secretariat notes

July 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: [email protected]: OPEC News Agency: [email protected] site: http://www.opec.org. Hard copy sub-scription: ATS 850 ( 61.77)/12 issues.

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

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

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

Director,Research Division Dr Shokri M Ghanem

Head,Energy Studies Department Dr Rezki Lounnas

Head, 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 Hawiyah gas oil separator plant No 4 in SaudiArabia, which has just signed a number of gas agree-ments with oil majors (see Newsline on page 21).Photo: SM Amin/Saudi Aramco.

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 YDrop the autopilotOPEC’s proactive decision to cut output by one million b/djust three weeks after the 116th Conference is a sign of strength

4 F O R U MThe global oil market: what lies ahead?By Javad Yarjani, Head of OPEC’s Petroleum Market Analysis Dept

8 C O N F E R E N C E N O T E S116th (Extraordinary) Meeting of the OPEC Conference

17 P R E S S R E L E A S EOPEC sees oil demand growth at 850,000 b/d in 2001

18 S E C R E T A R I A T N O T E SDirector of Research Division completes term of officeVenezuelan soprano gives concert of opera arias at OPEC Secretariat

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

31 M A R K E T R E V I E WOil market monitoring report for June 2001

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

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

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

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

65 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 7 ISSN 0474-6279 July 2001

2 OPEC Bulletin

N O T I C E B O A R D

Forthcoming events

Rio de Janeiro, Brazil, September 3–4, 2001,6th Latin Upstream 2001. Details: GlobalPacific & Partners. Tel: +27 11 778 4360; fax:+27 11 880 3391; Web site: www.petro21.com.

Dundee, Scotland, UK, September 3–7,2001, Negotiation and Documenting Petro-leum Industry Transactions. Details: Centrefor Energy, Petroleum and Mineral Law andPolicy, University of Dundee, DD1 4HNScotland, UK. Tel: +44 (0)1382 344300; fax:+44 (0)1382 322578; e-mail: [email protected]; Web site: www.dundee.ac.uk/cepmlp; or www.cepmlp.org.

Aberdeen, UK, September 4–7, 2001, Off-shore Europe 2001. Details: The OffshoreEurope Partnership, Ocean House, 50 King-ston Road, New Malden, Surrey KT3 3LZ,UK. Tel: +44 20 8949 9222; fax: +44 208949 8193/8186/8204; e-mail: [email protected]; www.offshore-europe.co.uk.

Singapore, September 7–8, 2001, PacificPetroleum Insiders 2001. Details: ConferenceConnection Administrators Pte Ltd, 212ATelok Ayer Street, Singapore 068645. Tel:+65 226 5280; fax: +65 226 4117; e-mail:[email protected]; Web site: www.cconnection.org.

Houston, USA, September 10–11, 2001, 5th

annual Worldwide Independents Forum 2001.Details: Global Pacific & Partners. Tel: +2711 778 4360; fax: +27 11 880 3391;www.petro21.com.

Singapore, September 10–12, 2001, 17th

Asia-Pacific Petroleum Conference. Details:APPEC 2001, Times Conferences & Exhibi-

tions, 1 New Industrial Road, Times Centre,Singapore 536196. Tel: +65 3801420; fax:+65 2865754; e-mail: [email protected].

Dundee, Scotland, UK, September 10–14,2001, Natural Gas Negotiations and Con-tracts. Details: Centre for Energy, Petroleumand Mineral Law and Policy, University ofDundee, DD1 4HN Scotland, UK. Tel: +44(0)1382 344300; fax: +44 (0)1382 322578;e-mail: [email protected]; Web site: www.dundee.ac.uk/cepmlp; or www.cepmlp.org.

Boston, MA, USA, September 10–21, 2001,International Petroleum Business ManagementProgramme. Details: IHRDC Headquarters,535 Boylston Street, Boston, MA 02116,USA. Tel: +1 617 536 0202; fax: +1 617 5364396; e-mail: [email protected]; Web site:www.ihrdc.com.

Boston, MA, USA, September 10–October 5, 2001, International PetroleumManagement Certificate Programme. Details:IHRDC Headquarters, 535 Boylston Street,Boston, MA 02116, USA. Tel: +1 617 5360202; fax: +1 617 536 4396; e-mail:[email protected]; www.ihrdc.com.

London, UK, September 12–13, 2001, Gasto Liquids IV. Details: SMi Conferences Ltd,1 New Concordia Wharf, Mill Street, Lon-don, SE1 2BB, UK. Tel: +44 (0)870 9090711; fax: +44 (0)870 9090 712; e-mail:[email protected]; Website: www.smi-online.co.uk/gtl.asp.

Jakarta, Indonesia, September 23–26, 2001,IIOGE 2001, 3rd Indonesian International Oiland Gas Exhibition & Conference. Details:ITE Group PLC, 105 Salusbury Rd, LondonNW6 6RG, UK. Tel: +44 (0)20 7596 5233;fax: +44 (0)20 7596 5106; e-mail: [email protected]; Web site: www.ite-exhibitions.com/og.

Dubai, UAESeptember 15–18, 2001

Arab Oil & Gas Show

Details: International Conferences& Exhibitions Ltd2 Churchgates, TheWilderness, Berkhamsted,Herts HP4 2UB, UKTel: +44 (0)1442 878222Fax: +44 (0)1442 879998E-mail: [email protected] site: www.araboilgas.com

Tripoli, SP Libyan AJSeptember 23–26, 2001

LIOGE 20011st Libyan InternationalOil and Gas Exhibition

and Conference

Details: Dan CobermanITE Group PLC105 Salusbury RdLondon NW6 6RG, UKTel: +44 (0)20 7596 5225Fax: +44 (0)20 7596 5111E-mail/Web site:[email protected]@ite-exhibitions.com

Tehran, IR IranSeptember 22–24, 2001

Middle East Energy Strategyto the Year 2014

Details: APS ConferencesPO Box 23896NicosiaCyprusFax: +357 2 350265

London, UK, September 24–25, 2001, IBC’s3rd Annual North African Oil and Gas Sum-mit. Details: IBC Global Conferences, KarenBligh, Gilmoora House, 57–61 MortimerHouse, London W1N 8JX, UK. Tel: +44(0)20 7453 2058; e-mail: [email protected].

Johannesburg, South Africa, September 26–27, 2001, Africa Power 2001, 5th AnnualInternational Energy Event. Details: GlobalPacific & Partners. Tel: +27 11 778 4360; fax:+27 11 880 3391; e-mail: [email protected];Web site: www.petro21.com.

Boston, MA, USA, October 1–12, 2001,International Gas Business Management Cer-tificate Programme. Details: IHRDC Head-quarters, 535 Boylston Street, Boston, MA02116, USA. Tel: +1 617 536 0202; fax: +1617 536 4396; e-mail: [email protected];Web site: www.ihrdc.com.

Houston, TX, USA, October 15–19, 2001,Petroleum Industry Site Visit. Details: IHRDCHeadquarters, 535 Boylston Street, Boston,MA 02116, USA. Tel: +1 617 536 0202; fax:+1 617 536 4396; e-mail: [email protected]; Web site: www.ihrdc.com.

Manama, Bahrain, October 29–31, 2001,Middle East Petrotech 2001, 3rd Middle EastRefining and Petrochemicals Exhibition andConference. Details: Overseas ExhibitionServices Ltd, 11 Manchester Square, Lon-don, W1M 5AB, UK. Tel: +44 (0)20 78622073; fax: +44 (0)20 7862 2078; e-mail:[email protected].

July 2001 3

C O M M E N T A R Y

Drop the autopilot OPEC’s proactive decision to cut output by one million b/d

just three weeks after the 116th Conference is a sign of strength

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

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Summer is often a time for vacations.Many people take a well-deservedbreak with their families. The airports

and the roads leading to popular holidaydestinations are usually jam-packed, whilethose in the big cities are much quieter.Some places — from humble shops to theparliaments of many nations — even takethe opportunity to shut down completelyfor a while, reawakening to life again onlyas the autumn approaches.

However, in this increasingly intercon-nected and globalized world, there are anever-growing number of companies andorganizations that operate in a 24-hours-a-day, 7-days-a-week, 365-days-a-year envi-ronment. This means that they can neverafford to relax and engage the autopilot,whatever time of year it may be — andOPEC counts itself among them. And so,this year, as spring moved into summer,and as the days grew longer and the sunclimbed higher in the sky, the OPEC Sec-retariat and the Oil and Energy Ministriesof its eleven Member Countries, far fromslowing down, became veritable hives ofactivity. Phone lines buzzed, faxes ande-mails zipped to and fro, consultations wereheld, decisions were taken.

The outcome of all this activity was twoExtraordinary OPEC Conferences — the115th in June and the 116th in July — atwhich it was decided not to make any ad-justment to crude oil production levels forthe time being. These two Conferences werethen swiftly followed by a decision takentowards the end of July to reduce outputby a further 1.0 million barrels/day to 23.2mb/d with effect from September 1, 2001.When combined with the previous reduc-tions totalling 2.5m b/d made at the 113th

and 114th Conferences earlier this year, thislatest move takes the total cuts made byOPEC in 2001 to 3.5m b/d.

Naturally, some commentators, as theyoften tend to do, immediately pointed outwhat they saw as a flaw in this decision:namely, that the price of the OPEC Reference

Basket had not fallen below the $22/b lowerlimit of the price band range for the speci-fied period of ten trading days, and there-fore that the output reduction was notjustified. However, the taking of suchdecisions is precisely what OPEC’s proactivemarket approach involves: not simply wait-ing for events to happen (such as the Basketprice dropping through the lower limit ofthe price band), but anticipating the likelycourse of future events and taking appro-priate action in good time.

In the case of the recent decision to cutoutput by another 1.0m b/d, it should bepointed out that, prior to that, the OPECBasket price was hovering near the bottomend of the $22-28/b price band range, andthe trend was clearly downwards. Factorsincluding the slowing world economy andthe consequent reduction in demand, aswell as healthy stock levels, were puttingpressure on prices.

Seeing that this situation would veryprobably worsen if left unchecked, OPECtherefore chose the proactive approach toensuring that the stability of the market wasmaintained. In this respect, the price bandmay be viewed as a tool that can be a usefulaid in the decision-making process in theright circumstances. It is not — and wasnever intended to be — an automaticmechanism to be applied without properand careful consideration of the marketsituation.

OPEC’s aims can be simply stated: theOrganization wishes to maintain marketstability at prices that are fair and reasonablefor both producers and consumers, that is,within the $22-28/b range for the OPECBasket, and preferably as close as possible tothe mid-point, which is $25/b. Of course,there will always be elements affecting oilprices that remain outside OPEC’s sphereof influence. But by refusing to coast alongon autopilot, and by maintaining itsstaunchly proactive approach, OPEC canensure that every effort is being made tobring harmony to the market.

4 OPEC Bulletin

F O R U M

2000–20. Oil’s share of world energydemand will decline from 41.0 per centin 2000 to 38.8 per cent in 2020. This2.2 percentage point decrease contrastswith a forecast 6.4 percentage point in-crease in gas demand in the same period,from 22.7 per cent to 29.1 per cent. Oil,however, will comfortably remain thefrontline energy resource, with a marketshare about ten percentage points higherthan gas in 2020. Figure 1 shows thedetails.

We project a rise in world oil demandfrom around 76 million barrels/day in2000 to 106m b/d in 2020. OPEC, withmore than three-quarters of the world’sproven recoverable crude oil reserves, willwatch its market share grow from around40 per cent in 2000 to just over 50 percent in 2020.

How will the Asia Pacific1 region fitinto the overall picture? Asia is expectedto be the major growth area for oil demandin the early 21st century. Demand in Asia— excluding the Middle East — is ex-pected to rise from around 21m b/d in2000 to 33m b/d in 2020. Thus the shareof Asia in total world oil demand is ex-pected to rise from 27 per cent in 2000 to31 per cent in 2020. As demand in thisregion overtakes that of North America,Asia will emerge as the world’s dominantoil consumer. This rising trend is alreadyvery much apparent, with the result thatAsia’s importance as a market for OPECoil has increased enormously. OPEC ex-ports of crude to the Asia Pacific have morethan doubled in just over a decade, risingfrom 3.4m b/d in 1987 to 7.9m b/d in1999. This has meant that the share of AsiaPacific in OPEC’s crude oil exports hasrisen from 29 per cent in 1987 to 41 percent in 1999.

But there is a flipside to this coin. AsAsia comes to rely increasingly on OPEC,and especially on the Middle East for its

The increased level of co-opera-tion recently witnessed between allplayers in the global oil industryoffers good prospects for continuedmarket stability, notes the Head ofOPEC’s Petroleum MarketAnalysis Department, JavadYarjani, in this article*.

The global oil market:what lies ahead?

crude, there will be the need to ensure thatthe world’s largest oil-producing region hassufficient production capacity to meet thefuture rising oil demand. The investmentrequirement is staggering, and it is up toall players — consumers as well as pro-ducers — to ensure that it is met, if con-sumers wish to receive an orderly supplyof oil at reasonable prices in the future.Developing countries in general and Asiannations in particular can help by strength-ening all bilateral relations, involving adeepening of trade relations, since theseare still weak. Developing countries stilltrade predominantly with developed coun-tries, with the share of imports fromOPEC representing a mere five per centof total merchandise imports in 1998.Moreover, Asian countries can help bycreating opportunities and responding toincentives for investment in the upstreamsectors in oil-producing nations, especiallyin the Middle East, their main source ofincremental supply. Naturally, oil produc-ers, for their part, will continue, even moreto facilitate such co-operation.

Economic growthThese figures are based on the assump-

tion of robust world economic growth inthe coming decades (around three per centfor the world and five per cent for Asia),together with a continued improvementin energy efficiency, consistent with thedevelopment and introduction of newtechnologies. But, as everybody in theindustry knows, the only predictable char-acteristic of the international oil market isits unpredictability. Therefore, in seekingto comprehensively assess the outlook forthe global oil market, we must allow foruncertainty. Some of this may arise forpolitical and strategic reasons, rather thaneconomic ones.

Areas to watch include the ongoingclimate change negotiations and world

* Based on Mr Yarjani’s address to the 6th

Annual Asia Oil and Gas Conference, KualaLumpur, Malaysia, June 10-12, 2001.

1. The OWEM definition of ‘Asia Pacific’ in-cludes OECD Pacific, China and all devel-oping countries in Asia.

There are three major factors — bal-ance, stability and co-operation —which ride hand-in-hand with

OPEC’s principal objective of guarantee-ing an orderly supply of oil to the inter-national market. Allow me to begin bybriefly outlining OPEC’s views on futureworld oil requirements.

The reference case from OPEC’sWorld Energy Model (OWEM) showsworld energy demand climbing by an an-nual average of roughly two per cent in

F O R U M

July 2001 5

trade talks, which, in their separate ways,could each significantly affect future oildemand and, particularly in the case of theclimate change issue, might result in sub-stantial losses of petroleum revenue for oilproducers. There is also uncertainty overthe growth of regionalism, and its inter-play with globalisation, as well as the paceand extent of developments in the Cas-pian Sea. All in all, these unpredictablefactors have the potential to significantlyaffect the world oil industry in the yearsahead, blowing even the most rigorousprojections well off course.

Uncertain worldHow should the industry react, as it

attempts to plan for the future in such anuncertain world? There are, withoutdoubt, important areas where it can con-centrate its efforts. For example, it canenhance the flow of information about thecurrent state of the market and of thechallenges that lie ahead. It can then usethis information to help set realistic tar-gets for future oil supply. It can ensure thatthe market works more smoothly and isbetter able to tackle problems as they arise.And it can acknowledge that we are all in

the same boat, and that the task facing allof us is best carried out in a spirit of con-sensus and co-operation.

This ties in with OPEC’s approach, asit seeks to create a more efficient and ef-fective market for both consumers andproducers. OPEC’s actions, in the recentperiod of excessive price movements, il-lustrate this, from the collapse of 1998 tothe peaks of 2000. We have sought toascertain the real reasons for the extrememovements in price, before taking appro-priate remedial measures. We have actedin concert with other leading producers.The situation has not been easy for us andhas required a large degree of alertness andanalytical skill in interpreting sometimesmisleading market signals. This in turn hasenabled oil producers to respond in atimely and responsible fashion.

For example, when oil prices contin-ued to rise last autumn, in spite of OPECalready having agreed to release more than3.7m b/d of extra crude onto the marketduring the year, there was much pressureon us to turn on the taps even more.However, it was clear that there was plentyof crude around and that other factors werethe root cause of the problem. Notably, in

the USA, the price rises had resulted froma sharp decline in domestic refining ca-pacity over the past two decades, combinedwith increasingly stringent environmentalregulations. An inadequate and insufficientpipeline network was aggravating the situ-ation. Effectively, strong product priceswere pulling up crude prices in a finely-balanced market, complicated by specula-tion and just-in-time inventory proce-dures. Aware of all this, OPEC refrainedfrom taking further action — despitemuch pressure from outside parties to doso — and our decision was subsequentlyjustified by the fall in prices this year.

High oil taxationMeanwhile, on the other side of the

Atlantic, the accent was on a problem ofa different kind, namely the high levels oftax on oil products. In Europe, the con-suming countries governments’ take on alitre of gasoline can be over 70 per cent ofthe final price. In other words, govern-ments can receive more than four timesthe revenue from the sale of an oil prod-uct than an oil producer. Details of thisare shown in Figure 2. It cannot be right,therefore, for producers to be blamed more

0

10

20

30

40

50

dro/Nuclear

Gas

Solids

Oil

2020102000

%

Figure 1: World energy fuel shares

F O R U M

6 OPEC Bulletin

than consumer country governments forprice rises. On top of all this, we are alsoconcerned about the possible introductionof a new wave of energy taxes — especiallyif they discriminate against oil — if theKyoto Protocol, or some near-equivalent,eventually gets off the ground. OPEC isas concerned as anyone else about havinga cleaner, safer and environmentally har-monious world, but the burden of achiev-ing this must be shared by the globalcommunity in a fair and balanced man-ner, without unduly prejudicing vulner-able groups.

Effect of inflationLet us put today’s oil prices in their

proper historic perspective. It is crucial toremember that nominal oil prices do notreflect the erosion in the value of the oilbarrel with time; this is due mainly toinflation and, depending on the periodunder consideration, on currency fluctua-tions. Thus the present nominal price ofOPEC’s spot Reference Basket of sevencrudes, $24.8/barrel (the average for Janu-ary–May 2001), would, in real terms, beequivalent to around $8.4/b at 1974 pricesand exchange rates; this is well below thenominal level of oil prices in the mid-

1970s of around $11–12/b.We can also look at real oil prices in

another way. If one recalls OPEC’s mini-mum Reference Basket price of $18/b,which was agreed upon in December1986, this would have translated into$27.04/b in May this year, allowing forinflation in the intervening period.OPEC’s July 1990 minimum ReferenceBasket price of $21/b would, in July 1990terms, have equated to almost the samevalue of $27.32/b in May this year. Whenthis is viewed in the context of OPEC’sprice band of $22–28/b, you can appre-ciate the justification behind the band’supper and lower levels.

The price band constitutes a new ap-proach to OPEC’s market-stabilising ac-tivities. It means that, instead of setting aspecific target price for the Basket, OPECnow seeks to maintain prices within adefined range, which has been arrived atafter careful consideration of both short-term and long-term trends.

There are some other matters thatOPEC is considering at the present time.One concerns the Basket itself, which wasintroduced in January 1987 and whosecomponents have remained unchangedsince that date, in spite of the consider-

able change that has happened in themarket since then. Does the Basket meetthe demands of the early 21st century? Isthere room for improvement? These arequestions we are looking at very carefully.Furthermore, in common with other op-erators in the market, we believe that theexisting international benchmark crudeseach have their own shortcomings and donot consistently reflect fundamentals, es-pecially when the market is under pres-sure. Therefore, the quest for some typeof correction or alternative is also of rel-evance at the present time, with obviousbenefits to the industry as a whole. We allhave to work together to find a satisfac-tory way of settling this matter.

Industry investmentAnother area that is occupying OPEC’s

time these days concerns investment in thepetroleum industry. There is no doubt thatcapital will be channelled to the industryif the price of oil is right. Logically, capitalshould flow first into the areas of low-costoil, and these are situated mainly inOPEC’s Member Countries. But thereshould not be an excessive level of com-petition among different producers inorder to attract investment. A fresh ap-

0.0 0.2 0.4 0.6 0.8 1.0 1.2

Tax

Industry margin

Crude CIF price

USA

Japan

Italy

Germany

Denmark

France

UK

$/litre

Figure 2: Regular unleaded gasoline prices and taxes, March 2001

F O R U M

July 2001 7

‘There are

many areas

where we can

anticipate

developments

and effectively

manage or

even pre-empt

crises.’

proach to this issue, therefore, could en-sure a fair division of economic rent be-tween host countries and investors, as wellas reducing volatility in the market.

Co-operative approachNo one can perform miracles in the

international oil market. With the centralrole that oil plays in the global economy,there has always been a disposition towardsmarket instability. There is little likelihoodof this changing in the future. But thereare many areas where we can anticipatedevelopments and effectively manage —or, better still, pre-empt — crises. It is herethat we should concentrate our efforts, sothat we can achieve secure, stable suppliesof oil to the world market in the yearsahead. Central to this is a co-operativeapproach among the leading parties in theindustry. In OPEC’s eyes, there have beenthree significant recent developments.

The first concerns co-operation amongour own Member Countries. Recent yearshave witnessed the strengthening of thebonds among these nations, as evidencedby the recent success they have had in theirmarket-stabilising activities. The climax ofthis new spirit occurred at the SecondSummit of OPEC Heads of State andGovernment, in Caracas, Venezuela, lastSeptember. On that historic occasion,OPEC’s Member Countries reaffirmedtheir commitment to the guiding princi-ples of the Organization, as set out in theOPEC Statute some 40 years ago — and

which remain equally valid today — toachieve sustainable order and stability inthe international oil market, with reason-able prices for consumers and fair returnsto investors.

The second involves co-operationamong OPEC and non-OPEC producers.

There has been encouraging progress madein this important field in recent years,which has, in particular, proved so success-ful in tackling the serious recent oil priceproblems which have been with us since1998. Such co-operation has reinforced theeffectiveness of OPEC’s production agree-ments and has established important prec-edents in the area of fighting market in-stability that can benefit the industry foryears to come.

Importance of dialogueThe third relates to producer-con-

sumer co-operation. While OPEC hasalways attached great importance to pro-ducer-consumer dialogue, the attitude ofmany leading consuming nations has, inthe past, appeared to be only lukewarm.However, at the Seventh InternationalEnergy Forum at Riyadh, Saudi Arabia,last November, with a higher level of rep-resentation than ever before from consum-ing countries, there were clear signs of abreakthrough in this regard, in the senseof a wider appreciation of the value ofdialogue and a willingness to participatemore fully in it.

Co-operation at all levels is essential ifthe industry is to meet the challenges thatlie ahead in the early 21st century, as weset about ensuring an orderly supply of oilto consumers in the years to come. Asia,with its growing importance as an oil-consuming region, will clearly have a largerole to play in every aspect of this.

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

Excellencies, ladies and gentlemen,Welcome to the 116th Extraordinary

Meeting of the OPEC Conference. Onemonth ago, we decided to convene today’sMeeting to review the market situationand any adjustments to our productionagreement. Also one month ago, mostobservers considered there was a shortageof supply, which would have resulted inunsustainably high prices, and they werethen talking about a need to increase sup-ply. Since then, though, there has been amarked slowdown in the US and Euro-

Press Release No 13/2001Vienna, Austria, July 3, 2001

Opening addressto the

116th (Extraordinary) Meetingof the OPEC Conference

byHE Dr Chakib Khelil

President of the Conferenceand

Minister of Energy and Mines,Algeria

OPEC agrees to cut crude oil productionby 1m barrels/day three weeks after

116th (Extraordinary) Conference

Algeria’s Minister of Energy & Mines andPresident of the Conference, HE Dr ChakibKhelil (left) confers with OPEC SecretaryGeneral, HE Dr Alí Rodríguez Araque(right).

pean economies and a strengthening ofcrude oil and gasoline stocks, and forecastsof weaker demand for crude oil for thefourth quarter 2001. We shall watch thesituation closely in the coming weeks inthe light of these developments.

Our thoughts are focused today on the

July 2001 9

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

evolution of the market from now untilour next Ordinary Meeting on September26. Let me restate our aims: the first is toensure that world demand for crude issatisfied without fail; the second is to sta-bilise the market at a fair price of around$25/b; and the third is to build consensus,harmony and discipline within the Or-ganization, co-operation with non-OPECoil producers, and continuous dialoguewith our clients. Because of our concernfor meeting the needs of our clients, the

consuming countries, at a reasonable pricewith minimum volatility, oil has alwaysunderpinned sustainable economic growth.The rate of growth and inflation in con-suming countries are, on the other hand,determined mainly by fiscal and monetarypolicies, which are outside the control ofOPEC.

Also, the level of prices of petroleum

products for consumers lies beyond thecontrol of our Organization, because ofthe high level of taxes imposed on theseproducts by the consuming countries. Inmany industrialised countries, excessivelevels of taxation result in consuming gov-ernments receiving four times the revenueof oil producers. In the USA, there areother constraining factors, principally ashortage of refinery capacity, stringentproduct specifications, transport problems,such as an inadequate pipeline structure,

and just-in-time stock-management poli-cies.

In three weeks’ time, ‘COP6’ — theSixth Conference of the Parties to theUnited Nations Framework Conventionon Climate Change — is to be reconvenedin Bonn. In attendance will be officialsfrom both OPEC’s Secretariat and indi-vidual Member Countries. We all want a

cleaner, safer and environmentally harmo-nious world. OPEC will continue to presshome its case, to ensure that the interests offossil fuel producers are properly repre-sented in the UN-sponsored negotiations.As we have repeatedly stated, if the KyotoProtocol were to be applied to the letter,this would result in huge financial lossesfor oil-producing nations.

As we have seen over the past few years,there has been a growing conviction withinthe oil industry that progress is best achieved

in a spirit of consensus and harmony.OPEC and non-OPEC producers, the oilindustry itself and, to an increasing degree,leading consuming nations have come torecognise the wisdom of adopting a coop-erative, rather than confrontational, ap-proach to meeting the industry’s challengesand building for the future. We maintain,in OPEC, that this can only work in the

As the Conference gets under way, HE Dr Khelil, HE Dr Rodríguez Araque and the Chairman of the Board of Governors, HE AbdullaH Salatt of Qatar (nearest camera) face the press.

10 OPEC Bulletin


Nigeria’s Presidential Advisor on Petroleum and Energy,HE Dr Rilwanu Lukman (left) listens to the country’sEconomic Commission Board Representative, Mohammed SBarkindo (right).

Qatar’s Minister of Energyand Industry, HE Abdullahbin Hamad Al Attiyah (right)makes a point to Kuwait’sMinister of Oil, HE Dr Adel KAl-Sabeeh (left) and SaudiArabia’s Minister of Petroleumand Mineral Resources, HE AliI Naimi (centre).

July 2001 11


Iran’s OPEC Governor,HE Hossein KazempourArdebili (left), with Memberof the Iranian Parliament(Majlis) HE HassanRamezaniyan Pour (right).

Nigeria’s Presidential Advisor on Petroleum and Energy, HE Dr Rilwanu Lukman (second left) greets Libya’sChairman of the National Oil Corporation, HE Ahmed Abdulkarim Ahmed (right). In between them are (l-r)Libya’s OPEC Governor Hammouda M El-Aswad, National Representative to the Economic Commission BoardMohamed M Abani and the Secretary of the Libyan People’s Bureau, HE Dr Said Abdulaati. On the left isJamal Bahelil, Petroleum Analyst in OPEC’s Petroleum Market Analysis Department.

12 OPEC Bulletin


Libya’s Chairman of the National Oil Corporation, HE Ahmed AbdulkarimAhmed (nearest camera) and the country’s OPEC Governor, Hammouda MEl-Aswad (next to him) talk to journalists. Standing behind them is theformer Head of OPEC’s Legal office, Ahmed Abdulaziz.

Discussing some documents are (l-r) Qatar’s Minister of Energy and Industry, HE Abdullah binHamad Al Attiyah, Indonesia’s Minister of Energy and Mineral Resources, HE Dr PurnomoYusgiantoro and Libya’s Chairman of the National Oil Corporation, HE Ahmed Abdulkarim Ahmed.

July 2001 13


OPEC Secretary General, HE Dr AlíRodríguez Araque, is surrounded by reporters.

Iran’s Minister of Petroleum, HE Bijan Namdar Zangeneh (left), together with the Headof the Iraqi Delegation, Saddam Z Hassan (right).

14 OPEC Bulletin


Facing the press are Saudi Arabia’sMinister of Petroleum and MineralResources, HE Ali I Naimi (seated centre),flanked by the country’s Ambassador toAustria, HE Omer Mohammed Kurdi(nearest camera) and OPEC Governor, HESuleiman Jasir Al-Herbish.

Below: Venezuela’s Minister of Energy and Mines, HE Alvaro Silva Calderon (seated centre), the country’sOPEC Governor, Edgar Rodriguez (nearest camera) and Economic Commission Board Representative DrGloria Mirt talk to reporters.

July 2001 15


The United Arab Emirates’ Minister of Petroleum and MineralResources, HE Obaid bin Saif Al-Nasseri (nearest camera)

answers reporters’ questions. Next to him is Chargé d’Affaires,HE Ahmad R F Al Dosari.

Below: The Head of OPEC’s PR & Information Department, Farouk U Muhammed mni(left), reads the final communiqué, watched by (l-r) HE Dr Khelil, HE Dr Rodríguez Araqueand OPEC News Agency Editor, Fernando J Garay.

The post-meeting press conferencewas lively as ever.

16 OPEC Bulletin


interest of the oil industry, the globaleconomy and our clients, the consumingnations.


116th (Extraordinary)Meeting of the Conference

The 116th (Extraordinary) Meeting of theConference of the Organization of thePetroleum Exporting Countries (OPEC)convened in Vienna, Austria, on July 3,2001, under the Chairmanship of its Presi-dent, HE Dr Chakib Khelil, Minister ofEnergy & Mines of Algeria and Head of itsDelegation.

Having reviewed the oil market situa-tion and supply/demand expectations forthe forthcoming period, the Conferencedecided to maintain OPEC’s present out-put levels unchanged, to maintain stabilityin the market and satisfy the needs ofconsumers.

The Conference emphasized thatOPEC is committed to continuing tomonitor the market and to taking anyfurther measures, when deemed necessary,to maintain prices within the range of$22–$28/barrel.

to hold an Extraordinary Meeting soon ifthe market warrants it. According to thisdecision, individual Member Countryoutput levels are as follows (in b/d):

NewDecrease output level

Algeria 32,000 741,000Indonesia 52,000 1,203,000IR Iran 146,000 3,406,000Kuwait 80,000 1,861,000SP Libyan AJ 54,000 1,242,000Nigeria 82,000 1,911,000Qatar 26,000 601,000Saudi Arabia 324,000 7,541,000UAE 88,000 2,025,000Venezuela 116,000 2,670,000

Total 1,000,000 23,201,000

In taking this step, the Members of theOrganization of the Petroleum ExportingCountries voiced confidence that theiraction would be matched by similar stepsfrom non-OPEC oil producing/exportingcountries whose interests are, likewise, best-served through market stability.

Finally, the Organization takes thisopportunity to recognize and express ap-preciation of the support being extendedto OPEC by the Government of Mexico.

The Conference reiterated its call onother oil exporters to continue to co-oper-ate with OPEC so as to minimize pricevolatility and ensure stability.

The Conference confirmed the date ofSeptember 26, 2001 for its 117th (Ordi-nary) Meeting.

Finally, the Conference expressed itsappreciation to the Government of theFederal Republic of Austria and the au-thorities of the City of Vienna for theirwarm hospitality and the excellent arrange-ments made for the Meeting.


Agreement of the OPEC ConferenceJuly 25, 2001

Considering the impact of the slowingworld economy on oil demand, and therelatively strong build-up of oil stocks,OPEC’s objectives are to ensure marketstability, satisfy world demand and avoidoil price volatility, in the interest of bothproducers and consumers. In order toachieve these objectives, OPEC has de-cided to reduce production by 1 millionbarrels per day (b/d), effective fromSeptember 1, 2001, with an open option

The Ministers, the Secretary General and the Chairman of the BoG, gather for a group photograph before the Meeting.

July 2001 17


No 15/2001

Vienna, Austria, July 18, 2001

OPEC Secretary General, Dr Alí

Rodríguez Araque, has challenged a

report forecasting a drastic fall in the

growth of crude oil demand for 2001.

“A market study released in recent

days by a well-known source projects

a sharp fall in average crude oil de-

mand growth for the year. However,

this figure does not coincide with that

of OPEC. We forecast average growth

in demand at 850,000 b/d,” he told

the OPEC News Agency (OPECNA).

“Moreover, other well-respected

sources project demand growth at

higher rates than that foreseen by

OPEC.”

The OPEC Secretary General said

that, as facts were now demonstrating,

OPEC had had good reason to keep its

crude oil production level unchanged

and to disregard calls to the contrary

made by many observers up to the Or-

ganization’s last extraordinary Ministe-

rial Conference, held in early July. At

the same time, he added, it had become

clear that, as far as prices were con-

cerned, not everything depended on

OPEC.

“In spite of the uncertainties which

still prevail in connection with the world

economy, there is no firm basis to an-

nounce definite figures.

OPEC sees oil demand growth at850,000 b/d in 2001 —

Rodríguez Araque

P R E S S R E L E A S E

“As we know, normally, in the

third and fourth quarters of the year,

demand tends to increase.

“For our part, we simply ratify

OPEC’s commitment to market sta-

bility. The Organization will con-

tinue to work towards attaining this

goal by placing on the market the

volumes required — accordingly,

we will either trim or increase output.

“Nonetheless, for the time being

there is no decision to change output

levels. Should such a measure eventu-

ally become necessary, it will be an-

nounced in due course.”*

* See Press Release No 17/2001 for details.

18 OPEC Bulletin

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

Director of Research Division completes term of officeThe Director of OPEC’s Research Division, Dr Shokri M Ghanem, completed his eight-year termof office in July. A farewell gathering was held for Dr Ghanem at the OPEC Secretariat on July 16,at which he was presented with a commemorative engraved salver by the Organization’s SecretaryGeneral, HE Dr Alí Rodríguez Araque.

Dr Rodríguez Araque and the Head of PR and Information Department, FaroukU Muhammed, mni (right), listen as Dr Ghanem reminisces light-heartedly.

Dr Ghanem (left) receives the commemorative salver fromDr Rodríguez Araque.

Below left: Dr Rodríguez Araque and Dr Ghanem in a warm embrace. Above and below: Some staff at the farewell gathering.

July 2001 19

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

Venezuelan soprano gives concert ofopera arias at OPEC Secretariat

Soprano GabrielaGonzález-Toledo andpianist Husan Parkduring the concert,watched by OPECSecretary GeneralHE Dr Alí RodríguezAraque (right), andthe VenezuelanAmbassador toAustria, GustavoMárquez (centre) and his wife.

The Venezuelan soprano,Gabriela González-Toledo,gave a concert of opera andoperetta arias at the OPECSecretariat on June 29.Accompanied by pianistHusan Park of South Korea,the singer delighted theaudience, which included theVenezuelan Ambassador toAustria, Gustavo Márquez,with her performances ofwell-known works by suchfamous composers as GeorgeFrederic Händel, FranzLéhar, Giovanni BattistaPergolesi and Oskar Strauss.

News and features from the

OPEC Member Countries

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Highlights of the Monthly Oil Market Report

Keep abreast of developments in OPEC

and its Member Countries by subscribing to OPECNA.

Our three daily transmissions are available by e-mail,

fax or post. For further details, including subscription

rates, please contact:

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OPECPR & Information DepartmentObere Donaustrasse 93A-1020 Vienna, AustriaTel: (+43 1) 21112 376Fax: (+43 1) 214 9827E-mail: [email protected]

OPEC NEWS AGENCY

N E W S L I N E

July 2001 21

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

eddah — Saudi Arabia’s ForeignMinister, Prince Saud Al-Faisal, has

described the recent signing of pre-paratory accords for three large-scale gasprojects with eight international oil ma-jors as an “important historic event”.

Prince Saud, who chaired a ministe-rial committee in charge of negotiationswith the majors, said that the agreementwould consolidate the national economy,boost development, and provide job op-portunities for Saudis.

The official Saudi Press Agency (SPA)quoted him as saying that the deals wouldnot only help the development of gasprojects, but also benefit the electricity,petrochemicals and water desalinationsectors.

The foreign companies would investtheir expertise and capital, while the King-dom would provide resources, a stable en-vironment for investment and its devel-opment skills, the Minister noted.

Massive investmentThe deals, worth an estimated total of

$25 billion in investment, are the firstupstream energy projects open to foreigncompanies since the sector was national-ized in Saudi Arabia a quarter of a cen-tury ago.

Prince Saud signed the accords withthe chief executives of ExxonMobil, RoyalDutch/Shell, BP, Phillips, Occidental pe-troleum, Marathon, TotalFinaElf andConoco.

The three gas projects cover 440,000square kilometres, making it the world’slargest physical area for hydrocarbon in-vestment.

US major ExxonMobil is to lead aconsortium with the Anglo-Dutch giantShell, BP of the UK and US firm Phillipsfor the main prize, the $15bn SouthGhawar project in the Kingdom’s EasternProvince.

In the second project, on the north-ern Red Sea, ExxonMobil heads a consor-tium that groups Occidental and Mara-

Saudi Foreign Minister describessigning of gas agreements withoil majors as “historic event”

thon, the latter taking the place of the USfirm Enron.

Shell was awarded the lead for Shaybahin the Empty Quarter desert region ofsouth-east Saudi Arabia, to work along-side TotalFinaElf of France and US firmConoco.

Economic turning pointThe projects are to be carried out in

co-operation with state oil firm SaudiAramco on a long-term basis for up to 30years.

Saudi Aramco has been working todouble the national gas network’s capacityfrom the current 3.5bn cubic feet/day to 7bncu ft/d in 2005. The country has provennatural gas reserves of 220 trillion cu ft.

Local economists agree that the gasdeals just signed by Saudi Arabia couldbecome a turning point for the nationaleconomy and could boost the regionaleconomy as well, according to a report bythe Kuwait News Agency.

A senior Gulf Co-operation Council(GCC) official, Mohammed Al-Mulla,said last month that the agreements wouldhelp to increase gas reserves in memberstates.

He said that the agreements wouldhave a positive impact on the regionalpetrochemical industry and on powergeneration.

The GCC comprises OPEC MembersSaudi Arabia, Kuwait, Qatar and theUnited Arab Emirates, plus non-OPECOman and Bahrain.

Qatar signs deal withEdison for 3.5m t/yof LNG from 2005Doha — Qatar’s Ras Laffan LiquefiedNatural Gas Company (RasGas) andEdison Gas of Italy have signed a deal,under which RasGas will provide the Ital-ian firm with 3.5m tonnes/year of lique-

fied natural gas (LNG) per year, for a 25-year period starting in 2005.

At the signing ceremony, RasGas wasrepresented by its Chairman, YousefHussain Kamal, who is also the QatariMinister of Finance, Economy and Trade,and Edison was represented by ChiefExecutive Giulio Del Ninno.

The Qatari Minister of Energy andIndustry and Chairman of Qatar Petro-leum, Abdullah Bin Hamad Al Attiyah,highlighted the importance of the con-tract, pointing out that it involved LNG

exports in great quantities to Europe,following similar long-term deals withAsian countries, such as Japan and SouthKorea.

Al Attiyah also noted that RasGas wasplanning to build a fourth production unitto boost capacity to 16m t/y.

“This event marks the beginning of anew era for Qatar. While we have enjoyedmuch success in becoming the premierLNG supplier to Asia, today we became thefirst Middle East supplier to capture amajor long-term sale to Europe,” he said.

“We see Europe as very strategic indiversifying our LNG markets and arebullish on demand growth both near andlong- term,” Al Attiyah added.

Long-term contract“RasGas is excited about signing its

first major long-term LNG contract withEurope, further demonstrating the ven-ture’s competitiveness and ability to cap-ture LNG markets both east and west ofSuez,” Al Attiyah said.

RasGas is a joint venture establishedin 1993 by what was then the QatarGeneral Petroleum Corporation (nowQatar Petroleum).

It is owned by Qatar Petroleum,ExxonMobil, and two Japanese firms,Itochu and Nissho Iwai. Long-term cus-tomer Kogas of South Korea signed a 25year take-or-pay agreement with the com-pany in 1995 for deliveries commencingin 1999, and has an option for a Koreanpartner to acquire a five per cent interestin RasGas.

The participating equity interests inRasGas would then be Qatar Petroleum(63 per cent), ExxonMobil (25 per cent),the Korean partner (five per cent), Itochu(four per cent), and Nissho Iwai (three percent).

J

N E W S L I N E

22 OPEC Bulletin

water West Seno project, being undertakenby Unocal Indonesia, said the report.

Iin said collective production fromother small and marginal fields, whichwere in the development stage, would alsoboost oil output in the country.

Indonesia is also doing well with gasproduction, having firmed up two gas salescontracts earlier this year with Singaporeand Malaysia and started another gas sup-ply contract with Singapore.

Gas field developments in the fieldsin South Sumatra and West Natuna wereon schedule, while Premier Oil was in themiddle of another gas sales contract withan Indonesian power station for its EastJava field.

A gas sales accord was expected to besealed by the end of this year to supply50m cubic feet/d of gas to the power sta-tion from Premier’s Unjung Pangkah gasfield, according to Premier’s President,Robin Allan.

Austria’s OMV seeksmedium-sized oil dealsin UAE and QatarAbu Dhabi — Austrian oil and gasgroup OMV has begun talks with AbuDhabi to undertake exploration and pro-duction activities in medium-sized oil andgas projects, it was reported last month.

OMV is also negotiating with Qatarand Yemen to develop oil and gas schemes,signalling the group’s debut in the Gulfregion, Chief Executive Richard Schenztold the local Gulf News.

“We are looking to explore and pro-duce oil and gas in Abu Dhabi. We do notwant to compete with majors such as Shellor BP. We are interested in medium-sizedprojects.

“We are in talks with the Abu DhabiNational Oil Company. They said theywould let us know about the possibilities,”he was quoted by the paper as saying.

Schenz said negotiations with Qatarand Yemen began recently and talks wereunder way as to which blocks should bedeveloped.

“We plan to get involved in the oil andgas projects of Qatar and Yemen, alongwith Abu Dhabi’s International PetroleumInvestment Company (IPIC),” he said,

adding that IPIC was a strategic and ac-tive shareholder engaged in developingOMV’s business plans.

“IPIC has been truly relevant to thesuccess of OMV since 1994,” he pointedout. IPIC holds a 19.6 per cent stake inOMV, making it one of its largest share-holders.

Regarding co-operation between IPICand OMV, Schenz said that, in 1998, eachcompany acquired a 50 per cent stake inBorealis, the world’s largest polyolefinscompany.

IPIC and OMV were closely involvedin the Pak-Arab Refinery Company(Parco). In 1998, the two sides foundedthe Abu Dhabi Petroleum InvestmentHoldings Company, which held 40 percent of Parco.

“Since then, a refinery was built within32 months and opened in February 2001,”added Schenz.

The OMV head also announced thatPakistan’s Miano gas field, in block 20,which was being developed by OMV inassociation with a local partner, would goonstream in October, while its Sawan gasfield, in the SW Miano block, would bein production in about two years’ time.

The natural gas produced by thesefields was intended for domestic consump-tion in Pakistan, he said. OMV had inter-ests of 17.7 per cent and 19.7 per centrespectively in the projects.

Algerian firm Nafteclaunches bidding roundto rehabilitate refineryAlgiers — The Algerian refining com-pany, Naftec, which is a subsidiary of stateoil firm Sonatrach, has launched an inter-national bidding round for the rehabilita-tion of the Amenas refinery, located in thesouth-east of the country.

According to the tender, the schemewill be assigned under a long-term leasingagreement, with the full transfer, or anyother arrangement, to be defined by thetechnical offers received from investors.

The successful company will be en-trusted with the rehabilitation of installa-tions, exploitation, maintenance of equip-ment, as well as the marketing of prod-ucts.

Edison, part of the Montedison Group,is Italy’s leading private company in elec-tric power and natural gas and also oper-ates in water services and telecommunica-tions.

Oil block developmentto boost Indonesia’scrude output capacityJakarta — The development of two newblocks could raise Indonesia’s crude oilproduction capability to 1.7 million bar-rels/day by 2004, according to the Direc-tor of Production Sharing Management atstate oil and gas company Pertamina, IinArifin Takhyan.

Far from experiencing a drop in oilproduction, as some analysts were predict-ing, the country was in fact likely to in-crease output, he was quoted as saying bythe Jakarta Post newspaper last month.

Much of the additional crude oil pro-duction, estimated to be about 200,000b/d, would come from the developmentof the Cepu block in East and Central Java,and the Belanak project in the WestNatuna basin, in the South China Sea.

A recent report by the Middle EastEconomic Survey estimated Indonesia’sdaily production at 1.22m b/d. Officially,Indonesia produces about 1.4m b/d, butoutput has been reduced from some de-pleted fields, making the average about1.34m b/d, according to industry observ-ers.

Security problems in the country’srebel-hit areas have affected daily produc-tion, with PT Caltex Pacific Indonesia,which produces around half of the coun-try’s oil, reporting a 40,000 b/d drop inoutput this year.

ExxonMobil’s Indonesian unit discov-ered the Cepu field in mid-March, whichhas proven reserves of 250m b. Its devel-opment is being accelerated with initialproduction starting in 2003 and full100,000 b/d output peaking in 2004.

Meanwhile, Conoco Indonesia hasalready started development of its Belanakproject, with production due to com-mence by 2004 and peaking at 100,000b/d later on.

Another 60,000 b/d of productionwould be added by 2004 from the deep-

N E W S L I N E

July 2001 23

Distribution of products could bemade through the existing network ofNaftal, the country’s oil distribution com-pany.

The selection process for the schemewill be made over three phases — the firstcovering technical proposals, the secondcomprising consultations with concernedparties, and the third for the acceptanceof commercial proposals.

Interested companies were invited toattend a general presentation of theproject, which was scheduled to be heldlast month, during which time all infor-mation related to the operation would bemade available.

Technical offers for the scheme haveto be lodged by September 24 this yearand trade offers received by January 21,2002.

The Amenas refinery covers an area of14 hectares and is situated near Sonatrach’scrude storage centre and a power plant.

The refinery includes a distillation unitwith a 75,000 b/d capacity, and a soften-ing unit, notably for kerosene. It was putinto operation in April 1980, but is cur-rently idle, due to the instability of itsinstallations.

In January this year, Sonatrach andNaftec launched a bid round for the con-struction and the exploitation of a refin-ery in the region of Adrar, in the south ofAlgeria.

NNPC head says privateNigerian refineries willboost economic growthAbuja — The decision of the Nigeriangovernment to allow the operation ofprivate refineries will boost economicdevelopment, according to the GroupManaging Director of the Nigerian Na-tional Petroleum Corporation (NNPC),Jackson Gaius-Obaseki.

Nigeria would become the major cen-tre of activity for the supply and distribu-tion of petroleum products in the WestAfrican sub-region when private refiner-ies become operational, said Gaius-Obaseki.

The Nigerian government’s desire toallow private refineries to operate in thecountry was “a step in the right direction,”

he noted, adding that the NNPC wasenthusiastic about the prospects for growthin the oil industry.

The commencement of operations byprivate refineries would undoubtedlystrengthen competition in the industry,which would in turn translate to betterservices to consumers, he went on.

“The country’s demand for petrolcontinues to increase at a significant pace,demonstrating the need for more refiner-ies to meet demand,” he said.

Gaius-Obaseki added that the supplyof petroleum products could be improvedby the construction of new facilities whichcould supply the quantity required forboth the domestic and international mar-kets.

He also confirmed that the NNPC hadsigned a memorandum of understandingwith Italy’s Agip, France’s TotalFinaElf andRoyal Dutch/Shell for the construction ofthe third phase of country’s liquefied natu-ral gas plant.

A study would be carried out to ex-amine and evaluate the cost of the project,and the facility would be operational soon,he said.

In a related development, Nigeria’sPresidential Advisor on Petroleum andEnergy, Dr Rilwanu Lukman, said lastmonth that the country was providingincentives to potential investors in thedownstream sector of the oil industry,especially as regards private ownership ofrefineries.

Dr Lukman, a former OPEC Secre-tary General, noted that the existing in-centives included a guarantee of profitmargins, security of tenure and guaran-teed export earnings, as well as a guaran-teed supply of crude oil and a big marketfor the products.

He emphasised that Nigeria was well-positioned to export oil to Europe and theAmericas, adding that the country hadproven reserves of about 28 billion barrelsof crude.

Nigeria’s oil reserves would hit the40bn b mark by 2010, with a productioncapacity of 4m b/d, compared with thecurrent reserve base of 28bn b, and aproduction capacity of over 2.2m b/d.

After the oil industry was deregulated,the government would not ban the exist-ing refineries from importing crude, if theyso wished, he stressed.

Norway’s output to remain strongBRUSSELS — Norwegian oil production willstay above 3.1 million barrels/day for the nextfive years, according to a report by the state-run Norwegian Petroleum Directorate(NPD). The Directorate has also revisedNorway’s oil and gas reserves upwards. “It isexpected that oil production will stay at thecurrent level of above 3.1m b/d over the nextfive years and that an annual $4.34bn–6.51bnwill be spent over the next 20 years on opera-tions and development,” said the NPD. It alsoestimates that Norway has about 4,100bncubic metres of gas for future sales, meaningthat “new contracts will be signed and thatgas exports will rise considerably,” predictedthe report. Total oil and gas resources are es-timated at 13.8bn cu m of oil equivalent, up0.6bn cu moe from the last comparable NPDreport in February 1999. Over the past sixyears, Norway has produced a total of 1.4bncu moe. The NPD says that there are still“large amounts of undiscovered oil and gasoff Norway” and that the rates of finds arestill high by international standards.

GCC states study gas network planMANAMA — Gulf Co-operation Council(GCC) energy officials, who concluded ameeting last month, have approved the firstphase of a feasibility study on a long-stand-ing project to link GCC countries’ gas net-works. “The cost of the gas pipeline projectis over $1 billion,” said Bahraini Oil Minis-try Under-Secretary, Mohammed Saleh El-Sheikh Ali. The study, which is being carriedout by the Doha-based Gulf Organization forIndustrial Consulting, would be submittedto the countries and to various internationalcompanies, the daily newspaper The Penin-sula quoted Ali as saying to reporters. Thesecond phase of the study would probably becompleted by the end of the year, he added.

French oil import prices risePARIS — Import prices for crude oil to Francerose to $28.40/barrel in May, compared with$25.60/b in April, on fears of a shortage ofgasoline ahead of the vacation period in NorthAmerica, the National Statistics Institute(INSEE) said last month. Problems affectingIraqi oil supply and the suspension of exportsfrom that country also put upward pressureon prices, INSEE remarked. The trendpushed premium gasoline up to $345/tonne,compared with $324/t a month earlier. Die-sel fuel and domestic heating oil prices firmedto $238/t from $233/t the previous month.Heavy fuel oil prices (3.5 per cent sulphur)advanced to $114/t from $104/t, while naph-tha was trading at $269/t, up from $249/t inApril.

In brief

N E W S L I N E

24 OPEC Bulletin

In briefThe Nigerian government recently

announced a set of guidelines for prospec-tive investors in refineries in the WestAfrican country.

New gas field will add103bn cu metres toIranian gas reservesTehran — Iran’s Dei gas field will add103 billion cubic metres of gas to the coun-try’s national reserves with the completionof the exploration stage, according to theDirector of Exploration Affairs at theNational Iranian Oil Company (NIOC),Mahmoud Mohaddes.

The field, located 140 km from Shiraz,the capital of Fars Province, covers an area19 km long and six km wide, with a gaslayer of 560 metres.

Mohaddes said the quality of the gaswas light, sweet and excellent overall,adding that after obtaining liquids it couldbe directly injected into the gas networkwithout refining.

The official Islamic Republic NewsAgency (IRNA) quoted him as saying thatthe value of the reserves stood at around$3bn at current market prices.

Drilling in the field began in the lastquarter of 1999 and was completed in thefourth quarter of last year. Mohaddes saidthe field’s production was estimated at85m cu m/d.

Earlier this month, the Iranian Petro-leum Minister, Bijan Namdar Zangeneh,said natural gas exploration in the 1999-2000 period had pinpointed 1,400bn cum of deposits.

Gas had been extracted from fields inthe southern parts of the country, includ-ing Kordan, Tabnak, Karanj, Zireh, andArash.

The Minister cited the reason for thewide-scale exploration as being a changein exploration methods. Efforts had beenmade to make maximum use of co-opera-tion with international oil companies.

Zangeneh said a considerable numberof buy-back contracts had been signed tojointly explore the country’s oil and gasfields.

Putting the total value of these con-tracts at $11.6bn, he predicted that underthe deals, 3.5bn b of condensed gas,

2,300bn cu m of gas, 100m tonnes ofliquefied gas, and 2.5bn b of oil would beproduced over a period of 30 years.

The projects were expected to earn thecountry a total of around $16.7bn inrevenue, noted the Minister.

Saudi Arabian firmsigns accord for $1bnoil, gas pipeline plantRiyadh — The Aziz Corporation, basedin the Saudi capital Riyadh, has signed adeal with a European firm to build a $1billion plant to manufacture pipelines totransport oil and gas, a company officialdisclose last month.

He said that the plant would startproduction by 2002, but declined to givedetails about the European firm involved,or the factory’s output capacity.

“We will disclose the name of thecompany and details of the deal in duecourse,” he was quoted by the Arab Newsdaily as saying.

The report said the plant would be thesecond-largest of its kind in the world. Itspipelines were aimed at the local and ex-port markets.

Iraqi oil industryproblems must besolved, says AnnanUN, New York — Iraq’s oil industrycontinues to face significant technicalproblems, which, unless addressed, will in-evitably result in a reduction in crude oilproduction from current levels, UN Sec-retary General Kofi Annan has said in aletter to the UN Security Council.

He said it was essential to take allnecessary measures to address the rapiddecline of the country’s oil-productioncapability in existing fields, as well as toensure additional output potential, inorder to sustain current production andexport levels.

When it renewed the oil-for-food pro-gramme for a ninth phase last December,the UN Security Council requested Annanto make the necessary arrangements, sub-ject to the approval of the Council, to allow

UK government mulls new energy taxesLONDON — Despite having some of the high-est fuel taxation in the world, the British gov-ernment is said to be considering bringing inyet more energy taxes, according to a reportin The Guardian newspaper. The threat comeswith the start of the first review of energy inthe UK by the Performance and InnovationUnit (PIU), the government think-tank di-rectly answerable to Prime Minister TonyBlair. The unit’s task is to examine future se-curity of the country’s energy supplies, whilstfulfilling government pledges to cut green-house gases. Fears that over the next 30 yearsBritain will become a net importer of oil andgas, could prompt the PIU to recommendnew energy taxes, the paper pointed out. Suchtaxes would very likely focus on fossil fuels,given the government’s pledge to cut carbondioxide emissions by 20 per cent by 2010from 1990 levels, under the Kyoto Protocol.Any reduction in the consumption of fossilfuels would also help the country’s trade bal-ance. Three-quarters of the price paid bymotorists for petrol in the UK goes directlyto the Treasury in duties and taxes.

Statoil submits plans for Sigyn fieldBRUSSELS — Norway’s state-owned oil and gasfirm, Statoil, has submitted to the governmentplans for the development and operation ofthe Sigyn field in the Norwegian sector ofthe North Sea. The development concept forthe gas and liquids field, on block 16/7, in-volves installing a sub-sea template tied backto Statoil’s Sleipner East field. Offshore de-velopment of Sigyn is scheduled for the mid-dle of next year. Sigyn has reserves of 5.6 bil-lion cubic metres of gas and 5.6 million cu mof condensate. It will supply 2.3bn cu m in2002 and 2003. Statoil has a 50 per cent stakein Sigyn, ExxonMobil has 40 per cent, andNorsk Hydro the remaining 10 per cent.

US carbon dioxide emissions riseNEW YORK — United States carbon dioxideemissions from burning fossil fuels rose by2.7 per cent in 2000, increasing from 1,517mtonnes in 1999 to 1,558m t last year, accord-ing to preliminary estimates released by theEnergy Information Administration. The2000 growth rate of 2.7 per cent was the high-est since 1996, when it stood at 3.6 per cent.The growth in energy-related carbon diox-ide emissions in 2000 can be attributed to areturn to more normal weather conditions,decreased hydroelectric power generation,which was replaced by fossil fuel use, andstrong economic growth, which, at five percent, represents the highest annual growthrate experienced during the 1992-2000 eco-nomic expansion.

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In brieffunds of up to 600 million euros from theUN escrow account, to be used for cov-ering the cost of maintenance and spareparts for the Iraqi oil industry.

To help him with this task, Annan senta team of experts to Iraq in March, whichsubsequently prepared a report for con-sideration by the Council.

The study reflects discussions withIraqi authorities and the proposed arrange-ments for the use of the 600m euros.

PDVSA unit Citgoopens its first gasstation in Puerto RicoCaracas — Citgo International LatinAmerica (CILA), a unit of the Citgo Pe-troleum Corporation, opened its firstgasoline outlet in Puerto Rico last month,according to an announcement by stateoil corporation Petroleos de Venezuela(PDVSA).

Attending the opening ceremony werethe PDVSA President, GuaicaipuroLameda Montero, and Citgo’s President,Oswaldo Contreras Maza.

CILA, which has begun a process ofnegotiations with independent retailers inPuerto Rico, plans to open several otherservice stations on the Caribbean island.

“Our goal is to continue signing upindependent gasoline retailers to offer thePuerto Rican consumer service, qualityand a secure supply that has characterizedour brand in the United States, where ourcompany ranks among the leaders with14,000 gasoline outlets,” said ContrerasMaza.

Citgo, a wholly-owned PDVSA sub-sidiary, is considered one of the maingasoline retail suppliers on the US mar-ket.

In Puerto Rico, there are an estimated1,300 service stations, of which some 300are owned by independent retailers whoservice about 30 per cent of the island’smarket, which consumes a total of some360 million litres/month of gasoline.

Last March, Citgo sent a shipment of180,000 barrels of fuel to Puerto Rico tomeet local demand. The shipment was sentfrom the refinery on Saint Croix, whichis owned by Hovensa, a venture in whichPDVSA holds a 50 per cent stake and Hess

the remaining 50 per cent. So far, some600,000 b of regular and premium gaso-line and diesel have been delivered.

Citgo’s entry into the Puerto Ricanmarket forms part of a PDVSA businessstrategy which includes the possibility ofseeking opportunities to market products,such as fuels and lubricants, in LatinAmerica and the Caribbean.

“We consider Puerto Rico one of themore important markets in the region andwe have decided to be an essential playerin the long-term in the island,” saidLameda Montero.

To service that market, Citgo had re-cently created another subsidiary, CitgoInternational Puerto Rico, based in SanJuan, he added.

Qatar Petroleum inksdeal for gas-to-liquidsplant with ExxonMobilNew York — Qatar Petroleum andExxonMobil have signed a letter of intentto conduct a technical feasibility study fora world-scale gas-to-liquids (GTL) plant inQatar.

The letter was signed by the QatariMinister of Energy & Industry and Chair-man of Qatar Petroleum, Abdullah BinHamad Al Attiyah, and ExxonMobilDirector and Senior Vice-President, HarryJ Longwell.

The study will provide Qatar Petro-leum with information on how the use ofExxonMobil’s proprietary AGC-21 tech-nology in a GTL plant would contribute tothe optimum utilization of resources fromthe giant North gas field.

The study will also identify and deter-mine potential synergy opportunities withother projects and infrastructure in Qatar.

The proposed GTL plant would con-vert gas from the North field into high-quality liquid products, such as low-sul-phur diesel fuel, naphtha, and lubricantbase-stocks, for export to world markets.

“The signing of this agreement sup-ports Qatar’s diversification plans anddemonstrates the government’s continuedimplementation of its strategy to developits industrial base,” said Al Attiyah.

“It represents another important stepin the development of the North field and

UK oil, gas output down slightlyLONDON — United Kingdom oil and gas pro-duction fell slightly during April, accordingto the latest figures from the Royal Bank ofScotland. April UK oil production fell to 2.2million barrels/day, 3.4 per cent down on themonth, and 10.4 per cent below the figurerecorded for April last year. Average daily pro-duction in the 12 months to April 2001 fellby 11 per cent, compared with the 12 monthsto April last year, the survey noted. UK gasproduction also fell slightly in April. Monthlyoutput dropped by 4.4 per cent, while year-on-year output fell by 231m cubic feet/d, or1.9 per cent. Combined oil and gas averagedaily production in the 12 months to Aprilfell by 5.1 per cent. The Bank said there werecontinuing concerns that the industry wouldbe unable to fully capitalize on increased in-vestment levels. “This could impact on thelong-term competitiveness of the North Seaby increasing its costs of production, relativeto other locations,” it noted.

IEA sees demand climbing steadilyPARIS — Global demand for crude oil during2001 should be around 76.55 million bar-rels/day, and supply levels to the market arecurrently viewed as adequate, according to thelatest report from the International EnergyAgency (IEA). Despite signs that the knock-on effects of the downturn in the USeconomy are affecting other OECD nations,the IEA indicated that North American de-mand growth had offset this factor. In addi-tion, the Paris-based Agency pointed out that“demand growth in China and the formerSoviet Union is expected to be immune fromthe global economic slowdown.” For the thirdquarter of 2001, demand is projected to riseby 500,000 b/d from a year earlier to 76.6mb/d, up 100,000 b/d from the IEA’s previousforecast.

TotalFinaElf reports new Angolan findPARIS — French oil group TotalFinaElf hasreported a seventh discovery on block 14, off-shore Angola, giving further confirmation ofthe significance of this development. In astatement, the company said the most recentfind, called Tombua 1, was located after drill-ing to a depth of 280 metres, where oil wasdiscovered in two separate zones. A flow rateof about 10,000 barrels/day of high-quality,39° API crude was recorded from the twozones. Geological and engineering studies willnow be carried out to appraise the discovery.Six other finds have been reported on block14. These include Kuito in 1997, followedby Landana, Benguela and Belize in 1998,while Toboco and Lobito were discovered in2000.

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In briefQatar’s efforts to become a major supplierto regional and international markets,” headded.

For his part, Longwell commented:“We appreciate the confidence and trustplaced in ExxonMobil and we are proudof the progress we have made together withour partners in Qatar Petroleum.

“We believe ExxonMobil’s proprietaryAGC-21 technology will bring a competi-tive advantage to the further developmentof Qatar’s gas resources.”

AGC-21 comprises technology forconverting natural gas into high-qualitytransportation fuels, lubricant base-stocksand petrochemical feedstocks.

ExxonMobil, through its various sub-sidiaries, has had a presence in Qatar since1935.

The company has interests in two LNG

projects — QatarGas (with an interest of10 per cent) and RasGas (25 per cent) —both of which are linked with Qatar’sNorth field, the world’s biggest source ofnon-associated natural gas.

Kuwait Petroleum Corpbudget for 2001–2002okayed by parliamentKuwait — The 2001-2002 budget ofthe Kuwait Petroleum Corporation (KPC)and its affiliates was endorsed by theNational Assembly last month.

Forty-two members of parliamentvoted in favour of the budget, while onelawmaker voted against it, and five depu-ties abstained.

Revenues and expenditure are bothestimated at $14.92 billion, while netprofits have been projected at $2bn, theKuwaiti News Agency (KUNA) reported.

While discussing KPC’s budget, thelawmakers asked company executives towork on periodical maintenance of oilfacilities to avoid accidents and leaks.

They stressed the need for utilizingefficient national manpower to replaceforeigners and to pay more attention tosafety of employees and equipment.

KPC Deputy Chairman and ChiefExecutive Officer, Nader H Sultan, saidthe company would implement projectsworth $15.44bn in the coming five years.

He noted that 2,970 Kuwaitis would

be hired by KPC and another 1,400 localemployees would be taken on with thecompletion of its olefins projects.

Proposed new LNGplant in Irian Jayamay face delaysJakarta — The proposed developmentof the Tangguh liquefied natural gas (LNG)plant in the east Indonesian province ofIrian Jaya may be delayed if potential buyerChina decides to seek more than one gassupply source, it was announced lastmonth.

The President of the Indonesian stateoil and gas firm Pertamina, BaihakiHakim, noted that China was operatingan open tender system for LNG suppliesfor its Guangdong receiving terminal from2005.

This was a major source of business,without which it would be difficult toproceed with the Tangguh development,he told the House of Representatives.

Pertamina would be bidding for theChina LNG contract, but if the deal wassplit among more than one buyer, it wouldbe difficult to develop Tangguh, as thegreenfield plant would not be viable if itsoutput was less than three million tonnes/year, he explained to the House commis-sion on energy affairs.

Pertamina, together with BP, plannedto develop Tangguh with a 6m t/y capac-ity, costing an initial investment of $1.5billion, he said.

As such, the China contract was veryimportant for the two-train scheme, whichwould become Indonesia’s third LNG com-plex after Bontang in East Kalimantan andArun in northern Sumatra.

Citing market sources, Baihakipointed out that China was seeking twosuppliers for the Guangdong complex,which is currently being built in the south-eastern coastal area of the country.

Pertamina sources said that if the com-pany, which is responsible for marketingLNG from Indonesia, secured a contractfrom China for less than 3m t/y, it couldsupply the gas from the rapidly expand-ing Bontang LNG plant.

Industry observers have pointed outthat it would be too risky to commence

Korean firms plan major investmentsSEOUL — The Korea Gas Corporation(Kogas) and the Korea Electric Power Cor-poration (Kepco) are planning to invest morethan $4.67 billion this year, which would helpaccelerate economic development in thecountry. Energy officials said the $466 mil-lion increase in investment in the energy in-dustry would boost the local economy, ac-cording to reports in the local media. Kogashas finalized a budget of $809.77m, whichrepresents a $59.2m increase from the previ-ous year’s plan. Meanwhile, the Korea Petro-leum Development Corporation is to invest$64.96m on the construction and mainte-nance of oil storage centres. HeavyweightKepco has set aside about $3.12bn for powerinfrastructure this year, especially investmentin the transmission and distribution network.

ExxonMobil shortlisted for China pipelineHONG KONG — An ExxonMobil subsidiaryhas been shortlisted for a 4,000-km west-to-east gas pipeline project in China, the com-pany announced last month. The project isdesigned to take gas from the Tarim Basinfields, in the Xinjiang region of westernChina, and the Ordos basin, in central China,to gas markets in and around Shanghai, ineastern China, according to an ExxonMobilstatement. The US firm said that its subsidi-ary ExxonMobil China Gas Pipeline, hadjoined a China Light & Power-led consor-tium in undertaking the huge pipelineproject, the first of its kind in the world.ExxonMobil and the Hong Kong-basedChina Light & Power had been operating forthe past 35 years in the Hong Kong powergeneration business and brought uniquestrength and experience to the project, com-mented the President of the ExxonMobil GasMarketing Company, Stuart McGill. Shang-hai has emerged as one of the largest naturalgas markets in China and the project will becompleted in about four to five years.

New Turkmen licensing round plannedASHGABAT — Turkmenistan’s Ministry of Oiland Gas is planning to announce a new li-censing round offering a broad range of in-vestment opportunities, emphasizing its com-mitment to attracting large-scale foreign capi-tal to its energy sector. The announcementof the new opportunities is scheduled to bemade at the 6th Turkmenistan InternationalOil and Gas Exhibition and Conference, tobe held in the country’s capital Ashgabat onOctober 17-18 this year. Turkmenistan’s oiland gas industry is estimated to need about$25 billion of capital between 2001 and 2010,hence the government’s determination to at-tract foreign investors.

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In briefdevelopment of Tangguh based on asmaller contract, as the global LNG marketremained limited in size.

In addition, a number of existing sup-pliers were in a better position to supplyLNG at a lower cost than a greenfieldproject.

The Tangguh LNG complex would besupported by 14 trillion cubic feet ofnatural gas reserves, in the waters off IrianJaya. It was originally expected to startcommercial production from 2003-05onwards.

In a separate development last month,Indonesia warned US major ExxonMobilthat it must resume output of gas fromthe Aceh fields, which supply the ArunLNG plant, soon.

ExxonMobil’s Indonesian subsidiarysuspended operations there in early Marchdue to growing security problems in thetroubled province, where the separatists ofthe Free Aceh Movement are fighting forindependence.

The official news agency Antaraquoted the Pertamina boss as saying thatif ExxonMobil refused to comply, hewould ask ExxonMobil’s head office in theUnited States to replace its managementin Indonesia with others who would workin Aceh.

Indonesia was losing $100 million amonth as a result of the closures, whichhad tarnished its reputation as a reliablesupplier of LNG, Baihaki noted.

UAE still Japan’slargest supplier ofcrude, says MITITokyo — Japan imported 125.33 mil-lion barrels of crude oil in May, down 0.7per cent from a year earlier, according tothe latest figures from the Ministry of In-ternational Trade and Industry (MITI).

The United Arab Emirates (UAE)remained the biggest oil supplier to Japan,with imports from that country down 9.3per cent to 29.90m b in May.

Saudi Arabia came second with im-ports down by 11.7 per cent to 28.30mb. Imports from Iran were up by 37.5 percent to 16.32m b, making it Japan’s third-largest oil supplier.

Kuwait was fourth with imports of

11.10m b, up 28.1 per cent, followed byQatar with 10.09m b, down by 15.8 percent.

Domestic output of petroleum prod-ucts rose by 0.1 per cent to 16.70m kilo-litres, for the first gain in three months,due partly to a 2.9 per cent increase in theoutput of gasoline to 4.81m kl, a recordfor May.

Sales of petroleum products in Japan,meanwhile, edged down 0.1 per cent to17.90m kl, down for the fourth month ina row.

Sales rose for naphtha, gasoline andheavy fuel oil, but were down for gas oiland kerosene. For gasoline, sales also hita record for May at 4.90m kl, up 0.1 percent.

Nigeria’s NNPC suffersloss of nearly 30 billionnaira in first quarterAbuja — The state-run Nigerian Na-tional Petroleum Corporation (NNPC)suffered a net loss of 29.5 billion naira inthe first quarter of this year, compared witha 19bn naira loss in the same period of2000.

Giving a breakdown of the corpora-tion’s first-quarter activities last month,Group Managing Director Jackson Gaius-Obaseki said the huge loss was as a resultof petroleum product subsidies.

He noted that the NNPC would con-tinue to suffer losses as long as the petro-leum sector remained regulated.

“The NNPC will never be able torecover the cost of products imported andsold domestically, due to the subsidy fac-tor,” he pointed out.

There was an urgent need to open upthe oil sector to fair competition, whichwould, in turn, ensure recovery of cost andavailability of products, he said.

He noted that between January andMarch 2000, the NNPC exported 76 percent of the crude oil it purchased from thegovernment, while the remaining 24 percent was processed locally, owing to theproblems of the refineries.

“During the period under review, 76.3per cent of total crude oil supplied waslocally refined since all the refineries wereoperational,” he observed.

US gasoline output hits new peakNEW YORK — US gasoline production hit anall-time record of 8.57 million barrels/day inMay, the American Petroleum Institute (API)reported last month. The nation’s almostmaxed-out refineries put more crude oil andother petroleum into refinery units than inany previous May, said the API. The 15.83mb/d of petroleum refined during the monthwas the fourth-highest amount ever. Nearly61 per cent of US petroleum needs came fromabroad during May and the amount of im-ported crude oil and refined products hit11.80m b/d, which was 7.5 per cent higherthan a year ago, and the tenth month in arow that imports had increased. Importedgasoline (650,000 b/d) and residual fuel oil,which is used heavily by electricity-generat-ing plants, accounted for 85 per cent of theincrease over last year. Crude oil imports of9.43m b/d were 5.8 per cent higher than inMay last year, the API said.

Gas has bright future in AsiaJAKARTA — Malaysian Prime Minister,Mahathir Mohamad, said last month that thefuture of the gas industry in south-east Asiawas bright, according to the Malaysian NewsAgency, Bernama. Speaking at a ceremonymarking the opening of a Petronas office inthe Indonesian capital Jakarta, Mahathirnoted that there were many encouraging de-velopments in downstream activity, and theindustry had plenty of potential for expan-sion. Gas demand was growing strongly inthe region, especially among the members ofthe Association of South-East Asian Nations,he said. Mahathir added that he welcomedthe co-operation between Petronas, Malay-sia’s national oil company, and Pertamina, itsIndonesian counterpart. Petronas and Indo-nesia have been working together since 1979.

UK firm says Buzzard field promisingBRUSSELS — The United Kingdom oil andgas exploration company, Edinburgh Oil &Gas (EOG), has announced that its Buzzardoil field in the UK North Sea has significantpotential. Prior to the announcement therehad been considerable market speculationabout the size of the field. According to aNorth Sea industry source, “an exploratorywell sidetracked from the original rig, 100 kmnorth-east of Aberdeen, established recover-able oil of 200m-300m barrels in this newreservoir.” EOG has a five per cent interestin Buzzard while Pan-Canadian holds thelargest stake, with a 45.01 per cent interest,and is due to drill another two or three ap-praisal wells in the autumn. The other licenceholders are Intrepid Energy North Sea, with30 per cent, and BG with 19.99 per cent.

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In brief Algeria’s Sonatrach andGaz de France set upfirm to market LNG

Algiers — Algerian state oil and gas com-pany Sonatrach and Gaz de France (GdF)last month signed articles of associationfor the setting up of a new joint venturecompany, Med LNG & Gas.

The new firm, whose capital will beshared equally by the two companies, willbe responsible for marketing liquefiednatural gas to Europe and North Americain the short and medium term.

The two companies also signed an-other accord regarding on the renewal until2013 of two LNG sales contracts with GdF,which expire in 2002.

According to a Sonatrach statement,the developments were part of the co-operation agreement signed by the twocompanies in June 2000 in Nice, France,which aimed at reinforcing bilateral gastrade relations, as well as developing gasreserves.

Speaking at the signing ceremony,Algerian Energy and Mines Minister, DrChakib Khelil, stressed that the deals werein the interests of both sides.

He pointed out that they opened upnew possibilities for Sonatrach in the in-ternational gas market, which was experi-encing rapid growth.

Kuwait’s Kufpecreports first surplusfor two decadesKuwait — The Kuwait Foreign Petro-leum Exploration Company (Kufpec), theforeign arm of the Kuwait Petroleum Cor-poration (KPC), has achieved its firstsurplus in 20 years of operations, it wasannounced last month.

The company had succeeded in wip-ing out huge accumulated losses thattopped $300 million, according to KufpecChairman, Ahmad Al-Arbeed.

Kufpec posted record profits of $106mlast year, up 44.4 per cent on 1999, asrevenues surged 26 per cent to $233m atthe end of 2000, from $177m the previ-ous year, Al-Arbeed said. Total assets stood

at $378m, up 13 per cent on 1999, whilethe firm’s capital was $655m.

The profits enabled the state-ownedcompany, which is responsible for produc-ing oil abroad, to pay off the last $65m ofits losses and transfer the rest to its parentcompany KPC, Al-Arbeed told a newsconference in Kuwait.

Kufpec is involved in oil and gas pro-duction in Australia, China, Egypt, Ma-laysia, Pakistan, Sudan, Yemen, as well asIndonesia and Tunisia, and is currentlydiscussing new projects with Algeria,Bahrain, Iran and Libya, he noted.

Profits for 2001 were projected at$55m, but Kufpec had already posted$31m of profits until the end of April, headded.

Kufpec, which marked its 20th anni-versary last month, made its first profitsin 1994, after years of sustained lossesbecause of a sharp drop in oil prices in the1980s.

The company’s current production hasreached 30,000 barrels/day of gas andcrude oil, Al-Arbeed said, adding it wasplanning to double output within fiveyears and expand production to 200,000b/d by 2015.

Algeria and Iransign new accord onenergy co-operationAlgiers — Algeria and Iran have signedan energy co-operation agreement, follow-ing a three-day visit to Algeria by IranianPetroleum Minister, Bijan NamdarZangeneh.

The accord, signed by Zangeneh andAlgerian Energy and Mines Minister, DrChakib Khelil, covered the developmentof bilateral co-operation in gas activities,and its extension to other sectors.

Both sides said in a statement that themove would serve as a solid basis for co-operation, which promised to be veryfruitful.

The signing of the agreement waspreceded by discussions where the mainlines of future Algeria-Iranian co-opera-tion in the oil and gas sector, and the wholehydrocarbons chain, were mapped out.

The two countries agreed to holdmeetings on furthering business relations

Korean energy import bill downSEOUL — South Korea paid $2.6 billion forits energy imports in April, down by morethan 12 per cent from a year ago, the Minis-try of Commerce, Industry and Energy an-nounced last month. The volume of importedoil dropped by 15.8 per cent during themonth, due to the continuing economicslump which the country has been goingthrough since March. Energy imports for thefirst four months of this year cost the nation$12.6bn, up by 3.1 per cent from the sameperiod last year, said the Ministry. January-April energy consumption amounted to68.12m tonnes of oil equivalent (toe), up by1.9 per cent from a year ago. The country’senergy consumption was lower by 2.1 percent and 0.1 per cent in February and March,respectively, from a year ago, but rose to470,000 toe/day in April.

Egypt seeks to refine Sumed crudeDUBAI — Egypt is negotiating a deal with theUnited Arab Emirates (UAE) and other mem-ber countries of the Gulf Co-operation Coun-cil to refine some of the oil passing throughthe Sumed pipeline. Egyptian Prime Minis-ter, Atef Obeid, speaking in Dubai en routeto Indonesia, where he was due to attend asummit of the Group of 15 developing coun-tries said: “Egypt transports Saudi, Kuwaitiand UAE crude oil through the Sumed pipe-line and our Mediterranean ports. We have arefining capacity of 29 million tonnes and ifwe refine part of the pipeline’s crude, this willbenefit Egypt and the Gulf,” Obeid wasquoted by Dubai’s daily Gulf News as saying.A Dubai-Egyptian team will be formed soonand will meet monthly to pave the way forjoint ventures, the report added.

Mahathir calls for oil discountsKUALA LUMPUR — Malaysian Prime Minis-ter, Mahathir Mohamad, last month calledon the oil-rich countries to help poor nationsby offering them discounts, as these coun-tries suffered the most during periods of highcrude prices. “Discounts or rebates to thesepoor countries during periods of high oilprices would go a long way towards alleviat-ing the financial problems of these countries,”he said in an address to the 6th Asian Oil andGas Conference. “The countries that sufferthe most from high crude prices are the poordeveloping countries with no oil resources oftheir own. They and their people would haveto cut back on using motor vehicles and elec-tricity,” said Mahathir. “It is entirely possibleto do this, although there will be some abuse,”he maintained, adding that it would be a smallprice to pay and the rich oil-producing coun-tries could well afford this.

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In briefand boosting co-operation and investmentopportunities.

A decision was taken to stage hydro-carbons roadshows in Algiers and Tehranto increase awareness of co-operationpossibilities on both sides.

Algeria and Iran are also to work to-gether in preparing for the second meet-ing of the Gas Exporting Countries Fo-rum, to be held in January 2002 in Al-giers.

Speaking after their talks, Khelilstressed the importance of the Iraniandelegation’s visit to Algeria. He highlightedthe two countries’ will to reinforce theireconomic relations, in giving priority tothe hydrocarbons sector, where Algeria andIran possessed great potential.

The Iranian Minister added that thetwo countries had important assets thatthey could pool to further develop thehydrocarbons sector, particularly in gasactivities.

During his trip, Zangeneh met severalhigh-ranking Algerian officials, includingthe President of the People’s NationalAssembly, Abdelkader Bensalah; the PrimeMinister Ali Benflis; and the ForeignAffairs Minister, Abdelaziz Belkhadem.

Venezuela’s PDVSAinks operational dealfor Jose oil terminalCaracas — State oil corporationPetroleos de Venezuela SA (PDVSA) hassigned an agreement with the SWECconsortium, regulating the operation andmaintenance of the petroleum storage andshipment terminal at Jose, Anzoateguistate, eastern Venezuela.

PDVSA said that the terms of theagreement “were favourable for both par-ties, following negotiations over the pastyear.”

The agreement formalizes a temporaryaccord reached between PDVSA and theconsortium members Williams, Enbridgeand Northville Industries in January 2001.

PDVSA will maintain ownership ofthe assets and the private companies willbe responsible for providing personnel tomaintain and operate the terminal for thenext 10 years.

The terminal will be used to load

upgraded synthetic crude from theOrinoco oil belt. It has the capacity toreceive 34 tankers per month and managesome 800,000 barrels/day of crude.

The SWEC consortium has beenoperating the Jose terminal since April1999, under a temporary arrangement,while the parties negotiated the final con-tract.

Qatar Petroleum awardsLPG tank contract toTechnip Abu DhabiDubai — Qatar Petroleum has awardedthe front-end engineering design contractfor additional liquefied petroleum gastanks to Technip Abu Dhabi, it was an-nounced last month.

Technip would build the two tanks atMesaieed, each with a nominal capacityof 100,000 cubic metres, and convert twotanks to butane storage, said the ChiefExecutive of Technip Abu Dhabi, J PGiraud.

The value of the contract was notdisclosed, nor was the schedule for com-pletion, according to a report in Dubai’sGulf News daily.

Technip will also provide ancillaryequipment, such as vapour recovery com-pressors and chillers, product exportpumps, fire detection and fighting systems,civil and structural facilities and a newelectrical sub-station for power supply.

Last month, Technip was awarded a43 million euro lump-sum contract byIran’s Arak Petroleum to expand the olefinsplant at Arak.

Under the contract, ethylene produc-tion capacity from naphtha and kerosene,based on Technip’s in-house technology,will be increased from 247,000 tonnes/year to 306,000 t/y.

Technip’s revenues for the first quar-ter of this year totalled 681m euros, slightlylower than revenues for the correspond-ing period in 2000, when it earned 684meuros.

Annual revenues are about 3 billioneuros. On a regional basis, the Middle Eastaccounts for the highest revenues with 33per cent, followed by the Commonwealthof Independent States and Central Asia,which accounts for 16 per cent.

UK-EU petrol price gap widensLONDON — The gap between British and con-tinental European petrol prices has widenedin recent weeks, as retailers in the UnitedKingdom fail to pass on lower wholesaleprices to the consumer, according to a newstudy released last month. The report, pub-lished by Oil Price Assessments Ltd (OPAL),found that UK-based oil companies and su-permarkets (which have a sizeable percent-age of the retail gasoline market in the UK)had not reduced pump prices in line with a25 per cent fall in gasoline rates on the bench-mark Rotterdam market. Wholesale priceshave steadily dropped from $375/tonne onMay 18 to $282/t on June 12. The study saidthat other European countries had respondedmore quickly to the price falls.

Malaysia’s Petronas awards new PSCKUALA LUMPUR — Malaysia’s state oil corpo-ration Petronas has signed a production-shar-ing contract (PSC) with the Sabah Shell Pe-troleum Company (SSPC), Shell SabahSelatan (SSS) and Petronas Carigali for blockSB303, offshore Sabah, the Malaysian newsagency Bernama reported last month. SSPCwill have a 50 per cent interest in the block,SSS will have 10 per cent, while PetronasCarigali, which is the exploration and pro-duction arm of Petronas, will own the remain-ing 40 per cent. SSPC would be the operatorof the block, said Petronas in a statement.Block SB303, located about 100 km offshoreKota Kinabalu, covers an area of 8,170 sq kmin an average water depth of 75 metres. Thestatement added that a total of 15 explora-tion wells had been drilled in the area, result-ing in the discovery of the Tiga Papan oil fieldand the Titik Terang gas field. The block re-mains promising, Petronas added.

BP buys stake in Egyptian concessionCAIRO — British Petroleum Egypt announcedlast month that it has reached agreement topurchase TotalFinaElf ’s 50 per cent interestin the West Mediterranean deep-water con-cession, in the offshore Nile Delta area, foran undisclosed sum, according to a BP state-ment. BP is already operator of this conces-sion with an existing 50 per cent interest. Theagreement, which was signed in June, is sub-ject to the approval of the Egyptian Ministryof Petroleum. Commenting on the deal,Hesham Mekawi, who was recently ap-pointed President and General Manager forBP Egypt, said that the acquisition “comple-ments our positions in the adjacent NorthAlexandria and North Idku concessions,where we have enjoyed four recent successfulexploration wells, proving up over two tril-lion cubic feet of new gas resources.”

30 OPEC Bulletin

The 1999 edition of the OPEC Annual Statistical Bulletin(ASB), which has established itself as the standard reference work on the oil and gas

industries of OPEC Member Countries, is now available from the Secretariat.

Compiled by a team of statistical experts, the ASB contains an unrivalled wealth of data covering the period until end-1999 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:

Summary tablesand basic indicators

Basic economicindicators in OPECMember Countries (GDP,population, trade, etc)from 1979-99. Side-by-side comparisons offundamental informationon the oil and gasindustries of OPECMember Countriesand the rest of theworld cover thesame period.

Oil and gas data

More detailedinformation on thehydrocarbon industriesof OPEC and non-OPEC countries,including oil and gasreserves, explorationand production outputand consumption ofrefined products,exports and imports.Most tables cover1995-99.

Transportation

A breakdown by size ofthe oil tanker and liquidgas carrier (LPG) andLNG) fleets of OPEC

Member Countries andthe rest of the world, aswell as freight rates for1995-99. Also includes

data on oil, gas andproduct pipelines in

OPEC MemberCountries.

1Prices

Monthly average pricesof the OPEC Reference

Basket of crudes andits components for

1997-99 and annualaverages for 1990-99,

plus selected majorcrudes (OPEC andnon-OPEC) for the

same periods. Spotrefined product prices

and a breakdown of thecomposite barrel are

also featured.

Major oil companies

Data on theoperations of

six oil majors:BP Amoco,

ExxonMobil,TotalFinaElf,

Royal Dutch/Shell,Chevron

and Texaco.Tables show revenue,

operating costs,taxation, net income

and much more.

23

4

5

The OPEC Annual Statistical Bulletin 1999 plus diskette costs ATS 940 for a hard copy. To order, 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. A PDF version can be downloaded free of charge at www.opec.org.

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.

Available exclusively from OPEC:

July 2001 31

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 averageMay June 2000 2001

Reference Basket 26.25 26.10 26.24 25.00Arabian Light 25.77 26.17 25.64 24.48Dubai 25.40 25.86 24.72 24.36Bonny Light 28.51 28.06 27.08 26.56Saharan Blend 28.47 28.16 27.28 26.87Minas 28.21 27.86 27.02 26.47Tia Juana Light 22.77 22.30 25.27 22.21Isthmus 24.62 24.25 26.69 24.02

Other crudesBrent 28.35 27.96 26.81 26.54WTI 28.60 27.67 28.85 28.36

DifferentialsWTI/Brent 0.25 –0.29 2.04 1.82Brent/Dubai 2.95 2.10 2.09 2.18


Crude oil price movements

After peaking in May, the monthly aver-age price of the OPEC spot ReferenceBasket weakened slightly in June, by15¢/b to reach $26.10/b. All the Basket’scomponents registered decreases, with theexception of Dubai and Arabian Light,which gained 46¢/b and 40¢/b, respec-tively. Of the remaining five crudes, Sa-haran Blend and Minas posted the smallestlosses, retreating by 31¢/b and 35¢/b,respectively, followed closely by Isthmus,whose monthly average slid by 37¢/b,with respect to the May figure. Finally,Brent-related Bonny Light and Tia JuanaLight accumulated the biggest losses, fin-ishing 45¢/b and 47¢/b down, respec-tively (see Table A).

The average weekly price of the Basketfirmed during the first half of the month,achieving its highest weekly average for2001 during the second week, when itreached $27.06/b. However, during thesecond half of the month, the Basket lostground, averaging $25.58/b for the thirdweek and declining further in the fourth,closing at $24.94/b. Earlier in the month,the market had drawn support fromOPEC’s decision to maintain existingoutput levels and from the interruption ofIraq’s exports, involving approximately2.0–2.2 million barrels per day in thedispute with the United Nations over the

proposal to introduce a new sanctionsregime. Prices strengthened further dur-ing the second week, amid increased con-cern over the fate of the lost Iraqi volumes,which constituted approximately five percent of the total crude oil trade, and thebearish US stock statistics released by theAmerican Petroleum Institute (API), whichshowed a huge 13.2m b drop in crude oilstocks. This sharp decline was attributedto a tropical storm that delayed the dis-charging of many tankers in the US GulfCoast. International benchmark crudesplummeted during the third week, withdated Brent losing more than $2/b andtriggering the fall in the market. Crudeprices came under tremendous pressurefrom speculation that Iraq’s exports couldbe resumed if the ‘oil-for-food’ programmewas extended by the UN. Crude pricescontinued to decrease, on the release ofbearish product inventory data by the API.The report showed a larger-than-antici-pated build in gasoline stocks, which causedthe gasoline futures contract to dive, tak-ing crude prices along for the ride. To-wards the end of the month, the Basket slidfurther, once again reacting to the Iraq-UN dispute over the ‘oil-for-food’ pro-gramme and bearish weekly API stockfigures. The highlight of the weekly APIreport, which played down market psy-chology, was the build in gasoline inven-

June1

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.

tories for the tenth consecutive week,despite the pick-up in seasonal demand.

US and European marketsRising US gasoline stocks weakened

crude oil prices in June. API statistics forthe four weeks of the month showed abuild in gasoline inventories in the rangeof 3m–6m b. Sour grades firmed in the USmarket, as a result of the decrease in sup-plies caused by the suspension of Iraqiexports. Light sweet grades came underpressure from falling product prices andthe subsequent weakness in refiners’ mar-gins. The relative strength of the Brentmarket, combined with the weakness inWTI, kept the arbitrage window closed forthe whole of June. In Europe, dated Brentwas supported later in the month by thecontinued buying of one European major,which picked up cargoes at premiums tothe August IP Brent contract of 35¢–65¢/b. High crude prices, combined withweak refiners’ margins, which were pushedlower by relatively low product prices,kept European refiners sidelined.

Far Eastern marketsThe sweet crude oil Asian market was

characterized by a lack of firm demandcreated by uncertainty over regional refin-ers’ margins. Japanese utilities were un-likely to ramp up demand for naphtha-rich

32 OPEC Bulletin


grades, in the face of weak refiners’ mar-gins. Availability of light sweet cargoes ofGriffin and Australian Cossack, amongothers, kept refiners relaxed and pricesunder pressure. Meanwhile, Chinese re-finers, facing depressed demand in thedomestic market, reversed roles and turnedinto net exporters, adding to the bearishmarket sentiment. In contrast, healthydemand for sour grades provided supportfor prices. Oman, which was traded at apremium to the Ministry for Oil and Gasfor Oman for most of the month, how-ever, slipped into negative territory, aftertraditional Oman buyers (China and SouthKorea) had turned into sellers.

Product markets andrefinery operations

After reaching new peaks in April, USgasoline prices fell for the second succes-sive month in June, on the back of abun-dant supply. This had a rapid downwardinfluence on leading gasoline markets inother world refining centres, despite sus-tained discretionary refinery run cuts inEurope and Asia. Refiners’ margins dete-riorated, jumping into negative territoryin all markets (see Table B).

US Gulf marketIn spite of the robust driving season

demand in June, the gasoline price fell bya substantial $8.31/b to $30.48/b, thelowest level for five months and slightlyabove the December 2000 value, whichwas then caused by a combination ofcollapsing crude markets and the usualreceding demand. Steep declines in thegasoline market during the month, on theback of gasoline stockbuilds, which rose tocomfortable levels, were based on a numberof developments. First, US refineries hadbecome well equipped to meet strictersummer standards, after they had carriedout some modifications during turna-rounds early this year, based on the expe-rience gained last summer in tackling newspecifications. In other words, the coun-try’s refiners were able to meet internalmarket requirements, provided that therewere no major operating problems in plantsor logistic systems, with the arbitragewindow open only to Latin Americancargoes — since higher gasoline prices in

wardation around the middle of the month,due to shortcovering by traders, and thenreturning to the contango status to finish42¢/b lower. This would encourage theearly stockpiling of heating oil, especiallyafter the gasoline shortagehad dissipated. The fuel oil price rose by80¢/b, supported by decent Mexican de-mand, amid the prospect of higher im-ports in the near future (see Table B).

US refiners’ margins fell steadily dur-ing June, switching from positive values inthe first half of the month to negative onesin the second, affected to a large extent bythe fact that the gasoline price collapsed ata much faster rate than the weaker bench-mark crudes, eg, the WTI margin stood at–24¢/b.

Decent refiners’ margins in early June

Table C: Refinery operations in selected OECD countries

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

April 01 May 01 June 01 April 01 May 01 June 01

USA 15.48 15.84 15.89 93.6 95.8 96.10France 1.65 1.76R 1.70 87.3 93.2R 89.85Germany 2.15 2.24R 2.23 95.4 99.0R 98.58Italy 1.87R 1.67R 1.73 79.4R 70.9R 73.25UK 1.42 1.34R 1.36 80.4 75.8 R 76.96Eur-16** 11.87R 11.76R 11.71 87.0R 86.2R 85.82Japan 4.25 3.63 na 85.7 73.1 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.

Europe and different material specifica-tions in Asia, on top of lower gasoline-to-crude differential prices, led to muchweaker activity in arbitrage trading. Sec-ondly, there was an increased number ofindependent refiners who signed deals withUnocal to use its patent for reformulatedgasoline (RFG) production, despite the ma-jors still being opposed to such a move-ment. Thirdly, there were start-ups of anumber of new gasoline-producing units.And finally, the Environmental Protec-tion Agency relaxed the range of lightmaterials to be utilized in the RFG pool inthe Midwest region. All these factors con-tributed to boosting gasoline supply torecord levels that outpaced demand. Gasoilmarkets exhibited different trends through-out June, switching from contango to back-

Table B: Selected refined product prices $/b

ChangeApril 01 May 01 June 01 June/May

US GulfRegular gasoline (unleaded) 42.03 38.79 30.48 –8.31Gasoil (0.2%S) 30.93 31.65 31.23 –0.42Fuel oil (3.0%S) 15.19 16.80 17.59 +0.80

RotterdamPremium gasoline (unleaded) 37.57 39.09 31.73 –7.36Gasoil (0.2%S) 30.37 31.18 31.06 –0.12Fuel oil (3.5%S) 17.05 18.23 17.97 –0.26

SingaporePremium gasoline (unleaded) 32.76 32.64 26.89 –5.75Gasoil (0.5%S) 29.80 30.79 30.00 –0.79Fuel oil (380 cst) 20.47 22.07 20.16 –1.90

July 2001 33


the $28.81/b support level, causing manylongs in the market to liquidate. Bearishfundamentals and the movement of thecontract below the 200-day average in-creased the pressure on prices. Creatingfurther pressure were builds in US gasolineand RFG stocks — the first by 3.6m b andthe second by 1.35m b. This caused thegasoline contract to move down sharply,registering the biggest one-day drop everrecorded on the Exchange and draggingNYMEX WTI to a low of $26.50/b.

In the last week of June, the WTIcontract moved up initially, in response tosignals from OPEC with regard to keepingthe present production ceiling unchanged— later in the week, it moved down, inresponse to another build in stocks ofgasoline, as well as distillates and crude.Signals of a weaker US economy also in-creased the bearish sentiment.

The tanker market

OPEC area spot-chartering declined by2.66m b/d to a monthly average of 11.29mb/d in June. The suspension of Iraq’s crudeoil exports and the slow-down in oil de-mand were behind this reduction. More-over, the weakening of the world economyresulted in the current level of fixturesbeing below the 2000 figures by 4.61mb/d, or about 30 per cent. Accordingly,global spot-chartering edged 2.33m b/dlower to a monthly average of 20.56mb/d, which was 5.33m b/d below the year-ago figure, or about 21 per cent. Theabsence of Iraq’s oil exports also causedOPEC’s share of global spot-chartering todecline in June, by 6.04 percentage pointsto 54.88 per cent, which was 6.53 percent-age points lower than the previous year’slevel. Spot fixtures from the Middle Easton eastbound and westbound long-haulroutes declined by 1.31m b/d to 3.89mb/d and by 1.14m b/d to 1.09m b/d,respectively. Furthermore, the shares ofeastbound and westbound long-haulOPEC total fixtures dropped by 2.82 and6.34 percentage points to 34.48 per centand 9.62 per cent, respectively; together,they accounted for 44.09 per cent of totalchartering in the OPEC area, and this was9.16 percentage points lower than thatobserved in May. Preliminary estimates ofsailings from the OPEC area declined by

induced refiners to increase throughput to15.89m b/d, the highest level since July2000. The refinery utilization rate, there-fore, rose to 96.10 per cent (see Table C).

Rotterdam marketDuring June, the gasoline price plunged

by $7.36/b, affected by falling US gasolinemarkets, together with weak Europeandemand. Despite the tightening distillatemarket, as a result of sustained refinery runcuts and dwindling Russian supply in theexpectation of a lower rail tariff in July,gasoil lost 12¢/b, amid rising regional stocksrelated to ebbing demand. Nonetheless,the market looked bullish, on the back ofanticipated German demand. Fuel oil lost26¢/b, undermined by a lack of exportsand lower arbitrage activity, followingsizeable losses in the US gasoline market;this was despite the tight market in thesecond part of the month, related to hy-drogen sulphide contamination of Rus-sian cargoes (see Table B).

The significant decline in gasolineprices hampered refiners’ margins and theseshifted into negative territory, the marginfor Brent equalling –$2.29/b.

Refinery throughput in the Eur-16(EU plus Norway) countries in June fellby a further 47,000 b/d to 11.71m b/d,reflecting continued discretionary run cuts,in response to poor refiners’ margins. Theutilization rate was 85.82 per cent, thelowest level for two months (see Table C).

Singapore marketIn June, although Asian-operated re-

finery run cuts were extended to includeChinese plants, on top of ongoing seasonalrefinery turnarounds in Japan and SouthKorea, sluggish regional demand, com-bined with a lack of exports, weighedheavily on product prices. Gasoline plum-meted by $5.75/b, as the much weaker USgasoline market translated into plentifulregional supply. Gasoil decreased by79¢/b, largely on weaker Indonesian de-mand that resulted from higher industrialinventories and a hike in consumer prices,as of June 15. Fuel oil shrugged off Dubai’smoderate gains and fell by $1.90/b, underpressure from the arrival of many foreigncargoes, creating a well-supplied market,and hence switched into contango (seeTable B).

Declining product prices, coupled with

sustained growth in the Dubai market,sent refiners’ margins deep into negativeterritory.

In May, refinery throughput in Japanfell heavily, by 630,000 b/d to 3.63mb/d, in line with seasonal maintenanceprogrammes. Consequently, the utiliza-tion rate was 73.1 per cent, which was 0.2percentage points higher than the onewitnessed last year (see Table C).

The oil futures market

In the first week of June, NYMEX WestTexas Intermediate (WTI) was initiallysupported by the halt in Iraqi exports; laterin the week, there was a corrective moveled by gasoline; but the main downwardforce was that of higher-than-expectedbuilds in gasoline, crude oil and heatingoil stocks. The July WTI contract endedthe week at $27.75/b, which was 18¢/blower than it had started. At the end of theweek, the speculative paper, that was lift-ing prices, was countered by fund-selling,which had started on June 1, after the pricehad moved below the 200-day movingaverage.

The WTI contract rallied in the sec-ond week, as the market focused on theabsence of Iraqi barrels. Adding extraimpetus to the rally was the CFTC’s Com-mitments of Traders report, which showedthat non-commercials had liquidated theirlong positions and gone short, meaningthat an increase in prices would triggershort-covering and a higher movement.Despite the move by Saudi Arabia to in-crease the supply to customers by three tofour per cent, the market maintained itsrally, due to the crude market’s tendencytowards backwardation. Concern aboutthe tropical storm Allison was also bullishand was the reason behind a big stock-draw of 13.7m b reported by the API. Theonly dip in prices during the week oc-curred because of gasoline, which showeda build in stocks of 6.3m b, thereby assur-ing markets of the adequacy of supplies forthe driving season. However, the dip wascountered by a strong heating oil market,which pulled up crude to $29.04/b. In thethird week, NYMEX WTI went througha continuous decline, on speculation aboutthe return of Iraqi exports. This led to atechnical sell-off, as the contract broke below

34 OPEC Bulletin


690,000 b/d to a monthly average of20.77m b/d, which was only 3.22 percent-age points below the previous month’slevel. Sailings from the Middle East de-clined by 1.30m b/d to a monthly averageof 13.79m b/d, which constituted about66 per cent of total OPEC sailings. Arriv-als in the US Gulf Coast, East Coast andthe Caribbean increased in June by 340,000b/d to a monthly average of 7.88m b/d,while arrivals in North-West Europe andEuromed rose by 220,000 b/d and 120,000b/d to 5.58m b/d and 4.22m b/d, respec-tively. The estimated oil-at-sea on June 30was 459m b, which was 23m b above thelevel registered at the end of May.

A thin volume of fixtures and excesssupply of tonnage hammered crude oiltanker freight rates on all the major tradingroutes for all type of tankers. The mainfactor affecting the decline in freight rateswas the lack of sufficient demand to employthe available tonnage. The VLCC marketin the Middle East experienced a roughmonth in June, with freight rates decliningsteadily since March, losing about 60 percent, and hit the lowest level since August1999. Rates dropped by 17 points to amonthly average of Worldscale 45 on theMiddle East eastbound long-haul routeand by 20 points to reach W38 on thewestbound route. This downturn in theVLCC market generated bearish pressureon the Suezmax tanker market; freightrates were also hit hard this month as theydropped to a two-digit level, which hadnot been seen since December 1999.Freight rates on the routes from WestAfrica and North-West Europe to the USGulf dropped sharply by 24 points to W89and by 30 points to W91, respectively, onthe lack of trade, as the US crude price,WTI, softened and traded at a discount toBrent and Bonny Light, limiting crudeimports to the US market. Aframax freightrates on short-haul trading routes followedthe downtrend in VLCC and Suezmaxand experienced steep drops. The biggestfall in rates occurred on the route from theCaribbean to the US Gulf Coast, wherethey declined by 19 points to W177. Onthe routes across the Mediterranean and toNorth-West Europe, the rates for modernAframax tonnage declined by ten points toW170 and by 14 points to W140, respec-tively. Freight rates for 70–100,000 dwttankers on the route from Indonesia to the

US West Coast continued to soften, asthey declined by a further two points toW134.

Product tanker freight rates displayedmixed trends in June. They continued toimprove on the route from the MiddleEast to the Far East, surging by 20 pointsto W258, due to higher Asian importneeds, where an early June refinery outagereduced local availability. Meanwhile, ratesdecreased by 19 points to W287 on theSingapore/Far East route, as refiners keptcutting their runs due to poor margins.Because of a lack of product export oppor-tunities across the Atlantic on the routefrom North-West Europe to the US EastCoast, freight rates plunged by 60 pointsto W295. In the Mediterranean, the cleantanker market was very quiet on thindemand, and freight rates within theMediterranean route dropped by 46 pointsto W287; meanwhile, on the route toNorth-West Europe, they fell by 62 pointsto W260, due to a sufficiency of productinventories in Europe. The Caribbeanmarket maintained the previous month’slevel of activity, and freight rates on theroute to the US Gulf Coast almost stabi-lized at W263, which was only four pointsbelow the level registered in May.

World oil demand

Figures for 2000

WorldAccording to the latest available fig-

ures, world oil consumption during 2000grew by 580,000 b/d, or 0.8 per cent, to75.68m b/d. This latest estimate translatesinto a downward revision of 60,000 b/d,compared with the figure presented in theprevious report. There has also been adownward revision to historical data.Nonetheless, we shall refer only to lastyear. Specifically, for 2000, the latest avail-able data shows that demand in develop-ing countries grew by only 170,000 b/d toaverage 18.62m b/d, instead of the 230,000b/d growth presented in the last report.Within this group, almost all the down-ward revision has been concentrated inLatin America, to the tune of 70,000b/d, to show a net contraction of 10,000b/d, instead of a rise of 60,000 b/d, aspresented in the last report. On a quarterly

basis, world demand has experienced aminor upward adjustment of 20,000 b/dduring 1Q, to average 75.61m b/d. For theremainder of the year, there have beendownward revisions of 120,000 b/d in2Q, 150,000 b/d in 3Q and 110,000b/d in 4Q.

Projections for 2001For 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 850,000 b/d, or 1.1 per cent, toaverage 76.53m b/d. On a regional basis,demand is projected to increase by 280,000b/d in the OECD and by 410,000 b/d indeveloping countries, with the remaining160,000 b/d originating in the ‘other re-gions’ (former CPEs). On a quarterly basis,compared with the year-earlier figure,world demand grew by 0.60 per cent, or470,000 b/d, to average 76.08m b/d inJanuary–March. For the rest of the year,demand is projected to register furtherincreases of 1.2 per cent in 2Q, 0.9 per centin 3Q and 1.8 per cent in 4Q.

OECDHaving grown by as little as 0.3 per

cent last year, OECD product deliveriesare projected to post a higher growth ratein 2001, rising by 0.6 per cent, or 280,000b/d, to average 48.11m b/d. Almost all thegrowth is expected to take place in NorthAmerica, with the lion’s share originatingin the USA. Inland delivery of petroleumproducts in North America in 1Q, accord-ing to the latest figures, grew by a solid 2.2per cent, or 520,000 b/d, to average 24.17mb/d. The USA accounted for almost all theincrease in demand in the region, whiledemand in Canada rose by a marginal10,000 b/d and declined in Mexico by40,000 b/d. US product deliveries rose by2.8 per cent, or 550,000 b/d, to average20.14m b/d. Demand in Western Europeremained on a declining path, posting afall of 0.5 per cent, or 80,000 b/d, during1Q. In contrast, the OECD Pacific coun-tries displayed 0.9 per cent growth, or90,000 b/d, in the same period. Accordingto the latest figures, demand for petroleumproducts grew by 1.5 per cent, or 90,000b/d, in Japan. It is important to point outthat consumption contracted by 0.7 per

July 2001 35


cent in South Korea, the second mostimportant regional consumer, during 1Q.

For the remainder of the year, demandis projected to rise in North America, withmost of the growth originating in the USAand, to a lesser extent, Canada. Deliveriesof petroleum products will continue to fallmarginally in Western Europe, at a rate of0.3 per cent, which translates into a 40,000b/d volumetric decline. Our present esti-mate calls for a nearly negligible 0.3 percent growth rate in demand for the OECDPacific countries. This projection is basedon the present situation in the Japaneseeconomy, which continues to show signsof weakening. GDP growth rate estimatesfor Japan in 2001 have again been reviseddown significantly and now stand at –0.2per cent; likewise, economic growth ratesin South Korea have been revised downsystematically.

Developing countriesOil demand in developing countries

has been revised down for 2001. It is nowexpected to rise by 410,000 b/d, or 2.2 percent, to average 19.04m b/d for the year.The estimated growth rate in consump-tion has been lowered for the Asian groupof countries from the previous 3.0 per centto 2.2 per cent. The fundamental factorbehind the lower demand outlook is thatAsian regional GDP is projected to grow ata lower-than-anticipated rate. These econo-mies are highly export-dependent and areextremely reliant upon the health of theirtrading partners. Projections for the re-maining regions of this group (LatinAmerica, Middle East and Africa) havebeen lowered, to reflect changes in re-gional economic indicators.

Other regionsApparent demand in the former CPEs

is projected to grow by 160,000 b/d, or 1.8per cent, to average 9.38m b/d for 2001.Revisions to the trade and production datafor 1Q show that apparent FSU demandgrew by 7.2 per cent, or 270,000 b/d,compared with the year-earlier figure,instead of the more optimistic eight percent presented in the previous report. Thelatest assessments indicate that there hasbeen growth of 130,000 b/d, or nearly 3.7per cent, in 2Q. For the remaining twoquarters, we anticipate a decline in appar-ent consumption, due to a rise in the levelof exports, which will outpace any gain inproduction. During 1Q, net exports were320,000 b/d higher than in 1Q00. Themost up-to-date figures show that thistrend continued in 2Q, when total netexports are estimated to be 3.78m b/d.High international oil prices, the need formore revenue, in order to service interna-tional loans, and the switch to natural gascontinue to undermine internal consump-tion. Indigenous production and tradedata for the first three months of the yearshow a considerable drop in Chinese ap-parent consumption. According to thelatest figures, apparent demand declinedby 7.5 per cent during 1Q. Even thoughthe decline seems huge, one should notforget that this comparison is made with1Q00, when demand surged by 17 percent to reach a 1Q record level. The latestavailable data shows a considerable recov-

ery in total imports for 2Q. Net oil im-ports registered a rise of 36.8 per cent,compared with the previous quarter, anda 26.4 per cent increase, versus 2Q00.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.

World oil supply

Non-OPEC

Figures for 2000The 2000 non-OPEC supply figure

has been revised down by around 20,000b/d to 45.79m b/d, compared with the lastreport. This is the result of downwardadjustments to the figures for 1Q, 3Q and4Q of around 30,000 b/d, 30,000 b/d and20,000 b/d to 45.80m b/d, 45.67m b/dand 46.20m b/d, respectively; 2Q figureremains unchanged at 45.50m b/d. Theyearly average increase is estimated at 1.21mb/d, compared with the 1999 figure.

Expectations for 2001The 2001 non-OPEC supply forecast

figure has been revised up by around170,000 b/d to 46.24m b/d, which is450,000 b/d higher than the revised 2000

Table D: FSU net oil exports m b/d

1Q 2Q 3Q 4Q Year

1997 2.81 2.92 2.88 2.88 2.871998 2.77 3.02 3.18 3.20 3.041999 3.12 3.62 3.52 3.49 3.4420001 3.97 4.13 4.47 4.01 4.1420012 4.28 4.54 4.99 4.33 4.54

1. Estimate.2. Forecast.

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

June 01/1999 2000 1Q01 May 01* June 01* 2Q01 May 01

Algeria 766 808 825 820 837 820 17Indonesia 1,310 1,280 1,253 1,199 1,222 1,214 23IR Iran 3,509 3,671 3,798 3,651 3,660 3,667 10Iraq 2,507 2,551 2,207 2,895 1,001 2,280 –1,894Kuwait 1,907 2,101 2,142 2,015 2,016 2,017 1SP Libyan AJ 1,337 1,405 1,407 1,361 1,368 1,365 7Nigeria 1,983 2,031 2,131 2,033 2,087 2,059 53Qatar 641 698 716 678 687 684 9Saudi Arabia 7,655 8,248 8,299 7,878 7,974 7,916 97UAE 2,077 2,252 2,312 2,114 2,128 2,147 14Venezuela 2,808 2,897 2,979 2,833 2,830 2,843 –3

Total OPEC 26,499 27,943 28,070 27,476 25,810 27,011 –1,666

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

36 OPEC Bulletin


Table F: US onland commercial petroleum stocks1 m b

ChangeDecember 29, 00 March 30, 01 June 1, 01 June 29, 01 June/May June 29, 00

Crude oil (excl SPR) 288.7 303.2 324.4 310.7 –13.7 290.9Gasoline 193.8 193.0 210.3 221.6 11.3 209.4Distillate fuel 116.1 104.0 108.1 112.8 4.7 105.9Residual fuel oil 34.7 39.8 41.5 42.5 1.0 37.1Jet fuel 43.9 40.1 41.6 43.0 1.4 43.6Unfinished oils 87.1 101.3 94.8 90.4 –4.4 90.9Other oils 165.8 142.1 179.3 191.4 12.1 178.7Total 930.0 923.5 1,000.0 1,012.4 12.4 956.5SPR 541.2 542.3 543.3 543.3 0.0 568.9

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

Table G: Western Europe onland commercial petroleum stocks1 m b

ChangeDecember 00 March 01 May 01 June 01 June/May June 00

Crude oil 420.6 451.7 445.5 438.2 –7.3 442.0Mogas 152.9 158.3 153.8 156.5 2.7 147.4Naphtha 24.6 22.0 24.6 25.1 0.4 23.3Middle distillates 342.8 330.8 330.3 333.2 2.9 319.1Fuel oils 125.8 123.6 125.3 122.2 –3.1 120.0Total products 646.2 634.7 634.0 637.0 3.0 609.8Overall total 1,066.7 1,086.3 1,079.5 1,075.2 –4.3 1,051.8

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 April 01 May 01 May/Apr May 00

Crude oil 105.1 118.7 118.5 126.1 7.6 117.2Gasoline 12.7 14.6 15.1 14.7 –0.4 15.8Middle distillates 40.3 31.4 34.0 33.8 –0.2 34.6Residual fuel oil 20.4 20.2 21.1 20.9 –0.2 19.7Total products 73.4 66.3 70.2 69.4 –0.8 70.0Overall total2 178.5 185.0 188.7 195.5 6.8 187.2

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

July 2001 37


estimate. The 2001 quarterly figures havebeen revised up by around 20,000 b/d to46.25m b/d, 150,000 b/d to 45.80mb/d, 290,000 b/d to 46.27m b/d and250,000 b/d to 46.63m b/d, respectively,compared with the previous report.

The FSU net oil export forecast for2001 has been revised down by 20,000b/d to 4.54m b/d, while the 2000 figureremains unchanged at 4.14m b/d, com-pared with the last report (see Table D).

OPEC natural gas liquidsOPEC NGL data for 2000 and 2001

have been revised up by around 40,000b/d each to 2.95m b/d and 2.99m b/d,respectively. Also, the 1999 figure hasbeen revised up by around 20,000 b/d to2.86m b/d.

OPEC NGL production — 1997–2001m b/d

1997 2.811998 2.781999 2.861Q00 2.952Q00 2.953Q00 2.954Q00 2.952000 2.95Change 2000/1999 0.092001 2.99Change 2001/2000 0.04

OPEC crude oil productionAvailable secondary sources indicate

that, in June, OPEC output was 25.81mb/d, which was 1.67m b/d lower than therevised May level of 27.48m b/d. Table Eshows OPEC production, as reported byselected secondary sources.

Stock movements

USAUS commercial onland oil stocks rose

by 12.4m b, or 440,000 b/d, to 1,012.4mb during the period June 1–29. This buildresulted mainly from an increase of 12.1m

b to 191.4m b in ‘other oils’, followed bygasoline, which rose by 11.3m b to 221.6mb, a level not seen since June 1999. Thehigh level of refinery throughput tookgasoline output to a record high, which,together with stagnant demand, fostereda rebuilding of gasoline stocks, while thisstrong level of refinery runs pushed downsharply crude oil stocks, by 13.7m b to310.7m b. Distillates registered an in-crease of 4.7m b to 112.8m b, on the backof lower demand, as well as increasingproduction. Jet kerosene and fuel oil alsoshowed slight builds, rising by 1.4m b to43.0m b and 1.0m b to 42.5m b, respec-tively, due to increasing output. Totalstocks were 55.9m b, or about 6 per cent,higher than last year’s figure.

During the same period, the US Stra-tegic Petroleum Reserve (SPR) remainedunchanged at the previous month’s levelof 543.3m b (see Table F).

Western EuropeIn June, commercial onland oil stocks

in Eur-16 witnessed a further contra-seasonal draw, moving down by a slight4.3m b, or 140,000 b/d, to 1,075.2m b.Most of the draw occurred with crude oil,which fell by 7.3m b to 438.2m b, due tothe downturn in crude oil imports, espe-cially from Iraq. This was followed by fueloil, which declined by 3.1m b to 122.2mb, on the back of lower output. Rises ingasoline and middle distillates diminishedthis draw, climbing by 2.7m b to 156.5mb and 2.9m b to 333.2m b, respectively.Sluggish demand and closing transatlanticarbitrage were the main reasons behind therise in gasoline, while increasing imports,especially Russian barrels, contributed tothe build in distillates. The overall stocklevel was 23.3m b, or about two per cent,above last year’s figure (see Table G).

JapanCommercial onland oil stocks in Japan

continued to show a seasonal build, as theyrose by a further 6.8m b, or 220,000b/d, to 195.5m b in May. Crude oil was

the sole contributor to this build, increas-ing by 7.6m b to 126.1m b, on the backof the cut in refinery throughput, due toseasonal maintenance. All major productstocks registered slight decreases, as a re-sult of lower production. Gasoline moveddown by 400,000 b to 14.7m b, whilemiddle distillates and fuel oil declined by200,000 b each, to stand at 33.8m b and20.9m b, respectively. The total level was8.3m b, or about four per cent, higher thanthe year-ago figure (see Table H).

Balance of supply/demand

The world oil demand estimate for 2000has been revised down since last month’sreport by around 100,000 b/d to 75.7mb/d, while non-OPEC supply remains un-changed at 48.7m b/d; the difference isestimated at 26.9m b/d, down by around100,000 b/d. The yearly average balanceis 1.0m b/d, revised up by around 100,000b/d, with quarterly distributions of–400,000 b/d, 2.3m b/d, 1.1m b/d and1.0m b/d, respectively; this contains noadjustment for 1Q, while the other quar-ters have been adjusted up by around200,000 b/d, 200,000 b/d and 100,000 b/d,respectively. The 1999 balance remainsunchanged at –1.2m b/d (see Table I).

The non-OPEC supply forecast figurefor 2001 has been revised up by around200,000 b/d to 49.2m b/d. while theworld oil demand figure has been reviseddown by around 300,000 b/d to 76.5mb/d, resulting in an annual difference of27.3m b/d, down by around 500,000b/d from the last report’s figure. The quar-terly distribution forecasts have been re-vised down by around 700,000 b/d to26.8m b/d, 300,000 b/d to 26.1m b/d,600,000 b/d to 27.5m b/d and 500,000b/d to 28.7m b/d, respectively, comparedwith the last report’s figures. The balancefor 1Q has been revised up by around700,000 b/d to 1.2m b/d, while 2Q bal-ance, which has been introduced for thefirst time, is estimated at 900,000 b/d.

38 OPEC Bulletin


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

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

World demandOECD 46.7 46.8 47.7 48.2 46.6 48.0 48.6 47.8 48.7 46.5 48.2 49.1 48.1

North America 22.7 23.1 23.8 23.7 23.8 24.5 24.4 24.1 24.2 24.0 24.7 24.8 24.4Western Europe 15.0 15.3 15.2 15.2 14.6 15.2 15.4 15.1 15.1 14.6 15.1 15.4 15.0Pacific 9.0 8.4 8.7 9.4 8.1 8.3 8.8 8.7 9.4 8.0 8.4 8.9 8.7

Developing countries 17.6 18.1 18.5 18.2 18.7 19.0 18.6 18.6 18.3 19.2 19.3 19.4 19.0FSU 4.4 4.3 4.0 3.7 3.6 3.5 4.2 3.8 4.0 3.8 3.4 4.0 3.8Other Europe 0.8 0.8 0.8 0.8 0.7 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8China 4.0 3.8 4.2 4.7 4.4 4.9 4.7 4.7 4.4 4.7 5.2 5.0 4.8(a) Total world demand 73.5 73.7 75.1 75.6 74.0 76.1 76.9 75.7 76.1 74.9 76.8 78.3 76.5

Non-OPEC supplyOECD 22.1 21.8 21.3 22.2 21.8 21.7 21.8 21.9 21.8 21.4 21.6 21.9 21.7

North America 14.6 14.5 14.1 14.3 14.4 14.3 14.1 14.3 14.2 14.1 14.3 14.4 14.2Western Europe 6.8 6.6 6.6 7.0 6.6 6.5 6.8 6.7 6.8 6.5 6.6 6.7 6.6Pacific 0.7 0.7 0.7 0.9 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8

Developing countries 10.3 10.6 10.8 10.9 10.9 11.0 11.2 11.0 11.1 11.0 11.1 11.2 11.1FSU 7.3 7.3 7.5 7.7 7.8 8.0 8.2 7.9 8.2 8.3 8.4 8.4 8.3Other Europe 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2China 3.3 3.2 3.2 3.3 3.2 3.2 3.2 3.2 3.3 3.3 3.3 3.3 3.3Processing gains 1.6 1.6 1.6 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7Total non-OPEC supply 44.7 44.5 44.6 45.8 45.5 45.7 46.2 45.8 46.2 45.8 46.3 46.6 46.2OPEC NGLs 2.8 2.8 2.9 2.9 2.9 2.9 2.9 2.9 3.0 3.0 3.0 3.0 3.0(b) Total non-OPEC supply and

OPEC NGLs 47.5 47.3 47.4 48.7 48.4 48.6 49.1 48.7 49.2 48.8 49.3 49.6 49.2

OPEC crude oil production1 27.2 27.8 26.5 26.5 27.8 28.6 28.8 27.9 28.1 27.0Total supply 74.7 75.1 73.9 75.2 76.3 77.2 78.0 76.7 77.3 75.8Balance2 1.3 1.4 -1.2 -0.4 2.3 1.1 1.0 1.0 1.2 0.9

Closing stock level (outside FCPEs) m bOECD onland commercial 2643 2725 2471 2445 2528 2566 2548 2548 2542OECD SPR 1207 1249 1228 1234 1232 1237 1210 1210 1210OECD total 3850 3974 3700 3679 3760 3803 3758 3758 3752Other onland 1030 1063 989 984 1005 1017 1005 1005 1003Oil on water 812 859 808 829 852 835 864 864 906Total stock 5692 5896 5497 5492 5618 5655 5627 5627 5661

Days of forward consumption in OECDCommercial onland stocks 56 57 52 53 53 53 52 53 55SPR 26 26 26 27 26 25 25 25 26Total 82 83 77 79 78 78 77 78 81Memo itemsFSU net exports 2.9 3.0 3.4 4.0 4.1 4.5 4.0 4.1 4.3 4.5 5.0 4.3 4.5[(a) — (b)] 25.9 26.4 27.7 26.9 25.6 27.5 27.8 26.9 26.8 26.1 27.5 28.7 27.3

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 40, whileGraphs One and Two (on pages 39 and 41) show the evolution on a weekly basis. Tables Three to Eight, and the corresponding graphson pages 42–47, 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).

July 2001 39


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

March to June 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 BlendSaharan BlendSaharan Blend

JuneMayAprilMarch111 222 33 444 111 222 33 444 111 222 33 44 111 222 33 44

$/barrel

555

40 OPEC Bulletin


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)

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

AlgeriaSaharan Blend (44.1) 29.94 28.76 29.25 33.18 31.19 33.06 26.11 26.08 27.80 24.82 25.65 28.47 29.12 29.20 27.32 27.01 28.16

IndonesiaMinas (33.9) 31.30 30.44 30.33 33.36 32.30 31.07 24.87 24.03 25.62 25.64 27.64 28.21 28.03 28.19 28.04 27.19 27.86

IR IranLight (33.9) 27.99 27.09 27.12 30.45 30.42 29.75 22.66 22.63 24.65 23.58 24.05 25.58 26.98 26.77 25.17 24.30 25.80

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

KuwaitExport (31.4) 27.44 26.39 26.21 29.05 28.87 28.20 21.11 21.08 23.10 22.03 22.50 24.03 25.43 25.22 23.62 22.75 24.25

SP Libyan AJBrega (40.4) 30.14 29.36 29.44 32.64 30.98 32.99 25.40 25.93 27.79 24.69 25.54 28.85 29.30 28.95 27.20 27.25 28.18

NigeriaBonny Light (36.7) 29.86 28.75 29.06 32.65 30.67 32.86 25.47 25.43 27.40 24.35 25.43 28.51 29.04 29.10 27.20 26.89 28.06

Saudi ArabiaLight (34.2) 29.09 27.19 27.12 30.60 30.17 29.81 22.65 22.31 24.82 23.77 24.24 25.77 27.29 27.16 25.56 24.69 26.17Heavy (28.0) 27.09 25.99 25.52 28.00 28.21 27.94 20.83 20.74 23.32 22.57 23.15 24.60 26.03 25.86 24.26 23.39 24.88

UAEDubai (32.5) 27.24 26.35 26.79 30.05 30.57 30.25 22.27 22.56 24.79 23.67 24.06 25.40 27.08 26.87 25.20 24.30 25.86

VenezuelaTia Juana Light1 (32.4) 27.99 26.32 26.84 29.33 28.34 30.01 23.11 23.18 22.79 21.08 20.79 22.77 22.57 23.41 21.91 21.32 22.30

OPEC Basket2 29.12 27.94 28.30 31.48 30.42 31.22 24.13 24.06 25.41 23.70 24.38 26.25 26.81 27.06 25.58 24.94 26.10

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

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

Gulf AreaOman Blend (34.0) 27.74 26.83 27.24 30.55 29.88 28.97 22.76 22.43 24.29 23.26 23.82 25.55 26.66 26.44 24.93 24.08 25.53

MediterraneanSuez Mix (Egypt, 33.0) 26.64 24.24 26.24 28.59 26.18 29.06 21.11 22.09 22.61 19.73 21.58 24.56 25.00 25.10 22.55 22.65 23.83

North SeaBrent (UK, 38.0) 29.74 28.96 29.74 32.94 30.86 32.67 25.07 25.60 27.30 24.42 25.37 28.35 28.92 29.06 26.97 26.91 27.96Ekofisk (Norway, 43.0) 29.85 28.44 28.57 32.75 30.77 32.66 25.50 25.51 27.49 24.34 25.38 28.45 28.94 28.82 26.47 26.13 27.59

Latin AmericaIsthmus (Mexico, 32.8) 29.45 27.74 28.75 31.19 29.73 31.47 24.40 24.80 24.63 22.60 22.86 24.62 24.54 25.46 23.82 23.18 24.25

North AmericaWTI (US, 40.0) 31.93 30.19 31.04 34.05 33.00 34.65 28.39 29.42 29.48 27.27 27.37 28.60 27.88 28.88 27.42 26.50 27.67

OthersUrals (Russia, 36.1) 27.39 24.75 27.00 30.30 28.04 31.23 24.06 24.40 24.78 21.72 23.60 26.46 26.78 26.60 24.67 24.36 25.60

July 2001 41


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

March to June 2001

151515

2020

2525

3030

3535

404040

OPEC BasketOPEC BasketOPEC BasketOPEC Basket

UralsUralsUrals

West TexasWest TexasWest Texas

IsthmusIsthmusIsthmus

EkofiskEkofiskEkofisk

BrentBrentBrent

Suex MixSuex MixSuex Mix

OmanOmanOman

JuneJuneJuneMayMayMayAprilAprilAprilMarchMarchMarch111 222 333 444 555111 222 333 444 111 222 333 444 111 222 333 444

$/barrel$/barrel$/barrel

42 OPEC Bulletin


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%SJune 17.34 18.18 19.14 16.58 19.02 12.56 12.03July 20.38 21.66 22.69 19.97 22.35 14.13 14.05August 22.34 25.51 26.39 22.22 24.42 16.97 16.76September 23.21 25.83 26.75 24.29 26.41 17.77 17.53October 24.78 25.88 26.61 24.19 26.04 19.16 18.78November 25.54 27.20 27.72 26.77 29.32 19.40 19.15December 24.73 28.41 28.93 28.18 33.07 19.69 18.672000January 27.41 27.81 28.23 28.96 32.24 19.85 18.83February 29.87 31.63 32.32 29.85 32.72 21.52 19.81March 31.06 35.71 36.27 30.28 34.01 22.67 22.12April 24.83 32.90 33.42 28.23 32.81 19.44 18.12May 28.39 37.01 38.99 29.87 32.07 20.02 18.70June 30.41 40.57 44.28 31.40 34.40 23.79 21.23July 29.89 36.51 37.67 33.02 36.07 24.13 19.79August 29.79 34.82 36.20 36.46 38.69 21.47 19.69September 33.28 36.87 37.70 42.09 43.84 24.29 23.04October 33.15 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 17.97

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

1999 2000 2001

0

10

20

30

40

50

fuel oil 3.5%S

fuel oil 1%S

jet kero

gasoil

premium

regular

naphtha

JunMayAprMarFebJanDecNovOctSepAugJulJunMayAprMarFebJanDecNovOctSepAugJul

$/barrel

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

July 2001 43


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%SJune 16.39 19.19 15.73 17.26 11.85 10.23July 19.45 23.12 19.06 21.04 14.26 12.65August 21.45 27.05 21.81 22.73 17.08 15.48September 22.37 26.90 23.36 25.18 17.34 16.55October 23.88 26.46 23.56 24.51 18.42 17.65November 24.68 27.77 26.25 27.67 17.76 17.53December 23.83 28.82 27.86 32.52 18.23 17.442000January 26.26 27.55 28.06 31.43 20.48 17.85February 28.57 32.11 29.97 31.28 22.12 19.05March 29.65 36.27 29.63 32.31 22.40 21.27April 23.41 32.77 26.69 31.16 19.28 17.09May 27.01 38.38 29.15 29.67 20.52 16.51June 28.93 44.06 30.14 31.99 24.50 19.95July 28.26 38.25 32.92 34.18 23.20 18.76August 28.14 36.67 36.09 36.60 20.85 17.85September 31.58 37.87 41.97 41.89 25.00 21.49October 32.48 37.20 41.53 41.85 27.16 23.58November 32.47 33.57 40.44 40.33 24.71 19.47December 27.74 27.79 34.92 35.99 23.46 17.962001January 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 15.89


0

10

20

30

40

50

fuel oil 3.5%S

fuel oil 1%S

jet kero

gasoil

premium

naphtha


$/barrel

1999 2000 2001

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

44 OPEC Bulletin


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%SJune 20.28 17.88 19.37 16.85 14.61 13.22July 24.30 20.77 22.56 18.60 16.39 14.65August 26.64 22.79 24.51 21.11 18.62 17.24September 28.67 25.04 26.66 22.22 19.48 18.85October 26.13 24.27 25.76 22.00 19.44 18.75November 28.87 26.90 28.78 22.73 19.52 18.95December 29.35 27.91 30.92 24.88 19.21 18.702000January 29.41 34.21 39.42 30.08 21.76 20.42February 33.91 34.64 35.50 31.74 22.90 21.22March 37.10 32.01 34.31 27.07 21.06 20.87April 30.35 30.16 32.20 26.81 20.98 19.85May 37.17 31.39 33.26 28.66 24.59 21.86June 40.12 32.62 33.69 30.69 27.11 23.20July 36.04 32.53 34.42 29.28 24.44 22.20August 36.33 37.17 38.59 29.48 24.50 21.57September 39.90 41.25 43.80 37.21 29.42 25.39October 39.83 41.04 42.86 36.86 29.51 25.96November 39.56 43.46 45.52 35.43 28.66 25.26December 30.96 39.52 40.97 34.59 25.63 22.042001January 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 17.64


000

101010

202020

303030

404040

505050

fuel oil 2.2%S

fuel oil 1%S

fuel oil 0.3%S LP

jet kero

gasoil

regular

JunMayAprMarFebJanDecNovOctSepAugJulJunMayAprMarFebJanDecNovOctSepAugJul20001999 2001

$/barrel

Graph 5: US East Coast market — New York

July 2001 45


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

1999 naphtha gasoil jet kero 2%S 2.8%SJune 18.03 17.44 19.18 12.21 11.40July 21.60 20.45 22.12 13.68 12.91August 23.50 22.65 24.57 16.45 15.95September 25.09 24.54 26.18 18.34 18.13October 23.16 23.83 25.32 18.20 17.91November 26.23 26.31 28.01 18.45 17.88December 25.96 27.38 29.93 18.20 17.872000January 28.17 30.61 32.85 19.82 18.46February 33.52 31.85 32.95 20.57 19.36March 32.74 30.82 33.01 20.17 19.70April 28.25 29.44 30.74 19.15 18.50May 32.59 31.11 31.84 21.16 19.39June 36.24 32.27 32.78 22.27 21.40July 31.06 32.35 33.38 20.84 19.67August 32.92 36.63 37.80 19.78 18.54September 35.32 41.01 42.78 23.59 20.46October 34.77 39.90 41.32 23.95 21.71November 34.37 40.93 43.64 22.96 17.96December 29.73 34.63 36.40 19.89 16.902001January 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 29.87 33.07 34.52 17.51 17.11June 26.83 32.12 32.66 16.81 16.36


19991999 20002000 20012001


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Graph 6: Caribbean cargoes — fob

46 OPEC Bulletin


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

1999 naphtha premium unleaded 95 gasoil jet kero 0.3%S 180C 380CJune 17.69 18.49 17.19 18.82 14.17 12.58 12.49July 20.75 22.63 19.22 22.10 15.50 14.45 14.46August 23.16 25.99 21.30 24.81 17.23 17.03 17.27September 24.49 26.86 23.04 26.37 18.91 18.42 18.83October 24.70 24.78 23.60 25.90 20.46 19.98 20.46November 25.86 25.88 24.74 27.56 21.23 20.68 21.19December 25.03 25.46 25.63 29.53 21.47 20.47 20.982000January 25.02 28.36 28.14 31.30 21.58 19.66 19.95February 27.09 31.16 29.90 31.14 23.43 20.76 21.15March 29.08 32.58 32.94 32.37 25.85 24.66 24.69April 25.01 28.01 26.73 27.99 24.54 22.13 22.39May 27.27 31.90 28.12 29.09 26.62 23.62 23.60June 28.13 33.08 30.69 31.23 26.78 25.30 25.31July 27.80 36.05 31.86 33.25 25.45 22.00 22.09August 30.19 38.31 37.46 37.98 27.08 21.57 21.64September 34.53 35.05 40.13 42.21 28.44 24.81 24.87October 33.50 33.03 38.96 43.30 26.77 26.35 26.55November 30.43 32.96 34.85 39.88 26.50 24.36 24.49December 25.52 29.97 29.61 32.92 24.45 19.78 19.742001January 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 20.16


00

101010

202020

303030

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fuel oil 380Cfuel oil 380Cfuel oil 380C

fuel oil 180Cfuel oil 180Cfuel oil 180C

fuel oil 0.3%Sfuel oil 0.3%Sfuel oil 0.3%S

jet kerojet kerojet kero

premiumpremiumpremium

naphthanaphthanaphtha

JunJunMayMayAprAprMarMarFebFebJanJanDecDecNovNovOctOctSepSepAugAugJulJulJunJunMayMayAprAprMarMarFebFebJanJanDecDecNovNovOctOctSepSepAugAugJulJul19991999 20002000 20012001


Graph 7: Singapore cargoes

July 2001 47


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

1999 naphtha gasoil jet kero 180CJune 17.32 15.86 17.56 11.95July 20.49 17.91 20.86 13.87August 22.84 19.99 23.57 16.30September 24.29 21.73 25.13 17.53October 24.40 22.33 24.68 19.15November 25.61 23.50 26.39 19.88December 24.85 24.34 28.30 19.412000January 24.62 26.63 29.87 18.47February 26.75 28.32 29.64 19.59March 28.42 31.28 30.79 23.40April 24.42 25.01 26.36 20.66May 26.84 26.39 27.46 22.06June 27.63 28.76 29.40 23.60July 27.07 29.73 31.24 20.27August 29.12 35.24 35.88 19.49September 33.03 37.79 40.01 22.98October 31.51 36.62 40.97 24.39November 28.88 32.42 37.38 22.05December 24.19 26.46 29.73 17.062001January 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 18.92Sources: Until September 2000 Platt’s Oilgram Price Report & Platt’s Global Alert; as of October 2000 Reuters. Prices are average of available days.

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JunMayAprMarFebJanDecNovOctSepAugJulJunMayAprMarFebJanDecNovOctSepAugJul1999 2000 2001

$/barrel

Graph 8: Middle East — fob

48 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

Qatari Emir opens state-of-the-artQVC vinyl plant in Mesaieed

Doha — The Emir of Qatar, Sheikh Hamad Bin Khalifa Al-Thani, opened a state-of-the-art vinyl plant last month, whichis owned by the Qatar Vinyl Company (QVC) and located atMesaieed industrial city.

The design capacity of the plant is 290,000 tonnes/year ofcaustic soda, 175,000 t/y of ethylene dichloride (EDC), and230,000 t/y of vinyl chloride monomer (VCM).

The unit is the first in Qatar to produce the three products,using available ethylene produced by the Qatar PetrochemicalCompany (QAPCO) as one of the feedstock materials.

In his address at the opening ceremony, Minister of Energyand Industry and QVC Chairman, Abdullah Bin Hamad AlAttiyah, said the project had been set up as part of a strategicplan by the government to achieve optimal utilization of thecountry’s natural resources through established, economicallyfeasible projects.

He said QVC was a natural extension of Qatar’s giantpetrochemical industry. The project would benefit fromQAPCO’s excess ethylene and use it to produce polyethylene,initially, and EDC, VCM and caustic soda in the later stages.

The new plant would operate using 130 megawatts ofelectricity generated from North Field natural gas.

Al Attiyah pointed out that except for sodium chloride, allraw materials required by the QVC plant were available in Qatar.

Another favourable factor for the company was the proxim-ity to consumer markets, such as India, Pakistan, South-east Asiaand Australia, he added.

The Minister said QVC would be the first project to adopta policy of optimal integration with an already existing projectin the country, which was QAPCO.

As part of this synergy, Al Attiyah said both companieswould share the common import and export facilities andseawater cooling system, as well as the raw materials requiredto operate both plants, such as nitrogen, water and water vapour.

Al Attiyah said the QVC plant was constructed using state-of-the-art technology for preserving the environment.

“All precautions were fully and duly observed well before thefeed designs, in terms of permissible measurements for air, landand sea. These were incorporated into the final design andconstruction,” he observed.

The first commercial shipment for export left the countryin April, one month ahead of schedule and within the originalbudget of $680m.

Following directives by the Qatari Emir for optimal utili-zation of the country’s human resources, QVC management hasbeen keen to recruit as many Qataris as possible under thestrategic five-year ‘Qatarization plan’.

QVC was established in 1997 and is owned by QAPCO,Norsk Hydro of Norway, and Elf Atochem of France.

Nigerian Vice-President praisesnew era of relations with Iran

Abuja — Nigerian Vice-President, Atiku Abubakar, said lastmonth that President Olusegun Obasanjo’s earlier visit to Iranhad opened new areas of co-operation between the two OPECMember Countries.

“Obasanjo’s visit opened our eyes to more areas of similari-ties and co-operation,” Abubakar said after meeting the outgo-ing Iranian Ambassador to Nigeria, Mohammed Chanezadeh.

The Nigerian Vice-President described Obasanjo’s visit as“profoundly successful and mutually beneficial”.

As a follow-up to the visit, Abubakar said there was a needfor the two countries to share experiences, as well as worktowards exploring new areas of cultural and technical co-opera-tion, with a view to improving the economic performance ofboth nations.

The Vice-President commended the outgoing Ambassadorfor the key role he played towards raising the profile of bilateralrelations to the highest level.

Abubakar urged the outgoing Ambassador to speed up theimplementation of the newly established joint working commis-sion, which was recently signed by Nigeria and Iran, so as tosustain the present tempo of bilateral diplomatic relations.

Speaking earlier, Chanezadeh said that his experience inNigeria had been worthwhile. He also expressed the belief thatthe two countries were naturally placed to assume greaterresponsibilities in the international arena.

He appealed to Nigerians to continue to work on bilateralco-operation efforts with his successor.________________________________________________

Algeria, Iraq to discusssetting up free trade area

Algiers — Algeria and Iraq will soon start discussions on settingup a free trade area between the two countries, it was officiallyannounced last month.

The announcement was made by the Algerian Minister ofIndustry and Restructuring, Abdelmadjid Menasra, followingtalks with the Iraqi Minister of Industry and Mines, AdnaneJassem Abdelmadjid, who was on an official visit to Algeria.

According to Menasra, the planned discussions, concerningexpanding bilateral partnerships, would focus particularly on theareas of training and technical co-operation.

The Iraqi Minister pointed out that the scope for co-operation and partnership between the two countries far ex-ceeded the opportunities presently offered.

He proposed the establishment in Baghdad of a representativeoffice for Algerian firms, which would be in charge of fosteringand maintaining contacts with Iraqi economic operators.

July 2001 49

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

The two Ministers also discussed joint projects alreadydefined by the two sides, including an assembly plant for lorriesand tractors, which is due to be set up in Iraq.

The Iraqi Minister met several high-ranking Algerian offi-cials during his trip, including the Prime Minister, Ali Benflis.

At that meeting, Benflis reaffirmed Algeria’s solidarity withthe Iraqi people who “were still facing United Nations sanctions,in spite of Baghdad fulfilling all its obligations”.________________________________________________

South Korean firm wins Fujairahdesalination and power contract

Abu Dhabi — South Korea’s Doosan Heavy Industries andConstruction, formerly Hanjung, last month received a letterof intent for the Fujairah desalination and power plant package,and a contract was expected to be signed soon, the United ArabEmirates Offsets Group (UOG) announced.

Doosan was selected after it bid $775 million to build adesalination plant in Fujairah with the capacity to process 100mgallons/day of water and construct a 620-megawatt power unit.

Of this, 120 mw would be used for the desalination plant’sconsumption, and the remaining 500 mw would be suppliedto the Northern Emirates and the national grid operated by theFederal Electricity and Water Authority (FEWA), the UOG saidin a statement.

Also still part of the bidding process, until the contract issigned, is France’s Sidem, which submitted a bid of $800m andItaly’s Fisia Italimpianti, with a submission price of $890m.

Doosan’s configuration uses a hybrid process of multi-stageflash (MSF) and reverse osmosis and provides significant savings,reducing fuel consumption by up to 25 per cent, compared withthe multiple effect distillation configuration proposed by Sidem,and the MSF option proposed by Fisia Italimpianti.

Meanwhile, bids for the transmission package — whichinvolves the construction of a 185-km water transmission pipe-line to Al Ain, a 25-km link to Al Dhaid, water storage tanksand associated facilities — were being evaluated separately.

The four bidders include Doosan, the local Al Jaber EnergyServices with Technip of Germany, the local Pan-Arab Enter-prises for Pipeline Construction and the Athens-based Consoli-dated Contractors International Company (CCC) with Saipemand Snamprogetti, both of Italy.________________________________________________

Electrical equipment exhibitionto be hosted by Algeria

Algiers — The Third Exhibition on the Manufacturing ofElectrical Equipment in Arab Countries will be hosted in Algiersfrom November 10-13 this year, it was officially announced inthe Algerian capital last month.

The event will be accompanied by a symposium on thetheme of ‘The development requirements of the electricitysector in Arab countries in the next decade’.

According to the Algerian Minister of Energy and Mines,Dr Chakib Khelil, the symposium would be a valuable oppor-tunity for the exchange of information and views on differentaspects of the transformation of the electricity sector.

In a statement, Khelil, who is also President of the OPECConference, expressed hope that the event would be used toexamine the possibilities for greater co-operation and partner-ship between Arab countries in this vital sector.

The gathering takes place at a time when Algeria is under-taking reforms in various sectors, including electric power, thestatement noted.

In a separate development, the United States decided tocontribute around $500,000 to finance a study aimed at theimprovement and reliability of the electrical grid betweenMorocco, Algeria and Tunisia.

The grant was made to the Maghreb Electricity Committee,Comelec, which is a consultative body that includes represen-tation from the state electricity companies of the three countries.

According to a statement from the US Embassy in Algiers,the financing falls within the framework of a programme of co-operation between the three Maghrebian countries and theUnited States.________________________________________________

Venezuela and United Statesmay sign investment treaty

Caracas — Venezuela is interested in signing a bilateralinvestment treaty with the United States, according to anannouncement made by the Venezuelan President, Hugo Chavez,last month.

The country is in the process of establishing a negotiatingteam, which would involve consulting firms and other privatesector representatives, the announcement said.

The treaty would enable Venezuela to actively participate inthe energy plan recently announced by the US President, GeorgeW Bush, Chavez was quoted as saying by Venezuela’s state newsagency, Venpres.

Meanwhile, Venezuela’s Minister of Energy and Mines,Alvaro Silva Calderón, also noted last month that Bush’s energyplan was in line with Venezuela’s requirements and potentialto serve the US market.________________________________________________

Tunisia to transfer technologicalknow-how to Nigeria

Abuja — Tunisia agreed last month to transfer its technologi-cal know-how in the exploration and exploitation of phosphatesto Nigeria, in an effort to develop the latter nation’s solidminerals sector.

This development resulted from a meeting held between thetwo countries’ joint commissions in the Nigerian capital lastmonth.

The meeting concluded having reached the decision that

50 OPEC Bulletin


Nigeria was to furnish Tunisia with the requisite informationon private companies in the field of mining. Meanwhile, con-cerning agriculture, Tunisia agreed to share with Nigeria itsvaried experience in small dams, irrigation and electricity supplyschemes.

A protocol signed by the two countries in 1998 calledfor more co-operation in the areas of biotechnology, researchand development, post-harvest crop storage and processingand participation in technology management training work-shops.

Speaking at the closing ceremony of the joint session, theNigerian Minister of State for Foreign Affairs, Chief DubenOnyia, who led his country’s delegation, expressed hope thatthe agreement reached would be faithfully implemented.

The Tunisian delegation to the talks was led by the country’sSecretary of State to the Minister of Foreign Affairs responsiblefor African and Maghrebian Affairs, Sadok Fayala.

The third session of the joint commission is scheduled tomeet in Tunisia in the second quarter of 2003.________________________________________________

Iran, Spain to expand tiesin power generation sector

Tehran — The Spanish Deputy Minister of the Economy,Jose Folgado Blanco, and his Iranian counterpart, MohammadMaleki, discussed ways of boosting bilateral ties in power gen-eration, according to a report last month by the official IslamicRepublic News Agency (IRNA).

Maleki, who is also head of Iran’s state electricity organiza-tion, Tavanir Corporation, said Iran and Spain had signedagreements worth $200 million, which currently were beingimplemented.

He said the agreement would allow the value of bilateralaccords in electricity to double.

Maleki said he was pleased with the achievements made sofar by Iran in power generation, and noted that there were greatprospects for further progress in the sector.

He said the shared expertise that Iran and Spain could offerto the sector made them capable of potentially implementingelectricity projects in third-party countries.

The Spanish Deputy Minister echoed these sentiments.Folgado, who is in charge of energy affairs and medium-sizedand small companies, described bilateral relations with Iran as“bright and constructive”.

As an example of expanding bilateral economic ties betweenthe two countries, Folgado said the Spanish Export InsuranceCompany had extended a $600m insurance cover for Iran.

He also noted that crude represented over 80 per cent ofSpain’s imports from Iran, and that higher oil prices had beenthe main reason for the increased value in trade exchangesbetween both countries.

Spanish exports to Iran exceeded $362m in 2000, which was$60m higher than the figure for the previous year. Spain is Iran’sfourth largest trading partner within the European Union andranks fifth among EU exporters to Iran.

Indian group acquires stake inAlgerian iron and steel firms

Algiers — Indian iron and steel group, LNM, has acquireda 70 per cent stake in two Algerian firms, Alfasid (iron and steel)and Ferphos (iron and phosphate), according to a statementreleased last month by the Indian company.

The two agreements were signed in Algiers, where severalmembers of the Algerian government attended the ceremony.LNM President, Lakhmi Niwas Mittal, committed his companyto acquiring a 70 per cent stake in the Algerian iron and steelcomplex of El Hadjar, which is managed by Alfasid, a subsidiaryof Sider. LNM also acquired 70 per cent ownership of Ferphos,which operates the iron mines of Ouenza and Boukhedra inAlgeria.

Under the contract, LNM will carry out all investmentnecessary to double El Hadjar’s production to 3.0 milliontonnes/year.

LNM did not disclose the amount it was paying to becomethe majority shareholder in the two firms.

LNM has pledged to maintain the 12,000 workers presentlyemployed by the Algerian firms.________________________________________________

Foreign currency reserves up,announces Bank Indonesia

Jakarta — Indonesia’s foreign reserves rose to $28.67 billionas of June 22, compared with $28.50bn in the previous week,boosted by an increase in oil and gas revenue, according to BankIndonesia, the central bank.

Bank Indonesia said in a weekly report last month that netinternational reserves had risen to 127.96 trillion rupiah from126.58tr rupiah, based on an assumed exchange rate of 7,000rupiah to the dollar. However, the rupiah fell to 11,370 to thedollar at the time of reporting.

The Bank’s Governor, Sjahril Sabirin, told the House ofRepresentatives last month that he expected this year’s economicgrowth to average between 3.0 and 4.0 per cent.

Sjahril said he was confident that next year’s growth wouldimprove to between 4.5 and 5.5 per cent.

These growth prospects, he said, were based on the premisethat the country’s social and political problems should improveover the reported period.

He emphasised that Indonesia’s economic restructuringprogramme should be accelerated to enhance the country’sgrowth, which would see a strengthened rupiah in the range of8,000 to 9,000 to the dollar.

Sjahril said he had been particularly concerned about theslow progress in the restructuring of corporate, foreign anddomestic debts.

Domestic economic growth in 2002 would be driven byexports, consumption and investment, Sjahril said, noting thatmacro-economic conditions had not improved as significantlyas expected at the beginning of this year.

July 2001 51


Iranian steel productioncapacity registers increase

Mashhad — The Iranian Minister of Industry and Mines,Eshaq Jahangiri, said last month that the country’s steel plantswere expected to turn out an additional 2.0 million tonnes ofthe material by March 2002.

This extra output would enable Iran’s steel productioncapacity to exceed 9.5m t/year, he said.

Global steel output, the Minister noted, reached 850m t lastyear, of which Iran’s share was 6.7m t, which ranked the country23rd among global steel producing countries.

Speaking at a ceremony marking the inauguration of theKhorasan steel complex, attended by President MohammadKhatami, the Minister said it was estimated that by the end ofthe country’s third five-year development plan (March 2000-2005), annual steel production capacity would exceed 14.7m t/y.

Domestic steel production had reached 25m t over the lastfour years, which was 25 per cent higher than in the precedingfour years, he was quoted by the official Islamic Republic NewsAgency (IRNA) as saying.

Jahangiri said Iranian mineral output had registered a 30 percent increase and was supplying 70 per cent of the domesticneeds for steel production.________________________________________________

Saudi Arabia grants licencesworth $8.5bn to investors

Jeddah — The Saudi Arabian General Investment Authority(SAGIA) has licensed projects worth $8.5 billion by foreigninvestors since its inception in April 2000, according to theSAGIA Governor, Prince Abdullah Ibn Faisal Ibn Turki.

In a report published in the local Arab News daily newspaperlast month, Prince Abdullah said the Authority was also con-sidering proposals to shorten the list of investment sectors thatare still closed to foreign businessmen.

Investment sectors still out of bounds to foreign firms,known as the negative list, was released some six months ago,Prince Abdullah said, adding that it would be subject to revisionafter a year.

“The negative list covers areas that are closed to foreigninvestment. It is our responsibility to reduce the list. We wantto bring down the number of activities which are not open toforeigners,” the Prince said.

The list includes sectors such as oil exploration and produc-tion, amongst others.

He said the Authority had already approached several de-partments concerning this matter, implying that there may bea willingness to ease some of the restrictions imposed on foreignfirms operating within the country.

Prince Abdullah said SAGIA was now half way through areview of the list, and during the next six months it would putforward recommendations to further reduce the areas thatexcluded foreign investment.

Under the foreign investment law, issued in April last year,foreign investors are allowed full ownership of their projects,they are free to transfer capital and profits, own property andtheir businesses are immune from any action, unless under acourt order.

Prince Abdullah said although SAGIA did not issue licensesto local investors, it nevertheless supported efforts aimed atsecuring business opportunities for them, and in this capacity,it was responsible for following up the investment process ingeneral.

He urged Saudi businessmen to invest in such areas as powergeneration and water desalination, saying these sectors offeredhuge opportunities for investors.

“We want to see large projects that are entirely and fully runby local investors,” the Prince said.

Referring to complaints by small and medium investors, whoact as local agents for international firms, that the opening upof the market to international investment would lead theirbusinesses into bankruptcy, Prince Abdullah said that wholesaleand retail trade was included in the negative list.

He was possibly implying that more opportunities couldpresent themselves to local investors and industries if othersectors were to be freed-up from the negative list. This kind ofbusiness was subject to the dealership law, he added.________________________________________________

Indonesian government okaysdebt restructuring for PLN

Jakarta — The Indonesian government last month approvedthe restructuring of just under three billion dollars worth of debtowed by the state power company, Perusahaan Listrik Negara(PLN), to keep it afloat.

Indonesian Minister of Finance, Rizal Ramli, said $2.5billion of the debt would be turned into government equity inPLN and the remaining $470 million would be converted intoa new 20-year loan, with a two-year grace period and anadditional administrative cost of four per cent per year.

The debts arose from soft loans taken by PLN from thegovernment during the 1998-2000 Asian financial crisis.

PLN would also have to re-evaluate its assets immediately,added the Minister, pointing out that the then Indonesian Vice-President, Megawati Sukarnoputri, had told the state-ownedcompany to improve its efficiency.

Rizal earlier turned down a PLN management request forrestructuring its debts, expressing concern that other indebtedstate enterprises would seek such concessions from the alreadycash-strapped government.

He had been leaning on the PLN management to boostefficiency and re-evaluate assets, which could generate a gain ofaround $1.0bn.

The near-bankrupt PLN, the debts of which had been higherthan its capital, was expected to suffer a loss of $1.94bn this year,having been in the red for the past three years.

The company had suffered losses due to the economic crisisand a sharp drop in power demand, PLN officials said.

52 OPEC Bulletin


Company officials also noted that PLN had to pay for powerpurchase contracts with 27 independent power producers (IPPs)in dollars, while the company sold electricity to the local marketin depreciating rupiahs. This had created a wide gap betweenearnings and costs.

The IPPs invested in new power plants in the mid-1990son the basis that PLN bought their electricity under long-termcontracts.

The IPPs’ contracts were now being renegotiated, takinginto account the current weak business environment in Indo-nesia.

The government plans to raise domestic power rates by anaverage of 17 per cent from next month with an eventual targetfor PLN to sell electricity at seven cents per kilowatt hour, justsufficient to cover its production costs.

However, there was widespread concern about raising powertariffs, as students had already staged violent protests against the30 per cent increase in fuel prices implemented by the govern-ment in June, the officials pointed out.________________________________________________

UAE-Japan trade risesby 53 per cent in 2000

Abu Dhabi — Two-way trade between Japan and the UnitedArab Emirates (UAE) rose by 53 per cent in 2000 to a valueof $17.4 billion, compared with $11.4bn in 1999, it wasreported by the official UAE news agency, WAM, last month.

The balance of trade was again tilted in favour of the UAE,due to the high level of oil prices seen over the period.

However, Japanese exports to the UAE, which had declinedin 1999, registered a slight growth of one per cent last year,WAM said.

During the year 2000, the UAE’s trade surplus with Japanstood at $12.3bn, compared with $6.3bn in 1999, accordingto figures released by the Japan External Trade Organization(JETRO).

Japanese exports to the UAE in 2000 stood at a value of$2.54bn, as against $2.52bn in 1999 — a rise of 0.77 per cent.

Imports into Japan from the UAE, boosted by the rise incrude prices, touched a new height of $14.88bn, compared with$8.85bn the previous year. Mineral fuels comprised over 98 percent of Japan’s imports from the UAE.

The UAE overtook Saudi Arabia to become Japan’s toptrading partner among member countries of the Gulf Co-operation Council (GCC).

The UAE also remained Japan’s largest supplier of mineralfuels, supplying 19 per cent of the country’s requirements. Inaddition, it supplied Japan with 25.5 per cent of its crude oilneeds.

Last year, Japan imported from the UAE a total of 395.45mbarrels of crude oil, valued at $11.40bn, compared with lastyear’s value of $6.88bn.

The UAE also secured itself in sixth position worldwide insupplying services and goods to Japan, contributing some 3.9per cent of the nation’s requirements. In 1999, the UAE was

in the ninth position, supplying 2.9 per cent of Japan’s require-ments in this sector.

Machinery and equipment constituted 78 per cent of Japan’sexports to the UAE. The rest comprised chemicals, textiles, andmetal products.________________________________________________

Kuwait to move ahead withSubiya water complex

London — The Kuwaiti Ministry of Electricity and Water(MEW) is expected to invite contractors to pre-qualify for thefirst phase of the proposed Subiya water storage and distributioncomplex soon.

The 30-month project, to be built in two phases, will betendered in six packages. It involves the supply of up to 96million gallons/day of water to residents and industrial users inSubiya and Mutla, Northern Kuwait, and in West Funaitees,south of Kuwait city.

The project is related to the construction of a 96m g/ddesalination plant, to be set up in Subiya in two phases of 48mg/d each.

MEW is expected to issue tender documents for the projectby the end of the year. The first phase of the water complexincludes four packages, at an estimated cost of $400m.

According to the Middle East Economic Digest (MEED), thefirst package would be for the construction of a water complexwith three underground reservoirs, each with a capacity of 55mg/d, pumping stations and blending facilities.

Package two was for the installation of a 24-km twin pipelinerunning from the planned desalination plant in Subiya to thewater storage facilities.

The third and fourth packages outlined a plan for theinstallation of 113-km of pipeline to supply water from Subiyato Mutla, and from there to the West Funaitees. The plan alsoinvolved building a water pipeline from Mutla to Subiya.________________________________________________

Trade exchanges between Iranand Italy up by 40 per cent

Rome — Italy’s National Institute for Statistics announced lastmonth that the value of trade exchanges between Iran and Italyduring January and February this year stood at $505.8 million.

An official at the Institute said Italy imported some 1.84mtonnes of raw materials and commodities from Iran, valued at$373m, during the period, the official Islamic Republic NewsAgency (IRNA) reported. Italy exported some 26,606t of com-modities to Iran, valued at $133m.

The volume of trade exchanges between Iran and Italy inthe two months rose by 40 per cent, compared with the cor-responding period last year, said IRNA.

Italy’s major import from Iran during the period was oil. Theimport of this commodity was valued at $327m, constituting87.5 per cent of Italy’s total imports from Iran.

July 2001 53

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

No 40/2001Pörtschach, Carinthia, Austria, June 13,2001

OPEC Fund MinisterialCouncil holds22nd Annual Session

The Ministerial Council of the OPECFund for International Development, theinstitution’s highest policy-making body,held its 22nd Annual Session in Pörtschach,Carinthia, Austria. The Council electedthe State of Kuwait to the Chair and theUnited Arab Emirates as Vice-Chair for aperiod of one year. In his acceptance ad-dress, HE Dr Yousef H Al-Ebraheem,Minister of Finance and Planning of theState of Kuwait, thanked the members ofthe Council for their support and for thetrust placed in Kuwait.

In advance of his opening statement tothe Council, Dr Al-Ebraheem paid tributeto the first Director-General of the Fund,Dr Ibrahim F I Shihata, who passed awayon May 28, 2001, in Washington, DC.The Chairman recalled Dr Shihata’s “out-standing contributions” to the OPEC Fundand to other international institutions. “Itwas under his [Dr Shihata’s] leadership thatthe OPEC Fund advanced from a specialaccount to the development finance agencyit is today,” he stated. Dr Al-Ebraheem thenled Ministers in observance of one minute’ssilence in Dr Shihata’s honour.

Addressing the Council, and reflectingon the role played by the OPEC Fundduring its first 25 years of existence, Dr Al-Ebraheem praised the institution’s contri-bution to poverty alleviation: “From atemporary international account … theFund has advanced to become a recog-nized player in global development fi-nancing, funding programmes and projectsof vital import to the developing world,”he said.

Dr Al-Ebraheem observed that, in ad-dition to the “recalcitrant” problems of“unequal distribution of education, medi-cal care and income,” developing coun-tries were now facing a new set of challenges.“The changes of the past 20 years have

altered, permanently, the intricate rela-tionship between countries, especiallybetween the developed, industrial econo-mies and the rest of us,” he noted. “We[developing nations] now face a tradingregime, not quite designed to answer toneeds peculiar to our situation and aninternational monetary system we hardlyco-manage.” Dr Al-Ebraheem urged OPECMember Countries to join forces in address-ing these issues. “We would need, as agroup, to draw on inner strengths, to nur-ture our commonality of interests and en-courage even closer co-operation,” he said.

Dr Al-Ebraheem stressed the contin-ued necessity of external aid for movingcountries forward. “We [the OPEC Fund]cannot ignore our less-endowed neigh-bours … and must continue to work to-ward the goals we set 25 years ago: toendeavour to reduce poverty in our midstand help improve the condition of man-kind,” he emphasized.

In his own statement to the Council,HE Dr Saleh A Al-Omair, Chairman ofthe Fund’s Governing Board, gave a briefoverview of developments in the worldeconomy during 2000. While noting withsome satisfaction a general strengtheningof the economy and improvements in theglobal financial situation, Dr Al-Omair

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

OPEC Fund’s Governing Board meetsin Carinthia and approves seven newloans worth more than $64 million

In June, the Governing Board of the OPEC Fund held its 95th Session in Pörtschach, in the Austrian provinceof Carinthia. A total of seven public sector loans with a combined value of $64.4 million were approved at themeeting, which will fund various projects in sectors including transportation, health, education, water and electricity.The developing countries which will benefit from the loans are Burkina Faso, Côte d’Ivoire, Honduras, India,Lebanon, Mozambique and Pakistan. In the same session, the Board also approved three new grants totalling justover $1m.

54 OPEC Bulletin


voiced concern over the outlook for 2001,which he said was tinged with “consider-able uncertainty.”

Referring to the II Summit of OPECHeads of State and Government, whichtook place in Caracas, Bolivarian Republicof Venezuela, in September 2000, Dr Al-Omair described it as an event of “enor-mous historical importance.” With allMember Countries represented at the high-est level, the gathering was an opportunityto “reaffirm ideals, refocus and revitalize.”The Solemn Declaration, issued at theclose of the meeting, served, among otherthings, to highlight the importance at-tached by OPEC Member Countries topoverty alleviation and South-South co-operation, he stated.

Dr Al-Omair also presented the Fund’s15th Lending Programme, scheduled tocommence on January 1, 2002. In con-trast to usual practice, he intimated, theProgramme would run for three yearsinstead of two, primarily to allow moretime for planning and development, andthus increase efficiency.

The Chairman also expressed his graveconcern over the HIV/AIDS pandemic,and confirmed the Fund’s supportive rolein contributing towards the “global fightagainst this plague”.

HE Dr Y Seyyid Abdulai, Director-General of the Fund, presented a briefsummary of the Fund’s activities during2000, and cumulatively to the end of thatyear. In the course of 2000, he reported,the Fund had approved a total of $284.4million in public and private sector loansand grants. Since inception, he disclosed,the cumulative amount of $5,820m hadbeen committed in the form of loans,grants and contributions to other develop-ment institutions. Total disbursements hadamounted to $3,921m.

In his statement, Dr Abdulai outlinedsome of the Fund’s achievements during2000, including its continuing support tothe “special needs of the least developedcountries.” He noted, with approval, theFund’s ongoing contribution to the Heav-ily Indebted Poor Countries (HIPC) Ini-tiative, and highlighted its strategy ofcollaboration with other bilateral and mul-tilateral aid agencies. “A pooling of re-sources and skills helps avoid overlaps andallows us to channel our assistance moreeffectively,” he stressed.

In addition, Dr Abdulai detailed someof the developments made with respect tothe Fund’s private sector window which,since its inception three years ago, hadprogressed significantly and had already“carved an important niche for itself”within the realm of the Fund’s lendingactivities. He informed Ministers thatAgreements for the Encouragement andProtection of Investment had been signedwith a number of governments, thereby“paving the way for the Fund to pursueprivate sector operations in those coun-tries.”

The Ministerial Council consideredand adopted the Fund’s Annual Report for2000. It also reviewed and approved theaudited financial statements of the Fundfor the fiscal year 2000.

The Council also discussed the statusof the Fund’s resources and operations andapproved the general orientation and struc-ture of the 15th Lending Programme (2002-2004).

In addition, the Council approved theestablishment of a Special Account for thefinancing of operations to counteract theHIV/AIDS pandemic.

Also at the meeting: a progress reporton the implementation of the Private SectorFacility was discussed and a note on thestatus of the Fund’s participation in theHIPC debt initiative was examined. Min-isters also reviewed a paper on a ten-yearcorporate strategy for the Fund.

The Council expressed its sincere ap-preciation to the Government and peopleof the Federal Republic of Austria and tothe authorities of Pörtschach, Carinthiafor the warm hospitality extended to mem-bers and the excellent arrangements madefor the Council meeting.

The next session (23rd) of the Minis-terial Council will be held in Vienna,Austria, on June 12, 2002.


OPEC Fund releasesAnnual Report 2000The 2000 Annual Report of the OPECFund for International Development was

released, following its adoption by theFund’s Ministerial Council meeting inPörtschach, Carinthia. Published in Eng-lish, Arabic, French and Spanish, the re-port details the Fund’s activities during2000 and gives an overview of operationssince the institution’s inception in 1976.Some important highlights are describedbelow:

— By the end of 2000, cumulative com-mitments stood at $5,820 million andtotal disbursements had reached $3,921million (see Table 1).

— In the course of 2000, $284.4m wascommitted in loans and grants, and$155.4m was disbursed (see Table 2).

The OPEC Fund, a multilateral devel-opment finance agency established byOPEC Member Countries, seeks to pro-mote co-operation between its MemberCountries and other developing nations,principally by providing much-needed fi-nancial resources to assist the countries ofthe South in their pursuit of economic andsocial advancement. The Fund extendsloans in support of development projectsand programmes and also provides bal-ance of payments (BoP) support. In 1998it set up a facility for the financing ofprivate sector activities. In addition, theinstitution has been active in extendinggrant aid for technical assistance and re-search and similar activities, as well as foremergency humanitarian aid. Moreover,the Fund financially assists other institu-tions whose activities benefit developingcountries. Since inception and up to theend of 2000, the Fund has extended de-velopment assistance in loans and grantsto a total of 107 countries in Africa, Asia,Latin America and the Caribbean, andEurope.

In his foreword to the Annual Report,the OPEC Fund’s Director-General, HEDr Y Seyyid Abdulai, reflected on thenumerous events of the year. He notedthat at international level, the most excep-tional among them was September’s Mil-lennium Summit in New York, the largest,single gathering of heads of state andgovernment ever. For OPEC nations, theyear’s most notable occasion was their ownsummit level meeting in Caracas,Bolivarian Republic of Venezuela, an event

July 2001 55


Table 1: Total commitments and disbursements, as of December 31, 2000($ million)

Commitments Disbursements

Public sector lending operationsProject financing 3,424.495 1,935.483BoP support 724.230 713.930Programme financing 305.296 262.991HIPC Initiative financing 94.230 —Sub-total 4,548.251* 2,912.404

Private sector lending operations 53.230 —Sub-total 53.230

Grant programmeTechnical assistance 96.000 88.755Special contribution to IFAD 20.000 20.000Project preparation 0.327 0.260Research and similar activities 4.000 3.182Emergency aid 42.600 42.267Common Fund for Commodities 83.600 11.528Sub-total 246.527 165.992

IFAD 861.142 731.989

IMF Trust Fund 110.721 110.721

Total 5,819.871 3,921.106

* No account is taken of terminations and balances subsequent to original commitments; in the area of lending, terminations total $268.915m andbalances total $168.52m for all countries. In the area of grant financing, terminations total $2.078m and balances $0.843m for all recipients.

Table 2: Commitments and disbursements in 2000 ($ million)

Commitments Disbursements

Public sector lending operationsProject financing 193.400 150.022Programme financing — 1.480HIPC Initiative financing 63.900 —Sub-total 257.300 151.502

Private sector lending operations 23.230 —Sub-total 23.230 —

Grant programmeTechnical assistance 2.750 2.240Research and similar activities 0.356 0.311Emergency aid 0.750 1.347Sub-total 3.856 3.898

Total 284.386 155.400

56 OPEC Bulletin


that served to “underline the commitmentof OPEC states to international peace andunderstanding.” Commented Dr Abdulai:“The resultant Caracas Declaration gaveapproval to the cumulative work of theOPEC Fund … and re-emphasized thateconomic and social development (andthe eradication of poverty) should remainthe overriding global priority.”

The Director-General also made ref-erence to the list of new goals the interna-tional community had added to its“plethora of promises and pledges.” Theseincluded targets relating to poverty reduc-tion, HIV infection, slum dwellers anduniversal primary education.

Dr Abdulai pointed out that whilemany of the earlier goals had not yet beenachieved, they at least served as guidepoststo “help shepherd action and channelresources in the direction needed.” How-ever, he stressed that in light of the tech-nology and resources at our [industrializedworld’s] fingertips “it is becoming increas-ingly difficult to justify or excuse lapses ineducation, poor health and extreme pov-erty,” and urged the international com-munity to re-double its efforts and“reinforce commitment … to assist ourneighbours.”

Referring to the mandate of the OPECFund, Dr Abdulai said: “[The Fund] re-mains steadfast in its commitment to thetime-tested values of solidarity, toleranceand respect for nature, responsible stew-ardship, good governance, transparencyand shared accountability … Our inten-tion is to continue to plead for openmarkets, best practices, poverty-reductionstrategies and a covenant with the privatesector to channel market-led investmentto low-income regions.”

Public sector lending operationsIn 2000, the Fund approved 39 loans

worth $257.3m to 30 countries: projectlending totaled $193.4m and went to 29countries, helping to finance developmentoperations in a range of sectors, with trans-portation (37.6 per cent), agriculture (26.1per cent) and water supply and sewerage(15.3 per cent) taking the largest shares.Substantial resources were also directedtowards the sectors of education and health,as well as to projects of a multisectoralnature. Eight loans valued at $63.9m wereapproved to provide debt relief within the

framework of the Heavily Indebted PoorCountries (HIPC) Initiative.

Cumulatively to the end of 2000, theFund had approved 867 public sector loans,amounting to $4,548.3m. These loans fellinto the following categories:Project

628 loans totaling $3,424.5mBoP support

185 loans amounting to $724.2mProgramme

41 loans valued at $305.3mHIPC Initiative

13 loans worth $94.2m

Countries in all developing regions ofthe world have benefited from the Fund’slending activities, with Africa receiving atotal of 491 loans, Asia 234 loans, LatinAmerica and the Caribbean 135 loans andEurope six loans. All economic sectorshave been covered by the Fund’s lendingoperations, but the focus in recent yearshas been on the main social sectors ofeducation, health, water supply and sew-erage and transportation. In line with itsmandate to target the neediest nations,$2,521m or 55 per cent of the Fund’s totallending commitments has been channeledinto the least developed countries.

Private sector lending operationsBy the end of December 2000, cumu-

lative private sector approvals had reached$53.23m. Approvals for 2000 comprisedfour lines of credit worth a total of $16.76mto private entities in Bangladesh, Bosniaand Herzegovina, Dominican Republicand Kazakhstan; and two equity participa-tion loans. The financing will be used toprovide credit facilities to small, mediumand micro enterprises in the concernedcountries.

GrantsIn 2000, the Fund approved 24 grants

in the total amount of $3.9m, of which$2.75m went to finance technical assist-ance schemes, $356,000 went to fundresearch and similar activities and $750,000helped support emergency relief opera-tions. The technical assistance grants ben-efited a diverse range of causes and included,among others, a number of health andeducation initiatives; agro-forestry andsustainable agriculture schemes; assistancetowards an ongoing screwworm eradica-

tion programme; and support to a pilotwater supply project sponsored by theNiger River Basin Authority. In the sphereof emergency assistance, aid was extendedto drought victims in Ethiopia and tosurvivors of the severe flooding in Mozam-bique and Madagascar. Grants drawn fromthe Research Account helped finance vari-ous research studies, as well as a numberof training courses and development con-ferences.

In all, some 531 grants valued at$246.6m had been cumulatively commit-ted by the Fund as of December 31, 2000.Of this sum, $96.1m was made availableas technical assistance; $42.6m was ap-proved in support of emergency reliefoperations; $4.1m sponsored research andsimilar activities; and a further $327,000was committed for project preparation. Inaddition, a special grant of $20m wasextended to the International Fund forAgricultural Development (IFAD), and acontribution of $83.6m made to theCommon Fund for Commodities.

Support to other institutionsAmong the various international insti-

tutions which have received OPEC Fundsupport since 1976 are IFAD which sup-ports rural development ($861.1m) andthe IMF Trust Fund which benefits low-income member countries ($110.7m).


OPEC Fund establishesspecial account tobattle HIV/AIDS

The OPEC Fund for International Devel-opment has affirmed its support to theglobal fight against HIV/AIDS, with thesanctioning of a Special Account to helpfinance operations aimed at addressing thepandemic. Authorization for the Account,which will have an initial allocation of $15million, was given by the Fund’s Minis-terial Council, the institution’s highestpolicy-making body, at its annual meetingin Pörtschach, Austria.

Worldwide concern continues to grow

July 2001 57


over the HIV/AIDS virus, which has in-fected some 56 million people and claimedthe lives of an estimated 22m, one-fifth ofthem children. The disease knows noboundaries, but is particularly prevalenton the African continent, where over three-quarters of the world’s AIDS-related deathshave occurred.

A decade ago, AIDS was regardedprimarily as a health problem. Today, itis considered a major development hazardwith the potential to wipe out the hard-won, socio-economic gains of the past 20years. Development finance agencies, theworld over, including the OPEC Fund,are reporting that their operations are beinghampered by deaths and illnesses asso-ciated with the spread of the pandemic.It has become clear that only an extra-ordinary, unified, international responsecan arrest the situation and, possibly, re-verse it.

The OPEC Fund has, over the years,contributed to efforts and the interna-tional dialogue on combating HIV/AIDS.In September 2000 and March 2001, theFund lent its support to two major con-ferences held to broaden awareness andmobilize human and financial resources tofight the disease. The Special Account willallow the Fund to consolidate its interven-tion and focus its contribution.

The establishment of the Accountcomes on the eve of a Special Session ofthe United Nations General Assembly [onHIV/AIDS] later this month, which isexpected to launch a Global Trust Fundagainst the epidemic. In implementing theAccount, the Fund will work in close co-operation with other international organi-zations engaged in HIV/AIDS work,meeting with them at the highest level toexchange views and study where the Fund’scontribution will have the greatest effect.Assistance will be primarily channeledtowards three major areas: preventativemedicine, post-infection care and recov-ery/mitigation of the impact.

In a statement at the Pörtschach Min-isterial Council Meeting, Council Chair-man, HE Dr Yousef H Al-Ebraheem,Finance and Planning Minister of Kuwait,remarked that the OPEC Fund, alongwith the rest of the international commu-nity, needed to do all they could to stopthe threat of HIV/AIDS “before humanityfaces another plague.” In his own state-

ment, HE Dr Saleh A Al-Omair, Chair-man of the Fund’s Governing Board,warned that the ramifications [of the HIV/AIDS threat] for the future of mankindwere grim. He said the OPEC Fund felta strong obligation to contribute to theglobal fight against the disease. Acknowl-edging that the battle is one that the Fundcannot fight alone, Fund Director-Gen-eral, HE Dr Y Seyyid Abdulai, said: “Wehope that by joining forces with others wecan make a worthwhile contribution.” Theresources agreed upon by the Council willhelp in this direction.


OPEC FundGoverning Boardholds 95th Session

The Governing Board of the OPEC Fundfor International Development has con-vened its 95th Session in Pörtschach,Carinthia, Austria.

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 April 2001, $4,579.6 million hadbeen approved in loans to the public sectorand $2,972.4m 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 HIPC Initiative, number886. All major economic and social sectorshave benefited from the Fund’s assistance,including agriculture, transportation,health, education, water supply and sew-erage, industry, energy, etc.

The Director-General further disclosedthat a total of thirteen operations had beenapproved under the Fund’s Private SectorFacility. As of the end of April 2001,cumulative commitments through thiswindow totaled $53.2m.

In addition, the Fund has approved atotal of 542 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 April 2001, amounted to$248.2m, of which $167.2m 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$972m, most of which has been disbursed.To date, the Fund has provided develop-ment assistance to 108 countries in Africa,Asia, Latin America and the Caribbean,the Middle East and Europe.

In this session, the Board approvedseven public sector project loans worth atotal of $64.4m. They are detailed as fol-lows:

Country/project $ million

Burkina FasoNational public healthlaboratory, Phase II 2.5Côte d’IvoireSecond basic educationimprovement 10.0HondurasPotable water and sanitation 5.0IndiaCIPET expansion 15.0LebanonNorthern coastal road 10.0MozambiqueRural electrification 6.9PakistanRailways development 15.0

Total 64.4

All of the above loans have a maturityof 20 years, including a grace period of fiveyears, and carry interest at rates rangingfrom 1 per cent to 2.0 per cent, with theexception of the loan to Lebanon whichbears an interest rate of 4.0 per cent.

The projects will be cofinanced withthe governments of the beneficiary coun-tries and with other donors including oneOPEC aid institution — the Islamic De-velopment Bank. Other contributors in-clude two regional development banks,the African Development Fund and theInter-American Development Bank.

The Board also approved three newgrants aimed at financing activities in thehealth and agriculture sectors. They total$1.02m, and are broken down as follows:

58 OPEC Bulletin


— $470,000 to help finance internationalagricultural research

— $350,000 to strengthen the health caresector in Palestine

— $200,000 in support of a health andnutrition initiative in the Sudan

The Board also discussed the Fund’sPrivate Sector Facility; three new privatesector investment proposals were approvedand a number of pipeline proposals dis-cussed.

In addition, the Board approved theFund’s 15th Lending Programme, whichwill cover the three-year period 2002-4,and will provide financing for develop-ment projects and programmes. A techni-cal assistance programme to cover the sameperiod was also approved.

Also in this session: the Board reviewedfinancial and budget matters; discussedmatters that arose from the 22nd AnnualSession of the Ministerial Council; con-sidered a progress report on ongoing grantsand looked at operations under active con-sideration in the public sector.

The next Governing Board Sessionwill take place in Vienna, Austria on August28, 2001.


OPEC Fund supportsagricultural researchwith $470,000 grant

The OPEC Fund for International Devel-opment has extended grant assistance inthe total amount of $470,000 in supportof agricultural research programmes at fiveresearch centres sponsored by the Con-sultative Group on International Agricul-tural Research (CGIAR). Founded in 1971,CGIAR is dedicated to increasing thequality and quantity of food productionin developing countries through research,training and technical assistance to na-tional programmes.

CGIAR sponsors a total of 16 agricul-tural research centres whose projects andactivities are spread over some 50 devel-oping countries. Since 1979, the OPEC

Fund has extended assistance to 11 ofthese establishments, amounting to$15.3m in grant aid.

The Fund’s grant assistance is directedat six current schemes, all of which addresspriority research activities. These include:1. A research programme designed tostrengthen resistance to the maize streakvirus affecting crops in East Africa. Thisis the continuation of a scheme launchedin 1997 with OPEC Fund support by theMexico-based International Centre for theImprovement of Maize and Germplasm(CIMMYT);2. An ongoing barley research develop-ment programme in the Mahgreb in NorthAfrica, which seeks to raise productivityand maximize crop yields among the re-gion’s poor farmers. The programme isbeing implemented by the Syria-basedInternational Centre for Agricultural Re-search in the Dry Areas (ICARDA);3. A continuing programme aimed atimproving groundnut production and es-tablishing economically and biologicallysustainable farming systems in Asia. Theprogramme is being carried out by theInternational Crops Research Institute forSemi-Arid Tropics (ICRISAT), which isbased in India;4. An ongoing programme run by theNairobi-based International Livestock Re-search Institute (ILRI), which seeks toimprove incomes among smallholder farm-ers in the tropics by increasing the produc-tivity of ruminant livestock; and5. The extension of a potato late blightcontrol programme implemented by thePeru-based International Potato Centre(CIP). The programme is being conductedin five countries – Bolivia, Ecuador, Peru,Ethiopia and Uganda – and seeks to trainfarmers on integrated insect and diseasemanagement.6. In addition, a new nutrition projectcalled VITA, and also executed by CIP,has been launched to fight vitamin A de-ficiency-related blindness in rural Africanchildren. Currently being developed arehigh-quality, beta-carotene rich sweetpotatoes.

All CGIAR-sponsored research cen-tres collaborate with national institutionsand aim to provide intensive training forlocal agriculturists, while working toachieve the widest possible disseminationof useful information.

Data summary

Sector:Agriculture.

Beneficiaries:CGIAR-sponsored international agri-cultural research centres: CIMMYT,ICARDA, ICRISAT, ILRI, CIP.

Programmes:Improving the resistance to streakvirus of lowland tropical maize in East-ern Africa (CIMMYT); decentraliza-tion of barley breeding with farmers’participation in the Maghreb(ICARDA); technological empower-ment of poor groundnut farmers inAsia: a step towards better ruraleconomy (ICRISAT); sustainable de-velopment of small-holder dairysystems in the tropics through increasedfeed supply and efficient use of fluc-tuating feed resources (ILRI).(i) Decision-support systems for re-source-poor farmers: tools to predictand manage potato late blight;(ii) Eradicating childhood blindness inAfrica with high beta-carotene sweetpotatoes (both schemes implementedby CIP).

OPEC Fund grants:CIMMYT: $100,000; ICARDA:$100,000; ICRISAT: $100,000; ILRI:$70,000; CIP: $100,000 (two grantsof $50,000 each).

Grant total:$470,000

Total cost:$3.2m

Grant administrator:OPEC Fund.

Programme duration:Variable.


Palestine health carereceives $350,000OPEC Fund grant

The OPEC Fund for International Devel-opment has approved a grant of $350,000in support of a project to provide urgently

July 2001 59


needed financial assistance to three NGOs(non-governmental organizations) thatsponsor a number of health care facilitiesfor injured Palestinians.

Since the onset of the Al-Aqsa intifadain late September 2000, the medical needsof Palestinians have burgeoned, severelyovertaxing the region’s health care sector.NGOs have been at the forefront in provid-ing medical supplies, first aid, emergencyservices and health care to the victims ofthe resultant clashes, as well as psychologi-cal counseling. In addition, they haveabsorbed the rehabilitation and hospitali-zation costs of patients experiencing eco-nomic hardship. Shouldering these extrafinancial burdens has forced the organiza-tions to draw from their annual budgetsin order to respond promptly to the grow-ing health crisis in Palestine.

Conditions are deteriorating, and NGOsurgently need additional financial supportto continue their vital, life-saving services.The OPEC Fund grant will be dividedamong the following non-profit institu-tions:

— The Zakat Fund Committee in Jenin,West Bank will receive $120,000 to-wards the purchase of medical equip-ment for the Al-Razi Hospital, whichwas expanded in 1998 to accommo-date additional specialties such as in-ternal medicine, cardiology, obstetricsand pediatrics.

— The Palestinian Red Crescent Societyin Qalqilia is expanding their emer-gency clinic by 200 square metres andis in need of additional furniture,medical supplies and funding for staffsalaries. The OPEC Fund grant of$90,000 will be used specifically toprocure a fully-equipped ambulance.

— The Patient’s Friends Society runs theAl-Ahli Hospital in Hebron, whichhas established additional departmentsin the past four years, including anendoscopy unit, histopathology and x-ray facilities, cardiac unit and nursingcollege. The Fund will extend$140,000 towards the purchase of anoxygen concentrator.

Data summary

Sector:Health.

Project:Strengthening the health sector inPalestine.

OPEC Fund grant:$350,000

Beneficiary:Palestine.

Total cost:$2.3m

Sponsoring NGOs:Zakat Fund Committee, Jenin; Pales-tinian Red Crescent Society, Qalqilia;Patient’s Friends Society, Hebron.

Grant administrator:Arab Fund for Economic and SocialDevelopment.

Project duration:Varies between 3-6 months.


OPEC Fund extends$200,000 to the Sudanemergency health project

The OPEC Fund for International Devel-opment has approved a grant of $200,000in support of a basic health and nutritioninitiative in the Sudan. Spearheaded byUNICEF, this emergency project aims toboost the health and nutritional status ofover one million women and children.

The health situation in the Sudan isfragile: maternal and infant mortality ratesare high, malnutrition-related illnesses arewidespread, and outbreaks of malaria andcholera are frequent. Children often fallvictim to preventable diseases such as polio,measles and diphtheria, while iron-defi-ciency anemia and other illnesses relatedto under-nutrition are prevalent amongboth women and young children. Addi-tionally, natural catastrophes such asdrought and pest infestation have takentheir toll on a country that relies almostentirely on agriculture both for subsist-ence and income generation.

Using a community-based approach,UNICEF is implementing a special emer-gency project that will bring medical serv-ices to the most vulnerable populationsliving in the Darfur, Kordofan, Upper

Nile, White Nile, Gezira and Gedarefregions. Disease prevention strategies in-clude purchasing syringes, needles and ‘coldchain’ equipment, holding National Im-munization Days for polio, training labtechnicians in the proper storage and main-tenance of serum supplies, and vaccinatingbabies and women of childbearing ageagainst tetanus. Around 120 health work-ers will receive instruction in integratedmanagement of childhood illnesses. Nu-tritional campaigns will take place in theform of iron supplement distribution topregnant women and Vitamin A doses toall children under five years of age. Saltiodization will be supported, and its pro-duction and household use encouraged.Feeding centres will be set up to helpprevent protein energy malnutrition.

A Safe Motherhood programme willalso be implemented, with rural hospitalsand maternity clinics being supplied withemergency obstetrical equipment, as well asoffering pre- and post-natal care. In addi-tion, 60 village midwives will receive anintensive training course. Other health carecentres will receive stocks of essential drugs.

Anti-malarial measures include pro-viding high-incidence areas with insecti-cides, treated bed nets and medications.Some 48 technicians will be trained inmalarial microscopy in order to diagnoseand treat the disease quickly.

Data summary

Sector:Health.

Project:Basic health and nutrition emergencyproject in the Sudan.

OPEC Fund grant:$200,000

Beneficiary:Republic of the Sudan.

Total cost:$4.3m

Cofinanciers:UNICEF; Canadian International De-velopment Agency; European Union.

Executing agencies:UNICEF; NGOs; Ministry of Health ofthe Sudan.

Grant administrator:OPEC Fund.

Project duration:1 year.

60 OPEC Bulletin



OPEC Fund extends$50,000 grant towardsregional research project

The OPEC Fund for International Devel-opment has approved a grant of $50,000in support of a regional research project onStrengthening Information and Commu-nication Technology (ICT) Policy in Af-rica. Sponsored by the African TechnologyPolicy Studies Network (ATPS), aims areto assist African countries in their effortsto make effective use of available ICTresources through the use of research net-works and new policy making approaches.

Out of all of the scientific researchconducted in the world, Africa’s contribu-tion comprises barely 0.3 per cent, despitethe wide range of information technolo-gies available such as the Internet andother databases. Although Africa has beendrawn into the rapid economic and socialchanges that have been taking place glo-bally, a cohesive strategy for implementingICT policy reforms and applying moderncommunications technology in the scien-tific arena is still lacking.

ATPS was established in 1994 as amulti-disciplinary network consisting ofresearchers and policy makers mandatedto promote science and technology policyresearch and dialogue among 15 Africancountries; namely, Botswana, Ethiopia,the Gambia, Ghana, Kenya, Lesotho,Liberia, Malawi, Nigeria, Sierra Leone,Swaziland, Tanzania, Uganda, Zambia andZimbabwe. Its mission is to improve thequality of science and technology policy-making in sub-Saharan Africa, andstrengthen the region’s institutional ca-pacity for the management of technologi-cal development through the use ofresearch, dissemination of information andtraining resources.

A comparative study will be carriedout by ATPS in applying ICTs within sub-Saharan Africa. The research will focus ontargeting possible areas of reform withinthe telecommunications industry in orderto integrate the appropriate informationtechnologies in an effective way. Goals are

to utilize ICTs in the areas of agriculture,health and environment; monitor theimpact of ICTs in both urban and ruralregions; strengthen the capacity of thepublic sector to formulate policies for theuse and training in various technologies;and organize analytical teams to undertakequality control studies.

No 48/2001Vienna, Austria, June 25, 2001

OPEC Fund and theGambia sign agreementto protect investment

An agreement for the encouragement andprotection of investment has been signedbetween the OPEC Fund for Interna-tional Development and the Republic ofthe Gambia. Drawn up within the frame-work of the Fund’s Private Sector Facility,the convention was initialed by HE FamaraL Jatta, Secretary of State for Finance andEconomic Affairs of the Republic of theGambia, and by HE Dr Y Seyyid Abdulai,Director-General of the OPEC Fund.

The Fund’s Private Sector Facility is anew financing window, endowed with itsown resources, through which the Fundchannels support directly to the privatesector in developing countries. The objec-tives of the Facility are to promote eco-nomic development by encouraging thegrowth of productive private enterpriseand supporting the development of localcapital markets. Under the Facility, loansare made to financial institutions for on-lending to small, medium and micro-en-terprises, as well as directly to specificprojects. Equity participation in privateenterprises is also undertaken, either di-rectly or through country or regional in-vestment funds. As a pre-condition tosuch investment, the Fund requires signa-ture of a standard agreement with thecountry concerned for the encouragementand protection of investment. Recognizedas a gesture of trust and confidence, theagreement accords the OPEC Fund thesame privileges as those normally given tointernational development institutions inwhich the country holds membership.

The Republic of the Gambia is situ-

ated on the West Coast of Africa and issurrounded on three sides by Senegal.Limited natural resources and an under-developed human capital base have con-strained economic diversification andgrowth. The country is one of the least-developed in sub-Saharan Africa, with a1999 GNP per capita of $350. The main-stay of its economy has traditionally beenrainfed cultivation of agricultural prod-ucts. Thanks to the robust performance ofthe tourism and agricultural sectors, theGambia, a country with a population of1.3 million people, saw a real GDP growthof 6.4 per cent in 1999. These achieve-ments have helped foster a hospitableenabling environment for the promotionof enterprises in the country’s private sec-tor, a situation regarded by government ascritical to the rapid development of thecountry.


Fund and Paraguaysign investmentprotection accord

An agreement for the encouragement andprotection of investment has been signedbetween the OPEC Fund for Interna-tional Development and the Republic ofParaguay. Drawn up within the frame-work of the Fund’s Private Sector Facility,the convention was initialed by HE Fran-cisco Oviedo Britez, Minister of Financeof the Republic of Paraguay, and by HEDr Y Seyyid Abdulai, Director-General ofthe OPEC Fund.

The Fund’s Private Sector Facility is afinancing window, endowed with its ownresources, through which the Fund chan-nels support directly to the private sectorin developing countries. The objectives ofthe Facility are to promote economicdevelopment by encouraging the growthof productive private enterprise and sup-porting the development of local capitalmarkets. Under the Facility, loans are madeto financial institutions for on-lending tosmall, medium and micro-enterprises, aswell as directly to specific projects. Equityparticipation in private enterprises is also

July 2001 61

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

undertaken, either directly or throughcountry or regional investment funds. Asa pre-condition to such investment, theFund requires signature of a standardagreement with the country concerned forthe encouragement and protection of in-vestment. Recognized as a gesture of trustand confidence, the agreement accords theOPEC Fund the same privileges as thosenormally given to international develop-ment institutions in which the countryholds membership.

Following trade liberalization meas-ures taken in 1989, Paraguay’s economyhas remained very open. The country’sperformance on fiscal, monetary and ex-change rate policies during the 1990s wasgood, with low central government defi-cits (less than one per cent of GDP) andsingle digit inflation during the first halfof the decade. With a population of 5.4million, the country recorded a GNP percapita of $1,580 in 1999, along with a GNP

of around $8.5 billion. Paraguay has cur-rently undertaken a series of strong eco-nomic reforms to help set the stage forreactivating the country’s growth, a stepthat will be facilitated by the recent passageof a law to privatize state water and tel-ecommunications companies, whichshould also boost foreign investment. Theseachievements have helped foster a hospi-table enabling environment for the pro-motion of enterprises in the country’sprivate sector, a situation regarded bygovernment as critical to the rapid devel-opment of the country.


OPEC Fund andBenin sign agreementto protect investment

An agreement for the encouragement andprotection of investment has been signedbetween the OPEC Fund for Interna-tional Development and the Republic ofBenin. Drawn up within the framework ofthe Fund’s Private Sector Facility, the con-

vention was initialed by HE AbdoulayeBio-Tchane, Minister of Finance andEconomy of the Republic of Benin, andby HE Dr Y Seyyid Abdulai, Director-General of the OPEC Fund.

The Fund’s Private Sector Facility is afinancing window, endowed with its ownresources, through which the Fund chan-nels support directly to the private sectorin developing countries. The objectives ofthe Facility are to promote economic de-velopment by encouraging the growth ofproductive private enterprise and support-ing the development of local capital mar-kets. Under the Facility, loans are made tofinancial institutions for on-lending tosmall, medium and micro-enterprises, aswell as directly to specific projects. Equityparticipation in private enterprises is alsoundertaken, either directly or throughcountry or regional investment funds. Asa pre-condition to such investment, theFund requires signature of a standardagreement with the country concerned forthe encouragement and protection of in-vestment. Recognized as a gesture of trustand confidence, the agreement accords theOPEC Fund the same privileges as thosenormally given to international develop-ment institutions in which the countryholds membership.

Benin is a country of more than 6million people with a GNP of around $2.3billion (1999) and a GNP per capita of$380. The economy is highly open andstrongly dependent on primary and terti-ary activities. The primary sector, whichaccounts for 38 per cent of GDP , providesthe country’s largest export commodity:cotton. A large tertiary sector dominatedby commerce accounts for 49 per cent ofGDP. Benin has currently undertaken aseries of strong economic reforms to helpset the stage to revitalize the country’sgrowth by privatizing the telecommunica-tions and water and electricity companies,steps that will be taking place once a legaland regulatory framework has beenadopted. These achievements have helpedfoster a hospitable enabling environmentfor the promotion of enterprises in thecountry’s private sector, a situation re-garded by government as critical to therapid development of the country.

Secretary General’s diary

Attended 22nd Annual Meeting of the Min-isterial Council of the OPEC Fund for In-ternational Development, Pörtschach,Carinthia, Austria, June 13, 2001.

Secretariat missions

The 6th Annual Asia Oil and Gas Confer-ence (AOGC 2001) was organized byPetronas, Malaysia and took place in KualaLumpur, Malaysia, June 10–12, 2001.

The 1st Meeting of the Informal SupportGroup (ISG) in preparation for the 8th

International Energy Forum was organ-ized by the Italian Government and heldin Rome, Italy, June 12–13, 2001.

Forthcoming OPEC Meetings

The 34th Meeting of the Ministerial Moni-toring Sub-Committee (MMSC) will beheld at the OPEC Secretariat, Vienna,Austria, on September 25, 2001.

The 117th Meeting of the Conference will beheld at the OPEC Secretariat, Vienna,Austria, on September 26, 2001.

The OPEC Anniverary Seminar onOPEC and the Global Energy Balance: To-wards a Sustainable Energy Future will beheld in Vienna, Austria, on September28–29, 2001. Details can be obtainedfrom: CWC Associates Ltd, ElizabethMcLaughlin, The Business Design Cen-tre, 52 Upper Street, London N1 0QH,UK. Tel: +44 (0)20 7704 0308; fax: +44(0)20 7704 8440; e-mail:[email protected]; Web site:www.thecwcgroup.com/opec.

June

62 OPEC Bulletin

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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.

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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

July 2001 63

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secretariat notes

Documents

Transcript of secretariat notes