Looking ahead

Iraqi oil output to drop: official warns. A decline in Iraqi crude production is imminent without necessary spare parts and equipment, warned Benon Sevan, executive director of the United Nations Office of the Iraq Program, in a briefing to the United Nations Security Council. Only $250 million of equipment had actually arrived, with $288 million "on hold." Sevan urged the Security Council to increase the oil revenues that Iraq could use to buy spare parts and equipment to $600 million from the $300 million set in a 1998 resolution.

BLM gives nod to ARCO for NPR drilling. The U.S. Bureau of Land Management authorized ARCO to begin drilling on some of the leases it acquired in last May’s NPR-Alaska lease sale. Three wells are planned for this winter drilling season, but as many as eight could be drilled over three seasons. Permission was given for three ice pads and ice roads, with no permanent roads to be built.

Pemex to expand gas capacity and boost oil production. Mexico’s President Ernesto Zedillo emphasized the country’s need to boost gas output substantially. State firm Pemex says that it will invest over $170 million in the gas sector. Gas demand is estimated to grow 9% a year over the next ten years due to conversion of electricity, industrial and domestic sectors to cleaner fuels to reduce pollution. Zedillo added Pemex’s overall crude capacity is 3.3 million bopd with peak capacity of 3.4 million bopd by next month when nitrogen injection begins in the Cantarell field. With slow demand growth and a 1.52-million bopd limit imposed on exports under its accords with other producers, crude output in recent months was 2.8 million bopd.

Colombia’s oil output expected to slide. Colombia’s crude production could drop 4.1% in 2000, to 788,000 bpd, from 822,000 bpd in 1999, says state oil company Ecopetrol. Exports will fall 2.6% to 259,000, from 266,000 last year, as output from BP and Occidental’s fields declines. In an effort to attract upstream investors, last year the government significantly reduced its take for small fields. Eight new association contracts with private oil companies were signed in 1999, with another seven soon to be signed.

Ecuador plans to revamp oil sector. Ecuador’s new President Gustavo Noboa expects a rejuvenated oil industry, with boosted output and export revenue, to fuel the nation’s economic recovery. Its currency, the sucre, lost 67% of its value against the dollar last year and plunged further this year. Noboa’s plan to "dollarize" the nation was met with protests from the country’s large indigenous population, citing it would only make them poorer, by raising prices and keeping salaries low. Government officials say Noboa will send a proposal to Congress that will open the oil sector up to foreign investors as an emergency bill, thereby giving deputies only 30 days to consider the reforms before a single debate and vote. If legislatures fail to meet the deadline, the bill will become law automatically.

GRI projects steady increase in U.S. energy consumption. GRI expects energy consumption to climb steadily with very strong gas demand to meet growing electricity-generation requirements. In the 2000 edition of its Baseline Projection of U.S. Energy Supply and Demand to 2015, GRI shows energy consumption growing by 2.6% annually to 33.5 quadrillion BTUs (quads) in 2015 compared to 21.8 quads in 1998. The natural gas share of total U.S. energy consumption will increase from 23% in 1998 to more than 28% by 2015.

DOE’s Richardson approves Ukraine’s Odessa-Poland pipeline. U.S. Department of Energy Secretary Bill Richardson said the U.S. government supports plans to complete a terminal near Odessa and an oil pipeline connecting Odessa and Poland to channel Caspian oil to Europe. Richardson said the terminal would help Ukraine diversify its energy sources and make the nation less vulnerable. Late last year, Russia suspended oil supplies to Ukraine, citing unpaid bills and alleged illegal siphoning of Russian gas. Following long and difficult negotiations, Russia is now expected to resume shipping supplies to Ukraine. Construction began on the terminal about five years ago, but a cash shortage delayed completion. The terminal and pipeline should be onstream by 2001.

Chevron hikes investment in DRC. Despite social instability, Chevron plans to sink about $75 million in the Democratic Republic of Congo’s offshore operations over the next three years. Plans call for a multi-year drilling program slated to include a combination of new development wells in existing producing fields and delineation wells to increase both production and reserves. Average production in 1999 was about 17,700 bopd. Output is projected to increase to more than 20,000 bopd later this year, and to rise above 21,000 bopd in 2002. Chevron will be consolidating its efforts in Muanda, while maintaining a presence in Kinshasa.

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