JANUARY

THE MARKET: The near-month futures price for light, sweet crude on the New York Mercantile Exchange ends the week of Jan. 3 at $25.64/bbl, up $5.67/bbl from the same week a year earlier. The gas futures price ends the same week at $2.86/MMBTU, down 7¢/MMBTU from a year earlier. By month`s end, the Nymex oil price is down to about $23.50/bbl, the gas price to $2.35/MMBTU.

GOVERNMENT: FERC streamlines its utility merger rules to focus on effects on competition, rates, and state and federal regulation...The Philippines government orders complete deregulation of the oil industry, ending state subsidies effective Feb. 8...China creates a third state oil company, China National Star Petroleum Corp.

ALTERNATIVE FUELS: Chrysler reports a breakthrough that it says will speed development of automobiles powered by fuel cells-a fuel cell that derives hydrogen from gasoline.

LNG: Qatar Liquefied Gas Co. (Qatargas) delivers the first cargo of LNG to Chubu Electric Power Co., Japan, from its new liquefaction plant at Ras Laffan...Yemen LNG-a venture of Exxon, Total, Hunt Oil, and Yukong-agrees to work with the government of Yemen to build a 5.3 million ton/year liquefaction plant and LNG export facility.

FEBRUARY

THE MARKET: The Nymex crude price falls below $21/bbl by the end of the month, the gas price to less than $1.85/MMBTU.

PIPELINES: Phillips Pipe Line and Seaway Pipeline announce plans to create a common carrier pipeline system to transport gasoline and distillates from near Houston to Wichita, Kan., by converting part of the 550 mile, 20 in. Seaway crude line to product service.

RESTRUCTURING: NGC Corp. announces plans to acquire Destec Energy, an independent power producer, in a stock purchase valued at $1.2 billion...In its first use of procedures to speed merger decisions, FERC (U.S.) rules that a proposed combination of Enron and Portland General would not hurt competition...Amoco and Shell Oil reach final agreement to form a limited partnership, Altura Energy Ltd., to operate the companies` producing assets in the Permian basin...British Gas ceases to exist as stock trading begins for BG plc, handling U.K. gas supply and worldwide exploration and production, and Centrica plc, handling U.K. gas sales, trading, and retail operations...Valero Energy agrees to sell its natural gas assets to Pacific Gas & Electric for $1.5 billion in order to concentrate on refining and marketing.

GOVERNMENT: U.S. Bureau of Land Management requests nominations for leases in the National Petroleum Reserve-Alaska.

MARCH

THE MARKET: Oil and gas prices end the month about where they began it: $21/bbl for crude and $1.85/MMBTU on the Nymex.

GOVERNMENT: Federico Peña, formerly Secretary of Transportation, becomes U.S. Secretary of Energy...The U.K. plans to open residential gas markets not already deregulated to competitive supply in six stages beginning in October.

RESTRUCTURING: Shell Oil and Texaco sign a memorandum of understanding to combine major elements of their midwestern and western U.S. refining and marketing activities and all of their U.S. transportation, trading, and lubricants businesses...Valero Energy agrees to acquire Basis Petroleum Inc. which owns three U.S. Gulf Coast refineries with combined capacities of 260,000 b/d from Salomon Inc....Murco Petroleum Ltd., a U.K. subsidiary of Murphy Oil Corp., withdraws from a planned merger of British refining and marketing assets with Elf Oil U.K. and Gulf Oil (Great Britain).

EXPLORATION: The environmentalist group Greenpeace submits a bid in the U.K.`s 17th offshore licensing round to operate all 22,000 sq miles on offer, promising to do nothing more than conduct scientific studies...India proposes a new exploration licensing policy that puts state-owned companies on the same terms as private firms and ends a requirement that private firms take their state-owned counterparts as partners.

PIPELINES: Mexico lets contract to a group led by TransCanada PipeLines to build, own, and operate the 434 mile, 370 MMcfd Merida natural gas pipeline in the Yucatan Peninsula...Great Lakes Gas Transmission Ltd. plans to lay 1,000 miles of pipeline along its existing interstate gas system between Canada and the upper U.S. Midwest at a cost of $2.5 billion...TransCanada PipeLines and Northern States Power say they`ll seek approval for a $1 billion, 800 mile gas line, the Viking Voyageur Gas Transmission Project, to serve the U.S. Midwest.

PROCESSING: Dubai Gas Co. starts up a $250 million, 500,000 ton/year MTBE plant at Jebel Ali, the first such plant in the U.A.E.

APRIL

THE MARKET: The Nymex crude price slips below $20/bbl in the last week of the month, while the gas prices edges above $2/MMBTU.

RESTRUCTURING: Mesa Inc. and Parker & Parsley Petroleum Co. agree to merge to form Pioneer Natural Resources Co., an independent producer with reserves of 1.7 tcf of natural gas and 293 million bbl of crude and liquids...Ultramar Diamond Shamrock agrees to acquire Total (North America) Ltd. in an $811 million deal that will increase the buyer`s refining capacity to 650,000 b/d.

LNG: A group led by Phillips Petroleum Canada discloses plans to build a 3.5 million ton/year LNG plant at Kitimat, B.C., North America`s largest, based on Phillips`s Optimized Cascade process. The project would include a 300 mile pipeline connection with the Westcoast Energy main trunk line.

PIPELINES: Columbia Gas System plans a 380 mile pipeline called Millennium to carry gas from the U.S. Midwest and western Canada to eastern New York.

SANCTIONS: The Clinton administration issues sanctions against new investments by U.S. firms in Myanmar in response to the Rangoon government`s repression of political dissidents.

MAY

THE MARKET: The Nymex crude price rebounds, ending the month at $21.60/bbl. The gas price continues its upswing, ending the month at $2.20/MMBTU but having reached higher levels earlier.

PRODUCTION: Statoil awards contracts for work on what will be the first oil field to be developed off Ireland-Connemara in the Porcupine basin.

PIPELINES: TransCanada PipeLines applies for a $1.1 billion system expansion that will increase capacity by 1.25 bcfd during 1998-99 and involve addition of 371 km of pipeline, 11 compressors, and four metering stations.

GOVERNMENT: New U.S. Energy Sec. Federico Peña says his department is working on a national energy strategy...The Justice Department discloses that it has ended, without finding any misbehavior, the investigation it began in response to a gasoline price surge during 1996.

PRODUCTION: Canadian Gas Potential Committee says western Canada holds enough natural gas to last 100 years and enough conventional resource to replace production at current rates for 50 years...Partners in Hibernia oil field off Newfoundland tow out the $5.8 billion concrete gravity platform from which Canada`s first offshore commercial oil will flow by yearend.

RESTRUCTURING: FERC approves the $7.7 billion merger of PanEnergy and Duke Power into Duke Energy, based in Charlotte, N.C....Elf Oil U.K. and Gulf Oil (Great Britain) cancel a planned merger of their British refining and marketing assets.

JUNE

THE MARKET: Ministers of OPEC member countries, together producing an estimated 27 million b/d, extend their 25.033 million b/d quota for 6 months. The Nymex crude futures price slips to $19.25/bbl at month`s end, the Nymex gas price to $2.21/MMBTU.

PRODUCTION: Shell and Occidental sign a memorandum of understanding with First Gas Holdings of Manila for a gas-supply deal that clears the way for the $2 billion development of Malampaya and Camago gas fields off Palawan Island, Philippines.

GOVERNMENT: Mohammed Khatami, a relative moderate within the ruling Islamic clergy, wins presidential elections in Iran, defeating a more staunchly anti-West candidate who had been expected to win...Against the advice of economic advisers, U.S. President Clinton endorses a proposal by the EPA for a sharp toughening of air pollution standards for ozone and fine particles, which will broaden the requirement for reformulated gasoline.

JULY

THE MARKET: The Nymex crude price ends the month at $19.51/bbl, the gas price at $2.13/MMBTU.

LNG: Westcoast Energy Inc., Vancouver, B.C., proposes to build and operate an LNG liquefaction, storage, and regasification complex in southern British Columbia as an alternative to a proposal by BC Gas Utility Ltd. for a 312-km, 24-in. pipeline from Yahk to Oliver, B.C. The plant would be able to liquefy gas at the rate of 16 MMcfd for storage for withdrawal into pipelines during peak demand periods.

GOVERNMENT: Utah`s School and Institutional Trust Lands Administration sues the U.S. government to fight President Clinton`s designation of 1.7 million acres of nonwilderness federal land as the Grand Staircase-Escalante National Monument...Russia says it will sell majority interest in Rosneft, its last wholly state-owned oil company.

PERSONNEL: A report by the firm John S. Herold of Stamford, Conn., warns of a "very serious shortage of youthful, energetic talent" in the petroleum industry.

RESTRUCTURING: Burlington Resources and Louisiana Land & Exploration sign a definitive agreement under which LL&E will merge with a Burlington unit in a stock transaction worth $3 billion.

GAS-TO-LIQUIDS: Sasol of South Africa signs a memorandum of understanding with Qatar General Petroleum Corp. and Phillips Petroleum to build a plant at Ras Laffan, Qatar, to convert natural gas to 20,000 b/d of naphtha and middle distillates.

REFINING: Kanematsu of Japan and Chinese Petroleum Corp. of Taiwan divulge plans to build a $1 billion refinery and petrochemical complex in Brunei able to process 60,000 b/d of crude and produce 420,000 metric tons/year of paraxylene and 200,000 tons/year of benzene.

PIPELINES: Unocal, Delta Oil of Saudi Arabia, and the governments of Turkmenistan and Pakistan sign a framework agreement for construction of a $2-2.5 billion, 2,600-km, 48-in. natural gas pipeline from Turkmen gas fields to Pakistan.

AUGUST

THE MARKET: Iraq resumes oil exports, suspended since June in a political controversy, under the U.N.`s oil-for-food program. To get revenues to allowed levels, it will produce as much as 1.8 million b/d. Prices hold steady, the Nymex crude futures price ending the month at about $19.50/bbl. The gas price rises above $2.70/MMBTU.

GOVERNMENT: Brazilian President Fernando Henrique Cardoso signs a law that ends 40 years of monopoly by Petrobras SA, deregulates prices of petroleum products over 3 years, and establishes a legal basis for foreign company participation in the country`s upstream activities.

TRANSPORTATION: Japan National Oil Corp. and partners are reported to be studying a $10 billion oil pipeline from Russia to Japan by way of China and South Korea...Pdvsa completes a feasibility study of a 3,190 km oil pipeline from eastern Venezuela to the southern tip of Florida.

REFINING: Venezuela`s Corpoven and Phillips Petroleum sign a $500 million deal to build a coking unit at Phillips`s refinery at Sweeney, Tex. As part of the deal, Corpoven agrees to supply 165,000 b/d of heavy crude for processing at Sweeney...U.S. refiners produce a record high average of 7.999 million b/d of gasoline during the month, according to API. Overall refinery inputs were a record 15.322 million b/d.

PRODUCTION: Petrobras sets a water depth record with start of production from the South Marlim 3B well, a subsea completion in 5,607 ft of water off Brazil.

SEPTEMBER

THE MARKET: The Nymex crude price rises to $20.12/bbl in the last week of the month, the gas price to $3.14/MMBTU.

GOVERNMENT: The Russian government annuls a deal with Exxon for development of oil and gas fields in the Timan-Pechora region worth $1.5 billion...The U.S. Forest Service decides not to allow drilling on gas-prospective federal lands along the Rocky Mountain front in the Lewis and Clark National Forest of Montana.

EXPLORATION: ARCO confirms discovery of a gas field named Tangguh off Irian Jaya, Indonesia, that contains proved and probable reserves exceeding 13 tcf, making it one of the largest gas finds of recent history...Amoco reports its Sparrow-1 and Sparrow-2 wells off eastern Trinidad found a field with gas in place exceeding 2 tcf.

PROCESSING: Gas Authority of India Ltd. plans a $1.2 billion expansion program involving gas processing plants at Gandhar, Gujarat, and Auraiya, Uttar Pradesh, and an LPG pipeline between Kandla and Loni.

ALTERNATE FUEL: Venezuela`s Orimulsion, a mixture of extra heavy crude, water, and surfactant used as a boiler fuel in competition with coal, runs into trouble in two key markets. Environmental opposition at the state government level threatens plans of Florida Power & Light to use the fuel. And National Power of the U.K. decides not to use Orimulsion in its 2,000 MW Pembroke power plant in Wales.

PRODUCTION: Shell Deepwater Production, Amoco, and Exxon begin production from the Ram-Powell tension-leg platform in 3,214 ft of water in the Gulf of Mexico.

SANCTIONS: In defiance of U.S. sanctions, a group led by Total and including Russia`s Gazprom and Indonesia`s Petronas agrees to conduct two phases of development worth $2 billion of South Pars natural gas field off Iran.

OCTOBER

THE MARKET: Crude prices jump at the end of the month as tensions rise in Iraq. On Oct. 29, the Nymex December price for crude jumps 25¢ to $20.71/bbl. The gas price continues its rise, averaging $3.51/MMBTU in the last week of the month.

GOVERNMENT: The U.S. Department of Energy decides to sell its 78% interest in Elk Hills oil field in California, a naval petroleum reserve, to Occidental Petroleum for $3.65 billion...Iraqi President Saddam Hussein bans American members of the UN weapons inspection team in his country, leading to the departure from Iraq for several days of the entire team and raising questions whether he is hiding military preparations...Energy Minister Marit Arnstad says Norway`s new environmentally oriented government is committed to cutting oil and gas production by postponing offshore licensing rounds and delaying projects.

ALTERNATE FUEL: Royal Dutch/Shell says it will invest $500 million over 5 years in a new unit, Shell International Renewables, in what it says is the largest ever investment in renewable energy.

EXPLORATION: A group led by Lasmo discloses a possible giant oil discovery in Libya about 470 miles south of Tripoli in the F1 well, which cut more than 300 ft of net oil pay and tested 7,500 b/d of oil.

NOVEMBER

THE MARKET: Oil prices drop in response to an end-of-the-month decision by OPEC to raise the group production quota by 10% to 28.03 million b/d. The Nymex crude price in the last week of the month averages $19.57/bbl. The natural gas futures price drops to $2.61/MMBTU.

GOVERNMENT: Russian President Boris Yeltsin signs a decree allowing 100% foreign ownership of Russian oil companies...Responding to Iraq`s expulsion of American weapons inspectors, the U.N. Security Council votes to cancel until April 1998 its 60 day sanctions review and to impose a travel ban...Just before collapsing, the United Front government of Indian Prime Minister Inder Kumar Gujral unveils a deregulation plan that will phase out administered oil prices over 4 years.

MARKETING: Retail gasoline prices in Japan fall to their lowest levels in 10 years in response to competition unleashed by deregulation.

PRODUCTION: Hibernia oil field off Newfoundland starts production 18 years after discovery, with flow rising toward a plateau level of 135,000 b/d.

SANCTIONS: The U.S. imposes economic sanctions against Sudan, alleging that the country sponsors international terrorism and violates human rights of its citizens

DECEMBER

THE MARKET: Crude prices extend their slide, which began with the late-November OPEC decision to lift quotas, through yearend, falling below $18/bbl on the Nymex. The gas futures price slumps to $2.24/MMBTU.

GOVERNMENT: An international meeting in Kyoto, Japan, yields a protocol on climate change that would, if ratified, require the U.S., European countries, and Japan to reduce emissions of greenhouse gases by an average of 6-8% from baseline levels...Iraq accepts a U.N. deal enabling it to again sell $2 billion worth of oil during 6 months...The European Union agrees to deregulate one third of Europe`s natural gas market in three phases over 10 years...Nigerian dictator Gen. San Abacha is reported to have repulsed an attempt to overthrow him by his deputy, Lt.-Gen. Oladipo Diya...Finland outlines plans for merging Neste Oy, the state-owned oil company, and Imatran Voima Oy, the state electricity company.

GAS-TO-LIQUIDS: Texaco, Brown & Root, and Syntroleum agree to develop a commercial plant to convert natural gas into hydrocarbon liquids-a modular 2,500 b/d unit to be built outside the U.S.