Jan 2004

Transcription

Jan 2004

This month’s cover ...
shows the Sanctuary of
“Riad-El-Feth”, Algiers
Photo: OPEC Secretariat
Vol XXXV, No 1
ISSN 0474-6279
January/February 2004
02 Editorial Information
03 Commentary
Maintaining the balance
OPEC Conference cuts output by 1.0m b/d (p4)
04 Conference Notes
OPEC decides to reduce production by 1.0m b/d at
129th (Extraordinary) Conference in Algiers
Photo: Reuters/Itsuo Inouye
8 Farewell Gathering
Former Secretary General bids farewell to OPEC
Photo: Reuters/Mohamed Azakir
Iran, Japan sign deal to develop Azadegan (p18)
Massive quake relief efforts for Iran (p49)
10 Forum
The maximization of Iran’s oil revenues
18 Newsline
Iran signs $2.0bn deal with Japan to develop
massive Azadegan oil field
Oil and gas news from OPEC (p19)
24 Market Review
Covering November/December
48 Member Country Focus
Development and economic news from OPEC
51 Appointments/Obituary
52 OPEC
Fund News
56 Noticeboard
Fund Director General meets with Austrian President (p52)
57
Secretariat Notes
1
Pu b l i s h e r s
Editorial policy
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Membership and aims
OPEC is a permanent, intergovernmental Organization, established in Baghdad, September
10–14, 1960, by IR Iran, Iraq, Kuwait, Saudi
Arabia and Venezuela. Its objective is to co-ordinate and unify petroleum policies among Member Countries, in order to secure fair and stable
prices for petroleum producers; an efficient,
economic and regular supply of petroleum to
consuming nations; and a fair return on capital
to those investing in the industry.
The Organization comprises the five
Founding Members and six other Full Members: Qatar (joined in 1961); Indonesia (1962);
SP Libyan AJ (1962); United Arab Emirates
(Abu Dhabi, 1967); Algeria (1969); and
Nigeria (1971). Ecuador joined the Organization in 1973 and left in 1992; Gabon joined
in 1975 and left in 1995.
Contributions
The OPEC Bulletin welcomes original contributions on the technical, financial and environmental aspects of all stages of the energy
industry, including letters for publication,
research reports and project descriptions with
supporting illustrations and photographs.
Secretariat officials
Secretary General
HE Dr Purnomo Yusgiantoro
Indonesian Governor for OPEC
Acting for the Secretary General
Dr Maizar Rahman
Director, Research Division
Dr Adnan Shihab-Eldin
Head, Data Services Department
Dr Muhammad A Al Tayyeb
Head, Administration &
Human Resources Department
Senussi J Senussi
Head, Energy Studies Department
Mohamed Hamel
Head, PR & Information Department
Dr Omar Farouk Ibrahim
Head, Petroleum Market Analysis
Department
Mohammad Alipour-Jeddi
Legal Officer
Dolores Dobarro
Head, Office of the Secretary General
Karin Chacin
Editorial staff
Editor-in-Chief
Dr Omar Farouk Ibrahim
Editor
Graham Patterson
Deputy Editor
Lizette Kilian
Philippa Webb-Muegge (maternity leave)
Production
Diana Lavnick
Andrea Birnbach
Design
Elfi Plakolm
Contributors to this issue
HE Hossein Kazempour Ardebili
We b s i t e : w w w. o p e c . o r g
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2
OPEC Bulletin
COMMENTARY
Maintaining the balance
Despite the recent firmness in oil prices,
all signs are that the markets are in fact
well-supplied with crude
A
s the OPEC Oil and Energy Ministers
gathered in Algiers in February for the 129th
(Extraordinary) Meeting of the Conference,
a number of commentators were predicting
that the Organization would maintain its production
ceiling for the OPEC-10 Member Countries (excluding
Iraq) unchanged at 24.5 million barrels/day. When the
actual decision, therefore, was announced — a cut of
1.0m b/d to 23.5m b/d, effective from April 1 — some
of them expressed surprise and wondered if the cut
was in fact necessary, given the recent firmness in oil
prices.
Although it is certainly true that prices have
remained strong in recent months, this should not
be misinterpreted as indicating that the market is
insufficiently supplied with crude. Quite the contrary
— all the available evidence points to a well-supplied
market. However, there are currently a number of other
factors that must be taken into account which have
contributed to the price strength, the most important
of which can be summarized as follows.
Firstly, as noted in a recent issue of OPEC’s Monthly
Oil Market Report (downloadable free of charge from the
official OPEC website at www.opec.org), commercial
crude oil stocks in the US have recently fallen to their
lowest level since 1975, dropping through the perceived
lower minimum operating level (LOI) of 270m b to
264m b in early January. The fact that stock levels
have breached the LOI, set by the National Petroleum
Council in 1998 to mark the minimum operating crude
oil stock requirement by refiners, has had a bullish
effect on the market and on prices.
Secondly, markets continue to be affected by a
variety of other factors, including excessive levels of
speculation and the ongoing geopolitical uncertainties.
Also of significance is the fall in the value of the dollar,
which has weakened the purchasing power of oilexporting nations. Oil exporters cannot, of course,
influence currency movements directly, but they can
at least seek to minimize their effects by striving to
maintain market stability.
Finally, as is well known, the second quarter of the
year is traditionally the weakest for oil demand. The
northern hemisphere winter has passed, and with it
the peak in heating oil use, but the summer driving
season, when gasoline demand is strongest, is not yet
in full swing. Prompt action is therefore required in
order to prevent excess supply building up in the
second quarter and exerting downward pressure on
prices, destabilizing the market.
To reiterate, therefore, the recent strength in oil
prices should not mislead observers into thinking
that the market is insufficiently supplied with crude.
The various other factors outlined above, which lie
outside OPEC’s sphere of influence, have contributed
to keeping prices firm. As the second quarter of the
year approaches, however, the Organization’s decision
in Algiers to cut supplies by 1.0m b/d to maintain
balance and stability in the market is a necessary
move.
3
CONFERENCE NOTES
OPEC decides to reduce production by
1.0m b/d at 129th (Extraordinary) Meeting
of the Conference in Algiers
OPEC decided to cut production by
1.0 million barrels/day with effect from
April 1, 2004, at the 129th (Extraordinary)
Meeting of the Conference in Algiers on
February 7.
In his opening address to the Meeting, OPEC Conference President and
Secretary General and Indonesian Minister of Energy and Mineral Resources,
Dr Purnomo Yusgiantoro, said that crude
oil prices have remained high since the last
Meeting on December 4, and that there
have been calls for OPEC to raise its output ceiling to help bring prices down.
He said that OPEC is sensitive to
Indonesia’s Minister of Energy and
Mineral Resources, Conference President
and OPEC Secretary General, HE Dr
Purnomo Yusgiantoro (left) is seen here
with the President of Algeria,
HE Abdelaziz Bouteflika.
OPEC production allocations
(1,000 b/d; effective April 1, 2004)
Algeria
Indonesia
IR Iran
Kuwait
Libya
Nigeria
Qatar
Saudi Arabia
UAE
Venezuela
Total
4
Old
New
Decrease
782
1,270
3,590
1,966
1,312
2,018
635
7,936
2,138
2,819
750
1,218
3,450
1,886
1,258
1,936
609
7,638
2,051
2,704
32
52
147
80
54
82
26
325
87
115
24,500
23,500
1,000
OPEC Bulletin
CONFERENCE NOTES
Kuwait’s Minister of Energy, HE Sheikh
Ahmad Fahad Al-Ahmad Al-Sabah (left) and
Algeria’s Minister of Energy & Mines,
HE Dr Chakib Khelil, speak to the press.
Iran’s Minister of Petroleum,
HE Bijan Namdar Zangeneh (left)
talks to Iraq’s Minister of Oil,
HE Dr Ibrahim Bahr Alolom.
The Saudi Delegation was headed by the
Minister of Petroleum and Mineral
Resources, HE Ali I Naimi (front centre),
and included OPEC Governor,
Dr Majid A Al-Moneef (front left);
Ambassador to Algeria, HE Bakr Ahmed
Kazaz (front right), and
(back, left to right)
Dr Ibrahim H Al-Muhanna, Ali H
Twairqi and Yasser M Mufti.
5
CONFERENCE NOTES
Venezuela’s Minister of Energy and
Mines, HE Rafael Ramírez (left), listens
to his country’s OPEC Governor,
Iván Orellana.
Centre: Qatar’s Second Deputy Prime
Minister and Minister of Energy &
Industry, HE Abdullah bin Hamad Al
Attiyah (centre), is seen here with OPEC
Governor Abdulla H Salatt (left) and
Mohammad Al-Mannai.
Bottom: Nigeria’s Presidential Adviser on
Petroleum & Energy, HE Dr Edmund M
Daukoru, talks to journalists.
such calls, because if oil prices pass certain threshold levels — either upper or
lower levels — they can have an adverse
impact in a broader economic and political realm, which may ultimately rebound
on the petroleum industry.
He pointed out that continued geopolitical tensions, excessive market speculation, weather conditions and US gas
prices had pushed crude oil prices above
the higher range of the price band’s targeted level.
The Secretary General said that even if
OPEC could make a significant and immediate increase in supply now, the Organization would be reluctant to do so.
This is because OPEC views oil market
dynamics as a continuum, which extends
beyond immediate short-term concerns
and embraces likely developments months
and perhaps even a year ahead.
He said that OPEC projections indicate that there will be a significant surplus
of oil in the second quarter of this year,
and, if this is not handled in a timely
and effective manner, there is likely to
be excessive downward pressure on prices,
leading to a protracted spell of volatility
in the market, which will be in nobody’s
interests.
The closing communiqué from the
Conference noted that, despite the increased demand observed in 2003, especially in the fourth quarter, OPEC production ensured that the market remained
well supplied throughout 2003.
“However, in view of the projected
significant supply surplus in the seasonally low demand second quarter, the Con6
OPEC Bulletin
CONFERENCE NOTES
ference decided that remedial supply responses are needed to maintain market
balance and avert downward pressure on
oil prices. To this end, the Conference decided to maintain the OPEC production
ceiling (excluding Iraq) at 24.5m b/d until the end of March 2004, with a strong
commitment from Member Countries to
comply with the agreed production levels,” said the communiqué.
“Furthermore, whilst reaffirming its
pledge to guarantee adequate supplies to
consumers, as consistently shown in the
past, the Conference decided to reduce
the 24.5m b/d ceiling by 1.0m b/d, to
23.5m b/d, effective April 1, 2004, distributed pro rata,” the statement added.
The Conference also extended its
deepest condolences to the government
and people of the Islamic Republic of Iran
for the terrible loss they suffered as a consequence of the disastrous earthquake that
struck the country some weeks previously, and expressed its sadness at the recent
death of Dr Fuad Rouhani, who served
as the Organization’s first Secretary General and Chairman of the OPEC Board
of Governors from 1961 to 1964.
The Conference reiterated that its next
Ordinary Meeting will convene in Vienna,
Austria, on March 31, 2004 and that an
Extraordinary Meeting will take place in
Beirut, Lebanon, on June 3, 2004.
Top: The United Arab Emirates’
Minister of Petroleum and Mineral
Resources, HE Obaid bin Saif
Al-Nasseri (centre), with OPEC Governor Saif Bin Ahmed Al-Ghafly (left), and
Chargé d’Affaires, Mohamad Al-Sayegh.
Centre: Libya’s Chairman of the
Management Committee of the NOC,
HE Dr Abdulhafid Mahmoud Zlitni
(centre), is pictured with Ambassador to
Algeria, HE Guma A Eswesi (left) and
OPEC Governor Hammouda M El Aswad.
The non-OPEC Delegates in attendance
were HE Desidério da Graça Veríssimo e
Costa (second right) and Manuel Vicente
of Angola (right); HE Nasser bin Khamis
Al Jashmi of Oman (centre); and HE
Salvador Beltrán-del-Rio (second left) and
Raúl Cardoso of Mexico (left).
7
FAREWELL GATHERING
Former Secretary General bids farewell to OPEC
Dr Silva-Calderón receives a silver salver as a gift from Dr Silva-Calderón and his wife Judith are pictured here with Internal Authe Head of OPEC’s Administration and Human
ditor Ali Omar (left), Senior Executive Secretaries to the SG, Jane Marchl
Resources Department, Senussi J Senussi.
(third left) and Brigitte Wolek-Käferhaus (third right), Senior Executive Secretary to the Director of Research, Vivien Pilles-Broadley (second right), and
the Head of the SG’s Office, Karin Chacin (right).
OPEC’s former Secretary
General, HE Dr Alvaro SilvaCalderón of Venezuela, bade
farewell to the staff of the
Secretariat in December.
Here is his farewell speech.
Thank you very much for the support
and co-operation that you have offered
me during my term as Secretary General.
I really appreciate that support, particularly because it came from such a qualified
and professional group of people.
During my short stay in the Organization, you made me feel as if I was among
family. The Organization is very familiar
to me, as it has been at the centre of my
professional life since its foundation, and
I can truly say that it is for me an important part of my life.
As in all families, there are sometimes
8
difficult situations that we have to face.
During my stay with the Organization,
we faced some very tough circumstances,
like the far-reaching geopolitical events
which have shaken the world in recent
months and that directly involved our
Member Countries.
The Organization, however, has managed to thrive and pull through these difficulties. It has successfully demonstrated
its stature as an international organization
able to guarantee oil supply even in abnormally difficult circumstances. It has
gained recognition as an important player in the world economy. It is no longer
perceived as an enemy. On the contrary
— the Organization is now recognised as
a partner by most other organizations and
players in the international oil market.
The Organization has achieved market
and price stability for the benefit of all,
consumers and producers. Average price
levels are well inside the band, although
on occasions they may be on the low
side, or at a higher level, as is currently
the case. However, this level has not disturbed world economic growth, which
is currently showing significant signs of
improvement.
From the perspective of the Member
Countries, who also play a part in the
world economy, there is indeed satisfaction with the current price levels, and we
hope that this satisfaction will continue in
the future, supported by the efforts that
we in OPEC have made in and that we
shall continue to make.
The international image and reputation of the Organization has been
strengthened due to the professionalism
and commitment of all of you. We all
should maintain this conviction within
ourselves, either in or outside the Organization, in or outside our own countries.
That is what I expect of you, and that is
exactly what I will continue to do, wherever I may be in the foreseeable future.
Thank you very much and I wish you all
a Happy New Year for 2004 and many
happy new years in the future.
OPEC Bulletin
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FORUM
The maximization of
Iran’s oil revenues
Iran’s policies for the
maximization of its oil
revenues in future years are
outlined in this article by
the country’s Governor for
OPEC, HE Hossein
Kazempour Ardebili.*
A
successful policy with the aim of
maximizing Iran’s oil revenues has
to be based on the identification
and recognition of political and economic challenges, balancing the internal and
external concerns and a thorough understanding of international policies and developments. Timely decisions and dynamism in its application can lead and secure
the national interest and security.
*
10
Based on the address delivered by
HE Kazempour Ardebili
to the Institute for International Energy
Studies conference in Tehran, IR Iran,
on October 18–19, 2003.
Let me now briefly touch upon the
world demand for oil to the year 2020,
Iran’s share in meeting this demand, and
then examine how Iran could maximize its
oil revenues. According to the base case
scenario of OPEC’s World Energy Model (OWEM), published in March 2003,
world oil demand will grow annually by
1.7 per cent to reach 107 million barrels/
day by the year 2020, which is 31m b/d
more than the oil demand for the year
2000 (see Table 1).
As regards supply, the most important
change is the increase in the Russian oil
production to the level of 9.1m b/d by
2010, rising further to a relatively stable figure of 9.5m b/d in the following
decade. Similarly, the Caspian Sea region
will also enjoy rapid growth in produc-
tion, reaching 3.1m b/d by the year 2010,
twice its current level. However, the trend
will slow down in the following decade
and production will reach 4.2m b/d by
2020.
OPEC’s share of the oil market will
rise to about 49 per cent of the world
total by the year 2020. Throughout this
period, non-OPEC production will be
relatively flat. Production increases in
developing countries and non-conventional oil will make up for the loss of
production in Western Europe and North
America.
Although the Persian Gulf region
carries a significant weight in supplying world oil and gas requirements at
present, its strategic importance in this
regard is likely to grow within the next
OPEC Bulletin
FORUM
Table 1: World oil demand outlook (OWEM base case scenario)
Annual growth rates
per cent
m b/d
Region
2000
2005
2010
2015
2020
2000–2010
2010–2020
Total OECD
47.7
48.8
50.6
52.1
53.4
0.6
0.5
Developing countries
23.7
27.3
33.1
39.8
47.4
3.4
3.6
Transition economies*
4.5
5.0
5.6
6.0
6.4
2.1
1.4
76.0
81.0
89.3
97.9
107.3
1.6
1.9
Total world
* Including the former Soviet Union and Eastern Europe.
Source: Oil and Energy Outlook to 2020: OWEM Scenarios Report, OPEC Secretariat, March 2003.
20 years. Saudi Arabia with 263 billion b,
Iran with 130bn b and Iraq with 112bn
b of oil reserves account for half of the
world proven reserves. Although in recent years Iran’s oil reserves have been
quoted at about 99bn b, accounting for
new exploration and assessment results,
the recoverable oil reserves of the country
have increased and now stand at 130bn
b, which constitutes about 12 per cent
of the world total and 15 per cent of
OPEC reserves.
This means that Iran is the country
endowed with the second-largest oil reserves in the world. Moreover, with 26.7
trillion cubic metres of gas, Iran is also
holder of the world’s second-largest gas
reserves. Field by field details of Iran’s
crude oil reserves are shown in Tables
2, 3, 4 and 5.
Oil and gas contribute about 80 per
cent of the country’s hard currency earnings and account for more than 98 per
cent of the national primary energy consumption. As such, the pivotal role of oil
and gas in our economic development is
well recognized and warrants the prudent examination of options pertaining
to strategies and planning that guarantee
the long-term maximization of oil and gas
revenues.
There now follows a review of production, export and oil revenues in selected
OPEC Member Countries from 19602002.
Iran, with one hundred years of history
in oil production, is regarded as the first
oil producer with the longest history in
the Persian Gulf region. In OPEC’s foundJanuary/February 2004
ing year (1960), Venezuela, with a production of 2.85m b/d ranked first among
Member Countries, with Kuwait, Saudi
Arabia and Iran following, respectively. In
the year 1970, Iran ranked first, with a
production level of 3.83m b/d and Saudi
Arabia, Venezuela and Kuwait followed
narrowly behind.
In the year 1980, Iran ranked behind
other OPEC oil producers including Saudi
Arabia and Iraq, but since then the country has succeeded in securing second place
among the OPEC Member Countries.
Despite two decades of war and economic sanctions, Iran’s huge oil reserves
and capable manpower conducive for the
sustainability of production mean that the
country has been able to retain its position as the second-largest oil producer in
OPEC. It should be noted that a failure
Table 2: OPEC’s proven crude oil reserves
Country
end-2002
2003*
mb
per cent
mb
per cent
11,314
1.3
11,314
1.3
4,722
0.6
4,722
0.5
99,080
11.7
130,798
14.9
112,500
13.3
112,500
12.8
Kuwait
96,500
11.4
96,500
11.0
SP Libyan AJ
36,000
4.3
36,000
4.1
Nigeria
31,506
3.7
31,506
3.6
Qatar
15,207
1.8
15,207
1.7
262,697
31.1
262,697
30.0
United Arab Emirates
97,800
11.6
97,800
11.2
Venezuela
77,685
9.2
77,685
8.9
845,011
100.0
876,729
100.0
Algeria
Indonesia
IR Iran
Iraq
Saudi Arabia
OPEC
* Percentages are based on the assumption that there were no alterations in the reserves of other countries.
Source: OPEC Annual Statistical Bulletin 2002, OPEC Secretariat.
11
FORUM
Table 3: Reserve additions and improved recovery status in 2002
Oil in place
Field name
Formation
Ahwaz
Before
revision
After
revision
Asmari
27,913.0
27,913.0
Bibi Hakimeh Asmari and Bangestan
17,032.0
Maroun
Asmari
Ahwaz
Improved recovery
Differential
Before
revision
After
revision
Differential
—
14,335.5
17,922.8
3,587.3
17,032.0
—
3,851.5
5,670.6
1,819.1
46,665.0
46,665.0
—
15,996.0
21,962.0
5,966.0
Bangestan
37,555.0
37,555.0
—
5,313.3
7,667.9
2,354.6
Parsi
Asmari
12,292.5
12,650.8
358.3
3,289.0
3,811.2
522.2
Gachsaran
Asmari and Bangestan
52,960.0
52,960.0
0.0
14,561.5
16,246.5
1,685.0
Aghajari
30,202.0
30,202.0
0.0
15,611.0
17,377.0
1,766.0
Kornej
Asmari and Pabdeh
10,405.5
11,167.6
762.1
4,578.0
5,731.5
1,153.5
Ragesefid
18,743.0
18,743.0
0.0
3,975.5
4,995.5
1,020.0
Pazanan
Asmari
6,929.0
7,555.0
626.0
879.0
1,854.6
975.6
Kopal
10,218.5
10,218.5
0.0
1,493.5
2,131.8
638.3
Haftgol
Asmari
8,575.0
8,575.0
0.0
1,926.0
1,946.0
20.0
Masjedsoliman Asmari and Pabdeh
6,628.0
6,628.0
0.0
1,169.0
1,329.0
160.0
Zeilaee
Asmari
2,652.5
2,652.5
0.0
500.8
940.8
440.0
Labsefid
Asmari
1,556.0
1,556.0
0.0
462.0
508.0
46.0
Beinak
Bangestan
3,280.0
3,511.0
231.0
940.0
1,012.0
72.0
Mansori
Asmari
2,499.0
3,731.5
1,232.5
778.0
1,747.1
969.1
Mansori
Bangestan
18,531.0
18,531.0
0.0
2,075.1
3,259.5
1,184.4
Darkhowein
Fahlian
3,497.0
6,507.0
3,010.0
437.6
2,642.0
2,204.4
Soroush
Bourgan B
6,902.0
9,878.8
2,976.8
598.0
1,327.4
729.4
Nowrooz
Nahrame
2,020.0
2,555.7
535.7
767.0
971.2
204.2
Nosrat
Meysharif, Sorouk and Fahlian
192.0
192.0
0.0
80.2
96.0
15.8
Doroud
Yamama, Menifa
6,773.0
10,797.3
4,024.3
3,222.0
3,409.8
187.8
Forouzan
All formations
2,495.0
3,095.4
600.4
938.5
1,067.6
129.1
Total: 24 fields subject to revisions in 2002 336,517.0
350,873.1
14,356.1
97,778.0
125,627.8
27,849.8
South Pars LPG C3 and C4
Addition to reserves (2002) as per Table 4
3,196.0
694.0
Total additions 2002
31,739.8
Crude oil and gas liquid reserves at the end of the Iranian year 1381 as per Table 5
99,060.0
Crude oil and gas liquid reserves early in the Iranian year 1382 (end-2002)
130,800
12
OPEC Bulletin
FORUM
Table 4: New discoveries during 2002
Field and formation
Hydrocarbon type
Reserves (m b)
Hosseinieh
crude oil
305.2
Beinak
crude oil
19.2
Beinak
condensate
163.6
crude oil
1,450
Azadegan (Fahlian)
Lavan (Dehram)
condensate
53
Salman Foraghan formation
condensate
109
Total new discoveries
2,100
Accumulated production during 2001
1,406
Additions to the reserve base
694
Table 5: Iran’s oil and condensate reserves at end–2001 (bn b)
Primary
Oil
Secondary
Total
Accumulated
production in
2001
Recoverable at the
end of 2001
92.76
21.4
114.16
49.55
64.61
6.56
0.0
6.56
0.99
5.57
Onland
99.32
21.4
120.72
50.54
70.18
Oil
11.18
6.68
17.86
4.81
13.05
Condensate
15.83
—
15.83
negligible
15.83
Offshore
27.01
6.68
33.69
4.81
28.88
126.33
28.08
154.41
55.35
99.06
Condensate
Total
Table 6: Oil production and shares of selected OPEC Member Countries
Country
1960
1970
1980
1985
1990
1995
2000
2002
m b/d
%
m b/d
%
m b/d
%
m b/d
%
m b/d
%
m b/d
%
m b/d
%
m b/d
%
Iran
1.1
12.3
3.8
16.4
1.8
6.8
2.2
14.7
3.1
14.2
3.6
14.6
3.7
13.2
3.2
13.5
Iraq
1.0
11.2
1.5
6.6
2.6
9.9
1.4
9.4
2.1
9.6
0.7
3.0
2.8
10.1
2.1
8.9
Kuwait
1.7
19.5
3.0
12.8
1.7
6.2
0.9
6.3
0.9
3.9
2.0
8.2
2.0
7.2
1.7
7.3
Saudi Arabia
1.3
15.1
3.8
16.3
9.9
36.9
3.2
21.3
6.4
29.1
8.0
32.6
8.1
29.2
7.1
29.6
UAE
0.0
0.0
0.8
3.3
1.7
6.3
1.0
6.8
1.8
8.0
2.1
8.7
2.2
7.8
1.9
7.9
Venezuela
2.8
32.8
3.7
15.9
2.2
8.1
1.6
10.5
2.1
9.7
2.4
9.7
2.9
10.4
2.4
10.1
Others
0.8
9.0
7.4
31.9
8.7
32.2
4.6
31.1
5.6
25.4
5.7
23.2
6.1
22.0
5.4
22.7
OPEC
8.7
100
23.3
100
26.9
100
14.9
100
22.0
100
24.6
100
27.7
100
24.0
100
World oil
production
21.1
—
45.4
—
60.0
—
52.3
—
59.0
—
60.3
—
65.8
—
63.6
—
—
41.1
—
51.3
—
44.7
—
28.5
—
37.3
—
40.8
—
42.2
—
37.7
OPEC
percentage
13
FORUM
Graph 1: A comparison of OPEC share in world production with Saudi Arabia and Iran’s quotas in OPEC (per cent)
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in taking full and rapid advantage of the
opportunities created by market openings
would enable other OPEC producers to
undermine Iran’s current position.
The long-term evolution of maintaining market shares can be examined by applying a linear progression of OPEC production as a percentage of the world and
the corresponding share of each member
country’s quota within OPEC. A comparison of OPEC, Saudi Arabia and Iran in
this respect is shown in Graph 1. Saudi Arabia is the only Member Country
in OPEC whose market share has increased in line with OPEC’s global market share.
Oil revenues
In the year 1970, the oil revenues of
14
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Iran, Saudi Arabia and Venezuela were
almost at parity. However, as a result of
increasing domestic consumption and
the lower allocated quota, Iran has experienced a period of lower revenues. The
oil revenues of OPEC Member Countries
during the last four decades are summarized in Table 7.
A quick glance at Table 8 reveals that
Iran’s oil revenues stood in third place in
1970, while they dropped to fourth in
2002.
Iran’s past and present position
within OPEC
Table 8 reflects Iran’s past and present
position within OPEC with regard to production, exports and oil revenues.
We will now examine the prospects for
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building up Iran’s oil production capacity
in the period up to 2020. Certain energy institutions have reported a rather
pessimistic outlook for Iran’s production
capacity in the next twenty years, which
are either politically motivated or stem
from lack of reliable information. These
forecasts assume an increment of 700,000
b/d in Iran’s oil production, raising it to
4.2m b/d in 2020 from 3.5m b/d in the
year 2000.
These views are contrary to the existing
facts and figures. Iran’s production capacity is currently 4.2m b/d, and there are
plans to expand it to 5.0m b/d by 2010
and further to 8.0m b/d by 2020.
Based on the OWEM reference case
outlook for OPEC oil demand, and assuming Iran’s share of OPEC production
OPEC Bulletin
FORUM
Table 7: OPEC Members’ revenues from crude oil, oil products and gas liquids (bn $)
Country
1960
1970
1980
1985
1990
1995
2000
2002
IR Iran
0.60
2.36
11.69
13.01
16.83
14.97
25.44
19.22
Iraq
0.45
0.79
26.10
10.10
9.59
0.46
18.15
10.40
Kuwait
0.86
1.58
18.94
9.45
6.39
12.05
18.18
15.55
Saudi Arabia
0.68
2.42
108.18
25.94
40.13
43.55
70.96
63.29
—
0.52
19.39
10.90
14.85
12.82
26.15
21.77
Venezuela
1.98
2.37
17.56
12.96
13.95
13.99
26.76
19.85
Others
0.44
4.45
80.77
46.52
44.24
35.64
63.96
56.51
OPEC total
5.00
14.49
282.63
128.87
145.98
133.49
249.60
206.58
—
—
36.15
27.01
22.26
16.86
27.60
24.36
OPEC production (m b/d)
8.7
23.3
26.9
14.9
22.0
24.6
27.7
24.0
OPEC exports (m b/d)
6.7
20.1
22.6
10.6
16.1
18.1
20.5
17.5
United Arab Emirates
OPEC Basket price
Table 8: Iran’s past and present position
1970
Rank
Crude oil
production
m b/d
Oil exports
m b/d
2002
Oil revenue
bn $
Crude oil
reserves
bn b
Crude oil
production
m b/d
Oil
exports
m b/d
Oil revenue
bn $
Crude oil
reserves
bn b
1
Iran
3.83
2
Saudi Arabia
3.80
Iran
3.52
Venezuela
2.37
Kuwait
80
Iran
3.2
Iran
2.1
UAE
21.8
Iraq
113
3
Venezuela
3.71
Venezuela
3.47
Iran
2.36
Iran
60
Venezuela
2.4
Nigeria
1.8
Venezuela
19.8
Iran*
99
4
Kuwait
2.99
Kuwait
2.83
Kuwait
1.58
Iraq
32
Iraq
2.1
Venezuela
1.61
Iran
19.2
UAE
98
5
Iraq
1.55
Iraq
1.50
Iraq
0.79
Venezuela
14
UAE
1.9
UAE
1.57
Nigeria
17.1
Kuwait
97
6
UAE
0.78
UAE
0.78
UAE
0.52
UAE
13
Kuwait
1.7
Iraq
1.5
Kuwait
15.5
Venezuela
78
Saudi Arabia Saudi Arabia Saudi Arabia Saudi Arabia Saudi Arabia Saudi Arabia Saudi Arabia
3.56
2.42
141
7.1
5.3
63.3
263
* In 2003, Iran’s oil reserves expanded to 130bn b and Iran was promoted to the second rank.
15
FORUM
Graph 2: The range of Iran’s budgetary flexibility to acquire market share
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The range of
Iran's budgetary
flexibility to
acquire market share
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Table 9: Prospects for Iran’s oil production capacity (m b/d)
2000
2005
2010
2015
2020
30.2
29.9
35.9
43.3
52.1
3.2
3.6
4.0
3.6
5.1
27.0
26.3
31.9
39.7
47.0
Iran’s share of the call on OPEC oil,
including 5 per cent contingency capacity
4.2
4.1
4.9
6.1
7.3
Additional 10 per cent excess capacity
—
0.4
0.5
0.6
0.7
Required production capacity
—
4.5
5.4
6.7
8.0
Capacity build-up requirement
(from 2003 level of 4.2m b/d)
—
0.3
1.2
1.3
1.2
Demand for OPEC oil
OPEC NGL production
Demand for OPEC crude oil
Notes: Required capacity build-ups are in addition to capacity upkeep in each period. Establishment of a 10 per cent excess capacity is also inevitable. In
fact, the extra revenues made on temporary occasions should be saved for investment settlements. At the same time, to enhance our bargaining power for
higher market share allocations, we should bear the cost of excess capacity build-ups.
16
OPEC Bulletin
FORUM
at 14.68 per cent, Iran’s capacity requirement will amount to 4.5m b/d by 2005,
5.4m b/d by 2010, 6.7m b/d by 2015 and
8.0m b/d by 2020. This is a moderate,
pragmatic and attainable objective, engineered thoughtfully and commensurate
with our deserved position in the supply
side and world demand outlook.
Given Iran’s current production capacity of 4.2m b/d in 2003, the total required additional capacity expansion by
the year 2020 will amount to 3.8m b/d.
To meet the objectives set in the long-term
plan, a yearly additional capacity build of
about 150,000 b/d by 2005 is required,
followed by about 1.2m b/d for each of
the following five years.
Domestic consumption of oil products, as a determining factor in the calculation of export volumes, has been assumed
to grow at an annual rate of 2 per cent
during the forecast period. It is assumed
that the gas substitution and the impact of
optimization of oil product consumption
in the country will reduce the domestic
consumption growth rate to manageable
proportions. Provided that the oil price
assumption of OWEM prevails, Iran’s oil
revenues will increase from $27.8bn in
the year 2000 to $56.1bn in 2020.
In fact, if the market conditions warrant, any additional barrel of oil exports
would increase oil revenues to the extent
that it is compatible with the price elasticity of demand. Beyond this point, oil
prices will fluctuate dramatically with a
declining trend in a disproportionate manner leading to a loss of revenues.
Given a hypothetical threshold price
for maintaining the budgetary hard currency requirements of the country, excess
revenues resulting from the differential
between the budgetary prices and those
prevailing in the market provide a safe
cushion for the country to compensate
for a possible loss of revenues for short
periods and to engage in venturing after
higher market shares. That means that
the excess revenues, which are represented
by the grey area in Graph 2, will provide
opportunities for the country to possibly
disengage itself from considerations focusing only on the price.
While in the cushion zone, Iran can
pursue to improve its market share, in the
context of the prevailing call on OPEC
oil and at given market prices to generate
incremental revenue.
Conclusion
In the ever-changing geopolitics of energy, particularly in the Persian Gulf, the
strategy of maximizing Iranian oil revenues shall be based on acquiring a larger
share in the oil market at an acceptable
price level by:
•
•
•
Increasing the share of oil in the world
energy mix;
Increasing OPEC’s share in the world
oil market; and
Increasing Iran’s share within OPEC.
The policy measures to be adopted
include the following:
— A capacity build-up to respond to the
current and future call on Iran’s oil
—
—
—
—
—
—
—
—
commensurate with its immense recoverable oil reserves.
Seeking a higher market share within
the context of our commitments to
OPEC, while observing the acceptable balance with other major producers in line with our national security
and interest.
Pursuing the policy of conservation
in domestic oil consumption through
substitution with gas and promoting
energy efficiency.
Enhancing co-operation with international oil companies (IOCs) to acquire
modern technologies.
Upgrading the quality of crude oil for
export and oil products through investing in the country’s refineries to
process and consume lower grades of
crude oil domestically.
Diversifying and creating markets
through the establishment of interdependencies with consumers.
Domestic consensus-building on the
principle that, in the process of maximizing oil revenues in the long term,
securing a larger share of the market
at lower prices is unavoidable.
However, the policy of a higher market
share should be pursued to the extent
that the minimum budgetary revenue
requirement is not compromised.
Iran should seek a higher market share
and shall invest in capacity building
and further promote its co-operation
with IOCs to enhance its access to
technology and market development
strategies, to foster its national security and interests.
17
NEWSLINE
Iran signs $2.0bn deal with Japan to develop
massive Azadegan oil field
to pump 150,000 b/d by mid-2008, and
reach 260,000 b/d by early 2012. Experts
say the deal will push Iran closer to its
production capacity goal of 5 million b/d
from the current 4.2m b/d.
The Japanese Prime Minister, Junichiro Koizumi (below left), expressed
his satisfaction with the Azadegan deal.
“It is a welcome move when we consider
the future relationship between Japan and
Iran,” he said, according to a report in the
Japanese newspaper Mainichi Shimbun.
The project is one of the largest that
Iran has signed with a foreign country
Photo: Reuters/Heinz-Peter Bader
was also present at the signing ceremony.
“Japan is the world’s second largest oil
consumer and Iran is the second largest
oil producer in OPEC, so we are actually
two sides of the same coin,” he was quoted
as saying by the BBC.
The Japanese partner, which will have
full development rights to the southern
part of Azadegan, will hold a 75 per cent
stake in the project, while Iran will have
the remaining 25 per cent.
Production is slated to begin at Azadegan at a rate of 50,000 barrels/day in 2007,
according to reports. The field is expected
Photo: Reuters/Itsuo Inouye
Iran has signed a $2.0 billion deal with
Japan to develop the massive Azadegan
oil field in south-western Iran, which is
estimated to have reserves of around 26
billion barrels, according to Japanese and
international media reports.
The accord was signed in the Iranian
capital by the President of Japan’s Inpex
Corp, Kunihiko Matsuo, and the General Manager of the National Iranian
Oil Company, Seyed Mehdi Mirmoezi,
reported the Kyodo News Agency.
The Iranian Minister of Petroleum,
Bijan Namdar Zangeneh (below right),
This section is compiled from various sources, including the OPEC News Agency (OPECNA), which transmits three daily
bulletins of news, analysis and features from OPEC Member Countries and emerging economies. For those who are interested in oil, energy and economic development issues, more details on OPECNA can be found in the advert on p9.
18
OPEC Bulletin
NEWSLINE
since the Islamic Revolution of 1979.
Negotiations on the deal began around
three years ago, but were delayed by US
concerns over Iran’s nuclear plans.
Japan, which has limited natural resources, has been keen to reach agreement
on developing Azadegan to meet its longterm energy needs, and diversify its sources
of oil imports. Two other OPEC Member
Countries, Saudi Arabia and the United
Arab Emirates, accounted for nearly twothirds of Japan’s oil imports in 2001.
Another Japanese newspaper, the Yomiuri Shimbun, reported that the project
is expected to help provide a steady supply
of crude oil to Japan. The country has been
seeking a new long-term oil deal since the
Japanese-operated Arabian Oil Co’s mining rights for the Khafji oil field in Saudi
Arabia expired in February 2000.
Japan is now pinning its hopes on the
development of Azadegan as a new “Japanese flag” crude oil supplier, according to
the Yomiuri Shimbun report.
Around half of Japan’s energy needs
are met by oil, some 88 per cent of which
is imported from the Middle East. The
price of imported oil in Japan is higher
than in the US or Europe, due to the
transport costs.
Saudi Aramco signs gas
exploration deals with
more oil companies
State oil firm Saudi Aramco has announced that it will be partnering with
more oil companies to find and develop
gas reservoirs, as part of the Kingdom of
Saudi Arabia’s upstream gas offering.
The exploration activities will take
place in a 30,000 square kilometre area in
the Kingdom’s Rub Al-Khali (the Empty
Quarter), according to a company statement.
The announcement that Russia’s Lukoil had won the bid for the region dubbed
Contract Area A was made by the Minister
of Petroleum and Mineral Resources, Ali
I Naimi.
To explore Contract Area A, Lukoil and
Saudi Aramco will establish an exploration
and producing company, with Saudi Aramco as a 20 per cent shareholder.
The winners of the bidding for
Contract Areas B and C have also been
announced by Saudi Aramco. Contract
Area B went to Sinopec of China, while
Contract Area C was won by a consortium
of Italian oil company ENI and Spanish
oil company Repsol.
“Saudi Aramco is very pleased to
have another opportunity to partner
with international oil companies,” said the
company’s President and Chief Executive
Officer, Abdallah S Jum’ah.
“We look forward to putting forth
our best efforts to leverage the Kingdom’s
natural resources. We recognize the
importance of natural gas to the future
of the country, and it’s gratifying to see
ourselves participate in this endeavor,”
he added.
OPEC NOCs again feature
strongly in PIW annual
company rankings
The national oil companies (NOCs) of all
eleven OPEC Member Countries feature
in the top half of the latest annual ranking
list of the world’s top oil and gas companies, published by industry newsletter
Petroleum Intelligence Weekly.
OPEC NOCs occupied three of the
top four places, with Saudi Aramco once
again holding onto the top spot. US major
ExxonMobil was second, Petroleos de Venezuela was third and the National Iranian
Oil Company was fourth, all unchanged
from last year.
The top ten was rounded out by AngloDutch firm Royal Dutch/Shell, the UK’s
BP, US major ChevronTexaco, Mexico’s
Pemex, France’s Total and PetroChina.
The placings of the other OPEC
NOCs were as follows: Kuwait Petroleum Corporation at 11 (up one place
from last year); Indonesia’s Pertamina
and Algeria’s Sonatrach joint 13th; the
UAE’s Abu Dhabi National Oil Co at
16; the Iraq National Oil Co at 21; the
Nigerian National Petroleum Corporation
at 22; Libya’s National Oil Corp at 23 and
Qatar Petroleum at 25.
The PIW rankings are based on criteria including oil reserves and production,
natural gas reserves and output, refinery
capacity and product sales volumes.
According to the newsletter, the latest
ranking list shows that “private sector firms
are continuing to move ahead, mainly at
the expense of the traditional NOCs.”
Although the top six places in the
list were unchanged from last year, factors such as “competition, acquisitions
and privatisation are helping the more
dynamic private sector firms and a select group of smaller state-owned firms
climb higher in the relative standings,”
said PIW.
This overall trend, it added, looks set
to continue, although there would probably be changes due to political impacts
and competitive pressures.
Nigeria’s NLNG sets
completion dates for new
production trains
The Nigeria Liquefied Natural Gas
Company (NLNG) has announced
that its new LNG projects, which form
NLNG-Plus, will expand production at
its complex by 8 million tons/year of LNG
and 1.5m t/y of liquefied petroleum gas
(LPG) and condensate.
NLNG Managing Director Andrew
Jamieson said in Lagos that NLNG-Plus,
comprising production trains 4 and 5,
would be completed in 2005, according
to a report by the OPEC News Agency.
He added that train 4 would start up
in June 2005, while the fifth would start
up in December of the same year.
On completion of the NLNG-Plus
projects, the overall capacity of NLNG
would be 17m t/y of LNG, 3.4m t/y of LPG
and 2.8 billion cubic feet/day of natural
gas feedstock, said Jamieson.
Studies for train 6 were at an advanced
stage and that all the volumes of LNG from
the train were already sold, he went on.
This train will be similar to trains 4
and 5 and the final investment decision
on the project will be taken soon, noted
Jamieson.
NLNG was incorporated in May 1989
to harness Nigeria’s vast natural gas resources
and produce LNG for export. It is a joint
venture between the state-run Nigerian
National Petroleum Corporation (49 per
cent), Anglo-Dutch oil giant Royal Dutch/
Shell (25.6 per cent), France’s Total (15 per
cent), and Italy’s Agip (10.4 per cent).
19
NEWSLINE
In brief
ExxonMobil releases energy trends study
IRVING, TEXAS — A new report released by
ExxonMobil says that the world will require
about 40 per cent more energy in 2020
than today and consumption levels will
reach almost 300 million barrels/day of oil
equivalent. “Developing reliable, affordable
supplies to meet this energy demand will be
an enormous challenge,” said the company’s
Vice-President for Safety, Health and the
Environment, Frank Sprow. According to
the report, 80 per cent of the energy growth
from 2000 through 2020 will be devoted to
improving living standards in many parts of
the developing world, where about 85 per
cent of the world’s population will live in 20
years. “Because 80 per cent of the world’s
growth in energy demand through 2020 will
be in developing countries, 80 per cent of the
growth in carbon emissions will also be in the
developing world,” Sprow added.
BP gets okay for Angolan project
LONDON — Angola’s state oil company, Sonangol, has authorised UK oil major BP to
proceed with the awarding of major contracts
for the development of the Greater Plutonio offshore project. The plan to develop
six fields will be the first development in
Angola’s block 18 and the first BP-operated
project in Angola. The fields Galio, Cromio,
Paladio, Plutonio, Cobalto and Platina are
collectively known as Greater Plutonio, and
are located in water depths of 1,200–1,500
metres. The development will consist of a
single spread-moored floating, production,
storage and offloading (FPSO) vessel linked
by risers to a network of subsea flowlines,
manifolds and wells. Following authorization
to proceed, BP has awarded two of the major
contracts for the development. The contract
for engineering, procurement, construction
and management went to Kellogg Brown &
Root, while the FPSO hull and topside equipment went to South Korea’s Hyundai.
Italy’s ENI announces
start-up of Elephant oil
field in Libya
Italian oil giant ENI has announced
the start-up of production from Libya’s
Elephant oil field, located 800 km south
of Tripoli.
The initial flow rate of 10,000 barrels/
day is expected to increase to 150,000 b/d
by the end of 2006, said the firm in a
statement.
The joint venture for the exploration
and exploitation of the area is made up
of Libya’s National Oil Corporation
(NOC), ENI and the Korea National Oil
Corporation (KNOC).
The operator of the Elephant field is
the Agip Oil Company, a company equally
owned by Libya’s NOC and ENI.
ENI has been operating in Libya
since 1959 and is currently one of the
major international producers there,
with approximately 14 per cent of the
country’s annual oil production.
By the end of 2004, ENI is also
planning the start of production for
the Western Libya gas project, which
will allow the export of 8 billion cubic
metres/year of gas to Italy.
Yusgiantoro stresses
need for improved oil,
gas incentives
The Indonesian Minister of Energy
and Mineral Resources, Dr Purnomo
Yusgiantoro (pictured below), has called
for more incentives to attract investors in
the oil and gas industry.
“We need to create more stimuli,
for instance, by changing the 70:30 per
cent profit-sharing ratio in oil and gas
exploration and production contracts,”
Purnomo, who is also OPEC Secretary
General, was quoted as saying by the
OPEC News Agency after attending a
cabinet session at the State Palace.
A better share of the oil and gas
ConocoPhillips starts Bayu-Undan output
HOUSTON — ConocoPhillips has announced
that first liquids production began on February 10 from the Bayu-Undan field in the
Timor Sea joint petroleum development area
between Timor-Leste and Australia. In the
first phase, the Bayu-Undan gas recycle facility will produce and process wet gas; separate
and store condensate, propane and butane;
and re-inject dry gas back into the reservoir.
Full design rates of 1.1 billion cubic feet/day
of gas; 115,000 barrels/day of combined
condensate, propane and butane; and 950
million cu ft/d of dry gas recycled into the
reservoir are anticipated to be reached by the
third quarter of 2004.
20
OPEC Bulletin
NEWSLINE
would attract investors, Purnomo said,
after reviewing oil and gas policies during
the cabinet meeting, which was chaired by
President Megawati Soekarnoputri.
Separately, Indonesia’s Investment
Co-ordinating Board said foreign direct
investment (FDI) in January dropped by
nearly 24 per cent to $264.4 million from
$324.2m for the same month last year.
The number of FDI projects dropped
by 50 per cent to 49 projects, down from
99 projects a year ago.
Although domestic investment
improved slightly to 1.044 trillion rupiahs
($124.28m), up from 1.033tr rupiahs in
January 2003, the new funds were only
committed to seven projects, compared
with 13 a year ago.
While the oil and gas sector in the past
has been the major FDI attraction, the board
said that the food sector attracted most of
the January investment, followed by the
construction, chemical and pharmacy
industries.
Most of the FDI came from the United
Kingdom, followed by Brazil and Japan.
Citgo announces start-up
of gasoline hydrotreater
at Lake Charles refinery
Citgo Petroleum has announced the
completion of construction and the
successful start-up of a new gasoline
hydrotreater unit at its refinery in Lake
Charles, Louisiana.
The unit is designed to remove sulphur
from the gasoline stream while at the same
time maintaining the octane value of the
fuel. It is a critical part of the refining
process to meet the new tier II fuel rules
and regulations, which impose dramatically lower limits on the sulphur content
of gasoline and will be phased in over a
three-year period.
The new unit is the first of two
identical gasoline hydrotreaters at the
Lake Charles refinery and is currently
operating at its 35,000 barrels/day design
capacity. The unit was successfully started
on December 28 last year.
“This is one of the smoothest start-ups
I have ever been involved with,” commented Citgo’s Vice-President at Lake
Charles, Al Prebula.
“We are very proud of the project,
particularly the safety performance during
construction and start-up,” he added.
The second unit will be completed in
mid-2004 and will come on line as needed
to meet federally-mandated clean fuels
regulations. The cost of the two gasoline
hydrotreaters is $210 million.
In addition, Citgo is planning additional investments at the Lake Charles
refinery over the next five years to meet
future environmental regulations.
Citgo, which is based in Tulsa, Oklahoma, is owned by PDV America Inc, an
indirect wholly-owned subsidiary of state
oil firm Petróleos de Venezuela.
Qatar Petroleum and
Dolphin Energy sign final
development plan
Qatar Petroleum and Dolphin Energy
have announced the signing of the final
field development plan for the forthcoming Dolphin Gas Project, according to a
statement by Qatar Petroleum.
The plan, signed at Qatar Petroleum’s
headquarters in Doha, was inked by the
country’s Second Deputy Prime Minister and Minister of Energy & Industry,
Abdullah bin Hamad Al Attiyah, and by
Dolphin Energy’s Chief Executive Officer,
Ahmed Ali Al Sayegh.
The signing of the development plan
represents the final investment decision
for the project and sets out the details
for the various development stages — the
drilling programme, offshore and onshore
construction, compression station and export facilities.
Once the development plan is fully implemented in 2006, Dolphin Energy will
produce natural gas from Qatar’s offshore
North field and process it onshore at Ras
Laffan Industrial City to extract condensate and natural gas liquids (NGL) products.
The resulting export gas will subsequently
be transported by the Dolphin pipeline
to the UAE.
The project will attain full capacity
within two years of the start of production,
with an export gas rate of 2 billion cubic
feet/day, condensate production of around
100,000 barrels/day and NGL products of
around 8,000 tons/day.
In brief
IEA meeting calls for co-operation
BANGKOK — Over 120 delegates from forty
countries attended the International Energy
Agency’s (IEA) Energy Experts’ Meeting in
February, co-hosted by Thailand’s Ministry
of Energy. Delegates called for continuing
co-operation among energy producers and
consumers to enhance global energy security
and market stability both from a supply and
demand perspective. Discussions focused on
issues ranging from global oil market stability, cross-border trading in electricity and
gas, growing LNG trade, and the investment
outlook for energy infrastructure. The IEA’s
Deputy Executive Director, Ambassador
William C Ramsay, said that the purpose of
holding the meeting in Bangkok “was to raise
global awareness of the already considerable
and growing importance of Asian countries
in world energy markets, now and even more
in the future.”
Shell to recategorise some proven reserves
LONDON — Anglo-Dutch oil giant Royal
Dutch/Shell has announced that, following
internal reviews, some of its proven hydrocarbon reserves will be recategorised. The total
recategorisation represents 3.9 billion barrels
of oil equivalent of proven reserves, or 20 per
cent of proven reserves as at December 31,
2002. Over 90 per cent of the change is a reduction in the proven undeveloped category;
the balance is a reduction in the proven developed category. Two-thirds (2.7bn b) relates
to crude oil and natural gas liquids, and one
third (1.2bn boe or 7.2 trillion cubic feet) to
natural gas. “The recategorisation of proved
reserves does not materially change the estimated total volume of hydrocarbons in place,
nor the volumes that are expected ultimately
to be recovered. It is anticipated that most of
these reserves will be re-booked in the proved
category over time as field developments mature,” said Shell in a statement.
Total signs tanker chartering contract
PARIS — French oil major Total has signed
a five-year contract to charter the first two
Stena Product-Max (P-Max) tankers currently under construction. The new P-Max
class of tankers are medium-sized, short and
wide-bodied with reduced draft. They have
an intermediate loading capacity of 65,000
tons, between the standard 45,000 t vessels
and the 70,000–80,000 t Panamax. The
tankers, specially designed for efficient and
safe transportation, are under construction
in the Croatian shipyard Brodosplit in Split
for delivery in 2005 and 2006. Specifically
engineered to reduce the risk of accidents and
oil pollution, the tankers are the result of a
collaboration between Total and Stena.
21
NEWSLINE
In brief
US refinery system hits record levels
WASHINGTON — The US refinery system ran
at record levels last year, producing record or
near record levels of gasoline and distillate as
well as importing record or near record levels
of gasoline and distillate last year, according to
the American Petroleum Institute (API) in its
Monthly Statistical Report for December 2003.
The report shows that the industry responded
to the challenges of 2003 by working hard to
deliver needed fuel to consumers. Refineries
utilized an average of 92.4 per cent of capacity, well above rates typical in many other
industries. “The year’s first-quarter challenges
included a cold winter, the shutdown of the
Venezuelan oil industry, Nigerian strikes
and the anticipated Iraq war,” said the API’s
Director of Policy Analysis and Statistics,
Dr John Felmy. High petroleum prices
stimulated demand for natural gas, and inventories of gas declined sharply to record
low levels to meet the increased demand,
he noted.
Motiva to sell Delaware City refinery
HOUSTON — Shell Oil Products US has announced that Motiva Enterprises has signed
a letter of interest to sell its Delaware City
refinery to the Premcor Refining Group. The
transaction is expected to close in the second
quarter of 2004 after all regulatory and other
approvals are obtained. The cost will be approximately $800 million, plus contingent
payments totalling up to $125m, and an
additional amount representing the value of
refined product and crude inventory at closing. The Delaware City refinery, which began
production in 1957 as part of the Tidewater
Oil Company’s refining system, is located 15
miles south of Wilmington and has the capacity to refine in excess of 180,000 barrels/day
of crude oil. Headquartered in Houston,
Motiva Enterprises is a refining and marketing joint venture owned by affiliates of Shell
and Saudi Aramco.
BP to sell equity stake in Sinopec
LONDON — UK oil giant BP has announced
that it intends to sell its entire 2.1 per cent
equity stake in China Petroleum and Chemical Corporation (Sinopec). The company will
carry out the sale through a placing of the
shares on public markets. BP acquired the
stake of approximately 1.8 billion ‘H’ shares
in Sinopec when 20 per cent of the company
was floated on international markets in October 2000. Commenting on the move, the
President of BP China, Gary Dirks, said:
“The decision to sell our stake in Sinopec
is entirely separate from our joint business
activities with the company, to which we
remain committed.”
22
Speaking at the signing ceremony, Al
Attiyah said: “The signature of this development plan further strengthens Qatar
Petroleum’s relationship with Dolphin Energy, following the signing of the original
development and production sharing
agreement in December 2001.
“This cross-border initiative is beneficial to the people of both countries, and
is a fine example of energy and industrial
co-operation between brotherly GCC
countries. The plan also cements the financial commitment of Dolphin Energy
to the project,” the Minister added.
Dolphin Energy’s Al Sayegh commented: “The development plan confirms
the approval of both Qatar Petroleum and
Dolphin Energy on key financial and
technical parameters under which our
company will produce gas in Qatar.”
Dolphin Energy was created to develop
substantial energy projects throughout the
nations of the Gulf Co-operation Council.
Its major strategic initiative, the Dolphin
project, involves the production and
processing of natural gas from Qatar’s
North field, and transportation of the
dry gas by pipeline to the United Arab
Emirates, beginning in 2006.
Dolphin Energy’s first energy initiative
will come on stream in the first quarter of
2004, when the natural gas pipeline from
Al Ain to Fujairah is inaugurated. This
pipeline will supply the Union Water and
Electricity Company in Fujairah, initially
with natural gas from Oman, and subsequently with Dolphin gas from Qatar.
Dolphin Energy’s shareholders are
the Mubadala Development Company,
which is wholly-owned by the government of Abu Dhabi, Total of France and
Occidental Petroleum of the US.
UAE’s ADCO uses
advanced technology
to save time, cut costs
The Emirate of Abu Dhabi has introduced advanced drilling technology to
boost its hydrocarbons recovery, which is
reducing drilling time and cutting costs
significantly, according to the Abu Dhabi
Chamber of Commerce and Industry’s
(ADCCI) magazine.
The Abu Dhabi Company for On-
shore Oil Operations (ADCO), managed
to reduce time to deliver wells by 46 per
cent, equivalent to 1,400 days, and cut
costs by 25 per cent, or around $73 million, the OPEC News Agency quoted the
ADCCI magazine as saying.
“In terms of the ADCO 2004-2007
business plan, it started implementing its
Well Delivery Limit System (WDL) in
making a major contribution by reducing the number of rigs required to meet
the target.
“Most of the activities were carried
out in the Bu Hasa and Asab fields,” the
ADCCI magazine added.
ADCO, which is a subsidiary of
the Abu Dhabi National Oil Company
(ADNOC), has estimated hydrocarbon
reserves of more than 20 billion barrels.
It is set to enhance its output capacity
through an ambitious programme to meet
growing demand from its customers in Japan, South Korea, the US, and Europe.
At least $15bn has been pumped into
development projects over the past decade
and more than $10bn is expected to be
invested during 2004-2007.
Abu Dhabi is the largest of the seven
Emirates that make up the United Arab
Emirates, and it accounts for the majority
of the country’s oil production.
Iraqi oil revenues could
top $1.0bn per month,
says US report
The Bush administration has issued a
report to Congress saying that Iraq’s oil
export revenues could surpass $1 billion
per month in 2004 if prices hold at current
levels and exports are maintained, according to a Reuters report.
The White House study said that
Iraq’s crude oil exports should increase
significantly once the pipeline from the
country’s northern Kirkuk oil fields to
Turkey’s Mediterranean port of Ceyhan
is sufficiently protected against sabotage
to allow it to reopen.
The report on progress in rebuilding
Iraq noted that the country’s domestic
consumption of oil was currently around
500,000-600,000 barrels/day of oil. However, refinery output of products including
kerosene, diesel and gasoline remains at
OPEC Bulletin
NEWSLINE
pre-war levels because of continuing attacks on crude oil pipelines and electric
power shortages, it added.
In order to meet Iraq’s domestic demand,
the US-led Coalition Provisional Authority
is spending $7–$8 million per day to import
refined oil products from Turkey, Kuwait
and Jordan, said the report.
It added that gasoline supplies consistently exceeded daily demand, and supplies
of other products including diesel and
kerosene also have improved.
In a separate development, the United
Nations Secretary General, Kofi Annan,
has said that elections cannot be organized in Iraq before the June 30 deadline
for a transfer of sovereignty, the UN News
Agency has reported.
Annan was speaking to reporters following a meeting with his Special Adviser,
Lakhdar Brahimi, who had just returned
from a fact-finding mission to Iraq, and
the ‘Group of Friends’ of the country.
“We hope that as we move forward
we will be able to work with the Iraqis
and the coalition to find a mechanism
for establishing a caretaker or an interim
government until such time that elections
are organized,” Annan said.
He added that there was an “emerging
consensus or understanding that elections
cannot be held before end of June, and
that the June 30 date for handover of
sovereignty must be respected.”
UN spokesman Fred Eckhard also told
reporters in New York that the Secretary
General had “emphasized that it is crucial
that we do not give the impression that
Iraq’s fate could be decided over the heads
of its people, stressing the need to engage
the Iraqi people.”
Explosion at Algeria’s
Skikda LNG complex
caused by gas leak
Preliminary results of an enquiry into the
explosion that partly destroyed Algeria’s
Skikda liquefied natural gas (LNG) complex
in January have shown that the accident
was caused by a gas leak, according to the
OPEC News Agency.
The Algerian Energy and Mines
Minister, Dr Chakib Khelil, told reporters that the explosion was due to a failure
in a pipeline, which caused a gas leak, and
not in a boiler, as some media reports had
said.
A commission of inquiry has been set
up by the Algerian authorities to investigate the accident. The commission, which
is due to submit its final conclusions in
about three months’ time, is being assisted by officials from state oil and gas
firm Sonatrach, an insurance company,
and foreign experts.
The explosion at the Skikda LNG plant
killed at least 23 people, forcing all activity at the oil and gas refining complex to
be halted. Three of Skikda’s six LNG trains
were destroyed by the blast, according to
a Reuters report.
Algeria is the world’s number two
LNG exporter after fellow OPEC Member
Indonesia and is one of Europe’s primary
sources of natural gas. The country has two
LNG plants — the Skikda facility, which
accounts for about 25 per cent of the
country’s LNG exports, and a larger plant
at Arzew to the west, which produces the
other 75 per cent.
Last year, the Skikda plant’s output
of LNG was around 4.6 million tonnes,
or about a quarter of Algeria’s total LNG
production of 19.6m t.
It was not immediately clear what
impact the Skikda explosion would
have on European LNG imports. The
Reuters report quoted an independent
gas analyst and former Director of LNG
at BP, Andrew Flower, as saying that the
port at Skikda is designed to load small
LNG tankers and is used for short-distance
exports to southern Europe rather than
for shipments across the Atlantic to the
United States.
“Skikda can only take small ships.
They normally ply across the Mediterranean to Italy, Spain and France. The
French and the Italians could really have
problems as their terminals at Fos and La
Spezia can only take small ships,” Reuters
quoted him as saying.
A spokesperson for Italian oil and gas
firm ENI said although the company imported LNG from Skikda, this was a small
proportion of its total supply.
Algerian President Abdelaziz Bouteflika was quoted as saying that his country
would meet its commitments to supply its
foreign partners with the required energy
products.
In brief
ExxonMobil plans LNG import terminal
IRVING, TEXAS — ExxonMobil affiliate Vista
del Sol LNG Terminal has announced plans
to develop a $600 million LNG receiving
terminal along the Gulf Coast of Texas. The
proposed project, to be located in San Patricio
County, about two miles west of Ingleside,
Texas, was announced at an event attended
by Texas Governor Rick Perry, the Consul
General of the State of Qatar, Mohamed
Al-Hayki, and officials from ExxonMobil.
The terminal, which will process imported
LNG for distribution throughout Texas and
the United States, should take about three
years to build and involve employment for
some 600 workers during peak construction.
In October last year, ExxonMobil and Qatar
Petroleum announced a deal to supply 15.6
million tonnes/year of LNG from Qatar to the
US for an expected period of 25 years.
ConocoPhillips earns $1bn in 4Q
HOUSTON — US major ConocoPhillips has
reported fourth quarter net income of just
over $1 billion, compared with a net loss
of $428 million for the same quarter in
2002. Total revenues were $26.0bn, versus
$23.5bn a year ago. Income from continuing
operations for the fourth quarter was $985m,
compared with $558m for the same period a
year ago. “Operationally, we performed well
overall during the fourth quarter, and there
remains opportunity for improvement,”
said the firm’s President and Chief Executive
Officer, Jim Mulva. “We produced 1.61m
barrels/day of oil equivalent and ran our refineries at 94 per cent of capacity. Compared
with last quarter, lower US refining margins
combined with higher turnaround expenses
significantly reduced downstream earnings,”
he added. US oil firms Conoco and Phillips
finalized their merger in August 2002.
India, IEA discuss emergency stocks
NEW DELHI — The Indian Ministry of Petroleum and Natural Gas, the government
of India and the Paris-based International
Energy Agency (IEA) organized a workshop
in New Delhi in January to discuss oil emergency response policies and measures, in particular the role of strategic stocks in oil crisis
management. India’s Minister of Petroleum
and Natural Gas, Shri Ram Naik, informed
the participants in the workshop about the
recent decision of the government of India
to establish a strategic crude oil reserve of 5
million tonnes. He also emphasized the need
for mutual co-operation between India and
IEA on the subject of energy security. The
discussions during the workshop focused on
different models available globally on various
aspects of strategic oil reserves.
23
MARKET REVIEW
November/
December
This section is based on the OPEC Monthly
Oil Market Report prepared by the Research
Division of the Secretariat — published
mid-month and containing up-to-date
analysis, additional information, graphs
and tables. The publication may be downloaded in PDF format from our Web site
(www.opec.org), provided OPEC is credited
as the source for any usage.
Crude oil price movements
November
The OPEC Reference Basket1 slid a few
cents per barrel but closed more than
half-a-dollar above the upper limit of the
price band mechanism. The Basket lost
9¢/b with respect to October to average
$28.45/b. With the sustained recovery
from this year’s lows in April and May,
the Basket’s year-to-date average stood
at $27.95/b at the end of November, a
significant increase of $4.01/b or 16.7
per cent above the $23.93/b of 2002 (see
Table A).
Following a six-month high in midOctober, the Basket moved lower in the
subsequent weeks extending the fall to the
first week of November when it lost 45¢/b
or 1.6 per cent to average $27.33/b. Then it
made an upturn gaining $1.32/b or almost
five per cent in the following week and
rising a further 71¢/b to $29.36/b by the
third week of the month. By month-end,
the Basket had shed 89¢/b, or three per
cent, to close at $28.47/b, followed by a
slight 3¢/b gain during the first week of
December and another rise of 86¢/b or
three per cent to $29.36/b in the second
week of the month.
Following weak values in the second
1. An average of Saharan Blend, Minas, Bonny
Light, Arabian Light, Dubai, Tia Juana Light
and Isthmus.
24
half of October, crude oil prices regained
strength over much of November before
undergoing a considerable correction towards month-end. Atlantic benchmarks
gained over $1/b early in November,
supported by concerns about low heating
oil stocks in the US with the approach of
the northern hemisphere winter season.
The price strength drew additional support from the 2.5m b draw on gasoline
stocks reported by the Energy Information Administration (EIA) in the week of
October 31. Asia-Pacific’s thirst for West
African and North Sea crude, especially
China’s, remained unabated. Demand for
direct-burning crude remained strong in
Japan on the continued closure of nuclear
plants. At mid-month, West Texas Intermediate (WTI) and Brent posted further
gains, with the US benchmark closing at
$32.37/b on November 14 while Brent
surged to $29.56/b on the International
Petroleum Exchange (IPE) in London.
The factors behind the excessive but
mainly speculative rally were fears of inadequate crude oil and product inventories
in the US and Europe, preliminary figures
showing OPEC-10 was implementing the
September 24 agreement calling for production cuts, and the dramatic increase in
speculators’ long positions on the New York
Mercantile Exchange (NYMEX), which indicates that the market expected prices to
rise in the future. In the following week,
crude prices edged to levels last seen just
before the war in Iraq. The NYMEX sweet
crude contract passed the $33/b mark on
November 18 to close at $33.28/b, and the
Brent contract surged to $30.47/b on the
same day. According to some analysts, the
rally was sparked by unseasonably strong
gasoline demand in the US and fears that
OPEC could engineer another production
cut in its December 4 Ministerial Meeting to counteract the seasonal decline in
demand during the 2Q of 2004. Adding to
the bullish market mode was the looming
methyl tertiary butyl ether ban in California, Connecticut and New York as well as
persistent strong demand from Asia-Pacific
which soaked up West African crude, otherwise bound for the US. Crude oil prices
collapsed as speculators’ exuberant net-long
positions over the past few weeks turned
out to be unsustainable. Speculators took
profits and reduced their exposure ahead
of the forthcoming OPEC Meeting, as the
unexpected September decision was still
fresh in their minds. With the speculative
premium mostly erased from crude prices,
market fundamentals are expected to take
the driver seat, thus minimising oil price
volatility.
US and European markets
The release of bullish stock data in the
US earlier in November, combined with incidents in Saudi Arabia and Turkey, pushed
the sweet crude benchmark NYMEX WTI
to $32.95/b on November 20. However,
buying interest by US refiners was timid
amid soft refining margins and aggressive
moves to push down stock levels to minimise tax payments on crude and product
Table A: Monthly average spot quotations for OPEC’s Reference Basket
and selected crudes including differentials
$/b
Reference Basket
Arabian Light
Dubai
Bonny Light
Saharan Blend
Minas
Tia Juana Light
Isthmus
Other crudes
Brent
WTI
Differentials
WTI/Brent
Brent/Dubai
Year-to-date average
2002
2003
24.36
28.10
24.32
27.69
23.83
26.77
25.15
28.76
24.91
28.73
25.60
29.52
22.61
26.97
24.12
28.25
Nov 03
28.45
28.63
27.62
28.93
28.94
30.12
26.69
28.24
Dec 03
29.44
29.20
28.06
29.64
29.77
32.09
27.60
29.71
28.68
30.94
29.82
32.15
25.03
26.13
28.81
31.09
2.26
1.06
2.33
1.76
1.10
1.20
2.28
2.04
OPEC Bulletin
MARKET REVIEW
inventories, an established pattern over the
last few years. Crude oil stocks retreated
in the second half of the month, closing
at 284.3m b on November 28, according
to the EIA’s weekly status report, which
was 4.1m b below the same week last year.
Falling import levels and unworkable transatlantic arbitrage opportunities given high
freight rates were behind the stock drawdown. In Europe, healthy refining margins
early in the month supported demand for
sour grades. Urals prices strengthened in the
Mediterranean market, following delays in
the Bosporus Straits and the closure of the
main Black Sea Urals loading terminal at
Novorossiysk. Later in November, dwindling regional demand, limited arbitrage
opportunities to the US and an overhang
of early December loading cargoes weighed
heavily on the North Sea cash market.
Far East market
The strength of regional benchmark
Dubai amid robust regional demand, especially from China, narrowed the spread
against Brent-Forcados-Oseberg-related
(BFO) crudes inducing a flow of West African cargoes despite the high freight rates.
The closing of the BFO/Dubai spread, together with high prices for regional sweet
grades, supported imports of some 10m b
of Angolan crude to the Asia-Pacific region
in the first half of November. Continued
strong demand by China narrowed Dubai’s
discount to January forward BFO to just
40¢/b, a level seen only in late April and
early May of this year, throwing open the
arbitrage window for Brent related crude.
By the first half of the month, 1.3m b/d
of December West African crude had been
sold to Asia-Pacific. However, the bullish
mode on the Asia-Pacific market was not
confined to sweet foreign grades, regional
crudes from Australia and Malaysia also
cleared as premiums to their respective
benchmarks strengthened.
December
The OPEC Reference Basket finished 2003
with an impressive cumulative average of
$28.10/b, the highest nominal yearly
average since 1984. A rough calculation
assuming a daily average production of
26.92 b/d results in a total revenue of
approximately $275 billion for the Organization during 2003. The 18 per cent
increase in total revenue, with respect to
2002, was due to the combined effects of
a 1.59m b/d increase in production and
a rise of $3.74/b in the Basket’s average
yearly price (see Table A).
During the month of December the
Basket added another 99¢/b to average
$29.44/b, a level not seen since the start
of hostilities in the Middle East. On a
weekly count the Basket started the month
of December with a minor dip, losing 4¢/b
to average $28.43/b, before switching to a
86¢/b gain in the second week to stand at
$29.29/b. The Basket added another 90¢/b
to $30.19/b in the third week but then fell
by 45¢/b to close at $29.74/b. The Basket
made another upturn in the first week of
January adding 58¢/b to $30.11/b, followed by a further 68¢/b rise to $30.79/b
in the second week.
Crude prices were supported early
in December by rampant demand for
products in Asia, especially China, falling
US commercial crude stocks and the sign
of a solid economic recovery in the US.
This led the Atlantic benchmarks WTI
and BFO to breach the $31/b and $29/b
marks, respectively. The narrowing of the
BFO-Dubai spread resulted in an inflow
of some 1.3–1.4m b/d of West African
crudes to the Asia Pacific region. Strong
diesel demand in China, which has crippled exports and could ultimately make the
country a net importer, supported regional
crude prices and contributed to the closing of the spread to Atlantic basin crudes.
The considerable draw on US crude stocks
together with strong 3Q economic growth
figures further underpinned crude prices
early in December. Meanwhile OPEC in
its 128th (Extraordinary) Meeting of the
Conference on December 4, decided to
maintain current agreed production levels until further notice, dissipating market
expectations prior to the Meeting. During
the second week of December, the first cold
snap, together with all the factors present
earlier in the month, pushed WTI futures
above the $33/b mark on December 12
with IPE Brent breaking through the $30/b
mark on the same day. Meanwhile, US
commercial crude stocks continued to fall
closing just above the perceived operational
minimum level of 270m b at 271.9m b
on December 12. The cold weather also
pushed up the NYMEX gas futures contract, leading utilities to seek the alterna-
tive crude products, fuel oil and gasoil.
Strong demand from Asia, which induced
the flow of considerable volumes of West
African crudes, continued to deprive the
US market of one of its natural supply
sources. Nonetheless, US refiners did not
seem especially concerned. They argued
that inventory management efficiency
has improved as a result of the industry
consolidation and that crude oil is readily available in the international market.
Crude markets picked up in the third week
of December only to ease a little towards the
end of the month, yet WTI futures prices
stayed well above the $32/b mark. Crude
oil inventories fell below the psychological
barrier of 270m b, while the East/West tug
of war for West African crudes continued.
Despite the widening of the WTI/BFO
spread to around $3/b, high freight rates
discouraged transatlantic movements to the
US. Shipping rates were under pressure by
continuous delays in the Bosporus Straits
which tightened vessel availability.
US and European markets
Commercial crude oil stocks in the
US ran down in December, breaching
the 270m b minimum operational level.
According to the weekly statistics of the
American Petroleum Institute (API), US
crude oil stocks fell to 267.5m b at the end
of December from 282.9m b the month
before. High freight rates prevented the
flow of transatlantic supplies despite a
workable arbitrage. Expensive freight
rates made it even more difficult to move
Latin American sour grades like Colombian
Cuisiana and Ecuadorian Oriente. Strong
Asian demand and a narrow arbitrage induced the flow of West African grades
to the East, competing with the US for
the same barrels. Meanwhile, US buying
remained lacklustre as refiners minimised
inventory holding for year-end tax purposes. Crude oil imports dropped below
the 9.0m b/d level early in December but
recovered thereafter, implying that crude
oil was readily available in the international
market. The European market firmed early
in December, boosted by a sharp decline in
Caspian and Russian crudes as a result of
the delays in the Bosporus Straits. Buoyant margins prompted European refiners
to step up buying of North Sea distillaterich grades underpinning prices of Forties and Oseberg. North Sea light sweet
25
MARKET REVIEW
grades drew support later in the month, as
buying interest surged ahead of the New
Year, clearing most availability until at least
the first two weeks of January.
Far East market
Demand for West African grades to
Asia Pacific remained buoyant during the
first half of December, underpinned by the
narrowing of the BFO/Dubai premium
which fell below $1.4/b. Regional sweet
crudes were also supported by dwindling
availability from Malaysia and Australia.
Nevertheless, high freight rates made regional refiners turn to local grades later
in the month. Expensive transportation
costs, combined with the slow-down of
Chinese demand, left West African crude
sellers with little alternative but to send
their crude to the West. Middle East crude
prices weakened following the allocation
of January term volumes while trading for
February cargoes was under pressure by the
perceived expensive official selling prices.
In late December and early January, the
lack of competing crudes, due to the high
freight rates, supported demand for light
sweet regional Australian and Malaysian
grades, while Chinese demand continued
to support the heavy grades.
Product markets and
refinery operations
November
Average petroleum product prices experienced mixed movements in November,
influenced largely by regional fundamentals rather than crude price trends, with
the price of the seasonal product, gasoil,
fairing best in all three markets. Refining
margins moved in different tracks, but they
maintained positive values in the world’s
main refining centres. (see Table B)
US Gulf market
Average spot product prices exhibited
divergent trends in the US Gulf market in
November. On average, prices for the light
and the heavy ends of the barrel, which
is made up of gasoline and high sulphur
fuel oil (HSFO), fell by two per cent, while
the gasoil counterpart rose by a similar
magnitude, amid a nearly two per cent
26
Table B: Selected refined product prices
$/b
Oct 03
Nov 03
Dec 03
Change
Dec/Nov
US Gulf
Regular gasoline
Gasoil
Fuel oil
(unleaded)
(0.2% S)
(3.0% S)
35.57
33.59
24.48
34.71
34.10
24.00
35.97
35.72
22.35
+1.26
+1.62
–1.65
Rotterdam
Premium gasoline
Gasoil
Fuel oil
(unleaded)
(0.2% S)
(3.5% S)
33.71
33.92
22.63
33.54
34.21
22.56
33.84
35.02
19.55
+0.30
+0.81
–3.01
Singapore
Premium gasoline
Gasoil
Fuel oil
(unleaded)
(0.5% S)
(380 cst)
35.55
33.58
24.38
35.78
35.08
24.02
39.52
36.67
23.79
+3.74
+1.59
–0.23
increase in WTI’s average value for the
same period. Nevertheless, the Energy
Information Administration’s four-week
average, representing the bulk of US refinery and product activity in November,
showed that average refinery throughput
in the US crept lower, albeit the supply
of major products was higher than in the
previous month. This essentially implied a
policy by refiners to boost the output of the
seasonal product, distillates, which together
with jet fuel registered an increase of almost
two per cent to stand at 3.8m b/d and
1.5m b/d respectively. While average US
gasoline refinery output remained almost
steady at 8.7m b/d, the US fuel oil refinery supply was reduced by nearly nine per
cent to around 500,000 b/d. Meanwhile,
gasoline demand continued to surpass last
year’s level by a hefty 2.6 per cent, registering almost 9m b/d, but still down two
per cent below the October level, which
was in line with the usual seasonal decline
in gasoline consumption. Although mild
weather dominated the densely populated
north-eastern region of the US, distillate
demand was robust, close to 4m b/d.
This equalled the level attained during
the colder than normal November of last
year. Fuel demand also moved around one
per cent higher compared to the previous
month and nearly three per cent above last
year’s level. This rise in distillate and fuel
oil demand seemed to reflect the active
stock-piling of heating oil and low sulphur
fuel oil (LSFO) in tertiary inventories for
use during the remaining winter months,
as demand for low sulphur gasoil from the
agricultural sector waned during November
(see Table B).
As a result of the combination of a modest increase in the WTI price and weaker
gross product worth (GPW), which is the
sum of each product price multiplied by
its refinery yield, the average refining margins for WTI fell in the US Gulf Coast in
November to remain barely above $1/b.
US refinery throughput decreased
further in November, sliding by 85,000
b/d to 15.49m b/d. Despite a fall of 0.5
per cent to 93.2 per cent on the month,
the US refinery utilisation rate added 1.2
per cent compared to the previous year’s
runs. (see Table C)
Rotterdam market
Average spot product prices in
Rotterdam were range-bound in November,
despite a significant fall of 4 per cent in
the price of their underlying crude, Brent.
However, the European product markets
were mainly shaped by the following
developments. Firstly, the gasoline market
was better supplied than in the previous
months, reflecting two principal factors,
which were rising refinery gasoline output
with the resolution of refinery operational
problems in the UK and Germany, and
the continuing slowdown in transatlantic
arbitrages for most of the month due to
high freight rates. Secondly, strong demand
from commercial aviation in Europe and
OPEC Bulletin
MARKET REVIEW
Table C: Refinery operations in selected OECD countries
Refinery throughput (m b/d)
Oct 03
Nov 03 Dec 03
USA
France
Germany
Italy
UK
Eur-16
Japan
15.57
1.80
2.28
1.81
1.46
12.06
3.95
15.49
1.84
2.29R
1.87
1.58R
12.41R
4.10R
15.54
1.84
2.21
1.79
1.58
12.29
4.30
Refinery utilization (%)1
Oct 03
Nov 03 Dec 03
93.7
94.6
100.7
78.8
81.6
87.8
82.9
93.2
96.5
100.9R
81.4
88.5R
90.4R
86.0R
93.5
96.5
97.7
77.8
88.2
89.5
90.1
1. Refinery capacities used are in barrels per calendar day.
R Revised since last issue.
Sources: OPEC statistics, Argus, Euroilstock Inventory Report/IEA.
rapid military airline requirements in Iraq
supported the jet fuel market. Gasoil saw
sluggish demand, affected by the mild
weather, which was further exacerbated on
news that end-user heating oil stocks in
Germany had been filled to 66 per cent by
the end of November. Thirdly, a number
of developments led to an overhang in
the regional fuel oil supply. These were
the reduction of refinery intakes of fuel
oil feedstocks on improving competitive
crude margins, the continuous flow of Russian straight-run fuel oil, increased refinery
fuel oil output, and slack purchases from
utilities in South European countries.
Brent refining margins rebounded in
November to move into positive territory,
despite rising freight costs. The exceptional
weakness of Brent was the underlying factor
behind the improvement in refining margins
as the GPW remained almost steady.
Refinery throughput in Eur-16 countries moved sharply higher by 400,000 b/d
to average 12.47m b/d in November, with
the equivalent utilisation rate rising to
90.8 per cent, representing similar levels
as in the corresponding period last year
(see Table C).
Singapore market
Average spot product prices moved in
different directions in Singapore in November, but showed unusual premiums
compared to the two aforementioned
markets (see Table B). The gasoil price
rose a considerable four per cent, followed
by a moderate one per cent increase in the
gasoline price. By contrast, the HSFO counterpart, slid one per cent, thereby balancing
out the almost one per cent increase in the
average marker crude, Dubai, for the same
period. Nevertheless, an overall analysis of
the Asian product market sheds light on
some important factors influencing them.
Firstly, the Asian gasoline market retained
the previous month’s fundamentals. Gasoline exports from China and Taiwan continued to be low as they had to meet strong
domestic demand. Furthermore, the price
of gasoline’s underlying feedstock, naphtha,
enjoyed a continuing surge of more than
$2/b in the month of November, linked
to healthy downstream industry margins.
This, together with reduced exports from
Saudi Arabia’s Aramco in early December, squeezed naphtha supply. However,
gasoline demand in Australia came to a
halt during November, as stock-piling for
the driving season ended. A second factor moving the market was the strength
of Asian demand for distillate products,
particularly for jet fuel and to a lesser
extent gasoil. A good month for Chinese
airlines, together with stockpiling of kerosene, which is widely used for heating in
most Asian countries, supported jet fuel
demand. Gasoil consumption during the
month originated mainly from China
where tight supply occurred. In contrast,
a lack of Chinese HSFO buying at a time of
continuous arrivals of foreign HSFO cargoes
resulted in a supply glut. Nonetheless, LSFO
enjoyed strong demand, supported by the
delayed restart of nuclear power generators in Japan and rising liquefied natural
gas (LNG) prices in South Korea, which
encouraged a switch to LSFO.
The relative strength in the GPW, in
comparison with the cost of Dubai, outpaced an increase in freight costs, further
boosting refining margins of the marker
crude to hover moderately above $1/b in
Singapore in November.
In Japan, refinery throughput enjoyed
another rise of 140,000 b/d to register
almost 4.1m b/d in November. This indicated a 85.8 per cent utilisation rate, a
drop of 4.4 per cent from the year before
(see Table C).
December
Average petroleum product prices continued to exhibit mixed trends in December,
with Asian product premiums exceeding
those of the US Gulf and Rotterdam
markets. Thus, refining margins soared
to a historically high level in Singapore,
while they remained moderately in positive territory in the two other centres (see
Table B).
US Gulf market
Spot product prices showed mixed
trends in the US Gulf in December. On
average, prices for gasoline and gasoil rose
four per cent and five per cent, respectively,
amid an almost four per cent increase in
WTI’s average value. The HSFO counterpart,
however, shrugged off the rise in its marker
crude WTI to plunge by seven per cent for
the same period. Nonetheless, the EIA’s
four-week average, representing major US
refinery and product activity in December,
indicated that gasoline demand declined
for the second consecutive month, sliding
further by 1.2 per cent to register nearly
8.9m b/d, although still higher than the
corresponding period last year. This came
in contrast to the expectation of heavy traffic during the holiday season.
Furthermore, the prolonged warmer
than normal temperatures from October
to December, despite several short-lived
cold snaps in some US regions, resulted in
mild weather generally dominating most of
the US during the first half of the winter
months, according to the National Oceanic and Atmospheric Administration
(NOAA). Therefore, distillate demand
fell by around three per cent below last
month’s and the previous year’s levels.
Lastly, fuel oil demand also plummeted
by 14 per cent and 18 per cent below the
level of both the previous month and the
preceding year, respectively, reflecting
largely lower utility consumption.
27
MARKET REVIEW
Average refining margins in the
US Gulf in December fell further, but
remained moderately in positive territory,
as a significant rise in the WTI price was
partially offset by a moderate increase in
the gross product worth.
US refinery throughput crept higher,
increasing by 60,000 b/d to 15.54m b/d.
The corresponding refinery utilisation rate
was 93.5 per cent, representing a 2.3 per
cent increase over the previous year’s runs
(see Table C).
Rotterdam market
Although the average price of the European marker crude Brent rose a considerable four per cent during December, the
HSFO counterpart plunged by 13 per cent.
Other product prices saw modest gains, as
gasoline edged up one per cent and gasoil
two per cent. However, an overall analysis of
the European product markets showed the
following developments. Firstly, narrowing
gasoline price differentials between Europe
and the US East Coast, coupled with
persistently high freight rates, hindered
transatlantic gasoline exports. However,
robust demand from Nigeria and Iraq via
the Eastern Mediterranean basin alleviated
the gasoline surplus in Europe. Secondly,
distillate supply was hindered by restricted
Russian exports due to increased domestic
demand. This was compounded by lower
European refinery input, which implied
lower output of the main product, distillates. Meanwhile, rising Russian fuel oil
exports, together with mild weather and
decreased efforts to send fuel oil to the Far
East market, constituted the main factors
for the prevailing abundant fuel oil supply
in the European market.
The exceptional strength of the Brent
price overwhelmed a moderate rise in light
and middle product prices. This led to a sharp
decline in Brent’s margins, though they still
roughly exhibited a value close to $1/b.
Refinery throughput in the Eur-16
countries fell to nearly 12.30m b/d in
December, representing a drop of 120,000
b/d from the preceding month’s level. The
equivalent refinery utilisation rate of 89.5
per cent represented a loss of 0.5 per cent
from the corresponding period last year
(see Table C).
Singapore market
Average spot product prices in
28
Singapore in December continued to
enjoy an unusual premium over other
world product markets, which implies
tightened supply coinciding with steady
robust demand for the light and middle
ends of the barrel. The average gasoline
price, for instance, made an impressive gain
of nearly ten per cent, followed by a five per
cent increase in the gasoil price. The fuel
oil price skidded one per cent, though the
marker crude, Dubai, tracked the opposite
direction for an average price rise of 1.6
per cent during the same period.
The Asian product market was shaped
by three main developments, the first of
which was strong gasoline fundamentals. China continued to sharply reduce
gasoline exports due to healthy domestic
demand. The Asian gasoline supply was
further exacerbated by a reduction in the
quantity of naphtha available for processing into gasoline, reflecting the diversion
of naphtha to the petrochemical industry
where it generates higher profits.
Moreover, naphtha exports from the
Middle East were cut significantly, as a
consequence of planned and unplanned
refinery outages and strong regional demand.
The second development shaping the
Asian product market was Asian refiners’
seasonal policies, which favour the main
regional heating fuel, kerosene, and jet
fuel, and, in turn, affects the gasoil supply. This, together with continuous firm
gasoil demand in China, led to a prevailing
surge in the Asian gasoil price. Thirdly,
the prolonged absence of China’s fuel oil
purchases due to governmental quota restrictions left an abundant fuel oil supply
in the market.
A combination of the relative weakness
of Dubai compared to the other marker
crudes and strong product prices supported
by robust demand and curtailed supply
added another boost to already healthy
refining margins in Singapore in December. According to an industry survey, this
resulted in average crude refining margins
in December that were the best for the last
seven years (see Table B).
Refinery throughput in Japan rose further, increasing by 200,000 b/d to 4.3m
b/d in December. This, however, indicated
a 90.1 per cent utilisation rate, a drop of
almost five per cent from last year (see
Table C).
The oil futures market
November
Aside from a brief period in the first week
of November when speculators held a netshort position of 2,988 contracts, most
of the month non-commercials showed
a more optimistic side, although always
exercising considerable caution, especially
in the second half of the month. The Commodity Futures Trading Commission’s
(CFTC) Commitments of Traders report
for the second week of November showed
a large increase in long positions (21,965
lots) while shorts gained only 2,407, resulting in a 16,750 lot return to the net-long
arena. Meanwhile, front-month WTI futures gained more than $2/b on November
11 to close at $31.15/b.
For the week ending November 18, the
CFTC reported a large increase in noncommercial long positions while shorts
remained largely unchanged for the week
ending November 18, implying that speculators had to a large extent turned bullish.
Long positions rose by more than 40,000
lots while shorts only gained 1,318 resulting in a net-long position of 56,469 lots.
Open interest gained 50,841 to 590,275
lots indicating that WTI futures trading
had become more attractive. Not surprisingly the WTI futures contract added
another $2/b during the week to surpass
the $33/b mark and close at $33.28/b
on November 18. The rally in both long
positions and WTI prices was induced by
speculators’ belief that OPEC might engineer a new production curb in its December
Meeting to counteract the seasonal drop
in demand during the forthcoming spring
season. High seasonal gasoline demand and
falling heating oil inventories in the US also
helped underpin prices. Large non-commercials disposed heavily of their long position ahead of the extended Thanksgiving
holiday weekend and OPEC’s impending
December 4 Meeting. According to the
CFTC’s Commitments of Traders report
on November 25, speculators trimmed
long positions by 25,175 lots to 82,886
and also disposed of their shorts by a mere
443 lots, leaving the net-long at 31,737
lots. The sell-off in long positions caused
WTI prices to plunge by $3.5/b in just
one week.
Curiously, speculators remained
OPEC Bulletin
MARKET REVIEW
bullish in the run-up to the OPEC Meeting, maybe in the belief that OPEC would
delay any decisions on output levels to
the beginning of next year when market
fundamentals and price trends would be
clearer. After the spike in mid-November,
prices have returned to a more moderate
and sustained level, thus, if the coming
winter generates enough demand for oil
to compensate for the rise in non-OPEC
and OPEC supply, prices should remain
within the $28–32/b range for WTI. On
the other hand, if the winter turns out to
be mild and the optimistic 900,000 b/d
expected rise in 1Q04 world oil demand
does not materialise, prices could go on a
downward spiral, especially heading into
the low demand spring season.
December
Enough factors combined to bring the
bulls out in December, with speculators
very active in the NYMEX building up
their long holdings in an attempt to profit
from a rising market. The factors which
combined to stir up investment funds’
optimistic market perception were low
US crude oil inventories, freezing winter
temperatures in the US north-east region
(a prime heating oil market), weather
forecasts predicting below normal winter
temperatures and OPEC’s decision early
in the month to keep output unchanged
although hinting that a cut might be in
the cards at OPEC’s Meeting in Algiers
on February 10.
The CFTC Commitments of Traders
Report for the week ending December 2
showed an almost unchanged net-long position with respect to the previous week,
as non-commercials awaited the outcome
of OPEC’s December 4 Meeting following the book squaring that took place
ahead of the long Thanksgiving holiday.
The CFTC report for the following week
showed a slight increase in net-long holding by non-commercials. Big speculators
added 770 lots to their net-longs which
stood at 33,221 contracts on December
9. Open interest rose in the same week by
23,851 lots to 568,500 lots underlining
the rise in interest and participation by
market makers. Taking advantage of the
cold winter temperatures and crude draw
downs in the US, which approached the
270m b perceived minimum operational
level, speculators decided to break the relative stability of the past three weeks and
bought the market heavily.
According to the Commitments of
Traders report for the week of December
16 non-commercials boosted long positions by 26,945 lots to 116,883 contacts
while short positions rose by just 3,729 lots
to 60,446, resulting in a net-long position
of 56,437 contracts. Speculators reduced
their net-long holdings during the week
of December 23 by 8,495 contracts to
47,942 on profit-taking, which induced
a fall in WTI futures prices. Further draws
on US crude stocks towards the end of the
month, which fell below the 270m b mark,
together with cold winter temperatures,
prompted non-commercials to increase
their net-long holdings by 2,645 lots to
50,587 in the week of December 30.
Continued cold weather and draws on
US crude oil stocks made large speculators
increase their net long positions by approximately 21 per cent, or 61,356 lots,
during the first week of January. In the
following week of January 13, the CFTC
report showed a small decline in the netlong positions of non-commercials. This
minor decline was inspired by the continuation of cold weather in the US north-east
and low crude oil stocks.
The tanker market
November
In November, OPEC area spot fixtures
continued to register record high levels
for the second consecutive month, standing at 15.59m b/d, an increase of 980,000
b/d over last month and a 24 per cent rise
over last year. The slight decrease in OPEC
oil production during November noted by
secondary sources does not justify the marginal gain in OPEC spot chartering. This
increase may be attributable to pre-seasonal
holiday bookings where charterers prefer
to secure tonnage ahead of Christmas and
New Year’s holidays. Another factor which
could explain the move upward was low oil
inventories which forced refiners to fill their
depleted tanks despite the high crude oil
prices. Accordingly, OPEC’s share of global
spot fixtures rose a further 3.31 per cent to
stand at about 65 per cent compared to the
October level and about 13 per cent over
last year. Most of the increment in OPEC
spot-chartering came from the non-Middle East region as fixtures on both Middle
East long-haul routes were affected by the
oil production cut effective November 1.
Middle East eastbound and westbound
long-haul spot fixtures declined slightly
by 60,000 b/d to 5.38m b/d and 40,000
b/d to 2.31m b/d, respectively. Compared
with the year-ago level, eastbound and
westbound long-haul spot fixtures were up
1.16m b/d and 410,000 b/d higher, respectively. Together, these routes accounted for
about 49 per cent of total fixtures in the
OPEC area, or five per cent less than that
registered last month. Non-OPEC spotchartering headed in the opposite direction,
declining by 690,000 b/d to 8.59m b/d,
which was 2.21m b/d or about 20 per cent
below last year’s figure. This drop pushed
non-OPEC’s share down to 36 per cent,
or about three per cent below last month’s
level. Hence, global spot fixtures moved
up a slight 290,000 b/d to 24.18m b/d
which was 1.49m b/d above the year-ago
level. Following a stagnant period, based
on preliminary estimates, sailings from the
OPEC area during the month of November
rose a remarkable 2.06m b/d to 25.04m
b/d. About one quarter of this rise came
from the Middle East, where sailings rose
550,000 b/d to 16.56m b/d. However, this
increase is not reflected in the region’s share
of sailings which fell four per cent compared
with last month’s level. Arrivals on most of
the main routes continued to show lower
figures than in the previous period, except
in Japan which moved up slightly by 80,000
b/d to 3.57m b/d. A considerable drop was
witnessed in NW Europe which fell by
860,000 b/d to 6.80m b/d, while sailings
in the US Gulf Coast, US East Coast and
the Caribbean decreased a marginal 30,000
b/d to 10.71m b/d. Sailings in Euro-Med
also declined, decreasing by 150,000 b/d
to 3.89m b/d.
During November, low crude oil
stocks in main consuming regions, combined with very tight tonnage availability,
pushed crude freight rates — particularly
VLCC rates — to an extreme high not seen
since November 2000. Increased demand
not only for November cargoes but also
for early December cargoes fueled this
rally as charterers were seeking to secure
satisfactory coverage amid concerns that
the tanker market might get very tight
29
MARKET REVIEW
before the Christmas period. Freight
rates for VLCC cargoes from the Middle
East to the Far East were twice as high as
last month, showing an extreme increase
of 72 points or 114 per cent to stand at
a monthly average of Worldscale 135.
On the Middle East to the West route,
VLCC freight rates followed the same
upward trend, soaring by 65 points or
120 per cent to reach a monthly average
of W119. Suezmax freight rates from West
Africa to the US Gulf Coast benefited from
the very tight VLCC market, displaying a
rise of 38 points or 34 per cent to stand at
a monthly average of W149. This average
was affected by a short period of low levels
in the middle of November, when rates fell
from a high of W160s to W120s on sparse
activity, but rates changed direction again
returning to a high W160s near the end
of the month. Aframax freight rates also
rose higher, especially within the Mediterranean basin, driven by a bottleneck in the
Bosporus. This helped rates to surge by 106
points or 66 per cent for a monthly average
of W266. The rise on the Mediterranean
to NW Europe route was not as high as
within the Mediterranean basin as rates
increased only 29 points or 17 per cent to
W203. Very high activity in the Caribbean
pushed prices up 56 points or 35 per cent
to W218 for cargoes from the Caribbean
to the US East Coast. Some improvement
was also seen on the Indonesia to the US
West Coast route where rates rose a slight 13
points or nine per cent to W152 on the back
of a generally healthy Aframax market.
Contrary to the previous month’s trend
where product freight rates suffered from a
lack of sufficient fixtures, rates were up on
all main routes during November, benefiting from high regional demand particularly
for the petrochemical sector. Clean freight
rates for medium-range tankers on the Middle East/Far East route gained two points
for a monthly average of W156. From
Singapore to the East, the increase was
much higher as rates reached a monthly
average of W216 or 32 points above last
month’s level. The route benefiting most
was the Mediterranean to NW Europe
route where rates surged by 101 points to
W273 due to very high activity especially
for jet fuel cargoes. Within the Mediterranean basin, rates improved less than on
other routes, increasing by only 17 points
to W214. From NW Europe to the US East
30
and Gulf Coasts, rates managed to enjoy
an 19 per cent increase or 38 points to
W239 on the back of increasing demand
from the US market where the cold weather
and low product inventories encouraged
end-users to seek higher quantities ahead of
the holiday season. US heating oil demand
helped freight rates along the Caribbean/ US
Gulf route to gain 54 points or 23 per cent
to register a monthly average of W294.
December
After two consecutive months of increases,
a holiday-filled December pushed OPEC
area spot fixtures down by nearly 40 per
cent to a level of 10.71m b/d. This was
4.16m b/d below a month ago, but at about
the same level as last year. Pre-bookings
in October and November could be the
reason behind the low seasonal level of
chartering in December when most charterers leave for year-end holidays. Hence,
OPEC’s share of global spot fixtures fell
by three per cent to 58 per cent compared
with last month, but remained about two
per cent higher than a year ago. Nearly
half of the fall occurred on Middle East
long-haul spot fixtures where Middle
East eastbound and westbound fixtures
declined by 1.40m b/d to 3.95m b/d and
by 680,000 b/d to 1.74m b/d, respectively.
Eastbound and westbound shares of total
OPEC fixtures were 37 per cent and 16
per cent, respectively, which was one per
cent higher for eastbound and flat for
westbound from the month before and a
drop of two per cent and three per cent
from a year ago. Together they accounted
for 53 per cent of total OPEC chartering
in the OPEC area, which was one per cent
higher than the level registered last month.
Non-OPEC spot fixtures followed the same
direction for similar reasons, declining by
1.75m b/d to stand at 7.62m b/d, a level
that represents a 42 per cent share of total
global chartering and a drop of 860,000
b/d below last year’s for a share loss of two
per cent. As a result, global spot chartering
displayed a massive fall of about 32 per cent
or 5.91m b/d to stand at 18.33m b/d. This
was the lowest level since August 2003, but
just 760,000 b/d below the same period
last year. According to preliminary estimates, sailings out of the OPEC area in
December rose 1.24m b/d to a monthly
average of 25.57m b/d. Sailings out of the
Middle East moved in a contrary direction,
declining by 490,000 b/d to a monthly
average of 15.66m b/d. This was about
61 per cent of total OPEC area sailings,
or five per cent below the month-ago level.
Preliminary estimates of arrivals in all main
areas displayed relatively small increases,
except in Euro-Med, which saw a minor
decline of 30,000 b/d to 4.20m b/d. Arrivals in US Gulf, US East Coast and the
Caribbean rose by 110,000 b/d to 10.56m
b/d, while in NW Europe they increased
by 330,000 b/d to 7.13m b/d. In Japan,
arrivals remained almost at last month’s
level, moving up slightly by 10,000 b/d
to 3.64m b/d.
In December, crude oil spot freight
rates touched all-time highs, mostly on
the back of very healthy demand for crude
oil in nearly all consuming regions, but
particularly in China, where oil imports
increased rapidly in the last months of
the year. The congestion in the Bosporus
Straits bolstered crude oil freight rates as
it led to a replacement of oil mostly from
the Atlantic basin, which increased the
voyage length. Rising demand for modern tonnage also contributed to the rate
boom. VLCC freight rates on the Middle
East eastbound and westbound long-haul
routes rose further by 12 per cent and
eight per cent, respectively in December
to stand at a monthly average of W153
and W129, or an increase of 18 and 10
points, respectively. Tight tonnage availability especially at the beginning of the
month, where 30-day VLCC availability
in the Middle East was hovering at around
40 vessels, encouraged ship-owners to seek
higher rates. A slight rise in 30-day VLCC
availability by the end of the month also
moved rates upwards. Suezmax was the
sector that benefited the most from the
bottleneck in the Bosporus Straits where
delays kept many tankers away from the
market for a longer than expected period.
This situation helped Suezmax freight rates
to gain considerably more than 50 per cent
on some routes. Freight rates along the
West Africa/US Gulf Coast route rose by
about 21 per cent, increasing by 31 points
to stand at a monthly average of W180.
On the NW Europe/US East-Gulf Coast
route, rates improved by 38 per cent as
healthy US demand and price differentials attracted North Sea grades by making
such high transportation costs worthwhile.
OPEC Bulletin
MARKET REVIEW
Very high activity in the Caribbean pushed
Aframax freight rates up by 18 per cent
along the Caribbean/US Gulf route, lifting them by 40 points to W258. Within
the Mediterranean and from there to NW
Europe, rates improved by about three per
cent and 16 per cent, respectively to stand
at W273 and W235, an increase of 7 and
32 points. The already high and still rising level of Aframax freight rates on the
Mediterranean/NW Europe route resulted
from higher Baltic exports as many exporters avoided the congestion in the Bosporus.
Along the Indonesia/US West Coast route,
rates also showed some improvement, increasing by 19 points to W171.
Product freight rates remained firm for
the second consecutive month, benefiting
from very high seasonal demand along all
main routes during December. Freight
rates for clean medium-range vessels on
the Middle East/Far East route rose by
20 points or about 13 per cent to stand at
W176 on relatively strong activity. From
Singapore to the East, rates enjoyed a
nearly similarly increase of 25 points or
12 per cent to stand at a monthly average of W241. This rise was mainly due
to high fixtures at the beginning of the
month, which slowed as the month wore
on, pushing rates down by a few points.
Healthy demand mainly for gasoline helped
vessel owners within the Atlantic basin to
gain 29 points or about 12 per cent to
W268 along the NW Europe/US EastGulf Coast route. In the Caribbean, rates
managed to get an increase of 33 points
to W327 due to pre-Christmas fixtures.
Within the Mediterranean basin and from
there to NW Europe, freight rates gained
44 and 35 points to stand at W258 and
W308, respectively. Strong demand and
tight tonnage availability were the main
reasons behind such buoyant levels.
World oil demand
November
Estimates for 2003
World
Further data on the actual demand
in the current year points to higher than
expected rises in 3Q consumption of
220,000 b/d in the OECD and 10,000
b/d in the FSU, partly offset by an 80,000
b/d reduction in the expected demand for
developing countries. As a result, the 3Q
average has been revised up by a substantial
150,000 b/d, while the forecast 2003 world
oil demand volume average has been raised
by 30,000 b/d to 78.36m b/d versus the
78.33m b/d in the last report. The yearly
increment, which represents the difference
between the 2002 and the 2003 averages,
has likewise been adjusted upwards by
30,000 b/d to read 1.39m b/d.
On a regional basis, 2003 demand is
forecast to rise 750,000 b/d or 1.56 per
cent in the OECD following a minor fall
of 70,000 b/d in 2002. Only a moderate
100,000 b/d or 0.50 per cent increase in
consumption is forecast in 2003 in developing countries, following much higher
growth of 180,000 b/d in 2002. Apparent
demand in the former CPEs is forecast to
grow by a considerable 540,000 b/d or 5.67
per cent, more than double the volume and
growth rate of 2002, which saw increases
of 210,000 b/d or 2.21 per cent.
On a quarterly basis, compared with
the exceptionally weak 1Q02, world
demand is estimated to have grown by a
significant 2.27m b/d or 2.96 per cent to
average 79.08m b/d in 1Q03. This is the
net effect of the colder than normal weather
in most parts of the northern hemisphere,
fuel substitution in Japan as a result of
nuclear power reactor maintenance, stockpiling ahead of the anticipated Iraq war,
and record high natural gas prices in the
US. 2Q03 consumption is estimated to
have risen by 1.08m b/d or 1.44 per cent
compared to the exceptionally weak 2Q02
thanks to the robust economic growth in
China and due to the continuation of fuel
substitution in Japan. 3Q consumption is
assumed to have grown a similar 1.04m
b/d or 1.35 per cent, while 4Q is expected
to display a somewhat higher growth of
1.17m b/d or 1.48 per cent.
OECD
The OECD consumption forecast of
48.48m b/d constitutes 62 per cent of the
total world demand in 2003 as indicated
in the previous report. Out of the forecast
1.39m b/d increment in world oil consumption in 2003, about 750,000 b/d or
nearly 54 per cent is expected to originate
in the OECD. Within the group, North
America ranks first in forecast demand
growth with 400,000 b/d, close to 54
per cent of the demand increment for the
group. OECD Pacific ranks second with
200,000 b/d, equivalent to 27 per cent and
Western Europe ranks third with 140,000
b/d, nearly 19 per cent.
Developing Countries
Oil demand in developing countries is
forecast to grow by 100,000 b/d or 0.50
per cent to 19.80m b/d. Consumption in
Latin America is expected to contract by
80,000 b/d or 1.62 per cent to average
4.67m b/d, indicating a relative improvement over the last year when demand
weakened by 120,000 b/d due to persistent economic and financial problems.
Other Asia is forecast to register highest
volume and percentage growth of 130,000
b/d or 1.74 per cent, followed by Africa
with 20,000 b/d or 0.88 per cent and the
Middle East with 20,000 b/d or 0.47 per
cent, respectively.
Other regions
Although apparent demand in the
former CPEs in 2003 is now forecast at
10.09m b/d, marginally higher than the
level mentioned in the last report, their
share of world oil consumption remains
unchanged at 13 per cent. Thanks to an
upward revision to China’s demand forecast
last month, the demand growth forecast
currently stands at 39 per cent of the total
world demand increment, equivalent to
540,000 b/d or 5.64 per cent and more than
double that in 2002. Within the group, the
apparent 5.48m b/d demand in China is
forecast to register the highest volume and
percentage growth of 440,000 b/d or 8.82
per cent, singly accounting for 32 per cent
of the total world increment. The FSU,
with an average 3.87m b/d, is expected to
experience the second highest demand rise
of 100,000 b/d or 2.61 per cent. Apparent
demand in Other Europe is expected to
experience a negligible change.
Forecast for 2004
Based on slightly higher prospects for
economic growth, the average world oil
demand forecast for 2004 has been revised
up by 50,000 b/d to 79.61m b/d, compared
with the 79.56m b/d presented in the last
report. The anticipated oil demand growth
in 2004, however, has been raised only by
10,000 b/d to 1.25m b/d to reflect the
31
MARKET REVIEW
simultaneous upward revision in average
2003 oil demand forecast, compared with
the 1.24m b/d reported in the last report.
The 3Q forecast has been raised by 160,000
b/d mostly to reflect the similar upward revision in the corresponding 2003 period.
The analysis of regional oil consumption
remains similar to that presented in the last
report. On a regional basis, oil demand is
forecast to register solid growth in all of the
three major groups of countries. Although
the demand in the OECD is expected to
grow at the lowest rate, ie 0.98 per cent,
the group is forecast to rank first through
a 470,000 b/d growth, equivalent to 38 per
cent of the total world demand increment.
Developing countries are expected to rank
second in growth rate at 2.18 per cent, with
an increment volume of 430,000 b/d, for
a 35 per cent share of world oil demand
growth. The highest percentage growth of
3.40 per cent is attributable to the former
CPEs. Their volume and share of the world
demand growth, however, ranks third at
340,000 b/d equivalent to 27 per cent of
the world increment.
Every single quarter of 2004 is forecast
to experience oil demand growth. The 1Q
is expected to account for the lowest growth
rate at 900,000 b/d or 1.14 per cent. The
2Q and the 3Qs are forecast to enjoy much
higher rises of 1.33m b/d and 1.27m b/d,
while the highest growth of 1.49m b/d or
1.86 per cent is expected in 4Q.
December
Estimates for 2003
World
Our 2003 demand estimates for 1Q,
2Q and 3Q which incorporate actual consumption data for the OECD up to the
end of the 3Q, remain basically unchanged
from the last report. Further evidence, however, points to higher than expected 4Q
consumption in China and the FSU of
200,000 b/d and 50,000 b/d, respectively,
partly offset by a 100,000 b/d reduction
in the estimated demand for the OECD
Pacific. As a result, the 4Q average has
been substantially revised up by 190,000
b/d, and the forecast average world oil
demand volume for 2003 has been raised
by 50,000 b/d to 78.41m b/d versus the
78.36m b/d presented in the last report.
The yearly increment — the difference
32
between the 2002 and the 2003 averages
— has likewise been adjusted upward by
40,000 b/d to read 1.42m b/d.
On a regional basis, demand in 2003
is estimated to have risen by 720,000 b/d
or 1.52 per cent in the OECD following a minor fall of 70,000 b/d in 2002.
Developing countries are forecast to see
only a moderate 100,000 b/d or 0.53
per cent rise in consumption in 2003,
following a much higher 180,000 b/d
growth in 2002. Apparent demand in the
former CPEs is estimated to have grown
considerably by 590,000 b/d or 6.23 per
cent, close to triple the 2002 volume and
growth rate of 210,000 b/d and 2.21 per
cent, respectively.
Since the first three quarterly averages
have undergone very minor changes, our
comments on the quarterly averages remain
very similar to those presented in the last
report. Compared with the exceptionally
weak 1Q02, world demand is estimated
to have grown significantly by 2.97 per
cent or 2.28m b/d to average 79.08m b/d
in 1Q03. 2Q03 consumption is estimated
to have risen by 1.44 per cent or 1.08m
b/d compared to the exceptionally weak
2Q02, thanks to robust economic growth
in China and due to the continuation of fuel
substitution in Japan. 3Q consumption is
assumed to have grown similarly by 1.02m
b/d or 1.32 per cent, but 4Q consumption
is expected to have undergone much higher
growth of 1.32m b/d or 1.68 per cent.
OECD
As indicated in the previous report,
OECD consumption assumed at 48.46m
b/d constitutes 62 per cent of total world
demand in 2003. Out of an estimated
1.42m b/d world oil consumption increment in 2003, about 720,000 b/d or nearly
51 per cent is expected to initiate in the
OECD. Within the group, North America
ranks first in estimated demand growth
with 390,000 b/d, close to 54 per cent
of the group demand increment. OECD
Pacific ranks second with 180,000 b/d,
equivalent to 25 per cent, and Western
Europe ranks third with 150,000 b/d,
nearly 21 per cent.
Actual consumption data suggests that
OECD January-October oil requirements
were 850,000 b/d higher compared to the
corresponding 2002 period. During this
period, similar to the January-September
period given in the last report, gasoil/diesel
was the leading volume and percentage
product gainer with a 410,000 b/d or 3.46
per cent rise in consumption due to fuel
switching in the US and across Europe.
The second volume and percentage product gainer was naphtha which experienced
100,000 b/d or 3.41 per cent growth thanks
to healthy margins in the petrochemical
sector. Direct use also experienced exceptionally high growth of 115 per cent due
to nuclear reactor maintenance in Japan.
Developing Countries
In developing countries, oil demand
is estimated to have grown by 100,000
b/d or 0.53 per cent to 19.80m b/d. Consumption in Latin America is estimated
to have contracted by 80,000 b/d or 1.62
per cent to average 4.67m b/d, indicating
a relative improvement over the last year
when demand weakened by 120,000 b/d
due to persistent economic and financial
problems. Other Asia is estimated to have
registered the highest volume and percentage growth of 130,000 b/d or 1.80 per cent,
followed by Africa and the Middle East with
20,000 b/d or 0.87 per cent and 20,000
b/d or 0.48 per cent, respectively.
Other regions
Although apparent demand in the
former CPEs in 2003 is now forecast at
10.15m b/d, or marginally higher than
the level mentioned in the last report, their
share of world oil consumption remains unchanged at 13 per cent. Due to the upward
revision in China’s consumption prospects,
the demand growth estimate now stands at
500,000 b/d or 9.85 per cent, equivalent to
35 per cent of the total world demand increment, and more than double the country’s
consumption growth in 2002. Within the
group, the apparent 5.53m b/d demand
in China is forecast to register the highest
volume and percentage growth. The FSU,
with an average of 3.88m b/d, is expected
to experience the second highest demand
rise of 100,000 b/d or 2.64 per cent, while
apparent demand in Other Europe is expected to see only a negligible change.
Forecast for 2004
Based on slightly higher prospects for
economic growth, our 2004 average world
oil demand forecast has been revised up
by 50,000 b/d to 79.66m b/d, compared
OPEC Bulletin
MARKET REVIEW
Table D: FSU net oil exports
2000
2001
20021
20032
20042
1.
2.
m b/d
1Q
2Q
3Q
4Q
Year
3.97
4.30
5.14
5.87
6.36
4.13
4.71
5.76
6.75
7.16
4.47
4.89
5.85
6.72
7.15
4.01
4.47
5.49
6.23
6.66
4.14
4.59
5.56
6.39
6.83
Estimate.
Forecast.
with the 79.61m b/d presented in the last
report. However, anticipated oil demand
growth in 2004 has been raised by only
10,000 b/d to 1.25m b/d to reflect the
simultaneous upward revision in the 2003
average oil demand forecast for 2003. The
4Q forecast has been raised by 120,000
b/d, partly to reflect the upward revision in
the corresponding 2003 period and also to
account for higher consumption prospects
in China and the FSU.
On a regional basis, oil demand is forecast to register solid growth in all of the
three major groups of countries. Demand
in the OECD is now expected to grow at
the lowest rate, 0.74 per cent or 360,000
b/d, due to lower consumption prospects
in the OECD Pacific. Demand growth
in the developing countries is forecast to
rank first with a 480,000 b/d or 2.40 per
cent growth, equivalent to 38 per cent of
the total world demand increment. The
former CPEs come in second in volume
and share of world demand growth, but
scored the highest percentage growth of
4.16 per cent at 420,000 b/d, equivalent
to 34 per cent of the world increment.
Every single quarter of 2004 is forecast
to experience oil demand growth. The 1Q
is expected to account for the lowest growth
rate of 930,000 b/d or 1.18 per cent, while
2Q and 3Q are forecast to enjoy much
higher rises of 1.36m b/d and 1.30m b/d,
respectively. The 4Q should see the highest
growth with 1.42m b/d or 1.77 per cent.
World oil supply
November
Non-OPEC
Forecast for 2003
The non-OPEC supply figure for 2003
Table E: OPEC crude oil production, based on secondary sources 1,000 b/d
Dec/
Dec 03* Nov 03
2002
2003
3Q03
Nov 03*
4Q03
Algeria
Indonesia
IR Iran
Iraq
Kuwait
SP Libyan AJ
Nigeria
Qatar
Saudi Arabia
UAE
Venezuela
864
1,120
3,428
2,000
1,885
1,314
1,969
648
7,535
1,988
2,586
1,136
1,028
3,752
1,309
2,167
1,421
2,127
744
8,706
2,240
2,288
1,160
1,011
3,766
1,046
2,130
1,425
2,179
740
8,533
2,261
2,562
1,178
1,002
3,807
1,910
2,173
1,445
2,255
739
8,332
2,171
2,550
1,184
1,002
3,825
1,836
2,179
1,444
2,260
745
8,401
2,201
2,544
1,201
994
3,838
1,945
2,169
1,443
2,271
749
8,376
2,230
2,520
24
–8
31
36
–5
–2
16
10
45
59
–30
Total OPEC
25,335
26,919
26,815
27,560
27,621
27,735
175
*
Not all sources available.
Totals may not add, due to independent rounding.
was revised down to 48.62m b/d. The 3Q
saw a significant 120,000 b/d downward
revision due to the longer maintenance
schedule and the underperformance in the
UK sector of the North Sea, while the other
quarters received only minor revisions.
The quarterly distribution now stands
at 48.62m b/d, 47.96m b/d, 48.65m b/d
and 49.22m b/d, respectively. The yearly
average increase stands at 860,000 b/d,
compared with the downwardly revised
figure for 2002.
Expectations for 2004
Non-OPEC supply for 2004 is expected to rise 1.13m b/d. Russia should
be the main contributor with an expected
490,000 b/d, followed by Chad, Angola
and Kazakhstan with 160,000 b/d, 110,000
b/d and 90,000 b/d, respectively. Colombia
also contributed to the increase with 60,000
b/d, partially offset by a 50,000 b/d decline in Oman. The quarterly distribution
now stands at 49.76m b/d, 49.14m b/d,
49.85m b/d and 50.24m b/d, respectively.
The yearly average is forecast at 49.75m
b/d.
FSU net oil exports for 2004 are
expected at 6.82m b/d, while figures for
2000–2003 remain almost unchanged
from the last report. (see Table D)
OPEC natural gas liquids
The OPEC NGL figure for 2004 is
expected to be 3.81m b/d, an increase
of 230,000 b/d over the 2003 figure of
3.58m b/d. Figures for 2000, 2001 and
2002 remain unchanged at 3.34m b/d,
3.58m b/d and 3.62m b/d, respectively,
compared with those in the last report.
OPEC crude oil production
Available secondary sources indicate that OPEC output for November
was 27.39m b/d, a decline of 50,000
b/d from the revised October figure of
27.44m b/d. Table E shows OPEC production as reported by selected secondary
sources.
December
Non-OPEC
Estimate for 2003
The non-OPEC supply figure for 2003
OPEC NGL production, 2000–04
m b/d
2000
2001
2002
1Q03
2Q03
3Q03
4Q03
2003
Change 2003/2002
2004
Change 2004/2003
3.34
3.58
3.62
3.44
3.59
3.64
3.64
3.58
–0.04
3.81
0.23
33
MARKET REVIEW
was revised up to 48.73m b/d, with the
4Q revised up a significant 390,000 b/d.
This increase was mainly contributed by
three new fields which were partially put
on stream and the full recovery from the
maintenance in the Norwegian sector of
the North Sea. Russia and Kazakhstan
also contributed to the rise which was
partially offset by some significant delays
in Chad and Angola. The other quarters
saw only minor revisions. The quarterly distribution now stands at 48.62m
b/d, 47.98m b/d, 48.68m b/d and
49.61m b/d, respectively. The yearly
average increase stands at 990,000 b/d,
compared with the downwardly revised
2002 figure.
Forecast for 2004
Non-OPEC supply for 2004 is forecast to rise 1.14m b/d. Russia is expected
to be the main contributor with around
490,000 b/d, followed by Chad with
200,000 b/d, Angola with 110,000
b/d and Kazakhstan with 70,000
b/d. Colombia is also expected to
contribute to the rise with 60,000
b/d, while Mauritania may add some
50,000 b/d and Oman is going to lose
roughly the same amount. The quarterly
distribution now stands at 49.70m b/d,
49.11m b/d, 49.84m b/d and 50.79m
b/d, respectively. The yearly average is
forecast at 49.87m b/d. The FSU’s net
oil exports for 2004 are expected to be
6.83m b/d. The 2003 figure was revised up
by 50,000 b/d to 6.39m b/d, while figures
for 2000–02 remained almost unchanged
from the last report.
The OPEC NGL figure for 2004 is forecast at 3.81m b/d, an increase of 230,000
b/d over the 2003 figure of 3.58m b/d.
Figures for 2000–2002 remain unchanged
at 3.34m b/d, 3.58m b/d and 3.62m b/d,
respectively, compared with the figures in
the last report. (see Table D)
OPEC crude oil production
Available secondary sources indicate that OPEC output for December was 27.73m b/d, an increase of
170,000 b/d from the revised November
figure of 27.56m b/d. Table E shows
OPEC production as reported by selected
secondary sources. OPEC 4Q production
averaged 27.62m b/d and the 2003 yearly
average stood at 26.92m b/d.
34
OPEC NGL production, 2000–04
m b/d
2000
2001
2002
1Q03
2Q03
3Q03
4Q03
2003
Change 2003/2002
2004
Change 2004/2003
3.34
3.58
3.62
3.44
3.59
3.64
3.64
3.58
–0.04
3.81
0.23
Rig count
November
Non-OPEC
Rig activity rose in November. North
America gained 27 rigs, compared to October. Canada added 18 rigs to reach 412
and the US saw an increase of ten rigs to
1,118, while Mexico dropped one rig to
107. Western Europe’s rig activity showed
a continuing decline of three rigs to 72.
Rig activity in Australia was also down by
three rigs to 12, while Other Asia witnessed
a loss of nine rigs to 113.
OPEC
OPEC’s rig count was 225 in November, an increase of 9 rigs compared with
the October figure. Algeria added two rigs
to 19 and Venezuela gained 3 rigs to 47
over the month before.
December
Non-OPEC
Rig activity rose in December. North
America gained seven rigs, compared with
the November figure. Canada and US rig
activities increased by five rigs to 417
and two to 1,114 rigs, respectively, while
Mexico remained unchanged at 107 rigs.
Western Europe’s rig activity increased by
six rigs to 78, solely contributed by the
UK which was up by eight rigs to 21 and
partially offset by a decline in the rest of the
group. Africa, Other Asia and Middle East
witnessed an increase of six, five and four
rigs to 56, 118 and 69 rigs, respectively.
OPEC
OPEC’s rig count was 229 in December, an increase of four rigs when compared
with the November figure. Iran was the
major contributor to the rise adding three
rigs to 39.
Stock movements
November
USA
Commercial oil stocks in the US registered a massive draw of 12.7m b at a rate
of 450,000 b/d to 953.8m b during the
period October 31–November 28. Both
crude oil and products contributed to the
draw, decreasing by 7.6m b to 284.3 and
5.0m b to 669.5m b, respectively. Crude oil
stocks began the period rising to 294.0m
b in the week ending November 14 as
crude oil imports reached 10.34m b/d.
However, directions changed during the
last two weeks with crude oil stock levels
and imports declining. Indeed, US crude
oil imports averaged 9.1m b/d in the week
ending November 28, down 230,000 b/d
from the previous week. For the last four
weeks, crude oil imports averaged 9.64m
b/d, more or less unchanged from the average over the same period last year. Although
it is still too early to determine the origin
of the weekly crude oil imports, Iraqi crude
oil exports appear to be the highest since
the resumption of exports after the war.
Another reason behind the draw on crude
oil stocks could be associated with the increase in refinery inputs, which moved up
290,000 b/d to 15.5m b/d during the week
ending November 28, corresponding to a
utilisation rate of 93.5 per cent. Almost all
of this increase was seen in the East Coast
(PADD 1), where crude runs returned to
levels seen a few weeks earlier. Crude oil
inputs to refineries have averaged 15.28m
b/d during the last four weeks, 150,000
b/d less than last year at the same time. On
the product side, distillate fuel oil stocks
registered a draw of 1.6m b to 131.1m b,
mainly due to high demand, which was
4.9 per cent above last month’s. But the
week ending November 28 saw a rise of
2.8m b in distillate stocks compared to the
previous week, with most of the increase in
low-sulphur (diesel) distillate fuel. At this
level, distillate stocks are 5.6 per cent above
OPEC Bulletin
MARKET REVIEW
last year at the same period, while heating
oil stocks showed a year-on-year surplus
of around 3.2 per cent. Gasoline stocks
moved up 5.8m b to 197.1m b to follow
a seasonal pattern, but still remained at a
3.7 per cent y-o-y deficit. This build was
observed gradually over the last four weeks,
with a surge of 4.3m b during the week
ending November 28. Gasoline demand
averaged 9.0m b/d over the last four weeks,
a decline of 1.9 per cent compared to last
month, but still 2.6 per cent above last year
at the same time. Residual fuel and jet fuel
oil stocks moved in different directions.
Residual fuel oil stocks increased 1.7m b
to 35.3m b on the back of a substantial
rise in imports, while jet fuel inventories
registered a draw of 2.0m b to 37.8m b
on the declining imports.
During the same period, the Strategic
Petroleum Reserve (SPR) continued its
build, increasing by 3.4m b, to reach a
new record of 633.4m b, 38m b higher
than last year’s level at the same time.
During the week ending December 5,
total commercial oil stocks showed a significant draw of 4.9m b to 948.9m b compared
to the previous week, widening the y-o-y
deficit to three per cent or around 30m b.
The bulk of this draw came from crude oil
stocks which declined 6.4m b to 277.9m
b as refiners stepped up production.
Crude oil refinery inputs averaged nearly
15.7m b/d, up 210,000 b/d, which corresponded to a refinery utilisation rate of
94.2 per cent or 0.7 per cent above a week
earlier. At the same time, crude oil imports
rose 400,000 b/d to around 9.5m b/d, with
virtually all the increase in the Gulf Coast
region (PADD III). With the drop in crude
oil stocks, the y-o-y shortage stood at about
3.1 per cent or 8.8m b. On the product
side, data showed some improvement.
Indeed, distillate stocks climbed by 1.0m
b to 131.1m b, registering 5.5 per cent
or 6.4m b above last year’s level. In the
meantime, heating oil stocks registered
a build of 200,000 b to 55.9m b, which
was a comfortable 5.5m b increase over
this time last year. The build in distillate
stocks was mainly due to high production
as refiners were concerned about heating
oil supplies in winter. The build of 3.4m
b to 200.5m b in gasoline stocks followed
the usual seasonal pattern at this time of
the year, but remained 5.8m b or 2.8 per
cent below last year’s level. The apparent
demand for gasoline was 8.77m b/d, a drop
of 200,000 b/d from the previous weeks.
The SPR continued the upward trend, increasing by 800,000 b to 634.2m b, around
38m b above the same period last year.
Western Europe
Total oil stocks in Eur-16 reversed the
previous two months’ pattern of drawdowns, increasing by 1.3m b or 40,000
b/d to 1,057.1m b. A moderate rise of 5.9m
b to 619.8m b in total products was nearly
offset by a decrease of 4.6m b to 437.3m b
in crude oil stocks. This build left total oil
inventories a slight 0.2 per cent or 2.3m
b below last year at the same period. The
draw on crude oil stocks came as refineries returned from a heavy turnaround of
autumn maintenance. In fact, crude runs
rose 250,000 b/d to 12.3m b/d, equivalent
to a 93.9 per cent utilisation rate or 1.9
per cent above the October level. With
this draw, the y-o-y deficit is also around
1.9 per cent or 8.5m b.
Distillate stocks, which include heating
oil, diesel and jet fuel, registered a slight
draw of 200,000 b to 347.0m b. This small
change occurred as high demand absorbed
the increase in production and a steady flow
of imports from Russia. At this level, distillate stocks remained at a comfortable level
of 2.4 per cent or 8m b above a year earlier.
Gasoline stocks rose 2.9m b to 138.4m b,
their highest level since May 2003. This was
mainly due to high production combined
with closed transatlantic gasoline arbitrage.
Fuel oil inventories continued upward for the
third successive month increasing by 2.3m
b to 113.6m b. This build came due to an
increase in refinery throughputs and a rise in
Russia’s exports. However, despite this build,
the y-o-y deficit remains at 5.5 per cent.
Japan
In October, Japan’s commercial oil
stocks experienced a large draw of 12m
b at a rate of 400,000 b/d to 191.7m b.
This draw, the first since March 2003, was
attributed mainly to a decline of 10.7m b
to 111.9m b in crude oil and, to a lesser
extent, a decrease in total product stocks of
1.3m b to 79.8m b. Despite this draw, total
commercial stocks remained at a comfortable level of 8.3 per cent. The massive draw
registered in crude oil stocks was a result
of the decline in crude oil imports combined with the rise in crude throughput.
Indeed, crude oil imports fell by 1.5 per
cent to 3.73m b/d from last month and
around 2.7 per cent from last year, while
crude oil throughput rose by seven per cent
to 3.96m b/d compared to the previous
month and by six per cent above a year ago.
This is equivalent to refinery operations
of 80 per cent compared with 75 per cent
a year earlier. Despite the draw on crude
oil stocks, the y-o-y surplus remained at a
comfortable level of 6.4 per cent. Middle
distillates registered a slight draw of 2.0m b
to 45.9m b, but remained 9.9 per cent above
last year’s level at the same time. The distillate component kerosene, which is used
for heating oil in Asia, declined by 2.2 per
cent despite a high increase in imports as
domestic oil companies boosted flows from
overseas to help compensate for the loss
in domestic capacity after the closure of
the Idemitsu Kosan refinery ahead of the
winter season. However, kerosene stocks
stood at a comfortable level of 12.8 per
cent. Another middle distillate component
“fuel oil B.C.”, which is used by oil-fired
thermal power stations, rose 9.4 per cent
compared to the previous month or 38.1
per cent from a year ago as most of the
Tokyo Electric Power Company’s (TEPCO)
generators have been shut down and might
remain so until the end of the year.
December
USA
Commercial oil stocks registered a
massive draw of 21.9m b or a rate of
680,000 b/d to 931.9m b at the end of
December 2003 compared to the previous
month. Both crude oil and “other oils”
contributed to this draw, while gasoline,
distillate and residual fuel stocks showed
an increase. At the same time, the SPR
continued its upward trend. Crude oil
stocks hit their lowest level since 1975,
dropping to 269.0m b, which was 8.5m
b or 3.1 per cent below this time last year
and 1.0m b below the minimum operational inventory level. Stocks have also
fallen to historic lows in terms of days of
refinery throughput, dropping to around
17.6 days compared to the previous low
of 17.7 days seen in August 2003. Crude
oil imports averaged 9.46m b/d, a loss of
160,000 b/d from the previous month, but
720,000 b/d above a year ago. Crude oil
inputs stayed more or less unchanged at
35
MARKET REVIEW
15.32m b/d, an increase of 420,000 b/d from
last year’s figure. Neither of the previous two
factors explains the large draw on crude oil
stocks. However, the SPR registered a build
of 4.8m b to 638.2m b, widening the y-on-y
supply to 39m b. Gasoline stocks jumped by
9.2m b to 206.3m b, narrowing the y-o-y
deficit to 2.9m b, a build which occurred
despite the decline in apparent demand
typically seen at this time of year. Distillate
inventories also rose 4.4m b to 135.5m b, an
increase of 2.1m b above the same time last
year. The combination of the rise in output
with the increase in imports was the reason
behind the build. During the week ending
January 9, total commercial oil stocks registered a slight draw of 3.6m b to 928.3m
b, leaving them at 9.2m b or one per cent
below last year at the same time. Commercial
crude oil stocks showed a surprising further
draw of 5m b to 264.0 pushing them 12.4
or 4.5 per cent below a year earlier. The
fall in crude oil imports of 550,000 b/d to
9.21m b/d was the main reason behind
this draw, which was in contradiction to
expectations that refineries would build
their crude oil stocks after having drawn
them at the end of the year for tax and accounting purposes. On the product side,
distillate stocks registered an contra-seasonal
build of 2.8m b to 138.3m b, putting them
at a comfortable y-o-y level of 9.9m b or
7.7 per cent. Heating oil stocks rose 1m
b to nearly 57m b, some 5.7m b more
than the year-ago level. This assumes that
tertiary inventory had been sufficiently
filled earlier to cope with the upcoming
winter. Gasoline stocks continued their
seasonal build, increasing by 2.1 y-o-y to
over 40m b.
Western Europe
Total stocks in the EU-16 moved
slightly down by 0.52m b or 20,000 b/d
to 1,059.2m b, an increase of 13m b or
1.3 per cent above the previous year. Crude
oil inventories rose 0.73m b to 440.19m
b, reaching a comfortable level of 10.3m
b or 2.4 per cent above the same time last
year. This increase came as refinery crude
runs dropped by 120,000 b/d after reaching a high rate of 12.4m b/d last month.
However, refinery runs are still 140,000
b/d above a year ago. This corresponds
to a utilisation rate of 93.8 per cent, or
a loss of 0.9 per cent from the previous
month, but a y-o-y rise of 1.5 per cent.
36
On the product side, middle distillates
fell seasonally by 1.95m b to 345.8m
b, but remained more than 7m b above
last year. The decline in distillate stocks,
which include heating oil, diesel and jet
fuel, came amid strong demand, lower
refinery output and a steady flow of Russian imports, which remained close to an
18-month low. Gasoline stocks continued
their seasonal build for the fourth successive
month, rising by 1.3m b to 139.7m b, an
increase of roughly 1m b or 0.5 per cent
above last year’s level. Lack of demand
and restrained exports to the US due to
high freight costs were behind the build in
gasoline inventories. Fuel oil stocks dropped
just 0.58m b to 110.7m b, which was 5.3m
b or 4.6 per cent below December last year.
This draw mainly reflects the decline in refinery output.
Japan
Japan’s commercial oil stocks registered
a considerable draw in November of 12.5m
b or 420,000 b/d to 179.2m b, mainly on
the massive decrease in crude oil stocks.
However, Japanese stocks remained at a
comfortable level of 12.2m b or 7.3 per
cent above the same time last year. Crude
oil stocks also showed a huge draw of 14.7m
b, dropping to 97.2m b, their lowest level
since February 2002, and are now around
2m b below year ago levels. This draw came
as Japan’s crude oil imports marked the
steepest y-o-y decline since March 2003.
Indeed, crude oil imports fell 3.6 per
cent compared to the previous month,
but 13.4 per cent compared to last year
at the same time. This year’s milder winter
is one factor behind the decline, as well
as the large volume of imports posted last
year as demand rose with the shut-down
of TEPCO’s nuclear reactors. Middle
distillate stocks continued their upward
trend increasing by 2.1m b to 48.0m b,
widening the y-o-y surplus to 10.5m b or
28 per cent. Japanese kerosene inventories
— the main component of middle distillate
stocks — have remained at high levels for
several months, and are now at 40 per cent
above last year at the same time.
Balance of supply/demand
November
Table I shows the supply/demand bal-
ance for 2003, with a downward revision
to total non-OPEC supply of 20,000 b/d
to 52.20m b/d and an upward revision to
world oil demand of 30,000 b/d to 78.36m
b/d, resulting in an estimated annual difference of around 26.16m b/d.
This represents a minor rise of 50,000
b/d from the last report’s figure, with a quarterly distribution of 27.02m b/d, 24.75m b/d,
25.81m b/d and 27.08m b/d, respectively.
Minor downward revisions were made to
the balance in the 1Q and 2Q, while the
3Q has been revised down significantly by
280,000 b/d. The quarterly balance figures
now stand at –250,000 b/d, 1.71m b/d
and 990,000 b/d, respectively.
The summarised supply/demand
balance table for 2004 shows world oil
demand expected at 79.61m b/d and
total non-OPEC supply anticipated at
53.56m b/d. This has resulted in a difference of around 26.05m b/d, with a
quarterly distribution of 26.61m b/d,
24.65m b/d, 25.63m b/d and 27.30m
b/d, respectively.
December
Table I shows the supply/demand balance for 2003, with an upward revision to
total non-OPEC supply of 110,000 b/d
to 52.31m b/d and to world oil demand
of 50,000 b/d to 78.41m b/d, resulting in
an estimated annual difference of around
26.10m b/d. This represents a minor decline of 60,000 b/d from the last report
figure, with a quarterly distribution of
27.02m b/d, 24.74m b/d, 25.79m b/d
and 26.87m b/d, respectively. Minor
revisions were made to the balance of
the first three quarters, while the 4Q
has been introduced for the first time in
this report and is estimated at 750,000
b/d. The quarterly balance figures now
stand at –250,000 b/d, 1.73m b/d,
1.03m b/d and 750,000 b/d, respectively. The balance for 2003 now averages
820,000 b/d.
The summarised supply/demand
balance table for 2004 shows world
oil demand expected at 81.55m b/d
and total non-OPEC supply expected
at 53.67m b/d. This has resulted in a
difference of around 25.99m b/d, with
a quarterly distribution of 26.69m b/d,
24.72m b/d, 25.68m b/d and 26.86m
b/d, respectively.
OPEC Bulletin
MARKET REVIEW
Table F: US onland commercial petroleum stocks1
Crude oil (excl SPR)
Gasoline
Distillate fuel
Residual fuel oil
Jet fuel
Unfinished oils
Other oils
Total
SPR
mb
Oct 31, 03
Nov 28, 03
Jan 2, 04
291.9
191.3
132.7
33.6
39.8
84.6
192.6
966.5
630.0
284.3
197.1
131.1
35.3
37.8
84.0
184.3
953.8
633.4
269.0
206.3
135.5
38.8
38.1
76.1
168.1
931.9
638.2
Change
Dec/Nov
–15.30
9.20
4.40
3.50
0.30
–7.90
–16.20
–21.90
4.80
Jan 2, 03
277.5
209.2
133.4
31.3
39.3
75.9
180.9
947.4
599.1
1. At end of month, unless otherwise stated.
2. Latest available data at time of publication.
mb
Oct 03
Nov 03
Dec 03
443.3
136.0
22.0
346.5
110.3
614.8
1,058.1
439.5
138.4
22.9
347.7
111.3
620.2
1,059.7
440.2
139.7
22.9
345.8
110.7
619.0
1,059.2
1. At end of month, and includes Eur-16.
Change
Dec/Nov
Dec 02
0.7
1.3
0.0
–1.9
–0.6
–1.3
–0.5
440.2
139.7
11.5
338.6
116.0
605.8
1,046.0
Source: Argus Euroilstock.
Table H: Japan’s commercial oil stocks1
Crude oil
Gasoline
Middle distillates
Residual fuel oil
Total products
Overall total2
mb
Sept 03
Oct 03
Nov 03
122.6
12.9
47.9
20.3
81.1
203.7
111.9
12.9
45.9
21.0
79.8
191.7
97.2
13.3
48.0
20.7
82.0
179.2
1. At end of month.
2. Includes crude oil and main products only.
264.0
208.4
138.3
39.2
40.0
75.1
163.3
928.3
639.3
Source: US/DoE-EIA.
Table G: Western Europe onland commercial petroleum stocks1
Crude oil
Mogas
Naphtha
Middle distillates
Fuel oils
Total products
Overall total
Jan 9, 042
Change
Nov/Oct
–14.7
0.4
2.1
–0.3
2.2
–12.5
Nov 02
99.2
12.9
37.5
17.5
67.8
167.0
Source: MITI, Japan.
37
MARKET REVIEW
Table I: World crude oil demand/supply balance
World demand
OECD
North America
Western Europe
Pacific
FSU
Other Europe
China
(a) Total world demand
Non-OPEC supply
OECD
North America
Western Europe
Pacific
FSU
Other Europe
China
Processing gains
Total non-OPEC supply
OPEC NGLS and non-conventionals
(b) Total non-OPEC supply
and OPEC NGLs
m b/d
1999
2000
2001
2002 1Q03 2Q03 3Q03 4Q03
2003 1Q04 2Q04 3Q04 4Q04
2004
47.7
23.8
15.2
8.7
18.9
4.0
0.8
4.2
75.5
47.8
24.1
15.1
8.6
19.2
3.8
0.7
4.7
76.2
47.8
24.0
15.3
8.5
19.5
3.9
0.7
4.7
76.7
47.7
24.2
15.1
8.5
19.7
3.8
0.7
5.0
77.0
49.4
24.6
15.2
9.6
19.5
4.0
0.8
5.4
79.1
47.2
24.2
15.0
8.0
19.6
3.3
0.7
5.5
76.3
48.0
24.8
15.3
7.9
20.0
3.7
0.7
5.8
78.1
49.3
24.7
15.4
9.2
20.1
4.5
0.8
5.5
80.1
48.5
24.6
15.2
8.7
19.8
3.9
0.7
5.5
78.4
49.6
24.8
15.3
9.6
19.9
4.1
0.8
5.7
80.0
47.5
24.4
15.1
8.0
20.1
3.5
0.8
5.7
77.7
48.4
25.1
15.4
7.9
20.5
3.8
0.7
6.0
79.4
49.8
25.1
15.6
9.1
20.6
4.6
0.8
5.8
81.6
48.8
24.9
15.3
8.6
20.3
4.0
0.8
5.8
79.7
21.3
14.0
21.9
14.2
21.8
14.3
21.9
14.5
22.2
14.8
21.4
14.6
21.6
14.8
22.0
14.8
21.8
14.7
22.3
14.8
21.5
14.6
21.7
14.9
22.1
14.9
21.9
14.8
6.6
6.8
6.7
6.6
6.7
6.2
6.1
6.6
6.4
6.7
6.2
6.1
6.6
6.4
0.7
10.7
7.5
0.2
3.2
1.6
44.5
3.2
0.8
10.9
7.9
0.2
3.2
1.7
45.7
3.3
0.8
10.9
8.5
0.2
3.3
1.7
46.4
3.6
0.8
11.2
9.3
0.2
3.4
1.7
47.7
3.6
0.7
11.2
9.9
0.2
3.4
1.8
48.6
3.4
0.6
11.1
10.1
0.2
3.4
1.8
48.0
3.6
0.7
11.4
10.4
0.2
3.4
1.8
48.7
3.6
0.6
11.5
10.7
0.2
3.4
1.8
49.6
3.6
0.7
11.3
10.3
0.2
3.4
1.8
48.7
3.6
0.7
11.7
10.4
0.2
3.4
1.8
49.7
3.6
0.6
11.6
10.6
0.2
3.4
1.8
49.1
3.8
0.7
11.9
11.0
0.2
3.4
1.8
49.8
3.9
0.6
12.0
11.3
0.2
3.4
1.8
50.8
3.9
0.7
11.8
10.8
0.2
3.4
1.8
49.9
3.8
47.7
49.1
50.0
51.4
52.1
51.6
52.3
53.3
52.3
53.3
52.9
53.7
54.7
53.7
27.2
77.2
0.5
25.3
76.7
–0.3
26.8
78.8
–0.3
26.5
78.0
1.7
26.8
79.1
1.0
27.6
80.9
0.7
26.9
79.2
0.8
2621
1285
3906
1045
831
5782
2465
1343
3807
1018
815
5641
2407
1357
3764
1007
857
5629
2525
1361
3886
1039
886
5811
2569
1379
3948
1056
873
5877
55
27
82
51
28
79
51
29
80
53
28
81
52
28
80
4.6
26.7
5.6
25.6
5.9
27.0
6.7
24.7
6.7
25.8
6.2
26.9
6.4
26.1
6.4
26.7
7.2
24.7
7.1
25.7
6.7
26.9
6.8
26.0
OPEC crude supply and balance
OPEC crude oil production1
26.5 28.0
Total supply
74.2 77.1
Balance2
–1.4
0.9
Stocks
Closing stock level (outside FCPEs) m b
OECD onland commercial
2446 2530
OECD SPR3
1284 1268
OECD total
3730 3798
Other onland
997 1016
Oil-on-water
808
876
Total stock
5535 5690
Days of forward consumption in OECD
Commercial onland stocks
51
53
SPR
27
27
Total
78
79
Memo items
FSU net exports
3.4
4.1
[(a) — (b)]
27.9 27.1
1. Secondary sources.
3. Korean government stocks are now included in Total OECD.
2. Stock change and miscellaneous.
Note: Totals may not add up due to independent rounding.
Table I above, prepared by the Secretariat’s Energy Studies Department, shows OPEC’s current forecast of world supply and demand for oil
and natural gas liquids.
The monthly evolution of spot prices for selected OPEC and non-OPEC crudes is presented in Tables One and Two on page 40, while
Graphs One and Two (on pages 39 and 41) show the evolution on a weekly basis. Tables Three to Eight, and the corresponding graphs on
pages 42–47, show the evolution of monthly average spot prices for important products in six major markets. (Data for Tables 1–8 is provided
by courtesy of Platt’s Energy Services).
38
OPEC Bulletin
MARKET REVIEW
Graph 1:
Evolution of spot prices for selected OPEC crudes
September to December 2003
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39
MARKET REVIEW
Table 1: OPEC spot crude oil prices, 2003
Member
Country/
Crude (API°)
($/b)
May Jun
Jul
Aug Sept Oct
4Wav 4Wav 5Wav 4Wav 5Wav 4Wav
1W
2003
November
2W
3W
4W
4Wav
1W
2W
December
3W
4W
5W
5Wav
Algeria
Saharan Blend (44.1) 25.24
27.20
27.91
29.59
27.29
29.87
27.99
29.23
29.83
28.72
28.94
28.91
29.75
30.49
29.79
29.92
29.77
Indonesia
Minas (33.9)
28.76
27.19
27.33
28.38
26.74
29.67
28.97
30.15
30.70
30.67
30.12
31.19
32.05
32.62
32.49
32.10
32.09
IR Iran
Light (33.9)
23.06
24.43
26.03
28.62
26.66
28.79
26.90
27.91
28.44
27.31
27.64
27.60
28.59
29.34
28.57
28.67
28.55
Iraq
Kirkuk (36.1)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Kuwait
Export (31.4)
24.35
25.50
26.70
27.78
25.78
27.67
26.65
27.90
28.46
28.04
27.76
27.43
28.13
28.95
28.54
28.20
28.25
SP Libyan AJ
Brega (40.4)
25.72
27.29
28.21
29.53
27.29
30.05
28.10
29.08
29.75
0.00
28.98
29.17
30.17
30.68
0.00
30.04
30.02
Nigeria
Bonny Light (36.7)
25.78
27.46
28.39
29.79
27.47
29.59
28.07
29.29
29.73
28.61
28.93
28.74
29.64
30.41
29.62
29.77
29.64
Saudi Arabia
Light (34.2)
Heavy (28.0)
24.92
24.19
26.15
25.37
27.24
26.68
28.36
27.63
26.41
24.92
28.26
26.87
27.22
25.92
28.87
26.97
29.42
27.52
29.00
27.10
28.63
26.88
28.39
26.49
29.08
26.93
29.90
27.75
29.48
27.33
29.14
26.99
29.20
27.10
UAE
Dubai (32.5)
24.31
25.46
26.66
27.66
25.52
27.42
26.51
27.75
28.30
27.93
27.62
27.28
27.97
28.79
28.32
27.93
28.06
Venezuela
Tia Juana Light1 (32.4) 24.56 26.23 26.71 27.52 24.64 26.60 25.54 26.83 27.94 26.43 26.69 26.25 27.24 28.47 28.17 27.85 27.60
OPEC Basket2 25.60 26.74 27.43 28.63 26.32 28.54 27.33 28.65 29.36 28.47 28.45 28.43 29.29 30.19 29.74 29.53 29.44
Table 2: Selected non-OPEC spot crude oil prices, 2003
Country/
Crude (API°)
May Jun
Jul
Aug Sept Oct
4Wav 4Wav 5Wav 4Wav 5Wav 4Wav
($/b)
1W
2003
November
2W
3W
4W
4Wav
1W
2W
December
3W
4W
5W
5Wav
Gulf Area
Oman Blend (34.0) 24.53
25.64
26.80
27.96
26.09
27.97
26.82
28.08
28.64
28.16
27.93
27.59
28.29
29.10
28.74
28.45
28.43
Mediterranean
Suez Mix (Egypt, 33.0) 22.84
24.07
25.69
27.59
24.70
27.02
25.37
26.67
27.16
25.49
26.17
25.48
26.14
26.52
25.65
25.67
25.89
North Sea
Brent (UK, 38.0)
25.79
Ekofisk (Norway, 43.0) 25.85
27.44
27.48
28.34
28.43
29.78
29.83
27.32
27.40
29.85
29.94
27.85
28.11
28.83
29.14
29.50
29.62
28.55
28.58
28.68
28.86
28.92
28.85
29.92
29.68
30.48
30.35
29.92
29.63
29.84
29.61
29.82
29.62
Latin America
Isthmus (Mexico, 32.8) 25.61
27.48
27.79
29.08
26.18
28.38
27.03
28.40
29.57
27.97
28.24
28.26
29.33
30.66
30.33
29.99
29.71
North America
WTI (US, 40.0)
28.23
30.71
30.61
31.60
28.55
30.43
29.49
31.21
32.50
30.57
30.94
30.76
31.65
33.19
32.52
32.61
32.15
Others
Urals (Russia, 36.1) 23.96
25.68
26.92
28.67
25.88
28.17
25.89
27.53
28.24
27.52
27.30
27.45
28.41
28.87
27.35
27.42
27.90
1. Tia Juana Light spot price = (TJL netback/Isthmus netback) x Isthmus spot price.
2. OPEC Basket: an average of Saharan Blend, Minas, Bonny Light, Arabian Light, Dubai, Tia Juana Light and Isthmus.
Kirkuk ex Ceyhan; Brent for dated cargoes; Urals cif Mediterranean. All others fob loading port.
Sources: The netback values for TJL price calculations are taken from RVM; Platt’s Oilgram Price Report; Reuters; Secretariat’s calculations.
40
OPEC Bulletin
MARKET REVIEW
Graph 2:
Evolution of spot prices for selected non-OPEC crudes
September to December 2003
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41
MARKET REVIEW
Table 3: North European market — spot barges, fob Rotterdam
($/b)
naphtha
regular gasoline
unleaded
premium gasoline
unleaded 95
gasoil
jet kero
fuel oil
1%S
fuel oil
3.5%S
2001
December
17.48
19.77
19.16
21.35
23.11
14.98
14.95
2002
January
February
March
April
May
June
July
August
September
October
November
December
21.42
23.77
28.27
29.29
27.68
24.33
28.20
30.23
33.46
31.55
28.67
34.20
20.87
21.18
25.63
29.77
29.14
28.90
30.61
30.95
32.40
32.04
27.75
31.17
20.93
21.17
25.74
29.94
28.94
29.02
30.77
31.14
32.63
32.16
27.88
31.34
21.55
21.69
25.05
26.53
26.54
25.97
27.80
28.95
31.54
31.23
28.52
32.63
23.46
23.43
26.73
28.01
28.99
28.04
29.11
30.46
34.19
33.36
30.48
33.21
16.20
14.70
17.25
19.51
19.93
19.32
21.18
21.49
24.33
27.20
23.59
26.11
15.25
15.52
17.86
19.93
21.02
19.94
21.02
21.68
24.02
22.44
18.40
19.99
2003
January
February
March
April
May
June
July
August
September
October
November
December
40.35
43.96
40.60
29.40
28.03
32.26
32.81
34.97
32.66
35.69
37.49
39.45
35.19
39.13
35.98
34.09
31.74
32.92
35.17
38.00
33.64
33.66
33.51
33.78
35.31
39.15
36.06
34.38
32.06
33.15
35.36
38.04
33.70
33.71
33.54
33.84
35.22
41.16
39.61
29.59
29.00
30.57
31.08
32.47
29.84
33.92
34.21
35.02
36.66
43.08
42.75
31.66
30.30
31.72
32.98
34.52
32.23
36.35
37.57
39.08
26.83
30.77
26.86
23.10
21.68
25.14
25.56
25.86
23.84
24.23
23.08
20.63
25.97
25.93
21.91
18.61
20.29
21.57
24.15
23.72
21.64
22.63
22.56
19.55
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Sources: Reuters; as of 2002 Platts. Prices are average of available days.
Graph 3: North European market — spot barges, fob Rotterdam
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42
OPEC Bulletin
MARKET REVIEW
Table 4: South European market — spot cargoes, fob Italy
naphtha
($/b)
gasoline premium
unleaded 95
0.15g/l
gasoil
fuel oil
1%S
fuel oil
3.5%S
2001
December
16.91
19.11
39.69
27.58
15.15
13.15
2002
January
February
March
April
May
June
July
August
September
October
November
December
17.55
19.42
23.43
24.48
22.88
22.05
23.79
24.92
27.95
26.18
23.45
27.71
19.89
20.06
24.07
28.27
27.80
26.23
28.45
29.21
31.79
31.13
26.78
30.57
20.67
21.47
26.34
30.24
29.46
29.31
30.40
30.82
32.26
31.41
27.11
30.86
22.37
21.29
24.15
28.27
25.48
25.48
26.92
28.23
30.56
29.86
27.91
32.02
17.26
15.37
17.99
20.31
20.01
20.21
20.43
21.45
25.07
24.28
21.26
24.07
14.18
14.77
16.33
18.39
19.18
18.56
19.27
20.04
22.53
20.58
16.99
18.32
2003
January
February
March
April
May
June
July
August
September
October
November
December
33.02
35.86
32.05
22.88
22.24
26.31
26.84
28.57
26.78
29.45
30.43
31.90
34.20
38.05
33.75
29.69
28.97
31.51
34.10
37.21
32.33
33.18
32.79
33.08
34.44
38.22
33.99
29.96
29.28
31.78
34.33
37.40
32.59
33.43
33.05
33.33
35.05
40.11
39.45
27.14
26.72
29.88
29.50
31.49
29.46
34.99
33.79
33.87
29.15
31.05
28.10
21.14
21.57
25.01
27.39
27.66
22.91
24.81
23.93
21.60
23.71
24.65
20.94
18.18
18.46
20.94
23.29
22.64
20.49
21.48
20.33
16.68
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Graph 4: South European market — spot cargoes, fob Italy
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43
MARKET REVIEW
Table 5: US East Coast market — spot cargoes, New York
($/b, duties and fees included)
regular gasoline
unleaded 87
gasoil
jet kero
fuel oil
0.3%S
fuel oil
1%S
fuel oil
2.2%S
2001
December
21.73
21.90
22.52
20.01
16.52
15.28
2002
January
February
March
April
May
June
July
August
September
October
November
December
22.53
23.01
28.94
31.00
29.18
29.78
31.90
31.96
32.61
34.44
31.43
33.59
22.23
22.51
26.48
27.78
27.70
26.89
28.26
29.22
32.25
31.98
29.98
34.21
23.35
23.96
27.00
28.61
28.70
28.34
29.84
31.31
34.11
33.97
30.79
34.67
19.23
18.09
21.79
25.24
25.62
24.63
25.79
26.63
27.52
28.33
26.94
32.62
16.08
14.83
19.43
22.24
23.37
22.70
22.55
25.43
26.02
26.39
23.86
26.68
15.30
14.42
19.05
21.59
21.73
21.54
21.60
23.51
25.35
24.43
21.46
24.30
2003
January
February
March
April
May
June
July
August
September
October
November
December
36.60
41.65
39.86
33.37
31.65
33.58
36.45
41.92
37.51
36.24
36.52
36.97
37.78
47.11
40.82
32.66
30.79
31.69
32.76
33.96
30.52
34.10
34.75
37.06
38.17
48.11
40.92
32.88
31.66
32.21
33.71
35.36
31.67
35.21
35.94
38.28
37.87
46.52
38.71
27.29
29.58
28.40
30.45
30.97
28.53
29.94
30.01
31.28
31.53
35.06
31.71
23.98
24.51
25.18
27.53
27.74
24.88
25.93
26.14
25.76
30.04
30.61
27.13
20.51
21.79
22.46
26.26
26.43
23.15
24.22
24.65
22.91
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Graph 5: US East Coast market — spot cargoes, New York
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44
OPEC Bulletin
MARKET REVIEW
Table 6: Caribbean market — spot cargoes, fob
($/b)
naphtha
gasoil
jet kero
fuel oil
2%S
fuel oil
2.8%S
2001
December
19.32
21.10
21.26
14.35
13.88
2002
January
February
March
April
May
June
July
August
September
October
November
December
19.63
21.30
25.86
28.55
27.14
26.85
27.98
28.73
32.16
32.54
24.39
31.43
21.49
21.79
25.77
27.31
27.28
26.49
28.11
28.83
31.91
32.04
29.65
33.64
22.24
23.41
26.72
28.33
28.31
27.66
29.43
30.53
33.67
33.23
29.51
34.27
14.50
13.62
18.25
20.79
20.95
20.79
20.88
22.78
24.55
23.70
20.73
23.58
13.89
13.54
18.09
20.59
20.65
20.36
20.67
22.52
24.77
23.86
19.97
23.18
2003
January
February
March
April
May
June
July
August
September
October
November
December
37.00
40.53
36.78
29.03
28.84
28.91
30.95
34.67
30.23
33.95
33.90
35.64
37.44
45.21
37.87
30.65
29.84
31.30
32.35
33.69
30.28
33.72
34.24
35.89
37.87
44.77
37.94
31.62
30.36
31.79
32.97
34.72
31.21
34.74
35.16
37.44
29.31
29.89
26.05
19.01
20.27
20.95
24.71
24.89
21.60
22.36
22.65
20.34
28.51
28.43
24.18
18.45
19.62
20.19
24.64
24.81
21.51
22.10
22.33
19.99
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Graph 6: Caribbean market — spot cargoes, fob
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45
MARKET REVIEW
Table 7: Singapore market — spot cargoes, fob
naphtha
($/b)
gasoline premium
unleaded 95
unleaded 92
gasoil
jet kero
fuel oil
180 Cst
fuel oil
380 Cst
2001
December
18.36
22.61
21.60
20.11
21.77
16.15
16.44
2002
January
February
March
April
May
June
July
August
September
October
November
December
18.97
21.04
24.92
26.11
24.90
23.84
24.64
25.52
27.52
26.87
25.06
29.57
21.00
24.16
27.93
30.11
29.73
28.54
28.19
28.17
30.49
29.62
27.80
30.25
20.30
22.95
26.43
28.80
28.81
27.45
26.95
26.65
29.21
28.37
29.38
29.35
21.66
22.54
25.71
28.64
28.76
27.82
28.19
28.79
31.43
33.10
29.37
31.88
22.93
22.54
25.16
27.27
27.85
26.49
27.56
29.28
32.92
32.43
29.38
32.10
16.07
17.04
19.37
21.45
22.60
21.66
22.47
23.39
24.70
23.13
21.77
23.95
16.24
17.37
19.73
21.75
22.98
21.99
22.88
24.10
25.34
23.46
21.83
24.24
2003
January
February
March
April
May
June
July
August
September
October
November
December
32.21
37.34
33.78
23.58
23.77
26.66
27.77
29.67
27.86
30.46
32.54
34.67
34.34
40.14
37.51
28.74
28.73
31.59
34.59
37.30
33.11
35.55
35.78
39.52
33.52
39.28
36.67
27.79
27.74
28.48
33.41
35.95
32.14
34.39
34.25
38.43
34.23
39.35
37.87
30.03
29.12
29.33
29.57
33.27
32.42
33.58
35.08
36.67
34.37
39.27
35.33
28.35
28.25
28.48
29.78
33.58
31.40
33.84
35.89
37.50
26.51
29.05
26.19
22.55
23.18
24.20
25.54
24.27
23.13
23.88
23.53
23.38
26.97
29.33
26.65
23.12
23.15
24.51
26.18
24.92
23.80
24.38
23.99
23.79
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Graph 7: Singapore market — spot cargoes, fob
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46
OPEC Bulletin
MARKET REVIEW
Table 8: Middle East Gulf market — spot cargoes, fob
($/b)
naphtha
gasoil
jet kero
fuel oil
180 Cst
2001
December
17.61
19.33
20.48
14.61
2002
January
February
March
April
May
June
July
August
September
October
November
December
18.55
20.11
24.27
26.03
24.98
23.82
24.37
25.15
27.13
26.53
24.50
28.14
19.50
20.21
23.28
26.30
26.63
25.89
26.06
26.37
28.90
30.81
27.03
28.53
21.62
21.12
23.65
25.92
26.56
25.09
26.08
27.58
31.19
30.84
27.63
29.77
14.95
16.00
18.41
20.52
21.60
20.64
21.46
22.30
23.66
22.05
20.31
21.95
2003
January
February
March
April
May
June
July
August
September
October
November
December
30.36
34.85
32.26
22.57
22.42
26.01
27.16
28.54
26.86
29.76
31.81
32.88
30.66
35.81
34.22
26.24
25.67
26.56
26.63
29.67
28.80
30.53
31.85
32.91
31.79
36.77
32.74
25.52
25.68
26.44
27.59
31.06
29.11
32.06
34.17
35.43
24.57
27.31
23.73
20.35
21.65
22.88
24.15
22.88
21.67
22.29
21.81
21.32
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Graph 8: Middle East Gulf market — spot cargoes, fob
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47
MEMBER COUNTRY FOCUS
Saudi Arabia moves to cut income
taxes on foreign investors
Saudi Arabia’s Majlis Al-Shura, or Consultative Council, decided
early in January to lower the rate of income tax imposed on
foreign investors, including those in the natural gas sector, from
30 per cent to 20 per cent. The council’s decision still needs
to be approved by the Saudi Cabinet; however, the latter is
expected to endorse it.
The council had received a request from the Supreme Economic Council (SEC) chaired by HRH Crown Prince Abdallah
bin Abdel Aziz, to reduce the tax rate on foreign investments
by 10 per cent, instead of the 5 per cent previously endorsed
by both the Council and the Finance Ministry. According to
a report by the official Saudi Press Agency (SPA), the council
approved the change by 61 votes to 46.
As part of Saudi Arabia’s efforts to attract foreign investment,
the Cabinet decided in 2000 to reduce income tax on foreign
investments from 45 per cent to 30 per cent by introducing a
clause whereby the state bears 15 per cent of the taxes imposed
on corporate profits. The tax applies to annual profits in excess
of 1 million Saudi riyals, or $266,000, said the SPA report.
The Secretary General of the Consultative Council, Hamoud
Al-Badr, was quoted as saying that the latest reduction comes
“in response to the current investment climate and the obstacles
to foreign investments.”
Meanwhile, speaking during the inauguration of the Haradh
natural gas and oil development project, the Minister of Petroleum and Mineral Resources, Ali I Naimi, said that to attract foreign investor in the gas sector, an investment friendly
environment has been established by the Kingdom, according
to the SPA report.
The ‘Gas Supply and Pricing Regulation and its Rules for
Implementation’, issued in September 2003, stipulate that the
tax on gas investments will be based on the internal rate of
return (IRR) for the annual accrued cash flows of the taxpayer,
with a sliding scale starting at 30 per cent for an IRR of up
to 8 per cent and ending at 85 per cent for an IRR of 20 per
cent or more. In addition, the law stated that income tax of
30 per cent would be imposed on the investment’s taxable
base, which would then be deducted from the investment tax
due.
Naimi also said that a dedicated tax code exclusively for
natural gas investors has also been issued with the objective
of encouraging natural gas investments in the Kingdom by
allowing them to get fair returns on their investments.
The Haradh natural gas and oil development project is the
third mega-project completed by Saudi Aramco, which is now
supplier of one-fourth of the Kingdom’s total gas consumption,
the report said.
Naimi said that the Haradh project will propel the Kingdom’s industrialization and development drive and avoid dependence on crude oil exports. Haradh is just one outcome of
the Kingdom’s integrated economic policy, which is designed
to optimize utilization of available natural resources, taking
into consideration the Kingdom’s relative advantage of having
48
abundant and relatively inexpensive energy available, Naimi
added.
The Haradh project consists of a gas plant capable of delivering 1.5 billion cubic feet/day of sales gas to Saudi Arabia’s
Master Gas System, and a gas oil separator plant capable of
stabilizing 300,000 barrels/day of crude oil.
Last year, Royal Dutch/Shell and France’s Total signed a
deal to invest in the exploration and production of natural gas
in Saudi Arabia. More companies followed this month, when
bids were opened for three tracts located to the south of the
Ghawar oil field.
Separately, Saudi Arabia is close to finalising an agreement
with a World Trade Organisation (WTO) working group on
accession. In a statement, WTO Chief, Supachai Panitchpadki,
said that Saudi Arabia has made surprisingly quick progress in
talks on joining the WTO and should be a member by the
end of the year. Remaining bilateral differences with the US
and three other WTO members were “not insurmountable”,
he added.
Abu Dhabi to launch two-year
privatisation plan
As part of Abu Dhabi’s strategy to stimulate the local economy
and attract investment in the industrial sector, the country has
appointed HSBC Bank Middle East, as its financial manager
to a two-year privatisation plan for some of its major industrial
utilities, according to the Chairman of the Abu Dhabi Economy
Department, Sheikh Hamed bin Zayed Al Nahyan.
“We will gradually sell stakes in public utilities to the private sector as part of the Emirate’s strategy to forge a publicprivate partnership and stimulate the local financial markets,”
he said.
The enterprises to be privatised include several factories
previously managed by the government-owned General Industry
Corporation (GIC), which was liquidated in 2002. He said
that he hoped that the sale would be completed by 2005.
“This plan is not new as it is a result of long, comprehensive studies carried out by specialised companies, which have
recommended the transfer of the ownership of those factories
to the private sector to better serve industrial development,
cut public costs and spur growth,” he announced.
Valued at $27.2 million, the GIC group holdings include
factories and plants in the cement, animal feed, flour mills,
mineral water bottling, building blocks and steel sector.
Indonesia to promote use of
renewables to generate electricity
Indonesia will promote the use of renewable sources of energy,
using biomass techniques, geothermal, and hydro power to generate
electricity and reduce dependence on expensive and diminishing
fossil fuels, according to a report in the Jakarta Post.
OPEC Bulletin
Photo: Reuters/Chip East
“Renewable sources are in line with the national energy policy,
or the green policy, that we are currently developing,” said newlyappointed Director General of Electricity and Energy Usage at
the Ministry of Energy and Mineral Resources, Yogo Pratomo.
Eighty-five per cent of Indonesia’s national energy consumption comes from fossil-based oil and gas, which are expected to
run out within the next 15 to 20 years. Biomass technology,
with a potential to produce up to 50,000 megawatts (mw) of
electricity nationwide, is considered one of the best alternatives
to replace fossil fuels. “While the potential is there, currently
only about 640 mw of electricity is being produced using
biomass,” the Jakarta Post quoted Yogo as saying. “Most is the
by-product of the forestry businesses,” he added.
In addition, forestry waste, estate crops waste, such as
palm fruit or sugarcane bagasse, agriculture crop waste,
such as paddy husks or cassava stems, and city waste can be
converted into energy by a combustion process. “Because
such things are considered waste, they are practically free of
charge,” Yogo said.
“Diesel fuel is expensive, and in remote areas, there’s also
high transportation costs,” he went on. Another advantage of
biomass is that it produces only clean gasses as excess. However,
Indonesia lacks the technology to undertake such a process on
a large scale.
Japan, Finland and the United Kingdom, have shown interest
in developing small-scale biomass power plants for Indonesia.
Meanwhile, PT Navigat Innovative Ind, in co-operation with
UK based Organics Ltd, is planning to build a facility to
convert city waste from the Denpasar, Gianyar, Tabanan and
Badung regencies in Bali into energy, the report said.
“We are currently in negotiation with (state-owned electricity company) PLN on power pricing,” said Navigat’s Director,
Sebastiaan Sauren. The planned $40 million power plant is
expected to produce 20 mw of electricity from 800 tonnes of
waste daily.
The Indonesian government has also proposed an energy law,
making it compulsory for all power producers to use renewable
materials to produce at least five per cent of their total capacity.
“We hope that it can be endorsed by the House of Representatives before the upcoming national elections,” Yogo stated.
The OPEC Fund for International Development has extended
an emergency assistance grant of $750,000 to help procure relief
items through the International Federation of Red Cross and
Red Crescent Societies, for the victims of the earthquake that
struck Iran’s Kerman Province on December 26.
Measuring 6.5 on the Richter scale, the quake left at least
30,000 dead, more than 30,000 injured, and an estimated
75,000 people homeless. The area hardest hit in the Kerman
Province was the Bam area, home to the world’s largest mudbrick edifice, a 2,000-year-old citadel.
Following the quake, Iran gathered an unprecedented
number of donors responding to a ‘Flash Appeal’ for funds
to cover 90 days of humanitarian aid, according to the Head
of the UN Office for the Coordination of Humanitarian Affairs (OCHA), Jan Egeland.
In a news conference at UN headquarters, Egeland said that
Iran had received pledges from 60 countries, with generous
contributions coming from the Gulf Co-operation Council. The
Flash Appeal, launched by nine UN agencies and programmes,
seeks $31.3 million for shelter, food, water and sanitation. The
long-term reconstruction is expected to cost between $700m
and $1 billion.
In addition, the United Nations Educational Scientific and
Cultural Organization (UNESCO) and other UN agencies
have pledged to help rebuild Iran’s 131 damaged schools and
to provide affected children with an education, and assist in
renovating Bam’s damaged cultural heritage cultural sites.
Iranian soldiers load medicines from the Iranian Red Crescent at
Kerman airport near Bam.
Photo: Reuters/Mohamed Azakir
Quake relief efforts for Iran gain
unprecedented support
49
Libya continues process of normalisation of relations
with the international community
Photo: Reuters/Stephen Hird
Libyan Foreign Minister, Abdurrahman Shalgham, has visited the United Kingdom, where he met with Prime Minister Tony
Blair and Foreign Secretary Jack Straw for talks on a range of issues. “We have, I believe, established a relationship of trust,”
said Straw.
Last month, Libya announced it was giving up any ambitions it had of acquiring weapons of mass destruction and that it
would allow UN inspections to its nuclear sites after nine months of secret talks with London and Washington.
“Over the last five years, we have built a relationship with Libya through active diplomacy which has enabled us together
to take an important step towards enhancing international peace and security,” Straw said.
Britain now has “corresponding responsibilities to enable Libya to come fully into the mainstream of the international community,” he added.
Meanwhile, the President of the European Commission, Romano Prodi, has welcomed the improvement in relations between
France and Libya. The strengthening of diplomatic ties follows the recent compensation settlement Libya awarded relatives of
170 victims killed when the French UTA 772 flight was bombed over Niger in September, 1989.
“I salute the efforts of the French and Libyan governments,” said Prodi. “This confirms that 2004 can mark a decisive
turning point in relations between Europe and Libya,” he added.
Britain’s Foreign Secretary Jack Straw and his Libyan counterpart Abdurrahman Shalgham attend a joint news conference in London.
50
OPEC Bulletin
APPOINTMENTS
Following the decision of the 128th Meeting of the OPEC Conference last December
“… that from January 1, 2004, until such time as a Secretary General will be appointed, the President of the Conference shall assume the responsibilities of the Secretary
General and is authorized to make whatever arrangements he deems appropriate for the
efficient direction of the Secretariat”, the President of the Conference, Dr Purnomo
Yusgiantoro, last week announced the posting of Dr Maizar Rahman, Indonesia’s
nominee-Governor for OPEC, to the Organization’s Secretariat in Vienna, to carry
out the day-to-day work of the Secretariat under the President’s supervision.
Dr Rahman was born on May 8, 1948. He graduated in chemistry from
the University of Gajah Mada, Indonesia, in 1974. He obtained his diploma in
Engineering from the Institut Français du Pétrole (IFP) in Paris in 1976, and his PhD
in Engineering, also from the IFP, in 1983. From 1992 to 1998, he was Director,
Division of Research for Refining and Petrochemicals at the National Research
and Development Center for Oil & Gas Technology (LEMIGAS), Indonesia, and
served as the President Director/CEO of this center from 1998 to 2002.
From 2002 to February 2004 he was Executive Secretary of the Government’s
Board of Commissioners for Pertamina, and Chairman of the British-Indonesian
Gas Working Group.
In February 2004 he was nominated Governor for OPEC and Chairman of
the National Committee of OPEC for Indonesia.
OBITUARY
OBITUARY
OPEC’s first Secretary General, Dr Fuad Rouhani,
died on January 30 in London. He was 96 years
old. Dr Rouhani was born on October 23, 1907
in Tehran, Iran. He obtained two degrees in law
from the University of London.
In 1926 he joined the Legal and Administrative
Branches of the Anglo-American Oil Company. In
1951, he became the Chief Legal Adviser of the
Iranian Oil Company, and in 1954 he was appointed
Director.
In 1961, he was appointed Secretary General of
OPEC and Chairman of the Board of Governors.
In 1964, he became Professor of Iranian Studies
at Columbia University in New York, US.
In 1965, he became Secretary General to the
Organization of Regional Co-operation for Development between Iran, Pakistan and Turkey. At
the same time he served as an adviser to the Prime
Minister of Iran and the Central Bank.
Rouhani is the author of A Guide to the Contents
of the Koran, as well as other books on religion.
He also translated into Persian works by Plato and
Jung, among others.
He was an accomplished pianist and played
the traditional Persian musical instrument, the tar.
Rouhani was also the co-founder of the Philharmonic Society of Tehran.
After the Iranian revolution of 1979, he moved
to Geneva, and later to London.
He is survived by his wife of 76 years, Rohan;
his daughters, Guitty Hosseinpour and Negar Diba,
and three grandchildren.
First Secretary General of OPEC,
Fuad Rouhani, dies at 96
51
OPEC FUND
News from the OPEC Fund
Fund Director General meets
with Austrian President
The Director General of the OPEC Fund,
Suleiman J Al-Herbish, met with Austrian Federal President, Dr Thomas Klestil
at Vienna’s Imperial Palace, the Hofburg.
The purpose of the meeting was for Dr
Klestil to officially welcome Al-Herbish to
Austria and to discuss ways of strengthening co-operation between the Fund and its
host country.
Dr Klestil congratulated Al-Herbish on
his new position as Director General and
conveyed his “deep appreciation” of the
work of the OPEC Fund. He remarked also
on the “solid ties” that had been built up
over the years between the institution and
the government and people of Austria.
In response, Al-Herbish paid tribute
to the Federal Republic: “Austria has been
our host now for 28 years, and throughout
this time, we have, without fail, enjoyed the
practical and moral support of the government at every level.” The Director General
reiterated his commitment to maintaining
and enhancing this relationship, which he
noted “extends well beyond official circles,”
he said.
Al-Herbish also visited the Austrian Minister for Foreign Affairs, Dr Benita FerreroWaldner to discuss development issues.
OPEC Fund welcomes UNFPA
Executive Director and
delegation
The OPEC Fund and the United Nations
Population Fund (UNFPA) held a highlevel meeting to discuss co-operation between the two institutions. The Director
General of the OPEC Fund, Suleiman J
Al-Herbish, received UN Under-Secretary
General and Executive Director of UNFPA,
Thoraya Ahmed Obaid, who paid a courtesy call on the Fund. She was accompanied by the Senior External Relations Officer, Erik Palstra.
Obaid focused on current initiatives being jointly pursued by the two institutions on
HIV/AIDS. Al-Herbish showed keen interest in the work of UNFPA and assured his
52
guests that the long-standing partnership between the institutions will continue.
The OPEC Fund and UNFPA are involved in two separate HIV/AIDS projects
to help with prevention, care and support of
people living with HIV/AIDS and to help
strengthen health systems in several countries
of Latin America and Caribbean, as well as
selected North African and Arab countries.
business sector, which is regarded as being
the most promising in terms of employment
creation and general economic benefits.
The line of credit represents the Fund’s
first lending operation in Swaziland, although the country has benefited from a
technical assistance grant from the OPEC
Fund that supported a rural resettlement
programme.
Fund supports development
finance institution in
Swaziland
OPEC Fund and WHO
strengthen co-operation
against HIV/AIDS
An agreement for a $3m line of credit was
signed between the OPEC Fund and FINCORP (Swaziland Development Finance
Corporation), an institution that provides
term lending to microfinance co-operatives
and other micro and small businesses.
Founded in 1995, FINCORP is seeking
to expand, to offer new products and make
a larger contribution to the development of
Swaziland. Financing for businesses in rural
areas, particularly for smallholders, is in relatively scarce supply, with financial institutions generally focusing on towns and larger
businesses. Given the loan size and the operational focus of FINCORP, activities will
concentrate on the microfinance and small
The OPEC Fund welcomed the World
Health Organization (WHO) Assistant
Directors General, Dr Jack C Chow and
Dr Kazem Behbehani. They paid the institution a courtesy call to discuss co-operation within the global campaign against
HIV/AIDS. The two were received by the
Director General of the OPEC Fund, Suleiman Jasir Al-Herbish, who expressed satisfaction at the level and state of co-operation
between the two organizations.
The WHO was the first lead agency
(within the United Nations System) with
which the OPEC Fund entered into agreement, in 2002, on HIV/AIDS interventions. WHO and the OPEC Fund are
OPEC Bulletin
OPEC FUND
implementing a $8.11m Initiative against
HIV/AIDS in Africa, meant to scale up interventions and strengthen healthcare delivery in 12 sub-Saharan African countries seeking to curb the onslaught of the disease.
Dr Chow is working for the WHO/
ADG, HIV/AIDS, Tuberculosis & Malaria; while Dr Behbehani is working for
the WHO/ADG, External Relations and
Governing Bodies. They briefed the OPEC
Fund about the new WHO 3-by-5 initiative, created to provide life-long anti-retroviral treatment (ART) to three million
people by year-end 2005.
OPEC Fund extends debt
relief to Mozambique under
the enhanced HIPC initiative
The OPEC Fund has signed a $3m financing agreement with the Republic of Mozambique for the provision of debt relief
within the framework of the Enhanced
Heavily Indebted Poor Countries (HIPC
II) Initiative. Endorsed by the Interim and
Development Committees of the World
Bank and the International Monetary
Fund in September 1996, the Initiative
represents a united effort by the international community to address the external
debt problems of the world’s heavily indebted poor countries.
Specifically, it aims to reduce the debt
of eligible countries to sustainable levels,
subject to satisfactory policy performance,
in order to ensure that adjustment and reform efforts are not put at risk by continued high debt and debt service burdens. As
the Initiative requires participation by all
relevant creditors, debt relief efforts entail
co-ordinated actions by the international
finance community, including multilateral
institutions.
Under the Initiative, the Fund has approved debt relief to 23 countries, 18 of
which are in Africa and five in Latin America. Debt service payments in Mozambique
are expected to be cut by almost one-half
within the next eight years, creating room
expenditures on poverty reduction programmes.
January 2004
Grants approved
Fund helps disadvantaged
youth in Kenya
The OPEC Fund has approved a grant of
$80,000 to co-founding an initiative to
help disadvantaged youth from the Eastland slums of Nairobi. Launched by the Institute for Co-operation in Development
Projects (ICEP), the project, New Chances
for Youth in Nairobi, Kenya, will provide
some 1,700 children and adolescents with
the chance to complete their education and
learn job-training skills.
ICEP is a non-profit, non-governmental organization (NGO) founded in
Austria in 1996 with the mandate to assist youth from the poorest communities in
developing countries in the form of capacity building projects. The present scheme,
in collaboration with two other NGOs,
the Strathmore Educational Trust and the
Kianda Foundation, will providing youth
with professional entrepreneurship training courses in areas such as basic management, marketing, accounting and business
skills; helping pupils in their final primary
school year qualify for enrolment in secondary school by offering individual tutoring and a place to study; and, establishing
a computer training facility, which will be
supervised by specialised tutors in information technology and will help needy female
students from the Kianda Primary and Secondary Schools.
February 2004
Grants approved
OPEC Fund and IACD sign
initial grant agreement
The Director General of the OPEC Fund
for International Development, Suleiman
Jasir Al-Herbish, has welcomed Sheila
Donovan, Director of Development Programmes of the Inter-American Agency for
Co-operation and Development (IACD),
for the signing of a $100,000 grant agreement and to discuss other means of future
collaboration, particularly in the private sector. Also in attendance was HE Gustavo
Marquez Marin, Ambassador of the Bolivarian Republic of Venezuela to Austria.
The grant, which was approved by the
Fund’s Governing Board on December 2,
2003, will co-founding an IACD initiative
to introduce Information Communication
Technology (ICT) to rural communities in
Guatemala as a means of raising literacy,
fostering the exchange of information and
ultimately reducing poverty.
Guatemala’s rural poor, particularly
those living in remote underserved areas,
represent a significant percentage of the
population. Educational and training opportunities are limited, leaving many without a chance to improve their situation. One
viable solution is to make a wide array of
information available through the use of
ICT such as the internet, videos, fax, radio
and other media, which can reach even the
most isolated communities.
Guatemala’s Ministry of Education is
already operating a successful Telesecondary Distance Education Programme at some
400 schools. Under the present scheme, the
IACD, in collaboration with the Ministry,
will establish three pilot school-based Telecentres in rural Guatemala. They will serve
as core models for an envisaged national
programme that aims at offering ICT services to the general community as well.
Loans signed
Fund extends nine loans
worth $62m
Nine agreements for public sector loans
totalling $68.7m have been extended to
Azerbaijan, Botswana, Burkina Faso, Cape
Verde, Cameroon, Ghana, Lesotho, Tunisia and Yemen. The loans will help support public sector projects in the education, health, multi-sectoral, transportation
and water supply and sewerage sectors. In
addition, through the Fund’s private sector
window, an agreement for a line of credit worth $3m was concluded with FINCORP (Swaziland Development Finance
Corporation).
All nine public sector projects will
be co-financed by the concerned governments and by a number of international
development institutions, including the
Arab Bank for Economic Development
in Africa, the Islamic Development Bank,
the West African Development Bank and
the Economic Community of West African States Regional Development Fund.
The majority of the OPEC Fund project
loans carry interest at rates ranging from
one per cent to 1.5 per cent and have a maturity of 20 years, including a grace period
of five years.
As of the end of December 2003,
cumulative public sector lending of the
OPEC Fund, for project and programme
financing, balance of payments support
and HIPC debt relief, stood at $5.4bn.
A further $238m had been extended
53
OPEC FUND
in support of private sector operations.
Total commitments, inclusive of grants
and contributions to other international
institutions, had reached $6.9bn and benefited 111 countries.
the surrounding environment. The project
will also help create employment opportunities for local non-skilled workers during
the construction phase.
Azerbaijan.
Amount: $7m.
Project: Kaya-Dori National Road.
Interest rate: one per cent per annum.
Executing agency: General Directorate
of Roads, Ministry of Infrastructure,
Transport and Urbanisation
Total cost: $34.28m.
Co-financiers: ECOWAS RDF; the
Islamic Development Bank; West African
Development Bank; and the Government
of Burkina Faso.
The loan will help co-founding
rehabilitation of the Kaya-Dori National
Road. The 163 km-long stretch, situated
in the northeast, makes up part of an
important regional corridor that links
Burkina Faso with Côte d’Ivoire and
Niger. Classified as a “modern earth road”
and surfaced with gravel, the stretch is
now 13 years-old and in urgent need of
rehabilitation.
Under the project, the Kaya-Dori
Road will be upgraded to double bitumen standard, designed to accommodate vehicles weighing up to 13 tons and
speeds of 100 km/hour, and given a 20year lifespan. Since the stretch passes over
two earth dams that have deteriorated from
constant flooding, the dams will also be
fully reconstructed.
Amount: $6m.
Project: Udjar-Yevlakh Road.
Interest rate: 1.5 per cent per annum.
Executing agency: Road Transport Services Department under the Ministry of
Transport.
Total cost: $31m.
Co-finacier: Government of Azerbaijan.
The loan agreement will help finance the
rehabilitation of the Udjar-Yevlakh road.
In line with government’s long-term aim
to rehabilitate the entire east-west corridor, this project will upgrade 44.5 km of
the Udjar-Yevlakh road to form half of a
four-lane highway that will be completed
under a future scheme. The remaining 8.5
km section will be converted into a fourlane dual carriageway.
Additionally, drainage structures will be
improved, culverts rehabilitated and bridges
replaced or rebuilt. It is anticipated that the
project will contribute substantially to poverty reduction through easier, cheaper and
safer travel, and enhanced access to incomegenerating opportunities, markets and social services.
Botswana.
Amount: $10m.
Project: Middlepits-Bokspits Road.
Executing agency: Ministry of Works,
Transport and Communication.
Total cost: $35m.
Co-financiers: BADEA and the
Government of Botswana.
The loan agreement will help co-founding
the upgrading of the Middlepits-Bokspits
Road. Once completed, the improved road
will provide the area with less expensive and
safer transport, and enable isolated communities to access markets, social services and
jobs. The 153 km-long, earth-surfaced
Middlepits-Bokspits Road is situated
in the Kgalagadi province, and passes
through a number of small towns, cattle
posts and farms. Under the project, the
Middlepits-Bokspits stretch and approximately four km of village access roads
will be upgraded to an all-weather paved
surface. Traffic signs, drainage works and
fencing will be installed, and throughout
implementation, careful measures will be
undertaken to insure the protection of
54
Burkina Faso.
Cameroon.
Amount: $6.7m.
Project: Sangmelima District Hospital.
Executing agency: Ministry of Public
Health
Total cost: $7.5m.
Co-financier: Government of Cameroon.
The loan will help finance the construction of a 100-bed referral hospital in
Sangmelima district.
Healthcare services in Cameroon are of
great concern, with high infant/maternal
mortality rates and a rising incidence
of malaria, HIV/AIDS, tuberculosis
and other diseases. Only around 15
per cent of the population has access to
medical services, and existing facilities
are usually understaffed and lack up-todate equipment and basic medication.
Works will entail the construction of
one-story modular hospital buildings
that will provide services in areas such as
emergency care and general medicine, as
well as a number of specialties including
obstetrics, paediatrics, orthopaedics, ophthalmology, dental care and radiology.
Also included will be operating theaters
and out-patient clinics, and it is estimated
that the facility will be capable of handling
100 in-patients per day. All medical and
administration equipment and furniture
will be purchased, and an initial stock of
essential drugs provided for the hospital’s
first year of operation. The complex will
also be designed to accommodate future
expansion. In addition to serving the
Sangmelima district, the new hospital is
expected to attract patients from neighbouring countries Equatorial Guinea,
Gabon and the Central African Republic,
where health services are also limited.
Cap Verde.
Amount: $5m.
Project: Secondary Education.
Interest rate: three per cent per annum.
Executing agencies: Ministry of
Education, Science, Youth and Sports,
Ministry of Infrastructure and Transport.
Total cost: $5.5m.
Co-financier: Government of Cape
Verde.
The loan will help finance the
rehabilitation and construction of selected
secondary schools. As well as enhancing
the overall quality of education, especially
in rural areas, the project will also enable
schools to accommodate some 4,000
additional pupils. Under this project,
activities will be carried out in the denselypopulated islands of Santiago, Fogo, Maio
and Santo Antao, where four existing
secondary schools will be rehabilitated and
three new ones built. Each will contain
science laboratories, computer rooms,
library, sports facilities and a cafeteria, and
provided with books, teaching materials,
furniture and equipment. Pre- and inservice training will be given to secondary,
vocational and higher education tutors,
and a teachers’ training centre will be
upgraded and suitably equipped.
Ghana.
Amount: $5m.
Project: Accra-Tema Rail Rehabilitation.
Executing agency: Ghana Railways
Company Ltd.
Total cost: $5.5m.
Co-financier: Government of Ghana.
A $5m loan agreement has been signed to
co-founding the re-commissioning of the
Accra-Tema railway line. This project falls
within the framework of government’s aim
OPEC Bulletin
OPEC FUND
Photo: A Tarter
to provide a reliable and alternative system
of transport and address the growing
demand for mass rail services.
The project will rehabilitate the
abandoned Accra-Tema rail line, which
totals 31.7 km in length.
Works will include refurbishment
of rails, sleepers and railway cars, and
modernization of signaling and telecommunication equipment. Nine railway
stations will be renovated, and safety
and security features such as fences and
pedestrian crossings built. A stock of
replacement parts and tools will also be
procured. It is estimated that, on the
average, 4.1 million passengers per year
will use the rail line, which will free up
roads, reduce travel time and result in
fewer accidents and less pollution.
Lesotho.
Amount: $4m.
Project: Maseru Water Supply.
Executing agency: Water and Sewerage
Authority
Co-financiers: BADEA and the
Government of Lesotho
The loan will help finance the second
phase of a project to expand the water
distribution network in the capital Maseru.
This project falls within the framework of
a government strategy to provide a safe
and reliable supply of potable water.
In light of the growing demand for
water that is presently exceeding available
supply, the government has implemented
the first phase of a project that involves
the installation of pumping stations and
transmission pipelines to bring water to
Maseru’s peri-urban areas.
Under phase II, a 150 km pipeline will
be installed along with house connections
and meters for around 3,000 homes. Two
new reservoirs will be built with a total
storage capacity of approximately 3,750
cubic metres, and two existing ones will
be enlarged. Two pumping stations will
be constructed, while another situated
in the northwest zone will be completely
upgraded. Additionally, some 13,000
m of ductile iron main pipeline will be
installed connecting the pumping stations
to nearby reservoirs.
Tunisia.
Amount: $12m.
Project: Beja Higher Institute of
Technology.
Executing agency: Ministry of Higher
Education, Scientific Research and
Technology
Co-financier: Government of Tunisia.
The loan will help finance the construction
of a Higher Institute of Technology (ISET)
in the northern governorate of Beja. As
part of government’s long-term plan to
establish one ISET in each of the country’s
24 governorates, the aim is to boost the
availability of higher education among the
region’s 316,000-strong population.
In addition to new universities, a
number of ISETs have been created to
provide specialty training in areas such
as management, computer technology
and industry. So far, 12 such institutes
have been successfully set up across
the country. The 12 still to be built
will contain a Management Training
Centre, to address the needs of small
and medium-scale enterprises. The
22,246 sq m Beja institute will be able
to accommodate 1,500 students per year,
and will contain exhibition halls, an
amphitheater, classrooms and laboratories.
Fully-equipped support facilities will be
built, including two dormitories with
the capacity to house 600 students, and
a restaurant. All infrastructure will be
fitted out with first associated computer
equipment, didactic materials and
furniture.
Yemen.
Amount: $13m.
Project: Social Fund for Development
(Phase III).
Executing agency: Social Fund for
Development.
Total cost: $15.2m.
Co-financiers: Beneficiaries and the
Government of Yemen.
The loan will help support the activities of
the Social Fund for Development (SFD).
SFD is charged with raising incomes
and living standards among the poorest
segments of the population by creating
employment opportunities and expanding
access to social services. This third phase
of the project will remain focused on subprojects in the areas of education, water
supply and environment, health and social
protection and rural/feeder roads. As
well as the construction/rehabilitation of
infrastructure, institutional strengthening
and capacity building measures will
be implemented across all sectors. In
addition, a social protection component
will target special needs groups such as
the handicapped, women, children and
the mentally disabled. These activities will
better educational prospects, improving
health and sanitation services and boost
household incomes.
OPEC Fund for International
Development, Parkring 8, PO Box
995, 1011 Vienna, Austria. Tel:
+43 1 515640; fax: +43 1 513
9238; cable: opecfund; e-mail:
info@opecfund.org; Web site: www.
opecfund.org.
55
NOTICEBOARD
Forthcoming events
Houston, TX, USA, February 18–19, 2004,
Achieving operational effectiveness under
sanctions and export controls. Details: IQPC.
Tel: +44 (0)20 7368 9300; e-mail: enquire@
iqpc.co.uk; Web site: www.iqpc.co.uk.
Singapore, February 18–20, 2004, Natural
gas industry fundamentals. Details: Conference
Connection Administrators Pte Ltd (CCA),
105 Cecil Street #07-02 The Octagon, Singapore 069534. Tel: +65 6222 0230; fax: +65
6222 0121; e-mail: info@cconnection.org;
Web site: www.cconnection.org.
London, UK, February 18–20, 2004,
ERTC Fluid catalytic cracking. Details: GTF,
Highview House, Tattenham Crescent, Epsom Downs, Surrey KT18 5QJ, UK. Tel:
+44 1737 365100; fax: +44 1737 365101;
e-mail: events@gtforum.com; Web site:
www.gtforum.com.
Kuala Lumpur, Malaysia, February 23–24,
2004, Contract risk management for upstream
oil and gas. Details: IQPC. Tel: +44 (0)20 7368
9300; e-mail: enquire@iqpc.co.uk; Web site:
www.iqpc.co.uk.
Aberdeen, Scotland, February 23–24, 2004,
Real time field management. Details: IQPC. Tel:
+44 (0)20 7368 9300; e-mail: enquire@
iqpc.co.uk; Web site: www.iqpc.co.uk.
Perth, Australia, February 23–25, 2004,
Production sharing contracts and international
petroleum fiscal systems. Details: Conference
Connection Administrators Pte Ltd (CCA),
105 Cecil Street #07-02 The Octagon, Singapore 069534. Tel: +65 6222 0230; fax: +65
6222 0121; e-mail: info@cconnection.org;
Web site: www.cconnection.org.
London, UK, February 23–25, 2004, Fundamentals of the oil and gas industry. Details:
The Petroleum Economist Ltd, PO Box 105,
Baird House, 15/17 St. Cross Street, London
EC1N 8UW, UK. Tel: +44 (0)20 7831 5588;
fax: +44 (0)20 7831 4567/5313; e-mail:
marketing@petroleum-economist.com; Web
site: www.petroleum-economist.com.
Cambridge, UK, February 23–27, 2004,
Price risk management in traded gas electricity
markets. Details: Alphatania, EconoMatters Ltd,
Rodwell House, 100 Middlesex St, London, E1
7HD, UK. Tel: +44 (0)20 7650 1405; fax: +44
(0)20 7650 1401; e-mail: p.barker@economatters.com; Web site: www.economatters.com.
56
London, UK, February 24, 2004, Introduction to gas and power. Details: Alphatania,
EconoMatters Ltd, Rodwell House, 100
Middlesex St, London, E1 7HD, UK. Tel:
+44 (0)20 7650 1405; fax: +44 (0)20 7650
1401; e-mail: p.barker@economatters.com;
Web site: www.economatters.com.
London, UK
March 9–10, 2004
Finance and Investment in
Qatar
Details: IBC Energy Conferences
Informa House
30-32 Mortimer Street
London, W1W 7RE, UK
Tel: +44 (0)20 7017 4025
Fax: +44 (0)20 7017 4039
E-mail:
charlotte.hunt@informa.com
Web site: www.ibcenergy.com.
Houston, TX, USA, February 24–25, 2004,
Portfolio optimization in oil and gas. Details:
IQPC. Tel: +44 (0)20 7368 9300; e-mail:
enquire@iqpc.co.uk.
Kuala Lumpur, Malaysia, February 24–25,
2004, Corrosion management for upstream oil
and gas. Details: IQPC. Tel: +44 (0)20 7368
9300; e-mail: enquire@iqpc.co.uk; Web site:
www.iqpc.co.uk.
Amsterdam, Netherlands, February 25–26,
2004, Offshore pipeline technology, annual industry conference and exhibition. Details: IBC
Energy Conferences, Informa House, 30-32
Mortimer Street, London, W1W 7RE, UK.
Tel: +44 (0)20 7017 4025; fax: +44 (0)20 7017
4039; e-mail: charlotte.hunt@informa.com;
Web site: www.ibcenergy.com.
London, UK, February 25–26, 2004, LNG
VI. Details: SMi Conferences Ltd, 1, New
Concordia Wharf, Mill Street, London,
SE1 2BB, UK. Tel: +44 (0)20 7827 6000;
fax: +44 (0)20 7827 6001; e-mail: customer_services@smi-online.co.uk; Web site:
www.smi-online.co.uk.
London, UK, February 26, 2004, New oil
discoveries in sub-Saharan Africa. Details:
CWC Associates Ltd, 3 Tyers Gate, London SE1 3HX, UK. Tel: +44 (0)20 7089
4200; fax: +44 (0)20 7089 4201; e-mail:
bookings@thecwcgroup.com; Web site:
www.thecwcgroup.com.
Perth, Australia, February 26–27, 2004,
Upstream government petroleum contracts.
Details: Conference Connection Administrators Pte Ltd (CCA), 105 Cecil Street
#07-02 The Octagon, Singapore 069534.
Tel: +65 6222 0230; fax: +65 6222 0121;
e-mail: info@cconnection.org; Web site:
www.cconnection.org.
Calgary, Alberta, Canada, March 1–2, 2004,
CERI North American natural gas conference and
Calgary Energy Show 2004. Details: Canadian
Energy Research Institute, Conference Division, 150, 3512 – 33 St NW, Calgary, AB T2L
2A6, Canada. Tel: +1 403 220 2380; fax: +1
403 289 2344; e-mail: conference@ceri.ca;
Web site: www.ceri.ca.
Kuala Lumpur, Malaysia, March 1–2,
2004, Petrochemical industry — economics
and technology. Details: Centre for Management Technology, 80 Marine Parade Road
#13-02, Parkway Parade, Singapore 449269.
Tel: +65 6345 7322/6346 9132; fax: +65
6345 5928; e-mail: cynthia@cmtsp.com.sg;
Web site: www.cmtevents.com.
Milan, Italy, March 1–2 2004, Italian
energy. Details: SMi Conferences Ltd, 1,
New Concordia Wharf, Mill Street, London, SE1 2BB, UK. Tel: +44 (0)20 7827
6000; fax: +44 (0)20 7827 6001; e-mail:
customer_services@smi-online.co.uk; Web
site: www.smi-online.co.uk.
London, UK, March 1–5, 2004, Fundamentals of upstream economics and risk analysis.
Details: The Petroleum Economist Ltd, PO
Box 105, Baird House, 15/17 St. Cross Street,
London EC1N 8UW, UK. Tel: +44 (0)20 7831
5588; fax: +44 (0)20 7831 4567/5313; e-mail:
marketing@petroleum-economist.com; Web
site: www.petroleum-economist.com.
London, UK, March 6–19, 2004, Oceanology International 2004. Details: Spearhead
Exhibitions Ltd, Apex Tower, New Malden,
Surrey KT3 4DQ, UK. Tel: +44 (0)20 8949
9222; fax: +44 (0)20 8949 8146; e-mail:
enquiries@spearhead.co.uk.
Prague, Czech Republic, March 7–12, 2004,
The gas chain — reservoir to burner tip. Details: Alphatania, EconoMatters Ltd, Rodwell
House, 100 Middlesex St, London, E1 7HD,
UK. Tel: +44 (0)20 7650 1405; fax: +44 (0)20
7650 1401; e-mail: p.barker@economatters.
com; Web site: www.economatters.com.
OPEC Bulletin
November/December
SECRETARIAT NOTES
OPEC Meetings
A 9th Conference of the Parties (COP-9) Co-ordination Meeting was held on November 28, 2003,
and the United Nations Framework Convention on
Climate Change (UNFCCC) COP-9 was held on
December 1–12, 2003, in Milan, Italy.
A Energy Charter Secretariat (ECT) Eurasian natural gas
conference was held in Brussels, Belgium, November 12–13,
2003.
A course on Refining operations planning and linear programme
was organized by the Institut Français du Pétrole and took
place in Paris, France, November 17–26, 2003.
The 46th Meeting of the Ministerial Monitoring
Sub-Committee (MMSC), was held in Vienna,
Austria, on December 4, 2003.
The 10th Session of the General Conference of the United Nations Industrial Development Organization (UNIDO), was
held in Vienna, Austria, December 1–5, 2003.
The 128th (Extraordinary) Meeting of the OPEC
Conference was held in Vienna, Austria, on December 4, 2003.
A course on Mechanics and operations of oil trading was
organized by the Energy Institute (IP) and took place in
London, UK, December 2–5, 2003.
The 111th (Extraordinary) Board of Governors
Meeting was held in Vienna, Austria, December
16–17, 2003.
A conference on Using JI & CDM in the EU emissions trading scheme was organized by the International Oil Pollution
Compensation Funds (IOPC) and held in Milan, Italy, December 3–5, 2003.
Secretary General’s diary
A visit was organized to the National Institute Forecasting
System, London, UK, December 8–10, 2003.
A Workshop of the International Association of
Oil and Gas Producers was held in Semmering,
Austria, November 17, 2003.
The United Nations Economic Commission for Europe (UNECE) Energy Security Forum organized
the Committee on Sustainable Energy Special Events,
Geneva, Switzerland, November 20, 2003.
A seminar on Oil: essential and reliable energy
was organized by the Spanish Oil Downstream
Industry Association and held in Santa Cruz de
Tenerife, Tenerife, November 20–21, 2003.
Attended the UNFCCC COP 9 in Milan, Italy,
December 1–12, 2003.
The 2nd WPC regional meeting was held in Doha, Qatar,
December 8–11, 2003.
A Regional meeting of the Petroleum Institutes and Similar
Institutions (PISI) was organized by the UNECE and held
in Doha, Qatar, December 8–12, 2003.
Event management training was organized by the Institute
of Public Relations (IPR), and took place in Manchester,
UK, December 9, 2003.
An inter-secretariat meeting, as a follow-up to the 4th Joint
Oil Data Meeting was organized by IEA, Eurostat, APEC,
OLADE, UN and OPEC, and held in Paris, France, December 11, 2003.
Secretariat missions
Forthcoming OPEC Meetings
The 21st Sessions of the Intergovernmental Panel on Climate Change
(IPCC) and Sessions of Working Groups I, II, III, organized by
IPCC, were held in Vienna, Austria, November 3–7, 2003.
The 112th Meeting of the Board of Governors will be held in
Vienna, Austria, March 2, 2004.
The Oil & Money 2003 conference was organized by the
International Herald Tribune/Energy Intelligence and held
in London, UK, November 4–5, 2003.
A conference on Investing in the Russian oil and gas sector was
organized by The Energy Exchange Ltd and held in Moscow,
Russian Federation, November 4–5, 2003.
The 101st Meeting of the Economic Commission Board (ECB)
will be held in Vienna, Austria, March 24, 2004.
The 130th Meeting of the OPEC Conference will be held in
Vienna, Austria, March 31, 2004.
The 131st (Extraordinary) Meeting of the OPEC Conference
will be held in Beirut, Lebanon, June 3, 2004.
57
For an in-depth look
at the oil market
and related issues
Energy economics and related issues
Vol. XXVII, No. 4
the OPEC Review
contains research papers
by experts from across
the world
Now in its 27th annual volume, the
OPEC Review is published quarterly.
Its content covers the international oil
market, energy generally, economic
development and the environment.
Subscription enquiries to: Blackwell
Publishing Journals, 9600 Garsington
Road, Oxford OX4 2DQ, UK. Free
sample copies sent on request.
The effect of inflation on
government revenue and
expenditure: the case of the
Islamic Republic of Iran
Ahmed El Hachemi Mazighi
Abbas Alavirad
Limiting global cooling
after global warming is
over — differentiating
between short- and longlived greenhouse gases
Axel Michaelowa
Energy indicators
OPEC Secretariat
People wishing to submit a paper for
publication should contact the Editor-inChief of the OPEC Review, Dr Omar Farouk Ibrahim, at the Public Relations and
Information Department, OPEC Secretariat, Obere Donaustrasse 93, A-1020
Vienna, Austria.
Recent issues
OPEC production agreements: a detailed
listing — OPEC Secretariat
September 2003
Special issue — Joint OPEC/IEA Workshop
on Oil Investment Prospects (proceedings)
December 2002
New energy technologies: trends in the
development of clean and efficient energy
technologies — Adnan Shihab-Eldin
Oil and macroeconomic fluctuations in
Mexico — François Boye
Energy indicators — OPEC Secretariat
OPEC official statements — OPEC
Secretariat
June 2003
Oil outlook to 2020 — Adnan Shihab-Eldin,
Mohamed Hamel and Garry Brennand
The importance of weighted variables to
OPEC’s production quota allocation —
Mahmoud Al-Osaimy and Aziz Yahyai
The efficiency of natural gas futures markets
— Ahmed El Hachemi Mazighi
Electric load forecasting for northern Vietnam, using an artificial neural network
— Subhes C Bhattacharyya and Le Tien
Thanh
March 2003
Price elasticity of demand for crude oil:
estimates for 23 countries — John C B Cooper
Ownership of associated and discovered
gas in Nigeria under the old joint venture
contracts — Andrew L Chukwuemerie
An introduction to the economics of
natural gas — Ferdinand E Banks
58
An examination of the
international natural
gas trade
December 2003
September 2002
Risk measurement for oil and gas exploration:
the marriage of geological and financial techniques — Thomas Stauffer
The prospects for the oil sector in the Iraqi
economy after sanctions — Imad Jabir
Energy use and GDP growth, 1950–97
— Rögnvaldur Hannesson
Oil price movements and globalisation: is
there a connection? — Robert Looney
June 2002
Oil outlook to 2020 — Rezki Lounnas and
Garry Brennand
Short-term forecasting of non-OPEC supply — a statistical analysis — S M R Tayyebi
Jazayeri and A Yahyai
Using non-time-series to determine supply
elasticity: how far do prices change the Hubbert curve? — Douglas B Reynolds
A simple economic analysis of electricity
deregulation failure — Ferdinand E Banks
March 2002
Short-term forecasting of non-OPEC
supply: a test of seasonality and seasonal
decomposition — S M R Tayyebi Jazayeri
and A Yahyai
Evidence that the terms of petroleum
contracts influence the rate of development
of oil fields — Mustafa Bakar Mahmud and
Alex Russell
Stimulation of investment in international
energy through Nigerian tax exemption laws
— Uche Jack Osimiri
Energy indicators — OPEC Secretariat
December 2001
Oil outlook to 2020 — Adnan Shihab-Eldin,
Rezki Lounnas and Garry Brennand
OPEC oil production and market
fundamentals: a causality relationship
— Atmane Dahmani and Mahmoud H
Al-Osaimy
Oil demand in North America: 1980–2020
— Salman Saif Ghouri
The price of natural gas — A M Samsam
Bakhtiari
September 2001
What have we learned from the experience
of low oil prices? — A F Alhajji
The estimation of risk-premium implicit in
oil prices — Jorge Barros Luís
The economics of an efficient reliance
on biomass, carbon capture and
carbon sequestration in a Kyoto-style
emissions control environment — Gary W Yohe
The geopolitics of natural gas in Asia
— Gawdat Bahgat
“The principal objective of the OPEC Review is to
broaden awareness of (energy and related) issues,
enhancing scholarship in universities, research
institutes and other centres of learning.”
OPEC Bulletin
OPEC PUBLIC ATIONS
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include OPEC Ministers, other top-level officials and decision-makers in government and business circles, together with policy
advisers in key industrial organizations.
The magazine not only conveys the viewpoints of OPEC and its Member Countries but also promotes discussion and
dialogue among all interested parties in the industry. It regularly features articles by officials of the Secretariat and leading
industry observers. Each issue includes a topical OPEC commentary, oil and product market reports, official statements, and
the latest energy and non-energy news from Member Countries and other developing countries.
General terms
Orders are accepted subject to the terms and conditions, current rates and technical data set out in the advertising brochure.
These may be varied without notice by the Publisher (OPEC). In particular, the Publisher reserves the right to refuse or
withdraw advertising felt to be incompatible with the aims, standards or interests of the Organization, without necessarily
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59
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OPEC Bulletin
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Vol. XXVII, No. 4
An examination of the
international natural gas trade
The effect of inflation on
government revenue and
expenditure: the case of the
Islamic Republic of Iran
Limiting global cooling after global
warming is over — differentiating
between short- and long-lived
greenhouse gases
Energy indicators
December 2003
Ahmed El Hachemi Mazighi
Abbas Alavirad
Axel Michaelowa
OPEC Secretariat
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Annual
Statistical
Bulletin 2002
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Jan 2004

Transcription

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