CAPITAL: Paris

MONETARY UNIT: Franc

REFINING CAPACITY: 1,946,923 b/cd

OIL PRODUCTION: 34,000 b/d

OIL RESERVES: 107 million bbl

GAS RESERVES: 509 bcf

France received its first direct link to a foreign producing natural gas field in 1998 when the NorFra offshore pipeline was completed.

The link established France as a major distribution hub in Europe`s newly liberalized natural gas market.

The 850-km, 5.6 billion franc NorFra pipeline linked giant Troll gas field in the Norwegian North Sea to the French gas grid at Loon Plage, near Dunkirk.

NorFra has a diameter of 105 cm and was said to be the world`s longest subsea pipeline. It was owned by an 11-member group comprising operator Statoil, Norsk Hydro AS, Norske Shell AS, Esso Norge AS, Elf Aquitaine, Saga Petroleum AS, Norske Conoco AS, Total, Neste Oy, Mobil Exploration Norway AS, and Agip SpA.

The Dunkirk terminal was owned 65% by the NorFra group and 35% by Gaz de France (GdF). It had a gas treatment capacity of 50 million cu m/day.

In order to distribute the additional gas supplies entering France through NorFra, GdF invested 1 billion francs to construct one of France`s largest gas pipelines, the 185-km, 110-cm Artere des Hauts-de-France.

The pipeline linked the Dunkirk terminal to GdF`s transmission system near the underground storage terminal at Gournay-sur-Aronde.

During 1997-99, GdF planned to invest 17 billion francs to develop its gas supply network in France alone.

Norwegian natural gas bound for Spain has transited France since 1987. But NorFra provided additional quantities of Norwegian gas to France, necessitating an expansion of the pipeline system.

A planned pipeline called Les Marches du Nord-Est would traverse France and Switzerland to Italy, where Snam SpA would take the gas shipments.

By 2005, France would be receiving an estimated 15 billion cu m/year of gas from Norway-an amount equivalent to about one third of French gas demand.

At that time, Norway would be France`s leading gas supplier, ahead of Russia and Algeria. And France would become Norway`s second largest gas importer, behind Germany`s Ruhrgas.

Meanwhile, the government adopted a controversial provision that would open gas markets to competition if they were not being served by GdF.

The provision was part of legislation passed to make France comply with the European Union`s directive for opening the European gas market.

It allowed private gas suppliers, including LPG companies, to bid to supply areas that GdF does not.

GAS and electricity unions protested the law, saying it would breach the monopoly the government had given GdF.

The government planned to increase its tax on diesel fuel in 1999, bringing it gradually into line with taxes on petrol. It also planned to bring taxation of lead-free gasoline and diesel into line with the European Union average within 7 years.

Processing activity

Investments in France`s refining industry had declined since peaking at 3 billion francs in 1994. The French industry ministry predicted an average of 2.1 billion francs through 2000.

Most future investments would be linked to implementation of the European Union`s motor fuels directive, which was to take effect in 2000. It required refinery changes to meet a future benzene specification of 1 vol % and stricter sulfur requirements.

The ministry said all refiners in France indicated they were nearly ready for the 2000 specifications, but had to make additional investments to meet the expected requirements in 2005.

Compagnie Rhenane de Raffinage deferred a decision to close the 80,000 b/d Reichstett-Vendenheim refinery at Strasbourg until an EU decision in 2000 on fuel specifications for 2005.

It also deferred a decision to invest $11 million in a benzene extraction unit to meet Year 2000 requirements. Instead, it shipped gasoline by barge to Shell`s Godorf, Germany, refinery, for benzene removal.

Owners were Shell 65%, BP 12%, Elf 10%, Total 8%, and Mobil 5%.

A consortium of Electricite de France, Total, and Texaco Inc. planned to build an integrated gasification combined-cycle plant at Total`s 320,000 b/d Gonfreville refinery in Normandy. It would be the first such plant for France.

The unit would use refinery residues to generate steam for industrial processes as well as electricity. The 4 billion franc project was due to come on line in 2003.

The refinery and other plants nearby would use the 250 tons/hr of process steam and 50-150 tons/day of hydrogen. Most of the 365 MW of electricity would be sold to EdF.

Gaz de France and Air Liquide agreed to form a 50-50 joint venture to supply and market natural gas for motor fuel use in heavy vehicles.

The venture would offer turnkey packages for construction of service stations and purchase of gas and maintenance of equipment. Service stations would offer natural gas in both liquid and gaseous forms.

BP and Mobil planned to spend $35 million to improve the catalytic cracker at their Lavera refinery and increase LPG and propolyene production. At their Notre-Dame de Gravenchon refinery in Normandy, they planned a $15 million benzene splitter to enable them to meet EU gasoline standards on Jan. 1, 2000.