September 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;Telefax: +43 1 216 4320;Public Relations & InformationDepartment fax: +43 1 214 9827.E-mail: prid@opec.orgE-mail: OPEC News Agency: opecna@opec.orgWeb site: http://www.opec.org.Hard copy subscription: $70/12 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 Adnan Shihab-Eldin

Head,Energy Studies Department Dr Rezki Lounnas

Head, Petroleum MarketAnalysis Department Javad Yarjani

Head, Data ServicesDepartment Dr Muhammad A Al Tayyeb

Head, PR & InformationDepartment Farouk U Muhammed, mni

Head, Administration &Human Resources Department Senussi J Senussi

Head, Office of theSecretary General Karin Chacin

Legal Officer 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 the OPEC Ministers at the 117th Meeting of theConference in Vienna in September (see ConferenceNotes beginning on page 8).

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 YForging new alliancesThe global economy will recover from the horrific events of September 11,but it will require international co-operation on a grand scale

4 F O R U MThe impact of oil price fluctuations on the world economyBy HE Dr Alí Rodríguez Araque, Secretary General of OPEC

8 C O N F E R E N C E N O T E S117th Meeting of the Conference agrees to keep oil output unchanged

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

26 M A R K E T R E V I E WOil market monitoring report for August 2001

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

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

55 A D V E R T I S I N G R A T E SHow to advertise in this magazine

56 O R D E R F O R MPublications: subscriptions and single orders

57 O P E C P U B L I C A T I O N SInformation available on the Organization

Indexed and abstracted in PAIS International

Vol XXXII, No 9 ISSN 0474-6279 September 2001

2 OPEC Bulletin

N O T I C E B O A R D

Forthcoming events

Houston, TX, USA, November 13–15, 2001,Overview of the Oil, Gas and Power Business.Details: IHRDC Headquarters, 535 BoylstonStreet, Boston, MA 02116, USA. Tel: +1 617536 0202; fax: +1 617 536 4396; e-mail:corporate@ihrdc.com; www.ihrdc.com.

London, UK, November 15–16, 2001, GasUtilities — Finance, Regulation & TariffsDesign. Details: Overview Conferences,Rodwell House, 100 Middlesex Street,London E1 7HD, UK. Tel: +44 (0)20 76501418; fax: +44 (0)20 7650 1431/1401;e-mail: confs@economatters.com; www.overview-gas.com.

Brussels, Belgium, November 20–21, 2001,2nd Annual European Renewables Summit.Details: CWC Associates, 3 Tyers Gate,London SE1 3HX, UK. Tel: +44 (0)207089 4200; fax: +44 (0)20 7089 4201;e-mail: bookings@thecwcgroup.com;www.thecwcgroup.com.

Madrid, Spain, November 26–27, 2001,European Power Market: Strategies for Profit-able Investment. Details: CWC Associates,3 Tyers Gate, London SE1 3HX, UK. Tel:+44 (0)20 7089 4200; fax: +44 (0)20 70894201; e-mail: bookings@thecwcgroup.com;www.thecwcgroup.com.

Aberdeen, Scotland, November 27–28, 2001,Cluster Fields Conference: Solutions for Cluster,Satellite and Marginal Fields. Details: TheBookings Department, IBC Gulf Confer-ences, Gilmoora House, 57–61 MortimerStreet, London W1N 8HS, UK. Tel: +44(0)1932 893851; fax: +44 (0)1932 893893;e-mail: cust.serv@informa.com; www.ibcenergy. com/ek125.

London, UK, December 3–4, 2001, 16th

Annual Conference & Exhibition: Floating Pro-duction Systems. Details: The Bookings De-

Rome, ItalyNovember 14–15, 2001

Iran:Future Directions and

Opportunities

Details: CWC Associates3 Tyers GateLondon SE1 3HX, UKTel: +44 (0)20 7089 4200Fax: +44 (0)20 7089 4201bookings@thecwcgroup.comwww.thecwcgroup.com

Dhahran, Saudi ArabiaFebruary 4–7, 2002

SOPEC 20025th International Oil, Gas,Petrochemical and Power

Exhibition and Conference

Details: ITE Group PLC105 Salusbury RdLondon NW6 6RG, UKTel: +44 (0)20 7596 5092Fax: +44 (0)20 7596 5106E-mail: tariq.mohammed@ ite-exhibitions.comwww.ite-exhibitions.com

partment, IBC Gulf Conferences, GilmooraHouse, 57–61 Mortimer Street, LondonW1N 8HS, UK. Tel: +44 (0)1932 893851;fax: +44 (0)1932 893893; e-mail:cust.serv@informa.com; www.ibcfps.com.

Luanda, Angola, December 3–4, 2001, Oiland Gas in Angola 2001. Details: CWC Asso-ciates, 3 Tyers Gate, London SE1 3HX, UK.Tel: +44 (0)20 7089 4200; fax: +44 (0)207089 4201; e-mail: bookings@thecwcgroup.com; www.thecwcgroup.com.

Houston, USA, December 3–4, 2001, andTrinidad & Tobago, December 6–7, 2001,Buying and Selling Oil and Gas Assets. Details:Conference Connection Administrators PteLtd, 212A Telok Ayer Street, Singapore068645. Tel: +65 226 5280; fax: +65 2264117; e-mail: info@cconnection.org; Website: www.cconnection.org/bsoahome.htm.

Trinidad & Tobago, December 3–5, 2001,Production Sharing Contracts and InternationalPetroleum Fiscal Systems. Details: ConferenceConnection Administrators Pte Ltd, 212ATelok Ayer Street, Singapore 068645. Tel:+65 226 5280; fax: +65 226 4117; e-mail:info@cconnection.org; Web site:www.cconnection.org/pschome.htm.

Rome, Italy, December 3–5, 2001, WorldLNG Summit. Details: CWC Associates, 3Tyers Gate, London SE1 3HX, UK. Tel: +44(0)20 7089 4200; fax: +44 (0)20 7089 4201;e-mail: bookings@thecwcgroup.com;www.thecwcgroup.com.

London, UK, December 6–7, 2001, TheIntegrated European Gas Network: Investmentsin Infrastructure. Details: Monica Gahlin,Energyforum.net. Tel: +46 8 20 90 95; fax:+46 8 20 90 73; e-mail: info@energyforum.net; www.energyforum.net/gas.

Ankara, Turkey, December 6–9, 2001, 1st

International Energy Exhibition: Enexp Türkiye.Details: Farshid Bagherian, General Man-

ager, Akart, 28/1, Ayten sok. Mebusevleri,Tandogan, Ankara, Turkey. Tel: +30 3122138530; fax: +90 312 2138532 or 4829372;e-mail: farshid@superonline.com.

Oslo, Norway, December 10–11, 2001, Fi-nancial Mathematics and Energy Derivatives.Details: Energyforum.net, ChristopherWaldén. Tel: +46 8 20 90 95; fax: +46 8 2090 73; e-mail: christopher@energyforum.net.

London, UK, December 13–14, 2001,Training course on Custody Transfer of CrudeOil — Trading & Loss Control Issues. Details:IP Training, Institute of Petroleum, 61 NewCavendish Street, London W1G 7AR, UK.Tel: +44 (0)20 7467 7100; fax: +44 (0)207255 1472; e-mail: nwilkinson@petroleum.co.uk.

New Delhi, India, January 14–16, 2002,Indian Oil and Gas Conference. Details:Conference Connection Administrators PteLtd, 212A Telok Ayer Street, Singapore068645. Tel: +65 226 5280; fax: +65 2264117; e-mail: info@cconnection.org; Website: www.cconnection.org/iogchome.htm.

Dubai, UAE, January 20–23, 2001, Inter-national Oil Trading and Price Risk Manage-ment. Details: Conference ConnectionAdministrators Pte Ltd, 212A Telok AyerStreet, Singapore 068645. Tel: +65 226 5280;fax: +65 226 4117; e-mail: info@cconnection.org;www.cconnection. org/oiltradinghome.htm.

Singapore, January 24–25, 2002, and Dubai,UAE, January 27–28, 2002, Buying andSelling Oil and Gas Assets. Details: ConferenceConnection Administrators Pte Ltd, 212ATelok Ayer Street, Singapore 068645. Tel:+65 226 5280; fax: +65 226 4117; e-mail:info@cconnection.org; www.cconnection.org/bsoahome.htm.

Houston, TX, USADecember 3–4, 2001

Nigeria Oil and Gas Summit

Details: The Bookings DepartmentIBC Gulf Conferences57–61 Mortimer StreetLondon W1N 8JX, UKTel: +44 (0)1932 893851Fax: +44 (0)1932 893893E-mail: cust.serv@informa.comwww.ibcenergy.com/nigeria

September 2001 3

C O M M E N T A R Y

Forging new alliancesThe global economy will recover from the horrific events of

September 11, but it will require international co-operation on a grand scale

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September 11 started out as just an-other ordinary day, as the citizens ofNew York and Washington set off for

work as usual in the bright autumn sun-shine. A few hours later, the unimaginablehad happened. Thousands of people weredead, the World Trade Center and part ofthe Pentagon were reduced to ashes andrubble, and financial markets around theglobe were in disarray. Our world had beenirrevocably changed.

Nobody would have thought it con-ceivable that terrorists could hijack severalpassenger airliners and deliberately fly theminto buildings where thousands of inno-cent people were working. The targets mayhave been located in the United States, butthe strikes were aimed at the very heart ofthe economic world. All countries aroundthe world, across all cultures and faiths,were horrified at the loss of life and unhesi-tatingly condemned the shocking brutalityof the acts. OPEC, at its 117th Conferencein late September, extended its heartfeltcondolences to the families of the victimsand all those affected by the tragedy. At thesame time, the Organization emphasized its“responsible and sensitive role throughoutthe crisis,” beginning with the “clear andprompt assurance to consumers” that theywould “remain adequately supplied withcrude at all times.”

The effect of these events on the inter-national oil market was immediate. In thedays following the attacks, prices initiallyclimbed, but this proved to be no morethan a typical nervous reaction. The mar-kets soon realised there was no shortage ofcrude, and within a matter of days, theyreversed direction and began to head down-wards. For not only was there no threat ofdisruption to physical crude supplies, butthe attacks had dealt a serious — althoughnot fatal — blow to the already fragile worldeconomy, and hence to oil demand.

As the immensity of what had hap-pened began to sink in, markets across theglobe tumbled. Consumer confidence inthe industrialized nations, on which so

much economic activity is founded, hastaken a big hit and could remain low for along time. The loss of confidence in theairline industry was immediate and cata-strophic. Several major airlines are alreadyin financial difficulties from which theymay never recover. The fear of flying hasreached an all-time high, which is having aknock-on effect on the tourism industry.The prospect of a global recession, with theconsequent negative impact on oil demand,looms large.

This is why, in the current fragile envi-ronment, it is more important than ever fornations to co-operate in rebuilding confi-dence in the world economy. We must makeevery effort to restore the stability that hasbeen lost in the wake of September 11. Inthe case of the international oil market, thismeans two things: firstly, ensuring that thereis no interruption in supplies, and secondly,rebalancing the level of crude supplied tothe market with the anticipated lower de-mand, so that there is no glut and pricesremain stable. OPEC quite simply cannotdo this alone. That is why we call on non-OPEC oil producers to recognize the grav-ity of the situation we are now facing, andto assist OPEC in sharing the burden ofstabilizing the oil market. If such co-opera-tion does not materialize, the consequencescould be very serious indeed.

The events of September 11 have servedto highlight the globalized nature of theworld we live in, and thus the need forinternational co-operation. It is not possibleto cause economic damage to one nationand expect that others will not be affected.A global recession would hit everybody,but it would hit the world’s poorest coun-tries the hardest, as they are the least well-equipped to survive in harsh economicconditions. The world will undoubtedlyexperience some tough times in the monthsahead but, given that all nations under-stand better than ever the importance ofinternational co-operation, we can — andmust — work together to restore stability tothe global economy.

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F O R U MF O R U M

to interconnect in a variety of ways, fromfinance and trade to computerization andmodern technology. The dimensions andcomplexity of the contemporary challengesfacing all of us, whether in the energyindustry, or in political and corporate gov-ernance, are considerable.

As far as the energy industry is con-cerned, it certainly is an intriguing time tobe in the oil business. As we all know,global economic growth drives the de-mand for oil. And with this growth fore-cast to expand by over three per centannually over the next 20 years, oil is set tomaintain its leading position in supplyingthe world’s energy needs for at least theforeseeable future.

OPEC, in accounting for 76 per centof global proven oil reserves, will continueto play a fundamental role in the worldenergy scene, especially as the key supplierof the incremental barrel. In fact, by 2020world oil demand could be in excess of 100million barrels/day, and with non-OPECoil production likely to remain relativelystable, OPEC Member Countries will berelied upon to supply the lion’s share of thenew demand, which will mostly comefrom developing nations.

Of course, making forecasts has, asoften seen in the past, proven to be aprecarious business and all manner of eventscan change things. But perhaps the singlemost important factor for sustaining avibrant oil industry is the level of price atwhich crude oil is sold to the consumer.

Throughout its history, OPEC hashad to overcome numerous difficult chal-lenges — from conflicts between some ofits Members to a series of price crises. Infact, it has lived with the spectre of both

The impact of oil price fluctuationson the world economy

The securing of a stable oilmarket is essential not just forexporting nations, but forglobal economic well-being,writes OPEC SecretaryGeneral, Dr Alí RodríguezAraque,* in this article.

* Based on Dr Rodríguez Araque’s address tothe Commonwealth Business Council, Lon-don, September 14, 2001.

The global economy of the new mil-lennium is a far cry from the worldeconomic order OPEC encoun-

tered at its creation some 41 years ago. Intoday’s economy, globalization is provingto be a powerful force of transformation.Rapid social, political and economicchanges are combining to reshape the worldwe live in.

In fact, globalization is widening, deep-ening and speeding up the world’s ability

high and low oil prices, which, in the past,had profound effects on the globaleconomy. Today, the new economic orderis clearly less sensitive to oil prices shocks,compared with the boom and bust cyclesexperienced over the past two decades.

Leading source of energyOil is still a leading source of energy in

most countries and absolutely essentialand irreplaceable for many users. But oil-consuming countries, in particular theindustrialized states, have reduced their oilintensity to such an extent that the presentrise in oil prices, albeit modest, is notdisrupting their economies. Their mon-etary and fiscal policies indicate that thelessons of past oil price increases have beenlearned.

But what has also been learned frompast experiences is that an oil price that istoo high or too low does not benefit eitherthe producer or the consumer of this pre-cious commodity. True, there will alwaysbe sections of the economy that will pros-per under the different price scenarios, butoverall, large swings in the price of oil aregenerally counter-productive. An oil mar-ket that is stable, with a fair and equitableprice, is the way forward for global eco-nomic prosperity, something that OPEChas been saying for many years. Let us lookat how oil prices at both ends of thespectrum affect economic performance.

The fact that, over the years, the shareof oil in the gross domestic product ofconsuming countries has seen a markeddecline is largely attributable to mitigationmeasures taken after the oil price increasesof 1973 and 1979. Consumer govern-ments, reeling from the shock inflationary

September 2001 5

F O R U M

effects of high-priced crude, implementeda range of fiscal policies relating to theimport and consumption of crude and oilproducts. This, together with moves to-wards conservation, environmental con-cerns, and technological developments,have, over the years, made the high con-suming developed economies more en-ergy efficient.

Increase in pricesLet me just quote a few statistics to

illustrate this point. The increase in oilprices seen in 1999-2000 is calculated bythe OECD to have caused a direct terms-of-trade loss to OECD countries of just0.5 per cent of GDP. This compares with aloss of 2.75 per cent in 1974 and 2.5 percent in 1979-80.

In fact, International Monetary Fundstudies now show that such has been theprogress of this group of countries that oilprices would today have to rise by a stag-gering $50/b for the same economic down-turns of 1974 and 1980 to be felt. Forsome developing states, the terms-of-tradeeffects from higher oil prices are morenoticeable, especially in countries wherethe existence of subsidies may prove to bea heavy burden on government budgets.However, in the medium term, higher oilprices may help to attract more foreigninvestment into their energy-intensive in-dustries.

Concerning inflation, the recent oilprice hikes have had little effect on corerates, which, in the case of most of theindustrialized consuming countries, aregenerally much lower than in the past.This, again, is due to today’s reducedweight of oil on consumer and producerprice indices, coupled with stronger com-petition in product markets, which haslimited the extent to which higher crudeprices can be passed on to the consumer.

Macroeconomic policyMoreover, greater emphasis is now

attached by governments to attaining pricestability in macroeconomic policy. In less-developed countries, the inflationary ef-fect may be more noticeable, given the lackof a tax cushion, which can act as a bufferbetween the price of crude and final oilproduct prices. But even though govern-ments and industry have adapted well tooil prices, over a sustained period they are

still potentially damaging to the consumer.Admittedly, for the oil producers, the

additional revenues higher oil prices bringis beneficial to their economic develop-ment. But on the other side of the coin, theincreased cost of importing the oil for theconsumer will inevitably spur more effortstowards conservation, and alternative en-ergy sources, such as coal, nuclear and

renewables. So the old adage that a satis-fied customer is a good customer is onethat OPEC clearly holds dear. That is whythe Organization is striving to keep theprice of oil in a range that benefits both theproducer and consumer.

Over the years, OPEC has twice seenthe price of its oil fall close to single digitfigures — firstly in 1986 and more re-cently in 1998-99. Both instances broughthome the inherent dangers of sustainedlow oil prices, not only for the producingcountries, but for the consumers as well.

The effects on the oil industry as awhole were devastating. Oil producers, aswell as companies, finding their revenuesslashed and facing fiscal deficits, had toquickly revise their budgets. Exploration

and development spending for future ca-pacity was cut, rig utilization rates slumped,and previously announced spending plansworldwide were shelved.

Stripper wells cappedAs for the consumers, the world’s larg-

est oil customer, the United States, saw itsoil industry badly affected. With some 20per cent of its domestic oil coming fromsmall stripper wells, the nation saw around15,000 out of 300,000 high-cost wellspermanently capped in 1998-99. Else-where, the frontier areas were particularlyaffected, with projects from Alaska to theNorth Sea being put on hold, or reconsid-ered entirely.

The entire retrenchment of the indus-try also translated into many thousands ofjob losses, not only directly, but indirectlyas well, through a host of related services.Of course, some consumers do benefitfrom low oil prices, which can lead tohigher economic growth, higher dispos-able income, and a lower cost of imports.But these benefits do not come withoutcost. Lower oil prices also increase futurevulnerability of consuming countries andjeopardize national security.

Fluctuating prices benefit no one inthe industry, whether they be OPEC ornon-OPEC producers, oil companies, in-vestors or consuming nations. In a situa-tion of perpetual instability, one cannotfunction effectively in the market or reachimportant day-to-day purchasing deci-sions. It is very difficult to budget for theyear ahead and earmark sufficient invest-ment to ensure secure supplies for thefuture. For the oil-producing developingcountry, one cannot guarantee a steadylevel of petroleum revenue with which tofinance the development of one’s domes-tic economy.

An unstable oil market does not, ofcourse, just affect the oil industry. It canalso have an adverse effect on the globaleconomy. As I stressed earlier, this is due tothe central role oil plays in the modernconsumer society. And with projected de-mand increasing in the years ahead to fuelglobal economic growth, there is an ever-greater need to achieve — and sustain —stability in the international oil market.

No one is more aware than OPEC ofthe need for market stability. In fact, theOPEC Statute, which was originally

‘Fluctuatingprices benefitno-one in theindustry, whetherthey be OPEC ornon-OPECproducers, oilcompanies,investors orconsumingnations.’

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F O R U M

drafted in 1965, declares that “The Or-ganization shall devise ways and means ofensuring the stabilization of prices in in-ternational oil markets with a view toeliminating harmful and unnecessary fluc-tuations.” More recently, this objectivewas reinforced by the Solemn Declarationmade at the 2nd Summit of OPEC Headsof State in Caracas last year.

Over the years, OPEC has undertakencountless measures to stabilize the oil mar-ket, often making substantial personal sac-rifices for the good of the market. We nowhave a much deeper understanding of howthe market works, of its complex mecha-nisms and its underlying psychology, aswell as a clear appreciation of how otherparties in the market react.

OPEC is a key international player inthe oil industry, with the proven ability tobe innovative and constructive in the wayit goes about its business. The most nota-ble recent example of this has been thesuccessful introduction of our price bandmechanism last year, which combines theflexibility to cope with day-to-day marketfluctuations with the need to keep priceswithin a manageable range of $22–28/bthat balances the interests of producersand consumers.

Maintaining a balanceThe price band mechanism has been a

timely innovation, since the noises gener-ated by the slowdown in the globaleconomy have become ever louder in re-cent months. Today we are facing thechallenge of maintaining a balance in theoil market, while the global economy weak-ens. This requires very careful monitoringof economic trends in the leading indus-trialized nations as we seek to gauge howthis will impact on oil demand. So far thisyear, OPEC has felt it necessary to reduceoutput by 3.5m b/d, in order to keepprices within its prescribed band.

However, it has to be stressed that thesharp fluctuations in international oil pricesare not necessarily the result of changes inthe relationship between crude oil supplyand demand. It is apparent that a numberof other factors have had — and, indeed,continue to have — a considerable impacton prices. These include a shortage ofrefined products in the US market, highfreight rates, and speculation on futuresmarkets.

since 1998. Such co-operation has rein-forced the effectiveness of OPEC’s pro-duction agreements and has establishedimportant precedents in the area of fight-ing market instability.

Important inroadsIn addition, important inroads have

been made in producer-consumer co-op-eration. In the past, many leading con-suming nations appeared reluctant toestablish such co-operation, but at lastyear’s 7th International Energy Forum inRiyadh, Saudi Arabia, there were clearsigns of a breakthrough in this regard, inthe sense of a wider appreciation of thevalue of dialogue and a willingness toparticipate more fully in such talks.

These are all welcome developments,since co-operation at all levels is essential ifthe industry is to meet the challenges thatlie ahead in the early 21st century, as we setabout ensuring an orderly supply of crudeto consumers in the years to come. ButOPEC cannot tackle the problems of mar-ket instability alone and it needs the con-tinued support of all the other players inthe industry — as well as the consumers —to rid the world of price fluctuations anduncertainty. This, in turn, will enable coun-tries to better plan for the future, leadingto stronger economic indicators and amore prosperous global economy.

Over the years, OPEC has learned justhow damaging fluctuating oil prices are,not only for the petroleum industry, butfor the global economy in general. That iswhy the Organization and its Membersare doing all in their power to bring abouta stable market, with prices that are fair forboth producers and consumers. We, asproducers, need a price that guaranteesprosperity and investment for the future,while the consumers are looking for a levelthat can sit comfortably in their fiscalbudgets. No-one gains from a roller-coaster oil market, least of all the worldeconomy.

OPEC will continue to strive to ensurethat a balance between supply and de-mand is forthcoming, which should, inturn, help to secure an enabling environ-ment for prices. With over 40 years ofexperience in the oil market under its belt,the Organization is well placed to meet thechallenges the modern-day oil industrywill bring.

‘OPEC cannottackle theproblems ofinstability in theoil market aloneand it needs thecontinuedsupport of all theother players inthe industry.’

On this side of the Atlantic, the moststriking feature facing consumers in theEU concerns the level of taxation on finalproducts. When I visit a petrol station inVienna, the base of our Secretariat, itcurrently costs me around $40 to fill up

my tank. Of that amount, 63 per cent istaken by the government, while only alittle over 18 per cent goes to the producerof the oil. If we look at Europe as a whole,an average 68 per cent of the final productprice paid by motorists goes to the taxman,while the producing countries get just 15per cent.

This brings me onto the importanttopic of co-operation, which is a vitalingredient in the quest for sustainablestability and fair prices. I am happy to saythat there have significant developmentsin this field, firstly through the strength-ening of relations among our own Mem-ber Countries, as evidenced by OPEC’srecent success in its market-stabilizing ac-tivities.

Progress has also been made in OPEC/non-OPEC ties in recent years, as wit-nessed by the successful joint approach tothe price problems that have been with us

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8 OPEC Bulletin

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

117th Meeting of the Conferenceagrees to keep oil output unchanged

No 19/2001Vienna, Austria, September 27, 2001

Opening address to the117th Meeting of the

OPEC Conferenceby HE Dr Chakib Khelil

President of the Conference andMinister of Energy and Mines, Algeria

Welcome to the 117th Meeting of theOPEC Conference, a Conference which istaking place during a period of heightenedinternational tensions, in the aftermath ofthe tragic event that occurred in the USAtwo weeks ago. This caused the deaths ofthousands of innocent people of manydifferent nationalities, ethnic groups andreligions, while the shock of it led to a pro-

found sense of sorrow in every nation of theworld. Let me begin this address, therefore,by extending the heartfelt condolences of ourOrganization and its Member Countries tothe families of the many thousands of peo-ple who died in the catastrophe or whoremain missing, as well as wishing a full andrapid recovery to those who were injured.

OPEC, for its part, has played a re-sponsible and sensitive role throughoutthe crisis. This began with our clear andprompt assurance to consumers that theywill remain adequately supplied with crudeat all times. This assurance was well re-ceived by the international oil market,which had become immediately nervousby the sudden, unexpected turn of events.

The disaster in the USA has already hadfar-reaching consequences for the world at

large, economically, politically and strategi-cally. It has left, in its wake, a trail ofuncertainty, insecurity, fears and hatredthat extends across many communities,which had previously lived in harmonywith each other for long periods. Therefore,in these unique, extremely dangerous andvolatile conditions, we urge all nationalleaders to tread carefully by ensuring thatthey reach a consensus in their decision-making, as they seek to resolve the crisis andbring it to a timely conclusion. Such aconclusion must win the broad acceptanceof the world community. Let us hope that,as a bonus, it will also lead to a new sense ofmutual understanding and belongingamong nations, where globalisation meansnot only a market economy with fiercecompetition, but also a more caring inter-

Algeria’s Minister of Energy & Mines and President of the Conference, HE Dr Chakib Khelil (c),opens the Meeting, flanked by OPEC Secretary General, HE Dr Alí Rodríguez Araque (r) andthe Chairman of the Board of Governors, HE Abdulla H Salatt of Qatar (l).

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Oman’s Ambassador to Austria, HE Salim Mohammed Al Riyami (r) addresses theConference, watched by the Head of the Mexican Delegation, HE Ing Juan Antonio Bargés(c) and Dr Lourdes Melgar (l).

The Heads of Delegation of four non-OPEC nations (l-r): HE Dr Fidelino Loy de JesusFigueiredo of Angola; HE Amin Sameh Fahmy of Egypt; HE Don Gabriel Nguema Limaof Equatorial Guinea, and HE Bolat Yelemanov of Kazakhstan.

national environment that is sensitive to theneeds of all the peoples of the world, bothrich and poor. OPEC will continue to playa progressive role in such an environment,with the OPEC Fund for InternationalDevelopment, in particular, being an im-portant source of assistance to the poorerdeveloping countries.

The impact of the disaster upon theinternational oil industry will be profound,particularly in the context of the globaleconomic slowdown and its implicationsfor energy demand. Even before Septem-ber 11, there was great concern about theextent and the pace at which this slowdownwas occurring in the leading industrialisednations. The situation has now deterio-rated, with, among other things, a plungein share prices the world over, in particularfor the airlines, tourism and insurance, aswell as heavy pressure on the US dollar,with refuge being sought in the Swiss franc.

A highly prominent casualty of thecrisis has been the aviation industry, withmany companies announcing major op-erational cutbacks and drastic reductionsin staff levels — these may total around100,000 employees in the USA alone.This is leading to a huge fall in demand forjet fuel, which has been estimated at around400,000 barrels a day across the globe. Atthe same time, the aviation industry’s re-trenchment will have a broader impact onthe performance of national economies,

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Far right: Deep in conversation are the Heads ofDelegation of Angola, HE Dr Fidelino Loy de JesusFigueiredo (l) and Equatorial Guinea, HE DonGabriel Nguema Lima (r).

Left: Answering journalists’ questions are Kuwait’sMinister of Oil, HE Dr Adel K Al-Sabeeh(nearest camera) and OPEC Governor, Ms SihamAbdulrazzak Razzouqi.

Left: Perusing some documents are (l-r) Saudi Ara-bia’s Minister of Petroleum and Mineral Resources,HE Ali I Naimi; the country’s OPEC Governor, HESuleiman Jasir Al-Herbish, and the Director ofOPEC’s Research Division, Dr Adnan Shihab-Eldin.

Left: Venezuela’s Minister of Energy and Mines, HEAlvaro Silva Calderón (l) and OPEC GovernorEdgar Rodriguez (c), consult with OPEC SecretaryGeneral, HE Dr Alí Rodríguez Araque (r).

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security purposes; these will all result inhigher costs for the petroleum industryand possible consequences for supplies.

In the present market climate — char-acterised by uncertainty, increased costsand possible softening demand — there isa greater need than ever before for non-OPEC producers, in a spirit of joint re-sponsibility with OPEC, to share theburden of guaranteeing stable prices andsecure supplies of crude; this will, at thesame time, prevent excessive volatility. Asound, viable and stable oil market is anessential ingredient of steady world eco-nomic growth. Over the past two and ahalf weeks, we have been reminded onceagain of how inherently unstable the mar-ket is. Initially, after the US disaster, therewas a sudden rise in prices. This was fol-lowed by a drop back to the price levelswith which we have been familiar duringthe course of this year, after OPEC hadguaranteed, on the day of the disaster, itscontinuing commitment to market stabil-ity and secure supplies. And finally, threedays ago, prices fell by $3–4 per barrel,driven essentially by speculation. OPEC’scommitment includes the willingness toensure adequate supplies at a price ofaround $25/b. But the task will not beeasy, without the benefit and effectivesupport of non-OPEC co-operation.

Indeed, we are pleased and thankful to

Above: Sudan’s Minister of Energy and Mining, HE Dr Awad Ahmed Al Jazz (second r),makes a point, watched by (l-r) the Head of the Iraqi Delegation, HE Saddam Z Hassan;Libya’s Chairman of the National Oil Corporation, HE Ahmed Abdulkarim Ahmed; Iran’sMinister of Petroleum, HE Bijan Namdar Zangeneh; and Algeria’s Minister of Energy &Mines and President of the Conference, HE Dr Chakib Khelil..

The Head of the Russian Delegation, EnergyMinister HE Igor Khanukovich Yusufov.

adversely affecting other sectors and exac-erbating the overall turmoil. On top of thisis the fact that, among the victims of thedisaster are many highly accomplishedmembers of the international financialcommunity, and their expertise will not beavailable just at the time when it is mostneeded to help cope with the present crisis.With many analysts predicting a decline inenergy use as a result of the events in theUSA, the share prices of oil companieshave been among the worst hit, and thiscould have widespread repercussions forthe future health of the industry.

Of particular concern to OPEC in the

present crisis has been the re-emergence offears about security of supply. There is nodoubt also that such fears will have direconsequences for the oil market, if they areallowed to prevail and influence the deci-sion-making process. They may also un-dermine the considerable progress that hasbeen made in producer-consumer rela-tions over the past decade, which has beento the considerable benefit of the interna-tional oil market. OPEC is also concernedabout such measures as imposing restric-tions on the free trade of hydrocarbon-based oil products, raising insurance costsand mandating excessive restocking for

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Far right: Smiling for the camera is Indonesia’sAmbassador to Austria, HE Rhousdy Soeriaatmadja,together with OPEC Governor (with back to camera)Dr Rachmat Sudibjo.

Left: Qatar’s Minister of Energy and Industry, HEAbdullah bin Hamad Al Attiyah, shares a moment ofhumour with the media.

Below right: Nigeria’s Presidential Advisor on Petro-leum and Energy, HE Dr Rilwanu Lukman, answersjournalists’ questions.

have among us today representatives fromeight non-OPEC oil-producing nationsthat acknowledge the role they can play inachieving order and price stability in theinternational oil market — Angola, Egypt,Equatorial Guinea, Kazakhstan, Mexico,Oman, the Russian Federation and Sudan.This is indicative of the advances that havebeen made in dialogue and co-operation.

You will recall that, when price stabil-ity was threatened in July, we took thedecision to remove one million b/d fromthe market, with effect from September 1.This sent a positive signal to the marketabout the seriousness of OPEC’s inten-tions and met with immediate success,because we put our credibility on the line.But our credibility is only as good as thecontinuation of the effort among ourMember Countries to maintain cohesion,solidarity and co-operation, as happened

Below: Facing the press are the United Arab Emirates’Minister of Petroleum and Mineral Resources, HEObaid bin Saif Al-Nasseri (r), and (next to him) theChargé d’Affaires, HE Ahmad R F Al Dosari.

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in July. We are prepared to act again, asand when necessary, in the interests ofmarket price stability, either as a full Con-ference or through informal contactsamong our Ministers. The price of OPEC’sspot Reference Basket of seven crudesso far this year has averaged just under$25/b, which, we believe, has provided afair balance between the interests of pro-ducers and consumers. The events of thepast fortnight demand a comprehensivereview of the new situation facing us, andthis will be undertaken by our Ministersat this Conference. We shall reach a deci-

sion that ensures adequate supplies at the$25/b market price, to the full satisfactionof producers and consumers alike.

Quite clearly, OPEC is doing all it canto maintain order and stability in the inter-national oil market during a very difficultperiod. We were, after all, the first group inthe industry to react publicly after theaggression on September 11, assuring themarket on the very same day of our un-flinching commitment to security of sup-ply. Now it is up to non-OPEC producersand the governments of consuming coun-tries to play their respective parts in the

process and assist us in our endeavours toensure a healthy global oil sector; this will,in turn, provide a sound base for worldeconomic growth. These governments couldbegin by reviewing the excessive levels oftaxation they impose on oil products, where-by some of them receive four times therevenue of oil producers, which is both in-equitable and distorts market economics.

Let me conclude by saying that tomor-row there will be an opportunity for OPECto take an in-depth look at many of theissues the oil industry is facing at thepresent time, when we hold a two-dayinternational seminar on OPEC and theglobal energy balance, which carries thetheme “Towards a sustainable energy fu-ture”. The seminar, which will take placein the Hotel Intercontinental in Vienna,aims to support OPEC’s moves towardsreaching a better understanding betweenproducers and consumers on energy mat-ters. Our Oil and Energy Ministers willparticipate, as well as leading industrialistsand academics.

No 20/2001Vienna, Austria, September 27, 2001

117th Meeting of theOPEC Conference

The 117th Meeting of the Conference ofthe Organization of the Petroleum Ex-porting Countries (OPEC) convened inVienna, Austria, on September 26 and 27,2001, under the Chairmanship of its Presi-dent, HE Dr Chakib Khelil, Minister ofEnergy & Mines of Algeria and Head of itsDelegation, and its Alternate President,HE Dr Rilwanu Lukman, PresidentialAdviser on Petroleum & Energy of Nigeriaand Head of its Delegation.

The Conference conveyed its condo-lences to the Government and peopleof the United States of America followingthe tragic events of earlier this month,events that have had major political andeconomic repercussions including onthe oil market in the form of immediatesharp price hikes and, later, sharp pricedeclines driven by speculative trading andmarket psychology. The Conferencerecalled the commitment it expressed im-mediately thereafter to ensure adequatesupplies are available to satisfy market

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needs and to strengthen market stability.The Conference considered the SecretaryGeneral’s report, the report of the Eco-nomic Commission Board, the report ofthe Ministerial Monitoring Sub-Commit-tee (MMSC), chaired by HE Bijan NamdarZangeneh, Minister of Petroleum of theIslamic Republic of Iran, and various ad-ministrative matters.

Having reviewed the current oil mar-ket, the Conference noted that the deterio-rating global economic outlook,exacerbated by the recent tragic events inthe USA, is expected to have a dampeningeffect on world oil demand that calls forprompt measures on the part of all oil-producing countries to maintain stabilityof the oil market and prices, in accordancewith oil producers’ common objectives.

In order to maintain stability in themarket, the Conference decided to leaveOPEC’s present output levels unchangedand continue to maintain solidarity amongOPEC Member Countries and disciplinein implementing agreements and commit-ments. On the other hand, the Confer-ence called on all consuming countries toplay their part so as to create conditionsconducive to global economic growth.

At the closing press conference are Dr Rodríguez Araque (second l); Dr Khelil (second r); the Head of OPEC’s PR & Information Department,Farouk U Muhammed, mni (r); and OPECNA Editor, Fernando J Garay (l).

Having warmly welcomed high-levelrepresentatives from Angola, Egypt, Equa-torial Guinea, Kazakhstan, Mexico, theSultanate of Oman, the Russian Federa-tion and Republic of Sudan, the Confer-ence highlighted the importance ofstrengthening effective co-operation withnon-OPEC producing countries in stabi-lizing the oil market and prices. Towardsthis end, the Conference decided to set upan Expert Working Group, from OPECMember Countries and invited non-OPECproducing nations, to study oil marketdevelopments and to come up with sug-gestions for possible actions to be taken onboth sides. They have also agreed that thisExpert Group will meet in Vienna duringOctober 2001.

The Conference reiterated that OPECis committed to continuing to monitor themarket and to taking any further measures,including the convening of ExtraordinaryMeetings, when deemed necessary, as hasbeen done in the past, to defend priceswithin the range of $22–$28/barrel. Withthis in mind, the Conference agreed to meetagain in Vienna, Austria, on November 14,2001, in order to review the situation. TheConference also decided that its next Ordi-

nary Meeting will be convened in Vienna,Austria, on March 12, 2002.

The Conference elected HE DrRilwanu Lukman, Presidential Adviser onPetroleum & Energy of Nigeria and Headof its Delegation, as President of the Con-ference, and HE Abdullah bin Hamad AlAttiyah, Minister of Energy & Industry ofQatar and Head of its Delegation, as Alter-nate President, for one year with effectfrom January 1, 2002.

The Conference appointed Suleiman JAl-Herbish, Governor for Saudi Arabia, asChairman of the Board of Governors forthe year 2002, and Mohamed D Al-Hamli,Governor for the United Arab Emirates, asAlternate Chairman for the same period,with effect from January 1, 2002.

The Conference approved the Budgetof the Organization for the year 2002.

The Conference expressed its appre-ciation to the Government of the FederalRepublic of Austria and the authorities ofthe City of Vienna for their warm hospital-ity and the excellent arrangements madefor the Meeting.

The Conference passed Resolutions thatwill be published on October 27, 2001, afterratification by Member Countries.

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lgiers — The Algerian state oil andgas company Sonatrach, in associa-tion with UK oil giant BP, last

month awarded three contracts worth atotal of $2.5 billion to an internationalconsortium for the development of thecountry’s In Salah gas fields.

The consortium, which comprisesKellogg Brown & Root and Bechtel of theUnited States, and Japan’s JGC, as well asthe Algerian drilling company, Enafor, willbe in charge of the realization of the threestages of the project.

The first contract, covering the provi-sion of treatment units and a gas-gather-ing network, has been entrusted to KelloggBrown & Root, and JGC.

The second deal has gone to Bechtelfor the construction of inter-field pipingand a 460-km gas pipeline to link the fieldsof In Salah to Hassi R’mel.

Meanwhile, Enafor will be responsi-ble for drilling 71 producing wells andcompleting well work-overs.

The entire project, which includes thedevelopment of seven gas fields, will pro-duce about 9.0 billion cubic metres/yearof gas, starting in 2004.

Total investment amounts to $2.5bnand will be financed by Sonatrach (35 percent), and BP (65 per cent).

The accords were signed by the Vice-Presidents of Sonatrach and BP and rep-resentatives of the five other firms involvedin the project, in the presence of the Al-gerian Energy and Mines Minister, DrChakib Khelil.

In another development last month,Sonatrach awarded a $70 million contractto Swiss firm ABB Lummus for the reno-vation of oil pipeline pumping stations.

The stations are located along thepipeline linking Haoud El Hamra, in thesouth of the country, to the port of Skikdaon the northern coast.

ABB Lummus won the contract in atender in which two other firms took part,Italy’s Bentini Costruzioni and SNCLavalin of Canada.

Algeria’s Sonatrach and BP awardthree contracts worth $2.5 billion fordevelopment of In Salah gas fields

The project, due to be completed in30 months, entails the installation of a newpumping station at Biskra and the reno-vation of three other units at El Oued,Batna and Ouargla.

The deal has been signed as part ofgovernment efforts to increase Algeria’scrude oil transportation capacity to 1.5mbarrels/day by 2004, compared with lessthan 1.0m b/d now.

NNPC, Chevron signaccords on Escravosgas-to-liquids projectAbuja — The Nigerian National Petro-leum Corporation (NNPC) and ChevronNigeria have signed accords for the execu-tion of phase three of the Escravos gasproject (EGP3) and the Escravos gas-to-liquids (EGTL) scheme.

The agreements, which were signed bythe NNPC’s Group Managing Director,Jackson Gaius-Obaseki, and ChevronNigeria Managing Director, Ray Wilcox,formally initiate the front-end engineer-ing design phase of the EGTL and EGP3projects.

Gaius-Obaseki commented: “Theagreement that we have signed is a signifi-cant milestone. We can say that theprojects have truly begun and we can begina countdown to their completion, whichwill almost totally eliminate routine gasflaring in oil fields operated by the NNPC/Chevron joint venture.”

In his remarks, Wilcox describedEGP3 and EGTL as “a direct result of ourcontinuing efforts at meeting the challengefor gas utilization initiatives and our com-mitment to putting out the flares in ouroperations by 2008.”

He said that apart from the environ-mental benefits, the schemes representeda major investment in Nigeria’s economythat would generate additional revenue forthe country and provide many jobs dur-

ing the construction and operationalphases.Both projects are major initiativesby the NNPC/Chevron joint venture toput out the flares and monetize the gasbeing produced along with oil in its op-erations. They will improve the environ-ment through the reduction of greenhousegases and generate revenue for Nigeria andChevron through product exports, whilecreating jobs.

EGP1 and EGP2, which cameonstream in 1997 and 2000, respectively,currently process nearly 200 million cu-bic feet/day of gas that would otherwisebe flared.

Under EGP3, a plant will be builtadjacent to the existing onshore gas plantat Escravos, which will increase the quan-tity of processed gas by 400m cu ft/d. Thegas-to-liquids plant will also be located atEscravos under the EGTL project.

EGTL will combine advanced hydro-processing technology, developed byChevron, and slurry phase distillate tech-nology, developed by Sasol of South Af-rica, to produce about 34,000 barrels/dayof premium synthetic fuel and naphtha forexport. These products are environmen-tally friendly, being virtually free of sul-phur and aromatics.

The venture agreements put theprojects, jointly valued at $2 billion, ontrack towards completion by late 2005.The NNPC has a 60 per cent stake inEGP3 and 25 per cent in EGTL.

The signing of the accords follows theformal launch of the initiative by Presi-dents Olusegun Obasanjo of Nigeria andThabo Mbeki of South Africa in New Yorkin September 2000, and by NNPC/Chev-ron the following month.

Libya and Egypt toset up joint firm totransport oil and gasCairo — The SP Libyan AJ and Egypthave formed a $100 million company topipe oil to Egypt and gas to Libya, theEgyptian General Petroleum Corporation(EGPC) announced last month.

Egypt’s General Authority for Invest-ment has approved the formation of thefirm, to be called the Arab Company forOil and Gas Pipelines (Al-Tayoub).

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Effendi said that the security problemsand technical difficulties at the Arun fieldshad mostly been cleared. The wells hadbeen inactive since March, when separa-tist rebels threatened company workersand forced the closure of the fields.

Despite the expected resumption ofproduction from Arun, Indonesia wouldnot be able to meet its contractual obliga-tions for delivering LNG in October andNovember, Effendi conceded.

In a separate development, Pertamina’sUpstream Director, Iin Arifin Takhyan,has said that Indonesia expected to raiseits oil production capability to 1.6 mil-lion barrels/day in 2004, when several newfields would come onstream. This, he said,compared with a production capacity of1.34m b/d at present.

Saudi Arabian firmin $150m deal tobuild paraffin plantDubai — Saudi Arabian firm Al-RajhiInternational Contracting and UOP of theUnited States have signed a licensing andtechnology transfer agreement for theconstruction of a $150 million normalparaffin plant at the Al Jubail industrialarea.

Under the terms of the deal, UOP willprovide technical information and know-how for engineering design, construction,commissioning and operation of the plant,according to a report in the Dubai-basednewspaper Gulf News.

The plant’s Chief Executive, Moham-med Bin Ibrahim Al Bibi, said that theSaudi Industrial Development Fund hadapproved a $66m loan for the new ven-ture, which would have a capacity of120,000 tonnes/year.

According to company officials, thefirm had signed a feedstock supply agree-ment with the Saudi Aramco Shell Refin-ery Co (Sasref ) in April this year.

“Moreover, the Royal Commission ofSaudi Arabia has allocated land for theproject, adjacent to Sasref, which will actas an added advantage for the scheme,”the report said.

Normal paraffin is an intermediatepetrochemical product used primarily forthe production of linear alkyl benzene

(LAB), which, in turn, is used in the pro-duction of alkyl sulphates — the activeingredient in household and industrialdetergents.

The company said there were plans toset up a production facility for LAB, whichwould use normal paraffin as its feedstock.The management was initiating steps toimplement both projects concurrently.

By 2003, the complex would have aproduction capacity of 120,000 t/y ofnormal paraffin and 70,000 t/y of LAB.

The LAB facility would call for an in-vestment of about $80m, which wouldtake the total cost of the complex to some$230m.

BNP Paribas namedas adviser for fourthRasGas LNG trainLondon — Qatar’s Ras Laffan Lique-fied Natural Gas Company (RasGas) hasappointed BNP Paribas as financial adviserfor its proposed fourth LNG train, accord-ing to the Middle East Economic Digest(MEED).

The bulk of the 4.4 million tonnes/year of LNG to be produced by the fourthtrain would be used to supply Italy’sEdison, reported MEED.

In June, RasGas signed a 25-year salesand purchase agreement for the supply of3.5m t/y of LNG, with deliveries startingin 2005.

The report noted that the fast pace ofmovement on the fourth RasGas train hadprovoked considerable speculation overhow the financing of the third train mightbe structured.

The similarly-sized third train wasoriginally planned to supply some of theLNG for the 7.5m t/y long-term contractRasGas signed with India’s Petronet LNG.

“RasGas was originally chasing about$700m of commercial debt for the thirdtrain,” commented one banking source.

Proposed financing for the third train,on which Taylor-DeJongh and GoldmanSachs are acting as financial advisers, is saidto be well advanced.

Four groups, each consisting of fivebanks, have been formed and they areawaiting receipt of a preliminary informa-tion memorandum.

Negotiations to form the companytook over five years to complete, theMiddle East News Agency reported.

Egyptian Petroleum Minister, SamehFahmy, said that that Libya’s National OilCorporation and EGPC would each pro-vide 50 per cent of the capital of the newfirm.

“A pipeline will be built to transferLibyan crude to Egyptian facilities andEgyptian natural gas to Libyan cities.Initial investment will be around $20million,” the Egyptian newspaper AkhbarAl-Youm quoted Fahmy as saying.

The Libyan oil would be refined inCairo and Alexandria, he said, and workwas to begin immediately on fixing theroute of the pipeline.

Egypt, with a host of maturing oilfields, wants to establish itself as a gasexport hub. The country’s proven gas re-serves stand at around 50 trillion cubicfeet. Libya has average oil output of 1.3mbarrels/day.

Egypt, Syria, Lebanon and Jordansigned an agreement in January to builda $1.0 billion pipeline to transport Egyp-tian and Syrian natural gas to Lebanon,Jordan and Turkey.

Egypt is leading current efforts to re-duce trade barriers and strengthen com-mercial relations between Arab countries.

Indonesia’s Arun fieldsexpected to return tofull production soonJakarta — ExxonMobil Indonesia’sArun fields in northern Sumatra are ex-pected to be in full operation soon, ac-cording to an official at state oil and gascompany, Pertamina.

The fields, restarted in July after sepa-ratist attacks forced their closure in March,would return to full production from earlySeptember, said the firm’s Production-Sharing Contracts Director, EffendiSitumorang.

He noted that output from clustersthree and four would restore full produc-tion from the Arun basin, which suppliednatural gas to the Arun LNG complex forexport to Japan and South Korea.ExxonMobil restarted production fromthe first two clusters in July.

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In briefIn a separate development last month,the country’s other major LNG firm, theQatar Liquefied Natural Gas Company(QatarGas), loaded its 400th cargo.

The shipment of LNG was loaded ontothe tanker Kutowaka Moro, which washeaded for the Tohoku Electric PowerCompany in Japan, according to a reportby the Qatar News Agency.

Qatari LNG exports began 21 years agowith shipments to the Chubu ElectricPower Company and seven other electric-ity firms in Japan, which signed contractsto buy 6m t/y of LNG for 25 years.

The report added that because of thehigh international demand for Qatari LNG,QatarGas had raised its production capac-ity from 6m t/y to 7.5m t/y.

Venezuela hands gasexploration licencesto tender winnersCaracas — Venezuelan Executive Vice-President, Adina Bastidas, and Energy andMines Minister, Alvaro Silva Calderon,have formally handed licences to the win-ners of a recent public tender for the ex-ploration of six gas-rich blocks around thecountry.

The successful companies to receivelicences were Trio Yucal Placer (a consor-tium made up of TotalFinaElf, Repsol-YPF, Otepi and Inelectra), Pluspetrol ofArgentina, Repsol of Spain, and PerezCompanc of Venezuela.

Trio Yucal Placer won the Yucal PlacerNorth and South blocks, Pluspetrol pickedup the Barbacoas and Tiznado blocks,Repsol was awarded the Barrancas block,and Perez Companc took the Tinacoblock.

Ms Bastidas expressed the govern-ment’s satisfaction at the move to developthe country’s gas sector and indicated thatthe exploration of the areas awarded un-der the licences would generate overallinvestment of some $700 million.

Of this amount, $400m would go tothe Yucal Placer North and South areas,$225m to the Barrancas block, and $155mto the Tinaco, Tiznado and Barbacoasareas.

She said that disbursement of the in-vestment would be made over the next five

to eight years. The programme would havea positive impact on Venezuela’s economythrough the creation of new jobs.

For his part, Silva Calderon underlinedthe government’s interest in developing thegas sector in Venezuela, stating that thecountry had vast reservoirs of gas yet to bedeveloped.

“Additionally, we have areas alreadyquantified and proven, both on land andoffshore, which we want to use,” theMinister said.

“Venezuela needs gas as a fuel, bothfor the purpose of the comfort of its peo-ple in domestic use, as well as for indus-trial use. Venezuela needs to transform itsgas and Venezuela counts on sufficientreservoirs, so as to have gas and be able toexport it,” he added.

Iraqi and Jordanianofficials hold talkson oil-for-food tradeBaghdad — Government ministersfrom Jordan visited the Iraqi capital Bagh-dad last month to negotiate deals aimedat boosting exports to Iraq under theUnited Nations oil-for-food programme,according to the Iraqi News Agency.

Jordan’s Trade and Industry Minister,Wasef Azzar, was quoted as saying that thetalks would focus on how to expand com-mercial and economic co-operation andraise the volume of trade exchanges.

Azzar, who was heading a delegationof ministers, businessmen and industrial-ists, said Jordan would soon start work ona 750-km pipeline to carry crude oil fromIraq. The project, agreed with Iraq in1998, would be put out to tender in thenext two months, he said.

The $350 million pipeline would runfrom Iraq’s Haditha pumping station, 260km north-west of Baghdad, to Jordan’sZarqa refinery, located north-east ofAmman.

Iraqi oil exports to Jordan are exemptfrom the UN sanctions that were imposedon Iraq in 1990 during the Gulf crisis.Baghdad remains Jordan’s main energysupplier, delivering over $600m worth ofcrude and refined oil products a year toits neighbour.

The oil-for-food programme allows

Petrochina’s first-half profit upHONG KONG — Petrochina has announcedthat its net profit rose by 17.8 per cent in thefirst half of this year, with gains coming fromincreased prices of principal products andhigher sales volumes. Revenue for the periodwas up by 10.2 per cent year-on-year, saidthe company in a statement. Aggregate oiland gas production grew steadily to 427 mil-lion barrels of oil equivalent, while crude pro-duction of 381m b was in line with the Janu-ary-June 2000 figure. Natural gas output in-creased by 10 per cent to 278.9 billion cubicfeet, and gas sales rose by 8.8 per cent to259.2bn cu ft. Crude throughput increasedby 5.5 per cent, lifting the utilization rate to81 per cent from 78 per cent at the end oflast year. Petrochina said it had achieved ac-cumulated savings in lifting costs, as well asoperating expenses, for the refining and mar-keting segment and chemicals and market-ing sector.

Japan urged to set up E&P firmTOKYO — The Japanese government has beenurged to set up a national oil exploration com-pany by merging firms linked to the JapanNational Oil Corporation (JNOC), whichwill be dissolved next year. The new concernshould be the Japanese equivalent of a for-eign oil major, said a private panel under theMinister in Charge of Administrative Re-forms, Nobuteru Ishihara. The panel said thatthe new firm should take over JNOC’s oilexploration functions, and it called for themerger of four JNOC subsidiaries: the JapanPetroleum Exploration Company, IndonesiaPetroleum, the Japan Oil Development Com-pany, and the Sakhalin Oil and Gas Explora-tion Company. JNOC has been involved inthe oil business for more than 30 years. It hassupported more than 300 E&P projectsaround the world, and has over 315 millionbarrels of oil in stocks.

Indian product exports strongly upNEW DELHI — India’s petroleum product ex-ports surged over 10-fold to 8.36 milliontonnes in 2000-01, as opposed to 746,000 tduring the previous fiscal year, sources saidlast month. The rise was mainly attributableto slowing growth in domestic consumption,which saw less than three per cent growth in2000-01, compared with 7.2 per cent in1999-2000. Petrol exports rose sharply to1.20m t in 2000-01, as against 131,000 t inthe previous period. Naphtha exports im-proved four-fold to 2.88m t, from 583,000tonnes in 1999-2000. In the period underreview, India exported 160,000 t of aviationturbine fuel, 1.60m t of high-speed diesel,508,000 t of fuel oil, and 1.60m t of coke.

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In briefIraq to sell oil to buy food, medicines andother humanitarian needs for its people.Jordan exports goods to Iraq under theprogramme, but only a small fraction ofwhat it used to.

According to official Jordanian figures,its exports to Iraq had increased to a valueof $450m this year, compared with $400min 2000.

Iraqi Trade Minister, MohammedMehdi Saleh, who received the Jordanianofficials at the airport, said Jordan wasconsidered the fourth most importanttrade partner among the 75 countrieswhich had commercial dealings with Iraq.

Iraq’s trade with Arab countries hadreached a value of $11 billion since theoil-for-food programme began in Decem-ber 1996, he noted.

Three bidders forIran’s South Pars gasscheme short-listedLondon — Three bidders have beenshort-listed for the development of phasesnine and ten of Iran’s giant South Pars gasfield, the Islamic Republic News Agency(IRNA) has reported.

Asadollah Salehiforoz, the ManagingDirector of Pars Oil and Gas, which over-sees the overall development of South Pars,said the technical evaluation of the pro-posals had been completed.

“Our conclusions will now be passedto the transactions committee and we areready to look at the commercial and fi-nancial bids,” he was quoted by the Petro-leum Argus newsletter as saying.

IRNA said that the three short-listedbids were from South Korea’s LG in aconsortium with Iran’s Oil IndustriesEngineering Co; France’s Technip withlocal firm Sunfire, which grouped 16contractors; and PetroCanada. The win-ner of the $1 billion contract could beannounced soon.

Phases nine and ten of South Pars willincrease production of natural gas for Iran’sexpanding domestic network, togetherwith liquefied petroleum gas and conden-sates, most of which will be allocated forexport.

Salehiforoz was also quoted as sayingthat negotiations for phases 11 and 12 of

South Pars would start in the fourth quar-ter of this year.

Italy’s ENI, which is already involvedin phases four and five, was said to befavourite among the bidders, which in-cluded BP, Royal Dutch/Shell,TotalFinaElf, and Statoil.

Another oil contract at South Pars,which had been tendered separately, wasalso expected to be awarded by the end ofthe year.

UAE to invest $1.2bnin new oil field inSharjah and FujairahDubai — The United Arab Emirates(UAE) is to invest $1.2 billion in a majornew oil field straddling the Emirates ofSharjah and Fujairah, according to thelocal Al-Khaleej newspaper.

Quoting sources at the Oil Depart-ment in Sharjah, the paper said drillingwork on the first wells would start inDecember.

Matco Oil of the United States recentlysigned an exploration accord with theSharjah government for the zone of thediscovery, the paper noted.

No estimate was given for reserves inthe field, but oil sources told the paperthat the figure of 12.5 billion barrels,previously reported by the press, had beenexaggerated.

The UAE has an OPEC productionquota of around two million barrels/day,with Abu Dhabi accounting for the lion’sshare of the output.

The discovery would place Fujairah,one of the smaller members of the seven-emirate federation, on the map of oilproducers for the first time.

Kuwaiti Oil Ministerholds energy talkswith British officialsKuwait — The Kuwaiti Oil Minister,Dr Adel K Al-Sabeeh, has met with seniorBritish government officials for energytalks, reported the Kuwait News Agency(KUNA) last month.

Speaking after a meeting in London

Syrian oil exports seen reboundingLONDON — Syria’s crude oil exports for Sep-tember will rebound from the unexpected dipseen in August, as imports continue to sup-ply domestic refineries, pushing out addi-tional volumes, trading sources have said. Ananalysis of preliminary September cargo load-ing slots from the country showed that theaverage daily flow of crude in Septemberwould be around 430,000 barrels/day, up bysome 10 per cent from August. This excludedone Syrian Light cargo deferred from Augustinto September. Last year, Syria’s exports regu-larly reached around 330,000 b/d, as domes-tic refineries consumed the balance of thecountry’s production, which totalled about550,000-600,000 b/d, local media quoted theindustry sources as saying. However, since lastDecember, exports had regularly topped400,000 b/d and had usually been closer to450,000 b/d.

Ecuador ships crude to Peru pipelineQUITO — Ecuadorean crude has arrived atthe North Peruvian pipeline for the first time,opening up a new way for transporting theoil from the Amazon region to the PacificOcean, it was reported last month. The crudewas shipped to the pipeline in small vesselsfrom the port of Pompeya in the Ecuadoreanprovince of Orellana, via the Napo, Amazonand Maranon rivers, arriving at the city ofIquitos. PetroPeru said that this first deliveryof Ecuadorean crude oil was very importantfor Peru, because it represented alternativeincome for the companies of both countries,as well as work for the oil firms exploitingthe oil contained in the Amazon region ofEcuador. The first shipments, amounting to5,000 barrels, were made by Repsol-YPF’sunit in Ecuador. The pipeline transportscrude from the Peruvian Amazon region toSan Jose de Saramuro on the Pacific coast.

Russian oil output up againBRUSSELS — Russian oil production in Janu-ary-July 2001 stood at 191.56 million tonnes,up by 7.3 per cent from the same period lastyear, according to figures released by the Rus-sian State Statistics Committee. The datashowed that output in July was up by 9.3 percent to 29.05m t, compared with July 2000.Lukoil, the leading Russian producer, hadoutput of 36.76m t of crude in the first sevenmonths of this year, up by 1.7 per cent fromthe same period of 2000. Of the other Rus-sian oil companies, Yukos produced 26m t(up by 20.7 per cent), Surgutneftegaz pro-duced 24.98m t (up by 7.5 per cent), TyumenOil produced 18.75m t (up by 22.1 per cent),and Tatneft produced 14.29m t (down by 0.2per cent) in the January-July period.

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In briefwith British Foreign Office Minister, BenBradshaw, and other energy officials, Al-Sabeeh said they had discussed a numberof issues, including Kuwait’s plans forforeign oil companies to invest in itsupstream oil sector.

The Kuwait Petroleum Corporation,he said, was in the final stages of prepar-ing a contractual and financial frameworkfor the move, which still had to be ap-proved by parliament.

The project entails boosting output atfive of Kuwait’s northern oil fields fromthe current 450,000 barrels/day to around900,000 b/d within a period of 5-10 years.

A shortlist of companies has alreadybeen drawn up, added the KUNA report.They include ExxonMobil, the recently-merged ChevronTexaco, Royal Dutch/Shell, BP, Conoco, TotalFinaElf and Lasmo.

Sonatrach, Agip signaccord on joint oilexploration in YemenAlgiers — Algerian state oil and gas com-pany Sonatrach and the Italian oil firm,Agip, have signed an agreement coveringthe joint exploration of an oil block inYemen.

Under the terms of the accord,Sonatrach will acquire 40 per cent of theinterest held by Agip in block 2, coveringan area of 4,019 sq km at El Maber, in thenorth-west of Yemen.

The block’s reserves are estimated at800 million barrels. The project requiresthe realization of 900 km of seismic andthe drilling of a well.

The agreement was signed by the Vice-Presidents of the two companies, Sona-trach’s Djamel Khene and Agip’s SergioPalma, in the presence of Algerian Energyand Mines Minister, Dr Chakib Khelil.

Speaking at the signing ceremony,Khelil expressed Sonatrach’s desire topursue co-operation with Agip. Hepointed out that Sonatrach was also con-sidering a number of projects with otherinternational oil firms.

The Minister added that Yemen was acountry of strategic importance for Alge-ria, which could be used as a support basefor Sonatrach’s operations in the Far Eastand Asia.

In a separate development last month,it was announced that Sonatrach is to takepart in petroleum exploration in Niger,following a meeting of the two countries’joint commission.

A statement issued after the meetingsaid that Sonatrach was available to pro-vide technical assistance to Niger’s petro-leum company, Sonidep. The two sidesalso agreed to pursue discussions on thesupply to Niger of petroleum products,including liquefied petroleum gas.

The meeting, which was co-chaired byAlgerian Foreign Minister, AbdelazizBelkhadem, and his counterpart fromNiger, Nassiro Sabo, also discussed ruralelectrification and mining research.

Gaius-Obaseki saysWarri refinery workmay have to waitAbuja — The start of long-expectedturnaround maintenance at the WarriRefining and Petrochemical Company(WRPC) plant may be delayed until nextyear, according to the Group ManagingDirector of the state-run Nigerian Na-tional Petroleum Corporation (NNPC),Jackson Gaius-Obaseki.

Gaius-Obaseki, on a visit to the refin-ery complex, explained that the mainte-nance would not begin until the NNPC’sproject consultants, Shell, had finished theevaluation of the cost of the scheme.

In answer to complaints by workersthat the turnaround maintenance at theplant was long overdue, Gaius-Obasekiadded that within 10 months, major re-pairs would start at the refinery, which waslast overhauled in 1994.

On the proposed privatization of theNNPC, he said the Corporation’s subsidi-aries would not be sold until they were allput in good shape. It was necessary to addvalue to them, so as to attract good pricesfrom would-be buyers and to ensure thesecurity of the workers.

Gaius-Obaseki urged the workers todedicate themselves to their duties andavoid sabotaging management efforts tobetter their lot. He challenged them to usetheir spare time to improve their academicstatus for enhanced remuneration.

He further implored the management

UK oil output lowest since 1995BRUSSELS — The latest figures from the RoyalBank of Scotland (RBS) show that Britain’soil production is at its lowest level since 1995.The UK is Europe’s second-largest oil pro-ducer after Norway, but in June this year,British output dropped to 1.99 million bar-rels/day from 2.17m b/d in May. RBS blamedthe slump in production on summer main-tenance, uncertainty over future oil prices,and the knock-on effects of diminished in-vestment in North Sea fields over the past twoyears. RBS Oil and Gas Economist, TonyWood, said: “In the longer term, market de-mand is weakening, and world supply is in-creasing, suggesting further downward pres-sure in prices in the coming months.” At thestart of the year, RBS had predicted that UKoil production would average about 2.4m b/dduring the course of 2001, but Woods nowsays that forecast was too optimistic.

Austria’s OMV sees big profit hikeBRUSSELS — Austrian oil firm OMV has re-ported an 88 per cent surge in its first-halfoperating profit and has predicted that full-year results would exceed those of 2000. Thecompany also indicated that it was to make amajor move into eastern Europe with a bidfor a stake in PKN Orlen, Poland’s largestrefinery. OMV has submitted an offer for a17.58 per cent stake in the plant, a movewhich could lead to wide-ranging consolida-tion in the energy sector in central and east-ern Europe. Oil analysts agree that the out-look for OMV in full-year 2001 is good, de-spite expectations of lower oil prices and ageneral weakening of the global economy.OMV’s Chief Executive Officer, RichardSchenz, said the first-half results confirmedthat the firm’s strategy expansion into cen-tral Europe was successful.

Oman’s oil output up last yearMUSCAT — Oman’s crude oil production roseby 5.8 per cent to 349.5 million barrels lastyear, compared with 330.2m b in 1999, ac-cording to the latest statistics from the Cen-tral Bank of Oman. Average production in-creased by 52,700 barrels/day to 957,400b/d in 2000, from 904,700 b/d the previousyear, the Bank said in its Annual Report 2000.Total crude oil exports reached 326.8m bduring 2000, while average daily exportsshowed an increase of 5.8 per cent, from846,000 b/d in 1999 to 895,300 b/d in 2000.The share of oil in total exports of Omaniorigin increased from 76.4 per cent in 1999to 82.8 per cent in 2000. The report alsonoted that the average price for Omanicrude, which was $17.35/b in 1999, rose to$26.71/b last year.

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In briefto ensure a uniform implementation ofpolicies on all categories of workers, add-ing: “August is the do-or-die month forthe WRPC.”

A spokesman for the workers, M SYahaya, urged Gaius-Obaseki to “take adefinite decision on this matter becausethe more we delay, the higher the risk.Please listen to the advice of those of usright here at the plant.”

The Warri refinery, one of four plantsin Nigeria, has a capacity to process125,000 barrels/day of crude oil. All Ni-geria’s refineries have been plagued byoperational problems due to lack of main-tenance.

Indonesian Presidentextends Caltex’s CPPcontract for one yearJakarta — Indonesia’s central govern-ment has told the restive province of Riauthat it will be allowed to take over andoperate a key oil block when the presentoperator’s contract expires in one year’stime.

The Coastal Plain Pekanbaru (CPP)block is currently operated by PT CaltexPacific Indonesia, a joint venture of thenewly-merged ChevronTexaco. It pro-duces about 50,000 barrels/day of heavycrude.

Provincial parliamentary speaker,Chaidir, said that a team would be set upby the central and provincial governments,as well as by state oil and gas companyPertamina, to handle the future operationsof the onshore CPP block.

The Caltex contract was due to expireearlier this year, but Indonesian President,Megawati Soekarnoputri, extended it forone year to allow more time for handingover the field to the Riau people.

The extra time would allow the Riauprovincial government, which had formedthe Riau Petroleum Company, one yearto learn how to operate the field, said theSecretary General of the Ministry of En-ergy and Mineral Resources, DjokoDarmono.

Megawati’s extension of the Caltexcontract triggered renewed protests bylocal people, who have been seeking a 70per cent stake in the field under a new

wealth-sharing law covering mineral re-sources for provinces.

Some media reports said that about10,000 people in Riau had threatened toblock operations at CPP in protest overthe extension. If output at the field wereto be blocked by the protestors, it wouldbe the second closure this year in Indone-sia, after the Arun natural gas field innorthern Sumatra was shut from Marchto July, following attacks by separatistrebels.

CPP is one of the four blocks oper-ated by Caltex in Riau, but due to differ-ences over the production-sharing dealswith locals, its production has fallen to50,000 b/d from around 70,000 b/d a fewyears ago.

The President of Indonesian state oiland gas firm Pertamina, Baihaki Hakim,added that the extension of the CPP blockwas important, as it would ensure thegovernment $260 million a year in rev-enue.

Caltex is Indonesia’s largest oil pro-ducer, with an average output of 700,000b/d from the Riau province. It is expectedto invest $8m on maintaining the currentlevel of production from the blocks, as wellas $15m on community developmentwork.

Qatari Marine crudedestined for newPakistani refineryKarachi — A private Pakistani oil re-finer has signed an agreement with TotalInternational, a subsidiary of France’sTotalFinaElf, to buy over one milliontonnes/year of Qatari crude oil, accord-ing to a company executive.

“We have awarded the contract tosupply feedstock crude to TotalFinaElfrecently,” said Bosicor Pakistan Director,Amir Abbasi, adding that the deal wouldbe worth about $250 million a year atcurrent prices.

According to a report in local paperThe Peninsula, under the agreement,TotalFinaElf would supply the refinerywith Qatari Marine crude.

The report added that Bosicor wasconstructing a refinery at Hub, a coastaltown located about 45 km west of Karachi,

Russian oil firms in Arctic studyBRUSSELS — Two of Russia’s largest oil explo-ration and production companies, Yukos andSibneft, are joining forces to study offshorezones off the Artic peninsula of Chukotka,close to Alaska, according to industry sources.A formal joint venture will be set up by thetwo firms, which will share the cost of re-searching and developing any potential fields.Yukos is Russia’s second largest oil company,while Sibneft is the country’s sixth biggest.The Chukotka region is said to be one of thelargest unexplored areas possibly holding oilreserves. It is understood to be similar in scopeto Alaska’s North Slope region. If seismic stud-ies prove promising, the two companies maycarry out exploration drilling. Sibneft is cur-rently drilling its first onshore test well in thearea. The investment for onshore explorationnow totals $50 million.

Cyprus, Syria hold oil talksNICOSIA — Cyprus and Syria have agreed toco-operate on defining each country’s oil ex-ploration rights in the eastern Mediterraneanregion, according to the Cyprus NewsAgency. The President of Cyprus, GlafcosClerides, held talks in Nicosia with SyrianMinister of Petroleum and Mineral Re-sources, Dr Mohamad Maher Jamal, who wason a three-day official visit to Cyprus. Jamalalso met with Cyprus’s Minister of Com-merce, Industry and Tourism, NicosRolandis, to discuss energy matters. Rolandissaid that Cyprus wanted to delimit the eco-nomic zone at sea for possible exploitation,and hold dialogue with Egypt, Lebanon andIsrael on possible co-operation with regardto oil and natural gas reserves in the easternMediterranean.

UK body warns on windfall taxBRUSSELS — Despite attempts by the Britishgovernment to ease oil company fears of awindfall tax on high profits, the United King-dom Offshore Operators Association(UKOOA), which represents North Sea oilgroups, has warned against the dangers ofmaking the North Sea uncompetitive, shouldthe tax be introduced. The Association saysthat the UK could lose out to newer oil prov-inces in areas such as West Africa, if the Brit-ish tax is too high. The government has triedto ease UKOOA’s fears, even though someoil analysts say it would be unusual if oil taxeswere not reappraised as part of the UK’s on-going energy review. The prospect of wind-fall taxes was raised recently after BP an-nounced an $8 billion profit for the first halfof the year. Oil companies, meanwhile, areexpressing confidence that the governmentwill not impose the tax.

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In briefat an estimated cost of $50m. The plant,due to be completed soon, would processmore than 30,000 barrels/day of crude.

Pakistan currently imports aroundeight million t/y of crude for its four re-fineries, with total petroleum imports of10m t/y, worth some $10.6 billion.

Venezuela unveils newdraft law to coverpetroleum sectorCaracas — The Venezuelan governmenthas unveiled a draft hydrocarbons law,designed to modernize and unify legisla-tion governing the petroleum sector, it wasreported last month.

The draft law was turned over to apresidential commission for discussionbefore a final version is approved by thegovernment in the next two months. Thecommission has called on the differenthydrocarbons-related sectors in the coun-try to forward suggestions regarding thedraft law.

Venezuela’s oil and gas industry iscurrently governed by several laws, includ-ing the hydrocarbons law of 1943 and theoil nationalization law of 1975.

“This (draft law) tries to unify all theaspects of hydrocarbons. It regulates all theactivities: exploration, extraction, trans-portation, refining, and national and in-ternational marketing,” said Energy andMines Minister, Alvaro Silva Calderón.

Among some key aspects of the draftlaw, companies would be required to paya 30 per cent royalty on oil production,compared with the 16.7 per cent currentlypaid. However, this increase would beaccompanied by a reduction in income taxfor the companies covered by the law to58 per cent from the current level of 67.7per cent.

“The draft proposes a modification ofthe fiscal regime and co-ordination be-tween royalties and income tax, so that wecan have more certainty in the fiscal flow,”commented Silva Calderón.

“The control of royalties is clearer,more efficient and safer for the purpose ofplanning a budget, or an income, for thewhole year,” he added.

Silva Calderón went on to say that hehoped the commission’s work on the law

would be concluded soon, so it could besent to the Venezuelan Cabinet.

The commission in charge of shapingthe final version of the draft includes Fi-nance Minister, Nelson Merentes; Plan-ning and Development Minister, JorgeGiordani; PDVSA President, GuaicaipuroLameda Montero; Petroleum ChamberPresident, Hugo Hernandez Rafalli; Cen-tral Bank Director, Domingo Maza Zavala,and academics Gaston Parra Luzardo,Mazhar Al Shereidah, Joe GiacopiniZarraga, and Anibal Martinez.

UAE short-lists firmsas strategic partnersfor Dolphin projectAbu Dhabi — The selection of a newstrategic partner for the UAE’s Dolphingas project is approaching the final stage,according to the Emirates News Agency(WAM).

The UAE Offsets Group (UOG) hasshort-listed five international oil firms fora stake in Dolphin Energy, the companyresponsible for implementing the scheme.

The first phase of the project, valuedat between $3.5 billion and $4bn, involvesthe development and transportation ofQatari natural gas for the domestic mar-kets of the UAE and Oman.

The short-listed companies compriseBP, Conoco, ExxonMobil, OccidentalPetroleum, and Shell. Troubled US energygiant Enron pulled out of the projectearlier this year.

At present, UOG owns 75.5 per centof Dolphin Energy, while France’sTotalFinaElf has the remaining 24.5 percent. The new partner, due to be selectedduring the last quarter of the current year,will acquire a portion of UOG’s stake.

UOG will shortly hold detailed nego-tiations with the short-listed companies toensure that the new partner will add sig-nificant commercial and strategic value tothe project, reported WAM.

Details of the development and pro-duction-sharing agreement, the signing ofwhich will pave the way for the project toenter the construction phase, are also beingfinalized.

The terms of this accord were set outin the detailed commercial term sheet

Ecuador mulls LPG recovery planQUITO — Ecuador has announced that itplans to launch a project at the start of nextyear to recover 14 million cubic feet of lique-fied petroleum gas (LPG), which is currentlybeing wasted. According to governmentsources in the capital, the scheme would gen-erate around $20 million/year for the stateand would help meet domestic demand forthe fuel. The gas sources were located atAguarico, Secoya, Atacapi-Parahuaco, andSacha, as well as from 12 small sources lo-cated far from the country’s oil-productioninfrastructure. State oil company Petro-Ec-uador noted that the LPG recovered from thesefields could be used not only for domesticconsumption, but also for electricity genera-tion. Investment for the project, to be madeby PetroEcuador and Petroindustrialin, hasbeen estimated at around $1.6m.

CPC shareholders okay oil accordMOSCOW — The shareholders of the CaspianPipeline Consortium (CPC) have approvedan agreement on oil transport which is a keyprerequisite for the beginning of the full-scaleoperation of the pipeline. Commenting onthe accord, which sets rates for the pumpingof oil through all segments of the line, Chev-ron Chairman, David O’Reilly, said that thedecision would “provide a powerful impulseto the world investment community, as it tes-tifies convincingly to the fact that Russia andKazakhstan are countries in which large andlong-term investments can be made with con-fidence.” After approving the agreement, theshareholders instructed the CPC board todecide on the beginning of oil shipments fromthe oil terminal at Novorossiisk, on the BlackSea coast. The CPC project provides for theconstruction of a 1,500-km pipeline fromKazakhstan’s Tenghiz oil field to Novorossiisk.

South Korean oil consumption downSEOUL — South Korea’s oil consumption inthe first half of this year totalled 376 millionbarrels, down by 0.8 per cent from the sameperiod a year ago, according to data releasedby the Ministry of Commerce, Industry andEnergy. Industrial and household oil con-sumption dropped by 2.4 per cent and 6.4per cent, respectively, but transportation sec-tor use rose by three per cent, while powerplant use surged by 14.3 per cent. Oil im-ports in the period were up by 1.4 per centon the year to 457m b, said the Ministry,which attributed lower industrial sector con-sumption to a sluggish manufacturing indus-try. The use of liquefied petroleum gas anddiesel oil in the transportation sector rose by14.5 per cent and 5.2 per cent, respectively,due to a hike in the special excise tax.

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In briefagreement signed in March by UOG,representing the government of the UAE,and Qatar Petroleum, representing thegovernment of the state of Qatar.

The Dolphin project involves thedevelopment of gas reserves from Qatar’sgiant North field and the transport of2.0bn cubic feet/day of natural gas to themarkets of the UAE and Oman.

Dolphin offers promising prospects forpower consumption and industrializationin the UAE, where demand for gas is ris-ing by about 10 per cent a year, mainly onthe back of the rapidly expanding powersector.

It complements the gas operations ofthe Abu Dhabi National Oil Companyand its main objective is to meet the re-quirements of the power sector. First gasis scheduled for delivery in 2005.

Iran, Turkey reviewimplementation ofgas export projectAnkara — Turkish Minister of Energyand Natural Resources, Zeki Cakan, andIran’s Ambassador to Turkey, MohammadHossein Lavasani, have discussed ways ofremoving a “technical snag” in the imple-mentation of a project to export Iraniangas to Ankara.

Following the talks, Lavasani told theIslamic Republic News Agency (IRNA)that the two sides had stressed the need totake a principled decision to begin the gasexports.

Both countries realized that a crucialproject of this kind would promote closeand amicable relations between the twocountries and should therefore not beaffected by minor issues.

“To show its goodwill and sincerity toimplement and complete the project, theIranian side is ready to test the (gas) meteronce again,” the Iranian envoy reiterated.

Gas deliveries were supposed to starton July 30 this year, after being postponedfrom the initial start date of January 2000agreed on in the contract.

However, this later start date was alsopostponed because of what the Turkishside claimed was a “technical snag” itfound in the gas meter on the Iranian sideof the border, IRNA reported.

The Turkish state pipeline company,Botas, agreed in January 2000 to compen-sate Iran for the delay on its part in im-plementing the terms of the contract.

Iran says it has carried out all its ob-ligations under the deal, having laid therequired pipeline to the Iranian border,IRNA noted.

The Managing Director of the Na-tional Iranian Gas Company, HamdollahMohammad-Nejad, said last month thatthe construction of the 255-km, 40-inchpipeline from Tabriz to the Bazarganborder point had been completed. Headded that Turkey had also finished lay-ing a 1,490-km pipeline from the Iranianborder to Ankara.

“There are four pumping stations toboost gas delivery in the cities of Tabriz,Sarab, Ardebil and Astara and we are nowconstructing a 48-inch pipeline to enhanceour export capacity to Turkey,” he said.

Under the terms of the $20 billion gasproject, signed by Iran and Turkey inAugust 1996, Iran was to supply 4.0 bil-lion cubic metres/year of gas over a 22-year period. The agreement provides forthe amount of deliveries being adjusted toreach 10bn cu m/y.

Algeria, Spain signagreement on newnatural gas pipelineAlgiers — Algerian Energy and MinesMinister, Dr Chakib Khelil, and SpanishVice-President, Rodrigo Rato, have signedan energy co-operation accord in Madrid,it was announced last month.

According to a statement, the accordwas related to feasibility studies and theconstruction of a second gas pipeline link-ing the Algerian port of Arzew withAlmeria, southern Spain.

The agreement also covered the pro-vision of a power cable connecting the twocountries, and laid the provisions for de-termining ways and means of reinforcingties in the energy sector.

The signing of the agreement waspreceded by a meeting between the twoofficials, during which Khelil reiterated hiscountry’s keenness to promote bilateral co-operation in all domains.

In turn, Rato reiterated Spain’s support

Norwegian oil gets $15bn investmentBRUSSELS — Some $15 billion will be investedin new offshore oil and gas field developmentsin Norway over the next three years, accord-ing to a report from UK oil analyst WoodMackenzie. The firm says that Norway re-mains “a world-class energy province that stillhas the potential for major new oil and gasdiscoveries.” Norway is Western Europe’s big-gest oil producer, with output of some threemillion barrels/day of oil from the North Sea.The report says that the potential is so largethat “Norwegian output will not peak untilseveral years after United Kingdom North Seaproduction starts to decline.” However, amajor part of the Norwegian output increasein the coming period is likely to be gas, ratherthan oil-led. Three-quarters of the 19 Nor-wegian projects identified by Wood Macken-zie for rolling out between now and 2005 willbe gas-focused.

Russia mulls gas pipeline roleMOSCOW — Russia is prepared to considermaking a contribution to building an Iran-Armenia natural gas pipeline, according toRussian Deputy Premier, Viktor Khristenko.He told a press conference in Moscow thathis country considered that the constructionof pipelines should connect countries and notdraw dividing lines between them. The Rus-sian news agency Itar-Tass reported him assaying that, in his view, competition was anintegral part of such projects and Moscow wasready to look for “mutually beneficial com-promise solutions with Iran and Armenia.”Meanwhile, Russia has made an offer toAzerbaijan to sign an agreement for increas-ing the transit of Azeri oil along the Baku-Novorossiisk route.

UK firms must find new reservesBRUSSELS — As the British government pre-pares to launch its twentieth North Sea oillicensing round later this year, exploration andproduction companies are under considerablepressure from the government and the off-shore industry to discover new reserves. Thegovernment’s Department of Trade and In-dustry (DTI) is hoping to entice the firms toadopt a more radical approach and return topreviously abandoned acreage. An exampleof the sort of field that the DTI wants to seereactivated is the Argyll field, which was aban-doned in the early 1990s, although industryopinion is that this field could be revitalized.The government is hoping that there may alsobe surprises, similar to the recent discoveryby Pan-Canadian, which, in partnership withEdinburgh Oil & Gas, stunned the sectorwhen it unveiled the Buzzard oil field in apreviously written off area of the North Sea.

N E W S L I N E

September 2001 23

In brieffor projects the two countries intended tojointly carry out, in particular the secondpipeline and the 2,000-megawatt powercable linking the countries.

Khelil, who was on a two-day visit toSpain, also held discussions with the Span-ish Foreign Minister, and met officialsfrom the country’s major energy firmsCepsa, Repsol-YPF, and Gas Natural.

Crude unit at Citgo’sLemont refinery maybe out for monthsCaracas — Citgo Petroleum, the Tulsa-based subsidiary of Venezuela’s PDVSA,has announced that the crude unit dam-aged by fire in August at its 160,000 b/drefinery at Lemont, Illinois will need about20 to 24 weeks before it returns to serv-ice.

“The company has completed a pre-liminary assessment of the damage to thecrude unit from the August 14 fire at therefinery,” commented Citgo Senior Vice-President, Refining and Petrochemicals,Adolph Lechtenberger.

“We have brought in outside expertsto help us determine the extent of thedamage and what the likely time framemight be before the crude unit is oper-able, but we still have considerably morework to do,” he said.

“As of today, for supply planningpurposes, we are assuming that the crudeunit will return to service in 20 to 24weeks. To ensure the safety of our employ-ees, we are proceeding cautiously with theassessment.

“We are also studying how we canoperate the refinery units downstreamfrom the crude unit by bringing infeedstock for those units from outside therefinery.

“If we are able to deliver sufficientfeedstock and blending components, wemay be able to begin producing gasolineand diesel fuel at the refinery, prior tobringing the crude unit back on line.

“The extent of the production loss willbe determined by our ability to bring therest of the refinery back on line. Furtherdetailed assessments will be required torefine the time period and the estimatedcost to repair the crude unit.

“In the meantime, we are exploringevery possibility to determine how we canbest meet our contractual commitmentsfor petroleum products,” said Lechten-berger.

He added that the company had beentalking to refiners in the USA and Canada,to find supplies of refined products.

“In addition, we are exploring all av-enues of transportation, including pipe-lines, ships and barges,” he said.

Citgo Petroleum is a refiner, trans-porter and marketer of transportationfuels, lubricants, petrochemicals, refinedwaxes, asphalt and other products.

Indonesia plans toexport more naturalgas to MalaysiaJakarta — Gulf Indonesia Resources ispreparing the Suban field to be part of agas export deal with Malaysia, the com-pany announced last month.

Project negotiations, it said, were at anadvanced stage between the Indonesianstate oil and gas firm Pertamina and itsMalaysian counterpart Petronas.

The scheme entailed exporting about300 million cubic feet/day of Indonesiannatural gas to Malaysia from 2004, saidGulf Indonesia, in its second-quarter 2001report.

The Suban field, part of the onshoreCorridor production-sharing contractwhich Gulf Indonesia operates withPertamina, had 4.0 trillion cu ft of gasreserves. Further field appraisal was con-tinuing, noted the company, in whichConoco of the United States has a 72 percent stake.

The Suban-6 well recorded a flow rateof 29m cu ft/d in the second quarter. TheSuban-7 well was being drilled in the thirdquarter and further drilling was plannedfor the later part of this year and in 2002.

“The substantial gas reserves that arebeing identified at Suban provide the basisto secure new gas sales contracts,” said GulfIndonesia President and Chief Executive,Paul C Warwick.

“A new gas sales contract with Malay-sia could add significant growth in provedgas reserves and gas sales beyond what iscurrently contracted,” he added.

Oman delays LNG project decisionMuscat — Oman will probably delay a deci-sion on whether to implement a multi-mil-lion dollar expansion of a third train at itsliquefied natural gas plant, according to a re-port in the Middle East Economic Digest. TheUnder-Secretary at the Sultanate’s Oil andGas Ministry, Salim Mohammed Al Shaban,was quoted by MEED as saying that the Sul-tanate had originally been expected to decideby the end of this year. Oman LNG was tohave started deliveries in November of itsthird long-term gas contract with India’sDabhol Power Company (DPC) for 1.6 mil-lion tonnes/year of LNG, but a dispute betweenDPC’s main shareholder, US energy firmEnron, and India’s Maharashtra State Elec-tricity Board had thrown that into doubt. Athird LNG train would boost production ca-pacity at the plant in Qalhat, on the ArabianSea, to 9.9m t/y, from the current 6.6m t/y.

BP to close polyethylene plantLONDON — BP has announced that it is toclose its low-density polyethylene manufac-turing operations at Wilton on Teesside inthe UK. The company cited difficult marketconditions as the reason for closing the100,000 tonnes/year plant. “It is with deepregret that, despite the efforts of everyone atthe site and the number of changes embracedin recent years, we have had to make this an-nouncement,” said BP Wilton Site Manager,Donald Austin. “In a highly competitive mar-ket, it has been increasingly difficult to main-tain profitability at the plant. The plant’s ageand related high costs of production andmaintenance combined with competitionfrom newer, larger plants have made Wiltonunprofitable and led to this decision,” headded. The plant will cease production at thebeginning of October.

Shell unveils new LNG technologyLONDON — Shell Development Australia(SDA) has unveiled a proposal to use theworld’s first floating liquefied natural gas(FLNG) technology to develop the GreaterSunrise gas fields in the Timor Sea. The newgeneration facility would be located offshoreon a barge, close to the proposed Sunrise drill-ing platform. It would be an industry first,placing Australia in the forefront of applyingadvanced LNG engineering. SDA’s Chief Ex-ecutive Officer, Dr Alan Parsley, said: “Thisbreakthrough results from an innovative com-bination of three well-established technolo-gies: floating production storage and off-takevessels for oil production, LNG shipping andLNG plant design.” The move would help toboost the economies of Australia and EastTimor, he added.

N E W S L I N E

24 OPEC Bulletin

In briefEgypt begins petrochemical ventureCAIRO — The Egyptian-Saudi Petrochemi-cal Industries Company (ESPIC) last monthstarted work on a large-scale petrochemicalindustries plant at the Egyptian port city ofAlexandria, ESPIC Board Chairman, AhmadBadeeb, announced. The plant is a joint ven-ture between Egypt, Saudi Arabia and Ger-many, the Qatar News Agency (QNA) quotedBadeeb as saying. He told reporters aftermeeting with the Egyptian Prime Minister,Atef Obeid, that investments totalling $550million were required for the first phase ofthe venture, which was expected to attract asmuch as $2.0 billion in its final stages. Badeebnoted that the Egyptian Ministry of Petro-leum would have a 10 per cent share of theinvestments, alongside the Saudi Arabian andGerman shareholders.

Demand for natural gas seen growingDOHA — Demand for natural gas is expectedto grow by 2.7 per cent annually, accordingto the Gulf Organization for Industrial Con-sulting (GOIC), which is based in the Qataricapital. The Organization said in a study thatdemand for the environmentally friendly fuelhad been boosted by its use in electricity gen-eration, water desalination, and transporta-tion, the English-language Gulf Times news-paper reported last month. The GOIC saidglobal gas reserves were estimated at 155 tril-lion cubic metres, of which 70 per cent wassituated in the Middle East. Total gas pro-duction of Arab states, as cited in an Organi-zation of Arab Petroleum Exporting Coun-tries (OAPEC) study, amounted to 379.2bncu m in 1999. This, the GOIC said, repre-sented 12.8 per cent of world production ofalmost 3.0 trillion cu m for 1999.

Venezuela, Mexico to ink San Jose AccordCARACAS — The governments of Venezuelaand Mexico are preparing to renew the SanJose Accord, under which the two countriessupply a total of 160,000 b/d of oil to con-suming nations in Central America and theCaribbean. Last month the bilateral commit-tee monitoring the energy co-operation pro-gramme for Central America and the Carib-bean, known as the San Jose Accord, con-cluded a meeting in the Venezuelan capital,which was a follow up to talks held in MexicoCity in June. The Venezuelan Ministry of En-ergy and Mines said that during the meeting,the delegations from Mexico and Venezuelareiterated the importance of the programme“as a unique instrument of co-operation.” Itadded: “In that regard, they agreed to pro-pose to the Presidents of both countries therenewal for an eleventh year of the Accordfor the period 2001 to 2002.”

Nigeria set to buildrefuelling stationsto boost use of CNG

Abuja — The Nigerian Gas Company(NGC) is set to build a number of com-pressed natural gas (CNG) refuelling sta-tions in the country over the next threeyears, it was announced last month.

The move forms part of efforts by thecompany, a subsidiary of the state-runNigerian National Petroleum Corporation(NNPC), to commercialize and popular-ize the use of CNG.

An NGC official said that the firststation would be built somewhere on theEscravos-Lagos pipeline route, which feedsgas from the Niger Delta to industrialestates in Ogun and Lagos States.

The official added that the projectwould enhance the efficient utilization ofnatural gas and the development of re-sources in the gas sector, where the nationwas in urgent need of investment. Each ofthe filling stations would be capable ofdelivering 300,000 cubic feet/day of gas.

“The NNPC will build CNG plantsacross the country, since the federal gov-ernment is planning to establish a nationalgas grid soon,” he pointed out.

The official also noted that said theCorporation planned to convert all itsoperational vehicles to utilize CNG beforethe end of the year and expected a similargesture from the multinationals operatingin the country.

Value of UAE crudeexports to Japan upstrongly in 2000Dubai — Crude oil exports from theUnited Arab Emirates (UAE) to Japan rosein value last year by 65 per cent to over$11.4 billion, according to the JapanExternal Trade Organization (Jetro).

Figures released by Jetro’s office inDubai said that a 68 per cent surge in totalUAE exports to Japan boosted trade tomore than $17.42bn, as against $11.38bnin 2000.

UAE imports from Japan last year werevalued at $2.54bn, slightly up on 1999.

Machinery and equipment constitutedsome 78 per cent of the Japanese goodsimported by the UAE.

During last year, the price of crude oilshot up by 68 per cent to an average of$28.84/barrel, compared with $17.14/bin 1999.

The UAE remained Japan’s leadingsupplier of mineral fuels in 2000, meet-ing 25.5 per cent of the country’s needs.

Iran concerned overtension betweenCaspian Sea statesTehran — Iranian officials last monthexpressed concern about escalating tensionamong the five littoral states sharing theoil-rich Caspian Sea, the Islamic Repub-lic News Agency (IRNA) reported.

“We are not concerned over the statusof the Caspian, since we are sufficientlyequipped to defend ourselves. But we areanxious over the dispute among the (lit-toral) states,” Foreign Ministry spokes-man, Amid-Reza Assefi, told a press con-ference in the Iranian capital.

The Caspian, he said, should be apublic sea and not grounds for rivalry.Assefi’s comments referred to tensionbetween Iran and Azerbaijan, sparked af-ter an Iranian warship forced an Azeri oilresearch vessel to back out of disputedwaters, said IRNA.

Iran has been protesting against Azerioil prospecting in the disputed region,which the Islamic Republic claims own-ership of.

Assefi also denied a reports in the Azerimedia of an imminent visit by IranianForeign Minister, Kamal Kharrazi, to theAzeri capital Baku.

He gave an upbeat assessment ofTehran-Baku ties, adding: “We believe thatthe disputes should be settled peacefullyand through understanding.”

Tension between the two nations easedafter Kharrazi called for “dialogue” overthe issue and Azeri President, HeidarAliyev, also made conciliatory statements.

Iran has made it known that it consid-ers any unilateral deals for energy explo-ration in the Caspian Sea as null and void,before the issue of the legal regime of theinland waters is settled.

N E W S L I N E

September 2001 25

Available exclusively from OPEC:

The 2000 edition of the OPEC Annual Statistical Bulletin, which has established

itself as the standard reference work on the oil and gas industries of OPEC Member Countries, is now

available exclusively from the Secretariat. Compiled by a team of statistical experts, the ASB contains

an unrivalled wealth of data covering the period until end-2000 on the oil and gas sectors of OPEC's

11 Member Countries, as well as comprehensive coverage of the rest of the world.

For ease of reference, the ASB is divided into five sections, which are:

Packaged with the ASB is a 3.5-inch computer diskette (for Microsoft Windows only) containing all the data in the book and more. Many of the time series in the summary tables in Section 1 are extended back to 1960, the year of OPEC's founding, while much of the data in Sections 2-5 extends back to 1980. The application is simple to install and easy to manipulate and query. The data can also be exported to Microsoft Excel or other spreadsheets.

The OPEC Annual Statistical Bulletin 2000 book plus diskette package costs $85.To order your copy, just fill in the form at the back of the issue, and fax it to OPEC's PR & Information Department

at (+43 1) 214 98 27.

1 Summary tables and basic indicatorsBasic economic indicators in OPEC Member Countries (GDP, population, trade, etc) from 1980-2000. Side-by-side comparisons of

the same period.

EC and non-OPEC

n and production,

ucts, exports and

0.

tione of the oil tanker

er (LPG and LNG)

Member Countries

the world, as well

s for 1996-2000.

ata on all oil, gas

pelines in OPEC

s.

s of the OPEC

nd its components

es for 1991-2000,

on-OPEC) for the

breakdown of the

evron and Texaco.

Tables show revenue, operating costs, taxation, net income and much more.

26 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 averageJuly 2001 August 2001 2000 2001

Reference Basket 23.73 24.46 26.73 24.75Arabian Light 24.03 24.92 26.03 24.46Dubai 23.45 24.70 25.20 24.27Bonny Light 24.81 25.41 27.55 26.18Saharan Blend 24.82 25.96 27.73 26.47Minas 25.32 24.82 27.89 26.12Tia Juana Light 20.55 21.54 25.61 21.90Isthmus 22.67 23.86 27.10 23.81

Other crudesBrent 24.66 25.78 27.48 26.18WTI 26.53 27.41 29.31 27.99

DifferentialsWTI/Brent 1.87 1.63 1.83 1.81Brent/Dubai 1.21 1.08 2.28 1.91

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

Crude oil price movements

After its losses in July, the monthly priceof OPEC’s spot Reference Basket2 gained73¢/b to average $24.46/b in August.Leading the gains was Dubai, which surgedby $1.25/b, pulling Arabian Light withit, as it moved 89¢/b higher. Isthmus andTia Juana Light followed, increasing by$1.19/b and 99¢/b, respectively. TheBrent-related Saharan Blend and BonnyLight also made considerable gains, of$1.14/b and 60¢/b, respectively. Theonly component of the Basket whichdecreased was Minas, which moved downby 50¢/b (see Table A).

The average price of the Basket gained87¢/b in the first week of August as pricescontinued their uptrend, assisted by con-cern about the tropical storm Berry in theGulf of Mexico, which accounts for arounda quarter of US production. Further sup-port came from a pre-API report rally,after which prices moved lower, whenboth events were over. The Basket contin-ued its rise in the second week, gaining22¢/b, basically influenced by an increasein Dubai in reaction to news that SaudiArabia would implement a further four toseven per cent cutback in its Septemberallocations to Asian customers. However,Atlantic Basin prices moved sideways,despite a considerable draw on gasoline

and distillate stocks in the USA. Duringthe third week, the Basket fell by 86¢/b,following losses in all markets, as bearishsentiment regarding the world economyprevailed. Neither larger-than-expecteddraws on US crude and gasoline stocks nora buying spree of Brent cargoes by aEuropean major was able to halt the de-cline in prices, although they curbed itsmomentum.

Prices changed direction in the fourthweek, and the Basket registered a rise of76¢/b, supported by refinery glitches inthe USA that caused huge draws on gaso-line stocks and by the continued buyingof Brent cargoes by the European major.The only factor that softened the rally wasrenewed concern about the slow-down ofthe US economy and its effect on productdemand.

US and European marketsDemand for crude oil was subdued in

the USA, influenced by weak refiners’margins and a backwardated market whichencouraged destocking rather than stock-ing. The US sour crude market was espe-cially weak, in the expectation of big arrivalsof Basrah Light to the US Gulf Coast andthe decision by a heavy-oil refiner to carryout thorough maintenance. Emergencyshut-downs at Citgo’s 160,000 b/dLemont, Illinois, refinery also dampened

August1

1. This section is based on the OPEC MonthlyOil Market Report prepared by the ResearchDivision of the Secretariat — published inmid-month and containing up-to-date analy-sis, additional information, graphs andtables. Researchers and other readers maydownload the publication in PDF formatfrom our Web site (www.opec.org), providedOPEC is credited as source for any usage.

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

heavy sour Canadian crudes, as well asBasrah Light.

In Europe, despite lacklustre demandin the USA for North Sea crudes, mostNorth Sea August cargoes were cleared byEuropean refiners. However, buying in-terest in mid-month eased, waiting for theSeptember loading programme. A tighter-than-expected September programme anda buying spree by Shell caused prices ofBrent wet barrels to jump, compared withthe forward and paper values. Shell amassedmore than 7m b in the third week ofAugust, thereby pushing prices higher andputting pressure on refiners’ margins.

In the Mediterranean, Urals pricesreceived continuous support from a scar-city of Iraqi Kirkuk and limited supply ofthe alternative North Sea Flotta. Uncer-tainty about the pricing of Kirkuk fur-thered this trend.

Far Eastern marketsThe main topics in the Asian market

were the economic slow-down, weakerdemand and cuts in refinery throughput.China, which is usually a supporter of themarket, started destocking, rather thanstocking ahead of the winter months. Evendistillate-rich Abu Dhabi grades faced re-stricted demand. West African grades en-countered similarly low demand,despite the very low Brent/Dubai spread,

September 2001 27

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

as refineries covered only their basicneeds, with regard to sweet crudes. Indo-nesia’s heavy sweet Minas also met weakdemand from Japanese utilities. The onlyfactor that supported prices in the regionwas OPEC’s expected cut in production,which was due to become effective onSeptember 1.

Product markets andrefinery operations

Most product markets improved consid-erably in August, led by gasoline in the USand Singapore markets. World gasoilmarkets nevertheless still exhibited unu-sual premiums over gasoline, except in theUS Gulf. Refiners’ margins recovered mod-erately in the US Gulf, but remained wellin negative territory in other markets (seeTable B).

US Gulf marketAfter the significant losses during the

three months up to July, the gasoline pricespiked by 16 per cent, or $4.56/b, inAugust, driven largely by tight supply ata time which usually witnesses strongdemand. The squeezed gasoline marketwas the result of a combination of factors.There were steady, hefty gasoline stock-draws for the second consecutive month;these registered an overall fall of 16m bbelow the end-of-July level and hencemoved total US gasoline inventories be-low last year’s level for the first time sinceApril.

Another factor concerned refiners’efforts to enhance distillate production.Most importantly, there was a string ofrefinery problems during the second halfof the month, including the outage of theCitgo refinery for a long period that mightextend up to six months in the land-lockedMidwest area; this created concern aboutsupply shortfalls in that isolated marketand caused a surge in the gasoline price inthe US Gulf refining centre, the mainsupplier to this particular market throughthe Explorer pipeline.

Nonetheless, the close of the drivingseason at the end of the month, whichcoincided with the decision of the Envi-ronmental Protection Agency to allowCitgo to start mixing light blend materialswith the already stored summer grade

US refinery throughput declined by190,000 b/d to around 15.55m b/d, as aresult of refinery run cuts and unplannedoutages (see Table C). The correspondingutilization rate fell accordingly to 94.0 percent, the lowest level since April.

Rotterdam marketProduct prices reversed the downward

trend, that had prevailed during June andJuly, and moved higher in August. Thegasoline price increased by 38¢/b, reflect-ing largely a higher level of activity intransatlantic arbitrage trading, that wasspurred by the resurgence in the US gaso-line markets. The rising Brent price con-tributed to gains in the middle and heavyends of the barrel. Consequently, gasoilrose by 85¢/b, despite well-supplied heat-

Table C: Refinery operations in selected OECD countries

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

June 01 July 01 August 01 June 01 July 01August 01

USA 15.89 15.74 15.55 96.1 95.2 94.0France 1.70 1.72 1.77 89.9 90.7 93.2Germany 2.03 2.18 2.17 90.0 96.4 95.9Italy 1.61R 1.74 1.81 68.1R 73.9 76.9UK 1.31R 1.45R 1.53 74.2R 81.8R 86.4Eur-162 11.35R 11.77R 11.99 83.2R 86.3R 87.9Japan 3.50 3.94 na 70.5 79.3R na

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.

gasoline, ie, to sell winter grade almost twoweeks before its usual starting date ofSeptember 15, helped ease the supplycrunch. Robust demand to store heatingoil amid a sustained contango market ledto a surge of $1.60/b in the gasoil price.The US fuel oil market remained generallybearish, linked to the continuing declinein the price of its competitor, natural gas.The high-sulphur fuel oil price, however,saw a moderate rise of 27¢/b, assisted bytight supply and cargoes exported to theFar East (see Table B).

Refiners’ margins recovered in the USGulf, shifting moderately into positiveterritory in August from the negative val-ues of the previous two months, as thesoaring gasoline price offset the effects ofthe improving crude markets.

Table B: Selected refined product prices $/b

ChangeJune 01 July 01 August 01 August/July

US GulfRegular gasoline (unleaded) 30.48 28.21 32.77 +4.56Gasoil (0.2%S) 31.23 28.59 30.19 +1.60Fuel oil (3.0%S) 17.59 17.40 17.67 +0.27

RotterdamPremium gasoline (unleaded) 31.73 27.86 28.24 +0.38Gasoil (0.2%S) 31.06 29.33 30.18 +0.85Fuel oil (3.5%S) 17.97 17.19 18.40 +1.21

SingaporePremium gasoline (unleaded) 26.89 24.36 26.68 +2.32Gasoil (0.5%S) 30.00 28.54 28.71 +0.17Fuel oil (380 cst) 20.16 19.19 20.94 +1.75

28 OPEC Bulletin

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

ing front for the gasoline price curve, whileit moved up by 50¢/b the next day in acorrective move. A big draw on US crudestocks, as reported by the API, did notcause a sustainable rally, as it has becomea trend in the energy market to push pricesahead of the API report and then takeprofits after the DoE report is publishedthe next day, irrespective of the content ofthe reports. NYMEX October WTI endedthe week at $26.63/b.

Contango was the main feature of thecrude oil market on NYMEX WTI in thefourth week, as heavy refining mainte-nance curtailed demand by refiners forprompt barrels. Crude was volatile, withno direction from news about fundamen-tals; but it was supported by the stronggasoline market early in the week. How-ever, towards the end of the month, gaso-line lost steam, as an abundance ofreformulated gasoline at the end of thedriving season weighed heavily on prices.

The tanker market

OPEC area spot-chartering decreased by4.03m b/d to a monthly average of 10.01mb/d in August, thinned by fewer west-bound fixtures. Compared with the pre-vious year’s level, the current volume ofOPEC fixtures was even lower — by 4.18mb/d. Therefore, global spot-charteringdropped by a significant 6.45m b/d to amonthly average of 16.98m b/d; thisvolume was also 5.42m b/d below theyear-ago figure. The OPEC area’s share ofglobal spot-chartering decreased by amarginal 0.95 percentage points to 58.95per cent; however, the present level was4.40 percentage points lower than theprevious year’s share.

Spot fixtures from the Middle East oneastbound and westbound long-haul routesdeclined by 220,000 b/d to 3.33m b/dand by 1.41m b/d to 1.40m b/d, respec-tively. However, the shares of the east-bound and westbound routes of OPECtotal fixtures reversed the previous month’sdistribution, rising on the eastbound routeby 7.98 percentage points to 33.31 percent and falling westbound by 6.03 per-centage points to 13.99 per cent; together,they accounted for 47.30 per cent of totalchartering in the OPEC area, as well asbeing 1.95 percentage points higher than

ing oil stocks in Germany, and, conse-quently, its purchase at the current speci-fication of 350 ppm, since it will switchto the ultra-low sulphur of 50 ppm begin-ning on November 1, came to a halt. Fueloil surged by $1.21/b on healthy bunkerdemand, in tandem with intensive gaso-line cargoes to the USA and prevailing fueloil exports to the Far East market (seeTable B).

Refiners’ margins worsened further,moving deeper into negative territory,owing to the considerable increases ofcrude prices that outpaced improved lightproduct markets.

Refinery throughput in Eur-16 (EU +Norway) maintained its uptrend, rising by224,000 b/d to nearly 12m b/d (see TableC). The equivalent utilization rate wasalmost 88 per cent. Refiners’ efforts toload transatlantic gasoline cargoes and buildheating oil stocks, which had declinedheavily during June and July, were themain reason for boosting European refin-ery output.

Singapore marketThe gasoline and fuel oil markets in

Singapore rebounded in August, mostlyin accordance with the magnitude ofChinese gasoline exports to and fuel oilimports from Singapore; gasoil also rose.Lean gasoline supplies from the largestregional exporter, China, linked to itsheavily reduced refinery runs, hefty de-mand from the Middle East, especiallyfrom Saudi Arabia following Ras Tanura’srefinery problems, healthy regional de-mand, when Indonesia purchased a vol-ume larger than its usual monthly quantity,and arbitrage flows to the US West Coastwere cited as the main reasons for the surgeof $2.32/b. Despite refinery run cuts inAsia, gasoil remained bearish, in an over-supplied market facing a slow-down indemand. Nonetheless, gasoil’s price in-creased slightly by 17¢/b, strengthened byimproving crude markets and active buy-ing by a major during the last part of themonth. Persistent Chinese fuel oil de-mand continued to support the price,which surged by $1.75/b, as the refineriesof China’s main supplier, South Korea,still operated at reduced throughput (seeTable B).

Refiners’ margins in Singapore re-treated further in the already negative

territory, undermined by sharp increasesin Dubai during August, relative to otherbenchmark crudes.

In Japan, refinery throughput roseconsiderably, by 440,000 b/d, to 3.94mb/d during July, marking a spate of refin-ery restarts following completion of yearlyturnarounds (see Table C). The utiliza-tion was set at 79.3 per cent, which wasstill 2.2 percentage points below last year’slevel.

The oil futures market

On the second day of August, NYMEXWest Texas Intermediate (WTI) jumpedby 94¢/b in a massive wave of short-covering, following a similar movement inthe IPE Brent market that took Brent$1.0/b higher. The short-covering was adelayed reaction to OPEC’s decision tocut production by 1m b/d and to a drawon US crude oil inventories for two con-secutive weeks. WTI reached $27.72/b.A further draw reported by the AmericanPetroleum Institute (API) gave therally more support and raised WTI to$27.94/b. However, as the market turnedto fundamentals and absorbed the higherlevels of crude and distillate stocks, com-pared with last year’s level, WTI fell by30¢/b. During the week, backwardationpersisted, and of special interest was thehigh December 2001/2002 spread, whichreached $3.0/b.

The second week also started with anincrease, as the International EnergyAgency raised its demand forecast for 2001for the first time in months, and as refineryglitches led to higher gasoline prices, pullingcrude up with them. However, banksselling the September/October spreadbrought prices down the next day, and,despite the draw on crude oil stocks re-ported by the API weekly statistics andlater confirmed (with a higher value) bythe Department of Energy (DoE), WTIprices kept moving lower for the next daysof the week, as NYMEX WTI reached$27.40/b. However, the backwardationlevel reached a high of 91¢/b.

In the third week, fundamentals didnot move the market. Technical factorswere dominant, as a sell-off at the begin-ning of the week brought prices down by72¢/b, against a background of a weaken-

September 2001 29

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

the level observed in July. Preliminaryestimates of sailings from the OPEC areadeclined slightly by 270,000 b/d to amonthly average of 22.87m b/d, whichwas only 1.17 percentage points below theprevious month’s level. However, sailingsfrom the Middle East rose by 330,000b/d to a monthly average of 16.55m b/d,which was about 72.34 per cent of totalOPEC sailings.

Arrivals in the US Gulf Coast, the EastCoast and the Caribbean declined inAugust by 1.59m b/d to a monthly average6.97m b/d, while arrivals in North-WestEurope and Euromed decreased by330,000 b/d and 580,000 b/d to 6.88mb/d and 4.63m b/d, respectively. Theestimated oil-at-sea on August 26 was464m b, which was 9.80m b below thelevel observed at the end of last month.

The VLCC market in the Middle Eastweakened in August, after the improve-ment witnessed during the previous month,undermined by strong volatility in thevolume of fixtures and leaving tanker-owners uncertain about the direction ofthe market. Thus, freight rates on theMiddle East eastbound and westboundlong-haul routes fluctuated widely duringthe month; they started to decline at thebeginning of the month, reached the low-est level in the middle, picked up stronglyfor one week and then declined again. Themonthly average decreased by four pointsto Worldscale 47 and by six points toW48, respectively, compared with theprevious month’s level.

The Suezmax market displayed mixedtrends. It weakened on the route fromWest Africa to the US Gulf Coast, asfreight rates declined by six points to amonthly average of W94, on North Seacrude competition as Brent prices weak-ened. However, the monthly averagefreight rates from North-West Europe tothe US East Coast improved by two pointsto W104, due to the open arbitrage win-dow to the US market, with Brent beingtraded at a discount of more than $2/b toWTI in the first half of the month.

The Aframax market’s trading on short-haul routes enjoyed a positive trend. Freightrates on the route from the Caribbean tothe US East Coast regained some of theloss of the previous month, increasing by25 points to W158, helped by higherdemand in the US market.

In the Mediterranean, freight rates im-proved slightly on the routes across theMediterranean and to North-West Eu-rope, rising by two points to W155 andsix points to W145, respectively. Freightrates for 70–100,00 dwt tankers on theroute from Indonesia to the US WestCoast reversed the previous month’s trendand showed a downward movement, de-creasing by seven points to W137.

The clean tanker markets displayed, ingeneral, a weaker trend in August, with theexception of the route from North-WestEurope to the US East Coast, where themonthly average freight rates edged threepoints higher to W223 on open transat-lantic arbitrage.

Freight rates from the Middle East tothe Far East came under pressure from thelow volume of fixtures, and they declinedsteadily during the month to end with amonthly average of W200, which was 18points lower than the previous month’sfigure. On the routes across the Mediter-ranean and from the Mediterranean toNorth-West Europe, freight rates declinedfor the third consecutive month, falling bythree points to W190 and 26 points toW231, respectively, due to less charteringactivity.

The biggest drops in freight rates thismonth occurred on the routes from theCaribbean to the US Gulf Coast and fromSingapore to the Far East, where theyplunged by 39 points to W194 and 41points to W218, respectively, caused byreduced refinery runs due to poor refiners’margins.

World oil demand

Historical dataThere has been a minor downward

revision to the 1999 world demand aver-age, which is now assumed to be 75.12mb/d, instead of the 75.14m b/d reportedin the last issue. According to the latestavailable figures, world oil consumptionduring 2000 grew by 590,000 b/d, or 0.8per cent, to 75.71m b/d. This latest esti-mate translates into an upward revision of10,000 b/d, compared with the figurepresented in the previous report.

However, due to a slight downwardrevision of the 1999 total, the volume ofchange in the 2000 average shows a larger

increase. Specifically for 2000, the latestavailable data shows that demand in de-veloping countries grew by only 180,000b/d to average 18.66m b/d, instead of the150,000 b/d growth presented in the lastreport. Within this group, the wholeupward revision has been applied to LatinAmerica.

Projections for 2001

WorldFor the present year, the projection for

world oil demand has once again beenrevised down, due to a further downwardadjustment to the world economic growthrate. Consumption is now estimated torise by 640,000 b/d, or 0.8 per cent, toaverage 76.35m b/d. On a regional basis,demand is projected to increase by 20,000b/d in the OECD and by 350,000 b/d indeveloping countries, with the remaining270,000 b/d originating in the ‘otherregions’ (former CPEs). On a quarterlybasis, compared with the year-earlier fig-ure, world demand grew by 0.78 per cent,or 590,000 b/d, to average 76.27m b/d in1Q. For the rest of the year, demand isprojected to register further increases of1.47 per cent in 2Q, 0.16 per cent in 3Qand 0.99 per cent in 4Q.

OECDHaving grown by as little as 0.3 per

cent last year, OECD product deliveriesare projected to post a negligible growthrate in 2001, rising by only 20,000 b/d,to average 47.86m b/d. This would be thenet effect of 90,000 b/d growth in NorthAmerica, partly offset by declines inWestern Europe and the OECD Pacific.Deliveries of petroleum products willcontinue to fall marginally in WesternEurope, at a rate of 0.3 per cent, whichtranslates into a 50,000 b/d volumetricdecline.

Our present estimate sees a marginaldecline in demand from the OECD Pa-cific countries. This projection is based onthe present situation in the Japanese andSouth Korean economies, which continueto show signs of weakening. TheGDP growth rate estimate for South Koreain 2001 has been revised down to 3.2per cent, compared with 8.8 per cent in2000. Likewise, the estimated 2001 eco-nomic growth rate in Japan has been re-

30 OPEC Bulletin

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

vised down systematically and now standsat –0.4 per cent.

Compared with the year-earlier fig-ures, the inland delivery of petroleumproducts in North America in 2Q, accord-ing to the latest data, dropped by a 0.4 percent, or 90,000 b/d, to average 23.75mb/d. US product deliveries rose by 0.5 percent, or 90,000 b/d, to average 19.86mb/d, while demand in Canada and Mexicodeclined significantly by 5.0 per cent, or100,000 b/d, and 3.9 per cent, or 80,000b/d, respectively.

Demand in Western Europe inchedup, posting a rise of 1.0 per cent, or150,000 b/d, during 2Q. However, theOECD Pacific countries displayed a 1.2per cent decline, or 100,000 b/d, in thesame period. According to the latest fig-ures, demand for petroleum productsdropped by 0.9 per cent, or 50,000 b/d,in Japan. It is important to point out thatconsumption also contracted by 3.1 percent in South Korea, the second mostimportant regional consumer, during 2Q.

Developing countriesOil demand in developing countries

has again been revised down marginallyfor 2001. It is now expected to rise by350,000 b/d, or 1.9 per cent, to average19.01m b/d for the year. The estimatedgrowth rate in consumption has beenlowered for the Asian group of countriesfrom the previous 2.0 per cent to 1.6 percent. The fundamental factor behind thelower demand outlook is that Asian re-gional GDP is projected to grow at a lower-than-anticipated rate. These economiesare highly export-dependent and are ex-tremely reliant upon the health of theirtrading partners. The demand growth ratefor Latin America has not changed, whilethose for Africa and the Middle East havebeen revised marginally in opposite direc-tions.Other regions

Apparent demand in the former CPEsis projected to grow by 270,000 b/d, or2.9 per cent, to average 9.48m b/d for2001. Revisions to the trade and produc-tion data for 1Q show that apparent FSUdemand grew by 7.4 per cent, or 270,000b/d, compared with the year-earlier figure.The latest assessments indicate that therehas been growth of 6.9 per cent, or 250,000b/d, in 2Q.

For the remaining two quarters, weanticipate a moderate decline in apparentconsumption, due to a rise in the level ofexports that will outpace any gain in pro-duction. During 1Q and 2Q, net exportswere 320,000 b/d and 510,000 b/d higherthan in the corresponding quarters of 2000.

High international oil prices, the needfor more revenue, in order to service in-ternational loans, and the switch to natu-ral gas continue to undermine internalconsumption. Indigenous production andtrade data for the first three months of theyear show a considerable drop in Chineseapparent consumption. According to thelatest figures, apparent demand declinedby 7.5 per cent during 1Q.

Even though the decline seems huge,one should not forget that this comparisonis made with 1Q00, when demand surgedby 17 per cent to reach a 1Q record level.2Q apparent demand, however, demon-strated a significant rise of 12.3 per cent.

This is in line with the considerablerecovery in total imports which registeredan impressive 44.4 per cent rise in 2Q.Therefore, we are still optimistic about thedemand outlook for the rest of the year;nonetheless, due to the size and the impor-tance of China in the overall demandpicture, we shall continue to monitorclosely further developments.

Preliminary forecasts for 2002Except for a downward revision to the

world economic growth rate, no changeshave been applied to our assumptionspresented in the last report.

The preliminary 2002 world demandforecast has, therefore, been revised downslightly to 77.36m b/d, compared with theprevious forecast of 77.47m b/d.

However, due to a similar down-ward revision to the 2001 estimate, thevolume and percentage of the differencehave remained basically the same, indicat-ing a 1.01m b/d (equivalent to 1.3 percent) rise in 2002 demand over that of2001.

The projected 2002 growth level ishigher than those experienced in 2000and expected in 2001. However, this isonly a preliminary assessment. It will besubject to further adjustment, as moreinformation becomes available on majorfactors, such as the economic growthoutlook, prices and the weather.

World oil supply

Non-OPEC

Figures for 2001The 2001 non-OPEC supply figure

has been revised up by 10,000 b/d to46.30m b/d. The quarterly distributionfigures for 1Q and 2Q have also beenrevised up, by 40,000 b/d and 60,000b/d to 46.28m b/d and 45.97m b/d, re-spectively, while those for 3Q and 4Qhave been revised down, by 30,000 b/dand 20,000 b/d to 46.31m b/d and 46.63mb/d, respectively, compared with the lastreport’s figures. The yearly average in-crease in non-OPEC supply is estimatedat 520,000 b/d, compared with the 2000figure.

Expectations for 2002Our preliminary forecast for 2002 non-

OPEC supply has been revised up by50,000 b/d to 47.23m b/d, which consti-tutes an increase of 930,000 b/d, com-pared with the figure estimated for 2001.The expected 2002 quarterly distributionis 47.20m b/d, 46.89m b/d, 47.25m b/dand 47.56m b/d, respectively.

The FSU’s net oil export forecast for2001 has been revised down by 40,000b/d to 4.51m b/d, while the 2000 figureremains unchanged at 4.14m b/d, com-pared with the last report. The forecast for2002 has also been revised down, by around60,000 b/d to 4.90m b/d (see Table D).

OPEC natural gas liquidsOPEC NGL figures for the years 1998–

2001 remain unchanged at 2.78m b/d,2.86m b/d, 2.98m b/d and 3.01m b/d,respectively, compared with the last re-

Table D: FSU net oil exports m b/d

1Q 2Q 3Q 4Q Year

1998 2.77 3.02 3.18 3.20 3.041999 3.12 3.62 3.52 3.49 3.442000 3.97 4.13 4.47 4.01 4.1420011 4.28 4.50 4.97 4.29 4.5120022 4.78 5.13 5.05 4.63 4.90

1. Estimate.2. Forecast.

September 2001 31

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

port. Also, the forecast for 2002 remainsat 3.04m b/d.

OPEC NGL production — 1998–2001m b/d

1998 2.781999 2.862000 2.981Q01 3.012Q01 3.013Q01 3.014Q01 3.012001 3.01Change 2001/2000 0.032002 3.04Change 2002/2001 0.03

OPEC crude oil productionAvailable secondary sources indicate

that, in August, OPEC’s output was27.67m b/d, which was 820,000 b/d higherthan the revised July level of 26.86mb/d. Table E shows OPEC production, asreported by selected secondary sources.

Stock movements

USAUS commercial onland oil stocks reg-

istered a contra-seasonal draw of 16.7m b,or 600,000 b/d, to 1,001.1m b during theperiod August 3–31. Gasoline stocks ledthis draw, falling by 13.1m b to 194.7mb, a level not seen since March. Higher

gasoline demand, as well as lower output,due to planned maintenance and unex-pected refinery glitches, were the maincontributors to this draw. Other majorproducts also showed decreases, particu-larly fuel oil, which moved down by 5.0mb to 35.6m b, on the back of improvingutility demand, due to the heat-wave onthe US East Coast and the opened arbitrageto Asia for US Gulf Coast high-sulphurfuel oil cargoes.

Middle distillates and jet kerosene de-creased marginally, by 1.3m b to 120.4mb and by 300,000 b to 42.9m b, respec-tively. Increasing refinery runs, due toimproving refiners’ margins, contributedto the draw of 6.1m b to 302.5m b oncrude oil stocks. The impact of thesedecreases was diminished by an increase of9.0m b to 215.6m b in ‘other oils’ stocks.Hence, the overall stock level was 40.4mb, or about four per cent, higher than theyear before (see Table F).

During the same period, the US Stra-tegic Petroleum Reserve (SPR) remainedunchanged at the 543.7m b level.

Western EuropeCommercial onland oil stocks in Eur-

16 in August reversed the last four months’behaviour of persistent contra-seasonaldraws, to show a seasonal build of 13.8mb, or 450,000 b/d, to stand at 1,056.5mb. Middle distillates contributed mainly tothis build, regaining most of July’s draw,

with an increase of 10.0m b, or about threeper cent, above last month’s figure, tostand at 331.1m b, on the back of stagnantdemand. Other major products also con-tributed to the build, except gasoline, whichremained unchanged at the previousmonth’s level of 144.9m b. Crude oil roseby a marginal 1.5m b to 433.0m b, despitean increase in refinery runs. This slightbuild in crude stocks was attributed to thesharp surge in imports, especially fromIraq. Total stocks were 8.7m b, or aboutone per cent, below last year’s level (seeTable G).

JapanIn July, commercial onland oil stocks

in Japan reversed June’s build, when theyfell by a moderate 11.1m b, or 360,000b/d, to 184.0m b. A decrease of 11.0m bto 116.3m b in crude oil stocks was themain driver behind this draw, on the backof increasing refinery throughput in Julyafter the end of seasonal refinery shut-downs. Total major products remainedunchanged, with a build of 2.9m b to36.5m b in middle distillates being bal-anced by draws of 1.9m b to 17.9m b onresidual fuel oil and 1.0m b to 13.3m bon gasoline. The overall stock level was3.3m b, or about two per cent, lower thanthe year-earlier figure (see Table H).

Balance of supply/demand

World oil demand for 2001 has beenrevised down by 100,000 b/d, while non-OPEC oil supply remains unchanged,compared with the last report, and they areestimated at 76.4m b/d and 49.3m b/d,respectively (Table I). The yearly averagedifference has been revised down by100,000 b/d to 27.0m b/d, with quarterlydistributions of 27.0m b/d, 26.1m b/d,26.9m b/d and 28.1m b/d, respectively.The balance for 1Q remains unchanged at1.1m b/d, while 2Q has been revised upby 200,000 b/d to 900,000 b/d. The 2000balance remains unchanged at 1.0m b/d.

The supply/demand balance for 2002shows a world oil demand forecast of 77.4mb/d and total non-OPEC supply of 50.3mb/d, resulting in an annual difference ofaround 27.1m b/d, with a quarterly dis-tribution of 27.5m b/d, 25.6m b/d, 26.6mb/d and 28.6m b/d, respectively.

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

Aug 01/ 1999 2000 1Q01 2Q01 July 01* Aug 01* July 01

Algeria 766 808 825 820 836 841 5Indonesia 1,310 1,280 1,253 1,216 1,211 1,213 2IR Iran 3,509 3,671 3,798 3,676 3,726 3,737 11Iraq 2,507 2,551 2,207 2,282 2,075 2,809 734Kuwait 1,907 2,101 2,142 2,018 2,016 2,028 12SP Libyan AJ 1,337 1,405 1,407 1,365 1,382 1,388 6Nigeria 1,983 2,031 2,131 2,051 2,015 2,080 65Qatar 641 698 716 685 689 698 9Saudi Arabia 7,655 8,248 8,299 7,918 7,927 7,920 –7UAE 2,077 2,252 2,312 2,174 2,142 2,135 –7Venezuela 2,808 2,897 2,979 2,846 2,838 2,827 –12

Total OPEC 26,499 27,943 28,070 27,049 26,856 27,675 819

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

32 OPEC Bulletin

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Table F: US onland commercial petroleum stocks1 m b

ChangeMarch 30, 01 June 29, 01 August 3, 01 August 31, 01 August/July August 31, 00

Crude oil (excl SPR) 303.2 310.7 308.6 302.5 –6.1 287.1Gasoline 193.0 221.6 207.8 194.7 –13.1 194.9Distillate fuel 104.0 112.8 121.7 120.4 –1.3 110.7Residual fuel oil 39.8 42.5 40.6 35.6 –5.0 37.1Jet fuel 40.1 43.0 43.2 42.9 –0.3 42.7Unfinished oils 101.3 90.4 90.0 89.4 –0.6 88.5Other oils 142.1 191.4 206.6 215.6 9.0 199.7Total 923.5 1012.4 1,017.8 1,001.1 –16.7 960.7SPR 542.3 543.3 543.7 543.7 0.0 571.3

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

Table G: Western Europe onland commercial petroleum stocks1 m b

ChangeMarch 01 June 01 July 01 August 01 August/July August 00

Crude oil 451.7 438.5 431.5 433.0 1.5 426.4Mogas 158.3 155.6 144.9 144.9 0.0 149.4Naphtha 22.0 25.1 25.5 26.0 0.4 25.8Middle distillates 330.8 331.4 321.1 331.1 10.0 338.4Fuel oils 123.6 122.2 119.7 121.5 1.8 125.2Total products 634.7 634.3 611.2 623.4 12.2 638.8Overall total 1,086.3 1,072.8 1,042.7 1,056.5 13.8 1,065.2

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

Table H: Japan’s commercial oil stocks1 m b

ChangeDecember 00 March 01 June 01 July 01 July/June July 00

Crude oil 105.1 118.7 127.3 116.3 –11.0 115.9Gasoline 12.7 14.6 14.3 13.3 –1.0 13.6Middle distillates 40.3 31.4 33.6 36.5 2.9 38.6Residual fuel oil 20.4 20.2 19.8 17.9 –1.9 19.2Total products 73.4 66.3 67.7 67.7 0.0 71.4Overall total2 178.5 185.0 195.1 184.0 –11.1 187.3

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

September 2001 33

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

1998 1999 2000 1Q01 2Q01 3Q01 4Q01 2001 1Q02 2Q02 3Q02 4Q02 2002

World demandOECD 46.8 47.7 47.8 48.8 46.5 47.6 48.5 47.9 49.4 46.5 47.5 49.3 48.2

North America 23.1 23.8 24.1 24.2 23.7 24.4 24.5 24.2 24.5 24.0 24.5 24.8 24.5Western Europe 15.3 15.2 15.1 15.2 14.8 15.0 15.3 15.0 15.3 14.6 14.8 15.5 15.1Pacific 8.4 8.7 8.7 9.4 8.0 8.3 8.8 8.6 9.6 7.9 8.3 9.0 8.7

Developing countries 18.2 18.5 18.7 18.4 19.1 19.3 19.3 19.0 18.9 19.4 19.6 19.8 19.4FSU 4.3 4.0 3.8 4.0 3.9 3.4 4.1 3.8 3.9 3.7 3.8 4.2 3.9Other Europe 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8China 3.8 4.2 4.7 4.4 4.9 5.2 5.0 4.8 4.7 5.1 5.2 5.1 5.0(a) Total world demand 73.8 75.1 75.7 76.3 75.1 76.3 77.8 76.4 77.8 75.5 76.9 79.2 77.4

Non-OPEC supplyOECD 21.8 21.3 21.9 21.8 21.6 21.7 21.9 21.7 22.0 21.8 21.9 22.1 22.0

North America 14.5 14.1 14.3 14.2 14.3 14.3 14.4 14.3 14.4 14.6 14.6 14.6 14.5Western Europe 6.6 6.6 6.7 6.8 6.5 6.5 6.7 6.6 6.8 6.5 6.6 6.7 6.6Pacific 0.7 0.7 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.7 0.8 0.8 0.8

Developing countries 10.5 10.8 11.0 11.1 10.9 11.1 11.2 11.0 11.2 11.0 11.3 11.4 11.2FSU 7.3 7.5 7.9 8.2 8.4 8.4 8.4 8.4 8.7 8.8 8.9 8.9 8.8Other 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 3.2 3.2 3.2 3.3 3.2 3.3 3.3 3.3 3.3 3.3 3.3 3.3 3.3Processing gains 1.6 1.6 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7Total non-OPEC supply 44.5 44.6 45.8 46.3 46.0 46.3 46.6 46.3 47.2 46.9 47.2 47.6 47.2OPEC NGLs 2.8 2.9 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0(b) Total non-OPEC supply and

OPEC NGLs 47.3 47.4 48.8 49.3 49.0 49.3 49.6 49.3 50.2 49.9 50.3 50.6 50.3

OPEC crude oil production1 27.8 26.5 27.9 28.1 27.0Total supply 75.0 73.9 76.7 77.4 76.0Balance2 1.2 -1.2 1.0 1.1 0.9

Closing stock level (outside FCPEs) m bOECD onland commercial 2698 2446 2527 2518 2603OECD SPR 1249 1228 1210 1210 1207OECD total 3947 3675 3737 3728 3810Other onland 1056 983 999 997 1019Oil on water 859 808 864 907 855Total stock 5861 5466 5600 5632 5684

Days of forward consumption in OECDCommercial onland stocks 57 51 53 54 55SPR 26 26 25 26 25Total 83 77 78 80 80Memo itemsFSU net exports 3.0 3.4 4.1 4.3 4.5 5.0 4.3 4.5 4.8 5.1 5.1 4.6 4.9[(a) — (b)] 26.5 27.7 27.0 27.0 26.1 26.9 28.1 27.0 27.5 25.6 26.6 28.6 27.1

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 35, whileGraphs One and Two (on pages 34 and 36) show the evolution on a weekly basis. Tables Three to Eight, and the corresponding graphson pages 37–42, 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).

34 OPEC Bulletin

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

May to August 2001

15

20

25

30

35

40

OPEC Basket

Tia Juana Light

Dubai

Arab Heavy

Arab Light

Bonny Light

Brega

Kuwait Export

Iran Light

Minas

Saharan Blend

AugustJulyJuneMay11 22 33 44 11 22 33 44 11 22 33 44 11 22 33 44

$/barrel

5555

September 2001 35

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1. Tia Juana Light spot price = (TJL netback/Isthmus netback) x Isthmus spot price.2. OPEC Basket: an average of Saharan Blend, Minas, Bonny Light, Arabian Light, Dubai, Tia Juana Light and Isthmus.Kirkuk ex Ceyhan; Brent for dated cargoes; Urals cif Mediterranean. All others fob loading port.Sources: The netback values for TJL price calculations are taken from RVM; Platt’s Oilgram Price Report; Reuters; Secretariat’s calculations.

Table 1: OPEC spot crude oil prices, 2000–2001 ($/b)

2000 2001Member Country/ Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Augusttype of crude (API°) 5Wav 4Wav 5Wav 4Wav 4Wav 5Wav 4Wav 4Wav 4Wav 5Wav 4Wav 5Wav 1W 2W 3W 4W 4Wav

AlgeriaSaharan Blend (44.1) 29.25 33.18 31.19 33.06 26.11 26.08 27.80 24.82 25.65 28.47 28.16 24.82 25.81 25.88 25.40 26.73 25.96

IndonesiaMinas (33.9) 30.33 33.36 32.30 31.07 24.87 24.03 25.62 25.64 27.64 28.21 27.86 25.32 25.59 25.36 24.08 24.26 24.82

IR IranLight (33.9) 27.12 30.45 30.42 29.75 22.66 22.63 24.65 23.58 24.05 25.58 25.80 23.78 24.63 25.21 24.17 24.69 24.68

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

KuwaitExport (31.4) 26.21 29.05 28.87 28.20 21.11 21.08 23.10 22.03 22.50 24.03 24.25 22.47 23.08 23.66 22.62 23.14 23.13

SP Libyan AJBrega (40.4) 29.44 32.64 30.98 32.99 25.40 25.93 27.79 24.69 25.54 28.85 28.18 24.88 0.00 25.30 25.35 26.60 25.85

NigeriaBonny Light (36.7) 29.06 32.65 30.67 32.86 25.47 25.43 27.40 24.35 25.43 28.51 28.06 24.81 24.00 25.76 25.28 26.61 25.41

Saudi ArabiaLight (34.2) 27.12 30.60 30.17 29.81 22.65 22.31 24.82 23.77 24.24 25.77 26.17 24.03 25.02 25.40 24.37 24.88 24.92Heavy (28.0) 25.52 28.00 28.21 27.94 20.83 20.74 23.32 22.57 23.15 24.60 24.88 22.61 23.72 24.30 23.27 23.78 23.77

UAEDubai (32.5) 26.79 30.05 30.57 30.25 22.27 22.56 24.79 23.67 24.06 25.40 25.86 23.45 24.55 25.28 24.14 24.82 24.70

VenezuelaTia Juana Light1 (32.4) 26.84 29.33 28.34 30.01 23.11 23.18 22.79 21.08 20.79 22.77 22.30 20.55 21.58 21.81 21.07 21.69 21.54

OPEC Basket2 28.30 31.48 30.42 31.22 24.13 24.06 25.41 23.70 24.38 26.25 26.10 23.73 24.35 24.81 23.95 24.72 24.46

Table 2: Selected non-OPEC spot crude oil prices, 2000–2001 ($/b)

2000 2001Country/ Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Augusttype of crude (API°) 5Wav 4Wav 5Wav 4Wav 4Wav 5Wav 4Wav 4Wav 4Wav 5Wav 4Wav 5Wav 1W 2W 3W 4W 4Wav

Gulf AreaOman Blend (34.0) 27.24 30.55 29.88 28.97 22.76 22.43 24.29 23.26 23.82 25.55 25.53 23.61 24.48 24.92 23.99 24.35 24.44

MediterraneanSuez Mix (Egypt, 33.0) 26.24 28.59 26.18 29.06 21.11 22.09 22.61 19.73 21.58 24.56 23.83 21.16 22.05 22.20 22.10 23.45 22.48

North SeaBrent (UK, 38.0) 29.74 32.94 30.86 32.67 25.07 25.60 27.30 24.42 25.37 28.35 27.96 24.66 25.55 25.63 25.42 26.53 25.78Ekofisk (Norway, 43.0) 28.57 32.75 30.77 32.66 25.50 25.51 27.49 24.34 25.38 28.45 27.59 24.55 25.77 25.79 25.17 26.08 25.70

Latin AmericaIsthmus (Mexico, 32.8) 28.75 31.19 29.73 31.47 24.40 24.80 24.63 22.60 22.86 24.62 24.25 22.67 23.90 24.16 23.34 24.03 23.86

North AmericaWTI (US, 40.0) 31.04 34.05 33.00 34.65 28.39 29.42 29.48 27.27 27.37 28.60 27.67 26.53 27.74 27.81 26.92 27.18 27.41

OthersUrals (Russia, 36.1) 27.00 30.30 28.04 31.23 24.06 24.40 24.78 21.72 23.60 26.46 25.60 23.08 24.30 24.46 23.83 25.24 24.46

36 OPEC Bulletin

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

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

May to August 2001

20

25

30

35

40

15

OPEC Basket

Urals

West Texas

Isthmus

Ekofisk

Brent

Suex Mix

Oman

AugustJulyJuneMay11 22 33 44 55 11 22 33 44 11 22 33 44 11 22 33 44

$/barrel$/barrel

55

September 2001 37

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

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

1999 naphtha unleaded 87 unleaded 95 gasoil jet kero 1%S 3.5%SAugust 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 34.72 35.28 40.06 43.64 27.06 23.82November 32.51 32.72 33.46 40.68 43.61 25.61 22.18December 29.27 27.77 28.05 34.25 37.50 23.24 18.312001January 27.36 29.44 29.85 30.15 32.03 20.54 15.48February 29.23 32.11 32.49 30.88 33.41 20.48 18.21March 27.19 30.69 31.52 29.38 31.72 20.56 17.58April 27.86 36.47 37.57 30.37 32.45 20.49 17.05May 29.71 37.93 39.09 31.18 34.17 20.48 18.21June 27.21 30.27 31.73 31.06 33.69 19.23 17.97July 22.28 27.06 27.86 29.33 31.55 17.97 17.19August 22.51 27.93 29.01 30.18 31.58 18.18 18.40

Sources: Until September 2000 Platt’s Oilgram Price Report & Platt’s Global Alert; as of October 2000 Reuters. Prices are average of available days.

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

1999 2000 2001

0

10

20

30

40

50

fuel oil 3.5%S

fuel oil 1%S

jet kero

gasoil

premium

regular

naphtha

AugJulJunMayAprMarFebJanDecNovOctSepAugJulJunMayAprMarFebJanDecNovOctSep

$/barrel

38 OPEC Bulletin

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

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

1999 naphtha premium unleaded 95 gasoil jet kero 1%S 3.5%SAugust 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 17.962001January 26.35 28.76 27.32 28.73 20.13 14.35February 26.04 31.89 31.32 29.11 18.80 16.86March 24.13 30.53 27.55 27.89 18.39 16.28April 27.07 36.43 29.00 28.28 19.23 14.96May 29.54 39.45 29.37 29.72 19.39 15.84June 27.15 32.21 30.98 29.40 17.71 15.89July 21.95 25.55 27.77 27.15 17.73 15.59August 22.26 26.60 27.58 27.74 18.20 16.93

Sources: Until September 2000 Platt’s Oilgram Price Report & Platt’s Global Alert; as of October 2000 Reuters. Prices are average of available days.

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

0

10

20

30

40

50

fuel oil 3.5%S

fuel oil 1%S

jet kero

gasoil

premium

naphtha

AugJulJunMayAprMarFebJanDecNovOctSepAugJulJunMayAprMarFebJanDecNovOctSep

$/barrel

1999 2000 2001

September 2001 39

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

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

1999 regular unleaded 87 gasoil jet kero 0.3%S LP 1%S 2.2%SAugust 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 22.042001January 34.81 35.51 36.03 33.09 25.40 22.34February 34.68 32.99 34.90 31.51 23.38 19.73March 32.96 31.12 32.91 27.61 23.31 20.30April 39.78 32.83 33.92 27.82 22.80 17.47May 39.06 32.48 35.60 27.84 23.09 18.58June 30.07 31.74 32.92 24.89 20.22 17.64July 28.69 29.31 30.10 23.71 19.33 16.72August 32.56 30.80 32.88 23.69 20.14 18.23

Sources: Until September 2000 Platt’s Oilgram Price Report & Platt’s Global Alert; as of October 2000 Reuters. Prices are average of available days.

Graph 5: US East Coast market — New York

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

AugJulJunMayAprMarFebJanDecNovOctSepAugJulJunMayAprMarFebJanDecNovOctSep2000200019991999 20012001

$/barrel

40 OPEC Bulletin

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

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

1999 naphtha gasoil jet kero 2%S 2.8%SAugust 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 16.902001January 34.10 35.56 36.17 20.21 16.48February 29.87 31.85 32.42 18.14 16.31March 28.63 28.97 30.11 18.26 17.16April 33.60 30.51 31.37 15.81 15.03May 29.65 33.07 34.46 17.50 17.10June 25.85 31.58 32.13 16.64 16.27July 25.06 28.84 29.57 15.54 14.45August 29.04 30.49 31.68 17.20 17.11

Sources: Until September 2000 Platt’s Oilgram Price Report & Platt’s Global Alert; as of October 2000 Reuters. Prices are average of available days.

Graph 6: Caribbean cargoes — fob

19991999 20002000 20012001

$/barrel$/barrel

0

10

20

30

40

50

fuel oil 2.8%S

fuel oil 2.0%S

jet kero

gasoil

naphtha

AugJulJunMayAprMarFebJanDecNovOctSepAugJulJunMayAprMarFebJanDecNovOctSep

September 2001 41

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

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

1999 naphtha premium unleaded 95 gasoil jet kero 0.3%S 180C 380CAugust 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 19.742001January 25.50 30.02 28.41 29.70 22.54 18.37 17.99February 27.83 31.33 27.57 30.48 22.68 19.91 19.69March 27.43 29.88 26.83 28.72 22.43 20.08 20.04April 28.14 32.76 29.80 30.25 22.60 20.48 20.47May 28.89 32.64 30.79 30.74 23.72 22.02 22.07June 27.57 26.89 30.00 30.84 25.11 20.26 20.16July 24.38 24.36 28.54 28.93 24.08 19.03 19.19August 24.33 26.68 28.71 29.37 21.03 20.70 20.94

Sources: Until September 2000 Platt’s Oilgram Price Report & Platt’s Global Alert; as of October 2000 Reuters. Prices are average of available days.

Graph 7: Singapore cargoes

0

10

20

30

40

50

fuel oil 380C

fuel oil 180C

fuel oil 0.3%S

jet kero

gasoil

premium

naphtha

AugJulJunMayAprMarFebJanDecNovOctSepAugJulJunMayAprMarFebJanDecNovOctSep19991999 20002000 20012001

$/barrel$/barrel

42 OPEC Bulletin

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

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

1999 naphtha gasoil jet kero 180CAugust 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 17.062001January 24.29 25.05 26.38 15.68February 26.86 24.40 27.31 17.58March 26.28 24.31 26.41 17.93April 27.42 28.05 28.49 18.83May 28.57 29.11 29.02 20.74June 26.95 28.08 28.93 18.92July 23.53 26.77 27.16 17.65August 23.49 27.15 27.78 19.28

Sources: Until September 2000 Platt’s Oilgram Price Report & Platt’s Global Alert; as of October 2000 Reuters. Prices are average of available days.

Graph 8: Middle East — fob

0

10

20

30

40

50

fuel oil 180C

jet kero

gasoil

naphtha

AugJulJunMayAprMarFebJanDecNovOctSepAugJulJunMayAprMarFebJanDecNovOctSep1999 2000 2001

$/barrel

September 2001 43

For an in-depth lookat the oil marketand related issues

the OPEC Reviewcontains research papersby experts from across

the world

Now in its 25th annual volume, theOPEC Review is published quarterly.Its content covers the international oilmarket, energy generally, economicdevelopment and the environment.

Subscription enquiries to: BlackwellPublishers Journals, PO Box 805, 108Cowley Road, Oxford, OX4 1FH, UK.Free sample copies sent on request.

Energy economics and related issues

Vol. XXV, No. 3 September 2001

People wishing to submit a paper forpublication should contact the Editor-in-Chief of the OPEC Review, Farouk UMuhammed, at the Public Relations andInformation Department, OPEC Secre-tariat, Obere Donaustrasse 93, A-1020Vienna, Austria.

“The principal objective of the OPEC Review is tobroaden awareness of (energy and related) issues,enhancing scholarship in universities, researchinstitutes and other centres of learning.”

Recent issues

June 2001Has the accuracy of energy projections inOECD countries improved since the 1970s?— Jan Bentzen and Hans LinderothOil product consumption in OPECMember Countries: a comparison of trendsand structures — Atmane DahmaniOil and macroeconomic fluctuations inEcuador — François BoyeEnergy indicators — OPEC Secretariat

March 2001Estimating oil product demand in Indone-sia using a cointegrating error correctionmodel — Carol Dahl and KurtubiThe gas dimension in the Iraqi oil industry— Thamir Abbas Ghadhban and SaadallahAl-FathiThe Russian coal industry in transition: alinear programming application — BoJonsson and Patrik SöderholmThe future of gaseous fuels in Hong Kong— Larry Chuen-ho Chow

December 2000Global energy outlook: an oil price sce-nario analysis — Shokri Ghanem, RezkiLounnas and Garry Brennand

The hybrid permit cum price ceiling policyproposal: intuition from the prices versusquantities literature — Gary W YoheWorld oil reserves: problems in definitionand estimation — Ghazi M HaiderA vector autoregressive analysis of an oil-dependent emerging economy — Nigeria —O Felix Ayadi, Amitava Chatterjee andC Pat ObiThe closure of European nuclear power plants:a commercial opportunity for the gas-pro-ducing countries — Jean-Pierre Pauwelsand Carine Swartenbroekx

September 2000Energy taxes and wages in a general equilib-rium model of production — Henry ThompsonResource windfalls: how to use them —Rögnvaldur HannessonEnergy consumption in the Islamic Republic

of Iran — A M Samsam Bakhtiari and FShahbudaghlouOil and non-oil sectors in the SaudiArabian economy — Masudul A Choudhuryand Mohammed A Al-Sahlawi

June 2000The case for conserving oil resources: thefundamentals of supply and demand —Douglas B ReynoldsVicissitudes in the Hong Kong oil market,1980–97 — Larry Chuen-ho ChowEconomic theory and nuclear energy —Ferdinand E BanksThe economic cost of low domestic prod-uct prices in OPEC Member Countries —Nadir Gürer and Jan Ban

March 2000Energy and interfactor substitution in Tur-key— Carol Dahl and Meftun ErdoganDomestic demand for petroleum in OPECcountries — Ujjayant Chakravorty,Fereidun Fesharaki and Shuoying ZhouCyclical asymmetry in energy consump-tion and intensity: the Japanese experience— Imad A MoosaBefore demand-side management is dis-carded, let’s see what pieces should bekept — Clark W Gellings

December 1999Energy in the Caspian Sea region in thelate 1990s: the end of the boom? — Chris-tian von Hirschhausen and Hella EngererHousehold energy demand in Kuwait: anintegrated two-level approach — M NagyEltony and Mohammad HajeehThe economics of the Nigerian liquefiednatural gas project — M Eghre-Ohgeneand O OmoleIncome determination in the GCC memberstates — Richard G Zind

September 1999The Caspian Sea geopolitical game: prospectsfor the new millennium — Gawdad BahgatAn analysis of Libya’s revenue per barrelfrom crude oil upstream activities, 1961–93— Mustafa Bakar Mahmud and Alex RussellEnergy use and productivity performancein the Nigerian manufacturing sector(1970–90) — Adeola F Adenikinju andOlumuyiwa B AlabaBasis risk: an expository note — FerdinandE Banks

What have we learned from theexperience of low oil prices?

The estimation of risk-premiumimplicit in oil prices

The economics of an efficient relianceon biomass, carbon capture and

carbon sequestration in a Kyoto-styleemissions control environment

The geopolitics of natural gas in Asia

A.F. Alhajji

Jorge Barros Luís

Gary W. Yohe

Gawdat Bahgat

44 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

Nigeria’s Eleme petrochemical plantresumes production after five-year gapAbuja — Nigeria’s Eleme petrochemical plant at Port Harcourthas resumed production, with all its units functioning, it wasreported last month.

The General Manager, Public Affairs, of the state-runNigerian National Petroleum Corporation (NNPC), NduUghamadu, told OPECNA that the resumption of work at theplant followed repair work carried out between December 2000and February this year.

The plant, owned by the NNPC, stopped production aboutfive years ago. According to Ughamadu, the facilities nowoperating at 100 per cent capacity were the polyethylene,polypropylene, olefins, and butene units.

He explained that all the four units produced raw materialsfor plastics and petroleum jelly, among other uses.

He pointed out that the NNPC would continue to play apositive role in ensuring that petroleum products were availablein the country.

Ughamadu quoted the Group Managing Director of theNNPC, Jackson Gaius-Obaseki, as imploring staff of the plantto work harder.

He assured workers that the management would rewardthem generously if they sustained the prevailing level of produc-tion for six months.

Venezuelan growth highest onAmerican continent, says Chavez

Caracas — Venezuelan President, Hugo Chavez, has an-nounced that his country’s economic growth for the first halfof this year was 3.4 per cent, the highest level throughout theAmerican continent.

“In the first quarter of this year we grew at 3.8 per cent, thesecond quarter closed at 2.9 per cent, and the average for thefirst semester was 3.4 per cent,” he said.

The Venezuelan leader said that a great part of that economicgrowth was in the non-petroleum sector of the Venezuelaneconomy.

“One of the objectives of revolution is to diversify theeconomy. The greatest growth is in the non-petroleum sector,where we grew by 5.9 per cent during the first quarter of theyear, and by 2.9 per cent in the second quarter, which meansthat what is growing most is not the public sector,” Chavez noted.

“In 1999, the fall of the economy was minus 8.5 per centfor January, February and March. Afterwards, we edged up tominus eight per cent and have not stopped growing since then,”said Chavez, who took over as President of Venezuela in Feb-ruary 1999.

He noted that the construction sector, which generatedmany jobs, grew by 20.9 per cent in the second quarter of thisyear, compared with minus 38 per cent in the first year of hisgovernment.

“In telecommunications, we grew by 12.9 per cent, inmanufacturing by 5.3 per cent, in commerce by 4.9 per cent,in electricity and water by 4.6 per cent, and in transportationby 3.9 per cent,” said Chavez, adding that, “in petroleum wedeclined by 3.3 per cent as a strategy to maintain prices.”

Algerian and US firms launchtender for desalination plant

Algiers — Algerian energy firm AEC and Black and VeathAfrica (BVAF) of the United States are to launch an interna-tional tender for a desalination plant in the petrochemical areaof Arzew, in western Algeria.

The plant would have a capacity of 40,000 cubic metres/day of water, combined with natural gas to electricity conversionof 300 megawatts.

The tender is being launched on behalf a joint-venturecompany now being formed, following the signing of a protocolbetween AEC and BVAF.

The tender specifies that only companies or consortia thathave completed similar projects over the last seven years, pref-erably in the context of independent water and power projects,are eligible to submit offers.

In the case of submissions by consortia, member companieswould be jointly responsible for the plant, and consequentlyeach should have at its disposal adequate financial resources.

According to AEC Head, Mohamed Bouterfa, the project,a first for Algeria in the desalination of sea water, would befinanced 70 per cent by BVAF and 20 per cent by AEC, withthe remaining ten per cent made by a third — probably foreign— partner.

AEC was set up in May this year. Its capital is equally heldby the Algerian state oil and gas company, Sonatrach, and thenational electricity and gas distribution firm, Sonelgaz.

Its activities include the production, transportation, distri-bution and marketing of electricity abroad.

Iran to hold tenders for fournew petrochemical projects

London — The National Petrochemical Company (NPC) ofIran is set to invite companies to bid for four new petrochemicalprojects later this year, according to the Middle East EconomicDigest (MEED).

Both local and international companies were said to be

September 2001 45

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

gearing up to bid for the olefins 11 plant, which would entailthe construction of an ethane cracker in the Bandar Assaluyehspecial economic zone.

Bidders were expected to include Tecnimont of Italy,Germany’s Krupp Uhde, and France’s Technip, which wasawarded a $262 million contract for the olefins 10 plant for NPCsubsidiary, the Jam Petrochemical Company, in March.

Technip also won the contract for the olefins 9 complex forthe Pars Petrochemical Company last September. Both plantsare also located in Assaluyeh.

NPC was also planning to issue a tender for an ammoniaplant at the existing Razi petrochemicals complex, located atBandar Imam Khomeini, with a planned capacity of 76,500tonnes/year, the official Islamic Republic News Agency quotedthe MEED report as saying.

NPC was said to be further preparing to tender for a world-scale polyvinyl chloride plant at Bandar Imam and an 80,000t/y soda ash plant, near the Shiraz petrochemical complex.

Nigeria’s external currency reserveshit $10.35bn, says Central Bank

Abuja — Nigeria’s external reserves stood at $10.35 billionin May, a 1.7 per cent rise over the $10.18bn recorded in April,according to the monthly report of the Central Bank of Nigeria(CBN).

The CBN said that there was an increase in the inflow offoreign exchange into the economy in the period under review.

“Total foreign exchange receipts through the economy inMay 2001 were $1.49bn, up by 5.4 per cent from $1.42bn inApril,” the statement noted.

The report said a total of $1.17bn, or 78.5 per cent of totalinflows in May, were from oil, while inflow from non-oil andautonomous sources stood at $321.1 million, or about 21.5 percent.

“Foreign exchange outflow from the economy stood at$1.80bn in May, representing a decline of 37.2 per cent fromthe level seen in April 2001,” it said.

The CBN attributed this development to a fall of about 30.3per cent and 81.3 per cent in the funding of the inter-bankforeign exchange market and payments for debt servicing,respectively.

Indonesian non-oil exports toJapan seen growing this year

Jakarta — Indonesia’s non-petroleum exports to Japan areexpected to grow by eight per cent to a value of $8 billion thisyear, compared with $7.4bn in 2000, according to the NationalAgency for Export Development (NAED).

Indonesia exported some $3.6bn worth of agricultural prod-ucts, textiles, plywood, furniture, processed food and beverages,and mining products to Japan during the first half of this year,

up by four per cent from the same period last year, said NAEDHead, Gusmardi Bustami said.

This, he noted, showed that the impact of the economicslowdown had not affected Indonesian exports to Japan. Heobserved that the Japanese would not normally cut purchasesof basic items, but would reduce buying electronics and tech-nology products during periods of recession.

Addressing a joint press conference with officials from theJapan External Trade Organization (Jetro), Gusmardi said heexpected Japan to buy more products during September andOctober in preparation for next year’s sales.

The President of Jetro’s centre in Jakarta, Hirojuki Kato,assured Indonesia of continuing support in marketing its prod-ucts in Japan.

The organization would help Indonesian exporters promotetheir products through several fairs and exhibitions, by provid-ing free venues for business meetings, booths at expos, as wellas translators at such events, he said.

Indonesia has set a target of $50bn in exports this year,slightly higher than the $48bn earned in 2000.

Algiers and Tripoli agree toboost economic co-operation

Algiers — The tenth session of the Algeria-Libya joint execu-tive commission has ended in the Libyan coastal town of Sirtewith the signing of several agreements and a programme of co-operation.

A joint statement issued at the conclusion of the meetingoutlined the accords reached by the two countries, including anagreement on the protection of reciprocal investments.

Speaking at the closing session, the two Heads of Delegation,the Algerian Premier, Ali Benflis, and the Libyan Secretary ofthe People’s General Committee, Moubarek AbdullahEchamekh, highlighted the success of the meeting.

They announced that arrangements would be made to meetagain in 2002 to evaluate progress on the implementation ofthe accords signed.

During his stay in Libya, Benflis met several high-rankingofficials, including the country’s leader, Colonel Moammer ElQaddafi.

Meanwhile, at a press conference jointly held with Libya’srepresentative to Algiers, the Algerian Ambassador to Tripolistressed the importance of the meeting, which, he said: “wouldbring a marked signal for the revival of co-operation betweenthe two countries in all domains.”

He noted that recommendations had been were made toincrease the volume of investments, and that Libya intended tocommit to a certain number of projects in hotels, trade, andtourism through the Libyan Arab Foreign Investment Company(Lafico).

In the energy sector, the delegations agreed to launch con-sultations on the Ghadames basin, with a view to jointlydeveloping the area’s gas fields.

The two sides also discussed connecting their power net-

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works, as well as improving telephone links through satellite andcable facilities.

Concerning water resources, the two countries agree to co-ordinate their efforts and co-operate in exploiting and prospect-ing for hydro-agricultural resources, including those that wereavailable in the Ghadames basin.

Indonesia appoints consultantto appraise value of coal stake

Jakarta — The Indonesian government has appointed aconsultant to appraise the value of a 51 per cent stake in PTKaltim Prima Coal (KPC), a coal producer in East Kalimantanprovince, which must divest to an Indonesian party under itscontracted agreement.

With the appointment of the consultant, the governmenthoped to negotiate a price for the stake in KPC with its ownersby next month, disclosed the Director General of Geology andMineral Resources at the Energy and Mineral Resources Min-istry, Wimpy S Tjetjep.

KPC, a joint venture between BP and Rio Tinto, is requiredto divest a 51 per cent in the coal mining operation to a localentity this year, as agreed under the mining contract.

However, there has been a deadlock over the price to be paid,which, sources said, would be raised further in October unlessa deal was finalized in September.

The East Kalimantan provincial administration has put upa price of $319 million, while KPC shareholders have valuedit at $448.8m, taking into consideration the coal reserves andsales contracts with export markets.

KPC produces about 15m t/y of coal from one of Indonesia’slargest coal mines in East Kalimantan, on Borneo island.

Venezuela’s Pequiven signsagreement for styrene plant

Caracas — Pequiven, the petrochemical subsidiary of Ven-ezuela’s PDVSA, and the Chevron Phillips Chemical Company(CPChem) have signed a letter of intent covering a feasibilitystudy for the construction of a styrene plant at Paraguana,western Venezuela.

The letter of intent was signed by Pequiven Director, MariaElizabeth Lizardo and CPChem Senior Vice-President forAromatics, Joseph M Parker.

The proposed installation would have the advantages ofinfrastructure and refinery runs from the Paraguana refiningcentre (PRC), as well as CPChem’s experience as a leader in theproduction and marketing of styrene, PDVSA said.

PRC is Venezuela’s largest and most important refiningcentre, with an installed capacity of some 955,000 barrels/day,which represents an estimated 72 per cent of the nation’srefining capacity and 33 per cent of PDVSA’s internationalrefining operations.

The proposed styrene plant would have a production capac-ity of some 500,000 tonnes/year and its output would be placedmainly on markets in Latin America, PDVSA said.

The company said the feasibility study would be completedby the end of this year and the plant could go on stream by 2007.

Fall in petrochemical investmentto reduce Iran’s forex revenue

Tehran — A fall in investment in petrochemical industrieswill reduce Iran’s foreign exchange revenues and create obstaclesto job generation in the country, according to a local economist.

In an interview with the Farsi daily Abrar-e Eqtesadi, BahmanArman said that only two small agreements had been signed inthe petrochemical sector since the beginning of the currentIranian year on March 21, 2001.

Highlighting the importance of the industry, he said it wasthe outstanding substitute for oil and could increase the coun-try’s non-oil exports by $10bn–15bn, the official Islamic Re-public News Agency (IRNA) reported, quoting the newspaper.

Arman noted that following parliament’s vote of confidencefor Petroleum Minister, Bijan Namdar Zangeneh, and thestability of the National Petrochemical Company’s manage-ment, plans for the construction of petrochemical complexes,especially in downstream production, should soon be realized.

He concluded by saying that the laws regarding the forexrevenue fund, earned through surplus oil revenue, should bereviewed and the petrochemical industry included in the indus-trial projects that received a share of the proceeds.

This, he pointed out, would reduce the cost of constructionof new petrochemical complexes in the country, reported IRNA.

Algeria, Saudi Arabia set upjoint investment company

Algiers — Algeria and Saudi Arabia have signed an agreementsetting up a joint investment company with a capital of $100million, shared equally by the two countries, it was announcedlast month.

According to Algerian Finance Minister, Mourad Medelci,who signed the agreement with Saudi Arabian Trade Minister,Oussama Ben Djaafar Fakih, the company would be operationalbefore the end of this year.

He noted that the two countries would boost their level ofco-operation, essentially based on trade exchanges, to includedirect investment of Saudi Arabian capital in Algeria.

The Algerian Minister said the move represented a strongsignal for Algeria to reactivate bilateral co-operation.

In turn, Fakih stressed the importance of the role of theprivate sector in the two countries and the need to expandmutually beneficial ties. Both sides would now pursue a frame-work for the establishment of such a partnership, he added.

The setting up of the Algeria-Saudi Arabia joint investment

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company took place at the end of a two-day meeting of thecountries’ joint commission.

The meeting also reached several other agreements relatedto youth, transportation, religious affairs, culture, and scientificresearch.

During his stay in Algeria, Fakih met several high-rankingofficials, including the nation’s President, Abdelaziz Bouteflika,and Prime Minister, Ali Benflis.

Kuwait explains dumping oftreated waste water into Gulf

Kuwait — The state-owned Kuwait Oil Company (KOC)has issued a statement defending its policy of dumping treatedwaste water into the Gulf.

“The Kuwait Oil Company confirms that the water dumpedinto the sea from the north Kuwait sea water treatment unitmatches specifications designated by the state’s EnvironmentalProtection Agency,” said a KOC statement.

Last November, the firm began operating its first-ever, full-scale water injection project in north Kuwait as part of anenhanced recovery scheme to raise northern production froman estimated 600,000 barrels/day to 900,000 b/d.

KOC said it pumped 270,000 b/d of sea water from theSubiya power station some 70 km to an enhanced recovery watertreatment plant between the Sabriya and Rawdatain fields innorthern Kuwait.

The water, it stressed, was treated and injected into wells toincrease field pressure, then checked for purity before it wasreturned to the sea.

KOC issued the statement in response to an article publishedin the Al-Watan newspaper, accusing the company of dumpingtoxic chemicals into northern Gulf waters.

The report alleged that the chemicals were responsible forkilling more than 600 tons of fish that had washed up on thenation’s shores.

The Kuwaiti government has banned certain types of fishingin the area and launched an investigation to determine what hadkilled the fish.

The country’s military was called into action to clean up thebeaches because of the amount of dead fish on the shores.

Iran sees improvement innon-oil commodity exports

Tehran — Iran’s exports of non-oil commodities betweenMarch and June this year were valued at $48 million, up by 52.6per cent, according to the latest figures.

The Head of the country’s customs administration, MehdiArbasian, said that real prices for exportable goods and thecancellation of foreign exchange certificates had contributed tothe value of non-oil commodities during the period under review.

He noted that the value of exports through border markets

stood at $23.1m, while the value of carry-on luggage trade stoodat $14.1m.

“Once these figures are included, the total value of non-oilexports during the period stands at $985m,” he said.

Arbasian pointed out that exports of non-oil goods in thefirst three months of the current Iranian year, which started onMarch 21, had reached only 66.3 per cent of the target set inthe third five-year development plan (March 2000-05).

Austria to open externaltrade office in Algiers

Algiers — Austria’s Ambassador to Algeria, Thomas MichaelBaier, has announced the opening of an Austrian external tradeoffice in the Algerian capital.

Speaking to the government daily El Moudjahid, he notedthat the office would permit the development of economic andtrade exchanges between the two countries.

Algeria and Austria, he noted, were undertaking vast co-operation in the rail domain, where several Austrian companieshad helped in the renovation of the Algerian rail network.

He stressed his country’s will to extend such co-operationto other sectors of the Algerian economy, including the priva-tization process which had started in the African state.

Baier also discussed the signing soon between the twocountries of an accord covering protection of investments,which, he said, would mark the beginning of real co-operationbetween the two sides.

Nigeria inaugurates scheme torevive ailing industrial sector

Abuja — Banks in Nigeria could raise up to 20 billion nairaas working capital to execute the country’s small- and medium-scale industries equity investment scheme, according to theGovernor of the Central Bank of Nigeria (CBN), Joseph Sanusi.

The scheme is an interventionist initiative of the bankers’committee to invest part of their profits before tax into devel-oping the small- and medium scale sub-sector of the economy.

Speaking at the inauguration of the scheme by NigerianPresident Olusegun Obasanjo, Sanusi said that funds raised bythe banks to prosecute the scheme would be well over 5.0bnnaira per annum.

He added that 33 banks with their financial years endingon or before April 30, 2001 had set aside 4.15bn naira as equityparticipation in enterprises under the scheme.

The fund would serve as seed money to attract both localand foreign entrepreneurs and investors, for the betterment ofthe nation’s economy, he said.

Money from the fund would be used alongside loans andadvances that banks would be free to make to small- andmedium-scale enterprises created through the scheme, Sanusiexplained.

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He noted that in the plan for the implementation of thescheme, the bankers had worked closely with stakeholders in theorganized private sector, ministries and government agencies,the securities and exchange commission, the presidential con-sultative committee, and international financial and develop-ment institutions.

Steps were being taken to ensure that the scheme contrib-uted adequately to achieve the overall policy objective of pro-moting economic growth and eradicating poverty in the country,he explained.

Sanusi went on to say that the banking sector was wellendowed with human and material resources to contribute tothe rapid development of the sector.

The banks also had the capacity to promote small-scaleindustries and easily reach potential institutional foreign inves-tors, who would be in partnership with the banks and otherentrepreneurs.

Algeria’s trade balance showssurplus of over $1 billion

Algiers — Algeria’s hydrocarbons exports were valued at $1.94billion in July, up by 10.16 per cent over the same period lastyear, according to the latest figures from the country’s customsoffice.

Hydrocarbon products represented 97.48 per cent of Alge-ria’s total global exports in the month, which were valued at$1.99bn, a rise of 10.24 per cent over July 2000.

Imports cost the country $895 million in July this year, upby 3.35 per cent compared with the same month in 2000.Consequently, Algeria’s trade balance showed a surplus of$1.09bn for the month.

In the first half of this year, the country’s hydrocarbonsexports fetched $10.51bn, down by about $1.0bn comparedwith the first half of 2000, when they were valued at $11.59bn.

Venezuelan, Brazilian leadersinaugurate joint power link

Caracas — Presidents Hugo Chavez of Venezuela andFernando Henrique Cardoso of Brazil have inaugurated a powerline between their two countries.

During a special ceremony at Santa Elena de Uairen insouthern Venezuela, the Brazilian and Venezuelan leaders for-mally turned on the $400 million, 670-km, high-voltage powerline that will provide electricity to the inhabitants of severaltowns and villages in southern Venezuela and the northernBrazilian state of Roraima.

Both Chavez and Cardoso underlined the importance ofLatin American integration during their speeches at the cer-emony, which was also attended by Cuban President, Fidel Castro.

Addressing environmental concerns of indigenous commu-nities in the region, Chavez said that in carrying out the project,

the two nations “fulfilled a commitment without disrespectinganyone, preserving the ecological balance.”

Chavez also said that the agreement for technical co-opera-tion signed within the framework of the inauguration of thepower line demonstrated “the will for integration, the accelera-tion of mechanisms of integration.”

For his part, Cardoso said the power line must be seen “asa new landmark in the friendship between Brazilians andVenezuelans” and as another step along the path of bi-nationalco-operation, which was being followed “because there is recip-rocal confidence, mutual interests, because there is a will toachieve common objectives and strengthen the fraternity be-tween Brazil and Venezuela.”

He said that in Latin America there was a common aspirationthat was none other than the achievement of growth and socialand economic development, which was only possible throughthe rational use of energy resources.

Cardoso also said that everybody who had expressed concernregarding the future of the peoples of Latin America had pointedto “only one path, which is the fraternal integration among ourbrother nations, due to their history, their culture and aboveall, their democratic ideals of liberty and justice.”

US okays $18.5 million grantto promote Nigerian democracy

Abuja — Nigeria is to receive a grant of $18.5 million fromthe United States to help boost democracy in the country,through education and agriculture initiatives.

The US Ambassador to Nigeria, Howard Jeter, was quotedby Reuters as saying at the signing ceremony that the grant“launches a new partnership between the two countries that isfocused on sustaining Nigeria’s transition to democracy.”

The grant marks the start of incremental funding for twoprojects announced in June, when the US government commit-ted $93m towards agriculture schemes and other initiatives thatwould encourage growth, as well as $34m towards educationand workforce development.

Nigeria returned to democracy in May 1999 under Presi-dent Olusegun Obasanjo, following many years of military rule.

Indonesian government mayfine-tune autonomy policy

Jakarta — The Indonesian government might make changesto its new regional autonomy policy, following complaints fromforeign investors, especially in oil, gas and mining operations,it was announced last month.

The country’s Energy and Mineral Resources Minister, DrPurnomo Yusgiantoro, noted there had been complaints ofmisuse of the policy, as regional governments imposed new taxeson foreign-operated projects and contravened contracts signedby the central government.

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He said that if the problem continued, foreign investorswould steer clear of Indonesia, and added that local adminis-trations had been too aggressive in collecting revenues throughnew taxes, which burdened foreign investors.

The new law has allowed regional governments to managetheir social and economic affairs since the beginning of this year.This has led to a misunderstanding between the provinces andinvestors, resulting in operations of some companies beingstopped.

The country’s President, Megawati Soekarnoputri, was criticalof the policy when she was Vice-President. Purnomo said theregional autonomy issue would be one of his top five prioritiesunder Megawati’s new Cabinet.

He also gave assurances that the government would be ableto meet its target of $10.4 billion in oil and gas revenue thisyear, despite weaker crude prices. Indonesia’s oil and gas revenuehad already reached 60 per cent of this target between Januaryand July.

First Algeria-Venezuela jointcommission meeting in November

Algiers — The Algeria-Venezuela high-level joint commissionwill meet for the first time in November, it was officially revealedlast month.

The announcement was made at the end of a two-day visitto Algeria by Venezuelan Foreign Affairs Minister, Luis AlfonsoDavila Garcia.

During his stay, Garcia held discussions with several high-ranking Algerian officials, including President AbdelazizBouteflika.

At the end of this meeting, the Venezuelan official indicatedthat co-operation between the two countries would take on anew look with the holding of the joint commission in Novem-ber.

In addition to boosting hydrocarbons ties, the talks wouldexamine bilateral economic and political relations, as well as anyother issues capable of promoting co-operation between the twocountries, he added.

Japan makes grant for ruralelectrification in Nigeria

Abuja — Japan is to extend a grant of $5.3 million to theNigerian government for rural electrification projects, accord-ing to a statement from the Japanese Embassy in Lagos.

The agreement for the grant was signed in Abuja by theJapanese Ambassador to Nigeria, Takahisa Sasaki, and the ChiefEconomic Adviser to President Obasanjo, Dr Magnus Kpakol.

The sites for the projects are Bogoro in Bauchi State andKalshingi in Gombe State. They were selected in accordancewith joint surveys conducted by a Japanese study team andNigerian authorities in November 1999 and September 2000.

“The main elements of the project are to construct 33 kVtransmission lines and 33/11 kV substations and to procureequipment and materials for 11 kV distribution lines, which willgreatly enhance the electricity capacity of these subject towns,”said the statement.

The project is expected to improve the local living conditionsand contribute to the economic development of the area, andto further boost relations between Nigeria and Japan, it added.

Venezuela, Romania lookingto boost commercial ties

Caracas — Venezuela is progressing with its expansion ofexports towards Europe, especially to Romania, which entailsdealing in non-traditional products, according to DeputyMinister at the Commerce & Production Ministry, Dr LuisVelasquez.

He was speaking after a meeting with Romanian Ambassa-dor to Caracas, Petru Papelea, which looked at the possibilityof reaching a short-term bilateral commercial agreement in theoil sector.

Papelea said his country was interested in holding talks withstate oil firm Petroleos de Venezuela and its subsidiary Bitor(which handles production of PDVSA’s power plant fuelOrimulsion), with the aim of becoming a refiner of Venezuelanoil.

“We hope to create a common market that benefits bothcountries in a short period of time. Both Venezuela and Roma-nia have a lot to give economically and commercially,” theRomanian Ambassador said.

Agip embarks on agriculturalprojects in Nigeria

Abuja — As part of efforts to participate in the socio-economicdevelopment of the host communities in Nigeria’s south-easternRivers State, the Nigerian Agip Oil Company (NAOC) hasengaged itself in agricultural projects in the region.

According to the Operations Manager of the NAOC inRivers State, Tayo Odugbemi, the company’s decision to engageitself in agriculture was designed to increase food productionin Nigeria.

“We are not only in the exploration and exploitation of oiland gas, we are also out to improve agricultural developmentin our areas of operation,” he told Nigeria’s visiting Ministerof Information, Professor Jerry Gana.

He pointed out that the NAOC supplied input to farmers,while agricultural officers were also being provided to advise inareas, as part of the company’s social welfare package.

Responding to this, the Nigerian Minister commended theoil company for its contribution to the development of thecountry and urged Agip to continue supporting the transfor-mation process currently being undertaken in Nigeria.

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No 56/2001Tehran, Islamic Republic of Iran, August 20, 2001

G-77 holds IFCC-X in Tehran:OPEC Fund pledges continued co-operation

with development co-operation. TheOPEC Fund was represented by a four-member official delegation headed bythe Director-General, HE Dr Y SeyyidAbdulai.

The meeting (IFCC-X) opened witha welcoming address by the Iranian Presi-dent HE Seyed Mohammad Khatami, whodescribed the G-77 as the “sole, universalnegotiating body of the developing worldin the multilateral arena.” He remarkedthat Iran’s presidency of the G-77 coin-cided with the UN Year for DialogueAmong Civilizations; and that Iran’s fun-damental message to fellow developingcountries “at the beginning of this newmillennium” remained the “imperative ofa collective enterprise for a better, com-mon future; a more humane world orderand a tomorrow free of fear and want forall.”

The President said that ECDC was be-coming all the more inevitable in “thistumultuous world; a world with hugepotentials, but an uncertain world, none-theless, fraught with daunting challenges.”

Other speakers focussed on develop-ment co-operation as a guarantor of globalpeace and security, while yet others dwelton the pains and promise of a globalizingworld economy. It was generally notedthat solidarity among developing coun-tries and, indeed, ECDC, should in no waydowngrade equally essential and equallystrategic North-South relations.

The OPEC Fund, in its own addressat the opening ceremony, touched uponthe work of the IFCC and the emergingframework of co-operation between theFund and the G-77. Dr Abdulai told thegathering that the need was obvious towork together in the South to move de-velopment forward. He spoke about theunending problems facing the developingworld in spite of concerted efforts at na-tional, regional and subregional levels toaccomplish progress. Relative poverty, hesaid, was still widespread amongpopulations of the South; per capita in-comes had been declining; and life expect-ancy was not much improved either; norwere infant and maternal mortality ratesdramatically lower.

Dr Abdulai called OPEC — as anorganization — a major example of South-South co-operation and reminded theassembly of the continuing contributionsto development in G-77 states by thebilateral and multilateral aid agenciesowned by OPEC states; among them

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:info@opecfund.org; Web site: http://www.opecfund.org.

OPEC Fund attends G-77’sIFCC-X meeting in Tehran

In August, the OPEC Fund attended the Group of 77’s IFCC-X meeting on economic co-operation among developingcountries in the Iranian capital Tehran. The Fund’s Governing Board also held its 96th Session during the month,at which it approved eight public sector loans worth more than $45 million to assist eight developing countrieswith projects in sectors including water supply, road construction, health care and information technologydevelopment.

The Group of 77 (G-77) began the tenthmeeting of its ministerial-level Intergov-ernmental Follow-Up and Co-ordinationCommittee (IFCC) on Economic Co-operation among Developing Countries(ECDC) on Sunday, August 19, 2001 inTehran, the Islamic Republic of Iran, witha high number of member countries inattendance. Also present were several in-ternational organizations which workclosely with the Group, among them, theUnited Nations Development Programme,the Food and Agriculture Organization ofthe United Nations, the UN Conferenceon Trade and Development and the In-ternational Fund for Agricultural Devel-opment.

The OPEC Fund for InternationalDevelopment was also in attendance, aswere numerous other agencies concerned

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Kuwait, Saudi Arabia and the United ArabEmirates. He also recalled the bilateral aidagencies of IR Iran itself, Iraq, Algeria,Indonesia, Algeria, Venezuela, the SPLibyan AJ and Nigeria. The Fund Direc-tor-General pledged that the OPEC Fundwould continue to work closely withG-77 member states — many of whom areFund beneficiaries — paying attentionto their priority requirements. He urgedparticipants not to leave Tehran withoutconcrete results to show for their delibera-tions.

IFCC-X proposed to examine follow-up activities carried out since the last suchmeeting (IFCC-IX) in Manila, the Phil-ippines, in 1996. The objective in Tehranwas to draft a response incorporating rec-ommendations made by various G-77related bodies and ad hoc meetings sinceManila. A Perez-Guerrero Trust Fund forECDC, whose resources require replenish-ment, will also be reviewed, as will thework of a number of southern institutionsmeeting parallel to IFCC-X. The G-77currently comprises a total of 133 devel-oping countries which seek to co-ordinatetheir positions vis-à-vis global development-related issues. IR Iran took over the mantleof the G-77 leadership from Nigeria.

No 57/2001Vienna, Austria, August 28, 2001

OPEC FundGoverning Boardholds 96th Session

The Governing Board of the OPEC Fundfor International Development convenedits 96th Session at the Fund’s headquartersin Vienna.

HE Dr Saleh A Al-Omair of the King-dom of Saudi Arabia was unanimously re-elected as Chairman of the GoverningBoard for the period of one year.

Following adoption of the meeting’sagenda, the Director-General of the Fund,HE Dr Y Seyyid Abdulai, reporting to theBoard on the Fund’s activities, indicatedthat on a cumulative basis, and as of theend of July 2001, $4,644.0 million hadbeen approved in loans to the public sectorand $3,019.4m disbursed. These loans,

which were extended for project and pro-gramme financing and balance of pay-ments support, as well as within theframework of the Heavily Indebted PoorCountries (HIPC) Initiative, number 896.All major economic and social sectors havebenefited from the Fund’s assistance, in-cluding agriculture, transportation, health,education, water supply and sewerage,industry, energy, etc.

The Director-General further disclosedthat a total of sixteen operations had beenapproved under the Fund’s Private SectorFacility. As of the end of July 2001, cu-mulative commitments through this win-dow totalled $61.2m.

In addition, the Fund has approved atotal of 547 grants in support of variousactivities in the areas of technical assist-ance, food aid, emergency relief and re-search. Cumulative grant commitments,as of the end of July 2001, amounted to$249.4m, of which $168.7m has beendisbursed. Moreover, the Fund has con-tributed, in grant form, substantialamounts to the resources of other interna-tional development institutions benefit-ing the South; these contributions total$971.8m, most of which has been dis-bursed. To date, the Fund has provideddevelopment assistance to 108 countriesin Africa, Asia, Latin America and theCaribbean, the Middle East and Europe.

In this session, the Board approvedeight public sector project loans worth atotal of $45.32m. They are detailed asfollows:

Country/project $ millionAlbania:Water supply rehabilitation 2.70Egypt: Buhiyyah canalirrigation improvement 10.00The Gambia:Coastal protection 5.78Korea DPR:Sinhung-Songgwan road 4.74Maldives: Informationtechnology development 2.50Sri Lanka:North-east communityrestoration and development 4.00Vietnam:Multipurpose rural development 10.00ZambiaCancer diseases hospital 5.60Total 45.32

All of the above loans have a maturityof 20 years, including a grace period of fiveyears, and carry interest at rates rangingfrom one per cent to two per cent.

The projects will be co-financed withthe governments of the beneficiary coun-tries. Other contributors include the In-ternational Development Association, theAfrican Development Bank, the AfricanDevelopment Fund, the Asian Develop-ment Bank and the governments of Ger-many and the Netherlands.

The Board also approved three newgrants aimed at financing activities in thehealth and agriculture sectors. They total$750,000 (see press releases nos 58/2001–60/2001), and are broken down as fol-lows:— $200,000 to strengthen maternal

health care delivery in Peru;— $350,000 towards combating

desertification in West Asia;— $200,000 to help improve primary

health care services in Yemen.The Board also discussed the Fund’s

Private Sector Facility; three new privatesector investment proposals were approvedand a number of pipeline proposals dis-cussed.

In addition, the Board reviewed finan-cial and budget matters; considered onenew proposal for the delivery of debt reliefunder the HIPC Initiative; discussed im-plementation modalities for the HIV/AIDS special account; considered aprogress report on ongoing grants andlooked at operations under active consid-eration in the public sector.

The next Governing Board Sessionwill take place in Vienna, Austria onNovember 6, 2001.

No 58/2001Vienna, Austria, August 28, 2001

OPEC Fund approvesgrant of $200,000 formaternal care in Peru

The OPEC Fund for International Devel-opment has approved a grant of $200,000in support of a programme to strengthenmaternal health care delivery in poor ruralcommunities in Peru.

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Sponsored by UNICEF, the aims areto provide comprehensive pre- and post-natal care to women and their babies inorder to reduce the number of stillbirthsand complications arising during preg-nancy/childbirth.

Although Peru has made progress inreforming its health care sector, maternaland infant mortality rates remain inordi-nately high, especially in rural areas. Di-rect causes of maternal deaths are attributedprimarily to hemorrhaging, infection,pregnancy-related hypertension and prob-lems encountered during delivery. An es-timated 9,000 infants per year perish atbirth or shortly thereafter, or suffer braindamage from hypoxia. Health care centresare so widely dispersed and under-equippedthat most women are unable to seek pre-natal care and few have access to trainedbirth attendants.

UNICEF, in co-operation with Peru’sMinistry of Health, has established a pro-gramme in nine provinces in the depart-ments of Cajamarca, Cuzco and Apurimec,areas with the lowest health care coverage.Workshops will be held to evaluate thequality of existing health care delivery andidentify what supplies and equipment areneeded to provide adequate pre- and post-natal care.

Health care workers will learn how tohandle obstetrical emergencies throughinternships at specialized centres, and allstaff will receive training in women’s rightsand child rearing practices. A follow-upprogramme will offer women with high-risk pregnancies household visits fromqualified medical personnel.

A strong focus will be placed on theaspects of community education, socialmobilization, gender equality and culturalsensitivity in providing maternal healthservices.

These new services will offer thou-sands of women a more enabling environ-ment for safe pregnancies and deliveries,and will give them confidence to seekmedical assistance. In addition, oncethis programme is implemented, it canthen be replicated in other underservedprovinces.

Data summary

Sector:Health.

Project:Strengthening the basic health careservice delivery in highland communi-ties in Peru.

OPEC Fund grant:$200,000

Beneficiary:Republic of Peru.

Total cost:$800,000

Co-financiers:UNICEF; Spanish National Commit-tee.

Executing agencies:Ministry of Health of Peru/SpanishNational Committee; UNICEF; bene-ficiary communities.

Grant administrator:OPEC Fund.

Project duration:Two years.

No 59/2001Vienna, Austria, August 28, 2001

Fund helps combatdesertification in WestAsia with $350,000 grant

The OPEC Fund for International Devel-opment has approved a grant of $350,000in support of a multi-partner initiative toarrest and reverse desertification in the dryareas of West Asia. Co-ordinated by theGlobal Mechanism of the United NationsConvention to Combat Desertification(GM-UNCCD), this undertaking willestablish a number of representative pilotprojects in ten countries aimed at theintegrated management of natural re-sources.

Around 35 per cent of Asia’s productiveland is under severe threat of desertification.Western Asia, in particular, faces wide-spread soil degradation caused, in part, byhuman-induced factors such as deforesta-tion, unsustainable agricultural practicesand overgrazing. Most of the region is madeup of arid and semi-arid zones referred toas rangelands or Badia, where desertificationis spreading at a rapid pace, resulting in lossof biodiversity and food security. AlthoughWest Asia’s mountainous regions receivea higher rainfall, land there has become

depleted of its natural vegetative cover dueto over-clearing. Areas with extreme waterscarcity rely on unconventional sourcessuch as recycled waste and irrigation waterand water from brackish aquifers. In manyareas, the improper use of water resourceshas caused land to become waterlogged orsaline.

In 1997, 113 countries launched theGlobal Mechanism, which draws on thecapacities of UN agencies and leadingagricultural research institutions to reversedesertification. Since the schemes involvedare complex and require long-term devel-opment, the pilot projects will be imple-mented in three stages over a five-yearperiod. A multidisciplinary approach thataddresses issues from a biophysical, tech-nical, socio-economic and cultural stand-point will be used. The participatingcountries are Bahrain, Jordan, Lebanon,Kuwait, Oman, Palestine, Saudi Arabia,Syria, United Arab Emirates and Yemen.The sub-projects will target:— mountainous areas: improved man-

agement of available water sources;rehabilitating and conserving naturalvegetative cover; introduction of vari-ous water and soil conservation tech-nologies;

— rangeland improvement: establishingguidelines for better range manage-ment based on grazing capacity; im-plementing micro-and macro waterharvesting techniques, replanting na-tive vegetation;

— coping with salinity: reclaiming saltaffected soils; introducing salt tolerantplant species, developing guidelinesfor irrigating with treated wastewater,drainage and brackish water.

Data summary

Sector:Agriculture.

Project:Integrated natural resource manage-ment for combating desertification inWest Africa

OPEC Fund grant:$350,000

Beneficiary countries:Lebanon, Jordan, Syria, Palestine,Saudi Arabia, Oman, Yemen, Bah-rain, Kuwait and the United ArabEmirates.

September 2001 53

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

Total cost:$4,949,700

Co-financiers and amount:International Centre for AgriculturalResearch in the Dry Areas (ICARDA),$164,700; Arab Centre for the Studiesof Arid Zones and Dry Lands(ACSAD), $150,000; Global Mecha-nism of the United Nations Conven-tion to Combat Desertification(GM-UNCCD), $150,000; UnitedNations Development Programme(UNDP), $150,000; United NationsEnvironment Programme (UNEP),$555,000; total: $1,169,700.

Executing agencies:GM-UNCCD; national institutionsof Member States; ICARDA; ACSAD.

Grant administrator:OPEC Fund.

Project duration:Five years.

No 60/2001Vienna, Austria, August 28, 2001

Yemen gets $200,000grant for healthcareimprovement initiative

The OPEC Fund for International Devel-opment has approved a grant of $200,000in support of a primary health care im-provement project in Yemen. Sponsoredby the UK charity International Co-op-eration for Development (ICD), the aimsare to raise the quality of medical servicesin remote rural communities.

The combination of poverty, inacces-sible and unaffordable health care andthe lack of safe water and sanitation arethe primary causes of Yemen’s poorhealth indicators. Maternal/infant mor-tality rates are high, malnutrition is rifeand the incidence of water borne diseaseswidespread.

ICD, a UK-based charitable institu-tion established in 1965, has been sup-porting health care initiatives in Yemenfor almost 20 years through the promo-tion of skill sharing, training and commu-nity development, with a strong focus onsupporting maternal and childcareschemes. Six districts have been identified

by ICD as having exceptionally unfavour-able health profiles, especially amongwomen and children: Al Jabin, Kussmahand Bilaad Al Ta’am within the Sana’agovernate and Beit Al Faquih, Mansorriyahand Sukhan in the Hodeidah governate.Lying adjacent to one another, thesedistricts share a number of problemssuch as an underdeveloped health careinfrastructure, shortage of medical staffand high incidence of poverty-related ill-nesses.

This multi-faceted initiative will pro-vide support at a district level towardsimplementing new organizational andpolicy-making procedures as well as devis-ing strategies to control main endemicdiseases.

Development workers will act as on-the-job trainers to health care employees,and special midwifery courses will be pro-vided to birth attendants and nurses, witha distinct emphasis placed on hiring ad-ditional female health care staff. Recom-mendations will be made relating to waterand sanitation issues in order to overcomethe associated health risks.

Core health problems such as diar-rhoea and childhood malnutrition will beaddressed through the distribution of oralrehydration salts and high-protein cerealmix, and the incidence of malaria will becurbed through the provision of mosquitonets. The project is expected to benefitsome 600,00 people, of whom 120,000are women of child-bearing age and 85,000children under five.

Data summary

Sector:Health.

Project:Improvement of primary health careservices in Yemen.

OPEC Fund grant:$200,000

Beneficiary:Republic of Yemen.

Total cost:$773,000

Co-financier:The World Bank’s Social Fund forDevelopment.

Executing agency:International Co-operation for Devel-opment.

Grant administrator:OPEC Fund.

Project duration:Three years.

No 61/2001Vienna, Austria, August 28, 2001

IDEP receives$70,000 grantfrom OPEC Fund

The OPEC Fund for International Devel-opment has extended a grant of $70,000to help finance an annual training courseon agricultural policy analysis in Africa tobe held in March 2002 in Dakar, Senegal.Sponsored by the African Institute forEconomic Development and Planning(IDEP), aims are to help participantsdevelop skills in the planning, analysis andmanagement of agricultural developmentprogrammes, placing a special focus onparticipatory approaches, environmentalsustainability, gender equity and povertyalleviation issues.

Established in 1962 at the Conferenceof Ministers of the UN Economic Com-mission for Africa, IDEP is mandated toundertake a wide range of activities aimedat reinforcing and improving membergovernments’ economic planning anddevelopment capabilities. To this end, itconducts training courses, organizes work-shops and conferences, and provides ad-visory services for the benefit of publicsector officials, involved, at national level,in the areas of planning, development andfinance.

This one-month course will cover threemodules: African development policiesand poverty in Africa; methods, investiga-tion tools and analytical instruments; se-lected themes of empirical analysis; and,rural development projects and pro-grammes.

Twenty-four participants from French-speaking countries will attend, compris-ing middle and high level officials involvedin the agricultural development policies ofministries and other public institutions.The Fund grant will sponsor the attend-ance of seven participants and contributeto the acquisition of equipment.

54 OPEC Bulletin

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

This is the second time the OPECFund has extended support to IDEP. Thefirst grant helped finance an initiative forupgrading its training facilities.

No 62/2001Vienna, Austria, August 28, 2001

Fund extends $25,000grant to sponsor trans-Saharan road seminar

The OPEC Fund for International Devel-opment has approved a grant of $25,000to help finance the attendance of partici-pants at a training seminar organized bythe Trans-Saharan Road Liaison Com-mittee (TRLC). To be held on November12-24, 2001 in Bamako, Mali, this work-shop will discuss a number of topics relat-ing to various technical, economical andfinancial issues involved with the ongoingconstruction of the Trans-Saharan Road.

Work on the road began in 1966 and,so far, some 3,000 km of the planned4,800 km have been completed. Africa,north and south of the Sahara, is investingmuch hope in the project to help enhancetrade and co-operation in the sub-regionand thus contribute to Africa-wide socialand economic development.

The TRLC, with a membership con-sisting of Algeria, Chad, Mali, Niger,Nigeria and Tunisia, was established at thesame time as the launch of the project andentrusted with the co-ordination andmanagement of issues relating to the con-struction of the road. In addition to its bi-

annual meetings, the TRLC organizesoccasional workshops and seminars thathave proved to be of considerable value infacilitating progress towards the realiza-tion of its goal.

Twenty-eight participants from mem-ber countries will attend the two-weekseminar. During the first week, an eco-nomic evaluation of the Trans-SaharanRoad will take place, including a cost-benefits risk analysis, choice of mainte-nance strategies, budget matters and workplans. In the workshop’s final week, tech-nical and administrative staff will partakein a number of information-exchangediscussions, and the management of theMalian road network will be reviewed, inparticular its available financial, physicaland human resources.

This is the third time the OPEC Fundhas extended support to the Trans-Saha-ran Road project. A grant of $10,000 wasapproved in November 1998 to help fi-nance a seminar on construction, mainte-nance and funding of the road and, inFebruary 2000, a $46,000 grant was ex-tended for a seminar on modern roadmanagement and maintenance techniques.

No 63/2001Vienna, Austria, August 28, 2001

OPEC Fund supportsbiotechnology conferencewith $35,000 grant

The OPEC Fund for International Devel-opment has approved a grant of $35,000

to help finance the 11th Conference onBiotechnology and Genetic Engineeringfor Development in the Islamic World,which is due to take place in Rabat,Morocco October 22-26, 2001. The gath-ering is being organized by the IslamicAcademy of Sciences (IAS), an interna-tional, non-political, non-governmentalinstitution, which works to enhance uti-lization of science and technology for thegeneral development of Islamic countriesand humanity at large.

The conference will discuss contem-porary concepts in biotechnology; defineareas of importance in research and devel-opment; develop innovative proposals forfuture activities in this area; access thestatus of genetic engineering research inthe Islamic world; formulate an Islamicscientific stand on biotechnology andgenetic engineering off-shoot issues; de-fine a role for governments in terms ofpriorities; and, establish paradigms thatdefine the impact of biotechnology devel-opments on the environment and agricul-ture.

Over 100 scientists will be attendingthe event, which is being co-sponsored bythe Academy of Morocco, the IslamicDevelopment Bank, the Rabat-based Is-lamic Educational, Scientific and CulturalOrganization, the Organization of theIslamic Conference (OIC) in Islamabad,Pakistan, along with the IAS itself.

This is the third time the OPEC Fundhas extended support to IAS. Two earliergrants totalling $65,000 helped financethe 2000 Conference on InformationTechnology for Development in the Is-lamic World that was held in Tunis,Tunisia.

September 2001 55

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