OIL & GAS / International Coverage
Energy Development In Western China
KUNMING (Nov. 11) Chinese scientists and specialists met to discuss the development and allocation of energy in western China at a recent symposium in Kunming, the capital of Yunnan Province.
Western China has 56.5 percent of the country's land and 23 percent of its population.
It also has 70 percent of the country's hydro-electric power resources, 64 percent of its coal resources, more than 40 percent of its petroleum resources, and more than half of its natural gas resources.
In addition, most of the country's exploitable coal-bed gas and solar energy resources is in western areas.
But, a shortage of funds and lack of technology and transport have held the development of these resources, resulting in a shortage of energy. So, the country has developed policies to speed up economic development in the western areas.
Priority is being given to the investment environment in these areas, which need more technology for coordinated economic, social, and enviromental development.
Malaysia's oil and gas industry struggles to gain new contracts
KUALA LUMPUR, Nov 12 04:42 EST (AFP) - Malaysia was stepping up efforts to secure long term gas supply contracts with new Asian buyers, despite the regional economic crisis which had hit the local petroleum industry, an official said Wednesday.
Abu Bakar Mohamed, senior manager in Malaysian national oil company Petronas, said Asia's devastated economy, and Japan's continued economic slump, would certainly offset the local industry's future performance.
"The region is and will continue to be our largest market," he said in a paper presented at an oil seminar here.
"Despite weaker energy market forecasts, Malaysia should remain focused on positioning itself in the emerging oil producing nations to capitalise on East Asia's continued dependence on non-indigenous crudes.
"Intensive efforts are being taken to secure the long-term gas supply contracts with existing and new buyers in the Asian region," he added.
Abu Bakar said Malaysia's other challenge was to seek "significant commercial discoveries in our acreage and in sustaining future deepwater exploration activities."
Although existing resources were sufficent to maintain oil and gas activities in the next decade, more new sources were needed to maintain the reserve base to sustain the industry on a longer term perspective, he said.
As at January this year, 122 oil and 208 gas fields have been discovered of which a total of 35 oil and 10 gas fields are currently on production, Abu Bakar said.
The estimated ultimate recovery for oil is 7.7 billion stock tank barrels (stb), of which 49 percent have been developed and produced.
For natural gas, the estimated ultimate recovery is 98.7 trillion standard cubic feet (scf), of which only 12 percent have been developed and produced.
Malaysia's annual crude oil production has increased from 258,000 barrels per day (bpd) in 1981 to 629,000 bpd in 1997 but it had been able to replenish the crude oil that was produced, he said.
The national oil production target of 600,000 stb a day could only be sustained until 2007, but Petronas is confident that new discoveries of resources could prolong the current production level beyond, he added.
Abu Bakar said some 17 billion dollars had been invested in oil development projects since production sharing contracts started in 1976.
Within the next five years, some 12.4 billion dollars is expected to be spent on oil and gas exploration, development and production activities, with another 4 billion dollars budgeted for gas development projects, he added.
Current gas production is some 4.9 billion scf per day but is expected to increase to about 6.8 billion in the early 21st century, he added.
Natural gas now supplies about 34 percent of Malaysia's total energy needs and forecast to meet about 43 percent of total requirements by 2000.
Abu Bakar said the major challenge facing the Malaysian petroleum industry was to "maintain profitability in the current soft oil and gas prices environment which is saddled by the increasing development and production cost."
But development cost was expected to rise due to factors such as inflation, smaller reserves, downgrading in crude oil quality and further location of fields from existing infrastructure, he said.
Petronas, which is the custodian for the national petroleum resources, launched a cost reduction exercise with its partners in 1995 to tackle escalating costs, he added.
Unocal finds new gas field in Gulf of Thailand
BANGKOK, Nov 11 - Unocal Thailand <UCL.N> said on Wednesday that it discovered a new natural gas field in the Gulf of Thailand with approximate reserves of 150-280 billion cubic feet, a company statement said.
Yemen cabinet sees lower '99 budget,higher deficit
SANAA, Nov 11 - Yemen's cabinet on Wednesday approved the 1999 budget, cutting spending 4.2 percent but predicting a higher deficit due to a forecast revenue slide.
"The Yemeni government agreed on the draft general budget for 1999 in its weekly session today," a government official told Reuters.
The cabinet approved spending of 335.5 billion rials ($2.4 billion) in 1999 and revenue of 294.4 billion rials, he said. This compared with forecast spending of 350.1 billion and income of 336.6 billion rials in the 1998 budget.
This means the projected deficit of 41.1 billion rials is sharply higher than the deficit forecast for 1998.
"The draft general budget was referred to parliament for approval," the official said. Yemen's president still has to ratify the budget after parliamentary approval.
The budget "will be agreed upon by the parliament without difficulty as the ruling General Peoples Congress has the majority of votes inside parliament", the official said.
Yemen, like other Arab oil producers, has been feeling the pinch of a sharp fall in world crude prices this year.
To try to cope with the lower prices, Yemen in February and June adopted austerity measures and cut state spending to curb the deficit. It was not clear what impact this would have on the actual deficit for 1998.
Yemen depends on oil for about 65 percent of revenue.
The official said the government "will continue its economic reform programme to reduce the deficit...soon subsidies on flour and wheat will be lifted...other services prices will be increased".
Yemen, one of the poorest states in the Arab world, launched an economic reform programme in 1995 led by the International Monetary Fund and World Bank.
Russian Oil Policy in Question as Exports Rise
MOSCOW, Nov 11 - Russia's oil export policy of maximising crude oil exports and cutting product exports to balance the overall level appears to be foundering as exports of both rose sharply last month.
Oleg Rumyantsev, press spokesman to Fuel and Energy Minister Sergei Generalov, said on Wednesday that Russia has decided to pursue a policy of maximising crude exports.
"Yes, there actually is a wish to increase slightly exports of crude oil and to compensate for this by reducing exports of oil products," Rumyantsev told Reuters, reflecting remarks made recently by Generalov.
"We promised OPEC to cut total exports of oil and products in the second half of 1998. We have slightly increased exports of crude in these months," he said, adding that product exports had been cut to balance this.
But rouble devaluation has made exports of products as well as crude far more profitable than domestic sales.
As a result exports from the former Soviet Union hit a record high for post-Soviet times in October, according to data from the International Energy Agency published this week.
This showed former Soviet exports in October running at 3.24 million barrels per day (bpd), with products accounting for over a million bpd of the total.
"It's quite possible that in October there was a rise (in product exports) because of the rise in the dollar and the fall in the rouble. But I think that in November and December this tendency will reverse itself," Rumyantsev said.
Stephen O'Sullivan, co-head of research at United Financial Group in Moscow, pointed out that oil companies had a "huge commercial imperative" to increase crude and product exports.
Since the rouble was effectively devalued in August, he said, "exports have become hugely profitable and domestic sales have become marginally unprofitable."
One reason for the rise in product exports was that the Finance Ministry had failed to provide finance to buy fuel stocks in preparation for the winter, Rumyantsev said.
The energy ministry issued a statement last week saying that the build up of winter stocks was running well behind schedule and laying the blame squarely on the finance ministry.
"In individual regions the build up of reserves of fuel remains critical, as before," the statement said.
Rumyantsev gave no reason why product exports should start to fall in November and December, although this is the beginning of the peak demand period in Russia.
In some years the ministry imposed an export duty on fuel oil, the main heating fuel, to retain stocks for domestic use. But no decision has yet been taken on this.
"Export duties are an extreme measure, it's not definite that they will be introduced," he said. "It's possible that there will be other mechanisms for regulating exports in the form of export quotas."
He added that the question of export duties would be reviewed at the end of November or the beginning of December.
O'Sullivan said it was not for oil companies to worry about the irony of exporting more products while domestic stocks were insufficient for the winter.
"A company's job is to deal with the microeconomic situation, which is that it is profitable for them to export. If the government wants them to retain (products)in the country it can do that by administrative means, by tax controls," he said.
The Russian winter has already begun to bite. The temperature on Wednesday morning in Moscow was -14 Celsius, unusually cold for so early in the season. U.S. based Weather Services Corporation forecast the day's low at -24 Celsius in Moscow.
Libya Considers Swapping Oil for Egyptian Gas
LONDON, Nov 11 - North African neighbours Egypt and Libya are considering a swap deal under which Libya would supply Egypt with 150,000 barrels per day (bpd) of crude oil in return for 500 million cubic feet of Egyptian gas, delegates told a gas conference.
Michael Shelton, commercial manager of British Gas International Egypt, said the Egyptian government had held preliminary swap talks with Libya for the export of gas from Egypt's western desert gas fields to the Libyan border.
In return, Libya would supply 150,000 bpd of crude oil to be processed at Egypt's Alexandria refinery with products to be marketed locally.
Libya, a member of the Organisation of the Petroleum Exporting Countries, produces 1.35 million bpd of crude oil at present. But production is set to rise with new fields expected to come on stream over the next to years.
Non-OPEC Egypt produces 800,000 bpd of crude oil and expects to become a major exporter of natural gas to countries in the region as new discoveries add to its reserves of 36 trillion cubic feet.
An oil pipeline linking Tubruk in Libya to the Egyptian Mediterranean port city of Alexandria is currently under construction.
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