The chart below is an exhaustive list of the events from 1970 through to 2003 that have affected the price of oil.
1. OPEC begins to assert power; raises tax rate & posted prices
2. OPEC begins nationalization process; raises prices in response to falling US dollar.
3. Negotiations for gradual transfer of ownership of western assets in OPEC countries
4. Oil embargo begins (October 19-20, 1973)
5. OPEC freezes posted prices; US begins mandatory oil allocation
6. Oil embargo ends (March 18, 1974)
7. Saudis increase tax rates and royalties
8. US crude oil entitlements program begins
9. OPEC announces 15% revenue increase effective October 1, 1975
10. Official Saudi Light price held constant for 1976
11. Iranian oil production hits a 27-year low
12. OPEC decides on 14.5% price increase for 1979
13. Iranian revolution; Shah deposed
14. OPEC raises prices 14.5% on April 1, 1979
15. US phased price decontrol begins
16. OPEC raises prices 15%
17. Iran takes hostages; President Carter halts imports from Iran; Iran cancels US contracts; Non-OPEC output hits 17.0 million b/d
18. Saudis raise marker crude price from 19$/bbl to 26$/bbl
19. Windfall Profits Tax enacted
20. Kuwait, Iran, and Libya production cuts drop OPEC oil production to 27 million b/d
21. Saudi Light raised to $28/bbl
22. Saudi Light raised to $34/bbl
23. First major fighting in Iran-Iraq War
24. President Reagan abolishes remaining price and allocation controls
25. Spot prices dominate official OPEC prices
26. US boycotts Libyan crude; OPEC plans 18 million b/d output
27. Syria cuts off Iraqi pipeline
28. Libya initiates discounts; Non-OPEC output reaches 20 million b/d; OPEC output drops to 15 million b/d
29. OPEC cuts prices by $5/bbl and agrees to 17.5 million b/d output
30. Norway, United Kingdom, and Nigeria cut prices
31. OPEC accord cuts Saudi Light price to $28/bbl
32. OPEC output falls to 13.7 million b/d
33. Saudis link to spot price and begin to raise output
34. OPEC output reaches 18 million b/d
35. Wide use of netback pricing
36. Wide use of fixed prices
37. Wide use of formula pricing
38. OPEC/Non-OPEC meeting failure
39. OPEC production accord; Fulmar/Brent production outages in the North Sea
40. Exxon's Valdez tanker spills 11 million gallons of crude oil
41. OPEC raises production ceiling to 19.5 million b/d
42. Iraq invades Kuwait
43. Operation Desert Storm begins; 17.3 million barrels of SPR crude oil sales is awarded
44. Persian Gulf war ends
45. Dissolution of Soviet Union; Last Kuwaiti oil fire is extinguished on November 6, 1991
46. UN sanctions threatened against Libya
47. Saudi Arabia agrees to support OPEC price increase
48. OPEC production reaches 25.3 million b/d, the highest in over a decade
49. Kuwait boosts production by 560,000 b/d in defiance of OPEC quota
50. Nigerian oil workers' strike
51. Extremely cold weather in the US and Europe
52. U.S. launches cruise missile attacks into southern Iraq following an Iraqi-supported invasion of Kurdish safe haven areas in northern Iraq.
53. Iraq begins exporting oil under United Nations Security Council Resolution 986.
54. Prices rise as Iraq's refusal to allow United Nations weapons inspectors into "sensitive" sites raises tensions in the oil-rich Middle East.
55. OPEC raises its production ceiling by 2.5 million barrels per day to 27.5 million barrels per day. This is the first increase in 4 years.
56. World oil supply increases by 2.25 million barrels per day in 1997, the largest annual increase since 1988.
57. Oil prices continue to plummet as increased production from Iraq coincides with no growth in Asian oil demand due to the Asian economic crisis and increases in world oil inventories following two unusually warm winters.
58. OPEC pledges additional production cuts for the third time since March 1998. Total pledged cuts amount to about 4.3 million barrels per day.
59. Oil prices triple between January 1999 and September 2000 due to strong world oil demand, OPEC oil production cutbacks, and other factors, including weather and low oil stock levels.
60. President Clinton authorizes the release of 30 million barrels of oil from the Strategic Petroleum Reserve (SPR) over 30 days to bolster oil supplies, particularly heating oil in the Northeast.
61. Oil prices fall due to weak world demand (largely as a result of economic recession in the United States) and OPEC overproduction.
62. Oil prices decline sharply following the September 11, 2001 terrorist attacks on the United States, largely on increased fears of a sharper worldwide economic downturn (and therefore sharply lower oil demand). Prices then increase on oil production cuts by OPEC and non-OPEC at the beginning of 2002, plus unrest in the Middle East and the possibility of renewed conflict with Iraq.
63. OPEC oil production cuts, unrest in Venezuela, and rising tension in the Middle East contribute to a significant increase in oil prices between January and June.
64. A general strike in Venezuela, concern over a possible military conflict in Iraq, and cold winter weather all contribute to a sharp decline in U.S. oil inventories and cause oil prices to escalate further at the end of the year.
65. Continued unrest in Venezuela and oil traders' anticipation of imminent military action in Iraq causes prices to rise in January and February, 2003.
66. Military action commences in Iraq on March 19, 2003. Iraqi oil fields are not destroyed as had been feared. Prices fall.
U.S. Federal oil depletion allowance reduced from 27.5 to 22.0 percent.
TAP line from Saudi Arabia to the Mediterranean interrupted in Syria, creating all-time tanker rate highs from June to December.
Sep 4 - Oct 9
Libya raises posted prices and increases tax rate from 50 percent to 55 percent. Iran and Kuwait follow in November.
OPEC meeting in Caracas establishes 55 percent as minimum tax rate and demands that posted prices be changed to reflect changes in foreign exchange rates.
Negotiations begin in Tehran between 6 Gulf producing countries and 22 oil companies.
OPEC mandates "total embargo" against any company that rejects the 55 percent tax rate.
Tehran agreement signed. Companies accept 55 percent tax rate, immediate increase in posted prices, and further successive increases.
Algeria nationalizes 51 percent of French oil concessions.
Libya concludes five weeks of negotiations with Western oil companies in Tripoli on behalf of itself, Saudi Arabia, Algeria and Iraq. Agreement raises posted prices of oil delivered to Mediterranean from $2.55 to $3.45 per barrel; provides for a 2.5 percent annual price increase plus inflation allowance; raises tax rate from a range of 50-58 percent to 60 percent of posted price.
Venezuela's Hydrocarbons Reversion Law mandates gradual transfer to government ownership of all "unexploited concession areas" by 1974 and "all their residual assets" by 1983.
U.S. Government institutes Phase I price controls. Invoking the powers granted to the president by the Economic Stabilization Act of 1970, President Nixon orders 90-day nationwide freeze on all wages, prices, salaries and rents.
OPEC directs members to negotiate price increases to offset the devaluation of the U.S. dollar.
U.S. Phase II price controls begin. Plan is to allow for gradual 2-3 percent annual price increases, however, domestic petroleum prices remain at Phase I levels.
Libya nationalizes British Petroleum concession.
Six exporting countries - Abu Dhabi, Iran, Iraq, Kuwait, Qatar and Saudi Arabia - conclude ten days of meetings with Western oil companies. An agreement is reached to raise the posted price of crude by 8.49 percent to offset the loss in value of oil concessions attributable to the decline in value of the U.S. dollar.
OPEC threatens "appropriate sanctions" against companies that "fail to comply with . . . any action taken by a Member Country in accordance with [OPEC] decisions."
Iraq nationalizes Iraq Petroleum Company's (IPC) concession owned by British Petroleum, Royal Dutch-Shell, Compagnie Francaise des Petroles, Mobil and Standard Oil of New Jersey (now Exxon). The concessions were valued at over one billion dollars.
In a show of support for Iraq, OPEC moves to prevent companies whose interests were nationalized in Iraq from increasing production elsewhere; appoints mediators between Iraq and IPC.
Libya acquires a 50 percent interest in two ENI concessions.
OPEC approves plan providing for 25 percent government ownership of all Western oil interests operating within Kuwait, Qatar, Abu Dhabi and Saudi Arabia beginning on January 1, 1973, and rising to 51 percent by January 1, 1983. (Iraq declines to agree.) Agreements signed on December 21.
U.S. Phase III price controls begin. Allows for voluntary instead of mandatory price control on all U.S. prices. This does not prevent a sharp rise in heating oil prices caused by a severe winter and shortage of product.
President Nixon suspends mandatory oil import quota on No. 2 heating oil through April 30.
Shah of Iran announces that the 1954 operating agreement between a consortium of oil companies and Iran will not be renewed when it expires in 1979. The consortium was formed in 1954 as a means to settle a dispute between a new ministry in Iran and the Anglo-Iranian Oil Company (AIOC). The consortium included Standard Oil of New Jersey, Standard Oil of California, SOCONY-Vacuum, the Texas Company, Gulf, Royal Dutch-Shell, the Compagnie Francaise de Petroles, and the AIOC.
Iraq and IPC reach an agreement on compensation for nationalization.
Special Rule No. 1 reimposes mandatory (Phase II) price controls on the 23 largest oil companies. Smaller companies, representing 5 percent of the market, enjoy uncontrolled prices.
Shah of Iran and Consortium members agree to nationalize all assets immediately in return for an assured 20-year supply of Iranian oil.
OPEC discusses raising prices to offset decline of U.S. dollar value.
OPEC increases posted prices by 5.7 percent.
U.S. Government ends Mandatory Oil Import Program. Program, established in 1959 by President Eisenhower, had limited imports of crude and product east of the Rocky Mountains to a percentage of domestic crude production.
Eight OPEC countries raise posted prices by 11.9 percent.
Libya nationalizes Bunker Hunt concession; Nigeria acquires 35 percent participation in Shell-BP concession.
Nixon administration imposes 60-day economy-wide price freeze, superseding Special Rule No. 1 for oil companies.
Libya nationalizes 51 percent of Occidental Petroleum concession and of the Oasis consortium.
President Nixon's Cost of Living Council imposes two-tier price ceiling on crude petroleum sales: production of "old" oil (that produced at or below 1972 levels from existing wells) to be sold at March 1973 prices plus 35 cents; production of "new" oil (that produced above 1972 levels from existing wells and oil produced from new wells) to be sold at uncontrolled prices.
Libya nationalizes 51 percent of nine other companies' concessions: Esso, Libya/Sirte, Mobil, Shell, Gelensberg, Texaco, SoCal, Libyan-American (ARCO), and Grace.
Conference of less developed countries approves forming "producers' associations," calls for withdrawal of Israeli forces from occupied Arab lands.
OPEC supports price hikes and designates six Gulf countries to negotiate collectively with companies over prices. Other members to negotiate individually.
Kuwait rejects gradual participation increase plan, insists on immediate 60 percent participation.
Beginning of fourth Arab-Israeli War.
Iraq nationalizes Exxon and Mobil shares in Basrah Petroleum Company representing 23.75 percent equity in the company.
OPEC meets with oil companies to discuss revision of 1971 Tehran agreement and oil prices. Negotiations fail.
The Gulf Six (Iran, Iraq, Abu Dhabi, Kuwait, Saudi Arabia and Qatar) unilaterally raise the posted price of Saudi Light marker crude 17 percent from $3.12 to $3.65 per barrel and announce production cuts.
OPEC oil ministers agree to use oil weapon in Arab-Israeli War, mandate cut in exports, and recommend embargo against unfriendly states.
Saudi Arabia, Libya, and other Arab states proclaim an embargo on oil exports to the United States.
Arab oil embargo extended to the Netherlands.
Arab producers announce 25 percent cut in production below September levels. Further cuts of five percent are threatened.
Arab oil ministers cancel the scheduled 5 percent cut in production for EEC.
Arab summit conference adopts open and secret resolutions on the use of the oil weapon. Embargo extended to Portugal, Rhodesia, and South Africa.
President Nixon signs the Emergency Petroleum Allocation Act (EPAA). Authorizes petroleum price, production, allocation and marketing controls.
Arab oil ministers announce a further production cut of 5 percent for January for non-friendly countries.
OPEC Gulf Six decides to raise the posted price of marker crude from $5.12 to $11.65 per barrel effective January 1, 1974.
Arab oil ministers cancel January 5 percent production cut. Saudi Arabian oil minister promises 10 percent OPEC production rise.
OPEC decides to freeze posted prices until April 1.
Kuwait announces 60 percent government participation in BP-Gulf concession; Qatar follows on February 20.
Washington Energy Conference opens. Attended by 13 industrial and oil producing nations. Called by U.S. to resolve the international energy problems through economic cooperation among nations. Henry Kissinger unveils Nixon Administration's seven-point "Project Independence" plan to make the U.S. energy independent. Libya nationalizes three U.S. oil companies that had not agreed to 51 percent nationalization in September.
Heads of state of Algeria, Egypt, Syria, and Saudi Arabia discuss oil strategy in view of the progress in Arab-Israeli disengagement.
Arab oil ministers announce the end of the embargo against the United States, all except Libya.
Nigeria announces 55 percent government participation in all concessions.
Arab oil ministers decide to end most restrictions on exports of oil to the United States but continue embargo against the Netherlands, Portugal, South Africa, and Rhodesia.
Saudi Arabia announces that it will increase its participation in Aramco to 60 percent. Abu Dhabi and Kuwait follow in September. Increases are retroactive to January 1.
IMF establishes its "oil facility," a special fund for loans to nations whose balance of payments have been severely affected by high oil prices.
OAPEC lifts the embargo against the Netherlands.
Sep 6Saudi Arabia increases its buy-back price from 93 percent to 94.9 percent of posted price.
OPEC instructs its Secretary General to "carry out a study of supply and demand in relation to possible production controls."
Saudi Arabians raise tax rate to 85 percent and royalty rate to 20 percent.
International Energy Agency formed in Paris within OECD framework. Saudi Arabia, Qatar, and United Arab Emirates announce a slight reduction in posted prices and tax rates.
U.S. Crude Oil Entitlements Program enacted, retroactive to November 1974.
Iraq announces plans to increase its production capacity to 3.5 MMB/D by 1975 and to 6 MMB/D by 1981.
U.S. Federal oil depletion allowance eliminated for large producers.
Business Week publishes Kissinger interview hinting at military action against oil countries in case of "actual strangulation."
Preliminary meeting at Paris on world economic crisis between oil-exporting (Algeria, Saudi Arabia, Iran, Venezuela), oil-importing (European countries, U.S., Japan), and non-oil Third World countries (India, Brazil, Zaire). Talks collapse after nations fail to decide whether agenda should focus on oil/energy issues or have a broader economic scope.
Twenty-four OECD members sign an agreement to establish a $25 billion lending facility to provide assistance to industrial nations hurt by high oil prices.
World Bank establishes its "Third Window," a fund to make loans to countries too rich to qualify for "soft" no-interest loans, but too distressed to afford loans at the prevailing normal lending rates. Action represents significant cooperation between oil-exporting and industrial nations.
OPEC announces a 15 percent increase in government per barrel revenues as of October 1.
Venezuela and foreign oil companies agree on nationalization as of January 1, 1976.
Kuwait and Gulf and BP agree on terms of nationalization.
Iraq completes nationalization by taking over the BP, CFP, and Shell shares of the Basrah Petroleum Company.
President Ford signs the Energy Policy and Conservation Act (EPCA) effective February 1976. Authorizes the establishment of the Strategic Petroleum Reserve (SPR), participation in International Energy Program, and oil price regulation.
Official price of Saudi Light remains at $12.37 per barrel throughout 1976.
EPCA 3-tier price regulation begins. Small changes in Entitlements Program.
April - May
Lebanese civil war causes drop in Iraq exports through trans-Lebanon pipelines to Mediterranean.
OPEC issues press release vowing to "take appropriate measures" to protect OPEC interests in light of protectionist actions by certain countries.
U.S. stripper well oil prices decontrolled.
640 foot Argo Merchant runs aground on the Nantucket Shoals, spilling 7.6 million gallons of No. 6 fuel oil.
Moderates and OPEC "hawks" disagree on how fast price should rise. Saudi Arabia and United Arab Emirates increase prices by 5 percent, others by 10 percent.
OPEC goes to two-tier pricing (Saudi Arabia and United Arab Emirates use $12.09 per barrel and other OPEC countries use $12.70per barrel).
Fifty percent of Saudi Arabia's 10 MMB/D production is halted briefly due to fire damage to separation facility in Abqaiq field. Prices increase slightly.
OPEC prices reunified at $12.70 per barrel as Saudi Arabia and UAE fall into line, then official price rises to $13.66 per barrel.
Dry dock complex opens at Bahrain; only facility between Portugal and Singapore capable of servicing VLCCs.
Student protests against government of Reza Pahlavi, Shah of Iran, begin, touching off a wave of political unrest and violent clashes between police and demonstrators. Throughout the year increasing anti-Shah activities are led by Muslim fundamentalists seeking to establish a Muslim state.
Amoco Cadiz tanker runs aground off the coast of France, spilling 1.6 million barrels of crude oil. (Largest crude spill to date.)
Iran and Saudi Arabia block efforts of OPEC price hawks to fix the price of OPEC oil in a currency more stable than the U.S. dollar. Say world economy cannot support associated price increases. Are accused by hawks of being U.S. agents.
Shah puts Iran under military rule. Muslim leader Noori arrested in crackdown of opposition groups.
Iranian strikes; departure of foreign technicians.
Pipeline fire drops Iraqi production 300,000 to 600,000 barrels per day.
Iranian oil production starts dropping.
Iranian production hits 1.5 MMB/D in mid-December; 500,000 on December 27, a 27-year low. OPEC production rises 1.6 MMBD over two months due to increased Saudi production.
OPEC decides on a 14.5 percent price increase for 1979, to be implemented quarterly.
First emergency Crude Oil Buy-Sell Program allocations.
Shah leaves Iran on vacation, never to return. Bakhtiar government established by the Shah to preside until unrest subsides.
Saudi Arabia announces drastic cut in first-quarter production. 9.5 MMBD ceiling imposed. Although actual cuts never reach announced levels, spot prices of Middle East light crudes rise 36 percent.
One million Iranians march in Teheran in a show of support for the exiled Ayatollah Komeini, fundamental Muslim leader.
Bakhtiar resigns as prime minister of Iran after losing support of the military.
Iran resumes petroleum exports.
Gasoline shortage/world oil glut.
OPEC makes full 14.5 percent price increase for 1979 effective on April 1. Marker crude raised to $14.56 per barrel.
DOE announces $5 per barrel entitlement to importers of heating oil. Saudi Arabia announces intention to increase direct sales and to sell less through Aramco. Both announcements send prices higher.
Phased oil price decontrol begins. Involves gradual 28 month increase of "old" oil price ceilings, and slower rate of increase of "new" oil price ceilings.
OPEC raises prices average of 15 percent, effective July 1.
Buy-Sell Program sales average more than 400,000 B/D from October 1979 through March 1980 - highest level since February 1976, due to emergency allocations.
Canada eliminates light crude oil exports to U.S. refiners, except for those exports required by operational constraints of pipelines.
Iran takes western hostages.
Carter orders cessation of Iranian imports to U.S.
Iran cancels all contracts with U.S. oil companies.
Saudi Arabia raises marker crude price to $24 per barrel.
Windfall Profits Tax enacted.
Saudi Light raised to $28.00 per barrel, retroactive to April 1.
Buy-Sell Program allocations drop to average of 120,000 B/D for period April to September 1980.
Iraq breaks 1975 treaty with Iran and proclaims sovereignty over Shatt al-Arab waterway.
Iraq invades Iran. Mutual bombing of installations.
Iraq captures southern port of Khorramshahr.
U.N. gulf war mediator Olaf Palme makes first unsuccessful peace shuttle between Tehran and Baghdad.
Collapse of OPEC's pricing structure. Saudis use $32 per barrel marker, others use $36 per barrel benchmark.
Saudis flood market with inexpensive oil in 1981, forcing unprecedented price cuts by OPEC members. In October, all 13 OPEC members align on a compromise $32 per barrel benchmark. Later, benchmark price is maintained, but differentials are adjusted.
Iraq repels first major Iranian offensive.
President Reagan lifts remaining domestic petroleum price and allocation controls originally scheduled to expire in September 1981.
After meetings in Baghdad and Teheran, attempts by nine Islamic Conference leaders to mediate peace between Iraq and Iran fail.
Windfall profits tax reduced.
Iran defends its besieged port of Abadan, driving back Iraqi forces.
OPEC reaches an agreement to unify crude price at $32 per barrel through 1982 and sets an ultimate price ceiling of $38 per barrel.
Major Iranian offensive mounted on central front.
Indications of a world oil glut lead to a rapid decline in world oil prices early in 1982. OPEC appears to lose control over world oil prices.
Damascus closes Iraq's 400,000 bbl/d trans-Syrian oil export pipeline to show support for Iran.
U.S. boycotts Libyan crude.
May 24Iran recaptures Khorramshahr.
Iran demands $150 billion in war reparations; pledges war until Iraq's Hussein stands trial.
Iraq declares unilateral cease-fire.
Iran launches first attack into Iraq.
Oil glut takes hold. Demand falls as a result of conservation, use of other fuels and recession. OPEC agrees to limit overall output to 17.5 MMB/D. OPEC agrees to individual output quotas and cuts prices by $5 to $29 per barrel.
Iraq increases missile attacks on Iran.
Iran moves into northern Iraq. Casualties top 13,800 in ten days.
U.S. threatens action to preserve navigation in Persian Gulf.
Heavy fighting and casualties in Iran-Iraq war.
Iran attacks northern Iraq, threatening Kirkuk pipeline.
Iran captures Najnoon Islands.
Beginning of "tanker war." Over the next nine months, 44 ships, including Iranian, Iraqi, Saudi Arabian and Kuwaiti tankers, are attacked by Iraqi or Iranian warplanes or damaged by mines.
Iran mobilizes 500,000 troops to southern front. No offensive materializes.
President Reagan rules out U.S. military intervention.
Civilian target truce in Iran-Iraq war.
Norway and Britain cut prices in response to falling spot market. Nigeria follows, renewing pressure on OPEC price cuts.
OPEC cuts production to 16 MMB/D, but agreement is negated by cheating and price-discounting.
Nine OPEC members adjust prices to cut gap between light and heavy crudes from $4 to $2.40 per barrel. Saudi light price cut one dollar to $28 per barrel.
Iranian offensive; heavy casualties.
"Battle of the cities" - heavy bombing from both Iran and Iraq.
OPEC output falls to 20-year low of 13.7 MMB/D.
Iran begins hit-and-run raids on Iraq.
OPEC loses customers to cheaper North Sea oil. More OPEC price cuts.
Saudi Arabia links prices to spot market. Output rises from 2 MMB/D in August to 5 MMB/D in early 1986.
First Iraqi air raid on Iran's main oil export terminal, Kharg Island.
Exploratory well in Ranger, Texas, blows out, spilling 150,000 BBLS of crude oil.
OPEC output hits 18 MMB/D boosting a glut and triggering a price war.
Average world oil prices fall by over 50 percent in 1986. There is wide use of netback pricing in 1986.
OPEC fails to agree upon a production accord after a two-day meeting in Vienna.
Iran captures southern Faw peninsula, starts northern offensive.
Iraq bombs Tehran refinery.
OPEC production-cut talks fail, ending in a tentative majority pact on an average 1986 ceiling of 17.6 MMB/D.
Iraqi jets attack Assadabad satellite station.
Brent price dips under $9 per barrel. OPEC production rises to 20 MMB/D.
Iraqi jets attack central Iranian city of Arak. Iran threatens missile attack of gulf states supporting Iraq.
Hussein offers peace in open letter to Iran.
Reports of probable OPEC agreement on output quotas sends oil prices higher.
Iran fires missile at refinery near Baghdad. Iraq raids Iranian terminal at Sirri Island severely disrupting Iranian exports.
OPEC reaches an accord that would cut production by seven percent for the first six months of 1987 (from 17 MMB/D to 16 MMB/D) and would raise prices immediately toward a target world oil price of $18 per barrel.
OPEC price accord begins to deteriorate.
OPEC majors stick to fixed prices.
Gulf war escalates.
OPEC meeting failure.
Wide use of crude formula pricing in 1988.
OPEC price meeting set.
OPEC/Non-OPEC meeting failure.
Iran accepts cease fire.
Crude oil prices jump in anticipation of possible production accord at Gulf Cooperation Council meeting set for October 16.
OPEC reaches production accord. Six-month agreement to set production at 18.5 MMB/D. Although the recent OPEC quota had been 19.0 MMB/D, actual OPEC production had been closer to 21.0 MMB/D.
Exxon tanker Valdez runs aground, spilling 11 million gallons of crude oil in the waters of Price William Sound. Oil prices react upward to news of the spill and to potential shortages on the west coast cased by refinery fires there.
OPEC raises their production ceiling to 19.5 MMB/D.
Iraq invades Kuwait. Crude and product prices soar upward; exchange markets react wildly to any middle east news events; cash markets dominate prices after trading hours; jet fuel prices rise to record spreads over other products due to increase in defense demand. In late August, OPEC president fails to revive floundering attempts to organize a formal OPEC meeting to discuss crisis/production strategies. Informal meetings held in Vienna result in record price falls.
Conflicting reports of promises to increase OPEC output to compensate for embargo of Iraq and Kuwait oil further compound market uncertainties.
raq invades Kuwait.
Bush orders troops to Saudi Arabia.
Market prices plunge as OPEC nears informal agreement to increase output to cover 4 MMB/D shortfall due to invasion. Cash market trading experiences abrupt decline.
U.S. citizen is shot in Kuwait. API reports 4.4 MMB weekly draw in domestic crude stocks. Oil markets surge on aggressive U.S. statements toward Iraq.
Reports that U.S refinery problems will lead to a 200,000 B/D loss in capacity and aggressive remarks by Saddam Hussein send crude prices to new highs.
Iraq invades the French and Dutch missions in Kuwait; French President Mitterand called the action a violation of international law; a U.S. warship boards an Iraqi-flagged tanker bound for the port of Basrah.
Crude prices outpace increases in product prices and there is talk of cutting refinery runs.
Poor refining margins.
Saddam Hussein states his willingness to strike first and his intention to damage oil fields in the region if Iraq does strike.
Saddam Hussein says he may be willing to negotiate the occupation of Kuwait and would consider foreign participation in negotiations.
API reports a 9 MMB weekly U.S. crude inventory draw.
Fear of war and long-term supply disruptions as Hussein threatens Israel.
API reports crude inventories dropped by more than 4 MMB in the last week.
Libya's Qadhafi says Israel must be eliminated, and U.K. Foreign Secretary Hurd says force would be used if Iraq doesn't withdrawal from Kuwait.
Reports of increasing Saudi production and lower world demand.
Iran's oil-producing region suffers a serious earthquake.
API reports 5 MMB U.S. crude inventory weekly increase.
Unconfirmed rumors that Bush would announce an airlift of supplies to U.S. embassy in Kuwait, which could ultimately trigger a military clash.
Saudis ask U.S. for rights to bid on SPR crude.
Report that Iraq will bolster its forces in Kuwait.
API reports crude inventory drop in U.S. of more than 4 MMB; Saddam Hussein announces plans to release German hostages; Soviet Union shows reluctance to endorse the use of force against Iraq.
French President Mitterand voices support of a proposed U.N. resolution that would authorize the use of force in the Persian Gulf.
U.S. proposes addition to U.N. resolution that would require Iraq's withdrawal from Kuwait by January 1.
U.N. Security Council approves U.S.-sponsored resolution authorizing the use of force in the Persian Gulf if Iraq does not withdrawal from Kuwait by Jan. 15, 1991.
President Bush offers to send Secretary of State James Baker to Baghdad to meet with Hussein.
An Iraqi official reports that Iraq will withdraw if it can retain control of the Rumailah field and keep Bubiyan and Werbah islands; also says that demands that the Palestinian issue be treated separately would not be surmountable.
Iraq announces willingness to speak with U.S. about resolving the Persian Gulf crisis.
Secretary of State Baker questions Iraq's seriousness about Middle East peace.
Bush reiterates his "no concessions" stance against Iraq.
Reports Iraq will accept U.S. offer for talks in Geneva.
Saddam Hussein prepares his troops for what he says will be a long violent war against the U.S.
At Geneva talks, Baker says that "regrettably" Iraqi Foreign Minister Aziz has indicated no softening in Iraq's position. Peace talks break down, but there is still talk of a peaceful solution to the crisis.
Report that Iraq has a new peace initiative.
U.S. begins air attack against Iraqi military targets. President Bush directs drawdown of Strategic Petroleum Reserve (SPR). U.S. Secretary of Energy James Watkins orders 33.75 MMB drawdown. Crude oil prices drop $9-10 per barrel in one day after having risen $3-5 per barrel during the first half of January.
Reports of early U.S. and allied success against Iraqi forces; DOE issues SPR sales notice.
Iraqi Scud missiles land in Israel.
Kuwaiti oil facilities are destroyed by Iraq and more Iraqi missile attacks on Saudi Arabia.
Jan 30DOE selects 13 firms to purchase 17.3 MMB of SPR crude oil.
Surplus of unsold oil held by oil producers reaches 80-90 MMB.
First SPR oil delivered to commercial buyers.
Daily market volatility as Hussein mentions withdrawal, but Bush calls his offer a "cruel hoax."
Signs of Iran crude now an option for U.S. refiners, but no imports from Iran likely in near future.
War ends. U.N. troops move into Kuwait City. Saddam Hussein orderstroops out of Kuwait. Iraqi soldiers ignite Kuwaiti oil fields during their retreat.
News that Kuwait will need to import crude in the short term.
OPEC announces production cut to 22.3 MMB/D.
API reports a 6 MMB weekly domestic crude inventory draw; Saudi Arabia and Iran say OPEC production cuts will take effect April 1.
Gorbachev says the Soviet Union will cut its oil exports by nearly half.
Nigerian crude becomes competitive in U.S. Gulf Coast as Nigeria cuts crude prices.
Iraq expects to resume crude and product exports by July.
Kuwait asks GCC members to produce 800,000 B/D of oil on its behalf.
Unsuccessful coup attempt against Soviet President Gorbachev has minimal effect on oil markets.
Soviet Union suspends petroleum product exports as its fuel shortages grow. NYMEX futures price for WTI climbs nearly $2, ending at $24 per barrel.
Last of Kuwait oil well fires extinguished by well control teams.
U.S. Senate filibuster causes withdrawl of an Alaska National Wildlife Refuge (ANWR) pro-leasing bill.
Soviet Union collapses as a series of events precipitated by Ukrainian vote for independence leads to formation of Commonwealth of Independent States (CIS).
Kuwait reports oil production of 400,000 B/D; insists on restoration of its pre-invasion OPEC quota of 1.5 MMB/D.
UN threatens sanctions against Libya for its refusal to extradite suspected terrorists.
CIS announces that 1991 crude exports dropped by 52%.
Saudi Arabia supports a crude oil price hike during a late-month OPEC meeting. NYMEX Futures prices exceed $22 per barrel.
OPEC production reaches highest level in more than a decade at 25.25 MMB/D.
U.S., Mexico, and Canada sign NAFTA multi-lateral free trade agreement.
Oil prices plunge on speculation that Iraq will accept U.N. missile test site inspections and receive approval to resume oil exports.
Combination of OPEC overproduction, surging North Sea output, and weak demand lowers the price of Brent to near $15 per barrel.
Oil Prices firm on strength of institutional shifting of U.S. investment funds from equity and bond markets to cash and commodities.
Nigerian production disrupted by oil workers' strike in response to imprisonment of apparent winner of presidential elections.
Sources include: Dallas Morning News (DMN); Dow Jones (DJ); Energy Compass (EC); Financial Times (FT); New York Times (NYT); Petroleum Intelligence Weekly (PIW); Platt's Oilgram News (PON); Wall Street Journal (WSJ); Washington Post (WP); Washington Times (WT); and Weekly Petroleum Argus (WPA).
Mexico pledges profits from state-owned Pemex's $7-billion-per-year oil revenues in an effort to secure U.S. congressional approval of $40-billion worth of loan guarantees. Subsequently, President Clinton approved a $20-billion U.S. aid package for Mexico. (DMN)
Norway's Statoil announces that a newly-formed consortium of 11 oil companies will develop a plan to supply Norwegian natural gas to the European continent. Three Norwegian companies recently signed a contract with Gaz de France to bring 1.4 trillion cubic feet of Norwegian gas to France between 2001 and 2027. (DJ)
The Pentagon announces that it monitored Iranian installation of surface-to-air Hawk missiles in the Strait of Hormuz. The Iranians also have taken possession of and fortified the nearby Abu Musa and the Tunb Islands, which are claimed by both Iran and the United Arab Emirates (UAE). (DJ)
After OPEC's semi-annual meeting in Vienna, President Ida Bagus Sudjana discloses the Organization's intention to roll over its present crude oil production ceiling of 24.52 million barrels per day. The announcement is followed by a trip to Norway by Saudi Arabian Oil Minister Hisham M. Nazer. Upon arriving, the Saudi Minister asks Norwegian Minister of Industry and Energy Jens Stoltenberg to restrain his country's oil production in the hopes of stabilizing world oil prices. (FT, DJ)
Exxon signs a $15.2-billion deal to develop oil and gas fields near Russia's Sakhalin Island. The Sakhalin I project will develop the offshore Shayvo, Odoptu, and Arkutun-Dagi fields that together are estimated to contain 2.5 billion barrels of crude oil and 15 trillion cubic feet of natural gas. Exxon has a 30 percent stake in the project. (NYT, DJ)
Venezuela's Congress approves the country's first investment law allowing for foreign participation in oil exploration and production. The newly-passed "model agreement" authorizes the state-owned oil company Petroleos de Venezuela S.A. (PDVSA) to offer 10 exploration blocks to foreign investors. If oil is discovered, the government will maintain a majority stake in any joint venture formed to develop the new fields. (FT, DJ)
Saudi Aramco awards the giant Shaybah oil field development project to U.S.-based Parsons Corporation. The $2.5-billion project will develop the 7-billion-barrel field, including the construction of crude oil production facilities, gas-oil separation plants, and a 372-mile pipeline. The Shaybah field is located on the Saudi-UAE border and is expected to produce 500,000 barrels per day after it comes on line in 1999. (PON)
Norwegian Finance Minister Sigbjorn Johnsen says that Norway should not lower its crude oil production in an attempt to boost world oil prices. Norwegian Oil Minister Jens Stoltenberg believes production cuts may be necessary if prices begin to fall. Minister Johnsen's remarks follow last month's visit by Saudi Arabian Oil Minister Hisham M. Nazer, who asked Minister Stoltenberg to cut Norway's crude oil production. (PON)
Saudi Arabia's King Fahd issues a decree replacing all members of the Council of Ministers who do not have blood ties so the royal Family. While most of the Council's top positions are unaffected by the reshuffling, Oil Minister Hisham Nazer is replaced with Ali bin Ibrahim al-Naimi. (WSJ)
Iran's official news agency, IRNA, reports that Iran has been unable to sell 200,000 barrels per day of crude oil since the imposition of a unilateral oil embargo by the U.S. Iran increasingly has sold its crude oil on spot markets as opposed to long-term contracts. Larger purchases by France, Spain, Italy, China, India, Pakistan, and Thailand have failed to offset decreased demand by German and Japanese refiners. Before the U.S. embargo was announced in April 1995, U.S. companies were buying between 400,000 and 450,000 barrels per day, down from roughly 600,000 barrels per day in 1994. (PON)
Kuwaiti Oil Minister Abdul Mohsen al-Medej announces that his country will increase its oil production capacity to as much as 3.5 million barrels per day by 2005. (DJ)
The Kuwaiti Oil Ministry states its intention to seek a 200,000-barrel-per-day increase to its current 2-million-barrel-per-day crude oil production quota at the November 1995 OPEC meeting in Vienna. The announcement comes amidst growing non-OPEC oil production and weak oil prices. (DJ)
OPEC states that it will roll over its current oil production quota of 25.42 million barrels per day. The roll-over was widely anticipated because of slack world oil demand, rising non-OPEC production, and weak prices. (DJ, PON)
President Clinton approves legislation lifting a 22-year-old ban on exports of oil from the Alaskan North Slope (ANS). The ban was imposed after the oil embargo by Arab oil producers in 1973. The lifting of the ban opens up about one-quarter of U.S. crude oil production for export. The ANS legislation also waives royalty payments on deep water oil and gas leases in the Gulf of Mexico. (WP)
Speaking in New York during a U.S. visit by Angolan President Eduardo dos Santos, Joaquim David, president of the state-owned oil company , Sonangol, states that Angola will increase its crude oil production by 10 percent per year over the next five years, reaching 720,000 barrels per day by the end of 1996 and 1 million barrels per day by 2001. The statement comes amidst sporadic violence involving government forces and the rebel group UNITA, less than a year after a peace accord was signed ending the country's 20-year-old civil war. At the end of 1995, Angola had raised its crude oil production to 690,000 barrels per day. (PON, DJ)
Sources include: Dow Jones (DJ), Financial Times (FT), New York Times (NYT), and Platt's Oilgram News (PON), Washington Post (WP), and the Wall Street Journal (WSJ).
For a more detailed description of 1996 events go here.
Iraq agrees to talks concerning a U.N. plan to allow for the Iraqi sale of $1 billion of oil for 90 days for a 180-day trial period. Under U.N. Resolution 986, proceeds from the sale would be used for humanitarian purposes. In the past, Iraq has opposed clauses 6 and 8b contained in Resolution 986. Clause 6 stipulates that oil exports under this plan must pass through the 1.6-million b/d Iraq-Turkey pipeline, which currently is unusable because of sludge build-ups and pumping station damage. By most estimates, the line would take a minimum of three months to repair. Clause 8b states that part of the proceeds from the sales would be disbursed under U.N. supervision to Kurdish provinces in northern Iraq. Negotiations between Iraq and the United Nations are scheduled to begin February 6, 1996. (FT, PON, DJ)
Vice Admiral Scott Redd, commander of the U.S. Fifth Fleet based in the Persian Gulf, states that Iran test-fired a new anti-ship missile near the Strait of Hormuz on January 6. The missile reportedly has a range of 60 miles and is viewed as a threat to regional security by U.S. naval forces operating in the area. Oil tankers carry about 15 million b/d through the Strait. (DJ)
In New York, the United Nations and Iraq end a third round of negotiations over Iraq's possible sale of $1 billion of oil for 90 days for a 180-day trial period. Under U.N. Resolution 986, proceeds from the sale would be used for humanitarian purposes. While both sides have reached agreement on most of the key issues, chief Iraqi negotiator Abdul Amir al-Anbari says that the United States and the United Kingdom have fundamentally altered the text of a proposed agreement which he had received from the United Nations early in the third round. Al-Anbari states that the changes have postponed any possible deal. The U.N.-Iraq talks are scheduled to restart on May 10. (DJ)
In the United States, President Clinton approves the sale of $227 million of crude oil from the Strategic Petroleum Reserve. At current oil prices, roughly 12 million barrels would be sold. The Clinton Administration hopes that the sale will lower gasoline prices in the United States, which are at their highest levels in five years. (WSJ)
In New York, the United Nations and Iraq agree to U.N. Resolution 986, which provides Iraq with the opportunity to sell $1 billion of oil for 90 days for a 180-day trial period. Under the resolution, proceeds from the sale would be used for humanitarian purposes. The agreement comes following months of heated negotiations. Iraqi oil exports are expected to begin by the Fall of 1996, after a pumping station on the Iraq-Turkey pipeline is repaired and U.N monitoring and aid distribution facilities are put in place. Shortly after the agreement, the White House announces its decision to allow U.S. oil companies to purchase Iraqi oil exports. (FT, PON, WSJ)
Exxon states that it will soon begin work on its $15-billion Sakhalin I oil and natural gas development in Russia's Far East. The Sakhalin I project will develop an estimated 5 billion barrels of oil and 15 trillion cubic feet (Tcf) of gas located in three offshore hydrocarbon fields. The $300 million appraisal program will include drilling one exploration well and conducting a 3-D seismic survey. The U.S. company says that it will start working despite ongoing differences with the Russian government over the country's new production sharing law, which is widely viewed as not offering adequate legal protection for foreign investment in the country's oil and gas sectors. (FT)
The Venezuelan Congress approves eight, multi-billion dollar, profit-sharing deals which allow foreign oil companies to explore and produce oil in Venezuela for the first time since the country's 1975 nationalization of the oil industry. The deals could boost Venezuela's current oil production by 500,000 b/d by 2005. Foreign oil companies such as Amoco and British Petroleum are expected to sign final deals with state-owned PdVSA within 10 days and may begin working on their new acreage by the third quarter of 1996. The eight blocks are estimated to hold between 7 to 11 billion barrels of light crude oil reserves. (PON, DJ)
OPEC issues a resolution announcing Gabon's withdrawal from the organization, effective January 1, 1995. Gabon had an OPEC quota of 287,000 b/d. (FT)
The United Nations formally approves an Iraqi aid distribution plan, a major step forward in the direction of allowing Iraq to sell oil under Resolution 986. (DJ)
President Clinton signs a new bill imposing sanctions on non-U.S. companies which invest over $40 million a year in the energy sectors of either Iran and Libya. Under the law, the President would be required to impose at least two of the following sanctions: import and export bans; lending embargoes from U.S. banks; a ban on U.S. procurement of goods and services from sanctioned companies; and a denial of U.S export financing. The European Union has stated its opposition to the U.S. law and threatened retaliation. (FT)
In Venezuela, a subsidiary of state-owned Petroleos de Venezuela (PdVSA), Corpoven, signs a memorandum of understanding (MOU) with U.S.-based ARCO. The MOU provides for a $3.5-billion joint venture to develop and upgrade roughly 200,000 b/d of crude oil from the country's 270-billion Orinoco Heavy Oil Belt. The project will produce 9° API gravity crude oil in the Hamaca region and upgrade it to 25° API for export to U.S. refineries. The project will be implemented in three phases, the last of which will be completed in 2006. Another PdVSA subsidiary, Maraven, recently signed another, similar deal with Conoco. (PON, FT)
Following U.S. cruise missile strikes on military facilities in southern Iraq, crude oil prices rise as the market speculates when Iraq will begin exporting oil under U.N. Resolution 986. Benchmark Brent Blend for October rises above $22/barrel amidst the uncertainty. The U.S. attack follows an Iraqi-supported invasion of Kurdish safe haven areas in the country's northern area. Subsequently, President Bill Clinton states that the U.N. oil-for-food sale should be postponed indefinitely. (DJ)
Exxon confirms that it is in talks with state-owned Qatar General Petroleum Corporation concerning the application of new technology to convert natural gas to petroleum products. Exxon believes that technology developed in a successful 200-b/d Anatural gas refinery project in Texas would work in Qatar, where a proposed $1-billion plant would be able produce between 50,000-100,000 b/d of middle distillate products. Under the proposal, Qatar's 270-Tcf North field would supply between 0.5-1 Bcf/d of gas for use as feedstock. In the past, technological barriers and high costs have precluded the development of natural gas refineries. (WSJ)
During a press conference, Iranian Deputy Foreign Minister Abbas Maleki states that Iran supports the free flow of oil through the Strait of Hormuz, but reserves the option of closing off the shipping route if it is threatened. Iran recently has admitted to deploying anti-aircraft and anti-ship missiles on Abu Musa, an island strategically located near the Strait of Hormuz's shipping lanes. (DJ)
The United Nations announces that a total of 21 contracts have been approved for the limited Iraqi oil sales under U.N. Resolution 986. The approved contracts will allow for 43.68 million barrels of oil to be exported in the first 90 days of the sale. At present, exports of 26.37 million barrels have been approved for the second 90-day period of the sale, which allows Iraq to sell up to $1 billion worth of oil every 90 days for an initial 6-month period. In mid-December 1996, Iraq restarted the Kirkuk-Ceyhan pipeline, which is expected to carry up to 450,000 b/d of oil under the sales agreements approved so far under U.N. Resolution 986. Iraq's remaining oil exports will flow through the Mina al-Bakr terminal. (NYT, DJ)
Sources include: Dow Jones (DJ), New York Times (NYT), and the Washington Post (WP).
For a more detailed description of 1997 events go here.
Japan's Ministry of Finance announces plans to cut import tariffs on crude oil and most petroleum products from April 1, 1997, in a phased process that will reduce the country's crude oil import tariff rate to zero in April 2002. (DJ)
Qatar inaugurates the world's largest liquefied natural gas (LNG) exporting facility and formally launches Qatar Liquefied Gas Co., which will have total output capacity of 6 million tons per year of LNG. The facilities are part of a new $7.2 billion industrial zone which also includes a sea port with a capacity to handle 25-30 million tons of LNG annually. Qatar plans to build more gas liquefaction plants in the area to exploit its natural gas reserves of around 237 trillion cubic feet. (DJ)
A Shell spokesman confirms the company will declare force majeure at its Nigerian Bonny terminal due to local protests which disrupted 210,000 barrels per day of the company's oil production. Although the protests have ended and production is returning to normal, the backlog is temporarily delaying loadings by 3 days. (DJ)
A final agreement creating the Caspian Pipeline Consortium (CPC) is signed by project participants: Russia (24 percent), Kazakstan (19 percent), Chevron Corp. (15 percent), AO Lukoil/Arco Corp. (12.5 percent), Mobil Corp. (7.5 percent), AO Rosneft/Shell Corp. (7.5 percent), Oman (7 percent), Agip SpA (2 percent), British Gas PLC (2 percent), Oryx Corp. (1.75 percent), and Kazakstan Pipeline Ventures, a joint venture of Kazakstan's state oil company and Amoco Corp. (1.75 percent). The Russian government plans to transfer its stake to two Russian oil companies, AO Lukoil and AO Rosneft. CPC plans to begin building a 932-mile pipeline to transport crude oil from the Caspian region to Russia's Black Sea coast in 1998 and begin shipping around 558,000 barrels per day of oil in 1999 (planned peak capacity is 1.4 million barrels per day). (DJ)
President Clinton signs an executive order barring new U.S. investment in Burma (also known as Myanmar), effective May 21 and renewable annually. U.S. companies have invested about $250 million in Burma, primarily in the oil and gas sector. The biggest U.S. investor is Unocal, which is building (with France's Total) a $1.2 billion pipeline from Burma's Yadana natural gas field to an electric power plant in Thailand. (DJ)
In a unanimous vote, the United Nations Security Council renews for another 180-day period its "oilforfood" initiative with Iraq. Under the resolution, Iraq may sell $2 billion worth of oil to buy food, medicine and other necessities to alleviate civilian suffering under the sanctions imposed when it invaded Kuwait in 1990. (WP)
The first shipments of oil produced from Kazakstan's Tengiz field arrive at terminals on the Black Sea in Novorossiysk (Russia) and Batumi (Georgia) for subsequent export through the Bosphoros Strait. Volumes total between 100,000 and 150,000 barrels per day. (DJ)
The U.S. State Department rules that Turkey's August 1996 agreement to purchase $23 billion worth of natural gas from Iran over a 20-year period does not violate the Iran and Libya Sanctions Act. In a May 1997 memorandum of understanding with Iran and Turkmenistan, Turkey modified the original arrangement so that the natural gas will be purchased from Turkmenistan rather than Iran. (DJ)
In Colombia, Occidental Petroleum, a California-based international oil company, and Ecopetrol, Colombia's national oil company, declare force majeure on all oil exports from the Cano Limon field. The declaration comes after a series of attacks dating back to July 30 knocked out a major oil pipeline transporting oil from the field to the Caribbean port of Covenas. The pipeline has been attacked 45 times this year which is equal to the total number of attacks for 1996. Responsibility for the attacks has not been determined, but leftist guerrillas from the National Liberation Army are usually blamed for such attacks. The force majeure declaration does not apply to the oil contained in the 2 million barrel storage facility at Covenas. (DJ)
The United Nations approves a sale-price formula for Iraqi crude oil sales under the oil-for-food plan. The approval cleared the way for Iraq to resume limited oil exports immediately through the Turkish port of Ceyhan on the Mediterranean Sea and Iraq's Gulf port of Mina al-Bakr. The United Nations will also begin reviewing contracts for Iraqi crude oil purchases. Iraq has until September 5 to raise the $1.07 billion allowed under the existing 90 day oil-for-food plan window. Iraqi officials state they will boost exports to 2 million barrels per day to meet the sales target. However, industry experts say that Iraq's export capacity is untested beyond 1.4 million barrel per day. (DJ)
The United Nations Security Council passes a resolution that allows Iraq to reach the $2.14 billion oil sales limit under its oil-for-food program by December 5. The current 6-month oil sales window, running from June 8 to December 5, will be split into a 120-day segment and a 60-day segment instead of two 90-day segments. During each segment Iraq can sell $1.07 billion worth of oil. The resolution should enable Iraq to make up for lost revenues during a delay in the start of oil sales during the first two months of the current six month sale period. (DJ)
Iraq's Revolution Command Council, the country's main decision making body, announces that it will no longer allow U.S. citizens and U.S. aircraft to serve with the United Nations (U.N.) arms inspection teams. The council's statement gives U.S. citizens working with the inspection teams one week to leave Iraq. Iraq has also asked the U.N. to stop flights by American reconnaissance aircraft monitoring its compliance with U.N. resolutions requiring the elimination of weapons of mass destruction. In response to this statement, the U.N. Security Council unanimously approves a statement condemning Iraq's threats to expel the Americans. (DJ)
Iraq's Revolution Command Council formally endorses an agreement, arranged by Russia, that enables United Nation's (U.N.) weapons inspection teams to resume operations in Iraq. The deal ends a three-week standoff between the U.N. and Iraq that began in late October 1997 after Iraq announced it would no longer allow U.S. citizens to serve on U.N. weapons' inspection teams. (DJ)
For the first time in four years, OPEC agrees to an increase in its production ceiling. OPEC has raised the ceiling to 27.5 million barrels per day for the first half of 1998, effective January 1, 1998. The new ceiling represents a 10 percent increase over the current ceiling. The new quotas are as follows: Saudi Arabia 8.76 million barrels per day (bbl/d), Iran 3.942 million bbl/d, Iraq 1.314 million bbl/d, Venezuela 2.583 million bbl/d, Nigeria 2.042 million bbl/d, Indonesia 1.456 million bbl/d, Kuwait 2.19 million bbl/d, Libya 1.522 million bbl/d, United Arab Emirates 2.366 million bbl/d, Algeria 0.909 million bbl/d, and Qatar 0.414 million bbl/d. (NYT)
Iraq's United Nations (U.N.) Ambassador Nizar Hamdoon warns that Iraq will not allow oil to flow during a third six-month phase of the U.N.'s oil-for-food sale until the U.N. approves an aid distribution plan. Despite the warning, the U.N. Security Council approves a third six-month phase following the end of the second six-month phase. Like the first two phases, the third phase allows Iraq to sell up to $1.07 billion of oil in each of two 90-day periods. However, the sales level may be increased by the Security Council in January 1998 after U.N. Secretary-General Kofi Annan reports on Iraq's needs. The next day Iraq stops pumping oil into the Iraqi-Turkish pipeline at the end of the second six-month phase of the United Nations (U.N.) oil-for-food program. (WP, NYT)
Delegates from 150 industrial nations attending a United Nations climate conference in Kyoto, Japan reach agreement on a protocol to control heat-trapping greenhouse gases. The protocol, if ratified, would commit nations to roll back emissions of six greenhouse gases (carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulphur hexafluoride) below 1990 levels. Under the protocol, the United States would be required to reduce its greenhouse gas emissions by 7 percent below 1990 levels, while Europe and Japan would make cuts of 8 percent and 9 percent, respectively. Developing countries are exempt from the emissions ceilings for the time being. (DJ)
Sources include: Dow Jones (DJ), New York Times (NYT), Wall Street Journal (WSJ), and the Washington Post (WP).
For a more detailed description of 1998 events go here.
Due to the continuing Asian economic crisis, South Korea's refiners have reportedly cut operations to around 80 percent of capacity. The refiners have also had difficulty securing crude oil supplies for delivery in late January or February, which could cut operations to as low as 70 percent-75 percent of capacity. (DJ)
Environmentalists hail the implementation of a 50-year moratorium on mining and oil exploration in the Antarctic. A protocol for the protection of the Antarctic was adopted by twenty-six countries in 1991, but it could not be implemented until Japan's ratification cleared the way last month. Antarctica contains 70 percent of the world's fresh water, and the moratorium attempts to preserve the world's least polluted continent. (WP)
Following a ruling by a federal judge denying a request from environmentalists and Native Americans seeking to block the sale of the Elk Hills Naval Petroleum Reserve, the U.S. Department of Energy formally transfers ownership of the reserve to Occidental Petroleum Corporation. Occidental purchased a 78 percent interest in the field for $3.65 billion. Chevron Corporation currently holds the remaining 22 percent. Elk Hills contains 450 million barrels of proven oil reserves; however, officials from Occidental believe the reserve may contain one billion barrels of recoverable reserves. (DJ)
The United Nations (U.N.) Security Council votes unanimously to more than double the amount of oil Iraq can export under the U.N. oil-for-food program. The Security Council's vote increases the amount Iraq can export from $2.14 billion to $5.26 billion over six months. Iraq maintains that it only has the capability to export up to $4 billion over a six-month period. (DJ)
OPEC releases an official communique from its 104th (extraordinary) meeting convened in Vienna, Austria, on March 30, 1998. The communique states that member countries have agreed to voluntary cuts from each country's current production levels in an attempt to boost oil prices. OPEC has agreed to cuts totaling 1.245 million barrels per day effective April 1, 1998. The cuts, in barrels per day, break down as follows: Algeria 50,000; Indonesia 70,000; Iran 140,000; Kuwait 125, 000; Libya 80,000; Nigeria 125,000; Qatar 30,000; Saudi Arabia 300,000; United Arab Emirates 125,000; and Venezuela 200,000. In addition, non-OPEC oil-producing countries Mexico, Oman, and Yemen have agreed to cut production by 100,000, 30,000, and 20,000 barrels per day, respectively. Moreover, a third non-OPEC country, Norway, the world's third largest oil exporter, has pledged to reduce its oil production by 3 percent, or approximately 100,000 barrels per day. However, Norway's cuts will not take effect until mid-April 1998. (Cuts are from February production based on secondary sources.) (DJ) (WSJ)(NYT)
The Atlantic Richfield Company (ARCO) announces that it will acquire Union Texas Petroleum Holdings Incorporated, an independent oil company based in Houston, Texas, for $2.47 billion. The acquisition will add 140,000 barrels per day to ARCO's oil and natural gas production and increase ARCO's total oil and gas reserves by 14 percent. The deal also helps ARCO enter the Caspian Sea region, with ARCO gaining a 12.5 percent interest in the Caspian Pipeline Consortium and a 5 percent interest in Kazakhstan's Tengiz oil filed. ARCO also will gain additional interests in projects located in the United Kingdom, Indonesia, Alaska, and Venezuela. (NYT) (WSJ)
India announces that it has conducted three underground nuclear tests, the country's first since 1974. The tests were conducted simultaneously 330 miles southwest of New Delhi, near the Pakistani border. The Indian government indicates that the three tests included a thermonuclear device, commonly known as a hydrogen bomb. Two days later, on May 13, 1998, India announces that it has conducted two more underground nuclear tests in the same desert range. (WP) (DJ)
The United Nations (U.N.) Security Council unanimously approves a resolution allowing Iraq to spend $300 million on spare parts for its oil industry. The funding is intended to help Iraq increase oil exports under the fourth phase of the U.N.'s oil-for-food program. The spare parts are expected to expand Iraq's oil export capacity from 1.6 million barrels per day to 1.8 million or 1.9 million barrels per day. (NYT) (DJ)
OPEC agrees, at its 105th ministerial conference, to another round of oil production cuts. In recent weeks oil prices have fallen to their lowest levels in more than a decade. OPEC members have agreed to cut production by 1.355 million barrels per day, effective July 1, 1998, bringing the group's total reductions since March 1998 to 2.6 million barrels per day. Together with promises from non-OPEC nations such as Russia, Oman, and Mexico, world oil producers have pledged to cut world-wide production by approximately 3.1 million barrels per day. (WP) (WSJ) (NYT)
British Petroleum announces that it will acquire Amoco for $48.2 billion in stock. If the merger is approved by regulators and shareholders of both companies, it will be the largest oil industry merger and the largest foreign take-over of a U.S. company to date. The company will be known as BP Amoco, and it will be the world's third-largest multinational oil company in terms of net income behind Exxon and Royal Dutch/Shell Group. (NYT) (WSJ) (WP)
South Korea's oil refining sector fully deregulates, allowing for 100 percent foreign investment. Originally, South Korea had expected to fully deregulate its refining industry by January 1999, but it decided to move up the date in order to help reform its economy. (DJ)
European Union (EU) nations approve an accord in which European car makers will voluntarily agree to cut carbon dioxide emissions 25 percent by 2008. EU officials say they will seek similar deals with automakers in Asia and North America. (WP)
Japan's Nippon Oil Company, the country's second largest petroleum distributor and Mitsubishi Oil Company, the sixth-ranking company in the industry, agree to merge as of April 1, 1999. The combined company will be the largest oil distributor in Japan. (WSJ)
Exxon Corporation agrees to buy Mobil Corporation for approximately $75.4 billion, which will make the company the largest corporation in the U.S. The companies say they expect to cut about 9,000 jobs from their combined worldwide workforce of 122,700 and to close offices, saving $730 million. The merger comes in the context of low oil prices, which have hurt profits at many oil companies. (DJ)
The Colombian government says it will allow gasoline and diesel prices to float with international oil prices starting January 1, 1999. The move will end a system of artificial price fixing which has cost the government more than $3.2 billion in subsidies over the past five years. (DJ)
Sources include: Dow Jones (DJ), New York Times (NYT), Wall Street Journal (WSJ), and the Washington Post (WP).
For a more detailed description of 1999 events see below.
British Petroleum Company and Amoco Corporation complete their $53 billion merger. Chicago-based Amoco is the United States' fifth-largest oil company with roughly 9,300 gasoline stations. London-based British Petroleum, the world's third largest oil company, sells its products through a network of about 17,900 stations. (DJ)
Italy's ENI SpA and Russia's RAO Gazprom, the world's largest natural gas producer, agree to build a natural gas pipeline from Russia to Turkey at a cost of nearly $3 billion. Each project partner will hold a 50 percent stake in the project. The proposed pipeline, called the Blue Stream project, is expensive by industry standards partly because it would run at great depth under the waters of the Black Sea. (Asian WSJ)
U.S. Energy Secretary Bill Richardson visits Saudi Arabia to discuss potential U.S. investment in the Kingdom's oil and gas sectors. Following his visit, Richardson says the Saudis are primarily interested in foreign investment in the natural gas sector and in the oil refining and marketing sectors, rather than in the upstream crude oil sector. Secretary Richardson's visit comes several months after a September 1998 meeting between several U.S. oil companies, Saudi Crown Prince Abdullah and Saudi Oil Minister Ali Naimi, in which Abdullah requested proposals from the companies on the development of Saudi oil reserves. (DJ, WSJ)
In an effort to raise oil prices, which fell sharply in late 1997 and stayed low through 1998 and into early 1999, OPEC and non-OPEC countries agree to cut oil output by a combined 2.104 million barrels per day, effective April 1, 1999, for one year. OPEC members have pledged to cut 1.716 million barrels per day, while several non-OPEC countries have pledged total reductions of 388,000 barrels per day. During 1998, due mainly to low oil prices, OPEC crude oil export revenues fell 30 percent (to $100 billion) from the previous year. (DJ, NYT)
Arco agrees to be acquired by BP Amoco PLC for $26.6 billion in stock. If approved, the merger will create the largest oil producer in the United States and one of the largest energy companies in the world. The deal marks the fourth largest oil company merger since the onset of low oil prices in late 1997. (DJ), (WSJ)
Following the arrival in the Netherlands of two Libyan suspects in the 1988 bombing of Pan American Flight 103 that killed 270 people, United Nations sanctions against Libya are suspended. The sanctions, imposed on March 31, 1992, initially included a ban on the sale of equipment for refining and transporting oil, but excluded oil production equipment. Sanctions were then expanded on November 11, 1993, to include a freeze on Libya's overseas assets, excluding revenue from oil, natural gas, or agricultural products. (DJ)
The U.S. Department of Energy (DOE) announces that it will begin taking oil deliveries within the next few days under its plan to add 28 million barrels of oil to the U.S. Government's Strategic Petroleum Reserve (SPR) from federal oil royalty payments. In Phase 1 of the plan, the SPR is expected to acquire about 43,000 barrels per day over the next 3 months from oil companies operating in the Gulf of Mexico. Although about 50 percent of the oil supplied in Phase 1 will be imported, domestic producers would still benefit from the entire acquisition since the oil market is international and fungible, according to a DOE official. Under Phase 2 of the program, the DOE expects to acquire about 100,000 barrels per day of royalty oil over a 6-month period. (DJ)
An oil pipeline that transports oil from Baku, Azerbaijan, to Suspa, Georgia, is officially opened. This is the second pipeline dedicated to exporting Caspian Sea oil, but the first built since the Soviet Union disbanded in 1991. The other Caspian Sea oil pipeline, which runs through the Russian breakaway republic of Chechnya to the Russian port of Novorossisk, is often shut down. The new pipeline to Georgia has a capacity of 100,000 barrels per day. (DJ)
The U.S. Department of Treasury's Office of Foreign Asset Control (OFAC), notifies Mobil that it has turned down Mobil's request for a license to swap crude oil it produces in Turkmenistan in exchange for Iranian oil. Mobil had hoped to be allowed to ship oil produced in Turkmenistan to northern Iranian oil refineries, while Iran, in turn, would provide Iranian oil from Iran's Persian Gulf export terminals to Mobil for shipment to global markets as payment. OFAC is responsible for enforcing U.S. unilateral sanctions against foreign countries. As a result of OFAC's denial of a swap arrangement with Iran, Mobil will have to continue exporting its Turkmenistan oil production across the Caspian Sea by barge to Azerbaijan, where it is then carried by rail or pipeline to Black Sea ports. (DJ, WP)
U.S. President Clinton unveils a plan to apply the same standard for tailpipe emissions to cars, light-duty trucks, and most sport utility vehicles (SUVs). Based on current nitrogen oxides (NOx) emission levels, the proposed plan would result in a 77 percent reduction for cars and a 95 percent reduction for light-duty trucks and SUVs. The new standards would be phased in from the 2004 to 2007 model years. At the same time, the Environmental Protection Agency (EPA) proposes a rule that would require refiners to reduce gasoline sulfur content from a current average of nearly 330 parts per million (ppm) to 30 ppm. The new sulfur standard is being proposed in conjunction with the new tailpipe emission proposal since sulfur impedes catalytic converter efficiency, thus making it more difficult to reduce tailpipe emissions without reducing sulfur content in gasoline. Oil industry representatives have vowed to protest the proposed rule, claiming that it will cost refiners $3 billion to $6 billion. The EPA estimates that the cost of compliance for both the automobile and oil industries will be between $3.4 billion and $4.4 billion. (DJ)
The Board of Argentine oil company YPF unanimously approved a $13.4 billion offer from Repsol, a Spanish company. Repsol, which already owns 14.99 percent of YPF, made an all cash offer to purchase the remaining 85.01 percent last month. The Board recommended to all shareholders to accept the Repsol offer. Two Argentine provinces, which own about five percent of YPF's shares, remain concerned about Repsol's intentions for their regions. (WSJ)
The Caspian Pipeline Consortium (CPC) begins construction of a 981-mile pipeline that will carry crude oil from the Caspian Sea to the Russian port of Novorossisk for export to foreign markets. The pipeline's planned capacity is about 1.3 million barrels per day, and the CPC is expecting to load the first tanker in mid-2001. (DJ)
The Environmental Protection Agency (EPA) states that it will not change its "Tier Two Plan" to cut gasoline sulfur content and tailpipe emissions, in response to a recent appellate court ruling that the EPA had overstepped its mandate in implementing some provisions of the Clean Air Act. Beginning in 2004, the Tier Two Plan would require refiners to cut gasoline sulfur content to an average of 30 parts per million, down more than 90 percent from the current national average. (DJ)
Exxon and Mobil shareholders approve an $81.2 billion merger, in which Exxon will issue 1.32 shares for each share of Mobil's approximately 780.2 million shares outstanding. The merger still must receive regulatory approval from the U.S. government and the European Union. The chairmen of both companies state that they expect regulatory approvals to be obtained by the end of the third quarter of 1999. (DJ)
Sudan starts pumping oil through its pipeline linking the Heglig oil field in Western Kordofan province to Port Sudan on the Red Sea. The pipeline has a capacity of 250,000 barrels per day, and was financed by a consortium of Chinese, Malaysian, Canadian, and Sudanese firms. (DJ)
The United States Department of Commerce dismisses a petition filed by Save Domestic Oil, Inc. under anti-dumping statutes. The petition alleged that Saudi Arabia, Venezuela, Mexico, and Iraq had sold crude oil to the United States at artificially low prices. The decision was based on the Department of Commerce's determination that "opposition to the petitions exceeded support." Majority support is defined as petitioner representation of at least 25 percent of the domestic industry and support from at least 50 percent of the industry expressing an opinion. Support from a majority in the affected industry is necessary under the law for Commerce to commence a formal investigation of an anti-dumping complaint. (DJ, WP, NYT)
French oil companies Total Fina and Elf Aquitaine agree to merge, after a lengthy takeover battle, in a deal which will form the world's fourth largest oil company. The deal will give Elf Aquitaine shareholders 19 shares of Total Fina for every 13 shares of Elf Aquitaine. According to Total Fina's management, the merger will result in annual cost savings for the combined firm of $1.56 billion. (WP, WSJ)
OPEC, at a meeting of its member states' oil ministers, decides to maintain current production cuts until March 2000, despite the fact the crude oil prices have doubled since early 1999. In another development, OPEC announces that its current Secretary General, Nigerian Rilwanu Lukman, will stay in office until March 2000. The announcement follows a vigorously contested race to succeed Lukman in the post, in which OPEC's three largest members, Saudi Arabia, Iran, and Iraq, had fielded candidates. (DJ)
Iranian Oil Minister Bijan Zanganeh announces that the National Iranian Oil Company has discovered a new oilfield, Azadegan, with 26 billion barrels of crude oil in Khuzestan province. The discovery is the largest new find in Iran in the last three decades. Zanganeh expects the field to produce between 300,000 and 400,000 barrels per day of crude oil three to four years after development begins next year. (DJ)
Japan suffers a serious nuclear accident at a uranium processing plant in Tokaimura, in which radiation is released after an apparent uncontrolled nuclear chain reaction. Three workers at the plant, operated by JCO, Inc., are injured. Japanese authorities issue a warning instructing 310,000 people in neighboring communities to stay indoors. (DJ, WSJ)
The United Nations Security Council agrees to raise the monetary ceiling on Iraqi oil sales to $8.3 billion from $5.26 billion, guaranteeing the continuation of Iraqi production until the November 20 end date for the current six month extension of the "oil-for-food" program. The move is a one time adjustment, and does not bind the Security Council to continue a higher ceiling if the program is renewed for another six month term. The increase reflects the difference between previous monetary ceilings and actual Iraqi sales during previous phases of the program. (DJ)
The heads of state of Turkey, Azerbaijan, and Georgia sign an agreement to build a pipeline for the export of crude oil from the Caspian Basin. The 1,080-mile pipeline will begin at the Azerbaijani capital, Baku, and run through Georgia and Turkey to the Turkish port of Ceyhan. The project is expected to cost $2.4 billion, and the government of Turkey has offered guarantees that the cost of the Turkish segment of the pipeline will not exceed $1.4 billion. The signing ceremony took place during a visit to Istanbul by U.S. President Clinton for a summit of the Organization for Cooperation and Security in Europe (OSCE). (WP, NYT)
The Federal Trade Commission (FTC) grants approval for the proposed merger between oil giants Exxon and Mobil. The $80 billion merger was approved by the FTC after the firms agreed to the largest divestiture of assets ever involved in a merger. The companies will sell over 2,400 retail outlets, mostly in the Northeast, Texas, and California, and a refinery in California. (DJ)
The California Air Resources Board approves a regulatory change that will halve the amount of sulfur allowed in gasoline sold in California from 30 parts per million to 15 parts per million, starting in 2003. The California limit would be half the national limit under a new rule proposed by the Environmental Protection Agency. The current federal sulfur limit for gasoline is 330 parts per million. (WSJ)
The Export-Import Bank drops a proposed $500 million loan to Russia's Tyumen Oil after Secretary of State Madeleine Albright exercises her statutory authority to block the transaction. The loan had been controversial in part because of Tyumen Oil's dispute with BP Amoco over the bankruptcy of Russian oil firm Sidanko, in which BP Amoco owns a major stake. BP Amoco and Tyumen Oil later settled the dispute on December 23. (DJ)
The Panama Canal Zone reverts to Panamanian sovereignty at noon, after nearly a century of American control. More than a half-million barrels of crude oil and petroleum products transit the Canal each day. (DJ)
After nearly two years of construction, ExxonMobil completes the Sable Offshore Energy Project, a $2 billion project to bring natural gas from fields offshore Nova Scotia to the northeastern United States. The fields are estimated to contain 3.5 trillion cubic feet of natural gas. (DJ)
Russian President Boris Yeltsin makes a surprise announcement that he is resigning immediately. Vladimir Putin becomes Acting President, and presidential elections will be held within 90 days, with a date to be set by the State Duma. Russia is the largest exporter of energy in the world. (DJ)
Sources include: Dow Jones (DJ), New York Times (NYT), Wall Street Journal (WSJ), and the Washington Post (WP).
For a more detailed description of 2000 events see below.
Energy companies and countries around the world report that they have passed into the year 2000 without significant problems from the "Y2K Bug." There was concern that the inability of some computers and embedded control systems to recognize the year 2000 could create serious problems. (DJ, WP)
The United Nations Security Council reaches agreement on the appointment of Hans Blix of Sweden, the former head of the International Atomic Energy Agency (IAEA), to lead the new United Nations weapons inspection organization for Iraq. Iraq has indicated that it does not intend to accept the new Security Council resolution. (DJ)
The Federal Trade Commission (FTC) acts to block the proposed merger between BP Amoco and Atlantic Richfield, saying the merger would unduly restrict competition along the West coast of the United States. (WSJ, WP)
The Federal Energy Regulatory Commission (FERC) issues a group of policy changes which extend the deregulation of the interstate natural gas pipeline system begun under Order 636 in 1992. Among the changes is a lifting, for a trial period of 30 months, of the price ceiling on secondary market exchanges of short-term gas pipeline capacity. FERC's lifting of the ceiling is meant in part to encourage gas shippers to use longer-term contracts which would promote market stability. (DJ)
The United States Supreme Court overturns the State of Washington's law establishing state regulation of oil tankers, ruling unanimously that federal laws take precedence. The attempt to impose tougher regulatory standards came in the wake of the 1989 Exxon Valdez disaster in Alaska. (WP, NYT)
New York Mercantile Exchange front-month West Texas Intermediate crude oil futures contract closes at $34.13 per barrel, the highest level in nine years. (WSJ)
Phillips Petroleum announces that it has agreed to purchase Atlantic Richfield's assets in Alaska for $6.5 billion. The sale is being made in an effort to secure approval from the Federal Trade Commission (FTC) for the merger of Atlantic Richfield with BP Amoco. Earlier the same day, the FTC announced that it had suspended its antitrust lawsuit seeking to block the merger, citing progress in talks with the companies involved. (DJ, NYT, WSJ)
EPA Administrator Carol Browner announces that the Clinton Administration intends to push for a phase out of the use of methyl tertiary butyl ether (MTBE) as a gasoline additive. The administration wants Congress to pass legislation which would end the requirement for the use of MTBE in gasoline sold in some smog-prone urban areas, and instead require nationwide use of ethanol. (DJ)
Vladimir Putin is elected president of Russia on the first ballot, winning 53 percent of the popular vote. Putin took office as acting president in December 1999 after the resignation of Boris Yeltsin. (DJ)
After two days of meetings, OPEC oil ministers agree on an increase in oil production of 1.452 million barrels per day by its members, excluding Iran and Iraq. Iraq, has not been subject to OPEC production agreements while under U.N. Security Council sanctions. Iran, though not formally signing on to the agreement, stated its intention to raise its production in order to avoid loss of its market share. This would represent about a 1.7 million barrel per day increase in OPEC production targets, if Iran was included. Several major non-OPEC producers, including Mexico and Norway, also have indicated an intention to raise production. (DJ)
Several Chief Executive Officers (CEOs) of major United States oil companies meet with senior Saudi Arabian officials to discuss possible investments in natural gas and petrochemical projects. The firms represented at the meetings include Chevron, Conoco, ExxonMobil, Marathon Oil, Phillips Petroleum, and Texaco. The Saudi government announces, in conjunction with the meetings, a package of legal changes that will make Saudi Arabia more open to foreign investors. Complete foreign ownership will be allowed for some types of projects, and the maximum corporate tax rate for foreign enterprises will be reduced to 15 percent. (WP)
BP Amoco receives approval from the Federal Trade Commission (FTC) for its $28 billion takeover of Atlantic Richfield Corporation (ARCO). As part of the approval, ARCO has agreed to sell its crude oil production operations in Alaska to Phillips Petroleum in a deal valued at $6.5 billion. (WP, WSJ)
Several sources, including the Washington Post, report a major oil find at the Kashagan field offshore from Kazakhstan, with reserves reportedly greater than 8 billion barrels. If these early reserve estimates prove correct, the additional production volumes could boost chances for construction of the proposed Baku-Ceyhan pipeline. (WP, DJ)
The Environmental Protection Agency (EPA) formally proposes a rule which, if finalized, would reduce allowable sulfur levels in diesel fuel by 97 percent over the next five years. The move is opposed by major refiners. (DJ
The Energy Information Administration releases a study of oil reserves in the Arctic National Wildlife Refuge (ANWR), which currently is off-limits to oil exploration. The study estimates that there are between 5.7 and 16 billion barrels of recoverable oil in the ANWR. (WSJ)
The World Bank executive board votes to approve a loan of $193 million to support a project to build a crude oil pipeline from Chad to the coast of Cameroon. The countries will collect an estimated $2 billion in revenues from the project over a period of 25 years. (DJ)
The Brazilian government conducts an auction of oil exploration and production concessions covering a total of 21 blocks, both onshore and offshore. The auction represents an important step in the opening of Brazil's oil industry to international competition and investment. (NYT)
The United States and Mexico sign a treaty resolving the issue of economic rights over the deepwater "doughnut hole" area in the Gulf of Mexico between the two countries. The agreement is based on measuring distances from each country's coast, and gives the United States rights to 38 percent of the area. (DJ)
The German government announces an agreement with utilities for the complete phaseout of nuclear power. Nuclear power plants will be closed after a lifespan of 32 years. Nuclear power supplies about one-third of Germany's electricity, and the phaseout plan may complicate Germany's plans to reduce fossil fuel consumption to curb greenhouse gas emissions. (DJ)
The Energy Information Administration reports a one-week rise of five cents in the average price of regular gasoline, to $1.681. This is the seventh straight week of increasing prices. Gasoline prices in the Midwest are the nation's highest, at $1.874. (DJ)
OPEC oil ministers, meeting in Vienna, agree to raise crude oil production quotas by a total of 708,000 barrels per day. OPEC's total production quota (excluding Iraq) will rise to 25.4 million barrels per day as of July 1, 2000. The next day, crude oil futures rise, with the New York Mercantile Exchange (NYMEX) August West Texas Intermediate contract closing June 22 at $32.19. (DJ)
The Kuwaiti parliament ratifies a treaty with Saudi Arabia resolving competing claims to offshore mineral rights. The two countries will share revenues from the Khafji, Dorra, and Hout oil and gas fields. The treaty will allow the two governments to begin negotiations with Iran to settle conflicting claims, which have again surfaced as Iran has begun drilling in the Dorra offshore gas field. (DJ)
Italy's ENI signs a deal with Iran worth $3.8 billion for the development of the country's South Pars gas field in the Persian Gulf. The project will take five years to become operational, and will eventually produce 530 million cubic feet of gas per day. (DJ)
Venezuelan President Hugo Chavez wins reelection with 60% of the popular vote. His Patriotic Pole party also wins a controlling majority in the country's new unicameral legislature. (DJ)
Venezuelan President Hugo Chavez meets with Iraqi President Saddam Hussein in Baghdad as part of a tour of OPEC member states. Chavez is the first head of state to visit Saddam Hussein since the 1990 Iraqi invasion of Kuwait. (NYT, WP)
The Energy Information Administration reports that crude oil stock levels in the United States have fallen to their lowest level since 1976. Crude oil for October delivery closes at $32.02 on the New York Mercantile Exchange (NYMEX), up 80 cents. (DJ)
The Department of Energy awards contracts to create a two-million-barrel reserve of heating oil. The oil will be stored in privately owned facilities in Woodbridge, New Jersey, and New Haven, Connecticut. (DJ)
Truck drivers in Britain begin a blockade of oil refineries to protest high fuel prices. The blockade follows a similar protest in France. (DJ)
At a meeting in Vienna, OPEC agrees to raise production quotas by 800,000 barrels per day (to 26.2 million barrels per day, not counting Iraq) in an attempt to push crude oil prices back under $28 per barrel. The quota increases become effective October 1. (DJ)
Oil prices close at $37.20 on the New York Mercantile Exchange (NYMEX), after trading as high as $37.80 during the day's trading session. The price spike comes amid an increase in tensions between Iraq and Kuwait. This level sets a new ten-year high for NYMEX crude oil. (DJ)
President Clinton authorizes the release of 30 million barrels of oil from the Strategic Petroleum Reserve (SPR) over 30 days to bolster oil supplies, particularly heating oil in the Northeast. The release will take the form of a "swap," in which crude oil volumes drawn from the SPR will be replaced by the recipients at a later date. Crude oil for November delivery falls four percent, to $32.68, on the New York Mercantile Exchange (NYMEX). (DJ)
A summit of OPEC heads of government opens in Caracas, Venezuela. The summit is only the second OPEC meeting held at that level. The summit ends on a conciliatory note, with the communique calling for increased dialogue between OPEC and consuming nations. (DJ)
The United Nations Compensation Commission, which handles claims for reparations arising from Iraq's 1990 invasion of Kuwait, approves by consensus a $15.9 billion claim by Kuwait for compensation for lost oil production and damage to oil reserves and equipment. The proportion of revenues from Iraqi oil sales under the "oil for food" program which are used for payment of claims is reduced from 30 percent to 25 percent. Iraq condemns the decision, but states that it will not call a halt to oil exports, as had earlier been feared. (DJ)
Oil prices rise sharply on news of a terrorist attack on an American warship, the USS Cole, in the Yemeni port of Aden, as well as escalating violence between Palestinians and Israeli security forces. November crude oil on the New York Mercantile Exchange (NYMEX) rises $2.81 to close at $36.06 per barrel. Prices for Henry Hub natural gas hit a record high of $5.78 per million British thermal units (BTU) before falling back slightly to close at $5.63 per million BTU. (WSJ)
Chevron agrees to purchase Texaco for $35.1 billion in stock. The deal would create the fourth largest oil and gas company in the world, and follows a general trend toward consolidation among the major oil companies over the last two years. Analysts expect the merger, like other recent mergers, to face intensive antitrust scrutiny, especially as a combined ChevronTexaco would have a heavy share of both refining capacity and retail outlets on the west coast of the United States. (WSJ)
The president OPEC, Venezuelan oil minister Ali Rodriguez, announces that the cartel will raise production quotas by 500,000 barrels per day, beginning November 1st. OPEC's action comes as a result of its "price band" mechanism, which triggers an increase in production quotas when the price of the OPEC Basket of crude oils closes over $28 per barrel for twenty consecutive trading days. Many analysts voice doubt as to whether the OPEC quota increase will lead to an actual increase in production of that magnitude, given the lack of spare production capacity of most OPEC members. (DJ, WP, WSJ)
The United Nations Sanctions Committee approves an Iraqi request to be paid in Euros, rather than United States dollars, for oil exported under the "oil for food" program, which is part of the sanctions regime stemming from Iraq's 1990 invasion of Kuwait. (DJ)
Russia's Lukoil announces that it will purchase Getty Petroleum Marketing of the United States for $71 million. Lukoil eventually intends to switch Getty's 1,300 retail outlets in the Northeastern and Middle Atlantic states to the Lukoil brand name. The purchase represents the first takeover of a publicly traded American company by a Russian firm. (DJ)
OPEC oil ministers, meeting in Vienna, announce a decision to put any further production increases on hold until their next meeting scheduled for January 17, 2001. The move effectively ends OPEC's "price band" mechanism, which called for automatic increases in production quotas of 500,000 barrels per day when the price of the OPEC Basket of crude oils remained over $28 per barrel for 20 consecutive trading days. OPEC also selects the Venezuelan oil minister, Ali Rodriguez, as its new Secretary General. He will formally take over from Nigeria's Rilwanu Lukman on January 1, 2001. (NYT, WSJ)
Iraq's State Oil Marketing Organization (SOMO) demands that companies lifting cargoes of Iraqi crude oil begin paying a fifty cent per barrel surcharge starting on December 1, 2000. The surcharge would be paid directly to the Iraqi government rather than being channeled into the account administered by the United Nations under the "oil for food" program, and would constitute clear violation of sanctions. The Iraqi move leads to concerns over a possible Iraqi cutoff of oil supplies beginning December 1. (DJ)
The sixth Conference of Parties (COP-6) of the Kyoto Protocol in The Hague ends without an agreement between member states on implementing cuts in emissions of greenhouse gases. One of the main issues under negotiation at the conference was the possibility that member states could claim credit for "carbon sinks," forests and farmland which absorb carbon dioxide, as part of their overall commitment to reducing carbon dioxide emissions. Another main issue was "emissions trading," which would allow member states to purchase "emissions credits" from other member states whose carbon dioxide emissions were below their targets. (WP, WSJ, NYT)
Vicente Fox is inaugurated as Mexico's president. Ernesto Martens takes office as the new Minister of Petroleum. (DJ)
California utilities are forced to cut off electricity supplies to some "interruptable" customers due to a supply shortage. California has suffered shortages and high wholesale electricity prices since May 2000. The immediate shortage stems, in part, from a reduction in electricity imports from the Pacific Northwest as a result of cold weather in the area. Other problems include: gas supply problems, low availability of hydroelectric and nuclear generating capacity, and high power demand. (DJ)
The United Nations Security Council approves a six month extension to the Iraq "oil for food" program. (DJ)
Ukraine permanently shuts down the last reactor at its Chernobyl nuclear power plant, which gained notoriety for a major accident and radiation leak in 1986. The facility will still be the location of a major cleanup effort, as Ukraine tries to contain continuing radiation leakage from the containment structures around the reactors damaged in the accident. (DJ)
The Environmental Protection Agency (EPA) announces new regulations which will drastically reduce the allowable sulfur content in diesel fuel in the United States. The new diesel sulfur standard will be 15 parts per million (PPM). Oil industry trade groups have opposed the new standard. (DJ)
Natural gas prices in the United States surge above $10 per million British Thermal Units (BTUs) first time ever in response to cold weather and stockdraws reported by the American Gas Association (AGA). Henry Hub natural gas closes at $9.978, after falling slightly from its intraday peak price. (DJ)
Venezuelan President Hugo Chavez appoints Alvaro Silva Calderon to replace Ali Rodriguez as Minister of Petroleum. Calderon had previously served as a deputy minister. Rodriguez had recently been chosen as the new OPEC Secretary General. Both will assume their new posts effective January 5, 2001. (DJ)
Saudi oil minister Ali Naimi says that OPEC will cut production when ministers meet in Vienna on January 17, 2001. Oil prices have fallen sharply in recent weeks, with the OPEC basket reaching $21.50 per barrel on December 25th, down one-third from highs reached in October 2000. Despite the recent decline, average oil prices for 2000 were the highest (not adjusted for inflation) in seventeen years. (DJ)
Sources include: Associated Press (AP), Dow Jones (DJ), Los Angeles Times (LAT), New York Times (NYT), Oil Daily (OD), USA Today (USAT), Wall Street Journal (WSJ), Washington Post (WP), World Markets Online (WMO).
For a more detailed description of 2001 events see below.
The White House announces that President Clinton will not designate the Arctic National Wildlife Refuge (ANWR) as a national monument prior to his departure from office. Environmentalist groups had been pressing for national monument status for the ANWR to prevent oil drilling. (DJ)
OPEC agrees at a meeting of ministers in Vienna, to reduce members' production quotas by 1.5 million barrels per day. The move comes in response to OPEC members' concerns about declining prices. Analysts expect the actual production cuts to total somewhat less than 1.5 million barrels per day, as some OPEC members had quotas above their actual production capacity. (NYT, WP)
George W. Bush is sworn into office as the President of the United States. Later in the day, the Senate votes to confirm Spencer Abraham as the new Secretary of Energy. (WP)
The United States Supreme Court declines to consider an appeal by five major oil companies against Unocal's patent on production of cleaner "reformulated" gasoline sold in California, allowing a lower court ruling in favor of Unocal to stand. The ruling may eventually have effects beyond the California market, as tighter environmental standards for fuels take effect across much of the country.(DJ, WSJ)
The Environmental Protection Agency (EPA) announces that it intends to proceed with implementation of tighter restrictions on sulfur content in diesel fuel, which were proposed by the Clinton administration. The rule, which will require a reduction of 97% in sulfur content by 2006, has been opposed by many in the refining industry. (DJ)
Tests in recent days confirm the world's largest oil find in three decades in the Kashagan field in the Caspian Sea. Kashagan is a single reservoir at least 25 miles across, and two-and-a-half times the size of the nearby Tengiz field. (WSJ)
United States Secretary of Energy Spencer Abraham formally establishes the Northeast Home Heating Oil Reserve, a two million barrel government-owned reserve to be used in emergency circumstances. (US Department of Energy)
The world's largest oil rig, located 80 miles offshore Brazil and operated by the Brazilian state oil company Petrobras, suffers three explosions. This one platform accounted for more than 5% of Petrobras' total production. On March 20 Petrobras' Platform-36 sinks with 400,000 gallons of fuel and crude oil aboard. (WSJ)
OPEC (Organization of Petroleum Exporting Countries) decides to cut output by 4% or 1 million barrels per day, effective April 1. The cut is aimed at preventing a price collapse in a time of weakening demand. (NYT)
Kazakhstan's Prime Minister opens an oil pipeline from the giant Tengiz field to the Russian port of Novorossiisk on Monday, giving the Central Asian producer its first direct link to international markets. The 900-mile pipeline will carry 600,000 barrels of oil per day by the end of the year, and eventually 1.5 million barrels per day. (NYT)
A letter from U.S. Department of the Interior Secretary Gale Norton to Florida Governor Jeb Bush is released, stating that the Bush administration has decided to go ahead with plans to auction six million acres of potentially oil-and-gas-rich seabed in the Gulf of Mexico. The U.S. Department of the Interior estimates that the area contains 396 million barrels of oil and 2.9 trillion cubic feet of natural gas. (USAT)
U.S. Vice-President Dick Cheney previews the administration's energy plan in a speech in Toronto, Canada. Cheney, stating that conservation alone cannot solve America's energy needs, calls for increased domestic production of fossil fuels and increased usage of nuclear power to meet America's energy demand. He also calls for construction of new coal and gas power plants, as well as upgrading and expanding of the country's transmission grid. (WSJ, USAT)
President Bush issues the administration's new energy policy. Among the plan's 105 specific recommendations are calls for reduced regulations to encourage more oil, gas, and nuclear production, tax incentives to boost coal output, and other tax incentives to promote conservation and alternative fuels. The plan also calls for increasing energy assistance to low-income households and for making the electricity grid more interconnected, both domestically and with Mexico and Canada. (LAT, WP, WSJ)
Saudi Arabia selects the eight foreign companies to take part in its "Gas Initiative," three core venture gas projects that have an anticipated worth of $25 billion. They are: Core Venture 1: ExxonMobil (lead), Shell, BP, and Phillips; Venture 2: ExxonMobil (lead), Occidental and Enron (a joint bid); Venture 3: Shell (lead), TotalFinaElf, and Conoco. The Gas Initiative is the first major reopening of Saudi Arabia's upstream hydrocarbon sector since nationalization in the 1970s. (WMO)
The Enron Corporation's power generating venture in India, the Dabhol Power Company, serves formal notice that it will terminate its power supply contract and pull out. The $2.9 billion Dabhol project represents the single largest foreign investment in India. The gas-fired plant already had a generating capacity of 740 megawatts and another 1,444 megawatts was scheduled to go on line in June. (WSJ)
Natural gas futures plunge 6% to a 10-month low on speculation that growing U.S. inventories will help power plants meet summer demand for air-conditioning. The price for June delivery fell 23.5 cents, to $3.738 per million British thermal units on the New York Mercantile Exchange (NYMEX). Natural gas prices had reached a high of $10.10 per million Btu on December 27, 2000, but then fell sharply beginning in late January 2001. (LAT)
Iraq announces that it will halt crude oil exports in response to a United Nations Security Council resolution, approved May 31, that extends the oil-for-food program by only one month, instead of the normal six-month period. The oil-for-food program affects revenues from Iraqi sales of about 2.1 million barrels per day. However, it has been reported Iraq will continue to sell several hundred thousand barrels per day to its neighbors through sales that are outside of the oil-for-food program. OPEC announces that, if need be, it will make up for lost Iraqi production. Oil prices do not change greatly in response to either announcement. (NYT)
OPEC ministers agree to leave the cartel's oil production quotas unchanged for at least a month, until a scheduled emergency meeting July 3. OPEC had been expected to leave the quotas unchanged until September, but Iraq's suspension of oil exports on June 3 created uncertainty.(LAT)
BP announces that it will build a new $600-million platform offshore Trinidad that is expected to double the company's production of natural gas there by 2004. BP currently produces one billion cubic feet per day in Trinidad. (DJ)
Saudi Arabia announces that it has seized ownership, effective June 7, of the 1.6-million barrel-per-day IPSA pipeline that had carried Iraqi crude oil to the Saudi Red Sea port of Mu'jiz prior to Iraq's invasion of Kuwait. The seizure includes pumping stations, storage tanks, and the maritime terminal. Saudi Arabia claims that the asset was confiscated as a result of aggressive Iraqi actions. Iraq insists that it still owns the pipeline. (DJ)
ExxonMobil and Qatar Petroleum sign a letter of intent for a natural gas to liquids (GTL) project that would be the largest in the world. The plant would have a production capacity of 80,000 to 90,000 barrels per day, and would use about 640 million to 720 million cubic feet of natural gas per day as feedstock. The project is expected to cost between $1.6 billion and $1.8 billion to construct. (OD)
ENI of Italy signs a $550 million contract to develop Iran's Darquain (Darkhovin) field, with expected production of 160,000 barrels per day. This deal may be seen as a test of the U.S. government's resolve to enforce sanctions against foreign companies investing in Iran's energy sector. (LAT)
U.S. Secretary of the Interior Gale A. Norton states that the Bush Administration will seek to let oil companies drill on about 1.5 million acres of the Gulf of Mexico out of the 6 million originally under consideration. This removes acreage closest to the shores of Alabama and Florida. (NYT)
The United Nations (U.N.) Security Council, facing an almost certain Russian veto, agrees to postpone indefinitely a vote on the U.S.-led "smart sanctions" package for Iraq, despite support by the four other council members. Instead, it will extend, most likely through the end of the year, the program that allows Iraq to export oil and import food and other commodities under U.N. supervision (WSJ)
At a meeting of its oil ministers, OPEC agrees to maintain current production quotas. Ministers indicate that, if Iraqi oil returns to the market, they may cut production in response to maintain their desired level of prices. (WP)
Australia and East Timor sign an agreement to share royalties from oil and natural gas production in the Timor Sea, which separates the two countries. The deal supercedes the former agreement between Australia and Indonesia that divided royalties 50-50, with a new arrangement of 90% for East Timor and 10% for Australia. This agreement clears the way for $7.25 billion in proposed energy projects for the area and further downstream projects for Australia. (WSJ)
Amerada Hess agrees to acquire Triton Energy for $2.7 billion in cash. Both companies' boards have approved the transaction. Triton Energy is an international exploration and production company with major oil and natural gas assets in West Africa and Latin America. Triton's total proved reserves are estimated at 293.5 million barrels of oil equivalent. Amerada Hess' total proved reserves are estimated at 1.1 billion barrels of oil equivalent. (DJ)
Iraq resumes oil exports, ending a 5-week halt in protest of a U.S. and British-sponsored United Nations (U.N.) Security Council resolution that would have overhauled U.N. sanctions, after this resolution did not come to a vote (see July 2). The oil-for-food program will be extended for five months. (NYT)
An Iranian warship in the Caspian Sea threatens a BP oil exploration ship off the coast of Azerbaijan. This prompts BP to suspend exploration in the area. The two vessels were in the Araz-Alov-Sharg field 90 miles southeast of Baku. Iran claims the field is in Iranian waters. Caspian Sea region countries have been unable to agree on a division of the Sea. (NYT)
Faced with declining oil prices, OPEC ministers agree to cut crude oil production quotas by about 4%, or one million barrels per day. The cut will take effect September 1, and is aimed at maintaining the price of the OPEC basket of crude oils at around $25 per barrel. Crude oil futures for September delivery climbed 47 cents per barrel, to $26.78, on the New York Mercantile Exchange (NYMEX) after the announcement. (DJ)
Former Indonesian President Abdurrahman Wahid leaves the presidential palace and the country, ending a 2-day standoff and clearing the way for his successor, Megawati Sukarnoputri, the former vice-president, to take over. The National Assembly had voted on July 23 to remove Wahid from office and install Sukarnoputri in the presidency. (AP)
U.S. President George Bush signs into law the Iran and Libya Sanctions Act (ILSA) Extension Act of 2001. This Act provides for a 5-year extension of ILSA with amendments that affect certain of the investment provisions. ILSA sanctions foreign companies that provide new investments of over $40 million for the development of petroleum resources in Iran or Libya, or that violate existing United Nations prohibitions against trade with Libya. The law allows the president to waive sanctions against a foreign company if doing so is deemed to be in the U.S. national interest. U.S. companies are prohibited by U.S. law from engaging in any commercial or financial transactions with Iran or Libya. (NYT)
The United States and Great Britain reject a proposal by United Nations Secretary General Kofi Annan to permit the Iraqi government to use $1 billion per year to fund infrastructure improvements and to increase oil production capacity. It has been suggested that without infrastructure investment, Iraq's production could fall significantly over the next few years. (WMO)
The U.S. Federal Trade Commission approves Chevron's bid to buy Texaco. Texaco must sell its Equilon Enterprises and Motiva Enterprises units in order to complete the $39-billion deal. The new company, ChevronTexaco, will have a market value of over $100 billion, assets of $83 billion, net proven reserves of 11.5 billion barrels of oil equivalent (boe), and daily production of 2.7 million boe.(DJ)
The largest terrorist attack in world history occurs as 2 hijacked airplanes crash into the twin towers of the World Trade Center in New York City, one hijacked plane crashes into the U.S. Department of Defense's Pentagon headquarters, and another hijacked plane crashes into a rural part of Pennsylvania. The World Trade Center is destroyed, and the Pentagon is heavily damaged. Thousands of people die and economic damage is estimated to be in the billions. Aviation is halted in the United States and all major trading markets (including energy) are closed for the remainder of the week. The U.S. government blames the attack on Osama Bin Laden's terrorist network (NYT)
Relative calm returns to world oil markets as U.S. retail gasoline prices return to normal levels and Brent crude oil futures fall back to $28.02 per barrel for October delivery after spiking to above $31.00 in the aftermath of the September 11 attacks. Also, energy trading by Houston energy companies resumes and limited commercial aviation starts. (WMO)
Major trading markets in the United States, including the New York Stock Exchange and the New York Mercantile Exchange (NYMEX), reopen for the first time since September 11. (NYT)
Crude oil and petroleum products futures fall to their lowest levels in nearly two years amid fears that a recession will reduce energy demand. At the New York Mercantile Exchange (NYMEX), crude oil set for October delivery falls $3.96 to $22.01 per barrel, and crude oil for November delivery falls $3.82 to $22.44 per barrel. Over the past six trading sessions crude oil and gasoline futures have fallen more than 26% and heating oil futures have fallen nearly 29%. (NYT, DJ)
At its two-day meeting in Vienna, OPEC decides to keep its production quotas unchanged at 23.2 million barrels per day, despite crude oil being at its lowest price levels since 1999. (NYT)
Crude oil resumes flowing through the trans-Alaska pipeline after workers welded shut a bullet hole that caused 260,000 gallons of oil to spill out. The pipeline, which carries about 17% of the United States' oil production, had been shut down on October 4 after being pierced with a bullet in an apparent act of criminal mischief. (DJ)
The first tanker loading of the new $2.5-billion Kazakh-Russia Pipeline takes place. This is a trial run that informally inaugurates the pipeline. Initial capacity of the pipeline is expected to be 28.2 million metric tons per year (around 560,000 barrels per day). The Caspian Pipeline Consortium (CPC), led by ChevronTexaco, runs the pipeline. (Reuters)
The U.S. Coast Guard lifts a ban on liquefied natural gas (LNG) tankers entering Boston Harbor to makes deliveries to Distrigas' Everett LNG terminal that had been imposed on September 26 in response to the terrorist attacks of September 11. LNG regasified at the Everett terminal normally provides 15%-20% of the natural gas that heats homes and businesses in New England, with the percentage rising to 35% on the coldest days. On October 26, the Mayor of Boston asks a federal court to prevent tankers from entering because he claims there are inadequate disaster response plans. (Reuters)
Crude Oil for November delivery falls to its lowest level since August 1999 on the New York Mercantile Exchange (NYMEX). Light, sweet crude falls 50 cents per barrel to settle at $21.31 per barrel. Brent crude for December delivery closed at $20.36 at London's International Petroleum Exchange (IPE), down 37 cents per barrel. Poor economic prospects in the next few months, and OPEC's inability to respond so far are seen as factors contributing to the sliding prices of crude oil. (OD)
ExxonMobil announces that a consortium it leads will spend $4 billion over 5 years to develop large offshore oil and natural gas fields in Russia's far eastern Sakhalin region. The fields are estimated to contain 2.3 billion barrels of oil and 17 trillion cubic feet of natural gas. ExxonMobil will be the operator and own a 30% interest in the fields. Sakhalin Oil and Gas Development of Japan will own 30%, ONGC Videsh of India 20%, Sakhalinmorneftegas-Shelf of Russia 11.5%, and RN-Astra of Russia 8.5%. The total investment could grow to $12 billion over the 30-40 year project life. This is the single largest foreign investment in Russia, as Russia continues to undertake market reforms. (WSJ, NYT)
Crude oil for December delivery on the New York Mercantile Exchange (NYMEX) falls to a two-year low after OPEC members warn that a downward price spiral could occur if major non-OPEC oil exporters do not reduce oil production. The NYMEX price settles at $19.92 per barrel, down 10 cents per barrel from the low of November 5, and the first time it has been under $20 per barrel since mid-1999. (NYT)
Enron, the world's largest electricity and natural gas trading company, agrees to an all-stock takeover by former competitor Dynegy. ChevronTexaco, a 27% stakeholder in Dynegy, will immediately inject $1.5 billion cash into Enron, and an additional $1 billion into the combined entity. The merged company will be called Dynegy Inc., and Dynegy executives will occupy all top positions. The deal is expected to take at least six months to close. (Note: On November 28, 2001, Dynegy withdraws from the merger deal) (WMO)
An agreement is reached at talks in Marrakech, Morocco, on rules for implementation of the Kyoto climate change treaty. Rules for joint implementation projects, the Clean Development Mechanism, and funding for less developed countries are elaborated. The United States does not participate actively in negotiations or agree to the rules. (OD)
U.S. President George Bush orders that the Strategic Petroleum Reserve be filled to capacity over the next few years. The reserve has a capacity of about 700 million barrels of oil, and now contains about 545 million barrels of oil. The Strategic Petroleum Reserve is intended, in the short run, to smooth out price spikes and shortages caused by a supply disruption. (Reuters)
At its meeting in Vienna, Austria, OPEC announces that it intends to cut its crude oil output quotas by 1.5 million barrels per day effective January 1, but only if non-OPEC producers cut their output by 500,000 barrels per day as well. The production cuts are an effort to steady or raise world oil prices, which have fallen markedly since September. (DJ)
Phillips Petroleum and Conoco agree to merge into a new company to be called ConocoPhillips, which would be the third-largest oil and natural gas company in the United States, and the sixth-largest in the world, in terms of production. The company also would be the largest gasoline retailer in the United States and the fifth-largest refiner in the world. Combined total reserves of the new company would be 8.7 billion barrels of oil equivalent, and production would be 1.7 million barrels of oil equivalent per day. The new company expects to be able to compete more effectively with its larger rivals and to achieve significant cost savings. The new company will be based in Houston, Texas. (NYT)
The United Nations Security Council unanimously approves a resolution extending the Oil-for-Food program in Iraq for another six-month period. This resolution allows Iraq to sell unlimited quantities of oil on the condition that the proceeds are used to buy food, medicine, and other humanitarian goods, and to pay war reparations. This resolution also calls on members of the Security Council to agree by May 31, 2002, on a list of "dual use" items that would require United Nations approval before Iraq could import them through the program. (DJ, WP)
Enron files for Chapter 11 bankruptcy in the Southern District of New York for 14 affiliated entities, including Enron, Enron North America, Enron Energy Services, Enron Transportation Services, Enron Broadband Services, and Enron Metals & Commodity Corporation. Enron was formerly the world's largest electricity and natural gas trading company, and the seventh-largest publicly-traded energy company in the world. Enron also files a $10 billion lawsuit against Dynegy, alleging breach of contract, in connection with Dynegy's November 28 termination of its proposed merger with Enron. (DJ)
Crude oil prices on the New York Mercantile Exchange (NYMEX) record one of their largest one-day jumps of the year as traders become convinced that OPEC will follow through on production cuts. Prices per barrel for February delivery settle at $20.27 per barrel, an increase of $1.65, or 8.4% higher than the December 21 closing price (the last day of trading before the holiday weekend). Also contributing to the price increase was the return of cold weather to the northeastern United States and forecasts that show that the cold weather pattern may continue. Nevertheless, prices are still considerably lower than one year ago. (NYT)
OPEC oil ministers meeting in Cairo agree to reduce their crude oil output quotas by a combined 1.5 million barrels per day (about 6.5%) for a six-month period beginning January 1, 2002. OPEC ministers also announce that they will meet again in March. OPEC received commitments for 462,500 barrels per day of the 500,000 barrels per day in cuts that it had requested from non-OPEC exporters, close enough to the target for OPEC to go ahead and implement its concomitant cuts. This month, Russia announced an export cut of 150,000 barrels per day on December 5. Oman announced a cut of 25,000 barrels per day on December 11, and raised it to 40,000 barrels per day on December 20. Angola announced a cut of 22,500 barrels per day on December 14. Norway announced a cut of 150,000 barrels per day on December 17. Mexico had already announced an export cut of 100,000 barrels per day in November. (DJ, Reuters)
Sources include: Associated Press (AP), Dow Jones (DJ), Los Angeles Times (LAT), New York Times (NYT), Oil Daily (OD), USA Today (USAT), Wall Street Journal (WSJ), Washington Post (WP), World Markets Research Center (WMRC).
For a more detailed description of 2002 events see below.
The OPEC crude oil production quota cuts of 1.5 million barrels per day, announced on December 28, officially go into effect for six months. Crude oil production or export cuts of 462,500 barrels per day by five non-OPEC oil exporters also go into effect. (Reuters)
U.S. Secretary of Energy Spencer Abraham announces that the Partnership for a New Generation of Vehicles program, started in 1993 in an effort to develop mass-produced vehicles that would get 80 miles per gallon of gasoline by 2004, will be replaced by a new program called Freedom Car. The Freedom Car program will emphasize developing fuel-cell vehicles, powered by oxygen and hydrogen, by an unspecified later date.(WP, NYT)
The U.S. Department of Energy opens the bidding process for oil companies to deliver 22 million barrels of crude oil to the Strategic Petroleum Reserve instead of making cash royalty payments. The royalty-in-kind oil is the first phase of the Bush administration's plan, announced last November, to fill the Strategic Petroleum Reserve to its capacity of 700 million barrels. (Reuters)
U.S. President George Bush delivers his State of the Union address. In his speech he identifies Iraq, Iran, and North Korea as part of an “axis of evil” that supports terrorism. President Bush also states, “The United States of America will not permit the world’s most dangerous regimes to threaten us with the world’s most destructive weapons.” (NYT)
Iraq says that it will not allow United Nations (U.N.) arms inspectors to return to Iraq. Iraqi Vice President Taha Yassin Ramadan states, "There is no need for the spies of the [U.N.] inspection teams to return to Iraq since Iraq is free of weapons of mass destruction." The United States has hinted that actions may be taken against the Iraqi government if U.N. arms inspectors are not allowed to return. (Reuters)
At a joint news conference, oil ministers of major non-OPEC oil exporters Mexico and Norway announce that they plan to maintain their respective export and production cuts through the end of the second quarter of 2002. This same day, non-OPEC Persian Gulf exporter Oman announces that it is willing to maintain its relatively small production cut through the end of the year. (Reuters)
Light, sweet crude oil for April delivery on the NYMEX closes at $23.71, the highest price since September 21, 2001, when oil prices had temporarily spiked because of the September 11 terrorist attack. Oil prices have been on the rise because of OPEC and non-OPEC production cuts, an improving U.S. economy, and concern over U.S. intentions toward Iraq. (OD)
Shareholders of Conoco and Phillips Petroleum approve a proposed $15.6-billion merger of the two major oil companies. The new company would be the third-largest oil company in the United States and the sixth-largest investor-owned oil company in the world. The company would also be the largest oil refiner in the United States. Joint reserves of the two companies are about 8.7 billion barrels of oil equivalent. (AP)
OPEC oil ministers meeting in Vienna decide to maintain their quota restrictions, established January 1, 2002, through the end of the second quarter of the year. On January 1, 2002, OPEC cut its crude oil production quotas by an aggregate 1.5 million barrels per day. (NYT)
Russian Prime Minister Mikhail Kasyanov announces that Russia will extend its voluntary crude oil export cuts of 150,000 barrels per day through the end of the second quarter of 2002. Russia, the biggest non-OPEC oil exporter, had agreed to implement the cuts beginning on January 1, 2002 as a cooperative move with OPEC. Many analysts question whether Russia has complied at all with its pledged cuts, and some data actually points to Russian exports rising since the beginning of January. (NYT)
India liberalizes its oil and natural gas sector by putting in place a series of market reforms, including: the end of government-fixed prices for gasoline and diesel; the end of subsidized cooking gas and kerosene prices; market competition for state-run downstream companies; and assigning the Oil Ministry the role of energy watchdog. (Reuters)
Royal Dutch/Shell agrees to buy Enterprise Oil for $5 billion in cash. This will increase Royal Dutch/Shell's production in the North Sea by 30% and overall production by 6%, according to the company. The acquisition will also add 1.5 billion barrels of oil to Royal Dutch/Shell's reserves. The company is also assuming $1.15 billion in Enterprise's debt. (NYT)
Venezuela sends out its first commercial shipment of 550,000 barrels of synthetic crude to a U.S. Gulf Coast refinery. Venezuela's Sincor heavy crude upgrade plant, which was inaugurated last month, refines ultra-heavy crude oil into 32 degree API syncrude. (Reuters)
The Angolan army signs a ceasefire accord with rebels of the National Union for the Total Independence of Angola (Unita). The agreement includes amnesty for former Unita soldiers and their demobilization and reintegration into society. The civil war, which began in 1975, has killed thousands of Angolans and taken much of the government's revenues from Angola's substantial oil production and exports. (NYT)
Thousands of workers at Venezuelan state oil company PdVSA stay home, close gates of facilities, and engage in protests. This is the largest disruption of PdVSA's operations in 2002, though it is not a full-blown strike by all PdVSA workers. Oil production and refining slows, and two of Venezuela's five main oil export terminals are unable to operate. The government of President Hugo Chavez threatens to militarize PdVSA's operations. (AP)
Iraq announces that it will halt its "oil-for-food" exports for 30 days as a "gesture of support" for the Palestinians' struggle with Israel. Iraq also requests that other OPEC countries do not raise production to make up for lost Iraqi exports. Iraqi "oil-for-food" exports had averaged about 1.7 million barrels per day to date in 2002. Major Arab OPEC exporters Saudi Arabia, Kuwait, and Qatar have expressed unwillingness to join in any embargo. (WSJ)
A general strike begins in Venezuela, shutting down many stores and factories and nearly halting oil production, refining, and export terminals. On April 12, Venezuelan President Hugo Chavez is ousted by the country's military after three consecutive days of general strikes during which oil production, refining, and exports-the mainstays of the Venezuelan economy-were seriously affected. Pedro Carmona is named interim President of Venezuela by the military high command. PdVSA operations that had been halted start up again, but rioting begins again the following day. On April 14, Interim President Carmona announces that he has resigned following large, and sometimes violent, pro-Chavez protests and a lack of support among many military officers. Several hours later, Hugo Chavez returns to power in Caracas and states that he never resigned the presidency. (WP, WSJ, Reuters, AP)
A summit of the leaders of the five littoral states of the Caspian Sea ends without an agreement on how to divide the Caspian's resources among the five countries. (Reuters)
Iraq starts pumping crude oil to its export terminals, following the country's announcement on May 5 that it would end its oil export embargo after one month, i.e., May 8. Iraq also submits price proposals for May crude oil loadings to the United Nations for approval. (Reuters)
The United Nations (U.N.) Security Council approves an overhaul of the "oil-for-food" program for Iraq that makes use of an extensive list of "dual-use" goods (goods that could have a military as well as civilian use). Iraq will be able to use its oil revenues, which go into a U.N. escrow account out of which suppliers exporting products to Baghdad are paid, in order to purchase items not on the list. The resolution renews the U.N. program until November 25, 2002. On May 16, official Iraqi news agency INA announces that it will comply with the new six-month tranche of the "oil-for-food" program voted by the U.N. Security Council on May 14, despite condemning the Security Council resolution in the same statement. Iraq officially accepts the U.N. proposal on May 29. (Reuters)
Russian Prime Minister Mikhail Kasyanov announces that Russia will not extend its 150,000-barrel-per-day crude oil export cut, agreed to with OPEC, into the third quarter of 2002 and furthermore, that Russia will gradually phase out the export cut in the remainder of the second quarter of 2002. Russia is the world's second-largest oil exporter. (WMRC)
U.S. President George Bush and Russian President Vladimir Putin agree to a major new energy partnership that will entail more investment from the United States in Russia's oil and natural gas sector. The leaders also agree to joint efforts to improve ports, pipelines, and refineries in order to expedite export flow. This could mean more Russian hydrocarbon exports to North America. (NYT)
The U.S. government decides to buy back leases for oil and natural gas drilling on the Florida coast and in the Everglades for $235 million because of environmental concerns. Secretary of the Interior Gale Norton has asserted that there are only 40 million barrels of oil equivalent in the area to be protected, about two days' worth of U.S. consumption. (OD)
Norway's Oil and Energy Ministry states that, "The Norwegian government has decided not to extend the restriction on oil production into the second half of 2002." Norway had agreed with OPEC to reduce its crude oil production by 150,000 barrels per day for the first two quarters of 2002. (Reuters)
Russia formally announces that it will raise its crude oil exports by 150,000 barrels per day in the third quarter of 2002 and thereby, end its agreement with OPEC to limit crude oil exports by 150,000 barrels per day for the first and second quarter of 2002. Many analysts believe that Russia has already been exporting near capacity for some months. (Reuters)
OPEC ministers meeting in Vienna decide to leave their combined output quota, excluding Iraq, unchanged at 21.7 million barrels per day for the third quarter of 2002. It is estimated that OPEC-10 countries (i.e. excluding Iraq) are producing between 1 million and 1.5 million barrels per day above the quota agreement. OPEC members also agree to appoint Venezuelan Oil Minister Alvaro Silva as the cartel's new secretary general, replacing Ali Rodriguez, who will now head Venezuelan state oil company PdVSA. At the meeting, Algeria requests a larger share of OPEC's total quota, but the issue will not be taken up until the OPEC Board of Governors meeting in August. (NYT, DJ)
Mexico announces that it will continue its agreement with OPEC to limit crude oil exports to 1.66 million barrels per day into the third quarter of 2002. A statement from the Energy Ministry said that the decision was "based on national interests and conditioned upon the future conduct of the world oil market." Mexico is among the five largest oil exporters to the United States. (Reuters)
An official at Oman's Oil and Gas Ministry announces that the non-OPEC country will continue its 40,000-barrel-per-day production cut into the third quarter of 2002. Oman had agreed with OPEC to cut production 40,000 barrels in the first and second quarters of 2002. (Reuters)
The California State Legislature passes a bill that limits vehicle emissions of carbon dioxide, the first such bill to pass a state legislature. The specific regulations, to be developed by 2005, would take effect on 2009 model-year vehicles. The limits, enacted because of carbon dioxide's putative effect on global climate change, are likely to have significant repercussions beyond California because the State represents some 10% of the U.S. automobile market. Governor Gray Davis signs the bill into law on July 22. (LAT)
The supertanker Astro Lupus arrives offshore of the Port of Houston, carrying the first direct shipment of Russian crude oil to the United States. The oil, about 2 million barrels of Urals Blend, was exported by Yukos, Russia's second-largest producer and destined for two ExxonMobil refineries in Texas. Yukos hopes to make six such shipments this year. (NYT, WMRC, OD)
The U.S. Department of Energy announces that it intends to increase the rate at which the Strategic Petroleum Reserve (SPR) is filled by increasing the "royalty-in-kind" exchange program by 40,000 barrels per day. Under the "royalty-in-kind" program, oil companies deposit oil that is produced on federal leases in the SPR as a form of payment for those leases. (OD)
ChevronTexaco announces the resumption of crude oil exports from Nigeria after protests and a fire caused the company to declare force majeure on its exports for a ten-day period. Between 300,000 and 400,000 barrels per day were temporarily halted. ChevronTexaco has not fully resolved the issues between the company and protestors who disrupt operations. Before the fire, about 110,000 barrels per day were interrupted at times by protestors. Nigeria's army moved in to prevent protestors from damaging equipment, but declined to remove the protestors from the facilities. (DJ)
The U.S. Office of Management and Budget approves U.S. Environmental Protection Agency regulations that authorize new penalties for manufacturers of diesel engines that exceed various pollutant levels, to take effect October 1, 2002. The new rules are part of long-term plan, begun in the previous administration, to require diesel trucks and buses to reduce emissions by 90% by 2007. (NYT)
Mexican Energy Minister Ernesto Martens announces that Mexico will continue to limit its crude oil exports to 1.66 million barrels per day, in coordination with OPEC, although Mexico is not a member of the cartel. Mexico is the only major non-OPEC exporter cooperating with the cartel, after Norway and Russia ended their cooperation earlier in the year. (Reuters)
The NYMEX near-month crude oil futures price closes above $30 per barrel for the first time since February 2001. Concern over possible conflict in Iraq, OPEC quotas, and declining crude oil and product stocks are among the factors leading to a nine-straight-session rise in NYMEX prices. (Reuters)
U.S. Vice President Cheney states that a new round of U.N. weapons inspections in Iraq is likely to be insufficient to guarantee that Iraq has ended its biological, chemical, and nuclear weapons programs. That same day, Iraqi Vice President Ramadan declares that future inspections by the United Nations are a "waste of time," as the U.S. administration has already decided upon "changing the regime by force." (WP)
The International Energy Agency's (IEA) monthly oil market report notes that global oil stock levels have fallen to "uncomfortably low" levels that could lead to higher prices and more price volatility in the coming months. According to the IEA, OECD crude oil inventories fell by 790,000 barrels per day in August compared with July. (DJ)
The European Union (EU) releases a plan for coordination of member countries' crude oil reserves, including raising the minimum level of national oil stocks to 120 days of consumption from 90 days and putting one third of reserves into a stockpile which could be drawn on in times of crisis. The European Commission would have the power to release oil from the stockpile onto the market if prices rose to a level that, if sustained for a year, would raise the EU's external oil bill by an amount equal to 0.5% of its gross domestic product. Energy Commissioner Loyola de Palacio predicts that the new system will be in place in 2007. (Reuters)
U.S. President George Bush addresses the United Nations. President Bush declares in regard to Iraq that "The Security Council resolutions will be enforced -- the just demands of peace and security will be met -- or action will be unavoidable…and a regime that has lost its legitimacy will also lose its power." (Reuters
The World Bank approves lending for a controversial oil pipeline between Chad and Cameroon. The bank is funding $140 million of the $4 billion project to develop the oil fields of Doba in southern Chad and construct a 665-mile pipeline to an offshore oil-loading facility on Cameroon's Atlantic coast. (Reuters)
Work begins on the $2.9 billion Baku-Ceyhan Pipeline, which will transport oil from the landlocked Caspian Sea to Turkey's Mediterranean coast. The BP-led pipeline will be 1,110 miles long when completed in 2005. Work begins on the Turkish section on September 26. (Reuters)
According to United Nations officials and representatives of the oil industry, Iraq has stopped attempting to impose illegal surcharges on oil it sells through the United Nations' "Oil-for-Food" program. Though the surcharges have provided funds to the regime, Iraq may be attempting to cooperate more closely with U.N. resolutions in the face of increased scrutiny by the United States and Britain. (DJ)
OPEC, meeting in Osaka, Japan, decides that its ten members subject to quotas (i.e. excluding Iraq) will not raise their current 21.7-million-barrel-per-day production ceiling. However, OPEC's communiqué states that OPEC is committed "to taking any further measures, including convening extraordinary meetings when deemed necessary…to maintain prices [OPEC basket price] within the range of $22-$28 [per barrel]." Also at the meeting, Qatari Oil Minister Abdullah bin Hamad al-Attiyah is appointed as the new OPEC President, replacing Rilwanu Lukman of Nigeria. (DJ)
Hurricane Lili makes landfall on the U.S. Gulf coast after passing through offshore hydrocarbon production areas and the Louisiana Offshore Oil Port (LOOP). Nearly all offshore production (about 1.5 million barrels per day of oil production), as well as some onshore refineries, the LOOP and the Capline crude oil pipeline are shut down. Refineries and offshore operations begin to come back on line on October 4, with most operations fully online by the second half of the month. There is little permanent damage. Hurricane Lili struck the U.S. Gulf coast only one week after Tropical Storm Isidore temporarily shut down the LOOP on September 24. (Reuters)
A French oil tanker chartered by Malaysian state oil company Petronas is attacked off the coast of Yemen, seriously damaging the ship and killing one crew member. The VLCC, with about 400,000 barrels of oil aboard, catches fire. The tanker does not sink, and is towed to port. Later, investigators determine that a terrorist suicide attack by a small boat is the cause of the explosion. The tanker was on its way to load additional oil in Yemen when attacked. (Reuters, DJ)
The U.S. Energy Information Administration (EIA) releases data showing that crude oil stocks in the previous week fell to their lowest levels (270.5 million barrels) since the agency began keeping weekly records over 20 years ago. Crude oil stocks have fallen by over 50 million barrels since February of this year and are now 39 million barrels below the year ago level and only 0.5 million above the EIA's "Lower Operational Inventory." While not implying shortages, operational problems, or price increases, the Lower Operational Inventory means that supply flexibility could be constrained. (Reuters)
The U.S. Senate votes to give President George Bush the authority to use force, if necessary, to persuade Iraqi President Saddam Hussein to abandon programs for the development of biological, chemical or nuclear weapons. The U.S. House of Representatives passed a similar measure the previous day. This moves the focus of debate to the U.N. Security Council. (Reuters)
Greece, Bulgaria, and Russia agree to equal stakes in the $699 million Trans-Balkan Pipeline. The 159-mile pipeline will bypass the Bosphorus Strait in order to bring Russian oil from the Bulgarian Black Sea port of Burgas to the Greek Mediterranean port of Alexandroupolis. The pipeline will be able to carry about 697,000 barrels per day. (Reuters)
The United Nations (UN) Security Council unanimously adopts Resolution 1441, that Iraq must accept or reject within seven days, giving United Nations inspectors the unconditional right to search anywhere in Iraq for banned weapons. Furthermore, Iraq will have to make an "accurate full and complete" declaration of its nuclear, chemical, biological and ballistic weapons and related materials used in civilian industries within 30 days. The resolution requires violations to be reported back to the Security Council by inspectors before any actions could be taken against Iraq for violating weapons bans. (Reuters)
In a letter to United Nations (UN) Secretary General Kofi Annan, Iraq accepts UN Security Council resolution 1441 of November 8, granting UN inspectors the right to conduct unfettered inspections in Iraq, "despite its bad contents." In the letter, Iraq also denies that it possesses any weapons of mass destruction. (AP)
The TengizChevroil consortium, a consortium of companies led by operator ChevronTexaco that is developing the estimated 2.7-billion-barrel Tengiz oil field in Kazakhstan, announces that the consortium has decided to indefinitely suspend investment in the second phase of the project. Production from the first phase was about 12.5 million metric tons in 2001 (about 249,000 barrels per day). The second phase would require about $3 billion of investment in order to boost the project's output by about 3 million metric tons per year (about 60,000 barrels per day). (WMRC)
The U.S. Strategic Petroleum Reserve, an emergency crude oil stockpile administered by the U.S. Department of Energy, reaches 592 million barrels, the largest amount in the reserve since it was initiated in 1977. (Reuters)
The tanker Prestige, loaded with 24 million gallons of Russian fuel oil, splits in two and sinks 155 miles off the coast of northwest Spain. The tanker, flying a Bahamian flag and owned by a Liberian company based in Athens, Greece, spills about 2.5 million gallons of the fuel oil from a crack before sinking, polluting beaches in the region and harming marine life. Fuel oil may continue leaking from the sunken ship. (WSJ, WP)
Murphy Oil of the United States announces the discovery of 400-700 million barrels of oil in the Kikeh field off the coast of Malaysia's Sabah region on the island of Borneo. This is one of the largest discoveries in Southeast Asia in recent years. (WMRC)
Officials of four of Russia's largest oil companies, Lukoil, Yukos, Sibneft, and Tyumen, announce a preliminary agreement for a joint project to build a $1.5 billion dollar Arctic oil port near the town of Murmansk. This would enable Russia to expand ocean-going tanker exports. (WSJ)
Business and labor groups in Venezuela, including employees of state-oil company PdVSA, begin a strike in order to obtain an early referendum on the rule of Venezuelan President Hugo Chávez. The strike has little effect on its first day, but as the strike continues through the end of the month, oil production, refinery runs, and crude oil and refined petroleum product exports fall dramatically. Several refineries in the Caribbean dependent on Venezuelan crude are also adversely affected. This has a serious impact on the Venezuelan economy, but no agreement between President Chávez and the opposition forces leading the strike is reached by the end of the month. (Reuters)
The United Nations (U.N.) Oil-for-Food program is unanimously renewed by the Security Council for another six months, and shortly thereafter accepted by the Iraqi government. The Oil-for-Food program allows Iraq to sell unlimited quantities of oil, with revenues going into a U.N. account that pays vendors for approved goods that Iraq orders. (Reuters)
The government of Iraq cancels a $3.8 billion contract with three Russian companies-Lukoil, Zarubezhnest, and Machinoimport-to develop the very large West Qurna oilfield. Although the reasoning for the decision is not made clear by Iraq, it is thought that it is in response to Russian political decisions regarding United Nations inspections and the Oil-for-Food program. (NYT)
OPEC oil ministers, meeting in Vienna, decide to raise OPEC-10's (i.e. excluding Iraq) total production quota from 21.7 million barrels per day to 23 million barrels per day. OPEC ministers also urge strict compliance with the new quotas in an effort to cut back production, as OPEC-10 production is widely regarded to be exceeding even the new production quota of 23 million barrels per day. (LAT)
The near-month crude oil futures price on the NYMEX tops $30 per barrel for the first time since October 2, as the general strike in Venezuela impacts the world oil market. Later in the month, on December 27, the near-month crude oil futures price rises to $32.72 per barrel, the highest price since November 2000. (WSJ, AP)
The U.S. Department of Energy allows several oil companies to postpone delivery of an additional 430,000 barrels of crude oil to the Strategic Petroleum Reserve in an attempt to keep more oil in the market during the strike in Venezuela. The oil companies will have to deliver the oil at a later date. (Reuters)
U.S. Secretary of State Colin Powell declares that Iraq is in "material breach" of United Nations resolutions after reviewing Iraq's weapons of mass destruction declaration released December 7 to the United Nations. States Powell: "Our [U.S.] experts have found it to be anything but currently accurate, full or complete. The Iraqi declaration ... totally fails to meet the resolution's requirements." (Reuters)
A tanker with 22 million gallons of gasoline arrives in Venezuela from Brazil, providing crucial supplies to the country, as the strike by employees of state-oil company PdVSA has meant severe reductions in refinery runs in that country. Crude oil production, that was in excess of 3 million barrels per day before the strike, is less than 500,000 barrels per day for many days in December. (WSJ)
Sources include: Associated Press (AP), Dow Jones (DJ), Japan Times, Los Angeles Times (LAT), New York Times (NYT), Oil Daily (OD), Reuters, USA Today (USAT), Wall Street Journal (WSJ), Washington Post (WP), World Markets Research Center (WMRC).
For a more detailed description of 2003 events see below.
Venezuelan Minister of Energy and Mines Rafael Ramírez announces that the Venezuelan government plans to split state oil company Petroleos de Venezuela S.A. (PdVSA) into two separate entities as part of a large-scale restructuring of the company, most of whose 40,000 workers are currently on strike. Such a decentralization could limit the power of Caracas-based executives who have joined in the strike, which began on December 2, 2002. (NYT)
The Organization of Petroleum Exporting Countries (OPEC), meeting in Vienna, agrees to raise the aggregate production quota of its members (excluding Iraq) to 24.5 million barrels per day, up from the current 23 million barrels per day, effective February 1. Each member will receive a proportionately higher share of the quota, about a 6.5% increase. (NYT)
Fourteen U.S. corporations or subsidiaries launch the Chicago Climate Exchange, a trading program wherein companies would be able to earn redeemable credits for exceeding emissions reductions goals of 4% of 1998-2001 average emissions over the next four years. Companies unable to meet the goals would buy the credits. The Exchange intends to create means to verify that actual reductions in emissions have taken place. (WP)
The near-month crude oil futures price on the NYMEX settles at $34.61 per barrel, the highest price since November 29, 2000. The market is experiencing a variety of higher price pressures, including the strike in Venezuela, fears of a conflict in Iraq, a cold winter in the United States, and low commercial oil stock levels in the United States. (USAT)
The U.S. Department of Energy approves oil company requests to delay delivery of March shipments to the Strategic Petroleum Reserve (SPR). The announcement will allow 4.4 million barrels of crude oil designated for storage in the SPR, to be marketed to domestic refineries instead. (Reuters)
Striking managers at Venezuelan state oil company PdVSA confirm that oil production has surpassed 1 million barrels per day once again, after falling to as low as 200,000 barrels per day during the strike that began on December 2. On January 31, PdVSA President Ali Rodriguez announces that production is at 1.5 million barrels per day and that 5,300 striking workers have been fired. Opposition estimates of production are much lower at around 1.05 million barrels per day. (NYT, Reuters)
During his State of the Union address, President Bush proposes $1.2 billion in funding to support the research and development of hydrogen-powered vehicles. (Reuters)
Indian Petroleum Minister Ram Naik announces that the government of India plans to boost the country's strategic crude oil reserves to 45 days from 15 days at an estimated cost of 43.50 billion rupees ($910 million). (Reuters)
Iranian Oil Minister Bijan Zanganeh announces that phases two and three of the South Pars natural gas field are now on-line. These phases represent additional production of about 55 million cubic meters (1.9 trillion cubic feet) of natural gas per year, 85,000 barrels per day of condensate, and 1 million metric tons (11.6 million barrels) of liquefied petroleum gas per year. The two phases are officially inaugurated on February 15. (DJ)
BP invests $6.75 billion in Russia by creating a new joint venture company with TNK (Russia's fourth largest oil company) and Sidanco, of which BP already held a 25% stake. BP will have a 50% stake in the new company. TNK's shareholders, investment groups Alfa Group and Access-Renova, will hold the other 50% stake of the new firm, and board control will be balanced equally. The investment by BP is equivalent to almost 10% of Russian foreign exchange reserves and around 1.5% of Russian gross domestic product (GDP). (Reuters)
Data from the U.S. Energy Information Administration (EIA) show that U.S. commercial crude oil stocks have fallen to 269.8 million barrels for the week ending February 7, 2003. This is the lowest commercial crude oil stock level since 1975, and just slightly below the lower operational inventory level of 270 million barrels. The lower operational inventory level, while not implying shortages, operational problems, or price increases, is indicative of a situation where inventory-related supply flexibility could be constrained or nonexistent. (Reuters)
Exxon Mobil begins construction of the $3 billion Kizomba B offshore development project in Angolan waters. The project, when completed, is expected to produce 250,000 barrels of crude oil per day, beginning in 2006, with total production over the life of the field estimated to be about 1 billion barrels. Besides Exxon Mobil, which has a 40% stake, the other stakeholders are BP (26.67%), Eni (20%), and Statoil (13.33%). The concessionaire is Angolan state oil company Sonangol. (Reuters)
The NYMEX near-month heating oil futures price settles at an all-time high of 125.59 cents per gallon, as many of the same market forces affecting the crude oil market also have driven up the price of heating oil, especially increased demand from the cold winter. High sulfur distillate fuel inventories (also referred to as heating oil) plunged more than 15% over the most recent four-week period to end the week of February 28, at 35.6 million barrels, 32% below the level for the same period last year. (Reuters)
Some 500,000 bbl/d of Venezuelan production in the eastern region begins to come back on-line. It was shut off at the wellhead for a week because of bottlenecks at export terminals as Venezuelan state oil company PdVSA encountered problems in returning loading at terminals to pre-strike levels. The Venezuelan government claims that oil production is over 2 million barrels per day, while fired PdVSA workers claim production is at 1.1 million barrels per day. (Reuters)
Venezuelan President Hugo Chavez announces that force majeure is henceforth lifted on Venezuelan oil exports. Venezuela had declared force majeure on its oil exports shortly after the national strike began on December 2, 2002. It is later revealed that this lifting does not apply to certain petroleum products. President Chavez also refuses to consider rehiring any of the over 15,000 fired PdVSA workers. (Reuters)
The New York Mercantile Exchange (NYMEX) puts into effect expanded price limits on its energy contracts and reduces to five minutes the time trading is halted when those limits are reached. Under the revised rules, the initial price limits for light, sweet crude oil futures will be expanded to $10 per barrel in all months from the current $7.50 in the first two months and $3.00 in all other months. The initial Henry Hub natural gas futures limits will expand to $3.00 per million British thermal units (MMBtu) in all months from $1 in all months. The initial limits on heating oil, gasoline and propane futures will increase to 25 cents per gallon in all months from 20 cents in the first two months and 6 cents in all other months. (Reuters)
Officials in the U.S. Environmental Protection Agency (EPA) announce that new clean water regulations for smaller sites, to take effect March 10, will not apply to the petroleum and natural gas industries. Rather, these two industries will have a two-year exemption, because, according to the EPA, further study of the effects of these regulations upon these two industries is needed. (NYT)
The Organization of Petroleum Exporting Countries (OPEC) meets in Vienna and decides to maintain crude oil production quotas for its member countries (excluding Iraq) at 24.5 million barrels per day. Saudi Arabia’s Oil Minister, Ali al-Naimi says, "There will be no shortage of oil. The test is, when the need is there, whether we will use the capacity or not and I can assure you we will. Most analysts, including EIA, believe that OPEC-10's (excluding Iraq) actual production is higher than the quota amount. (NYT, Reuters)
The near-month (April) crude oil futures price at the NYMEX settles at $37.83 per barrel, the highest near-month settlement price (in nominal terms) since October 1990. This comes as EIA reports today that commercial crude oil inventories for the previous week declined by 3.8 million barrels to 269 million barrels. This is below the 270 million barrel lower operational inventory level, which, while not implying shortages, operational problems, or price increases, is indicative of a situation where inventory-related supply flexibility could be constrained or nonexistent. This heightens supply concerns before an impending war in Iraq. (WSJ)
Military action in Iraq commences with a bombing raid and missile attack on targets in the Iraqi capital of Baghdad (March 20 Baghdad time) by Coalition forces, given Saddam Hussein and his regime's rejection of U.S. President George Bush's March 17 ultimatum. Iraq launches several conventional missiles at Kuwait, but this has no effect on Kuwaiti oil production. However, the Kuwait Petroleum Company does implement an emergency plan to protect its workers and facilities. (Reuters)
Outbreaks of violence between soldiers and militants of various ethnic groups in the Niger Delta region of Nigeria prompt three major oil companies operating in the region - ChevronTexaco, Royal Dutch/Shell, and TotalFinaElf - to shut in operations in the area, totaling about 800,000 barrels per day. This represents about 40% of Nigeria's total production, including about 768,000 barrels per day in the West Niger Delta (all operations there for the three companies) and 50,000 barrels per day of Shell production in the East Niger Delta. Employees of ChevronTexaco, which had declared force majeure on its Escravos crude oil terminal three days earlier, return to Nigeria on April 4 to begin a gradual resumption of production. Force majeure is lifted on April 24, 2003. (NYT, Reuters)
After Coalition forces have pushed further into Iraq securing most of the southern oilfields over the weekend, Kuwaiti fire fighters are able to enter Iraq and are able to extinguish one of the wellhead fires. Iraq's southern fields represent about 40% of the country's output. Damage is assessed to be relatively minimal. Some pockets or Iraqi resistance in the southern oilfields remain, however. Furthermore, heavy Iraqi resistance in some parts of Iraq gives rise to market speculation that the war could last longer than initially thought. The NYMEX near-month crude oil price rises 6.5%, to settle at $28.66 per barrel, as the war in Iraq as well as the situation in Nigeria have traders concerned. (Reuters, DJ)
Coalition forces continue to make progress against the regime of Saddam Hussein in Iraq, with the U.S. military capturing Baghdad's main international airport. Also, according to the U.S. military, 80%-90% of Iraq's southern oilfield production is under coalition control, as well as all related export facilities, as of this date. (Reuters)
Royal Dutch/Shell restarts production and development work at the Soroosh and Nowrooz fields offshore southwestern Iran, after shutting down work at the two fields on March 19 because of fears that staff could be vulnerable to intentional or accidental attack, given the fields' proximity to the border with Iraq. Soroosh produces about 60,000 barrels per day, and the shut down has delayed the coming on line of the Nowrooz field, scheduled for later this year. (DJ, Reuters) )
Syrian state oil company Sytrol informs customers that it will cut crude oil term export volumes by around 40% (about 150,000 barrels per day) as a result of the halt in Iraqi imports through the Iraq-Syria-Lebanon pipeline that is reported to have been shut down. Sytrol suggests that the reduction will continue for the rest of the year. (WMRC)
Pumping on the oil pipeline from Iraq's Kirkuk oilfields to the Turkish port of Ceyhan is halted as the storage facilities have reached their maximum capacity of about 6.5 million barrels. There has not been a loading of Iraqi crude oil at the port since March 20. (Reuters)
Tokyo Electric Power Company (TEPCO) shuts down for inspection the last of its 17 nuclear reactors still in operation. The shut downs result from the discovery last year that TEPCO had falsified data regarding reactor inspections, leading to the decision to shut down by Japan's nuclear authorities. Japan's largest power firm said that unless its reactors were started back up, there would be an electricity shortage of up to 9.55 million kilowatts during the summer, when electricity demand hits its peak. (Japan Times)
U.S. Secretary of Defense Donald Rumsfeld announces that the U.S. military has shut off an oil pipeline from Iraq to Syria that is alleged to have been carrying 100,000-150,000 barrels per day. "We have been told that they have shut off a pipeline," Secretary Rumsfeld told a Pentagon briefing. "Whether it's the only one and whether that has completely stopped the flow of oil between Iraq and Syria, I cannot tell you. ... I cannot assure you that all illegal oil flowing from Iraq into Syria is shut off. I just hope it is." (Reuters)
Yukos Oil Company and Sibneft, Russia's first and fifth largest oil companies, respectively, in terms of production, announce that they will merge in a deal in which Yukos will pay $13 billion in cash and stock for Sibneft. The new company will be the world's fifth-largest publicly traded oil and gas company, with a production of 2.4 million barrels per day. The new company plans to become a major player outside of Russia as well. (NYT, WSJ)
According to the American military officer in charge of restarting Iraq's oil production infrastructure, Iraq's southern fields have begun to produce again. Four southern wells have begun producing a modest amount of crude oil, but according to Brig. Gen. Robert Crear of the Army Corps of Engineers, southern wells should soon be producing about 170,000 barrels a day. Initial production would go toward meeting domestic demand, especially as more refineries come back on line. The country's northern oilfields are still offline. (WSJ)
OPEC oil ministers, meeting for emergency talks in Vienna, decide to simultaneously reduce crude oil production by 2 million barrels per day, as of June 1, and increase their overall production quota by 900,000 barrels per day to a total quota of 25.4 million barrels per day. This is a tacit admission that OPEC production is well in excess of the previous quota of 24.5 million barrels per day. Iraq does not participate in the meetings and is not subject to the quota regime. (LAT)
Brazilian state oil company Petrobras announces the largest-ever natural gas discovery in Brazil. The discovery, located about 85 miles off the coast of the state of Sao Paulo, is a field containing an estimated 2.47 trillion cubic feet of natural gas. This field raises Brazil's natural gas reserves by about 30%, according to some estimates. (Reuters)
The United Nations Security Council approves the immediate end of 13 years of economic sanctions on Iraq, dating from the time of Iraq's invasion of Kuwait in 1990. Resolution 1483 effectively grants the United States-led coalition forces control of Iraq until a new Iraqi government can be put in place. The end of the sanctions also makes it easier for Iraqi oil exports to resume without the auspices of the United Nations. Later, on May 27, the U.S. Department of the Treasury lifts most remaining sanctions on Iraq, thereby implementing U.N. Security Council Resolution 1483. Secretary of the Treasury John W. Snow states, "It is no longer a crime for U.S. companies and individuals to do business with Iraq." (WP)
Yukos of Russia signs a $150 billion agreement with China National Petroleum Company (CNPC), wherein CNPC agrees to purchase 5.13 billion barrels of oil between 2005 and 2030 via a $2.5 billion pipeline from Russia's Western Siberia fields to China's Daqing field. (Reuters)
Royal Dutch/Shell signs a $2 billion contract with an alliance of Japanese and Russian companies for the construction of Russia's first natural gas liquefaction plant in Sakhalin. This comes after Tokyo Electric Power Company (TEPCO) and Tokyo Gas agreed two weeks earlier to purchase about one-quarter of the liquefaction plant's planned capacity of 9.6 million metric tons per year. Shell owns 55% of the production rights for the natural gas supplying the planned plant. (NYT)
Federal Reserve Chairman Alan Greenspan notes that rising natural gas prices in the United States could have a negative impact on the economy in the months ahead if prices remain at high levels. States Greenspan, "I have no doubt that...if we stay at these very elevated prices we're going to see some erosion in a number of macroeconomic variables which are not evident at this stage. A very significant amount of natural gas using infrastructure in the American economy was based on $2 gas. That means a lot of noncompetitive structures are sitting out there." (Reuters)
Oil Ministers of the Organization of Petroleum Exporting Countries (OPEC) meeting in Qatar decide to keep OPEC crude oil production quotas unchanged for the ten members (i.e. not including Iraq) participating in the quota regime. The combined output quota for the ten members is 25.4 million barrels of crude oil per day. OPEC President Abdullah bin Hamad Al Attiyah, also Qatar's Minister of Energy and Industry, says, "We don't want to cut for the sake of it. We should justify it." (Reuters, DJ)
Two explosions damage the Kirkuk-Ceyhan oil pipeline, in what is later determined to be an act of sabotage. Several other Iraqi pipelines are damaged in acts of sabotage throughout the month, including a natural gas pipeline in the western desert on June 21, an oil pipeline west of Baghdad on June 22, and the now-stalled Iraq-Syria pipeline on June 23. (Reuters, AP)
ConocoPhillips announces that the company will proceed with its $1.5 billion liquefied natural gas (LNG) development project at the Bayu-Undan fields after government officials of Australia and East Timor approved the project in the Timor Sea Joint Petroleum Development Area. Natural gas from the field will be piped to an LNG liquefaction plant in Australia's Northern Territory. (WSJ, NYT)
The head of Iraq's North Oil Company, Adil al-Qazzaz, states that Iraq's main north-south crude oil pipeline, the so-called Strategic Pipeline, will not be operable for some time, especially because the K-3 pumping station was badly damaged during the recent war. Al-Qazzaz goes on to state that because the pipeline is not working, "[W]e don't have export flexibility, and that will have an impact." (WSJ)
Iraq exports oil for the first time since March 20, the first day of the war that eventually toppled the regime of Saddam Hussein. The crude oil, 1 million barrels, was part of the June 12 tender and will be sold to Turkish refiners from oil in storage at the Turkish port of Ceyhan. Loading of the oil onto a tanker begins today. (WP)
The European Parliament votes to cap European industry's carbon dioxide output and let firms trade the right to pollute. As of January 2005, many plants in the oil refining, smelting, steel, cement, ceramics, glass and paper sectors will need special permits to emit carbon dioxide (CO2). "It means that the largest emissions trading scheme in the world to date will be a reality from 2005, and that the architecture foreseen under the Kyoto Protocol is coming to life," according to European Union Environment Commissioner Margot Wallstrom. (Reuters)
The government of Chad announces that it has begun its first-ever crude oil production, as wells began pumping on July 1. It will still take weeks before crude is shipped from the $3.5 billion project through a 650-mile pipeline to the Atlantic coast in neighboring Cameroon. The government does not announce the initial flow rate, but eventual production is expected to reach 225,000 barrels per day. Oil begins flowing through the pipeline on July 15. (Reuters)
Sakhalin Oil Development Corporation, the Japanese partner in an international consortium in the Sakhalin-1 project, announces that oil drilling offshore has begun. The project, which may eventually see $12 billion invested in oil and natural gas development, is potentially the largest direct foreign investment in Russia. Total recoverable reserves at the Sakhalin-1 area are estimated to be 2.3 billion barrels of oil and 17.1 trillion cubic feet of natural gas. (DJ)
The operator of Israel's Eilat-Ashkelon pipeline, a bi-directional pipeline linking the Mediterranean and the Red Sea, announces that the pipeline is operational. The pipeline, with a current capacity of 400,000 barrels per day, but a design capacity of 1.2 million barrels per day, provides an alternative to the Suez Canal, as both Israeli ports can handle VLCCs, whereas Suez cannot. Perhaps even more importantly, with the new southerly flow, Russian crude on small tankers from the Bosporus will be able to eventually load onto VLCCs bound for East Asia. (Reuters)
Hurricane Claudette hits the Texas coast about 80 miles southwest of Houston. According the U.S. Minerals Management Service, an estimated 2.5 billion cubic feet per day of natural gas had been shut in by Claudette, or about 18% of the Gulf's total gas output. Also, about 330,000 barrels per day of oil, or some 21% of the Gulf of Mexico's daily oil production, has been shut down. Production is quickly restored in the next few days. (Reuters)
Italian oil and gas major Eni announces that it has begun exporting oil production from the giant Karachaganak field in Kazakhstan to the Novorossiysk terminal on the Black Sea. In addition, Eni said that it and its partners had completed pipelines and treatment facilities so that output from the oil field could grow by the end of the year to 380,000 barrels of oil equivalent per day from the current 220,000 barrels of oil equivalent per day. (DJ)
Royal Dutch/Shell and Total successfully conclude the first deal with Saudi Arabia giving Western companies access to the Kingdom’s hydrocarbon reserves since the nationalization of its petroleum industry. The agreement entails natural gas exploration and development across 77,000 square miles in Saudi Arabia’s Empty Quarter. Previous efforts to open up Saudi Arabia's upstream natural gas sector, known as “Saudi Arabia’s natural gas initiative” and the three “Core Ventures” were larger, with each estimated to be worth $10-$15 billion. The Core Ventures fell apart in June due to conflicts with foreign investors over financial terms. (Reuters)
The first delivery of liquefied natural gas (LNG) since 1980 is made to the reactivated Cove Point LNG regasification plant in Maryland, as a tanker from Trinidad arrives carrying 22 million gallons of LNG. According to Dominion, owner of the facility, the plant will be able to supply 1 billion cubic feet of natural gas per day, and will be the largest LNG regasification facility in the United States. (WP)
Oil Ministers of the Organization of Petroleum Exporting Countries (OPEC), meeting in Vienna, decide to keep their crude oil production quotas unchanged until their next meeting, on September 24. The combined quota for the ten members participating in the quota regime (i.e. excluding Iraq) is 24.5 million barrels per day. (WSJ)
The United States estimates that restoring Iraq's oil sector to its pre-war status will cost at least $1.1 billion and take nine months to complete. Prior to the war, Iraq was producing around 2.5-2.6 million barrels per day and exporting around 2.0-2.1 million barrels per day. Current production is closer to 1 million barrels per day, with exports of about 600,000-700,000 barrels per day. (LAT))
Libya reportedly agrees to compensate families of the 1988 Lockerbie airplane bombing with $2.7 billion total. The money is to be released in three tranches, the first following a lifting of United Nations sanctions, the second after possible lifting of U.S. sanctions, and the third after Libya is removed from the U.S. State Department's state sponsors of terrorism list. (WMRC)
A huge electric power blackout hits large parts of the northeastern United States, the Midwest, and southern Canada late in the afternoon. Power is out for at least several hours in major cities like New York, Detroit, Cleveland, and Toronto. Three months later, on November 19, the U.S.-Canada Power System Outage Task Force, led by U.S. Secretary of Energy Spencer Abraham and Canadian Natural Resource Minister Herbert Dhaliwal, releases a 124-page investigative report which concludes that the blackout was "largely preventable" and cites several failures by regional utility companies and regulators. Analyses are also published by The Michigan Public Service Commission and the Electric Power Research Institute (EPRI). (NYT, WSJ, AP)
Russia approves a $13 billion merger between Yukos and Sibneft, creating "YukosSibneft," Russia's first "supermajor" and one of the world's largest publicly traded oil companies. (WMRC)
Iraq's crucial northern oil pipeline from Kirkuk to the Turkish port of Ceyhan is attacked, stopping flows on the line just two days after it reopened for the first time since the war. The pipeline had a pre-war capacity of 1.1 million barrels per day, but sustained significant damage during hostilities and had started pumping at only around 200,000 barrels per day. Repairs to the line from the latest attack may take weeks, while full restoration of the pipeline's pre-war capacity could take months. (WMRC)
Ibrahim Bahr al-Uloum, a former Iraqi exile, is appointed Iraq’s first post-war oil minister by the country’s Governing Council. Uloum replaces Thamir Ghadban, who had been the acting oil minister since early May. (Reuters)
The Inter-American Development Bank approves financing for Peru’s Camisea natural gas project. The Camisea fields were discovered by Shell in 1986 and are estimated to hold 13 trillion cubic feet of natural gas and 660 million barrels of condensate, possibly transforming Peru into a net energy exporter. (DJ, WP, WMRC, EIA)
The Federal Energy Regulatory Commission approves a plan for the new Cameron liquefied natural gas (LNG) import terminal in Hackberry, Louisiana. Cameron represents the first such project in the United States in over 20 years. (NYT)
The United Nations (U.N.) Security Council lifts 11-year-old sanctions against Libya. Development of Libya’s sizeable oil resources has been hindered by the sanctions, which were imposed in 1992 in an effort to extradite two Libyans indicted for the 1998 bombing of an American plane over Scotland. (AP)
Iranian Oil Minister Bijan Zanganeh announces that the deal which granted a Japanese consortium preferential rights to develop Iran’s Azadegan oil field has expired. The consortium was granted the rights in late 2000, but had yet to negotiate and sign a contract. The Azadegan field is estimated to hold some 26 billion barrels of oil. (Platts)
OPEC members agree to cut the output ceiling for the ten member countries, excluding Iraq, by 900,000 barrel per day to 24.5 million barrels per day, effective November 1. Iraq attends the OPEC meeting for the first time since 1990. OPEC cited concerns that the world oil market will be oversupplied in 2004 leading to lower prices. (Reuters)
The Chicago Climate Exchange announces its first auction of emission allowances. Although emissions cuts are still voluntary, the exchange is considered an important prototype. (WMRC)
Chad's President Idriss Deby announced that the new Chad-Cameroon oil pipeline is officially "onstream." Chad began pumping oil into the pipeline in July 2003 from the Doba field. The $3.7 billion Chad-Cameroon oil pipeline represents the World Bank's single largest investment ever in sub-Saharan Africa. (NYT)
The Russian oil companies Yukos and Sibneft complete their merger, creating YukosSibneft, the world's fourth-largest private oil producer. The news is accompanied by rumors that major American firms are interested in making a deal with YukosSibneft in order to gain access to the Russian energy market. (WP)
Bowing to protests, Bolivian President Gonzalo Sanchez de Lozada announces he will not pursue a plan to export more than one billion cubic feet per day of liquefied natural gas (LNG) to the United States through Chile. The proposal had led to massive popular protests in Bolivia, resulting in the deaths of at least 16 people. (WSJ, WP, NYT)
The International Finance Corporation, the private lending division of the World Bank, approves a $250 million loan for the Baku-Tbilisi-Ceyhan pipeline. Later, on November 11, the European Bank for Reconstruction and Development approves its $250 million loan for the project. The 1-million-barrel-per-day pipeline will enable crude oil exports from the land-locked Caspian Sea region to reach world markets through the Turkish Mediterranean port of Ceyhan. (WSJ, EIA, WMRC)
ChevronTexaco reports that it has received final approval form the Federal Energy Regulatory Commission (FERC) to build the world's first-ever deepwater liquefied natural gas (LNG) import terminal at Port Pelican in the U.S. Gulf of Mexico. The plant will have a capacity of 1.6 billion cubic feet per day, with construction to begin in 2004 and to be completed in 2007. (WMRC)
The United Nations hands over the "oil-for-food" program in Iraq to the U.S.-led administration in Baghdad. The "oil-for-food" program was established by the United Nations in 1995, and used proceeds from the sale of Iraqi oil to buy food and medicine for Iraqis as well as to finance infrastructure and humanitarian projects. Iraqi oil exports reportedly have reached around 1.5 million barrels per day. (USAT, WMRC)
The U.S. Congress abandons plans to pass an energy bill before the end of the legislative session. The bill was approved in the U.S. House of Representatives on November 18, but then blocked in the Senate as its proponents were unable to close debate on the issue and call for a vote. The legislation has been under construction for three years and represents Congress's first attempt at a comprehensive energy bill since 1992. The bill's proponents intend to revisit the issue in 2004. (NYT, WP, WSJ)
Russian oil company Sibneft makes a surprise announcement suspending its merger with Russian oil major Yukos citing technical difficulties. The $13 billion merger was announced in April 2003, and would create the world's fifth-largest publicly traded oil company. (WP, WSJ)
President George W. Bush signs a $27.3 billion energy and water bill that includes funding for a nuclear waste repository at Yucca Mountain, Nevada. The repository remains a source of controversy between state and federal officials. (AP)
OPEC holds its 128th meeting to review oil markets in Vienna, Austria, leaving OPEC 10 output quotas unchanged. (DJ)
Oil prices fall 4% on the news that U.S. military forces capture Saddam Hussein near his hometown of Tikrit, Iraq. (CBS, WMRC)
BP signs a 20-year deal to sell 500 million cubic feet per day of liquefied natural gas (LNG) from its Tangguh facility in Indonesia to the U.S. energy company Sempra Energy. The LNG will be shipped to Sempra's proposed import and regasification terminal in Baja California, Mexico before being distributed to buyers in the United States. (DJ)
Libya announces that it will abandon its weapons of mass destruction programs and comply with the Nuclear Non-Proliferation Treaty. The United States welcomes the move, but says that it will maintain economic sanctions until it sees evidence of compliance. (WMRC, NYT)