February 2001 1

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

Telephone: +43 1 211 12/0; Telex: 134474;Telefax: +43 1 216 4320;Public Relations & InformationDepartment fax: +43 1 214 9827.E-mail: prid@opec.orgE-mail: OPEC News Agency: opecna@opec.orgWeb 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, Data ServicesDepartment Dr Muhammad A Al Tayyeb

Head, Petroleum MarketAnalysis Department Javad Yarjani

Head, Administration &Human Resources Department Dr Talal Dehrab

Head, PR & InformationDepartment Farouk U Muhammed, mni

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

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

http://www.opec.org

T h i s m o n t h ’ s c o v e r . . .shows an oil installation in the region of FlancoSurandino, Venezuela (see Newsline on page 13).Photo courtesy PDVSA.

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 YA matter of factsOPEC’s more proactive information policy opens the way toa greater understanding of the Organization and its aims

4 F O R U MWhat should developing countries do to benefit fromtheir oil wealth?By HE Alí Rodríguez Araque, OPEC Secretary General

6 S E C R E T A R I A T N O T E SRodríguez Araque meets Members of the Austrian GovernmentPresident Klestil honours Dr Rilwanu Lukman

10 I R A N I A N C O N C E R TOPEC Secretariat hosts Iranian Concert

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

22 M A R K E T R E V I E WOil market monitoring report for January 2001

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

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

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

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

49 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 2 ISSN 0474-6279 February 2001

2 OPEC Bulletin

N O T I C E B O A R D

Kuwait appoints new Minister of Oil

Kuwait has appointed HE Dr Adel Khalid Al-Sabeeh as thecountry’s Min-ister of Oil in anew govern-ment that wasformed on Feb-ruary 14, 2001.The appoint-ment came afterA l - S a b e e h ’ sp r edec e s so r ,Sheikh SaudNasser Al-Sabah,

asked to be replaced when the old govern-ment resigned in January. The Kuwaiti-bornAl-Sabeeh has also been appointed as Chair-man of Kuwait Petroleum Corporation. Heholds a doctorate in mechanical engineeringfrom North Carolina State University in theUnited States and has held several Cabinetposts in the Kuwaiti Government since Oc-tober 1997. Al-Sabeeh takes a keen interest inmechanical and creative design and holds apatent for a radial piston rotary device anddrive mechanism, and has another pendingfor a domestic water cooler.

OPEC seminar is postponed

A planned OPEC seminar due to be held inVienna on March 14–15, two days before theMarch 16 Conference, has been postponeduntil next September. The seminar, entitledOPEC and the global energy balance: towardsa sustainable energy future, was postponedbecause a number of Oil Ministers, who wereto speak at the two-day event, were unable toattend due to other pressing commitments. Anotice will be issued in good time advisingparticipants of the new date.

OPEC publications now free of charge

As from March 2001, the Monthly Oil MarketReport, the OPEC Bulletin and the AnnualStatistical Bulletin will be available free ofcharge. Previously, these publications wereoffered only on subscription. The OPECmanagement has taken this decision as partof the Organization’s commitment to sup-porting researchers and other interested read-ers in matters concerning the oil market. Thepublications may be downloaded from theInternet provided OPEC is credited as thesource for any secondary usage. The publica-tions that have always been free of charge,such as the Annual Report and the OPECStatute, will remain so, and may also be down-loaded from the Internet.

Forthcoming events

Ashgabat, Turkmenistan, March 14–16, 2001,TIOGE 2001, 6th Turkmenistan InternationalOil & Gas Exhibition and Conference. Details:ITE Oil and Gas, ITE Group Plc, 105Salusbury Road, London NW6 6RG, UK.Tel: +44 (0)20 7596 5000; fax: +44 (0)20 75965111; e-mail: enquiry@ite-exhibitions.com.

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

Middle East Oil Show & SPE Conference.Details: Overseas Exhibition Services Ltd, 11Manchester Square, London W1M 5AB, UK.Tel: +44(0)20 7862 2141; fax: +44(0)20 78622001; e-mail: pmckean@montnet.com; Website: www.montnet.com.

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

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

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

Dubai, UAE, March 26–28, 2001, The NinthAnnual Middle East Petroleum & Gas Confer-ence. Details: Conference ConnectionAdministrators Pte, Ltd, 212A Telok AyerStreet, Singapore 068645. Tel: +65 2265280; fax +65 226 4117; e-mail: info@cconnection.org.

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

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

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

London, UKApril 26–27, 2001

Oil and Gas Investmentsin Nigeria

Details: CWC AssociatesThe Business Design Centre52 Upper StreetLondon N1 0QH, UKTel: +44 (0)20 7704 6161Fax: +44 (0)20 7354 9590E-mail:bookings@the cwcgroup.com

Miramare-Trieste, Italy, April 23–27, 2001,Workshop on Technologies for Desalination,followed by April 30–May 4, 2001, Work-shop on Desalination Economic Evaluation.Details: The Abdus Salam International Cen-tre for Theoretical Physics, c/o Ms EBrancaccio, Strada Costiera 11, I-34014Trieste, Italy, Tel: +39 040 224 02 84; fax:+39 040 224 163; e-mail: smr1314@ictp.trieste.it or smr1315@ictp.trieste.it.

Boston, MA, USA, April 23–May 4, 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: corporate@ihrdc.com; Web site:www.ihrdc.com.

Houston, TX, USA, May 7–11, 2001, Pe-troleum Industry Site Visit. Details: IHRDCHeadquarters, 535 Boylston Street, Boston,MA 02116, USA. Tel: +1 617 536 0202; fax:+1 617 536 4396; e-mail: corporate@ihrdc.com; Web site: www.ihrdc.com.

Boston, MA, USA, May 7–11, 2001, Up-stream Petroleum Agreements. Details: IHRDCHeadquarters, 535 Boylston Street, Boston,MA 02116, USA. Tel: +1 617 536 0202; fax:+1 617 536 4396; e-mail: corporate@ihrdc.com; Web site: www.ihrdc.com.

Boston, MA, USA, May 14–25, 2001, Up-stream Oil and Gas Asset Management — ashared learning workshop programme. Details:IHRDC Headquarters, 535 Boylston Street,Boston, MA 02116, USA. Tel: +1 617 5360202; fax: +1 617 536 4396; e-mail:corporate@ihrdc.com; Web site: www.ihrdc.com.

Riyadh, Saudi Arabia, May 29–30, 2001,Saudi Arabia: Financing the Future. Details:Suzanne Freeman, Logistics Manager, Euro-money Conference. Tel: +44 (0)20 7779 8833;e-mail: sfreeman@euromoneyplc.com.

February 2001 3

C O M M E N T A R Y

A matter of factsOPEC’s more proactive information policy opens the way to

a greater understanding of the Organization and its aims

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

Relations & Information Department. The

contents do not necessarily reflect the official

views of OPEC or its Member Countries.

Names and boundaries on any maps should not

be regarded as authoritative. No responsibility

is taken for claims or contents of advertise-

ments. Editorial material may be freely repro-

duced (unless copyrighted), crediting OPEC

Bulletin as the source. A copy to the Editor-in-

Chief would be appreciated.

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

tions on the technical, financial and environ-

mental aspects of all stages of the energy indus-

try, including letters for publication, research

reports and project descriptions with support-

ing illustrations and photographs.

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

Editor Graham Patterson

Assistant Editor Philippa Webb

Production Diana Lavnick

Design Elfi Plakolm

Circulation vacant

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

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Europe: G Arnold Teesing BV, Molenland32, 3994 TA Houten, The Netherlands. Tel:+31 30 6340660; fax: +31 30 6590690;e-mail: grim@terep.nl.

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Southern Africa: International MediaReps, Pvt Bag X18, Bryanston, 2021 SouthAfrica. Tel: +2711 706 2820; fax: +2711 7062892.

Members of the internationaland specialist press, oilindustry analysts and oth-

ers who follow developments inOPEC closely may have noticed asubtle but significant change comeover the Organization over the pastfew months. More frequent, moredetailed statements by OPEC offi-cials. More information available forfree on the Web site. And, generally,a greater desire to see that OPEC isrepresented as fairly and accuratelyas possible in the world’s media.

All this is part of a concerted effortby the Organization to provide jour-nalists and analysts around the worldwith the information they need to dotheir job, when they need it. How-ever, casting an eye over the recentpress coverage of OPEC, it seemsthat not everyone is taking notice.Despite the Organization’s best ef-forts at increasing transparency, onenewspaper still managed to describethe OPEC Members as “all MiddleEastern and Third World countries”.That the eleven OPEC Members areall developing nations is not in dis-pute. But what about “all MiddleEastern”? Did Algeria, Indonesia,Libya, Nigeria and Venezuela allsuddenly move to a different conti-nent when nobody was looking?

Evidently, it would have take thewriter only a matter of seconds tocheck the facts, so why not do so?Could it be that any facts whichdon’t fit in with the preconceptionsof OPEC as a secretive Middle East-ern cartel are conveniently ignored?“Greedy cartel has world economyover a barrel” is an attention-grab-bing headline. It is also wrong.

“Organization strives to stabilizeglobal oil markets” is a much moreaccurate statement, but apparentlytoo boring to even merit coverage.Sadly, it seems that sometimes theneed for sensationalism outweighsthe need for accuracy.

One could select many more simi-lar examples, all of them indicative ofa cavalier disregard for the true stateof affairs. Everyone is entitled to theiropinion. But what is the reader tothink when, according to whichnewspaper he or she chooses to read,OPEC is either “now imposing aniron discipline on (the) organisation”or “cheating to the tune of an esti-mated 500,000 barrels a day”. Thesetwo quotes, incidentally, appearedin the press on consecutive days.

To be fair, there are a great manyjournalists who regularly attendOPEC Meetings, conduct in-depthinterviews and research and make agenuine effort to portray OPEC in afair and balanced manner. But thereare also those who, far away in thecomfort of their offices, find it easierto reach for their dictionary of out-dated clichés than to do some realwork.

OPEC has made substantial ef-forts to put a great deal of detailedinformation at the disposal of every-one who needs it. Now it is up to theglobal media to make the effort toobtain and use that information. Wefirmly believe that a fairer, more bal-anced portrayal of the Organizationwill lead automatically to a betterunderstanding of what OPEC is anddoes. Just as in the oil market, greatertransparency in the world of informa-tion is to the benefit of everyone.

4 OPEC Bulletin

F O R U M

this period. Also, we must not forget that,at the same time, added revenue will comefrom increased natural gas sales.

The common task facing producers isto use their oil revenue to maximum ad-vantage in developing their economies ina sustainable manner, so that they can con-tinue to prosper when the oil runs out.Inevitably, there will be differences in theway countries handle this task, due to thediversity of cultures, geography, popula-tion sizes and so on.

They should, however, learn from thelessons of the past, especially those of the1970s and 1980s. Then, many countries ex-perienced huge political, social and economicupheaval, the abandonment of cherished,traditional ways of life and crippling debt.

Producers should aim to “sow the pe-troleum”, in order to achieve sustainablelong-term economic growth. This shouldinclude diversifying their industrial baseaway from oil dependence, revitalisingtheir agricultural sectors and developingtheir infrastructure to accommodate this,in such areas as roads, railways, telecom-munications and power generation. Thesemeasures should be supported by invest-ment in human capital — in education,health and social services.

Producers should look at problemsfrom a fresh new perspective and be flex-ible, inventive and bold in providing so-lutions. In this regard, there are several keyareas that warrant examination and canprovide the basis for our discussion.

To begin with, there is the means bywhich we develop our petroleum sectorsto meet future oil demand, so as to gen-erate the required revenue. Oil-producing,developing countries must choose the bestoption for their own particular set of cir-cumstances.

Some countries have chosen to rely onaccessing foreign technology and capital,by entering into agreements with outside

It is clear that OPEC will providemost of the world’s future oil,but that should not precludethese countries from taking a freshand flexible approach to diversify-ing their economies to achievelong-term sustainable growth,says OPEC Secretary General,HE Dr Alí Rodríguez Araque.*

What should developing countries doto benefit from their oil wealth?

companies. In this age of globalisation,competition for capital has become fierce.Therefore, the conditions these countriesoffer must be attractive enough to appealto potential partners. In addition to theactual cost of capital, the so-called coun-try risk factor introduces an element thatmakes the access to funds more expensivefor a number of countries.

In considering the options, however,producers would be advised to ensure that,in the longer term, there will not be toobig a price to pay in terms of their nationalsovereignty or their potential to accruereasonable levels of revenue.

One important area that can be ex-plored is enhanced regional co-operation,where a producing country recognises andaccommodates the local dimension to itsoil resource facility. It could, for example,provide a buffer for its neighbours whenoil prices are particularly high; this movecould then be reciprocated by their neigh-bours offering more favourable regionaltrade terms when prices are weak.

Crude oil prices obviously have a di-rect link with revenue. Therefore, everyeffort should be made to ensure that pricesare set at levels which find a satisfactorybalance between the requirements of pro-ducers and consumers and that can be sus-tained over long periods. OPEC recentlyintroduced its price band mechanism, setat $22–$28 per barrel, with the purposeof achieving this objective; this has alreadymet with success and acceptance by anumber of consuming countries.

Another option aimed at tacklingproblems created by the unstable oil mar-ket is an income stabilisation fund, withexcess revenues from periods of high pricesbeing banked, for use in periods of lowprices. Such a fund is already in operationin some oil-producing countries.

Attention should also be given to do-mestic subsidies on goods and services.

* Based on HE Dr Rodríguez Araque’saddress to the World Economic Forum, Davos,Switzerland, January 28, 2001.

Mainstream forecasters agree that,unless something unexpectedhappens, the future for world oil

demand is assured for years to come.OPEC projections show that oil consump-tion will grow by well over a third up to2020, compared with current levels.

The world will rely increasingly on de-veloping country oil, particularly fromOPEC, which possesses three-quarters ofthe world’s proven recoverable crude oilreserves.

Oil-producing developing countrieswill, therefore, have to decide on how bestto benefit from their oil revenue during

F O R U M

February 2001 5

These can harbour substantial economicinefficiencies, to the detriment of thecountry concerned. But there is a word ofcaution here. The over-hasty removal ofsubsidies can have serious social implica-tions for people whose livelihoods havelong been dependent on them.

Finally, producers should ensure thattheir interests are properly represented inthe ongoing climate change negotiations,whereby the widespread introduction offiscal and regulatory measures will inevi-tably threaten future revenue flows. Theyshould at all times insist that the richer

nations honour their assurances that cli-mate change mitigation measures willaddress the concerns of all parties.

These are just some of the more im-portant areas oil-producing developingcountries should focus on, in order to derivethe maximum benefit from their oil wealth.

Any discussion regarding crude oil will al-ways involve the topic of prices — it seemsthat one is not mutually exclusive of theother. Since this is indeed the case, let uslook at some of the other factors that alsoinfluence the prices of crudes.

Over the past 20 years, taxes on oilproducts have increased by an average of350 per cent in OECD countries — es-pecially in the European Union. Accord-ingly, the governments of these consum-ing nations obtain revenues from oil overand above those accruing to the produc-ing countries.

There is, therefore, no need to empha-size the impact that such high taxationlevels have on the price paid by the finalconsumer for oil products.

Transportation fees have risen morethan three-fold in recent years as a conse-quence of stringent environmental regu-lations mandating the use of double-hulledtankers and other factors.

In the United States over the past year,high oil product prices were driven mainlyby insufficient US refining capacity. Inthe last 20 years, US refining capacity hasfallen by 2.7 million b/d because of refin-ery closures. Additionally, installed capac-ity is not being fully used.

Speculation arising from a myriad offactors can play a large role in affectingthe prices of various crudes. Accordingly,political and geopolitical elements, rightlyor wrongly, assume a larger role in map-ping out the direction of the futuresmarket, which, essentially, can be particu-larly vulnerable to manipulation by a fewparties interested in enhancing profits.

OPEC Members, concerned with thislast issue, have been analyzing the possi-

bility of introducing corrective mecha-nisms in addition to the OPEC price band.

A major concern to the Organizationis that oil prices are fixed according to threemarker crudes — WTI, Brent and Dubai— which together do not represent onemillion b/d of the traded oil on the worldmarket. OPEC, on the other hand, places22 million b/d of crude oil on the inter-national market.

Another topic which is of major con-cern to OPEC is the ongoing environmen-tal debate. Here there are two separateissues that need to be clarified fromOPEC’s perspective. Firstly, the Organiza-tion would like to express sincere, legiti-mate concern for such problems as globalwarming, pollution, rising sea levels andmany other pressing issues that beg forurgent solutions and action from theworld’s nations.

Secondly, there is also the issue of bal-ancing the losses that would be accruedby many countries — developing and de-veloped. All parties should receive a fairhearing, and it is imperative that the dif-ferent sources of energy within the fossilfuel category are treated equally, and with-out discrimination. This is especially sig-nificant when comparing oil versus coal.It is known that coal continues to be sub-sidized in some countries, despite its highcarbon content which contributes tohigher carbon dioxide levels.

The message that OPEC has beenconsistently conveying at fora held underthe umbrella of the United Nations Frame-work Convention on Climate Change isone of genuine concern for the environ-ment. However, the Organization isequally concerned over the inevitable eco-

nomic disruption in Member Countriesthat will result from the policies andmeasures aimed at reducing greenhouse gasemissions.

Finally, I would like to address the issuethat I believe we should be concentratingon — co-operation in the world oil in-dustry.

In the oil world there are three inter-related sectors — consumers, investors andthe owners of the natural resource. Thus,we ought to ask ourselves: What is themain concern for consumers? And theanswer is a reasonable level of prices andstability. What is the main concern forinvestors? Profits. And what is the mainconcern for the owner of the resource? Toexercise its rights over this resource, and,consequently, its participation in the indus-try, in order to obtain benefits that can havea positive impact on the life of its popula-tion.

So the future of oil and OPEC in anage of transition is strongly linked with anequitable relationship involving these threeparties. It should be aimed at a commonobjective — a fair, reasonable and stablemarket and the need to correct the factorsthat are presently distorting the market andleading to volatility.

I believe important progress has beenmade in the area of cooperation as pro-ducers and consumers are ceasing to seeeach other as rivals. After all, at the end ofthe day they are linked by a relationshipof interdependence. Let us not forget thatthe consumer is nothing else but a cus-tomer for the producer. Thus, if the cus-tomer suffers, this will have a negativeimpact on the producer as well. This, ofcourse, works both ways.

In a separate speech to the Governors for the Energy Industry at the World Economic Forum,HE Dr Rodríguez Araque examined some of the factors in the oil market — apart from the supply/demand balance, over which OPEC can exert an influence — which affect the price of crude oil.

6 OPEC Bulletin

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

Rodríguez Araque meets Members of theAustrian Government in his new role as

OPEC Secretary GeneralAs part of the observed diplomatic protocol, the new OPEC Secretary General, HE Dr Alí RodríguezAraque, who took up his post on January 1, has spent the first couple of months in office meetingMembers of the Austrian Government and diplomatic community.

These courtesy calls are routine practice in the life of top diplomats. Apart from meetingprominent Austrian politicians, Dr Rodríguez will also call on fellow heads of international or-ganizations and ambassadors of OPEC Member Countries who are seated in Vienna.

OPEC Secretary General,HE Dr Alí RodríguezAraque (r), meets theAustrian Minister ofEconomic Affairs andLabour, Dr MartinBartenstein (l).

Meeting officially, althoughcertainly not for the first time,

is OPEC Secretary General,HE Dr Alí Rodríguez

Araque, and the DirectorGeneral of the OPEC Fund

for International Development,HE Dr Y Seyyid Abdulai.

Venezuela’s former Minister of Energy and Mines (1979–84), Dr Humberto Calderon Berti, pictured on the right at the head of the table, also paida courtesy call to the new OPEC Secretary General, HE Dr Alí Rodríguez Araque, pictured in the centre. Sitting next to Dr Calderon Berti, on theright-hand side of the table, is Steve Hellman from the New York-based crude oil trading and integrated-information firm, Oilspace Inc, with two ofhis colleagues. On the left-hand side of the table are members of staff from the OPEC Secretariat.

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

February 2001 7

Granting interviews to journalists from around the world is very much a large part of the job asSecretary General. Quite naturally, the appointment of HE Dr Alí Rodríguez Araque as the Or-ganization’s new chief attracted much interest from members of the press.

HE Dr Alí Rodríguez Araque pictured with Ms Sylviane Bourgeteau fromPolitique Internationale

Ms Patricia Ventura from the Venezuelan daily newspaper, ElUniversal, looking quite comfortable with her fellow countryman,HE Dr Alí Rodríguez Araque

Mr Thaddeus Herrick from the Wall Street Journal putting a question to HE DrAlí Rodríguez Araque

Mr Juan Carlos Barrena (right), and Ms Wanda Rudich (left) from Spain’snews agency, EFE, with HE Dr Alí Rodríguez Araque

Ms Karin Kneissl from Germany’s Die Welt daily newspaper and HE Dr AlíRodríguez Araque

HE Dr Alí Rodríguez Araque making a point to Mr Isicheri Osamgbifrom the Nigerian daily newspaper, Thisday

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

8 OPEC Bulletin

President Klestil honoursDr Rilwanu Lukman

for his services to AustriaA farewell lunch was held in honour of HE Dr Rilwanu Lukman, and hosted by Austrian

Minister of Foreign Affairs, Dr Benita Ferrero-Waldner, who presented the outgoing Secretary

General with the silver medal of honour from Austrian President, Thomas Klestil. The recep-

tion was held at Palais Pallavicini in Vienna on January 30, 2001. Medals of honour can only be

worn in Austria on particular formal occasions, such as at the world-famous Viennese Opera Ball.

Austrian Minister of Foreign Affairs, Dr Benita Ferrero-Waldner, gives outgoing Secretary-General, HE Dr RilwanuLukman, his silver medal of honour, which recognises hisservices to Austria over his two three-year terms.

Outgoing Secretary General, HE Dr Rilwanu Lukman, Austrian Ministerof Foreign Affairs, Dr Benita Ferrero-Waldner, and OPEC Secretary General,HE Dr Alí Rodríguez Araque.

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

February 2001 9

An internal staff gathering was held at the OPEC headquarters to bid HE Dr Rilwanu Lukman

a final farewell from the Secretariat in his capacity as the Organization’s Secretary General.

Dr Lukman departed the Secretariat for Nigeria where he will continue to act as the country’s

Presidential Advisor on Petroleum and Energy.

Dr Lukman and Dr Rodríguez Araque pictured in the OPEC Conference room with some of the Secretariat’s staff members.

Dr Lukman appreciates the silver traythat was given to him as a farewell giftfrom the Secretariat.

OPEC Secretary General, HE Dr AlíRodríguez Araque, saying some kindwords to a rather pensive-looking outgo-ing Secretary General, HE Dr RilwanuLukman. Pictured on the left is theDirector of OPEC’s Research Division,Dr Shokri Ghanem.

10 OPEC Bulletin

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

The Oriental Percussion Ensemble of Tehranvisited Austria in January where they performed at the OPEC Secretariat

and in the city of St Pölten, in what were their first concerts outside of Iran.

The 20-strong all-women Ensemble, whose ages ranged from 14 to 17, were led bythe Director of The Tehran School of Music, Mrs Saidi, and accompanied byIran’s most renowned Tombak player, Master Professor Mohammed Esmaili.

The Tombak is a cylindrical drum that creates a magical sound in conjunctionwith the other Iranian stringed instruments that were used by the Ensemble.

The all-womenOriental Percussion Ensemble

of Tehranentertains audiences in Austria

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

February 2001 11

The ladies from the Oriental Percussion Ensemble of Tehran after the concert.

The Oriental Percussion Ensemble performing in the OPEC Secretariat.

Receiving applause and appreciation from the audience are, at thefront of the stage, Master Professor Mohammed Esmaili, who teachesat The Tehran School of Music, and to the left of him, taking a bow,is the Director of The Tehran School of Music, Mrs Saidi.

In the front row, third from right, is Iran’s Ambassador toAustria, HE Ebrahim Rahim Pour, with his wife and daughter.

12 OPEC Bulletin

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Organization of the Petroleum Exporting Countries

Energy economics and related issues

Vol. XXV, No. 1 March 2001

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

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

Recent issuesDecember 2000

Global energy outlook: an oil price sce-nario analysis — Shokri Ghanem, RezkiLounnas and Garry BrennandThe 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 powerplants: a commercial opportunity for thegas-producing countries — Jean-PierrePauwels and Carine Swartenbroekx

September 2000Energy taxes and wages in a general equilib-rium model of production — HenryThompsonResource windfalls: how to use them —Rögnvaldur HannessonEnergy consumption in the Islamic Republicof Iran — A M Samsam Bakhtiari and FShahbudaghlouOil and non-oil sectors in the Saudi Arabianeconomy — Masudul A Choudhury andMohammed A Al-Sahlawi

June 2000The case for conserving oil resources: thefundamentals of supply and demand — Doug-las 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 productprices in OPEC Member Countries — NadirGürer and Jan Ban

March 2000Energy and interfactor substitution in Tur-key— Carol Dahl and Meftun ErdoganDomestic demand for petroleum in OPECcountries — Ujjayant Chakravorty, FereidunFesharaki and Shuoying ZhouCyclical asymmetry in energy consumptionand intensity: the Japanese experience —Imad A Moosa

Before demand-side management is dis-carded, let’s see what pieces should be kept— Clark W Gellings

December 1999Energy in the Caspian Sea region in the late1990s: the end of the boom? — Christianvon 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

June 1999The impact of emissions trading on OPEC— Shokri Ghanem, Rezki Lounnas andGarry BrennandTechnology, oil reserve depletion and themyth of the reserves-to-production ratio— Mamdouh G SalamehDoes devaluation improve the trade bal-ance of Iraq? — T M ZaidanWagner’s law and public expendituregrowth in Kuwait — Nadeem A Burneyand Nadia Al-MussallamThe economic cost of oil or gas production:a generalised methodology — Thomas Stauffer

March 1999The price of crude oil — A M SamsamBakhtiariElectricity demand by the commercial sec-tor in Kuwait: an econometric analysis —M Nagy Eltony and Mohammad HajeehThe oil and gas links between Central Asiaand China: a geopolitical perspective —Xiaojie XuThe development and acquisition of oillicences and leases in Nigeria — LawrenceAtsegbua

Estimating oil product demand inIndonesia using a cointegrating error

correction model

The gas dimension in the Iraqi oilindustry

The Russian coal industry in transition:a linear programming application

The future of gaseous fuels in HongKong

Carol Dahl and Kurtubi

Thamir Abbas Ghadhbanand Saadallah Al-Fathi

Bo Jonsson andPatrik Söderholm

Larry Chuen-ho Chow

N E W S L I N E

February 2001 13

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

aracas — Alvaro Silva Calderón,a highly-respected oil expert, law-yer and former legislator, was

appointed in late December as Venezue-la’s new Minister of Energy and Mines,replacing Alí Rodríguez Araque, who tookup his three-year tenure as OPEC Secre-tary-General in January.

Shortly after his appointment, SilvaCalderón told reporters that he plannedto continue with the oil policy followedby his predecessor “which has broughtexcellent results for the country thus far”.

He said: “It will be the same strategyfollowed by Alí Rodríguez ... we will con-tinue strengthening the defence of ourmain export product, which is petroleum.

“The goal is to achieve the transfor-mation and industrialization of petroleumdomestically that will give us the au-tonomy to sit down at international fora,from a position of strength, to discuss withconsumers the level of oil prices andmarket stability that are satisfactory for oilproducers, consumers and the economy,”Silva Calderón said.

Prior to his appointment, SilvaCalderón, 71, served as the country’sDeputy Minister of Energy and Mines,responsible for the mines portfolio underRodríguez.

His long-term petroleum industry-related career dates back to the time whenhe graduated as a lawyer from the CentralUniversity of Venezuela (UCV) in Cara-cas and helped draft the oil reversion andthe oil nationalization laws of 1975.

Since then he has served as the legaladvisor to the Ministry of Energy andMines, and he is a member of the oldbicameral Venezuelan Congress, the HouseEnergy and Mines Committee, and of theNational Energy Council.

Upon naming Silva Calderón as thenew Minister of Energy and Mines, Ven-ezuelan President, Hugo Chavez, vowedto defend current oil prices. He added thathe was prepared to travel to all OPECMember Countries and discuss possible

Venezuela’s Silva Calderónreaffirms continuity in strategy

for the country’s oil industrymechanisms, including oil output cuts, toprevent the price of crude from returningto 1998 levels.

The Venezuelan leader was reacting tothe recent softening of world oil prices thathas led to a substantial decline in his coun-try’s oil export prices.

Since Chavez took office almost twoyears ago, the export price of Venezuela’soil basket has grown more than three-fold,with the average crude price at $26.40 abarrel for the year 2000, which is withinthe desired range of between $22 to $28/barrel, specified by the OPEC pricemechanism.

Silva Calderón’s first official meetingas Minister of Energy and Mines was heldalmost immediately after his appointmentwith his Mexican counterpart, ErnestoMartens, who travelled to Caracas in thefirst week in January for a one-day visit todiscuss ways to further strengthen energyrelations between the two countries.

It was the first meeting between SilvaCalderón and Martens since the recentappointment of both men as the respec-tive Energy Ministers for their countries.Martens was given the portfolio of energyunder the recently-elected government ofMexican President, Vicente Fox, whichcame to power in July 2000.

Martens led the high-level Mexicandelegation which met with PresidentChavez, and the President of the state oilcorporation Petroleos de Venezuela SA(PDVSA), Guaicaipuro Lameda.

The Mexican delegation included theDirector General of Petroleos Mexicanos(Pemex), Raul Muñoz Leos, and the Mexi-can Undersecretary for Energy Policies andDevelopment, Juan Antonio Barges.

Mexico and Venezuela, Latin Ameri-ca’s leading oil producers and exporters,have maintained close relations on energymatters over the last couple of years.

During Chavez’ weekly radio pro-gramme Hello President, broadcast at thetime of the visit, the Venezuelan Presidentwelcomed Martens’ visit and noted that

he had previously spoken with the Mexi-can President, Vicente Fox, during theend-of-year holidays regarding continuedbilateral energy relations between theircountries.

Iraq resumes oil exportsfrom the Turkish port ofCeyhan — UNBaghdad — Iraq has resumed oil ex-ports from the Turkish port of Ceyhan,after a three-week suspension in January,according to a United Nations’ reporthanded to reporters in the country’s capi-tal last month.

The report said the UN SanctionsCommittee on Iraq had also approved apricing mechanism for the purchase ofIraqi crude oil during the month of Feb-ruary, under the UN-monitored oil-for-food programme.

Iraq exports its oil under the pro-gramme through two outlets — the Turk-ish port of Ceyhan, via an Iraqi-Turkishpipeline, and the Mina-Al-Bakr terminalin southern Iraq.

“Loadings did resume (from Ceyhan)on Sunday, January 21, after a three-weekpause,” the report revealed, whereasloadings from Mina-Al-Bakr resumed atthe beginning of January.

“The prices proposed by the Iraqi StateOil Marketing Organization (SOMO)have been approved by the UN SecurityCouncil’s 661 Sanctions Committee forIraq, on the recommendation of the UNoverseers,” the report said.

Issued by the Office of the Iraq Pro-gramme (OIP) in New York, the reportnoted that during the week of January 13-19, Iraq exported 5.7 million barrels ofcrude oil through three loadings at Mina-Al-Bakr, earning an estimated �132 mil-lion ($140m) in revenue.

Iraq’s oil-for-food programme with theUN allows the country to sell unlimitedquantities of oil over six month periods,on a renewable basis, to buy food, medi-cine and other humanitarian needs for theIraqi people.

The report said the committee and theoil overseers had approved eight new con-tracts to sell Iraqi crude oil during the weekleading up to January 19.

C

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14 OPEC Bulletin

new culture, spirit and commitment thatwas fast spreading throughout Qatar Pe-troleum’s employees, he said.

TotalFinaElf begins workon $1.3bn Amenam/Kpono project in NigeriaAbuja —Elf Petroleum Nigeria has ear-marked a $1.3 billion project at Warri inthe Niger Delta to develop around 500million barrels (m b) of crude oil and addmore than 125,000 barrels per day (b/d)of crude output to Nigeria’s capacity, thecompany’s Managing Director, GeorgesBuresi, commented last month.

Investment in what is known as theAmenam/Kpono project will double thecompany’s total offshore production whenit comes onstream in 2003.

Buresi said in a statement issued latein January that funds for the project wereobtained internationally with the endorse-ment of the company’s joint-venture part-ners — the state-run Nigerian NationalPetroleum Corporation (NNPC) andExxonMobil Nigeria.

“The funding arrangement agreedwith the NNPC affirms the objectives forgrowth and confidence of the TotalFinaElfgroup in Nigeria and as an active partnerin the quest for the economic growth ofNigeria,” Buresi stated.

“It also marks a new phase of co-op-eration among major players in the Nige-rian oil industry as the field is being de-veloped as a unit jointly owned by theNNPC, TotalFinaElf and ExxonMobil,with TotalFinaElf as the operator,” headded.

He stated that 55 per cent of the fundsto be sourced would be spent in Nigeriaon the manufacturing of essential facili-ties.

Fabrication of the platform for theproject would be done by Globestar, aNigerian company at Warri.

The project involves the constructionand installation of two well-head plat-forms, and a production, compression andutilities platform which will weigh around11,000 tonnes and will be about the sizeof a football pitch.

It also entails the construction of liv-ing quarters to accommodate 80 people

and a floating storage and offloading ter-minal to handle and export around230,000 b/d of oil.

Buresi stated that 31 wells would bedrilled and that gas would be re-injectedto enhance hydrocarbon recovery to en-sure that the gas was not flared at the field.

Singapore takes firstdelivery of Indonesiannatural gasSingapore — Singapore last month re-ceived its first deliveries of natural gas fromIndonesia ahead of schedule through a640-km pipeline, marking the beginninga 22-year contract for supplies of 325 mil-lion standard cubic feet per day (cu ft/d),a statement released by SembCorp GasPTE announced last month.

SembCorp said gas from Indonesianfields in the Natuna Sea began flowing toSingapore on January 3, some six monthsahead of schedule, under a contract signedon January 15, 1999. It was originally duefor delivery from July 2001 onwards.

The company said total early gas de-mand in Singapore was 130m cu ft/d,while available supply from the three fieldswas 175m cu ft/d.

Total gas supply would be raised to335m cu ft/d by the first quarter of 2002,SembCorp officials said, adding that thecontract had the flexibility to allow a 10mcu ft/d supply margin.

An estimated $3.0 billion has beenspent on developing the three fields in theNatuna Sea, as well as the pipeline, andthe receiving facilities onshore in Singa-pore over the last two years.

That cost has been incurred since thecontract was first agreed on with the In-donesian state oil and gas company,Pertamina, and its production-sharingcontractors, Conoco Indonesia, Gulf In-donesia Resources, and Premier Oil.

The pipeline is designed to carry 700mcu ft/d of uncompressed gas, or 1.0bn cuft/d of compressed gas, indicating a strongpossibility of increasing supply.

The move represents the first commer-cial gas supply contract for Singapore, whichhas a government-to-government 120m cuft/d gas supply contract with Malaysia.

In a separate story, gas producers in

“These were for 11m barrels of Kirkukcrude, destined for the United States andEuropean markets, and 19.5m b of BasrahLight for the US, European and Far East-ern markets,” the report said.

It put Iraq’s total oil exports since thestart of the programme on December 10,1996 at 2.23 billion barrels, for an esti-mated revenue of over $38.9bn and�558m.

Baghdad has repeatedly complained tothe UN that it has sold billions of dollars’worth of oil, but has only received a smallamount of commodities and spare partsfor its oil industry.

The report said that, as of January 19,the total value of contracts placed on holdby the Sanctions Committee was $3.15bn,comprising $2.7bn for humanitarian sup-plies and $435m for oil industry spareparts and equipment.

Under the oil deal, Baghdad is allowedto purchase $1.2bn worth of spare partsa year.

Qatar’s oil giantacquires new nameand corporate identityDoha — The Qatar General PetroleumCorporation (QGPC) has acquired a newcorporate identity with a change of nameand logo.

The Qatari Minister of Energy andIndustry, Abdullah Bin Hamad Al Attiyah,announced last month the transformationof QGPC into Qatar Petroleum and un-veiled the company’s new logo.

In a brief address, he said the compa-ny’s new identity would serve as a symbolof commitment to bring pride to Qatar,to develop its potential and to live up tothe expectations of the Qatari people andQatar Petroleum’s partners.

On the new logo, the Minister said:“It is a symbol of our new commitment toexcel.”

Al Attiyah reviewed the transformationof QGPC “from an entity struggling tofind a place on the energy map into alandmark of Qatar’s economy and a lead-ing corporation enjoying the confidenceand respect of all local, regional and inter-national organizations”.

QGPC’s status had brought about a

N E W S L I N E

February 2001 15

Indonesia are working on additional ex-port projects worth $2.0bn, the sales con-tracts for which will be signed within thenext two months.

The projects are the $800m WestNatuna gas export scheme to Malaysia bya consortium led by Conoco of the UnitedStates and the $1.2bn Asamera gas exportscheme to Singapore by a group led byGulf Indonesia Resources.

The schemes are progressing on sched-ule and as soon as the gas sales contractsare signed with Malaysian and Singaporeanbuyers, major development contracts willbe awarded.

Conoco Indonesia President, PatrickL Meyer, said in an interview that the de-velopment of Block B in the West NatunaSea was progressing well, while the Indo-nesian state oil and gas company,Pertamina, was close to signing a gas salesagreement with its Malaysian counterpart,Petronas.

He added that Block B was a majorsource for natural gas exports via a pipe-line and it was from this location that the22-year contract to supply gas to Singa-pore commenced in January.

Gulf Indonesia President, Bill Fanagan,disclosed that an average of $300m a yearwas being invested on developing theAsamera and other South Sumatra gasfields, the main export for which wouldbe the 350m cu ft/d of gas to Singapore.

He said that once the deal was signedin mid-February, the contract for the main400km pipeline from southern Sumatrato Singapore would be awarded.

Fanagan said they were expecting toinvest around $1.2bn over the four-yeardevelopment period.

Over 20 oil firmsinterested in Algerian oilexploration blocksAlgiers — Some 21 international oilcompanies have shown an interest in theexploration of six exploration blocks in Al-geria, the tenders of which were launchedin November last year, according to theAlgerian Ministry of Energy and Mines ina statement released last month.

The tenders involve four blocks locatedin the Berkine Basin, in the south-east of

Algeria, another in the In Salah region, inthe south, and the sixth block is situatedin the north-east of the country.

Among those companies that havesatisfied the Algerian government’s require-ments to qualify for the tender of the sixblocks, and are not involved in the coun-try’s oil sector to date, were quoted by theMinistry as being: Devon and Devon SFS(formerly Sante Fe Snyder), ExxonMobil,Royal Dutch/Shell, Hunt, Marathon Oiland Tesco.

The list released by the Ministry alsoincluded the Russian company, Transgaz,China’s Sheng, South Korea’s KNOC, theUAE’s Keystone, and the Kuwait ForeignPetroleum Exploration Company(KUFPEC).

Other bidders — Anadarko, AmeradaHess, Burlington, BP Amoco, Australia’sBHP, TotalFinaElf, Agip, Repsol-YPF,Cepsa, and Petronas of Malaysia — arealready present in the Algerian hydrocar-bon sector.

A Ministry source pointed out that thedeadline for the lodging of bids was fixedfor February 14. The public opening ofsealed tenders would be conducted the dayafter and the announcement of the win-ners would follow shortly as part of theAlgerian government’s plans to fast trackdecisions on foreign investment in its oiland gas sectors.

Russian EnergyMinister begins oiltalks with IraqBaghdad — Russian Minister of Fueland Energy, Alexander Gavrin, held talkswith Iraqi officials last month to strikedeals under Iraq’s oil-for-food programmewith the United Nations, Iraqi newspapersreported in the country’s capital lastmonth.

Gavrin, heading a large Russian del-egation, arrived in Baghdad at the recentlyreopened Saddam International Airport.

Russia has submitted to Iraq a list ofcompanies designated to lift Iraqi crudeoil during the current ninth phase of theUN oil-for-food programme.

Russian firms have accounted for thelion’s share of Iraqi oil contracts during theprevious phases of the oil pact.

API dissatisfied with government policiesNEW YORK — It is becoming increasingly dif-ficult to satisfy the needs of American con-sumers with readily available and affordablepetroleum products because “energy has notbeen an overriding government priority forsome time”, President of the American Pe-troleum Institute (API), Red Cavaney, saidlast month. He said problems over the pastyear showed that US energy capacity hadreached its maximum potential. “If our na-tion continues on the current policy course,the negative impacts will be exacerbated, andconsumers increasingly inconvenienced,” henoted. New technology, he added, had giventhe industry the ability to provide the neces-sary oil and natural gas, while ensuring envi-ronmental protection. But the federal gov-ernment’s “patchwork” of regulations oftenignored or worked counter to ensuring a re-liable supply of affordable energy such as gaso-line, home heating fuel and natural gas.

EU prospects for growth remain firmBRUSSELS — European Union (EU) FinanceMinisters of nations of the Euro-zone haveexpressed confidence that neither rising oilprices in the wake of OPEC’s production cuts,nor a slowdown in the United States’ eco-nomic growth, would harm Europe’s pros-pects for growth in 2001. This confidence wasexpressed after a special meeting of EU Fi-nance Ministers held in Brussels last month,designed to examine the impact on EU eco-nomic growth that could result from the de-cision made by OPEC on January 17 to cutits crude output by 1.5m b/d. After a latenight meeting, the Chairman of the group,Belgian Minister of Finance, Didier Reynders,said: “There is realistic optimism that therewill be good growth in the EU.” The EUMinisters concluded that the OPEC outputcut had so far created little inflationary pres-sure in the EU. Reynders said the EU wasnow “less dependent on external shocks”.

Marathon Oil interested in Saudi projectNEW YORK — Marathon Oil of the UnitedStates confirmed last month that it has agreedwith Saudi Arabia to review a project, as partof the Kingdom’s natural gas initiative. Com-pany officials continue to visit Saudi Arabiato discuss a detailed proposal in respect of apossible gas, power, water and petrochemicalscheme. Marathon Oil, part of the USX-Marathon Group, and a unit of the USXCorporation, is one of the top ten oil-pro-ducing firms in North America. It is engagedin the worldwide exploration and productionof crude oil and natural gas and, throughMarathon Ashland Petroleum, the companyrefines, markets and transports petroleumproducts in the US.

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�������� The oil-for-food programme allowsIraq to sell crude over renewable six-monthperiods to buy food, medicine and otherhumanitarian needs for the Iraqi people.

“We hope we will have the opportu-nity to discuss with senior Iraqi officialsmeans of developing joint co-operation indifferent fields,” Gavrin told reportersshortly after his arrival.

Answering a question on the fate ofcontracts previously signed between ma-jor Russian oil companies and Iraq to de-velop the West Qurna oil field in south-ern Iraq, Gavrin said that it was “prema-ture to answer such a question”, addingthat “the issue would be the subject of talksin the country”.

Iraq has accused Russian companies ofnot honouring a contract worth billionsof dollars to develop West Qurna.

Russia’s largest oil company, Lukoil,signed a $3.5bn contract in 1997 withpartners, Zarubezneft and Mashino-import, to develop the West Qurna oil-field, which has reserves of up to 8.0bnbarrels.

The deal would have been effectiveonce the UN sanctions were lifted.

Gavrin said his Ministry did not delaythe signing or the implementation of anycontracts with Iraq because the Russian oilfirms were the parties responsible for thesigning of such deals.

“The Energy Ministry has every inter-est to see contracts signed between Rus-sian oil companies and Iraq be imple-mented,” he stressed.

Iraqi Minister of Oil, Dr Amer Moham-med Rasheed, and a number of officialsfrom the Iraqi Ministry of Oil receivedGavrin and his delegation at the airport.

Russia, the leading buyer of Iraqicrude, favours an easing of the sanctionsthat were imposed on the country in 1990.

TotalFinaElf saysdevelopment starts onLibya’s block 137Paris — TotalFinaElf of France an-nounced last month the commencementof development work on structure ‘B’ ofblock 137 in the waters offshore Libya,following an agreement with governmentauthorities.

The French oil giant said the structure,which was discovered in 1975, was located100 km off the Libyan coast.

The structure is situated in 90 metresof water and oil deposits were confirmedthere two years ago.

The development plan calls for pro-duction start-up in early 2003. The plansinclude the installation of a well platformconnected to a floating production, stor-age and offloading facility.

Output is expected to plateau ataround 35,000 b/d.

TotalFinaElf is operator on the fieldwith a share of 37.5 per cent, in associa-tion with the Libyan National Oil Corpo-ration (50 per cent) and Germany’sWintershall (12.5 per cent).

Iranian Ministercriticizes unresolvedCaspian legal statusTehran — Iranian Minister of Petro-leum, Bijan Namdar Zangeneh, has criti-cised the protracted muddle over the legalstatus of the Caspian Sea and has repeat-edly indicated that his country favouredthe boundaries which existed before thebreak-up of the former Soviet Union.

“We cannot wait forever until theCaspian Sea legal status is resolved. Iranhas considered a share for itself,” Zangenehsaid.

The Minister stressed the importanceof resolving the boundary issue becauseIran has signed oil-prospecting contractswith Royal Dutch/Shell and Lasmo for theCaspian, the official Islamic RepublicNews Agency (IRNA) reported.

Iran, Russia, Kazakhstan, Turkmeni-stan and Azerbaijan are the five countrieswhich now have common borders with theCaspian Sea.

Iran has repeatedly indicated that itwould agree to an equitable sharing of theoil-rich Caspian region, which would giveit a share of 20 per cent.

Russia has signed a bilateral agreementwith Azerbaijan on how to divide theCaspian, which is still in dispute 10 yearsafter the collapse of the former SovietUnion.

Iran and the former Soviet Union werethe sea’s only littoral states before the Soviet

Turkmenistan exports more gas to IranASHGABAT — Natural gas exports fromTurkmenistan to Iran have reached 20 mil-lion cubic metres per day, according to theHead of the National Turkmen Gas Com-pany, Taj Nazarov. Presenting a report onthe activities of the company to the Presidentof Turkmenistan, Saparmurat Niyazov,Nazarov said about 6 billion cu m ofTurkmenistan’s natural gas had been exportedto Iran through the Korpeche-Kord-Kouy pipeline during the past three years.Besides this line, a new pipeline transfersTurkmenistan’s natural gas from the country’sArtiq border to the Iranian city of Latifabad,in Khorasan province, the official IslamicRepublic News Agency (IRNA) reported.President Niyazov also announced at a meet-ing of government ministers last month thatthe country’s oil production stood at 7mtonnes during 1999 and would reach 10m tby the end of the current year.

TotalFinaElf net profit hits �7.6bn in 2000PARIS — TotalFinaElf of France announcedlast month that its estimated net profit, in-cluding exceptional items, rose sharply to �7.6billion ($7.1bn) in 2000, an increase of 127per cent over the pro forma �3.35bn regis-tered in 1999. A statement from the com-pany reported a 55 per cent hike in overallsales to �116bn from �75bn a year earlier.The company’s stronger performance waslargely explained by a 58 per cent increase inoil prices during the 12-month period, whenaverage prices rose to $28.5 a barrel, com-pared with $18/b in 1999. TotalFinaElf alsoattributed part of its stronger performance onthe strength of the US dollar, which appreci-ated by 16 per cent during 2000. Total in-vestments by the group in 2000 were evalu-ated at �7.6bn. This was set to increase thisyear by 20 per cent to �9.4bn.

Statoil considers investing in Saudi, BrazilBRUSSELS — The Norwegian state-owned oilexploration and production company, Statoil,is considering investments in Saudi Arabiaand Brazil. According to Norwegian mediareports last month, the investments includethe development of oil and gas reserves as apart of Statoil’s new commitment to expandits international activities. A Norwegian oilindustry source commented: “Statoil’s inter-national expansion over the past few years hasbeen concentrated around the Caspian Sea,West Africa, Western Europe, and Venezuela.Statoil is now looking to make new invest-ments in Latin America and the Middle East,whilst also checking out the possibilities inRussia.” Final investment decisions would bemade during the first half of the year, thesource noted.

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February 2001 17

��������break-up, and Tehran has repeatedly sig-nalled its insistence on the previous accordsbeing honoured and its displeasure overMoscow’s moves to alter them.

A reliable Iranian Foreign Ministrysource said: “For now, only the 1921 and1940 agreements (between Iran and theformer Soviet Union) apply and no otherarrangement outside those agreements isacceptable.”

According to some estimates, there are200 billion barrels of oil and 600 trillioncubic feet of gas reserves under the Cas-pian, the lion’s share of which are held byAzerbaijan.

The Caspian Sea is estimated to con-tain the world’s third-largest reserves of oiland gas after the Gulf region and Siberia.

The Russian Kremlin’s special envoyfor the Caspian, Viktor Kalyuzhny, hasannounced that Iranian President,Mohammad Khatami, would visit Russiaon March 19 in an attempt to resolve theissue.

He said Khatami and Russian PrimeMinister, Vladimir Putin, were likely tobroach an agreement on how to divide theoil-rich Caspian Sea between the five lit-toral states.

Iraq, Syria plan toset up new oilpipeline — MinisterBaghdad — Iraq and Syria plan to setup a new oil pipeline to replace an old andcorroding line, Iraq’s Minister of Oil, DrAmer Mohammed Rasheed, told the gov-ernment newspaper Al-Jumhouriya lastmonth.

“We are planning with our brothers,the Syrians, to set up a new oil pipelinebecause the old one is no longer economi-cal,” Rasheed said.

He said the planned capacity of thenew pipeline was around 1.4 million bar-rels per day (m b/d).

Rasheed explained that the existing oilpipeline, disused since 1982, was 20 yearsold, adding that it had problems withleakage and corrosion.

The Minister noted that the imple-mentation of the new pipeline would bedivided into stages — the first extendingfrom the Iraqi border into Syrian territory,

while the second phase would take placeinside Iraq.

He said an announcement of a tenderwould be made to construct the sectioninside Syria, while the route inside Iraqwould be implemented when Iraq’s finan-cial situation improved.

Iraq is under stringent United Nations’sanctions which bar Baghdad from freelyexporting its oil and making investmentsin the oil sector.

But since December 1996, Iraq hasbeen allowed to sell oil to buy food, medi-cine and other humanitarian needs for theIraqi people.

Rasheed said another oil pipelinewould be set up with Jordan. This linewould also be set up in two stages. Thefirst phase would extend from the Iraqiborder to Jordan’s Al-Zarka refinery, whilethe second part of the pipeline would runfrom Haditha, 260 km north-west ofBaghdad, to the Syrian border.

He said the first stage would be im-plemented by the Jordanian government,which had already announced a tender toset up the pipeline.

Again, the stage inside Iraq would bepostponed until Iraq’s financial situationimproved, Rasheed added.

Iraq is currently exporting some80,000 b/d of oil overland to Jordan us-ing tanker trucks. This oil is exempt fromUN trade sanctions.

Agip Nigeria plans450,000 b/d oil outputwithin three yearsAbuja — Agip Nigeria has set itself acrude oil output target of 450,000 b/d tobe achieved in three years from 2001, thecompany’s Vice-Chairman and ManagingDirector, Claudio Descalzi, announced inthe country’s capital last month.

If realized, the output projectionwould place the company as the third-largest oil producer in Nigeria, after theNigerian units of Royal Dutch/Shell andExxonMobil.

Agip Nigeria raised its output from150,000 b/d in 1999 to 200,000 b/d in2000.

Descalzi made mention of this in hisNew Year message to the company by

US air quality cleaner than expectedNEW YORK — Americans are breathing dra-matically cleaner air than 20 years ago, de-spite environmentalists’ claims to the con-trary, according to data from the United StatesEnvironmental Protection Agency (USEPA)released last month. The study, conducted byan independent environmental analysis firmfor the Foundation for Clean Air Progress(FCAP), debunks the long-held perceptionthat US air quality was worsening. The analy-sis of USEPA data shows that days with highlevels of ozone pollution declined by 43 percent during the two-decade period from theearly 1980s to the late 1990s in 323 US met-ropolitan areas that experienced at least onefederally-defined ozone standard exceedanceduring the 20-year study period. Ozone, of-ten referred to as smog, is a pollutant thathinders normal breathing and may contrib-ute to other negative health effects. “We arebreathing easier because we have invested sig-nificant resources in cleaner cars, cleaner fu-els and cleaner power,” FCAP President, BillFay, remarked.

Chad seeks UAE investors in oil projectsDUBAI — Chad is seeking Gulf expertise andaid in developing its petroleum sector, thecountry’s Prime Minister, NagoumYamassoum, said during a trip to the regionlast month. “We are engaged in a number ofambitious oil-related projects — includingbuilding a $3.7 billion pipeline of over 1,000km, extending from the south of our coun-try to the Cameroon coast, and developinganother oil field near lake Chad to meet ourdomestic requirements … we need the helpof the United Arab Emirates (UAE) to en-able us to achieve our goals,” he commented.According to Gulf News of Dubai,Yamassoum, who was on a private visit, heldseveral meetings with potential investors. Hesaid an official UAE delegation was due tovisit Chad within two weeks to pursue dis-cussions on co-operation. On the petroleumfront, he said the pipeline was scheduled forcompletion by 2004. “Our reserves are cur-rently estimated at 1bn barrels,” he noted.

US Energy Secretary to be approvedNEW YORK — The Energy and Natural Re-sources Committee of the United States Sen-ate has approved the appointment of EnergySecretary designate, Spencer Abraham, it wasannounced last month. The Committee votedunanimously to approve the appointment byPresident George W Bush, who was swornin as America’s 43rd President on January 20.There was not much difference of opinionduring the confirmation hearings, which pro-gressed very smoothly, unlike the hearings ofother Cabinet Members, sources said.

N E W S L I N E

18 OPEC Bulletin

�������� saying that ExxonMobil’s achievement was“momentous” in the year 2000.

He attributed the firm’s success lastyear to a number of oil fields having comeonstream and the introduction of newtechnology in the drilling and productionof hydrocarbons.

In addition, Agip re-opened the Iduflow station, which had been shut forseveral years, and took some other stepsthat had resulted in increased oil produc-tion at the Beniboye and Kwale fields.

Descalzi said the company had also putthe Biseni and Nimbe fields into produc-tion during the course of last year.

He listed other company achievementsin 2000 as being the launching of a gasmaster-plan, which was expected to placeAgip Nigeria at the forefront of the Nige-rian government’s zero gas-flaring pro-gramme, and the pioneering of the inde-pendent power project scheme, designedto help stem the incessant power outagesin the country.

Other successes listed by Descalzi were:the launching of the process of the devel-opment of the Abo field by a subsidiary ofthe company — Nigeria Agip Exploration;the award of deep offshore oil block 244last December; and the renewal of theoperating licence of Agip Energy andNatural Resources for another 20 years.

He stated that it was also a positivedevelopment that Agip had successfullybid for oil-prospecting lease 91 on behalfof the state-run Nigerian National Petro-leum Corporation (NNPC) in the oil li-censing round conducted last year.

UN team set to visitIraq to examine needsof oil industryNew York — The government of Iraqhas agreed to the dispatch of a United Na-tions’ team of experts to examine ways ofdisbursing funds to upgrade the country’soil industry, a UN spokesman announcedlast month.

The UN and Baghdad still needed toagree on the length and scope of the mis-sion, spokesman Fred Eckhard told jour-nalists at the organization’s headquartersin New York.

The development has its roots in a

resolution adopted by the UN SecurityCouncil when it last extended the oil-for-aid programme, which allows Baghdadto sell its petroleum and use a portion ofthe proceeds to purchase humanitarianrelief.

A provision in that resolution re-quested that the UN Secretary General,Kofi Annan, make the necessary arrange-ments, subject to the approval of theCouncil, to allow funds of up to �600million, to be deposited in an escrow ac-count which would be used for equipmentand spare parts for the oil industry.

The Iraqi government was called onto co-operate in the implementation of allsuch arrangements.

Baghdad communicated its agreementto the team’s mission by a letter sent tothe Office of the Iraq Programme, whichoversees the oil-for-food scheme, Eckhardcommented.

ENOC seeks funds toexpand Dragon Oil inTurkmenistanDubai — The Emirates National OilCompany (ENOC) is asking Abu Dhabifor new financing to expand its DragonOil operations in Turkmenistan, it wasrevealed last month.

“We have held discussions with SheikhKhalifa Bin Zayed Al Nahyan, CrownPrince of Abu Dhabi and Deputy SupremeCommander of the Armed Forces,”ENOC Chief Executive, Hussain Sultan,was quoted as saying by Dubai’s Gulf News.

The move follows Sultan’s visit toTyumen two weeks ago at the start ofDragon’s maiden drilling operations onconcession 22.

Turkmen President, SaparmuratNiyazov, has urged ENOC “to do more”,considering the company has a 69.4 percent stake in Dragon Oil.

“The Turkmen President hopedENOC, through Dragon, would be ableto interest other parties in the oil explo-ration and production effort,” said Sultan.

Dragon is moving rapidly to developthe concession, but ENOC is likely to takesix to nine months to decide its course ofaction.

“This is expected to be decided at

US foreign oil dependency rose in 2000NEW YORK — The United States’ domesticcrude oil production last year of 5.84m b/dwas down by 0.7 per cent from 1999 figures,according to the American Petroleum Insti-tute (API). But oil output in the lower 48 statesof around 4.9m b/d showed positive growthfor the first time since 1997, the API’s monthlystatistical report disclosed. Alaskan output of968,000 b/d was down by eight per cent, thelowest annual mark since its production be-gan in the 1970s. With no new federal landsor offshore sites available for expanded oil andnatural gas production last year, US depend-ency on imported crude oil and refined prod-ucts equalled an all-time yearly average highof 11.03m b/d. That represented an annualincrease of 1.7 per cent over 1999. The reportnoted that the US was now importing 56.6per cent of its consumer needs.

IEA predicts oil demand slowdown in 2001PARIS — Crude oil demand this year is ex-pected to be lower than earlier forecasts be-cause of a slowdown in the United States’economy and the spin-off effect on the coun-try’s trading partners, the International En-ergy Agency (IEA) reported in January. Al-ready for the first quarter, the IEA has reviseddownwards its estimates for worldwide oildemand by 300,000 b/d to 77.4m b/d. For2001, the agency now predicts average de-mand of 77.3m b/d, around 200,000 b/dlower than the projections in December. Inthe fourth quarter of 2000, demand estimateshave also been pegged lower at 77.3m b/d, adecline of around 350,000 b/d. The revisionsare a reflection of “the direct effect of the slow-ing US economy and the indirect effects onits trading partners, primarily in Asia andNorth America”, the IEA said. It added thatJapan’s economy also “continues to remainquite fragile” and this could affect the rest ofthe Asian region.

Offshore drilling industry set for boomBRUSSELS — This year is shaping up to be aboom year for the offshore drilling industry asoil companies pour their recent record cashflowback into exploration and development op-erations, it was reported last month. This pre-diction was made by an American offshoredrilling company, Global Marine Incorpo-rated, at an offshore oil and gas industry con-ference. According to industry analysts, therecould be a 20 per cent increase in upstreamspending by oil and gas companies in 2001.This was on top of the 19 per cent hike al-ready witnessed in spending last year. How-ever, President of Global Marine, Robert Rose,said the 20 per cent forecast was too conserva-tive and he predicted that the 2001 increase inupstream spending could be even higher.

N E W S L I N E

February 2001 19

��������Dragon’s upcoming annual general meet-ing in May, in consultation with the othershareholders.

“At the moment, there are a numberof things on the table, but as I see it thereare three possibilities which can fast-trackDragon’s future development,” he said.

Sultan said that some of the initiativesto do this comprised expanding the exist-ing operation, enlisting the services of an-other company, or farming out the opera-tions to others.

Sultan added that the most rapid wayto fast-track development would be toenlarge existing operations, but this wouldentail additional financial and other re-sources.

“We will play our part and hope AbuDhabi will join us in this effort,” he said.

Regarding his recent trip to India,Sultan said ENOC had planned severaljoint ventures with the Indian Oil Corpo-ration (IOC) in the downstream sector,including retail, liquefied petroleum gas(LPG), lubricants, aviation fuel and chemi-cal products.

“We are today a major trader and dis-tributor of petrochemical products and,towards this end, we are expanding ourliquid chemical storage facility at Jebel Alito include dry chemicals,” he pointed out.

But Sultan ruled out taking a stake inany Indian refinery because, he said, theindustry was capital-intensive and Far-Eastern refiners had faced difficulties overthe past two years with their operations.

Nigeria’s Unipetrolrecords 15 per centprofit hike in 2000Lagos — Unipetrol, one of the majormarketers of petroleum products in Ni-geria, which was recently privatised, re-corded a profit of $6.67 million last year,a 15 per cent increase over the $5.78m itmade in 1999.

The company’s Managing Director,Ja’afaru Paki, who made the disclosure inthe Nigerian capital last month, said thefirm’s turnover for the last financial year,which ended in September 2000, rosesignificantly from the $110m in 1999 to$143m last year.

Paki attributed the improved perform-

ance to strategic measures which wereintroduced by the company’s board ofdirectors and management to position thefirm at the leading edge of the market.

As part of the measures to sustain thepace of improved performance, a five-yearstrategic business plan (2000-2005) wasapproved by the board to further consoli-date the company’s leading position in theproduct marketing business, he pointedout.

Paki noted that improved businessstrategies had also been mapped out forthe company’s affiliates in Ghana, Togoand Sierra Leone.

He said the Nigerian government hadfinally divested from the company underthe nation’s privatization programme.

The government sold 10 per cent ofits equity holding in the company toNigerian investors and the balance of 30per cent to a core investor — the Oceanand Oil Company.

Companies signproduction-sharingdeal in AlgeriaParis — Gaz de France announced latelast month that it had reached a produc-tion-sharing agreement with Algeria’sSonatrach and Petronas of Malaysia toexplore the natural gas potential of theAhnet Basin in the North African coun-try.

The accord calls for the exploration ofa 17,000 square kilometre area south ofIn Salah region over the next three years,and for the investment of $58 million fromthe partners during that period.

At the end of the exploration period,the partners would decide on whether ornot to launch production.

In a statement, Gaz de France saidrecoverable gas reserves to be explored inthe area could reach 140 billion cubicmetres (cu m), which would support an-nual production of between 3.5bn cu mand 7.0bn cu m over 25 years.

Last June, Sonatrach and Gaz deFrance signed a co-operation agreement tostrengthen commercial links and tobroaden the scope of their co-operationto include field development and naturalgas sales.

Record cold in US in Nov/Dec 2000NEW YORK — Scientists from the UnitedStates National Oceanic and AtmosphericAdministration (NOAA) announced that thecountry’s national temperature during No-vember-December 2000 was the coldest re-corded for that period. Following the secondcoldest November on record in the US, be-low normal temperatures continued to gripmuch of the nation in December. With anaverage temperature of 28.9° Fahrenheit, De-cember 2000 was the seventh coldest Decem-ber since national records began in 1895.Director of NOAA’s National Weather Serv-ice, retired Brig Gen Jack Kelly, said the year2000 was shaped by variability and extremes,which would continue throughout the winter.

International rig count higher in DecemberNEW YORK — Baker Hughes announced lastmonth that the international rig count forDecember 2000 was 705, up by five from the700 counted in November 2000, and higherby 131 from the 574 recorded in December1999. The international rig count includesthose operating worldwide, except in theUnited States and Canada. The internationaloffshore rig count for December was 201, upby five from the 196 counted in Novemberand higher by 42 than the 159 recorded inDecember the previous year. The US rigcount for December was 1,097, 30 more thanthe 1,067 counted in November and 299higher than the 798 registered in December1999. The Canadian rig count for last monthstood at 410, up by 48 from the 362 countedin November and higher by 25 than the 385counted in December the previous year. Theworldwide rig count for December 2000 was2,212, up by 83 from the 2,129 counted inNovember and higher by 455 from the 1,757registered in December 1999.

Norwegian oil output set to increase in 2001BRUSSELS — Norway’s oil output is likely torise this year, according to the NorwegianPetroleum Protectorate (NPD). It said pro-duction was set to average as much as 3.3million b/d, compared with 3.1m b/d lastyear. In a review of the country’s petroleumresources, the NPD also said that natural gasoutput was likely to rise to 60 billion cubicmetres this year, compared with 50bn cu min 2000. Total production of oil, includingcondensates, natural gas liquids (NGL) andnatural gas was estimated to rise to 260m cum of oil equivalent in 2001, compared with240m last year. Norway’s Ministry of Financesaid that total exploitable petroleum resourceson the Norwegian Continental Shelf wereestimated at 13.8bn cu m of oil equivalent atthe end of 2000, of which 3bn cu m had beenproduced.

N E W S L I N E

20 OPEC Bulletin

��������UK oil output down, consumption upLONDON — Britain’s oil output in the threemonths to November 2000 fell by 13.9 percent, while consumption rose by 2.4 per cent,according to the latest provisional statisticsreleased by the country’s Department of Tradeand Industry (DTI) last month. During theperiod, overall production of indigenous pri-mary fuels was put at 68.8 million tonnes ofoil equivalent, 6.7 per cent lower than thatof the corresponding period in 1999. Whileoutput of oil and coal fell, gas production roseby 7.3 per cent. The fall in oil output fromthe North Sea was attributed to maintenancework during the summer having had a longerand greater impact than the previous year.

Oil firms to increase exploration spendingLONDON — Investment in oil exploration isexpected to rise by an extra $5 billion thisyear, following the accumulation of profitsby the world’s leading energy companies dur-ing 2000 on the back of high crude prices.According to the Schroder Salomon SmithBarney investment bank, the ten leading oiland gas explorers, including ExxonMobil andRoyal Dutch/Shell, would increase theirspending in 2001 by around 14 per cent to$40.7bn. The bank suggested that investmenton new wells would rise by $20bn this year,representing a near 20 per cent increase over2000 and the largest expansion in two dec-ades. The bulk of the expansion would beoutside the United States, in such areas as theCaspian region, Angola and Nigeria. The ex-pected increase in spending follows invest-ment in oil exploration having risen by lessthan five per cent in 2000. The bank pointedout that the investment level in the oil indus-try was on the rise after a lean spell.

South Korean oil use down in NovemberSEOUL — South Korean oil consumptiondropped by a sharp 7.6 per cent in Novemberlast year, to 10.23 million barrels, from the11.08m b registered in the same month of1999. Total oil consumption for the January-November 2000 period was 673.51 b, up by3.7 per cent from 1999. The increase was sig-nificantly smaller than the 8.2 per cent figureregistered in the same period the previous year.However, statistics from the Ministry of Com-merce, Industry and Energy showed that ac-cumulated oil consumption of households forJanuary-November fell by 3.9 per cent year-on-year to 100.65m b. “A drop in oil con-sumption in the high-demand season of win-ter is proof that consumers’ sentiments are dras-tically depressed for gloomy economic out-looks,” the Ministry said. Liquefied petroleumgas (LPG) had the highest growth rate of 11.7per cent as LPG-fuelled mini vans gained popu-larity in the country, it said.

The French company said the accordgave “concrete expression” to the earlier co-operation agreement.

The accord gave traditional down-stream company, Gaz de France, a strongerfoothold in the upstream end of the gaschain, the statement said.

The company said that by 2003, itwould hope to acquire enough natural gasreserves to produce around 15 per cent ofthe gas it supplied to its customers.

West Seno, Belanakfields to boost Indonesianoil output capacityJakarta — Indonesia expects to boostits oil production from two major fieldsby 160,000 b/d over the next two years,according to a senior official last month atthe state oil and gas company, Pertamina.

The development of the West Senoand Belanak fields would also increasenatural gas production by 490 millionstandard cubic feet per day and liquefiedpetroleum gas (LPG) output by 45,000b/d, the Director for Management of Pro-duction-Sharing Contractors (PSCS), IinArifin Takhyan, said.

The deep-water West Seno field, lo-cated in the Makassar Strait, would comeonstream by the fourth quarter of nextyear, he noted. PSCS Unocal andExxonMobil Indonesia have so far invested$700m in the field, the production fromwhich would peak at 60,000 b/d of oil and150m cu ft/d of gas.

The field was discovered in 1998 in awater depth of 1,000 metres, off EastKalimantan, on Borneo Island.

ExxonMobil is reportedly giving up its50 per cent stake to Unocal, which wouldalso develop the Merah Besar field next toWest Seno.

Iin said a floating production storageoffloading facility was being sought for theBelanak field, which would start produc-tion from 2003, peaking at 100,000 b/dof oil and 340m cu ft/d of gas.

Belanak, located in the West NatunaSea, was being developed by Conoco withthe aim of exporting 250m cu ft/d of gasto Malaysia through a submarine pipeline.

The initial agreement had been signedwith the Malaysian state oil and gas cor-

poration, Petronas, to buy gas from theBelanak field.

Conoco had so far invested $600m inthe field, Iin said.

Royal Dutch/Shellholds oil explorationtalks with IraqLondon — European oil giant RoyalDutch/Shell announced last month thatit had been involved in talks with Iraq onthe possibility of future oil exploration.

“We’ve had low-level, largely techni-cal discussions about developing oil fields,but Iraq has made it very clear that Shellwill not do anything to contravene any-thing arising from United Nations’ reso-lutions, or any other legislation,” a spokes-woman for the Anglo-Dutch companyconfirmed.

The admission from Royal Dutch/Shell follows measures taken by a long lineof oil companies from France, Italy, Rus-sia and China which have previously ne-gotiated with Iraq, in anticipation of the10-year-old sanctions being lifted.

The discussions also come after reportslast month, coinciding with the swearingin of the Bush administration in Wash-ington, that Britain was considering areview of the sanctions’ regime and waspreparing for a policy turnaround.

United Kingdom oil independent, Pre-mier Oil, has also said it was keeping Iraqunder review, but BP Amoco insisted itwould not approach Baghdad until theembargo was lifted.

With regard to the talks by RoyalDutch/Shell, The Times newspaper of Brit-ain said last month that direct negotiationswith a leading British company “certainlybreaks the spirit of the embargo”.

Such a move, the newspaper main-tained, would also “encourage the leader-ship in Baghdad to believe that attitudesin Britain were softening”.

Britain and the United States have beenthe two main countries that have insistedon maintaining the sanctions regimeagainst Iraq, while the three other perma-nent Security Council members, France,Russia and China have become moreoutspoken about the humanitarian coststo the country.

N E W S L I N E

February 2001 21

��������South Korean dependenceon Middle Eastern oilrises by 4.9 per cent

Seoul — The Korean National Oil Cor-poration (KNOC) has said that its depend-ence on oil from the Middle East last yearincreased by 4.9 per cent to 76.9 per cent,or by 634 million barrels (m b).

The company disclosed that its importbill in 2000 surged by 70 per cent to $25.2billion, compared with the $18.4bn spentin the previous year.

However, its long-term contract vol-ume rose by just 2.6 per cent to 324m b.

The company said the average oilimport price last year was $26.18 a barrel,the highest level since the $26.51/b re-corded in 1985.

Crude prices averaged just $10/bthroughout the 1990s, with the exceptionof the $20.25/b recorded in 1990 whenthe Gulf conflict erupted.

According to KNOC, total oil con-sumption would rise by 2.2 per cent to758m b this year, from the estimated744m b used in 2000.

Looking ahead, the company fore-casted that household and commercialconsumption of crude oil would drop by1.3 per cent from last year, while the powergeneration sector would use 18.2 per centmore oil to revive idle facilities.

A 3.9 per cent increase was projectedfor the transportation sector, while theindustrial sector was expected to see a 1.0per cent rise in oil usage.

Nigerian committeealleges over-lifting ofnation’s crudeAbuja — A committee set up by Niger-ia’s lower legislative house, the House ofRepresentatives, alleged last month thatmultinational oil companies operating inthe country had over-lifted Nigeria’s crudeby 12 million barrels between May andDecember 1999.

Chairman of the committee set up lastyear to probe into the activities of the state-run Nigerian National Petroleum Corpo-ration (NNPC), Ibrahim Ganyama, al-

leged that five oil companies were involvedin the extra oil lifting.

He told a news conference in the coun-try’s capital that during the period theNigerian unit of Royal Dutch/Shell hadlifted 723,590 barrels above its expectedvolume, while ExxonMobil Nigeria andTexaco Nigeria had lifted an excess of1.67m b and 2.8m b, respectively.

In addition, Chevron Nigeria hadlifted an excess of 637,581 b, whileTotalFinaElf had lifted 770,675 morebarrels than it should have, he said.

However, Ganyama noted that AgipNigeria had under-lifted its expected vol-ume of crude by 275,814 b.

He noted that in June 1999, the NNPCwas supposed to have lifted 34.7m b fromthe operations of its joint-venture partners.

Figures released by the Departmentof Petroleum Resources (DPR) showed,however, that the NNPC had lifted only28.2m b, showing a difference of 6.0m b,he said.

The DPR is the government agencyresponsible for the monitoring of activi-ties in the nation’s oil sector.

Ganyama said the committee wasabout to invite in the NNPC and the otheroil companies for talks over the discrep-ancies.

Founding Presidentof Indonesia’sPertamina dies at 86Jakarta — Dr Ibnu Sutowo, the armydoctor who in 1957 became the foundingPresident of Indonesia’s state oil and gascompany, Pertamina, passed away on Janu-ary 12 at the age of 86, the country’s Antaranews agency reported last month.

The report said Ibnu Sutowo, widelyaccredited for introducing the production-sharing contract (PSC) system for petro-leum mining in Indonesia, died of old age.

Ibnu Sutowo became a director of theoriginal oil company Permina in 1957 andbuilt its successor, Pertamina, from scratchinto an empire complete with its own air-craft, cargo fleet and hospital in the 1970s.

He stepped down from the company’spresidency in 1976 when the firm wascaught in a debt trap that cost the Indo-nesian government $10 billion.

UAE’s Dragon Oil starts drilling in CaspianASHGABAT — The United Arab Emirates(UAE) registered company, Dragon Oil, hasstarted to drill a well on the Caspian Shelf ofTurkmenistan, the company’s General Direc-tor, Iap Beron, was quoted as saying by Rus-sia’s Itar-Tass news agency last month. Thewell will be drilled on the Lam field, in thesouth-east of the Caspian Sea, and the workswill be financed under a credit agreementsigned with the European Bank for Recon-struction and Development (EBRD) in De-cember 1999. There has been no drilling inthe sector since the late 1980s, but an inde-pendent examination has proved the presenceof reserves of 600 million barrels of oil and2.2 trillion cubic metres of gas, according tothe company chief. Beron said he hoped thecompany would increase its oil output as theprogramme was implemented.

US exploration & development picks up paceNEW YORK — Estimated completions of oil,natural gas and dry wells in the United Statesincreased by 33 per cent in the fourth quar-ter (Q4) of last year, compared with the sameperiod of 1999, the American Petroleum In-stitute (API) estimated last month. Oil wellcompletions rose by 41 per cent, and naturalgas completions increased by 46 per cent inthe period, compared with the last threemonths of 1999. According to the API’s Q42000 well completion report, 7,891 oil, natu-ral gas and dry wells were completed in thequarter, as opposed to the 5,923 completionsduring the previous year. Gas completions inQ4 2000 were up at 4,772, whereas oil wellcompletions increased to 2,305, and dry holesfell by 21 per cent to 814.

EU likely to approve ChevronTexaco mergerNEW YORK — The proposed merger of Chev-ron and Texaco is likely to clear a regulatoryhurdle on March 1 when the European Un-ion (EU) is expected to announce its deci-sion. Approvals are also still pending from theUS Federal Trade Commission (FTC) andother agencies, such as state attorneys gen-eral. While there is no specific timetable forthese approvals, similar mergers have beenapproved between six and 12 months fromthe time of their original announcements.The merger between Chevron and Texaco wasannounced on October 16, 2000. The newcompany, ChevronTexaco, will have reservesof 11.2 billion barrels of oil equivalent (boe),daily production of 2.7 million boe, assets of$77bn, and operations throughout the world.The combined company expects to achieveannual savings of at least $1.2bn within sixto nine months of the merger’s completion.The merger requires approvals from stock-holders of both companies.

22 OPEC Bulletin

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

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

Year-to-date averageDecember January 2000 2001

Reference Basket 24.13 24.06 24.58 24.06Arabian Light 22.65 22.31 24.43 22.31Dubai 22.27 22.56 23.23 22.56Bonny Light 25.47 25.43 25.41 25.43Saharan Blend 26.11 26.08 25.89 26.08Minas 24.87 24.03 24.39 24.03Tia Juana Light 23.11 23.18 23.74 23.18Isthmus 24.40 24.80 24.97 24.80

Other crudesBrent 25.07 25.60 25.26 25.60WTI 28.39 29.42 27.15 29.42

DifferentialsWTI/Brent 3.32 3.82 1.89 3.82Brent/Dubai 2.80 3.04 2.03 3.04

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

Crude oil price movements

The monthly price of OPEC’s spot Ref-erence Basket2 of crudes edged down by7¢/b to average $24.06/b in January. Minaswas the main contributor to the pricedecrease, moving down sharply by 84¢/b.Arabian Light’s loss was 34¢/b, while thetwo Brent-related crudes, Bonny Lightand Saharan Blend, each edged slightlylower, by around 4¢/b. Tia Juana Lightmoved up by just 7¢/b, but the increasefor Isthmus was much higher, at 40¢/b,while Dubai rose by 29¢/b (see Table A).

In the first week of January, the averageweekly price of the Basket increased by97¢/b, as the market reacted to news fore-casting a sizeable cut in OPEC produc-tion, at the same time as the US weeklystocks data showed a draw on crude oil.Further support came from the tight NorthSea market, due to low availability andstrong buying interest. The Basket madea further improvement of 78¢/b to average$24.25/b in the second week, in the vola-tile environment which usually precedesOPEC Conferences. The Conference’ssubsequent confirmation of a 1.5 millionbarrels per day (m b/d) cut in OPECproduction gave solid support to prices inAsia. The rally continued into the thirdweek, its major support stemming from

the cut in OPEC production, and it wasfurther augmented by short-covering inthe futures market and a sharp rise in datedBrent, due to a single trader amassingcargoes for movement to the USA. To-wards the end of the week, prices startedto move down, as refiners’ margins beganto deteriorate in Europe and US heatingoil stocks showed a counter-seasonal build,which coincided with forecasts of milderweather. Nevertheless, the Basket gained$1.16/b in the week. The downtrend inprices dropped the average by 51¢/b in thefourth week, as the Basket registered$24.70/b. Prices moved sideways, butspiked in one day by more than $1/b, asfunds bought heavily in the futures market.

US and European marketsA big differential between West Texas

Intermediate (WTI) and Brent kept at-tracting transatlantic cargoes into the USGulf Coast throughout January, despitehigh freight rates, but a bottleneck in thepipeline leading to the mid-continentcaused stocks in Cushing, Oklahoma, todrop to 58m b, thereby increasing thebackwardation of WTI to $1.8/b. Thereturn of US refineries from maintenanceand their urge to produce high-qualitygasoline increased premiums of sweetercrudes. On the other hand, sour crudessuffered great pressure due to ample avail-

January1

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.

ability, and Basrah Light’s competitive-ness was lost due to uncertainty in itssupply.

In Europe, strong refiners’ marginsencouraged refiners to buy more NorthSea grades, causing the market to be tight,and the movement of six cargoes across theAtlantic caused dated Brent to rise by85¢/b above February Brent.

In the Mediterranean, sour crudesstrengthened due to the absence of Iraq’sKirkuk crude, but refiners’ margins cre-ated a preference for sweeter West Africancrudes in the region. However, refineryrun cuts maintained the pressure on Rus-sian Urals.

Far Eastern marketsSour crudes were over-supplied early

in the month, but the OPEC productioncut gave prices a boost, as buyers rushedto buy spot crudes. The absence of Chinafrom the market throughout the monthput pressure on heavy sweet Minas andlight sweet Tapis.

Product markets andrefinery operations

US Gulf products and European gasolineexperienced large price rises in January,driven by impending US refinery mainte-

February 2001 23

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

nance and soaring natural gas prices. Otherproduct markets fell under further pres-sure from abundant supply, except forgasoline in Singapore, which gained slightlyon healthy regional demand (see Table B).

US Gulf marketAfter collapsing in December, US Gulf

product markets witnessed enormous pricegains in January. Gasoline took the lead,putting gasoil in the back seat for the firsttime since August and indicating a switchin the market’s focus from heating oil togasoline. Both products, however, showedunusual premiums over their counterpartsin the US East Coast; these were morepronounced for gasoline, with the averagemonthly differential exceeding $1.50/bbetween the US Gulf Coast and New Yorkand attracting product cargoes originallydestined for the latter’s harbour. Moreo-ver, gasoline and gasoil production werereduced on the back of heavy scheduledrefinery turnarounds, particularly in con-version units.

Despite strong unseasonal foreign cargoarrivals and seasonally thin winter demand,gasoline soared by $6.08/b, supported byrecord tightness in blending and the rawmaterial markets — namely methyl terti-ary butyl ether (MTBE), which is a compo-nent of the reformulated gasoline pool,and naphtha, whose prices witnessed un-precedented levels for a couple of weeksthat lingered from late December overunleaded gasoline. It is worth noting thatsqueezed MTBE and naphtha supply werea direct consequence of a rally in the naturalgas market for most of the month. Thisalso firmed up the distillates market, sincenatural gas is essential for making low-sulphur gasoil; therefore, its price surgedby $1.55/b. This was helped by robustutility consumption, in the light of sus-tained strong natural gas prices, althougha middle distillates inventory deficit, com-pared with January 2000, was erased amidprevailing moderate weather and strongimport flows, which reached an all-timerecord of 965,000 b/d for distillates dur-ing the first week of the month. BuoyantMexican and bunker demand in late Janu-ary, in addition to a considerable increasein WTI prices, compared with other crudes,constituted the main reasons for a signifi-cant increase of $2.13/b in the fuel oilprice (see Table B).

throughputs. However, narrowed NYMEXlight product futures, compared with theirIPE counterparts, caused a closure of anarbitrage window throughout the secondhalf of January and, consequently, seri-ously affected refiners’ margins, whichforced refiners to cut runs. Gasoline surgedby $1.80/b, supported by the large gainsin US gasoline markets and soaring naph-tha prices. Gasoil experienced a sharpdecline of $4.10/b, on a number of de-pressing factors: first, thin regional de-mand amid mild European weather;secondly, the perception of a weaker USheating oil market, following recent ro-bust imports and bearish weather fore-casts; and thirdly, ample Russian supply.The fuel oil market shrugged off Brent’smoderate gain and plunged by $2.83/b,

Table C: Refinery operations in selected OECD countries

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

Nov 00 Dec 00 Jan 01 Nov 00 Dec 00 Jan 01

USA 15.38 15.49 15.02 93.0 93.6 90.8France 1.85R 1.78 1.87 97.4R 93.5 98.8Germany 2.18R 2.17 2.21 95.8R 95.2 98.0Italy 1.86R 1.75R 1.84 79.7R 74.9R 77.9UK 1.66R 1.64 1.68 93.1R 91.7R 95.1Eur-162 12.70R 12.29R 12.56 93.3R 90.3R 92.1Japan 4.39 4.52 na 87.9 90.5 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.

Refiners’ margins witnessed tremen-dous gains (the highest for at least fiveyears) on the back of soaring productprices, specifically gasoline on squeezedsupply (see Table C).

US refinery throughput in Januarystood at 15.02m b/d; this was a fall of460,000 b/d from the previous month’srun, indicating a utilization rate of 90.8per cent, which was nearly five percentagepoints higher than last year’s level.

Rotterdam marketFor most of the first half of January,

European light product markets werebullish, particularly for gasoline, in tan-dem with extended heavy movements oftransatlantic arbitrages, hence improvingrefiners’ margins and increasing refinery

Table B: Selected refined product prices $/b

ChangeNovember December January Jan/Dec

US GulfRegular gasoline (unleaded) 35.99 30.25 36.34 +6.08Gasoil (0.2%S) 40.54 34.32 35.86 +1.55Fuel oil (3.0%S) 20.81 16.44 18.57 +2.13

RotterdamPremium gasoline (unleaded) 33.46 28.05 29.85 +1.80Gasoil (0.2%S) 40.68 34.25 30.15 –4.10Fuel oil (3.5%S) 22.18 18.31 15.48 –2.83

SingaporePremium gasoline (unleaded) 32.97 29.97 30.02 +0.05Gasoil (0.5%S) 34.85 29.61 28.41 –1.20Fuel oil (380 cst) 24.49 19.74 17.99 –1.75

24 OPEC Bulletin

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

per cent in the share of eastbound long-haul chartering, while the westbound sharerose by 6.49 percentage points to 17.02per cent. Together, they accounted for51.87 per cent of total chartering in theOPEC area, which was 1.50 percentagepoints lower than in December. Prelimi-nary estimates of sailings from the OPECarea for the weeks ending January 6, 13,20 and 27, are 22.77m b/d, 22.82m b/d,23.26m b/d, and 22.70m b/d, respec-tively.

The Middle East’s share of OPECsailings was nearly at the preceding month’slevel, as it moved down by 0.59 percentagepoints to stand at 69.39 per cent. Arrivalsin the US Gulf and East Coasts, includingthe Caribbean, NW Europe and Euromedall showed increases in January. In NWEurope, they rose by 210,000 b/d to 6.28mb/d, followed by the US Gulf and EastCoasts, including the Caribbean, whichincreased by 60,000 b/d to 8.23m b/d,while arrivals in Euromed moved upmarginally by 10,000 b/d to 4.13m b/d.The estimate of oil-at-sea on January 28is 483m b, which is 25m b below thatwitnessed at the end of December; this isthe lowest level since September and canbe attributed to the increasing arrivalsduring the month.

Despite an increase of about 20 percent in Worldscale flat rates for 2001,freight rates for VLCC long-haul cargoesfrom the Middle East to the Far East andthe West fell by 24 points to W147 andby 33 points to W119, respectively, inJanuary. The suspension of Iraqi exports,which had been cut short since late De-cember and continued during most ofJanuary, the lower spot fixtures after theyear-end holidays, the production cutannounced by the 113th (Extraordinary)Meeting of the OPEC Conference and theChinese New Year holiday were the factorsdepressing VLCC freight rates the most.

The monthly average freight rates forSuezmax cargoes from West Africa to theUS Gulf moved up by 11 points to W221;very high rates at the beginning of themonth were behind this level, but theystarted to fall as the month continued, dueto lower activity. Freight rates for cargoeson Aframax tankers within the Mediter-ranean and from the Caribbean to the USEast Coast slipped by 10 points to W236and by 34 points to W281, on the back

undermined by fading refinery and bun-ker demand and steady Russian supply(see Table B).

Collapsing refiners’ margins in thesecond half of January were faster thantheir rises during the first half; therefore,the monthly average margins for all crudegrades switched to negative territory.

Refinery throughput in the Eur-16rose by 270,000 b/d to stay around 12.56mb/d in January, responding to good mar-gins during the first half of the month onactive transatlantic trading (see Table C).The refinery utilization rate climbed to92.1 per cent, which was 2.5 percentagepoints above the preceding year’s volume.

Singapore marketIn Singapore, regional refinery run cuts,

in addition to scheduled refinery mainte-nance in Indonesia and Thailand, put acap on hefty losses in product prices inJanuary, after the big price falls experi-enced in December. Gasoline climbed byjust 5¢/b, on continued robust Indonesiandemand, coupled with an upsurge in thenaphtha market. However, both the gasoiland fuel oil markets remained under pres-sure from well-supplied markets. There-fore, gasoil fell by a further $1.20/b andfuel oil price by another $1.75/b, hinderedby fading Chinese and bunker buyinginterest, amid an overhang of regional andLatin American supplies (see Table B).

Although refiners’ margins retreatedfor all types of crude on persistent ampleproduct supply in Singapore in January,Dubai and Minas showed positive mar-gins, in contrast with other crudes.

In Japan, refinery throughput in Dec-ember was boosted further to register 4.52mb/d, representing a utilization rate of 90.5per cent, which was 3.3 percentage pointsabove the year-ago figure (see Table C).

The oil futures market

NYMEX WTI moved up from $26.81/bon the last day of 2000 to $29.41/b onJanuary 11, 2001 in a nearly continuousrally, as signals from OPEC MemberCountries pointed towards a cut in outputof at least 1.5m b/d. The rally was inter-rupted by a breathtaking level of liquidat-ing and profit-taking and then resumed,as evidence emerged that Saudi Arabia had

notified customers of cuts in its Februarycontracts amounting to 500,000 b/d.

In the following week, an initial con-tinuation of the rally was followed by aprice dip, due to profit-taking after theannouncement of the decision of the 113th

(Extraordinary) Meeting of the Confer-ence to cut production by 1.5m b/d. Theshut-down of a pipeline from Canada,which carried 640,000 b/d of crude intothe mid-continent, and gains in heatingoil again pushed up WTI by 65¢/b to$30.45/b; thereafter, technical buyingraised it further to $32.19/b. Profit-takingand long liquidation, in addition to aweakening heating oil market, brought theprice down to $29.36/b.

In the last week of January, WTI startedwith a rise of 41¢/b, as the March/Aprilspread ballooned to $1.0/b on concernabout low inventories in the mid-conti-nent. However, technical factors and ex-tended mild weather brought the pricesdown again. NYMEX WTI ended at$28.66/b for January.

The tanker market

OPEC area spot-chartering increased by5.52m b/d to stand at a monthly averageof 13.88m b/d in January, the highest levelsince October. This was consistent withseasonal trends, whereby the spot-charter-ing volume rises at this time of the year,and reflected higher demand, especially inthe first half of the month, from commer-cial oil companies rather than national oilcompanies, in response to expectations ofa big cut in OPEC oil production. Com-pared with year-ago fixtures, the currentvolume is 250,000 b/d higher. The sub-stantial increase in OPEC spot fixtures hashad a positive impact on global spot-char-tering, which moved up considerably, by8.85m b/d, to a monthly average of 23.64mb/d in January.

This volume of global spot-charteringwas 2.51m b/d higher. OPEC’s share ofglobal spot fixtures stood at 58.71 percent, which was 2.18 percentage pointshigher than its share in the precedingmonth. Middle East eastbound and west-bound long-haul fixtures rose by 1.26mb/d to 4.84m b/d and by 1.48m b/d to2.36m b/d, respectively. This resulted ina fall of 7.98 percentage points to 34.86

February 2001 25

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

of ample tonnage availability, while theyrose by one point to W258 on the Medi-terranean-to-NW Europe route, due tosteady activity. Freight rates for 70–100,000 dwt tankers, for cargoes shippedby Aframax along the Indonesia/US WestCoast route, increased by 20 points toW253; this rise was attributed to strongactivity, due to higher demand for Indo-nesian grades, in light of uncertainty aboutIraqi exports.

Product freight rates for cargoes on theMiddle East-to-Far East route for me-dium-range tankers and from Singaporeto the Far East firmed in January, movingup by 39 points to W359 and by 31 pointsto W414, respectively, due to a scarcity ofvessels. Freight rates on the other majorroutes showed considerable decreases, fall-ing by 38 points to W319 along theCaribbean-to-US Gulf route, on the backof lower activity, especially as the monthdrew to an end. Freight rates for cleancargoes on the Mediterranean-to-NWEurope route and within the Mediterra-nean slumped by 33 points to W357 andby 13 points to W333, respectively; adecline in US diesel imports from Europewas the main reason for this fall.

World oil demand

Revisions to 1999According to the latest revisions, world

oil demand growth for 1999 has beenadjusted up by 90,000 b/d, from the pre-vious 1.20m b/d to 1.29m b/d. The ad-justments are most noticeable in thedeveloping country growth rate, whichhas been revised up by 0.3 per cent fromthe previous 1.4 per cent. OECD oilconsumption is also up, by 10,000 b/d,mainly to account for higher growth inNorth America. The figure for apparentconsumption in the former CPEs has alsobeen increased, by 40,000 b/d, to stand at180,000 b/d.

Figures for 2000

WorldWorld oil demand growth has once

again been revised down for the year justended. The revision arises from the latestavailable data, which include 11 months(January–November) and the best esti-

mate for December. According to this,demand grew by 830,000 b/d, or 1.1 percent, and averaged 75.81m b/d for the year2000. The quarterly data show that, com-pared with year-earlier figures, consump-tion declined by 320,000 b/d, or 0.4 percent, during 1Q; for the remaining threequarters, demand growth recovered, risingby 1.4 per cent, 2.0 per cent and 1.5 percent, respectively. On a regional basis,OECD consumption registered a mar-ginal increment of 50,000 b/d, or 0.1 percent, to average 47.67m b/d. DC con-sumption is expected to show a rise of500,000 b/d, or 2.7 per cent; however, dueto the limited reliability and availability ofthe data, no definite conclusion can bedrawn yet. Finally, ‘Other regions’ appar-ent consumption growth, derived fromproduction and trade statistics, seems tohave increased by 280,000 b/d, or 3.1 percent, to 9.27m b/d.

OECDThe most recent estimates for 2000

indicate that oil demand grew modestly,by 160,000 b/d, or 0.7 per cent, in NorthAmerica. The entire increment was con-centrated in the two smaller countries ofthe group (Mexico and Canada). In theUSA, the world’s biggest oil consumer,demand declined marginally, by 0.1 percent. Relatively strong product prices andwarm weather in 1Q contributed to theyear’s decline in demand. Inland deliveriesof motor gasoline fell by 0.7 per cent,capping the growth in jet fuel, distillatesand fuel oil. In Western Europe, accordingto the latest estimates, demand shrank, by110,000 b/d, or 0.7 per cent, for thesecond consecutive year; however, the fallwas less pronounced than the 1.1 per centseen in 1999. All the loss in consumptiontook place in the ‘Big Four’ economies,with the remaining 15 smaller countriesposting a 50,000 b/d, or 0.7 per cent,increase. On a quarterly basis, comparedwith year-earlier figures, consumptionregistered a considerable 4.5 per cent dropin 1Q, possibly attributed to the ‘Y2K’effect, which prompted earlier (4Q99)buying; consumption then grew by 1.1 percent and 2.2 per cent during 2Q and 3Q,but declined by 1.5 per cent in 4Q. Asmentioned in many past reports, struc-tural changes in the electricity sector, thesubstitution of fuel oil for gas, environ-

mental policies and higher taxation onenergy continue to dampen consumption.OECD Pacific consumption growth, con-trary to expectations at the beginning ofthe year, finished almost unchanged at8.63m b/d. Inland deliveries dropped by1.3 per cent in 1Q, but recovered during2Q and 3Q. By the last three months ofthe year, consumption of petroleum prod-ucts showed a noticeable decline. Japancontinues to undermine demand growthin the group, with South Korea making upfor lost Japanese consumption. Japanesedemand has been on a plateau of 5.5mb/d for several years, due to poor refiners’and marketing margins.

Developing countriesDC oil demand is forecast to rise by

500,000 b/d in the year. However, be-cause of the huge time-lag and the limitedreliability of data in this group, this assess-ment is subject to further change and thusshould not be considered as definite.Evidence suggests that consumption de-celerated in the ‘Other Asia’ group ofcountries towards 4Q of the year. None-theless, this group constitutes half the totalgrowth in demand expected in the devel-oping world. The group’s economies grewby a healthy 5.8 per cent; however, thephasing-out of government subsidies seemsto have undermined demand. For instance,India’s gasoil demand fell sharply at theend of the year, as the government wasforced to pass on to consumers part of theinternational rise in prices. The remainderof the gain in consumption of half a mil-lion b/d took place in Latin America(80,000 b/d), the Middle East (120,000b/d) and Africa (50,000 b/d).

Other regionsApparent demand in the ‘Other re-

gions’, according to preliminary estimates,grew by 280,000 b/d, or 3.1 per cent.Consumption in the FSU continued tofall sharply, declining by 6.9 per cent, or280,000 b/d. In the FSU, with the excep-tion of 1997, consumption has shrunkthroughout the last eight years. Among theexplanations for such a decline is theongoing restructuring of the industrialsector; but the need for hard currency isinducing an increase in exports at theexpense of domestic consumption. Quotasystems imposed by the government are

26 OPEC Bulletin

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

likely to loosen, making the situation morecritical. China, by contrast, has put up animpressive performance. Consumptiongrowth, derived from production and tradedata, increased by an astonishing 13.1 percent, or 550,000 b/d. On a quarterly basis,compared with year-earlier figures, appar-ent demand shot up by 17 per cent, 3.1per cent, 18.3 per cent and 14.4 per cent,respectively. These numbers, even thoughimpressive, are drawn from China Oil, Gasand Petrochemicals, the acceptable sourceused by the Secretariat. Of course, thereason behind such formidable growth liesin the extremely high level of imports,since production has remained fairly flat.For instance, imports of crude oil andpetroleum products were 1.45m b/d,1.71m b/d and 1.63m b/d in the last threemonths of the year.

Projections for 2001The world oil demand forecast for

2001 has been revised down to account forsharp corrections in regional and globalGDP growth rate estimates. Initially, inAugust 2000, when OPEC first issued itsdemand projections for the current year,the world GDP growth rate was estimatedat 3.5 per cent (market exchange rate-based). Since then, this estimate has beenlowered several times and now stands at2.7 per cent. The forecast is also based onassumptions that weather patterns behavenormally and that crude and product pricesremain at moderate levels throughout theyear. Our main concern regarding thedemand equation for the present year relatesto the level of prices, but also importantis the issue of temperature. Another factorundermining demand is the ongoing phas-ing-out of government subsidies in manydeveloping countries, especially in Asia,which will ultimately translate into higherprices at the consumers’ end.

World demand is now projected togrow by 1.34m b/d, or 1.8 per cent, toreach 77.15m b/d by the end of the year.Demand in 1Q is projected to reach76.97m b/d, which is 1.8 per cent higherthan in 1Q00. These levels, somehowconservative, seem reasonable in theabsence of lower temperatures in the north-ern hemisphere. Temperatures, as meas-ured by degree days for January, weremilder than the accepted historical normallevels in the USA. In Europe, the winter

season has also been warmer than normal.Seasonality will bring world demand downto 75.03m b/d in 2Q, which is still 1.2 percent higher year-on-year. Oil demand isexpected to pick up considerably during3Q to reach 77.07m b/d, gaining 1.6 percent, or 1.24m b/d, with respect to thesame quarter of 2000. Consumption willlevel off at 79.50m b/d during 4Q. Thiswill represent an increase of 2.4 per cent,or 1.84m b/d, compared with 4Q00, anda rise of 2.43m b/d against 3Q01.

OECDOECD inland delivery of petroleum

products is projected to rise by 560,000b/d, or 1.2 per cent, to average 48.23mb/d in the present year. Slightly more thanhalf the incremental consumption will beconcentrated in North America. The USAwill account for the lion’s share in thisgroup. In the USA, demand is projectedto grow again after the marginal decline of2000; nevertheless, it is expected to rise ata moderate level in line with the lower rateof economic growth.

Reversing last year’s decline, gasolineconsumption is projected to rise, driven bylower pump prices. Distillate consump-tion is expected to grow, based on incre-mental demand for transportation diesel;however, heating oil demand is projectedto remain unchanged or contract. Jet fueldeliveries will grow, bolstered by the risein disposable income. Fuel oil consump-tion, on the contrary, will most likelyexperience a decline, and the extent of thiswill depend on the drop in gas prices,which will result in the displacement offuel oil in the industrial and power gen-eration sectors. Oil consumption in West-ern Europe is projected to rise modestly,by 140,000 b/d, or one per cent, to 15.15mb/d, after the declines seen in the last twoyears.

This forecast is based on a healthy 2.9per cent regional forecast rate of economicgrowth, but the issues of high taxes, thesubstitution of fuel oil for gas and conser-vation measures ought to be considered.Healthy projected economic growth in theOECD Pacific countries will be the mainforce driving oil demand growth. SouthKorea’s economy is expected to expand by4.7 per cent, and Australia and New Zea-land will experience growth rates of 2.9 percent and 2.7 per cent, respectively. Japan’s

economy, on the other hand, is expectedto undergo a mild 0.7 per cent economicexpansion, which will ultimately translateinto lower oil consumption. Poor refiners’and marketing margins will also cap de-mand for crude oil.

Developing countriesDC consumption is estimated to rise

by 630,000 b/d, or 3.4 per cent, to 19.50mb/d in 2001. Half the growth in consump-tion will be concentrated in the Asiancountries belonging to this group, whereeconomic growth is projected to expandby 4.9 per cent. As stated above, demandgrowth in these countries might be haltedby the elimination of government subsi-dies, as they struggle to balance their na-tional accounts. The rest of the growth indemand will come from Latin America,the Middle East and Africa, where theconsumption of crude oil and petroleumproducts is projected to rise by 2.1 percent, 3.0 per cent and 3.7 per cent, respec-tively.

Other regionsCurrent projections set apparent con-

sumption for the ‘Other regions’ at 9.42mb/d, rising by 140,000 b/d, or 1.6 per cent,during the year. Apparent FSU demand isprojected to shrink by 0.9 per cent, or30,000 b/d; however, this estimate mightprove to be too conservative, based on theexperience of previous years. The healthyrate of economic expansion anticipated forthe year implies that oil consumptionshould not experience a big decline, butthe need for hard currency and the restruc-turing of the industrial sector might resultin another considerable drop in demand.China remains the wild card, when assess-ing demand for the present year.

According to several well-known tradepublications, China has remained absentfrom international markets since the be-ginning of the year and, in some instances,has come forward to sell cargoes that hadbeen bought previously. In December, oilimports were down by nearly half thelevels of November. The growth rate inChina appears to be slowing. This is whywe have chosen to be conservative in ourprojection of oil demand growth in China(3.1 per cent), even though the estimatefor economic expansion has remained ata very healthy 7.0 per cent. China’s con-

February 2001 27

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

sumption will be critical, in order to bal-ance the global supply/demand equation.A small increase in Chinese consumptionor, even worse, a decline, will mean thatthe critical balance between supply anddemand will have to be adjusted, so as toavoid a negative impact on prices. Thisbecame evident in 2000, where two-thirdsof the total growth in consumption origi-nated in China.

World oil supply

Non-OPEC

Historical data, including 1999There are no revisions to non-OPEC

supply historical data, compared with thelast report’s figures.

Figures for 2000The non-OPEC supply total for 2000

has been revised up by 60,000 b/d to45.89m b/d. This is the result of revisionsmade to the figures for 2Q, 3Qand 4Q,which have been revised up by 30,000b/d to 45.57m b/d, 130,000 b/d to 45.73mb/d and 60,000 b/d to 46.36m b/d, re-spectively; 1Q remains unchanged fromthe last report. The yearly average increaseis estimated at around 1.30m b/d, com-pared with the 1999 figure.

Expectations for 2001The non-OPEC supply forecast for

2001 has been revised up by 140,000b/d to 46.81m b/d, which is 930,000b/d more than the revised estimate for2000. The expected 2001 quarterly fig-ures have been revised up by 80,000 b/dto 46.80m b/d, 110,000 b/d to 46.48mb/d, 210,000 b/d to 46.66m b/d and

140,000 b/d to 47.31m b/d, respectively,from the last report.

The FSU’s net oil export figures for1999 and 2000 have been revised down by40,000 b/d to 3.44m b/d and up by 10,000b/d to 4.13m b/d, respectively; the fore-cast for 2001 remains unchanged, com-pared with the last report’s figures (seeTable D).

OPEC natural gas liquidsOPEC NGL data for the 2000 estimate

and 2001 forecast remain unchanged, at2.91m b/d and 2.95m b/d, respectively.

OPEC NGL production — 1997–2001m b/d

1997 2.811998 2.781999 2.841Q00 2.912Q00 2.913Q00 2.914Q00 2.912000 2.91Change 2000/1999 0.072001 2.95Change 2001/2000 0.04

OPEC crude oil productionAvailable secondary sources indicate

that, in January, OPEC output was 27.91mb/d, which was 40,000 b/d higher than therevised December level of 27.87m b/d.

Table E shows OPEC production, as re-ported by selected secondary sources.

Stock movementsUSA

US commercial onland oil stocks de-clined by a further 7.4m b, or 260,000b/d, to 922.6m b during December 29–January 26. This draw resulted mainlyfrom a decrease of 14.4m b to 151.4m bin ‘Other oils’, followed by a fall in crudeoil of 6.1m b to 282.6m b, on stagnantcrude oil output. Meanwhile, a build of12.1m b to 205.9m b in gasoline, whichwas due to low demand, capped the overallUS stock-draw. Distillates continued toshow a slight draw, decreasing by 1.6m bto 114.5m b, on the back of higher USutility diesel demand, due to ongoing highnatural gas prices and lower imports. Totaloil stocks were 27.6m b below the year-ago figure.

During the same period, and as the saleof oil from the US Strategic PetroleumReserve (SPR) under the 30m b swapprogramme approached its conclusion, theSPR showed a slight decrease of 500,000 bto 540.7m b (see Table F).

Western EuropeIn January, commercial onland oil

stocks in Eur-16 (EU plus Norway) re-mained mostly unchanged from the pre-

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

Jan 01/1999 3Q00 Dec 00* 4Q00 2000 Jan 01* Dec 00

Algeria 766 823 843 840 807 835 –8Indonesia 1,310 1,277 1,296 1,290 1,281 1,248 –49IR Iran 3,509 3,697 3,845 3,812 3,673 3,798 –48Iraq 2,507 2,760 1,282 2,350 2,548 1,768 486Kuwait 1,907 2,161 2,220 2,207 2,101 2,199 –22SP Libyan AJ 1,337 1,411 1,441 1,436 1,405 1,425 –16Nigeria 1,983 2,032 2,152 2,133 2,033 2,164 11Qatar 646 709 730 727 698 735 5Saudi Arabia 7,655 8,535 8,673 8,696 8,246 8,366 –307UAE 2,077 2,297 2,352 2,340 2,253 2,361 9Venezuela 2,809 2,919 3,040 3,008 2,899 3,015 –25

Total OPEC 26,506 28,621 27,874 28,837 27,944 27,912 38

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

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 3.95 4.1320012 4.10 4.33 4.63 4.21 4.32

1. Estimate.2. Forecast.

28 OPEC Bulletin

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Table F: US onland commercial petroleum stocks1 m b

Change June 30, 00 Sept 29, 00 Dec 29, 00 Jan 26, 01 Jan/Dec January 26, 01

Crude oil (excl SPR) 293.7 286.7 288.7 282.6 –6.1 285.7Gasoline 204.5 195.6 193.8 205.9 12.1 205.3Distillate fuel 103.7 114.2 116.1 114.5 –1.6 110.4Residual fuel oil 37.0 36.5 34.7 34.4 –0.3 35.8Jet fuel 44.5 43.1 43.9 45.1 1.2 42.8Unfinished oils 90.1 88.0 87.1 88.7 1.6 88.4Other oils 179.4 195.9 165.8 151.4 –14.4 145.0Total 953.0 959.9 930.0 922.6 –7.4 913.5SPR 568.4 570.7 541.2 540.7 –0.5 568.3

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

Table G: Western Europe onland commercial petroleum stocks1 m b

ChangeJune 00 September 00 December 00 January 01 Jan/Dec January 00

Crude oil 440.4 424.4 420.6 417.7 –2.8 428.3Mogas 146.9 152.8 152.9 160.6 7.7 159.5Naphtha 24.6 26.0 24.6 25.1 0.4 24.6Middle distillates 311.4 325.7 342.8 337.4 –5.3 338.0Fuel oils 125.9 124.2 125.8 125.7 –0.1 128.8Total products 608.8 628.7 646.2 648.8 2.6 650.8Overall total 1,049.2 1,053.0 1,066.7 1,066.5 –0.2 1,079.1

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

Table H: Japan’s commercial oil stocks1 m b

ChangeJune 00 September 00 November 00 December 00 Dec/Nov December 99

Crude oil 121.4 101.2 110.8 105.1 –5.7 110.3Gasoline 14.0 13.4 14.2 12.7 –1.5 13.2Middle distillates 34.4 43.5 46.9 40.3 –6.6 41.5Residual fuel oil 18.3 18.9 19.9 20.4 0.5 19.1Total products 66.7 75.8 81.0 73.4 –7.6 73.9Overall total2 188.1 176.9 191.8 178.5 –13.3 184.1

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

February 2001 29

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

vious month’s level, due to stagnant de-mand as a result of the mild weather. Theydeclined by only 200,000 b, or at abouta rate of 10,000 b/d, to 1,066.5m b. Totalmajor product and crude oil stocks movedin different directions by almost the samevolume; the former rose by 2.6m b to648.8m b, while the latter declined by2.8m b to 417.7m b, thus allowing thewithdrawal of marginal crude oil quanti-ties to push total oil stocks down slightly.The modest rise in total products resultedfrom a considerable build of 7.7m b to160.6m b in gasoline, which was fuelledby lower demand and increasing gasolineoutput to take advantage of higher USgasoline prices, and a smaller draw ondistillates of 5.3m b to 337.4m b, due tolow consumption because of the mildweather. Total product inventories were12.6m b lower than the level witnessed lastyear (see Table G).

JapanIn Japan, commercial oil stocks showed

a seasonal draw of 13.3m b, or 430,000b/d, to 178.5m b in December. Crude oiland total major products both contributedto this draw, with crude oil falling by 5.7m

b to 105.1m b and total major productsdecreasing by 7.6m b to 73.4m b. Distil-lates accounted for the greatest part of theproduct draw, when they moved down by6.6m b to 40.3m b, due to higher demandcaused by the cold weather.

Gasoline also contributed to the draw,declining by 1.5m b to 12.7m b on theback of low output. Fuel oil was an excep-tion, registering a slight build of 500,000b to 20.4m b, due to increasing output.The total level was 5.6m b lower than thatobserved a year earlier (Table H).

OECDDuring 4Q00, OECD commercial oil

stocks (the USA, Eur-16 and Japan) areestimated to have shown a minor seasonaldraw of 14.6m b, or a rate of 160,000b/d, to 2,175.2m b, compared with 3Qfigure. This estimated draw took placemainly with US commercial oil stocks,which declined by 29.9m b, or at a rate of330,000 b/d, to 930.0m b.

The main reason for this was ‘Otheroils’, which fell by 30.1m b, while crudeoil and distillates showed slight increases.Eur-16 and Japanese stock movementsdiminished the overall impact of the

OECD draw, when they rose by 13.7mb to 1,066.7m b and by 1.6m b to 178.5mb, respectively. The increase in Eur-16was mainly due to a substantial build of17.1m b in distillate stocks, which resultedfrom lower demand, because of the mildweather, and from higher distillate output(see Table I).

Balance of supply/demand

The non-OPEC supply estimate for 2000has been revised up by less than 100,000b/d to 48.8m b/d, while no revision hasbeen made to world oil demand, which isestimated at 75.8m b/d, compared withthe last report. This results in revisingdown the difference item by less than100,000 b/d, which is now estimated at27.0m b/d. The balances for 1Q and 2Qremain unchanged, while those for 3Qand 4Q have been revised down by 200,000b/d to 1.4m b/d and up by less than500,000 b/d to 500,000 b/d, respectively.The 1999 balance remains unchanged fromlast month’s report, at –1.0m b/d (seeTable J).

The non-OPEC supply forecast for2001 has been revised up by more than100,000 b/d to 49.8m b/d, while world oildemand has been revised down by morethan 100,000 b/d to 77.1m b/d; the an-nual difference is, therefore, estimated at27.4m b/d, down by less than 300,000b/d from the last report. The differencehas been revised down by 300,000 b/d to25.6m b/d, by 300,000 b/d to 27.5mb/d and by 400,000 b/d to 29.2m b/d forthe second-to-fourth quarters, respectively,but remains unchanged for the first.

Table I: Estimated stock movements in OECD* in 4Q 2000 m b

Change Dec 00/Sep 00 September December m b m b/d

USA 959.9 930.0 –29.9 –0.33Eur-16 1,053.0 1,066.7 13.7 0.15Japan 176.9 178.5 1.6 0.02OECD total 2,189.8 2,175.2 –14.6 –0.16

* Includes USA, Eur-16 and Japan only; data at end of month.

30 OPEC Bulletin

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

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

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

World demandOECD 46.7 46.8 47.6 47.9 46.3 47.6 48.8 47.7 48.5 46.5 48.2 49.8 48.2

North America 22.7 23.1 23.9 23.6 23.7 24.3 24.5 24.0 23.8 23.7 24.8 25.1 24.3Western Europe 15.0 15.3 15.1 15.1 14.5 15.0 15.4 15.0 15.2 14.7 15.1 15.6 15.1Pacific 9.0 8.4 8.6 9.3 8.0 8.3 8.9 8.6 9.5 8.1 8.3 9.1 8.7

Developing countries 17.7 18.1 18.4 18.4 19.0 19.0 19.0 18.9 19.1 19.5 19.6 19.8 19.5FSU 4.3 4.2 4.0 3.7 3.6 3.5 4.2 3.8 3.7 3.6 3.5 4.1 3.7Other Europe 0.7 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.9 0.8 0.8 0.9 0.8China 4.0 3.8 4.2 4.7 4.4 4.9 4.8 4.7 4.9 4.6 5.0 4.9 4.9(a) Total world demand 73.4 73.7 75.0 75.6 74.1 75.8 77.7 75.8 77.0 75.0 77.1 79.5 77.1

Non-OPEC supplyOECD 22.1 21.8 21.3 22.2 21.8 21.7 22.0 21.9 22.6 22.2 22.1 22.4 22.3

North America 14.6 14.5 14.0 14.4 14.4 14.3 14.3 14.3 14.6 14.6 14.6 14.5 14.6Western Europe 6.8 6.6 6.6 7.0 6.6 6.5 6.9 6.7 7.2 6.7 6.7 7.1 6.9Pacific 0.7 0.7 0.7 0.9 0.8 0.8 0.8 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 11.2 11.2 11.4 11.6 11.3FSU 7.2 7.2 7.5 7.7 7.8 8.0 8.1 7.9 7.8 7.9 8.1 8.3 8.0Other Europe 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2China 3.3 3.2 3.2 3.3 3.3 3.2 3.2 3.2 3.3 3.3 3.2 3.2 3.3Processing gains 1.6 1.6 1.6 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7Total non-OPEC supply 44.6 44.5 44.6 45.9 45.6 45.7 46.4 45.9 46.8 46.5 46.7 47.3 46.8OPEC NGLs 2.8 2.8 2.8 2.9 2.9 2.9 2.9 2.9 2.9 2.9 2.9 2.9 2.9(b) Total non-OPEC supply and

OPEC NGLs 47.5 47.3 47.4 48.8 48.5 48.6 49.3 48.8 49.7 49.4 49.6 50.3 49.8

OPEC crude oil production1 27.2 27.8 26.5 26.5 27.8 28.6 28.8 27.9Total supply 74.7 75.1 73.9 75.3 76.3 77.3 78.1 76.7Balance2 1.3 1.4 -1.0 -0.4 2.2 1.4 0.5 0.9

Closing stock level (outside FCPEs) m bOECD onland commercial 2643 2725 2470 2446 2526 2557 2518OECD SPR 1207 1249 1228 1234 1232 1237 1202OECD total 3850 3974 3699 3680 3758 3794 3720Other onland 1030 1063 989 984 1005 1015 995Oil on water 812 859 808 829 853 834 847Total stock 5692 5896 5496 5492 5616 5643 5562

Days of forward consumption in OECDCommercial onland stocks 56 57 52 53 53 52 53SPR 26 26 26 27 26 25 25Total 82 83 78 80 79 78 78Memo itemsFSU net exports 2.9 3.0 3.4 4.0 4.1 4.5 3.9 4.1 4.1 4.3 4.6 4.2 4.3[(a) — (b)] 25.9 26.4 27.6 26.8 25.6 27.2 28.4 27.0 27.2 25.6 27.5 29.2 27.4

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

Table J above, prepared by the Secretariat’s Energy Studies Department, shows OPEC’s current forecast of world supply and demand foroil and natural gas liquids.

The monthly evolution of spot prices for selected OPEC and non-OPEC crudes is presented in Tables One and Two on page 63, whileGraphs One and Two (on pages 62 and 64) show the evolution on a weekly basis. Tables Three to Eight, and the corresponding graphson pages 65–70, show the evolution of monthly average spot prices for important products in six major markets. (Data for Tables 1–8 isprovided by courtesy of Platt’s Energy Services).

February 2001 31

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

October 2000 to January 2001

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

$/barrel

16

19

22

25

28

31

34

37

40

OPEC Basket

Tia Juana Light

Dubai

Arab Heavy

Arab Light

Bonny Light

Brega

Kuwait Export

Iran Light

Minas

Saharan Blend

JanuaryDecemberNovemberOctober5 5

32 OPEC Bulletin

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

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

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

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

AlgeriaSaharan Blend (44.1) 28.74 27.65 22.91 28.02 29.94 28.76 29.25 33.18 31.19 33.06 26.11 24.11 25.45 25.84 27.60 27.41 26.08

IndonesiaMinas (33.9) 26.48 27.39 24.15 28.26 31.30 30.44 30.33 33.36 32.30 31.07 24.87 22.74 23.77 24.16 24.64 24.85 24.03

IR IranLight (33.9) 25.70 25.87 22.86 26.10 27.99 27.09 27.12 30.45 30.42 29.75 22.66 20.89 22.01 22.92 23.65 23.69 22.63

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

KuwaitExport (31.4) 24.84 25.07 22.29 25.60 27.44 26.39 26.21 29.05 28.87 28.20 21.11 19.34 20.46 21.37 22.10 22.14 21.08

SP Libyan AJBrega (40.4) 28.59 27.71 22.86 27.84 30.14 29.36 29.44 32.64 30.98 32.99 25.40 23.75 24.85 25.45 27.80 0.00 25.46

NigeriaBonny Light (36.7) 28.36 27.54 22.91 27.87 29.86 28.75 29.06 32.65 30.67 32.86 25.47 23.32 24.73 25.22 27.00 26.87 25.43

Saudi ArabiaLight (34.2) 25.85 26.02 22.95 26.27 29.09 27.19 27.12 30.60 30.17 29.81 22.65 20.84 21.62 22.52 23.26 23.33 22.31Heavy (28.0) 24.00 24.52 22.00 25.27 27.09 25.99 25.52 28.00 28.21 27.94 20.83 18.99 20.12 21.02 21.76 21.83 20.74

UAEDubai (32.5) 24.77 24.99 22.14 25.69 27.24 26.35 26.79 30.05 30.57 30.25 22.27 20.87 21.83 22.74 23.63 23.73 22.56

VenezuelaTia Juana Light1 (32.4) 26.08 25.89 22.16 25.50 27.99 26.32 26.84 29.33 28.34 30.01 23.11 21.83 22.51 23.64 24.84 23.08 23.18

OPEC Basket2 26.84 26.71 22.93 26.94 29.12 27.94 28.30 31.48 30.42 31.22 24.13 22.44 23.43 24.20 25.36 24.85 24.06

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

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

Gulf AreaOman Blend (34.0) 25.42 25.55 22.75 25.65 27.74 26.83 27.24 30.55 29.88 28.97 22.76 20.62 21.90 22.80 23.39 23.43 22.43

MediterraneanSuez Mix (Egypt, 33.0) 26.16 24.68 19.90 25.03 26.64 24.24 26.24 28.59 26.18 29.06 21.11 20.15 21.30 21.85 23.65 0.00 21.74

North SeaBrent (UK, 38.0) 27.99 27.14 22.66 27.60 29.74 28.96 29.74 32.94 30.86 32.67 25.07 23.49 24.69 25.19 27.48 27.16 25.60Ekofisk (Norway, 43.0) 28.47 27.29 22.74 27.91 29.85 28.44 28.57 32.75 30.77 32.66 25.50 23.57 24.88 25.30 26.77 27.02 25.51

Latin AmericaIsthmus (Mexico, 32.8) 27.62 27.51 23.31 26.95 29.45 27.74 28.75 31.19 29.73 31.47 24.40 23.36 24.08 25.30 26.58 24.70 24.80

North AmericaWTI (US, 40.0) 29.44 29.85 25.81 28.78 31.93 30.19 31.04 34.05 33.00 34.65 28.39 27.50 28.41 30.10 31.78 29.33 29.42

OthersUrals (Russia, 36.1) 27.52 25.60 21.20 26.35 27.39 24.75 27.00 30.30 28.04 31.23 24.06 22.64 24.04 24.37 25.63 25.33 24.40

February 2001 33

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

October 2000 to January 2001

16

19

22

25

28

31

34

37

40

OPEC Basket

UralsWest Texas IntermediateIsthmus

Ekofisk

BrentSuez MixOman

JanuaryDecemberNovemberOctober1 2 3 4 2 3 4 1 2 3 4 1 2 3 41

$/barrel

5 5

34 OPEC Bulletin

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

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

1999 naphtha unleaded 87 unleaded 95 gasoil jet kero 1%S 3.5%SJanuary 11.12 12.55 13.45 13.23 14.65 10.79 9.30February 10.46 12.44 13.05 12.75 13.83 8.99 8.29March 13.09 14.49 15.36 15.61 16.16 9.68 9.11April 15.59 18.23 18.93 17.10 19.29 11.53 10.61May 17.50 18.11 18.93 16.01 18.51 12.40 10.42June 17.34 18.18 19.14 16.58 19.02 12.56 12.03July 20.38 21.66 22.69 19.97 22.35 14.13 14.05August 22.34 25.51 26.39 22.22 24.42 16.97 16.76September 23.21 25.83 26.75 24.29 26.41 17.77 17.53October 24.78 25.88 26.61 24.19 26.04 19.16 18.78November 25.54 27.20 27.72 26.77 29.32 19.40 19.15December 24.73 28.41 28.93 28.18 33.07 19.69 18.672000January 27.41 27.81 28.23 28.96 32.24 19.85 18.83February 29.87 31.63 32.32 29.85 32.72 21.52 19.81March 31.06 35.71 36.27 30.28 34.01 22.67 22.12April 24.83 32.90 33.42 28.23 32.81 19.44 18.12May 28.39 37.01 38.99 29.87 32.07 20.02 18.70June 30.41 40.57 44.28 31.40 34.40 23.79 21.23July 29.89 36.51 37.67 33.02 36.07 24.13 19.79August 29.79 34.82 36.20 36.46 38.69 21.47 19.69September 33.28 36.87 37.70 42.09 43.84 24.29 23.04October 33.15 37.17 35.31 40.06 43.64 27.06 23.82November 32.51 37.35 33.46 40.68 43.61 25.61 22.18December 29.27 37.35 28.05 34.25 37.50 23.24 18.312001January 27.36 37.35 29.85 30.15 32.03 20.54 15.48

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

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

0

9

18

27

36

45

fuel oil 3.5%Sfuel oil 1%S

jet kerogasoilpremiumregularnaphtha

JanDecNovOctSepAugJulJunMayAprMarFebJanDecNovOctSepAugJulJunMayAprMarFeb

$/barrel

1999 2000 2001

February 2001 35

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

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

1999 naphtha premium unleaded 95 gasoil jet kero 1%S 3.5%SJanuary 9.80 13.09 12.71 12.69 10.86 8.40February 9.26 12.69 11.07 12.36 8.44 7.47March 11.80 15.08 13.88 14.47 9.45 8.04April 14.49 18.82 15.32 18.30 10.71 9.85May 16.38 18.88 14.52 16.63 11.44 9.52June 16.39 19.19 15.73 17.26 11.85 10.23July 19.45 23.12 19.06 21.04 14.26 12.65August 21.45 27.05 21.81 22.73 17.08 15.48September 22.37 26.90 23.36 25.18 17.34 16.55October 23.88 26.46 23.56 24.51 18.42 17.65November 24.68 27.77 26.25 27.67 17.76 17.53December 23.83 28.82 27.86 32.52 18.23 17.442000January 26.26 27.55 28.06 31.43 20.48 17.85February 28.57 32.11 29.97 31.28 22.12 19.05March 29.65 36.27 29.63 32.31 22.40 21.27April 23.41 32.77 26.69 31.16 19.28 17.09May 27.01 38.38 29.15 29.67 20.52 16.51June 28.93 44.06 30.14 31.99 24.50 19.95July 28.26 38.25 32.92 34.18 23.20 18.76August 28.14 36.67 36.09 36.60 20.85 17.85September 31.58 37.87 41.97 41.89 25.00 21.49October 32.48 37.20 41.53 41.85 27.16 23.58November 32.47 33.57 40.44 40.33 24.71 19.47December 27.74 27.79 34.92 35.99 23.46 17.962001January 26.35 28.76 27.32 28.73 20.13 14.35

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

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

$/barrel

0

9

18

27

36

45

fuel oil 3.5%S

fuel oil 1%S

jet kero

gasoil

premium

naphtha

JanDecNovOctSepAugJulJunMayAprMarFebJanDecNovOctSepAugJulJunMayAprMarFeb

1999 2000 2001

36 OPEC Bulletin

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

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

1999 regular unleaded 87 gasoil jet kero 0.3%S LP 1%S 2.2%SJanuary 14.13 13.90 14.34 12.90 10.98 10.18February 13.12 12.63 13.36 11.42 8.73 8.31March 17.50 16.02 16.68 13.21 11.20 10.36April 20.61 17.85 18.84 15.18 13.06 11.78May 20.30 17.27 17.88 16.41 13.82 12.95June 20.28 17.88 19.37 16.85 14.61 13.22July 24.30 20.77 22.56 18.60 16.39 14.65August 26.64 22.79 24.51 21.11 18.62 17.24September 28.67 25.04 26.66 22.22 19.48 18.85October 26.13 24.27 25.76 22.00 19.44 18.75November 28.87 26.90 28.78 22.73 19.52 18.95December 29.35 27.91 30.92 24.88 19.21 18.702000January 29.41 34.21 39.42 30.08 21.76 20.42February 33.91 34.64 35.50 31.74 22.90 21.22March 37.10 32.01 34.31 27.07 21.06 20.87April 30.35 30.16 32.20 26.81 20.98 19.85May 37.17 31.39 33.26 28.66 24.59 21.86June 40.12 32.62 33.69 30.69 27.11 23.20July 36.04 32.53 34.42 29.28 24.44 22.20August 36.33 37.17 38.59 29.48 24.50 21.57September 39.90 41.25 43.80 37.21 29.42 25.39October 39.83 41.04 42.86 36.86 29.51 25.96November 39.56 43.46 45.52 35.43 28.66 25.26December 30.96 39.52 40.97 34.59 25.63 22.041999January 34.81 35.51 36.03 33.09 25.40 22.34

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

Graph 5: US East Coast market — New York

$/barrel

0

10

20

30

40

50

fuel oil 2.2%S

fuel oil 1%S

fuel oil 0.3%S LP

jet kero

gasoil

regular

JanDecNovOctSepAugJulJunMayAprMarFebJanDecNovOctSepAugJulJunMayAprMarFeb1999 2000 2001

February 2001 37

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

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

1999 naphtha gasoil jet kero 2%S 2.8%SJanuary 11.93 12.71 13.88 9.29 7.93February 10.46 11.59 12.72 7.41 6.67March 15.39 15.04 15.66 9.42 8.37April 16.70 17.34 18.36 10.85 10.01May 17.53 16.87 17.73 11.97 11.26June 18.03 17.44 19.18 12.21 11.40July 21.60 20.45 22.12 13.68 12.91August 23.50 22.65 24.57 16.45 15.95September 25.09 24.54 26.18 18.34 18.13October 23.16 23.83 25.32 18.20 17.91November 26.23 26.31 28.01 18.45 17.88December 25.96 27.38 29.93 18.20 17.872000January 28.17 30.61 32.85 19.82 18.46February 33.52 31.85 32.95 20.57 19.36March 32.74 30.82 33.01 20.17 19.70April 28.25 29.44 30.74 19.15 18.50May 32.59 31.11 31.84 21.16 19.39June 36.24 32.27 32.78 22.27 21.40July 31.06 32.35 33.38 20.84 19.67August 32.92 36.63 37.80 19.78 18.54September 35.32 41.01 42.78 23.59 20.46October 34.77 39.90 41.32 23.95 21.71November 34.37 40.93 43.64 22.96 17.96December 29.73 34.63 36.40 19.89 16.902001January 35.39 35.26 35.85 20.20 16.45

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

Graph 6: Caribbean cargoes — fob

$/barrel

0

9

18

27

36

45

fuel oil 380C

fuel oil 180Cfuel oil 0.3%S

jet kerogasoil

premiumnaphtha

JanDecNovOctSepAugJulJunMayAprMarFebJanDecNovOctSepAugJulJunMayAprMarFeb1999 2000 2001

38 OPEC Bulletin

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

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

1999 naphtha premium unleaded 95 gasoil jet kero 0.3%S 180C 380CJanuary 12.04 14.15 14.66 15.81 9.94 9.49 9.40February 11.48 13.85 12.32 13.34 9.00 8.46 8.24March 13.66 15.79 14.10 15.82 10.85 9.80 9.57April 16.19 19.74 16.73 19.29 13.07 11.93 11.71May 17.42 18.58 16.99 17.81 14.02 12.65 12.48June 17.69 18.49 17.19 18.82 14.17 12.58 12.49July 20.75 22.63 19.22 22.10 15.50 14.45 14.46August 23.16 25.99 21.30 24.81 17.23 17.03 17.27September 24.49 26.86 23.04 26.37 18.91 18.42 18.83October 24.70 24.78 23.60 25.90 20.46 19.98 20.46November 25.86 25.88 24.74 27.56 21.23 20.68 21.19December 25.03 25.46 25.63 29.53 21.47 20.47 20.982000January 25.02 28.36 28.14 31.30 21.58 19.66 19.95February 27.09 31.16 29.90 31.14 23.43 20.76 21.15March 29.08 32.58 32.94 32.37 25.85 24.66 24.69April 25.01 28.01 26.73 27.99 24.54 22.13 22.39May 27.27 31.90 28.12 29.09 26.62 23.62 23.60June 28.13 33.08 30.69 31.23 26.78 25.30 25.31July 27.80 36.05 31.86 33.25 25.45 22.00 22.09August 30.19 38.31 37.46 37.98 27.08 21.57 21.64September 34.53 35.05 40.13 42.21 28.44 24.81 24.87October 33.50 33.03 38.96 43.30 26.77 26.35 26.55November 30.43 32.96 34.85 39.88 26.50 24.36 24.49December 25.52 29.97 29.61 32.92 24.45 19.78 19.742001January 25.50 30.02 28.41 29.75 22.54 18.37 17.99

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

Graph 7: Singapore cargoes

$/barrel

0

9

18

27

36

45

fuel oil 180C

jet kero

gasoil

naphtha

JanDecNovOctSepAugJulJunMayAprMarFebJanDecNovOctSepAugJulJunMayAprMarFeb1999 2000 2001

February 2001 39

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

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

1999 naphtha gasoil jet kero 180CJanuary 11.71 13.32 14.53 8.61February 11.27 11.17 12.25 7.62March 13.61 13.07 14.86 8.94April 16.25 15.68 18.29 11.17May 17.15 15.78 16.67 11.96June 17.32 15.86 17.56 11.95July 20.49 17.91 20.86 13.87August 22.84 19.99 23.57 16.30September 24.29 21.73 25.13 17.53October 24.40 22.33 24.68 19.15November 25.61 23.50 26.39 19.88December 24.85 24.34 28.30 19.412000January 24.62 26.63 29.87 18.47February 26.75 28.32 29.64 19.59March 28.42 31.28 30.79 23.40April 24.42 25.01 26.36 20.66May 26.84 26.39 27.46 22.06June 27.63 28.76 29.40 23.60July 27.07 29.73 31.24 20.27August 29.12 35.24 35.88 19.49September 33.03 37.79 40.01 22.98October 31.51 36.62 40.97 24.39November 28.88 32.42 37.38 22.05December 24.19 26.46 29.73 17.062001January 24.29 25.05 26.46 15.68

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

Graph 8: Middle East — fob

$/barrel

0

9

18

27

36

45

fuel oil 180C

jet kero

gasoil

naphtha

JanDecNovOctSepAugJulJunMayAprMarFebJanDecNovOctSepAugJulJunMayAprMarFeb1999 2000 2001

40 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

American actress launches polioeradication campaign in Nigeria

New York — American actress Mia Farrow has launched apolio vaccination campaign in Nigeria, which is designed toimmunize every child under the age of five — around 40 millionchildren, according to the United Nations Children’s Fund(UNICEF).

The Fund said the event was an immense undertaking inwhich tens of thousands of health professionals and volunteerswould cross the country to give the polio vaccine to children.

It said Nigeria was a priority in the worldwide campaign toeradicate the crippling disease because it was one of the lastcountries still plagued by the intense transmission of the virus.

“In the West, most people think polio is a relic of the past,”said Ms Farrow, who was appointed UNICEF special repre-sentative for the disease last September.

“But millions of children remain at risk in some of theworld’s poorest countries. Far from forgetting these countries,we must focus even more attention on them until each childeverywhere has been immunized. Then, and only then, will thevirus die out,” she stressed.

A staunch advocate for children’s rights, Ms Farrow knowsfirst-hand the debilitating effects of polio, having been infectedwith the virus as a child.

The worldwide eradication campaign is one of the largestpublic health initiatives ever conducted.________________________________________________

UAE-Japan trade surgesby 137.4 per cent

Abu Dhabi — The balance of trade between the United ArabEmirates (UAE) and Japan surged by 137.4 per cent in the firsthalf of 2000 to $5.71 billion in favour of the UAE, reflectingstrong oil prices, according to a report last month in the Dubai-based Gulf News daily newspaper.

In the first half of 1999, the balance of trade stood at$2.40bn.

The impact of high oil prices also reflected on the tradefigures between the UAE and Japan, which consequently roseby 74.11 per cent during the first six months of 2000 to $8.28bn,compared with the $4.75bn during the same period in 1999,the report stated.

Japan’s imports from the UAE rose from $3.58bn to $7.0bn,while Japanese exports to the UAE rose from $1.17bn to $1.28bn.

Exports grew by nearly 10 per cent, and import growth wasa staggering 95 per cent. This unprecedented growth level wasattributed to the steady rise in oil prices.

Japan imported 204.14 million barrels (m b) of crude oilfrom the UAE, at an average price of $26.7 per barrel in the

first half of 2000, compared with 208.22m b at $13.13/b in thefirst half of 1999.

The UAE remained Japan’s largest crude supplier, account-ing for 26.5 per cent of Japan’s oil imports, according to statisticsreleased by the Dubai office of the Japanese External TradeOrganization (JETRO), the report said.________________________________________________

Iran’s non-oil earningsto rise to $4.77bn

Tehran — Iran’s revenue from the export of non-oil com-modities is expected to rise to $4.77 billion in the next Iranianfiscal year, starting in March, according to a report by theManagement and Planning Organization (MPO) released in thecountry’s capital last month.

The report said the major reason for the growth was theincrease in parity rates of foreign exchange.

Iranian imports were expected to hit a value of $20.69bnnext year, said the report, adding that goods would constitute$17.24bn of the total and services $3.45bn.

An expected increase in oil prices over the budgeted crudeprice in fiscal 2001, and the continuation of that trend mightlead to an increase in the country’s foreign exchange revenuesand a growth in the import of capital and intermediary goods.

It was estimated that real growth in the country’s grossdomestic product (GDP) would reach 4.4 per cent and 5.5 percent in 2001 and 2002, respectively.

The share of tax revenue in total state earnings was forecastto reach 31 per cent next year from 27 per cent at present.

Meanwhile, the share of oil revenues in the government’sgeneral income was expected to be 50 per cent next year,compared with the present level of 27 per cent, the officialIslamic Republic News Agency (IRNA) reported.

The share of Iran’s current and development expenditure inthe general state budget next year would reach 75 per cent and25 per cent respectively, while next year’s budget was expectedto register a 940bn Iranian rial deficit.________________________________________________

Iraq to sign free tradeagreement with Syria

Baghdad — Iraqi Vice-President, Taha Yassin Ramadan,announced he would visit Damascus shortly to sign a free tradeagreement with Syria, similar to that signed with Egypt recently,local newspapers reported last month in the country’s capital.

The reports said the decision to send Ramadan to Syria wastaken during a Cabinet meeting last month chaired by IraqiPresident, Saddam Hussein.

Earlier, Iraq’s Deputy Prime Minister, Tareq Aziz, said his

February 2001 41

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

country and Syria would sign a bi-lateral trade deal before theend of this month.

“We have agreed with the Syrian leadership to sign a similaragreement to that (which was) signed with Egypt,” he toldreporters.

Iraq, which has been under United Nations trade sanctionssince 1990, signed a free trade agreement with Egypt in Januaryduring a rare visit to Cairo by the Iraqi Vice-President.

The agreement, which is yet to be ratified by Egypt’sparliament, is expected to boost Egyptian exports to Iraq to avalue of $1.0 billion a year. The Iraqi government has alreadyratified the accord.

The agreement with Syria is forecast to increase trade be-tween the two countries also to $1.0bn, from the $500 millionrecorded in 2000.

Ties between Syria and Iraq, ruled by rival factions of theBaath party, were broken during the 1980-88 Gulf conflict andduring the Gulf crisis of 1990-91.

But the two countries re-opened their borders and startedeconomic co-operation nearly three years ago within the frame-work of the UN-controlled ‘oil-for-food’ programme.

Earlier last month, Syria removed restrictions on its citizenstravelling to Iraq, the latest sign that ties between the twoneighbours were improving.

Iraqi Foreign Minister, Mohammed Saeed Al-Sahaf, said ina television interview last month that Iraq wanted Syria tosupport it against the decade-old UN trade sanctions.

Baghdad and Damascus also want to reopen an oil pipelinebetween them, disused since 1982, while the office of IraqiAirways in Damascus, closed since the beginning of the 1980s,was reopened nearly two months ago.________________________________________________

Obasanjo takes anti-corruptioninitiative to government offices

Abuja — Nigerian President, Olusegun Obasanjo, last monthdirected all government offices to establish anti-corruption unitsto give impetus to the government’s fight against fraud.

Sources noted that corruption, graft and greed had eaten sodeeply into the Nigerian culture that virtually nothing got doneuntil the government and private company officials had taken“something” from whoever planned to benefit from any scheme.

Advance fee fraud, in which fraudulent people lured victimsinto depositing money into bank accounts had been so rife inNigeria that foreigners and Nigerians alike were sceptical aboutentering into business deals, the sources added.

The situation had become so bad that Transparency Inter-national, a non-governmental organization, had ranked Nigeriaas the most corrupt nation in the world.

Declaring open a two-day symposium on ‘corruption andnational re-birth’, Obasanjo advised private sector organizationsto also launch an anti-corruption war in their establishments tocomplement the government’s efforts.

“All ministries and departments in both the public andprivate sectors should have anti-corruption units so that all

citizens and foreigners resident in Nigeria can join in the waragainst this endemic disease, which has brought under-devel-opment (to) our society,” the President stressed.

Obasanjo charged the country’s legislature, the judiciary,financial institutions, the industrial sector, universities and othereducational institutions to take on the fight, so as to encouragea society where corruption would be taboo.

“My view is that there cannot be corruption without (the)active collaboration of some people,” he said, stating that van-dalizing public utilities, adulteration of petroleum products bystreet urchins, oil pipeline vandalization, and the diversion offuel to neighbouring countries, “were different faces of corrup-tion in Nigerian society”.________________________________________________

Algeria’s hydrocarbon exportvolume up by six per cent

Algiers — Algeria’s hydrocarbon exports totalled 80.4 milliontonnes (m t) in 2000, up by six per cent over the 75.8m tregistered in 1999.

According to data issued by the Algerian Ministry of Trans-port, hydrocarbons represented 97.5 per cent of the country’sglobal exports, which reached 80.4m t last year.

Algerian non-hydrocarbon exports remained marginal withonly 2.06m t of products exported.

The country’s hydrocarbon revenues have also been revisedupward for 2000.

According to the Director of the Hydrocarbons Departmentat the Ministry of Energy, receipts amounted to $21.1 billionlast year.

Provisional results issued by the customs’ authorities earlierin January this year estimated hydrocarbon sales in 2000 at about$19bn.

It is the first time since the country’s independence in 1962that hydrocarbon sales have fetched more than $20bn in one year.________________________________________________

Iran takes over leadershipof G-77 from Nigeria

New York — The chairmanship of the Group of 77 (G-77)developing countries and China was handed over from Nigeriato Iran at a ceremonial meeting at the United Nations’ head-quarters in New York last month.

UN Secretary General, Kofi Annan, praised the group’swork throughout the past year, under the leadership of Nigeria’sAmbassador, Chief Arthur Mbanefo, in keeping developmentissues high on the UN agenda.

“I would also want to thank the Nigerian Minister of ForeignAffairs, Alhaji Sule Lamido, for being with us today and to thank,through him, President Olusegun Obasanjo and the govern-ment of Nigeria for the outstanding leadership they providedduring the past year.

Annan expressed confidence in the role the G-77 would play

42 OPEC Bulletin

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

under the leadership of the Foreign Minister of Iran, Dr KamalKharrazi.

“Issues of sustainable development are still not getting theattention they deserve,” Annan pointed out. “Under (the) Ira-nian leadership I am sure they will.

“I noted with pleasure in September, when Iran was electedto take over the chair in 2001, that you, Minister Kharrazi,promised to continue in that tradition,” the Secretary Generalaffirmed.

“I know that (Iranian) Ambassador (to the UN) Hosseinianand the other members of the Iranian delegation will seek tofoster that constructive spirit in the year ahead.

“Foreign Minister Kharrazi, we welcome you once again at(the) UN headquarters. Your presence here today shows thatIran intends to take its responsibilities as Chairman very seri-ously. And rightly so. Given your own past performance, I thinkwe can expect a stimulating leadership during the coming year,”the Secretary General added.________________________________________________

Khelil in talks with IndonesianConsultative Council President

Algiers — OPEC President of the Conference and AlgerianMinister of Energy and Mines, Dr Chakib Khelil, held talks inthe Algerian capital last month with the President of the Indo-nesian Consultative Council, Amine Rais.

According to a statement released by the Algerian Ministryof Energy and Mines, the discussions centred on reinforcing anddeveloping bilateral co-operation between the two countries inthe hydrocarbon sector.

The two sides also discussed the situation in the internationaloil market.

The Indonesian official met several high-ranking officialsduring his three-day stay in the country, including the AlgerianPresident, Abdelaziz Bouteflika.

Before his departure, Rais indicated that his stay in Algeriahad allowed him to reinforce his country’s commitment tofurther consolidate relations with Algiers for “a fruitful future”.________________________________________________

Value of Iran-Italy trade isestimated at $2.4 billion

Rome — The volume of trade exchanges between Iran and Italystood at $2.4 billion in the first 10 months of last year, Italy’sStatistics Centre announced last month.

According to a trade report, Iran imported over 152,000 tonsof commodities worth $600 million from Italy over the periodJanuary to October 2000.

During the same period, Italy imported over 8.58m tons ofIranian raw materials, valued at $1.8bn.

The export of Iran’s crude oil to Italy made up 88.2 per centof the imports — an indication of the imbalance in Italy’s tradewith Iran, the report noted.

Italy’s other imports from Iran during the period includedanimal intestines, textiles, iron and other metals, as well asagricultural and horticultural products.

Italy’s major exports to Iran during the 10 months weremechanical equipment, machinery and pipes.________________________________________________

UAE heads into anotheryear of solid growth

Dubai — The United Arab Emirates is expected to realizestrong economic growth in 2001 after last year’s improvementin oil revenues and in other economic sectors overall, accordingto a report released by the Emirates Industrial Bank last month.

A study entitled Economic Developments in the UAE duringthe Year 2000 reported that more liquidity was expected to bepumped into the country’s financial system as government andprivate development projects began to take shape.

Last year, the nation’s gross domestic product (GDP) rose by14 per cent to $59.128 billion from $47.411bn in 1999.

Expanding by 73 per cent, the oil sector’s contribution toGDP was $22.615bn, up from $13.079bn in 1999.

The non-oil sector grew by 6.3 per cent to $36.512bn from$34.332bn, although its contribution to GDP fell to 62 per centfrom 72.5 per cent.

The decline in non-oil growth was attributed to the surgein oil prices and crude output levels. A rise in the value of exports— especially crude — also increased the surplus by 159 per centto $9.536bn.

UAE exports of petrochemicals and aluminium grew byseven per cent to $6.675bn.

Some non-oil sectors recorded relatively high growth rates,with manufacturing up by 14.3 per cent. The sector’s contri-bution to last year’s GDP was 11 per cent, while the commercialsector registered 11.3 per cent.

The report notes that although rents declined by 10 to 15per cent in the year, the real estate sector remained vital to theeconomy. Major commercial, residential and tourism projectswere announced in many emirates.________________________________________________

Venezuelan President returnsfrom visit to Puerto Rico

Caracas — Venezuelan President, Hugo Chávez, made a briefvisit to Puerto Rico last month where he attended the inaugu-ration of the Caribbean nation’s new Governor, Silva MariaCalderón, and held talks with high-ranking government andbusiness representatives.

Chávez was accompanied by several top government offi-cials, including Venezuelan Foreign Minister, Jose VicenteRangel, and the newly-appointed Minister of Energy and Mines,Alvaro Silva Calderón.

Shortly after his arrival in Caracas, Chávez told reporters thathe was highly satisfied with the outcome of the two-day trip and

February 2001 43

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that he had met with a group of Puerto Rican businessmen whohad expressed their interest in investing in Venezuela.

Noting that Venezuelan exports to Puerto Rico, with apopulation of some three million, were currently estimated ataround $800m a year, Chávez said that the Puerto Ricanbusinessmen were interested in investing in the sectors oftourism, infrastructure, banking and trade in general.

“In agriculture, for example, (Puerto Rico) imports rice fromNorth America, they import foodstuffs from Europe, and weare so near that there is a great potential for us to work in thearea of agricultural production, in mining, and of course inpetroleum, energy and petroleum by-products,” Chávez said.

The Venezuelan President indicated that his governmentstood willing and ready to co-operate with the Puerto Ricanauthorities in the energy sector.

Chávez commented: “There is a gas project in Venezuela thatwe are offering to the world, not only to Puerto Rico, thatinvolves the old idea of several years ago on the possibility, andit’s only a possibility ... of building a trans-Caribbean gaspipeline from Venezuela and passing through most of theCaribbean islands, including, of course, Puerto Rico.”

He noted that the World Bank had already studied theproject about six years ago and gave it a high level of strategicvalue and technical and financial viability.________________________________________________

US company to take overpower project in Nigeria

New York — The United States-based AES Corporationannounced last month that one of its subsidiaries had acquireda majority-interest in a barge-mounted electricity-generatingbusiness in Lagos, Nigeria, from the Enron Corporation, alsoof the US.

The barge is to be located adjacent to the Egbin power stationthat is run by the National Electric Power Authority (NEPA).

The total investment in the scheme will be $225 million.YF Power, a Nigerian conglomerate, owns the remaining sharesin the business.

The generating facility will consist of nine barge-mountedcombustion turbines with a total net output of 290 megawatts(mw).

The barges are currently under construction and the startof commercial operations of the power facility is expected inSeptember this year. AES is both manager of construction andthe plant operator.

Natural gas will be initially supplied by NEPA, prior to theprivatization of the authority. Thereafter, gas will be suppliedunder a long-term contract with a competitive supplier.

The project has been undertaken as an emergency supplymeasure and to help increase generating power in a region wherecapacity shortfalls are estimated to be around 40 mw.

Executive Vice-President of AES, Mark Fitzpatrick, said:“This facility will help stabilize the Nigerian electricity gridduring a time when Nigeria goes about formulating and imple-menting its energy restructuring plan.”

President and Chief Executive Officer of AES, Dennis WBakke, stated: “We are very excited about increasing our pres-ence in the African market and are delighted to have the chanceto be the first independent power generator in Nigeria.________________________________________________

Kuwait, Indonesia keen toexpand co-operation with Iran

Kuwait — The Kuwaiti Chamber of Commerce and Industryis prepared to co-operate with Iranian businessmen and Iran’sChamber of Commerce, Industries and Mines, it was reportedlast month.

The Head of the Kuwaiti Chamber of Commerce, AbdulrazaqAl-Khaled, told Iran’s Minister of Labour and Social Affairs,Hossein Kamali, that before 1990 Kuwait’s trade with Iranaccounted for almost 40 per cent of its total foreign tradetransactions.

However, after 1990 the figure had declined, he pointed out.Despite this, he said the Iran-Kuwait trade exchanges had

risen slightly to $100 million in 1999, from $60m in 1996.Expressing dissatisfaction with the current level of commer-

cial co-operation between his country and Iran, Al-Khaled calledfor further efforts of co-ordination to increase the trade figures.

Quoted by the official Islamic Republic News Agency (IRNA),he said the Kuwaiti Chamber of Commerce was ready to set upjoint seminars covering exports and trade, so as to ensure theimplementation of trade agreements and to attract investment.

Kamali stressed that ongoing economic conditions world-wide necessitated co-operation and closer ties among regionalstates.

He called for co-operation between Iranian and Kuwaititraders, businessmen and entrepreneurs in marketing agricul-tural, industrial and service products.________________________________________________

Syrian Minister in Baghdadto study water-sharing plan

Baghdad — Iraq and Syria have started talks on how to sharethe waters of the Euphrates River, which passes through the twoArab countries, local Iraqi newspapers reported last month.

The newspaper reports noted that Syrian Minister of Irri-gation, Taha Al-Atrash, had met with his Iraqi counterpart,Mohammed Diyab Al-Ahmed, to discuss “how to divide thewaters of the Euphrates between the two countries”.

The Euphrates and the Tigris rivers both originate in Tur-key. The former winds through Syria, before entering Iraq, whilethe latter passes through Iraq.

“The two Ministers also decided to invite the TurkishIrrigation Minister for talks to reach a three-way water-sharingagreement,” the ruling Baath party paper Thawra commented.

Earlier, Al-Ahmed said that Iraq and Syria had reachedagreement on sharing the waters of the Euphrates and that theaccord would be signed in Baghdad during Al-Atrash’s visit.

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Al-Ahmed accused Turkey of blocking efforts to reach a three-way water-sharing agreement with Baghdad and Damascus.

Iraqi weekly newspaper Tikrit quoted Al-Ahmed as sayingthat an invitation was extended to the Turkish Minister ofIrrigation to visit Iraq to discuss the water issue, but there wasno reply so far.

Baghdad and Damascus depend on both the Euphrates andTigris rivers largely for drinking water, irrigation and powergeneration.

Iraqi protests have grown since 1996 when Turkey announceda $1.62 billion plan for its fourth dam on the Euphrates to producepower and irrigation for a large area of south-east Turkey.

Iraq, Turkey and Syria have held several meetings in the past,but they failed to clinch a water-sharing agreement.

Ankara and Damascus signed a provisional accord in 1987,under which Turkey allows the flow of 500 cubic metres of waterper second to Syria.

Iraqi and Syrian ties, strained for more than 17 years, havebeen improving since 1997 when the two countries re-openedtheir borders and started economic co-operation.________________________________________________

Algerian foreign reservesincrease to total $11.9 billion

Algiers — Algeria’s foreign reserves reached $11.9 billion atthe end of December 2000, up from $10.4bn at the end ofNovember the same year, it was officially reported in thecountry’s capital last month.

According to data issued by the Central Bank, foreignexchange reserves stood at $9.6bn at the end of October andat $4.4bn in December of the same year, as a comparison.

The bank said the improvement in reserves was due to theincrease in oil prices, which reached an average of more than$25 a barrel for Algeria’s Sahara Blend last year.

The country’s hydrocarbons exports — which representaround 98 per cent of Algeria’s global exports — exceeded $19bnlast year, while the 2000 finance bill projected receipts of$15.8bn on the basis of an average oil price of $19/b.________________________________________________

Indonesian government urges labourgroups to minimalise disputes

Jakarta — The Indonesian government is taking steps toprevent foreign electronics and shoe manufacturers from pullingout their operations from the country, because of the fear oflabour disputes.

The country’s Co-ordinating Minister for the Economy,Rizal Ramli, said he had asked the Minister for Industry andTrade, Luhut Pandjaitan, and the Minister for Manpower andTransmigration, Alhilal Hamdi, to address the problem.

“I have asked the Manpower Minister to meet with the headsof labour organizations to come to an understanding that willsatisfy both investors and unions,” Rizal said.

According to local media reports, shoe and electronics’manufacturers were planning to pull out of Indonesia, fearingincreased labour disputes.

The reports said some 50 textile companies had alreadyrelocated to Vietnam and Cambodia.

In acknowledging the problem, Rizal said foreign investorspreferred to move their operations out of Indonesia because theydepended heavily on imported materials for production.

He warned that workers would suffer by losing their jobsif they opted for strikes and labour disputes.

His concern was supported by the Secretary General of theIndonesian footwear association, Djimanto, who pointed outthat foreign investors feared they would be unable to meet ordersbecause of the uncertainty in deliveries.

He pointed out that workers in Thailand, China and Vi-etnam were more disciplined, which made those countriesfavourable to labour-intensive manufacturing factories.

Foreign shoe manufacturers were no longer interestedin making new investments in Indonesia, he pointed out,adding that some manufacturers had stopped their plannedexpansions.________________________________________________

Iran’s petrochemical exportsreach record high

Tehran — The value of Iran’s three million tonnes of exportedpetrochemical products in the current Iranian fiscal year, whichbegan in March 2000, has been put at around $80 million.

Iranian Deputy Minister of Petroleum for PetrochemicalAffairs, Mohammad-Reza Nematzadeh, told reporters in thecountry’s capital last month that petrochemical product exportssince March 1999 had reached a record high and had overtakenhand-woven carpet exports in terms of value.

The reason for the improvement last year, he said, was theincrease in prices of products and the volume of exports.

Quoted by the official Islamic Republic News Agency (IRNA),Nematzadeh expressed hope that up to 12m t of petrochemicalproducts would be produced during the current fiscal year,showing a rise of 1.0m t over the previous year.

He said the National Iranian Petrochemical Company (NIPC)was now implementing 16 petrochemical projects with aninvestment outlay of over $6.0 billion.

He predicted that Iran’s petrochemical production capacitywould reach 40m t in 2005 from the present 15m t/y, followingthe commissioning of these 16 projects.

The total value of Iran’s petrochemical products was ex-pected to exceed $7.0bn by the end of the country’s third five-year economic development plan (2000–05).

Nematzadeh expressed hope that the export of petrochemi-cal products would realize an annual turnover of $4.0bn by theend of the five-year plan.

Two projects for the production of polyethylene and ascheme for the establishment of utility peripheral installationswere to be implemented through joint ventures with Dutch,German, Belgian and French companies, he noted.

February 2001 45

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

No 1/2001Vienna, Austria, January 3, 2001

OPEC Fund extends$200,000 in medicalaid to Palestine

The OPEC Fund for International Devel-opment has approved an emergency assist-ance grant of $200,000 to help providespecial medical treatment in Austrianhospitals to severely injured Palestinians,especially women and children, who havebecome victims of the renewed fighting intheir homeland.

Serious clashes between Israeli forcesand the Palestinian people in the WestBank and Gaza Strip have resulted inmany deaths and injuries among Palestin-ian civilians. Although these areas are underthe Palestine Authority, they are subject totight controls by the Israelis. These restric-tions are causing great hardship by pre-venting workers from going to their jobs,doctors and patients from reaching medi-cal centres and students and teachers fromschools.

Efforts are now underway to bringrelief to the citizens of Palestine in theform of a fund-raising campaign organ-ized by the Austrian Committee for the

Holy Land in Austria. The committeemembers have approached the govern-ments of the Austrian federal provincesand national institutions, as well as inter-national and national funding agencies tohelp finance the provision of medical treat-ment for 50 injured Palestinians in Aus-trian hospitals. This number could beincreased to 100 injured people depend-ing on the outcome of the fund-raising.

The selection of the most criticallyinjured cases will be done by the PalestineMinistry of Health in coordination withthe hospitals of the West Bank and Gaza,while the necessary arrangements for bring-ing selected patients to Austria will beundertaken by the Embassy of Palestine inAustria and the Committee.

The OPEC Fund grant will be used tohelp cover the transportation costs ofpatients and one family member, hospi-talization, accommodation and living al-lowance per person for two months, as wellas post-hospital treatment.

No 2/2001Vienna, Austria, January 18, 2001

Afghan refugees inPakistan get $200,000in humanitarian aid

The OPEC Fund for International Devel-opment has approved a humanitarian grantof $200,000 towards the provision of reliefsupplies for Afghan refugees in Pakistan,who have fled their strife-torn homeland

and are in urgent need of shelter, food andclothing.

Already hosting some 1.5 million refu-gees, most of whom are women and chil-dren, Pakistani officials fear that theGovernment will be unable to cope withthe latest influx of around 37,000 refugeessince last September. Many facilities com-prise makeshift, open-air camps, whereliving conditions in the harsh winterweather are becoming intolerable. Chil-dren are the worst affected; in the past fourmonths at least seventy infants in the Jaloziasettlement alone have died of exposure.

The United Nations High Commis-sioner for Refugees (UNHCR) has relo-cated a large number of Afghans to campslocated in the North-West Frontier Prov-ince and Baluchistan, Peshawar andQuetta, but the UN agency lacks resourcesto provide adequate care. It is feared thatthe situation will worsen as many morerefugees are expected to arrive in order toescape conflict in northern Afghanistan, acountry that is also suffering from one ofthe worst droughts in almost thirty years.

The Fund’s grant will be channelledthrough the UNHCR and will be used topurchase basic relief supplies such as food,medicine, water containers and sanitationfacilities.

No 3/2001Vienna, Austria, January 18, 2001

OPEC Fund extends$200,000 to earthquakevictims in El Salvador

The OPEC Fund for International Devel-opment has approved an emergency assist-ance grant of $200,000 to help procurerelief supplies for victims of the massiveearthquake which struck El Salvador onJanuary 6. Measuring 7.6 on the RichterScale, at least 683 people have been con-firmed dead, with some 2,400 still re-ported as missing, and more than 2,500people injured.

The hardest places hit were the sub-urbs of the capital, San Salvador, wheremudslides have engulfed hundreds ofhomes, while the areas of San Miguel,Santa Ana, La Libertad and La Paz have

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

OPEC Fund extends fourgrants worth a total of$800,000 in January

46 OPEC Bulletin

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

also sustained considerable damage. Al-though around 45,000 people have beenevacuated from danger zones, continuedaftershocks have sparked fears of furthercasualties. Considered one of the worstquakes in the area’s history, thousands ofhomes have been left destroyed or dam-aged, major roads blocked and an esti-mated one-half of the country’s 6.2million-strong population are withoutwater supplies. Communication and elec-tric lines, public buildings and infrastruc-ture have been severely damaged, thushampering search and relief efforts.

El Salvador has declared a state ofemergency and has appealed to the inter-national community for assistance. Imme-diate emergency requirements are tents,water containers, medical and surgicalsupplies and mobile hospital units. Searchand rescue operations are in need of light-ing and debris removal equipment, elec-tric generators and extra personnel.

The OPEC Fund’s contribution to theaid effort will be used to purchase some ofthese urgently-needed relief supplies andwill be channelled through the Interna-tional Federation of Red Cross and RedCrescent Societies.

No 4/2000Vienna, Austria, January 31, 2001

OPEC Fund extends$200,000 to earthquakevictims in India

The OPEC Fund for International Devel-opment has approved an emergency assist-ance grant of $200,000 to help procurerelief supplies for victims of the massiveearthquake which struck north-west Indiaon January 26. Measuring 7.9 on the Rich-ter Scale, the official death toll could bebetween 15,000 and 20,000, but officials

fear the final toll may be nearer 100,000,making it one of the deadliest quakes inthe past century.

The quake flattened two towns (Bhujand Anjar) in India’s western Gujarat state,and rescue workers are still combing thedevastated areas for survivors. Although theexact number of people missing or injuredis still unclear, estimates are that countscould reach tens of thousands. Aftershockshave sparked widespread panic, causingmany to flee their homes and leaving othersfearful about seeking refuge in the fewbuildings that have been left standing.

Thousands of houses and essential in-frastructure have been destroyed, puttingessentials such as food, water and shelterin short supply. Providing adequate medi-cal care is a primary problem, as manyhospitals were demolished by the quake.Communication and electric lines havealso been severely damaged, thus hamper-ing search and relief efforts. Damage wasestimated at up to $5.5 billion.

India has appealed to the internationalcommunity for assistance. Immediate re-quirements are blankets, water purifica-tion equipment and other emergency reliefsupplies.

The OPEC Fund’s contribution to theaid effort will be used to purchase some ofthese urgently-needed items and will bechannelled through the International Fed-eration of Red Cross and Red CrescentSocieties.

No 5/2001Vienna, Austria, January 31, 2001

OPEC Fund andBurundi sign agreementto help private sector

An agreement for the encouragement andprotection of investment has been signed

between the OPEC Fund for Interna-tional Development and the Republic ofBurundi. Drawn up within the frameworkof the Fund’s Private Sector Facility, theconvention was initialled by the Ministerof Finance of Burundi, HE CharlesNihangaza, and by the Director-Generalof the OPEC Fund, HE Dr Y SeyyidAbdulai.

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, 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 trust andconfidence, the agreement accords theOPEC Fund the same privileges as thosenormally given to international develop-ment institutions in which the countryholds membership.

Burundi, a landlocked country in cen-tral Africa, has limited natural resourcesother than fertile agricultural land. Itseconomy is primarily subsistence-based,with coffee remaining its chief export,providing about 80 per cent of exportearnings. With a population estimated at6.7 million and an average annual growthrate of 2.1 per cent for 1993-99, Burundihad a gross national product of $800m andper capita GNP of $120 in 1999.

February 2001 47

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