WORLD DEPENDENCY ON MIDEAST OIL SAID INEVITABLE
The world's dependency on the Mideast
as the source for its petroleum is growing and nothing is going
to stop it, Donald K. McIvor, an Exxon Corp <XON> Director and
senior vice president told Reuters in an interview.
    "Non-OPEC production will begin to decline and the gap
between demand and supply will widen so that the trend to
increasing dependence on OPEC and the Middle East is
inevitable," McIvor said.
    Decreased supplies will firm prices for crude oil but are
not likely to change a growing dependence, McIvor said.
    McIvor, Exxon's senior vice president responsible for oil
and gas exploration and production said that dependence would
result from the Mideast's large spare capacity at a time when
the rest of the world consumes more oil than it was finding.
    "Since 1970 we've been consuming oil at rates of 20-25
billion barrels per year while making new discoveries of only
about 10-15 bilion barrels per year," McIvor said.
    "The bulk of the inventory and more than half of the
remaining proved reserves lies in the middle east which is
producing at much less than current capacity," he added.
    McIvor said that of the some 30,000 oil fields discovered
so far only 37 "one-one thousandth of the total number contained
about 35 pct of all the oil ever discovered."
    McIvor said, in response to a question, that he did not
believe there were any more "super giants", or oil fields with
reserves greater than five billion barrels, to be found which
would change the conclusion of the world's growing dependency.
    "Of those 37 super giants only 11 lie outside the Middle
East. Only five of the 37 have been discovered in the past 20
years and only two of these lie outside the middle east
(Cantarell in Mexico and Alaska's North Slope)." McIvor said.
    McIvor said that many of the large fields outside the U.S.
like Alaska's Prudhoe Bay and the North Sea were reaching a
peak and would soon begin to decline.
    But the Exxon executive said that there were still plenty
of opportunities to be explored and developed outside of the
Middle east, particulartly in Canada, the North Sea, and
Australia and Africa.
    McIvor said that decisions to explore and drill in those
areas would be depedent upon both the expectations of a higher
price of oil as well as the legal regime affecting the
companies.
    "The ideal regime is a stable one not one where there is a
constant change in policies," McIvor said.
    McIvor said he opposed import subsidies or tariffs used to
increase exploration as these only benefit one part of the
economy at the expense of other parts of the economy.
    Asked about the options offered this week by U.S. Energy
Secretary Herrington to increase U.S. production McIvor said he
could not comment on subjects like the oil depletion allowance
now but "the thrust of his (Herrington) report is valid. It has
highlighted the growing dependency on the Middle east and the
need to increase U.S. production."
    McIvor also said that he expected natural gas to play a
greater role in the future in meeting energy needs.
    "Natural gas will have the opportunity to become an
increasingly important part of the worlkd's energy supply,"
McIvor said.
    "Crude oil will be used more and more as a transportation
fuel and natural gas will be used more to generate heat, as an
industrial fuel," he added.
 Reuter
