CAPITAL: Bonn

MONETARY UNIT: Deutsche Mark

REFINING CAPACITY: 2,183,720 b/cd

OIL PRODUCTION: 55,000 b/d

OIL RESERVES: 410.5 million bbl

GAS RESERVES: 12,113 bcf

The German government held four sales of federal crude oil inventories in 1997 over the objections of the International Energy Agency.

IEA member nations are required to stockpile enough oil to offset 90 days of net imports. IEA objected to the sale, although it left Germany with more than enough oil stocks to meet the 90 day threshold.

The German government, under pressure to cut its budget deficit, planned additional oil stockpile sales in 1998 and 1999. It was to sell about 50 million bbl, or 20% of its strategic stocks.

Sales in 1997 targeted 12 million bbl, or $227 million worth, of heavy and medium-heavy gravity crude with a high sulfur content.

The reserves were stored in salt caverns at Etzel and were moved to Wilhelmshaven for sale.

In other German activity, RWE-DEA and Wintershall, equal partners, boosted production at Mittelplate field by 300,000 metric tons/year to 800,000 tons/year with the addition of a lighter vessel.

Production at Germany`s largest oil field, in marshland about 6.5 miles off the coast of Schleswig-Holstein, was limited by use of two transport ships.

Reserves recently were boosted to 30 million tons from 25 million tons.

Processing activity

Deutsche Shell AG let a $6 million contract to upgrade its Grasbrook lube oil blending plant at Hamburg. The $26 million plant revamp was part of rationalization of European lubricants operations.

Norway`s Statoil sold its 48 gasoline stations in Germany to Deutsche Shell AG. It said its limited network was too small to be efficient in a competitive market.

Statoil retained its liquefied petroleum gas, aviation fuel, and natural gas businesses in Germany.

Wintershall began a $66 million expansion of the coking units at its ERE refinery in Lingen, northwestern Germany. The project, due completion in mid-1998, was to eliminate production of all heavy heating oil.

The state of Saxony in eastern Germany put the Addinoil lubricants refinery into receivership after failing to find a buyer. It faced possible closure in 1998. The 150,000 ton/year plant was operating at under 100,000 tons/year.

Mobil, BP, Agip, and Ruhr Oel formed a joint refining venture combining two refineries in Bavaria with distillation capacity of about 248,000 b/d.

They combined the 144,000 b/d Mobil-Ruhr Oel refinery at Neustadt with the 104,000 b/d BP-Agip plant at Volhburg-Ingolsadt.

BP will have 30% of the resulting joint venture, Mobil and Ruhr Oel 25% each, and Agip 20%.

DEA said it would spend about $175 million to upgrade its Heide refinery in northern Germany. About half of the money will be spent on a 700,000 ton/year hydrocracker to add flexibility to the 4 million ton/year refinery`s crude slate and increase output of light products.

The bankrupt BETA refinery in Wilhelmshaven was sold to the Louis Dreyfus group, ending a dispute over the 190,000 b/d refinery between former co-owners Dreyfus and Holding Tusculum BV, which had sent the facility into receivership in 1996. The dispute did not affect processing operations.

Elf Aquitaine started up a 170,000 b/d refinery at Leuna in eastern Germany after closing a 100,000 b/d plant nearby at Mider.

The grassroots refinery uses a new technology called progressive distillation. It was designed to meet European Union fuel specifications for the year 2005 and EU pollution control requirements that will take effect after 2000.

Transmission

The gas utility Verbundnetz Gas AG in eastern Germany bought British Gas Deutschland GmbH, the German unit of British Gas, for an undisclosed amount.

British Gas Deutschland was a holding company with a 24% interest in Erdgas West-Sachsen GmbH, 25.5% of Gasversorgung Sachsen-Anhalt GmbH, and 5% of Verbundnetz.

Verbundnetz received an 85% share of the gas market in eastern Germany and more than 16% in Germany as a whole.

Berlin`s city authorities planned to sell a 51% stake in the municipal gas supply company Gasag. Other shareholders include Ruhrgas AG, RWE-DEA, and Veba Oel AG.

Germany`s Wingas, a 65-35 joint venture of Wintershall AS and Russia`s Gazprom, started work on the Jagal pipeline for the import of Russian gas.

The new line extends 330 km from Mallnow in Brandenburg to Ruckersdorf in Thuringia, where it will link with the Stengal gas pipeline. Completion was due in 1999.

The 47 in. line can move up to 28 billion cu m/year. It will cost about $560 million.

BSL started up a 430 km feedstock/crude pipeline from the Baltic Seaport of Rostock to its 450,000 metric ton/year ethylene plant at Bohlen.

The line moves naphtha to the ethylene plant, but Elf Aquitaine, a 20% partner, can use excess capacity to move crude to its new Leuna refinery near Bohlen.

BP Exploration signed a 15-year deal with Ruhrgas to supply it 1 billion cu m/year of gas beginning Oct. 1, 1998. The gas will be delivered from BP`s North Sea fields to Zeebrugge, Belgium, via the new Interconnector pipeline. Distrigaz will move the gas on to Germany.

Ruhrgas also agreed to buy another 20 billion cu m of gas from Phillips Petroleum Co. at Ekofisk field, extending a contract until 2028. And it will buy a further 90 billion cu m of gas from Gasunie, extending a contract to 2022.