OGJ NEWSLETTER

OPEC Sec. Gen. Subroto has urged Japan to provide an unspecified level of funding to help OPEC raise productive capacity to prepare for a tighter crude oil market.

Subroto told Hikaru Matsunaga, minister of international trade and industry, OPEC will need $60 billion in foreign aid to boost capacity 6-7 million b/d by 1995. Matsunaga said the Japanese government will carefully consider the request.

Japan imported 3.59 million b/d in 1989, 76.5% of it from OPEC and an 8.2%, gain from 1988 imports. The import rate, expanding due to industrial growth, accelerated near yearend. December crude imports topped 4 million b/d.

Japan signed a contract last month to import 150,000 b/d of Mexican crude for 5 years, replacing an expired 10 year agreement. Japan invested $15 million in construction of a 160 mile, 48 in., 500,000 b/d trans-Mexican pipeline from Veracruz to Salina Cruz that will enable Japanese importers to bypass the Panama Canal. The line started up in February 1989.

Saudi Arabia hopes to become Japan's largest crude supplier and set up a refining/marketing joint venture with Japan, Saudi Oil Minister Hisham Nazer told Prime Minister Toshiki Kaifu. The Saudis exported 550,000 b/d of oil to Japan in 1988.

A Japanese official outlined conditions for foreign acquisition of Japanese refineries on a visit to the United Arab Emirates last month.

The joint venturer, he said, must allow Japan participation in and ownership of the producing oil field, assurances of a long term crude supply, and enough foreign capital to improve the refiner's financial position.

The Soviet Union produced 12.14 million b/d of crude and condensate during 1989, down 2.7%, from 1988, according to official statistics. The figure is a 340,000 b/d drop from 1988 and the lowest production since 1985.

U.K. petrochemical demand is slowing down fast.

Consumption is projected to grow by only 0.5%, this year following 3 years of very strong growth: 8.5%, in 1989, 6% in 1988, and 9%, in 1987, according to the Chemical Industries Association, London.

Richard Freeman, chief economist of ICI plc and chairman of the association's economic appraisal committee, said U.K. production would grow by 1%. Freeman added there is a general slowdown in chemical growth throughout the OECD, with West European chemical output growth for 1990 forecast to slow to 2.6% compared with 3.6% in 1989.

Referring to a forthcoming study on the longer term prospects for the world chemical industry by the association, Freeman said this showed a distinct improvement in the second half of the 1990's on the expectations of faster economic growth and, in particular, an acceleration in the rate of investment.

Ercros SA, the Spanish downstream group created last year through the merger of Union Explosivos Rio Tinto SA and SA Cros, has spun off its operations into five independent units.

The move will enable the companies to seek eventually a listing on Spanish stock exchanges and forge their own ties with foreign firms.

The operating subsidiaries are Ertoil SA (oil refining and petrochemicals), Erkimia SA (chemicals), Fertilizantes Espanoles SA (fertilizers), Rio Tinto Minera SA (mining), and Union Espanola de Explosivos SA (explosives and defense equipment).

Chinese lawmakers plan to revise parts of the law concerning joint ventures and foreign investment this year, says Gu Ming, deputy director of the legal commission under the National People's Congress.

Joint venture chairmen, previously required to be Chinese, will be jointly selected after consultation. Joint venture time limits are expected to be rescinded, and the congress will speed up formulation of foreign trade, maritime, and foreign exchange control laws, Gu told Beijing Review.

Yemen Arab Republic (North Yemen) and Canada's energy, mines, and resources minister signed a 5 year umbrella agreement that provides for trade opportunities for Canada's remote sensing industry. The Canadian government will also assist Yemen in establishing a data base of remotely sensed data to support resource development.

Drilling in western Canada will rise 15% this year from depressed 1989 levels, says the Canadian Association of Oilwell Drilling Contractors.

The Caodc forecast 53% utilization of the 475 available rigs in first quarter 1990 and 10%/year utilization growth until the mid-1990's. First quarter 1989 utilization was 40%.

Meanwhile, the Daily Oil Bulletin trade paper reported 3,896 Alberta well completions in 1989, down 38% from 1988.

The Alberta and Canadian federal governments have solved a potential jurisdictional problem by agreeing to conduct a joint environmental review of the $4.1 billion Oslo oilsands project in northern Alberta.

Esso Resources Ltd. is lead partner in the Oslo group, which under an agreement with the governments has to decide by mid-1991 whether to proceed with.the project in the Fort McMurray area.

Oslo hopes to apply to Alberta's Energy Resources Conservation Board by Sept. 1 to build the plant. The board will hold hearings on the project.

Northwest Pipeline Corp., Salt Lake City, plans an open season to assess customer interest in transportation service, and that could lead to expansions of its system.

Northwest has received service requests that greatly exceed current system capacity of 2 trillion BTU/day, but the requests may contain duplications. It asked customers to list needs and identify spare capacity in existing firm agreements.

Planned gas pipeline construction in the U.S. and North Sea is the main reason behind a world pipeline construction increase expected in 1990, an OGJ survey shows (see p. 17).

Contracts expired at midnight Jan. 31 but U.S. oil workers remained on the job day to day. Oil, Chemical & Atomic Workers union rejected a third offer from Amoco and several other refiners Jan. 31.

It called for 4%/year wage hikes for 2 years and increases in the company contribution to family hospital/medical insurance of $45/month the first year and $40/month the second. The offer also called for companies to pay $15/month more the first year and $13/month the second year toward single hospital/medical insurance.

The Minerals Management Service has proposed a rule changing its policy on oil companies' recovery of overpayments to Indian lessors.

Current policy permits lessees to recoup overpayments as a credit against future payments. Because that can create a hardship for Indians, MMS wants to change policy to prevent Indian lessors' current monthly revenue from being cut by more than 50%. The change was detailed in the Federal Register Jan. 31.