WORLD DEPENDENCY ON MIDEAST OIL SAID INEVITABLE

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

