* ~~~~DOCWW* of --- - - - - - - K O FICIAL USE ON", Repst No. 7350 PROJWCT COPlSTION REPORT RONANIA VIDELE/BALARIA ENII(CED OIL RECOVERY PROJECT (LOAN 2148-RO) June 30, 1988 ., Energy Department This doemnent s a reSrid Jsrbto and may be ued by repin only In the performanc oo f hdr offial dudes. Its ents may met oelwse be dosda without World Bank autozaton. - m. of cutrecy Xa E A lppvaiuat year avwrage US$1 a 13 Lei latervening yeawrs avewrae US$l a 1?.3 tai Completion year's avmrae US$1 a 17.5 Lei I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ l~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ -ORlD -A FOR OFFICIAL USE ONLY Q.0 W00ttD BANet U 4shm#Mrr01C 204 1 June 30, 1988 MEMTW0RNDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Romania Videle/Balaria Euhanced Oil Recovery ProJect (Loan 2148-RO) Attached, for information, is a copy of a report entitled "Project Completion Report on Romania Vieele/Balaria Enhanced Oil Recovery Project (Loan 2148-RO)" prepared by the former Energy Department. As a result of the reorganization the PCR was reviewed by the Europe, Middle East and North Africa Regional Office. Further evaluation of this project by the Operations Evaluation Department has not been made. Yves Rovani by Graha; lonaldson Attachment This document has a restricted distributon and may be used by reeipients only in the perrormansc| of their of fcial dutieL Its corntents many not otherwse be disclosed without Worl Bank; authorization. | FOR OVWIA S !L ROMANIA -VIDELM/ALMRIA ENSANCE 1 OIL RECOVERY POJECT- (WAY 2148-O) PROJECT COMPLEON ItEPORT TABLE OF CONTENTS PAGE NO. BAIC ASEEET............................................. iC it. * RJCT PREPARATION AIM APPRAiSAL.e.................. ..ee.. 2 --- * ..gsS............ :.,..... . ,..** ..t .* .. *.*..... .. iY III. I IL EE rA 3O 4 4 IUplemuntation Schedule e...... 4 Project C@gti .........ae 5 Disburswe4nt and Financial. : 7 Perforuance of Consultants, Contractors and Suppliers... 7 Enviromnuntal Ipaect .....................*......... 8 IV * OPERATING P...X.C................. ******,**0 O 8 V. FINACIAL P ECFORMA CL .................. ......................- 10 VI. IISTiTUTIONAL PE3FOrNANCR AND ..VtL .P Eh. 13 Background. .a........ * ..aa.*......... .....*.. e.g...... 13 Organization and Performazace.... 13 Training................................................ 14 Lo anCvn 14 VTI. ECOOOWIC REEVALU A$ION 14 VIII. PFORNANCE AND ROLE OF THE 8AK..... ..................... 1S IX. COCe . aa. eaa 16 This document hs a stied dItbuton and may be ud by rpens only In the peformn of their officid dudes Its cotents may not otherwe be dhckod without Wodd Dank authoriat ANNEXES .1.. Project Costs,- Variance 2. ProJect Costs.- Yeatwise-Expenditure. 3. Implementation Schedule 4. Enhanced Oil Recovery (EOR) 5. Production Performance 6. Production Table - Appraisal vs. Actual 7. Disbursement of Bank Loan 8. Income Statement " 9. Sources and U8e of Funds 10. Balance Sheets 11. Financial Unit Production Costs for TPB U12. Financial Unit Production Costs of Videle Enterprises 134 Revised Increerital Production Cost (Finadcial) Estimate 14. Economic Rate of Return Calculation 15. Assumptions Underlying Economic Analysis 16. Comments Received from the Borrower MAP IBRD 16066 - VidelelBalaria Enhanced Oil Recovery Project ROMW4IA VIDELE/BALARIA ENHANCED OI REC"VERY PROJECT- (LOAN 2148-RO) PROJECT COMPLETION REPORT PREFACE This report reviews the results of axi enhanced oil recovery (EOR) project, partly financed by Loan 2148-RO. The loan, made to the Banca de Investitii (IB) with the guarantee of the Socialist Republic of Romania, for the equivalent of US$101.5 million (including the capitalized front end fee of US$1.5 million) was approved on May 20, 1982. It was fully disbursed in December 1984, about 18 months ahead of the appraisal forecast. The proceeds of the loan financed tubulars (casing, tubing, linepipe), drilling and production materials and equipment for drilling over 900 wells, installation of surface production and in situ combustion facilities. The project was physically completed with a two-year delay, mainly in the installation of compressor stations in Videle, caused by three successive severe winter seasons, together with an-excessively long compressor delivery schedule.- The reservoir performance in Balaria indicates higher oil recovery than originally expected. The initial results in the other reservoirs are also encouraging. The target incremental production of 731,000 tons/year is expected to be achieved by 1989, approximately 3 years behind the appraisal estimate. This project completion report was prepared by the former Energy Department and subsequently reviewed by EM4IE, and was based on the information obtained during completion mission and from the Appraisal, President's and Supervision reports, as well as other documents from the project files. -The borrower submitted a final completion report containing its views on the project implementation and supplied additional data for this report. The PCR has been submitted to the Borrower, whose response (Annex 16) did not contain any objections or critical remarks to the PCR. In accordance with the revised procedures for project performance audit reporting, this Project Completion Report was read by the Operations Evaluation Department (OED), but the project was not audited by OED staff. - -ii - - -~~L. IMI gA . VIDEEIALAI EHAMCED OIL RECOVERY PROJtCT (LOAN NO. 2148-SO) PROJECT COMPLETION REPORT BASIC DATA SHEET KEY PROJECT DATA ( a OF -JUNl9S - Actual or .Appraisal Current EzPetation Estimate Total Project Cost (Lai Million) 6,620 5,802 Underrun (2) 12 Loan Amount (US$ Million) 101.5 101.5 Disbursed 101.5 101.5 Cancetlled - Repaid (to 6/31/87) 16.9 Outstanding 84.6 Dete Physical Components Completed */ 12131/86 12/31/87 Proportion Completed by Above Date tZ) b/ 100 95 Proportion of Time overrun (2) 25 Economic Rate of Return (Z) 29 13 Financial Performance Satisfactory Satisfactory Institutional Performance Satisfactory Satisfactory I/ wVork still to be completod after June 1987 represents less tban 12 of project cost. b/ In terms of project empenditures. CUKULATIVE LOAN DISBURSEMENT FY 81/82 FY82/83 FY83184 FY84/85 FY85/86 Ci) PlannId 7.9 67.0 91.5 98.7 101 5 (ii) Actual 35.1 89.3 101.5 -- (iii) (ii) as 2 of ti) 444.3 133.2 110.9 - OTHnE PROJECT DATA Original Actual or Plan Reestimated First Mentioned in Project File Sept. 1980 Covernment Application Nov. 1980 Negotiations 4f04182 4/04/82 Board Approval 5/20/82 5/20182 -Loan Agreement--Dat - -- - - 7/23/82 Effectiveness Date 91151t2 10/06/82 Closing Date 6/30/8t 12/31/84 Borrowers - anca do investitii (IB) g.ocuting Agencqt solutin Petroleum Trust (TPB) Fiscal Year of Borrower: January 1 - Decerber 31 Folluo-u Project: None MISSION DATA Month/ No. of No. of Man DAte of Year Persons Weeks Report Appraisal Oct. 1981 18 4 14.4 4/30/82 Supervision I May 1982 8 2 3.2 5/20/82 SupervisionilI Sept. 1982 9 3 5.4 - 10/22/82 Supervision III March 1983 7 3 4.2 4/25/83 Supervision IV Sept. 1983 6 1 1.2 10/4/83 Supervision V April 1984 7 2 2.8 S122/84 Supervision VI may 1985 6 2 2.4 - 5117/85 Supeivision VII Oct. 1986 8 2 3.2 10/22/86 Completion June 1987 6 3 3.6 75 40.4 ROMANIA VIDELEIBALARIA ENHANCED OIL RECOVERY PROJECT (LOAN 2148-RO) PROJECT COMPLETION REPORT HIGHLIGHTS 1. -The-loa under.review,-.in--the-amount-of US$101.5 million, -was to -help finance the 1982-86 slice of the Videle/Balaria in situ combustion enhanced oil recovery (EOR) program. The Investment Bank (IB), was the iorrower, and Bolintin Petroleum Trust (TPB), a state enterprise, was the beneficiary and the implementing agency. 2. "he main objective of the project was to stop and reverse the sharply declining production from the Videle ant' Balaria oil fields by applying the in situ combustion process. It was predicted (para 2.04 of this report) that this measure would increase the ultimate oil recovery from these two fields from 15% to 39S of the owl initially in place and that the annual incremental production due to the ECR process would reach 731,000 tons (4.9 million barrels) by 1986 and continue at this.level over the 20-year life of the project. The incremental production goal is now expected to be reached in 1989 (three years later than planned during project e.ppraisal) because of the long v-elivery schedule of the 110 compressors required for supplying air to support the combustion front, and also construction delays caused by the unprecedented severe winters during the project implementation period. Nevertheless, production and reservoir data observed so far give positive indications that, except for the three-year delay, the produ4tion objective will be met and that the 39X ultimate recovery goal will not only be met but, may even be exceeded (para 4.03). 3. The project facilities were comple;ed more than two years later than planned during project appraisal at a cost of Lei 5.8 billion, approximately 12t less than the appraisal estimate (Lei 6.62 billion). The difference is mainly attributed to the lower than estimated Cost of the air compressors and other equipment and materials (para 3.06). 4. The economic reevaluation (para 7.01) projects that the economic rate of return (ERR) from the project will be 13X which is satisfactory but substantially short of the 292 expected at appraisal. The lower ERR is largely due to the sharp drop in actual and projected future international oil prices along with the three-year delay in benefits and increased production costs (mostly offset by the lowez project cost). TPB met the financial objectives under the project and is expected to maintain a satisfactory finan4ial performance given the Government's commitment to increase crude oil prices from time to time to reflect the rising oil production costs which will accompany the increased use of expensive EOR production techniques (paras.- 5.02-5.03). 5.@ -TPB is a mature and competent institution. and the various specialized-support organizations it has acces to provide it.with a self- reliance hich -is not paral-leled- in many developing countvrie. However, the project has shown that TPB, as well as the petroleum sector as a whole, could benefit from relaxing the almost total reliance on Romanian equipment and technology (para 6.03). The practice is understandable in light of the country's severe foreign exchange constraints, but this self-reliance must be weighed against the increasing laj in technology and efficiency which will follow if it is continued. 6. Experience in carrying out the project has highlighted the following lessons (para 9.06): - (a) The EOR process, based on in situ" combiidtion is a -highly effective and efficient method for recovering large oil reserves which would otherwise have to be abandoned in the reservoir; however, the reservoir must possess the appropriate geological qualifications, and careful study and analysis of the ERR surface and sub-surface parameters along with costs and benefits are required for a successful EOR ooeration. (b) In preparing an in situ coTbustion project, the design and optimization of the surface facilities, especially the air supply system, should receive the same detailed attention as is given to the reservoir aspects. (c) In selecting items to be financed from its loans, the Bank should focus on critical items which can promote procurement efficiency and lead to improved project design and operations. RO#WhIA VI-LM./9LASXA -MMICED OIL RECOVY PROJEC? (LOAN 2148-RO) PROJECT COMPLEION REPORT I INTRODUCTION 1.01 Oil production iv Romnis dates back to the nineteenth century when it-ves-one-of-the-important oil-producing ceaters ia-^the--e w .- loveuvert the mjor oil fields have long since passed their peak primary production years. Despite the widespread application of secondary recovery techniques of water and gas injection, production beasn to fall sharply from 1976 ;a, *t- =- -4 million tons in 1976 to 11.5 million tons in 1980. The year 1976 vwas also. when Rotania became a net oil importer for the first time; by 1980, the cost of these imports had i creased to almost US$ 2 billion per year. The 1981- 1985 five-Year Plan focused on arresting the oil production decline by finding and developing new oil reserves and by increasing the production from existing oil fields so as to stabilize future oil production at about 13 million tons per year. 1.02 The Plan allocated about a billion dollars to develop increased production from existing reservoirs, about half that amount to finance conven- tional secondqiiy recovery and the other half to finance tertiary enhAnced oil recovery (EOR±I) projects. Extensive laboratory and field tests had identified some 41 possible LOR projects, 18 of which were sufficiently prepared to be included in the plan. These projects incorporated the generally applied tertiary recovery techniquess thermal including steam injection and in situ combustion, carbon dioxide injection and polymer mieellar solution injection. The VidelelBalaria 3OR project, the most important and largest of the 18, was based oan the in situ combustion process. 1.03 Essentially, the project covered the 1982-1986 portioe of the long term MR program for the Videle and galaria reservoirs and was expected to increase ultimate recovery from 152 to 391 of the oil initially in-pLace. This increase would be equivalent to roughly 102 of the country's net oil imports or about a US$ 0.2 billion foreign exchange saving per year based on crude oil prices prevailing in 1981. major components of the project included: (i) well,drilling and the facilities necessary to recover, process, store and transport the oil produced at the two fields; (ii) air injection fac.lities; (iii) utilities; and (iv) civil works, engineering and technical services. I/ Amex 4 gives a short description of modern WR processese i lt~~1 Annex 4 gives a short descr.ipcion of modern 803 processes. I. -2 ..1.04 Tma borrowee .as the Investment Danxk (IS), the speciialized agency~, under-the Kinistry-of-?inance for dealing with-investment projects in all' sectors of the economy except Agriculture and food -processingi The Bolintin- Petroleum Trust (ZTUS) was the beneficiary of the Bank loan and the implementing agency of the project. Tfl, a juridical entity under Romanian law, is responsible for oil development and extraction in the southwestern plart of Romania. Its responksibdiiies end activities are exacuaed through a hitadquarters staff., which takes care of technical, financial and .oordination matters, and seven semi autonomous operating divisions known ais eonterprises: Mi four engaged in crude oil production in geographically divided areas; (ii) one in drilling; MOii one in maintenance end manufacture of oilfield equipment; and (iv) one in construction and erection services. 1.05 The project was estimated to cost US$ 454.1 millioa. 282 of w.hich was to be covered by the, Dank loan of US$ 101.5 million. The balance of the project was to be financed by TPB from internally generated funds and from budgetary Allocations by the Government. This report is based on the completion report prepared by the Investment Bank and the Bolintin Petroleum Trust and the findings of a mission which visited Romania in June 1987. II. PROJECT PROPAIIATIOR AND APPRAISAL 2.01 In 19601, a Bank petroleum mission visited Rtomania to review the Government's investment program for increasing the country's crude oil production. The mission found that new oil discoveries could not be counted on to be a major contributor to production in the cear or medium term.- However, enhanced oil recovery (OE010from existing fields held the promise of stabilixing production from these fields17t a substantial level over the next 20 years or more. from the OEM projectsz. mder preparation at the time, the Bank mission selected the Videle/Dalaria project as the best suited for Bank participation as it was both the largest in terms of potential incremental oil production and the most advanced in terms of project preparation. The in situ combustion process was seletted in lieu of steam injection '~the other LOU process which was deemed to be suitable for the Videle and Balaria reservoirs) because of the greater ultimate oil recovery potential, better fuel economy and the fact that the ezisting production and injection waLls could be used- with the in situ combustion process but not with the steam injection system. 2.02 Project preparation proceeded expeditiously. The Instit%;e of Research and Industrial Design for Oil and Gas Production (ICPPC)I' designed th4 ROE Tocess on the basis of extensive laboratory tests, studies and pilot operations which had already been carried outo Bank consultants and a Bank engineering panel reviewed the SO& design and offered several beneficial 11 The Romanian oil industry-was among the first in the world to apply, or experiment with, the technically feasible ERO processes. 2/ The state-owned research, engineering and design institute comprising a geological research center in Bucharest, a design and engineering center in Ploiesti and a center for drilling, production and reservoir' development in Cimpina. _3_ reeoCsendaCions which were subsequently incorporated-into thewproject. The project was appraised during September/October 1981.- 2.03 Looking at the project-preparation process retrvspectively, some flaws can be seen in the Bank's and TPB's performance in this activity. The project preparation effort concentrated almost entirely on the technical aspects of the EOR program, while three other important elements of the project preparation process were not given the close attention they should have received.- (a) Mechanical design of the surface facilities: At appraisal, ICPPC had already prepared preliminary ngineering for these -facilities based on past practices and experience at TPDS' ongoing EOR operations. The large number of small compressors suggists that a better air supply system could have been developed. Novever, there is no way to confirm this conclusion since no thorough project optimization study was undertaken (para. 8.04). (b) Project Planning and implementation: Considering the history of project implementation delays in other sectors, a special effort was made to ensure expeditious project implementation. Never- theless, the project completion goals could not be achieved; in fact, the incremeptal crude oil production target was missed by three years. Any improvement ia this area will require a greater effort, especially in identifying and correcting the institutional constraints responsible (para. 6.03). (c) Use of the Bank loan: It now appears that the Bank loan should have financed the air compressors instead of the standard drilling equipment and materials. This requirements would have provided an opportunity to compare the merits of the compressors available on the international market with those manufactured in Romania and may possibly have resulted in a superior air supply system (para'. 8.05). - Considering the financial and institutional constraints at the time, it is unlikely that any Sank initiative toward improving the shortcomings noted above would have been very successful. Lowever, any future lending operation in the sector should address the issue of correcting che project preparation and implementation deficiencies brought to light by the project. 2.04 The project was expected to increase the ultimate recovery of oil from the two oil field from about 15S (without the project) to 391 of the oil initially in place in the reservoirs. This was expected to result in an annual increm ntal production at full development (then expected in 1986) of 731,000 tons per year, equivalent to roughly 10 of the country's net oil imports and saving some $0.2 billion per year in foreign exchange. The project covered the 1982-86 portion of a long term E08 program for the Videle antd Salaria oil fields and comprised the following: .~~~~~~ (a) fDrilling of 909 vells for oil productionad air injectionL I -:(b) Conitruction o£ 24 oil and aSs separation centers (7 of -thesse 9- - - -s- eparation centers would be equipped with water injection .facilit ies); (c) Construction of one central oil treatment storage and pumping facility,; (d) Construction of one water treatment facility for water reinjection into the reservoirs; I (e) Construction of 5 compressor-stations and air injection facilities; (f) Laying of approximately 1,300 km. of pipelines for air and water injection, gas supply, fluid collection and disposal (g) Construction of power substation and distribution lines, treated water and steam supply facilities; (h) Setting up of laboratory and field monitoring instruments; and (i) Engineering and technical services for surveys, hydrological, and geotechnical investigations, coring, logging, ceesnting, perforations and design engineering. III. IWPLENMTrATION Start-Up 3.01 Project implementation got underway -on schedule witiout undue problems except that initial delays in procuring Banh-finauced materials, establishing a site organization and drilling rig mobilization slowed drilling during the first year (295 wells scheduled vs. 34 actually drilled). There was no permanent adverse impact from this delay as drilling progressed at an accelerated rate in the following years. In fact, by end-1986, 1,220 wells had been completed compared to the 909 originally anticipated. The larger number of wells was a result of operating experience gained as the project progressed; it was found that a closer spaced well configuration vas necessary for optimum recovery efficiency along with more in-fill drilling to realize earlier production gains. There were no revisions to the original project scope other than the increased number of wells. Impleeatation Schedule 3.02 : Annex 3 shows graphically the original scheduling of the major project activities and the actual accomplishments. It can be seen that the compressor plants, the heart of the in situ combustion process, missed the mid-1984 completion target by a wide margin, in fact almost 3.5 years based on the current October 1987 completion target for the last of the five compressor plants. The project schedule allowed only about two years to procure, deliver and construct the five compressor plants.. To complete in the time allocated an air compressor s teom of the size required for the project would have 't - - s~~-5 required an all-out- construction effort and about a one-year deLivery period fcr a system based on -hih capacity compressor trains (not of Romanian manufact^ire). Actually, no such effort vas made. The compressors (110 or 22 per compressor plant) were purchased from a Romanian manufacturer with a staggered delivery time ranging from early 1983 to September 1986. In addition to the prolonged compressor delivery schedule, further delays were encountered during the construction phase. The unusually severe winters during the construction period accounted for moat of these delays, but labor shortages was also.a factor, although to a lesser degree,A-Ancillary y facilities experienced similar delays as the compressor plants, but they were completed by the time they were actually required. - 3.03 The EOR program had-an air-injection target of 8.t million cubic meters per day by end-1986 but, because of the compressor delays, only a 5.0 million cubic meters capacity (S71) was installEd by that date. The reduced air injection capacity caused a substantial decrease in the incremen- tal oil recovery, from a rate of 731,000 tons per year expected to 101,000 tons per year actually produced. It is now expected that the full 731,000 ton rate will be achieved in 1989, three years later than the original target. Reportin8 3.04 TPB and IS met all the reporting requirements; both submitted, on a regular basis, the progress reports agreed with the Bank. Procurement 3.05 The borrower procured oil field tubulars (valued at US$60.3 million) and production equipment (valued at US$39.1 million) totalling US$100 million out of the Bank's funds following the Bank's international competitive bidding guidelines. Nine bid lots, approved by the Bank, were internationally advertised in June 1982. Fifty-one firms procured bid documents and 24 foreign participants competed in the bidding. However, all nine bid Lots were won by Romanian companies whiclh were the lowest evaluated bidders, probably because there was an overall shortage of these types of goods in the world at that time, and international suppliers quoted high and not firm prices and long deliveries. TPD did not find it necessary to avail itself of the domestic preference option available to it under the Loan Agrement. The Bank and the borrower had no disagreement over any procurement matters. Project Costs 3.06 The following table based on Annex I compares the projec costs by major compomeots as estimated in the Staff Appraisal Qeport (SAR) and the actual costs incurred. -6 {Le1 BIll ian) a -- SAP O/ Actual - I nd I rect I nd i rect Local Foreign Total Local Foreign Total Currency Exchtnce Currency Exchanga - Ossign, Engg a Supervision 0.25 - 0.25 0.73 - 0.73 Land OwvelAPuIt & "ads 0.37 0.01 0.36 0.07 - 0.07 -Well Qriiang 0.91. 0.96 1.89 0.99 1.10 2.09 K Vel lWletle1 & hm'au 0.60 0.368 - 1.03 0.33 0.37 0.70 _tmormuM eir supply 1.47 0.14 2.21 1.00 0.22 1.22 Other fecllties 0.63 0.23 0.69 0.71 0.28 0.99 Total 4.28 2.34 6.62 3.63 1.97 5.80 a/ Csts are givn In Lei since foreign xchang oeandi turs were recorded In Lel in cost accounts. U/ Physlcal and price entIngwieons have lee prorated to ach Item. The SAk cost represents the project cost to the Government which adjusted the cost of the indirect import contents (e.g., petroleum products, iron ore, coking coal, special steels, sub-assemblies, ete.) of locally purchased equip- ment and materials to import prices or international levels as opposed to the Government-set domestic catalog prices which were reflected in the financial ..cost to.TPB. From 1981-86, the government raised catalog prices three times with the view to eliminate any hidden subsidies to State enterprises; cstalog prices are currently the sam as the Government costs. As indicated in the comparison table, the actual project cost of 5.8 billion Lei underran the 6.62 billion Lei estimated UR cost by 0.82 billion Lei, or 122 of the estimated cost. The estimated financial cost to SPB at the time of appraisal was 5.89 billion Lei based on 1981 catalog prices. 3.07 The cost variance analysis in Annex I shows that there were substantial underruns in the cost of three project components (land development and roads, well completions and hook-ups, and compressed air supply) which more than made up for both the over-expenditures in the other three project components. As a general conclusion, the cost underrun can probably be attributed to the sizeable physical and price contingencies included in the estimate. Three of the more signif£cant variances can be explained by the fact thar: (a) Well costs were higher because of the increased number of wells; (b) Engineering and supervision costs were underestimatedt based On Romanian standards, they were estimated at onLy 4Z of the project cost whereas one would expect them to be at least 102 on the basis of international experience (and actually turned out to be 12.6Z in this case); and (c) Compressor costs in the estimate were based on more expensive foreign supply. Disbursements and Financial Sources 3.08 Except for the US$101.5 million Bank loan, all other funds'were raised by TPB through internal cash generation ana budget allocations from the State. The Government tnd IB confirmed during negotiations their intention to seek co-financing for the project as soon as foreign capital market conditions and Romania's external borrowing program allowed. However, because capital market conditions did not improve and Romania's creditworthiness continued to be a concern along vith the Government's policy of not incurring new foreign debt, no action was taken on co-financing arrangements. 3.09 The comparison of appraisal versus actual disbursement is given in Annex 7. Actual disbursement was one and half years ahead of the appraisal estimate due to expeditious procurement by the borrower and faster than expected deliveries of the Bank financed items. After the conclusion of these contracts, the borrower requested, and the Bank agreed in November 1983 to the reallocation of the loan amounts under various categories shown in the following table: Reallocation of the Loan (U15 Million) Amount Allocated Revised Under the Loan Agreement Allocation Oil field tubular materials 65.0 60.3 Drilling and production equipment 35.0 39.7 Front end fee 1.5 1.5 $101.5 $101.5 Performance of Consultants, Contractors and Suppliers 3.10 The borrower appointed ICPPC, the designated organization in Romania for all research, design and engineering activities for oil and gas, as the consultants for the basic design, reservoir engineering and project monitoring. With extensive experience of EOR techniques, the consultant's team of experts performed their assignments satisfactorily. They closely monitored reservoir behaviour and made modifications in the drilling and production plans (e.g., drilling 1,220 wells instead of 909 wells as planned) to assist in arresting the production decline during the early phase of the EO program and to improve the overall EOR efficiency in Balaria and VideLe fields. ICPPC satisfactorily monitored reservoir performance as influenced by the M0R process t Bsalaria and Videle. The Institute is well qualified for this type of assignment, particularly when in situ combustioa is involved. 3.11 Drilling and construction of surface facilities were provided by the state enterprises responsible for these services in accordance with the system prevailing in Romania. These entities were well qualified to carry out the tasks assigned to them, and they performed them satisfactorily. As already noted, the construction delays encountered during project implementation were largely due to the exceptionally severi winters during this period, and labor shortages were also reported to have U,&b a problem. However, the major cause of the extended implementation period was the long compressor deliveries. The supplier of the compressors (a Romanian manufacturer) cannot be held completely accountable for the delivery schedule since the company apparently had other priority commitments to fulfill and, in fact, did es #ntially meet the contract delivery dates except for one compressor station.' There were no problems or difficulties of any substance with the supply of the other equipment and materials required for the project. Environmental Impact 3.12 The Videle/Salaria fields are located in the densely populated agricultural area of the country, and, thus, the environmental impact of the- in situ combustion project with carbon monoxide and carbon dioxide as efflu^ ents is particularly significant. As agreed with the Bank during appraisal, the borrower took the required measures for the protection of the environment against pollution by crude oil, chemically treated water, and combustion products in oil/gas separation centers. A monitoring system, including setting up of special laboratories, was installed to de'termine average concen- tration of carbon monoxide and carbon dioxide on a regular basis. Particular attention was paid to installing facilities to protect against fire and toxis combustion products, and to coordinate with the Institute of Hygiene and Ssfety to solve any problems that might be encountered. These arrangements ajvear to be satisfactory. IV. OPERATINC PERFORMANCE Overall Assessment 4.01 The appraisal anticipations were that the field-wide in situ combustion program in the Balaria "a+b," Videle (East) "a*b," Videle (West) "a+b' and Videle "c" reservoirs would lead to a peak incremental production of 731,000 tons in 1986 which would then be maintained over the next 20 years. The current estimate, however, is that full incremental production now stands to be achieved and maintained only in 1989. The comparison between past and expected performance against the appraisal forecasts is as follows: 1/ Two stations were delivered early by two months; two stations were delivered Late by one month; and one station was late by six months. -9- ActuallEspected Reservoir As_raisaL Forecasts Ac ra/actd 3alarZa wa - Air injection to Air injection comenced in commence in October June 1984, 1983, To achieve peak Achieved 84,000 tons in 1986, incremental 100,000 To achieve 100,000 tons in tons in 1986, 1987, Videle (East) Air injection to Air injection comenced in commence in July 1986, October 1983, -To achieve peak To achieve 91,000 tons in incremental 182,000 1987, tons in 1986, To achieve 182,000 tons in 1988, Videle (West) Air injection to Air injection com_enced at one commence in April compresso? station in February 1984, 1987. At a second compressor station, air injection is schedulud to start in October 1987. To achieve peak To achieve 20,000 tons in 1988, hincremental produc- and 288,000 tons in 1989 tion of 288,000 tons in 1986, Videle (Vest) Air injection to Air injection commenced in - nC" - commence in April October 1986. 1983, To achieve peak To achieve incremental produc- incremental produc- tion of 120,000 tons in 1988, tion of 160,000 tons and 160,000 tons in 1989. in 1985. Total (Balaria/ To achieve 731,000 Achieved 101,000 tons incremen- Videle Reservoirs) tons incremental tal production and 1,272 tons/ production in 1986 day peak and 288,000 tons total production in 1986 Expect to achieve incremental production of 731,000 tons in 1989 4.02 The difference between the SAR forecast and the actual and projected production rates noted above is directly related to the air supply which, along with the critical reservoir parameters, governs the performance of an in situ combustion operation. The prolonged air compressor deliveries and installation delayi (paras. 3.02 and 3.02) resulted in a corresponding delay in achieving the incremental production targets. - 10 - 4.03 The question arises as to how reliable are the projected reservoir performances and whether the projected incremental production of 731,000 tons per year can ind6ed be achieved by 1989. At 8elaria, nearly peak production has already been realized. At Videle East "aub," a daily production of 210 tons of which 190 tons are incremental (902 of total production) has been attained. At this location, 83 wells on pxoduction have so far been influenced by the combustion front. At Videle West "c," all of the 80 tons per day of production at present are incremental, the combustion front having influen.ed 33 production wells so for. Civen these data and various other performance details and parameters of the reservoirs, as well as the future program for air and water injection, it is reasonable to expect that the production targets will be achieved by 1989. In situ combustion on a field wide scale has proved to be a success in Balarias. It has been demonstrated that the ultimate oil recovery from Balaria-will exceed the 392 of the oil initially in place conservatively assessed at appraisal; an average recovery of 42Z is now expected. Therefore, with the similar or better reservoir characteristics existing at Videle, it should be possible to at least meet or even exceed the 39Z recovery target. V. FINANCIAL PERFORMANCE 5.01 At the time of appraisal in late 1981, TPs fJinancial performance had deteriorated from an operating profit (or benefit1l) breakeven situation in 1978 to progressively larger operating losses in 1979 and 1980. The Government had recognized this problem and had adopted a policy, as part of the 1981-1985 Five-Year Plan, that the petroleum industry would earn during the Plan period a five-year average benefit (i.e., profits before interest expense) equivalent to at least 7.5Z of the costs of oil extraction. On the other hand, the service or non-petroleum activities of the petroleum trusts, which mainly comprise sundry services for employees, were expected to cover just about 95Z of their correspotding costs reflecting additional employee benefits. Thus, the overall bene5fit or o*;rating prufit rate during 1981-1985 of the individual petroleum trusts, such as TPB, was expected during appraisal to be somewhat lower - roughly ranging from 41 to 62 of total revenues. While this policy on petroleum production profits was a major step in the right direction, it remined to be demonstrated at the time of appraisal whether the Covernment would in fact increase prices sufficiently and in a timely manner given the experience during the 1978-1980 period when prices were not adjusted sufficiently to reflect increases in costs. The Bank's financial appraisal of the project and of TPB further indicated that because most of its oil fields have been in production for over 20 years and have passed their peak productive years, TPB's oil produ.-ion costs would continuously increase as it resorts to more capital and energy intensive secondary and tertiary oil recovery techniques. The investments required for these more capital intensive drilling, as well as enhanced recovery techni- ques, would also be very substantial. Thus, in the context of the project, it _I The Romanian financial system uses the concept of 'benefits," which corresponds to operating profit before interest expenses, as a measure of profitability. Since 1979, a value-added tax repLaced the profit t4x but the petroleum industry was exempted from this charge. - II - was agreed to set minimum financial performance objectives for TP8. These were. (a) that TPB would earn reasonable annual benefits (i.e., profits before interest) equivalent to at least ?.5t of oil production costs; and (b) that TPB would finance a substantial portion (i.e., at least 301) of its annual investment program from internally generated cash after provisions for debt service and benefit distributions. For TP8 to comply with these under- takings, it was forecasted that the Covernment would have to progressively raise the price TPB received for its oil by a total of about 601 (in current terms) between 1981 (Lei 483/ton) and 1986 (Lei 776/ton) and another 92 in 1987 (Lei 847/ton). 5.02 TPS has complied with all the financial covenants, including the submission of audited accounts and other reports. In particular, TP8 exceeded the minimum financial objectives during the period 1982-1986. During this period, the actual benefits averaged 10.31 of the cost of petroleum opera- tions, compared with the minimum of 7.52 assumed in the SAI. Likewise, the actual self-financing rates averaged 411 of the investments, compared to the 381 estimated in the SAR and a minimum ratio of 301 agreed during negotia- tions. This satisfactory financial performance is mainly due to three factors: (a) the Covernment increased the price received by TPh for crude oil by a total of about 682 between 1981 and 19866 on average the price increases were about S higher than the SM forecasts; (b) the service or non-petroleum activities of TPm earned benefits (i.e., profits) averaging 61 of the corresponding costs compared to the SAR assumption that revenues from such activities would, as mentioned earlier, incur a S loss (i.e., only cover about 952 of the costs) reflecting additional employee benefitst and (c) TPB produced about 61 more crude oil than estimated during appraisal because higher production from other oil fields made up for the lower production from the Videle and Salaria oil fields caused by the delay in project implementa- tion. The financial annexes contain details for the income statement (Annex 8), cash flow statement (Annex 9), balance sheet (Annex 10) and the production cost structure (Annexes 11 and 12) of TP6 and the Videle enterprise respectively. The revised incremental production cost structure of the project is given in Annex 13. It is shovn that the average financial production cost of the Videle enterprise when full output is achieved in 1989 would be about Lei 768 per con in current terms compared to Lei 732 per ton estimated in the SAl for 1986 when the corresponding full output was expected. A summary of the actual annual financial resu ts for 1982-1986, together with a comparison between the SAR estimates for the entire five-year period is shamw below. - 1U - IFS FINANIAL PEROAC (IN MILLION ClEME LEt) Cumulative (Total) Actual 1962-196- SAR 19"2 193 1984 1985 1986 Est. Aetual S 01ff. Crude OlI Sales (1.000 Tons) 2,908 2,936 2.66 2.670 2,440 13,054 13,848 41 Crude 0lI PrIce (Le I/t7) 562 562 709 691 814 642 * 42 aI *SS PSrlOl Rovenues, Ob 1,180 1,753 2,202 2,079 2,166 6,710 10,002 .151 bt'Atroiu am-enues 1.302 174 t.lf 1,U143 t43 4.718 8._32 #.77 Total Revenues 3,082 3,427 4,067 3,922 3,846 13.428 18,344 +375 Cost of Petroleu Operatlos 1,S 1,776 1.952 2,004 2,217 7?,69 9,529 .215 Cost of Non-1II Activities 1.334 1"601 16874 1'" 1.36 4.968 7827 +261 Total Oeating Costs 2,914 3,37 3,826 3,664 3,57 12,837 17,356 .355 Beoflts C/ 16 5so 241 25 271 591 966 4675 Intenal Cash Generation 4/ 865 966 1,424 1,640 1,570 5,121 6,485 *.75 Odebt Swvic NA 211 241 395 574 75S */ t,441f/ Invetmnts MA 2,54) 2.192 2,630 1,963 6,700 ±' 9,328 7/ +7S mnsfits as . of Cost of Peltrolum Operations 10.6 2.8 12.3 12.9 12.2 7.5 10.3 375 S SOlf-FInancing 1 NA 31 44 40 51 38 *f 41 f/ .86 A nnual overag for 1982-1986. bI Sales of crude oil natural gsol Ine and natural gas. / enefits (i.e.. pof its) before fi tert expnso. 1 b0nef its plus depreclatlon and reserve discovery charges (before dt Svice P3Snt5). ei Internal cas gewation less debt sevico and benf it distribution as a percentage of f ixd Investeents and Increas In net working caOltal. f/ Cmslative for 1913-1916 only. 5.03 As noted in the SAR, TP? does not pay oil produccion royalties nor incoqm taxes. Thus, the price it receives for crude oil (equivalent to about UIS$6.50/Bbl in 1986) is not comparable to the international price of crude oil of which typically anywhere from 402 to 702 is accounted for by royalties, taxes and government share. In addition, TPB does not undertake petroleum exploration, the most risky activity in the sector, but developes fields discovered by other specialized exploration enterprises funded by the Government. Thus, TPB's profitability or return on investments, given the relatively lover risk of its production operations, need not contain a "risk" premium and can be lower than the rates for typical incernational oil exploratioa and production companies. In this context, and in light of the operating losses incurred by TPB during the years preceeding the project appraisal (i.e., 1979 and 1980) as well as its other projected large - 13 - investments for enhanced oil recovery in the future (i.e., 1982-1987), the minimum financial performance objectives established under the project, as well as the actual results, were reasonable and satisfactory. VI. INSTITUTIONAL PERFOSMANCE AND DEVELOPMENT Background 6.01 The petroleum industry in Romania is among the oldest in the world and has a long-standing reputation for being well-organized and self- reliant. The Ministry of Petroleum is responsible for the overall direction and coordination of the sundry activities in the petroleum sector under its purview. Actual operations are carried out by a network of trusts and enterprises organized along regional and functionat lines. The main elements in the network are the six oil drilling and extraction trusts of which TPB is the one,responsible for oil development and production (along with various ancillary operations and services) in the southwest region of Romania. OrLanization and Performance 6.02 TPB is organized into seven semi-autonoous operating divisions, also known as enterprises, and a headquarters group which performs the necessary support and coordination functiona. Its annual investment and operating budget is subject to ministerial approval in the context of the Covernment's five-Year and Annual Plans. The top decision making power within TPB rests with the Working People's Council which has 25 members representing management and labor unions and which includes the director of the Trusc who reports to a deputy minister in the Ministry of Petroleum. A People's Executive Board chaired by the director and made up of 7 to 9 members picked from the Council manages the Trust's operations. 6.03 TPB and its operating divisions and the other organizations which assisted in carrying out the project are staffed with experienced and capable individuals. Project management and coordination was assigned to a team of senior level staff from these organizations, the Ministry and ICPPG, and the project activities came under periodic review by a high-level interministet-ria committee and the Minister of Petroleum who took an active interest in the project. Despite this strong, well-organized back-up, TPS fell three years short of meeting the *nd-1986 incremental oil production goal. The cause of this shortfall is not due to any lack of experience or technical short-coming; it is mainly due to two essentially interrelated institutional weaknesses. The first is to the propensity to use exclusively Romanian equipment and technology to avoid imports and reliance on foreign technology. This predilection led to a project design based on air compressors of Romanian manufacture with a protracted deLivery schedule and which by virtue of their numbers required a lengthy installation period. Then secondly, having no options on compressors, it was natural not to; devote time to the kind of comprehensive studies and planning for the overall project design that went into the in situ combustion design. For example, there was no investment study to analyze the costs and benefits associated with the various possible project design scenarios. Any future Bank lendi.ng operation in the petroleum sector should focus on rectifying the institutional constraints responsible for the project preparation and implementation experienced with this project. - 14 - Training 6.04 The project did not include provisions for training because it was felt to be redundant considering the Roanian oil industry's experience and expertise which was on a par with any in the world in this field. However, Romania has not kept pace with the international oil industry in offshore exploration and production and in deep drilling technology. Any future Bank lending operation in the petroleum sector should address this technology transfer issue along with the project preparation and impLementation weaknesses demonstrated in this pftoject, and include appropriate training and technology transfer provisions. Loan Covenants 6.05 TPB complied fully with the9 conditions of the Loan Agreement. Although not a loan condition, the Government and IB did confirm during negotiations that cofinancing of the project would be sought; however, no cofinancing arrangements were entered into because of adverse capital market conditions and other unfavorable conditions (para. 3.08). VII. ECONOMIC REEVAL'ATION 7.01 The economic reevaluation of the project follows the same methodology as was used in tJe SAR. The economic costs and benefits, expressed in constant 1981 US dollar terms, are on an incremental basis using actual costs and benefits realized during 1982-1986 and revised estimates from 1987 onwards. The details are discussed in Annex 1S. The economic rate of return (ERR) of the project is now revised at 131 compared to the 29X estimated in the SAR. This revised ERa is still satisfactory. The lower return is mostly due to the sharp decline, in real terms, in international oil prices and to a Lesser extent to the higher production cost, as well as to the three-year delay in achieving the full incremental production. These adverse developments were slibhtly offset by a 112 lower actual economic capital cost (USS332 million) compared to the SAR estimates (US$371 million). W4;reas the SAR assumed (base case) that the economic value of the crude oil produced by the project would be about US$221 per ton (jq 1961 terms based on an international crude oil price of US$34IBbO)' throughout the project life, the actual (1982-1986) and revised forecast or assumed values (1987-2009) show a trend dectining from US$196 per ton in 1982 to a low of US$79 per ton in 1986, temporarily riaing to US$99 per ton in 1987 and again falling to US$92 per ton by 1989 before gradually rising again to about US$163 per ton by the year 2000 and remaining at that level through the end of the project economic life (2009). The incremental economic production cost (before provisions for capital charges or recovery) has been revised upwards and now reestimated at about US$9.87 per ton (US$1.47/Bbl) compared to the SAM estimate of US$S5.06 per ton (US$0.76/Bbl). This increase is due primarily to higher labor, chemicals and other input requirements, as well as the real increases in the economic costs of these inputs. 1/ See Annex 15, page 2, footnote "a" for the basis for projecting crude oil prices for the economic reevaluaticnaf - 15 - VIll. PE1FO3AWCE -N ROLE OP TEE UAK 8.01 A cooperative working relationship was maintained throughout the project cycle by Bank staff and I8, TPI s-4d GovernmeUt offictals. These officials confirmed that complying with Sank procedures an4 requirements created no proSlems of any consequence in carrying out the project, lank staff undertook sevea supervision missions between May 1982 and October 1986. These missions along with the timely progress reports submitted by the borrower were adequate for the effe-nive supervision of the project. 8.02 In addition to providing funds needed for accelerating the £01 program, an important concribution considering the rapid production decline taking place in Romania's oil fields, the Bank participated in the technical preparation of the project. The tmmanian petroleum industry Wan aong the first in the world to experiment with and commercialize the in situ combustion type £01 process. Nevertheless, the Rank correctly insisted that it was prudent to have an outside party study the project.especially in view of the fact Chat the project represented the largest application of the in situ combustion process in the world and entailed a significan /technical risk. Accordingly, the Sank engaged a consortium of LOR expertsz to review the project design and expected production gains, as well as the monitoring system for the combustion front and its effluents for operational and environmental prote tion purposes. The experts agreed with the project concept and the design parameters, and they made a number of useful recomendations regarding the phasing of the fireflooding of the Videle reservoirs, the number and configuration of isjection and production wells and the combustion monitoring scheme. These recommendations were subsequently incorporated in the £OR programo. 8.03 A Sank engineering panel reviewed the final projeit designs (a) the choice of technology (in situ combustion) and basic design parameters (b) the reservoir data requirementst (c) the combustion monitoring arrangements; and (d) the investment phasing. Except for recommending additional and better data acquisition through well coring and logging during implementation, the panel found the project acceptable with regard to these points. This recommendation was subsequently included as a covenant in the loan agreemnt. 8.04 On the choice of equipment, the Rank engineering panel noted that basing the air injection facilities on an exceptionally large number (22 per compressor station and a total of S stations) of relatively small compressors was contrary to Western practices of taking advantage of the economy of scale principle. On the other hand, the panel accepted the fact that the lomenian 1/ A Canadian research institution in cooperation with ROMPSTROL, the Romanian enterprise for international cooperation in the oiL and gas industry. - 16 - injection design had the merit of being a tested working design familiar to Romanian technical, operating and maintenance personiel and had the advantage of ready access to spare parts and established mintenance services since che compressors vere of Romanian manufacture. These considerations along with the fact that the Bank loan could not cover the total cost of the compression equipment which was consequently entirely excluded from Bank financing, caused the panel to conclude that the Romanian choice of compressors was acceptable. Also, reinforcing this conclusion was the fact that it was of utmost importance to initiate the EOR program as soon as possible because of the rapidly dectining production in the Videle and aalaria fieLds. It was felt that any delays in developing a different air injection system could not be justified because of the consequent production loss that would be incurred. However, it appears in retrospect that an optimization study of the air injection system would probably not have added significantly to the implementation delays actually experienced and might have developed a more efficient and cost effective air compressor installation not necessarily of Romanian manufacture. 8.05 The Bank's rationale for participating in the project was to help improve the quality and efficiency of project preparation and impLemntation activities. Although generally successful in this area, events have shown that the Bank should have opted for financing the air compression equipment instead of the standard oil field items actually selected, even if It required increasing the loan amount. It can be seen now that such an allocation of tte Bank loan was particularly important in the absence of an optimization study of the air injection system because the Bank's international competitive bidding requirements would have provided cost, operating, delivery and other essential data on air compressor systems internationally available. It is possible that the Romanian air compressors would still have turned out to be the best selection because of price, spare parts and other considerations. However, not having investigated the international market, it is impossible to know whether an opportunity was missed to install a better air injection system-at less cost. IX. CONCLUSIONS 9e01 Results of the Balaris and Videle £01 operations indicate that the ultimate oil recovery target of 392 of the oil initially in place will be achieved, and in fact, the recovery could be as high as 421. These results strongly support the conclusion that the project objective of recovering 731,000 tons per year of incremental oil over a 20-year period can be realized. However, the long implementation pe^iod coupled with the fall in international crude oil prices and higher than forecasted production costs have reduced the economic rate of return to 132 which is still satisfactory but falls short of the 291 return projected at appraisal. 9.02 The minimum financial performance objectives established for TP? under the project were justified and have proved to be successful. As a result of the increased crude oil price it now receives from the Government, TPB has exceeded these objectives and is now in a much better financial position to carry out future EO£ operations. 9.03 The project demonstrated that the 1OR technique based on in situ combustion is highly effective and efficient in recovering oil which might - 17 - otherwise be abandoned in the reservoir. However, intensive study, tests and pilot operation? are required to assure that the £0R process to be applied is the correct one for the specific reservoir under consideration. to this regard, preparation of the Videle/Balaria W£ program was excellent and could be used as a model for similar applications elsewhere, possibly with the assistance of the Rommaian oil industry which is an internationally recognized leader in IOR technology, especially where in situ combustion is involved. 9.04 The project also demonstrated that economic considerations are as important as the technological factors in preparing an EOR investment. This fact was amply emphasized by the sharp drop in crude oil prices, especially in the first part of 1986, which essentially wiped out new EOR investments everywhere. Since tebn, crude oil prices have recovered considerably and reestablished the economic viability of the project. However, considering the magnitude of the investments required for U0K projects, the need to pay particular attention to the economics of these projects is still valid. 9.0S As a corollary to the conclusions discussed above, it can be observed that in contrast to the thorough and detailed preparation devoted to the reservoir aspects of the £0R program, relatively less of an effort went into preparing the rest of the project, as for instance, the surface facilities which include the heart of the in situ process, the air supply system, and an analysis of the economic costs and benefits associated with the possible alternative arrangements. Although the EOB facilities actually installed undoubtedly meet the design parameters established for the project, there is no basis for concluding that they satisfy the least cost criteria for the project from the standpoint of overall costs and benefits. 9.06 To complement its high degree of technical expertise in £0R processes, TP8, and the Romanian oil industry in general, need to correct three institutional weaknesses brought to light by the project: (a) to stop relying exclusively on Romanian equipment and technology; this is particularly important in the areas of offshore petroleum activities and deep drilling where the lomaian oil industry has not kept up with developments in the international oil industry; (b) to strengthen its project preparation performance, particularly with regard to the analytical studies required to devwlop an optimum project design aimed at achieving the maximum benefits from the project at least cost in economic terms; and (c) to strengthen its project implementation performance by developing the project management arrangements necessary for planning and executing a project expeditiously and in accordance with an implementation schedule to be strictly adhered to. 9.07 The Bank should select items to be financed from its future loans with the view to promote the introduction of more efficient technology and provide an opportunity to assist in achieving optimum design and operational objectives. - 18- 9.08 Any future Bank lending operation in the Rommnian petroleum sector should address the weaknesses discussed above. A rationale for such lending would be the bedeficial changes and improvements in these areas which the Bank could effect by its participation. .. - -~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ RO4 IA VIDELE 5MARIA EM PROJECT PROJECT COMPLETION REPORT PROJECT COSTS (In *illio Lae) (13 _____-------- VARIANCE (ACTUAL vs. PPRAISAL) ---- 121 ---- APPRAISAL ESTIT -- -- -- ACTUAL In blillon LeL ------ ------------ M ----------- Local Forein Local ForeLa Local Fore tn Lohl Fore2ga Carcpy Bsohanse Total Currency Sbeng Total Curreny Eachm*e Total CUzr.ncp bobanga Toal -__.-_.--__--_-- ___ _ _ - _ _ _ .___ _____ -__ _._ _ _ _ _ ___ _ _._ ____. .__ . .. .. -------- ----- -------- . . ._____. ----- --- --- Deeg,Eng'gs &*S tWol 0.23 0.00 0.25 0.73 0.73 0.48 0.48 192 19212 Len Delcpe_t a bads 0.S7 0.01 0.38 0.07 0.07 -0.30 -0.01 -0.31X 011 -822 -a2 Vell DrIllIw 0.91 0.98 1.69 0.99 1.10 2.09 0.00 0.12 0.20 92 121 In2 Vell Ckletim 4 5B0o-Up 0."5 0.18 1.s 0.25 0.37 0.70 -0.32 -0.01 -0.33 -A93 -53 -322 1 Caros"d Al Su1ll 1.47 0.74 2.21 1.00 0.22 1.22 -0.47 -0.52 -0.99 -322 -712 -452 Otbmt factllties 0.63 0.22 0."0 0.71 0.28 0." 0.08 0.05 0.13 122 242 151 - . - - - - - - - . - - .----- ... - - - - - ----.- ---- -- --- --- .... - - - - - . Tetl Project Costs 4.28 2.54 842 2.83 1.97 $.60 -0.45 -0.57 -0.82 -112 -162 -122 III Costs a" gL1 In lot aIms folrel eqendtture La recorded In lel. 121 Phyalcal and prc coatblVncles have beea prorated to each Item. IU VIELE SALItA EO PRDECT PROJECT COSTS - YTMUISE EXPRIDITURE (In Niltion L..) 1982 1983 1984 1985 1986 1987 TOTAL L.C. P.B. L.C. F.E. L.C. F.E. L.C. F.E. L.C. P.E. L.C. F.S. L.C. F.E. Totlt WELL DRILLING S CO2PLETIoN 24.0 130.0 5710 719.0 73.0 826.0 750.0 599.0 1503.0 167S.0 3178.0 CWWUESSOR STATIIS 4 AIR PIPING 20.0 353.0 110.0 121.0 233.0 132.0 282.9 183.1 1182.0 253.0 14S5.0 GAS FEEDINC 20.0 17.0 1.0 16.0 14.0 67.0 1.0 68.0 OIL SEPERATION CENTRES 20.0 13S.O 120.0 12.0 116.0 14.0 108.0 17.0 516.0 24.0 542.0 OIL STORACB 4 SR8 NT5X C8TEN 8.0 20.0 17.0 1.0 17.0 2.0 17.0 79.0 3.0 82.0 WASTE OIL & SALT WAT1R DISPOSAL 10.0 51.0 51.0 1.0 47.0 3.0 32.0 1S.0 204.0 4.0 208.0 0 ELECTRICAL SUPPLY 19.0 19.0 3.0 13.0 5.0 9.0 10.0 70.0 8.0 78.0 VATSR IZJECTIOW FACILITIES 4.0 22.0 20.0 19.0 2.0 18.0 3.0 86.0 2.0 68.0 LUAD 4 ROADS 19.0 21.0 20.0 1.0 15.0 76.0 0.0 76.0 01635 ooaxs 1.0 15.0 10.0 11.0 8.1 2.0 47.1 0.0 47.1 ----- ----- ---r -_ ----- ----- ------ ______ ------ ______ ----- ...... ------ ......___ TOTAL COSTS 87.0 130.0 711.0 719.0 458.0 965.0 1242.0 158.0 1089.0 0.0 243.1 0.0 3830.1 1972.0 5802.1 "mum3381 DURING 006STRUCTXIO 23.2 102.3 214.5 19S.9 227.3 191.5 0.0 954.9 954.9 TOTAL 87.0 153.2 711.0 821.3 456.0 1179.5 1242.0 353.9 1089.0 227.5 243.1 191.5 3830.1 2926.i 6757.0 - i n asomomm wom wou"-. -.m om -momo - on-- . , - ~~~~~~~21 -- ANNE.X 3 - 2~~~~~~2 39M~~ _ , _ _ __ _ 3 : e. .j i .m I _ _ _ _ _ _ _ _ _ Il -1 M114[ D .. - AAUL... _; ____ . . , i ___ mH.uLi.o __ .3~H ,FE|--- 41~~~ _ _ !--- §~~ - __ !1 2 § H ] H i' e " x- 0 I~~~~~ jI _ I . .~ ~~~~! - 22 - ANWEX 4 Page 1 of 2 ROMANIA VIDBLE/BAURIA EWHANCED OIL RECOVERY PROJECT PROJECT COMPLETION REPORT ENHANCED OIL RECOVERY (EOR) 1. Oil reservoirs are initially produced using their latent energy in the form of oil, gas and water expansion and reservoir rock compaction. Depending on reservoir properties, the final oil recovery obtainable by this technique (primary recovery) may be as high as 451 of the oil initially in place (OIIP). However, in most cases, it is rather low, being on the order of lS%-30X. 2. In most reservoirs, the ultimate oil recovery can be increased by the use of the so-called enhanced oil recovery techniques (EOR). OR techniques essentially consist of introducing extraneous energy into oil reservoirs in order to eztract more of the oil in place. The simplest and oldeit EOR techniques are waterflooding and gas injection (secondary recovery) in which additional energy is introduced into the reservoir in the form of injected water and gas, respectively. Being the least expensive EOR techniques, water and gas injection are usually the first to be considered towards the end of the primary producing life of an oil reservoir. The additional oil production from these simple and inexpensive secondary oil recovery techniques would range from 5Z to 201 of the OIIP. 3. The ultimate recovery of oil can be further increased by the application of more advanced EO1 techniques designed either to improve the performance of water and gas injection where they ere applicable or to supplant them where they are not applicable, such as heavy oil reservoirs. As such, they can be classified as both secondary (coming immediately after primary) and tertiary (coming after secondary) recovery mechanisms. Advanced £0R methods which are generally accepted as proven by the petroleum industry can be divided into three groups: (i) improved waterflooding, (ii) miscible displacement and (iii) thermal oil recovery. In improved waterflooding, the efficiency of oil displacement by the injected water is enhanced by the injection of chemicals (surfactants), viscous solutions (polymers) or microemulsions of oil and water (micellar solutions) to achieve higher oil recovery. Miscible displacement achieves the same goal by injecting into the reservoir substances that are uiscible in both the displaced oil and the displacing fluid, normally a gas. Carbon dioxide, high-pressure natural gas, enriched natural gas, LPC and solvents are the most widely used miscibility agents. In thermal EO techniques, extraneous energy is introduced into the reservoir as heat in the form of either surface-generated steam (cyclic or - 23 - ANNEX 4 Page 2 of 2 continuous steam injection) or high-pressure air which burns part of the reservoir oil (in situ combustion). 4. Although they are rather simple in concept, advanced EOR techniques involve many physical and chemical phenomena which are not yet well understood; have widely differing conditions of applicability: are expensive and difficult to implement and monitor; and require extensive pilot-scale testing before full-scale field application. - 24 - AMINEX 5 ROMANIA VIDELMBALARIA ENHANCED OIL RECOVERY PROJECT PROJECT COMPLETION REPORT PRODUCTION PEWRORMANCE Videle 8alaria Total Field Mid-1981 tnd-1986 Mid-1981 End-1986 4id-1981 End-1986 Number of Wells on Production 660 486 60 387 720 873 Daily Oil Production 959 729 162 543 1,121 1,272 Average Well Productivity (ton/day/well) 1.45 3.55 2.70 1.4 1.56 1.45 Average Water Cut, X 96.9 98.0 84.6 92.1 96.5 96.7 No. of Air Injection Wells in Operation -- 30 -- 29 -- 59 No. of Water Injection Wells -- 172 -- 9 -- 81 Avg.3Air/Oil Ratio NM 3/Ton 3,026 2,950 - 25 - ANNEX 6 ROMANIA VIDEL/IBALARIA ENHANCED OIL RECOVEflY PROJECT PROJECT COMPLETION REPORT OIL PRODUCTION TO BE ACHIEVED WITH AND WITHOUT THE PROJECT ('000 TONS/YEAR) Avpraisal Estimates Actual Forecast ';ncre- Without Incre- Without Incre- Without mental Project Total mental Project Total mental Project Total 1982 9 400 409 18 373 391 -- -- 1983 16 351 367 24 321 345 - -- -- 1984 50 304 354 33 281 314 -- -- -- 198S 395 264 659 67 235 302 -- -- -- 1986 731 229 960 101 187 288 -- -- 1987 731 201 932 - -- 206 157 363 1988 731 177 908 -- - 422 132 554 1989 731 156 887 -- -- 731 116 847 1990 731 138 869 -- -- -- 731 102 833 - 26 - ANX 7 ROMANIA VIDELE/FALARIA ENHANCED OIL RECOVERY PROJECT PROJECT COMPLETION REPORT SCHEDULE OF DISBURSEMENTS Fiscal Year and Appraisal Actual/Appraisal Quarter Estimate Actual (X) 1982 III 3.4 -- 0 IV 7.9 35.i 444 1983 I 34.3 50.6 147.5 II 46.0 64.2 139.6 III 57.0 64.2 112.6 IV 67.0 89.3 133.2 1984 I 76.0 91.9 120.9 II 83.4 95.2 114.1 III 88.7 98.7 111.1 IV 91.5 101.S 110.9 1985 I 95.1 -- II 96.9 -- -- III 97.9 - IV 98.7 - - 1986 I 99.7 -- I II . 101.5 -- TOTAL 101.5 101.5 ROWAMIA VIDSLR-IALARIA DUUASCD OIL RECEXR11 PROJECT IZNCau STATUUUrS _____________.___ (In NillLon Let) 1982 1983 1984 1985 1986 Actual Apptaiaal Actual Appraisal Actual Aptpt sa Actual AppratsaL Actua4 Apprtalt Salem qPuaatttv Crude 0o1 (000 tmen) 2908.0 2970.0 2936.0 2695.0 2886.0 2515.0 2670.0 2545.0 2483.0 2531.0 natural Csotlas (000 teas) 0.6 1.8 0.7 1.7 0.8 1.6 0.5 1.4 0.2 1.4 Natural Ga. () 329.0 355.0 365.0 345.0 356.0 345.0 406.0 345.0 360.0 345.0 SLes Eknsne _____________ CCU" 011 1,693 1,484 1,649 1,551 2,045 1,562 1,845 1,664 2,020 1,965 Naturu Alal G 3 1 3 1 3 1 3 1 3 Uatural a" 44 30 65 32 82 34 83 35 59 37 Ohders (.4-related 42 45 38 52 74 61 IS0 69 U08 74 Subtotal (,1 aoctivlty) 1,700 1,563 1,753 1,637 2,202 1,659 2,079 1,770 2,188 2,080 Den-Ol Aettvtty e 1,302 856 1,674 897 1,8S 909 1,843 949 1,458 1,061 Ttatl bwnu 3,062 2,419 3,427 2,534 4.06T7 2546 3,922 2,759 3.844 3.148 ------ ------ ------ ------ , ,___,_ _ ..... ---- ------ ------ ------ Preduotloe Costs 011 Activty Variable Coats 969 428 909 445 1,028 659 939 565 1,171 592 Fled Costs 611 65 103 91 20 96 47 102 122 109 DPreSaLtlea 400 482 471 415 491 756 679 739 935 Resbuu Dftoouery Chbrxe 297 282 270 289 252 262 235 185 253 ____________ ------ _ .,__..... ------ ------ ----- ___ ----- ------ -- -. ._ ------ 6ubtotal 1,560 1,407 1.776 1,476 1,952 1,497 2,004 1,400 2,217 1,6' ______ ...... ------ ------ ------ ------ ------ ------ Us-Oul Acttvvty Ibqwpeoiatla 50 71 SO 89 50 109 50 134 50 Other. 1,334 854 1,530 89? 1,785 909 1,551 989 1,224 1,067 Subtotal 1,334 966 1,401 947 1,874 959 1,660 1,039 1.SS8 1,117 -__-- . _. .__._. . _ _ ___ ____ __._ __ -. -_ __,_ - ___. -.___._---- 1-- -- ---- - Total Costa 2,914 2,313 3,377 2,423 3,826 2,456 3,664 2.639 3,S5S 3,006 eomf1ts I"8 106 S0 III 241 112 258 120 271 142 Operatls RatIo 0.95t 0.96 9 0.96 0.94 0.96 0.93 0.96 0.93 0.95 - 28 - Baum= An uuA!NmX 9 ROAI - sosulcua Ufi nOW 0 (T itIlLu LeOU 19os 1944 198S 198o SOURCES Actual Appratsal Actual Appgrosal Actul Appraigal Actual Appraisal SBeofts6 Bft- Interest 150.7 110.7 '31.4 112.3 5131 120.0 511.5 141.7 Ad4: Oeprectariam on Productivw 482.0 471.0 615.0 491.0 756.0 6785.3 *s9. 935.2 Other Deproettren - 71.0 30.0 89.0 50.0 209.0 50.0 134.C 50.0 Rsarve Dtscoerr C4bAge 23a.0 269.3 289.0 251.5 232.0 234.5 185.0 253.1 _ --- - -- _-_- --- - -- --- _ - -- --- --- --- _ - -- - - _- - - ---- _- uternal C se Seration, 985.7 901.2 1424.4 904.8 1640.2 1083.0 4*59.5 1380.0 Loam Drawings - IuRD 1045.7 884.$ 251.0 367.5 0.0 105.0 0.0 42.0 - Is 277.0 3.0 139.0 4.0 256.5 5.0 9.0 3.0 Star* Budgat unds 319.0 313.3 72S.0 1101.2 1605.0 1496.9 932.0 841.2 Sale of Scrap ead Obsoleto Assets 14.0 3.0 14.0 3.0 5.0 4.0 5.0 4.0 mncease in Working Capitol 112.2 0.0 121.4 0.0 0.0 0.0 0.0 0.0 ------ ------ ------ ------ ------ ------ Total Sources 2753.6 2307.0 2697.8 2380.5 3506.7 2690.9 2615.5 2272.2 S~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ tavesteats for Pre30ct 1248.0 1751.9 632.0 1357.3 884.0 753.4 454.0 732.2 Other Invesa 1ne 2195.0 448.1 1540.0 842.7 1946.0 1647.4 1509.0 1167.6 Debt Service Interest on tEtD Loan 9.0 73.5 175.0 145.5 241.5 169.5 227.3 169.6 laterest an Other Loes 1.7 1.7 15.4 1.9 13.7 2.0 13G0 2.3 ReparUent of TURD Loae, 0.0 .6.8 74.3 65.0 281.2 126.0 Repa"ymnt of Other Loaso 109.9 43.6 65.7 51.8 1.2 Total Debt Servic 210.6 75.2 280.8 147.4 59s.2 234.5 573.5 299.1 RUittanee to Stat. Budget - 11.1 225.0 11.2 - 13.0 - 14.2 Decrease Ln WorkIng Capltal 0.0 20.7 0.0 21.9 281.5 50.4 79.0 38.9 Total Uss 27st.6 2347.0 2597.8 2280.5 $506.7 2609.9 2615.5 2272.2 Debt Serrtc Covernge 4.68 11.98 5.07 6.14 4.15 4.62 2.74 4.61 RWUIA =-zam _UAM OIL RBOV PROMTc YIDZLRSAL ALA=1513 0SWMT VRTPOJC ac sum (IT ILILon Lot) 1982 1983 1984 1985 1986 ASS9T$ Ac:ue.1 App:aL.aL Actual Appraisal Actual AppaLSal Actual Appraisal Actual Appraisal _-____ ------ ........ _- .... ______ ------ _.____ ------ --------- Curreat Asserq Cabh *nd _Acouata 3Rcvabl 161.5 70.0 154.2 70.0 141.4 70.0 190.2 70.0 256.7 70.0 Iwfatogri and Prepaid Itm 134.1 136.2 280.2 167.1 221.0 180.2 271.7 19S.7 278.7 263.1 Otwbw COurret AsetS 2.0 10.0 61.0 10.0 38.5 10.0 53.9 10.0 49.8 10.0 Tota1 CumBI 655:5 2;7.6 236.2 515.4 247.; 400.9 260.2 315.; 273.7 565.2 343.1 Fixed Asset La Opertton CX0S4 Fixed Assets 8910.0 10981.0 10102.0 12737.2 10695.0 14684.8 13741.2 17236.8 17451.0 Least Ataumlated Vepreoiatua *460.1 4053.0 5292.0 4517.0 $962.4 4970.0 6735.4 5563.5 75S7.9 6266.1 not VIsed Assets 4904.6 457.0 5669.0 5585.0 6774.6 5725.0 8149.4 8157.7 9698.9 11184.9 Ziwestamat9 t Cms"tmutoua 1464.3 1907.9 3011.9 2879.8 3776.4 4452.1 7019.5 $757.5 8307.8 1699.9 Other Assets 177.3 23.1 213.1 26.4 258.6 29.7 306.7 33.3 294.5 37.5 Total Assts 6863.8 7024.2 9329.4 738.6 11210.7 10467.0 16-91.4 12222.2 18886.4 13465.65-4 LIASILITIS Currnat Liabilitles Curat Portion of LIT Liabilttles 63.0 127.2 127.2 Shet-tas Loasu 132.6 60.9 231.8 84.3 117.9 88.1 266.8 92.1 265.2 112.9 _1pplie Credts mid Pa bls 154.8 73.1 $24.7 74.2 275.3 75.5 267.2 76.9 312.3 63.6 Total Current LLwbi1ities 267.4 1S4.0 56. 5 158. 393.2 226.6 534.0 296.2 577.5 323.9 Lemp-Teom Liabilities. I5 Subs&Ldgy Loan 526.6 118.5 1572.3 1005.0 1776.5 1309.5 1702.2 1291.5 1421.0 207.5 Oth.t: 110.8 2.0 277.9 5.0 393.3 9.0 5".1 12.6 631.3 16.6 otal Les-St LUablItles 637.4 120.5 1650.2 1010.0 2169.6 1316.5 2286.3 1304.3 2052.3 1224.1 osh-Tom rams (i.e. Eqity) 5939.0 6749.7 6922.7 7570.1 8647.7 4921.9 13771.1 10621.7 16256.6 197.4 Totl Liabilities 6663.8 7024.2 9329.4 8738.6 11210.7 147.0 16591.4 12222.2 15886.4 13U65.4 Current latio 1.0 1.5 0.9 1.6 1.0 1.6 1.0 1.6 1.0 1.7 Debt-Eqlty RatIo 10190 2198 21179 12186 20180 13187 14186 12188 11189 10190 - 30 - IPELE-MMI EIMCEO CIL EERE C rM.M0Ct 'NAVAL Olt "OHICTRN COST STRUCTURE 'rF t 0. ESIIATOlN ACTIVtTy i 1' Curret Lea) ACT,AL ..... . A ISOL ----- - JUtS OF LEII LEtL UIitS OF LEI; Wei [N*p'J!itC *,sr QF TOR :F NPUTtOI uNIT 3F Tom IF Cf CfJDE INPUT CRUDE OF CRUDE :ouT c ';E 4. :aria:e Costs ' . Puwer 'e) 15'.69 M.1 90.42 110.00 0.51 5M.I '. Di1esl !I I 4.00 2.AS 4.70 1.47 Is.1 l .atura: 3as co) :0.00 0. 16 8.62 t5.0 I.;1 :.76 4 hesicals I Consumables IAF) (a) 18.48 1.07 ?.40 40.,U 5. Labor COsts iean-tenthsO (bi 131.20 l.01S2 4300.0 !".92 t. O'.her Cash Costs (AF) 94.01 1.01 U0.20 0(.S; 7. eserves Ciscovefv ChargueAF) 100.00 I.00 00.00 I I1$ 4, Subtotal 444.13 1 9 .ied Costs EC] i. 3tsmn & Senal Exoenses 27.10 . maintenance Naterials I SPares 25.36 Ceoreciation (dl m.07 SuDtotal 324.53 412.4 ?ctal %3st if Production - 6.66 a&^ 99 C. Total Crude IlI Production (000 tons) 2.463 .. ta] AF stands t arbitrary tactor taging the 198 cenwution/cot ot the Videle Enterorise for the grou of inputs as the base with a factor value of 1.0 . lhl Includ1 15S NW tax and 16.5t oial security tax joplied to both *age And wile tax. ,ct Annual fixed costs located wr ton Of Crude oil cutout icots. escet for fepreCIAtion, have ben ecalated using the industrial wacluale price escalatior ratesl. 'd] At historical cost of fixed usets (oroductive assets only, now-oroductiwe dssets contribute about Lot " Billion acre w vear to total aottiatioul. RNANIA VICELEDALAIA EROWEO OIL RECOVER P60JECT FINNCIAL UNIT ROOLDUCTION COST SlTUCURE Of THE VIOELE ENTEWRISE (IN _wNT LEO) Actual - 1962 Actual - 1983 Actual - 1984 Actual - Ile Unit Of Loei/Ton Units of Lei/Too Units of LeiTFn Units of LeifTon Input/Ton Lel*Un~t of Input/Fon LoeiUnit ot InputfTon LoIAJnIt of Input/Ton LeljUnit of of Cru4 of Input Crude of Crude of Input Crude of Crude o lnput Crude of Crud of Input Crud. A. VARIBLE COSTS 1. Pe"er (h111) 131.50 0.41 53.92 152.20 0.41 62.41 145.30 0.41 59.56 I5O.4 0.41 61.6 2. Olosl Oil (kg} 2.90 2.85 8.26 3.25 2.85 9.26 3.03 2.85 8.66 3.37 2.05 9.04 3. Natural 6as (a) 50.00 0.16 0.00 50.00 0.16 6.00 50.00 0.16 0.00 50.00 0.16 8.00 4. ChemIcals and Consurnules 0.42 14*10 15.60 16.02 5. Labor Costs 72.11 98.90 124.52 132.05 6. Other Cts 73.97 97.06 119.46 111.60 7. bserve DIscoewry Charg Q100.00 100.00 100.00 100.00 Sutotal 324.00 390.53 436.00 439.95 S. FIXED COSTS 1. AdmIn. and Oeeosl E_peeo 22.85 25.07 27.4f 26.0 2. Nelatouoae nmatoerals and SWpra 13.00 15.44 21.27 26.20 3. Doprciatlon 145.94 150.0 20.18 2.00 Subtotal 172.59 191.64 250.90 .60 TOTAL COST OF PR TIN 497.27 562.17 006.90 706.75 C. TOTAL CRUO OIL IUCTION tIn Thousand Lei., 1.153.8 1238.5 1158.6 1 .0111.7 ° Actual - 1906 Forecast - 1987 forocast - in! Forecast - tog9 Units of Lei/Ton Units of Let/Ton iUnits of Let/Ton Units of tei/Ton Input/Ton Let/Unit of Input/Ton Lei/Unit of Input/Ton Let/Unit of Input/Ton Lei/Unit of of Crude of Input Crude of Crude of Input Crude of Crude of Input Crude of Crude Of oInput Crude A. VARIABLE COSTS 1. Power (kWb) 153.92 0.51 78.50 150.20 0.51 76.60 143.70 0.51 73.29 13? 20 0.51 69.97 2. DIesel Oil (kgl 4.12 2.1S 11.73 4.15 2.85 11.13 3.65 2.85 10.40 3.11 2.65 6.86 3. Natural Gas (ao) 51.00 0.16 0.20 45.00 0.16 7.20 37.00 0.16 8.16 30.00 0.16 4.40 4. Chemicals and Consumables 16.90 20.34 21.10 22.30 5. Labor Costs 130.20 130.70 139.20 139.20 6. Other Costs 102.62 91.15 S.92 57.38 7. Reserve Oiscowery Charge 0100. 100.00 IOO .OD Subtotal 45.35 445.82 42S.83 402.51 8. FIXED COSTS I. Adin. and Gener.4i xpense 26.64 28.30 26.30 20.30 2. Maintenaoce Materials and Speres 26.80 26.40 26.40 26.40 3. Depreciatio 3.36 342 2 Subtotal 392.00 396.20 362.12 365.95 TOTAL COST OF PROD1UCTIoN 051.15 842.02 807.95 768.46 C. TOTAL CRUDE Oit PRODUCTION (In Thousand Let) 986.9 1,061.9 1.252.9 1,545.9 o VIDELBiDALARIA EIIANCED OIL R£COVERY PROJECT (LOAN 2148-00) lEVISED INMIENTAL PROMUCTION COST ESTIMATE Videle Enterprise Revised Production Cost (Financial) Es?llate (1989) (In Current Lei) With the Froject Without the Project Incromental Due to Ptoject Units. of Total Units of Total Total Deive Lel/Unit Input/fen Input cost Input/Ion lIput Cost Input Cost .l0/1on Unit of input/ Variable Costs of Input of 011 (4Millon Lel) of Oil a/ (MlliIon Lole (Million Lei) of Oil Ton of 01I Power 0.51 L*1/kWh 137.20 kWh 108.2 153.92 kWh 64.0. 44.2 60.46 118.6 ksWh Diesel Fuel 2.85 Leit 3.11 1 3.7 4.12 k 9.6 4.1 5.61 1.98 k Natural Gas 0.16 Lals 30.00 o 7.4 Sl.00 a 6.6 0.6 1.09 684 a Chem. & Consumable$ 22.30 Lei 34.5 18.90 Lei 15.4 19.1 26.13 26.13 Lel Labor 139.20 tol 215.2 225.30 Lel 183.6 31.6 43.21 43.21 Lela Others 57.38 Lei 86.7 102.82 Lel 83.8 4.9 6.70 6,70 Lea i Reserve Discovery Charge 100.00 ei1 154.6 100.00 Lei 61.5 73.1 100.00 100.00 Lei 1 Subtotal 622.3 444.5 177.6 243.20 Adlen. & Gen. Expenses 43.7 35.6 8.1 11.08 Maintenance materials 40.6 32.1 8.7 11.90 Osipreclatlon 481.2 298.0 b/ 183.2 250.62 Subtotal 565.7 365.7 200.0 273.60 Total Cost 1,168.0 810.2 377.6 516.ti Total Ol Production (1.000 tons) 1,545.9 614.9 131.0 a/ Identical to the technical Input coefficients for 1906 (except lbor and fixed cost items) just before substantial ncremental productilon to.9 over 200(be tonsaeum) tiro the project is rtalized b p Identicuc to 1985 actual 2base0 on ossu/ption fh the nitical pi oJect tacilities Installd In 1982 thro 1964 are depreciated starting 1966). Septeabe 1981 am a NWUT Irn 1s0 1as 19 1900 1ama aso lo" ano ag a -- -- -- ... ...,_ _ ___ _ _. ----__ ...._ _._.__.__ .sa.a..m.. s..ts.. ln.rAtelCM" oil Peistim n(1,000 Uto) 16 24 33 67 101 20 4*22 731 731 711 aze.eslCawia 011 hIs (we l Obli eat 3wbU) 31.0 36.2 27.9 2.7 13.6 17.5 1*.0 10.0 16.0 19.2 30.9 r.als. IofletI I-1.O.u 161.1.0) *. Pemi.s b.w two ..9 0.911 0.944 0.95 1.133 1.145 1.224 1." 1.234 1.26 1.20 b. tlsl Searm (I_) 1. N 1.101 1.109 1. 1.1 59 1.15 1I5 1.167 1.100 1 . r4* _ gsh= Nsot CLAM730 11.0 O.9 I4 16. 0. 11.5 Wrn3.e CWlt.1 Coat IlIUm 3.5 Let) *. lOasigb 3UIhi5 Goo" 1C0.0 719.0 90.0 150.0 0.0 0.0 S. Jash @.umy CGas" $7.0 711.0 456.0 1,242. 1,069.0 243.1 - - - - Recr"" Capna Ca0se (Nlhiw as _ast 10I7 Let) - - - - - - 210.0 420.0 420.0 Iasgmnae Vedeble 21adse1 *ho&timr Cofleoat PM teoo .5 eOasi 0f1 a.i 131.50 152.20 143.30 150.44 152.92 142.14 130.36 110.36 U0.56 110.56 110.50 b. 01el lt (4.) 2.60 5.2 3.03 3.37 4.12 3.41 2.70 1.06 1.90 1.96 1." c. ate_l os (A" maote) 50.0 500 50.00 50.00 $1.00 36.20 21.56 6." 6.0 6.04 6.04 4. heals 1 £_ C=onbl (1.1 to) 0.42 14.10 15.60 10.e2 lo.90 21.31 22.72 26.13 26.13 20.t1 26.13 O. ses (31 la) 0.06 0.00 0.06 0.00 0.00 0.00 *.10 4.31 4.21 42.21 42.21 f. Obsa (Lo1 1) 72.97 97.f0 119." al1.0G 102.02 70.78 30.74 6.70 6.70 G.7 6.70 (UhIhlO Let1 . *. mf. a Cosl Eampea 5.1 10.2 19.4 15.4 15.4 15.4 b. 1 S5,5_ 4 Sw11s 4.6 9.6 14.4 14.4 14.4 14.4 bIt tasmat riem of Vs.leble 1apas S. eat(16 SIU ) 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.09 b. 111es_ 1.51 (1i0n 11R) 0.30 0.2 0.20 0.27 0.12 0.1S 0.14 0.14 0.14 0.15 0.AS o. bmmsl 0G (1O1 Ilebe astst) .19 0.14 0.14 0.13 0.06 0.07 0.07 0.07 0.07 0.07 0.06 4. _ea1. I _o.mei" (1 Me) 0.91 0.0 0.90 1.04 1.09 1.23 1.30 1.40 1.40 1.40 I." a. EaSe (I1O1 14) o.52 7.92 7.97 0.10 2.4 2.49 2.47 2.42 2.42 2.42 2.42 f. OSbsv (161 ISO 4.4 5.50 6.02 6.44 S." 4.09 2.21 0.0 0.6 0.36 0.36 Ibt _eos v< ofe 0o 1 hO t1e (in oeeota 1092 =$I9tG) 190.23 132.02 162.36 I7.64 79.06 90.0 95.3 92.43 94.06 08.44 102.53 Sommoleo Cetlf n tt Strau (in uslluma of Cinotat 11 M9U) PeaeJt Cepit l OCos" 14.0 04.6 75.1 81.2 62.9 14.0 _ nat ClteG Crate 11.1 24.2 24.2 lstlabI. ftaEem Costs 0.9 0.6 0.9 1. 1.0 3.l S.$ 4.3 6. *. 3 0. . Vlmd Coea 0.0 0.0 0.0 0.0 0.6 0.53 0.6 0.06 0.94 0." 0.06 tul asedetfi Coats 0.9 0.6 0.9 1.0 1.0 . 6.1 1. 7.0 6.6 *.0 total Gonte 14.5 05.2 76.0 03.0 0.6 17.6 0.1 1.0 20.3 2.2 32.3 ISoeilo YsA d 011 au edag$in 34. 4.4 6.0 11.0 8.0 20.4 40.2 67.6 69.2 72.0 74.9 aot encaml e lite (1.09) (O-.6) (9.9) (71.2) (56.7) 2.6 34.1 90.6 49.1 9.7 42.7 ii 3e-^ lest of Satur 13.22 *I Crn ot fL Ifr 1902-1909 *nd *S,_Ms to cousi to L mleM 1989 tons tbasratar. 19-bAs-67 . m m. ou t-cut "t woos*1W to ts 9#t v-n,*0 Olt$ *I U *U n1 * Oc §-h $,sbo- 1 11 90 990~~~l*t 0916 996t 06*t $901* 006 01,u 1" 9 069 .tu'1 ;a 3 443 Ui r-et teltt t'6t 1-411 *-111 4601 6*6 6-06 6*90 910 t-U q13 tI P u9 h g Ott oIn *-#*n St2 6It *13n *-n 3 626n "GOD W$A O e ig ig ve SI* I o I-s t' -s `I 0 *IS w W60 96.0 "le Wo 960 WO "lo 960 1 90 60 6t "t W" tons' U-e *o l* '9 *- I5 6 9 0 9I *- 0 S VInt3SW"qe1q11S gg g-" tt ~t-tv SI" $la twnt vmw-t w g* _ (O@D tat 361W P s n,ito int) to2Igt 10191t SO9t 301691 6t-Zf 1t1291 * 1 41921n 61911tt 011t1 -Ot (Mann tat l ommuo 111) 6113-30P1 n to a" 011 nq 610 06` OS OS Oi6* 3t10 "IO 660 31 t0 - 0'0 (o0 1n) "OMFD Is so-: t-i a'g "It 9*1 9t1 St'sg I'g gil i*g "It an tast) I 10 "It gill n"*t "I*t "I-t "I-t "I*t n"*t n"*t "It "I*t (On tat -4 I 'IO I D 1011000 I* St, 1 O t-O 910 991 tile 9tl1 o9l Ot-O 6091 so' sol1 tM- t _ tats) me n T a10 11,5 115 ire 110 a's "lo *tl6 010o gte "le (5Wm s imenTW ev -q to, So, S00 C00 60-0 00 l 00 COlO 60 t @ tOle toe 0l MWg 15) "_I *l w3ab @16186 P 001184 I~ 3163 *-11 *-t V-II *-it Vt 911 *'It *lot W,91 #-tt *t *`* tntdEb v etevassma- *ec v nps *q 9*-t 99?l 9f91 99t *-f 991 991 99*t II"t *-St *'ft -one I d0s *- Me s-ta t"- 5*-9 0*-9 0*9 6-9 OC-9 0*9 0*-9 0**O 0*-9 0*-9 01- ('1 tWt) 93649 * 0119 1219 W1 01119 1s9 ilt ol 116 "Ilt 121 1"I9 1269 (of 161) exam! I~ ~~~~1 T9199 t Wz tvXt tZ-9vtt lgt 19-gt tgt't tt-tt tt'tt tZ-Ct tt-tt (W 1 i) SOW1 * tt69 ti9Z 1s9"t tilts tt9' t192t tt'K 6t9t t119K 1t19Z slt ( Ios t) '9 *19 lp *s 909 W9 "lo 9t39 "t wo 9 909 909 909 "I0 "It (S331 Ie1q5) we I -3a -. 661 061t 01it 961t 86 St 661t Ct1 6It WI 0olt all (0*4) t1W t_sa 'q 9tl0t 9619t1 0 6l 91t11 tt Wsit K tt 9t11 9St11t9l0t I 9et 9 1 Ott 0) _M I 110spo 6So3 50 21 d %.31315503 6n136196 t61 1616661 *16*vt tIluzt 0 Ot 029 oltt olot Gloat O529 C O O'OZ 0o091 0529 0la9 O O05t (1w! got *6 100* go fIl) 6356 tmuit sam331613 *--- £uaxW ItDv q - - - - - - ~ ~~~~~- - - - - flS d~. utme -w (lusmax 61111) v3m W3lde 3.r.3a5 (VtuU;w) 6*36 *_t*p* e1t*a0 - - - - - - - - - - _P31 (m31) A033sw 169_ q - - - liS-t 800't *t1- 1091t 609 t *1't 696-1 661 _96 t 30) *Om qau u osm o- (O51 .t16 I ) ItSow 61 13t12 6t 1 1 611*1 110 09633 1- l1 3'lOW 602 2602 1?tlC 0002 0441 661 t *6 dt 9661 646 S19661 G6OA mumu'w ain. ODUaoS *t itt U Uo ut3 U l3twmt-uaa1p 9-~~~~~~~~~~~~~~~~;*a --P V33DAAI us WR 2004 80 200 2007 2006 2009 -- ..--- .. .. .... ....... Iawr l C"e Oil ft.tlm (1.00 tame) 721 M3 73 71 731 40 teS. Dli euv Ptwe latIm la. (1961-U4.ln) S. 110_a 1a1 ( J_ _ _ 2_ . b. lase Cwasm CIU) S1ft VzeEa bSod. Sue (E.0115 Ww.Jet COPLsel boat" oBtus Let e) * sm b e mta- - - . . __ h. _ee _awm _at _ _ &ourn t 0961951 GM" (llIm as emetet 1m Ee) 420.0 420.0 - - - - Zesaimnsel VeotS.Ie b8ea1i premsatlm *. lint (km) 116.6 11.SG 118.06 116.56 116.36 116.56 b. 1taa Pue ft.) 1." 1.91 1.96 1." 1.96 1.91 c. Datsl_ b (Cuble eSta) 6.64 0. .4 6.U4 6. 6 4.ft 6.64 d. bemleels a c mbL. (14l 1e as.11 26.13 26.13 26.11 26.13 36.13 *. Ea (EI 1-i) 43.21 4S.21 43.21 W3.21 41.81 43.21 9. _Sbwe (Ims 1) 6.70 6.70 6.70 6.70 6.70 6.70 w Soaeet fund I Aman a. da. 6 1OmmasI I ase 15.4 1.4 15.4 15.4 1S.4 i b. B1uam Datea s 1l&e 14.4 14.4 14.4 14.4 14.4 14.4 Ibet _e i twS. df IetI 7_ut a. p_ (193 O Mb) 0.03 0.0) 0.03 0.03 0.03 0.02 b. 0 1ea f l (16 t 6ft) 0.25 0.25 0.25 6.25 0.25 0.25 c. *tnel " ae (Ion 1Etbse one) ).1 0.12 0.12 0.12 0.12 0.12 4. Ch.ML 6 GemWAMblee (1O91 US) 1."6 1.4 1.46 1.46 I.4 1.46 *. lbg (I961 USI 2.42 2.42 2.42 2.42 2.42 2.42 f. hdme (1OU 4US) 0.36 0.36 0.6 0.36 0.36 0.3s unt _ae. Vae of 1_~6 d moism (in sat 1963 M 16./) 16.02 16U.03 161.02 163.02 1S."02 16S.02 eomme btlkmafls Sta (111km asf e_ uumtI 1961 l et cost"l Gbet a.ouait cosItal bet" 84.8 4. wiegble a-,t mum Gone 4.? #t 6.7 4., 6.1 6.7 VI4as bate 0.64 O." 6.94 S.4 0.94 0.94 loe Fasimatlam Costs 6.4 6.4 6.4 6.4 0.4 6.4 total cbsa 38.6 8.6 6. 6.6 6.4 6.4 seaom. VeI. of OIL Pe&datlaa 119.2 11U.2 119.8 119.2 119.2 119.2 2et B2m"q Un=it. "4.6 66.6 110.0 110.8 110.6 110.6 Beaco; DAte of fOatur 40 ....,.._._...__....._...........______ of Ctwent la cog 1902-19B9 *Nd aao d to I realn to e teest 1969 terx tbaaef et. 19-Ai-Ol -37 ANNEX 15 Pae o S ROIANrA VIDELE/BALARIA hbNAbCED OIL RECOVERY PROJECT (LOAN 2148-RO) ASSUJPTIONS FOR ECONOMIC REEALUATION 1. The economic reevaluation of the project is done on an incremental costs and benefits basis, expressed in constant 1981 US dollar terms, as was done in the economic analysis in the SAR. Likewise, a 20-year period of full incremental production at 731,000 tons of oil per year is used, but starting in 1989, three years later than expected in the SAR. Some small actual incremental production during 1982 through 1986 is also used, which quickly rises to the full level by 1989. This revised production profile, as mentioned earlier, represents a two-year production response lag between the completion of full-scale comencement of in situ combustion in 1987 and the attainment of the full EOR-induced incremental production, which is normal for this type of EOR technique. 2. The economic value of the incremental crude oil production of the project is derived on the basis of international crude oil prices (FOB) adjusted ky a 102 discount for the lower quality (e.g., heavier oil at 18'API) of the project output compared to the typical or reference internationally traded crude oil and for the transport cost to Romania. Actual average prices for OPEC oil exports during 1982-86, as well as World Bank estimates for 1987 through 2000 expressed in constant 1981 US dollars, are used. The economic reevaluation assumes prices will remain constant in real terms from 2000 onwards. These are sumarized belows 38 ANNEX 1S Page 2 of 5 CRhDE OIL ASSUMPTIONS Economic Value of Project Oil Production Revised FOB Price (OPEC) 1981 USs/Ton a/ Current 1981 US$/Bbl USS/Bbl b/ Revised SAM Est. Actual 1982 31.0 31.4 196.3 221.0 - 1983 28.1 29.2 183.0 221.0 1984 27.5 29.1 182.4 221.0 1985 26.7 28.0 175.6 221.0 1986 13.6 12.0 79.1 221.0 Estimte 1987 17.5 15.3 98.8 221.0 Forecast 1988 18.0 14.7 95.4 221.0 1989 18.0 14.2 92.4 221.0 1990 18.0 14.6 94.6 221.0 1995 2S.0 18.2 116.2 221.0 2000 40.0 25.9 163.0 221.0 8/ Based on the heavy oil produced by the project (6.7 barrels per ton) being priced at IOZ below the typical OPEC crude (7.4 barrels per ton) and a transport provision of US$1.00 per barrel (1981 ters). b/ ,Deflated using the Wv indez (as of February 1987, see Table 1). 3. The SAB made a distinction concerning the capital costs between the financial cost to TPB (excluding interest during construction) and the financial cost of the project to the Government. The financial cost to TPB estimated in the SM was based on the then prevailing 1981 Romanian catalog prices (i.e., Government-set prices) for locally purchased items. At that time, these catalog prices did not generally fully reflect the cost of the indirect import contents of locally produced or distributed items. In the specific case of the locally procured items for the project, the SAM estimated that on average, the financial cost to the Government would be about 12Z higher than the financial cost to TPB, on the basis of the international prices of their indirect import contents. This financial cost to the Government was used in the SAR as the economic capital cost for the equipment, materials and supplies used by the project. The SAR 4id use the financial cost to TPB of laboi and services as the economic costs. Mowever, between 1981 and 1986, the Government revised the catalog prices three times and adjusted the foreign exchange rate five times in order to eliminate these indirect or hidden subsidies. In the judgment of the PCR mission, the difference between the financial capital cost to TPB and the financial capital cost to the Government did iot actually materialixe. Thus, for tho economic reevaluation of the project, the economic capital cost is based on the actual financial costs incurred by TPB for the purchase of equipment, materials, -39- - 39 - ~~~~~ANNEX 15 Page 3 ofS supplies, as well as for labor and services (there is no tax element in these finaneial prices since the project was exempt rcn ales and import taxes). 4. The foreign exchange resource cost of the project is taken as the foreign exchange financing in the economic reevaluation. Siace this foreign exchange financing has been recorded in current Lei by TPB, it was first converted to current US dollars using the average exchange rate prevailing during the year of disbursement, and then converted to constant 1981 US dollar terms using the Bank's manufacturing unit value (NUV) index issued in February 1987. The domestic resource cost is taken as the local currency financing in current Lei (or difference between the total economic capital cost and the foreign exchange financing), first converted to constant 1981 Lei using the Romanian producer price inflation rate during 1982-1986 as deflator, and then finally converted to constant 1981 US dollars using the exchange rate (Lei 15/US$1.00) prevailing in 1981 (Table 1). On this basis, the actual economic capital cost of the project in constant 1981 terms is about US$331.8 million compared to about US$371 million estimated in the SAR. Finally, recurrent annual capital investments to sustain the full level of incremental production vilL be required from mid-1990 onwards at a revised cost of about UMS24.5 million in 1981 terms (equivalent to Lei 420 million in 1987 terms) which is almost the same as the SAB estimate of about US$24.6 million per year but starting from 1986 onwards. S. The economic variable operating cost for the project is based on technical input coefficients for energy, chemicals, labor, etc. experienced during 1982-1986 and estimated by TPB for 1987 through 1989. These technical input coefficients are expected to remain constant from 1989 onvards when the project tdaches full incremental production. The unit economic cost of the variable operating inputs have been reestimated as follows: (a) For power, the economic cost is now revised at US$0.030 per kWh in 1981 terms (Let S2/kVh in 1987 terms) compared to US$0.035 per kWh estimated in the SMA reflecting the real decline in energy prices worldwide. This revised economic price is only marginally higher than the financial price prevailing in 1987 (Lei SIAkMh in 1987 terms). (b) For diesel fuel, the economic cost is derived from the actual (1982-1986) and projected crude oil international prices (FOS) and the expectation that diesel fuel international prices would on average be about 302 higher (on a per barrel basis) than the typical or reference crude oil international pri.ces. (c) For natural gas, the economic cost is derived from the economic cost of fuel oil on a gross heating value equivalent basis (i.e., 1,192 cubic meters of gas is equivalent to one ton of fuel oil). The economic cost of fuel oil in turn is derived from the international crude oil prices on the basis that fuel oil international prices would on average be about 202 lower (on a per barrel basis) than the typical crude oil price. (d) The economic cost of all the other variable operating costs (chemicals, consumables, labor, etc.), as well as the incremental fixed costs, are taken as their actual financial - 40 -ANNX IS Page 4 of S values for 1982-1986 and TPB's estimates for 1987 through 1989 deflated to constant 1981 terms as in the case of the local currency capital costs. The economic costs from 1989 onwards are projected to remain constant in real terms for these non- energy operating cost items. On these bases, the operating cost (before capital charges) when full production is attained is now estimated at about US$9.87 per ton or US$1.47 per barrel compared to the SAR estimate of US$5.06 per ton or US$0.76 per barrel (all in 1981 terms). The higher revised incremental production cost is primarily due to more labor, chemicals and other input requirements and, to a lesser extent, the higher real costs of these items. The comparison is shown below. Incremental Economic Production Cost (1981 USS) a/ Revised Estimate (1989) SAR Estimate (1966) Units of Units of Input/Ton USSAInit USS/Ton Input/ron USSAJnit USSUTon of Qll of Input of OfI of Oil of Input of Oil Variable Costs Power 118.56 kWh 0.03 3.36 80.0 0.035 2.80 O;esel 1.98 i 0,14 0.28 3.79 0.29 1.11 Natural Gas 6.84 m 0.07 0.48 20.46 O.1S 3.02 Chemicals 1,46 0.19 Labor 2.42 0.21 Others 0.38 (3,12) Subtotal (Variable) 8.38 4.21 -ixed Costs Admin. & Gen. Expense 0.62 0.02 Maintenance Materials 0.67 0.41 Subtotal (Fixed) 1.29 0.43 Total Production Cost 9.87 4.64 a/ When full incremental production of 731,000 tons per year of oll Is initially achieved. The production cost does not include provisions for capital charges or recovery. 6. The reestimated economic rate of return (ERU) of the project is about 13.2Z (Annex 15), compared to the SAR estimate of 29X. The lower revised rate is due primarily to the tower revised price of crude oil compared to the SAE estimate and, to a lesser extent, to the two-year delay in the project - 41 - ANNEX 15 Page 5 of 5 benefits and the higher production costs. Nonetheless, the reestimted ERR is still satflfactory. The lower capital cost, as a result of 8ood cost control and engineering efforts on the part of TPB, mitigated slightly the adverse effect of higher production costs and the delay in project benefits. Tablo I Price Inflation Rates Use For Deflatos In Ecnomtc Analysis Actualdewvled Estimates SAR Estimates Foreign Exchang Domestic Foreign Exchange osmetic 9esource Cost a/ Rsource Gost b/ Resource Cost e/ feswve Cost b/ Actual 1982 -1.4 10.7% 8.%o 5.ss 1983 -2.6% 5.6% 8.0 9.51 1984 -1.7% -0.1% .%S 5.1s 1985 0.9% -1.1% 7.0% 5.0% 1986 (praO) 18.9% 0.0s 6.0% 4.5% Forecasts 1987 1.1% 0.0% 1988 6.9% 1.0% 1989 3.4% 2.0% a/ World Bank Manufacturing lnit Value (NV) Index, Februwy 1987. b Ranian Producr Price Index. IW dat for 1982-1986. fCR mission estimte for 1987-1969. u42- 16 :- VKDBLU/ARIA OWED OIL RECOMY PROJEC COmENS CEIVED FROM TE s8RR0W UORLD3ANK(iiS ZCZC OERtP0069 .A .0852 OEDD2 REF: TCP PJ * OEMD2- 8* ** * * ** JAS0852 ZA221 IN 08/02:,09 WT 08/02:12 TELEX MR. 85/08.04.1988 TO MR. ALEXANDER NOUICKI CHIEF DEPARTMENT OPERATIONS EVALUTION EPT. R.ROIANIA UE VOULD LIKE TO THA YOU FOR TO LETER OF NARC THE I ST. 1988 BY UHICM YOU HAVE SUIITTE US E PJECT COWPLETION REPORT FOR THE VIDELE-ALARIA ENHANCED OIL RECOVERY PROJECTS AND U1ICH REFLECTS R THE SUCCESSFUL IMPLEMENTATION OF THE PROJECTS, AND THE GOOD COOPERATION KETUEE THE SORROERt AND THE BANK DURING TH ZMPLEMENTATION UITH THANKS FOR YOUR COOPERATION YOURS SINCERELY, GNOERGHE POPESWU PRESIDENT OF THE INVESTMENT DN OF ROMAIA 10138 INYV R VO90ANO, 2:r . 2)' 26' W2 29 iRi U. S. -- R. ROMANIA - . r~~~~~s-. ........ t ; / r °iiLl ~~~~~~~~~~~~~~~~v , ALARIA 0 ' LCOVERY ' EC < eA | ;tA \t; ;;;_/-~_ j> ft < Ol AND GAS SUBSECMOR G. oFieclt* tilU''. ,,4;SbE* A - oil Pipolines 4t.$'='*f~ f I PettelmG P'podium t Piielinsli +~~~~~q C-0 V ipiU };8otin" U Gegni Cw ),t \5Udi 8 Of . \ Tpancrstt fi No ic° % S5 Ta,k., T.minaDs V YDEL I BLAR, IntSLA IAD y17ndw 9 clis %r 2, 2"2m2