2 NOTICEBOARD 3 COMMENTARY 4 FORUM · 2020-02-11 · Research Division Dr Shokri M Ghanem Head, Energy Studies DepartmentDr Rezki Lounnas Head, Data Services Department Dr Muhammad

January 2001 1

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P u b l i s h e r sOrganization of the PetroleumExporting Countries, Obere Donau-strasse 93, 1020 Vienna, Austria.

Telephone: +43 1 211 12/0; Telex: 134474;Telefax: +43 1 216 4320;Public Relations & InformationDepartment fax: +43 1 214 9827.E-mail: [email protected]: OPEC News Agency: [email protected]: http://www.opec.orgSubscription: ATS 850 ( 61.77)/12 issues.

M e m b e r s h i p a n d a i m sOPEC is a permanent, intergovernmental Or-ganization, established in Baghdad, September10–14, 1960, by IR Iran, Iraq, Kuwait, SaudiArabia and Venezuela. Its objective is to co-ordinate and unify petroleum policies amongMember Countries, in order to secure fair andstable prices for petroleum producers; an effi-cient, economic and regular supply of petro-leum to consuming nations; and a fair returnon capital to those investing in the industry.

The Organization comprises the fiveFounding Members and six other Full Mem-bers: Qatar (joined in 1961); Indonesia (1962);SP Libyan AJ (1962); United Arab Emirates(Abu Dhabi, 1967); Algeria (1969); andNigeria (1971). Ecuador joined the Organiza-tion in 1973 and left in 1992; Gabon joined in1975 and left in 1995.

S e c r e t a r i a t o f f i c i a l sSecretary General Dr Alí Rodríguez Araque

Director,Research Division Dr Shokri M Ghanem

Head,Energy Studies Department Dr Rezki Lounnas

Head, Data ServicesDepartment Dr Muhammad A Al Tayyeb

Head, Petroleum MarketAnalysis Department Javad Yarjani

Head, Administration &Human Resources Department Dr Talal Dehrab

Head, PR & InformationDepartment Farouk U Muhammed, mni

Legal Officer,In charge of the Officeof the Secretary General Mrs Dolores Dobarro

W e b - s i t eVisit the OPEC Web-site for the latest news andinformation about the Organization and itsMember Countries. The URL is

http://www.opec.org

T h i s m o n t h ’ s c o v e r . . .shows a well being drilled at a Nigerian NationalPetroleum Corporation site in the Chad basin (seeNewsline on page 43).

2 N O T I C E B O A R DForthcoming conferences and other events

3 C O M M E N T A R YActing in anticipationThe recent decision to trim output by 1.5m b/d is evidenceof OPEC’s more proactive approach to market stability

4 F O R U MOPEC: maintaining oil market stability while facing thefuture with confidenceBy HE Dr Rilwanu Lukman, former OPEC Secretary General

8 C O N F E R E N C E N O T E S113th Meeting of the OPEC Conference

18 O P E C S E C R E T A R I A T R E C E P T I O NOPEC Secretariat hosts reception for the incoming andoutgoing Secretaries General

28 R U S S I A N F E D E R A T I O N R E C E P T I O NRussian Federation holds reception forDr Rodríguez Araque and Dr Lukman

33 O P E C / U S D o E M E E T I N GOPEC and US Energy Secretary hold informal meeting

34 M I L L E N N I U M P A R T YOPEC/OPEC Fund Social Committee’s Millennium Party

43 N E W S L I N EEnergy stories concerning OPEC and the Third World

51 E N V I R O N M E N T N O T E B O O KExecutive summary and calendar of meetings

54 M A R K E T R E V I E WOil market monitoring report for December 2000

72 M E M B E R C O U N T R Y F O C U SFinancial and development news about OPEC Countries

77 O P E C F U N D N E W SRecent loans and grants made by the OPEC Fund

78 S E C R E T A R I A T N O T E SOPEC Secretariat activities and forthcoming meetings

Indexed and abstracted in PAIS International

Vol XXXII, No 1 ISSN 0474-6279 January 2001

2 OPEC Bulletin

N O T I C E B O A R D

Venezuela appoints newMinister of Energy and Mines

Venezuela has appointed HE Alvaro SilvaCalderón as the country’s new Minister of

Energy andMines. He takesover from HEAlí RodríguezAraque, whobecame OPECSecretary Gen-eral effectivefrom January 1,2000. SilvaCalderón wasborn in Teresen,Monagas State,Venezuela in

1929 and holds a Doctorate in Law from theCentral University of Venezuela, where he isalso Emeritus Professor. He has held variousposts at the Ministry of Energy and Mines,including that of Deputy Minister in Chargeof the Mines Portfolio, Deputy Energy andMines Minister and Head of the Legal De-partment. A Member of the House of Rep-resentatives of the Venezuelan Congress, SilvaCalderón is married with two children.

Forthcoming events

London, UK, February 22–23, 2001, 2nd

Annual Conference: Nigeria Oil & Gas Sum-mit. Details: Ms Karen Bligh, IBC GlobalConferences Limited, Mortimer House, 37-41 Mortimer Street, London, WIT 3JH, UK.Tel: +44 (0)20 7453 2061; fax: +44 (0)207453 2058, e-mail: [email protected]; Web site: www.ibcglobal.com/eq169.

London, UK, March 5–6, 2001, African Gas2001. Details: Global Pacific and Partners,UK. Fax: +44 (0)2711 880 3391; e-mail:[email protected] or [email protected].

Boston, MA, USA, March 6–8, 2001, Over-view of the Oil, Gas and Power Business. Details:IHRDC Headquarters, 535 Boylston Street,Boston, MA 02116, USA. Tel: +1 617 536 0202;fax: +1 617 536 4396; e-mail: [email protected]; Web site: www.ihrdc.com.

Ashgabat, Turkmenistan, March 14–16,2001, TIOGE 2001, 6th Turkmenistan Inter-national Oil & Gas Exhibition and Conference.Details: ITE Oil and Gas, ITE Group Plc,105 Salusbury Road, London NW6 6RG,UK. Tel: +44 (0)20 7596 5000; fax: +44(0)20 7596 5111; e-mail: [email protected].

Manama, Bahrain, March 17–20, 2001, 12th

Middle East Oil Show & SPE Conference.Details: Overseas Exhibition Services Ltd, 11Manchester Square, London W1M 5AB, UK.Tel: +44(0)20 7862 2141; fax: +44(0)20 7862

Vienna, AustriaMarch 14–15, 2001

OPEC and the Global EnergyBalance: Towards a

Sustainable Energy Future

Details: CWC Associates LtdElizabeth McLaughlinBusiness Design Centre52 Upper StreetLondon N1 0QH, UKTel: +44 (0)20 7704 0308Fax: +44 (0)20 7704 [email protected]/opec

2001; e-mail: [email protected]; Website: www.montnet.com.

Cape Town, South Africa, March 19–21,2001, Production Sharing Contracts and Inter-national Petroleum Fiscal Systems. Details:Conference Connection Administrators PteLtd, 212A Telok Ayer Street, Singapore068645. Tel: +65 226 5280; fax: +65 2264117; e-mail: [email protected]; Website: www.cconnection.org.

Abuja, Nigeria, March 21–23, 2001, OWA2001, 5th Offshore West Africa Conference &Exhibition. Details: Ms Isabelle Dessaux,PennWell, 1700 West Loop South, Suite1000, Houston, TX 77027, USA. Tel: +1 713963 6236; fax: +1 713 963 6212/6296; e-mail: [email protected].

Dubai, UAE, March 24–25, 2001, MiddleEast Petroleum Strategy Briefing VI. Details:Conference Connection Administrators Pte,Ltd, 212A Telok Ayer Street, Singapore068645. Tel: +65 226 5280; fax +65 2264117; e-mail: [email protected].

Dubai, UAE, March 26–28, 2001, The NinthAnnual Middle East Petroleum & Gas Confer-ence. Details: Conference Connection Ad-ministrators Pte, Ltd, 212A Telok Ayer Street,Singapore 068645. Tel: +65 226 5280; fax+65 226 4117; e-mail: info@ cconnection.org.

Dubai, UAE, March 29, 2001, Middle EastGas Markets 2001. Details: Conference Con-nection Administrators Pte, Ltd, 212A TelokAyer Street Singapore 068645. Tel +65 2265280; fax: +65 226 4117; e-mail: [email protected].

Ravenna, Italy, March 28–30, 2001, Off-shore Mediterranean Conference (OMC) 2001.Details: OPITO, Fax: +33 493 386 908.

Manama, Bahrain, March 31–April 3, 2001,12th Middle East Oil Show & SPE Conference.Details: Overseas Exhibition Services Ltd, 11Manchester Square, London W1M 5AB, UK.

Doha, QatarMarch 12–14, 2001

4th Doha Conference onNatural Gas

Details: Qatar PetroleumPublic Relations DepartmentPO Box 3212, Doha, QatarTel: +974 449 14 49Fax: +974 483 1000E-mail: [email protected]

Tel: +44 (0)20 7862 2000; fax: +44 (0)207862 2001; www.montnet.com.

Miami, USA, April 3–5, 2001, OceanologyInternational 2001. Details: PGI/SpearheadExhibitions Ltd, Ocean House, 50 KingstonRoad, New Malden, Surrey, KT3 3LZ, UK.Tel: +44 (0)181 949 9813/9222; fax: +44(0)181 949 8186, e-mail: [email protected]; www.oiamericas.com.

Miramare-Trieste, Italy, April 23–27, 2001,Workshop on Technologies for Desalination,followed by April 30–May 4, 2001, Work-shop on Desalination Economic Evaluation.Details: The Abdus Salam International Cen-tre for Theoretical Physics, c/o Ms EBrancaccio, Strada Costiera 11, I-34014Trieste, Italy, Tel: +39 040 224 02 84; fax:+39 040 224 163; e-mail: [email protected] or [email protected].

Cairo, Egypt, May 27–31, 2001, Interna-tional Seminar on Status and Prospects forSmall and Medium Sized Reactors. Details:International Atomic Energy Agency, VIC,Wagramer Strasse 5, PO Box 100, A-1400,Vienna, Austria, Tel: +43 (0)1 2600 (0); fax:+43 (0)1 12645; e-mail: [email protected].

Baku, Republic of Azerbaijan, June 5–8,2001, 8th International Caspian Oil & GasExhibition & Conference, Details: PGI Spear-head Ltd, Coombe Hill House, Beverley Way,London SW20 0AR, UK. Tel: +44 (0)208949 9222; fax: +44 (0)20 8949 8186/8193;e-mail: [email protected].

Copenhagen, Denmark, July 2–6, 2001,European Wind Energy Conference and Exhi-bition. Details: WIP, Sylvensteinstrasse 2, D-81369 München, Germany. Tel: +49 89 7201235; fax: +49 89 72012 91, e-mail: [email protected]; www.wip-munich.de.

January 2001 3

C O M M E N T A R Y

Acting in anticipationThe recent decision to trim output by 1.5m b/d is evidence

of OPEC’s more proactive approach to market stability

E d i t o r i a l p o l i c yOPEC Bulletin is published by the Public

Relations & Information Department. The

contents do not necessarily reflect the official

views of OPEC or its Member Countries.

Names and boundaries on any maps should not

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C o n t r i b u t o r sOPEC Bulletin welcomes original contribu-

tions on the technical, financial and environ-

mental aspects of all stages of the energy indus-

try, including letters for publication, research

reports and project descriptions with support-

ing illustrations and photographs.

E d i t o r i a l s t a f fEditor-in-Chief Farouk U Muhammed, mni

Editor Graham Patterson

Assistant Editor Philippa Webb

Production Diana Lavnick

Design Elfi Plakolm

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A d v e r t i s e m e n t sOPEC Bulletin reaches the decision-makersin Member Countries. For details of its rea-sonable advertisement rates see the appropri-ate page at the end of the magazine. Ordersfrom Member Countries (and areas not listedbelow) should be sent directly to the Editor-in-Chief at the Secretariat address. Other-wise, orders should be placed through thefollowing Advertising Representatives:

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The international oil marketseems to be unpredictable. Yetin the run-up to any OPEC

Conference, there is one thing that canalways be predicted with confidence:There will never be a shortage of indus-try experts, analysts and commentatorsoffering their advice on what measuresthe Organization should or should nottake regarding the oil output levels ofits Member Countries.

Thus, as the 113th Conference drewcloser, some voices could be heardadvising the Organization not to cut oilproduction. These voices were appar-ently oblivious to the fact that OPECboosted output on four occasions lastyear, thus adding almost four millionbarrels per day to the market. So whenthe decision was announced that OPEChad agreed to cut output by 1.5m b/d,there was a mixed reaction from theconsuming countries, with some voic-ing their disappointment over the Or-ganization’s latest move.

Yet there is something that every-body should understand: OPEC is nowkeeping abreast of the changes that areoccurring worldwide, especially devel-opments in the oil market. Therefore,the decisions taken by OPEC are nolonger mere reactions to events. TheOrganization’s strength is demonstratedby its ability to anticipate develop-ments.

This explains the decision of the113th Conference: to reduce output by1.5m b/d, effective as of February 1,2001. The decision, as the facts prove,was a prudent one.

Among the various factors influenc-ing that decision, three deserve to bementioned: firstly, the counter-seasonalphenomena experienced during themonth of December 2000 and the first

days of January 2001, when pricesdropped by over $10 per barrel. Sec-ondly, it is well known that as thenorthern hemisphere winter draws to aclose, oil demand slackens as less heat-ing oil is needed, while the summerdriving season (and hence gasolinedemand) is not yet in full swing. Thirdly,it is now obvious that the US economyis slowing down, although it is unclearexactly how much effect this slowdownwill have on oil demand. What is clearis that the US, which is of course theworld’s biggest consumer of oil, hasenjoyed unprecedented economic ex-pansion over the past decade or so, andas this economic boom begins to falter,the consequences for oil demand canonly be negative.

When we take into account the factthat the US slowdown could very wellhave a knock-on effect throughout therest of the global economy, then oildemand could take an even more seri-ous hit. Thus, the decision by OPECto cut production by 1.5m b/d can beseen as a thoughtful and well-consid-ered anticipatory move as the oil mar-ket moves into a period of lower demand.

It is no secret that attempting tobalance oil supply and demand is notan exact science, and no-one is capableof making perfect predictions, evengiven the fullest and most accuratehistorical data available. But the latestcut ought to have the effect of prevent-ing oil prices falling through the flooras demand slackens and avoiding arepeat of the price crash of 1998. Thus,the action is aimed at ensuring contin-ued harmony and stability in the worldoil market. It is, therefore, a decisionfor which OPEC should be applaudedby fair-minded commentators and par-ticipants in the world oil scene.

4 OPEC Bulletin

F O R U M

of oil, so the former are able to meet theneeds of their ever-growing populationswhile at the same time investing in thefuture of our industry, and the latter paya fair price for the end-products — frompetrol to plastics — without which mod-ern life would be difficult to imagine.

At the mention of market stability,many readers will be reminded of thedramatic oil price fluctuations we havewitnessed over the past three years, so letme take a closer look at the events thatdrove the market during that period, inorder to obtain a clearer idea of how OPEChas striven and continues to strive to meetits responsibilities in that area.

Over the last few years, internationaloil prices have been highly unstable. It isimportant to stress, however, that OPEC’sdesire to stabilize the market encompassestaking action when prices are either so lowor so high that they threaten to damagethe global economy – not just when theyare low. Let us look at what this has meantin practice over the past three years.

Oil markets 1997-2000Just over three years ago, in Novem-

ber 1997, oil prices began to fall. The de-cline was triggered in part by the Asianeconomic crisis and the consequent slumpin demand growth in that region, amplecrude supplies, unusually warm winterweather and high levels of stocks in theconsuming countries. The slump was sodeep and prolonged that in 1998 alone,OPEC Member Countries lost between$50 billion and $60bn in oil revenues andhad to make drastic cuts in their spendingprogrammes.

Meanwhile, a wave of mergers, acqui-sitions and drastic cost-cutting measuresswept through the international oil com-panies, which were also forced to drasti-cally cut their investment programmes inorder to adapt to what at the time was

History shows that those whodo not react swiftly to the ever-changing world around themare either left behind or, worse,punished severely for their inabil-ity to respond, according toHE Dr Rilwanu Lukman*,OPEC Secretary General from1995–2000.

OPEC: maintaining oil market stabilitywhile facing the future with confidence

thought to be a permanent new reality. Weare already seeing the effects of these cutsin the seeming inability of non-OPECcountries to react to the current strongprice levels by increasing exploration andproduction activity, as one might expect.Indeed, we have recently seen that somemajors prefer to spend their surplus cashon share buybacks instead.

One significant point that should benoted is that when prices were at rockbottom, in late 1998 and early 1999, itwas not just the OPEC nations and theinternational oil companies that were feel-ing the pain. Consuming nations alsosuffered. In the USA, allegations weremade by a group calling itself ‘Save Do-mestic Oil’ that certain OPEC Memberswere dumping oil on the US market, thusharming the interests of US domestic oilproducers. Although these allegations wererightly dismissed by the US authorities,they nonetheless show how serious thesituation had become for everyone.

In the event, as we now know, the newera of low oil prices that some analysts wereproclaiming turned out to be an illusion.In 1998, OPEC and some non-OPECnations made two rounds of output cutswhich failed to have the desired effect ofrestoring stability to the market. The turn-ing point was the OPEC/non-OPECagreement in March 1999 to remove 2.1million barrels per day of oil from themarket — 1.7m b/d from OPEC andanother 400,000 b/d from non-OPECnations including Mexico, Norway,Oman, and Russia.

This agreement had the decisive effectof swinging the market around, andthroughout 1999 and into 2000, pricescontinued to recover steadily. In March2000, as the Ministers of our MemberCountries gathered in Vienna for theirregular Meeting, there were loud calls fromthe consuming countries for OPEC to

* Based on Dr Lukman’s speech to the Insti-tute for International Energy Studies confer-ence on The Impact of Middle East/CaspianOil on Global Energy Markets, Tehran, IRIran, November 4–5, 2000.

The question is often asked: whatshould be OPEC’s short, mediumand long-term role in the world oil

market? Or, to put it another way, whatare our responsibilities, and how can webest fulfil them? Let me begin this articleby looking at OPEC’s role in stabilizingthe oil market.

Briefly stated, the Organization aimsto stabilize the oil market at levels whichare fair for both producers and consumers

F O R U M

January 2001 5

increase output and prevent prices fromstaying too high for too long. The Organi-zation’s response was, I think we can safelysay, both balanced and prudent, as themajority of Members agreed to reverse theMarch 1999 output cuts, which had beenso successful in restoring balance to themarket.

As prices remained firm in the follow-ing months, OPEC took three subsequentdecisions to boost output: at the 110th

Meeting in June, production was furtherincreased by over 700,000 b/d, in Septem-ber the 111th Meeting added another800,000 b/d, and another 500,000 b/dwas added from October 31, 2000. Thismade a total of four output increases in2000, totalling close to 4m b/d per day.In addition, our non-OPEC partners alsorelaxed their production restrictions byseveral hundred thousand barrels per day.Further proof of OPEC’s constant vigi-lance in monitoring the market came whenthe Organization cut output by 1.5mb/d at its most recent Meeting in Januarythis this year.

Predicting oil prices can be a riskybusiness. Nevertheless, one thing can besaid for certain: OPEC and its partners innon-OPEC, by acting with decisiveness,firmness and unity of purpose, have suc-ceeded in returning harmony and stabil-ity to the market.

Nevertheless, we shall not relax orbecome complacent. History showsthat those who do not react swiftly to theever-changing world around them are atbest left behind, or at worst, punishedseverely for their inability to respond. Italso needs to be borne in mind that manyindustry experts agree that the high priceswe have seen in recent months are not theresult of a shortage of crude on the mar-ket, but rather tight supplies of certainproducts.

Oil product taxationAt the same time as it was taking the

necessary measures to restore stability tothe market, OPEC also took the opportu-nity to strongly remind the oil-consum-ing countries of what it has been sayingfor many years: that while the Organiza-tion’s actions can moderate crude prices,it cannot exert much, if any, influence onthe prices of products like gasoline orheating oil. The reason is simple: the high

end-user prices for such products are notthe result of a shortage of crude, but thedirect consequence of the frankly extor-tionate tax burden imposed on oil prod-ucts by the governments of those samecountries.

What OPEC is keen for everybody torealize is that while we acknowledge that

the price of crude is one element in prod-uct prices, it is a relatively small one whencompared with the other elements, prin-cipally taxation levels. A very clear distinc-tion therefore needs to be drawn betweenhigh crude prices, which can be moder-ated by the Organization (and its non-OPEC partners) agreeing to increase pro-duction, and high product prices, whichare largely the result of excessive taxationin consuming countries over which OPEChas no control.

Nevertheless, in some of the countrieswith the highest tax burdens, principallythose in Western Europe, a public debatehas recently been sparked off over the highlevels of taxation. Last year, we even sawa flurry of protests and blockades in coun-

tries where such things were previouslyunheard of. The end users, after havingbeen fleeced for so many years by theirgovernments, are at last getting fed up andexpressing their views. OPEC acknowl-edges that the governments of the consum-ing countries have every right to tax oilproducts if they want to, but of course theymust also take into account that, by thesame token, their citizens have every rightto tell their governments what they thinkof such taxes, and to protest against them.

However, while OPEC’s output in-creases last year helped to reduce upwardpressure on crude prices, product priceswill remain high unless the consumingcountries fulfil their part of the bargain.OPEC cannot be successful if it acts alone.It is doing its bit to help moderate crudeprices by increasing output — now it isup to the consuming countries to play theirpart and take action to cut taxes on prod-ucts.

The environmental aspectClosely linked to the issue of oil taxa-

tion is that of the environment. I use thephrase ‘closely linked’ because it is anunfortunate fact of life that in most of theindustrialized nations, taxes designed todiscriminate against oil are often intro-duced under the bogus guise of ‘protect-ing the environment’, when in fact theyare often nothing more than a revenue-generating measure designed to fill thecoffers of the governments which intro-duce them.

Allied to this whole issue is the ongo-ing process of the international negotia-tions on climate change, the increasingimportance of which makes it imperativefor us to look at this more in depth. OPEChas been closely following developmentsregarding the UN Framework Conventionon Climate Change, the Kyoto Protocoland all the subsequent meetings. TheSecretariat has been doing its utmost byproviding numerous studies and holdingworkshops in recent years, in addition topresenting the views of Member Countriesin various international fora.

The reason is simple: the measures pro-posed to curtail greenhouse gas emissionsrepresent a very real and dangerous threatto the economic health of nations whichare heavily reliant on oil exports. The factthat many of our Member Countries earn

‘A very clear

distinction

needs to be

drawn between

high crude

prices and

high product

prices.’

F O R U M

6 OPEC Bulletin

more than 90 per cent of their foreignexchange from hydrocarbon sales thusmakes them highly vulnerable.

Studies prepared by our Organizationshow that the OPEC Member Countriescould stand to lose annual oil export rev-enues of between $23bn and $63bn, de-pending on the scenario, if industrialisedcountries imposed carbon taxes at suffi-cient levels to achieve their emission re-duction targets by 2010, as set out by theKyoto Protocol of December 1997. Thisequates to a fall in world oil demand ofbetween 7.6m b/d and 10.1m b/d by2010. Additionally, OPEC welfare lossesas a percentage of GDP would be in therange of –1.7 to –3.5 per cent.

Restructuring energy taxesNonetheless, several ideas have been

proposed to minimise the direct effects ofmitigation measures on oil exporters. Onesuggestion is that energy taxes could berestructured according to carbon content.This would obviously lead to price in-creases for coal, bringing in turn a dramaticreduction in the use of coal for electricitygeneration. With this, carbon dioxideemissions would fall by a significantamount, which would certainly be a ma-jor achievement in terms of reducinggreenhouse gas emissions. OPEC’s losseswould also be around $4 billion less thanin the simple taxation scenarios.

Another measure could be the estab-lishment of broader investment funds tohelp oil-exporting developing countriesdiversify their economies away from oil,through increased investment in key sec-tors and expanded technology transferefforts. Preferential trade treatment fordeveloping countries should also be en-couraged, along with the elimination ofsuch market distortions as subsidies oncoal or nuclear power and tax incentivesfor oil production in industrialised nations.

With so many issues to be considered,it came as no surprise that the most recentround of climate change negotiations —COP6 in The Netherlands — ended instalemate, as many of the most difficultissues remained unresolved. From OPEC’spoint of view, we shall continue our activerole in safeguarding our Members’ inter-ests, particularly with regard to the KyotoMechanisms and the implementation ofArticles 4.8 of the UNFCCC and 3.14 of

the Kyoto Protocol, which are vital toOPEC interests.

Other unresolved issues include the ex-tent to which nations will be able to payother nations to reduce pollution on theirbehalf, for example, emissions trading. Asto the extent of this, the European Unionfavours a limit of 50 per cent, while the

United States wants to see as few restric-tions on this as possible. There is also noagreement on the penalties to be imposedif nations do not meet their pollutiontargets. Additionally, the divide betweenindustrialised nations and the developingworld remains strong, with the latter jus-tifiably fearing that by committing them-selves to limits, they may hamper their ownfuture growth.

In fact, the gap between rich nationsand their developing counterparts was oneof the main themes of the original Sum-mit of OPEC Heads of State in Algiers,twenty-five years ago, and it was addressedagain at the Second Summit of Heads ofState in the Venezuelan capital, Caracas,in September last year.

OPEC Members have made a tremen-dous contribution to improving the envi-ronment. Nevertheless, there is still a

massive gap between the developing andthe developed world. It is a luxury affordedonly to the world’s developed nations tobe able to talk about ‘preservation of theenvironment’. However, one questionshow genuine the sentiment really is, espe-cially when one examines how the so-calledenvironmental taxes have been misused bythe world’s developed nations to date. Thisnaturally leads one to also question theintent of these nations in really wantingto close the gap between the world’s richand poor nations, especially consideringthe positions they take in the context ofclimate change talks. From the develop-ing world’s perspective, as is recognised bythe ‘Caracas Declaration’, the greatestpolluter of our planet is not carbon diox-ide, or any other greenhouse gas, for thatmatter. It is poverty. That is why the de-veloping countries must not be denied theright to development by their rich coun-terparts.

It needs to be underlined that OPECand its Member Countries have just as biga stake in a clean environment as anyoneelse. We are not asking for a licence topollute because our economies are so re-liant on fossil fuels. What we are askingfor is that the many issues which need tobe addressed before the climate changenegotiations can lead to actions that willactually benefit the whole planet. Of vitalimportance is that these issues are ad-dressed in a manner that is satisfactory toall who have a stake in the outcome of suchdiscussions.

The industrialized world has clear ob-ligations to fulfil with regard to the im-pact of any measures taken to combatclimate change on oil-producing countries.OPEC will therefore continue to strive sothat the voices not only of oil-producingdeveloping nations, but also of the devel-oping world as a whole, are clearly heard.

The future role of oilLet us now examine the future role of

oil and of the Organization of the Petro-leum Exporting Countries. We can becertain that OPEC’s place in the future ofthe oil industry is secure. At present, theOrganization’s output represents about 40per cent of the oil produced worldwide.However, that same output level also ac-counts for around 60 per cent of the oiltraded internationally, from a reserve base

‘There is still

a massive gap

between the

developing

and the

developed

world.’

F O R U M

January 2001 7

representing over three-quarters of theworld total. Thus, it is certain that withina few years, as global energy demand con-tinues to increase, the Organization’s 11Member Countries will meet a greatershare of that demand.

Growing thirst for oilAccording to our own OPEC World

Energy Model (OWEM), which is up-dated every year, world oil demand willrise from around 73m b/d in 1998 to some76m b/d in 2000. Over the followingdecade, the world’s thirst for oil should riseby a further 14m b/d to over 90m b/d,and will reach an estimated 103m b/d in2020.

These projections are in tandemwith a global economy that is slated to seeexpansion of 3.5 per cent annually in1998–2000, 3.4 per cent a year between2000–2010, and 3.3 per cent a year in2010–2020. It is forecast that non-OPECoil production in the first two decades ofthe 21st century will remain relatively sta-ble at around 49m b/d, which means thatOPEC Member Countries should take thelion’s share of incremental demand.

With projected global demand rising,and the Organization being the only trueand reliable incremental supplier, OPECwill need to expand its oil production ca-pacity. Although several of our Membersare currently operating at or very close tocapacity, they all have, in varying degrees,tremendous potential. The scale of invest-ments OPEC Member Countries will needto make for the future is enormous, run-

in the future, and OPEC must thereforebe prepared to meet that challenge.

Future challengesIf we look towards the future of the oil

industry, it is clear that the initiativesOPEC has advanced in recent years em-phasise one very important point: that thekey to the Organization’s success in main-taining market stability lies in co-opera-tion.

If the experiences of the past few yearshave taught us anything, it is that withoutco-operation, an entity as big and assprawling as the international oil indus-try, with all its many diverse facets, can-not hope to thrive and prosper. We mustsustain and build on the levels of co-op-eration and understanding that enabled theoil industry to recover so strongly from theprice slump of 1998.

OPEC remains as committed as everto a stable oil market, and we stand readyto work together with all the players inthe global energy industry to ensure thatwe can meet the demands of the newmillennium. We have successfully met thenumerous challenges we have had to faceduring our forty-year history. We are con-tinuing to act responsibly in our currentefforts to stabilize the oil market in co-operation with our non-OPEC partners.All in all, it can safely be said that theOrganization of the Petroleum ExportingCountries, now that it has entered its fifthdecade, can look forward with completeconfidence to whatever the future mayhold.

‘OPEC is

continuing to

act responsibly

in our efforts

to stabilize the

oil market.’

ning into tens of billions of dollars overthe next few decades.

For this, they will require a reasonablelevel of income and a fair share of petro-leum revenues. That is why a fair and stableprice for crude oil is so important to ourMember Countries. The type of extremeprice fluctuations we have seen over the

past three years makes it impossible to planwith any degree of certainty. Nevertheless,one thing is clear: the world will increas-ingly look to our Member Countries tosupply the bulk of incremental demand

8 OPEC Bulletin

C O N F E R E N C E N O T E S

Press Release No 1/2001Vienna, Austria, January 17, 2001

Opening Address to the113th (Extraordinary) Meeting of the

OPEC Conferenceby HE Dr Chakib Khelil,

President of the Conference andMinister of Energy and Mines of

Algeria

Let me begin by welcoming you to the113th (Extraordinary) Meeting of theOPEC Conference and to wish all of youa happy and successful New Year. I shouldlike to extend a special greeting to HisExcellency Alvaro Silva Calderón, therecently-appointed Minister of Energy andMines for Venezuela, who is attending theOPEC Conference for the first time asHead of Delegation.

He replaces His Excellency Dr AlíRodríguez Araque, who took up the postof OPEC Secretary General on January 1.As the legally authorised representative ofthe Organization and the Chief Executiveof the Secretariat, the Secretary Generalhas a central role to play in OPEC’s af-fairs, both externally and internally, en-suring that decisions made at Ministeriallevel are efficiently and effectively carriedout by the Secretariat. We are confidentthat, through his extensive knowledge ofthe energy industry, his character and hisdrive, His Excellency Dr RodríguezAraque will prove an ideal replacement forHE Dr Rilwanu Lukman, who served withdistinction as Secretary General from 1995to the year 2000. We should like to ex-

press our heartfelt thanks once again toHE Dr Lukman, and wish him everysuccess in the future, as he concentrateshis energies full-time on his role as Niger-ia’s Presidential Adviser on Petroleum andEnergy.

Today’s gathering is the latest in arecent series of Extraordinary Meetings ofour Conference. These have been broughtabout by the need to closely monitordevelopments in the international oilmarket during a period of unusually highinstability and, where considered neces-sary, to take action. Since we concludedour last Meeting in mid-November, the

average price of OPEC’s spot ReferenceBasket has fallen heavily. At the end of thatMeeting, the price was $31.5 per barrel.Since then, it has briefly dipped below$21.5/b. As we all know, this is beneaththe $22/b lower limit of the price band.So far this year, the price has averagedabout $23/b. This turn of events has re-sulted in a broad consensus among ourMember Countries on the need for acutback in production.

However, while this issue will be cen-tral to our proceedings, the outcome ofthis Meeting should not be taken forgranted. Before arriving at any decision,

113th (Extraordinary) Conferenceagrees to cut production

by 1.5 million b/d

Below: New Secretary General, HE Dr Rodríguez Araque (centre), Algeria’s Energy &Mines Minister and President of the OPEC Conference, HE Dr Chakib Khelil (left) andDirector of Research Division, Dr Shokri Ghanem examine some information.


January 2001 9

we shall examine closely the market out-look, with particular regard to the supplyand demand balance and inventory lev-els. Clearly, at the moment, the market isover-supplied with crude, with some esti-mates putting the excess at around 1.5million barrels a day. This has been partlydue to the mild northern hemispherewinter, with the specific impact of this ondemand being magnified, as usual, byspeculation. The role of stocks, however,is crucial. When stock levels are high,prices have a tendency to fall. Stocks atpresent are sufficient, but they are expectedto climb quickly if OPEC productionremains at current levels. Without anydoubt, this will cause prices to weakenfurther.

As well as examining the oil marketoutlook, our deliberations at this Meetingwill also embrace broader economic ele-ments, particularly the perceivedslowdown in the United States economyand the impact that this may have on theworld at large and, consequently, on glo-bal energy demand.

At this point, let me remind you that,late last year, we did, in fact, predict thepossibility of a situation of over-supplyarising during the winter. This is why wedeclined to increase output at our Meet-ing on November 12–13, despite callsfrom many quarters to do so. After all, inorder to moderate price levels, we hadalready increased output on four separateoccasions last year, by a total of more than3.7m b/d, and we knew that more timewas needed for the full effect of this towork its way through the system. As itturned out, it is just as well that we actedaccording to our own calculations, al-though we did also carefully consider theadvice of others. We shall adopt a similarapproach of cautious and realistic appraisalat this Meeting, as we seek to bring abouta balance between supply and demand,with fair and reasonable prices.

We look forward to receiving supportfrom leading non-OPEC producers, inparticular, those countries which havecooperated with us in the past, notablyAngola, Mexico, Norway, Oman andRussia. Their support for our market-sta-bilising measures since the late 1990s hascontributed significantly to their success,and this has benefited the market at large.

Moreover, these producers, like our

own Member Countries, acknowledge thefact that any decisions reached should alsoembody the concept of sustainability.Bearing in mind the central importanceof oil to the global economy, it is disturb-ing to see how the price of crude has fluc-tuated since the mid-1990s. OPEC’s Bas-ket price averaged $19b in 1997, $12/bin 1998, $17/b in 1999, $28/b in 2000and $23/b so far this year. How can in-dustry, trade and commerce function ef-fectively in such a climate in any area ofactivity, energy or otherwise? Somehow, adurable solution must be found to thisboom-or-bust trend. We must treat thedisease and not just the symptoms. Thedisease has been around for far too long.It is up to all parties to act for the com-mon good, OPEC and non-OPEC pro-ducers, international organisations andconsumers, if the industry is to prosper inthe future.

This is by no means an easy task, es-pecially for oil-producing, developingcountries, whose economies are heavilydependant upon oil revenues. Therefore,I should like to express my full apprecia-tion to our Member Countries for thestrong spirit of solidarity, the seriousnessand the discipline they have shown inapplying the decisions of our Conferencein the present unstable market conditions.Their actions have been highly satisfactoryand have enhanced the credibility of ourOrganization. We have demonstrated that,

Above: Dr Ghanem (left)and Libya’s Head ofDelegation, the ActingChairman of the NationalOil Corporation, HE AhmedAbdulkarim Ahmed.

Below: Saudi Arabia’sMinister of Petroleum

and Mineral Resources,HE Ali I Naimi (centre)

among a crowd of journalists.


10 OPEC Bulletin

Left: Kuwait’s Head ofDelegation, Oil MinisterHE Sheikh Saud NasserAl-Sabah (centre), with thecountry’s Ambassador toAustria, HE NabeelaAbdulla Al-Mulla (left)and Dr Mohammad AAl-Ramadhan (right).

Right: Iran’sPetroleum Minister,HE Bijan Namdar

Zangeneh (left)with OPEC’s newSecretary General,

HE Dr AlíRodríguez Araque.

Left: The Head of Nigeria’sDelegation and PresidentialAdvisor on Petroleum and Energy,HE Dr Rilwanu Lukman (centre)ponders the next point, togetherwith the Group ManagingDirector of the Nigerian NationalPetroleum Corporation, JacksonGaius-Obaseki (right) and theNational Representative to theECB, Mohammed S Barkindo(left).


January 2001 11

Right: Algeria’sHead of Delegation andAmbassador to Austria,

HE Mokhtar Reguieg(centre) is pictured

here with OPECGovernor Abdelhadi

Benzaghou (right) andAli Hached (left).

Right: Venezuela’s newEnergy and Mines

Minister, HE AlvaroSilva Calderón (centre),

flanked by DeputyEnergy and Mines

Minister, HE BernardoAlvarez (left) and OPEC

Governor, EdgarRodriguez (right).

Left: The Chair-man of the Boardof Governors,HE Abdulla HSalatt of Qatar(left) and Iran’sOPEC Governor,HE HosseinKazempourArdebili.


12 OPEC Bulletin

Right: Iran’s Petroleum Minister,HE Bijan Namdar Zangeneh

(centre) checks out some data withhis country’s OPEC Governor,

HE Hossein Kazempour Ardebili(right). On the left is Iran’s

Permanent Representative to theInternational Organizations in

Vienna, HE Pirooz Hosseini.

Right: The Head of the IraqiDelegation and Ambassador to

Austria, HE Dr Naji SabriAl-Hadithi (centre), with

OPEC Governor Dr Mussab HAl-Dujayli (left) and National

Representative to the ECB,Shamkhi H Faraj (right).

Left: Algeria’s Minster of Energy and Mines and OPEC ConferencePresident, HE Dr Chakib Khelil (left) with the Director General of theOPEC Fund for International Development, HE Dr Y Seyyid Abdulai.Behind Dr Abdulai is Algeria’s Ambassador to Austria, HE MokhtarReguieg.


January 2001 13

Left: Libya’s Governor for OPEC,Ali A Fituri (centre), explains somepoints to Head of Delegation andActing Chairman of the NationalOil Corporation, HE AhmedAbdulkarim Ahmed (centre). Onthe left is Libya’s Ambassador toAustria, HE Dr Said Abdulaati.

Left: Venezuela’s Energy and MinesMinister, HE Alvaro SilvaCalderón (nearest the camera)responds to reporters’ questions.Seated next to him is DeputyEnergy and Mines Minister,HE Bernardo Alvarez.

Right:HE Rodríguez

Araque with thewife of Algeria’s

Energy andMines Minister,

Mrs Khelil.


14 OPEC Bulletin

Below: The Head of Nigeria’s Delegation, HE Dr Lukman (seatedcentre), clarifies some points for David Bird, a senior journalist withDow Jones Newswires.

Below: HE Dr Rodríguez Araque, HE Dr Khelil and HE Salatt face the media. Standing behind the new Secretary General is theHead of PR and Information Department, Farouk U Muhammed, mni.

Above: The UAE’s Minister of Petroleum and Mineral Resources,HE Obaid bin Saif Al-Nasseri, speaks to reporters.


January 2001 15

Below: Qatari Minister of Energy and Industry, HE Abdullah binHamad Al Attiyah, speaks to the press.

Above: Indonesia’s Minister of Energy and Mines, HE Dr PurnomoYusgiantoro, talks to Ms Nina Alswede of Nippon News Network.

Above: Saudi Arabia’s Minister of Petroleum and Mineral Resources, HE Ali I Naimi, answers reporters’ questions, flanked by DeputyMinister for Petroleum Affairs, HRH Prince Abdul Aziz Bin Salman (left) and Ambassador to Austria, HE Omer Mohammed Kurdi


16 OPEC Bulletin

when we say something, we mean it. Wehave, in short, done what we have said wewould do.

I should, at the same time, like to sendthis message of hope to consumers. OPECis committed to satisfying consumer needsand to achieving order and stability in theinternational oil market, with fair pricesfor crude and products and reasonablereturns on investment. Furthermore, letme assure you that we are also aware ofthe need to help sustain growth in theworld economy, without fuelling inflationin consuming countries.

Turning to the future, we wish to fa-cilitate new flows of investment to respondto the widely forecast rising levels of oildemand in the decades to come. At thesame time, we shall do all we can to en-sure that the evolution of the hydrocar-bons industry is not adversely affected byunreasonable demands made at the ongo-ing climate change negotiations. Gener-ally speaking, we should like to share withconsuming countries the risks, the profitsand the responsibility to all our citizensfor the sustainable development of well-functioning market economies within theframework of the globalisation. We seekto eradicate the situation where there areonly a few winners, but a large majorityof losers.

A united approach is essential for this.

We, producers and consumers, shouldbecome more actively associated withmaking decisions that serve our commoninterests in the spirit of dialogue, trans-parency and a shared vision of the longterm, overcoming national self-interest.Put simply, the future welfare of mankindshould be shared and guaranteed by all.

Finally, may I kindly draw your atten-tion to an important event that will takeplace just before the next Ordinary Meet-ing of the Conference. This will be theOPEC Seminar, which will be held inVienna on March 14–15. As its title sug-gests — OPEC and the Global EnergyBalance: Towards a Sustainable EnergyFuture — it will cover, in depth, topicalissues affecting the global energy indus-try, with the accent on sustainability.

Thank you for your attention.

Press Release No 2/2001Vienna, Austria, January 17, 2001

113th (Extraordinary) Meeting of theOPEC Conference

The 113th (Extraordinary) Meeting of theConference of the Organization of thePetroleum Exporting Countries (OPEC)convened in Vienna, Austria, on January17, 2001, under the Chairmanship of its

President, HE Dr Chakib Khelil, Minis-ter of Energy & Mines of Algeria and Headof its Delegation.

The Conference considered the reportof the Ministerial Monitoring Sub-Com-mittee, and thanked the Sub-CommitteeMembers for their continuous endeavourson behalf of the Organization.

Having reviewed the oil market situ-ation and supply/demand expectations forthe forthcoming period, the Conferencehas agreed to decrease overall productionby 1.5m b/d, applicable from February 1,2001, making individual Member Coun-tries’ output levels as follows (b/d):

Production New outputCountry decrease levelAlgeria 48,000 805,000Indonesia 78,000 1,307,000IR Iran 219,000 3,698,000Kuwait 120,000 2,021,000SP Libyan AJ 81,000 1,350,000Nigeria 123,000 2,075,000Qatar 39,000 653,000Saudi Arabia 486,000 8,189,000UAE 132,000 2,201,000Venezuela 174,000 2,902,000Total 1,500,000 25,200,000

This agreement has been reached tak-ing into consideration the interests of bothconsumers and producers and mindful ofthe fact that one of the Organization’smain objectives remains working towardsa stable oil market at reasonable prices.However, this step is being taken in rec-ognition of the fact that current crude oilsupplies far exceed demand, a situationexacerbated by the slowing growth in key

Left: HE Dr Rodríguez Araque answersreporters’ questions at the press conference.


January 2001 17

Right:HE Dr Rodríguez

Araque (l) respondsto more questions,

watched byDr Lukman (r).

Above: At the press conference are HE Dr Rodríguez Araque(second left), HE Dr Lukman (second right), Dr Ghanem (l)and Mr Muhammed (r), who read the OPEC communiqué.

economies. With the approach of theseasonally lower demand in the secondquarter, unchecked production couldprecipitate a price collapse, serving theshort- and longer-term economic inter-ests of neither producers nor consum-ers. Given the precarious supply/de-mand situation, and desirous ofmaintaining crude oil prices at agreedlevels, the Conference instructed theSecretariat to continuously follow-upand report on developments takingplace in market.

The Conference decided that itwould review the market situation at itsnext Ordinary Meeting, scheduled tocommence in Vienna, Austria, onMarch 16, 2001, and take whatevermeasures are deemed appropriate at thattime.

The Conference expressed its appre-ciation to the Government of the Fed-eral Republic of Austria and the authori-ties of the City of Vienna for their warmhospitality and the excellent arrange-ments made for the Meeting.

18 OPEC Bulletin

O P E C S E C R E T A R I A T R E C E P T I O N

OPEC Secretariat hosts reception for theincoming and outgoingSecretaries GeneralIntercontinental Hotel, Vienna, January 17, 2001

Right: New OPEC SecretaryGeneral, HE Dr Alí Rodríguez

Araque embraces his predecessor,HE Dr Rilwanu Lukman at

the reception.

Left: Dr RodríguezAraque (furthestfrom camera) and(clockwise) KuwaitiMinister of Oil,HE Sheikh SaudNasser Al-Sabah;Iranian Minister ofPetroleum, HE BijanNamdar Zangeneh,Venezuela’s recently-appointed Ministerof Energy andMines, HE AlvaroSilva Calderón;Qatari Minister ofEnergy and Industry,HE Abdullah BinHamad Al Attiyahand Saudi ArabianMinister of Petro-leum and MineralResources, HE Ali INaimi.

The OPEC Secretariatorganized a reception atVienna’s IntercontinentalHotel in honour of theincoming and outgoingSecretaries General onJanuary 17, 2001.


January 2001 19

Right: Applauding the speech by HE Dr Lukman(standing right) are (front

left) HE Dr RodríguezAraque, and (clockwise

around the table)HE Al-Sabah,HE Zangeneh,

HE Silva Calderón,HE Al Attiyah and

HE Naimi.

Below: Seated clockwise around the table are the Acting Chairman ofthe Libyan National Oil Corporation, HE Ahmed Abdulkarim Ahmed;the UAE’s Minister of Petroleum and Mineral Resources, HE ObaidBin Saif Al-Nasseri; HE Dr Lukman and Indonesia’s Minister ofEnergy and Mineral Resources, HE Dr Purnomo Yusgiantoro.

Above: Algerian Minister of Energy and Minesand President of the Conference, HE Dr ChakibKhelil, addresses the gathering.


20 OPEC Bulletin

Right: Algeria’s Ambassador to Austria,HE Mokhtar Reguieg (left), greets a guest.

Also pictured are Egyptian Ambassador,HE Sameh Hassan Shoukry (centre), and

Nicaraguan Chargé d’Affaires, Prof DrAlberto José Altamirano-Lacayo (right).

Left: HE Al-Nasseri (left) and HE Naimi(centre) share an amusing moment whileHE Dr Lukman (right) listens.

Right: Iraq’s Ambassador to Austria,HE Dr Naji Sabri Al-Hadithi (centre)

and his wife are seen here with theDirector of OPEC’s Research Division,

Dr Shokri Ghanem (right).


January 2001 21

Left: HE Dr Khelil(left) in a tête-a-têtewith HE Dr Abdulai.

Right: Around the table are (l-r)Mrs Denie Tampubolon; OPEC’s

Head of Human Resources Section,Sugeng Haryanto, and his wife; and

Budget and Accounts Officer, HuddieDewanto (right) and his wife.

Right: NicaraguanChargé d’Affaires,

Prof Dr Alberto JoséAltamirano-Lacayo

(left) and guests.


22 OPEC Bulletin

Right: The Russian guests includedthe country’s Permanent Representative to

the International Organizations inVienna, Valery V Loschchinin (second

left); Andrey V Lazykin (left) of theRussian Permanent Mission; the Alternate

Chairman of the International EnergyReserve, Jaad Othman (second right);

and the Alternate Chairman of theInternational Energy Institute,

A Mikoyan-Iarikov (right).

Right: Dr Rodríguez Araque(centre) speaking to Tom Mintier

from CNN (right), togetherwith Mostafa Abdalla Aly from

Al-Ahram and Egyptian TV (left).

Left: The Alternate Chairman of the Inter-national Energy Reserve, Jaad Othman (left),deep in conversation with HE Dr Lukman.


January 2001 23

Left: Assistant Director Generalof the OPEC Fund, Said Aissi(right), together withAbdelkrim Boudai and BrahimAklil of the Algerian Delega-tion.

Right: The Chairman ofthe Board of Governors,HE Abdulla H Salatt of

Qatar (left), listens toHE Dr Purnomo.

Right: Pictured here are (l-r) formerAlgerian Minister of Energy and Mines,Nordine Ait-Laoussine; Libyan Delegate,

Mohamed Kelani; andHE Abdulkarim Ahmed.


24 OPEC Bulletin

Left: Pictured here are (l-r) Venezuela’sOPEC Governor, Edgar Rodriguez,chatting to Bernard Mommer from theOxford Institute for Energy Studies,while Venezuelan Deputy Energy andMines Minister, HE Bernardo Alvarez,makes a point to Iran’s OPEC Governor,HE Hossein Kazempour Ardebili.

Right: The OPEC Fund’sController, Department of Finance,

Dr M Abozrida (centre) and his wife(second left) are seen here with (right)

Mrs Ghanem and next to her,her daughter Ghada, and

Mrs Bukader (left).

Right: OPEC staff membersFadhil Sharad (left) and WajdiWilson with a guest.


January 2001 25

Right: Seen here are (l-r)Nigerian National Petro-leum Corporation Group

Managing Director, JacksonGaius-Obaseki; Mrs Khelil;Mrs Reguieg; Mrs Lukman;

HE Dr Khelil;HE Dr Lukman;

and (far right) Nigeria’sECB Representative,

Mohammed S Barkindo.

Left: Seen here are (l-r)Mrs Achutegui andMrs Gonzalo Plaza withDr Jorge Gonçalves andhis wife Maria Olga.

Left: Around the table are(l-r) OPEC’s Head of

Administration andHuman Resources Depart-

ment, Dr Talal Dehrab;former and current Energy

Studies Department staffmembers, Hamid

Dahmani and KhaledArebi, and their wives:

Mrs Arebi, Mrs Dahmaniand Mrs Dehrab.


26 OPEC Bulletin

Right: Seen here are (clockwise fromleft) Dr Lukman; the Director

General of the OPEC Fund forInternational Development,

HE Dr Y Seyyid Abdulai;Mrs Barkindo; Mrs Amina Lukman;

and HE Abdulkarim Ahmed.

Left: Guests atthe receptionwere entertainedby an all-womenViennese cham-ber orchestra,Mastaire’s WienerDamenkapelle.

Left: The OPEC Fund’s LegalCounsel, Mu’azu Abdul-Malik(right) and (next to him) his wifeWinnie, together with OPEC FundEditor, Sam Ifeagwu and his wife.


January 2001 27

Right: HE Dr andMrs Lukman (right) with

Mr and Mrs BoureimaDiallo.

Right:Dr Lukman

(centre) and theHead of Public

Relations andInformation

Department,Farouk U

Muhammed(right), with

some of theOPEC staff

and theirfamilies.

Left: Seen here are (l-r) Mrs AbuFarouk Muhammed; the wife of theNigerian Embassy’s Minister Council-lor, Mrs Dahiru Adamu; the OPECFund’s Mrs Sutura Bello-Bobbo andMrs Zainab Gana.

28 OPEC Bulletin

R U S S I A N F E D E R A T I O N R E C E P T I O N

Russian Federation holds reception forDr Rodríguez Araque and Dr Lukman

The Permanent Representative of theRussian Federation to the InternationalOrganizations in Vienna, HE Valery VLoschchinin, hosted a reception in honourof OPEC’s incoming and outgoing Secretar-ies General, HE Dr Alí Rodríguez Araqueand HE Dr Rilwanu Lukman, on January19, 2001, at the Russian PermanentMission in Vienna.

Above: HE Dr Rodríguez Araque, offers some words of appreciation tothe hosts. Also pictured are (l-r) HE Loschchinin, HE Dr Lukman andMr Andrey V Lazykin of the Russian Permanent Mission.

Left: HE Dr Lukmanthanks the hosts.Next to him areHE Loschchinin andMr Lazykin, whilesitting on the right isHE Dr RodríguezAraque.


January 2001 29

Above: HE Loschchinin (left), welcomes HE Dr Rodríguez Araque (centre). Second left is Mr Lazykin of the RussianPermanent Mission, and two other guests, including (second right) the Deputy Head of the Mission.

Right:HE Dr

RodríguezAraque andother guests

acknowledgesome kind

words bythe chiefhost, HE

Loschchinin.


30 OPEC Bulletin

Right: The Deputy Head ofthe Mission (second left)

with some guests.

Left: Pictured here are (l-r)Mohammad Alipour-Jeddi of OPEC’sEnergy Studies Department;Dr Fereydoun Barkeshli; the Headof PR and Information Department,Farouk U Muhammed, andDr Davoud Ghasamzadeh of ESD.

Right: HE Loschchinin (left)welcomes HE Dr Lukman and

his wife Amina, watched by(second left) Mr Lazykin.


January 2001 31

Left: HE Dr Rodríguez Araque(second left) chats withHE Loschchinin and some guests.

Right:Denie Tampubolon (left) ofData Services Department

and his wife, withDr and Mrs Atmane

Dahmani, also of DSD.

Left: Keith Marchant, Editor in OPEC’sPublic Relations and Information Depart-ment, with Olatunji Kolawole of DataServices Department.


32 OPEC Bulletin

Left: HE Dr Lukman (left) andhis wife Amina (right), with theHead of Public Relations andInformation Department,Farouk U Muhammed and hiswife Abu.

Below: Seen here are (l-r) OPECNA Editor, Fernando J Garay; Jorge and Dolores Dobarro De Torres, Legal Officer and inCharge of the Office of the Secretary General; former OPEC officer Jorge Goncalves; Venezuelan Chargé d’Affaires, Mary SilvaPavan; Dr Rodríguez Araque; his personal assistant Karin Chacin; and Venezuela’s ECB Representative, Dr Gloria Mirt.

January 2001 33

O P E C / U S D o E M E E T I N G

��

An informal breakfast meeting was held at the SAS Raddisson Hotel, Vienna, Austria, on January 7, 2001,between an OPEC delegation consisting of new Secretary General, HE Dr Alí Rodríguez Araque, the outgoingSecretary General, HE Dr Rilwanu Lukman, the Director of Research Division, Dr Shokri Ghanem, and the Headof PR and Information Department, Farouk U Muhammed, mni, and on the US side, former Energy Secretary,HE Bill Richardson and other senior officials from the Department of Energy (DoE).

Below: At the meeting areHE Dr Rodríguez Araque and(seated clockwise around the table)HE Dr Lukman, Dr Ghanem,Mr Muhammed, Dr RodríguezAraque’s personal assistant KarinChacin; the translator; the Chargéd’Affaires at the Venezuelan Embassy,Mary Silva Pavan; the DoE’s Director,Office of Policy, Melanie AKenderdine; the Senior Advisor to theSecretary for International Affairs,Rachel King, and HE Richardson.

Above: HE Richardson (left) exchangingpleasantries before the start of the meetingwith (l-r) HE Dr Rodríguez Araque,HE Dr Lukman, Dr Ghanem andMr Muhammed.

34 OPEC Bulletin

M I L L E N N I U M P A R T Y

OPEC/OPEC Fund Social Committee’sMillennium Party honours incomingand outgoing Secretaries General

The OPEC/OPEC Fund SocialCommittee organized a Millen-nium Party at the TropicanaDiana-Erlebnisbad in Vienna onJanuary 13, 2001. As well as beingthe usual occasion for staff to relaxand enjoy themselves, the Millen-nium Party also welcomed newSecretary General, HE Dr AlíRodríguez Araque, and said fare-well to outgoing Secretary General,HE Dr Rilwanu Lukman.

Above: Seen here are (l-r) Algeria’s Minister of Energy and Mines, HE Dr Chakib Kheliland his wife; the country’s OPEC Governor Abdelhadi Benzaghou; and Director, Minis-ter’s Office, Kamal Brahiti.

Left: The DirectorGeneral of the OPECFund, HE Dr Y SeyyidAbdulai (left), withHE Dr Lukman andHE Dr Rodríguez Araque.


January 2001 35

Below: The Head of OPEC’s PR and InformationDepartment and Chairman of the OPEC/OPECFund Social Committee, Farouk U Muhammed(left), delivers his welcome address. Standing next tohim is HE Dr Lukman.

Below: HE Rodríguez Araque says hello to Ms Fana Abdulai; looking on approv-ingly is HE Dr Lukman.

Right: The Director of OPEC’sResearch Division,

Dr Shokri Ghanem (right),greets HE Dr Khelil.

Below: HE Dr Khelil (second left) greets HE Dr Lukman and his wife Amina;looking on are HE Dr Rodríguez Araque (right) and Mr Muhammed (left).


36 OPEC Bulletin

Left: HE Dr Rodríguez Araquewith some of the staff and guests.

Right: Dr Abdulrahman Al-Kheraigi,Media Relations Officer in OPEC’s

Public Relations and InformationDepartment, with his family.

Below: Seen here are (l-r) Mrs Lukman,Mrs Khelil and the wife of the OPECFund’s Director General, Mrs ZenaAbdulai.

Above:CAPTION TO

COME


January 2001 37

Left: HE Dr Khelil (left) with theOPEC Fund’s Assistant DirectorGeneral, Said Aissi.

Right: Some of the staff and guests,including Zaid Hammo and Faris Hasan

of Petroleum Market Analysis Depart-ment (fourth and third right), and

Neama Faris (second right), the formerIraqi Ambassador to Austria.

Right: OPEC Internal Auditor,Ali Omar, and his family.


38 OPEC Bulletin

Left: HE Dr RodríguezAraque (second right)and HE Dr Lukman(third right) withAhmed Lukman (right),Dr Lukman’s daughterRamatu (third left)and her husbandMr Mohammed (fourthleft). On the left areMrs Amina Lukmanand (behind her)Fana Abdulai.

Left: HE Dr Rodríguez Araque (right)shakes hands with the Alternate Chair-man of the International Energy Reserve,Jaad Othman. Looking on is the Alter-nate Chairman of the InternationalEnergy Institute, A Mikoyan-Iarikov and(next to him) his wife. On the left (withback to camera) is the Head of Logisticsand Technical Services at the Inter-national Energy Reserve, Dr JorgeGoncalves and (far left) his wife.

Right: Staff and guests includingMr Aissi (right) and the OPEC

Fund’s Director of Researchand Information, Abdelkader

Benamara (second left).


January 2001 39

Left: Staff and guests includingEvelyn Oduro-Kwateng (left)and Martey Korley (right).

Right: Staff and guests includingMrs Hasan (first left), Mrs Najib

(second left), Mrs Bilal (third right),and Mrs Ghanem (right).

Right: HE Dr Khelil (secondright) and his wife (next to him),

with HE Benzaghou (fourthright), the Head of OPEC’sEnergy Studies Department,

Dr Rezki Lounnas (right) andRachid Bencherif of ESD (left).


40 OPEC Bulletin

Around the table are (l-r) Lisa Feix,Hermine Ehsani-Klaus, Elfriede

Widhalm, Helmuth and Jane Marchl,and Werner and Vivien Pilles-Broadley.

Right: MohammadAlipour-Jeddi of

ESD (second left)and his family.

Left: Pictured here are (l-r)Mrs Lukman, Ms Fana Abdulai,Dr Lukman’s son Ahmed, andMrs Zena Abdulai.


January 2001 41

Left: PR Co-ordinator SihamAlawami (centre) with Dir WalterGoettling (left), and the Food andBeverage Manager of Tropicana,Mr Goettling (right).

Right: Some of theTropicana staff whohelped to make the

event a success.

Right: TheCuban band thatentertained guests

at the party.

N E W S L I N E

January 2001 43

N E W S L I N E f r o m t h e O P E C N A N e w s D e s k

buja — Nigeria has announcedthe results of the bidding on eightof the 22 oil blocks in the coun-

try’s Niger Delta region, which closed onJune 30 last year.

The announcement was made in thecountry’s capital Abuja last month by thePresidential Advisor on Petroleum &Energy and former OPEC Secretary Gen-eral, Dr Rilwanu Lukman.

Under the bidding process, which wasannounced in March, Nigeria put on of-fer four onshore blocks, seven blocks onthe continental shelf, and 11 blocks in thedeep and ultra-deep offshore waters.

It was a departure from past practice,when blocks were allocated in secrecy andat the discretion of the country’s militaryrulers.

The winners of the eight blocks wereas follows: block 250 was awarded to a con-sortium of Chevron, Brazil’s Petrobras,Ocean Energy, and the Shell Nigeria Ex-ploration and Production Company. Thelease will be operated by Chevron.

Esso, Chevron and Malaysia’s Petronaswon block 214, also in the deep offshore,and the lease will be operated by Esso.

Other winners of leases in the deepoffshore were Italy’s Agip and the Nige-rian Petroleum Development Company (awholly-owned subsidiary of the NigerianNational Petroleum Corporation), whichwould jointly operate block 244. Mean-while, Phillips won and will operate block318.

Oranto and Orandi were successfulnew investors in the deep offshore on block320, which would be operated by Oranto.Petrobras will operate block 324 in thedeep offshore, which it jointly won withHorizon. Block 242 went to Obelepa,although the operator was yet to be named.

On the Continental Shelf, indigenouscompany Amni won block 229 jointlywith a new investor, Emerald, which wasselected as operator on the lease.

Lukman said that these eight leaseswould be awarded immediately, while

Nigeria’s Lukman announces winners of newoil blocks and says marginal fields will be

offered to indigenous oil and gas companies

others were either yet to be finalized, wereunder litigation, or bids on them weredisqualified.

Based on the estimates of premiumpayments expected from the firms towhich offers had been made, a total of$900 million was expected to accrue tothe government.

Of this amount, $700m representedfirm commitments, while $200m wascontingent upon the companies makingcommercial discoveries.

Lukman said that at the close of bidsubmissions, 57 bid packages were sold,to which 51 firms responded with tenders.

Out of the 51 bids received, 22 werefrom multinational oil companies alreadyoperating in the country, while four werefrom new investors.

Tenders were also received from 20indigenous firms, two of which were oldoperators in the Nigerian oil industry.

Earlier in the month, Lukman alsoannounced that Nigeria would put someof the 116 marginal fields already identi-fied in the Niger Delta on offer to indig-enous oil companies in February.

Marginal fields are those considered bymultinational oil companies as not hold-ing crude reserves in commercial quanti-ties and therefore not worth developing.

The marginal fields had reserves total-ling approximately 1.3 billion barrels,Lukman told a meeting announcing thegovernment’s intention to put the fieldson offer, which was attended by interna-tional and indigenous oil firms.

Out of the 116 fields, five have reservestotalling more than 291m b (averagingaround 50m b), 20 fields have reservestotalling 489m b (averaging between 15mb and 50m b), while there are 91 fields ofless than 15m b each, totalling another489m b.

The bidding for the blocks will be inthree phases expected to last 12 months,said Lukman. There will be a pre-qualifi-cation screening stage by the Departmentof Petroleum Resources (DPR).

There will be also a field-specific bidoutlining technical and development plansand commercial issues, and negotiationsof detailed farm-out terms by the opera-tor, with the DPR playing the role of theumpire as necessary.

Indigenous oil companies in Nigeriahave the government’s backing to farm out40 per cent of their equity holdings toforeign technical partners.

Lukman said that in order to avoid theproblems of the past with indigenousparticipation in Nigeria’s oil industry, in-terested oil companies should ensure thatindigenes of the Niger Delta held equityin the applicant companies.

He added that the government wouldpay attention to the companies’ back-ground and experience in exploration andproduction at a sufficiently high level.

Attempts by Nigeria to promote in-digenous participation in its oil industryin the early 1970s and 1980s had poorresults, as only two such companies, HenryStephens Westates and Nigus Petroleum,were allocated two offshore blocks, onwhich they did not carry out any opera-tional activity.

Over the past 10 years, however, thesituation had changed and 11 indigenousoil companies had spent some $752m toproduce 150,000 barrels/day, Lukmansaid.

Some 34 Nigerian indigenous oil com-panies have allocations of oil blocks, butless than five are currently producing fromtheir fields.

Pertamina hikes itsoil exploration budgetfor 2001 to $189mJakarta — The Indonesian state oil andgas company, Pertamina, has increased itsexploration and production investment to$189 million for the current year, up from$105m in 2000.

The move represents the start of a five-year programme to double the company’soil production capability to 425,000 bar-rels/day.

The company, which is set to becomeindependent later this year when it is de-monopolized, is currently producing210,000 b/d of oil equivalent from reserves

A

N E W S L I N E

44 OPEC Bulletin

The report also forecast that the coun-try’s gas production would decline to 2.2trillion cubic feet in 2001, down from2.4tr cu ft last year, although this wouldnot affect Indonesia’s liquefied natural gasexports.

Foreign oil and gas companies wereexpected to spend $5.28bn on explorationand production in 2001, an increase of$785m from last year, said the report.

Production expenditure was estimatedat $2.87bn, down from $3.01bn the pre-vious year. Exploration budgets wouldamount to $752m, up from $164m in2000.

Among major projects would be the$600m development of the West Seno oilfield’s 150m b of recoverable oil and gasreserves, offshore East Kalimantan, onBorneo island, by a joint venture of Unocaland ExxonMobil.

Gas fields and pipelines in the NatunaSea and southern Sumatra were othermajor upstream projects for the country,according to the report.

Algeria awards contractfor six pumping stationsto French/Italian JVAlgiers — Algerian state oil and gas firmSonatrach has awarded a $324 millioncontract for the development of six pump-ing stations to a French-Italian joint ven-ture, according to a Sonatrach statementlast month.

The pumping stations will operate ona pipeline linking the fields of Haoud ElHamra, in south-eastern Algeria, to thenorthern port of Arzew. They will be builtwithin a two-year period.

The joint venture, formed by France’sSpie-Capag and Italy’s Saipem, won thecontract through a tender, beating bidsfrom two other consortia (Entrepose/Bonatti/Dragados and Snamprogetti/ABB) as well as Bechtel of the UnitedStates.

A similar selection process was carriedout at the end of November for develop-ment of the actual pipeline, constructionof which was divided into two stretches of419 km and 403 km.

The first segment was assigned to ajoint venture involving Algeria’s Cosider

and Brown & Root Condor of the UnitedStates. The project has an estimated costof $95 million.

The second segment, worth $90m, hasbeen assigned to a Russian joint ventureinvolving Stroy and Transgaz.

Once finished, the project is to con-vey some 34m tonnes/year of crude oilfrom the Berkine basin, in south-easternAlgeria.

It was also announced last month thatfive companies — BP Amoco, Italy’s ENI,Endesa of Spain, and two French firms,Gaz de France and TotalFinaElf — are tojoin Sonatrach and Spain’s Cepsa in afeasibility study for the third Algeria-Eu-rope gas pipeline.

The joint venture handling the pipe-line project is known as Medgaz and wasformed by Sonatrach and Cepsa last year.

The statement noted that the groupof firms had been selected from a largenumber of applicants, adding that thosechosen were companies that had developedstrategies in the Spanish energy sector andin oil and gas downstream and upstreamoperations in Algeria.

Companies not selected for this stageof the project would, however, still be ableto take part in further phases of thescheme, it noted.

The proposed third pipeline routewould link the port of Beni Saf, in north-west Algeria, with Almeira, in southernSpain. The pipeline’s length would beabout 450 km.

According to Sonatrach and Cepsa, thescheme was technically feasible and eco-nomically attractive because of the impor-tant projected increase in gas consump-tion expected in Europe.

Special economic zonein Iran to attract $10bninvestment — MinisterTehran — More than $10 billion in in-vestments are to go into the Pars specialeconomic zone, according to Iranian Pe-troleum Minister, Bijan NamdarZangeneh.

Crude exports from the area wereslated to fetch $7bn within eight years, hewas quoted as saying by the official IslamicRepublic News Agency (IRNA).

of 1.4 billion b of oil and 2.6 trillion cubicfeet of natural gas.

Exploration and Production Director,Gatot K Wiroyudo said Pertamina wouldhave to match international oil companies,which had at least 25 years of reserves, toproduce a minimum of 200,000 b/d.

He also announced that the firm hadsigned a memorandum of understandingwith the Malaysian national oil corpora-tion, Petronas, and Vietnam’s state oil andgas company, PetroVietnam, to carry outjoint exploration in blocks in their respec-tive countries and overseas.

“The chances of finding new oil to-gether are better than doing it alone,” localmedia quoted Gatot as saying. Field sur-veys would also be carried out jointly, headded.

Gatot acknowledged that Indonesiawas not able to meet its current OPECproduction level, as continuing social dis-turbances in the country were limiting newdevelopments.

He noted that Indonesia’s total oilproduction was around 1.26m b/d, whichwas below the level allocated to it byOPEC.

While existing onshore operationsfaced security problems, locals in severalregions were also preventing Pertaminafrom conducting seismic activities, theIndonesian media quoted him as saying.

Also last month, a report released byPertamina confirmed that the country’scrude production is projected to fall to463.2m barrels (about 1.27m b/d) in2001, down from 515.6m b (1.41m b/d)produced last year.

Output in 2000 had declined from519.9m b in 1999 and 542.1m b in 1998,said Pertamina, which also took accountof a forecast made by foreign oil and gasproducing companies in Indonesia.

The projection for 2001 amounted to90 per cent of the previous year’s totaloutput, as production from new wells hadnot come onstream to cover the naturaldecline from operating oil fields.

However, the study stressed that theIndonesian oil industry had the potentialto produce 483m b of oil next year, slightlyhigher than the projected 463.2m b.

“We see there is a potential to furtherraise output,” said the Head of ForeignContractors’ Operations at Pertamina,Herucokro.

N E W S L I N E

January 2001 45

The Minister told reporters that manyindustrial projects had been given the go-ahead in the zone, with several more underconstruction. Over 10,000 people wereemployed in the zone, he added.

Zangeneh went on to say that all therefineries connected to the South Pars gasfield were being constructed in the area.Other contracts for the construction of apower plant and several petrochemical andindustrial projects were also being imple-mented.

“Of more than 8,800 personnel em-ployed by TotalFinaElf of France in thezone, 8,000 are Iranians,” he noted.

Zangeneh underlined that the trans-fer of technology and manufacturing ofoil-related equipment were among thePetroleum Ministry’s priorities in enteringinto purchase agreements with foreigncompanies.

The Ministry planned to utilize the‘purchase lever’ to encourage productionof at least 10 major items used by the oilindustry, he remarked.

He added that these 10 items (includ-ing chemicals and compressors) made up70 per cent of all the international pur-chases by the Ministry.

He reiterated his call to domestic andinternational investors to invest in theIranian oil industry and expressed theMinistry’s readiness in supporting thosecompanies that are capable of transferringtechnology or have the ability to enter intopartnerships with foreign firms.

Zangeneh announced a Ministry planto offer bank credits with low interest ratesto promote schemes by companies thattransfer technology and produce oil equip-ment and machinery in Iran.

He brushed aside criticism on Iran’s oiland gas buy-back agreements, adding thatthe agreements were carried out with aview to boosting capacity in the oil sector.

“Undoubtedly, we prefer cash schemesto buy-back projects, but in the currentcircumstances, buy-back schemes are es-sential,” he noted.

He added that Ministry’s policy wasto incorporate various clauses or condi-tions in the agreements which would re-ward those companies that achieved orexceeded their agreed goals, while alsohaving the possibility to take measuresagainst companies that did not achievetheir targets.

Zangeneh also confirmed the discov-ery of oil reserves in the South Pars field,but gave no figure on the quantity.

In a related development last month,the UK independent oil and gas companyEnterprise Oil confirmed that it had se-cured a 20 per cent interest in phases six,seven and eight of the South Pars devel-opment.

The company’s Chief Executive, PierreJungels, said that given that almost all ofEnterprise’s activities in the North Sea,Ireland, Italy, the Gulf of Mexico andBrazil came under tax and royalty regimes,its Iranian buy-back deal formed a naturalhedge against oil price falls.

Analysts described the deal, signedwith PetroPars, an offshoot of the NationalIranian Oil Company, as something of acoup for Enterprise.

The British independent is to providetechnical help in drilling some 30 produc-tion wells from three new platform com-plexes, each with a 32-inch pipeline to theshore, where gas processing will take place.

Enterprise is to bear an estimated$500m share of the expected $2.65bn costof phases six to eight of Iran’s largest gasfield over a six-year period.

IRNA quoted Jungels as saying that thebuy-back method of payment from the saleof condensate and liquefied petroleum gashad the virtue of providing a guaranteedreturn on capital, whatever the oil price.It was the first step in building up a prof-itable business in Iran, he added.

Government of Dubaitransfers ownership ofDubai Gas to ENOCDubai — The Dubai government hastransferred the ownership of the DubaiNatural Gas Company (DUGAS) to theEmirates National Oil Company(ENOC), it was announced last month.

ENOC’s Chief Executive Officer,Hussain Sultan, was quoted by the KhaleejTimes as saying that the move would makeENOC capable of providing an integratedenergy strategy for the Emirate.

“The new structure will provide op-portunities and challenges to all thoseinvolved and will take the ENOC groupa step further towards providing an inte-

Oil firms agree human rights guidelinesLONDON — Seven leading US and UK oiland mining companies have announced theirsupport for new government-led guidelinesaimed at curbing human rights abuses asso-ciated with the interests in conflict-pronedeveloping countries. Welcoming the agree-ment, British Foreign Secretary Robin Cooksaid: “Now we must ensure that the guide-lines are put into operation effectively.” Theguidelines follow pressure on oil companiesfrom human rights organizations regardingkillings carried out by private and public se-curity forces in protecting the firms’ opera-tions in such countries as Nigeria, Indonesiaand Colombia. According to a report in theFinancial Times, the seven companies an-nouncing their support include Chevron,Texaco and Conoco of the US and four Brit-ish firms — BP Amoco, Royal Dutch/Shell,Rio Tinto, and Freeport Macmoran.

Lundin Oil spuds new wellKUALA LUMPUR — Sweden’s Lundin Oil hasannounced that its Malaysian subsidiary hasspudded a new exploration well in the SouthChina Sea to further assess the hydrocarbonreserves of a field jointly owned by Malaysiaand Vietnam. Lundin has two partners in theproject, Malaysia’s Petronas Carigali and theupstream unit of PetroVietnam. The EastBunga Raya 1 well is to be drilled to a depthof 8,000 feet to test a deeper oil-bearing res-ervoir and shallow gas filled sand channels inblock PM3, offshore Malaysia/Vietnam. TheBunga Raya field was discovered in 1991,when the first well flowed 1,120 barrels/dayof oil and 63 million cubic ft/d of naturalgas. The new well could increase the oil andgas reserves of the Bunga Raya field substan-tially, Lundin said in a statement, adding thatthe current probable reserves were in excessof 144m b of oil and 1.5 trillion cu ft of gas.

South Korea increases strategic reservesSEOUL — South Korea plans to increase itsstrategic oil reserves to 90 days of local con-sumption by 2006, a big increase from thecurrent 65 days, or 129 million barrels, ac-cording to an announcement by the Minis-try of Commerce, Industry and Energy. Thegovernment was planning to increase the statereserves drastically to 60 days, up from 58mb (29 days), said the Ministry. Private oil re-fineries held 71m b (36 days) of stock at theend of November. For 2001, the governmentwanted to raise its reserves to 141m b, up by12m b from 2000, said the Ministry, addingthat to meet the target, the government wouldhold 65.5m b by purchasing 7.4m b of crudeand 300,000 b of petroleum products. Theprivate sector was also expected to increaseits stockpile to 75.9m b in 2001, it said.

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46 OPEC Bulletin

�� grated energy strategy for Dubai,” he toldthe paper.

Noting that ENOC had becomestronger with the addition of DUGAS,Sultan added that the integration wouldprovide a firm platform for the group asa whole to face up to the challenges of theoil and gas industry.

“The ENOC group will work hard toensure that its new subsidiary is fullyequipped to achieve improved perform-ance and further growth,” he said.

ENOC, which has been primarily adownstream company, has also gone up-stream with the acquisition of Dragon Oil.It has plans to produce 40,000-50,000barrels/day of crude through Dragon infive years. ENOC has acquired 69.4 percent of the firm, which is listed on theDublin and London stock exchanges.

ENOC also received approved oiltrader status recently from the SingaporeTrade Development Board. The company,with daily output of 120,000 b/d, was theMiddle East first firm to do so.

The paper also reported that ENOCwould soon open an office in London tooversee its international oil opportunitiesand to provide greater global coverage toits operations.

The Singapore branch of the group,which was opened last year, and later in-corporated as ENOC Singapore, wouldcontinue to function as the Asian centreof ENOC’s international refining andmarketing business, commented Sultan.

ENOC also announced recently thatit was consolidating its insurance and riskmanagement activities at a group level, aspart of a restructuring plan that becameessential with the diversification of itsinterests.

Sultan said that with ENOC nowcomprising such a diverse range of up-stream and downstream activities, it madesense to centralize all insurance and riskmanagement activities.

He was of the view that the central-ized approach would deliver uniform in-surance coverage and economies of scaleto the group as a whole.

ENOC would use consultants to iden-tify, analyse, manage, control and assist inthe transfer of its complex risks. The groupwas also directly dealing with the insur-ance market.

ENOC was established in 1993 as a

wholly-owned company of the Dubaigovernment. It is now seeking to promotethe interests of its shareholders through thedevelopment of further downstream andupstream activities.

Iraq, UN agree renewalof oil-for-aid programmefor another six monthsBaghdad — Iraq has officially notifiedthe United Nations of its intention toaccept a renewal of the oil-for-aid pro-gramme for another period of six months,it was announced last month.

Iraq relayed its acceptance of the ninthphase of the programme in a letter to UNSecretary General, Kofi Annan, from IraqiForeign Minister, Mohammed Said AlSahaf.

The move follows a decision by theUN Security Council to renew the hu-manitarian plan for Iraq for another sixmonths, beginning on December 6, 2000.

Prior to the latest developments, Iraqhad been in dispute with the UN over itspricing formula for oil in December, tem-porarily halting crude exports.

The Oil Minister, Dr Amer Moham-med Rasheed, said Iraq’s oil exports hadstopped because of opposition by theUnited States to the formula proposed byhis country for pricing its oil.

“The US representative at the UNSanctions Committee presented a proposalon November 30 that allows buyers tocontinue to lift oil, without referring to aformula for pricing,” the Minister wasquoted as saying by the Iraqi News Agency.

“The proposal violated Iraq’s oil exportconditions as agreed with the UN. There-fore, buyers could not lift oil from Iraq’sMina Al Bakr and from Ceyhan, in Tur-key, in order to avoid the risk, since thereis no agreed pricing formula,” Rasheedsaid.

“Iraq has no intention of impeding itsoil exports and its oil policy has alwaysbeen aimed at maintaining world marketstability,” he stressed.

Rasheed said he expected to reach anagreement with international oil supervi-sors on a new price formula, despite po-litical pressures on these officials at theUN.

US refinery output hits another recordNEW YORK — US refinery operations con-tinued at full speed in November, processing15.36 million barrels/day of mostly crude oil,a record for this time of year and 2.2 per centmore than in November 1999, the AmericanPetroleum Institute (API) has reported. Thisvibrant activity stretches back to last May,with refinery capacity utilization rates dur-ing that time well above 90 per cent. Refin-ery utilization was 92.7 per cent in Novem-ber, substantially higher than the nation’s 82.1per cent total industrial rate, the API said inits Monthly Statistical Report. In the upstreamsector, crude oil production in the lower 48states was 4.89m b/d, 0.9 per cent less than ayear ago. Alaskan production averaged958,000 b/d, which was a 6.4 per cent de-cline compared to November 1999. Crudeoil imports of 8.34m b/d were 1.4 per centhigher than in November a year ago.

Shell mulls MDS plants in MalaysiaKOTA KINABALU, MALAYSIA — Shell’s Malay-sian unit is exploring the possibility of invest-ing in four new middle distillate synthesisplants in the region over the next 10 years,reported the Malaysian news agency Bernamalast month. The new plants would have fivetimes the capacity of Shell’s pioneering plantin Bintulu, in the Malaysian state of Sarawak.The Chairman of Shell Malaysia and Man-aging Director of the Sabah Shell PetroleumCompany (SSPC), Datuk Lim Haw Kuang,said the proposed plant could be built in anypart of the world, once Shell embarked on itsmulti-billion ringgit programme to invest insuch plants. “I hope that Shell in Malaysiacan compete with the other countries, espe-cially in gas-to-liquids technology,” he saidat the recent signing of a memorandum ofunderstanding between SSPC and the SabahFoundation.

UK oil output continues to fallLONDON — UK North Sea oil production fellto 2.2 million barrels/day in October, thefourth consecutive monthly fall, according tothe latest report from the Royal Bank of Scot-land. The Head of Business Economics at theBank, Stephen Boyle, said the fall was “notthe start of any meaningful decline in oil pro-duction, but a modest and temporary declineacross a large number of fields”. He said hewas confident that output, which was 16 percent lower than a year ago, would rise againnext year, perhaps reaching new peaks. Thefall followed several analysts reducing theirforecasts of oil production from all sectors ofthe North Sea by at least four per cent belowexpectations for 2000, due to spending cutsover the past three years. The bank said out-put was expected to peak next year.

N E W S L I N E

January 2001 47

��Iraq held contacts with the supervisorsand would follow up the talks further, inorder to put an end to the problem, henoted.

The Minister said he considered theformula Iraq had proposed during the pastmonths as reasonable and fair and as hav-ing an economic basis.

“The formula proposed by Iraq wasbased on an oil policy aimed at makingIraqi oil competitive on the market,” hepointed out.

Rasheed said Iraq had asked Annan tohave 1.5 euros ($1.32) of the price of eachbarrel of oil paid into a special account toenable the Oil Ministry to purchase equip-ment.

The oil-for-aid programme, whichbegan in late 1996, allows Iraq to sell oilunder UN supervision to buy food, medi-cine, oil spare parts, and other goods, inan effort to ease the impact of the UNsanctions imposed on the country in 1990.

Venezuela’s Sincorheavy crude projectenters production phaseCaracas — Sincor, a $4 billion strate-gic association designed to produce, up-grade and market extra-heavy crude fromthe Orinoco oil belt in eastern Venezuela,has entered its production phase, state oilcorporation PDVSA has announced.

In the initial stage, Sincor expects toproduce about 40,000 barrels/day of ex-tra-heavy 8.5° API crude from the belt,which will be mixed with 25,000 b/d oflight 30° API crude to make a moremarketable 16° API crude for export.

Depending on market conditions,Sincor’s output of extra- heavy crude couldbe increased to 80,000 b/d, or more, saidPDVSA.

The initial stage of production is ex-pected to be concluded by the end of 2001,when an upgrader plant currently beingbuilt at Jose, Anzoategui state, in easternVenezuela, is scheduled to be inaugurated.

After the upgrader goes onstream,Sincor will progressively increase its pro-duction to about 200,000 b/d of extra-heavy crude, which will be upgraded atthe Jose plant and converted into 180,000b/d of a high-quality, low-sulphur content

synthetic crude that will be known asZuata Sweet. Exports are scheduled tobegin early in 2002.

Sincor’s partners include operatorTotalFinaElf of France, which holds a 47per cent stake in the venture, PDVSA, with38 per cent, and Statoil of Norway with15 per cent.

Kuwait’s oil industry toseek billions of dollarsin investment — MinisterKuwait — Kuwaiti Oil Minister, SheikhSaud Nasser Al-Sabah, has announced thatthe country’s oil sector would be seekingbids for projects totalling billions of dol-lars of investment for 2001-02.

Noting that the government was keento stimulate economic growth, SheikhSaud said that there was “a necessity ofhighlighting the role of the oil sector toboost the government’s approach to refreshand boost the national economy, since theoil sector has a sensitive weight and a bigrole in Kuwait’s economy.”

The total value of oil projects to beoffered by the Kuwait Petroleum Corpo-ration (KPC) would be around $7.5bn,of which the share of the Kuwait OilCompany (KOC), which is KPC’s up-stream subsidiary, would be $5.8bn.

The share of the downstream unit,Kuwait National Petroleum Company(KNPC) would amount to $1.09bn, thePetrochemical Industries Company wouldbe allocated $314m, the Kuwait OilTanker Company $209m, and the mainoffice $137m.

The Minister said KPC would offervital and essential projects with clear andspecific objectives, all aimed at upgradingthe oil sector, which would have a posi-tive impact on the national economy.

“Such an amount cannot be neglectedand it will absolutely push forward thewheel of the national economy and de-velop and activate many economic do-mains,” he said.

The Minister noted that the hugeamount of investment was different togovernment allocations for projects inother sectors.

“Indeed, we believe that the privatesector has the ability and efficiency and

IEA cuts winter oil demand forecastPARIS — The International Energy Agency(IEA) has revised its demand forecast for thewinter period downwards by 200,000 bar-rels/day, estimating that global demand willaverage about 77.7m b/d in the last quarterof 2000 and the first quarter of 2001. Whilethere was expected to be a 2m b/d increase indemand from the third to the fourth quar-ters of 2000, the IEA said this would not besustained over the winter period because of“an anticipated slowdown in mainland Chi-nese deliveries”. In addition, demand hasgrown only moderately in the industrializedcountries of the OECD area for the thirdconsecutive month, following a 3.5 per centsurge last August. In November, OECD de-liveries totalled 49m b/d, up by 1.2 per centfrom the previous month. Mild winterweather and a slowdown in the US economycould further ease demand in the comingmonths, noted the Paris-based IEA.

NYMEX okays Internet-traded productsNEW YORK — The New York Mercantile Ex-change has approved a range of energy prod-ucts for listing on Enymexsm, the Exchange’sinternet-based trading system, which is sched-uled to be launched during the second quar-ter of 2001. The contracts that will be listedon Enymexsm include a West Texas Interme-diate crude oil calendar swap contract, aHenry Hub natural gas swap contract, calen-dar swap contracts based on the differentialbetween Platts’ quoted prices for Gulf Coastunleaded 87 gasoline and the Exchange’s light,sweet crude oil and New York Harbourunleaded gasoline futures contracts, spreadcalendar swap contracts, based on the differ-entials between the Platts quoted price forGulf Coast pipeline no 2 heating oil and theExchange’s light, sweet crude oil and NewYork Harbour heating oil futures.

Worldwide rig count up on last yearNEW YORK — Baker Hughes has announcedthat the international rig count for Novem-ber, covering all countries excluding theUnited States and Canada, was 700, whichwas down by 27 from the 727 counted inOctober, but up by 125 from the 575 countedin November 1999. The international off-shore rig count for November was 196, downby 23 from the 219 counted in October, butup by 38 from the 158 counted in Novem-ber last year. The US rig count for Novemberwas 1,067, up by 12 from the 1,055 countedin October, and also 285 higher than the 782counted in November 1999. The Canadianrig count for the same month was 362, up bynine from the 353 counted in October and26 more than the 336 recorded in November1999.

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�� the financial capability and we back thisapproach” of involving this sector to jointhe government in improving the nationaleconomy, he said.

KOC’s major projects, Sheikh Saudsaid, would be to develop oil-exportingfacilities and to lay a pipeline to pump oilfrom the northern oil fields to the exportpoints in the south.

KNPC had several projects planned tomodernize and develop refineries, bring innew technologies, and enhance safety andsecurity. Its budget did not, however, in-clude allocations for repairing the Al-Ahmadi oil refinery, which was damagedby an explosion last year.

GCC oil revenuesseen higher in 2000as prices stay strongAbu Dhabi — The oil revenues of thesix Gulf Co-operation Council (GCC)member countries will rise by 84 per centto $151 billion in 2000, as against $82bnin 1999, according to a study by the Emir-ates Industrial Bank (EIB).

OPEC revenues, excluding Iraq, areexpected to hit $280bn, compared with$160bn in 1999, said the EIB, adding thatOPEC production rose to close on 30million barrels/day in November.

The study pointed out that the actiontaken by OPEC had restored balance toglobal oil markets this year and led to arise in prices.

Nonetheless, it stated that the Organi-zation should further pursue efforts aimedat stabilizing the market and devise amechanism to track global demand.

The study said there were many posi-tive developments in the oil market, butthey were inconsistent. The majority ofOPEC producers had reached maximumoutput levels as a result of the productionincreases made by OPEC in 2000.

Next spring would bring majorchanges in global supply and demand.OPEC would then be required to drawup scenarios based on expected develop-ments, the study noted.

The GCC groups together OPECMembers Kuwait, Qatar, Saudi Arabia andthe United Arab Emirates, in addition tonon-OPEC Oman and Bahrain.

Nigeria LNG signstechnical servicesagreement with Shell

Lagos — Nigeria Liquefied Natural Gas(NLNG) has signed a technical servicesagreement with Shell Gas Nigeria for thefurther expansion of its plants on BonnyIsland, in south-east Nigeria, the firm’sGeneral Manager, External Relations,Siene Allwell-Brown, said in a statementlast month.

The expansion project, known asNLNG Plus, involves the construction oftwo additional liquefaction trains at theexisting $3.7 billion plant.

Ms Allwell-Brown explained that theproject would be based on proven, mod-ern technology that would enable each ofthe LNG trains to produce at a capacity ofabout 4m tonnes/year.

“Technical and commercial studies forNLNG Plus commenced at the beginningof the year and the contract for the de-tailed engineering, procurement and con-struction of the plant is expected to beawarded in early 2002, with first produc-tion of LNG in mid-2005,” she stated.

The completion of the NLNG Plusproject in 2005-06 would increase produc-tion of LNG from the plant to 16.7m t/y.

In addition, the plant would produceliquefied petroleum gas and condensateand would enable NLNG to process al-most 3bn cubic feet/day of associated gas,she added.

The agreement was signed on behalfof NLNG by its Managing Director,Andrew Jamieson, while the President ofShell Global Solutions International,Michiel Boersma, and Shell Gas Nigeria’sGeneral Manager — Projects, HanGoudsmit, signed on behalf of their firms.

NLNG started its original plant, con-sisting of two parallel LNG trains with acapacity of 5.9m t/y, in August 1999.

The plant has exceeded its design ca-pacity and a third train, identical to theexisting two, is currently under construc-tion and scheduled for completion in late2002.

NLNG is a joint venture of the state-run Nigerian National Petroleum Corpo-ration, which owns 49 per cent equity inthe project, Shell (25.6 per cent), France’s

Global FDI over $1.1tr, says UNCTADNEW YORK — Worldwide flows of foreign di-rect investment (FDI) are expected to exceed$1.1 trillion in 2000, up by 14 per cent over1999, according to preliminary estimates re-leased by the United Nations Conference onTrade and Development (UNCTAD). Theincrease represents a doubling in just threeyears. A decade ago, FDI flows were about$200 billion. More than four-fifths of FDIinflows for 2000 have gone to developedcountries, resulting mostly from cross-bordermergers and acquisitions. Western Europecontinues to be the largest recipient, withinvestments of $597bn, of which almost$250bn has gone to Germany.

US firm tests spill clean-up productNEW YORK — US firm Microbics has com-pleted testing its new groundwater treatmentproduct, called Bio-Raptor, which the com-pany claims can dramatically improve clean-up times for soil contaminated by petroleumproducts, including methyl tertiary butylether. Microbics also announced that tests ofits MTBE-specific treatment technology hadbeen proven to reduce contamination levelsto regulatory requirements within a week af-ter initial treatment. The Executive Directorof the Oxygenated Fuels Association, Tho-mas Adams, commented: “We have said re-peatedly that gasoline, with or withoutMTBE, should not be allowed to leak into theenvironment and threaten groundwatersources. Now, in the event of a gasoline spill,or a leak, there is another clean-up technol-ogy to ensure that gasoline and all of itsconstituent parts are removed quickly andefficiently.”

UK firms step up exploration effortsBRUSSELS — United Kingdom oil companiesare set to significantly increase their explora-tion efforts, in a bid to increase oil and gasreserves on Britain’s Atlantic frontier, accord-ing to a new report from industry consult-ants Wood Mackenzie. The report said thatseven exploration wells were drilled in 2000and, according to European oil industry ana-lysts, a further 10 were scheduled to be startedin 2001, with a possibility of an additionalfour, if sufficient deep-water rigs could beacquired. However, this estimate took no ac-count of BP Amoco’s pioneering explorationin the just-opened Faro sector. The UK De-partment of Trade and Industry’s nineteenthlicensing round, which is currently offeringacreage to bid, could also spur new explora-tion activity in the summer of 2001. An ana-lyst with Wood Mackenzie said that the UKAtlantic frontier, together with offshore WestAfrica, remained one of the world’s deep-wa-ter hotspots.

N E W S L I N E

January 2001 49

��TotalFinaElf (15 per cent), and Italy’s Agip(10.04 per cent).

Production from the first two trainswas pre-sold to customers in Europe forthe first 22.5 years. The first shipmentsailed out of Nigeria in October 1999.

Indonesian gas dealsto generate significantrevenue — MinisterJakarta — Indonesia expects to earn an-nual income of more than $1 billion fromthree new gas contracts signed with Sin-gapore and Malaysia, Energy and MineralResources Minister, Dr PurnomoYusgiantoro, said last month.

He noted that Indonesia’s two separategas contracts with Singapore would gen-erate $775 million, while the deal withMalaysia would generate annual revenueof about $300m.

A 20-year contract for 325m cubicfeet/day of gas supply was being finalizedbetween the Indonesian state oil and gascompany, Pertamina, and its Malaysiancounterpart, Petronas, he added.

The gas would be piped from Indone-sia’s Natuna Sea fields to the nearbytrunkline connected to the Malaysianfields in the South China Sea.

Pertamina has already signed an agree-ment with a Singapore gas firm for thesupply of 350m cu ft/d of gas for a 20-year period from 2003, which would gen-erate annual revenue of $400m. The gaswill be supplied from the southernSumatra fields.

A further $375m a year will be earnedfrom a 22-year contract with Singapore’sSembawang Gas, first delivery of whichwas due by the middle of next year. Thegas will also be supplied from the Natunafields.

The Minister added that Pertaminawas also bidding for a liquefied natural gassupply contract with Taiwan from itsplanned new train, at the Bontang LNG

complex on the coast of East Kalimantan,Borneo Island.

Preparations were already being madeto build the new train, which would raiseBontang’s LNG processing capacity to27.2m tonnes/year in about two to threeyears’ time, from about 24m t/y at present.

In a separate development last month,Japan’s Indonesia Petroleum (Inpex) saidit had made a major hydrocarbon discov-ery on the Indonesian side of the gas-richTimor Sea.

Inpex said it had completed drillingand testing operations on the Abadi-1 well,the first exploration well to yield hydro-carbon reserves in the Masela block. Thereservoir structure straddles the Indone-sia–Australia maritime boundary.

The well flowed 25m cu ft/d of natu-ral gas and 260 b/d of condensate througha 40/64 inch choke from the centre of theMasela block, Inpex said.

Abadi-1 was drilled to a depth of 4,230metres in 457 m of water in the 5,725 sqkm block, where water depths range from300–1,000 m.

Further assessment and explorationwould be required to evaluate the eco-nomic potential of the discovery, saidInpex, which is a production sharing con-tractor with Pertamina.

It signed the exploration contract inNovember 1998. An evaluation of thestructure using data obtained from the wellwould be conducted, and a programmewould be worked out, the firm said.

Inpex, which owns 100 per cent of theblock through Inpex Masela, added thaton the Australian side of the reservoirstructure, major gas and condensate dis-coveries had been made, such as the fieldsSunrise, Troubadour and Evans Shoal.

It said the Masela block was 800 kmeast of Kupang, a major port city in theIndonesian province of West Timor, and400 km north of Darwin, a major hydro-carbon centre in Australia.

Canadian firm Essexannounces drilling ofnew well in AlgeriaNew York — Essex Resources of Canadaexpects to commence drilling of the SEM-1 well at Hassi Bir Rekaiz in Algeria soon,according to a company statement lastmonth.

The well is to be drilled by the PrideForasol drill rig in around 70 days. It willcommence with a 26-inch hole and finishwith a six-inch hole at a planned depth of3,810 metres.

World Bank forecasts lower oil pricesNEW YORK — Technological innovations thathave reduced the costs of transport and com-munications, together with the dismantlingof trade barriers over the past decade, haveled to accelerated growth in global trade, ac-cording to a new World Bank report. The lat-est edition of Global Economic Prospects andthe Developing Countries 2001, the Bank’sannual update on prospects for developingstates, says their economic growth is expectedto register 5.3 per cent this year, five per centnext year, and ease to 4.8 per cent by 2002.However, developments in oil markets remaina major uncertainty in the outlook, as doesthe durability of the remarkable non- infla-tionary United States expansion. The currentoil price level, according to the Bank, is ex-pected to be temporary, since it was gener-ated by a combination of short-term factors.

De Klerk calls for African Marshall planLAGOS — Former South African President FW De Klerk has called for a “Marshall plan”to jump-start Africa’s development and eco-nomic integration, currently inhibited by ahuge debt profile. “Africa needs a fair break,with our crippling debt and access to firstworld trade investment,” he said in a speechin the former Nigerian capital Lagos, addingthat the developed world was not doingenough for humanity. He added that althoughpoverty was a problem plaguing humanityand not Africa alone, if nothing was doneabout Africa’s case, as was done for Germanyand Europe after World War II, it could causea global problem. De Klerk went on to saythat poverty in Africa should be “a challengeto the conscience of men of goodwill”, not-ing that western leaders paid only lip serviceto human development in Africa.

Italy’s ENI bids for UK’s LasmoLONDON — Italian oil and gas giant ENI haslaunched an agreed $4 billion bid for UnitedKingdom independent oil and gas producerLasmo. The bid, which is said to have beenbacked by Lasmo’s board and accepted by 25per cent of shareholders, tops a rival offer fromUnited States-based Amerada Hess, whichhad raised questions about the British explo-ration company’s interests in Iran and Libyabecause of American sanctions threats. Re-ports last month suggested that, in the eventof a successful Amerada Hess bid, the US firmmight have to dispose of Lasmo’s Iranian andLibyan interests, before it could legally ac-quire Lasmo. Serious doubts were expressedabout a plan by Amerada Hess to circumventAmerican sanctions legislation by setting upa foreign subsidiary, so that Lasmo’s opera-tions could be continued in the two OPECMember Countries.

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50 OPEC Bulletin

��Eleven billion barrels found in 2000GENEVA — The world discovered around 11billion barrels of oil through wildcat drillingin 2000, compared with consumption ofsome 24bn b, according to figures culled fromthe country-by-country Global Explorationand Production Service database of industryanalysts IHS Energy Group. In its traditionaloverview of the preceding year, IHS notedthat the largest single discovery wasKazakhstan’s enormous Kashagan East field,with reserves of 6.4bn b of oil and 12 trillioncubic feet of gas, totalling some 8.4bn b ofoil equivalent. Offshore West Africa contin-ued to be a hot spot, with several large findsoff Angola being complemented by Nigeria’sAkpo (300m b of oil and 750bn cu ft of gas)and Ikija (20m b and 2tr cu ft) fields. OPECMember Countries also featured prominentlyin several large gas discoveries, among themIran’s Tabnak (15.7tr cu ft) and Homa (4.7trcu ft) fields, Saudi Arabia’s Al Gazal discov-ery (3tr cu ft), and Indonesia’s Gendalo andGula finds (1.5tr cu ft each).

Deal signed for Peru’s Camisea projectALGIERS — An international consortium, in-cluding Algerian state oil and gas companySonatrach, has signed an accord with the Pe-ruvian authorities for the exploitation of thegiant Camisea natural gas project, accordingto a Sonatrach statement last month. Theconsortium, headed by Argentina’s Techint,also includes two of its subsidiaries, Teggasand Pluspetrol, as well as Hunt Oil of theUnited States, the SK Corporation of SouthKorea, and Grana Y Montero of Peru. Theproject, with an estimated initial investmentof $3 billion, involves the exploitation andmaintenance of a gas transport and distribu-tion network, including two pipelines de-signed to carry liquids and gas products fromthe Camisea field to the Peruvian capital, Lima.

Industry not to blame for gasoline pricesNEW YORK — A report accusing gasoline-pro-ducing companies of causing last summer’sgasoline price spike in the United States Mid-West was “at odds with the full facts”, accord-ing to the American Petroleum Institute(API). The report’s findings were also con-tradicted by at least six other studies releasedthis year documenting the causes of the pricespike, the API’s Director of Policy Analysisand Statistics, John Felmy, said in testimonybefore an Illinois House special committeeon reformulated gas pricing and supply. Hetold the committee that the report, preparedby a consultant for the Foundation for Tax-payer and Consumer Rights, Tim Hamilton,unfairly blamed the oil and gas industry forthe high gasoline prices in the Mid-West lastspring.

SEM-1 will be the third well drilledon the 283 sq km Semhari structure, fol-lowing the two successful SMR-1 andSMRE-1 wells.

The recently-drilled SMRE-1 well wasa 15-km step-out to the east of the SMR-1 discovery well. Data showed that a con-tinuous oil column of at least 60 m inheight was present between the two wells.The oil is light sweet crude of 40° API.

The upcoming SEM-1 well will be a10-km step-out to the north from thesetwo wells. The Semhari structure is one ofthe largest structures in northern Africaand is one of several promising structureswithin the 3,192 sq km Hassi Bir Rekaizconcession.

The project is located within a prolificoil-producing region, which containsmulti-billion barrel oil fields with exten-sive oil facilities and pipeline infrastruc-ture already in place.

Iran finishes pipelineand reduces fees forCaspian oil swapsTehran — Iran’s Governor for OPEC,Hossein Kazempour Ardebili, announcedlast month that his country had finishedthe first phase of the Neka–Tehran oilpipeline and reduced the fees to be appliedunder oil swap accords with Caspian Seastates.

As of January 1, 2001 the fee for onetonne of crude from Turkmenistan carriedto Iran would be cut from $21 to $16,and the price for oil from Kazakhstan oilwould fall to $13.

Under the swaps, Iran receives crudefrom neighbouring Caspian Sea states inthe north of the country and delivers anequivalent amount to clients in the south,on the Gulf coast.

Kazempour Ardebili said that if acountry swapped more than 10,000 bar-rels/day of crude, and less than 20,000b/d, it would be granted a five per centdiscount on the total haul, and if the swapwas more than 20,000 b/d, then a 10 percent discount would be offered.

The capacity of the Neka–Tehran pipe-line would be increased to 50,000 b/dbeginning on January 1, he added.

He also underlined that the amount

of crude carried from Turkmenistan andKazakhstan to Iran had gone up from11,000 b/d at the beginning of last year to17,000 b/d in recent months.

He said that the decisions to increasethe pipeline’s capacity and lower fees werein line with the Neka–Tehran pipelineagreement.

Completion of the pipeline’s first phasewas indicative of Iran’s active and construc-tive role in transferring Caspian oil tointernational markets.

Additionally, he said, countries look-ing for ways to substitute their oil transitroutes could regard Iran as the most se-cure, and economical route.

Arco to transfer itsMargham concessionto new Dubai firmDubai — The Margham onshore gas andcondensate concession in Dubai has beentransferred by Arco Dubai to a new localfirm, it was announced last month.

“Arco had proposed to the governmentof Dubai that Arco Dubai relinquish itsinterest in the Margham concession,” thefirm said in a statement.

“The government of Dubai indicatedthat it intends to agree to Arco Dubai’sproposal and has created a new entity —the Margham Dubai Establishment — tooperate the Margham field and its relatedbusiness activities,” the statement said.

Arco has been undergoing a reorgani-zation of its operations, following its re-cent merger with BP Amoco, and therelinquishment of the Margham conces-sion is part of these moves.

In a separate development last month,the Abu Dhabi Gas Company (Atheer)plans to reach total gas processing capac-ity of 3 billion cubic feet/day in 2001,according to a company statement.

It will also be responsible for the sup-ply of gas to Dubai, through a 48-inchdiameter, 112-km pipeline.

Atheer’s principal objective is the de-velopment of natural gas resources in AbuDhabi, in order to secure additional sup-plies and meet future domestic demand.

The company will also use its gas re-sources for injection into oil reservoirs, inorder to sustain output levels.

January 2001 51

E N V I R O N M E N T N O T E B O O KE N V I R O N M E N T N O T E B O O K

The Sixth Conference of the Parties(COP6) to the United NationsFramework Convention on Cli-

mate Change (UNFCCC) and the re-sumed 13th sessions of the subsidiary bodies(SBI and SBSTA) were held in The Hague,the Netherlands, on November 13–25,2000.

In attempting to achieve the KyotoProtocol goals, the meeting was intendedto bring to a close more than two years ofpreparations and negotiations set out inthe UNFCCC’s 1998 Buenos Aires Planof Action. These meetings aimed to reducedifferences in the text for decisions on arange of issues related to the Protocol and

the UNFCCC, including: the transfer oftechnology and capacity-building, toassist developing countries and countrieswith economies in transition; the adverseeffects of climate change and the impactof the implementation of responsemeasures; best practices in domestic poli-cies and measures to address greenhousegas (GHG) emissions; the Kyoto mecha-nisms; a compliance system for the Pro-tocol; and issues relating to the land-use,land-use change and forestry (LULUCF)sector.

However, by November 23, negotia-tions appeared to be stalled, and COP6President Jan Pronk distributed a note

containing his proposals on key issues inan attempt to force a breakthrough thatwould lead to consensus. After intensetalks on the President’s proposals, negotia-tors failed to achieve a breakthrough, withsupplementarity, compliance andLULUCF proving to be particular stick-ing points. Delegates agreed to suspendCOP6, and expressed a willingness toresume their work in 2001.

US senators recently reaffirmed theiropposition to key aspects of the KyotoProtocol, particularly the instrument’s lackof obligatory reductions for developingcountries. Advancing the notion that theUS would bear a disproportionate burden

The OPEC Secretariat established its own Environmen-tal Task Force (ETF) in 1994 to monitor developmentsin the field of energy use and the environment. Itsprincipal objective is to keep OPEC’s Ministers continu-ously informed about the status of the energy/environ-mental debate, as it affects the Organization and itsMember Countries. The ETF’s work is also seen asadding impetus and authority to the discusssions at high-level meetings involving OPEC.

A Quarterly Environmental Report (QER) is circu-lated to Member Countries, in which the ETF reviewsrecent activities in the various international environ-mental fora, monitors changes in energy taxation, and

provides background information on relevant forth-coming events, etc. Although this is an internalOPEC document, a selection from it appears regularlyin the OPEC Bulletin for the benefit of a wider read-ership.

This month’s selection comes from the QER publishedat the end of the fourth quarter of 2000. It features anextract from the Executive Summary (below), whichcovers recent developments including COP6 and theresumed 13th Session of Subsidiary Bodies of the UnitedNations Framework Convention on Climate Change,held in the Hague, the Netherlands, in November 2000,and a calendar of events.

Sixth Conference of the Parties to theUnited Nations Framework Convention

on Climate Change is suspended

Executive Summary

52 OPEC Bulletin

E N V I R O N M E N T N O T E B O O K

of the climate change action, SenatorChuck Hagel (Nebraska-R) said that thecutbacks in carbon emissions were simplynot attainable. Citing a recent report byJames Hansen, director of the NationalAeronautics and Space Administration’s(NASA) Goddard Institute for Space Stud-ies, Hagel said the US would not onlyimpede economic growth by concentrat-ing on carbon dioxide (CO

2) reductions,

but that such a strategy would do littlegood anyway. Based on current projec-tions, the nation would have to reduceemissions from a business-as-usual sce-nario by roughly 30 per cent to meet itstarget.

The US Department of Energy’s En-ergy Information Administration has re-leased its annual report on GHG emissionsin the US. The estimated emissions ofCO

2 in the US increased by 1.3 per cent

in 1999, rising from 1,507 million tonnesof carbon equivalent in 1998 to 1,527mt of carbon equivalent in 1999. The 1.3per cent growth in emissions in 1999 ismore in line with the average annual growthrate during the 1990s (1.4 per cent) thanthe 0.1 per cent increase of 1998.

Growing energy useAccording to an International Energy

Agency (IEA) press release on November21, world energy use will grow by asteady two per cent a year from now till2020, and carbon dioxide emissions,which, it is claimed, contribute to climatechange, will rise at about the same rate.Most of the increases will come in devel-oping countries. Oil, gas and coal willcontinue to dominate the world fuel mix.Countries that import oil and gas willgrow increasingly dependent on produc-tion from OPEC Members in the MiddleEast.

These are some of the main projec-tions to be found in the ‘reference sce-nario’ of World Energy 2000, the biennialflagship publication of the IEA. It assumesthat the world economy will grow by threeper cent a year, and that fossil fuel priceswill remain flat till 2010, then rise to $28/b in today’s money by 2020. In that event,overall energy demand will grow by 57 percent over 20 years, slightly below the ratein recent years. CO2 emissions will swellby 60 per cent, or 2.1 per cent annually— one-third from power generation.

In a similar vein to the concerns ex-pressed by OPEC Member Countries thatclimate change mitigation measures willhave severe implications for their econo-mies, a new study has examined preciselythe same problem for Norway.

The Norwegian research centre,CICERO, has looked at how the KyotoProtocol will result in reduced oil andnatural gas profits for Norway, emphasis-ing that it is clearly a challenge to try tobe a climate policy leader and, at the sametime, export large amounts of oil andnatural gas. As a result of the Kyoto targetsbeing met, producer prices will decrease asa result of reduced demand. This is likelyto have a great impact on Norway, whichin 1998 was the world’s seventh largest oilproducer. Indeed, one main conclusionthat can be drawn from the analysis is thatthe costs for Norway of participating inthe climate agreement will primarily beincurred by reduced oil and natural gasprofits.

Kyoto mechanismsThe study concludes that it is essential

for Norway to support unrestricted emis-sions trading with the Kyoto mechanisms,since the analysis clearly shows that thisleads to the lowest costs for Norway.Furthermore, Norway should support rulesand institutions for the Kyoto mecha-nisms that reduce transaction costs andcontribute to making the Clean Develop-ment Mechanism (CDM) the best possi-ble alternative. The study suggests that thedecrease in oil and natural gas income canbe minimised in two ways. First, Norwayshould develop technology that can de-posit CO

2 in oil wells and abandoned

mines, etc, so that oil and natural gas cancompete with cleaner energy sources. Andsecondly, Norway can also influence theEuropean natural gas market, in that theprice of natural gas can, to a certain degree,be raised by slowing down production,and thereby compensate for some of thelost revenue.

Recent research on the science of cli-mate change has strengthened doubts overthe extent to which the phenomenon iscaused by greenhouse gas emissions. Forexample, a top Canadian scientist, whohas tracked global temperatures and green-house gases back 500 million years, hassaid that other natural factors — such as

fluctuations in the sun’s intensity — aremore likely the prime cause of seriousglobal warming incidents during theEarth’s history. Several scientists agreedthat the scope of the work — five years andmore than $700,000 in finance — madethe findings a serious challenge to somebasic assumptions in climate change.

Solar variabilityAnother researcher suggested that the

study ‘undermines the case for reducingfossil-fuel emissions.’ The research stronglysuggests CO

2 and other GHGs may not

drive climate change, but simply amplifychange set off by some other factor. Sci-entists at Armagh Observatory in the UKhave also claimed that the sun has been themain contributor to global warming. Theastronomer in charge of the project sug-gests that the greenhouse lobby have un-derestimated the role of solar variability inclimate change.

Yet another study from the HadleyCentre, published in December, says thatonly a combination of natural and humancauses can explain the Earth’s warmingduring the 20th century. The study com-bined data on GHG emissions, ozone andsulphate aerosol levels, solar variations,and volcanic aerosols in different versionsof a state-of-the-art climate model. Natu-ral causes were found to matter more earlyin the century, and human-induced fac-tors during the present warming. It wasmaintained that this new research com-bined, for the first time, the most impor-tant human and natural factors in oneclimate model.

Gas-to-liquids (GTL) projects are nowbeing developed in many countries. InEgypt and Thailand, GTL plants with acapacity of 75,000 b/d each are expectedto come on stream by late 2005. Othercountries, like Australia and Nigeria, alsoplan to have GTL plants, with a lowercapacity of 10,000 b/d and 33,000 b/drespectively, while Indonesia and IR Iranare now conducting a study on the possi-bility of developing GTL plants for utilisingtheir huge natural gas reserves.

On the liquefied natural gas (LNG)market, Middle East LNG has started en-tering the Far East LNG market. In Novem-ber, Oman loaded its first shipment of LNG

to Japan’s Osaka Gas, after loading itsfirst LNG supply to South Korea last

January 2001 53

E N V I R O N M E N T N O T E B O O K

April. Another LNG producer from theMiddle East, Qatar, has agreed tosupply Taiwan’s natural gas network bylate 2003. Meanwhile, in the US, LNG

supplies, particularly from Trinidad andVenezuela, could be the swing supplysource of natural gas to meet the expectedstrong increase in natural gas demand inthe coming years.

The great grandson of the founder ofthe Ford Motor Company, the world’ssecond-largest car-maker, has predictedthe demise of the internal combustionengine. Bill Ford, who is the company’scurrent chairman, told the annual Green-peace business conference in London inOctober that traditional engine technol-ogy would be replaced by zero-emissionfuel cells. He also raised the prospect of anend to car ownership as the preferredmethod of personal transport, saying thatthis practice would become unnecessary incities, since car-makers could own vehiclesand make them available to fee-payingmotorists when they needed access to trans-port.

Progress continued to be made withthe development of fuel cell powered carsin the fourth quarter of 2000. MercedesBenz introduced the latest version of itsfuel cell car, which, for the first time, usedliquid methanol as the fuel carrier; this wasbecause it was readily available, came fromsustainable resources and was easy to re-form, even though it also had some seriousdownsides; the car was claimed to closelyresemble the production version expectedin 2004.

Hybrid vehiclesTaking a different route to low-emis-

sion vehicles, Toyota said it planned tooffer hybrid petrol-electric vehiclesthroughout its model line-up. Action atgovernment level was also prominent inthe fourth quarter, with Spain announc-ing a tax rebate to reduce the number ofpolluting cars, the UK announcing a £30million ‘windfall’ to encourage ‘green cars’,as well as introducing what was believedto be the world’s toughest ‘green’ annualroadworthiness check-up, and Nepal an-nouncing a blanket ban on all old andpolluting vehicles. On January 1, stringentnew car emissions legislation was due tocome into force in the European Union.

Also this month, a recent consultancy

(0)1794 511455; e-mail: [email protected]

August 20–24, 2001: Climate Confer-ence 2001, Utrecht University, Utrecht,The Netherlands. Contact: Utrecht Uni-versity. Tel: +31 30 2533154; fax: +31 302543163; e-mail: [email protected];Web site: http://www.phys.uu.nl

September 9–14, 2001: ICCDU VI, 6thInternational Conference on Carbon Di-oxide Utilization, Breckenridge, Colorado,USA. Contact: The Secretariat, ICCDUVI, National Renewable Energy Labora-tory, 1617 Cole Boulevard, Golden, CO80401-3393, USA. Tel: +1 303 384 6199;fax: +1 303 384 6150; e-mail: [email protected]; Web site: www.nrel.gov/iccduvi

October 21–25, 2001: 18th World En-ergy Congress, Energy Markets: The Chal-lenges of the New Millennium, Buenos Aires,Argentina. Contact: 18th WEC, c/oCongresos Internacionales SA, Moreno584 - Piso 9, 1091 Buenos Aires, Argen-tina. Tel: +54 11 4342 3216/4342 3283;fax: +54 11 4331 0223/4334 3811; e-Mail: [email protected];Web site: http://www.18th-wec.com.ar

October 20–November 9, 2001: SeventhSession of the Conference of the Parties,Marrakech, Morocco. Contact: FCCCSecretariat. Tel: +49 228 815 1000; fax:+49 228 815 1999; e-mail: [email protected]; http://www.unfccc.de.

study undertaken by Charles River Asso-ciates is summarised.

The study, which is entitled Impacts ofKyoto Protocol Implementation on IndividualMember Countries: An MS-MRT ModelApproach, yields five key results about theimpacts on non-Annex B countries ofactions taken by Annex B countries toreduce greenhouse gas emissions: theseresults are most poignant for energy-ex-porting non-Annex B countries, whichbear the brunt of these spillover effects;measures taken by Annex B countries willhave a disproportionate economic impacton non-Annex B countries; oil-producing,as well as poorer non-Annex B countries,are the most negatively affected by theimplementation of the Kyoto Protocol;

Calendar of meetings

April 1–3, 2001: The Second AnnualGlobal Conference on EnvironmentalTaxation Issues, Experience and Poten-tial, Vancouver, Canada. Contact: AidaBurgos. Tel: +1 604 453 4018; fax: +1 604436 0286; e-mail: [email protected];www.pembina.org/pubs/2001envirotax_conference/conference_info.pdf

April 8–11, 2001: The XIIth GlobalWarming International Conference &Expo, The Year 2001 Conference, Cam-bridge University, Cambridge, UK. Formore information, contact Global Warm-ing International Centre, 22W381, 75thStreet, Naperville, IL 60565, USA. Tel: +1630 910 1551; fax: +1 630 910 156; e-mail: [email protected]; Web site:http://GlobalWarming.Net

May 21–June 1, 2001: Sessions of theSubsidiary Bodies. For more informa-tion, contact the FCCC Secretariat. Tel:+49 228 815 1000; fax: +49 228 8151999; e-mail: [email protected]; Website: http://www.unfccc.de.

June 28–30 , 2001: EAERE Annual Con-ference 2001, Southampton, UK. Con-tact: EAERE 2001 Conference Secretariat,Index Communications Meetings Serv-ices, Crown House, 28 Winchester Road,Romsey, Hampshire SO51 8AA, UK. Tel:+44 (0)1794 511331/511332; fax: + 44

greenhouse gas abatement policies willcause the terms of trade to deteriorate themost in oil-exporting countries and im-prove in oil-importing countries, whichresults in a wealth transfer from the formercountries to the latter; the restructuring oftaxes on fuels, to reflect carbon contentand the removal of subsidies in Annex Bcountries, will result in reduced economicburdens on both non-Annex B and AnnexB countries; and the use of the Kyotomechanisms can result in more efficientchoices among oil, gas and coal use glo-bally, and can reduce the adverse impactson oil-exporting non-Annex B countries.Eliminating the 50 per cent supple-mentarity constraint would reduce im-pacts further.

54 OPEC Bulletin

M A R K E T R E V I E W

Table A: Monthly average spot quotations of OPEC Reference Basket and selectedcrudes including differentials $/b

Year-to-date averageNovember 00 December 00 1999 2000

Reference Basket 31.22 24.13 17.47 27.60Arabian Light 29.81 22.65 17.45 26.81Dubai 30.25 22.27 17.24 26.25Bonny Light 32.86 25.47 18.07 28.49Saharan Blend 33.06 26.11 18.12 28.77Minas 31.07 24.87 17.84 28.74Tia Juana Light 30.01 23.11 16.31 26.31Isthmus 31.47 24.40 17.29 27.80

Other crudesBrent 32.67 25.07 17.91 28.44WTI 34.65 28.39 19.30 30.37

DifferentialsWTI/Brent 1.98 3.32 1.39 1.93Brent/Dubai 2.42 2.80 0.67 2.19


Crude oil price movements

The monthly average price of the OPECspot Reference Basket suffered a steepdecline, of more than $7/b, in Decemberto $24.13/b. This was the lowest price inthe year 2000. Dubai was the heaviestloser, decreasing by nearly $8/b. Brent-related Bonny Light and Saharan Blendwent down by $7.39/b and $6.95/b. Ara-bian Light followed, falling by $7.16/b.Tia Juana Light and Isthmus were$6.90/b and $7.07/b lower, respectively,while the Minas price retreated by$6.20/b (see Table A).

In the first week of December, theaverage weekly Basket price fell by$3.67/b to $27.25/b. The drop came asfunds liquidated their positions in thefutures market, after the US Administra-tion had announced that it would co-ordinate its activities with the InternationalEnergy Agency to counteract any possibledisruption to supplies from the MiddleEast. Further bearish sentiment came fromthe reported prospects of a possible solu-tion to the sanctions issue between theUnited Nations and Iraq.

The surplus of supply in Asia providedthe background to the decline. A further

drop of $2.52/b was incurred by the Bas-ket price in the second week, when Iraqiexports were resumed temporarily andwhen heating oil prices in the USA de-creased dramatically, as competing gasprices moved steeply lower; even draws onUS crude and heating oil stocks could notstop the decline.

The downtrend continued into thethird week with a fall of $1.72/b in theprice of the Basket, as the market envis-aged the cut by the US Federal Reserve ininterest rates as a sign of a slowdown in theUS economy which would affect demandin 2001 negatively. A build in US inven-tories provided further bearish sentiment,and funds and energy companies startedselling the market. The weak Asian marketwas continuously watched, as a negativeelement in prices.

US and European marketsSeveral factors curtailed US buying

during December. First, refiners drewdown their crude stocks to minimise theiryear-end tax exposure; secondly, there wasa bottleneck in the Colonial pipeline (whichcarries products from the US Gulf Coastto the north-east), which caused an over-supply of products in the US Gulf Coast,thereby lowering buying interest; andthirdly, there was an increase in Canadiansynthetic crude output. Sour crudes were

December1

1. This section is based on the OPEC MonthlyOil Market Report prepared by the ResearchDivision of the Secretariat. Readers can ob-tain the full report — published in mid-month and containing up-to-date analysis,additional information, graphs and tables —by taking out a subscription. A form can befound on page 71.

2. An average of Saharan Blend, Minas, BonnyLight, Arabian Light, Dubai, Tia JuanaLight and Isthmus.

hit even harder, due to a well-suppliedmarket, the end of the asphalt season andrefinery maintenance on the West Coast.The cut in Iraqi exports was supportive,but waned quickly as news of a resumptionspread. High freight rates deferred long-haul crudes and favoured closer Colom-bian grades, but better margins for sweetercrudes kept up US demand for WestAfrican grades, despite a slight downturnearly in the month.

In Europe, refiners’ crude oil stockdraw-downs, to minimise tax effects, alsorestricted demand, and a premium ondated Brent by one trader limited trade inother North Sea grades. However, as datedBrent fell in the second half of the monthand a contango developed in the market,refiners started buying for storage reasons.

West African crudes came under pres-sure, due to unsold January cargoes andbecause refiners’ margins in Europe werehigher for sour crudes than for sweeterones.

Far Eastern marketsMiddle East sour crudes were hit hard-

est by over-supply. Oman came underpressure, through the absence of Chinesebuying, since refiners’ stocks were high.Sweeter Abu Dhabi grades were negativelyaffected by limited Japanese demand,caused by the milder weather in Japan.

January 2001 55


China’s absence from the market also af-fected heavy sweet Minas.

Product markets andrefinery operations

Petroleum product prices in all threemarkets experienced considerable losses inDecember, driven by sustained amplerefining supplies, which had gatheredfurther momentum during the month,and induced by plunging crude prices;hence, there were improving refiners’margins (see Table B).

US Gulf marketPlummeting crude prices, coupled with

robust import flows, particularly for lightproducts, weighed heavily on productprices in December. The gasoline pricedeclined sharply by $5.74/b, exacerbatedby the completion of scheduling on theColonial pipeline up to the year-end, leav-ing the spot market without secured buy-ers at a time when refiners tried todraw-down stocks in order to reduce thetax liabilities, giving limited barge activity,which was curbed by soaring freight ratesand a lack of suitable vessels.

The restart of the Louisiana refinery,with 243,000 b/d, added to the bearishtone in the market. After the gasoil pricehad enjoyed an accumulative gain sinceJuly, in tandem with strong consumerheating oil demand to build secondary andtertiary inventories, its price displayed asignificant fall of $6.22/b; though colder-than-usual weather dominated the north-east region during the month, utilitiesopted to burn heating oil instead of naturalgas, due to its soaring price and prevailinglower primary distillate stock levels. Thefuel oil price tumbled by $4.37/b, alongwith sizeable crude losses and weak de-mand (see Table B).

Refiners’ margins reversed last month’sremarkable retreat and moved higher,switching all crude grades to positive ter-ritory, except Arabian Heavy, since thecollapse in crude markets was much morepronounced than the fall in product prices(see Table C).

US refinery throughput in Decemberinched up slightly, by 110,000 b/d to15.49m b/d, representing a 93.6 per centutilization rate, which was barely 0.6 per-

ers’ margins, particularly for sweet crudegrades, which yield a higher percentage ofincurred middle distillate products.

Refinery throughput in Eur-16 coun-tries stood at 12.40m b/d in December, amarginal fall of 0.14m b/d from the pre-ceding month’s level (see Table C). Therefinery utilization rate of 91.1 per centwas 3.5 percentage points higher than theyear-before volume.

Singapore marketA stubborn abundance of supply in

Asia, which was faced with limited end-user demand and a restriction of arbitragefrom the region on soaring freight rates,constituted the main reason for tumblingproduct prices during December. Thegasoline price fell sharply, by $3.00/b,

Table C: Refinery operations in selected OECD countries

Refinery throughput (m b/d) Refinery utilization (%)1

Oct 00 Nov 00 Dec 00 Oct 00 Nov 00 Dec 00

USA 15.50 15.38 15.49 93.7 93.0 93.6Japan 3.92 4.39 na 78.5 87.9 naFrance 1.67 1.84 1.78 87.9 96.6 93.5Germany 2.21 2.13R 2.17 97.3 93.6R 95.2Italy 1.82 1.82R 1.81 78.0 78.0R 77.5UK 1.69 1.62 1.64 95.0 90.7 91.7Eur-162 12.57R 12.54R 12.40 92.3R 92.1R 91.1

1. Refinery capacities used are in barrels per calendar day. na Not available.2. European Union plus Norway. R Revised since last issue.Sources: OPEC Statistics, Argus, Euroilstock Inventory Report/IEA.

centage points above both the previousmonth’s and previous year’s levels.

Rotterdam marketProduct prices lost ground in Decem-

ber as the market remained well supplied,and transatlantic light product arbitrageswere unable to soak up excess Europeanproduction. The gasoline price droppedby $5.41/b. The gasoil price plunged by$6.43/b, amid mild weather which domi-nated Europe for most of the month;although, Russian distillate cargoes by-passed European markets to the USA. Thefuel oil price was pulled down by $3.86/b, depressed by slack demand as refineriesswitched to cheaper crude (see Table B).

The sharp decline in crude prices wasthe primary reason for rebounding refin-

Table B: Selected refined product prices $/b

ChangeOct 00 Nov 00 Dec 00 Dec/Nov

US GulfRegular gasoline (unleaded) 36.98 35.99 30.25 –5.74Gasoil (0.2%S) 39.55 40.54 34.32 –6.22Fuel oil (3.0%S) 23.10 20.81 16.44 –4.37

RotterdamPremium gasoline (unleaded) 35.31 33.46 28.05 –5.41Gasoil (0.2%S) 40.06 40.68 34.25 –6.43Fuel oil (3.5%S) 23.82 22.18 18.31 –3.86

SingaporePremium gasoline (unleaded) 33.09 32.97 29.97 –3.00Gasoil (0.5%S) 39.02 34.85 29.61 –5.24Fuel oil (380 cst) 26.53 24.49 19.74 –4.75

56 OPEC Bulletin


Middle East’s share of OPEC sailings was69.98 per cent, which was 1.44 percentagepoints higher than last month’s level.Arrivals in the US Gulf and East Coasts,including the Caribbean, and in NWEurope, rose by 10,000 b/d to 8.17mb/d and by 270,000 b/d to 6.07m b/d,respectively, while arrivals in Euromeddecreased by 60,000 b/d to 4.12m b/d inDecember. The estimate of oil-at-sea onDecember 31, is 461m b, which is 37mb below that observed at the end of No-vember; this low level reflected reducedsailings, which were affected significantlyby depressed spot fixtures during the lasttwo months of 4Q.

Freight rates for VLCC long-haulcargoes from the Middle East to the FarEast and the West soared by 35 points toWorldscale 171 and by 15 points to W152,respectively. These all-time high levels re-flected the on-going tight VLCC tankermarket, despite the very low spot fixtures,especially in the second half of the month.Suezmax freight rates from West Africa tothe US Gulf rose four points further toW215, on the back of higher activity anda shortage of tonnage, which resultedparticularly from delays on the US EastCoast. Steady demand continued to pushAframax rates from the Caribbean to theUS East Coast higher, as they improvedby a further three points to W315. Aframaxfreight rates within the Mediterranean andfrom the Mediterranean to NW Europealso rose slightly, by five points to W246and two points to W257, respectively,benefiting from healthy demand, espe-cially ahead of the year-end holidays.Freight rates for 70–100,000 dwt tankersfor cargoes from Indonesia to the US WestCoast surged by 14 points to W233, amidincreasing demand, especially from Japan.

Amid strong activity, fuelled by in-creasing inquiries ahead of the holidayseason, combined with extremely tighttonnage supply, as February fixtures werestarting to fix earlier than normal, cleancargo freight rates soared considerably alongthe major product export routes in De-cember. The highest increase was for cleancargoes on the Mediterranean-to-NWEurope route, as rates surged by 115 pointsto W390, receiving strong support fromopen arbitrage across the Atlantic. Freightrates within the Mediterranean alsoclimbed heavily, by 91 points to W385,

despite Indonesia’s purchase of 1.7m bfrom the spot market. The gasoil priceplunged further, by $5.24/b, amid warmer-than-usual winter weather in North Asia.The fuel oil price declined heavily, by$4.75/b, hampered further by fadingbunker demand (see Table B).

Contrary to the previous month’snegative values and the ample supply pre-vailing in December, refiners’ margins weresatisfactory for all crude grades, includingthe heavy ones (eg, Arabian Heavy).

In Japan, refinery throughput roseconsiderably, by almost 470,000 b/d, tohover at 4.39m b/d during November.This was equivalent to an 87.9 per centutilization rate, which was 1.2 percentagepoints above the previous year’s level (seeTable C).

The oil futures market

In the first week of December, NYMEXWTI lost nearly $4/b. The loss occurreddespite a suspension of Iraqi oil exportsand was due to technical selling and fundliquidations. The funds were followingthe ‘smart money’, ie, the oil majors, asthey began to sense some physical surplus.Adding further pressure was a well-sup-plied market in China, with excess crudeand products moving from that region tothe West Coast of the USA.

NYMEX WTI shed another $2/b inthe second week of the month, within avolatile environment. Anticipation of theresumption of Iraqi exports and a weakerproduct market, especially for heating oil,contributed to the loss. The draw on UScrude oil and heating oil stocks gave crudeprices a temporary lift, but the expectationof heating oil imports from Europe, Asiaand the Middle East overwhelmed themarket, which weakened further due totechnical trading.

The downtrend continued into thethird week, adding another loss of $2/b toNYMEX WTI. After an initial technicalrebound at the beginning of the week, thecontract lost $3.56/b in one single day, asfunds liquidated their positions ahead ofthe January contract expiry and as USstock data showed a build of 3.1m b incrude inventories, at a time when investorswere also concerned about the downturnin the US economy. The only support for

prices came at the end of the week, whenthe OPEC President expressed disagree-ment with calls by the US President-elect,George W Bush, for OPEC to increaseproduction.

The last week of the year witnessed aslight improvement in prices as NYMEXWTI closed at $26.80/b, an increase of lessthan $1.06/b. This was on weather reportswhich pointed to lower-than-normal tem-peratures in the USA and as the OPECReference Basket fell below the $22/b level;this inspired short-covering in the market,which was strengthened by calls from someOPEC Members to cut production by2.0m b/d.

The tanker market

OPEC area spot-chartering decreased bya further 3.56m b/d to a monthly averageof 8.36m b/d in December, the lowestlevel since December 1999. The consid-erable decline in Iraqi exports, suspendedover a dispute with the United Nations onthe renewal of the ‘oil-for-food’ programmefor a ninth phase, was the main reasonbehind this fall. Compared with year-agofixtures, the current volume is 270,000b/d higher. The year-end holidays alsomade a substantial impact on spot-char-tering, resulting in the year’s lowest levelfor global spot fixtures, which plunged by6.51m b/d to stand at a monthly averageof 14.79m b/d in December. This wasonly 40,000 b/d higher than the year be-fore. Despite this decrease, OPEC’s sharerose marginally, by 0.55 percentage points,to stand at 56.53 per cent. Middle Easteastbound long-haul fixtures moved downslightly, by 330,000 b/d to 3.58m b/d,while westbound fixtures sank by 1.64mb/d to 880,000 b/d. The share of east-bound long-haul chartering surged by10.04 percentage points to 42.84 per cent,while that of westbound fell counter-sea-sonally by 10.60 percentage points to 10.53per cent. Together, they accounted for53.37 per cent of total chartering in theOPEC area, and this was 0.56 percentagepoints lower than that reported in Novem-ber. Preliminary estimates of sailings fromthe OPEC area for the weeks endingDecember 2, 9, 16, 23 and 30, are 26.46mb/d, 18.82m b/d, 21.94m b/d, 19.05mb/d and 20.80m b/d, respectively. The

January 2001 57


for the same reasons. On the Middle East-to-Far East route for medium-range tank-ers and from Singapore to the Far East,freight rates improved by 16 points toW320 and 21 points to W406 respec-tively. Along the Caribbean-to-US Gulfroute, product freight rates regained lastmonth’s losses, moving up by 67 points toW357 on the back of the strong tankermarket.

World oil demand

Figures for 2000

WorldWorld oil demand is projected to

average 75.83m b/d for the year which hasjust ended. The net demand increment forthe year is estimated to be 940,000 b/d,which represents an annual increase of 1.3per cent, with respect to 1999. Accordingto our latest estimates, consumption grewby 2.45m b/d during 4Q2000, comparedwith the previous quarter.

OECDOECD oil consumption is expected to

average 47.83m b/d, which is 220,000b/d or 0.5 per cent higher than last year.North America’s consumption is projectedto rise by only 180,000 b/d, or 0.8 percent, to average 24.06m b/d. A furtherbreakdown will show that consumption inthe USA was almost flat, rising by a mere30,000 b/d, with the rest equally dividedbetween Mexico and Canada. Even thoughthere are obvious reasons to explain thisminimal increase in consumption, com-pared with the more substantial 610,000b/d rise in 1999, like the ‘Y2K effect’,milder winter and inter-fuel substitution,such a marked contrast should be analyzedclosely. It has been argued by many ana-lysts that part of the decline in consump-tion is a direct consequence of the level ofproduct prices seen during the year. Motorgasoline demand was probably the mostresponsive price among all the products,dropping by an estimated 0.7 per cent forthe year. By contrast, fuel oil consumptionrose (despite the milder temperatures),induced by the recent spike in natural gasprices. Distillate consumption also postedan increase; however, this concentrated ontransportation fuel (diesel), closely related

to the robust state of the economy. Heat-ing oil demand, the other distillate sub-group, declined, contrary to general belief.In Western Europe, oil demand is esti-mated to have declined marginally, by10,000 b/d, or 0.1 per cent, to 15.11m b/d.Consumption in the ‘Big Four’ Europeaneconomies is projected to shrink furtherby 60,000 b/d, or 0.8 per cent — a rateless pronounced than the sharp drop seenduring 1999 (220,000 b/d).

According to the latest information,demand in the ‘Big Four’ countries rose by1.4 per cent and 4.1 per cent in Octoberand November respectively. In the rest ofEurope, demand will post a slight gain,rising by 60,000 b/d, or 0.8 per cent.OECD Pacific demand has been reviseddown considerably to incorporate the lat-est information from 1Q–3Q of the year.The latest preliminary information for 4Qalso shows a dramatic slowdown in deliv-eries, especially in Japan and South Korea.This, in our opinion, requires close atten-tion, as demand weakness in this sensitivearea of the world could trigger a dominoeffect.

Developing countriesDeveloping countries oil demand is set

at 18.82m b/d. Consumption growth inthis group is estimated to average 500,000b/d or 2.7 per cent, twice that of 1999.Half this gain will come from the ‘OtherAsia’ group; nonetheless, a slowdown inconsumption has become evident in thisgroup as well. The rest of the gain inconsumption will come from LatinAmerica, the Middle East and Africa, wheredemand is projected to grow by 80,000b/d, 110,000 b/d and 70,000 b/d respec-tively.

Other regionsThe current projection calls for a con-

traction in apparent FSU demand of230,000 b/d, or 5.8 per cent, to average3.76m b/d in the present year. By contrast,apparent demand in China has grown byan impressive 10.4 per cent, or 430,000b/d, accounting for 46 per cent of the totalrise in world oil consumption for the year.Evidence, however, suggests a sharp de-cline in Chinese consumption during thelast months of 2000. According to dailymarket publications, China has remainedaway from the international oil market in

the recent past and, in some instances, haschanged its role from net importer toexporter. A sharp drop in Chinese con-sumption could exert strong pressure onworld demand and, therefore, its develop-ment needs close monitoring.

Projections for 2001The forecast for the year 2001 has been

revised down to account for sharp correc-tions to regional and global GDP growthrate estimates. Initially, in August 2000,when we first issued our demand forecastfor the current year, the total world GDP

growth rate was estimated at 3.5 per cent.Since then, this estimate has been loweredseveral times and now stands at 2.7 percent. The forecast is also based on assump-tions that weather patterns behave nor-mally and that crude and product pricesremain at the levels seen during the firsthalf of 1999. Our main concern about thedemand equation for 2001 relates to thelevels of product prices, but no less impor-tant are the issues of economic growth andtemperature. A warmer-than-normal win-ter, as well as a milder-than-normal sum-mer, could swing total consumption300,000 b/d either way. Regarding globaleconomic growth, it should be noted thata drastic slowdown of the world economywill ultimately translate into a consider-able drop in oil consumption. Many ana-lysts believe that the rate of world economicexpansion could be much lower than thepresent estimate. Deviations from thesesets of assumptions will definitely alter theaccuracy of this forecast.

There is one issue which deserves aword of caution and thus close monitor-ing. This has to do with the phasing-outof government subsidies in many develop-ing countries, especially in Asia, and thiswill ultimately traslate into higher pricesat the consumer end. World oil demandis now projected to grow by 1.44m b/d,or 1.9 per cent, to reach 77.26m b/d bythe end of the year. Demand in 1Q isprojected to average 76.88m b/d, which is1.7 per cent higher than in 1Q00. Thislevel — somehow on the conservative side— could be revised up in the presence ofa colder-than-normal winter. Seasonalitywill bring demand down to 75.24m b/din 2Q, which is still 1.5 per cent higheryear-on-year. Demand is expected to riseconsiderably during 3Q to 77.14m b/d.

58 OPEC Bulletin


Table E: OPEC crude oil production, based on secondary sources 1,000 b/d

Dec 00/1999 3Q00 Nov 00* Dec 00* 4Q00* 2000 Nov 00

Algeria 766 823 839 840 839 807 1Indonesia 1,310 1,303 1,300 1,288 1,295 1,290 –12IR Iran 3,509 3,697 3,806 3,837 3,807 3,672 30Iraq 2,507 2,760 2,779 1,270 2,338 2,545 –1,510Kuwait 1,907 2,161 2,210 2,222 2,207 2,101 11SP Libyan AJ 1,337 1,411 1,435 1,437 1,434 1,404 2Nigeria 1,983 2,031 2,123 2,151 2,129 2,031 28Qatar 646 709 730 730 727 698 0Saudi Arabia 7,655 8,548 8,677 8,700 8,690 8,248 24UAE 2,077 2,297 2,334 2,350 2,336 2,252 16Venezuela 2,809 2,919 3,003 3,043 3,007 2,899 41

Total OPEC 26,506 28,659 29,235 27,867 28,809 27,948 –1,368

* Not all sources available.Totals may not add, due to independent rounding.

Consumption will plateau at 79.77m b/dduring 4Q. This will represent an increaseof 2.2 per cent or 1.74m b/d, comparedwith 4Q2000, and a rise of 2.63m b/dagainst 3Q2001. At a regional level, de-mand is projected to grow by 540,000b/d, or 1.1 per cent, to 48.38m b/d in theOECD.

Developing countries consumption isestimated to rise by 680,000 b/d, or 3.6per cent, to 19.50m b/d. Finally, in thegroup ‘Other regions’, formed by the FSU,China and some Central European coun-tries, apparent demand is assessed at 9.39mb/d. In China, hydrocarbon consumptionis projected to rise by 230,000 b/d, or 5.0per cent. On the other hand, the FSU’s oildemand will further shrink or, in the bestof scenarios, remain at the same depressedlevel as in the year 2000.

World oil supply

Non-OPEC

Historical data, including 1999There are no revisions to historical

non-OPEC supply data, compared withthe last report’s figures.

Figures for 2000The overall figure for 2000 non-OPEC

supply has been revised down, by around20,000 b/d, to 45.83m b/d. This was theresult of revisions made to the quarterlynon-OPEC supply distributions, whichare up by 40,000 b/d to 45.89m b/d andby 10,000 b/d to 45.54m b/d and downby 90,000 b/d to 45.60m b/d and by50,000 b/d to 46.30m b/d, respectively.The yearly average increase is estimated ataround 1.25m b/d, compared with the1999 figure.

Expectations for 2001The non-OPEC supply forecast for

2001 has been revised up by around 20,000b/d to 46.68m b/d, which is 850,000 b/dmore than the revised estimate for 2000.The expected non-OPEC quarterly distri-bution is 46.72m b/d, 46.37m b/d, 46.45mb/d and 47.17m b/d, respectively.

The net oil export figures for the FSUfor 1999, 2000 and 2001 have beenrevised up by 40,000 b/d to 3.48mb/d, 110,000 b/d to 4.12m b/d and110,000 b/d to 4.32m b/d, respectively,compared with the last report’s figures (seeTable D).

OPEC natural gas liquidsOPEC NGL data for the 2000 estimate

and the 2001 forecast remain unchanged,at 2.91m b/d and 2.95m b/d, respectively.

OPEC NGL production — 1997–2001

m b/d1997 2.811998 2.781999 2.841Q00 2.912Q00 2.913Q00 2.914Q00 2.912000 2.91Change 2000/1999 0.072001 2.95Change 2001/2000 0.04

OPEC crude oil productionAvailable secondary sources indicate

that, in December, OPEC output was27.87m b/d, which was 1.37m b/d lowerthan the revised November level of 29.23mb/d. Table E shows OPEC production, asreported by selected secondary sources.

Stock movementsUSA

US commercial onland oil stocks fellby 24.0m b, or 860,000 b/d, to 930.0mb during the period December 1–29. Sincerefiners declined to hold extra barrels forfiscal reasons ahead of the year-end, allmajor products (except jet fuel) and crudeoil showed marginal decreases; the small-est was gasoline, which declined by 1.4mb to 193.8m b, and the biggest was dis-tillates, which moved down by 3.9m b to116.1m b, on the back of higher demand,resulting from cold weather which hitnotably the US north-east. ‘Other oils’registered more than half of this draw, asthey fell by 13.2m b to 165.8m b, whilejet kerosene, the only stocks which showeda build, increased marginally, by 2.1m bto 43.9m b, on increasing output. Thetotal level was 26.2m b lower than thatwitnessed a year earlier.

During the same period, the US SPRcontinued to decrease, falling by 11.6m bto 541.2m b, as part of the 30m b swapprogramme (see Table F).

Table D: FSU net oil exports m b/d

1Q 2Q 3Q 4Q Year

1997 2.81 2.92 2.88 2.88 2.871998 2.77 3.02 3.18 3.20 3.041999 3.14 3.67 3.60 3.49 3.4820001 3.97 4.13 4.47 3.90 4.1220012 4.39 4.33 4.28 4.27 4.32

1. Estimate.2. Forecast.

January 2001 59


Table F: US onland commercial petroleum stocks1 m b

ChangeJune 30, 00 Sept 29, 00 Dec 1, 00 Dec 29, 00 Dec/Nov Dec 29, 99

Crude oil (excl SPR) 293.7 286.7 292.1 288.7 –3.4 285.8Gasoline 204.5 195.6 195.2 193.8 –1.4 194.5Distillate fuel 103.7 114.2 120.0 116.1 –3.9 127.0Residual fuel oil 37.0 36.5 38.5 34.7 –3.8 36.3Jet fuel 44.5 43.1 41.8 43.9 2.1 40.6Unfinished oils 90.1 88.0 87.4 87.1 –0.3 86.9Other oils 179.4 195.9 179.0 165.8 –13.2 161.9Total 953.0 959.9 954.0 930.0 –24.0 933.0SPR 568.4 570.7 552.8 541.2 –11.6 567.4

1. At end of month, unless otherwise stated. Source: US/DoE-EIA.

Table G: Western Europe onland commercial petroleum stocks1 m b

ChangeJune 00 Sept 00 Nov 00 Dec 00 Dec/Nov Dec 99

Crude oil 440.4 424.4 426.9 417.4 –9.5 433.1Mogas 146.9 152.8 150.6 151.2 0.6 149.5Naphtha 24.6 26.0 26.8 26.0 –0.9 23.2Middle distillates 311.4 325.7 334.5 340.5 6.0 322.6Fuel oils 125.9 124.2 118.0 121.6 3.6 130.0Total products 608.8 628.7 629.9 639.3 9.4 625.4Overall total 1,049.2 1,053.0 1,056.8 1,056.7 –0.1 1,058.5

1. At end of month, and includes Eur-16. Source: Argus Euroilstocks.

Table H: Japan’s commercial oil stocks1 m b

ChangeJune 00 Sept 00 Oct 00 Nov 00 Nov/Oct Nov 99

Crude oil 121.4 101.2 107.6 110.8 3.2 119.0Gasoline 14.0 13.4 13.8 14.2 0.4 14.3Middle distillates 34.4 43.5 47.4 46.9 –0.5 52.5Residual fuel oil 18.3 18.9 20.3 19.9 –0.4 19.8Total products 66.7 75.8 81.6 81.0 –0.6 86.5Overall total2 188.1 176.9 189.1 191.8 2.7 205.6

1. At end of month. Source: MITI, Japan.2. Includes crude oil and main products only.

60 OPEC Bulletin


Western EuropeIn December, commercial onland oil

stocks in Eur-16 (EU plus Norway) werealmost stable at the previous month’s level,when they moved down marginally, by100,000 b to 1,056.7m b.

A build of 9.4m b to 639.3m b in totalmajor product inventories was almostbalanced by a draw of 9.5m b to417.4m b on crude oil stocks; this was duemainly to a substantial decrease in Iraqiexports, which were suspended during adispute with the United Nations on theninth phase of the ‘oil-for-food’ pro-gramme. Middle distillates gained mostof the build in total product inven-tories, rising by 6.0m b to 340.5m b,almost the highest level of the year, on theback of lower demand brought about bymild weather. The total level was only1.8m b below the year-ago figure (seeTable G).

JapanIn Japan, commercial oil stocks rose

slightly, by 2.7m b, or 90,000 b/d, to191.8m b during November. This buildresulted mainly from an increase of 3.2mb to 110.8m b in crude oil stocks, whilea marginal draw of 600,000 b to 81.0mb on total major product inventories di-minished this build. The overall figure was13.8m b less than the year-ago level (seeTable H).

Balance of supply/demand

The non-OPEC supply estimate for 2000has been revised down by less than 100,000b/d to 48.7m b/d and the world oil de-mand estimate by more than 100,000b/d to 75.8m b/d, compared with lastmonth’s report. This results in revisingdown the difference item by less than

100,000 b/d, and this is now estimated at27.1m b/d. The balances for1Q and 2Qhave each been revised up by around100,000 b/d, to –300,000 b/d and 2.2mb/d respectively, while 3Q remains un-changed at 1.6m b/d. A figure has beenintroduced for 4Q for the first time, andthis is 0 b/d. The 1999 balance remainsunchanged from last month’s report, at–1.0m b/d (see Table I).

For 2001, non-OPEC supply remainsunchanged at 49.6m b/d, while world oildemand has been revised down by morethan 200,000 b/d to 77.3m b/d; theannual difference is estimated at 27.6mb/d, which is less than 300,000 b/d belowthat of the last report. The quarterly dis-tribution forecasts have been revised downby 300,000 b/d to 27.2m b/d, 300,000b/d to 25.9m b/d, 200,000 b/d to 27.7mb/d and by 200,000 b/d to 29.7m b/d,respectively.

January 2001 61


Table I: World crude oil demand/supply balance m b/d

1997 1998 1999 1Q00 2Q00 3Q00 4Q00 2000 1Q01 2Q01 3Q01 4Q01 2001

World demandOECD 46.7 46.8 47.6 47.9 46.3 47.5 49.6 47.8 48.5 46.5 48.0 50.4 48.4

North America 22.7 23.1 23.9 23.6 23.7 24.3 24.6 24.1 23.8 23.7 24.8 25.1 24.3Western Europe 15.0 15.3 15.1 15.0 14.5 14.9 15.9 15.1 15.3 14.7 15.0 16.0 15.2Pacific 9.0 8.4 8.6 9.3 8.0 8.3 9.1 8.7 9.5 8.1 8.3 9.3 8.8

Developing countries 17.7 18.1 18.3 18.4 19.0 18.9 19.0 18.8 19.1 19.5 19.6 19.8 19.5FSU 4.3 4.2 4.0 3.7 3.6 3.5 4.2 3.8 3.4 3.6 3.9 4.0 3.7Other Europe 0.7 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.9 0.8 0.8 0.9 0.8China 4.0 3.8 4.2 4.7 4.4 4.9 4.4 4.6 5.0 4.8 4.8 4.7 4.8(a) Total world demand 73.4 73.7 74.9 75.6 74.1 75.6 78.0 75.8 76.9 75.2 77.1 79.8 77.3

Non-OPEC supplyOECD 22.1 21.8 21.3 22.2 21.8 21.7 22.1 22.0 22.6 22.2 22.0 22.5 22.3

North America 14.6 14.5 14.0 14.4 14.4 14.3 14.3 14.3 14.6 14.7 14.5 14.6 14.6Western Europe 6.8 6.6 6.6 7.0 6.6 6.5 6.9 6.7 7.2 6.7 6.7 7.1 6.9Pacific 0.7 0.7 0.7 0.9 0.8 0.8 0.9 0.9 0.8 0.8 0.8 0.8 0.8

Developing countries 10.3 10.6 10.8 10.9 10.9 10.9 11.0 10.9 11.1 11.1 11.2 11.3 11.2FSU 7.2 7.2 7.5 7.7 7.8 8.0 8.1 7.9 7.8 7.9 8.1 8.3 8.0Other Europe 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2China 3.3 3.2 3.2 3.3 3.3 3.2 3.2 3.2 3.3 3.3 3.2 3.2 3.3Processing gains 1.6 1.6 1.6 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7Total non-OPEC supply 44.6 44.5 44.6 45.9 45.5 45.6 46.3 45.8 46.7 46.4 46.5 47.2 46.7OPEC NGLs 2.8 2.8 2.8 2.9 2.9 2.9 2.9 2.9 2.9 2.9 2.9 2.9 2.9(b) Total non-OPEC supply and

OPEC NGLs 47.5 47.3 47.4 48.8 48.4 48.5 49.2 48.7 49.7 49.3 49.4 50.1 49.6

OPEC crude oil production1 27.2 27.8 26.5 26.5 27.9 28.7 28.8 27.9Total supply 74.7 75.1 73.9 75.3 76.3 77.2 78.0 76.7Balance2 1.3 1.4 -1.0 -0.3 2.2 1.6 0.0 0.9

Closing stock level (outside FCPEs) m bOECD onland commercial 2,643 2,725 2,470 2,445 2,525 2,554OECD SPR 1,207 1,249 1,228 1,234 1,232 1,235OECD total 3,850 3,974 3,699 3,679 3,757 3,789Other onland 1,030 1,063 989 984 1,005 1,013Oil on water 812 859 808 826 853 837Total stock 5,692 5,896 5,496 5,489 5,615 5,638

Days of forward consumption in OECDCommercial onland stocks 56 57 52 53 53 52SPR 26 26 26 27 26 25Total 82 83 77 79 79 76Memo itemsFSU net exports 2.9 3.0 3.5 4.0 4.1 4.5 3.9 4.1 4.4 4.3 4.3 4.3 4.3[(a) — (b)] 25.9 26.4 27.5 26.8 25.6 27.1 28.8 27.1 27.2 25.9 27.7 29.7 27.6

Note: Totals may not add up due to independent rounding.1. Secondary sources.2. Stock change and miscellaneous.

Table I above, prepared by the Secretariat’s Energy Studies Department, shows OPEC’s current forecast of world supply and demand foroil 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 63, whileGraphs One and Two (on pages 62 and 64) show the evolution on a weekly basis. Tables Three to Eight, and the corresponding graphson pages 65–70, show the evolution of monthly average spot prices for important products in six major markets. (Data for Tables 1–8 isprovided by courtesy of Platt’s Energy Services).

62 OPEC Bulletin


Graph 1:Evolution of spot prices for selected OPEC crudes,

September to December 2000

1 3 4 2 3 4 1 3 4 2 3 41 22 1

$/barrel

16

19

22

25

28

31

34

37

40

OPEC Basket

Tia Juana Light

Dubai

Arab Heavy

Arab Light

Bonny Light

Brega

Kuwait Export

Iran Light

Minas

Saharan Blend

DecemberNovemberOctoberSeptember5

January 2001 63


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; Secretariat’s calculations.

Table 1: OPEC spot crude oil prices, 1999–2000 ($/b)

1999 2000Member Country/ Dec Jan Feb Mar April May June July Aug Sept Oct Nov Decembertype of crude (API°) 4Wav 4Wav 5Wav 4Wav 4Wav 5Wav 4Wav 4Wav 5Wav 4Wav 5Wav 4Wav 1W 2W 3W 4W 4Wav

AlgeriaSaharan Blend (44.1) 26.13 25.89 28.74 27.65 22.91 28.02 29.94 28.76 29.25 33.18 31.19 33.06 29.94 27.02 24.52 22.97 26.11

IndonesiaMinas (33.9) 24.27 24.39 26.48 27.39 24.15 28.26 31.30 30.44 30.33 33.36 32.30 31.07 28.26 25.27 23.56 22.40 24.87

IR IranLight (33.9) 24.81 24.35 25.70 25.87 22.86 26.10 27.99 27.09 27.12 30.45 30.42 29.75 25.43 23.00 21.71 20.48 22.66

IraqKirkuk (36.1) — — — — — — — — — — — — — — — — —

KuwaitExport (31.4) 24.20 23.70 24.84 25.07 22.29 25.60 27.44 26.39 26.21 29.05 28.87 28.20 23.88 21.45 20.16 18.93 21.11

SP Libyan AJBrega (40.4) 26.23 25.32 28.59 27.71 22.86 27.84 30.14 29.36 29.44 32.64 30.98 32.99 28.95 26.65 23.60 22.40 25.40

NigeriaBonny Light (36.7) 25.86 25.41 28.36 27.54 22.91 27.87 29.86 28.75 29.06 32.65 30.67 32.86 29.49 26.44 23.82 22.14 25.47

Saudi ArabiaLight (34.2) 25.04 24.43 25.85 26.02 22.95 26.27 29.09 27.19 27.12 30.60 30.17 29.81 25.49 22.96 21.67 20.49 22.65Heavy (28.0) 23.70 23.08 24.00 24.52 22.00 25.27 27.09 25.99 25.52 28.00 28.21 27.94 23.74 21.11 19.82 18.64 20.83

UAEDubai (32.5) 23.65 23.23 24.77 24.99 22.14 25.69 27.24 26.35 26.79 30.05 30.57 30.25 24.90 22.40 21.60 20.17 22.27

VenezuelaTia Juana Light1 (32.4) 23.61 23.74 26.08 25.89 22.16 25.50 27.99 26.32 26.84 29.33 28.34 30.01 25.52 23.76 22.25 20.89 23.11

OPEC Basket2 24.77 24.58 26.84 26.71 22.93 26.94 29.12 27.94 28.30 31.48 30.42 31.22 27.22 24.71 22.99 21.59 24.13

Table 2: Selected non-OPEC spot crude oil prices, 1999–2000 ($/b)

1999 2000Country/ Dec Jan Feb Mar April May June July Aug Sept Oct Nov Decembertype of crude (API°) 4Wav 4Wav 5Wav 4Wav 4Wav 5Wav 4Wav 4Wav 5Wav 4Wav 5Wav 4Wav 1W 2W 3W 4W 4Wav

Gulf AreaOman Blend (34.0) 24.34 24.14 25.42 25.55 22.75 25.65 27.74 26.83 27.24 30.55 29.88 29.97 25.67 23.32 21.53 20.50 22.76

MediterraneanSuez Mix (Egypt, 33.0) 23.87 23.33 26.16 24.68 19.90 25.03 26.64 24.24 26.24 28.59 26.18 29.06 24.85 21.80 19.15 18.65 21.11

North SeaBrent (UK, 38.0) 25.63 25.26 27.99 27.14 22.66 27.60 29.74 28.96 29.74 32.94 30.86 32.67 28.58 26.10 23.26 22.33 25.07Ekofisk (Norway, 43.0) 25.92 25.53 28.47 27.29 22.74 27.91 29.85 28.44 28.57 32.75 30.77 32.66 29.35 26.67 23.72 22.27 25.50

Latin AmericaIsthmus (Mexico, 32.8) 24.79 24.97 27.62 27.51 23.31 26.95 29.45 27.74 28.75 31.19 29.73 31.47 26.95 25.09 23.50 22.06 24.40

North AmericaWTI (US, 40.0) 26.21 27.15 29.44 29.85 25.81 28.78 31.93 30.19 31.04 34.05 33.00 34.65 30.44 28.92 27.92 26.30 28.39

OthersUrals (Russia, 36.1) 25.44 24.83 27.52 25.60 21.20 26.35 27.39 24.75 27.00 30.30 28.04 31.23 28.00 24.79 22.28 21.16 24.06

64 OPEC Bulletin


Graph 2:Evolution of spot prices for selected non-OPEC crudes,

September to December 2000

16

19

22

25

28

31

34

37

40

OPEC Basket

Urals

West Texas Intermediate

Isthmus

Ekofisk

Brent

Suez Mix

Oman

DecemberNovemberOctoberSeptember1 2 3 4 2 3 4 1 2 3 4 1 2 3 41

$/barrel

5

January 2001 65


Table 3: North European market — bulk barges, fob Rotterdam ($/b)regular gas premium gas fuel oil

1998 naphtha unleaded 87 unleaded 95 gasoil jet kero 1%S 3.5%SDecember 12.00 11.81 12.82 12.76 13.94 10.06 7.721999January 11.12 12.55 13.45 13.23 14.65 10.79 9.30February 10.46 12.44 13.05 12.75 13.83 8.99 8.29March 13.09 14.49 15.36 15.61 16.16 9.68 9.11April 15.59 18.23 18.93 17.10 19.29 11.53 10.61May 17.50 18.11 18.93 16.01 18.51 12.40 10.42June 17.34 18.18 19.14 16.58 19.02 12.56 12.03July 20.38 21.66 22.69 19.97 22.35 14.13 14.05August 22.34 25.51 26.39 22.22 24.42 16.97 16.76September 23.21 25.83 26.75 24.29 26.41 17.77 17.53October 24.78 25.88 26.61 24.19 26.04 19.16 18.78November 25.54 27.20 27.72 26.77 29.32 19.40 19.15December 24.73 28.41 28.93 28.18 33.07 19.69 18.672000January 27.41 27.81 28.23 28.96 32.24 19.85 18.83February 29.87 31.63 32.32 29.85 32.72 21.52 19.81March 31.06 35.71 36.27 30.28 34.01 22.67 22.12April 24.83 32.90 33.42 28.23 32.81 19.44 18.12May 28.39 37.01 38.99 29.87 32.07 20.02 18.70June 30.41 40.57 44.28 31.40 34.40 23.79 21.23July 29.89 36.51 37.67 33.02 36.07 24.13 19.79August 29.79 34.82 36.20 36.46 38.69 21.47 19.69September 33.28 36.87 37.70 42.09 43.84 24.29 23.04October 33.15 37.17 35.31 40.06 43.64 27.06 23.82November 32.51 37.35 33.46 40.68 43.61 25.61 22.18December 29.27 37.35 28.05 34.25 37.50 23.24 18.31

Sources: Platt’s Oilgram Price Report & Platt’s Global Alert. Prices are average of available days.

Graph 3: North European market — bulk barges, fob Rotterdam

0

9

18

27

36

45

fuel oil 3.5%Sfuel oil 1%S

jet kerogasoilpremiumregularnaphtha

DecNovOctSepAugJulJunMayAprMarFebJanDecNovOctSepAugJulJunMayAprMarFebJan

$/barrel

1999 2000

66 OPEC Bulletin


Table 4: South European market — bulk cargoes, fob Italy ($/b)gasoline fuel oil

1998 naphtha premium unleaded 95 gasoil jet kero 1%S 3.5%SDecember 10.56 12.29 11.90 11.69 8.73 7.571999January 9.80 13.09 12.71 12.69 10.86 8.40February 9.26 12.69 11.07 12.36 8.44 7.47March 11.80 15.08 13.88 14.47 9.45 8.04April 14.49 18.82 15.32 18.30 10.71 9.85May 16.38 18.88 14.52 16.63 11.44 9.52June 16.39 19.19 15.73 17.26 11.85 10.23July 19.45 23.12 19.06 21.04 14.26 12.65August 21.45 27.05 21.81 22.73 17.08 15.48September 22.37 26.90 23.36 25.18 17.34 16.55October 23.88 26.46 23.56 24.51 18.42 17.65November 24.68 27.77 26.25 27.67 17.76 17.53December 23.83 28.82 27.86 32.52 18.23 17.442000January 26.26 27.55 28.06 31.43 20.48 17.85February 28.57 32.11 29.97 31.28 22.12 19.05March 29.65 36.27 29.63 32.31 22.40 21.27April 23.41 32.77 26.69 31.16 19.28 17.09May 27.01 38.38 29.15 29.67 20.52 16.51June 28.93 44.06 30.14 31.99 24.50 19.95July 28.26 38.25 32.92 34.18 23.20 18.76August 28.14 36.67 36.09 36.60 20.85 17.85September 31.58 37.87 41.97 41.89 25.00 21.49October 32.48 37.20 41.53 41.85 27.16 23.58November 32.47 33.57 40.44 40.33 24.71 19.47December 27.74 27.79 34.92 35.99 23.46 17.96


Graph 4: South European market — bulk cargoes, fob Italy

$/barrel

0

9

18

27

36

45

fuel oil 3.5%S

fuel oil 1%S

jet kero

gasoil

premium

naphtha

DecNovOctSepAugJulJunMayAprMarFebJanDecNovOctSepAugJulJunMayAprMarFebJan1999 2000

January 2001 67


Table 5: US East Coast market — New York ($/b, duties and fees included)gasoline fuel oil

1998 regular unleaded 87 gasoil jet kero 0.3%S LP 1%S 2.2%SDecember 12.75 12.98 13.60 12.17 10.09 8.961999January 14.13 13.90 14.34 12.90 10.98 10.18February 13.12 12.63 13.36 11.42 8.73 8.31March 17.50 16.02 16.68 13.21 11.20 10.36April 20.61 17.85 18.84 15.18 13.06 11.78May 20.30 17.27 17.88 16.41 13.82 12.95June 20.28 17.88 19.37 16.85 14.61 13.22July 24.30 20.77 22.56 18.60 16.39 14.65August 26.64 22.79 24.51 21.11 18.62 17.24September 28.67 25.04 26.66 22.22 19.48 18.85October 26.13 24.27 25.76 22.00 19.44 18.75November 28.87 26.90 28.78 22.73 19.52 18.95December 29.35 27.91 30.92 24.88 19.21 18.702000January 29.41 34.21 39.42 30.08 21.76 20.42February 33.91 34.64 35.50 31.74 22.90 21.22March 37.10 32.01 34.31 27.07 21.06 20.87April 30.35 30.16 32.20 26.81 20.98 19.85May 37.17 31.39 33.26 28.66 24.59 21.86June 40.12 32.62 33.69 30.69 27.11 23.20July 36.04 32.53 34.42 29.28 24.44 22.20August 36.33 37.17 38.59 29.48 24.50 21.57September 39.90 41.25 43.80 37.21 29.42 25.39October 39.83 41.04 42.86 36.86 29.51 25.96November 39.56 43.46 45.52 35.43 28.66 25.26December 30.96 39.52 40.97 34.59 25.63 22.04


Graph 5: US East Coast market — New York

$/barrel

0

10

20

30

40

50

fuel oil 2.2%S

fuel oil 1%S

fuel oil 0.3%S LP

jet kero

gasoil

regular


68 OPEC Bulletin


Table 6: Caribbean cargoes — fob ($/b)fuel oil

1998 naphtha gasoil jet kero 2%S 2.8%SDecember 11.03 12.07 12.70 8.06 6.341999January 11.93 12.71 13.88 9.29 7.93February 10.46 11.59 12.72 7.41 6.67March 15.39 15.04 15.66 9.42 8.37April 16.70 17.34 18.36 10.85 10.01May 17.53 16.87 17.73 11.97 11.26June 18.03 17.44 19.18 12.21 11.40July 21.60 20.45 22.12 13.68 12.91August 23.50 22.65 24.57 16.45 15.95September 25.09 24.54 26.18 18.34 18.13October 23.16 23.83 25.32 18.20 17.91November 26.23 26.31 28.01 18.45 17.88December 25.96 27.38 29.93 18.20 17.872000January 28.17 30.61 32.85 19.82 18.46February 33.52 31.85 32.95 20.57 19.36March 32.74 30.82 33.01 20.17 19.70April 28.25 29.44 30.74 19.15 18.50May 32.59 31.11 31.84 21.16 19.39June 36.24 32.27 32.78 22.27 21.40July 31.06 32.35 33.38 20.84 19.67August 32.92 36.63 37.80 19.78 18.54September 35.32 41.01 42.78 23.59 20.46October 34.77 39.90 41.32 23.95 21.71November 34.37 40.93 43.64 22.96 17.96December 29.73 34.63 36.40 19.89 16.90


Graph 6: Caribbean cargoes — fob

$/barrel

0

9

18

27

36

45

fuel oil 2.8%S

fuel oil 2.0%S

jet kero

gasoil

naphtha


1999 2000

January 2001 69


Table 7: Singapore cargoes ($/b)gasoline fuel oil

1998 naphtha premium unleaded 95 gasoil jet kero 0.3%S 180C 380CDecember 12.59 13.56 12.74 14.23 9.06 9.13 9.121999January 12.04 14.15 14.66 15.81 9.94 9.49 9.40February 11.48 13.85 12.32 13.34 9.00 8.46 8.24March 13.66 15.79 14.10 15.82 10.85 9.80 9.57April 16.19 19.74 16.73 19.29 13.07 11.93 11.71May 17.42 18.58 16.99 17.81 14.02 12.65 12.48June 17.69 18.49 17.19 18.82 14.17 12.58 12.49July 20.75 22.63 19.22 22.10 15.50 14.45 14.46August 23.16 25.99 21.30 24.81 17.23 17.03 17.27September 24.49 26.86 23.04 26.37 18.91 18.42 18.83October 24.70 24.78 23.60 25.90 20.46 19.98 20.46November 25.86 25.88 24.74 27.56 21.23 20.68 21.19December 25.03 25.46 25.63 29.53 21.47 20.47 20.982000January 25.02 28.36 28.14 31.30 21.58 19.66 19.95February 27.09 31.16 29.90 31.14 23.43 20.76 21.15March 29.08 32.58 32.94 32.37 25.85 24.66 24.69April 25.01 28.01 26.73 27.99 24.54 22.13 22.39May 27.27 31.90 28.12 29.09 26.62 23.62 23.60June 28.13 33.08 30.69 31.23 26.78 25.30 25.31July 27.80 36.05 31.86 33.25 25.45 22.00 22.09August 30.19 38.31 37.46 37.98 27.08 21.57 21.64September 34.53 35.05 40.13 42.21 28.44 24.81 24.87October 33.50 33.03 38.96 43.30 26.77 26.35 26.55November 30.43 32.96 34.85 39.88 26.50 24.36 24.49December 25.52 29.97 29.61 32.92 24.45 19.78 19.74


$/barrel

0

9

18

27

36

45

fuel oil 380C

fuel oil 180Cfuel oil 0.3%S

jet kerogasoil

premiumnaphtha


1999 2000

Graph 7: Singapore cargoes

70 OPEC Bulletin


Table 8: Middle East— fob ($/b)fuel oil

1998 naphtha gasoil jet kero 180CDecember 12.39 11.26 12.83 8.261999January 11.71 13.32 14.53 8.61February 11.27 11.17 12.25 7.62March 13.61 13.07 14.86 8.94April 16.25 15.68 18.29 11.17May 17.15 15.78 16.67 11.96June 17.32 15.86 17.56 11.95July 20.49 17.91 20.86 13.87August 22.84 19.99 23.57 16.30September 24.29 21.73 25.13 17.53October 24.40 22.33 24.68 19.15November 25.61 23.50 26.39 19.88December 24.85 24.34 28.30 19.412000January 24.62 26.63 29.87 18.47February 26.75 28.32 29.64 19.59March 28.42 31.28 30.79 23.40April 24.42 25.01 26.36 20.66May 26.84 26.39 27.46 22.06June 27.63 28.76 29.40 23.60July 27.07 29.73 31.24 20.27August 29.12 35.24 35.88 19.49September 33.03 37.79 40.01 22.98October 31.51 36.62 40.97 24.39November 28.88 32.42 37.38 22.05December 24.19 26.46 29.73 17.06


Graph 8: Middle East — fob

$/barrel

0

9

18

27

36

45

fuel oil 180C

jet kero

gasoil

naphtha


72 OPEC Bulletin

M E M B E R C O U N T R Y F O C U SM E M B E R C O U N T R Y F O C U S

opecna news desk ... from the opecna news desk ... from the opecna

Saudi Arabian Cabinet approvesbudget for the fiscal year 2001

Riyadh — The Saudi Arabian Cabinet last month approvedthe Kingdom’s budget for fiscal 2001, with government rev-enues estimated at $57.3 billion and expenditure at the samelevel, according to the Saudi Press Agency (SPA).

The SPA quoted King Fahd, during an address to theCabinet, as saying: “When the budget was prepared, the statewas keen on attaining financial balance as well as supporting thesectors and activities that contribute to the development andprogress of the country.”

The King noted that the new budget included the creationof 27,000 jobs, mainly in the education, health and socialsectors.

The budget also included an allocation of $10.13bn for newprogrammes and projects, including additional phases for someinitiatives previously approved.

Some $14.21bn went to general and higher education andmanpower training (up eight per cent from the previous budget),while $5.84bn went to health services and social development(up 10 per cent) and $2.32bn went to municipal services (up23 per cent).

Some $1.54bn went to transport and communications (upfour per cent) and $2.98bn went to infrastructure, industry,agriculture and other sectors (up six per cent).

The King highlighted the effective role played by the privatesector in ongoing efforts to reduce dependence on governmentexpenditure. In particular, he said the manufacturing sector hadexperienced steady growth.

He pointed out that during 2000 a number of laws had beenapproved, including those on foreign investment and on theownership of real estate by non-Saudis.

The King noted that the gross national product was expectedto close at the year-end with a positive growth of 15.5 per cent,reaching $164.8bn, compared to $142.6bn in 1999.

He attributed the Kingdom’s strong economic performanceto higher oil prices and output, and said the petroleum sectorwas expected to close at the year-end with 39.4 per cent growth.________________________________________________

Kuwait’s GDP seen climbingby 3.6 per cent in 2000

Beirut — Kuwait’s gross domestic product rose by 3.6 per centlast year, compared with just 0.5 per cent in 1999, accordingto a new report issued by the Economic and Social Commissionfor Western Asia (ESCWA).

Oil production rose by 10.2 per cent, reaching 2.9 millionb/d, said the report by ESCWA, which is based in the Lebanesecapital Beirut.

The rise in Kuwait’s GDP was due to two reasons — theperformance of the oil sector and the drop in the level of theexpatriate workforce.

It noted that 90 per cent of Kuwaitis were employed in thepublic sector because salaries were higher than in the privatesector, adding that the total workforce in Kuwait this year stoodat 1.2m, 1.6 per cent below last year’s total.

Concerning inflation rates, the report noted that these werelow in the multi-faceted economies of the Gulf region, wherecountries could keep rates under control, generally below thethree per cent level. Kuwait’s inflation in 2000 stood at 2.6 percent.

The study underlined that the financial positions had im-proved this year in all ESCWA member states, except in Leba-non and Palestine, due to the impact of the rise in oil prices.

The report also pointed out that Kuwait’s fiscal budgetsurplus was up to 7.1 per cent, the highest in the region, notingthat by the end of June, total Kuwaiti revenues were up at $17billion, with a surplus of $3.9bn.

The report observed that total ESCWA region GDP (exclud-ing Iraq) was up by 5.1 per cent last year, due to the rise in oilprices, coupled with the economic reforms adopted by the GulfCo-operation Council (GCC).

Initial ESCWA estimates indicated that total regional oilrevenues increased last year to $166bn.________________________________________________

Asian Development Bank extends$115m loan to Indonesia

Manila — The Asian Development Bank (ADB) has extendeda loan worth $115 million to Indonesia, which will be used tofinance poverty alleviation efforts, the Indonesian News Agency(Antara) reported last month.

The loan agreement was signed in Manila by the IndonesianAmbassador, Soeratmin, and the President of the Asian Devel-opment Bank (ADB), Tadao Chino.

The loan will partially finance a $170.2m joint project withIndonesia, aimed at reducing poverty in six of the country’s least-developed provinces.

The scheme, known as the Community Empowerment forRural Development project, was designed to reduce poverty byincreasing the incomes of about 425,000 people, or 85,000 poorfamilies.

Of these, about 370,000 people, or 74,000 families, areexpected to move above the poverty line in 11 districts withinthe Indonesian provinces of Central, East and South Kalimantan,and Central, North and South-East Sulawesi.

Community-Based Savings and Loan Organizations will beformed and training will be given to help support existing micro-and small enterprises, and the necessary rural infrastructure willbe provided to promote rural-urban linkages.

January 2001 73

M E M B E R C O U N T R Y F O C U S

The project will revitalise poverty reduction efforts in therural sector by supporting the Indonesian government’s pro-gramme to improve development resources to local govern-ments.

It will also strengthen the institutional and human resourcecapacity necessary to enable rural communities to plan andmanage local development initiatives on a nation-wide basis.________________________________________________

Iran to build five power plants,partly privatize power generation

Tehran — Iran is considering the construction of five newpower plants this year and the transfer of part of the country’spower generation to the private sector, Deputy Minister ofEnergy, Mohammad Mallaki, was reported as saying in the localIran newspaper last month.

One of the plants would be constructed in Tehran and othersin the Khuzestan and Khorasan provinces.

Once completed, he said that they would add some 1,250megawatts (mw) of electricity to the country’s power grid.

One of the plants would be constructed near Tehran andwould be probably built jointly by a consortium of German andItalian companies.

Mallaki also suggested that part of the power productioncould be transferred to the private sector, saying the governmentwas hard-pressed for credit required for the purpose.

“If the power sector remains under state monopoly, over5,000 billion rials will be needed annually for power generation,which the government cannot afford,” he said.

Several other hydro- or coal-fuelled power plants would bebuilt or developed, Mallaki said, adding that substantial invest-ments were needed for their completion.

He added that the results of a tender for the constructionof a power plant in Northern Parehsar, in Gilan province, wouldbe made known in the near future.________________________________________________

Venezuela learns from Kuwait’sexperience in water desalination

Kuwait — Venezuela’s Ambassador to Kuwait, Eloy Fernandez,said last month that a Venezuelan government delegation wouldvisit Kuwait in March to acquaint themselves with the country’sknow-how in water resource management, especially in the fieldof sea water desalination.

Fernandez said Venezuela had many islands in the Carib-bean Sea, which could be developed for tourism, but they stilllacked fresh water resources, according to the Kuwaiti NewsAgency.

Venezuela could obtain technology from any industrializedcountry to operate water desalination stations, but it consideredKuwait to be most competent in its water resource management,the Ambassador said.

Thus, Venezuela could learn from the experience of coun-

tries, such as Kuwait, that basically depend on water desalinationto cover their fresh water needs, Fernandez said.

Also, a delegation of Venezuelan businessmen plan to visitKuwait in February to co-operate and share their expertise inthe manufacturing of cleaner oil products.

Co-operation in this field was envisioned in an agreementsigned between the two countries in Caracas last October,Fernandez said.

Bilateral economic relations and joint investments have notyet reached their full potential between the two countries, theAmbassador noted.

In addition, bilateral trade relations between Venezuela andwere limited to transactions, such as exchanges of auto spareparts and metal wires, under an agreement signed by someKuwaiti businessmen a year ago.

Fernandez attributed the weakness of bilateral trade betweenthe two countries to the fact that both rely on oil exports andare not directly linked by commercial flights.________________________________________________

Saudi Arabia attracts largestshare of FDI in Arab nations

Dammam — Saudi Arabia attracted the highest share offoreign investment among Arab countries in 1999, drawing $4.8billion, or 54.7 per cent of the total funds spent in this area,the local Al-Eqtisadiah daily reported last month.

Egypt attracted the second largest sum, with $1.5bn, or 17.1per cent of the total, followed by Morocco with $847m, or 9.7per cent of the total.

Of the total world share of direct foreign investment, coun-tries in the Arab region only secured one per cent, or $8.7bn,out of the total $865.5bn invested globally last year.________________________________________________

Qatar establishes Supreme Councilfor investing financial resources

Doha — Qatar decided last month to set up a Supreme Councilwhich will be responsible for investing the state’s financialreserves.

The Council will be chaired by the Emir, Sheikh HamadBin Khalifa Al Thani, while the Crown Prince, Sheikh JassemBin Hamad Al Thani, will act as his deputy.

The Council Members include the Prime Minister, andMinisters of Foreign Affairs, Energy and Industry, Finance andEconomy, and the Governor of the Central Bank.

The Council’s mandate will be for three years and will berenewable. It will invest state reserves, plan a long-term strategyand annual programmes for the reserves, follow up and assessinvestments, select banks and financial organizations to investreserves and specify the currency to be used.

A body called the Foreign Investment Bureau, affiliated tothe Ministry of Finance and Economy, has been overseeing thestate’s foreign investments until now.

74 OPEC Bulletin


Iran’s current account balanceseen sharply up in 1999

Tehran — Iran’s current account balance rose sharply in 1999,reaching $4.7 billion, according to a report by the local Man-agement and Planning Organization (MPO), quoted last monthby the official Islamic Republic News Agency (IRNA).

MPO’s Department of Macroeconomics attributed theincrease to a stronger trade balance, and higher oil and gasexports.

It said the trade balance included exports and imports ofgoods, such as oil, gas and non-oil commodities.

Iran’s total exports reached $19.7 billion in 1999, up by$6.6bn from the preceding year. Oil and gas exports rose by$6.3bn and non-oil commodities by $270 million.

A reduction of $1.77bn in the cost of imports last year waseffective in pushing up the current trade balance, the reportnoted. Last year, the value of imported goods dropped to$13.5bn.

If oil revenues are excluded, Iran’s trade balance last yearrecorded a $10bn deficit, the report noted, adding that just 25.5per cent of imported goods were purchased by foreign exchangeearned from non-oil commodity exports.

The report said that the country’s second five-year economicdevelopment plan (1995-2000) envisioned non-oil exports at$6.16bn, oil exports at $15.89bn and imported goods at$20.42bn.

Fifty-six per cent of the figure for non-oil exports was metin the period, it added.________________________________________________

UAE creates new companyto run unified power grid

Abu Dhabi — The United Arab Emirates (UAE) Ministryof Electricity has approved the establishment of a federal com-pany to connect local power grids, according to a report in theSharjah-based Al Khaleej daily.

Apart from the creation of the new body — the EmiratesPower Linkage Corporation — the Ministry also approved a400-kilovolt power plant in Al Dhaid, said the paper.

The report added that the inter-connection of power gridsin Dubai and Abu Dhabi was expected to be completed in thefirst quarter of 2003, with total costs estimated at $163.5million.

The sources said the projects had been approved in a meetingchaired recently by the UAE Minister of Electricity and Water,Hamad Bin Nasser Al Owais, and attended by representativesof the electricity authorities in Abu Dhabi, Dubai and Sharjah.

The new corporation would link all power transfer networksin two phases. The first phase would include Abu Dhabi andDubai, while the second phase would inter-connect Dubai andthe rest of the Emirates, which would include linking the Dubaiand Al Dhaid grids through the new 400-kv power plant.

This, in turn, would link Dubai with the Emirates of

Sharjah, Ajman, Ras Al Khaimah and the Eastern Region,according to the report.

The sources said the inter-connection of the power gridswould help expand the reserve capacity of each authority andconsequently cut down operational costs, as well as costs ofmaintenance and investment.

It would also improve the performance of power distributionin the UAE, in the case of failures or power disconnection.

The grid linkage would also allow for the installation of high-efficiency, large power plants and the transfer of power ateconomical rates.

The Ministry’s outlay for related projects this year is esti-mated at $136m, including $54.5m for power generation projects,$54.5m for power grid linkage projects and $27m for waterdesalination projects, in addition to a new $27m water desalinationplant in Ajman, which will produce 300m gallons of water.

In a related move, the Gulf Co-operation Council (GCC)recently approved the establishment of a specialized corporationfor linking the power grids of the six GCC Member States witha budget of $1.1 billion.

Under the first phase of the project the power grids of SaudiArabia, Bahrain, Qatar and Kuwait would be linked, while thesecond phase involved Qatar and the UAE, and the third phasewould ensure the inter-connection of the UAE and Oman, thereport added.________________________________________________

Kuwaiti budget for fiscal 2000seen achieving healthy surplus

Kuwait City — Kuwait’s state budget is expected to achievea surplus of between $3.5 billion and $5.2bn for the fiscal year2000–01, according to a report from the National Bank ofKuwait.

An average oil price for the period of $25–28 per barrel wasassumed, said the Bank in its monthly report, quoted by theKuwaiti News Agency.

It added that the surplus might be achieved only if actualexpenditure was not equivalent to what had been set aside inthe budget.

“The surplus can be $650 million higher in the likely event(that) spending comes in under budget by six per cent or more,as it typically does,” the report noted.

According to the study’s tables, the government had esti-mated the amount of revenue for the year at around $7.5bn,based on an oil price of $13/b.

The total amount of official expenditure was estimated atabout $11.7bn, which would result in a deficit of $4.2bn. Thereport also expected oil prices to ease in 2001 by the end of thewinter season

It highlighted the situation in the international oil marketin October and November last year, noting that the prices ofcrude oil barely eased in these months, despite the total of fouroutput hikes by OPEC during the year.

“Low oil inventories going into the winter remained themain factor behind the strong prices, particularly in North

January 2001 75


America and Europe. It is feared that if (the) winter is a coldone, there may not be sufficient fuel in stock to meet demand,”the study added.

On the other hand, the report noted that United Nations’compensation payments made in October had helped boostKuwait’s liquidity by increasing deposits at local banks.

The strong growth in foreign currency deposits was also afactor in improved liquidity and stronger money supply growth,the study pointed out.________________________________________________

Algeria’s ENOR to start goldproduction in March 2001

Algiers — The Algerian Company for the Exploitation of Gold(ENOR) announced last month that gold production in thecountry would start in March this year.

ENOR General Manager, Ali Nouaouia, indicated that thefirst gold would be produced at the Tirek field, located in theTamanrasset region, in the south of the country.

He told a press conference at the Ministry of Energy andMines that when his company was set up in 1992, the nationalAlgerian oil company, Sonatrach, was its majority stakeholderwith 35 per cent of the shares.

However, he said the Tirek gold project, which was launchedin 1998 through local funding initiatives, now required part-nership assistance and external financing for its further devel-opment.

In this regard, Nouaouia noted that the firm had launchedinternational tenders for the exploitation of the field, as well asfor the Amesmessa field, situated in the same region.

He said ENOR proposed the exploration of new fields onthe permit it held covering a surface area of 1,200 sq km.

He said that so far some 10 international firms — principallyCanadian, South African, American and a French company —had shown the necessary credentials as being likely partners forthe project. The evaluation of offers would take place in May2001, he added.

Estimated gold reserves of the combined Tirek and Amesmessafields contained around 90 tonnes, Nouaouia disclosed, addingthat annual extraction of 1.6 t of gold was expected from Tirek,starting in March, and 3.0 t a year from Amesmessa by 2004.________________________________________________

Iran plans to build its firstforeign-financed power station

Tehran — Iran plans to build its first foreign-financed powerstation in Southern Parehsar, Gilan province, according to theIranian Minister of Energy, Habibollah Bitaraf.

Bitaraf was quoted by the official Islamic Republic NewsAgency (IRNA) as saying that his office had held initial talkswith two consortia, but a final agreement had yet to be reached.

Bitaraf declined to name the companies involved, or give anyfurther details.

He said the talks had been aimed at attracting investmentto power generation projects under a build, operate and transferscheme.

Bitaraf said Iranian power subsidies had prevented foreigninvestment flows from going into the sector up to now. Inresponse to this, he said his office had guaranteed the purchaseof generated power from the consortia which were consideringinvesting in the power station.

The Minister said that next year Iran would allocate signifi-cant funds to power generation and would complete severalunfinished power plants. Investment would also go into powertransfer projects.

Under the country’s third development plan (2000-05), Iranwill add some 13,500 megawatts of electricity to its powernetwork. To achieve this, the country must expand its powertransfer and distribution lines.________________________________________________

Saudi Arabian budget deficitfell by 25 per cent in 1999

Riyadh — Saudi Arabia’s budget deficit declined by 25 percent last year, compared with the deficit recorded in 1998, dueto an improvement in the performance of the Kingdom’seconomy, according to a new report from the Saudi ArabianMonetary Agency (SAMA).

Meanwhile, the deficit in the balance of payments currentaccount fell by 78.1 per cent over the same period, said SAMA.

It added that consumer prices remained stable in 1999, whilethe performance of the stock markets improved remarkably.

The report noted that in order to enhance the process ofeconomic development and diversification of the economy, theKingdom had established a number of important bodies overthe 1999–2000 financial year.

These included the Supreme Economic Council, the Su-preme Council for Petroleum and Mineral Affairs, the GeneralInvestment Commission, and the Higher Tourism Commis-sion, which would enhance and facilitate economic diversifica-tion in the Kingdom, the report noted.

The report, carried by the Saudi Press Agency (SPA), pointedout that initial estimates for the country’s gross national productindicated that GNP increased by 0.4 per cent last year, comparedwith a 1.5 per cent rise in 1998.

Non-oil GNP increased by 1.2 per cent in 1999, the same asin 1998. Agricultural sector growth stood at 1.4 per cent,compared with one per cent in 1998, while the manufacturingsector expanded by 3.1 per cent in 1999, as opposed to 2.9 percent in 1998.

Meanwhile, the electricity and gas, and building and con-struction sectors increased by 3.7 per cent and 1.8 per cent,respectively, in 1999, compared with 2.1 per cent and 0.9 percent over the previous year.

Concerning the Kingdom’s cost of living, the report saidconsumer prices were characterized by stabilization in 1999,with the cost of living declining by 1.3 per cent, compared witha drop of 0.2 per cent in 1998 and 0.4 per cent in 1997.

76 OPEC Bulletin


European economist sees strongsigns of recovery in Indonesia

Jakarta — European and American investors should comeforward and invest in Indonesia, so as to not miss good businessopportunities, according to economist and former EuropeanCommissioner of Economic, Monetary and Financial Affairs,Yves-Thibault de Silguy.

He said there were “good signals of economic recovery inthe country,” despite pessimism among foreign investors.

De Silguy, who was involved in the 1999 launching of theeuro, highlighted Indonesia’s strong consumption growth asimportant to investors.

The main strength of the country was the market, becauseit drove the economy, and the larger the market, the greater theopportunities for development, he said, referring to Indonesia’spopulation of 210 million.

De Silguy, who is Vice-President of France’s Suez des EauxGroup, said his company would invest further in Indonesia.

The company’s Indonesian subsidiary, PT Pam LyonnaiseJaya, would raise its investment in Indonesia to $140 millionover the next 10 years from $60m at present.________________________________________________

Iranian Central Bank reportsregistration of 31 foreign firms

Tehran — The Iranian Central Bank has reported that 31foreign firms were registered in the country during 1999, anincrease of 121.4 per cent from the previous year, according toa report by the bank’s economic statistics office published in theIran daily newspaper last month.

In 1999, 26,840 domestic companies were registered in thecountry, up by 21.5 per cent from the preceding year. Mean-while, 4,280 domestic companies were dissolved last year, upby 8.3 per cent from 1998.

The average capital of domestic companies last year amountedto 23.2 billion rials, down by 28.8 per cent from the previousyear. The total capital of domestic companies in 1999 was610,478 million rials, down by 13.4 per cent from 1998.

According to the CBI report, of the companies registeredlast year, some 25.9 per cent belonged to the commercial sector,including hotels and restaurants, 23.9 per cent to industry, 10.8per cent to credit institutes, insurance and commercial services,8.9 per cent to agriculture, 7.2 per cent to the public, privateand social services sectors, and 4.2 per cent to other areas.

Out of the total capital of the companies registered, 3.0 percent belonged to the industrial sector, 31.3 per cent to creditinstitutes, insurance and commercial services, 16 per cent to thecommercial sector, restaurants and hotels, 7.7 per cent toagriculture, 4.9 per cent to construction, 2.4 per cent to thepublic, private and social sectors, and 2.7 per cent to othereconomic sectors.

In the industrial sector, 27.9 per cent belonged to the textiles,clothing and leather industries.

As for foreign companies, the CBI report said that out ofthe registered total, the United Arab Emirates had four, Ger-many and Britain three each, Russia, Singapore, Spain, Lebanonand the Netherlands two each, and Australia, Armenia, Italy,Bosnia-Herzegovina, Switzerland, France, Sweden, South Ko-rea, Kuwait, Norway, and Hong Kong each had one.________________________________________________

GDP growth in the UAE seenat 20 per cent for 2000–01

Dubai — The gross domestic product of the United ArabEmirates (UAE) could total between $59.20 to $62 billion thisyear — an increase of 14.4 to 20 per cent — due to strong oilprices, according to the Oman Emirates Investment HoldingCompany (OEIHC) in its analysis of the country’s economy forfiscal 2000–01.

The company, a licensed broker on the Abu Dhabi securitiesmarket, has made its projections based on oil prices and indi-cators from UAE Central Bank reports.

“Our low-end GDP estimate is based on fixed daily produc-tion of 2.0 million barrels/day, while maintaining a price of$26.32/barrel. The result is that oil revenues will not be less than$19.16bn,” the report said.

“We maintained 3.5 per cent growth in non oil-basedindustry revenues,” it added, noting that total GDP would registergrowth of 14.39 per cent, according to a report carried by thelocal Gulf News daily newspaper last month.

The company’s high-end estimate for the UAE’s GDP wasthat crude oil revenues might increase to $22.23bn, includingother energy-related revenues.________________________________________________

Algeria, Spain discuss possibleconversion of debt to investment

Algiers — Algerian Minister of Economic Reforms, HamidTemmar, last month discussed ways to convert Algerian debtheld by Spain into investment, it was officially announced inthe country’s capital.

On the sidelines of the event, he met Spain’s ForeignMinister, Jose Pique, the Minister of Economy, Rodrigo Rato,and Deputy Minister of External Trade, Juan Costa, and dis-cussed the shape of the debt conversion.

The conversion scheme, Temmar said, could focus on theacquisition of shares in Algerian state-run firms that are due tobe privatized, or by lending support to local developmentprogrammes.

Shortly after the event, Algeria announced a list of state-runfirms to be privatized, which would become eligible to beincluded in the conversion programme. Algeria’s public sectordebt with Spain is worth $1.72 billion.

The idea of converting this debt into investment was an-nounced several months ago during a state visit to Algeria bythe Spanish Prime Minister, José Maria Aznar.

January 2001 77

O P E C F U N D N E W S

No 86/2000Vienna, Austria, December 6, 2000

African DevelopmentForum 2000 takesplace in Addis Ababa

An Africa-led initiative to concentrate glo-bal attention and sharpen perspectives onthe AIDS scourge on the continent gotunder way, on December 3 in Addis Ababa,Ethiopia, with various experts and researchspecialists warning of dire consequences inthe event of inaction by the internationalcommunity. The conference, African De-velopment Forum 2000, on the theme ofAIDS: the greatest leadership challenge,has brought together more than 1,500delegates drawn from government, civilsociety, business, academia, youth groupsand the media. In attendance were anumber of heads of state and government,ministers and ambassadors, developmentfinance institutions such as the WorldBank, the International Labor Organiza-tion (ILO), several regional developmentbanks and the OPEC Fund for Interna-tional Development.

Sponsored by the African Develop-ment Forum (ADF), the conference washosted by the United Nations EconomicCommission for Africa (ECA), in partner-ship with the ILO, the Organization ofAfrican Unity (OAU) and various United

Nations organs and specialized agencies.The conference sought to examine theleadership role and responsibilities of bothgovernment and the civil society in thefight against HIV/AIDS. The objectivewas to launch a higher level of commit-ment to a viable program of sustainedaction against the disease in Africa, withthe active involvement of all Africans andfriends of the continent within the globalfamily of nations. ADF 2000 analyzed theimpact of HIV/AIDS on Africa’s develop-ment prospects; took stock of progressmade to date on prevention, treatmentand support structures; and highlightedpositive, national and local level experi-ences and best practices. It also articulatedconcrete time-framed follow-up actionsand attempted to mobilize adequate re-sources (domestic and external) to go intoprevention and care programs; and workedfor consensus on follow-up arrangements.

At a plenary session, December 5, HEDr Y Seyyid Abdulai, Director-General ofthe OPEC Fund, told a packed Confer-ence Hall One in Addis Ababa’s imposingUN Conference Centre that the presentmeeting was clearly results- and action-oriented. He had words of praise for thesolid preparation and planning which wentinto the organization of the meeting. DrAbdulai was chair of the plenary and dis-cussion group on roles and approaches foreffective HIV/AIDS response. He moder-ated a spirited discussion, which followeda keynote address on Leadership and So-cial Mobilization given by HE Mrs GracaMachel of Mozambique, wife of formerSouth African President Nelson Mandela.

Dr Abdulai told the capacity, 1,000-seat hall that the message had gone out andaround the world that Africa was finallymobilizing to take action against the prob-

lem of AIDS. He expressed appreciationfor the quality of the informed interven-tions, which marked the plenary session.He called on the development financeinstitutions present to redouble their ef-forts, aware that all development co-op-eration work was done for people: “if wedo not protect people — the very subjectsof our efforts — then we miss the road.”Mrs Graca Machel’s statement was a pow-erful speech in which she called on Africato review aspects of its cultures and tradi-tions which tended to constitute constraintsin the ways of progress. She cited, amongother practices, the customs of inheritanceof wives and the superiority complex ofmen, as fathers, husbands, brothers andsons, as well as the predominant preferencefor male children. In a voice practicallydrowned by ovations, Madam Graca urgedAfrica to accord greater recognition to youth;listen to them, seek their fresh ideas and notalways expect quiet, docile compliance.

She also called on African countries totry to depend mostly on their own domes-tic resources in the fight against AIDS,counting on external partners only forsupplementary and complementary financ-ing. Southern Africa, she disclosed, wasparticularly troubled by HIV/AIDS. Butthis did not call for complacency on theside of other sub-regions and specificcountries less affected.

ADF is an innovative, overarchinginitiative, which, annually, assembles gov-ernment, civil society, business, develop-ment partners and other ‘stakeholders’ tofocus on strategies, policies and programsdesigned to move the African develop-ment agenda forward, placing emphasison Africa-driven responses. ADF stressesinteractive dialogue, to share experiencesand best practices, formulate policy and

OPEC Fund for International Development,Parkring 8, PO Box 995, 1011 Vienna, Austria.Tel: +43 1 515640; fax: +43 1 513 9238; tx: 1-31734 fund a; cable: opecfund; e-mail:[email protected]; Web site: http://www.opecfund.org.

OPEC Fund participates inAfrican Development Forum 2000

in Addis Ababa

78 OPEC Bulletin

SECRETARIAT NOTESO P E C F U N D N E W S

December

Secretariat missions

The Global Forum on Sustainable Energywas organization by the InternationalInstitute for Applied Systems Analysis,and held in Laxenburg, Austria, Decem-ber 11–13, 2001.

Forthcoming OPEC Conferences

The 102nd Meeting of the Board of Gover-nors will be held at the OPEC Secretariaton February 12–13, 2001.

The 95th Meeting of the Economic Commis-sion Board (ECB), will be held at the OPECSecretariat on March 12–13, 2001.

The OPEC Anniversary Seminar on OPECand the Global Energy Balance: Towards aSustainable Energy Future, is being held inVienna, Austria, on March 14–15, 2001.Details can be obtained from: CWC As-sociates Ltd, Elizabeth McLaughlin, TheBusiness Design Centre, 52 Upper Street,London N1 0QH, UK. Tel: +44 (0)207704 0308; fax: +44 (0)20 7704 8440; e-mail: [email protected];Web site: www.thecwcgroup.com/opec.

The 32nd Meeting of the Ministerial Moni-toring Sub-Committee will be held at theOPEC Secretariat on March 15, 2001.

The 114th Meeting of the Conference will beheld at the OPEC Secretariat on March16, 2001.

action programs and build co-operationand partnerships at all levels. ADF seesHIV/AIDS as, currently, a critical issue forAfrica and its development partners.

Using such epithets as epidemic, pan-demic, emergency, crisis and threat todescribe the African HIV/AIDS situation,both ADF and ECA, along with theirvarious partners, describe an AIDS on-slaught which is decimating African lives,especially the young. AIDS is reportedundermining social and economic struc-tures across Africa and reversing the fragilegains painfully accomplished by the con-tinent since independence.

In parts of the continent, AIDS iskilling one in every three adults; makingorphans of every 10th child and decimatingentire communities, directly affectinghealth and life expectancies, the labourforce and household security. Most deathsamong young adults in Africa today areattributed to AIDS. And, since the begin-ning of the pandemic, some 12.1 millionAfrican children have been made orphans,out of a global estimate of 13.2m. Someprojections hold that, within the next tenyears, there will be 40m AIDS orphans inAfrica. December 2 was World AIDS Day,commemorating the millions alreadyclaimed by the epidemic, world-wide, andraising greater awareness, across borders,on the disasters still looming. The OPECFund, in September, extended a technicalassistance grant of $200,000 to the ADF,to help with the organization and financ-ing of ADF 2000. The recent conferencewas the second in an expected annualseries, planned to put Africa’s major con-cerns and difficulties on the global agenda.The first ADF was held (also in AddisAbaba), in October 1999, on the theme,The Challenge to Africa of Globalizationand the Information Age.

No 87/2000Vienna, Austria, December 6, 2000

OPEC Fund andBolivia sign investmentprotection agreement

An agreement for the encouragement andprotection of investment has been signed

between the OPEC Fund for Interna-tional Development and the Republic ofBolivia. Drawn up within the frameworkof the Fund’s Private Sector Facility, theconvention was initialed by HE Lic JoséLuis Lupo Flores, Minister of Finance ofBolivia, and by OPEC Fund Director-General, HE Dr Y Seyyid Abdulai, onbehalf of the OPEC Fund.

The Fund’s Private Sector Facility is anew financing window, endowed with itsown resources, through which the Fundchannels support directly to the privatesector in developing countries. The objec-tives of the Facility are to promote eco-nomic development by encouraging thegrowth of productive private enterpriseand supporting the development of localcapital markets. Under the Facility, loansare made to financial institutions for on-lending to small, medium and micro-en-terprises, as well as directly to specificprojects.

Equity participation in private enter-prises is also undertaken, either directly orthrough country or regional investmentfunds. As a pre-condition to such invest-ment, the Fund requires signature of astandard agreement with the country con-cerned for the encouragement and protec-tion of investment. Recognized as a gestureof trust and confidence, the agreementaccords the OPEC Fund the same privi-leges as those normally given to interna-tional development institutions in whichthe country holds membership.

The Bolivian government is fully awareof the growing importance of the privatesector and has fostered a hospitable ena-bling environment for its development.The country is endowed with amplemineral and hydrocarbon resources, andalthough exploitation of these has tradi-tionally been dominated by public enter-prises, private sector participation in nowencouraged and has been increasing.

A new legal and regulatory framework,enacted in 1994 to provide a uniform andstable tax environment applicable to allprivate enterprises, has enabled govern-ment to privatize many state-ownedsectoral enterprises. Economic perform-ance in the 1990s has been encouragingwith real GDP growth averaging about fourper cent annually. Private investment hasbeen growing by about ten per cent peryear since 1992.

December 2000 71

Reach decision-makers through OPEC BulletinThe OPEC Bulletin is distributed on subscription and to a selected readership in the following fields: oil and gas industry; energyand economics ministries; press and media; consultancy, science and research; service and ancillary industries. Recipients includeOPEC Ministers, other top-level officials and decision-makers in government and business circles, together with policy advisers inkey industrial organizations.

The magazine not only conveys the viewpoints of OPEC and its Member Countries but also promotes discussion and dialogueamong 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.

��Orders are accepted subject to the terms and conditions, current rates and technical data set out in the advertising brochure. Thesemay be varied without notice by the Publisher (OPEC). In particular, the Publisher reserves the right to refuse or withdraw advertisingfelt to be incompatible with the aims, standards or interests of the Organization, without necessarily stating a reason.

�� North America: Donnelly & Associates, PO Box 851471, Richardson, Texas 75085-1471, USA. Tel: +1 972 437 9557; fax: +1 972 437 9558.Europe: G Arnold Teesing BV, Molenland 32, 3994 TA Houten, The Netherlands. Tel: +31 30 6340660; fax: +31 30 6590690.Middle East: Imprint International, Suite 3, 16 Colinette Rd, London SW15 6QQ, UK. Tel: +44 (0)181 785 3775; fax: +44 (0)171 837 2764Southern Africa: International Media Reps, Pvt Bag X18, Bryanston, 2021 South Africa. Tel: +2711 706 2820; fax: +2711 706 2892.Orders from Member Countries (and areas not listed below) should be sent directly to OPEC.

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�� !"#$��Frequency: Published 12 times per year.Deadlines: Contact Publisher or local advertising representative at the address above.Language: Advertisement text is acceptable in any OPEC Member Country language, but orders should be placed in English.Printing/binding: Sheet-fed offset-litho; perfect binding (glued spine).Page size: 210 mm x 275 mm (8 1/

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2 NOTICEBOARD 3 COMMENTARY 4 FORUM · 2020-02-11 · Research Division Dr Shokri M Ghanem Head, Energy Studies DepartmentDr Rezki Lounnas Head, Data Services Department Dr Muhammad