An Oracle of Oil Predicts $200-a-Barrel Crude

An Oracle of Oil Predicts $200-a-Barrel Crude
New York Times
May 21st, 2008

http://www.nytimes.com/2008/05/21/business/21oil.html?hp

Arjun Murti's predictions

Net Oil Exports - May 2008 Update

Net Oil Exports - May Update. Top 20 Exporters (93% of total exports).

http://www.savefile.com/files/1562272


I revised February up by about 330,000 bpd. March stays about the same and April exports drop by about 135,000 bpd. all revision data is included in spreadsheet.

Click on following link to download updated Excel spreadsheet(420 kb):
http://www.savefile.com/files/1562272
scroll down to bottom of linked page and hit orange button on right and
then hit second prompt if download doesn't start immediately

Latest Pickens Video - May 20th, 2008

T. Boone Pickens - May 20th, 2008

Latest video interview with Becky Quick on CNBC
http://www.cnbc.com/id/15840232?video=747990771

1) No Presidential candidates talking about issue.

2) Oil is going to $150 this year.

3) BP Capital was wrong earlier this year. But is now right.

4) BP Capital is long crude oil.

Venezuela adds 30 billion barrels

Venezuela Says Proved Oil Reserves Rise to 130 Billion Barrels
By Steven Bodzin
May 8 (Bloomberg)

Venezuela has added 30 billion barrels of new proved crude oil reserves, bringing its total to 130 billion barrels, Oil and Energy Minister Rafael Ramirez told reporters today in Caracas.

Ramirez spoke at the opening ceremony of a meeting of South American energy ministers in Caracas.

Rumor has it that the petroleum engineer doing the proving was named Hugo Chavez. Interestingly, this comes on the heels of news that Brazil might surpass Venezuela as South America's biggest producer. 30 billion barrels is larger than Brazil's recent Tupi and Carioca finds combined.

Petrobras to Start Output at Tupi in 2009

Petrobras to Start Output at Tupi Ahead of Schedule
By Joe Carroll and Monica Bertran
May 5 (Bloomberg)

Petroleo Brasileiro SA, Brazil's state-controlled oil company, plans to begin pumping crude from its 8 billion-barrel Tupi field in 2009, a year ahead of schedule, and to start its Carioca field in four to five years.

A test well at the offshore Tupi field will produce about 20,000 barrels of oil a day starting in next year's first quarter, Chief Executive Officer Jose Sergio Gabrielli said today in an interview in Houston. Production will reach 100,000 barrels a day by the end of 2010, he said.

Technical challenges involved in tapping crude beneath thousands of meters of rock and salt aren't insurmountable, Gabrielli said. The company will announce an increase in June in its $112.7 billion, 5-year capital budget to fund the work at Tupi, the Western Hemisphere's largest petroleum discovery since 1976, and other offshore prospects, he said.

``I am very surprised that they're saying they can start production that quickly,'' said Matt Cline, a U.S. Energy Department economist who tracks the Latin American energy industry. ``I can't even think of a scenario where that's even plausible.''

Petrobras, as Rio de Janeiro-based Petroleo Brasileiro is known, rose 1.6 percent to 43.70 reais in Sao Paulo. The stock has climbed 25 percent since the company said in November that Tupi may hold 8 billion barrels of recoverable oil equivalent.

Carioca

Carioca, located to the southwest of Tupi, may hold 33 billion barrels of oil, Brazilian regulator Haroldo Lima said last month. The estimate was based on a magazine article, Lima later said. Gabrielli said it will take several months of drilling to evaluate the field.

There are 7 or 8 prospects in the area of the Atlantic Ocean where Tupi and Carioca are located, Gabrielli said. Other producers exploring that area for oil and gas include Exxon Mobil Corp., Chevron Corp., BG Group Plc and Repsol YPF SA.

``The hypothesis we have is that they are very large reserves, but we don't know,'' Gabrielli said. The increase in capital spending will be ``a lot,'' he said. ``We need more rigs, and they are very expensive right now.''

Tupi, located 155 miles (250 kilometers) off the Brazilian coast, may employ more than six drilling vessels once next year's test well is finished, Gabrielli said. The world's most advanced deepwater rigs are renting for $600,000 or more per day in some cases.

Fine Tuning

Petrobras plans to use knowledge gained from next year's production test at Tupi to ``fine tune'' tools and techniques it'll use to tap other offshore reservoirs, Gabrielli said. The company is spending $60 million to drill each offshore well, down from $240 million per well a few years ago, as rig crews and engineers become more familiar with the region's geology, he said.

``We think we don't have any big technical challenge here,'' Gabrielli said. ``We know pretty much most of the technology.''

Petrobras expects to increase production to the equivalent of 4.2 million barrels of oil a day by 2015, Gabrielli said. The company produced 2.34 million barrels a day in March.

Will Brazil Become a Net Exporter?

In Robert Bryce's "Gusher of Lies" (2008) I found the following section on Brazil:

By 2010, the company [Petrobras] will likely be exporting 500,000 barrels of oil per day. and by 2015, the company hopes to double its oil production again, to some 4.5 million barrels per day. These plans gained credence in November 2007 when the company announced that its new offshore Tupi field may hold up to 8 billion barrels of oil equivalent. Tupi is the second largest oil discovery in the last 20 years.

I found this odd, since the 4.5 mbpd goes well beyond even the most optimistic forecasts I've seen in the last few years.


*N.B. - The following chart is not a forecast, it is an implementation of the scenario described above. It uses numbers that produce 500 kbpd of exports in 2010 and 4.5 mbpd of crude, condensate, NGL, and RPG production (excluding ethanol) in 2015. Ethanol production is included in chart, but kept at its 2007 level of 400 kbpb. Consumption is estimated at growing 2% annually through 2010 and 6% annually through 2015.



From the numbers of the last 5 years we can see that Brazil's production has accelerated to 10-12% annually at times and flattened out twice. Since Early 2006 it has dropped to about 2% annually.

Will Brazil Become a Net Exporter?

Deutsche Bank Forecast

Oil May Rise Until Demand Collapses, Says Deutsche
By Ayesha Daya
April 28 (Bloomberg)

There is a ``huge risk'' that oil prices will continue to rise until demand collapses because additional supplies are limited and alternative fuels decades away from replacing crude, Deutsche Bank AG said.

``There is a huge risk that the oil price simply continues to escalate until it gets to some level ($200 a barrel?) when demand finally collapses because ordinary people can no longer afford to burn as much energy as they are burning now,'' Deutsche Bank's chief energy economist Adam Sieminski wrote in a report dated April 25.

Oil demand previously collapsed in the early 1980s, after nominal oil prices rose tenfold between 1970-73 and 1980-83, to $35 a barrel from around $3.50. Oil averaged about $25 a barrel from 2000-03, suggesting prices would have to increase to $250 a barrel in 2010-13 to have the same impact on oil users this time around, Sieminski said. Deutsche Bank's price forecast for Brent and West Texas Intermediate oil next year is $102.50 a barrel.

Oil prices have surged 82 percent in the past year as investors purchased contracts as a hedge against the dollar, which fell to a record low against the euro, and as an alternative to flagging equity markets. Crude oil rose to a record $119.93 a barrel today after BP Plc shut a North Sea pipeline and gunmen attacked police guarding Nigeria's largest oil and gas terminal.

Investment Needs

Additional oil supplies will come only from the Organization of Petroleum Exporting Countries, which produces 40 percent of the world's oil, because non-OPEC output will need ``enormous levels of investment'' just to maintain current levels of production.

``However, much of the remaining oil-in-the-ground in OPEC is run by National Oil Companies that have, by and large, been starved of investment capital by their own governments, for example Venezuela, Nigeria, Iran,'' Sieminski said.

The exception is Saudi Arabia, which holds the world's largest oil reserves. The country has no plans to raise output beyond its 2009 target of 12.5 million barrels a day, Oil Minister Ali al-Naimi said in an interview with Argus Media this month.

Any strengthening of the U.S. dollar would take time to stem the flow of investment into commodities, and alternative energies such as solar power or biofuels are at least a decade away from contributing to energy supply, Sieminski said.

Goldman Sachs Forecast

Goldman Sachs Says Window `Closing Fast' for Oil Drop
By Will Kennedy and Grant Smith
April 23 (Bloomberg)

Goldman Sachs Group Inc., the most profitable Wall Street bank, said the window for a decline in oil this spring is `closing fast,' as prices rise to records and the summer period of peak gasoline demand approaches.

U.S. crude imports are likely to rise because of lower inventories and the strength of local oil prices relative to the rest of the world, Goldman analysts led by Giovanni Serio said in their Energy Weekly report.

``Looking into the second half of this year, given the fundamental tightness, we believe the risks are substantially skewed to the upside,'' the report said.

The bank said on April 10 that oil may not fall as far as it expected previously, predicting that prices may slip to $98.80 in the spring, above a previous ``floor'' of $90 a barrel.

Crude oil futures rose to a record $119.90 a barrel on the New York Mercantile Exchange yesterday.

Goldman maintained its expectations for the price of the front-month crude contract in three, six and 12-months at $102, $107.50 and $115 a barrel respectively. The bank's forecast for the average price in 2008 of $105 is the second-highest among 31 estimates compiled by Bloomberg.

Net Oil Exports - April 2008 Update

Net Oil Exports - April Update. Top 20 Exporters (93% of total exports).

For those of you that have already downloaded the spreadsheet - The correct value for Venezuelan March production is 2444 not 2244. Thanks to eastender for catching that.


Exports dropped by about 150,000 barrels per day in March.

check link to right for newer spreadsheet

Pickens Reversal

Boone Pickens Adopts Long Position on Oil Investments
By Daniel Whitten
April 17 (Bloomberg)

Boone Pickens, a billionaire energy investor, said he reversed course and adopted a long position on oil, meaning he is betting the price of crude will rise.

Pickens, 79, the founder and chairman of Dallas-based BP Capital LLC, said today in a speech at Georgetown University that the price of crude oil will only continue to climb and demand will eventually be dampened.

``The position is long, not short,'' Pickens told reporters after his speech. ``I covered the short position, it was a mistake on my part. We missed.''

Crude oil futures in New York touched $115.54 a barrel today, the highest intraday price since trading began in 1983.

Pickens said he thought oil was approaching $125 a barrel. Oil will eventually reach $150 per barrel, he said while cautioning ``I won't be investing in $150 oil.''

World oil supplies won't exceed 85 million barrels a day because of high depletion rates of existing wells, he said in his speech.

``There is only 85 million barrels of oil globally in the market coming a day and I don't think you can increase that 85 million,'' Pickens said.

World oil demand during the four years ending 2008 is rising at an average annualized pace of about 1.4 percent, according to International Energy Agency forecasts.

OPEC Reluctance

Over the same period, non-OPEC oil supply is seen climbing at a slower pace of 0.9 percent. The Organization of Petroleum Exporting Countries has this year been reluctant to commit to pumping more, saying supply and demand are in balance.

Pickens endorsed Republican presidential candidate John McCain, while criticizing his energy policies. Recent McCain proposals to stop putting oil into the federal Strategic Petroleum Reserve and to suspend a gasoline tax for the summer wouldn't be good for the country, Pickens said.

``I'm hoping he will become better informed and come up with better ideas about energy than he has up to now,'' he said.

He plans to invest $10 billion in 4,000 megawatts of wind projects within the next several years.

``We are going to put a lot of money into wind next month,'' Pickens said, adding he expects at least a 25 percent return on his investment.

Angola

Angola Crude Oil Exports, Including Palanca, Fall 1.7% in June
By Alexander Kwiatkowski and Nesa Subrahmaniyan
April 17 (Bloomberg)

Angola's daily crude oil shipments, including the Palanca grade, will drop 1.7 percent in June.

BP Plc, Total SA, Chevron Corp., Exxon Mobil Corp. and other companies will ship an average of 1.92 million barrels a day in June, compared with 1.95 million barrels a day scheduled for May, according to the loading program. The schedule for Palanca cargoes had previously been unavailable.

Angola, which became a member of the Organization of Petroleum Exporting Countries in 2007, was given a daily production target of 1.9 million barrels at the group's meeting in Abu Dhabi last year. The country's oil output increased 18 percent last year to 1.61 million barrels a day, according to the International Energy Agency.

Sixty cargoes totaling about 57.6 million barrels will load in June, compared with 63 cargoes totaling 60.6 million barrels in May.

Angola's June loadings will include seven cargoes apiece for BP and Total, and six for Exxon Mobil. StatoilHydro ASA, Eni SpA and Chevron are scheduled to lift five cargoes. Galp Energia SGPS SA will load one cargo of Nemba crude.

State-run Sonangol SA has 22 cargoes, while Sonangol Sinopec International, a venture between the national oil company and China's biggest refiner, will load two Plutonio shipments.

Angolan oil comprised 5 percent of total U.S. crude imports in 2006, or 513,000 barrels a day, according to the Energy Information Administration.

Angola's cargoes typically range in size from 875,000 barrels to 1 million barrels apiece. Following is a table showing the number of Angolan crude cargoes scheduled to load in June and May.

================================================================
Grade      Cargoes    Total      Bbls/Day     Previous   %Change

Cabinda       6     5,700,000     190,000      183,871      +3.3
Dalia         9     8,550,000     285,000      245,161     +16.3
Girassol      8     8,000,000     266,667      290,323      -8.1
Hungo         8     7,600,000     253,333      275,806      -8.1
Kissanje      8     7,600,000     253,333      245,161      +3.3
Kuito         2     1,750,000      58,333       56,452      +3.3
Mondo         3     2,850,000      95,000       91,935      +3.3
Nemba         8     7,600,000     253,333      275,806      -8.1
Palanca       2     1,970,000      65,667       95,323     -31.1
Plutonio      6     6,000,000     200,000      193,548      +3.3

Total        60    57,620,000    1,920,667   1,953,387      -1.7
================================================================

New Production Record - January 2008

The EIA has just released its numbers for January 2008. They show a new production record for Crude and Condensate production (C+C).

You saw it here first. I had prepared a piece for this in the last week as I was sure it was going to happen, but I will hold off and wait to see what those who have been adamant about 2005 being the peak have to say. Hopefully they are starting to learn that we just can't predict.

74,466 is 168,000 barrels per day above the previous monthly record of May 2005.

http://www.eia.doe.gov/emeu/international/oilproduction.html




Here is a link to graphs on EIA Revisions and what they tend to do.

IEA April update (for March)

April 11th IEA Oil Market Report - Highlights

Crude futures set new records above $110/bbl in early April, driven by tight distillate markets, strong non-OECD imports and a weaker dollar. Refining margins remain extremely volatile, reverting into positive territory in recent weeks following a large US gasoline stock draw, which has tightened regional supplies.

Global oil product demand has been revised down by 310 kb/d in 2008 to 87.2 mb/d following the downgrading of global GDP prospects by the IMF, coupled with a change in FSU methodology and baseline data revisions. By the same token, 2007 demand is up by 140 kb/d over last month’s report to 86.0 mb/d. As a result of these divergent shifts, demand growth in 2008 is now expected at almost 1.3 mb/d or 1.5% over 2007.

Global oil supply fell by 100 kb/d in March to 87.3 mb/d, led by lower supplies last month from OPEC, the North Sea and non-OPEC Africa. Non-OPEC supply growth in 2008 is trimmed to 815 kb/d on a broad swathe of adjustments in the Americas, Africa and Europe.

OPEC crude supply fell by 265 kb/d in March to 32.1 mb/d, on field maintenance in UAE, Nigeria and Venezuela. Pipeline/power outages highlighted ongoing risks to production in Iraq and Nigeria amid effective spare capacity of just 2.3 mb/d. Weaker economic growth cuts the 2008 call on OPEC by 0.3 mb/d to 31.6 mb/d.

OECD total industry stocks fell by 48.9 mb in February, to 2,579 mb, offsetting a similar rise in January. The February draw leaves inventories At 53.3 days of forward demand. With preliminary data indicating a build of just 6.3 mb in March, OECD end-1Q08 stocks remain close to end-December levels.

Global refinery throughput weakened in March, as poor margins curbed crude runs in all OECD regions. Estimated 1Q08 global throughput is unchanged at 74.0 mb/d. However, 2Q08 estimates have been cut by 0.2 mb/d to 73.7 mb/d, in line with weaker demand.

OPEC exports down 100,000 bpd

OPEC exports down 100,000 bpd 4 wks to Mar 23
Mon 7 Apr 2008

LONDON, April 7 (Reuters) - OPEC seaborne oil exports, excluding Angola and Ecuador, fell 100,000 barrels per day (bpd) in the four weeks to March 23, mostly on slippage from Gulf producers, data released by Lloyd's Marine Intelligence Unit showed on Monday.

LMIU said shipments from 11 OPEC producers, including Iraq, fell to an average of 22.104 million bpd in the peroid, versus 22.201 in the previous four weeks to Feb. 25.

"Exports are trending downwards, with Gulf shipments clearly falling in the period. Volumes are cyclically lower," an LMIU analyst said.

He said that refinery maintenance in the first and early into the second quarter was likely affecting flows as demand slows.

The analyst said lower output in Nigeria and Venzuela in March, could also be responsible for the turndown, a trend confirmed by other industry sources and analysts.

Last week a Reuters survey of 12 OPEC members showed production fell slightly in March because of lower Nigerian and Venezuelan output as maintenance at oil installations curbed supply.

Why Oil Requires a Sense of Humor

I won't be printing any jokes today (April Fool's Day). I promise. But this is pretty funny.

I was cleaning up the website when I stumbled upon this old draft. I'm glad I didn't throw it away. I think it goes well with the material I've been posting lately on forecasting. I haven't found out what Lehman's "revised" forecast is, if somebody knows where to find it by all means post it here. Most likely it has been buried in the recent turmoil surrounding these brokers and banks. Keep in mind that February 20th was more than halfway through the first quarter. Can you forecast history? The comment that follows the piece was written in February.

From Bloomberg last month:

Lehman Will Revise First-Quarter Oil Price Forecast
By Jeremy Naylor and Grant Smith
Feb. 20 (Bloomberg)

Lehman Brothers Holdings Inc. will revise its first-quarter New York crude oil price forecast of $86 a barrel, chief energy economist Edward Morse said.

``We will be revising it up,'' Morse said in an interview with Bloomberg television. Oil prices, which rose to a record $100.10 a barrel on the New York Mercantile Exchange yesterday, are being driven by financial markets rather than supply-demand fundamentals, he said.

The Organization of Petroleum Exporting Countries is unlikely to reduce output at its March 5 meeting with prices at current levels, Morse said. The 13-member group, which produces more than 40 percent of the world's oil, left production targets unchanged at its previous Feb. 1 conference.

``It's unlikely that at $100 a barrel anybody's going to be in the mood for a cut,'' said Morse. ``The Saudis are uncomfortable at $100 oil.''

Consumption in export-driven emerging markets won't be immune to a slowdown in the U.S., the world's biggest energy user, Morse said. Some analysts have said that Asian markets are ``decoupled'' from the U.S. and so demand there can weather a U.S. recession.

``We will be seeing an impact on Chinese demand, probably after the Olympics, and that's because of what's happening in the U.S. economy,'' he said.

Yesterday's price record was part of a broader flow of investment into commodities rather than the result of any genuine threat to crude supplies, Morse said.

``It's certainly not oil market fundamentals and nothing to do with geopolitics,'' he said. ``This is a commodities issue rather than an oil market issue.''

I don't mean to single this story out. Ninety-five percent of business stories and ninety-nine percent of those on oil are filled with this meaningless nonsense. I haven't figured out the percentage of garbage that comes from the analysts, but I suspect it is even higher.

We Just Can't Predict

"The Scandal Of Prediction"
from The Black Swan
by Nicholas Taleb
pages 160-162

I once gave a talk to policy wonks at the Woodrow Wilson Center in Washington, D.C., challenging them to be aware of our weaknesses in seeing ahead.

The attendees were tame and silent. What I was telling them was against everything they believed and stood for; I had gotten carried away with my aggressive message, but they looked thoughtful, compared to the testosterone-charged characters one encounters in business. I felt guilty for my aggressive stance. Few asked questions. The person who organized the talk and invited me must have been pulling a joke on his colleagues. I was like an aggressive atheist making his case in front of a synod of cardinals, while dispensing with the usual formulaic euphemisms.

Yet some members of the audience were sympathetic to the message. One anonymous person (he is employed by a governmental agency) explained to me privately after the talk that in January 2004 his department was forecasting the price of oil for twenty-five years later at $27 a barrel, slightly higher than what it was at the time. Six months later, around June 2004, after oil doubled in price, they had to revise their estimate to $54 (the price of oil is currently, as I am writing these lines, close to $79 a barrel). It did not dawn on them that it was ludicrous to forecast a second time given that their forecast was off so early and so markedly, that this business of forecasting had to be somehow questioned. And they were looking twenty-five years ahead! Nor did it hit them that there was something called an error rate to take into account. *

Forecasting without incorporating an error rate uncovers three fallacies, all arising from the same misconception about the nature of uncertainty.

The first fallacy: variability matters. The first error lies in taking a projection too seriously, without heeding its accuracy. Yet, for planning purposes, the accuracy in your forecast matters far more the forecast itself. I will explain it as follows.

Don’t cross a river if it is four feet deep on average. You would take a different set of clothes on your trip to some remote destination if I told you that the temperature was expected to be seventy degrees Fahrenheit, with an expected error rate of forty degrees than if I told you that my margin of error was only five degrees. The policies we need to make decisions on should depend far more on the range of possible outcomes than on the expected final number. I have seen, while working for a bank, how people project cash flows for companies without wrapping them in the thinnest layer of uncertainty. Go to the stockbroker and check on what method they use to forecast sales ten years ahead to “calibrate” their valuation models. Go find out how analysts forecast government deficits. Go to a bank or security-analysis training program and see how they teach trainees to make assumptions; they do not teach you to build an error rate around those assumptions—but their error rate is so large that it is far more significant than the projection itself!...

* While forecast errors have always been entertaining, commodity prices have been a great trap for suckers. Consider this 1970 forecast by U.S. officials (signed by the U.S. Secretaries of the Treasury, State, Interior, and Defense): “the standard price of foreign crude oil by 1980 may well decline and will in any event not experience a substantial increase.” Oil prices went up tenfold by 1980. I just wonder if current forecasters lack in intellectual curiosity or if they are intentionally ignoring forecast errors.

Also note this additional aberration: since high oil prices are marking up their inventories, oil companies are making record bucks and oil executives are getting huge bonuses because “they did a good job”—as if they brought profits by causing the rise of oil prices.

-------

_______

India Turns to Angola for Oil

India Turns to Angola for Oil After Losing in Energy Auctions
By Manash Goswami
March 31 (Bloomberg)

India, Asia's third-largest consumer of oil, will focus on obtaining energy assets in Angola after failing to secure supplies closer to home.

``Angola is the next country where we are going to concentrate,'' Indian Oil Minister Murli Deora said in an interview in New Delhi. ``We lost because our bid wasn't good enough'' in previous auctions, he said. ``We have learned from this,'' the minister said.

State-run refiners from India and China are among 43 companies that have submitted bids for 11 oil blocks in Angola, OPEC's fastest-growing member. India's oil shortage has spurred Deora to turn to Angola, with reserves equivalent to 11 years of India's crude imports, after losing out to China in $10 billion of auctions in three years.

India's energy independence has been threatened because it hasn't been able to increase production at home, where output from three-decade-old fields is declining while economic growth boosts demand for gasoline and diesel. India will also compete for oil in Nigeria, Africa's biggest producer, and Sudan.

``India has to acquire assets overseas. There is no other way,'' said Prashant Periwal, an analyst at B&K Securities in London. ``China has slowly and steadily spread across most of Africa and is sitting on huge resources. For fuel security, you have to take control of supplies.''

India plans to resume talks with Pakistan over a $7.4 billion pipeline to transport natural gas from Iran after more than a decade of delays, Deora said.

Blackouts, Growth

Asia's third-largest economy can produce only half the gas it needs to generate electricity, causing blackouts and curbing economic growth. Demand may more than double to 400 million cubic meters a day by 2025 if the economy grows at the projected rate of 7 to 8 percent a year, according to the Oil Ministry.

India has been beaten by China to auctions for energy assets in Kazakhstan and Myanmar in the past three years. India has offered to build ports and railways in Nigeria and Sudan, copying tactics used by China.

India organized a two-day India-Africa conference in November to discuss oil cooperation, where Deora offered to build refineries and pipelines.

India, Venezuela

India, the fastest-growing economy after China, estimates its requirement for oil will rise 62 percent over the next five years to 241 million tons a year, or 4.8 million barrels a day.

Deora will travel to Venezuela next month to complete an agreement to acquire a stake in fields in the biggest crude- exporting nation in the Americas.

ONGC Videsh Ltd., the overseas exploration unit of Oil & Natural Gas Corp., India's biggest producer, will invest up to $356 million in a venture with state-owned Petroleos de Venezuela SA, to operate the San Cristobal area.

ONGC Videsh and China Petroleum & Chemical Corp., Asia's largest oil refiner, have been selected to bid for assets in Angola, according to state-run Sonangol SA. The African nation is offering 11 licenses for fields with a potential of 9.6 billion barrels of oil reserves, Sonangol said on its Web site.

Bidding Delayed

The bidding has been delayed after Angola extended the deadline indefinitely. The offers originally had to be submitted by March 13, according to Sonangol.

The auction will take place after elections in September, Diario Economico reported on March 19, without saying where it got the information.

Net Oil Exports - March 2008 Update

Net Oil Exports - March Update. Top 20 Exporters (93% of total exports).

http://www.savefile.com/files/1463034






Click on following link to download updated Excel spreadsheet(404 kb):
http://www.savefile.com/files/1463034
scroll down to bottom of linked page and hit orange button on right and
then hit second prompt if download doesn't start immediately

Michael Lynch on Peak Oil

Original ASPO-USA article
http://www.aspo-usa.com/index.php?option=com_content&task=view&id=337&Itemid=91

Energy Bulletin link to article
http://www.energybulletin.net/41628.html


Peak oil, uncommon ground
by Michael C. Lynch
March 17th, 2008
ASPO-USA
excerpt:

(Although I have certainly not predicted oil price behavior correctly in the past few years --to put it mildly--I would argue that this is not relevant to the issue of supply forecasting, and hope my views on that subject will be considered in that light.) The prospect of an oil production peak at 100 mb/d, as some in industry now believe, appears unlikely in my opinion, as most of the above-ground constraints should be overcome. Unless there are serious demand side pressures (which I don’t expect), oil production will probably pass 100 mb/d within 12-15 years. Certainly, given that we’ve produced only 10-15% of conventional oil resources and unconventional resources are larger than that, there seems no reason to consider petroleum to be a scarce resource.

And while non-OPEC supply has underperformed, it seems likely to recover soon, as it has done the past two times it plateaued. Indeed, having spent two decades writing about the Malthusian bias to oil supply forecasts, I cannot find any differences with the current set of arguments, whether from resource pessimists, those concerned about flow rates, or senior industry officials, and the predictions of a quarter-century ago.

Instead, we appear to be experiencing a financially-driven oil price bubble, which will eventually burst and leave oil prices much lower than the current $110/barrel. (Prices might not go below $80 this year, but longer term, $45 is more likely the norm.) The industry will once again lament that they “screwed up the boom,” companies with deep pockets will buy up those who are cash short, resource nationalism will recede as will upstream costs, while investors in alternative energies flock to Washington in search of ever more government support.

I found this article fascinating for several reasons. Michael Lynch is one of the best known resource optimists, the article appears by request at a rather strange location (a peak-oil website), I haven’t seen any discussion of the article (including at ASPO-USA), and the only mention of Michael Lynch I’ve seen recently was a rather nasty comment in a silly post by Kenneth Deffeyes.

All that aside, I think that whether or not one agrees with many of these points, the article raises some very important topics concerning forecasting the oil situation and hopefully I’ll have a chance to slowly start picking this apart.

I try to stay away from forecasting and prediction because I strongely believe it is next to impossible to do successfully for reasons I’ll get into. I frequently post articles, reports, and videos by oil-world luminaries making such predictions, not because I agree with any of them but as a way of documenting the things they’ve said, so that later (in many cases years from know) we’ll see if in fact anybody produced a decent record of forecasting.

Pickens's BP Capital Energy Fund Fell 14% This Year

Pickens's BP Capital Energy Fund Fell 14% This Year
By Margot Habiby
March 11 (Bloomberg)

Billionaire investor Boone Pickens's BP Capital Energy Equity Fund fell 14 percent in the first two months of this year, amid soaring prices for natural gas and crude oil.

BP Capital spokesman Jay Rosser, who said in an e-mail that the fund fell, declined to comment on the hedge fund's specific market positions and holdings.

About 90 percent of the Energy Equity Fund's assets are in energy-company stocks, according to Bloomberg data. Natural gas futures jumped 25 percent on the New York Mercantile Exchange through February, as crude oil climbed 6.1 percent.

BP Capital's biggest equity holdings as of the end of last year were in Suncor Energy Inc., Exxon Mobil Corp. and Occidental Petroleum Corp., according to a regulatory filing. Suncor's shares lost 16 percent through February, and Exxon Mobil dropped 7.1 percent. Occidental rose 0.5 percent.

Pickens, the founder and chairman of Dallas-based BP Capital LLC, told CNBC on Feb. 21 that he was short on both crude oil and natural gas. He didn't provide additional information on his positions. A short is a bet that prices will decline.

``Oil is going to back off here in the second quarter,'' Pickens said in the CNBC interview last month. ``It'll be back above $100 in the second half.''