PetroFina’s share in Group unaudited operational profit at the end of September 1998 was BEF 16.1 billion, compared to BEF 18.1 billion in 1997. The unaudited profit was BEF 14.9 billion compared to BEF 17.9 billion in 1997 and the cash flow was BEF 43.3 billion compared to BEF 44.4 billion in 1997.

During this period, the Group’s European refineries improved their throughput by 5% and the Fina network increased its sales by 6.2%. In unfavourable economic conditions, sales of polymers grew by an average of 1.4% in Europe and in the United States. In paints, the profits of the Sigma group grew by 22%. These positive developments, however, could not offset the effects of the collapse in crude oil prices, reduction in the gas price, lower refining margins in the United States and the decline in monomer margins in Europe.

PetroFina’s share in the unaudited profit for the third quarter of 1998 amounted to BEF 5.2 billion, compared to BEF 7 billion for the third quarter of 1997. Cash flow for the quarter was BEF 12.3 billion, compared to BEF 16.3 billion for the third quarter of 1997, which was particularly good.

Operating performance for the third quarter was affected by the start-up problems with the Ekofisk II project, by planned shutdowns in the Groups chemical plants to enable investment works to be carried out and by some technical problems which led to a reduction in volumes produced and processed.

During these three months, all the fundamental parameters of the oil industry were down compared to the corresponding period of 1997: crude oil prices fell by 33%, American gas prices fell by 17%, refining margins shrank by 13% in Europe and 36% in the United States and the dollar fell by 3% against BEF. In chemicals, monomer prices declined to levels close or equal to historic lows.

The quarterly profits of the Group’s various areas of operation carry the effects of these changes.

UPSTREAM

In the third quarter of 1998, the Group’s oil production was 11.3 million barrels and its gas production was 40.4 billion cubic feet, compared to production of 14.3 million barrels and 50.8 billion cubic feet in the third quarter of 1997. This reduction was mainly due to the temporary shutdown of Ekofisk production to allow the new installations to be connected according to the Ekofisk II plan and due to technical problems which arose during start-up. The production should regain its normal level at the beginning of next year.

In Angola, in deep offshore waters, the Group participated in the fourth discovery of oil in block 17, which confirms the extraordinary potential of this licence, where Fina holds 5%.

In Italy, the Group has held a 25% participation in all the concessions covering the Tempa Rossa field since July, when Lasmo sold its interest in the field to its four partners who now each hold 25%.

In Alaska, the Badami field, where PetroFina holds 30%, came on stream at the end of August, more than one month ahead of schedule. Production should reach 30,000 barrels per day.

In the British sector of the North Sea, the Delilah gas field, where the Group holds 18.75%, became operational following its connection to the Hewett field infrastructure.

DOWNSTREAM

In the third quarter of 1998, Group refining throughput (excluding the Angola refinery) grew by 1.4% compared to the third quarter of 1997, reaching 681,000 barrels per day.

Sales by the Fina network in Europe increased by 6% in a stagnant market.

CHEMICALS

The decline in chemical profits is due to lower monomer margins and programmed shutdowns to allow expansion work to take place.

The Group concluded two agreements with the Solvay group covering industrial and technical cooperation in the area of high density polyethylene (HDPE): under the industrial agreement, the two groups will share the production facilities to be built in Belgium, one by Solvay and the other by PetroFina, in 2002 and 2005 respectively. The technical agreement provides PetroFina with access to a worldwide licence to produce HDPE using chrome catalysts, and the combining by both companies of research and development into metallocene and other catalysts to be used in HDPE.

The Group has entered into an agreement with Mitsui Chemicals covering research and development in the area of polypropylenes produced using metallocene catalysts. This agreement, which extends and expands a long-standing collaboration, will accelerate the development and marketing of products with high added-value.


PAINTS

Profits of the Sigma group for the quarter grew by 10% compared to the same period in 1997. This continued recovery is due to Sigma’s improved performance in the industrial paint sector in Europe and in the decorative paint sector in Belgium and France.