Net Oil Exports

opec_quotas_121708

2009-01-13T11:14:00.000-04:00

opec_quotas_121708

OPEC members' compliance with output curbs

saudi_121508

2008-12-15T12:10:00.001-04:00

saudi_121508

Saudi makes oil cut ahead of OPEC meet-OPEC chief
Mon 15 Dec 2008, 11:52 GMT

ORAN, Algeria, Dec 15 (Reuters) - The world's top oil exporter Saudi Arabia has already cut supply in anticipation of OPEC agreeing further curbs at its meeting on Wednesday, OPEC's President said on Monday.

Chakib Khelil said the kingdom's oil minister Ali al-Naimi informed him Riyadh had cut its supply by eight percent. OPEC's last overall cut of 1.5 million barrels per day (bpd), agreed in October, was just over 5 percent.

"Everybody is supporting a cut -- I don't have any doubt about it. The Saudis have already taken a decision ahead of the meeting, as you know, they have reduced their supply to the market by 8 percent, which has had an affect on the market," Khelil told reporters.

"The Saudi minister has declared he is producing 8.399 (million barrels per day)."

Khelil reiterated that OPEC ministers were in agreement on the need to cut output at the Wednesday meeting. The first ministers are expected to arrive in Oran later on Monday.

He said there was an oversupply of 400 million barrels in the oil market. OPEC is expected to make a cut of 1-2 million barrels per day, and Khelil was asked how long he thought it would take for a reduction to clear the overhang.

"If we decide on one (million bpd cut) it will take 400 days, if we decide two it will take 200 days," he said. Khelil said he expected global oil demand to drop by 200,000 bpd in the first quarter of next year and by another 1.2 million bpd in the second, but then to pick up.

Khelil, also Algeria's oil minister, was asked about possible Russian involvement in any OPEC output decision.

"They have already expressed their support -- we are hoping for concrete support," he said.

Asked whether Russia could join the group, he said: "We have always hoped they will join OPEC. Russia would give particular weight to OPEC."

With Russia on board OPEC would account for around 50 percent of world oil supply rather than around 40 percent at present, he added.

The head of Russia's LUKOIL said on Monday he expected Russia to offer an output cut of 200,000-300,000 bpd to support an OPEC reduction [nLF660884].

Analysts have said Russia is unlikely to become a member of the exporter group, although it regularly attends its meetings as an observer.

OPEC December 2008

2008-12-10T04:25:00.006-04:00

Oil Rises on Potential OPEC Cut, Traders’ Contract Buybacks
By Christian Schmollinger
Bloomberg
Dec. 10

Crude oil rose as traders bought contracts to close out bets that prices will fall and on signs that OPEC will cut production twice in as many months.

OPEC, which pumps 40 percent of the world’s oil, may reduce its output limit by as much as 2.5 million barrels a day to reverse recent declines, billionaire hedge-fund manager Boone Pickens said yesterday. Traders who held short positions, or bets prices would fall, are purchasing futures after oil dropped more than 20 percent in the past two weeks.

“For short-term traders, for scalpers, that kind of drop is definitely a buy signal,” said Jonathan Kornafel, director for Asia at options trader Hudson Capital Energy in Singapore. “Everyone is waiting to see what OPEC does. There are enough things to support the market but nothing to propel it higher.”

Crude oil futures for January delivery rose as much as $1.42, or 3.4 percent, to $43.49 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $43.01 a barrel at 3:37 p.m. Singapore time. Yesterday, futures fell $1.64, or 3.8 percent, to $42.07 a barrel, capping a 23 percent drop since Nov. 26.

OPEC should make a “substantial” output cut when it meets on Dec. 17 in Algeria, Shokri Ghanem, Libya’s top oil official, said on Dec. 8. OPEC agreed on Oct. 24 to cut daily output by 1.5 million barrels.

Obama’s Plan

OPEC will “work it back up to $100,” Pickens said in an interview in New York. “It will all be determined by the global economy. If you get a recovery in the global economy, you will get it back up.”

U.S. President-elect Barack Obama proposed on Dec. 7 an economic stimulus plan based on infrastructure development to help lift the country out of its worst recession since World War II. Australia will start making one-time payments to families and pensioners under a A$10.4 billion grant program and China may cut personal income tax.

OPEC’s agreed 1.5 million barrel-a-day cut would be larger than a forecast drop in demand by the U.S. Energy Department. Global oil consumption will average 85.75 million barrels a day in 2008, down 50,000 barrels from 2007, the department said in its Short-Term Energy Outlook yesterday.

Global demand fell every year from 1980 to 1983, according to the department, the last time there was a yearly consumption drop. Oil usage will decline an additional 450,000 barrels a day next year to 85.3 million barrels a day, the department said.

2009 Forecasts

The International Energy Agency and OPEC have lowered demand forecasts in the past month because of the economic contraction.

The IEA reduced its 2009 estimate by 670,000 barrels a day, or 0.8 percent, to 86.5 million barrels a day in a Nov. 13 report. The Organization of Petroleum Exporting Countries cut its forecast for next year by 530,000 barrels a day, or 0.6 percent, to 86.68 million barrels a day, in its monthly oil market report on Nov. 17.

Traders are betting that oil for January delivery may fall below $42 a barrel, according to data on put options contract volume from the New York Mercantile Exchange. Crude may decline to $25 a barrel next year as demand drops on the economic contraction, Merrill Lynch & Co. said last week.

Oil Rises as Saudis Say They Delivered Promised Output Cuts
By Mark Shenk
Bloomberg
Dec. 11

Crude oil jumped 9.5 percent, the biggest gain in five weeks, after the Saudi Arabian oil minister said he had delivered the output cuts promised to OPEC, a sign that world supplies are smaller than traders had estimated.

Ali al-Naimi, the Saudi minister, said in an interview in Poznan, Poland, that the kingdom pumped 8.493 million barrels of oil a day in November, close to its OPEC production quota of 8.477 million barrels a day. That’s 287,000 barrels a day less than estimated by the International Energy Agency.

“It’s quite unusual for the Saudis to make this kind of statement, and it should give confidence that they are following through with the cuts,” said Chip Hodge, a managing director at MFC Global Investment Management in Boston, who oversees a $5 billion energy-company bond portfolio. “This may encourage others to behave similarly to end the free-fall in prices.”

Crude oil for January delivery rose $4.15 to $47.67 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures are heading for the biggest gain since Nov. 4. Oil is up 17 percent so far this week, the largest one-week gain since June 1998, when OPEC slashed output by more than 3.1 million barrels a day.

Saudi Arabia’s oil production was “absolutely” in line with its OPEC quota, al-Naimi said today in an interview in Poznan, where he is attending climate-protection talks. He declined to comment further on OPEC policy.

“The Saudis might have been impatient with the market’s skepticism, so they’ve decided some transparency is needed,” said Mike Wittner, head of oil market research at Societe Generale SA in London. “It shows they’re deadly serious about cutting already and serious about cutting more.”

Further Reduction

OPEC’s previous oil-supply cuts aren’t enough, and the group will need to make a “substantial” additional reduction at its next meeting, on Dec. 17 in Oran, Algeria, Shokri Ghanem, Libya’s top oil official, said in a Bloomberg TV interview today.

“The Oran meeting will decide a severe production cut to stabilize the oil market,” OPEC President Chakib Khelil, who is also Algeria’s oil minister, said in an interview on state radio today. “There is a consensus to reduce production.”

Oil has tumbled 25 percent since the Organization of Petroleum Exporting Countries, which supplies about 40 percent of the world’s oil, announced a 1.5 million-barrel-a-day output cut on Oct. 24 in Vienna. Prices fell as fuel demand slumped and speculation grew that some members weren’t complying with their agreed-on quotas.

“The OPEC heavyweights are all serious about getting prices higher, so they will make the cuts,” said Sarah Emerson, managing director of Energy Security Analysis Inc., a consulting firm in Wakefield, Massachusetts.

Russia’s Option

Russian President Dmitry Medvedev said his country, the second-biggest oil producer, may join OPEC and reduce output to support prices, RIA Novosti reported from Kurgan, Russia.

Futures, which have dropped 53 percent this year, are heading for the biggest annual decline since trading began in 1983, as global economies falter.

Oil for delivery in December 2009 traded at a $13.11 premium to January futures, down from a $14.27 premium on Dec. 8. The shrinking spread may indicate that storage space for oil is scarce and that the crude is being sold on the spot market, said Stephen Schork, president of the Schork Group, an energy markets analysis company in Philadelphia.

This price structure, when the subsequent month’s price is higher than the one before it, is known as a contango.

“You are starting to see a shift in the curve,” Schork said. “You are starting to see a return of demand to the front of the board.”

Inventories Climb

Contango trading encourages companies to increase stockpiles. U.S. crude-oil supplies rose in 10 of the past 11 weeks, according to the Energy Department.

“The weaker dollar and the likelihood of a significant OPEC cut is sending the market higher,” said Peter Beutel, president Cameron Hanover Inc., an energy consulting company in New Canaan, Connecticut. “These are the strongest reasons we’ve seen for a rally since prices started to slide in July.”

The Paris-based IEA, an adviser to 28 nations, said global oil demand will contract this year for the first time since 1983 and reduced its outlook for 2009.

Consumption worldwide will shrink in 2008 by 200,000 barrels a day, or 0.2 percent, the IEA said in a monthly report today. The reduction in demand is concentrated in developed economies in the Organization for Economic Cooperation and Development, where oil use will tumble 3.3 percent. Next year’s growth may be wiped out if the economic slump deepens, the agency said.

xxx

OPEC Agrees Larger-Than-Expected Cut to Revive Price
By Maher Chmaytelli and Fred Pals
Bloomberg
Dec. 17

OPEC, supplier of more than 40 percent of the world’s oil, agreed to cut production quotas by a larger- than-expected 9 percent to revive prices as a global recession reduces demand for crude.

The Organization of Petroleum Exporting Countries set a quota for 11 of its members of 24.845 million barrels a day, starting Jan. 1, compared with its current target of 27.308 million barrels a day, OPEC President Chakib Khelil said. The record 2.46 million barrel-a-day cut is larger than a 2 million-barrel drop indicated yesterday by Saudi Arabian Oil Minister Ali al-Naimi.

“OPEC is sending a message that they are trying to cut pretty seriously,” said Mike Wittner, head of oil research at Societe Generale SA in London. “If they need more cuts, there will be more cuts.”

Crude oil fell as low as $39.88 a barrel in New York, the lowest since July 2004, on skepticism OPEC will adhere to its new agreement and after a government report showed rising U.S. crude stockpiles. Oil’s $100-a-barrel collapse from July’s record has curbed revenue for producers, threatening government budget shortfalls. Saudi Arabia’s King Abdullah said last month that producers need crude at $75 to spur investment in new fields.

Russia, the biggest oil exporter outside of OPEC, today pledged to curb exports too, as it did a decade ago when oil sank toward $10 a barrel.

‘Dramatically Low’

“If OPEC would not do what it has to do given demand destruction, the price could stay at a level that is really dramatically low,” Venezuelan Oil Minister Rafael Ramirez said after today’s meeting.

OPEC announced the new quota by saying the group had agreed to reduce output by 4.2 million barrels a day from September’s actual production level of 29.045 million barrels a day for the same 11 nations. That measure of actual production came from an average of analyst and news agency estimates compiled by OPEC’s Vienna-based secretariat.

To be sure, OPEC often pumps more than its quotas permit. Last month, the 11 nations, excluding Iraq and Indonesia, pumped 629,000 barrels a day more than the ceiling, according to OPEC’s monthly report. U.S. Energy Information Administration acting head Howard Gruenspecht said compliance with cutbacks will be “critical” in determining how oil markets will react.

Today’s decision is OPEC’s biggest ever reduction in quotas, exceeding a 1.9 million-barrel, 8.3 percent cut agreed in March 2000, when Iran was temporarily excluded from the ceiling. The new quota will be 2.2 million barrels a day lower than OPEC’s December production, Khelil said.

Russian Help

Russia may cut exports by 320,000 barrels a day next year if prices remain weak, after reducing daily exports by 350,000 barrels last month, Russian Deputy Prime Minister Igor Sechin said earlier today in Oran.

Other non-OPEC producers, including Kazakhstan, may trim supply as well, Sechin said. Azerbaijan may lower production as much as 300,000 barrels a day, Azeri Energy Minister Natig Aliyev said in Oran. Mexico’s energy ministry spokesman Hector Escalante yesterday declined to say whether it will aid OPEC cuts while Norway has said it has no plans to lower production.

Forecasts for oil consumption have shrunk during the past few months as the global recession weighs on consumers and industries. The International Energy Agency says global oil demand will contract this year for the first time since 1983.

In the U.S., oil consumption will be almost flat through 2030, as the use of biofuels, rising prices and new car efficiency standards temper demand, the Energy Information Administration, part of the U.S. Energy Department, said in a statement today.

London Summit

“The fall in oil prices in recent months has benefited the economy at a difficult time and helped hard-pressed consumers,” U.K. Energy Minister Mike O’Brien said in a statement after OPEC’s announcement. The U.K. will host a summit of energy ministers, including Saudi’s al-Naimi, in London in two days time.

Falling oil prices may delay or halt investment in exploration and production projects, setting up a possible “supply crunch” in future years, IEA Chief Economist Fatih Birol said on Dec. 10. Cheaper fossil fuels may also deter efforts to develop wind, solar and other alternative energy sources.

Oslo-based StatoilHydro ASA and Royal Dutch Shell Plc of The Hague postponed investments in Canada’s oil sands this year after tumbling prices reduced potential profits.

Saudi Arabia’s Manifa oil field will start in 2011 only if consumers require the extra crude, al-Naimi said in an interview today. “When we need it, it will be there,” he said, adding that the start of the field depends on the “market situation.”

OPEC will next meet on March 15 in Vienna and chose Angolan Oil Minister Jose Maris Botelho de Vasconcelos as its president for 2009.

Canada - Oil Sands and Crude Oil Production

2008-11-01T12:43:00.000-04:00

Canadian oil-sands/tar-sands production

This is a good chart from the Canadian Association of Petroleum Producers. It comes from a 48-page PDF report available on their website detailing current production and forecasting production out decades. Also available is a spreadsheet containing two different scenarios and a breakdown of all the numbers. From the dotted line here, it appears they have lowered last year's forecast by about 200,000 barrels per day total going forward.

The top slice is offshore production in Newfoundland which is not considered "conventional." The thick, expanding slices in the middle are tar-sands/oil-sands production. The bottom three declining slices are conventional onshore production in Western Canada.

Canadian Oil Sands Production

following are some articles on the recent scaling back of oil-sands projects due to the lower price of crude:

Suncor Slows Oil-Sands Project, Others May Follow

Current industry forecasts see oil sands output more than doubling to 2.8 million barrels a day in 2015, but this is more modest than last year's forecasts, as regulatory delays and vague environmental rules take their toll. The Canadian Association of Petroleum Producers, an industry lobbying group, publishes the widely watched annual forecasts.

Oil Sands on Front Line in Energy Sector's Battle with Costs

These extra barrels may not immediately be missed given the dismal demand outlook in the U.S., where nearly all of Canada's oil exports are destined. But cutbacks to new and existing energy ventures may threaten future oil flows and cause a spike in prices down the road, as oil executives play a game of brinksmanship with their suppliers.

CAPP website

OPEC Production Rising

2008-10-30T11:16:00.001-04:00

OPEC oil output rising in Oct - Petrologistics
By Alex Lawler
Oct 29th, 2008
Reuters

http://africa.reuters.com/energyandoil/news/usnLT52955.html?rpc=401&

* OPEC oil output expected to rise 200,000 barrels per day

* Saudi, UAE, Kuwait trim output, Iran and Angola pump more

OPEC's oil output in October is expected to rise by 200,000 barrels per day to 31.9 million bpd because of higher supplies from Iraq, industry consultant Petrologistics said on Wednesday.

The estimate also indicates that the Organization of the Petroleum Exporting Countries, excluding Iraq, is trimming output back to official target levels, in line with a Sept. 10 agreement to prop up prices.

Output from the 12 OPEC members with supply targets -- all except Iraq -- is expected to average 29.59 million bpd, little changed from 29.56 million bpd in September and less than their target of 29.67 million bpd.

"This has come down from well over 30 million barrels per day in August and is expected to come down further in November," Conrad Gerber, head of Petrologistics, told Reuters by telephone from Geneva.

Output is set to fall further, from November, following OPEC's decision on Oct. 24 to cut production by 1.5 million bpd in response to a steep fall in prices to about $66 a barrel, less than half the record high of $147.27 reached in July.

From Nov. 1, the production target for 11 OPEC members will drop to 27.3 million bpd.

OPEC's Gulf members are already trimming output, according to Petrologistics. Top exporter Saudi Arabia is expected to pump 9.05 million bpd in October, down from 9.2 million bpd in September.

Kuwait is forecast to lower supply by about 120,000 bpd in October and the United Arab Emirates is expected to curb output by 130,000 bpd, Gerber said.

Higher supply elsewhere in the group in October is offsetting the declines.

Angolan production is expected to rise by about 200,000 bpd because the BP Plc-led Plutonio field returned to service after maintenance work.

Iranian supply is forecast to climb to 3.85 million bpd from 3.7 million bpd in September. Its exports can vary month-to-month, affecting supply, while oilfield production remains steady.

Iraqi exports are rising in October, boosting supply to 2.31 million bpd from 2.14 million in September and accounting for the increase in overall OPEC output.

Petrologistics measures OPEC supply, which excludes oil produced but sent into storage, by tracking tanker shipments. OPEC itself does not issue timely estimates of its members' output.

Another Month, Another Billion Dollars For T. Boone Pickens

2008-10-27T12:08:00.002-04:00

T. Boone Estimates He’s Down $2B From Drop in Oil, Gas Prices
By KATIE FEHRENBACHER
October 27, 2008
NYT

Yet another profile of wind crusader T. Boone Pickens aired Sunday night — this time on 60 Minutes — and it had the usual details about the 80-year-old former oil baron’s plan to get the U.S. off its addiction to foreign oil. But 60 Minutes did score an interesting tidbit about how much Pickens and his investment firm BP Capital have lost since oil and natural gas prices started dropping in July: $2 billion!

The steep drop in oil and gas prices since July has cut the value of Pickens’ hedge fund in half. . . Overall, Pickens and BP Capital are down a staggering $2 billion. . . Boone acknowledges that is serious money. Asked if he’ll get it back again, he says, “Yeah, I’ll get it back.”

At the end of September the Wall Street Journal estimated that Pickens’ funds had lost about $1 billion this year, including $270 million of personal losses. “It’s my toughest run in 10 years,” Pickens told the Journal. “We missed the turn in the market, there’s nothing fun about it.”

But Pickens also told the Journal that he thought oil would finish the year around $120 or $125, barring a major global economic downturn. Well, the international economic downturn appears to be here. On Friday oil prices dropped to around $63. While it’s pretty hard to predict oil prices these days, we’re not sure it’s set to double in 2 months.

Net Oil Exports - October 2008 Update

2008-10-26T17:24:00.005-04:00

Net Oil Exports - October 2008 Update. Top 20 Exporters (93% of total exports).

Click on following link to download updated Excel spreadsheet
http://www.savefile.com/files/1861608

Click on following link to download updated Excel spreadsheet(450 kb):
http://www.savefile.com/files/1861608
scroll down to bottom of linked page and hit orange button on right and
then hit second prompt if download doesn't start immediately

chart, crude oil, crude oil exports, graph, net oil exports, net petroleum exports, oil exports

OPEC quotas

2008-10-19T14:45:00.016-04:00

In response to the rapidly falling price of crude oil, OPEC has called an 'emergency' meeting for this week, a month earlier than planned. Actually, two months early, since the November meeting was rescheduled not long ago from December.

Here are some charts showing what OPEC has actually been producing versus their quota levels.

This first chart contains only 9 of the 13 OPEC countries. Not included are the following:

Iraq - has no assigned quota.
Angola and Ecuador- these countries have only had quotas assigned since January. There have been no official changes to OPEC production quotas since then.
Indonesia - has been a net importer for years, has been producing far under its quota for years, and is leaving OPEC in January. Indonesia will not be included in any of the data contained in these charts.

This is what happened in the chart above: OPEC made two cuts of 1.2 mbpd in November 2006 and 500,000 bpd in February 2007. Those cuts remained in place until the September 2007 meeting, at which OPEC decided to raise production by about 500,000 bpd. So why does the raise look like it makes up the entire 1.7 mbpd that was originally cut? This is because OPEC finally decided to get partially serious and base their decisions on what was actually being produced by member countries instead of on their quota numbers. The result was to come up with new "production targets" which were composed of an equal distribution of about 500,000 bpd over July 2007 production numbers.

There are some interesting stories here, but the bottom line is this - the two countries who are most frequently labeled "price-hawks," Venezuela and Iran, have not been carrying their weight for the last few years when it comes to managing production levels. It is well known that Saudi Arabia is the lone, real swing-producer in the group, but Iran rarely alters its production significantly and Venezuela chronically underproduces its quota.

I think it can be generally assumed that the UAE, Kuwait, and Qatar (as solid allies of both the West and Saudi Arabia) fall in line with "what is expected from the team" as they say in auto-racing. Algeria and Libya might also be included in this group, however, the production levels of all these countries combined only equal Saudi's.

More and more it seems that OPEC quota/production changes are an attempt by Iran and Venezuela to get Saudi Arabia to lower its production. It doesn't appear that either has the ability to increase its production for various reasons and lowering production only means they bring in less dollars than they could if Saudi Arabia did more of the heavy lifting.

There are a few interesting things to note here (shown clearly in the chart):
1) OPEC seems to anticipate quota changes by a number of months and begin to react in that direction. Or maybe this is just the Saudi group acting on its own.
2) OPEC almost always cheats as a group. They over-produce by 500,000 bpd.
3) (Not clear from this chart, but you can see where it happened) When OPEC hit its low in the summer of 2007, Saudi Arabia was on target at its quota of 8.6 mbpd. Which means that all the cheating at that point was being done by the other 8 countries. Of course, after the quota had been raised Saudi was doing most of the cheating, producing as much as 800,000 bpd over their quota in July and August.

OPEC Plans to Cut Supply as Oil Prices Head Toward $50 a Barrel
By Grant Smith and Margot Habiby
Oct. 20 (Bloomberg)

OPEC, the supplier of more than 40 percent of the world's oil, plans to cut output for the first time in almost two years as the worst financial crisis since the 1930s sends crude toward $50 a barrel.

Options contracts to sell oil at $50 by December soared 28- fold in the past two weeks on the New York Mercantile Exchange. Goldman Sachs Group Inc. and Merrill Lynch & Co. analysts say crude, which fell more than 50 percent from a record high in July to $71.85 a barrel last week, may drop another 44 percent should the world economy slip into a recession.

The Organization of Petroleum Exporting Countries, which meets Oct. 24 in Vienna, three weeks earlier than planned, is facing the weakest growth in demand since 1993 just as new fields come on line from Angola to the Gulf of Mexico.

``OPEC is going to try to prevent some of the price decline,'' Francisco Blanch, head of global commodities research at Merrill in London, said in a Bloomberg television interview. ``It's going to be very difficult to stem a price fall.''

Options contracts that allow holders to sell 1,000 barrels of oil for $50 each by December closed at $280 on the Nymex on Oct. 17, up from $10 on Oct. 3.

Even at today's prices, Venezuela and Iran, two of the organization's 13 members, may struggle to balance budgets because they rely on energy sales for more than half of their revenue, according to estimates compiled by the U.S. Central Intelligence Agency.

GDP Down 25%

``Some countries like Venezuela and Iran need prices above $80 a barrel,'' said Leo Drollas, deputy director of the Centre for Global Energy Studies, a London-based consulting company. ``The Saudis have a bottom price of about $65 a barrel, but they might go ahead with a cut to keep solidarity within OPEC.''

Gross domestic product in the six-member Gulf Cooperation Council of Saudi Arabia, United Arab Emirates, Kuwait, Oman, Qatar and Bahrain would shrink 25 percent if oil averaged $50 next year, ING Bank NV estimates.

Ministers from Algeria, Libya, Iran and Venezuela already called for a reduction in supplies from the current quota of 28.8 million barrels a day. OPEC President Chakib Khelil, who is also Algeria's oil minister, said on Oct. 16 the ``ideal'' price for crude is between $70 and $90 a barrel. A week earlier he said OPEC is ``very likely'' to lower production.

Qatari Oil Minister Abdullah bin Hamad al-Attiyah told Al Jazeera TV the cut will likely be 1 million barrels a day, or 14 percent more than his nation pumps. Saudi Arabia, which dominates OPEC proceedings as the group's largest producer, has yet to comment on its intentions.

Reducing Estimates

While OPEC already agreed to curb production by observing output quotas after a Sept. 10 meeting to lower supplies by 500,000 barrels a day, members routinely pump more than their allocation, according to data compiled by Bloomberg. Since that session, Credit Suisse Group pared its forecast for oil next year by 32 percent to $75 a barrel. Deutsche Bank AG cut its 2009 assessment by 23 percent to $92.50 on Sept. 29. BNP Paribas SA lowered its outlook by 18 percent to $92.50 on Oct. 10.

At the same time, Exxon Mobil Corp.'s Saxi-Batuque fields off Angola's shore started pumping in August, while BP Plc's Thunder Horse field in the Gulf of Mexico is scheduled to increase supplies by the end of the year. World oil capacity will rise 1.45 million barrels a day in 2009, twice the rate of growth in demand, according to the International Energy Agency.

``Prices could fall as low as $50 a barrel during the fourth quarter if OPEC can't find a way to offset the financial meltdown,'' said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.

The prospect of OPEC cuts, slowing economic growth and falling prices drove the Dow Jones Europe Stoxx Oil & Gas Index down 25 percent in the past five weeks. Irving, Texas-based Exxon Mobil, the world's biggest oil company, fell 37 percent this year, while The Hague-based Royal Dutch Shell Plc, the second- biggest, lost 33 percent.

$4 Gas

OPEC lowered its forecast for demand in 2009 last week, saying consumption will be 450,000 barrels a day less than expected at 87.21 million a day. The Paris-based International Energy Agency shaved its 2009 outlook the previous week and said this year's demand growth of 0.5 percent will be the weakest since 1993.

U.S. motorists are driving less after gasoline pump prices topped $4 a gallon in July. Vehicle-miles traveled on all U.S. roads that month were 3.7 percent lower than a year earlier, Federal Highway Administration data show. Prices fell to an average of $3.21 a gallon last week, according to the Department of Energy.

Output Cut

As demand declined, OPEC trimmed supplies 3.8 percent to 31.8 million barrels a day in September, according to Geneva- based tanker-tracking service PetroLogistics Ltd. Saudi Arabia's volume fell 520,000 barrels a day to 9.18 million, PetroLogistics said.

``This may be OPEC's toughest balancing act in their history,'' said Tetsu Emori, the fund manager at Astmax Co. in Tokyo, Japan's biggest commodities asset manager with $200 million under management. ``By the time OPEC announces a cut, they would be hoping to have seen the bottom of the price.''

The last time OPEC slashed quotas was at a December 2006 meeting in Abuja, Nigeria. That 500,000 barrel-a-day cut took effect in February 2007 and followed an earlier, 1.2 million- barrel reduction in October 2006. Those actions were reversed later in 2007 as prices rallied.

``The situation has gotten dire enough that they're willing to move and even become a topic of conversation'' during the U.S. election campaign, Ronald Smith, chief strategist at Alfa Bank in Moscow, said in a Bloomberg television interview. OPEC will cut by 1 million barrels a day ``at the very minimum'' and potentially ``wait until after the election, then add another million on top of it, or half a million,'' he said.

The Last Time OPEC Raised Production Targets

OPEC on Sept. 14 published a table on its Web site showing individual member production targets. The OPEC Secretariat removed the table after Venezuela protested that the published table wasn't official. (2007)

The Disappearing Table


              August     New allocation  Change
              output     from Nov 1
Saudi Arabia   8,616       8,943         327
Iran           3,869       3,817         -52
UAE            2,573       2,567          -6
Kuwait         2,446       2,531          85
Venezuela      2,358       2,470         112
Nigeria        2,145       2,163          18
Libya          1,710       1,712           2
Algeria        1,354       1,357           3
Indonesia        839         865          26
Qatar            821         828           7

Total         26,730      27,253         522
(All figures in '000 barrels/day)

China - Oil Production

2008-10-15T06:41:00.006-04:00

China is a net importer, but its status as the second largest petroleum consumer along with its ambiguous production situation makes it the most interesting oil story next to Saudi Arabia.

Its thriving economy and double-digit increases in petroleum consumption are setting it on a path to conflict with other importers as it tries to secure future supplies. For the last few years there have been many forecasts of China's production plateauing and falling. So far that hasn't happened. Yet interestingly, if we look at the oil China has already produced and its known reserves, we can get a good look at the problems involved with forecasting peak oil using Hubbert's methods. China was the first good example that demonstrated this issue, but I will cover more countries in the coming months.

Notes on reserves and 70% URR

The BP Annual Statistical Review starts tracking production in 1965, but that is sufficient in this case. China produced an average 227,000 bpd of oil in 1965, or about 6% of their present production level. This strongly suggests that previous to 1965 China's cumulative production was no greater than 500 millions barrels or a billion barrels. At the end of 2008, China will have produced a total of about 38 billion barrels. In 2008, China will produce 1.38 billion barrels.

BP lists China's proved reserves at the end of 2007 as 15.5 billion barrels, minus the 1.4 used this year leaves them with 14.1, meaning that the current rate, they would run out of oil in 10 years. But we know that oil production does not behave in that manner and they won't simply be out of oil 11 years from now. Production drops and tapers off. I've constructed the following chart to illustrate one possibility based on the available data.

Adding 38 billion barrels to 14.1 billion barrels we get 52.1 billion barrels of what are commonly referred to as URR, or ultimately recoverable reserves. This means that presently we are at 73% of URR. According to Hubbert, production should level off and start dropping around 50% of URR, suggesting China's production should have started dropping in the early 1990s at the latest.

But let's continue. Over the last 20 years, China has discovered and added to its proved reserves an average of about 1 billion barrels per year. If we assume this trend will continue and add 20 billion barrels onto a final analysis, we get a much prettier 53% of URR.

This next chart shows is constructed with a theoretical, additional 10 billion barrels of reserves added. I'll add one soon with the 20 billion barrels.

Here are excerpts from two articles and a report referencing the current situation in China. There may be conflicting forecasts/expectations of what the immediate future holds contained in them but they provide a good look at China's consumption and what is effecting it.

Back to the Future: Revisiting 1982 Auto Sales [4-page PDF]
by Jeff Rubin and Meny Grauman

World Auto Sales to Hit Record High on Soaring Demand from BRIC Countries

Despite the systemic problems facing the US auto market, the world market has seldom been better. This year should mark the seventh consecutive record for annual vehicle sales, led by continued strength in Brazil, Russia, India, China (BRIC) and the rest of the developing world. While vehicle sales in the second quarter fell a combined 7% in the United States, Canada, the European Union and Japan, they were up 20% in BRIC countries. In fact, total annual sales in these countries are expected to overtake the US next year for the first time ever.

Moreover, the very models that American motorists are shunning, motorists overseas are snapping up. SUV sales, which already make up roughly 8% of the red-hot Chinese car market, are up 40% since the beginning of the year, and demand for such vehicles is similarly strong in Russia as well. So great is the demand for SUVs in the Chinese market that General Motors plans to start shipping the Michigan-made Buick Enclave, a seven-passenger vehicle, to China. SUV demand is growing at double the rate of any other class of vehicle in the Chinese market and four times the pace of sales of fuel-efficient subcompact cars. As their own domestic auto market shrinks, American car companies better look overseas if they hope to be able to see sales growth in the future.

Asia's Oil Production Expected to Increase, Ease Stress on Global Supplies
By Patrick Barta
October 7th, 2008

China, India and other big energy users in Asia aren't about to become major oil exporters -- far from it. They still consume much more crude than they produce and that trend won't change.

But several countries, including China, are lifting oil output. The unexpected boost -- some industry analysts had said the region would struggle to maintain production levels in the current decade -- should help Asia meet more of its own demand and reduce stress on supplies for the rest of the world.

The International Energy Agency in Paris expects China, Vietnam, Malaysia and other Asian-Pacific nations to increase production by almost 300,000 barrels of oil a day in 2009, the region's biggest annual increase since at least the 1990s. When contributions from Central Asian nations such as Kazakhstan are added, the total increased production rises to about 500,000 barrels per day, analysts say. Overall, non-OPEC world production is only expected to grow about 760,000 barrels a day in 2009, the IEA says.

Asia's increased crude production is still a drop in the bucket compared to total world consumption, which is now approaching 87 million barrels a day. Moreover, many analysts believe Asian output will start falling in a few years, as big existing fields decline. Although growing at a slower pace in recent months, consumption continues to rise across the region, which means that any easing of supply pressures could be short-lived.

China's Faltering Oil Appetite
Steve Mufson
October 6th, 2008
Newsweek/WashingtonPost.com

A lot of people who forecast the future tend to draw a straight line forward from existing trends. That's why people forecast a continuation of the breakneck increases in Chinese oil consumption.

There are at least two reasons to question that. One is that the current financial crisis could hammer the U.S. economy, and cut deeply into our purchases of all kinds of stuff, including stuff that comes from China. If that happened, it's doubtful that China would keep up its double-digit economic growth in the coming months.

The other reason is more benign: China has drastically raised fuel prices, effectively slashing its subsidies for motor fuel. And we all know that when retail petroleum product prices rise sharply, we tend to use less of them. Will the Chinese be any different?

It's a question that matters to every one of us, whether a car owner or simply a consumer who buys goods that travel in trucks. That's because the challenge of meeting rising Chinese demand is expected to keep oil markets tight and prices high even if Americans buy more efficient cars.

I would think that given the relatively limited means of the average Chinese wage earner, Chinese drivers would be even more sensitive to a sharp increase in fuel prices.

And lo and behold, in August Chinese gasoline demand fell 5.6 percent, or 470,000 barrels a day, below June and 2.7 percent, or 200,000 barrels a day, below July levels.

One month is not enough to reach many conclusions, especially when that month and the months preceding it may have been distorted by stockpiling of fuel in advance of the Olympic games that took place in Beijing in August. (Ting notes that China went on an "inventory building binge" in November 2007 and that its gasoline and diesel inventories grew by 83 percent by August this year.) And the August consumption figure was still up 7.1 percent from August last year.

I would argue that higher prices will put China on a new, more gradual growth trajectory - with consumption still rising, but at a pace that should ease some of the pressure on oil markets, and prices at the pumps throughout the rest of the world.

tags: chart, China, crude oil, graph. Jeff Rubin, oil, oil demand, oil production, oil supply

More OPEC News

2008-10-15T00:52:00.004-04:00

OPEC exports drop 600,000 bpd in September
Oct 14, 2008
Reuters

OPEC seaborne oil exports, excluding Angola and Ecuador, fell 600,000 barrels per day (bpd) in September and dropped 840,000 bpd from Gulf suppliers, Lloyd's Marine Intelligence Unit (LMIU) said on Tuesday.

The London-based consultancy that tracks tanker exports said oil shipments from 11 OPEC producers, including Iraq, fell to 23.031 million bpd, down from 23.644 million bpd in the four weeks previous.

LMIU said supply from big Gulf producers, including Iraq, dropped 844,000 bpd from 18.553 million bpd to 17.709 million bpd in the same four weeks.

OPEC decided at a meeting in Vienna on Sept. 9-10 to comply strictly with its formal output target, a move officials said would result in the group trimming supply of crude oil by about 500,000 bpd from world markets.

Conflicting OPEC accounts for September

2008-10-03T13:05:00.006-04:00

OPEC oil output falls in Sept-Reuters survey
By Alex Lawler
Oct. 3rd, 2008
(Reuters)

* OPEC oil output expected to drop 310,000 barrels per day

* Decline in OPEC supply is first since April

* Saudi Arabia, Iran, Iraq, Nigeria, Angola supplying less

OPEC oil supply in September fell, the first monthly decline since April, as violence in Nigeria cut output and top exporter Saudi Arabia trimmed production, a Reuters survey showed on Friday.

The survey indicates that output from the Organization of the Petroleum Exporting Countries, source of two in every five barrels of oil, was falling even before it agreed at a meeting in September to trim output and prop up prices.

"We are in a moment of turmoil. Vision is blurred," Shokri Ghanem, the top oil official for OPEC member Libya, told Reuters. "We will give it a few days until things calm down, then we can form an opinion."

Supply from all 13 OPEC members fell to 32.39 mbpd in September from 32.70 mbpd in August, according to the survey of oil firms, OPEC officials and analysts.

The decline was due to supply disruptions in two of OPEC's African members, and lower shipments to customers from the group's top two producers Saudi Arabia and Iran.

Attacks on Nigeria's oil industry curbed output by 60,000 bpd, the survey found. During one six-day period in September, militants bombed pipelines, platforms, gas plants and oilfields, halting up to 150,000 bpd of production.

Angolan supply dropped because the BP Plc-led Plutonio field remained closed. The 200,000-bpd site shut on Aug. 16 following an incident at a gas plant at the facility.

SAUDI, IRAN

Fewer barrels from Saudi Arabia also contributed to the decline in output.

The kingdom supplied 9.55 mbpd in September, down from 9.65 million bpd in August, according to the survey. It had raised output earlier in the year partly to quell what it saw as unacceptably high prices.

Iranian supply declined by 50,000 bpd due to lower exports. Iran's exports can vary month-to-month, affecting supply, while oilfield production remains little changed, analysts say.

The survey suggests the 12 OPEC members bound by deals to set supply policy, all except Iraq, pumped 30.18 mbpd, above their target of 29.67 mbpd, the survey found.

OPEC supply may fall further in coming months should members implement an agreement reached in September in Vienna to comply strictly with its formal output target, a move OPEC officials said would result in members trimming their actual supply of crude oil by about 500,000 bpd.

OPEC also adopted a new supply target of 28.8 million bpd -- effectively unchanged because it excludes Indonesia, which has suspended its membership from Jan. 1 2009.

Supply from Iraq declined in September by 90,000 bpd to 2.21 mbpd due to rising domestic consumption and a slowdown in exports, the survey found.

Following is crude output in millions of barrels a day.

September August Target*
output output output

Saudi Arabia 9.55 9.65 8.943
Iran 4.00 4.05 3.817
UAE 2.62 2.63 2.567
Kuwait 2.61 2.60 2.531
Venezuela 2.37 2.36 2.47
Iraq 2.21 2.30 (R)
Angola 1.80 1.85(R) 1.90
Nigeria 1.90 1.96 2.163
Libya 1.70 1.68 1.712
Algeria 1.41 1.40 1.357
Indonesia** 0.86 0.86 0.865
Qatar 0.86 0.86 0.828
Ecuador 0.50 0.50 0.52

OPEC-12 30.18 30.40(R) 29.67

TOTAL 32.39 32.70(R)

(R) = Revised

*OPEC agreed at a meeting on Sept. 9-10 to adopt a production ceiling of 28.8 million bpd for 11 members, all except Indonesia and Iraq.

The producer group declined to provide a list of individual members' output targets. The limits given are in line with figures previously issued by OPEC.

**Indonesia is included within OPEC until the suspension of its membership takes effect on Jan. 1, 2009.

OPEC quotas exclude condensate and natural gas liquids and apply to supply rather than wellhead output, defined to exclude movements to, but not sales from, storage. Saudi and Kuwaiti data includes Neutral Zone. Saudi data excludes oil produced for Bahrain. Venezuelan data includes upgraded synthetic oil.

OPEC exports to jump 540,000 bpd to Oct.11
Sept 25, 2008
Reuters

OPEC oil exports, excluding Angola and Ecuador, will jump by 540,000 bpd in the
four weeks to Oct. 11, on strong Asian demand and seasonal factors, an analyst
who tracks future flows said on Thursday.

Seaborne crude exports from 11 OPEC members, including Iraq, will leap to 24.75 million bpd from 24.21 million bpd in the period to Sept. 13, British consultancy Oil
Movements reported.

The head of the consultancy, Roy Mason, said there was no evidence in the latest figures that OPEC had reined in output to comply with a Sept. 10 decision to trim output back to official targets.

"Everything is going East and it's a much bigger increase than we would
expect at this time of year. The rise to Asia is at a record high for
September," he said.

He said the jump could be partly explained by several big new refineries in China which are due to come on stream this year, as well as seasonal demand which picks up at the start of the fourth quarter.

"The refinery factor could argue the (rise) is a transient thing," Mason
said.

The estimate follows a report from another leading analyst, Petrologistics, which showed production from the 13 members dropping 800,000 bpd through September.

OPEC oil output expected to drop
Sep 24, 2008
Reuters

OPEC's oil supply is expected to fall sharply in September because of lower
output from members including Saudi Arabia and Iran, industry consultant Petrologistics said on Wednesday.

The estimate boosted oil prices and indicates that the Organization of the Petroleum Exporting Countries was starting to cut supplies even before it agreed on Sept. 10 to trim output back to official targets.

OPEC's 13 members are expected to pump 32.6 million barrels per day in September, down from a revised 33.4 million bpd in August when output was unusually high, Conrad Gerber, head of Petrologistics, told Reuters.

"Things have come back to normal," Gerber said. "This has nothing to do with the OPEC decision. That reduction will come later on."

Much of the cutback is coming from OPEC's two largest producers, Saudi Arabia and Iran, which supplied more oil than previously thought to customers in August.

Top exporter Saudi Arabia is expected to pump 9.55 million bpd in September, down from 9.7 million bpd in August. The kingdom raised output earlier in the year partly to quell what it saw as unacceptably high prices.

Iranian supply is forecast to decline to 4.05 million bpd from 4.4 million bpd in August. Its exports can vary month-to-month, affecting supply, while oilfield production remains steady.

The Petrologistics estimate suggests the 12 OPEC members bound by deals to set supply policy, all except Iraq, are producing 30.4 million bpd, more than their informal target of 29.67 million bpd.

OPEC at its meeting in Vienna on Sept. 9-10 adopted a lower target of 28.8 million bpd for 11 members, all except Indonesia, which will suspend its membership from Jan. 1, and Iraq.

Supply from Iraq is expected to decline by about 100,000 bpd to 2.2 million bpd in September due to rising domestic consumption and a slowdown in exports.

Militant attacks curbed output in Nigeria, which is expected to pump 1.8 million bpd, 140,000 bpd less than in August.

Petrologistics measures OPEC supply, which excludes oil produced but sent into storage, by tracking tanker shipments. OPEC itself does not issue timely estimates of its members' output.

October 3rd article:
http://africa.reuters.com/energyandoil/news/usnL3275619.html?rpc=401

Net Oil Exports - September 2008 Update

2008-09-26T12:14:00.004-04:00

Net Oil Exports - September 2008 Update. Top 20 Exporters (93% of total exports).

chart, crude oil, crude oil exports, graph, net oil exports, net petroleum exports, oil exports

Saudi Arabian Oil Production

2008-09-26T00:40:00.004-04:00

Saudi Arabian Oil Production
Crude and Condensate only

sources:

1) Platts - usually published around the 25th of the month for previous month - unrevised (August 2007 to Sept 2008)
2) EIA - through June
3) IEA original -published around 25th of the month for previous month
4) IEA revised - final monthly revision published 2 months after original

Whoops!

2008-09-25T01:51:00.001-04:00

Boone Pickens Loses Big On Oil, Natural Gas Bets: Wind-Farm Ads Worked Too Well
Corey Lorinsky
Aug 13, 2008
Clusterstock.com

Boone Pickens has been a very busy man lately, lecturing Congress about his wind and natural gas-focused energy policy, assembling a "green" army, and starring in his own commercials. Maybe he's been too busy.

The New York Post says the billionaire octogenerian's $300 oil predictions couldn't help him last month. The commodity half of Pickens' BP Capital hedge fund (which has $7 billion in total assets under management) sank about 35% in July. He can add those losses to the boot-licking he just took in Yahoo (YHOO).

"We notified our commodity-fund investors last week that the steep decline in natural gas and oil prices has had an adverse impact on our performance...We continue to analyze the market and adjust accordingly," a Pickens spokeswoman said.

For those who haven't seen his ubiquitous commercials, Pickens master energy plan is to build massive wind farms in Middle America to replace natural gas a source of electricity. Then, natural gas will be available to use as a fuel for automobiles. Where does the Middle East fit into this plan? Nowhere. Pickens has sunk multiple billions into his own wind farm already and is positioning himself as the "energy guru" for the next Presidential administration.

Needless to say, these losses are embarrasing to Pickens on many levels.

Pickens says oil won't go below $100
August 14th, 2008
Reuters

T. Boone Pickens said on Thursday crude prices may soon fall as low as $110 a barrel amid falling gasoline demand, but should not sink below $100 because the United States depends heavily on oil imports.

"I don't think it'll drop below $100," Pickens told Reuters in a telephone interview. "I would say $110 is where it might go, something like that."

Pickens' hedge fund BP Capital, which manages about $7 billion in assets, sank about 35 percent in July, according to a report this week in the New York Post.

Pickens declined to comment in the interview about the performance of his fund.

The U.S. Department of Transportation reported this week that vehicle travel declined for the eighth month in a row.

Pickens’ Loses $1 Billion on Energy Bets
September 24, 2008
NYT

T. Boone Pickens, it seems, has taken a bath on his energy investments.

According to The Wall Street Journal, funds run by the 80-year-old oil magnate have lost around $1 billion this year, a figure that includes $270 million of personal losses.

Apparently blindsided by the downturn in energy prices, one of the investor’s energy-focused hedge funds is down own almost 30 percent through August, while a smaller commodity-focused fund is down 84 percent, The Journal said.

“It’s my toughest run in 10 years,” Mr. Pickens told The Journal. “We missed the turn in the market, there’s nothing fun about it.”

Before the most recent tough spell, the investor’s energy-stock fund, which started the year at $2 billion, has returned a compounded annual return of 37 percent over seven years, The Journal reported, citing an investor. The commodity fund, which started the year at about $600 million, has had similar strong performance, according to the newspaper.

----

according to another source he said:

“Oil likely will finish the year around $120 or $125 a barrel.”

So how bad has it been for BP? Pickens says “It’s like mashing all your fingers in the door… This has been a pretty bad period for us,” he says.

Net Oil Exports - August 2008 Update

2008-09-19T02:25:00.001-04:00

Net Oil Exports - August 2008 Update. Top 20 Exporters (93% of total exports).

NBC, Pickens Spar Over Foreign Oil Ad

2008-08-29T15:10:00.005-04:00

NBC, Pickens Spar Over Foreign Oil Ad
By Steve McClellan
Aug 28
Adweek

Texas billionaire T. Boone Pickens doesn't take no for an answer. At least he didn't when NBC -- and sibling cable networks CNBC and MSNBC -- apparently rejected his latest ad stating the case for the U.S. to decrease its dependence on foreign oil.

In the war of words that ensued, Pickens won his fight to get the spot on all three nets.

The ad was rejected Tuesday, according to sources in the Pickens camp, for making unsubstantiated claims and for being "controversial." NBC issued a statement late Wednesday declaring that it never made a final decision on whether to broadcast the commercial.

Clearly, Pickens believed the ad had been barred. On Wednesday, his lawyers sent a letter to NBC and he appeared on Fox News' Neil Cavuto program to express his dismay. A copy of the "lawyer letter" was made public by Pickens at 4 p.m. Wednesday. Two hours later, a source close to Pickens said NBC accepted the ad for all three networks.

The latest ad is a 15-second spot that says Iran is re-engineering domestic cars to run on natural gas so it can sell more oil abroad at hefty rates, while "we're not doing a thing" in the U.S. to cut consumption.

A source said NBC initially rejected the ad on two grounds: controversial subject matter and failure to support the statement that nothing is being done to cut domestic consumption. "The ad is not acceptable for air on the NBC network because the spots address controversial issues and it is our policy not to air ads addressing such issues on our network," NBC wrote in rejecting the ad, said a source who read the letter to Adweek.

In addition, the network said the ad was not acceptable for air on the networks "because you have not established to our satisfaction that there is a reasonable basis for the claim that 'we are not doing a thing here."'

Pickens and his team were puzzled because all the previous ads they placed, including 60-second spots that the networks did air, were at least equally controversial. For example, in one previous spot, Pickens says when it comes to domestic oil reserves, America should "drill, drill, drill."

The letter sent to NBC on Pickens' behalf by the Washington law firm Patton Boggs and dated August 27 charged the network with "selectively applying the First Amendment and denying your viewers access to information that is important to their education and understanding of the issue of energy independence."

In a statement issued Wednesday evening after approving the ad, NBC said: "We have been airing seven of the eight advertisements that were submitted for broadcast by T. Boone Pickens. As we were in the process of clearing the eighth, Mr. Pickens released his statement prematurely."

The statement did not address why the network sent Pickens a notice on Tuesday that appeared to reject the ad.

Reuters/Hollywood Reporter

Crude Oil Production - August Update

2008-08-06T19:25:00.000-04:00

Crude Oil Production - August Update

rnk	Country	bl	---	---	---	bl	Δ	Δ	Δ
---	---	x	---	---	---	---	prev	high	low
---	---	x	Mar	Apr	May	---	Apr	May	Aug
---	Country---	x	2008	2008	2008	x	2008	2005	2007
---	---	---	---	---	---	---	---	---	---
1	Saudi Arabia	x	9200	9100	9400	x	300	-200	800
2	Russia	x	9334	9296	9315	x	19	415	-75
3	US	x	5139	5162	5166	x	4	-414	253
4	Iran	x	4000	4000	4004	x	4	-96	104
5	China	x	3769	3751	3811	x	60	200	65
6	Mexico	x	2847	2767	2798	x	31	-643	-45
7	UAE	x	2710	2710	2710	x	0	308	51
8	Kuwait	x	2600	2600	2609	x	9	109	109
9	Canada	x	2595	2546	2590	x	44	230	-208
10	Iraq	x	2303	2303	2453	x	150	550	550
11	Venezuela	x	2440	2440	2440	x	0	-100	-4
12	Norway	x	2209	2111	2247	x	136	-548	112
13	Nigeria	x	2330	2130	2060	x	-70	-630	-320
14	Angola	x	2003	2009	2015	x	6	845	285
15	Algeria	x	1865	1895	1895	x	0	120	71
16	Brazil	x	1750	1797	1815	x	18	126	57
17	Libya	x	1740	1718	1700	x	-18	70	0
18	UK	x	1453	1499	1486	x	-13	-257	258
19	Kazakhstan	x	1398	1368	1357	x	-11	-17	30
20	Azerbaijan	x	913	939	976	x	37	576	94
21	Indonesia	x	975	964	965	x	1	-107	13
22	Qatar	x	920	934	938	x	4	103	73
23	Oman	x	755	748	721	x	-27	-46	19
24	India	x	705	702	701	x	-1	19	8
25	Egypt	x	609	609	609	x	0	-47	-70
26	Malaysia	x	623	607	597	x	-10	43	10
27	Columbia	x	562	567	579	x	12	48	51
28	Argentina	x	675	672	548	x	-125	-174	-133
29	Sudan	x	520	520	520	x	0	170	34
30	Australia	x	436	476	501	x	25	1	22
31	Ecuador	x	508	510	499	x	-11	-27	-9
32	Syria	x	390	389	388	x	-1	-48	8
33	Eq. Guinea	x	385	386	388	x	2	-2	0
34	Yemen	x	313	297	306	x	9	-99	-11
35	Denmark	x	285	290	291	x	0	-94	-32
36	Vietnam	x	274	288	260	x	-28	-133	-44
37	Gabon	x	228	250	250	x	0	-21	5
x	other	x	2525	2549	2574	x	25	-15	89
x	blank	x	x	x	x	x	x	x	x
x	world	x	74286	73901	74481	x	580	215	2220
x	barrels	x	x	x	x	x	x	x	x
x	percentage	x	x	x	x	x	x	x	x

May 2008 is current the record for Crude and Condensate production.
May 2005 is the previous high.
August 2007 is the month with the lowest production in the interim.
The final three columns show the changes in production between the previous month(April), those two months, and the most recent month (May).

Tupi Update

2008-08-01T17:59:00.003-04:00

Petrobras to Start Oil Output at Tupi Field in 2009
By Anthony DiPaola and Juan Pablo Spinetto
Aug. 1 (Bloomberg

Petroleo Brasileiro SA, Brazil's state-controlled oil company, plans to start crude production at the offshore Tupi field in the first quarter of next year.

The initial output will be between 20,000 and 30,000 barrels a day, Chief Executive Officer Jose Sergio Gabrielli said today in London. The company and partners will ramp up production at the pilot project to 100,000 barrels a day in 2010.

Rio de Janeiro-based Petrobras will boost investment in projects from its previous plan to spend $112 billion by 2012, Gabrielli said. It will order 28 new drilling rigs between 2013 and 2017.

``For sure the new plan has to be bigger than that,'' Gabrielli said in a television interview. ``We have to increase our debt, because the amount of money we need for capital expenditure will be very big.''

Petrobras plans to start crude extraction from an offshore field in the so-called pre-salt Campos Basin in September, Gabrielli said. At first 10,000 barrels a day will be pumped from the Jubarte field.

He said the company may be able to give oil and gas reserves estimates for the Campos Basin at the end of 2009. The producer will announce investment and borrowing plans in September or October. Brazil's National Petroleum Agency said on its Web site today Petrobras and Royal Dutch Shell Plc found traces of oil in an offshore well in Campos Basin.

Petrobras owns 65 percent of Tupi and operates the concession. Reading, U.K.-based BG Group Plc owns 25 percent and Lisbon-based Galp Energia SGPS SA owns 10 percent.

This press release says the exact same thing as the one they put out three months ago. So I guess they are on track.

Link to more information on Brazil's future prospects

Net Oil Exports - July 2008 Update

2008-07-21T18:14:00.008-04:00

Net Oil Exports - July 2008 Update. Top 20 Exporters (93% of total exports).

Oil Dollars

2008-07-08T16:06:00.004-04:00

This was made by simply multiplying the average monthly price of WTI by the barrels per day of Crude and Condensate produced in that month.

Oil Consumption Changes 2005 - 2007

2008-06-14T18:13:00.003-04:00

The BP 2008 Annual Statistical Review has been released. These are the consumption numbers. I used the difference over the past two year, rather than one year. I'll comment some more on the numbers soon building up to an export update around the 30th.

These are the Top Ten Gainers and Top Ten Losers by Barrels per Day. Besides China and Saudi, which are obvious points of interest, Germany and Singapore must be looked at.

Matt Simmons responds to Henry Blodget

2008-06-08T21:17:00.006-04:00

I haven't heard anything from Matt Simmons in a while, so I was quite surprised when reading an entry on Henry Blodget's new finance blog to see that his was the first response. Also amusing that the subject was Arun Murti (weren't we just talking about those two last week?)

Here's his response:

You really should research your terminology before you drop it about in your articles.

"On the supply side, we don't subscribe to the peak-oil view. We don't think the world has run out of oil."

Definition of Peak Oil:

"Peak oil, as part of the fossil fuel depletion, is the point in time when the maximum rate of global petroleum production is reached, after which the rate of production enters its terminal decline."
source - wikipedia.org

Peak Oil is about the "Peak" in oil production... we sir have peaked, we did so in 2006. We are in what's called an undulating plateau and will soon enter a irreversible decline in oil production.

We will NEVER run out of oil, we simply will run out of CHEAP oil... easy to find and produce oil... I hope this sinks in clearly.

We discovered oil, found large deposits of oil and we produced those first, they were the easiest to get at. Most of those fields are in decline now, we're now going after the more difficult, smaller deposits...

Please go to www.theoildrum.com and do a bit of reading.

Kind Regards,
M. Simmons

Simmons response

Blog home: ClusterStock

No Calls for OPEC Meeting

2008-06-08T11:38:00.003-04:00

Oil supply adequate, no calls for OPEC meet
June 8th, 2008
Reuters

Global oil supplies are adequate and there are no moves within OPEC to hold an emergency meeting to discuss record oil prices, Libya's top oil official said on Sunday.

"I think there is enough oil in the market, I did not hear anybody calling for a meeting," Shokri Ghanem, head of Libya's National Oil Corporation, told Reuters in a telephone interview.

U.S. oil surged nearly 9 percent to a record above $139 a barrel on Friday. Ghanem said he expected the price to continue rising.

"I think it will go higher," said Ghanem, who is also head of Libya's OPEC delegation. "That is a trend that will continue for some time."

Oil prices were rising due to reasons other than fundamentals such as speculation and concern over political tension in the Middle East, he said.

Consuming countries have called for more supply from the Organization of the Petroleum Exporting Countries (OPEC) to help ease high prices, but OPEC officials blame factors beyond their control for oil's rally.

OPEC, supplier of more than a third of the world's oil, was next scheduled to meet on September 9 to discuss oil policy.

Oil was becoming more difficult and costly to produce, and global supplies were nearing their peak, Ghanem said.

"The easy, cheap oil is over, peak oil is looming," Ghanem said.

Ghanem said last year that it may not be possible to boost global supply beyond 100 million barrels, from about 87 million bpd now.

OPEC's Oil Production Rose 300,000 bpd in May

2008-06-04T19:21:00.004-04:00

OPEC's Oil Production Rose 0.9% in May, Survey Shows
By Diane Munro and Mark Shenk
June 4 (Bloomberg)

The Organization of Petroleum Exporting Countries increased oil production 0.9 percent in May as Iraqi output climbed to a pre-war high, a Bloomberg News survey showed.

OPEC pumped an average 32.28 million barrels a day last month, up 300,000 barrels from April, according to the survey of oil companies, producers and analysts. April output was revised down by 125,000 barrels a day. Production by the 12 members with quotas, all except Iraq, rose 200,000 barrels to 29.79 million barrels a day.

Crude oil on the New York Mercantile Exchange reached a record $135.09 a barrel on May 22 and closed at $122.30 a barrel today. Prices are up 85 percent from a year ago.

Iraqi production increased 100,000 barrels to an average 2.49 million barrels a day last month, the highest since October 2002. Output in the Persian Gulf nation has been curbed since the March 2003 U.S.-led invasion.

Iraqi Exports

Iraq exported an average 2.01 million barrels of oil a day in May, up 100,000 barrels from the previous month and the highest since before the invasion, the survey showed.

Exports from Iraq's two Persian Gulf ports, Basrah and Khor al Amaya, averaged 1.56 million barrels a day in May, up 100,000 barrels from the prior month. The increase followed repairs to infrastructure damaged by military action during March in the Basrah oil-producing region.

Oil exports from Iraq's northern fields to Turkey's Ceyhan export terminal on the Mediterranean Sea were unchanged at 442,000 barrels a day in May. April exports from Ceyhan were revised 22,000 barrels a day higher. Iraq exported about 10,000 barrels a day overland to Syria.

Nigerian production rose 50,000 barrels to an average 1.9 million barrels a day last month. April's output was the lowest since 1999. Security concerns and militant attacks on oil infrastructure in the country's Niger Delta region hampered repair work last month.

Exxon Mobil Corp.'s Nigerian oil unit gradually restored output from the Qua Iboe, Erha, Yoho and Oso fields over the month following a strike by the Petroleum & Natural Gas Senior Staff Association of Nigeria, or Pengassan, which represents white-collar workers. The strike ended on May 1.

Saudi Pledge

Saudi Arabia, OPEC's largest producer and the world's top oil exporter, raised production by 130,000 barrels to an average 9.25 million barrels a day in May. It was the biggest increase among OPEC members last month.

``Saudi Arabia probably made the big increase for political reasons, while Iraq and Nigeria had gains due to improved security,'' said Rick Mueller, director of oil practice at Energy Security Analysis Inc. in Wakefield, Massachusetts.

Saudi Oil Minister Ali al-Naimi said on May 16 that the kingdom had started ramping up production on May 10 in response to stronger demand from customers. He said output would reach 9.45 million barrels a day in June. The Saudi announcement followed a meeting that day in Riyadh between President George W. Bush and King Abdullah.

``The Saudis are either just taking advantage of the high prices or are responding to political pressure and trying to purge some of the speculation that's in the market,'' Mueller said. ``They are following through with the promise made during George W. Bush's visit.''

The planned increase in June output won't be affected by delays to the new Khursaniyah field. The field will eventually pump 500,000 barrels a day, Saudi Aramco said. The state-owned company will increase capacity by a further 250,000 barrels a day by the end of the year because of expansion of the Shaybah field.

Output Declines

Iran, the second-biggest OPEC producer, cut output last month because of a lack of interest in its high-sulfur, heavy oil grades. The country pumped an average 3.82 million barrels a day in May, down 60,000 barrels a day from April. Iran has at least 14 very large crude carriers, or VLCCs, floating near Kharg Island, a loading facility.

Libyan oil production declined 35,000 barrels a day to 1.735 million barrels a day in May because of operational problems at al-Jurf offshore oil field, which is operated by Total SA. A technical problem led to 45,000 barrels a day of production being shut-in beginning on April 24.

WSJ article on Oil Exporters

2008-06-02T02:59:00.003-04:00

Oil Exporters Are Unable To Keep Up With Demand
Domestic Needs, Sluggish Investment Crimp Shipments

By Neil King Jr. and Spencer Schwartz
May 29, 2008
Wall Street Journal

The world’s top oil producers are proving unable to put more barrels on thirsty world markets despite sky-high prices, a shift that defies traditional market logic and looks set to continue.

Fresh data from the U.S. Department of Energy show the amount of petroleum products shipped by the world’s top oil exporters fell 2.5% last year, despite a 57% increase in prices, a trend that appears to be holding true this year as well.

There are several reasons behind the net-export decline. Soaring profits from high-price crude have fueled a boom in oil demand in Saudi Arabia and across the Middle East, leaving less oil for export. At the same time, aging fields and sluggish investments have caused exports to drop significantly in Mexico, Norway and, most recently, Russia. The Organization of Petroleum Exporting Countries also cut production early last year and didn’t move to boost supplies again until last fall.

In all, according to the Energy Department figures, net exports by the world’s top 15 suppliers, which account for 45% of all production, fell by nearly a million barrels to 38.7 million barrels a day last year. The drop would have been steeper if not for heightened output in less-developed countries such as Angola and Libya, whose economies have yet to become big energy consumers.

For all the attention paid to China’s increasing energy thirst, rising energy demand in the Middle East may pose the greater challenge. Last year, the region’s six largest petroleum exporters — Saudi Arabia, United Arab Emirates, Iran, Kuwait, Iraq and Qatar — curbed their output by 544,000 barrels a day. At the same time, their domestic demand increased by 318,000 barrels a day, leading to a loss in net exports of 862,000 barrels a day, according to the U.S. Energy Information Administration.

Demand in the Middle East is a major factor right now, said Adam Robinson, an oil analyst at Lehman Brothers in New York. Mr. Robinson predicts the region will constitute more than 40% of increased demand next year.

Saudi Arabia in particular has become a major energy consumer as the country pushes to put its oil riches to greater use. The kingdom is in the middle of a major investment campaign to become a world player in petrochemicals, aluminum and fertilizers, all of which will require huge amounts of oil and natural gas.

Since 2004, Saudi oil consumption has increased nearly 23%, to 2.3 million barrels a day last year. Jeffrey Brown, a Dallas-based petroleum geologist who studies net export numbers, said that at its current growth rate, Saudi Arabia could be consuming 4.6 million barrels a day by 2020.

That would cut significantly into Saudi exports even as the world looks to its largest oil supplier to help manage rising demand. Saudi Arabia has nearly a quarter of the world’s proven reserves and supplies around 12% of the 86 million barrels a day that the world now consumes.

One reason Middle Eastern nations are using more oil is a shortage of natural gas, said Bill Farren-Price, director of energy at Medley Global Advisors. This is particularly troublesome during the summer, when governments scramble to keep the lights on and air conditioners cranking.

Some producers, such as the U.A.E., are easing back at times on the crucial industry practice of injecting natural gas into crude oil fields, which is done to boost reservoir pressure and increase crude recovery rates. Halting the injections ends up undercutting oil production, further reducing exports.

As top exporters hit trouble, historically marginal players such as Brazil and Kazakhstan are likely to play a greater role. Three of the four non-OPEC players among the top 15 oil exporters — Russia, Norway and Mexico — are reporting declines in production this year. Kazakhstan is showing slight net export gains.

No big exporter is struggling more than Mexico, where net exports dropped 15% in 2007. Mexican officials announced Monday that output from the country’s once-mighty offshore Cantarell field had plunged by a third in less than a year.

Analysts said there are reasons for optimism. Russia’s government is scrambling to alter the tax rates that many say have put a lid on new oil development. Mr. Robinson said 65 new ultra-deepwater drilling rigs are expected to arrive over the next three years, following a five-year stretch in which the industry gained only 10 such rigs.

Those additional rigs will help companies tap some of the most promising, but now inaccessible, waters off Brazil, Australia, West Africa and in the Gulf of Mexico.

“The sense in the market is that peak oil is here and that things will only get worse,” says Mr. Robinson. “But the verdict is still out on that.”

Oracle

2008-05-23T22:05:00.005-04:00

A reader asked about Murti's oracle status. I give a lot of attention to predictions, mostly negative. But Murti has been correct. His record in the last 3 years is better than that of Pickens. But only if we discount the fact that he was horribly wrong on the low side.

The real Oracle is Simmons. He rarely mentions price. In 2005 he bet Tierney of the New York Times $10,000 that oil would average $200 in 2010.

He has recently said that oil would be $200-$400 (I've also seen it reported as $500) in 6 months to 4 years.

http://www.simmonsco-intl.com/files/Another%20Nail%20in%20the%20Coffin.pdf

Annual Net Oil Exports

2008-05-22T15:10:00.002-04:00

Note: I saw a comment on The Oil Drum suggesting that I should have an annual graph. I posted this last October and will update it in June when the EIA releases its latest annual numbers. I'll also make a version matching the Top 20 Chart using raw barrels instead of a percentage.

The purple line extends out a few more years because it had the data I was using for the Top 20 (I was only doing Top 15 at the time)

_________

Here is a preliminary yearly chart of oil exports. These numbers are simply the Total Liquids Production numbers minus the Total Liquids Consumption numbers published each June by the EIA. I believe t12 is the consumption table I used. I'll document that when I update this. I made this earlier this year and I still need to update it for the last year of available data. But the basic shape of things should be clear.

The reason I used the different datasets of countries was the result of adding more and more data to see if anything changed significantly. It doesn't. The reason the different datasets use such weird numbers(18,26,42,49, etc.) was because I wanted to use the same countries in each case, and there are only 49 countries that have consistently exported oil in the last 20 years.

China for instance is number 49 on the list and they haven't exported since 1991. Six other countries have not exported in a few years, hence the next dataset of Top 42. The addition of Kazakhstan to the top 15 gives the current Top 16 which I use for the Monthly Chart. These top 16 make up 90% of total net exports. The top 20 are 93% and top 25 are 96%

Note that this chart uses Percentage of Total Liquids as a measure, when I update this, I'll probably switch to raw barrels.

IEA Drastically Reduces Long-Term Forecast

2008-05-22T03:28:00.002-04:00

International Energy Agency to Cut Supply Forecast, WSJ Says
By Steven Bodzin
May 21 (Bloomberg)

The International Energy Agency, the Paris-based energy analysis organization, will predict that companies may produce 100 million barrels a day by 2030, lower than the 116 million previously forecast, the Wall Street Journal reported.

The group is analyzing the 400 oilfields that provide more than two thirds of crude today to determine how much they are likely to produce in the future based on field health and investment, the newspaper said on its Web site.

The IEA is working with oil companies, oilfield-service companies, energy ministries and consultants, the Journal said. Saudi Arabia, Venezuela, Iran and China aren't cooperating with the new study, the newspaper reported.

The IEA has traditionally assumed that supply would rise to match demand, the Journal said. That assumption is now in doubt as producing nations fail to invest, according to the newspaper.

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

2008-05-21T09:00:00.004-04:00

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

2008-05-21T01:30:00.001-04:00

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

[next update -July 15th]

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):
[Next update July 15th]
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

2008-05-21T01:16:00.005-04:00

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

2008-05-08T13:45:00.004-04:00

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

2008-05-05T16:56:00.003-04:00

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?

2008-05-01T07:21:00.002-04:00

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

2008-04-28T09:33:00.000-04:00

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

2008-04-23T19:13:00.002-04:00

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

2008-04-17T15:06:00.012-04:00

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

2008-04-17T13:55:00.000-04:00

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

2008-04-17T07:23:00.001-04:00

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

2008-04-11T09:29:00.009-04:00

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)

2008-04-11T04:28:00.003-04:00

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

2008-04-07T17:25:00.000-04:00

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

2008-04-01T00:19:00.001-04:00

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

2008-03-31T05:39:00.006-04:00

"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

2008-03-30T21:57:00.003-04:00

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

2008-03-25T14:27:00.005-04:00

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

2008-03-22T17:25:00.005-04:00

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

2008-03-11T15:09:00.000-04:00

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.''

Trendline

2008-03-05T13:16:00.004-04:00

This chart was done by Xeroid.

If you put trend lines through EIA 'World C+C' and your 'net exports' data and overlay them you can see the 'World C+C' ~2.2% annual growth suddenly slow in 2005 and also net exports fall away and peak around the beginning of 2007 as the net exporters hang on to crude for their own use.

Interestingly, the trendlines predict peak world C+C around 2009. I guess the trendlines are as good as anything for predicting slightly into the future!

Xeroid.

Warren Buffett Discusses Peak Oil

2008-03-03T13:54:00.002-04:00

Warren Buffett interview on CNBC, March 3rd, 2008.

http://www.cnbc.com/id/15840232?video=671171278

He mentions Pickens who they had on last week.

T. Boone Pickens

2008-02-26T01:12:00.000-04:00

T. Boone Pickens on CNBC February 21st, 2008

Part I
http://www.cnbc.com/id/15840232?video=658910248

Part II
http://www.cnbc.com/id/15840232?video=658914274

Global All Liquids Production vs. Net Oil Exports

2008-02-25T12:02:00.000-04:00

Global All Liquids Production vs. Net Oil Exports (Top 20 Producers)
Monthly Chart 2005 - 2008

These data points are 3-month moving averages. I matched the scale for the two series at 3 mbpd each.

Monthly Chart 2001 - 2008

This a longer-term view with a 10 mbpd scale for both series. Sometime in late 2006/early 2007 it appears something changed.

Mexican Production

2008-02-22T21:28:00.000-04:00

Mexican Energy Reforms on Horizon
By Randy Woods
EnergyTribune.com
Feb. 21, 2008

Mexico’s political leadership is building on the momentum created by last year’s passage of several reforms to the state-controlled energy sector. Mexico’s congress is now considering proposals that could break the monopoly of state oil company Pemex over refining and transportation operations. Perhaps more important are proposals that would allow Pemex to partner with other companies in promising new regions, especially offshore. Pemex’s falling reserves and production, as well as its financial problems, have created a sense of urgency for reform, so some form of change is likely.

Change is needed in Mexico, where production is declining at Cantarell, its biggest oilfield. Overall reserves are dwindling away, and operational and financial problems are plaguing Pemex, which posted some $1.3 billion in losses during the third quarter of 2007. According to Pemex’s December 2007 figures, Mexico’s production declined 8.3 percent to 2.9 million barrels per day of crude in November 2007, down from 3.16 MMbbl/d in November 2006. Given Pemex’s current reserve replacement ratio of roughly 50 percent, the company has just nine years of production left. And according to an energy ministry forecast, by 2016 oil production could drop by a third if something is not done to fix the problem.

Last year’s fiscal reforms (which will reduce Pemex’s tax burden by up to $3 billion per year) were a good start. The Senate Energy Committee, led by Francisco Labastida Ochoa of the PRI, is hammering out a deal that could allow Pemex to contract out operations of its refining, transport, and distribution infrastructure. That would permit other companies to invest in Mexico’s infrastructure and let Pemex focus more on its upstream operations. Other proposed reforms include allowing Pemex to partner with other companies to jointly perform exploration and even production, enabling it to exploit its promising deepwater areas, long viewed as the answer to Cantarell’s decline. According to the ministry, deepwater production could start by 2014 at a rate of 19,000 bbl/d, increasing quickly to 174,000 bbl/d in just two years.

Pemex Says January's Daily Oil Output Little Changed
By Andres R. Martinez
Feb. 21 (Bloomberg)

Petroleos Mexicanos, the state-owned Mexican oil monopoly, said daily crude oil production in January was little changed from December. Output at its largest field, Cantarell, fell to the lowest in more than eight years.

Output rose to an average 2.957 million barrels a day from 2.954 million barrels in December[??? Jan], Mexico City-based Pemex, as the company is known, said today in an e-mailed statement. Production fell 5.9 percent from January 2007.

Crude output fell short of a company goal of 3.1 million barrels a day. Production may fall to 2.8 million barrels this year because Mexico does not have production capacity to make up for the decline at Cantarell, its largest oil field, according to Cambridge Energy Research Associates, a consulting firm.

``In the short term, there are not many alternatives,'' said Alejandra Leon, an analyst with CERA in Mexico City. ``It has been very difficult finding projects that could replace the magnitude of the fall at Cantarell.''

Crude output at Cantarell, the third-largest crude field in the world, fell 1.3 percent in January from the previous month to 1.24 million barrels daily, the lowest since December 1999. The offshore field accounted for about 42 percent of Mexico's oil output in January. The field peaked in December 2003 at 2.19 million barrels, or about two-thirds of Pemex's production that month.

President Felipe Calderon will present his plan to open the oil industry to private and foreign investment next month, said Energy Minister Georgina Kessel on Feb. 14. Mexico must begin exploring in waters deeper than 1,500 meters to help counter the decline at Cantarell and replace reserves.

Kessel set a goal of raising the rate of replacement of proven oil reserves to 100 percent by 2012. The company's reserves may run out in 9.3 years if the goal isn't met, she has said.

Crude exports fell 4.1 percent to 1.434 million barrels a day in January from December after closing export terminals multiple times because of stormy weather. Exports to the U.S. fell 1 percent to 1.146 million barrels a day. Pemex is the third-largest supplier of crude to the U.S.

Natural gas output reached a record 6.534 billion cubic feet a day last month, the company said.

Links to Mexico Charts:

October 2007

Jan 2008

Mega-Projects and Peak-Oil: A Debate

2008-02-22T05:57:00.006-04:00

I know that once in a while I see comments about The Oil Drum website here (or maybe it's just Xeroid) and I've seen my Net Oil Export chart reposted there, so to prove that I pay attention I wanted to post a link to a debate I saw there the other day that was fantastic.

It doesn't really have much to do with Net Oil Exports, but it does have to do with the contentious issue of peak-oil which I think goes hand-in-hand with NOE.

This is where it started:
http://www.theoildrum.com/node/3623#comment-304572

But this is where it starts to get good:
http://www.theoildrum.com/node/3623#comment-304746

I highly recommend this reading, there is a lot of valuable information here presented brilliantly.

America's Energy Security a 'Mess'

2008-02-21T21:20:00.000-04:00

Shell President: America's Energy Security a 'Mess'
by Kerry Laird
Rigzone 2/21/2008
URL: http://www.rigzone.com/news/article.asp?a_id=57175

Shell President John Hofmeister addressed U.S. policy makers on Feb. 21 to proffer suggestions for energy policy changes. Hofmeister urged policy shapers to extend the rights of U.S. companies by allowing them to drill the outer continental shelf of the U.S., which is currently illegal.

Hofmeister said that the U.S.'s energy consumption, along with outdated policy, have led to a failure in energy security.

"During the course of today, the U.S. will consume 10,000 gallons of oil a second," said Hoffmeister. "That equivalent is 21 million barrels of oil a day ... that's a swimming pool full of oil every second of every minute of every hour throughout the day.

"In addition, we will consume some 60 billion cubic feet of gas. Sixty billion cubic feet of gas, if stacked on top of each other, would be 25 roundtrips to the moon. So when you put that kind of energy consumption in perspective … when we deal with energy security in this country, that's a very big deal.

"It's the basis of our lifestyle."

Hofmeister admitted that while Shell has been one of the first big oil companies to invest in alternative energy sources, such supplies "while meaningful over the longer term … cannot displace or replace the kind of day-to-day demand for hydrocarbon energy" the U.S. has today.

"My goodness, what a mess we're in when it comes to national energy security," he concluded.

Hofmeister said that energy security should enjoy the same importance as homeland and economic security, because each contributes to the other as a part of the "foundation of America's well-being."

"With energy security, we can have the best of all worlds," he said.

The Shell president defines energy security as a "comprehensive, holistic strategy with a short-term makeup, a medium-term makeup, and a long-term makeup," which is how Shell designs its own business model.

Consequently, Hofmesiter said that this country's "short-term hurt" is that it imports more than 60% of the oil it consumes. The $2 trillion the U.S. spends on oil imports is $2 trillion that the country will never see again, he said. That money is used to develop and maintain resources for oil exporters in other parts of the world.

Last year, S&P's top-six oil companies were state-run companies, like PDVSA, Petrobras, and Rosneft. Hofmeister said the nationalism of natural resources is the "legitimate" right of sovereign nations, yet this is where American energy security fails. He said that contrary to popular belief, the energy market place is not a free market.

"When a cartel of countries can determine production limits which help to guide a price level, and when U.S. companies are prohibited by public law from developing U.S. natural resources, that represents constraint of a free market," said Hofmeister. "And so it is a myth to think that U.S. oil companies can just go and explore and produce where they choose in a free oil market."

Hofmeister pointed out that only 15% of the outer continental shelf of the U.S. is available for E&P purposes while 85% is off-limits by law.

"As long as that is the case, we are contributing to, in a sense, the lack of development of our own national natural resources," he said, "and it is necessary for us then to pull upon a pool of international natural resources, which are controlled by nationally sovereign nations."

Hofmister said that to secure the U.S.'s energy future, policies must be moved so that the country can manage its natural resources in the interest of the American people.

"Calling for a comprehensive, integrated, short-term, medium-term, long-term energy strategy would put in place for America an energy strategy that has not existed over the last 50 years," said Hofmeister. "The last time America had an energy strategy … in terms of a coherent, integrated, short-medium-long-term approach, was World War II.

"The strategy was simple: Produce all the energy the nation can produce and ration it to consumers in order to support the war effort.

"Since then, we've relied upon free markets, which have consistently lost their degrees of freedom over the last 50 years. It's time now for the nation … to approach energy security in a bipartisan nationally led model, such as we do with homeland security and economic security."

Saudi Aramco to Start Khursaniyah Output

2008-02-18T10:44:00.001-04:00

Saudi Aramco to Start Khursaniyah Oil Output by April
By Nidaa Bakhsh and Grant Smith
Feb. 18 (Bloomberg)

Saudi Aramco, the world's largest state-owned oil company, will start production from its Khursaniyah oil-field project by April.

``Khursaniyah will make available 500,000 barrels a day within two months,'' Senior Vice President Khalid Buainain said today at a conference in London.

The start of output was delayed from December to allow ``commissioning activities'' to be completed. Saudi Arabia, like other Persian Gulf oil producers, is implementing large-scale energy projects to boost crude oil and refining capacity to meet rising demand.

Saudi Aramco plans to produce 12 million barrels a day by 2009 from all its fields, Buainain said. An additional 250,000 barrels a day this year from the Shaybah field, in the southeast desert known as the Empty Quarter, will bring total output to 750,000 barrels a day. It's also planning to pump 1.2 million barrels a day from the Khurais field by mid-2009, and expects production from the Manifa field will reach 900,000 barrels a day from 2011.

The company expects to see no drop in demand from the U.S. for crude oil even as economic growth slows, Buainain said. The Organization of Petroleum Exporting Countries, whose members produce more than 40 percent of the world's oil, and the Paris- based International Energy Agency, cut their estimates for oil demand because of the threat of a U.S.-led global recession. OPEC maintained its output quota at a meeting on Feb. 1.

EIA Revisions

2008-02-18T09:25:00.001-04:00

For this first chart, I used about 12 data sets I had saved from the EIA. The first one was from November 2005. Since it does not use moving averages, I have included 2004 data here.

In this second chart the numbers are 3-month averages. I used this approach to eliminate some of the noise. I was pleased with the result. Anyone see any patterns?

This third chart shows how over time(about two years) the final revisions tend to settle on the higher level.

And of course, the one that includes price. I threw in some extra verticle lines around where I thought the downward trends in price are. I'm not seeing much of any correlation with short-term increased production levels.

Over this period the highest value for the difference between the high and low revisions was about 400,000 bpd, with an average of about 250,000 bpd (or 0.33%).

A Random Essay About Oil

2008-02-17T22:56:00.003-04:00

Oil Hydra
Is there an easy way out of the mess we've gotten ourselves into?
By Victor Davis Hanson
NationalReview.com

November 08, 2007

Oil is nearly $100 a barrel. Gas may soon reach $4 a gallon. And Americans are being bitten in almost every way imaginable by this insidious oil hydra.

Two billion people in China and India are now eager consumers. They want the cars, gadgets, and lifestyle that Westerners have claimed as a birthright for a half-century. Their growing energy appetites mean that the international petroleum market may remain tight, even if Americans — who use almost twice as much oil per day as China and India put together — cut back on imported energy.

The Middle East is raking in billions each week. At best, our so-called friends in cash-laden Saudi Arabia subsidize fundamentalist mosques and hate-filled madrassas worldwide. At worst, our enemies in petrol-rich Iran are after the bomb, send weapons into Iraq to kill Americans and fund Hezbollah jihadists.

War in Iraq, rumors of fighting in the near-future in Iran and tension on the West Bank only panic markets, raise oil prices and further enrich our grinning enemies.

The nearly half-trillion dollars we will soon pay for imported oil does a lot more than prop up Russia's Vladimir Putin, Venezuela's Hugo Chavez and Iran's Mahmoud Ahmadinejad. The petrodollar drain also contributes to our trade deficits, falling dollar and a general demoralization of the American people.

Our oil habit not only makes us dependent on some creepy suppliers, but we look like fools as we work nonstop to hand over our earnings to those who are rich by an accident of sitting atop oil someone else found and developed.

There is talk in this country of a gradual transition to alternative fuels, solar power, wind machines, plug-in electric cars, and nuclear power. Supposedly Americans will soon be less dependent on imported oil — while helping to slow global warming — as we are weaned off our fossil-fuel addiction.

But let's talk about the present: If oil continues to climb, ultimately, it will change our very way of life. Hard-pressed families will shell out thousands more a year in direct transportation and heating and cooling costs, and more still as consumer prices inflate.

It may have always been unwise for commuters to buy large SUVs and V8 supercab trucks. Now, though, we may reach the point where these pricey huge vehicles will sputter to a halt. Indebted Americans will still shell out monthly payments to pay off their parked dinosaurs, only to drive them for emergency or ceremonial occasions.

Also expect rising popular anger at an asleep-at-the-wheel government that for the last 20 years should have been doing a lot more to mandate conservation, subsidize alternate fuels, encourage nuclear power and open up oil fields offshore and in Alaska.

Instead, doctrinaire free-market purists and radical environmentalists, hand in glove, for years have thwarted both conservation and exploration.

True, in a perfect world, the market would teach Detroit not to build gas-hungry big cars. Yet in the here and now, we are needlessly burning scarce fuel as too many 7,000-pound mammoths deliver single 180-pound drivers to work — while the auto industry continues on its path to irrelevance.

Meanwhile, green politicians may not want messy oilrigs off their coasts, or tankers up north among the ice and polar bears. But so far very few of them have sworn off jet travel, nice cars or ample homes.

Oil companies claim that they are only passing along escalating costs from overseas suppliers over which they have no control. But around a third of our oil is pumped here at home.

Think about it: The cost to extract oil from existing older wells is relatively fixed. For much of the 1990s and early 2000s, oil prices had been steady at between $20 and $30 a barrel (when adjusted for inflation) — and domestic oil companies did quite well. So now at near $100 a barrel, these corporations are raking additional profits of over $60 a barrel — potentially a domestic windfall of hundreds of billions of dollars each year.

Is there an easy way out of the mess we've gotten ourselves into?

Maybe a Silicon Valley genius inventor or entrepreneur will step forward with a breakthrough new energy source.

Maybe our government will start a crash project on the scale of the Manhattan Project to conserve and produce more fuels.

Maybe China and India will consider radical conservation measures.

Maybe countries like Iraq, Libya, and Russia will start reinvesting in their oil infrastructures and double production.

Maybe the Middle East will finally settle down and soothe jittery oil speculators.

Those are too many maybes to wait for while our way of life hangs in the balance. It is past time to demand from our presidential candidates, as well as the current government, exactly when and how they plan to slay this many-headed oil monster.

Alright, I was joking about CERA

2008-01-23T06:02:00.002-04:00

Test Mexico Exports 1 - bar
change colors, update last two months

1) change export chart to lines, run an average of two data-sets, and moving average of that

2) discuss Mexican exports in light of CIBC/Rubin's forecast

World Oil Supply to increase by 20 mbpd in next 9 years

2008-01-19T01:14:00.000-04:00

I'll be deleting this blog in the morning and moving to Montana.

CERA(Cambridge Energy Research Associates) published a paper this week showing definitively that oil production capacity will increase by 2 mbpd per year for the next decade. When I started this blog I was under the impression that oil was at or near a peak. I was worried. I thought I might try to partially document the issue. I was wrong. I'm relieved.

CERA has an excellent record forecasting oil production, particularly in the last 3 years. I can't see how demand can possibly catch up to this flood of oil we are about to see. Net Oil Exports are going to shoot through the roof. I called this one wrong.

The blogspot address is there for the first person that requests it. But I'm done.

Monthly Oil Production

2008-01-17T05:45:00.001-04:00

Monthy Oil Supply Numbers

Record production is noted in bolded red.

2007	EIA C+C	%change	EIA All	%change	Diff	%	IEA All	%change
Jan	73,133	-0.12%	84,113	-0.11%	10,980	13.1%	85,270	+0.19%
Feb	73,315	+0.25%	84,338	+0.27%	11,022	13.1%	85,500	+0.27%
Mar	73,240	-0.10%	84,083	-0.30%	10,843	12.9%	85,320	-0.21%
Apr	73,525	+0.39%	84,570	+0.58%	11,045	13.1%	85,580	+0.30%
May	73,987	-0.73%	84,250	-0.38%	11,263	13.4%	84,860	-0.84%
Jun	72,710	-0.38%	84,379	+0.15%	11,669	13.8%	84,500	-0.42%
Jul	73,152	+0.61%	84,816	+0.52%	11,664	13.8%	85,470	+1.15%
Aug	72,471	-0.93%	83,838	-1.15%	11,368	13.6%	84,560	-1.06%
Sep	73,410	+1.30%	84,753	+1.09%	11,343	13.4%	85,030	+0.56%
Oct	74,124	+0.97%	85,605	+1.00%	11,481	13.4%	86,500	+1.73%
Nov	Feb	Feb	Feb	Feb	Feb	Feb	86,130	---
Dec	Mar	Mar	Mar	Mar	Mar	Mar	87,000	---

This table contains the latest revised numbers from the EIA and IEA.
C+C : Crude oil including lease condensate (the percentage column gives the change from the previous month.

EIA All: The EIA's "All Liquids" crude supply number. This includes C+C, Natural Gas Liquids, "Other Liquids," and Refinery Processing Gain.

IEA All: This is the IEA's "All Liquids" number. What is included is the same as that for the EIA, but for some reason never matches the EIA's number and the direction of change is often opposite to the EIA.

Diff: This is the Difference between the EIA's C+C number and the "All Liquids" number. What should be NGLs, "Other Liquids" (biofuels, CTL, etc.), and Refinery Processing Gain. The percentage given (currently about 13%) is the percentage of All Liquids that these non-conventional liquid hydrocarbons represent. This percentage has been steady increasing for a number of years.

OPEC Production December 2007 (Platts)

2008-01-17T05:34:00.000-04:00

OPEC's Total Crude Oil Output Rose to 32 Million Barrels Per Day in December, a Platts Survey Shows
Jan. 15

The members of the Organization of Petroleum Exporting Countries (OPEC) produced an average 32.03 million barrels per day (b/d) of crude oil in December, according to a Platts survey of OPEC and oil industry officials January 14. This is up from November's rate of 31.65 million b/d.

Production from OPEC's ten members bound by crude output agreements averaged 27.43 million b/d in December, the survey showed. This is 460,000 b/d more than in November and 177,000 b/d higher than the group's 27.253 million b/d target which came into effect at the beginning of November.

"The increase in supply is certainly welcome to this market," said John Kingston, Platts Global Director of Oil. "It appears the group's on track to meet its January target, which is nearly 29.7 million barrels per day for 11 of the members, excluding Iraq."

The bulk of the December output increase was due to higher production from the United Arab Emirates (UAE) as key maintenance programs were brought to a close. UAE production was estimated at 2.5 million b/d, 350,000 b/d higher than November's 2.15 million b/d. Smaller increases of between 10,000 b/d and 40,000 b/d came from Indonesia, Iran, Kuwait, Libya and Saudi Arabia. The OPEC 10 excludes Iraq and new members Angola and Ecuador.

Iraqi production was estimated at 2.3 million b/d, some 100,000 b/d lower than in November. (Earlier this month, Iraqi oil ministry data obtained by Platts showed total Iraqi output at 2.475 million b/d in December, despite a sharp fall in exports from November levels. But Platts' methodology for calculating output differs from that of the Iraqi government). Angolan production edged up from 1.78 million b/d to 1.8 million b/d. Ecuador, which left OPEC in the early 1990s but resumed its membership in mid-November, produced an estimated 500,000 b/d.

When OPEC met in Abu Dhabi in December it left the OPEC-10 target of 27.253 million b/d unchanged but allocated targets of 1.9 million b/d and 520,000 b/d to Angola and Ecuador from the beginning of January. OPEC's production target rose to 29.673 million b/d on January 1, 2008. Iraq does not participate in OPEC output agreements because it is in process of rebuilding its oil industry after years of United Nations sanctions followed by a US-led war.

OPEC ministers will meet in Vienna on February 1. The beginning of this year saw US light crude prices climb above $100/barrel, but several top OPEC officials have said the high prices have less to do with any shortage of crude than to do with non-fundamental factors such as geopolitics and speculative activity in futures markets.
Country  Dec Nov  Oct  Sep  August  Nov 1 target 
Algeria  1.390 1.390 1.380 1.360 1.360 1.357
Indonesia  0.840 0.830 0.830 0.830 0.830 0.865
Iran  3.970 3.950 3.900 3.880 3.880 3.817
Kuwait  2.540 2.500 2.450 2.420 2.420 2.531
Libya  1.740 1.720 1.710 1.700 1.690 1.712
Nigeria  2.200 2.200 2.190 2.180 2.150 2.163
Qatar  0.830 0.830 0.820 0.810 0.810 0.828
Saudi Arabia  9.020 9.000 8.800 8.700 8.660 8.943
UAE  2.500 2.150 2.600 2.590 2.590 2.567
Venezuela  2.400 2.400 2.400 2.400 2.400 2.470
OPEC-10  27.430 26.970 27.080 26.870 26.790 2.470
Angola*  1.800 1.780 1.750 1.720 1.680  N/A
Iraq  2.300 2.400 2.280 2.170 1.990 N/A 
OPEC-10+ Angola, Iraq 31.530  31.150 31.110  30.760  N/A 
Equador** .500 .500 N/A N/A N/A 
Total  32.03  31.650 N/A N/A N/A

Chart Archive

2008-01-07T14:39:00.000-04:00

Version 1 Draft

Topic [font - Georgia

1. Original Chart ____________________June 2007

2.

3.

Topic

1. Annual Net Exports______________Oct 2007

2. try small numbers

3.

Topic orig (appears Times)

Topic arial
Topic arial small

Topic verdana

Topic Georgia
Topic Times normal

1. Original Cantarell_______________Oct 2007

2. Mexico and Cantarell______________Jan 2008 [font change - arial]

3.

4.

Topic

1.

2.

Topic

1.

2.

Oil $200 Options Rise 10-Fold in Bet on Higher Crude

2008-01-07T07:41:00.000-04:00

Oil $200 Options Rise 10-Fold in Bet on Higher Crude
By Grant Smith

Jan. 7 (Bloomberg) -- The fastest-growing bet in the oil market these days is that the price of crude will double to $200 a barrel by the end of the year.

Options to buy oil for $200 on the New York Mercantile Exchange rose 10-fold in the past two months to 5,533 contracts, a record increase for any similar period. The contracts, the cheapest way to speculate in energy markets, appreciated 36 percent since early December as crude futures reached a record $100.09 on Jan. 3.

While analysts at Merrill Lynch & Co. and UBS AG say the slowing U.S. economy will lead to the biggest drop in prices since 2001, the options show some traders expect oil to rise for a seventh straight year. Demand will increase 2.5 percent in 2008, according to the International Energy Agency. U.S. inventories fell to a three-year low on Dec. 28. Production from Mexico is declining and Saudi Arabia is behind schedule in opening its newest field.

``One hundred dollars a barrel is actually 14.9 cents a cup, so we're still talking about oil being remarkably cheap,'' said Matthew R. Simmons, chairman of Simmons & Co. International, a Houston-based investment bank that focuses on energy. Inventories ``are tight as a drum and I don't see how we get out of this box,'' he said in a Bloomberg television interview last week. ``Demand clearly isn't starting to slow down.''

Global Consumption

World consumption will rise to 87.8 million barrels a day this year, 2.1 million more than in 2007, or about the same amount that Nigeria supplies, according to the Paris-based IEA, an adviser to oil-consuming nations. Demand from China alone will increase 5.7 percent to 8 million barrels a day as imports expand to support an economy that's likely to grow 11 percent, the IEA said.

Oil suppliers are straining to increase production. Saudi Arabia, the world's largest exporter, said last week that the 500,000 barrel-a-day Khursaniyah oilfield missed a December start date. Brazil's Tupi field, the second-largest find of the past two decades, lies more than eight kilometers (five miles) below the ocean surface and will take at least five years to develop.

Petroleos Mexicanos, Mexico's state oil monopoly, suffered a three-year, 40 percent decline at its Cantarell field, the world's third-largest. Fighting in Nigeria reduced production 11 percent since December 2005 to 2.18 million barrels a day, according to data compiled by Bloomberg.

U.S. Inventories

Speculators don't require prices to rise all the way to $200 to make money from options since they can sell the contracts on to others as their value rises. Nymex oil futures for February delivery were worth $97.41 a barrel in electronic trading at 11:11 a.m. London time, down 50 cents. December futures were at $93.59.

Crude futures rose 2 percent in the first three trading days of the new year. U.S. crude inventories fell to a three-year low of 289.6 million barrels on Dec. 28, according to a Jan. 3 Energy Department report.

``We haven't got to $100 on just a whim,'' said Paul Horsnell, head of commodities research at Barclays Capital in London. ``This is at heart also about longer-term concerns that supply capacity investment needs higher prices to keep up with demand growth.''

Barclays forecasts oil will average $87.40 a barrel this year, a 21 percent increase from the 2007 average.

The Nymex options, which give speculators the right to buy 1,000 barrels of oil in December, are becoming a favorite for traders even if they don't expect crude to reach $200 because they are a cheaper way to speculate than using futures contracts. Options expire worthless if crude fails to reach the ``strike'' price. There were 500 of the options on Nov. 7.

The price of the options rose as high as $550 last week before closing at $300 on Jan. 4. That amounts to 30 cents a barrel. The December futures to purchase 1,000 barrels in December rose 3.5 percent to $94,010, or $94 a barrel.

`Insurance' Bet

``The most common analogy used to describe options is that it represents insurance'' against ``low probability'' events, said Tim Evans, a Citigroup Global Markets Inc. energy analyst in New York.

Oil forecasters say there's no chance of $200 crude, as the U.S., which consumes a quarter of the world's oil, slows. Prices will average $78 a barrel this year, 20 percent below the current level, and $75 in the fourth quarter, according to the median forecast of 27 analysts surveyed by Bloomberg. The last time prices fell that much was in 2001, when they dropped 26 percent.

Jobless Rate

Merrill Lynch and Morgan Stanley in New York expect the U.S. economy, the world's largest, will slip into recession this year. The jobless rate rose to 5 percent in December, the highest in two years. The Institute for Supply Management's factory index fell to the lowest level in almost five years in December.

The U.S. probably expanded 1 percent last quarter, and gross domestic product will grow 2.3 percent in 2008, according to the median estimate of 63 economists surveyed by Bloomberg.

Oil is overpriced, given the outlook for the economy, said Jan Stuart, an analyst at UBS AG in New York. He forecasts an average price of $74 a barrel this year, little changed from 2007. Merrill Lynch's Francisco Blanch predicts $78 in the fourth quarter.

``I am afraid that we are going to see an economic slowdown that we have not seen the beginning of yet that will take some significant amount of oil demand off the table,'' Stuart said in a Bloomberg television interview Jan. 2.

Most strategists didn't foresee last year's 57 percent gain. Crude traded at an average of $72.36 in 2007. A Bloomberg survey of 29 analysts in September 2006 forecast a median price of $64.

Higher Numbers

``Going through $100 means that people are seeking more protection against a higher number,'' said Michael Lewis, a strategist at Deutsche Bank AG in London. Deutsche Bank expects oil to fall to about $80 a barrel.

Options trading indicates that the likelihood of crude reaching $125 a barrel in December has almost doubled since Dec. 25, to 18 percent, Lewis said.

While $200 may remain an outside chance, Simmons at Simmons & Co. showed he's willing to make that bet. He wagered $5,000 with New York Times columnist John Tierney in August 2005 that oil would average at least $200 a barrel in 2010.

The latest assessment from OPEC, which produces 40 percent of the world's oil, suggests prices will rise.

``There is enough oil in the market,'' Chakib Khelil, the current president of the Organization of Petroleum Exporting Countries, told reporters in Algiers two days ago. Khelil, who is also Algeria's energy minister, said rising prices aren't OPEC's fault. The group is scheduled to meets on Feb. 1 in Vienna.

``You will see even $200 oil in the next five years,'' said Jean-Francois Tardif, senior portfolio manager at Sprott Asset Management Inc. in Toronto.

The following table shows the median, mean, high and low estimates for the average price of Nymex crude oil futures during the four quarters of this year and the yearly averages for 2008 and 2009. The estimates from 27 analysts were compiled by Bloomberg.

Nymex WTI Crude Oil Futures Forecasts
To contact the reporter on this story:
Grant Smith in London at
gsmith52@bloomberg.net

http://www.bloomberg.com/apps/news?pid=20601087&sid=aERkSvnAUV_U&refer=home

Last Updated: January 7, 2008 06:12 EST

Why We Can’t Stop $100 Oil

2008-01-06T04:46:00.001-04:00

I'm posting this article not because I necessarily agree with anything in it, in fact some of the numbers are clearly wrong or irrelevant - but I think it touches on a number of topics important to the study of supply and demand numbers and their relationship.

Why We Can’t Stop $100 Oil

It's becoming evident that the rising price of oil has little relationship to anything Americans do, or don't do.

By Daniel Gross
NEWSWEEK
Updated: 11:40 AM ET Jan 5, 2008

When the price of a barrel of oil briefly hit $100 in trading last Wednesday morning, it was basically a nonevent. After adjusting for inflation, $100 per barrel in 2008 still isn't a record. And really, what's the difference between $99 and $100? (If you answered $1, come to the front of the class.)

It functioned more as a Rorschach test. For presidential candidate John Edwards, it was "just another example of how corporate greed is squeezing the middle class." American Petroleum Institute spokesperson Karen Matusic noted that oil's hitting the century mark should spur efforts to "explore for more oil and natural gas. After all, 80 percent of our potential domestic resources are cut off from drilling." For Renewable Fuels Association president Bob Dinneen, the event highlighted (wait for it!) the importance of recently passed legislation that subsidizes ethanol production. And for Treasury Secretary Henry Paulson, it was an occasion to marvel at just how well the U.S. economy has held up in the face of such challenges. "When you look at the structural changes in our economy, we're using oil more efficiently and it has a smaller overall impact on our growth," he told NEWSWEEK.

A hundred factors—production disruptions in Nigeria, speculators in Singapore, the pathetic dollar—helped push the price of a barrel of oil to $100 (or roughly what lunch at McDonald's in London costs, thanks to said pathetic dollar). But it's safe to say that oil's breaching three figures last week was explicitly not due to the venality of ExxonMobil's bosses, or to our inexplicable hesitancy to drill for methane in the Grand Canyon, or to the lack of subsidies for schemes to process bacon fat into diesel. In fact, it's becoming evident that it's not about anything Americans do, or don't do.

As we are endlessly reminded, Americans, about 4.5 percent of humanity, account for about 25 percent of the world's oil consumption. Historically, the consumption habits of these power users have had a huge effect on the commodity's global price. But we matter less and less each year, macroeconomically speaking. Oil nicked $100 the same day the Institute for Supply Management reported that the manufacturing sector—you know, that energy-intensive sector that burns up lots of oil—contracted in December. In theory, it should be hard for the price of oil to rise at a time when the world's economic engine is idling and plotting a shift into reverse. But that's exactly what happened in 2007.

Prices in the market are determined by supply and demand. Even with demand in the United States stagnating, global demand for oil is booming. "A big part of the oil story has to do with demand globally," says Henry Paulson. "There is strong growth in many countries around the world." Indeed, according to the World Bank, 104 countries grew at more than 5 percent in 2006—a modern record—and most of them powered through 2007 at a similar pace. Americans may have reacted to higher oil prices by buying smaller cars, but businesses and consumers in Asia, South America and Africa haven't been deterred in gobbling up oil. In 2007, according to OPEC, world demand for crude oil rose by 1.4 percent, or 1.2 million barrels per day. But the United States and its fellow industrialized firms in Asia and Europe—the 30 nations that make up the Organization for Economic Cooperation and Development (OECD)—actually reduced consumption. According to OPEC, non-OECD countries accounted for all of 2007's oil-demand growth.

Obviously, China has a lot do with it. Its consumption of crude oil rose from 5.6 million barrels per day in 2003 to 7.6 million in 2007. Thanks in part to China's growth, Asia in 2004 surpassed the United States as the largest consumer of oil in the world, according to Daniel Yergin, chairman of energy analyst Cambridge Energy Research Associates.

But demand is booming elsewhere, especially in the Middle East. The nations that have grown rich on petrodollars aren't just spending money on champagne and lavish hotels on the French Riviera. They're plowing cash into diversifying economies, building things that use lots of energy—condominium towers in Dubai, an indoor ski resort in Bahrain and petrochemical plants in Kuwait and Saudi Arabia. In the past, OPEC could calm oil markets by increasing supply. But OPEC members are now eating a lot more of what they grow. Between 1997 and 2007, notes Yergin, six Mideast OPEC members—Iran, Iraq, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates—boosted production by 2.5 million barrels per day. But they increased consumption by 1.9 million barrels per day. In effect, three quarters of the production increase stayed in the region.

The trends that boosted demand in 2007 are still intact. OPEC projects that in 2008, world oil demand for crude will rise by 1.3 million barrels per day, but that non-OECD countries will account for 1.1 million barrels per day, or 80 percent of the total. China alone is expected to boost consumption by 400,000 barrels per day. Lehman Brothers analysts project that this year OPEC countries will increase their use of oil by 350,000 barrels per day, or 4 percent.

It's beyond our control. Using less gas, running factories at fewer shifts and redoubling efforts to conserve and find alternatives may save us some money. But it won't result in lower prices at the pump.

URL: http://www.newsweek.com/id/84530

What Am I Trying To Do Here? (Parts I and II)

2008-01-04T20:48:00.000-04:00

Part I

Anonymous suggested that I superimpose a Top 20 Importers graph on the Exporters to show who were the losers in what is becoming a bidding war for exported oil. This is an approach I’m considering, but feel at this time that it is beyond the scope of what I’m trying to do here. I appreciate the feedback and will probably at some point post some stuff on imports.

What am I trying to do here?

Clearly there is something going on in the world of energy and oil. It’s hard to say when it began. 2003, maybe, when oil prices started their climb to what is now $100 – a one hundred year record (at least, I’ll have to look that up) both nominally and in inflation-adjusted real terms. Although at $100, oil in the United States is still well below it’s peak in the early 1980’s when measured as a percentage of GDP. It will probably take $150 to pass that mark.

When I first started tracking the numbers, the focus was strictly on supply and whether we had reached or were near a definitive peak in global production. Talk of demand has always been tempered by a fact that the vast majority of analysts and commentators seem to completely miss. This is that you can’t measure demand. At least not in any realistic, timely manner. Measuring production/supply on such a vast scale is hard enough.

Once oil is extracted from the ground (produced) it enters a global supply chain that moves it through pipelines, onto tankers, to refineries, through pipelines, maybe onto more tankers, then into tanker trucks for the final delivery as gasoline to the station. This entire process is interspersed with storage of various lengths of time at different point along the route.

The consumer doesn’t demand oil. The consumer demands gasoline, or jet fuel, or one of several other refined, finished products.

Part II

My personal belief is that we cannot consume more oil than we produce. Some might say this is rather obvious, however the ramifications of this problem aren’t entirely appreciated until you start trying to track the numbers and make sense of what is being said about rising demand and stagnant supply. Invariably those concerned with future oil supply will invoke the 200-year chart plotting supply and demand. The timeline usually starts around 1860 when oil was discovered in Pennsylvania, or maybe 1900, and goes out to 2050 or 2100. At first there is one line which plots yearly oil production (supply) until the present and which was also consequently the demand (also known as consumption or “amount supplied”). We cannot consume more oil than we produce.

There is usually a vertical line drawn at the present or at some year in the recent past when the chart was produced. Maybe the areas to the left and the right of this line are shaded differently to emphasize the point and there is a label saying that everything to the right of the line is “projected” or “forecast.” But then something happens that makes me cringe every time I see it and makes me call into question the sanity of whoever was responsible. The line tracking supply and demand splits. From about that point a line representing supply begins to curve downward in a smoothed mirror version of the jagged line to the left of the present and tapers off somewhere around 2100. This would complete what is usually Hubbert’s curve or some variation representing the dying days of a finite resource. Now, in addition, and always starting the day after the chart was drawn, there is a second line, usually fairly straight, which shoots up into the heavens at about the rate of 2 or 3 percent per year. This is forecast demand.

It's hard to see the split here, because they don't project a peak
until 2010 and the "actual"production line is smoothed. It looks
like this one was made in mid-2006.

I have never understood this line and the conclusions that some draw from it because I don’t see how it could possibly ever exist. If we were to take two versions of the chart I describe, one produced in 1997 and one in 2007, the upper “demand” line from the former would have magically disappeared in the latter. Why? Because the “projected demand” for those ten years would have turned out to be exactly the same as the amount actually produced and supplied, overlapping, and thus becoming the single line that always exists in the past.

There may be good reason to produce charts like this. The creator is usually trying to warn of stark realities in our energy future. But they are using a sleight of hand to do this and ultimately I don’t think that is a good tactic. Usually the area between the upper demand curve and the lower supply curve is highlighted the way one would an Economics 101 supply and demand chart to note a shortage or surplus. The further into the future we move the worse the discrepancy becomes. Of course, as I demonstrated above with the example of the two version’s of this chart, real life doesn’t work this way. Just as in an Economics 101 chart, supply and demand always meet at one point which represents a single amount corresponding to a price (which I will get to soon).

I don’t mean to suggest that shortages and surpluses don’t exist. They certainly do. Whether it was gas lines in the Seventies or stories presently about China:

A shortage of gasoline and diesel fuel has led to long queues and rationing in some Chinese cities, and even civil unrest, causing some service stations to request police protection. The shortages began in October, and now Premier Wen Jiabao has called for increased refinery production. In mid-November, Wen said that the country needs “comprehensive measures to increase crude oil production and refining, to realistically ensure supplies of refined oil products."

The shortage can be blamed on one thing: excessive government intervention in the market. By setting prices artificially low, the Chinese government prevented refiners from making a profit on much of their production. That led many independent refiners to reduce production or else shut down completely, rather than suffer ever-increasing losses on their output.

http://www.energytribune.com/articles.cfm?aid=739

Our thirst or demand for oil and petroleum products can certainly outstrip the supply. Some may want to believe that 10 years from now demand will be 10 or 20 million barrels more than supply. And in some theoretical way they may be right. My point is simply that nobody has figured out a way to measure this demand. It always ends up being what was supplied (unless you look at the official data, then you’ll be even more confused, but more on that next).

Next:

Demand always exists at a certain price. This is why we have the issue of price and demand destruction.

On BP’s numbers the Oil Drum story on consumption in response to anonymous
Demand Destruction: Myths and Reality
http://europe.theoildrum.com/node/3443

Monthly numbers

To be continued...

Net Oil Exports - December Update

2007-12-14T10:52:00.000-04:00

Net Oil Exports - December Update. Top 16 Exporters (90% of total exports) in blue, Top 20 Exporters (93%) in Pink.

Click on following link to download updated Excel spreadsheet(430kb):

http://www.savefile.com/files/1264162

scroll down to bottom of linked page and hit orange button on right and

then hit second prompt if download doesn't start immediately

December Revisions

2007-12-14T08:45:00.000-04:00

This is a graph of the current Top 16 Exporters versus the original data I came up with for each month. These are not revisions from last month - in other words, if I do this in December 2008 I will be measuring the difference between those figures and the first data presented for November 2007 (here).

New York Times article on exports

2007-12-09T15:15:00.000-04:00

Oil-Rich Nations Use More Energy, Cutting Exports
By CLIFFORD KRAUSS
New York Times
December 9, 2007
http://www.nytimes.com/2007/12/09/business/worldbusiness/09oil.html?_r=1&hp&oref=slogin

The economies of many big oil-exporting countries are growing so fast that their need for energy within their borders is crimping how much they can sell abroad, adding new strains to the global oil market.

Experts say the sharp growth, if it continues, means several of the world’s most important suppliers may need to start importing oil within a decade to power all the new cars, houses and businesses they are buying and creating with their oil wealth.

Indonesia has already made this flip. By some projections, the same thing could happen within five years to Mexico, the No. 2 source of foreign oil for the United States, and soon after that to Iran, the world’s fourth-largest exporter. In some cases, the governments of these countries subsidize gasoline heavily for their citizens, selling it for as little as 7 cents a gallon, a practice that industry experts say fosters wasteful habits.

“It is a very serious threat that a lot of major exporters that we count on today for international oil supply are no longer going to be net exporters any more in 5 to 10 years,” said Amy Myers Jaffe, an oil analyst at Rice University.

Rising internal demand may offset 40 percent of the increase in Saudi oil production between now and 2010, while more than half the projected decline in Iranian exports will be caused by internal consumption, said a recent report by CIBC World Markets.

The report said “soaring internal rates of oil consumption” in Russia, in Mexico and in member states of the Organization of the Petroleum Exporting Countries would reduce crude exports as much as 2.5 million barrels a day by the end of the decade.

That is about 3 percent of global oil demand. It may not sound high, but experts say demand for oil is so inflexible, and the world has so little spare production capacity, that even small shortfalls can raise prices. In 2002, when a labor strike in Venezuela took 3 percent of global production off line, oil prices spiked 26 percent within weeks.

The trend, though increasingly important, does not necessarily mean there will be oil shortages. More likely, experts say, it will mean big market shifts, with the number of exporting countries shrinking and unconventional sources like Canadian tar sands becoming more important, especially for the United States. And there is likely to be more pressure to open areas now closed to oil production.

Greater political stability and increased drilling in some important oil states, notably Iraq, Iran and Venezuela, could help offset the rising demand from other oil exporters.

“Ten years from now, world capacity to produce oil could be 20 percent higher than today,” said Daniel Yergin, chairman of Cambridge Energy Research Associates. “But a lot will depend on how the geopolitics work out.”

Growth in demand among oil exporters is one aspect of a larger issue, breakneck economic growth in parts of the developing world. China and India are expected to account for much of the increase in global oil demand in the next 20 years. But Fatih Birol, chief economist at the International Energy Agency in Paris, rated consumption growth among oil exporters as the second-biggest threat to meeting the world’s oil needs.

“It’s a big problem, and growing all the time,” Mr. Birol said.

Internal oil consumption by the five biggest oil exporters — Saudi Arabia, Russia, Norway, Iran and the United Arab Emirates — grew 5.9 percent in 2006 over 2005, according to government data. Exports declined more than 3 percent. By contrast, oil demand is essentially flat in the United States.

CIBC’s demand projections suggest that for many oil countries, including Saudi Arabia, Kuwait and Libya, internal oil demand will double in a decade.

Factors contributing to the trend include increased industrialization, higher government spending and increasing personal consumption. According to a World Bank report, economic growth in the Middle East and North Africa has doubled since the 1990s, and Russia has done even better.

Oil money is giving many countries the means to invest in their own economic development, and robust global growth is creating markets for their goods — including plastics, chemicals and fuels refined from oil.

To be sure, many oil-exporting states have a long way to go before they achieve Western living standards. The global oil market is still dominated by traditional consumers, particularly the United States, which uses nearly a quarter of the world’s oil.

Perhaps surprisingly, though, some producing countries have surpassed the United States in oil consumption per person. They include Bahrain, Kuwait, Qatar and the United Arab Emirates.

Particularly in oil-producing countries with large populations, like Indonesia, Russia and Mexico, a rapid rise in car ownership is a big factor driving consumption increases. Russian farmers are replacing horses and carts with gas-guzzling four-wheel-drive vehicles, while urban consumers are snapping up BMWs even before they learn to drive.

“Most of the producing countries have young populations entering the driving age and can more readily afford to buy cars because the price of fuel is low,” said Charles McPherson, an oil expert at the International Monetary Fund. “It’s certainly pulling product off the international markets.”

Some oil-exporting countries use price controls and subsidies to ensure cheap fuel for their people. These programs are politically popular, even though experts say they contribute to wasteful energy use.

Kuwaitis, for instance, often leave their air conditioning — powered by electricity generated from natural gas or oil-derived fuels — running for weeks while on vacation, said an official at the World Bank. Sportsmen of the United Arab Emirates ski indoors on manufactured snow and play golf on lush courses that require desalinated water produced with fuels refined from oil.

Saudis, Iranians and Iraqis pay 30 to 50 cents a gallon for gasoline. Venezuelans pay 7 cents, and demand is projected to rise as much as 10 percent this year. Auto sales have tripled in four years. “Where cheap oil is viewed as a national human right, you’ve virtually got runaway demand,” said Chris B. Newton, an executive of the Indonesian Petroleum Association in Jakarta.

Indonesia flipped from exporting oil to importing it three years ago because of sagging production in depleted fields and rising demand. Iran, Algeria and Malaysia are vulnerable in the next decade. Most oil experts view Mexico as the next country likely to flip, in as little as five years.

Rapidly falling production in Mexico’s aging Cantarell oil field is part of the problem. Also significant, though, is the rising number of cars on Mexican roads. They have nearly doubled, to almost 16 million, in the last decade, and gasoline consumption is growing 5 percent a year.

In Mexico City the other day, a bricklayer named Jaime Guerrero arrived at a local Chevrolet dealership. His extended family cried “bravo!” as he signed the papers for his first car.

“To have a new car in my name is a dream transformed into reality,” said Mr. Guerrero, 26. He and his family piled in and weaved through the chaotic traffic of the capital, hunting for a priest to douse the car with holy water.

“I don’t worry about the climate or shortages of oil in the world,” Mr. Guerrero said. “I just worry if gasoline prices go up.”

Net Oil Exports and WTI / Nymex Price

2007-12-01T05:40:00.001-04:00

Found it. I'll update it soon. $80 a barrel? Wow! Remember those days! Jesus. Oh wait... this is from last month.

Net Oil Exports and WTI / Nymex Price

Net Oil Exports - November Update

2007-11-13T20:48:00.000-04:00

I have arbitrarily increased Venezuela's domestic consumption for 2007 from about 580,000 bpd to 650,000 bpd based on two articles I read recently.

Oil is now used to create electricity. Some of Venezuela’s electric plants used to burn natural gas, but gas production has dropped, creating shortages that oil is filling. Domestic consumption of oil has reached at least 650,000 barrels a day, according to Venezuelan economists. Venezuela is importing oil products and may soon have to import gasoline. There is also the problem of contraband: subsidized gasoline smuggled out and sold at world-market prices in Colombia and the Caribbean. Between its domestic consumption and its use of oil to make friends overseas, Venezuela gives away or subsidizes a third of its production. Most of the rest is sold in the United States.

The Perils of Petrocracy, NYT Magazine , Nov. 4th, 2007

The numbers for Norway's production for the last three months are a bit sketchy. I'm using the EIA's from their Short Term Energy Outlook(STEO, Nov. 6th) . These differ from the IEA's numbers in their direction and size the last couple of months. Hopefully these will iron themselves out in the next few months with revisions. I am not including NGPL's for Norway and I probably should be. I'll add these next month (about 300 kbpd).

In response to comments about the percentage of total exports that these 16 countries represent: about 90%. The Top 20 would be 93%, Top 24 - 96%. I have plans to add four more countries now that the EIA has begun publishing more up-to-date numbers for the countries in question (Ecuador, Oman, Equatorial Guinea, and Azerbaijan) and Ecuador has rejoined OPEC. Probably the beginning of next year.

Click on following link to download updated Excel spreadsheet(320kb):

http://www.savefile.com/files/1203700

chart, crude oil, crude oil exports, graph, net oil exports, net petroleum exports, oil, oil exports

Net Oil Exports - October Update

2007-10-15T13:02:00.000-04:00

FSU Exports July (September IEA report)

2007-10-11T15:49:00.000-04:00

Former Soviet Union (FSU)

Russia – July actual, August provisional: Russian projections are also held steady, with total oil production in 2007 of 9.92 mb/d and 10.10 mb/d in 2008 representing growth of 2.5% and 1.8% respectively. Growth this year has slowed from 1Q levels near 400 kb/d, although inflated early-2007 growth levels need to be seen in the context of weak 1Q06 production due to weather. That said, August growth stood at a more modest 125 kb/d year-on-year. Recent months have seen production drift lower from Lukoil, Gazpromneft (formerly Sibneft), TNK-BP and Gazprom, partly offset by Rosneft increases.

Yearly growth by Rosneft currently stands close to 600 kb/d, with total production of 2.2 mb/d representing a five-fold increase on 2004 levels. Some commentators have suggested that organic production growth has been sacrificed to a programme of acquisitions that has reportedly pushed Rosneft debt to around $30 billion. This is seen as potentially undermining Rosneft’s ability to finance future development at fields such as Vankor, Sakhalin and Verknechonskoye, which helped underpin MTOMR projections for Russian output reaching 10.6 mb/d by end-decade. A further twist in the tale emerged from press reports in August suggesting that the government is planning to establish a new state producer incorporating the oil assets of Rosneft, Gazprom and Surgutneftegaz. Surgutneftegaz’s inclusion may in part reflect its cash-rich status, which in turn might help alleviate Rosneft debts.

Azerbaijan – July actual: Azeri oil production remains on track for growth of around 200 kb/d both this year and next. Prevailing output of some 950 kb/d could dip to 650 kb/d in September owing to construction work on the Central Azeri platform, part of the 700 kb/d offshore ACG complex. Work should largely be completed by October however, based on higher expected shipments via the Baku- Tbilisi- Ceyhan (BTC) pipeline. Total Azerbaijan production attains 1.1 mb/d in the second half of 2008, with increased contributions from the Azeri field and from start-up at the deep Guneshli complex. Growth will be dependent however, on maintaining the integrity of the BTC pipeline, after a Kurdish rebel group said BTC would be attacked unless Turkey desists from attacks on Kurdish rebel forces.

According to preliminary data, FSU net oil exports totalled 8.89 mb/d in July, up 70 kb/d from June and 520 kb/d higher than July 2006. A 150 kb/d month-on-month increase in seaborne crude exports, including an extra 90 kb/d leaving Baltic ports, was tempered by another drop in Druzhba transits, this time by 50 kb/d (see Refining section, page 44). There are reports of Lukoil having curbed June-July deliveries to German refineries, in part due to pricing issues. However, latest information suggests reinstatedvolumes for September. Average monthly FSU product exports fell by 20 kb/d in July.

August loading schedules suggest that exports via Transneft may have been 100 kb/d below July volumes, coinciding with an increase in Russian export duties from 1 August. However, higher BTC flows may have restricted any drop in aggregate FSU supplies to around 50 kb/d. Further declines in FSU exports are anticipated later this year. The threat from late-August of a strike by Turkish ship pilots, if realised, may hinder traffic through the Turkish straits which could restrict trade flows from FSU ports in the Black Sea. Maintenance is due to reduce Caspian output by up to 300 kb/d in September, which should overshadow extra Russian barrels exported before the next rise in crude and product export duties, effective 1 October.

FSU Exports July (September IEA report)

Azerbaijan, crude oil, crude oil exports, FSU, Kazakhstan, net oil exports, net petroleum exports, oil, oil exports, Russia

Cantarell (in progress)

2007-10-11T15:36:00.000-04:00

Cantarell Monthly Oil Production 2002-2007

Data from Pemex 2007 Statistical Yearbook covering through December 2006, page 18.
Monthly data from 2004-2007 derived from yearly data, monthly Pemex hydrocarbon spreadsheets, and periodic news reports.

[add yearly chart 1 - Cantarell]
[add yearly chart 2 - Mexico and Cantarell]
[add monthly chart with Mexico and Cantarell separated]
[add Pemex monthly with exports]
[add monthly exports vs. Cantarell]

[add table with yearly Cantarell and projected decline losses]

[discuss worst case scenario projections and production vs. reserve estimates]

Net Oil Exports - September Update

2007-09-23T03:38:00.000-04:00

Norway's Oil Output Fell 7.3% in August

2007-09-16T19:58:00.000-04:00

Norway's Oil Output Fell 7.3% in August From a Month Earlier
By Bunny Nooryani
Sept. 14 (Bloomberg)

Norway, the world's fifth-largest oil exporter, said crude production in August decreased 7.3 percent from a month earlier.

Output averaged 2.111 million barrels a day, compared with 2.277 million barrels a day in July, according to a statement posted today on the Web site of the Norwegian Petroleum Directorate, which oversees the nation's oil industry. The figures for August are preliminary.

Norway pumped about 319,000 barrels a day of condensate and natural-gas liquids in August, the directorate estimated. That compares with 329,000 barrels a day the month before.

FSU Exports June (August IEA report)

2007-08-24T06:00:00.000-04:00

Former Soviet Union (FSU)

Russia – June actual, July provisional: Production data for June and July continued to show Russianoutput running around 2% ahead of 2006, averaging 9.9 mb/d. For July, Rosneft production, and thatfrom the seasonal Sakhalin 2 project, came in ahead of this report’s earlier expectations. However, thiswas offset by weaker than anticipated output from Lukoil, TNK-BP and Tatneft, leading to a 20 kb/ddownward reduction in the Russian production forecast for 3Q07 onwards. Moreover, stronger Rosneftperformance results in part from its now almost-complete takeover of former Yukos production assets.Either Rosneft or Gazprom are seen by most commentators as eventual owners of producer Russneft’sassets (300 kb/d) after owner Mikhail Gutseriyev’s end-July decision to sell up.

Russian growth in 2007 now comes in at 2.3% (+225 kb/d), followed by 1.8% (+175 kb/d) in 2008. Recentreports suggest that year-round Sakhalin 2 crude production could be attained earlier than this report’sassumption of end-2008. Also, Gazpromneft (formerly Sibneft) announced it will boost spending by 66%in 2007 in order to raise output. In both instances, this report retains a more cautious outlook until signsemerge that the higher targets are close to being reached. The economy ministry’s latest long-termproduction forecast sees output stable at 10.6 mb/d in 2015-2020. Our own MTOMR last month projected Russian output of 10.6 mb/d for 2010/2011 and 10.5 mb/d in 2012, potentially rising further by mid-decade.

Kazakhstan – June actual: June production (crude and condensate) came in 110 kb/d below earlier estimates, largely due to maintenance at the Tengiz field. This report had earlier assumed 3Q maintenance, so a 30 kb/d downward revision for 2Q07 is offset by a similar upward revision for 3Q, leaving the 2007 forecast largely unchanged at 1.36 mb/d. Production rises further in 2008 to 1.45 mb/d.

Further gains from Kazakhstan longer-term centre on the triumvirate of fields consisting of the existing Tengiz and Karachaganak and the currently underdevelopment Kashagan. Early August is due to see the government opening talks with Kashagan partners to renegotiate the field’s production sharing agreement, after delays have successively pushed back start-up from an original 2005 to a latest estimate of late 2010 (see MTOMR, July 2007, p38). Meanwhile, in early July, Karachaganak Petroleum Operating (KPO) BV awarded a front-end engineering and design (FEED) contract for phase three of the Karachaganak processing complex. This will substantially add to liquids production of 290 kb/d by 2012.

FSU net oil exports in June averaged 8.8 mb/d, some 270 kb/d lower than May levels. Crude exports fell by 450 kb/d following a 28% increase in Russian crude export duties, from 1 June, to $200/tonne. This was partially offset by a 190 kb/d increase in product exports, including an extra 160 kb/d of gasoil.

June crude exports of 5.98 mb/d were at a six-month low. On top of higher Russian export duties, maintenance at Novorossiysk contributed to a 220 kb/d drop in Black Sea volumes. Moreover, 110 kb/d less crude was exported via the Baltic in June. A 100 kb/d month-on-month decrease in Druzhba volumes, and lower CPC transits after Tengiz field maintenance, saw total crude volumes via the Transneft pipeline system falling by 350 kb/d. BTC pipeline exports from Azerbaijan in June were unchanged from May.

FSU exports in July could be up to 100 kb/d higher than in June, with loading schedules showing 50 kb/d more oil coming through the Transneft system and an extra 20 kb/d via BTC. However, a further hike of 12% in Russian export duties was due on 1 August. While this is set to reduce volumes exported through Transneft by up to 100 kb/d, a partial offset will come from higher Caspian volumes via BTC.

Pemex Expects Chicontepec Output of 470,000 bpd

2007-08-22T13:37:00.000-04:00

Pemex Expects Peak Chicontepec Output of 470,000 bpd
BNamericas 8/22/2007
URL: http://www.rigzone.com/news/article.asp?a_id=49291

Mexican state oil company Pemex expects its Chicontepec oilfield in Veracruz and Puebla states to reach peak production of 470,000 bpd in 2014, newspaper El Norte reported, citing Pemex sources.

The field produced 23,000 bpd in the first six months of 2007, but Pemex is hoping the field will ultimately help offset the natural decline of the Cantarell field, which produces roughly half Pemex's crude output.

With this goal in mind, Pemex aims to invest 164bn pesos (US$14.7bn) in Chicontepec in 2008-17, with annual investment hitting a peak of 26.2bn pesos in 2011.

The first five years of investment are expected to total 114bn pesos, with the second five years reaching 48.8bn pesos.

A consortium led by US oilfield services company Schlumberger (NYSE: SLB) won the first Chicontepec service contract in 2003, which initially featured a 200-well drilling program. Schlumberger recently signed a US$1.4bn contract for the drilling of 500 wells on the field.

Pemex estimates Chicontepec has probable reserves of 8.70 Bboe, the paper reported.

Method - Draft

2007-08-11T03:00:00.000-04:00

What I term Net Exports is as follows. Production minus domestic consumption. So I will tackle each in turn after a brief summary of both together. I’m using somewhat of a hybrid of what is considered “all liquids.”

I use “all liquids” because it is what I consider the better “consumption” data-set, which is BP’s. So to keep things as uniform as possible, I need an all-liquids production data-set. Unfortunately one does not exist that provides monthly numbers for the relevant countries. The IEA would be my choice, except that they break out straight crude for the OPEC countries and only provide a “total” other-liquids figure for each month. I decided to use the EIA’s monthly numbers for production and to construct my own all-liquids hybrid from the available data.

This is a monthly “attempt” – so I have to make do with the fact that all consumption numbers are yearly. I will describe that process specifically when I start to talk about how I got my monthly consumption numbers.

Let’s start with production. The EIA publishes its numbers usually in the first week of every month. They cover everything up to and including the month three months previous. This first attempt at a timely report uses the EIA’s t11 series Crude+Condensate numbers as well as the EIA’s STEO(Short Term Energy Outlook). Both were released on August 10th. The t11 series covers through May. The STEO covers June and July, but only for OPEC and only for OPEC straight crude(excluding lease condensate).

The categories. Total oil supply and hence what is consumed (implied demand or “product supplied”) is wrapped into the category “all-liquids.”

All-liquids consists of four categories, one of which is divided into two sub-categories. First, there are C+C(Crude and Condensate), NGLs (or NGPLs), “Other Liquids,” and Refinery Processing Gains(RPG).

“Other liquids” include mainly ethanol. RPG typically occurs in highly technology advanced countries, where the refineries are actually able to generate carbon-based liquids is such large volume from the process of refining that they can be fed back into the system as if they were fresh barrels of something or other. See book: “Oil on the Brain.”

The main category is of course what is considered straight crude oil. This is C+C(crude plus condensate). domestic consumption is measured in all-liquids, however.

There is another issue. Condensate while tracked together with crude for the EIA does not count for OPEC quotas. Both the EIA and IEA break it apart from the OPEC crude numbers. The best way to look at this specifically is in the case of Algeria. Outside of OPEC the reporting agencies don’t split condensate from crude.

Production – The Sixteen Countries

On the production side, the OPEC countries are by far the easiest to deal with. Of the twelve countries, all except Indonesia are represented here. Indonesia is not a net exporter, and is in decline. Whether this is geologic or due to above-ground “investment” factors is a subject for another day.

The individual production of the OPEC countries is given in the EIA STEO for June and July. Using previous months’ data from the t11 series and table12(excluding condensate) we can figure what is probable for the monthly condensate production(I calculate this separately from my spreadsheet). Adding this to the STEO figures I get C+C production for these 11 OPEC countries through July. These figures will of course be revised next month when revisions are made to the underlying data.

Next, I add NGL figures for certain countries. Of the 16 countries, NGL is tracked monthly for Saudi, Algeria, Mexico. Russia, Canada, and I think one other. For the others, it is too small to be relevant, with one exception. For Norway, I discovered this time around that they have about 270kbpd of NGL production each month and I will account for this next time.

I do not include RPG or “other liquids.” For the countries involved the volumes are too small to be significant and add too much complexity. This is one reason I call this an all-liquids hybrid.

Now for an explanation of the other 5, Non-OPEC countries.

Russia
Norway
Mexico
Kazakhstan
Canada

Consumption – The Sixteen Countries

Saudi Arabia
Russia
Norway
Iran
UAE
Venezuela
Kuwait
Nigeria (EIA)
Algeria
Mexico
Libya (EIA)
Iraq (EIA)
Angola (EIA)
Kazakhstan
Canada
Qatar

Energy Market Consultants December 2006 Report on FSU exports

2007-07-09T03:18:00.001-04:00

http://www.fgenergymc.com/?page=document_type&action=read&id=21

Former Soviet Union (FSU) Demand and Net Exports

2007-06-29T02:16:00.001-04:00

From June 2007 IEA Oil Market Report

FSU apparent demand – defined as domestic crude production minus net exports of crude and oil products – has been marginally revised upwards by 16 kb/d in 1Q07 and downwards by 19 kb/d in 2Q07. Overall, the region’s apparent demand in 2007 is virtually unchanged from last month’s report, and isexpected to average 4.0 mb/d (0.1% lower than in 2006).The region’s net exports are expected to continue to peak at close to 9.0 mb/d during 2Q07. This would be the second quarter in a row of post-Soviet highs. It should also be noted that Russian duties fell from 1 April, further boosting net exports. Duties, however, are poised to increase again on 1 June.

click on image to view larger version

Mr. Five Percent

2007-06-19T01:16:00.001-04:00

Under the agreement, the Anglo-Persian Group and Shell each gave up the "beneficiary interest" of 2.5 percent of the total shares to the Armenian. That meant that he could not vote shares, but would enjoy all the financial benefits of such a shareholding. And so Mr. Five Percent was born, and that is how he was known ever after.

Everything seemed settled at last, even the boundary with Turkey, except for one stumbling block -- Calouste Gulbenkian and his 5 percent. Throughout the negotiations, Gulbenkian had remained a strange and solitary figure. He went to great lengths to avoid meetings, but scrutinized every word of memoranda, and replied with a torrent of telegrams. Isolation also marked his personal connections. "Oil friendships are very slippery," he once said.

Net Oil Exports

2007-06-18T13:40:00.000-04:00