C:\Annual Report 1998\AR1998 fo - Peace Palace Library

Oil Market Developments
shows a decline compared to the 20.1 per cent ratio in 1997. This decline is the result of a drop
in total conversion capacity on the one hand and the increase in crude distillation capacity on the
other.
Foreign Refining Capacity
The foreign refining capacity of OPEC Member Countries, based on equity ownership, increased by 150,000
b/d, from 2.14m b/d in 1997 to 2.29m b/d in 1998. All of the increase came from the Asia/Far East
region, with the acquisition by Saudi Arabia of 85 per cent of the 170,000 b/d Bataan refinery in the
Philippines (Table 13).
OPEC Member Countries’ share of foreign refining capacity climbed to 5.2 per cent in 1998; a rise of
0.3 per cent compared with 1997. The increase, of course, came from the Asia/Far East region, where
OPEC’s share rose to 3.1 per cent in 1998, 1.1 per cent higher than in the previous year. OPEC’s equity
ownership in Western Europe and the USA remained almost unchanged at 5.4 per cent and 6.7 per cent,
respectively. OPEC Member Countries’ supply agreements remained unchanged from the previous year
at 2.94m b/d during 1998.
At the regional level, supply agreements to the USA top the list, with 1.41m b/d committed by Saudi
Arabia and Venezuela, followed by Western Europe with a total commitment of 870,000 b/d and the
Asia/Far East region with 650,000 b/d. Even though OPEC Member Countries’ supply agreements remained
unchanged volume-wise, they fell by 0.2 per cent during 1998 to 7.2 per cent. The drop in share is the
result of the increase in refining capacity in the three regions.
Tanker Market
The volume of international trade in oil increased by 4.6 per cent from 1,979 million tonnes in 1997
to 2,075m t in 1998, due primarily to low oil prices and the growth of 2.3 per cent in the world economy.
In spite of this, the continuing financial crisis in South-East Asian economies, impacted negatively on longhaul
freight rates along the Middle East/Far East route. The freight rate on this route declined by six points
to an average of Worldscale 63 for the year. The average rate on the long-haul routes to the West remained
at the preceding year’s level of W59. Freight rates for products declined generally on all the major routes.
Higher crude oil production for the year resulted in increases in the average monthly volume of tankers
chartered in the spot market and tankers used for storage by 5.8m t and 700,000 t to 133.9m t and
12.5m t, respectively.
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