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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: diana g who wrote (45453)	5/25/1999 10:53:00 PM
From: Now Shes Blonde	Read Replies (1) \| Respond to of 95453

<<It's sort of like if someone invented the car before there were engines and said --- "Here it is! A Horseless Carriage!" >> How about here it is, a better flying machine, all I need is an anti-gravity device.

To: diana g who wrote (45453)	5/25/1999 10:55:00 PM
From: Tomas	Respond to of 95453

Japan: Change in oil exploration urged Financial Times, May 20 By Alexandra Harney in Tokyo Japan's oil sector is lagging behind its competitors because it has failed to invest strategically in productive oil fields or generate enough return on those assets to become self-sufficient, according to a report to the Japanese government by a western consulting group. The industry should acquire more overseas reserves, consolidate the number of exploration companies from 25 to as few as three, align with foreign oil groups, and use political influence to gain better access to reserves overseas. The report, compiled for the Ministry of International Trade and Industry (Miti) by Booz-Allen & Hamilton, the US consultancy group, is part of an effort by Miti to reassess its oil policy after controversy last summer about the use of tax money to subsidise unprofitable exploration companies. Miti, like other government organisations such as the Bank of Japan, is increasingly turning to western consultancy groups and investment banks for policy advice. Booz-Allen & Hamilton argues that the companies' management decisions, including neglecting to monitor the performance of projects, has lowered productivity and return on assets. The ratio of after-tax earnings to fixed assets is a startlingly low 3.2 per cent in Japan, compared with an average 13.7 per cent at the big western oil groups. Specifically, Japanese oil groups have invested heavily in exploration rather than seeking a balance with acquired reserves, the report says. Japanese companies "are perceived as weak partners by their western counterparts" because they fail to press operating companies on efficiency. This raises their operating costs. The industry is too diversified geographically and has often made investment decisions with little concern for marketability. "Japanese companies do not have a clear sense of direction, in terms of being relatively opportunistic," explained Pascal Martin, a principal who helped to compile the report. While western groups divided their production between Europe and North America, Japanese companies have overwhelmingly focused on Asia and the Middle East, where taxes are much higher. Much of this policy has been driven by political demands for energy security, as Japan depends on imports for nearly all oil and gas. Miti, through an umbrella organisation known as Japan National Oil Corporation (JNOC), subsidises exploration projects in an attempt to reduce reliance on oil produced by other countries. JNOC funds up to 70 per cent of companies' exploration costs, whether the project finds oil or not. This situation has given groups little financial incentive to seek high returns on investments or assets, and has created huge debts in the sector. If adopted, the reforms would dramatically reduce the number of companies that receive JNOC funds and represent a seismic shift in Japanese oil policy. JNOC confirmed last week that Inpex, an exploration group, was forced to abandon its participation in an oil and gas project off southern Indonesia because reserves were smaller than expected. JNOC had a 50 per cent interest in that project.