administration officials and capstans of big business unanimously declared in support of creating a system envisaging various ways of putting Caspian oil on international markets. It was noted that among its main sections are Baku-Novorossiisk pipeline and a route from Kazakhstan's Tengiz deposit via Russian territory to a Black sea port chosen by the Caspian pipeline consortium. Taking part in the consortium are the Russian and Azeri governments and nine oil companies, among them Rosneft and LUKoil, as well as US Chevron and Mobil.
US oil firms, government agree Baku-Ceyhan pipeline off for now
WASHINGTON, Oct 22 - U.S. oil company executives, and top U.S. government officials agreed at a special meeting on Thursday that a key pipeline from Baku in Azerbaijan through Turkey to the Meditarranean port of Ceyhan is not currently commercially viable, though they stressed that it would be built if Caspian oil exports grow sufficiently.
Thursday's meeting was the highest-level effort by the Clinton administration to secure a commitment to build the 1,080-mile Baku-Ceyhan pipeline, seen as a key regional policy goal aimed at ensuring an oil export route from the Caspian that avoids Iran and is not dependent on northern routes through Russia and Georgia.
"Baku-Ceyhan makes sense, we all agreed. What we need to do is find ways to make it commercially viable in the shortest possible time," said an administration official familiar with the meeting.
The meeting was attended by James Steinberg, deputy director of the National Security Council; Richard Morningstar, secretary of state for Caspian Basin energy diplomacy, and representatives from all the major U.S. oil companies doing business in the Caspian, including Mobil Corp. <MOB.N>, Amoco Corp. <AN.N>, Chevron Corp. <CHV.N>, Exxon Corp. <XON.N>, Unocal Corp. <UCL.N>, Phillips Petroleum Co. <P.N> and Pennzoil Co. <PZL.N>
The gathering comes as the Azerbaijan International Oil Co. (AIOC), a consortium of 12 private and state companies led by BP-Amoco <BP.L>, is due to deliver to the Azerbaijan government its recommendation on which should be the main initial export route from Baku.
Persistently low oil prices over the past year, as well as a series of disappointing exploration wells this year, have led to a downgrade of near-term estimates of export volumes from the Caspian.
Oil industry officials said the administration recognizes that the initial focus of investment will be on the route taking oil from Baku to the Georgian Black Sea port of Supsa, the first phase of which is already near completion. They also said there is likely to be investment in the existing northern route to Russia's Black Sea oil port, Novorossiisk.
But the U.S. is still keen to ensure that the Baku-Ceyhan line remains the logical next route if the Caspian's oil promise is fulfilled.
"It's going to take a while, frankly, to find enough oil to fill all those pipelines. We don't know how long that is going to be," the administration official said.
The oil company executives took a similar line.
"There was a great degree of agreement as to the logical pattern of pipeline development...and that this (Baku-Ceyhan) sould be the next logical development. The question was on timing and on financing," said Richard Matzke, head of Chevron Overseas Petroleum Inc., who attended the meeting.
The U.S. officials were intent on getting across their support for that position and said they would make every effort to make sure the Baku-Ceyhan pipeline is built when commercially viable.
Administration officials repeated that American taxpayer money wouldn't be used to pay for the pipeline, but financing could be supported by the U.S. Export-Import Bank, the Overseas Private Investment Corp. and the U.S. Trade and Development Agency, which on Thursday announced an $823,000 grant to Turkey to help study the pipeline.
The U.S. will also encourage Turkey to make every effort to support the building of the 1,080-mile line, most of which would run across its territory and produce extra oil revenue.
Turkey defends Baku-Ceyhan oil pipeline plan
ANKARA, Oct 23 - Turkey on Friday sprang to the defence of its plan for a pipeline bringing Caspian oil to the Mediterranean and warned against rival proposals to bring it instead by tanker through the crowded Bosphorus straits.
Top Turkish energy officials travelled to Azerbaijan late on Thursday in an effort to convince wary oil company executives of the viability of the pipeline plan from the Azeri capital Baku to the Turkish port of Ceyhan, ministry sources said.
U.S. oil company executives and top U.S. officials earlier agreed at a special meeting in Washington that the Baku-Ceyhan plan was not currently commercially feasible.
"Baku-Ceyhan makes sense, we all agreed. What we need to do is to find ways of making it commercially viable in the shortest possible time," said a government official close to the talks.
The U.S. Embassy in Ankara denied any notion of "shelving" the plan. Washington still backed Baku-Ceyhan, it said in a statement.
A senior Turkish energy official said that if the international consortium of oil companies developing oil fields in the Azeri sector of the Caspian failed to recommend the Baku-Ceyhan route, other financiers could be found.
"If the Azerbaijan International Operating Consortium (AIOC) makes a negative decision, there are other companies who say they will build it," the official, who asked not to be named, told Reuters.
Doubts have arisen over the viability of the Ceyhan route due to the low price of oil and disappointing exploration results in the Caspian area. The pipeline is estimated to cost between $2 billion and $4 billion.
The other options are a pipeline to the Georgian port of Supsa, and to Russia's main Black Sea oil port of Novorossiisk.
At Thursday's meeting on Caspian oil strategy in Washington attended by James Steinberg, deputy National Security Council director; Richard Morningstar, secretary of state for Caspian Energy policy, and executives of all major U.S. oil companies operating in the region, the talk was of imminent Russian assent to the Caspian Pipeline Consortium (CPC) to build a pipeline from the giant Tengiz oil field in Kazakhstan to the Black Sea.
But Turkey's maritime minister, Burhan Kara, said other routes were unacceptable due to the extra tanker traffic they would cause through the already congested Bosphorus straits which winds its way through Istanbul.
"We will not sacrifice the 10 million people living around the Bosphorus for an oil tanker...Caspian oil can definitely not be transported through the straits," he told Reuters in an interview on Friday.
"Our worry over the straits is for protecting life, property, the environment and 3,000 years of history," Kara said. "If they are looking for a route to market oil from Central Asia, they shouldn't hope to bring it through the Bosphorus."
The Bosphorus and Dardanelles straits which connect the Black Sea to the Aegean are governed by the 1936 Montreux Convention which guarantees free passage to all vessels.
But Turkish authorities are allowed to close the straits temporarily for safety reasons. More than 50,000 vessels passed through the Bosphorus last year with 63 million tonnes of oil being transported by an average of 12 tankers a day.
British Petroleum <BP.L>, and Amoco <AN.N> Corp, soon to be merged, hold the largest shares in AIOC which combines 12 companies including state-owned Azeri SOCAR and Turkish TPAO.
The consortium was due to make its recommendation to the Azeri government at the end of October, but a well-placed Turkish energy source said the AIOC would not be ready with its decision until mid-November.
The government in Baku, which has repeatedly voiced support for the route to Ceyhan, has the final say in the matter but is expected to implement AIOC's recommendations due its inability to finance the project itself. JON BLT
Now even the Seychelles wants to be on the oil map
JOHANNESBURG, Oct 23 - The Seychelles islands, better known as an unspoilt tourist paradise, could become the land of oil rigs and gushers if the government convinces foreign firms that its turquoise waters hold black treasures.
Seychelles National Oil Company (SNOC) has re-launched a campaign to attract foreign explorers by heralding the 115 Indian Ocean islands that make-up the Seychelles as "one of the few truely frontier areas left in the world."
The line is that God does put oil in beautiful places -- not just in the remote wastelands of Siberia and Alaska, the harsh Arabian deserts or the unforgiving waters of the North Sea.
SNOC said the hydrocarbon potential locked in its ocean rocks are commercially viable under an new improved tax regime and that development will not ruin the country's beauty or harm the local fishing industry.
"Since the prospective areas are far offshore, drilling rigs will not be seen from these islands...We believe that tourism and petroleum exploration-production are not mutually exclusive," said SNOC's managing director E. Belle.
Caribbean islands such as Barbados and Trinidad and Tobago were proof that oil and sun-seekers can co-exist, Belle said.
Shipping and helicopter traffic would pick up if fields were brought on stream, but strict environmental legislation as tough as those adopted by world oil powerhouse Norway would limit the risk of harmful spills.
So far honeymooners and other tourists can relax since the search for oil, which goes back to the 1970s, has yet to yield anything other than enjoyable expense accounts.
U.S. oil giant Texaco <TX.N> and Britain's Lasmo <LSMR.L> and Enterprise Oil <ETP.L> have all reliquished their acreage rights over the last six years, meaning that the nearest oilfield remains about 1,400 miles (2,240 km) away in India.
Four wells have been drilled but no commercial discoveries have been found to excite the island's population of just 72,000, according to SNOC data.
Even the appearance of mysterious tar-balls on the archipelago's beaches in 1992 -- believed to be a seepage from a yet-to-be-discovered field -- failed to materialise in a boom.
With world oil prices at their lowest in ten years, it is now unlikely that firms will plough millions of dollars into developing such a remote and unproven oil province.
"Trying to persuade the finance guys that we need a budget to open an office in the Seychelles to export oil would take one hell of an effort," conceded one Western executive.
Briefing - Asia Energy Today
Oct 23, 1998 (Asia Pulse) -- An executive briefing on energy for Oct 23, 1998, prepared by Asia Pulse (http://www.asiapulse.com), the real-time, Asia-based wire with exclusive news, commercial intelligence and business opportunities.
CHINA NUKE PLANT CONSTRUCTION GOES TO ENCLOSED OPERATIONS
NANJING - Construction of the Lianyungang Nuclear Power Plant in east China's Jiangsu Province went into the stage of enclosed operations this week, according to local sources.
In this stage, all staff, visitors and vehicles going in and out of the work site must show valid certificates.
CHINA'S ELECTRICAL POWER MARKET NEEDS TO BE EXPLORED BEIJING
China's market of electrical power has not been effectively tapped, according to Zhang Zhigang, vice-minister of the State Economic and Trade Commission.
This is why people feel that the acute power shortage seems to have eased in recent years, but power remains out of the reach of the people in many remote areas of the country, he added. |
