Oil and gas reserves developed
from 140 million years ago. Global depletion of these reserves by
humans between1859 until 2005 has now reached the halfway point. The
shape of the 'top of the curve' depends on the rate of oil and gas use,
which in turn depends on employment and confidence. Recession can
flatten the top of the curve. Wars in the 'high volume' suppliers of
Middle East or Russia could also flatten the top of the curve.
Unexpected events such as collapse of mega-oil and gas fields can
steepen the shape of the downslope. The
story from 140
million years ago until the global peak of oil production in 2005 is
Outlook for 2006
Oil and gas demand continues to rise globally as gas and oil supplies
slowly decline, and population numbers in many areas continues to rise.
demand is fed by burgeoning transport, as global car numbers climb.
With the exception of regions of Africa, tropical Asia and Southeast
Asia and tropical South America, all economies are effectively
oil-based economies. Oil products provide the majority of the motive
power for goods. Many economies also rely heavily on natural gas to
generate electricity. This dependance on gas for electricity supply at
peak times is becoming critical for more and more countries of the
world. Some countries, such as India, Iran, and Iraq, also rely very
heavily on bottled natural gas to be able to cook their grain and
bean-based foods. Demand for natural gas is surging. The UK and USA in
particular, are facing shortfall in domestic supply and an interim
period of 2006 - 2007 when domestic importation infrastructure
(pipelines and terminals) will likely be insufficient to meet peaks of
All around the world, countries are developing terminals for
increased importation of natural gas for electricity generation. Prices
are likely to remain high as competition for natural gas on the spot
market hots up, especially in winter. New nuclear power plants are a
long way off, and coal, especially 'clean burning' coal is becoming
shorter in supply and thus more expensive.
Crude oil supply and demand
Crude oil supply and demand will likely be very closely matched.
World oil reserve depletion rates are considered to average around 3% a
year. New projects in 2006 are believed to bring in an additional about
3.5% of supply. Growth in demand for oil is expected to be at least 3%,
barring recession. Some shortfall in supply, and thus higher prices,
seem inevitable at some point in the year. Temporary shortages may
happen early in 2006 if the weather in USA is
particularly cold. If not, prices may rise in the USA 'driving season'
later in the year.
're-configuring' projects to enable refineries to handle heavy and
'sour' crude are likely to be completed this year, but are unlikely to
be large enough to help convert 'heavy' and 'sour' crude into the
required marginal volumes of gasoline and diesel. Reduction in demand
due to recession is the key to moderate or lower oil prices. Whether or
prices increase to a higher band (say US$65-$US75), hover between
US$55- US$65, or fall to a lower band (US$45 - US$55) depends on
whether or not the vast USA borrowing boom slows down and
in USA and China goes up. There is a possibility that China may keep
oil prices up even in recessionary conditions by filling strategic
reserves - but the capacity and
filling schedule for these reserves isn't known, so can't be factored
in as yet. On last years experience, any supply 'pinch' in gasoline
(specifically) in USA should drift light sweet crude up by around
$US20, to around the US$80 - US$85 mark.
As always, Russia and Saudi Arabia are the two countries crucial to
high volume oil and gas supply (and to a lesser extent Norway is also a
significant volume producer). Both produce roughly 9 million barrels
a day of crude each. Russias daily production increases have been
dramatic over the last few years. But Russia may have already produced
more than 80% of its reserves, as far as can be told, but it is new
investment in technology and new management that is holding volumes -
the moment. When Russia commences production
decline is uncertain. The
commencement is probably not this year, but is likely within 6 years,
and decline rates may be significant (any
decline rate in a high volume supplier is important - but even a high
decline rate in a low volume supplier has no significant impact on
Iraqi production will doubtless hold, and
development will not be possible until the future, when it will be
helpful but not 'the answer'. Non-OPEC supply is likely to be fairly
static over 2006.
Saudi Arabia claims it will be able to reduce oil supply by a million
barrels a day in 2006 in order to underpin prices. This seems like a
fantasy, given the razor edge margin that exists in supply and demand
at the moment. Perhaps they know more about their ability to supply in
2006 than they are publicly revealing. In any event, they are at or
just past their likely production peak. So long as pressurisation of
their massive fields holds, Saudis are likely to maintain volume this
year. Straws in the wind around the secretive Saudi camp suggest
pressurisation is becoming insufficient to maintain full volumes. There
is no reliable information, but if true, results will speak for
themselves by the end of the year. All bets are off after this year.
Recession in 2006 staved off?
The USA backs the US dollar directly with both USA and Iraqi oil
(growing more valuable by the day), plus
an agreement with Saudi Arabia to denominate international oil sales in
US dollars only. Russia may accept Euros and other currencies
for oil and gas sales starting 2006. Iran may continue to accept euros
and other countries currency, and open an internet based oil bourse to
other oil producers to do the same. This may weaken the US dollar
relative to other countries currencies - especially as the USA Federal
Reserve must continue to raise interest rates to attract buyers of USA
treasury debt notes. (The USA requires the rest of the world to loan it
$US1 billion per day to pay for oil imports, and the cost of securing
future Iraqi oil prospects is now $US5 billion per month.)
Continuing to price oil exclusively in US dollars will make oil and gas
cheaper for countries
needing to use their own currency to buy USA dollars to in turn then
Whether the market bids up the dollar price of oil and gas to reflect
dollar will remain to be seen. A weaker dollar makes
imports of foreign goods more expensive, in turn helping USA domestic
manufacturers to survive and to a degree easing recessionary pressures.
The big question is whether or not the USA Fed interest rate
hikes will make home mortgage repayments difficult, or even impossible.
mortgage defaults reach a certain point, consumer spending drops,
businesses lose confidence, and the USA economy (at least) slides into
a recession. A USA recession means less consumer spending. This may
have global effects.
China may then be faced with selling its cheap manufactures in a
USA market, and at the very time that its domestic market is not large
enough to 'take up the slack'. At the same time, the central and local
governments have made massive numbers of loans (nearly 47% of China's
GDP is put into 'investments' of all kinds) to create business
start-ups which are
not likely to find a sufficient market - or are simply uncompetitive
against existing Chinese businesses. China's governing clique believes
it must create 7% annual growth in industry to soak up immmigrants to
the cities and prevent social unrest in its huge population of
impoverished rural workers. Government-subsidised
businesses sell at artificially low prices and create domestic and
export market oversupply, driving down the profits of
already established Chinese manufacturing businesses, and making these
otherwise sound businesses less able to survive. But
market-distorting businesses founded on artificially cheap loans to
unwise enterprises are not the only artificial subsidy propping up some
Chinese (and South East Asian) business.
For decades China has subsidised
its businesses with cut-price oil and gas. It has further subsidised
industry by allowing it to escape the cost of preventing or mitigating
pollution produced by its coal burning power plants, and by its
unregulated factories. Environmental controls 'on the books' are either
unenforceable or not enforced effectively or regularly.
The true cost
of business includes not doing harm to a nations people and to the
peoples land. But this
cost has not been paid by China's business owners - the cost has been
the poorest working people, through poor education, dangerous and
working conditions, polluted air, polluted water, and food that can be
polluted with unacceptable levels of metals (for example arsenic and
fluoride from coal) and overuse of pesticides. Estimates are that
identified costs of pollution cost 8-12% of GDP. These conditions are
causing increasing unrest in China, and the judicial system seems
poorly able to
It is possible that China will aggressively institute 'world's best
practise' in mitigating and preventing environmental pollution, and
educate its populace to insist on an open, fair and accessible justice
system, a healthy environment and healthy working conditions for its
people. But it is extremely unlikely. As the rest of the
industrialised world found out from the 1960's onward, these problems
can be faced and
systematically overcome. The danger is that as these
problems worsen, China will not invest in overcoming them, will not
stop helping to create economically unviable business start-ups, and
will also slip into a recession made worse by unresolved environmental
and social grievances. Recession means loss of markets, business
failures and slowdowns, bankruptcies, and disillusionment in the middle
Protests over illegal land confiscation, punitive taxation of
ordinary people, corruption and pollution continue to increase in
As China (and businesses) is basically run directly or
indirectly by the military, the
xenophobic military elements may use the situation to promote a
catastrophic military 'final
solution' to China's reluctance to deal with its social, political
and environmental challenges.
Aside from 'wild cards' of a sneak Chinese neutron bomb or biological
warfare attack on USA, global bird influenza pandemic, a sudden and
irrational collapse of the USA dollar, steep collapse of the Saudi
Gharwar oil field, insufficient snowfall in the mountains of Eurasia
and North America followed by prolonged drought, or other possible but
improbable event, economic
conditions are possibly likely to be like those of 2005, but perhaps
with a 'harder edge'.
The harder edge is likely to be increasing USA interest rates, slowing
economic activity, lower profits, increase in
business failures, lower tax receipts, cuts in government programmes,
increase in personal bankruptcies, slowing of
speculation in house buying, lowering house values, slipping value of
the USA dollar, derivatives wobbling (if not crashing), holding
of value of gold and of the euro, slipping economic activity in Europe
with a higher euro value and higher interst rates, razor edged margins
of supply of natural gas
those countries that are dependant on it, seasonal spikes in natural
gas, petrol and diesel prices, and a move to heightened
caution in business investment and planning.
There is likely to be a creeping popular understanding that things are
not quite right. In the event of a gas supply/demand mismatch in a
severe UK winter, dramatic
events may result in a sudden popular understanding.
But even although the warning flags have been raised in Parliaments and
around the world, it is a very safe prediction that no government will
publicly, actively, positively, and effectively start to plan and
provide for the fading of the oil economy and the rise of the solar
economy during the course of 2006.
January - Saudi Arabia - Saudi
Aramco's operating plan is to increase the number of development wells
drilled by 61% relative to last year. These wells are required to
"support current production" and to accomodate future increase in
demand. The Saudis plan to double the size of their fleet of offshore
January 1 - East Eurasia - China - New energy laws come into effect.
These include subsidies and tax incentives to develop renewable
energy - wind power, solar energy, biomass, and other renewable
sources. Renewable biomass-based power fed into the grid will be based
on a small premium above the regional price of de-sulphurised coal
power. Subsidies decline annually, and stop after 15 years a project
has been running. Wind power will be bought as long as it is at or
below conventional grid power prices. Solar, wave, and geothermal power
will be bought so long as projects are economic and are reasonable in
pricing. China aims to derive 15% of its power supply from renewable
sources by 2020.
January - China now builds one coal-fired electricity generating plant
around every 10 days. Most are relatively inefficient
'electricity-only', and do not re-cycle heat for nearby industrial
January - China now builds one gas-fired electricity
around every 3 days. Most are relatively efficient
'electricity-only', and are much less polluting and release
less carbon doxide into the atmosphere.
January 1 - USA - Almost 40% of Gulf of Mexico gas production (an
important component of the US winter heating supply) remains shut down
due to the 2005 hurricanes. Natural gas storage levels are not as high
as normal for winter (1.2% lower than 2005, an unusually warm winter).
Imported compressed natural gas prices are high due to 'tight supply'
in Europe. If january is cold,
prices will almost certainly spike high.
1 - West Eurasia - Europe - Russian gas firm Gazprom cuts its gas flow
to Ukraine by 20 million cubic meters a day (Ukraines own gas needs) as
leverage to solve a dispute over how much Ukraine should pay for
Russian gas. (Russia is seeking current market prices from Ukraine, but
Ukraine wants to continue to be paid in a fixed volume of gas,
regardless of current market prices.) Gazprom sends 75% of its gas
through Ukraines gas pipeline to Europe under a transit contract.
Ukraine replies by using 67 million cubic
meters of gas bound for Europe for domestic purposes. Russia claims up
to 100 million cubic meters have been "stolen".
2 - West Eurasia - Europe - gas supplies to Hungary are down by 40%,
France, Austria, Romania and Slovakia by about 30%, Italy is down 24%,
and Poland 14%. All due to the cut in gas being transited through
Ukraine from Russia. Gas reserves in these countries vary - Italy has
15 days reserves ( 6 billion cubic metres). Gas is used for about 23%
of west European energy needs. Some European countries - for example
the Netherlands - rely on gas for 50% of their energy needs. Russias
Gazprom supplies about a quarter of Europes total consumption (domestic
plus imported gas), and makes up about a third of the Eurozones
'foreign' imports. While Germany receives 30% of its gas from Russia
via the Ukraine, it is one of the few countries that can source
alternate supplies, mainly from Norway. Belgium does not use Russian
Netherlands is self sufficient in gas, and most western European
countries use Dutch, Norwegian and UK gas, plus LPG from Algeria, Qatar
and Nigeria for the greatest part of their supply anyway.
Of the gas that is imported to supplement domestic supplies (chiefly UK
and Netherlands) in the EU (west, central and east europe, excludes
Norway, which is not a member) as a whole, around 45% of its gas from
Russia, 27% from Africa, about 24% from Norway, and 1.7% from the
January 3 - Oil prices jump sharply to US$62.40
January 3 - West Eurasia - Europe - Russia restores gas flow volume to
January - Hungary - badly affected by its dependence
on Russian gas, Hungary signs an agreement with Croatia to build an LNG
terminal on Croatia's Mediterranean coastline to allow imports of
Algerian and other nations gas to Hungary (and Croatia).
January 3 - Africa - Nigeria - Shell ships the first crude oil from the
Bonga deepwater oil and gas field for the first time, following its
november 2005 start-up. Crude oil production is estimated to be 200,000
barrels per day over the course of 2006. As Bonga (like Agbami) is 100
kms off the coast, it is relatively secure from attack by Nigerian
January 4 - Europe - UK - the continued
high gas prices results in some gas-fired electricity generating
stations switching to gasoil and
kerosene. This sharply increased demand reduces refining capacity
petrol and diesel production. The result is shortages of wholesale oil
for heating, and localised run-downs in petrol stocks, causing delays
in re-supply. Supplies are very tight, but are expected to ease.
January 7 - Europe - Netherlands - Shells Pernis oil refinery in
Rotterdam is in trouble again,
and cuts production of refined product (petrol and diesel) due to a
failure in the steam production unit. Pernis processes 418,000 barrels
a day, and is Europes's biggest refinery. Petroleum on the spot market
will undoubtedly climb, and prices to USA, 'shorted' by hurricanes and
committed to refining winter fuel rather than increased gasoline, and
as a result increasingly dependant on imports of refined gasoline from
the spot market (rather than long-term fixed price contracts), will
surely face higher petrol prices. With refineries running at capacity
around the world, any disruption to a major refinery has ripple effects
due to lack of spare capacity anywhere.
January - Indonesia - Balongan refinery will have to close its 83,000
barrel a day residual cracking unit in february for repairs to the
catalytic cooler. Current problems at the refinery mean Indonesia may
have to import an additional 800,000 barrels of refined products in
January. Indonesia currently imports around 9,000,000 barrels of
refined product (mainly petrol and diesel) a month.
January - India - The government resolves to build a 5 million tonne
(37 million barrel) crude oil reserve. This amount will supply Indias
needs for 5 day, far below the International Eneergy Agencies
requirement that countries hold 90 days of imports. India burns about
2.6 million barrels of oil a day, and 2 million barrels a day of that
is imported. The reserve is expected to take 9 years to complete and
January 18th -
Russia - Record cold snap, electricity consumption
hits a record consumption of 146,000
megawatts. Gas supply to some mid European countries reduced to
conserve Russian domestic supply.
January 17th - Iran -
cold weather drives up natural gas consumption. Iran cuts gas supply to
Turkey from 26 million cubic metres a day to 5 million cubic metres a
January 21st - Russia - New record 15,760 megawatt of electricity use
in Moscow reached as the intense cold continues. Electricity to
industries in and
around Moscow is cut back to reduce the load. Residential consumers are
urged to minimise electricity use at peak times. One power station runs
low on gas, and resorts to fuel switching, burning, coal, diesel, and
January 20th - China - gas
prices rise as part of government
progressive introduction of 'true market' pricing of fuels. A
15-kilogram bottle of LNG now costs 115 yuan
(US$14), up from 95 yuan (US$12) 3 weeks ago. Many cities in southern
China have a shortage of bottled gas as rising wholesale prices squeeze
retailers profit margins and retailers reduce their stock. Use of clean
burning LNG is being promoted as way of combatting Chinas air
largely from burning coal with little in the way of effective
smokestack pollution control.
January - Central Eurasia -
gas pipelines from Russia into Armenia and
Georgia are sabotaged by persons unknown. Some claim the explosions are
the result of the bad state of repair of the pipelines.
January - Propaganda war
over Irans supposed intentions to create a
nuclear weapon intensifies as USA seeks to have Iran referred to the UN
Security Council for "shoot myself in the foot" sanctions, and Iran
baldly states the obvious - it will hurt ultimately USA more than it
Iran. USA does not buy Iranian oil, but suddenly removing a significant
part of the 2.5 million barrel a day Iranian oil production from the
market would cause competition for the remaining supply and initially
raise global oil prices 20-40%.
China, an important long-term customer for
Iranian oil and gas (and
supplier to Iran of sophisticated 'silkworm' anti-missile missiles)
'cool head'. China hopes to draw Iranian oil from a pipeland overland
through Kazakhstan, via China's
new Kazak oil concessions. The pipeline intersects with a Russian
pipeline into/out of Kazakhstan.
US public deployment of 'bunker-busting' weapons may be aimed at
illustrating to Iran that any oil and gas exports it makes cannot be at
the expense of future reduced Iranian supply to the west. It may be
illustrating that a direct or indirect threat to other Middle East oil
and gas supply will not be tolerated. It may be illustrating that a
direct or indirect threat to continued substantial denomination
of oil in dollars will not be tolerated. USA has already
illustrated the effect of targeted missile attacks in neighbouring
Iraq. Infrastructure is expensive, and takes a long time and vast
amounts of money to repair.
January - Nigeria -
insurgents kidnap several
oil workers at Shell's 120,000 barrel a day E.A. offshore oilfield. The
platform, 25 kilometres off the coast, temporarily closes to
safeguard its workers. A few days later, insurgents kill 15 soldiers
with rocket fire, then blow up the Benisede oil pipeline pumping
facility, cutting oil exports by 100,000 barrels a day.
A total of 220,000 barrels of Nigerian crude are
of global trade, but not as much as in previous
Nigeria is the worlds 8th largest oil exporter,
exporting about 2.6 million barrels of oil a day, and is soon expected
to be number 7 in the world. Nigeria produces 'sweet' light oil,
currently in high demand due to limited global refinery capacity for
heavy and sour oils.
Both Europe and USA have significant reliance on
An insurgent group,
MEND, says it will intensify attacks in february, aimed at reducing
Nigerias oil exports by a third. MEND says its ultimate goal is to stop
Nigerian oil exports entirely.
Nigeria has huge oil revenues, but most of the money is taken by
utterly corrupt officials. Little gets spent on infrastructure,
development, or social needs. The vast bulk of the population are
Corrupt oil workers and corrupt military
collude with local delta gangs
to 'bunker' oil - divert oil into barges, which is then sold off the
coast to tankers. Cosmetic efforts to 'suppress' the delta gangs make
the problem worse, as the corrupt military task force tries to take
over the 'bunker' trade for itself, and is resisted by other elements
of the ministry and by local gangs/political/insurgent/ethnic groups.
January 23rd - oil prices briefly hit $US69 a barrel.
January 23rd - USA - gasoline in USA is about $US2.30 a USA gallon.
January - New Zealand - Diesel prices are NZ$1.06 cents/litre (US
72.5 cents/litre), farmers complain the fuel cost for their tractors is
now 63% higher than two
January - USA - Hurricane Katrina and USA's declining natural gas
production caused a
supply shortfall. Fertiliser companies with existing fixed prices for
natural gas took the opportunity to stop producing nitrogenous
fertiliser and simply re-sold the gas to the supplier for a tidy
profit. Shortening of the nitrogenous fertiliser supply causes prices
Farmers planning spring maize and soybean sowings currently face an
increased cost of sowing of about 8%, mostly due to the rise in the
cost of nitrogenous fertilisers. These fertilisers are made from
natural gas. For crops with a high nitrogen demand, such as maize, the
cost of fertiliser is about 30% of the direct growing costs. Harvest,
drying,and transport costs are additional. If maize has to be dried
(using natural gas) costs are much higher.
January 24th - Saudi Arabian oil minister says "Fundamentals today are
in excellent shape and inventories are at
reasonable levels, supply plentiful, demand is well-met by
supply...There is no reason why
prices should be rising - other than these tensions"
January 24th - Russia - Gas supplies to European customers are still
curtailed. Countries short of gas cut supplies to industry in favour of
households. Work is under way to restore gas to Armenia and Georgia.
January 23rd - Saudi oil minister Ali
al-Naimi visits China on a sweep of the Asian region that takes in
India, Pakistan, and Malaysia. The Asian region takes 60% of Saudi oil
January 24th - Saudi
Arabia and China sign
an 'accord' on oil, natural gas, and
minerals between the two countries. Details are few, but seem to
involve Saudi involvement in 'energy cooperation' and 'infrastructure',
with "specific agreements" due to be signed between the two nations
state owned oil companies. Reports suggest China and Saudi Arabia plan
to jointly build a 25-30
million tonne strategic crude oil storage
facility in China's Hainan province, with a contract for an associated
oil refinery and natural gas storage facility.
China and Saudi Arabia have cooperated in large-scale energy projects
for the last 3 years. Saudi Aramco is involved in a joint venture with
Sinopec and Exxon Mobil in building an oil refinery in
China's Fujian province, and is working in a joint venture with China's
Sinopec to build a refinery in Qingdao city. Sinopec is engaged in
a partnership with Saudi Aramco to explore for gas in south of the
giant Ghawar oil field.
January - China
- imports of crude oil from Saudi Arabia now run at
more than 22 million
tonnes per year. This is 28% higher than the same time last year. Saudi
Arabia is the single largest supplier of China's
oil imports of roughly 130 million tonnes a year. Angola is China's
second largest supplier.
January - India - Saudi Arabia is the largest supplier of India's oil
imports. Saudi Arabia invites Hindustan
Petroleum and the Indian Oil Corp to tender for part ownership of a new
Saudi Aramco oil refinery at Yanbu,
on the Red Sea.
January - Japan remains Saudi
Arabias single biggest customer. South
Korea is second, India is third, and China fourth.
January - Kuwait's oil reserves, officially about 99 billion barrels,
are finally acknowledged in an internal document of the Kuwait
Petroleum Corp to be lower, with about 48
billion barrels (proven and non-proven) remaining to be produced.
Burgan, one of the biggest oilfields in the world, is said to have
around 15 billion barrels of oil. True reserves (already produced and
oil in the ground not yet produced) may be somewhere in the region of
85 billion barrels.
January - Spain - Repsol YPF oil and gas group
reveals it will have to remove 25% of its previously reported proven
Over half the revisions are in its Bolivian concessions, where 658m
barrels of oil
equivalent (BOE) of gas and oil have been removed from the 'proven'
category of reserves. It nows books its global reserves as 4.93 billion
barrels of oil equivalent (oil, liquids, and gas).
January - China -Shortage of natural gas brings most of China's
gas-fired electricity generation power
plants to the point of closing. A total of 4 Gigawatt of
electricity generation is idle in east China due to lack of gas for the
turbines, in spite of being at the terminus of the countries biggest
gas pipeline. Gas turbine power stations recently completed in south
China remain unused due to lack of gas.
January 25 - China - China
launches its first domestically produced LNG
tanker, with a capacity of 147,200 cubic meters. China wishes to import LNG in volume, and is planning 16
LNG facilities throughout central, northern, and southwestern China. So
far, only 2 have long term gas supply contracts in place, with the
Australian LNG contract being for 3 million tons of LNG a year. The
facilities in Guangdong and Fujian are due to commence operation in
January - LNG is in demand all over Asia for power generation and
cooking fuel. World shipyards have orders for 126 natural gas tankers,
taking the world
fleet to 310 ships.
January 27 - Turkey - gas supplies from Iran have now increased to 10
million cubic metres a day, enough for households. Some industries have
supplies reduced or cut off temporarily. Around 75 million cubic metres
of LPG shipped in from Algeria is expected to restore supply to near
January 26 - Itay
- gas consumption hits a record 420M cubic metres. Russia, Algeria,
Libya and the
Netherlands provide the maximum possible amount, 230m cubic metres, and
local production provides its maximum of 20m cubic metres. It is
not enough. 170m of stored gas is also used, resulting in the limits of
the gas distribution capacity being reached. Cuts are made to
industrial users gas supply, and to some domestic heating supply. Some
electric power stations are switched from natural gas to fuel oil.
Italy just squeaks through the crisis. Italy is heavily reliant on gas
to generate electricity.
January 25 - price of oil -
crude is now
January 27th - The International Energy
Agency (IEA) announces it is ready to coordinate release of emergency
oil stocks if the Nigerian or Iranian
supply is disrupted.
January - USA - Ford motor company announces it will dismiss 30,000
employees and close 14 car production plants over the next 6 years.
General motors makes a loss of over $US86 million. One quarter of
General Motors cashflow comes from sale of gas-guzzling SUVs and
January 26th - USA - President Bush said he will no longer spend
taxpayer money to prop up SUV producing Ford and General Motors
Corporation, but would encourage them to build "a product that's relevant."
Clearly, Bush is conceding the blindingly obvious - the American gas
guzzling cars are irrelevant in an era of declining oil reserves. They
are dinosaurs heading for extinction.
January - USA
- President Bushs state of the nation address spouts
old misleading garbage on 'new' sources of energy releasing USA
on the Middle East for oil. The USA imports around
584 million barrels of oil from Canada every year, and about the same
amount from Mexico. USA imports a little less (548 million barrels a
year) from Saudi Arabia, then 475 million barrels from Venezuela and
about 400 million barrels a year from Nigeria. USA's Iraq supplies 256
million barrels a year, and Angola and UK 110 million barrels a year.
Smaller amounts come from Algeria and Kuwait.
So the USA is broadly similarly heavily dependant on Canada, Mexico,
Venuezuela, Nigeria and Saudi Arabia for its imported oil. Hardly
dependant on the Middle
East. Of these countries, Canadian production cannot be increased,
Mexico's giant Canterell field has started to decline, Saudi Arabia is
sound and Venuezuela is sound, and Nigeria may well become so unstable
oil exports are severly cut.
There is no excess
capacity in the world to make up for the
possibility of a sharp drop-off from Mexico, or a 30% cut in exports from
Nigeria. There is no 'spare' gas capacity within pipeline reach of USA.
There is no alternative fuel available to meet the supply/demand
mismatch that is slowly evolving. Alcohol (a relatively low energy
fuel) from crops generally takes more energy to produce than is
knows this, and knows there is no realistic plan 'B' involving
'cheap' energy in abundance. But gives the impression there is.
January - quote of the
"Current U.S. energy policy and the
President's Advanced Energy
Initiative are too modest and overly focused on the goal of increasing
domestic production of oil and alternatives to support increasing oil
consumption. This is futile and
self-defeating because U.S. oil
production is in permanent decline and world oil production will follow
- perhaps disastrously soon.
...Technology and alternatives are important. However, unless we also
use less oil, we won't reduce America's oil imports. Delayed
gratification and self-sufficiency are traditional conservative values.
That is why the next conservatism should champion policy changes to use
less, not more oil through conservation and energy efficiency.
Conservatives should recognize that unless
we have a national energy
conservation program with the commitment, breadth and intensity of the
Apollo moon mission and the Manhattan Project to create the atom bomb,
our country is unlikely to achieve the goal of replacing "more than 75
percent of our oil imports from the Middle East by 2025" and
likely to break our oil addiction. "
- Roscoe G. Bartlett, Republican Senator
January - high natural gas prices for electricity generation results
in the demand for wind turbine power generators intended for commercial
wind power supply to be unmet. The cost of these wind powered
generators goes up.
January - The International Energy
Agency forecasts an increase of 14.5% in the price of natural gas for
2006, relative to 2005.
This gives an average residential price of $US14.57 per
thousand cubic feet.
Quote of the month:
"The proven world gas reserves as of 1 January, 2001 are 164 trillion
cm [cubic metres]. It is believed that these reserves will be enough
for 62 years.
Russia and Iran have 50% of the world's natural gas reserves, while the
territory of Russia, Kazakhstan, Turkmenistan, Uzbekistan and Middle
East has 70% of the world reserves."
- Institute of Analysis and Prognostication Kazakhstan-USA, a
strategic studies institute
January - Georgia - the pipelines supplying Georgia with Russian
natural gas are still not yet repaired. Russian gas routed to Georgia
through neighboring Azerbaijan was severely cut back due to a problem
with a compressor (according to Russia). Lack of gas for electricity
generation causes supply failure in all of Eastern Georgia. The
government hands out firewood and sells cheap kerosine. After a few
days some electricity is restored in the east, but electricity is
rationed in the Georgian capital Tblisi. Iran promises to provide
Georgia with 4 million cubic meters a day, also via Azerbaijan. A
Georgian official says once Iranian gas begins flowing, "then Russia
won't see the usefulness of the energy blockade any longer." The
Georgian President hints that Russia is punishing Georgia for its
pro-western stance by taking longer than necessary to repair the gas
The Georgian case illustrates the danger of dependence on
centralised power supply from a few large volume pipelines.
January - USA - Unusually mild winter results in reduced natural gas
demand. High gas prices at the start of winter result in switching to
electricity, and other fuels. US natural gas supply remains favorable,
stored supplies being over 20% higher than the five-year average
for this time of year.
February - USA
- the 727 million barrel capacity strategic petroleum
reserve remains at around 684 million barrels stockpile. Around 20
millions barrels of sweet crude 'loaned' to USA refineries post
hurricane Katrina or sold for undetermined reasons has still not been
replaced. Congress authorised the reserve to be increased to 1 billion
barrels, but so far, it hasn't been implemented.
February - USA - nearly 363,000 barrels a day of crude are still
shut-in from last years hurricane Katrina damage.
February 10 -
USA - average daily net oil imports (crude oil plus refined
petroleum) are 13,396,000 barrel per day.
February - Nigeria - crude production is still down, by about 26%.
February - Iran - crude
production is down by 40,000 barrels a day,
due to high rates of depletion in existing fields and difficulty
selling its existing stocks of heavy Soroush
and Nowrouz crude. These two offshore fields have been shutdown,
and are expected to re-start in may.
February - Mexico - Mexico's oil production for the month averages
3,747,000 barrels per day in total.
February - ASPO - The Association for the study of Peak oil and Gas
estimates world 'regular' (conventional, i.e. cheap) oil production for
2005 at an average of 67 million barrels a day, and 80 million barrels
a day if heavy oils, deep water, polar oil, and natural gas
liquids are added in.
16th - UK - an accident at the Bravo gas platform off the coast of
Yorkshire interrupts operation of the Rough gas storage facility, where
the UK stores the vast majority (82%) of its
long term gas supplies. (The Rough facility can also meet about 37% of
the peak demand load.) The Rough facility is not expected to be back
online until early may.
February 18th - USA - record cold weather in Colorado increased peak
demand for electricity and gas heating, causing the load on the power
grid to suddenly increase. The grid was closed for a short time to
prevent collapse. Peak load power is generated in gas fired plants.
Insufficient gas supply to meet the demand for peak load power
generation was at hand partly due to unplanned demand, partly due to
freezing at the wellheads, partly due to breakdowns at local coal-fired
power plants, and possibly partly due to insufficient pressure from the
fading Colorado natural gas wells.
February 2nd - Saudi Arabia - Saudi terrorists attempt to penetrate
the extensive security surrounding the Abqaiq oil export facility. The
process 5-7 million barrels of crude a day, seperating gas from the oil
and removing hydrogen sulphide in readiness for shipping. This latest
terrorist attack on Saudi oil facilities fails at the outer perimeter.
The terrorists blow themselves and some security guards up 1.5
kilometers from the main gate. Oil prices on the New York bourse jumps
to $US62.50 on the news.
February 28th - light sweet
crude is now US$61.41
February 24 - USA - US net daily petroleum imports are down about 8%
relative same period last year, roughly one million barrels a day.
March 9 - Mexico - Presidential candidate in the forthcoming election
announces an intention to stop drilling for oil in
deep water and concentrate soley on land and shallow water
reserves. Critics say this is short sighted, as production from
deep water will take at least 10 years from commencement of exploratory
drilling. Observers say that this is one means of preserving some
oil for Mexico's future domestic needs, and deep water production
in the hurricane-prone Gulf of Mexico ought to wait until oil prices
justify the high cost of extraction in that environment.
March 14 - Mexico - President
claims a deepwater exploratory well
(Noxal) indicates a massive find of gas and oil. Industry observers
dismiss the claim as more related to the upcoming election than reality.
March 15 - Mexico - President Fox announces US$37.5 million will be
invested over the next 20 years to develop the sprawling Chicontepec
on-shore oil field. It contains 18 billion barrels of 'oil equivalent'
- oil, gas, and gas liquids. How much will be recoverable is uncertain,
as it is a difficult field. The field is low permeability, and sprawls
across 3,800 square kilometres. The aim is to produce 1 million barrels
a day from this field, to replace the declining Canterell field. This
would entail drilling 20,000 wells, four times more wells than exist in
the entire of Mexico at the moment. Chicontepec contains 38% of Mexicos
March 12 - Kuwait - discovers around 35 trillion cubic feet
of natural gas, with about 60-70% of the reserves recoverable. The new
"free gas' reserves - not associated with an oil play - were discovered
at four fields, and in very large quantities
at the Sabriya and Um Niga fields.
production is expected by the end of 2007. Kuwait currently produces
one million cubic feet of natural gas a day, most of which is used in
power generation. Kuwait had
entered into initial talks with a view to importing natural gas from
Iran, Iraq and Qatar. The new gas find is expected to cover Kuwait’s
for electrical power generation, and with enough left to use in
March - Kuwait
- The Kuwait Oil Company announces it has found an estimated 10 to 13
billion barrels of light crude oil in
the north, in
the Bahra and Rawdatain fields. 31 reservoirs out of 105 known
reservoirs have been explored. Most of existing production is heavy
oil. The light oil discovery will add
10% to the country’s claimed oil reserves of about 90
March - India - India hosts Russian Prime Minister Mikhail Fradkov
on a state visit and proposes Russia has an involvement in the gas
pipeline projected to take Iranian
gas to Pakistan and then on to India.
March 23 -
Russia - Russia's president Putin visits Beijing and
discusses building a new gas-pipeline system, to be called the Altai,
to deliver gas from western Siberia to China. This pipeline, plus
another from eastern Siberia (the East Siberia-Pacific Ocean Pipeline,
or 'ESPO' pipeline) could deliver 80 billion cubic meters of
gas a year to China. The route and the gas fields that might be used
have not been determined. The cost for this proposal is estimated at
about $US10 billion. Russia already supplies 25% of West Eurasia gas.
March - Russia
- Gazprom explores possibly extending Russia's
Stream pipeline that runs from Russia to Turkey. It is suggested
the pipeline be extended to Italy, with supply to other countries such
as Greece en route. Gazprom
hopes to enter the retail gas supply and distribution business along
the Mediterranean as part of the deal. Gazprom suggests the pipeline
could one day take gas as far as Spain. It could also supply Israel.
The pipeline will mean Russia would no longer have to route gas bound
for Europe through
It also enable Russia to buy Turkmenistani gas to re-supply to the
European market (existing contracts call for gas from Turkmenistan
to Russia to eventually reach 70-80 billion cubic meters a year).
Russia is slowly becoming a Eurasian energy major, albeit new giant
fields are in extreme environments and far distant from major markets.
Significant supply from these fields is many years off as yet.
The Sakhalin and, to a lesser extent, East
Siberian gas fields will
eventually supply east Eurasia (China, Korea, and Japan) and perhaps a
little to North America.
Ultimately, northwest Russian fields on the Barents sea will link with
the planned North-European pipeline from the Yamal field in west
Siberia (still undeveloped) to supply West Eurasia by pipeline (Germany
and adjacent), and
The Barents Sea fields may also supply Canada and the USA Atlantic
coast by LNG tanker. Canada is negotiating to promote the building of a
gasification plant at Petersburg to ship Barent gas to Quebec.
Norways Statoil is promoting a gasification plant to be built onshore
from the field (at Murmansk) capable of liquefying 25-27 billion
cubic meters for export as LNG. Linking with the proposed
North-European pipeline will come later. No final decisions have been
West Siberian pipelines already supply parts of Europe, and Turkey,
with 80% of the gas currently routed via Ukraine.
Extensions to the existing Blue
Stream pipeline will directly supply
the Mediterranean with Russian gas as far as Spain.
Russia is well placed to buy Turmanistani gas now (rather than the
Turkman waiting for the Chinese to build a gas pipeline to
Gazprom, currently deeply indebted, aims to be a retailer in the
countries it supplies, as well as
a wholesaler, the same as other major energy (oil) companies today. It
is looking for partners with capital and technological know-how to form
Russia - Domestic gas
consumption continues to increase. Most Russian
electricity in Russia is generated in gas powered electricity
generation plants. Russia's gas-fired electric generators have an
average efficiency of 33%. Europe's gas-fired electric generators have
an average efficiency of 50% - 55 %.
Over 90% of residential and industrial consumers of gas are un-metered.
Russia has abundant coal, but Russia is almost the only country in the
world where gas is cheaper than coal.
Russia - It is
estimated that the declining western gas fields may be
insufficient to supply both Russian domestic users and European
customers by winter 2008.
Russia's major large gas fields in west Siberia are mature and
declining. The deputy head of Gazprom notes that required new capacity
to meet existing needs will not be met until deposits in the north
Yamal Peninsular begin to come on stream about 2012. (The only other
reserves of note are the Urengoi
and Zapolyarny fields gas fields, but these contain 'wet' gas and
heavy hydrocarbons, and are thus very expensive to develop). In
the interim, the last of the largest
deposits (25-30 billion cubic meters of natural gas a year), the
Yuzhno-Russkoye field, in
Nadym-Purtazovsky will come onstream in 2008. But it will not be
enough. In spite of Gazprom's plans to add 45-55 billion cubic meters
of gas from independants such as TNK-BP and LUKoil operating in the
Nadym-Purtazovsky region to the Gazprom pipelines, the necessary
pipeline infrastructure will not be in place until about 2009.
It is likely that the demand for natural gas in Russia and parts of
Europe in the peak winter period will not be able to be met in the
coming few years.
March - Russia - Belarus - Russia triples the price of gas to its close
ally, Belarus. Former Soviet satellite states have enjoyed artificially
low gas prices since gas discovery in the former Soviet Union.
March - Algeria - Russia - President Putin signs an exclusive agreement
to help develop certain Saharan gas prospects in return for access to
Algerian gas liquification technology.
March - UK - A very mild winter has meant demand for gas for
domestic heating has been lower than would be expected in a normal
winter. UK escapes a gas crisis.
March - UK - short term gas
storage may reduce to198 gigawatt hours
at current usage rates. Daily gas use at this time is around 350 to 389
million cubic metres a day. Draw required from short term storage
thereafter could be higher than the actual amount available. Medium
term storage holds about 7 days worth of gas at current consumption
rates. Gas from the long term store is unavailable.
Supplies direct from the North sea fields are insufficient as the
fields are declining.
A 50% chance of a phase one gas emergency by the end of march now
exists. At that point, large industrial users will disconnected. It is
hoped that additional supplies of gas from the continental
interconnecter will be available in time to avert shut downs. Most gas
in the continet is sold on contract, and little is available for the
spot market, even when prices spike high. The quantity 'required' by
the UK may be unavailable at almost any price at this time.
March - UK - gas prices within
UK reach 255 UK pence a therm (a therm is 100,000 Btu's), or the
equivalent of US$33
per million British thermal units. World spot prices are US$7.15
per million Btu's.
March - UK - Power stations used 15% less gas this last winter, due
to price constraints. Gas fired
power stations emit an average of 99 tonnes of carbon for every
Gigawatt hour of
electricity they generate.
Conversely, power stations used 13% more coal. Coal-fired power
stations emit 238 tonnes of carbon for every Gigawatt hour of
electricity they generate. This is because burning coal is essentially
burning 'pure carbon', whereas burning gas burns both carbon and
The increased use of coal and fuel oil for electricity generation
increased UK carbon emissions rose by 1,687,853 tonnes (nearly 7%)
between the previous winter and this last one.
the deserts of Saudi Arabia, the permafrost vastness of Siberia’s Yamal
Peninsula, in the emerald green islands of the Indonesian archipelago,
in the depths of the ocean off West Africa and the ancient Persian
plateau lies the gas reserves of the planet, the future of the next
world energy order. Governments spend untold billions to control
reserves, built pipelines and regas plants, lease fleets of LNG
tankers. Like crude oil, gas is the currency of power in the new
the grim reality of Peak Oil dawns on an increasingly gas guzzling
world, the smart money and Big Oil have rearranged the chessboard of
international finance and power
politics to stake their claim
priceless reserves of the only hydrocarbon fuel that complement crude
oil. Power generation, electricity, winter heating and industry are all
derived from gas that, sometime after 2020, could emerge as the
planet's dominant energy source....
technologies have now linked the world gas markets for the first time
in history. The advent of $60 crude oil, intercontinental pipeline
networks, the emergence of LNG and sophisticated derivatives market to
hedge price risk have created a truly gas market. It is no coincidence
that the Russian - Ukraine spat led to nightmares in Western Europe's
most powerful boardrooms and diplomats chancelleries, or that Big Oil's
multi-billion dollar LNG bet in Qatar is defacto underwritten by the
White House, or that bulk methane has made the President of
one of the most potentate in Central Asia or that Gazprom, not
Microsoft or GE, will be the most valuable company on earth one day.
lessons of Hugo Chavez and the 1974 Arab oil embargo mean the US will
never allow the Ayatullah’s Iran with the world’s second largest gas
reserves to dictate its energy supply ... Gas is the reason the spark
spread will one day become as critical a metric of the world’s
financial heartbeat as the North Sea Brent or West Texas Intermediate
futures price. .. Big Oil wrote the
history of the twentieth century. Big gas will define the secret
history of the new millennium."
- Matein Khalid, Dubai Investment
Banker, writing in the Khaleej Times, April 2006
March - Russia - China - USA - the chairman of the US Senate's
Foreign Relations Committee unveils an 'Energy and Diplomacy Act' to be
introduced in the USA Congress.
This extraordinary move has come about because USA is beginning to
admit its dependance on 'foreign' oil when the rest of the world also
demands a share of what is a limited resource, and USA is an energy
"Chinese and Indians, with one-third of the world's people between
them, know that their economic future is directly tied to finding
energy resources to sustain their rapid economic growth. They are
willing to negotiate with anyone willing to sell them an energy
lifeline ... The demand for energy from these industrializing giants is
creating unprecedented competition for oil and natural gas." When the
senator says "negotiate with anyone" he means China and India are
willing to negotiate with Iran, Russia and Venezuela.
The proposed legislation would "offer a formal coordination agreement
with China and India as they develop strategic petroleum reserves. This
will help draw them into the international system, providing supply
reassurance, and thereby reducing potential for conflict." Presumably
this is aimed at Chinese and Indian cooperation with Iran
and Saudi Arabia in developing joint venture oil and gas field
operations. The 'coordination' agreement referred to is presumably
the beginning of an attempt to arrange the 'orderly marketing' of the
major oil and gas fields, a sort of consumer bizarro 'reverse OPEC'.
The "International system" referred to is presumably pricing in US
dollars. "Supply reassurance" is presumably a reassurance by the
parties that the USA will continue to be supplied with around 20% or so
of the energy resources of the entire world.
This idea of 'orderly marketing', with allocations no doubt based on
historic use (so that USA can take an unfair share) stands in contrast
to the 'traditional' approach, as outlined by an USA official in 1992,
just after the first Gulf war in 1991. In 1991 Saddam
Hussein was evicted from Kuwait by blockading all ports, systematically
flattening Iraqi infrastructure such as power plants and pipelines, and
carpet bombing his under-equipped army. Hussein was left with no option
but to withdraw back to Iraq. The whole episode screened live on
“What the American people
learned from the Gulf war is that it’s a helluva lot easier and a
helluva lot more fun to kick ass in the Middle East than it is to make
any sacrifices to limit America’s dependency on imported crude.”
- James Schlesinger, former secretary of defence and
of the CIA and former energy secretary, in an address to the 15th
World Energy Congress in september 1992
Given the USA investment in land-based 'unsinkable aircraft carriers'
strategically placed across Iraq, it is impossible that USA has decided
to abandon the blockade and infrastructure destruction technique in
favor of multilateral agreement. Use of multilateral agreement is just
another tool in the box for the USA, nice to have if it works, but not
essential if it doesn't.
March - Russia - China - USA - the European Union's
foreign-policy chief, Javier Solana says "We have to find the right
balance between a market-driven and a more strategic approach."
Here "we" refers to USA, China, India and Europe. In a curious echo of
the new American call for what is in effect a 'consumer collective', he
calls for a 'collective energy dialogue' by major consumers with the
producers. "What we need is an orderly combination of markets, law and
consensual negotiations ... The role of politics is to balance
different considerations ... The
time has come to forge a European energy diplomacy, based on common
interests and shared principles."
March - Russia - Germany -
former German Chancellor
Gerhard Schroeder is made chair of the Russian-German consortium to
build a natural gas pipeline, the North
European Gas Pipeline (NEGP), under the Baltic
Sea from Vyborg on the Russian Baltic Coast to Greifswald on the German
March - Russia - the strategic Baltic
Pipeline System carrying oil to a Russian export terminus in the
Baltic, rather than transiting through NATO aligned countries as
before, is now complete.
March 23 - Saudi Arabia - the Haradh
oilfield project is officially opened 4 months ahead of time. It is
pumping 300,000 barrels per day, and
pumping at full output capacity. Over
500,000 barrels of seawater a day are pumped in to maintain high
Oil Minister Ali al-Naimi claims new oil from Haradh has raised Saudi
output capacity to 11.3 million
barrels per day. Saudi Arabia currently pumps 9.5 million
barrels per day.
The minister claims three new oilfield projects will allow the Saudis
barrels per day by 2009. Khursaniyah oilfield is expected to pump
500,000 bpd in 2007, Shaybah and Nuayyim are expected to add
300,000bpd in 2008 and the Khurais oilfield is expected to produce 1.2 million
barrels per day in 2009.
The 'extra' capacity by 2009 is expected to be 1.5 to 2 million barrels
a day, to be used for contingencies. Production in 2009 is therefore
likely to be 10.5 to 11 million barrels a day.
March - USA - USA
Army report on energy trends and their implication for the army
dated september 2005 is made available for public release and discussed
by Senator Roscoe Bartlett in congress ["...Mr. Speaker, I would
remind you that this is not an article from some environmental journal.
This is from a report, which has kind of been kept under cover now
since last September, just released. I think that it was inadvertently
released, by the way. But now that it is out, you can get a copy of it.
This was done by the Corps of Engineers. This is a U.S. Army
publication...."]. In a career killing move, the authors lay out the
un-embellished, uncomfortable, stark data, the 'real life' constraints
and challenges. Recognising the risk to the functionality of the army,
they ignore the inaction and dissembling of the US
Government and lay out the sort of program for the army that the US
and other governments should be implementing.
There are eerie echos of the US Government action plan that almost
happened in 1977.
Read the report.
Quote from the summary, accents added, layout altered -
"Availability. Future availability of customary energy sources is
The US Department of Defense is the single largest buyer of fuel in
the USA. The military burn a breath-taking 97% of the total oil burnt
by the USA state. The USA government burns about 440,000 barrels of
oil a day, around 160 million barrels a year. The Air Force is
responsible for burning 53% of this massive amount, the Navy (including
the Marines) 32%, and the Army 12%.
Domestic production of both oil and natural gas are past their peak and world petroleum production is nearing its peak.
Growing domestic consumption will continue to increase dependence on foreign and
potentially unstable energy sources.
Almost half of the existing U.S. natural gas reserves are considered to
be either remote or stranded, i.e., they are too far from existing
infrastructure, located on restricted Federal lands, or considered too
environmentally detrimental to harvest. Construction of an Alaskan
natural gas pipe-line and the importation of Liquefied Natural Gas
(LNG) are possible solutions to domestic natural gas problems. However,
the necessary production and distribution infrastructure will require years to
our electrical transmission grid is aging and overtaxed. It was not
designed to accommodate the complex high load traffic it must now
handle due to deregulation.
Its reliability will degrade
until appropriate investments are made.
• Affordability. As demand for natural gas and petroleum exceeds
supply on a national or worldwide basis, prices rise. As the Earth’s population swells and as
standards of living are improved for the developing world, competition for finite resources will
• Sustainability. Worldwide consumption of fossil fuels...continue to
The earth’s endowment of natural
resources are depleting at an
alarming rate—exponentially faster than the biosphere’s ability to
replenish them. It took nature 100 million years to create the
energy the world uses in 1 year....
Wastes from nuclear power generation
plants are accumulating
and no viable means exists to safely and effectively dispose of them.
Current energy policies and consumption practices are not
They clearly limit and potentially eliminate options for future
• Security. In an age of terrorism, combustible and explosive fuels
along with potential weapons-grade nuclear materials create security
The United States currently has 5
percent of the world’s population, but uses 25 percent of the world’s
annual energy production. This disproportionate
consumption of energy relative to global consumption causes loss of the
world’s good will and provides a
context for potential military conflicts,
at the cost of lives, money, and political capital.
A more equitable distribution of
resources is in our best
interest for a peaceful future.
...the United States currently imports 26 percent of its
total energy supply and 56 percent of its oil supply...
The domestic supply and demand imbalance would lessen if coal and/or
nuclear energy could be made more environmentally acceptable or if
the renewable share of our
energy portfolio were to vastly increase.
Worldwide energy consumption
is expected to increase by 2.1
percent/yr and domestic energy
by 1.4 percent per year.
will exacerbate global
energy competition for existing
Renewable energy technologies will certainly be a growing part of
the energy mix and will penetrate faster and further than conventional
energy advocates think... the cost of renewable technologies continues
to fall while the cost of conventional energy sources continues to rise.
The electrical system will likely become increasingly problematic
over the next 5 to 10 years. Power capacity should suffice....The grid,
itself, however is the weak point in the Nation’s electrical system.
Investments are not keeping up with power flow demands; consequently,
bottlenecks exist in certain regions, which lowers the reliability of the grid
as a whole...
Energy consumption is indispensable ...current trends
are not sustainable.
The impact of excessive, unsustainable
energy consumption may undermine the very culture and activities it
The days of inexpensive, convenient, abundant energy sources are
quickly drawing to a close.
Domestic natural gas production peaked in 1973.
The proved domestic reserve
lifetime for natural gas at current
consumption rates is about 8.4 yrs.
The proved world reserve
lifetime for natural gas is about 40 years,
but will follow a traditional rise to a peak and then a rapid decline.
Domestic oil production peaked in 1970 and continues to decline.
Proved domestic reserve lifetime for oil is about 3.4 yrs.
World oil production is at or near its peak and current world demand exceeds the
Saudi Arabia is considered the bellwether nation for oil production and
has not increased production since April 2003. After peak production,
supply no longer meets demand, prices
and competition increase.
World proved reserve lifetime for oil is about 41 years, most of this
at a declining availability.
Our current throw-away nuclear cycle will consume the world reserve of low-cost
uranium in about 20 years. Unless we dramatically change our
consumption practices, the Earth’s finite resources of petroleum and natural gas will become
depleted in this century.
Coal supplies may last into
the next century depending on technology
and consumption trends as it starts to replace oil and natural gas.
We must act now to develop the
technology and infrastructure necessary to transition to other energy
sources. Policy changes, leap ahead technology breakthroughs, cultural changes, and significant
investment is requisite for this new energy future.Time is essential to
enact these changes.
The process should begin now.
Our best options
for meeting future energy requirements are
energy efficiency and renewable sources.
Energy efficiency is the least expensive, most readily available, and
environmentally friendly way to stretch our current energy supplies...
The potential savings for the Army is about 30 percent of current and
future consumption. ...Renewable
options make use of Earth’s resources
that are not depleted by our energy consumption practices:
namely solar, wind, geothermal, geoexchange, hydrology, tidal
movements, agricultural products, and municipal wastes... These options
are available, sustainable, and secure.
The affordability of renewable technologies is improving steadily and
if the market is pulled by large Army application the cost reductions
could be dramatic....Many of the issues in the energy arena are outside
the control of the Army. Several actions
are in the purview of the national government to foster the
ability of all groups, including the Army, to optimize their natural
The Army needs to ...be prepared to proceed regardless of the national
measures that are taken.
The following steps by the national government would help the Army with
its energy challenges:
• Increase supplies.
- Recognize and promote energy efficiency as the cheapest, fastest,
cleanest source of new energy.- Recognize and promote that renewable
energy technologies make sense for America on a very
- Promote renewable applications and work to change the image of solar
roofs and off-shore wind farms.
- Appropriate the necessary funding to bring Federal facilities to
state-of - the- art efficiency.
- Pull renewable technology markets to produce more cost effective
solutions with tax incentives and large Federal applications.
- Provide incentives for green power production through continued and
expanded tax credits.
- Open up Federal lands for oil and natural gas harvesting where
- Encourage the development of LNG terminals and infrastructure by
streamlining approvals and assisting with local approvals.
• Modernize infrastructure.
- Support modernizing and expanding the electricity grid.
- Support the construction of a natural gas pipeline from Alaska and
- Enhance the expansion of LNG
terminals and natural gas
• Diversify sources.
- Invest in research and development (R&D) in clean coal
technologies, renewable technologies, carbon sequestration, breeder reactor nuclear power.
- Invest in R&D in energy
efficiency in the built environment.
• Optimize end-use.
- Significantly increase Corporate
Average Fuel Efficiency (CAFE) standards and expand to all classes of motor
- Expand rebate programs for hybrid vehicles.
- Expand appliance and equipment efficiency standards as many states
are doing.- Continue and enhance the Federal Energy Management Program.
- Continue and enhance the Energy Star Program.
• Minimize Environmental Impact.
• Cooperate in global energy markets.
The national and world energy
strategic planning and action by the Army. The pending
challenges of meeting the Army’s ongoing energy requirements in a reliable,
affordable, sustainable, and
secure fashion demand thoughtful and comprehensive approaches. ... The
informed and disciplined management
of consumption is imperative.
Army has already begun this necessary strategic planning and its Army
Energy Strategy for Installations defines the overarching mission and
goals, and outlines broad approaches for reaching the Army’s full
potential....Special attention to the diversification of sources is
This incorporates a massive expansion in
renewable energy purchases, a
distributed generation including photovoltaic, solar thermal, wind,
microturbines and biomass, and the large-scale networking of on-site
The Army must continue to improve and optimize its energy ...
management to meet mission requirements."
According to Senator Roscoe Bartlett the USA military is "doing more
than anyone else - in the government
or around the country" to try to mitigate the huge dependance on
increasingly expensive oil and gas. Including working on new energy
efficient battleships, some with masts and sails and clad in
March - USA - Corrosion
in a transit pipeline at USA's Prudhoe Bay oilfield in Alaska causes a
rupture and spill of 200,000 barrels of crude oil in the western sector
of the field. BP tells the USA Senate Energy Committee that the
corrosion problem is now under good control.
March - Dubai - the Dubai government and the New
York Mercantile Exchange to agree to launch an International Mercantile
Exchange dealing mainly in energy futures and derivatives The first
offering will be in Middle East sour crude, and may be underwritten by
Omani oil. It is hoped the Omani oil will be a benchmark crude for
trading crudes from the Middle East to Asia.
March 20 - Qatar - Qatar
announces it is will create what it hopes will be the Middle Easts
first International Mercantile Exchange dedicated soley to energy
trading in all its forms. The promoters, 'Gulf energy', describing
itself as a 'global
consortium of energy experts', has signed an agreement with the
government-backed Qatar Financial Centre, and expects to 'go live' in a
relatively short time.
Qatari state owned 'Qatar
Petroleum' is being
approached to underwrite the oil supply futures. Qatars energy minister
says he goes for long term contracts, and "...we will never go
for these activities". Other
Qatari government ministers praise it as an excellent fit to Qatars
LNG sales and financial hub services. The exchange will operate in
a tax free zone.
Qatar currently pumps
840,000 barrels of oil a day.
has one of the largest gas reserves in the world.
Qatar is strongly
'pro-American' and hosts the command and control base for
USA forces in Iraq and in the Gulf.
Qatar is believed to have
connections with USA banking interests, and it is believed that these
interests are behind the superficially 'Arab' bourse.
March 20 - Iran -
Iran's planned electronic oil bourse is delayed for several months to a
year. It is planned to start trading in petrochemicals first, with
crude being the last commodity to be included. It is expected that
crude would commence trading in about three years time, probably for
direct physical product. British
consultant Chris Cook, member of
the consortium (headed by the Tehran Stock Exchange) working on
implementing the project says "... it's
at a much earlier stage than people would think...there will not be a crude oil contract,
Gulf-based, in my opinion, within a year -- and that would be really
pushing it". The exchange will be located on Kish Island, an Iranian
duty and tax free zone.
- Japan - Iran - The Nippon oil company cuts 15% of its Iranian
oil imports by cancelling oil brokers contracts sourcing oil from Iran.
Direct imports continue. Japan takes about a quarter of Iranian total
although in total Japan buys more crude from Saudi Arabia and the
Emirates. The move by Nippon Oil is seen as insurance against supply
disruption due to the USA moves against Iran's programme to develop
nuclear power, and the possible eventual development (or importation
from North Korea) of a nuclear weapon.
"From a business standpoint,
announcement will have no effect on
either Japan and Iran. Iran has many options to sell its oil, but
how they take the message is another thing...Even if Japan reduces
Iranian oil imports, Iran knows China would buy as much oil as it
- Hidenobu Sato, Middle East Research
Institute of Japan.
March - Pakistan -
the oil import
bill for Pakistan's current financial year (July-June) is expected to
$US6 billion. For the same period last year it was $US4.4 billion.
March - China - retail gasoline and diesel prices are increased by 3%
- 5%, the first rise for eight months. Gasoline and diesel are
subsidised by the State by regulating the prices refineries can charge.
Refineries continue to lose about $US1 on every barrel of crude they
March 30 - Light sweet crude is now $US66.07.
March 31 - Light sweet crude peaks at $US67.15 before sliding back a
few dollars. Brief period of low petroleum reserves in USA may have
caused the surge, along with USA and UK threats against Iran.
April 16th - the latest IEA report shows world
oil supply at 84.5 million barrels a day. This is down by 125,000
barrels a day relative to last month. Reduced production from OPEC
America and the North Sea fields due to a variety of outages
(destruction of Iraqi pre-invasion oil commerce and sabotage of the
northern Ceyhan pipeline, Iran production down, Nigerian rebels closing
out significant Nigerian production) outstripped higher production from
elsewhere. If these political constraints didn't exist, production
would have shown an increase.
April 4 - Iran - Iran claims to have 'unstoppable' high speed torpedos
could use in the event of being attacked. A clear warning to USA that a
USA attack will result in oil tankers or USA aggressor ships being sunk
the narrow Straits of Hormuz. Married to Iran's defensive Russian and
Chinese coastal short range missile batteries (which are also
effectively unstoppable), the stage is set for the USA to precipitate a
massive disruption to world oil supply. Both countries will lose if USA
attacks Iranian defense forces.
It is likely the USA has taken a longer term view, and seizing on the
fortuituous duplicity of the Iranians as they pursue an ultimate
capability of a nuclear weapon (which, paradoxically, they could never
ever use without guaranteeing their own total annihilation). This gives
an excuse to attack Iranian defenses. Iran would have to be rendered
defenseless so that USA/Israeli attack planes can destroy the Iranian
nuclear research facilities. With Iran's extremely dangerous and
effective coastal defense missiles and radar destroyed, the USA would
have total control of the Middle East from its command and control
centre in Qatar (a country with vast gas reserves
and developing a
USA/Qatari oil bourse in competition with Iran's) and its vast new
billion dollar "little
America" bases strategically placed to protect the USA oil reserves
in Iraq. No doubt the bases with be "long term" 'leased' from USA/Iraqi
companies...It is almost certain that USA will not only police and
control the Middle East oil industry - including all bourses competing
with its New York and London-based bourses - but will buy increasingly
high prices hydrocarbons with increasingly high priced carbohydrates
(USA wheat, sorghum, and maize).
USA plan continues to unfold.
April - USA - Russia
- Iran - USA office of Secretary of State official visitis Moscow and
publicly asks Russia to cancel the sale of
the Russian Tor-M1 mobile anti-missile missiles to Iran. His request is
rejected by the Russian Chief of Staff.
April 4 - UK - Gazprom (Russia) delivers 85 million cubic meters of gas
(140,000 cubic meters of liquid) to UK.
This is the first time Gazprom has delivered gas to the UK. Gazprom
does not have its own LNG facility, and obtained the LNG from Gaz de
France. Gazprom is anxious to diversify into the area of gas
distribution and retail throughout western Eurasia, as well as
wholesale supply. It plans a similar business expansion in USA
Gazprom aims to become one of the worlds major vertically
integrated energy companies.
Gazprom hold roughly 20% of the world's gas reserves.
But 70% of Gazprom's production comes from mature giant fields which
are declining rapidly. Newer fields cannot fully compensate for
decline. Declining supply is likely to dramatically increase prices by
The cost of exploring, developing, and piping gas from the new
prospects and new fields is conservatively estimated at about $US700
billion over the next 20 years.
April - Russia - Germany - Gazprom signs an agreements with the German
for the BASF subsidiary gas company Wintershall to
jointly develop the Yuzhno Russkoye gas field in west Siberia. The
field contains 500 billion cubic meters of gas - enough to supply all
Germany's gas needs for 5 years.
April - Germany - Russia - Gazprom signs an agreements with the German
for the BASF subsidiary gas company Wintershall to
jointly build the North European gas pipeline, to transport gas from
the Yuzhno Russkoye gas field across the Baltic sea to Germany, and
perhaps other parts of western europe.
April - Russia - Germany - the German BASF chemical company and Gazprom
joint venture company Achimgaz announces drilling in the Russian
Urengoy gas field in west Siberia is due to start this year. The field
is believed to hold 200 million
cubic meters of natural gas, and 40 million metric tons of condensates.
The field life is anticipated to be 40 years.
April - UK - Russia - UK government illegally tries to block the sale
of the UK's
largest gas supplier, Centrica, to Gazprom.
April - UK - Russia - EU - In response to the UK's underhand moves,
Alexei Miller, Gazprom’s chief
executive says, after meeting EU ambassadors:
“It is necessary to
note that attempts to limit Gazprom’s activities in the European market
and politicise questions of gas supply, which in fact are of an
entirely economic nature, will not lead to good results...It should not
be forgotten that we are actively familiarising ourselves
with new markets, such as North America and China. Gas producers in
central Asia are also paying attention to the Chinese market. This is
not by chance: competition for energy resources is growing...”
Gazprom said that while it would fulfill its current contracts - signed on
rather favorable terms to the EU customers when Russia was desperate
for overseas income - "If the European Union wants our gas, it has to
consider our interests as well" , referring to Russias wish to become a
fully integrated wholesale energy supplier and retail distributor, just
like all significant UK, US, and European energy companies.
About a third of Gazprom's gas (by volume) goes to Europe. But sale of
that third of the gas that Gaprom supplies brings in two thirds of
Gazproms revenue - about $US25.7 billion in 2005. The reason the
European market is so profitable is that the two thirds of supply to
Russias domestic market has to be made at government-mandated
artificially low prices.
Russia is as much dependant on Europe as a market for its gas as Europe
is on Russia. These two parts of central and west Eurasia are virtually
co-dependant. In the absence of an alternative market for Russia and
an alternative high volume supplier for Europe, neither party has 'the
April - Russia - China - Russia signs an 'outline agreement' regarding
the possibility of selling West Siberian gas to China. West Siberian
gas is Europes main gas source. This West Siberian gas will be very
expensive to pipe east to China, and cost overruns in this challenging
frozen environment are almost certain. There will virtually only one
customer for this gas, China. Price negotiations would be interesting.
April - Russia - Armenia - Gazprom signs an agreement to take control
of Armenian pipelines and a power
station in return for supplying gas to Armenia at a 50% discount to
European current market prices. Even so, supplying gas at half the
market rate almost doubles the current artificially low price of gas in
Armenia. The cheap rate for gas ends in
2009. Armenia is almost totally dependent on Russia for gas supply.
April -Russia - USA -
Turkey - Greece - USA Rice wants Greece and
Turkey to exclude Russia's Gazprom from a €600m gas pipeline project of
the Turk and Greek state gas companies designed to supply Russian gas already imported into
Turkey from Gazprom to go to Greece and also Italy. Rice 'wants' Greece
and Turkey to buy Azerbaijani gas from supplies being developed in
Azerbaijan by a consortium led by BP (USA) and Statoil (Norway) and due
to come on stream next year.
USA is said to be negotiating a military
base in Azerbaijan.
April 12 - Light sweet
crude is now $US68.74.
April - Russia - the massive but isolated Kovykta
gas field in East Siberia will now not begin large scale production
2015. It had been hoped that significant gas would reach Beijing,
Dalian, and South Korea by about 2008. It currently produces about 35
cubic feet a year.
April - South Korea -
imported LNG now supplies 13% of South
Korea's energy requirements. South Koreas long term contracts with
Qatar, Malaysia, and Indonesia end within the next two years.
April 14 - Mexico - USA - Mexico usually exports 50% of its oil
production to USA. In the first 2 months of the year Pemex sent 10.6
million more barrels of oil to
the USA than it did for the same period last year (up from 99 million
barrels to 109.6 million barrels, close to 10% more). This is
about 1.77 million barrels a day, and now over 50% of Mexico's production.
This time next year, the
declining major Mexican oilfield complex
(Cantarell) will be producing 1.7 million barrels a day. USA will need
the equivalent of all of the Cantarell megafield oil in 2007.
April 14 - Mexico -
Mexico's state oil company Pemex had a record
revenue of US$4.88 billion for January-February 2006. Mexico is the
USA's second largest supplier. (Canada is USA's major supplier by
volume.) Mexico is now desperately looking to joint venture
partnerships with available rigs as its major field declines. As
Mexicos ability to supply starts to diminish, oil revenue will plateau.
A third of Mexico's revenue comes from oil. Mexico's population is
currently about 107 million people. By 2015 it will be nearly 120
million. By 2015, a social time-bomb will be released. The question is
whether Mexico's government will conserve remaining oil for domestic
use in the future to reduce the impact of loss of cheap oil, or sell
oil as fast as it can right up to depletion to buy short term social
harmony - at the price of hugely greater social discord later.
April - Venezuela - President Chavez
promises to blow up the Venezuelan
oilfields if a USA aggressor attacks. US officials deny plans for
attacks, then call the elected President a "threat" to "stability".
Presumably "stability" means USA control of Venezuala's oil resources.
Venezuela supplies around 40 million barrels a month to USA, around 60%
of its production. Much goes to it's USA subsidary distributor, Citgo.
April - Venezuela's
state owned oil company PDVSA (Petroleos de
Venezuela) signs a deal
with India to supply 2 million barrels of oil a month. India is one of
the relatively few countries with refineries able to handle Venezuelas
increasing amounts of heavy sour crude.
April - Canada - USA -
China - While USA depends on Canadian oil and gas, USA
continues to treat Canada with contempt, ignoring judgements in
Canada's favor in disputes bought by Canada against USA under the North
American Free Trade Agreement. Canada as a result is increasing it's
trade relationship with China, with the possibility of shifting up to a
quarter of its oil exports from USA to China instead. Canada and China
have agreed to a joint project to build a pipeline from Alberta to
Canada's west coast to ship oil to China.
April - USA - President Bush
orders the Energy Department to delay buying oil to finish replenishing
strategic reserve until USA autumn (september). The given 'reason' was
to 'make more oil available' to motorists in the driving season.
The only possible effect would be to keep one more major buyer off the
market, and to that extent, not fuel oil price rise.
April - USA - daily net oil imports (crude oil plus refined
petroleum) are down by about 13% over previous
weeks to around 11,634,000 barrels per day.
April 17 - Light sweet
crude briefly touches $US70 in overnight trading before settling at
$US69.32. USA petrol stocks prior to the may to september driving
season are down around a million barrels, plus razor edge supply:
demand, and with possible speculators entering 'plays' on future prices
as the USA pre- bombing of Iran propaganda 'talk up' continues
might push prices up for the moment.
April 18 - Anniversary of President
Carters prescient televised address warning the USA people time is running out.
April 21 - Light sweet
crude for june delivery briefly hits $US75.15 on the New York
Mercantile Exchange, a record price.
April 24 - Light sweet
crude is now $US73.15
April 24 - USA -
gasoline price per (USA) gallon tips over $3 in
some areas. Much USA gasoline is imported, some of the borrowed
hurricane Rita remains to be repaid,
and as the USA dollar weakens the cost
of gasoline imports rises, even if crude oil prices remain static. The
USA consumes around 135 billion gallons of gasoline a year (about 370
million gallons a day).
Repayment of 8.6 million barrels of oil borrowed from overseas to
meet the hurricane Katrina
shortfall have now been repaid. There are 1.7 million barrels reamining
to be repaid. As part of his 'Four Part Plan to
Confront High Gasoline Prices', the President directs this 1.7 million
not be repaid, as it is 'sweet' oil, and repaying it would make the USA
gasoline market even 'tighter' (higher prices) than it would otherwise
be. The final 1.7 million barrels will supposedly be
delivered around April 2007.
April 27 - UK - gasoline prices now
hit a record high of 96.13 pence per litre (roughly $US6.55 per US
gallon). Over 60% of the price of petrol in the UK is government
tax (about 61 pence).
April - Middle East - Surging metal (steel, copper, aluminium) and
other commodity prices has tripled the cost of energy projects over the
last two years. Shortage of some minerals is extreme. Copper
stockpiles, in particular, equate to just 2.5 days of daily global
Quotes of the month:
"It is not just the Australian
public, then, that seems to be struggling
to come to grips with the fact that the future of oil prices that once
seemed inconceivably high is upon us. Service Station Association chief
executive officer Ron Bowden this week summed it up: "You're living in
a fool's paradise if you think you're just weathering a storm and
everything will go back to normal. Normal is high energy prices ...
a litre is quite possible."...Some seemingly obvious answers,
converting vast natural gas
reserves into liquid fuel, may not be as cheap or last as long as
expected once the world starts looking at this alternative. The US
(which could use up Australia's gas in three years) and Europe have
depleted much of their natural gas, and China is buying up Australian
gas...Politicians have not led the way in informing the public
...State governments, Victoria's included, are backing huge road
that keep commuters in cars and promote oil use. The car industry is
also built around six-cylinder cars, rather than smaller,
fuel-efficient models that motorists are realising are a smarter
choice...If Australians and their leaders act now, this country can be
when oil supplies become unaffordable or unreliable. Planning for the
transition from an oil-dependent economy is one of the great challenges
of this generation."
Editorial in The Age newspaper, Australia, 23rd April 2006
"Worry now. The problem is enormous. There will be massive shortages
unless we act in time. But mitigation takes a long time. Peak oil is
not a theory; 33 out of 48 of the largest oil producing countries have
hit peak. There is no warning for peak, as production goes up until the
peak. After peak, the drop off is sudden."
Robert Hirsch, Senior Energy Program Advisor at the
consulting firm SAIC speaking at a Pentagon-sponsored presentation,
"Energy: a Conversation about Our National Addiction" on April 24th 2006
April - UK - UK Coal re-negotiates key contracts with
electricity generators. The contract calls for an increase in the price
of coal of 40%. The generators cannot import all their coal as
the UK rail network cannot cope with the volume that will be required
as gas supplies fade. 50% of UK's power generation now comes from coal
April - USA - brief shortages of gasoline appear in some areas as
the formula for USA gasoline is changed to exclude environmnetally
damaging chemicals. The chemicals are replaced with ethanol. Ethanol
absorbs water and can't be shipped in pipelines. It must be trucked to
April - USA -
gasoline dependant USA cannot buy up enough
gasoline from Europe (which predominantly runs on deisel, and whose
largest gasoline exporter, Total, has re-jigged refineries to produce
more deisel at the expense of gasoline) and, exacerbated somewhat by
re-formulated gasoline shortages in some areas, the supply/demand
mis-match pushes up the price of transport fuels. The light crude
refineries want for the summer driving season is in short supply - as
it was last
year. There are still insufficient refineries to handle sour and
heavy crudes. Many smaller USA refineries are looking for light sweet
crude to process for the summer driving season, bidding up the price of
this class of crude, and helping bid up the price of the gasoline made
April - USA - Ethanol is mandated
in some states as an oxygenate
added to gasoline to replace the carcinogenic MTBE. This will
require 700 million gallons of ethanol a year in California alone.
is insufficient ethanol supply in the USA to accomplish the government
mandated switch-over in those states. Even if it were possible to
produce the 6 billion or so gallons of ethanol needed in 2006, this
represents only about 4% of the gallons of petroleum the USA uses per
year. But ethanol is not volume for volume equivalent to gasoline in
the energy it supplies. Ethanol
contains only 70% the energy value of an equivalent volume of
gasoline. The theoretical 6 billion gallons of ethanol would substitute
for less than 3% of USA's petroleum usage.
USA ethanol production increased last season as production of maize for
ethanol becomes more competitive with gasoline. There are two main
reasons. First, the taxpayers of USA pay the farmers to produce it
(farm welfare) via subsidies, presumably in small part to achieve
sufficient supply for the ethanol switch-over states, partly for Bush's
flawed dream of an ethanol economy, and partly to'pay-off' midwest
republican pressure groups. Second, new varieties of maize developed
for ethanol production have, in tandem with improved processing
techniques, improved yeild of ethanol per bushel of harvested
maize. In 1980 a US bushel (56 lbs/25
kg of corn/maize) yielded 2.5 US gallons of ethanol. Now the yield per
bushel is about 2.8 US gallons per bushel.
Current USA maize production is very roughly 11 billion
Most maize is grown for animal feed (pigs and cattle), and the amount
grown is relatively static from year to year. Nearly 2 billion bushels
are exported, and this amount has also remained fairly static over the
last decade or so. Ironically, this years stored-maize surplus will be
gone by the time next years harvest is in, and as the current drought
has decimated USA planting this spring, next years harvest (2007) will
be short over even USA domestic demand by around a billion bushels.
This means the subsidized USA beef and pig and poultry fatteners will
competing with the subsidized ethanol producers for that last billion
bushels of corn...prices will rise. USA beef and pork will be more
expensive. Ethanol will be more expensive.
In 1994 maize production for ethanol was relatively insignificant. But
in 2005 it was getting up towards 2 billion bushels.
Clearly, the USA government is 'pork barreling' (paying large taxpayer
funded welfare checks to corporate farmers) USA ethanol production from
maize. Vast Department of Energy subsidies go to research and
development of 'anything ethanol'. But it is both a waste of public
money and a subsidy to the already rich.
Nitrogen is the primary fertiliser for corn. Nitrogenous fertilisers
are mostly made from
natural gas. Nitrogen fertiliser prices have increased dramatically
with the increased price of natural gas. Anhydrous ammonia, selling for
$US150 a ton a few years ago, reached $US400 a ton in september
2005. Transport costs to isolated farms were an additional $US50 per ton at that
It is uncertain whether maize plantings will remain steady or decrease
in future. Some predictions are for over 1 million less acres of maize
planted this USA sowing season. And drought has already ruined some
When all factors of production of ethanol from maize are accounted for
- fuel for planting and harvesting, energy cost of making and
transporting fertilisers and herbicides, energy costs of pumping
irrigation water from ever-depleting underground aquifers, energy cost
of manufacturing and transporting the manufactured ethanol - then
ethanol from maize takes more energy to produce than it returns. At
this time, unsubsidized corn ethanol is estimated to economically break
even at the equivalent $US100 barrel of oil. But when oil eventually
reached $US100 a barrel, the finishing line is shifted further out
because all the costs of producing the ethanol would rise yet again as
oil prices rise.
It is only economic now because of obvious and hidden
farm welfare subsidy payments extracted from taxpayers and handed to
the corporates (710,000 USA farms receive farm subsidies, substantial
numbers of which are controlled or owned by rich giant corporations).
April - Sweden - The only country to acknowledge the reality of the end
of cheap energy, Swedish taxpayers continue to invest huge capital sums
in railway and electric tramline infrastructure and maintainance.
Around 90% of Swedens rail network is electrified. A large part of
Swedens domestic heating comes from its hydro-electric and nuclear
power capacity (Sweden has around 15% of the world uranium reserves,
albeit mostly low grade). Increased demand is expected to be met from
municipality heat schemes using a variety of co-generation and
heat-retrieval sources from industry, burning of waste, some coal, fuel
oil generation for peak demand, and efficient wood pellet burners.
Transport industry is actively pursuing hybrid cars and trucks, and the
use of biofuel, including from the waste produced by the Swedish paper
industry. Sweden actively plans and implements projects for the
impossible - an oil free economy by 2020.
April - China - Aware of
its dependance on imports of foreign oil in a politically unstable
region, China moves its strategy of developing coal-to-liquids
technology up a click. China's state-owned coal producer, the Shenhua
has a CTL plant under construction in Mongolia, and is planning joint
venture plants in South Africa with Sasol and Shell. The South African
facilities are being designed to produce the equivalent of 10 million
tons of crude oil by 2010, increasing to 30 million tons of crude oil
equivalent by 2020. Yanzhou Coal Mining Co, also a major coal producer,
plans to complete construction of a CTL plant producing 2 million tons
of oil equivalent by 2008. The estimated production from all the
CTL plants in China either under construction, or with construction due
to start, is about the equivalent of 16 million tons of crude oil.
The economics of these plants is predicated on a high price for oil and
a largely unchanged price for coal. As China gains most of its power
from coal-fired electricity generation plants, China's state-owned
electricity industry will be increasingly competing with its
state-owned coal industry for supply. China says it used 2.19 billion
tons of coal in 2005, a 10% increase over 2004. More coal-fired
electricity plants are under construction to meet China's rapidly
growing demand for electricity. An estimated 300 million people will
move into China's industrialised coastal cities over the next 20 years,
seriously straining electricity supply. Increased demand for coal for
both electricity and to extract oil from would drive up the price of
coal in a market-led economy. China is a state-command and control
polity, and price increases may be frozen (subsidised) - in effect a
new tax on the people of China. Increased coal use will also require a
huge investment in rail
infrastructure. As with all industrialised nations, the question is
whether the investment capital should be applied to gas to liquids or
to energy conservation and development of solar and wind power.
April - USA - Rutgers
chemists refine and improve the efficiency of the
Fischer-Tropsch process that converts coal to oil. The process
produces useful gas and useful medium heavy products for deisel, but
too much middle hydrocarbons, which have made it uneconomic to convert
coal to liquid fuels. The new invention changes the middle weight
products to useful forms, making coal to liquid fuels economic for the
first time. USA has around 286 billion tons of coal of varying
usefulness at varying depths in the ground.
Diesel transports 94% of all USA freight in the U.S. and 95% of
buses.USA uses about
56 billion (US) gallons of diesel a year.
April - USA - 22% of the Gulf of Mexico oil production, and 13% of gas
production has still not been brought back on stream after last years
hurricane season. Many platforms have yet to have underwater damage
fully assessed, due to lack of divers and boats. Most work is on
permanently sealing off small wells that are uneconomic to repair. The
hurricane season starts again in June.
April 17 - USA - Jet fuel in USA is now the equivalent of $US89.55 per
barrel when unrefined crude is selling for around $70 per barrel, a
difference of around $US9 a barrel. After the dispuptions of Hurricane
Katrina, jet fuel in the USA climbed to around $US107 a barrel, when
crude was selling for about $US63 a barrel, a difference of around
$US44 a barrel.
domestic and cargo airlines now consume jet fuel at the
rate of 19.9 billion
gallons a year (a little less than last year, partly due to the
industry achieving fuel
efficiencies of around 16%).
Every one cent increase in the price of a gallon
fuel adds about $199 million extra to the total annual fuel bill of USA
airlines. Some airlines are on the point of bankruptcy already.
USA refineries produce 1.55 million barrels of jet fuel a day. A nett
of 92,000 additional barrels a day is imported (a tiny amount of USA
production is exported for a variety of reasons).
The USA airline industry cannot afford another hurricane Katrina this
April 22 - USA - Canada - Delivery of 50,000 barrels a day of heavy
crude from west Canadian oil sands through a link into a 858-mile long
pipeline from Illinois to Texas refineries commences. The USA leg of
the pipeline has been predominantly unused for some time.
April 22 - USA - Crude imports from Canada in January and February now average of 1.736 million
barrels a day, nearly 13% higher than the same period last year.
April - Qatar - with
the huge worldwide demand for natural gas products such as urea (Qatar
has the largest gas-based fertiliser plant in the Middle East) and
gas production is now around 11 billion cubic feet a day. At this rate
of production, it will be producing 25 billion cubic feet a day by
production level that was not expected until around 2020. Qatar is
re-evaluating reserves in the Northern gas field to see if this rate of
production is sustainable into the future. It cancelled two extraction
programmes last year. Qatar expects to triple LNG production by 2010.
Qatar has the worlds largest gas field, and is of great strategic importance.
- Russia - Russia announces stage one of construction of the East
Siberia-Pacific Ocean Pipeline
(ESPO). This huge project, handled by Transneft, Russia's state-owned
pipeline company, will take crude oil from Taishet, near
Lake Baikal in East Siberia, to the port of Nakhodka in Perevoznaya Bay
on Russia’s Pacific
Ocean coastline. The pipeline capacity will be 1.6 million barrels a
day. The estimated cost of the pipeline is at least $US11.5 billion.
Stage one is scheduled for completion in 2008. Initially, oil will be
able to be tankered from Nakhodka to East Asian markets, including
China and Japan.
A further pipeline extension between Russia's
Blagoveshchensk andChina's Daqing will see part of the oil piped
directly to China, and further branch lines could pipe oil directly to
North Korea and South Korea. A later stage sees a refinery built near
the Chinese border to on-sell value-added refined products to China,
Asia, and the Pacific.
April 23 - Russia - West Eurasia - Russia's president of oil pipeline
monopoly Transneft observes that Russia has "overfed Europe with oil"
and "surplus supply lowers prices". Because current pipelines head to
west Eurasia, Russia can't do much to reduce supply to its European
customers without losing revenue. But once the Eastern Siberia-Pacific
Ocean pipeline (ESPO) opens, around 1.5 million barrels a day will
east, not west. This will, in Vainshtok's estimation, reduce supply to
Europe without cutting income, and presumably leverage higher prices.
April 26 - Iran - Oil Minister Kazem Vaziri Hamaneh says "The need of
the world for energy is soaring,
and if Iran is taken out of the equation, prices will shoot up and
there will be big difficulties in the energy markets...We don't want to
cause hardship for
any consumers around the world," he said. "We have a commodity and we
want to sell it, and we are doing our best and we have shown in the
past we are a very reliable source of supply and meeting the demand of
the world". He also noted that Iran's willingness to supply the world
oil market through all recent disruptions should be noted by the
countries of the UN when considering USA's call to aggressively
'punish' Iran for its legitimate nuclear energy program "In my opinion,
there are reasonable people in the U.N., and when they
are looking at this issue and seeing our activity, they will decide
with logic and prudence..."
Iran's virtue in being a reliable supplier is of course dictated by its
absolute reliance on oil revenue. Around 40% of revenue is from oil.
The birth rate is high, incomes are low, and employment is dependant on
a relatively inefficient industrial and agricultural and service sector
that is either state owned or subsidised. Iran needs to spend a lot of
money on keeping its oilfields pressurised (amongst other elements) if
it is to continue to produce the amount of oil it needs to fund the
social needs of a young and growing population.
April 26 - Iran - Iran's oil minister admits that the decline rate of
it's mature fields averages 6% - 7%. Iran's oil production is stagnant,
at about 4 million barrels a day. It
consumes at least 1.5 million barrels a day domestically. It exports
about 2.5 million barrels a day.
April 26 - Iran - Iran
can provide only half it's own
gasoline. It must import gasoline to make up the shortfall. Iran's
gasoline consumption continues to
increase. The annual increase in the amount of gasoline
Iranian's consume has now reached the rate of 10%. Iran now imports
around 160,000 barrels a day of refined gasoline, at a cost of around
US$4 billion a year. A new refinery is
planned to provide sufficient gasoline for domestic needs without
having to import. The refinery, once built, will use about 500,000
barrels of oil a day. This will reduce the amount of crude available
for export, but increase the amount of diesel and fuel oils available
for sale overseas.
April 26 - Iran - Iran plans to spend at least $US25 billion for the
next four years on oil and gas development and production to make up
declines. A further $US25
billion will comes from foreign partners.
Intensive development of the oil fields may produce an additional
pumping capacity of 1.3 million barrels a day. But the oil Minister
says that after taking existing declines into account, this represents
only an additional 500,000 barrels a day amortised over the four year
The conclusion from his statements is that existing mature fields, if
left 'untweaked', would have naturally declined by around 800,000
barrels a day over this four year period. The decline rate of big
fields is very important. It suggests that by 2014 decline in Irans big
oil fields will outstrip new production by at least 300,000 barrels a
day, potentially dropping Iran's export production to around 2.2
million barrels by 2014. It also suggests that heavily 'massaged'
fields will enter a phase of steep decline some time after 2014.
April - Iran - Iranian diplomat notes Iran's population has more
than doubled since 1979. It's installed electrical generation capacity
is 30,000 megawatts, but needs an additional 2,000 megawatts capacity
to be brought on line to meet growth in demand. Domestic oil
consumption is increasing 8% a year, and "57 of the 60 Iranian oil
fields need major repairs, upgrading, and re-pressurising which would
require, over a 15-year period, investment of at least US$40
billion...[if current domestic consumption trends continue]...Iran
could become a net oil importer by 2010, a catastrophe for a
which relies on oil for 80% of its foreign currency and 45% of its
Currently much of the developed Iranian gas is
used domestically for
electricity generation and for cooking. As few fields new are being
developed, there is no extra gas available for export beyond existing
contracts - especially as domestic consumption is huge and continuing
to increase. Indeed, some commentators believe Iran will be in gas
'deficit' by 2010 if current trends continue.
The diplomat notes that even with massive foreign investment, Iran's
electricty needs cannot be met by oil and gas alone, and that
"According to the IAEA, "...of the new [nuclear power] plants being
built, 18 of 27 are also in Asia, all driven by pressures of economic
growth, natural resource scarcity and increasing populations. These are
the same pressures faced by Iran.
Iran's uranium ore deposits are sufficient to generate the same amount
of electricity as could be obtained from burning of 45 billion
barrels of oil.
April 26 -
Iran - Iranian Oil Minister Kazem Vaziri Hamaneh
announces that the Iranian Oil Stock Exchange is nearly complete, and
the bourse will be launched next week. Presumably its first trades will
be in petrochemicals, as previously
April - USA - The occupation of Iraq, the building of vast new
extension' bases in Iraq, and control of the Middle East oil resources
via Iraq, Qatar and the Gulf fleet now costs over $US 6 billion a
month. The initial investment in securing Iraq cost $US320 billion. USA
outstanding borrowings (via Treasury 'notes') are around $US660 billion.
April - The USA current account deficit is now a record 7% of GDP.
Historically, such levels would push the value of he dollar down by
over 33%. The US dollar has hit a year long low against the Euro (the
dollar commenced depreciating against the euro since Saddam Hussein
switched payments for oil to euros in november 2000 - at the beginning
of the year the dollar regained 12% of the 50% it has lost to the euro
since 2002, and is now falling again). The dollar continues to fall in
value against virtually all major currencies. The International
(comprised chiefly of big USA
and European banks) states the obvious, saying the USA dollar will
ultimately have to depreciate "significantly" if "global economic
imbalances" are to be resolved in an "orderly" fashion. The USA has
funded its protection of the oil-backing of the dollar via "guarding"
Middle East oil and via dollar payment for oil and ability to print
endless dollars. As a result, USA
domestic savings are almost non-existant, and consumers are in debt up
to their eyebrows. The amount of dollars in circulation has now grown
so much that the USA federal reserve no longer dares report it. Only a
world that will continue to buy US treasury
debt notes because they are backed with oil will keep interest rates
down and thus allow USA consumers to remain solvent.
But as the dollar devalues, the cost of imported oil rises due to
of the buying power of the USA dollar. In turn, as oil begins to be
denominated in other currencies, and particularly the currencies of oil
exporting nations and 'balanced budget' countries (some of which are
also buying considerable amounts
of gold) the increasingly unfavorable USA exchange rate drives
up the cost of some oil even when crude prices remain stable.
'Confidence' in the (essentially hugely overvalued) USA fiat currency
then begins to erode. USA interest rates must then rise.
This may mark a tipping point, the
beginning of 'demand destruction' in
USA. That is,
costs of transport fuels may cause people to reduce journeys, and
changing transport options. Peoples discretionary spending power falls.
When interest rates rise in order to tempt overseas people to buy yet
more dollars, discretionary spending power erodes further. Imported
goods become more expensive. (The dollar value of USA goods and
services imports is now 60% greater than the dollar value of exports.)
Consumer spending drives 70% of the USA gross domestic product, with
most of the tradable goods and services being imports. Less spending
power means jobs become
'at risk'. At this point, the existng slow slide into recession
would normally increase somewhat - if not for USA's unique ability to
The question now is, USA having protected the west's unfettered access
to Middle East oil, why has it not taken it's due commission for the
service provided? Or has it already been paid?
Since it is the U.S.
that prints the
petro-dollars, they control the
flow of oil. Period. When oil is denominated in dollars through U.S.
state action and the dollar is the only fiat currency for trading in
oil, an argument can be made that the U.S. essentially owns the world's
oil for free."
- Paul Harris, february 2003
April 28 - Venezuela - Petróleos de Venezuela (PDVSA) buys
100,000 barrels a day of light crude oil from Russia until the
end of 2006 to supply existing customer contracts in Germany. Venezuela
may have overcommitted light oils as it trades oil for services within
the South American region. Venezuela has to buy the light crude because
it's production of light crudes is insufficient to meet the contract.
Venezuela produces mainly heavy crudes.
April - Norway - crude
production is about 2.22 Million barrels a day for the month, lower
then anticipated due to shut-downs for maintenance. The older (1970's)
Norwegian giant fields are declining at a rather rapid rate - greater
than 12% a year. Their decline has so far been compensated by
production from newer fields. Norwegian fields are highly pressurised
to maintain production. The rapid decline rate of these giant fields
may shift their total depletion profile to more of a cliff than a
gentle down-slope as new smaller fields also begin to decline and costs
of extraction increase.
April - Saudi Arabia -
Asia - Saudi oil exports to Asia (which takes nearly half of Saudi oil)
are 350,000 barrels a day lower than
April - Saudi
production is down to 9.1 million barrels a day, instead of an
estimated average of 9.5 million barrels a day for the first quarter of
the year. The Saudis claim
due to reduced world demand for oil, both light and heavy. They also
claim the seasonal
refinery close downs of recent months in the Atlantic basin and Asian
region - which they
claim has removed 3
million barrels a day of production capacity (others say april-june
refinery closures took out 1.1 million barrels a day of capacity) - has
no relevance, as world demand, they claim, is down anyway.
The drop in demand is said by the Saudis to be in the Asian markets,
with Japan's demand for summer gasoline, for example, said to be less
than usual. There remains no transparency or independently verifiable
in Saudi claims on production and production rates.
May 1 - Bolivia -
Announcing "The pillage of our natural resources by
companies is over", Bolivia's President Evo Morales passes a
Presidential decree requiring all foreign oil and gas companies to sell
it's products through the Bolivian state. The military immediately
moves to control 53 gas fields, pipelines
and refineries. Bolivia is the most deeply impoversihed country in
South America. Bolivia has the second largest gas reserves (48.7
trillion cubic feet) in South America, after Venezuela. Foreign energy
companies controlling Bolivia's two largest gas fields will receive
18% of all nett revenue. Companies operating smaller fields will
receive around 50% of their nett revenue. The major foreign companies
affected are Petrobras (Brazil), the Spanish-Argentine company
Repsol YPF, British Gas, British Petroleum and
Total (France). Petrobas controls 14% of Bolivia's gas reserves.
Currently most of Bolivia's gas is exported to Brazil and Argentina.
May 5 - Light sweet
crude is now $US74.61
May 6 - Mexico - State owned Pemex gasoline stations in Mexicali,
Tijuana and the northern
Baja cities drop their 'magna' (regular) gasoline price by US66 cents
after Mexicali taxi drivers protesting high petrol prices block
deliveries of gasoline to towns and tourist destinations. The state
governor of Baja California Norte convinces Permex to renege on a
'pact' that links gasoline prices to those in USA cities near the
USA/Mexican border. The linkage was designed to discourage people in
USA travelling to Mexico to fill up with cheap gas.
May 6 - Mexico - USA - USA recreational boat owners in Southern
California travel to Mexico's coastal marinas in Baja California Norte
to fill up with cheap diesel. Diesel at the Mexican marinas sells for
around $US2 a gallon, and in USA's San Diego it is around $3.80 a
May - Oil Companies - oil companies, private and state owned,
unsuprisingly, report record profits. Exxon Mobil reports a profit of
$US8 billion for the last quarter. The profits from state owned oil
companies in impoverished and overpopulated countries will go on social
investment to try to make up for decades of non-investment during a
corrupt colonial past. In other similar countries it goes to corrupt
officials and favored classes. The profits from private oil companies
goes to rich shareholders and to pension funds for the middle class,
where it is re-invested in stocks.
Oil money is a major source of capital for the fading window of
opportunity to immediately invest heavily in photovoltaics, electric
battery cars, public transport, solar heating and a host of other
energy conserving technologies that might make renewable energy not
just affordable, but the only choice. One wasted, this enormous
capital, this one opportunity, will never re-appear. Time is running
May - Russia - Liquified
natural gas from Sakhalin phase II, whose
startup has been delayed until mid 2008 (the entire cost of the second
phase of the Sakhalin gas and oil project is now expected to be double
the initial $US10 billion estimate) is now fully pre-sold. Sakhalin
energy, a joint project company dominated by Shell, completing a
two-train LNG plant with a total capacity
of 9.6 million tonnes of LNG year. Almost the entire output of the LNG
plant has been sold to Japan's Chubu Electric Power Co. and Osaka Gas
Co, with minor amounts going to Hiroshima Gas. As the surrounding seas
are only ice-free in summer, special ice-class LNG carriers are needed
to maximise the time shipment is possible.
May - Saudi Arabia - exploration to hold off the gradual production
decline from the mature Saudi fields cranks up. The Saudis now have
about 20 exploration rigs searching for offshore oil, rather than
around 7. The number of onshore exploration rigs is expected to
reach 1,120 by the years end, up from 85 at the end of last year.
May - the new
200,000 barrel a day oil pipeline oil from Kazakhstan to neighbouring
China commences operation delivering crude oil from Chinese-owned
PetroKazakhstan. Talks between China and Kazakhstan on building a
new gas pipeline from Iran to China via Kazakhstan continue.
May - Turkmenistan - The Turkman president visits China to discuss
building a new pipeline to take Turkman gas to China.
May - USA - vice president Cheney visits Kazakhstan to try to convince
the Kazaks to build a new pipeline to take Kazakh gas west to
Azerbaijan and then on to Turkey, by-passing Russia. Kazak gas would
have to be piped
under the Caspian sea, whose adjacent states - including Iran - have
yet to agree on the demarcation of offshore borders of their respective
countries. Cheney urges Turkmanistan to participate in the proposal by
piping its gas to the proposed pipeline and patching it in. One
objective appears to be to create an alternative to Russias gas
pipeline to Europe.
May 6 - Iran - Iranian oil bourse is licensed by the Iranian Oil
Ministry. Trading will be in Euros. This will be the fifth oil trading
market, after New York, London, Singapore and Tokyo. Except that it
will be the only market trading in Euros, not dollars. Iranian
president Mahmoud Ahmadinejad says the oil bourse will supposedly
commence business within the next two months. If this is true, it is
clearly aimed at oil trading, not petrochemical trading.
May - USA - vice president
Cheney accuses Russia of rolling back
democracy and bullying
its ex-Soviet neighbour states. At a conference in Lituania
attended by European heads of state, he says Russia
uses oil and gas as "tools of intimidation and blackmail."
legitimate interest is served when oil and gas become tools of
intimidation or blackmail, either by supply manipulation, or attempts
to monopolise transportation"
-vice president Chney of USA
May 10 - Russia - In the 'State of the Nation' address Russia's
president replies to Cheney
and his hypocritical
"Where is all this pathos about protecting human
rights and democracy
when it comes to the need to pursue their own interests?...We are aware
what is going on in the world - comrade wolf
knows whom to eat, it eats without listening, and it's clearly not
to listen to anyone'', referring to the USA invasion of Iraq
to ensure continued dollar
hegemony and direct influence over hydrocarbon supply, and USA's
looming threat to extend
feeding ground into Iran.
May 10 - Russia - In the
'State of the Nation' address Russia's
president proposes a Russian oil and gas exchange in Russia denominated
in the Russian ruble.
The aim is to make the rouble an internationally convertible currency
"The rouble must become a more widespread
means of international transactions. To this end, we need to open a
stock exchange in Russia to trade in oil, gas, and other goods to be
paid for in roubles."
Russia's oil exports are about 15% of the world export oil trade.
Russia exports about 25% of the worlds gas. In contrast, Iran has about
6% of the world oil trade, and exports relatively little gas as yet.
Clearly, Russia's opening up of an oil and gas bourse will have far
more impact on the USA dollar than Iran's move to open a bourse. The
move to back currencies with both gold and oil seems to be a widespread
trend that cannot easily be reversed. With a weakening USA dollar, oil
importing countries outside the USA can buy more oil if their currency
is strong relative to the USA currency. Oil exporters are being
increasingly 'stuck' with dollars whose worth erodes almost as soon as
they receive them. Iran's move to diversify its currency receipts for
oil is no more or less than any other major oil exporter is doing,
openly, or quietly. Faced with this widespread and unstoppable move
away from 'dollar hegemony', Iran's move to other currencies assumes
much less importance. Is Iran now safe from USA
- president Putin of Russia
- Russia - UK - Eurasia - USA - As West Eurasia faces the certainty
of being dependent on imported gas for 80% of its needs by 2030, the
focus of energy security talks amongst the G8 shifts to 'diversifying
supply' away from Russia, and G8 investment/control of Russian gas
resources. Russia feels its considerations are being ignored, as it is
May 15 - China - Several Chinese economist advocate - "unofficially" -
China protect itself against the falling USA dollar and "...in case of
future possible turbulence in the international
political and economic situation" by increasing the Chinese central
bank gold reserves from 1.3% to between 3% and 5%. As China has a
massive $US875 billion of reserves, this would require the purchase of
1,900 tonnes of gold. In spite of record gold prices and regular profit
taking by speculators, gold has bounced back in price very rapidly
following each dip. Some bullion traders suggest that this could only
happen if a major player was quietly buying on the open market. China
as yet has not informed the IMF of any 'adjustment' to its bullion
May - UK - as its indigenous gas supplies fades, the UK scrambles to
build infrastructure for a new era of dependancy on imported gas. New
interconnectors are being built which will handle 58 billion cubic
metres by 2008, capacity for handling LNG is expected to reach 43
billion cubic metres a year by 2010, and additional gas storage of 5.4
billion cubic metres is being planned or built - also to be complete by
2010. These new facilities will be sufficient to store and handle
imported gas representing 87% of the forecast gas use in the UK in
2010. The more trenchant question is where reliable long-term supply
for these facilities will come from in an increasingly gas-hungry world.
May - Venezuela - China - USA - Venuzuelan state oil company PDVSA
signs a memorandum of understanding with the China State Shipbuilding
Corporation to buy 18 oil tankers to transport crude and oil products
to the Asian market. Venuezuela currently ships 15% of its production
to Asia. It ships nearly 70% of its oil to USA. Around 15% goes to the
Caribbean region, where,
ironically, a large part is refined and the
products re-shipped to USA. In order to reduce dependancy on it's USA
wants to increase its sales into various Asian markets to 45% of
production by 2012. The shipbuilding deal includes a requirement for
technology transfer and training from China to Venuezuelan workers.
China is also
increasingly able to handle the heavy and extra heavy
crude that countries such as Venezuela are starting to have to turn to
as lighter oils begin to fade. Venuezuela now produces about 700,000
barrels a day of extra heavy crude.
May - Venezuela - China -Venezuela signs a deal to
supply 300,000 barrels of
oil a day to China (15 million tonnes per annum) starting within the
next few years, and possibly by the end of 2006.
May 13 - Venezuela - UK - An EU-Latin America summit is held in Vienna.
Venezuela's president Chavez lambasts the Blair/Thatcher 'hands off'
'neoliberalism' that has delivered Latin America's oil and gas
resources into the hands of the rich (many of whom are foreigners)
while people starve, saying "neoliberalism has begun its decline and
has come to an
end" and "a new era has begun in Latin America...There is a big
ideological confrontation in the
region, some defend the big project of Washington [installation and
support of a kleptocracy under the guise of 'investment'] that has
people. We want a profound change, a new socialism and we are going to
debate: do we want socialist or capitalism? We say socialism.""
Blair says "What countries do in their energy policy
when they are energy producers like Bolivia and Venezuela matters
enormously to all of us. My only plea is that people exercise the power
they have got in this regard responsibly for the whole of the
international community." The word "responsibly" means, of course,
selling oil to the USA, in US dollars, even as the US dollar slips in
value. In other words, continuing to underpin the USA dollar with
May - UK - President
Chavez of Venezuela visits UK to talk to some 'grass roots' social
democrat labour party supporters about democratic control of countries
resources. Chavez, with huge popular democratic turnout and support
(re-elected nine times in free and fair elections, independently
monitored), has used oil money to help educate, employ, feed, and treat
the huge number of grindingly impoverished people in Venezuela. Chavez
heating oil to impoverished USA citizens via USA charities last winter.
Chavez decentralised the hugely corrupt Venezuelan government,
introduced popular referenda to vote on issues, and enshrined the human
rights of previously discriminated against 'mixed blood' Venezuelan's
in the constitution for the first time ever. He is absurdly villified
by some of the UK press ( 'president' Blair was elected by 20% of the
vote), quoting one of the USA's chief architects of the invasion and
break-up of Iraq, Rumsfelt, blatantly and manipulatively (and
apparently unaware of the rich irony) comparing Chavez to Hitler!
America is an even weaker 'model' of a democracy than the UK's
non-proportionally represented parliamentary system. In the USA's
'representative' democracy (actually a two party state) only around 33%
of eligible American People vote in mid term USA congressional
"Chávez is, of course, a threat,
especially to the United States. Like
the Sandinistas in Nicaragua, who based their revolution on the English
co-operative moment, and the moderate Allende in Chile
he offers the
threat of an alternative way of developing a decent society: in other
words, the threat of a good example in a continent where the majority
of humanity has long suffered a Washington-designed peonage. In the US
media in the 1980s, the "threat" of tiny Nicaragua was seriously
debated until it was crushed. Venezuela
is clearly being "softened up"
for something similar.
A US army publication, Doctrine for Asymmetric
War against Venezuela
describes Chávez and the Bolivarian revolution
as the "largest threat since the Soviet Union and Communism"..."
John Pilger, writing in The Guardian newspaper (UK), may 13 2006
The "threat" is not a model of a
relatively successful democratic and
decent society in South America that might embarrass the USA. The
threat is Venuezuela diversifying it's oil sales so a lesser proportion
goes to USA. At the moment, the USA is one of the few nations with
refineries able to handle heavy Venezuelan crude. This reality
currently ties Venezuela to the USA market. But new refineries are
being built in Asia and elsewhere that can handle heavy crude. The USA
industrial/military/presidential complex needs an
excuse to take control of the flow of oil from Venezuela so that the
vast bulk of it continues to flow to USA, and not elsewhere - and
especially not to Chinese East Eurasia.
Because there is no possible excuse for aggression against a democratic
country, the USA therefore needs to spread crude propoganda against
Chavez to try to 'justify' to the world its illegal actions in pursuit
of its own interests. So long as Venezuela is one of the major
suppliers of oil to USA, the
politics of overwhelming USA military power say Venezuela will continue
to sell most of its oil to USA.
May - USA - China -
Cuba - Cuba's 'possible' oil reserves in the
northern Cuban basin are guessed at in a 2005 US Geological Survey
report as being between 4.6 and 9.3 billion barrels. USA politicians
complain the USA has cut itself out of the action right in its' "own"
backyard by embargoing trade with Cuba. Cuba state oil company
Cubapetroleo has signed a joint venture deal with China's Sinopec to
explore Cuba's offshore resources north of Pinar del Rio. Sinopec will
bankroll the exploration, and production from any finds will be jointly
shared between the two partners. Many countries, including China,
Canada, Brazil, Spain, and France now either have or are seeking joint
venture concessions with Cuba to explore the Cuban offshore basins.
May 15 - Libya - USA - Libya is removed from the list of 'terrorist
states' in which USA firms may not invest. Libya produces about 1.5
million barrels of oil a day, with production expected to peak about
2010 at about 2 million barrels of oil a day before commencing decline.
May - Iraq - oil production has still not returned to levels available
prior to the Gulf war. The USA invasion has resulted in removal of
around 1 million barrels a day of oil. Ironically, this 'lost oil' now
causes prices to increase on the world market, while at the same time
making it an even more valuable asset of the USA - and of other OPEC
members (USA, in effect the 'state' owner of Iraqi oil via
ultimately-USA traceable contracts, is now a de facto OPEC participant). About
476,000 barrels a day of USA's Iraqi oil is consigned to mainland USA.
May - Big oil companies scratch hard to find oil concessions to drill.
Big oil no longer finds enough to replace declining production from
existing fields. Private oil company wells are now having to explore
and drill further out to sea, in more difficult environments, and have
to drill much deeper. At the same time, there is a worldwide shortage
of skilled oil workers and of equipment. As a result, the average well
now costs $50 million - five times the cost of a decade ago. Such huge
investments investments now have to be very carefully weighed against
the 'certainty' of the prospect, it's size - and the political
stability of the country whose territory they are drilling in.
May - Saudi - A Saudi Aramco oil
spokesman says the Saudi mature fields
are expected to decline at a 'gross average rate' of 8.5% a year unless
there is additional
"maintenance" and drilling. This 8% is an average of the decline rates
of all the fields, which varies from 5% to 12%. Even a huge 12% decline
rate in a small field such as Halfaa-1
that produces little oil is trivial. But even a 5% decline rate in a
world-beating mega field such as North Ghawar is hugely important.
Given that the Saudi
mega fields - and the critical North Ghawar
in particular - are already pressurised, the need for even
greater pressurisation and re-working is a worrying admission.
claims that the routine drilling of "additional development wells" in
the mature fields, plus a "maintain potential" programme (presumably
pressurisation and replacing older vertical wells with multiple
branched horizontal wells), has lowered the "composite" decline rate to
But to pressurise and re-work mid and south Ghawar to a level
for dropping North Ghawar production - let alone the project to
pressurise the very low-flow Khurais field - may require more oil rigs
and operators than are readily available in the world.
Four new wellhead production platform at the Safaniya
mega-field due to
commence operation by late 2007 will increase flows of heavy oil from
this field. An additional three production wellheads as the smaller
Zuluf field will also increase production of crude from Zuluf. Again,
this is heavy crude. Again, it is for the future. And will require
specialised refinery expansion to handle this class of crude.
May 15 - South East Asia and
China has reduced the amount of gasoline it exports. Partly as a
result, the benchmark 92-RON gasoline (close to USA's 87 octane
climbs to a record US$90.55 (HK$706.29) a barrel at Singapore.
May - Thailand - Increased transport costs depress consumer spending.
Price exceed ability to pay. Oil companies import less fuel from the
international market, gambling on drops in the international price.
Reserves in store fall to 40 days supply (they should be 90).
Consumption of diesel drops from 55 million litres to 51
million per day. Gasoline consumption drops from 20 million litres a
day to18 million litres daily. Thailand imports 90% of its 70 million
liter a day total transport fuel
May - USA - 3 out of 4 consumers surveyed claimed they were reducing
their spending as a direct result of increased petrol prices.
May - Saudi - Saudi Aramco and France's Total oil company sign a
contract to build a 400,000 barrel a day oil refinery in Saudi Arabia.
Presumably this will refine heavy oil. Saudi Arabias largest 'unused'
capacity is for the production of heavy crude. The offshore Sanifaya
field may be able to ultimately produce over a million barrels a day,
but there is no spare capacity in the specialised heavy-oil refineries
to deal with it.
May - Brazil - Australia - Brazil announces it will build an uranium
enrichment plant to fuel it nuclear reactors which will "save Brazil
millions of dollars it now spends to enrich fuel at Urenco, the
European enrichment consortium". As Brazil has no vast gas reserves,
its plans are not likely to be challenged by the USA.
Australia also announces it wants a 'dialogue' with the nation on
whether it should build nuclear power stations. Australia has the
world's largest uranium reserves. Concentrated uranium sources will
only last 40 years (at best) if there are global moves to nuclear
energy. The fossil fuel cost of then decomissioning the plants and
burying the most toxic of the wastes will use more energy than the
plants themselves produce. 'Investment' in nuclear energy is ultimately
the squandering of oil-derived capital needed to aggressively develop
localised and decentralised, wind, wave and solar-based energy sources.
May - Australia - Australian crude and gas liquids production is now
29% less than the peak of production in 2000. At this rate of decline,
by 2015 Australia will have to import 70% of its daily transport fuel
needs. Currently, Australia imports about 30% of the crude it needs for
its daily use of 700,000 barrels a day.
May - USA - USA demand for natural gas is
increasing as domestic
sources deplete in spite of intensified drilling by natural gas
companies. Paradoxically, natural gas inventories are now at record
springtime levels due to the warm winter and reduced industrial
feed-stock use of gas (overseas gas producers are increasingly
converting hard-to-ship gas into easy-to-ship relatively 'cheap'
chemicals and fertilisers, achieving economies of scale). Prices fall
by around 60%
from mid-december highs. The USA National Gas Supply Association warns
that this supply cushion may not be so large by the end of summer if
the weather is hot (the gas will be used in producing electricity to
run air-conditioners), and may not exist by next winter. Gas is
normally stockpiled in caverns over summer in anticipation of winter
May - USA - Afghanistan - Fearful that the next election may see the
current USA president replaced and the USA troops end their Afghan
occupation, the USA orders astonishingly large volumes of ammunition
from Russia for the Kalashnikovs that the northern Afghan government
supplies its soldiers with. If the north of Afghanistan remains
relatively secure, the
pipeline route might be safe.
May - Central Asia
- Russia - China - The Shanghai
Cooperation Organization, an economic and cultural cooperation
organisation of Central Asian oil and gas producing countries plus
Russia and China, agree that Iran, Pakistan, and India will remain at
observer status only at Junes meeting. The foreign ministers' council
feels there is too much politics, too little business orientation, and
conflicts of interest (Pakistan-USA) to contemplate adding to the
membership at this time. Presumably this rebuffal of Iran carries a
message to get serious about business
and leave off the politics or face the USA without support of any kind.
May 17 - India -
Pakistan - USA - Afghanistan - Indian government
decides to join USA's 'TAP' project to pipe gas from Turkmenistan, right
across Afghanistan, to Multan in Pakistan. With India on board, the
pipeline would then be extended to India's western border. The current
price tag is around US$3.5 billion. The TAP concept is a little
confounded by the fact that Russia already has an agreement with
Turkmenistan to at some point take 100 billion cubic meters of Turkman
gas annually, and China has signed up for 30 billion cubic meters a
year, starting 2009. These two contracts alone are for more gas than
Turkmenistan can produce.
The USA is holding out the prospect of a pipeline in an attempt to
convince oil and gas rich Central Asian countries to send their
products to South Asian markets (India and Pakistan maybe Afghanistan)
rather than allow, firstly, Russia to onsell central Asian gas and oil
via Russia's existing pipelines into Europe, and secondly, rather than
sell Central Asian gas and oil to China.
The USA is desperate to create a USA-sympathetic 'South Asian' bloc
adjacent to oil and gas rich Central Asia. According to a USA state
department official, the USA wants "to give South Asians access to the
vast and rapidly growing energy resources in Central Asia, whether they
are oil and gas in Kazakhstan and Turkmenistan, thermal power in
Uzbekistan, or hydropower in Tajikistan and Kyrgyzstan...Within the
next few years, we expect to see private investment lead to the
establishment of a 500 kilovolt power line transmitting much-needed
electricity from Central Asia across Afghanistan to Pakistan and
USA fears the growing emergence of a strong Central, North, and
East Asian trading bloc that has Iran and Iranian gas trading cooperatively with Central
Asian and Russian gas.
May - Pakistan - Disgruntled Pakistani militants blow up two natural
gas pipelines in the southwest province of Baluchistan. Locals say the
gas is not benefitting the region. Insurgents are increasingly
the pipelines, rail infrastructure and army facilities.
Pipelines are an easy
target for those wishing to make a political
May - USA - depletion rates for most significant USA
oil wells is about 10%.
May 22 - World - Russia - Saudi - An article by Rafael Sandrea in the
Oil & Gas Journal uses the "Hubbert Linearisation" technique on oil
fields being developed for further production to estimate reserves in
place and oil (and probably 'oil equivalent liquids) that has been used
up. This technique suggests the total recoverable reserves in all the
worlds oil fields were an initial 2,000 Gigabarrels; 957 gigabarrels
have been burned, and 1,043 gigabarrels remain. That is, 48% of the
entire world oil stocks have now been used up.
More importantly, the extremely important 'high volume' producer,
Russia, has only 23% of its original recoverable oil reserves
(estimated at 195 gigabarrels) left. And domestic consumption increases
year on year.
Saudi Arabia, the other 'high volume producer', has 39% of its
recoverable reserves left.
While around half the worlds 'once-only' oil supply is yet to be used
up, the 'bottom half' is from multiple, smaller, lower-volume fields
that together cannot make up the pre-peak very high daily flow rate
from Russia, Saudi Arabia's North Ghawar, and Mexico (in particular).
May 22 - Russia announces its rouble-based trading market
for oil, oil products and gold will commence june 3.
May - BP - Thanks to a strategy of acquiring as many Gulf of
exploration leases as possible, BP now has 650 lease tracts in the
deepwater Gulf, each 9 miles square. As exploratory wells in this
difficult region now cost around $US100 million, BP has concentrated
only on large reservoirs.The successsful exploratory wells Atlantis,
Neptune, Mad Dog, Holstein, and Thunder Horse have been the result.
May - BP - The Thunder
Horse oil platform was supposed to be repaired and in production this
month. Pressure testing the oil distribution pipes 6,000 feet under the
sea revealed that welds had failed under the severe pressure at this
depth. In addition, as the oil reservoir is at a total depth of about 5
miles below the water surface, it is already under immense pressure.
The pipelines must hold crude oil coming out of the rock at a pressure
of over 17,000 pounds per square inch. The pressure at this depth
underground is susch that the oil itself is 275
Production is now once more on hold.
May 22 - Mexico - Mexican
oil and gas liquids production for the period
January to April was 3.351
million barrels a day, mostly from the major Bay of Campeche fields
which are being heavily developed to make up for falling production.
The major Campeche candidate for extended pressurisation and drilling,
the Ku-Maloob-Zaap field, produces heavy oil. Mexico's heavy 'Maya'
crude is refined almost entirely in the USA.
May 22 - Mexico -
Production of light oil from Mexico is now 976,000 barrels a day.
May 22 - Mexico - Production of heavy oil from Mexico is now 2.376
million barrels a day.
May 22 - Mexico - Oil
exports, at 1.969
million barrels per day, are the highest in 6 years. About 1.697 million barrels a day are sent to USA
- an increase of around 100,000 barrels a day over the same period last
Mexico has sent 90% of its oil, light and heavy, to USA. Overall
Mexican oil production has not increased, therefore the additional exports might have come
from reduced demand on the domestic market. Domestic oil consumption appears to be about 1.382
million barrels a day. This may be misleading. Given that Mexico
depends on importing 25% of its gasoline from USA, it may in fact be
the case that increased domestic gasoline consumption in Mexico
requires Mexico to export greater volumes of heavy crude for refining
and return of the refined product from the specialised heavy oil
refineries on the Gulf of Mexico coast of USA.
May 22 - Mexico - Energy ministers admits the deepwater Noxal -1 well
60 miles off the coast of Veracruz has produced
disappointingly. The well had been touted as the first tapping of a
field that was supposed to contain "up to"10 billion barrels of crude.
Mexico is hoping the deepwater (3,000 feet) field, named 'Deep
Coatzacoalcos', will eventually prove a 'world class' find.
May - Mexico - Pemex announces it will spend US$37.5 billion over the
years to develop the Chicontepec reservoir in
southern Veracruz. The field covers 38,000 square kilometres, and holds
about 40% of Mexico's oil reserves. Production is very poor, only
26,000 barrels a day. Pemex hopes to sink a very large number of wells
within the next decade in order to bring production up to 1 million
barrels a day.
May - Mexico - Canterell produced just over 1.8 million barrels a day
for the month.
May - Kazakhstan - USA - Kazakhstan still refuses to comply with USA
calls to pipe its Kashagan oil under the Caspian sea to the head of the
USA sponsored $US2 billion Azerbaijan-to-Turkey
May - USA -
Under-investment in rail has seen some power companies in
southern USA unable to stockpile the full coal stocks they need
to burn over the coming southern states peak demand 'airconditioning
season'. As these companies have only one product - power - a few take
extreme measures to obtain coal - one company purchased 150,000 tons of
coal from South America, shipped it to a Texan port, then move all
150,000 tons by truck 140 miles inland to the power station stockpile
yards. USA is a huge country. While it has massive coal reserves, the
quality is variable, and both the production rate in the face of
increased demand and the over-burdened and relatively poorly maintained
railway network are creating a bottleneck. Coal is the major energy
source for USA electricity.
May - USA - USA ethanol plants use a lot of energy to make ethanol from
corn. They are finding the cost of natural gas prohibitive. Almost all
the 100 ethanol plants in USA use natural gas. The plants want to use
cheaper coal. "Pork barrel' politics in the corn and coal states is
pressuring the USA government to change the 'clean air act' to allow
ethanol plants to burn coal. There are 190 more ethanol plants due to
be built. One analyst claims that all will burn coal, partly due to the
high cost of gas, and partly because coal is a domestic energy source
and is not subject to the uncertainties around imported energy sources.
May 24 - China - Chinese refineries continue to bleed money as they are
not allowed to pass on the cost of the recent rises in crude prices.
The state raises the price refineries are permitted to sell at by
10%-12%. This cuts their losses to the level near the
beginning of the year.
May - China - China's expanding
importation of oil is creating supply
and security problems. China now
imports around 140 to 150 million tons of oil a year (roughly 900
million barrels, equating to roughly 2,465,753 barrels a day), mostly
from Saudi Arabia and Africa. Around 70% of
China's oil shipments have to go through the narrow Straits of Malacca
sandwhiched between the Malay Peninsular and the large Indonesian
island of Sumatra. This channel has become a shipping choke point,
limiting the number of large vessels that can pass through. China aims
to continue to develop
overseas sources of oil and gas
diversify the political and geological
risk inherent in relying on a few major suppliers, and to diversify the routes
away from the Malacca bottleneck.
May - China - Crude oil from Kazakhstan commences flowing for the first
time in the new Kazakhstan to China oil pipeline. The 597 mile long
pipeline takes oil from Atasu in Kazakhstan to China via the Xinjiang
region in China's far west. The pipeline was completed last year at a
cost of $US700 million. The pipeline will carry about 140 million
barrels a year, and will increase the total amount of oil China imports
from Kazakhstan from the current about 9 million barrels a year (about
24,657 barrels a day) to
about 33 million barrels a year (about 90,410 barrels a day). China
expects to source 56 million
barrels of crude oil a year (about 153,424 barrels a day) from
Kazakhstan by 2007.
May - China - Plants to convert China's coal reserves into liquid fuels
('coal-to-liquids') under construction or in the planning stage have an
estimated capacity of 16 million
tons of crude oil equivalent a year.
May 26 - Japan - Iran -
Japan has almost run out of time in its contract
to implement the main stages preparatory to producing crude from the
very large Azadegan oil field in southwest Iran. The field may contain
26 billion barrels of oil, and the production rate when developed has
been estimated at 400,000 barrels a day. The contract terminates in
september. The Japanese government-owned oil field development company,
Inpex, says it has been unable to complete the contract because the
Iranian side has not finished de-mining the area. The Iranian partner,
Iranian National Oil, agrees that Iran has an obligation to finish
de-mining the area, but that the major drill sites have been cleared
and there is no barrier to drilling. The joint investment was slated to
total $US 2 billion, with Japan supplying most of the capital. Iran
says the contract will be terminated at the deadline, with no
possiblity of extension of the existing contract. Japanese officials
say the project is important to Japan to obtain a stable energy supply.
When it is suggested that Japan is deliberately delaying the project at
the request of the USA, Iranian Oil Company officials admit they have
no specific strategy if Japan is unable to re-negotiate a new contract,
but that they would likely partner with whoever was available,
May 27 - the first Caspian sea oil from the Baku
to Ceyhan oil pipeline commences loading a tanker at Ceyhan.
May - Iran - Little progress
has been made on upgrading Iran's five refineries to provide more
gasoline, let alone build the three proposed new refineries. As a
result, the government still has to import around 40% of its domestic
gasoline needs. Iran's refineries can produce only 40 million litres a
day. The hugely subsidised price of gasoline is US9 cents a litre to
the consumer. Iran's government needs to spend 20% more this year than
last to keep up with a rapidly growing population and inflation of over
May - Saudi Arabia
- Saudi production for may is 9.05 million barrels a day, down yet
again from levels in april.
Why? According to the Saudis, it is due to high stock levels and lack
of storage in importing countries. The OECD growth in demand for oil
has been less than predicted for the last three quarters. Some
estimates in USA have a 10% price rise for gasoline dropping usage by
2%, not quite enough to stop overall demand growth of about 1% in USA
(with some of the world's cheapest gasoline prices). Other countries
may now have reduced demand. Overall, whether the beginning of
recessionary conditions is reducing demand, or whether Saudi output is
dropping, or a bit of both, is impossible to determine as yet. The jury
is out on whether the Saudi explaination is the truth or not.
- Russia - Russian officials "suggest" that as the three largest
'joint venture' oil projects in Russia - the Sakhalin-2 field operated
by Shell, Sakhalin-1, operated by Exxon Mobil, and the Kharyaga
license area held by Total -.are behind schedule and over budget,
Russian involvement should be increased and the contracts re-negotiated
Russian ownership. This continues the trend of
re-nationalisation of a nation's major oil and gas fields completed
long ago by countries such as Saudi
and so on. USA and UK oil and gas fields are owned by USA and UK
private companies, making them, in effect, nationalised. The strategic
importance of oil and gas is a major factor driving nationalisation.
But a very important factor is the inequity in return between the
partners. The joint ventures still remaining were signed up between the
host country and the foreign oil company investor at a time of low oil
prices. The foreign investor still made a commercially satisfactory
return on investment. With high prices, the foreign investor is making
phenomonal 'windfall' profits, profits which were never initially
dreamed of when the contract was signed.
May - USA - Exxon
Mobil, the world's largest company, pays Lee Raymond,
the retiring boss of the company, a retirement package of $US400
million. He will also be paid $US1 million per year to act as a
"consultant" to the company. In addition, his salary and bonuses for
year just gone came to $US49 million. Exxon Mobil made the largest
profit of any company in the world last year, a staggering $US36.1
billion. Under Raymond, Exxon has donated $19 million of shareholder
funds to 'global warming denial' groups. In contrast to BP,
Exxon Mobil under Raymond cut funding to developing alternative energy
projects such as solar energy. Exxon Mobil was a very important
corporate contributor to USA Bush junior's campaign to win govenorship
of Texas, a springboard to Bush becoming Commander-in-Chief
of the USA
May - USA - USA Energy Department proposes a 2007 budget which will cut
the 16% ($US152 million) currently allocated to energy efficiency
programs of the Industrial Technologies Program. Small scale, practical
initiatives of this program are claimed to saves the $US7 worth of
energy for each dollar spent. Money is being re-directed to grandiose
but hopelessly flawed programmes such as Bush's "Hydrogen Fuel
Initiative", which will waste $US1.2 billion over five years.
May - The authors of the 1995 'Hirsch report' complete a new report, 'Economic
Impacts of Liquid Fuel Mitigation Options' aimed at finding out the
options available for physical dependence on imported oil. It concludes
that in the best case a simultaneous crash programme across:
would contribute "significantly" to both saving and producing fuel in
USA. They found that because of the time needed to build industrial
plant and the $US2.6 trillion cost of implementing such a crash
programme, results would take "decades" to bed in. In the best case,
there could be combined savings and new production of 44 billion
barrels of liquid fuels. The authors don't fully account for the energy
required to derive oil from shale. Nor do they fully acccount for the
need for increased rail infrastructure for coal transport. Or the use
of conventional liquid fuels to blend with coal to liquids.
- Vehicle fuel efficiency
- Coal liquefaction (coal to liquids or CTL)
- Oil shale
- Enhanced oil recovery from existing USA wells
Finally, the authors note that no such massive 'crash programme' is in
place, or even being planned.
June 1 - Light sweet
crude is now
$US67. USA offers 'conditional' diplomatic discussions with Iran. Some
interpret this as diminishing of the USA threat against Iran and
therefore lessening the likelihood of disruption of Gulf oil supplies.
June 2- Light sweet
crude is now $US70.
June 2 - Canada - over 700 million
cubic feet of natural gas is now
being used to produce 1 million barrels of oil a day from Canadas
massive oil sand reserves. The gas is burnt to make hot water and steam
oil from the bituminous
sands; and also as a source of hydrogen needed when synthesising oil
the bitumen. The US$90 billion worth of expansion planned for the oil
sand production will require an additional 1.4 billion cubic feet of
natural gas by 2015 - which is equal to about 13% of Canada's present
gas production. The problem is, the Canadian gas production of around
17 billion cubic feet a day is starting a slow decline, and at the same
time both Canadian and USA demand for gas for electricity generation is
increasing. Large quantities of gas have been found in the McKenzie
delta and Beaufort Sea regions, but a pipeline to deliver this gas is
still only in the planning stage.
June - USA - 21%
of the Gulf of Mexico's oil production
and 13% of its natural gas production remains unavailable due to damage
from last years hurricanes. An acute shortage of trained people to
effect repairs remains a key issue.
June - Qatar - Qatar has revealed that it
placed a moratorium on
further exploration of its giant North Pars gas field. This field
covers about 50% of the surface area of Qatar and is said to contain
900 trillion cubic feet of recoverable natural gas.
June - Qatar - continues its
projects to enable it to become the worlds
largest liquified natural gas exporter. Qatar currently can liquify 3.4
billion cubic feet of its
total natural gas production per day, 14% of the world total of
LNG. Projects under way will increase liquification capacity to over 10
billion cubic feet per day by 2011. Ultimately Qatar will have at least
7 gas trains producing liquid gas for shipment. Significant quantities
have been contracted to USA, Japan, and China.
June 13 - UK - The UK
Office for National
Statistics records the increase in domestic gas and
electricity charges in the year to may at more than 25%. It notes
energy costs are rising at ten times the rate of inflation. Electricity
and gas tariffs are due to be increased again over the next few months.
June - Gulf
States - Oil producing countries of the Middle East
Persian Gulf domestic oil consumption is growing 4.5% a year - the
highest growth rate. USA, the worlds largest user of world oil and gas
supplies, has an annual increase in oil consumption of about 1%. Middle
East Gulf countries use about 17% of the oil they produce in domestic
June - Gulf
States - the Dubai based Gulf Research Centre notes
that even although the hot deserts of the Middle East are one of the
most favorable places on earth to exploit the power of sunshine (which
they also note supplies 15,000 times the amount of energy - as solar
radiation - than all the energy used in the world today) very little
solar energy is exploited in the Middle East. The report notes that the
Gulf countries rely on oil and gas, a depleting resource, and tourism,
also liable to diminish as travel costs rise. The Centre notes that
Gulf countries could use the emerging renewable technologies to provide
employment, conserve oil and gas for use in Gulf petrochemical
industries, and prepare for the 'post-fossil fuel era'.
Currently there are very few renewable energy projects in operation
- solar parking meters in Dubai, an apartment complex whose day
time air conditioning is solar powered, one hotel with some solar water
heating, and a wind power plant on Bani Yas island.
June - Abu Dhabi - Mubadala project launched to establish Abu Dhabi as
a centre of exellence for renewable energy research. It will establish
a research centre, 'special economic zone', and provide venture capital
for renewable energy projects. The ultimate aim is to switch Abu Dhabi
from a technology importer to a technology exporter "over the
coming decades". Renewable technologies are seen as at the beginning of
their technological development phase, with few barriers to entry, are
relatively labour intensive, and ideally suited to the Middle Easts
comparative advantage - heat and sunshine. Abu Dhabi is the world's
10th largest oil producer, producing 2.1 million barrels a day in 2005.
Like Saudi Arabia (and unlike world number two, Russia) Abu Dhabi's
production is expected to remain static about this level until about
June - wind power - A recently published University of Stanford
'world atlas' of suitable wind power sites claimed to show that, in
theory, if all these sites were use, there would be enough energy
generated to meet current world needs several
June - Brunei - The Brunei Minister of Energy says "Without discovery
of new reservoirs with
large volumes that can be produced at a low cost, we would not be able
to lower the current high average cost of production even if the
required state-of-the-art technology and expert resources are
available," in 2005 the
Brunei government subsidised diesel and gasoline to the tune of about
B$167 million. The subsidy is expected to cost B$226 million.in 2006.
June 13 - China - China announces it will cut gasoline exports for the
fourth month in a row. Increasing Chinese domestic demand (car sales
have increased by 50% annually) cuts the available surplus and
contributes to a gasoline
shortfall in the region, as China has been a significant exporter
of refined gasoline to Southeast
Asian markets. Shipments may drop
to only 130,000 tonnes this month.
June - China's first
strategic oil reserve, in Zhenhai, near Shanghai, is due to be complete
august. Its capacity is 38.1 million barrels of oil. Planning for oil
storage began in 2004, but budgeted on $US20 per barrel oil. Three
reserves are due to be built and filled by 2008. It is not clear
whether China will use indigenous or imported oil to fill the reserves.
Saudi Arabia currently supplies China with about 445,000 barrels of
crude a day, around 17% of the oil China imports.
June - Russia - Currently Russia exports roughly 6.67 million barrels
of oil a day. While production is said to be likely to increase by a
few percent until 2009, continous increases in domestic demand are
likely to negate the small incremental production gains.
June 12 - BP - The head of BP, Browne, says that "It is very likely
that, in the medium term, prices will stand
at about $40 on average. In the very long run, even $25 to $30 are
possible..." He went on to say 'large' new oilfields were still being
found - without mentioning that the few 'large fields' are in difficult
terrain and will not make up for the decline in the mature 'mega
fields. Interestingly, Browne rebutted the idea that prices could only
go up as scarcity increased. He points to oil sands, (and probably has
in mind 'liquids to oil' technology Qatar and other stranded gas
regions) and to West African offshore oil. These factors might or might
not extend the plateau at peak oil. He is correct that in the long run
oil prices will be down. He omits to mention that in the long run
inevitable world recession will be the driver.
June - BP - BP's 2006 update
of its 'Statistical Review of World
Energy' is published. This document is one of the most comprehensive
and accessible sources of energy information available to the public in
the world. Because of that, it is frequently relied on as an
authoritative source. But, in line with Chief Executive Browne's
predilection for downplaying diminishing conventional crude oil
reserves (started in 2004 with the addition of 'unconventional' tar
sands and natural gas liquids to the global crude oil inventory), the
report continues to count unproduced tars and sands, thus increasing global proven reserves
over last year to 1,200 billion barrels of ultimately economically
recoverable reserves. The report successfully conflates relatively
easily accessible conventional crude with difficult and expensive to
extract tar sands, and continues to add-in liquids from natural gas
wells. In this way, so-called 'crude oil' reserves appear to be increasing,
when fact they are decreasing (production increases or decreases is
different to reserves, albeit releated in the long run).
June - Bolivia - Russia -
Gazprom, Russia's gas major, explores the
possibility of investing $US2 billion in both reworking some of
Bolivias abandoned gas wells, and sinking new wells. More importantly,
it is in discussion with Bolivia to use its experience as operator of
the world's longest gas pipelines to liquify and pipe recently nationalised
Bolivian gas for export overseas. Currently Bolivia is trying to
re-negotiate the price for the gas it pipes to Argentina and Brazil,
with little progress so far.
June 14 - Iran -
Iranian Oil Bourse is still at least two years
away, according to one of it's architects. He also says existing
bourses trade in risk, not physical
product, and that speculation by such ''intermediaries" playing
hedge funds have dominated and manipulated
the market, driving up the
price of oil -
"As for trading oil in euro's most
commentators tend to forget how limited the supply of Euro's is, and I
don't think that will change much soon either bearing in mind how
conservative the European Central Bank is. Having said all that I do
tend to agree that the dollar's collapse is both inevitable and
overdue, and that it MIGHT be precipitated in the next year or so by a
"melt-down" in the energy markets caused by rampant speculation by
hedge funds. A bit like the Long Term Capital Management fiasco, the
difference being that the Federal Reserve Bank cannot print oil to bail
market particpants out... "
- Chris Cook
June - quote of the month-
"The most effective and fastest solution
to high world oil prices is high world oil prices."
-Robert Blohmn, writing in the China Daily June 13th 2006
June - Iran - The budget to march 2007 cuts money for gasoline imports from $US2.5
billion from $US4 billion. As a result, gasoline imports will cease
from september 23, and gasoline rationing will start from that
June 15 - Venezuela - Colombia and Venezuela announce that the
construction of a natural gas pipeline connecting Colombia on the
Pacific coast with
Venezuela on the Atlantic coast. This pipeline will enable the
possiblity of shipping to Asian markets (if there were investment in
LNG trains in coastal Colombia). The pipeline is part of a
regional plan for energy networking, such as already exists in North
America (USA obtains a very large part of its gas from Canada).
20 - China - Saudi Arabia - discussions are now under way between
the two parties on a contract for the Saudis to supply the oil
for China's strategic reserves. It is likely to be sulfur-containing
medium-heavy crude oil needing a Chinese refinery
capable of de-sulfurising it. Shipping is unlikely until at least
June - Saudi Arabia - China - Oil from Saudi Arabia now make up more
than 17.5% of China's imports of crude. About 57% of the oil China uses
comes from domestic fields. (About 40% of the oil USA uses comes from
domestic fields - but USA uses around 25 million barrels of oil a day,
where China is said to use very roughly 6.2 millon barrels of oil a
day.) China's oil demand growth has been running at around 9% a year,
but turned up sharply to around 13% in may.
June - Exxon Mobil - New chief executive Rex Tillelrson demands an
end to the public subsidy to grow corn for ethanol, saying "We've never
been a supporter of subsidies under any conditions because
they distort market signals"
June - Exxon Mobil - Taxpayer subsidies known as 'royalty relief'
continue to be paid to Exxon Mobil for oil production from the Gulf of
Mexico. Exemption of payment for oil and gas found in the Gulf was a
'sweetner' designed to stimulate exploration in public waters at a time
of low oil prices. The USA government ommitted to include a
'phase-back-in' point at which royalties would be once more collected
should oil prices rise substantially. Estimates of the lost revenue
from the very small percentage royalty are around $US10 billion oveer
the next 25 years. The USA
public is outraged at some oil company attitudes to the companies
windfall mega-profits at a time that they are hurting.
June - China - Underground coal-seam fires burning uncontrollably in
through much of northern China continue to incinerate about 200
million tonnes of coal - for comparison, USA uses about 1,000 million
tonnes of coal a year. The fires are started by lightning, by mining
accidents, or erupt spontaneously when oxygen is continuosly available.
Such fires are sometimes impossible to put out, and may burn for
decades - or longer.
June 23 - USA - An oil spill in the Calcasieu Ship Channel in
Louisiana blocks ship access to some oil refineries. This appears to be
enough to allow the President to authorise the 'loan' of 750,000
barrels of oil to several oil companies (including Venezuelan Citgo).
June - USA - costs of road transport sees a swing to cheaper rail
transport. But lack of rail infrastructure upgrades, repairs and
extensions has seen congestion and frustrating delays in delivery of
June - Iraq - the oil export pipeline from Kirkuk in Northern Iraq
to Ceyhan in Turkey re-opens. It had been closed since september, due
to insurgents blowing it up.
June - USA - Iraq - The 'Iraqi' Oil Minister says Iraq hoped
to be producing 4.3
million barrels a day by 2010, "challenging Saudi Arabia as the world's
largest producer by 2015".
June 20 - Russia - India - Iran - Pakistan - Gazprom announces it is
ready to "support" the proposed gas pipeline from Iran to India via
Pakistan. Gazprom is effectively an arm of the Russian government. The
pipeline will be 2,775 kilometres long, and current costing is in the
region of $US10 billion. India and Pakistan hope to receive 70 billion
cubic metres of Iranian gas via the pipeline by 2015 Pakistani
president Musharraf proposes the pipeline be extended to Yunnan, China,
at a future date. Pakistan wants to start construction next year.
June - Iran - Russia - The
presidents of the two countries meet at
Cooperation Organisation and discuss a proposal to cooperate in
the supply and distribution of gas within Eurasia, from west to east.
Such a move would provide an East Eurasian market for Iran's gas, and
cause Iranian gas to be temporarily excluded from Russia's 'patch' in
west Eurasia. Turkmensitan is considering joining the pipeline, linking
its existing Iran-Turkman line, and opening up Central Eurasia to the
group. Russia and Iran acting together could therefore control around
43% of the world's gas reserves. President Putin says "OPEC is a
cartel, but we will have a joint venture."
June 30 - Mexico - Operators of the Bellota oil field commence
removing pumps and compressors from scores of oil wells that are no
longer productive as Mexico continues its inexorable decline. Bellota
was developed in 1992. Bellota now only provides about 35,000 barrels a
day. At peak it pumped about 140,000 barrels a day. This illustrates
the point that while new fields will be brought into world new
production statistics, they are relatively small, and peak and decline
relatively quickly. In other words, they make no difference to the
reality of world conventional oil having almost certainly peaked.
June 30 - Mexico buys $US
4.5 billion of gasoline from USA as it has
little refining capacity. Mexico currently consumes 710,000 barrels of
gasoline a day (and 344,000 barrels of diesel a
day). Mexico also buys almost $US10 million of
petrochemicals, mostly from USA. As the Canterell field declines, so
will oil receipts to pay for imports. There is no 'solution'.
June 30 - Mexico - current government projections see Canterell
production fall to somewhere between 1.4 million barrels a day and
520,000 barrels a day by 2008. The lower range seems most likely.
June - Mexico - Cantarell
production is1.74 million barrels a day - 13% less than june 2005.
June - Russia produces 9.236 million barrels of
oil a day - more than Saudi Arabia. Oil and gas now account for over
half of the Russian State income.
June - world - demand for oil in Q2
drops in response to higher prices.
Consumption over the last 2 quarters is 83.15 million barrels per day,
where it was 85 million barrels per day for the same period last year.
July - UK - The Department of Trade and
Industry in its Energy Review suggests
the UK will not be a nett energy importer until 2010.
July 11 - OPEC " We in OPEC do not subscribe to the peak-oil
- Acting Secretary General of OPEC, Mohammed Barkindo.
July 14 - Light sweet
crude oil surges to $US77.03, a record high. Price increases have been driven
by high demand for sweet crude when supply of sweet crude is dimishing
and being replaced by heavy crude which has a lower gasoline yield and fewer
refineries able to process it. Speculation on oil futures and
slightly increased political tension in the Middle East also helps
boost speculation. Crude oil futures for december delivery hit $US80 a
July - OPEC - production for
July is 29.61 million barrels a day -
down by 250,000 barrels a day relative to June.
Saudi Arabias production is
million barrels a day, down about 70,000 barrels a day.
Iranian production is 3.8
million barrels a day down about 50,000
barrels a day.
Kuwaiti production is 2.46 million barrels a day, down about 40,000
barrels a day.
Nigerian production is 2.2 million barrels a day, down about 50,000
barrels a day.
Indonesian production is now
900,000 barrels a day, down about 10,000
barrels a day, a 35 year low.
Reduced Persian Gulf demand is blamed on reduced demand for
the increasing proportion of high-sulfur oil grades in the Middle East
Reduced Nigerian production is due to increasing attacks on oil
facilities by domestic insurgents.
the IEA, 'oil' production for July is 86.13-milion barrels a
day - the highest ever recorded. From the OPEC figures, the IEA figure
unlikely to be conventional crude, but is likely to be inflated by
including condensate, ethanol, heavy oil-water emulsions, tar sand oil
and similar in the calculation. In other words, 'all liquids', not just
July - IEA predict non-OPEC oil
production will increase by 2.2 million barrel in 2007.
July - Japan - Indonesia - Japan
obtains 50% of its LNG from
Indonesia. Faced with falling gas production, Indonesia says it will
not export further gas to Japan after contracts expire in 2008 and 2010.
July - Iraq - Oil exports averaged 1.68 million barrels a day over
July, the only OPEC country to show an increase in daily production.
This is 40,000 barrels day more than June. Almost all the increased
exports were from Northern Iraq. Northern Iraq now exports 150,000
barrels a day now that the pipeline from Northern Iraq to Ceyhan in
Turkey has re-opened.
July - Iraq - exports of crude to Syria reach 12,000 barrels a day.
Syria does a partial swap of Iraqi crude oil for Syrian refined
petroleum products .
July - Iraq - leaks develop in one of the two pipelines from Kirkuk to
southern Iraq. Both pipelines are closed until the leaks are repaired.
July - Iraq - Oil exports from Basra, Iraqs main export terminal,
dropped by about 20,000 barrels a day to 1.51 million barrels a day, in
spite of less damage to pipelines and refineries because the focus of
violence now turns from the American occupiers to the internal
religious-sect and tribal-based struggle to impose belief-based,
racist, sexist, intolerant, non-democratic totalitarian control (as
exists in most Middle East and South Asian countries).
July - Mexico -
Cantarell production is now
1.71 million barrels a day.
Decline to this level was not expected until 2007. While
politics in Saudi Arabia, Venezuela and Nigeria only might significantly affect USA's
energy 'security' by this time next year, at this decline rate, Mexicos
failing geology very likely will.
July - Bolivia - Argentina - Argentina agrees to a 25% increase in
natural gas prices to $US5 per million Btu's.
July - USA - the Murphy oil refinery at Meraux very badly damaged by
hurricane Katrina finally recommences production.
July - China now
peaks at 3.7 million barrels a day. Their largest field, Daqing, makes
up 25% of oil produced, but now has a 90% water cut and is in
July - Qatar - Shell and Qatar Petroleum announce a project to build
the largest gas-to-liquids complex of its type in the world. The
'Pearl' project is designed to make around 3 billion barrels of oil
equivalent over its design life, at a cost of around $US 4-6 a barrel.
It is expected to come into production in 2010.
August - Australia - Crude oil production is 113.3
in the 12 months 2005-2006, down from 126.3 million barrels in the same
period last year, a drop of about 10%. In the same period, liquefied
natural gas sales increased nearly 16%.
August - UK - oil production for the last 3 months is now 12% less than
the same period last year (and counts as the lowest production for the
last 28 years).
August - UK - according to new Department of Trade and Industry data,
after taking into account the UK's own production of oil and gas, there
is a nett excess of foreign
energy imports (gas, crude, petroleum products) of about 420,000
barrels of oil and oil equivalent a day. The UK is now
a nett energy importer.
August - Iraq - UN report notes that the money from Iraqi oil
is being diminished by growing corruption in the Iraqi administration
of the oil resources, including overland 'bunkering'
August - Iraq - The power plants bombed by the American have still
not been fully repaired. Most Iraqi families bought small petrol or
deisel generators to supply power. The huge increase in the cost of
fuel in Iraq means that most Iraqis cannot
afford to run their generators. Now, most people now sit in the
dark at night. The civil war intensifies.
The USA bases
Iraqi oilfields and facilities near completion.
The USA generals are
'priming' the public to understand the situation is 'hopeless'. The
next stage will be for the USA military to 'protect' the Iraqi oil
infrastructure from damage as the country splits into regional
mini-states controlled by local war lords. The Iraqi constitution has
been corruptly written and supported under direct USA influence so that
Iraq is obliged by law to enter exploration agreements with major
private oil companies (excluding any significant share to French,
Russian, and Chinese companies). The constitution prevents any future
law being able to invalidate these inequitable agreements. The law is
due to be validated in december. At that point, most USA troops
can then go home (a relatively small number will remain in the
USA regional forts protecting the US-Iraq oil resources and pipelines).
But only if oil sales remain centralised. USA cannot afford mini-states
to cut their own deals.
August - USA - beginning of the summer 'driving
August - USA - Refinery problems in California have tripled in the
first half of the year. State gasoline production is lower as a result.
As demand for imported gasoline increases, tankers in California's
congested oil docks take three times as long to dock and unload.
Over 40% of oil stock for Californian refineries is now imported.
Shipment of gasoline and diesel from California to Nevada and Arizona
reach a 5 year high, and supply pipelines for Southern Nevada are near
the limit of their
August 7 - USA - BP
'temporarily'closes production from its Alaskan Prudhoe Bay oilfield
due to leaks
developing in corroded
transit pipes. Initially, 400,000 barrels of daily oil production
is shut down. This is around 8% of USA
daily production, mostly shipped to west coast USA (and Hawaii).
400,000 barrels a day is about 2.6% of total USA daily oil use (made up
of imported oil plus USA domestic oil production). Sweet crude prices
climb briefly to $US76.98.
August - USA - Saudi Arabia - Saudi Arabia 'quietly' cuts production by
200,000 barrels a day this month. It is unclear if they actually cut
production, or have diverted
oil to USA to make up for the shortfall from Prudhoe Bay.
August 7 - USA - Gasoline on the west coast is around $US2.85 a
gallon, and around $US3.20 a gallon in the midwest. The national
average hits a high of $3.04 a gallon for regular. It is around
$US7 a gallon in parts of Europe.
August 13 - USA - The western half of the Prudhoe field remains in
operation, but 280,000 barrels a day of crude remains 'shut in'. It is
hoped to increase production in the Western segment, (currently 150,000
barrels a day) to 200,000 barrels a day by months end. All 26
kilometres of oil transit pipe will ultimately be replaced. Given the cost
of pipeline construction in this environment, this propostion is
very expensive. An additional problem is that the corrosion, believed
to be caused by sulphate reducing bacteria naturally occuring in the
oil flow in cool conditions, appears to have developed because oil is
now moving more slowly in the transit pipe as the pressure in the field
away as reserves are depleted. These bacteria need other conditions,
such as acidity, salinity and other factors to also be right in that
particular crude. It may mean that at least some pipelines in temperate
and sub-arctic zones might be vunerable to corrosion when flow rates
drop off as field deplete.
August 13 - USA - OPEC - Opec President Edmund
Daukoru says OPEC doesn't need to take special measures in response to
the USA need to buy more crude on the world market and the lack of
supply to west coast USA refineries -
"We are mindful of the
BP volume that is shut in, but I think overall the market is flush. The
main constraint is gasoline. I do think we'll be able to
ride it until September".
August 13 - USA - Oil industry commentators estimate it will take 2 to
3 months to get the trans Alaskan pipeline back in full production.
August - USA - Colorado has a diesel fuel shortage. Some stations
ration trucks to 50 gallons of their 100-300 gallon tank capacity.
August - Chile - Argentina - Natural gas from Argentina supplies 30%
to 40% of Chiles electric power generation capacity. Argentina now has
to import additional gas from Bolivia to meet seasonal demand. Falling
production in Argentina, coupled with increased domestic demand, see
Chile with urgent need for new power generation. Chile turns not to
coal, but to urgent investigation of renewable power sources such as
hydro-electric generation and wind as a long term solution.
August 26 - Chad - The world's most corrupt country (according to
Transparency International) breaks apart its joint venture with Mobil,
Petronas, and Chevron as it forms its State owned oil company and moves
to sieze more of the profits from oil operations. Petronas, the 35%
partner, and Chevron, the 25% partner, are kicked out of Chad, in a
move seen as priming the scene for a joint venture with China on terms
more profitable to Chads government. According to the Chadian
government, the oil consortium's $3 billion investment has earned them
$5 billion. Chad's share of the earnings after transport costs has been
world - global oil consumption is now 85.096 million barrels a day.
Relative to august
2005, this is a 0.4% increase (309,000 barrels a day), much less
than projected year on year demand growth.
September 05 - USA - Chevron announces an exploratory deepwater well
('Jack number 2) 175 miles offshore has promising oil reserves.
Not only is it right in the middle of the area of worst Gulf of Mexico
intensity, it is at water depths (over a kilometre deep) where
production has yet to be done, and in highly complex resrvoir
structures difficult to characterise under the best of circumstances;
it will require enormously expensive testing and very difficult
drilling to characterise. This is how desperate the oil industry is to
replace declining assets.
Iran - Oil Minister Kazem Vaziri-Hamaneh says all the necessary
preparations for launching the Iranian oil stock market are now in
place, although it yet to be officially launched. This will not be a
traditional bourse, where intermediaries control (and manipulate) the
sales, but a "Market Network" where buyer and seller contact each other
directly. Any risk of default is managed by a dedicated default fund
managed by a risk management service organisation - a form of
insurance. Intermediaries will no longeer be able to bet on margins, or
'short' or 'long' the market, making the oil trading market in this
system hugely more transparent. It is certain to be vigorously opposed
by US and European financial interests.
September 26 - USA - Uranium spot and contract prices continue to
climb, to the dismay of the electricity utility operators. Spot price
uranium is now $US54 a pound. USA reactors were running at 75% of
capacity a decade ago. Now they run at 90% of capacity.
September - USA - gasoline prices drop in the USA in the face of
refineries selling off summer product as they change formulations for
winter, and speculators losing their bet
that Gulf of Mexico hurricanes
would disrupt gasoline supply again this august and drive up prices.
Demand in USA is up about 3.8% over september last year (and refineries
had to run almost at full capacity of about 17.3 million barrels of
crude oil a day - producing around 9.8 million barrels of gasoline a
day - all summer), but last year supply
was constrained by hurricane Katrina.
In other words, this year's
demand and supply was almost 'normal' (historically, 'normal' would be
a slightly increased demand of around 1% more than the previous year,
which did not eventuate), but 'burnt'
speculators were desperately unloading paper gasoline options and
driving down price. Demand destruction
may also be playing a part, although masked by factors mentioned
Demand for diesel is now very high. Refineries have ample capacity
to meet gasoline demand, but cannot use all that capacity (close to 60%
of refinery operating capacity) during the winter diesel switch. The
'float' of extra gasoline in storage continues its historic slow
US crude oil inventories are actually less than reported, as it
includes 30 million barrels borrowed from Europe
last year (due to hurricane damage), 10 million from Saudi Arabia
making up for lost prodution from Prudhoe Bay, and 10 million barrels
released from the Strategic Petroleum Reserve.
September - fuel
efficient cars - VW abandons its 2 litre petrol engine as too fuel
inefficient. It replaces it with the award-winning 'twin charger
stratified injection' turbo assisted engine. This engine has similar
speed and pull as VW's 2.3 litre naturally aspirated engine, the
1.4litre performance being very close to that of the larger engine. The
new enginep roduces 125kW (170bhp) at 6,500rpm, and torque with little
fade (175Nm at 1000rpm grading to continuous 240Nm between 1500 rpm and
4750 rpm). Fuel economy is 7.2 litres per 100kms, i.e. about 40mpg.
September - USA - Saudi Arabia - Saudi Arabia's quiet production cut
200,000 barrels a day continues through this month. It remains unclear
if they actually cut
production, or have diverted
oil to USA to make up for the shortfall from Prudhoe Bay.
September - USA - exports
of around 1.4 million barrels a day of finished gasoline continue.
September - USA -
Importation of both finished gasoline and gasoline
blending components (mostly from Europe and Venezuela) increased
in the last 9 month period from 260,071,000 barrels to 314,587,000
barrels, an historically very high level.
September - USA - As of this
month, the USA now imports 69% of the crude oil
and petroleum products it uses.
September - USA - the recent introduction of ultra low suphur deisel
has meant refineries have had to use more hydrogen gas to clean the
sulfur out of their product. Around 25%-40% (depending on how much
sulphur is 'naturally' present in the crude to begin with) more
hydrogen gas is now needed than before to meet this new standard.
Hydrogen is generated from natural gas. Increasing natural gas prices
drive up the cost of producing low sulfur deisel.
September 26 - Iraq - USA -
Iraqi Oil Minister Hussein
al-Shahristani says the federal government won't recognize oil
the contracts recently signed by the Kurdistan Regional
Government. The rest of Iraq continues its internal sectarian war,
rapidly devolving into religio-gangster fiefdoms as in Afghanistan.
Canada - Natural gas wells continue to decline in
production. Canada produces 6.3 trillion cubic feet of gas per
year, about the same amount as it did in 1998 - but now drills two
times as many wells per year to simply maintain production. Canada exports over half its natural gas to
September - USA - Imported LNG is about 3% of all natural gas gas
used in USA.
September - USA - With the warmest winter on record, natural
gas prices slump, and there are large inventories of gas (3.2
trillion cubic feet). An average winter usually requires about 5
feet of natural gas for domestic use (partially supplied from storage).
In addition, US industrial users of gas have been steadily relocating
overseas - industrial use has fallen 22% over the last 8 years as
energy-hungry heavy manufacturing jobs disappear in favour of high tech
manufacture and service jobs. For these reasons, prices are at an
historic low right now (helped by a major
margin trader going bankrupt and being forced to quit all its forward
September - USA - There are now around 400,000 producing natural gas
wells in USA. The average life of a new well in USA is now about 18
months before it is effectively exhausted. A decade ago the average new
well produced gas for between 120 and 180 months.
September - Russia
- Russian gas production remains static at about 400 billion cubic
metres. There is little investment in new production. Gazprom, which
controls 94% of all Russian gas, has commissioned just one new field in
twenty years. The projected new gas fields (e.g. Yamal) dates have now
slipped by more than a decade. The large West Siberian fields (the main
source of gas exports to Europe) are in decline. Some Russian
electricity generators cannot always obtain adequate gas and have to
switch to diesel. Energy use in Russia, usually increasing by about 2%
a year, has now surged
to an annualised increase of nearly 5%. The Russo-European gas crisis
September 26 - Russia -
Germany - USA - President Putin publicly
considers cancelling the proposed ship-borne LNG supply from the huge
Shtokman field in the Barent Sea to east coast of USA in favor of
additional long-term supply to Europe. Some say this is 'payback' for USA's lack
of support for Russia's bid for entry to the World Trade Organisation
and embargo on Russia's armaments industry sales. There may be other
factors. Others say that since
USA is now building additional re-gassifying facilities, Russia's plan
to control the largest part of gas imports and distribution on the east
coast is no longer viable. In the event, it might be as easy to pipe
under the Barents Sea to Murmansk, and then overland to Europe.
However, 'easy' and Shtokman field don't go together. The field is
the arctic, is over 500 kilometres from land, it will require at least
4 huge self-contained ice-reinforced platforms, and will need at least
150 wells drilled into stormy arctic seas in a depth of 350 metres. The
drilling rigs and platforms will be iced in for part of the year, and
the distance is too great for resupply by helicopter. While the field
is the largest offshore gas field in the world, the investment money
needed to bring it into production is huge. If all goes well, it is
unlikley to reach full production before at least 2016. At that point,
in spite of its vast reserves, it will do little more than replace
dwindling North Sea and Russian gas production from declining existing
September - Russia - Russia's gas major, Gazprom, fails to gain
access to the Royal Dutch Shell controlled Sakhalin-2 project.
September - Russia - Russia's
Natural Resources Ministry withdraws
ecological permit for the Sakhalin-2 liquified natural gas project (due
on-stream in 2008) on the grounds the budget
increase from $10 billion to $20 billion will increase the scale and
environmental effect of the project, and on the grounds the clearing of
pipeline route is causing erosion, river silting, and damge to forests.
The Ministry also puts pressure on
Exxon (Sakhalin-1), whose development budget has also been increased
beyond the agreed sum, affecting the agreed production sharing
outcomes. The Government is not entitled to a share of the oil until
the operators have retrieved their costs; their costs have been
recently ramped up heavily. The foreign ministry threatens to withdraw
licences, but later backs down. These moves are likely to be the
beginning of either a re-balancing of profit share, or a partial
re-nationalisation of Russias major gas and oil assets.
September - Russia - Russia's Natural Resources Ministry now
says the De Kastri oil terminal of ExxonMobil's
gas and oil project does not meet required environmental standards.
These moves are likely to be the
beginning of either a re-balancing of profit share, or a partial
re-nationalisation of Russias major gas and oil assets.
August - Russia - Russian courts rule that the 50:50 joint
British-Russian oil venture ('TNK-BP') owes back taxes of $US130
million. The Anglo part is owned by BP, the Russian part is owned by
'private Russian investors'. Presumably the Russian government is
beginning to use a similar technique as was used to regain state
October 2 - Russia - Rusia Petroleum, a company 63% owned by the
Russo-Anglo TNK-BP and 37% owned by Russian 'private interests' is
targeted by Russia's Gazprom for acquisition of a stakeholding.
Gazproms oil subsidarly, Gazprom Neft, has a very good cashflow, which
could easily be leveraged by loans from oil-industry investors to bring
together the $US25 billion to buy a controlling share in TNK-BP.
Whether the Russian private investors would be willing sellers or not
is another matter (BP, as a public company accountable to shareholders,
would probably have to accept any good offer that also accounted for
future profit increases from the project as energy prices rise).
Rusia Petroleum is
developing the $18 billion Kovykta natural-gas project in East Siberia.
October 2 - Russia - The chief engineer in charge of the Rusia
Petroleum Kovykta natural-gas project is found
shot three times in the head. The circumstances opens the possibility
it is a 'contract killing'.
October - Russia - USA - After quietly acquiring gasoline outlets
from Getty Petroleum and Conoco Phillips throughout 13 states of the
eastern United States over the last
few years, Lukoil finally brands itself in the market with its bold
red and black image on all its stations. Lukoil hopes to compete in the
eastern USA markets head to head with international oil company brands
such as BP and Mobil. Lukoil now owners more gasoline stations in USA
(2,000 outlets) than it does in Russia. American consumer acceptance is
“All we hear
is they don’t care whether we are Russian
or not. They
would certainly care if we were from the Middle East, but there’s no
concern over Russia.” - Lukoil
Americas CEO Vadim Gluzman
Long term, Lukoil hopes to ship oil from northern Russia to USA and
refine it in Lukoil-owned refineries on the east coast of USA. Lukoil
has the second largest oil reserves after Exxon Mobil.
October - USA - UK - An energy economist, Peter Odell, claims in an
article in the Guardian newspaper that western oil majors, such as
Exxon Mobil and BP, are losing their control of global oil exploration
and distribution systems. These majors now have only around 10% of the
global reserves. The rest are in government hands, and the oilmajors
are now limited to minority partners. Odell believes it is "only a
matter of time" before Gazprom or Lukoil make a bid for BP or Shell.
Similarly, he sees ExxonMobil vulnerable to a Chinese takeover.
Certainly, the Chinese government is drowning in American dollars.
Chinese bid for Exxon and/or Chevron and/or a Russian bid for Shell
and/or BP, backed by funds provided by the wealthy member countries of
Opec seem likely to be only a matter of time."
In the face of this, Odell predicts re-nationalisation of such
companies as France's Total.
September 25 - China - in an article in the Financial Times, China's
Prime Minister and China's vice President confirm that China's massive
foreign exchange reserves will be used to secure raw material, fill the
near complete oil strategic reserve tanks, and "considering whether to
buy gold, considered a hedge against the potential of a falling US
dollar". China has $US1,000 billion (1 trillion) in reserves. As a
government official has already stated that China needs only about
$US700 billion as reserves, and the governor of the Chinese state bank
has said China already has enough reserves, there is $US300 billion
available to China. China's reserves increase by around $US20 billion a
month. $US300 would buy around 15,500 tonnes of gold at current market
prices. USA supposedly has
reserves of physical gold of around 8,000
September - According to the US Department of Energy figures, world oil
supply (demand) is 1 million barrels a day less this september than
true, this is interesting - last septembers oil supply was affected
by Hurricane Katrina.
September - USA - Japan - Honda announce they will make a range of
highly efficient automobile diesel engines and sell them in USA. Diesel
engines are far more fuel effcient than gasoline engines, but, unlike
Europe, barely have a presence in the USA car market. This is a sea
change in strategy, and a very smart move.
September - Global demand for industrial-scale wind turbines is
booming. Sales are
expanding by 10-20% per annum. Shortages of critical components -
gearboxes and bearings - slow deployment.
October - UK - Home handyman chain B&Q offers package-deal wind
turbines for $US2,821 installed. The 2 metre high, 1.75 metre turbines
can generate a maximum of 1 kilowatt. The 'free' power can be fed
straight into the householders ring main (a wiring layout unique to the
UK) via a micro-grid tie inverter. Customers are also eligible for a
grant of 30% of the capital cost from a government-backed energy saving
Norway - The Government announces a $US3 billion investment fund from
oil revenues whose profits will be spent on subsidising renewable
energy. A subsidy will be given for every kilowatt hour of energy
produced from wind or small hydroelectric projects. The funds will also
subsidise energy efficiency and energy conservation programmes. Norway
obtains 99% of its electricity from hydropower, but most major sources
are now dammed. Worse, global warming is affecting the re-charge of the
waterways that feed the dam. Low storage levels may result in
electricity rationing this winter.
September - USA -
The Department of Energy says it intends to buy
oil to finish replenishing the
reserve this winter, when winter fuel oil inventories should be in
September - USA - Montana State announces it has signed contracts to
build a coal-to-liquids plant at Bull Mountain Mine, Roundup, Montana.
The combined-cycle plant will gasify coal to synthesize 22,000 barrels
day of diesel. A portion of the gas will be burnt to generate around
megawatts of electricity. The promoters claim the carbon dioxide will
be re-injected underground, and that the mercury and sulfur in the coal
will be captured, and not released to the environment.
September 30 - Iran -
Japan - The Iranian parliament's energy
commission announces it will not renew Iran's contract with Japan to
develop the Azadegan
offshore oil and gas play. Japan held 75% of the value of the
concession. The contract expires now, with Japan still insisting it has
a 10% interest in the field. Iran blames Japan
for on-going delays. Iran supplied 14% of Japan's oil needs last year,
over 500,000 barrels a day.
This huge quantity makes Japan Iran's biggest foreign customer.
September 30 - Indonesia - Japan - Indonesia gives advance notice to
its Japanese customers that it will cut exports of liquefied natural
gas to Japan by half when current long term supply contracts expire in
October - Indonesia -
Japan - Japan's State-owned Inpex Holdings is
in talks with Indonesia over a plan to finance and develop the
Abadi gas field off Indonesia at a cost of $US4.2 billion. Japan's plan
to buy and operate concessions in overseas oil and gas assets
equivalent to 40% of its needs by
2030 looks increasingly hopeless.
October 3 - Light sweet
crude oil prices fall to
- OPEC claims it is going to cut production by 1
million barrels a day in order to stop prices falling further. It says
it is going to defend a $US50 - $US55 floor.
October 4 - Nigeria and Venezuela claim they will cut
production by a combined total of 170,000 barrels a day.
October 4 - Saudi Arabia - Europe - Saudi Arabia 'sharply increases'
the price it charges European refineries for Saudi light crude. The price
spread between light
and heavy crude continues.
October 10 -
China - Strategic reserve
tanks are now complete, and
available for filling. The tanks in Zhenhai, south of Shanghai, are now
being filled from China's domestic production.
October - Syria - Oil production has now
fallen to a daily average of 400,000 barrels a day, according to the
Syrian Oil Minister. Production in 2005 averaged 414,000 barrels a day.
Apart from Shell Oil Company and Petro Canada, there has been
relatively little International Investment in Syrian oil prospects, due
to perceived instability caused by Syria investing its oil wealth
invasion of Lebanon and sponsorship of terrorist groups. Syria now
eases terms to International oil exploration companies in the hopes of
attracting investment capital to 12 new exploration blocks. Syria is
pinning its hopes on advanced production techniques to force continuous
high volume production from existing wells. The inevitable longer term
outcome will be not just earlier depletion, but sudden depletion. Two
thirds of Syrias export income is from oil. Syria will be a nett oil
importer by about 2010. It has not invested in refineries, so is
already an importer of $US1 billion of refined oil products per year.
October - UK - Head of the UK National Farmers Union claims
that current animal-feed wheat surpluses, plus canola (rape) seed grown
on the large amount of land (750,000 hectares) currently 'set aside',
can meet the UK's target of 5% of fuel from renewable resources by
2010. He claims this will be achieved by petrol blended with ethanol
from the 3.5 million tonnes of surplus wheat, and deisel made directly
from the oil expressed from the three quarters of a million hectares
canola seed crop.
The UK renewable fuel target, if met, is
estimated to reduce CO2 emissions
by two million tonnes. This is said to be equivalent to removing one
million cars from use (already taking into account the carbon released
transporting and processing the crops).
October - Iraq - Iraqi people continue to
have to queue in huge lines at petrol stations, as the USA-led invasion
has cut operational functionality of the refinery and distribution
sytem and corruption and theft of petrol consignments reaches
outrageous proportions. Daily domestic demand is about 22 million
litres of gasoline. Daily supply is around 10 million litres.
October - Iraq - A small new oil refinery
opens in the city of Najaf, designed to meet domestic needs for the
immediate area. It can process a meagre 10,000 barrels a day. Iraq's
three main oil refineries (Dora, Baiji and Shuaiba) are
crippled, working at only half their capacity. Their daily production
is only 350,000 barrels a
day. Before the American invasion the refineries produced around
700,000 barrels a day. Iraq continues to have to import kerosine,
gasoline, and electricity from neighbouring Iran.
October 18 - Iraq - Iraq's largest refinery, the Baiji refinery in
central Iraq, shuts down yet again due to lack of electricity from a
nearby thermal power station. Internal Iraqi domestic oil and oil
product supply is of no strategic importance for the American occupiers.
20 - Iraq - USA - Turkey - Israel - the major crude pipeline from northern
Iraq to Turkey re-opens. Previously, the US had considered building
a new pipeline from Kirkuk to Israel to replace it. But the cost of a
new 42 inch pipeline alongside the existing disused old
oil pipeline from Kirkuk, through Jordan, to Israel (closed by the
Iraqis in 1948 during the first Arab-Israeli war) was estimated to be
about $US400,000 per kilometre. Kirkuk currently produces roughly
300,000 barrels of Iraqi oil. The newly repaired Kirkuk to Ceyhan
(on the Turkish Mediterranean coast) pipeline can carry 200,000 barrels
of unrefined crude a day. This pipeline is of major strategic
importance to USA.
Export of unrefined crude via the Persian Gulf (and through the
equally narrow Gulf of
Aden) are predominantly from southern Iraqi (Basra) oilfields.
These fields produce around 1.8 million barrels a day of crude, and are
of even greater strategic importance to USA.
October 10 -North Korea explodes a weapon
of mass destruction. USA does not invade North Korea.
North Korea has no oil
October 11 - Light
sweet crude oil prices drop to $US57.59
October 10 - Russia - Gazprom is to develop the Shtokman gas field itself. The NEGP pipeline project may be
expanded to include a parallel pipeline to take Shtokman gas to Germany
and West Eurasian markets.
October 20 - Russia - President Putin publicly gives a deadline by
which an energy plan must be developed to forestay a Russian domestic gas crisis.
October - Russia develops a framework for pricing its crude
oil via the Russian Fuel and Energy Exchange and Urals REBCO crude as a
way of developing its own pricing benchmark
instead of using the North
Sea Brent Crude benchmark.
October - Indonesia - ExxonMobils contract to develop the large
offshore gas field in the Natuna Sea off
Borneo is cancelled by the Indonesian government, in spite of the oil
October - USA - drilling reaches the highest levels recorded in 21
years. U.S. About 37,261 oil wells, natural gas wells
and dry holes have been drilled so far this year. The number of
completed wells in Q3 is the highest since the peak of USA hole
drilling in early 1986.
Like Canada, USA
has to drill more to try to maintain production, but finds are now
smaller and run out sooner.
October - Peak Oil - An update on peak oil is presented
by Khebab at the 'Oil drum' blog. It includes 'business as usual'
projections from the EIA's 'International Energy Outlook 2006' and
total liquid demand for 2006 and 2007 forecast, and assuming a constant
per capita oil use. It also includes projections from oil-field by
'bottom up' peak-oil analysts. It includes analysis by peak oil 'curve
use the Hubbert linearization technique.
Conventional oil has been in a peak or plateau since at least 2005,
and new discoveries of conventional (cheap) oil will not balance out
declines in old
large fields (estimated at 6%). Agencies - especially the EIA -
'draw out' the plateau or peak by including condensate in their
figures, as well as unconventional oil, such as the very heavy
(70% bitumen, 30% water), add in 'non crude liquids' such as ethanol
(an oil 'displacer'),
from coal and oil shale, and take no account of additional refinery
crude oil products required to add to condensates and natural gas
liquids to bring them up to saleable specification..
There is little doubt that 'all liquids' - conventional plus
unconventional - will not peak until at least 2010 (and perhaps 2015
if economies slow). But adding in
'unconventional' means a premium for this expensive class of oil.
Supply and demand for 'cheap' oil remains pretty much matched. Only
recession can ease demand pressure for cheap oil. Nothing can increase
supply of cheap oil. Collapse of Ghawar or Cantarell remains, as ever,
the joker in the pack.
October 19th - Iraq - USA - UK - US and British commanders go on
television to 'prime' the public for withdrawal of some US and British
troops, following successful completion of the next phase of the
US plan to control Iraqi oil. The sudden and large increase in numbers
of troops sent into the most dangerous areas of urban Bhagdad and the
use of extensive house-to-house ground searchs have predictably
resulted in a sudden rise in USA troop deaths. The British have taken
similar provocative steps into previously relatively calm areas in some
southern urban areas, with similar results.
21st - Iraq - USA - UK - With southern ports and major
oilfields secure, the major crude pipeline from northern
Iraq to Turkey re-opened,
and the december sign-over of oil sovereignty to US-UK multinational
oil conglomerates (via PSA's
embedded in the constitution) in sight, and with Iraq partitioning
discrete regions along tribal lines (with oil-less and troublesome
Bhagdad region heavily 'sunni-fied') USA prepares the public for
withdrawal of some troops (probably intially a small tranche, of
symbolic and political value), in line with the next phase of planning.
In an extended interview, President Bush carefully inserts an
'acknowledgement' that the 'sudden upsurge' in violence in Iraq could
be like the Vietcong's 'Tet offensive' in the US war against Vietnam -
a factually absurd claim, but with high emotional resonance with the
USA target audience.
October - USA - Afghanistan - The planned US-backed pipeline from
gas-and-oil-rich Central Eurasia across Afghanistan to the Indian coast
is now pointless due to changed political allegiances of the Central
Eurasian states. Post
invasion, Afghanistan is not only a 'useless' asset, it is now a
liability. USA commences 'handing over responsibility' for Afghanistans
shaky and localised democracy to NATO forces.
October 22 - Japan -
Exxon Mobil reaches a preliminary agreement to sell natural gas from
Sakhalin -1 in far East Siberia to China - not Japan as was originally
October 24 - USA - Iraq - Japan - Japan lends Iraq $US3.5
projects to re-develop and
upgrade a refinery in Basra,
improve oil export
infrastructure (popelines) in southern Iraq and develop a facility to
liquefied petroleum gas. In addition, other Japanese firms are holding
talks with the Iraqi 'government' to explore increasing the possibility
of improving some Iraqi oil fields in the south.
"We don't want to miss a
boat that leads to vast oil
reserves in Iraq - the next promising source of
oil is Iraq."
- Shin Hosaka, director of the oil and gas division of the Japanese
October - Russia - Israel - Turkey - Russia and Israel are scheduled
to hold talks on extending the existing BTC
oiil pipeline from its terminus on the Turkish coast through to
Sea oil terminus. This would allow Russia to export their oil to the
Far East, and allow Israel to access Russian oil. At the same time, the
proposal is for the pipeline route to also carry electricity from
Turkey to Israel, and water from Turkey to Israel. Over 90% of Israel's
oil now comes from Russia and the Caspian region. Israel burns about 270,100 barrels of oil a day, ranking it a moderately
high user - 42nd of the 211 countries of the world. Like many developed
countries, by far the largest proportion - 51% - goes on transportation
liquids for cars, trucks, buses, and motorbikes,
in spite of the small size of the country.
Previously, Israel accessed most of its oil from Egypt, West Africa,
Mexico, and the North Sea. Mexico and the North Sea oil are in decline.
Egypt is not a friend of Israel (and adjacent Iraqi, Syrian, Saudi, Kuwaiti and Iranian oil is
unlikely to want to ever supply Israel). West
Africa oil supply is unstable. That
leaves Russia, a high volume supplier. For
October - world -
demand for oil continues to reduce. Reduced demand
in Asia has seen some speculators having to quit oil to distant markets
at considerable shipping cost. Other speculators are using tankers as
storage. Tanker hire rates have dropped dramatically with falling
demand for oil shipment. Singapore is estimated to have a 100,000 tonne
surplus of gasoline product. The IEA has lowered global consumption
forecast by 95,000 barrels a day - the third lowering of forecast
demand this year.
October 26 - Ukraine - Russia - Ukraine agrees to a 36%
increase in the previously heavily discounted price of natural gas
it buys from Russia. Winter is not far away.
Russia - Crude oil plus condensates production are now 9.71 million
barrels a day (crude was 9.58 million
barrels a day), a further decline in production from september's 9.77
million barrels a day. The Russian economy minister sees a "sharp
reduction" in petroleum exports over the next 3 years as a challenge
for the Russsian economy. Domestic
oil is supplied at a heavily subsidised price - the tax paid price is
$US25 a barrel. The government's "moderately
optimistic' scenario has increased investment in oil drilling,
production, and development result in an increase in production to 507
million tons by 2009. Russia has produced nearly 400 million tons of
crude and condensate in the year to date.
Crude oil exports are down
just over 2% for the month, a sharp increase over the 0.5% decline for
the year to end of september.
Fuel oil is being stored in greater amounts
in expectation of a difficult winter for gas supply this year, coupled
with old and increasingly unreliable energy infrastructure. Electricity
shortages are predicted for 16 regions of Russia this winter, with
supply cuts to businesses inevitable at the temperature trigger point
of minus 15 degrees celsius.
Oil sales on the domestic market in the year to date are up by over 5%,
to 4.35 million barrels a day.
October 30 - USA - Matt Simmons, long time oil industry insider and
author of 'Twilight in the desert', observes at the ASPO conference
that while several public bodies see oil supply at a plateau (or a
'bumpy' plateau) until some point in the band 2010 - 2015, there are so
few oil rigs now left available in the world, and the existing rigs are
so old and high maintainance, that not only is it physically impossible
to keep supply growing, but also that "sustaining the base" production
for the next 5 to10 years is "not impossible but extremely long
October 30 - World - UK - Former World Bank Nicholas Stern economist
releases the 'Stern
Report'. It is the first ever report by an
economist to calculate and bring to book the true cost to human life of
the effect of releasing previously permanantly locked-up geological
carbon dioxide to the atmosphere - and thereby creating a
greenhouse-like blanket around the earth.
Stern explodes the American and Australian myth that carbon taxing to
help make non-fossil energy such as solar energy competitive will
reduce economic growth.
The report shows that in fact a 'business-as-usual' approach will
result in economic losses in the range of 5% to 20%, due to the effects
of sea level rises on infrastructure, climate change causing drought,
reduced cropping, changes in fisheries. While no account is taken of
feedback acceleration of change as oil supply dwindles and increasing
amounts of coal are burnt, the author feels carbon dioxide in the
atmosphere might eventually be stabilised at 550 part per million by
2050. Just over 200 years ago, at the start of the coal-burning
revolution, there were only 280 parts per million of carbon dioxide in
the atmosphere. Currently levels are at 430 ppm.
If the use of fossil carbon (coal) and hydrocarbon (oil and gas) is
not reduced dramatically, carbon dioxide in the atmosphere will
continue to grow.
Stern identifies some quick gains - stopping deforestation
forests, which accounts for around 18% of greenhouse gases, better
agriculture practises to retain the carbon in organic matter in soils,
increased energy efficiency.
Finally, an economist recognises future-eating uncontrolled growth
based on ancient sequestered hydrocarbons as cancerous growth. The
future of economically sustainable growth is a homeostatic growth,
where solar, water, and photosynthesis energy cycle continously through
complex human systems; and only as much ancient carbon is burnt as can
be permanently re-sequestered in the soil or back underground.
October 31 - Australia - leading Australia National University
researcher Dr. NU's Professor Andrew Blakers urges the installation of
two kilowatt photovoltaic panel on the roof of every home in Australia
to export power to the national grid. He calculates that because
Australia is a sunny nation, this would in effect supply the entire
residential sector with its total electricity needs without having to
burn fossil carbon. But because coal does not include the economic cost
of adding to global warming, existing photovoltaic power cannot compete.
October - Bolivia - The Bolivian government successfully re-negotiates all its
major gas contracts on terms more favorable to the government.
October - USA - gasoline
stocks are about 215 million barrels.
November - Brazil - Brazils oil production has now more than doubled
over the last ten years. Its ethanol production has increased at about
half that rate.
November - Japan - an unusually mild winter (so far) this year meant
demand for kerosene used for heating dropped by about 3%
over the month (to around 560,000
day). Kerosene is largely used for space heating rooms, as few
Japanese homes have central heating, in spite of most houses having
little or no insulation. Commercial buildings use electric central
heating from nuclear or coal-powered electricity generation plants.
India - India generates 130,000 megawatts of
electricity, mainly from fossil fuel sources (coal, fuel oil, natural
gas). The supply is notoriously unreliable, with more than 60% of
middle sized and larger businesses owning and running their own
oil-burning generators to keep businesses operational during power
cuts. India's rapidly growing population and economy means it is
forecast to 'need' 60% more oil (almost all imported) and 300% more
natural gas by 2010. In light of this impending energy crisis, wind
power is being promoted. Around 6,000 megawatts of electricity now
comes from wind power. The number of installed wind plants increased by
almost 50% last year. India's President says 16% of India's electricity
needs "could" come from wind power by 2030.
November - A large natural gas field is discovered in southeastern
Turkmenistan. Reserves are estimated at 7 billion cubic meters.
Turkmenistan's proven reserves are about 2.8 trillion cubic meters.
controls the pipeline route for Turkmen gas exports Europe and former
Soviet states. Turkmenistan plans alternative pipelines to circumvent
Russian transit fees. Four pipeline projects have been mooted by the
Turkmen dictator. One to China, of 30 billion cubic meter capacity, due
to commence 2007 and complete 2009; the Trans-Afghan
Pipeline to Pakistan and India, also with a capacity of 30 billion
cubic meters; a pipeline along the Caspian coast to access Europe; and
another through Afghanistan and Pakistan to supply the United Arab
Emirates with gas to pressurise some of their failed oil fields. How
many of these 'ambitious' ideas become real is in serious doubt. The
'President' of Turkmenistan has pledged "to supply the world with 200
billion cubic meters".
- USA - The 727 million barrel strategic petroleum
reserve is now full, at 688.5 million barrels in store. Only 11.5
million barrels remain
to be replaced to previous levels, or 38.5 million barrels to fill it
China - China commences filling its strategic oil reserves.
China has been buying oil (mainly contracting oil from Saudi
as well as using its domestic supply, and is aiming for a 7 day cushion
in the first phase of filling its first 4 strategic reserves. It has
accumulated 3 million barrels so far, with another 4.4 million barrels
expected to be in place by the end of december. An additional 3
reserves are planned for completion 2008, with an ultimate object of
acquiring a months cushion, about 100 million barrels.
November - China - crude oil imports are now approximately 15% more
year. But the oil now costs almost one third more than last year.
Oil product imports have increased by roughly the same amount. But the
oil products now cost almost 50% more than last year.
Unlike countries such as USA which primarily use natural gas as a
feedstock for petrochemicals, China
has little natural gas and
committed to using oil, rather than coal as it modernised in the time
of cheap oil of the last few decades. China's heavy investment in new
infrastructure has 'locked' it into an oil-based manufactury (apart
from fertiliser production) from which only massive recession and drop
in demand will release it.
November - China - 60% of irrigation water is now moved by deisel
powered pumps. Farmers are given preferential supply. In many rural
areas electric pumps can't be used, as the power draw would exceed the
capacity of the local grid.
November - China - Automobile manufacturers sell 5.76 million
new cars in the year to date. This is an increase of 25% over the same
period last year.
November 25 -
Iran - China - Sinopec, China's oil major, signs
a deal with Iran to develop the Yadavaran oil field near the Iraqi
border. China hopes to ultimately sign for a controlling 51% stake in
the field. Royal Dutch Shell, the technical advisors, are looking for
20%. Yadavaran is said to have reserves of 3 billion barrels, and when
the field is fully developed it is claimed to be able to produce
of oil a day. The longer term deal, if signed, would allow China
150,000 barrels a day for 25 years at market rates. It would also cover
sales to China of 250 million tonnes of liquified natural gas.
These kinds of
bilateral long term contracts are a partial return the one to one
exporter/customer contracts that existed prior to the 1973 oil shock.
It is the beginning of a virtual oil 'country allocation' system, where
importing countries assure themselves of exclusive supply into the
future by dealing directly (one way or another)
with the producing country, rather than buying on the spot market.
Quote of the month:
"Russia, China, India and the rest
of the world outside the West have little fundamental attraction or
loyalty to the US-supported global oil market or the governing
institutions from which (such as the IEA and the Organization for
Economic Cooperation and Development) they have largely been excluded.
They do not feel an integral part of the global system they see as
greedily and inordinately dominated by the multinational oil companies
of the West, with which their relations are growing ever more tense. As
such, they certainly cannot be expected to bolster the US-led model,
and they are not doing so."
- W Joseph Stroupe, writing in the Asia Times Online, November 23
November - OPEC - a cut of
around 1.2 million barrels a day has been
voted by OPEC members in order to support prices. As always, some
members will 'free ride' and not cut as deeply as they say they will.
Oil takes about 45 days to move from the Middle East Gulf, but
physical shipment shouldn't be necessary to send a signal to traders if
demand is greater than supply. Prices should adjust the instant there
is a shortfall. They haven't.
November - Poland - Russia - Poland agrees to a large increase in
price for Russian gas this winter.
November 27 - Russia - Belarus - Latvia - Lithuania - Estonia
- a leaked report sees these former Soviet Republic states paying
market rates for its natural gas from 2007. Belarus currently pays
Russian gas giant Gazprom a hugely subsidised price of $US46 per 1,000
cubic metres. Next year Belarus will have to pay $US200 per 1,000 cubic
metres. Latvia and Lithuania also face European Union average maket
prices of a similar level.
November - Russia - Gazprom is budgetting for an average price of
gas in 2007 of $US293 per 1,000 cubic metres of gas -
14% higher than the present budgetted price.
November - Russia - Gazprom is budgetting for an average price of
gas in 2007 of $US49 per 1,000 cubic metres of gas -
15% higher than the present budgetted price, but massively subsidised
relative to the prevailing EU market price.
November - Russia - Russia faces a small shortage of gas going into
2007 - perhaps around 4 billion cubic metres.
Russian has roughly a quarter of the world's gas reserves, either
producing or on-selling (Central Asian land-locked gas) a total of
around 786 billion cubic metres, but has huge contracts for supply
(mostly to Europe) at the same time as domestic consumption is
increasing and the 'old gas fields' are depleting. Vast new gasfields
exist, but are in difficult arctic areas, out at sea, and often
isolated from existing pipelines.
90% of Russian gas is controlled by
Gazprom, which has been slow to invest to the level required to bring
new supplies on-stream. Rapidly escalating costs have worked against
Gazprom. Current fields are increasingly more expensive to operate,
with operational costs tripling from the 1990's, and now stand at $US6
per 1,000 cubic metres of gas produced. The new permafrost areas are
even more expensive to operate. Costs there are closer to $US20 per
1,000 cubic metres.
While cuts have been made to the internal industrial market, the
CIS, there is reluctance to cut domestic industries and exports. If new
high-volume supplies aren't produced soon, it is expected, on current
trends, that Russia will have a shortfall of 30 billion cubic metres by
2010. It will then have to chose whose supply to cut.
Saudi Arabia - production of crude oil plus condensate is 8.8 million
barrels per day
December - Iran
- China - A deal is signed between Iran's Pars
LNG Company (co-owner by Iran,
Total, and Petronas Malaysia) and PetroChina Company to sell 3
million tons of liquefied natural gas (LNG) a year to China for the next 25 years.
The price of gas will
be linked to the price of crude. The huge Pars project is
expected to be implemented about the middle of 2007.
Iran - China - Chinese state-owned
oil producer Zhuhai Zhenrong Corporation switches out of the US dollar
to other currencies to pay for its 240,000 barrels
of oil a day from Iran.
December - Southeast Asia - UK
consultants Energyfiles Ltd present data showing the Southeast Asian region crude oil production is
expected to peak about 2013 at a peak production of 3.3 million barrels
a day. New deepwater Malaysian and Vietnamese production coming
on-stream will save South East Asia from an earlier peak (in
conjunction with increaasing Thai production).
Southeast Asias natural gas production will be
substantial in 2013 - about 4.7 million barrels a day of
oil-equivalent. At that point, Southeast Asia will theoretically be a
net gas exporter, able to export a surplus of about 1.6 million barrels a day of oil-equivalent. Gas production will continue to grow, until it, too
peaks, around 2020, before declining. Given that Southeast Asian crude
production will commence declining just when a surplus of gas becomes
available to export suggests that what is in
theory exportable looking ahead from 2006,
will more likely in fact be eaten up by increased domestic demand in
December - Russia - China - Rosneft,
Russia's state-owned oil business, announces a joint venture between
itself and China
National Petroleum Corporation (CNPC). The joint venture will build a
oil refinery hundreds of petrol
stations in China. As part of the deal, CNPC will be licenced to
produce oil in Russia's far Eastern oil fields. Rosneft will also
increase its sales of crude oil to China from around 13 million tonnes
a year at the moment, to about 20 million tonnes in 2007.
December - USA - refineries are now working at
close to 90% or their capacity.
- USA - about 2.2 billion bushels of corn (maize) was exported
in the year to date. US corn is heavily subsidised via a taxpayer
'corporate welfare' system, aimed mainly at further enriching rich
corporate corn producers. A rapidly escalating policy of subsidised
ethanol production means the US taxpayer gives two welfare checks to
the corporations. Exports of corn may be reduced as demand for corn for
ethanol increases - unless additional corn is planted this (northern
hemisphere) spring, in reaction to the high world prices.
December - China - China's largest
coal producer, Shenhua, is likely produce 200 million tons of coal by
the end of this year, (versus 150 million tons in 2005),
exceeding the record of the USA's Peabody Energy, likely to produce 225
million tons by years end (versus 240 million tons in 2005). This will
make the Shenhua
Group the world's largest coal producer.
December - Japan - some indications are that Japan has imported
about 8% less crude over the last few months. Japan uses about 20% of
its fuel in gasoline engines. Japanese cars are small and highly fuel
efficient; few urban Japanese use their cars during the week, major
roads are tolled heavily, the
national public transport system is excellent, and the aging workforce
is probably less inclined to travel on roads that are consistantly
choked in the weekends. Unlike many other industrialised countries,
Japan has almost no ability to cut domestic vehicle use in the event of
a sudden oil shortfall. Therefore, a shortfall would hit industry
December - China - car production and sales this
year are about 7 million vehicles. Relatively little of China's oil
consumption is for transport - around 36% - and an even smaller
proportion of that (maybe 5% or so) is for personal transport.
December - China - The state-owned Chery automotive company now
sells 305,236 cars a year - over double the volume sold in 2005. Most
are exported. In 2000, it built and sold only about 2,000 vehicles.
December - China - China now exports 340,000 vehicles a year,
33% of which are sedans. Most are sold in the Middle East,
Southeast Asia, Africa, Russia, and Latin America. Chery Automotive and
vehicles built by the privately owned Geely Group are the major
December - USA - China - a deal by a USA entrepreneur to establish a
joint venture with China's Chery Automobile company to importChinese
built fuel-efficient small cars fails.
December - USA - China
- the USA's DaimlerChrysler AG and China's state-owned Chery Automobile
Co announce a joint venture to build small cars in China and distribute
them worldwide via DaimlerChrysler AG under their 'Dodge' brand. China
can offer very cheap car manufacture - a Chinese auto assembler
typically earns $US1.95 an hour, where a German assembly worker earns
$US49.50 an hour.
December - USA -
small cars - sales of small cars
such as the Toyota Yaris (Echo), Honda Fit, Nissan Versa, Kia Rio and
Accent have taken off as consumers react to higher gasoline prices. All
the small cars have fuel economy of at least 30 miles per gallon
(highway), and the Yaris (Echo) achieves 40 mpg. Only some diesel cars
gasoline-electric hybrids have better fuel efficiency. But relative to
the deisels and the hybrids the small cars are very inexpensive, at
around $US12,500 for the Toyota Yaris to around $US14,500 for the Honda
Fit. The Yaris, Fit, and Versa sell in a quarter of the time it
normally takes to move a new car from the dealers showroom. Demand is
currently outstripping supply.
December - USA - Europe - Japan - less than 15% of car
owners are first-time car owners.
December - China - around 80% of China's car owners are first
time car owners. Calculations by General Motors suggest that because of
China's rapid growth, most middle class families, while still a small
percent of Chinas's overall population, could afford to buy a car if
they chose to. GM reckons that amounts to a potential customer base of
74 million families.
December 5 - USA - Venuezuela - U.S.
Lugar at the NATO suggests the
rules of NATO be changed so that an energy boycott of any NATO
member state is regarded as an act of coercion akin to a military
attack. He suggests that such an 'attack' be met with a 'collective
response'. While most commentators see it as a response to Russia's
actions in shutting down some gas supplies in Europe
last winter, the likely target will be Venezuela. Venezuelan oil
imports are now of critical
importance to USA.
December 5 - Iran - USA - Iran's Oil
Ministry now includes a clause allowing it to substitute the euro for
the USA dollar in almost all its oil dealings. The price tag may still
be expressed in dollars, as this is the global trusted 'benchmark'
currency (for the moment), but the payment is in euros. Presumably this
contract provision will be for non-Asian and non-European oil dealings.
The majority of Iran's sales are in Asia and Europe and are already largely denominated in euros; the existing policy already results in a considerable
saving to Iran in currency exchange. There is no exchange costs for
its European customers, and exchange costs to go from US dollars to
euros is borne by the Asian customer. Iran may also want to avoid
having dollar assets tied up in the international banking-go-round,
where they are vunerable to being 'frozen'
by America in times of conflict.
December - Iran - USA - Iran has cut
its dollar reserves in the last quarter by $US4 billion.
December - Qatar - USA - Qatar has cut its dollar reserves in the last
quarter by $US2.4 billion.
Are both these countries reducing their
holdings for the same
December - USA - Energy Industry
economists at their conference in Houston claim that while world oil
consumption and demand have only around 400,000 barrels a day of
padding between them, the high oil prices have allowed enough refinery
expansion and 'new-build' to handle the increasing proportion of heavy
and sour crudes, such that overall through-put volumes will increase
and oil prices will likely plateau - by 2010.
December - Iraq - USA - As part of its
job of preparing the USA public for the final phase of operation Iraqi
Oil, a bipartisan 'study group' releases its recommendations. While the
father of the report, James
Baker, publicy states at the time of the release that it is "not
about oil" the report publicly reveals a continuation of
the plan - which at base, is all about oil:
Recommendation No. 63: USA should
"assist Iraqi leaders to reorganize the national oil industry as a
commercial enterprise" to "encourage investment
in Iraq's oil
sector by the international community and by international
companies" and to "provide technical assistance to the Iraqi
prepare a draft oil law." This re-afirms the plan to privatise Iraqi
oil resources and open them to USA and selected European oil firms.
Recommendation No. 26: a review of the
constitution should be "pursued on an urgent basis." The USA
crafted constitution slipped up in not explicitly stating whether
or future revenue from undeveloped oilfields should be held by the
province the oilfield is in, or go to a central government.
Recommendation No. 28
control of Iraq's oil revenues to be put into the hands of the
central government. As Iraq breaks up into a nominal federation of
three states, the USA needs the revenue to go largely to several
central strongmen (representing the 3 factions) so that they can
sub-contract access to exploration and development rights in their
region. USA cannot afford to have regions selling their (USA'S) oil rights to
December - OECD - oil
stocks on hand in OECD countries are now being used at the rate of 1
million barrels a day. Stocks on hand at the end of the year are 2.67
barrels, equivalent to about 53 days of demand.
December - Russia - Netherlands -
Russia stalls the Sakhalin-2
project once more on the
grounds of breach of environmental rules. Shell realises it is over a
barrel and agrees to reduce its majority holding of 55% down to 25%.
Japanese joint venture partners Mitsui will divest from their
current 25% holding down to 15% and Mitsubishi will sell down its 20%
stake to a 10% holding. Gazprom will pick this 45% up in return for
cash and some 'field assets' in eastern Siberia.
December - Russia - Belarus - Russia imposes a $US180 per tonne export
duty on Russian oil sold
to Belarus. Belarus has been importing cheap oil subsidised by Russia,
and refining and re-selling it at a handsome margin. Russia estimates
this gambit by Belarus has cost Russia more than 3 billion dollars a
year in foregone revenue.
December - Russia -
Belarus - Belarus imposes an import duty of $US45
per tonne on Russian oil that transiting its territory via the Druzhba
pipeline to Europe. Belarus enjoys duty free trade with Russia, and has
done for many years.
December 13 - Angola - The
offshore Dalia deepwater oil field commences production. Full
expected mid 2007, when it will produce about 240,000 barrels of oil
per day. Like most modern fields, the field pressure is maintained with
31 water injectors and 3 gas injectors. When this field eventually
declines, it will likely decline relatively steeply.
December - USA - Angola - oil supply to USA surges 41%.
-Azerbaijan - Turkey - the Shah Deniz gas and condensate field in
Azerbaijan’s sector of the Caspian
Sea commences production. It is one of the largest producing fields in
the world, with gas reserves estimated at around 50 to 100 billion
cubic meters. The 'wet' gas is believed to have condensate reserves of
around 400 million cubic meters. Most of the gas will be piped via the
new 690 kilometre long South
Caucasus pipeline. This pipeline runs in
parallel with the Baku-Tblisi-Ceyhan oil pipeline from Azerbaijan,
across Georgia, to Turkey. Georgia will also buy some of the gas.
December - Saudi
Arabia - South Korea - Taiwan - Japan - Saudi
Aramco tells refiners in Japan,
South Korea and
Taiwan that it will cut their contracted crude oil supplies by 4% - 5%
below their contracted annual volumes for this month, then cut their
allocation in january 2007 by 8% - 9%. For whatever reason, temporary or
permanent, Saudi Arabia seems to be allocating a reduced supply.
December 14 - OPEC - OPEC agree to further cut supply
by 500,000 barrels per day (2% of current production) starting on
February 1st 2007, after the northern winter.
December - OPEC quote of the month
"...since peak oil output is not about
the time at which oil will run out,
but the time at which production can no longer be increased to cope
with increased demand, it seems the only way the oil price can go is up.
December - Algeria - starting 2007, Algeria will now tax oil company
"excess" profits when oil is over $30 a barrel. In future Algerias
national oil company must have a 51%
controlling interest in all oil and refining contracts. All
existing foreign oil company contracts will have to be renewed, and on these terms.
This conclusion seems to be in line with the view held by the peak oil
output advocates who argue that the ongoing oil price rises are mainly
due to supply-demand imbalances. This is because we are at, or near,
the production peak of world oil, if not on the downward slope of
Hubbert’s peak curve."
-Senior OPEC member Dr Shokri Ghanem, writing in the december OPEC
December 25 - Azerbaijan - Turkey - Production at the Shah Deniz
gas and condensate field is stopped due to a
leak deep in the well hole. It is not expected to be repaired until mid
january 2007. Just one well is (was) operational at the field, with
others due to drilled next year.
December 29 - Light sweet crude oil is now $US61.05.
31 - Russia - Belarus - Belarus reluctantly agrees to pay increased
natural gas prices of $100 per thousand cubic meters (tcm) for Russian
natural gas. This is
still far below the market price of around $235 per tcm. In turn,
Belarus will pay
$US70 cash and $US30 as shares in the Belarus pipeline company
Beltrangaz. The price will gradually rise over the next 4 years to to
the full market price, when Gazprom will have received shares equally a
50% stake in Beltrangaz, at an ultimate cost to Gazprom of US$2.5
December - Saudi
Arabia - exports this month have been 1.1 million barrels a
day lower than october,
when OPEC called for production cuts of a million barrels a day (upped
to 1.2 million barrels a day in november).
December production has therefore
been about 7.7
million barrels per day.
December - Mexico -
Cantarell crude production is now
down to an 'average' of 1.5 million barrels
a day for the year according
to figures from
the Mexican Energy Ministry. This is an apparent drop of almost 250,000
day in the last 6 months, but as it is the year average taken from the
July production, it is likely to have been a somewhat larger drop in
december. Cantarells's collapse continues.
December - Mexico - total production (all fields) is now
2,978,000 barrels of oil per day, (crude plus condensate). Mexican domestic consumption
continues to increase.
Brazil - Oil production was about 1,800,000 barrels of oil per day,
(crude plus condensate).Brazilian domestic consumption was about
2,100,000 barrels of oil per day.
Iraq - in 2006, a total of 44
million barrels of oil 'disappear' into the black market.
Oil Production - the average combined
plus condensates used in 2006 was 73.48 million barrels per day
(according to America's 'Energy Information Administration', the EIA)
Domestic oil consumption by the top 10 oil producing nations is
estimated to have increased by at least 6% relative to end 2005.
Increasing domestic demand in export nations decreases the amount
available for export.
Revised (2007) IEA (International Energy Agency) estimates of crude oil
plus all other liquids
(demand) for 2006 was 85.5 million barrels a day, slightly lower
than last year.
America's EIA estimate total natural gas liquids produced in 2006 was
7.9 million barrels a day (up 140,000 barrels a day)
America's EIA estimate total 'other liquids' produced in 2006 was
3.3 million barrels a day (up 80,000 barrels a day)
America's EIA estimate of average total liquids use for 2006 was
84.6 million barrels a day - about 1 million barrels a day lower than
the International Energy Agency estimate.
Saudi Arabia decreased their exports by about 8% for the year, mostly
from mid to end year. It remains unclear if this is a result of
reduced year end demand, reduced production of light crude and lack of
refinery capacity for heavy crude, slowing demand, increased internal
consumption, efforts to support the price
at above $50 a barrel, decline in production from Ghawar, or a bit of
This year the top 10 nett oil exporting countries increased their
domestic consumption by an additional 500,000 barrels a day.
Russia increased their liquids production by 200,000 barrels a day.
Russia's total oil output was 3.5 billion barrels (480.02 million
tonnes), an increase on 2.1% over last year.
China's oil production peaked this year, with the annual
depletion rate estimated to now be about 320,000 barrels a day. Crude
production at Daqing, China's largest oilfield, dropped by 3.5% this
China's total crude oil imports for
was 138.8 million tonnes - almost 17% more than 2005.
Angola is now second largest supplier of crude oil to China, beaten by
Saudi Arabia by only 2%.
China exported 26.1 million tonnes of
Venezuelan oil production
5.5% this year (IEA). Production averaged over the year was 2.56
million barrels a day. Spare capacity of 210,000 is mainly in four
partially completed heavy oil projects, but limited domestic capital
means the production potential is 'on hold' for the moment.
USA - natural gas - Around 32,000 new natural gas wells were drilled this
year. More wells than ever have to be drilled to
keep up supply, but new finds are small, and relatively low
volume. They are used up relatively quickly. The decline rate since USA
natural gas peaked
has been about 1.3 trillion cubic feet per year. Some new fields such
as the Barnett Shale prospect in Texas may come on
stream soon, but at best, will halt the decline, and then only for a
few years. The concern is that after that, current feverish in-fill
drilling of existing fields may cause rapid decline rates in all the
largest remaining fields - such as occurred with the very large
near-Gulf gas basin, which declined by 42% in the short space of about
Canada - natural gas - Around 17,700 new natural gas wells were
USA - electricity - natural gas - 40% of all USA electric power
generation is now from gas-fired plants, with %US100 billion of new
plant having been built over the last 6 years.
USA - electricity - natural gas - The US's EIA february forecast that
the natural gas consumption to generate electricity for the year would
be 5.36 trillion cubic feet in 2006 is wrong - it is around 6.2
trillion cubic feet a year.
USA - small cars - Demand for small cars has doubled, but from a
tiny base - they are now 2% of new car sales. Around 16.6 million new
vehicles were sold in USA.
USA - compact cars - sales of so-called 'compact' cars increased in USA
this year. Toyota corolla sales are up 13%.
UK - petroleum production fell 9.3% to 1.63 million barrels a day,
natural gas production fell 9.1% and coal production fell 8.3%.
UK - due to the North Sea oil fields passing their peak of production,
the UK is now a nett oil importer once again. It was last a nett oil
importer in 1980.
USA - the USA now imports 10.095 million barrels of crude oil a
day, only a fraction less than last year
(when hurricane Katrina shut down significant domestic production).
Canada supplied USA with 1.782 million barrels a day - up about 9% on
Saudi Arabia supplied USA with 1.42 million barrels a day - down 1.7%
on last year.
Venezuela supplied USA with 1.139 million barrels a day - making it
fourth largest supplier.
Angola (Africa offshore) supplied USA with 513,000 barrels a day - up
by 12.5% on last year.
Kuwait supplied USA
with 179,000 barrels a day - down by 21%.
USA - oil imports - USA now
imports more (by a tiny margin) oil from
Africa - just over 2.23 million barrels a day - than from the Middle
East. Both regions supply about 22% of USA needs.
Oil companies - Exxon Mobil
makes a net profit of $US10.25
billion for the last quarter, a little down on last
years record profit. Exxon Mobil is the world's largest publicly
traded oil company.
Norway - Norway is now the world's
fifth largest oil producer. Previously it was third largest. The
decline is due to falling North Sea oil production.
Renewable energy - according to the United Nations Environment Program,
global investment in renewable energy - particularly solar, wind and
biofuel - was $US100
2006 Sustainable Living Organisation
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