2006
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
the
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
available here.
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. Coal will be increasingly used for power
generation, especially in East Eurasia and North America.
Global production is running at full steam and consumption almost
matches it, meaning the greatest influences - political events and
weather events - are 'wildcards' and very difficult to predict when or
even if they will appear. 'Chance' events will have a major effect, but
cannot be easily predicted.
In general, the large increase in carbon dioxide emmissions from coal,
in particular, is likely to add even more influence toward trapping
additional heat in the global climatic system. It is possible regional
oceanic warming effects - whether from natural climatic variablity or
from as-yet unregistered forcing of climate to a new dynamic -
might add to destructive force of hurricanes. This might effect
deepwater oil production. Increased calving of icebergs might affect
northern latitude deepwater production. Permafrost melt might result in
pipeline slump and fractures. Markedly warm summers may prevent nuclear
power plants from accessing suffiicent water volumes for cooling
purposes, requiring a switch to coal or gas. Heatwaves might cause
surges in power demand for airconditioning, destabilising and
'crashing' poorly maintained and regulated electricity grids. Severe
snow storms in eastern USA or Europe might cause a temporary large
spike in crude prices as demand for fuel oil surges.
Or none of these climatic events or effects may occur.
In summary, it is 'business as usual' this year, with adequate oil and
gas supplies, with one huge caveat - margins of production over demand
are so thin that -
1. large weather events in the 'wrong' place,
2. precipitous decline in North Ghawar or Canterell megafield
production,
3. or pipeline or port disruptions in the Middle East
could cause supply shortfalls and price spikes. The size of the spike
will depend on the volumes lost, how long they are lost for, and
whether preventing or mitigating further loss in that locale or
facility is within reasonable human control in future.
Outlook for 2007
Oil and gas demand appears was increasing slightly (around 1-2%
globally) but may now be unevenly 'plateauing' as the margin between
gas
and oil supply and demand thins and increased energy prices feed into
the structure of the global economy.
Global car numbers climb, but there is
an increasing trend to smaller cars, and CNG powered cars. Biggest
effects on transport fuel use will come from the biggest users, and
this is USA. The slight trend to smaller vehicles and more fuel
efficient diesel vehicles is unlikely to increase - unless gasoline
becomes expensive for 3 quarters or longer. European transport fuel use
is already heavily price-limited, resulting in small and effcicient
cars and excellent public transport. Relatively little fuel is used for
personal transport in China and Japan.
Natural Gas
Dependance on gas for electricity supply at
peak times is becoming critical for more and more countries of the
world. Tight natural gas supply in Russia this winter might see
cuts to domestic supply in order to keep European customers
supplied. 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 continues to surging. The UK
and USA in
particular, are facing shortfall in domestic supply and an interim
period of 2007 when domestic importation infrastructure
(pipelines and terminals) will likely be insufficient to meet peaks of
demand.
All around the world, countries are investing and providing for
terminals for
increased importation of natural gas for electricity generation. These
costly investments demand matching long-term gas contracts and secure
and stable bilateral deals between gas producing countries and gas
consuming countries. Bilateral arrangements have long been shown to
stabilise prices over the medium
run.
Natural gas prices
are likely to remain firm, but with spikes in improvident (lacking long
term plan-and-build for significant bilateral supply and facilities
agreements) countries such as
UK and USA as competition for natural gas on the 'spot'
market hots up in winter. Russian gas is already slated to increase by
14% this year as supplies tighten, and because new gas supply areas are
in very expensive to produce arctic areas. This year will continue the
move to entrench diversity of gas supply sources within and to Eurasia
(including coal gasification), continued increase of strategic gas
storage facilities, all at the same time as there is increased use of
gas globally. Bilateral long-term supply arrangements are likely to
increase, as producers are as economically dependant on the gas revenue
as are the industrial consumers. Stability of supply and good
relationships between suppliers and consuming countries will continue
to increase in importance.
Natural gas supplies in North America will continue to tighten. Supply
in Asia will improve as new South East Asian fields come on stream,
Kazakhstan supplies increasing volumes of gas, Irans vast Pars field
starts supplying China, and as increasing number of new LNG terminals
in China are built.
New nuclear power plants are a
long way off, cost of uranium 'yellowcake' for processing into fuel is
likely to rise, 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 continue to be very closely
matched.
World oil reserve depletion rates are considered to average around 3% a
year. The largest, most important fields, fields have higher depletion
rates - around 6%. Growth in demand for oil is expected to be at least
3%,
barring recession. The year is beginning with ample fuel oil in store
in USA as the winter is mild. OPEC plans to reduce supply to hold up
prices, starting early in the year.
By mid year, Mexico's Canterell oil field, a
major supplier to USA will
likely
be showing increased fadeoff in production, perhaps down 5% or more on
last year. Saudi Arabia is the one country that might replace the
shortfall from Mexico. Two new high volume refineries to handle heavy
crude are expected to come into operation this year. If Saudi Arabia
can't take up the
slack, some shortfall in supply of cheap
crudes, and thus higher prices,
seem likely in the USA 'driving season'
later in the year.
Overall, it is likely that more expensive crudes will meet any
shortfall in supply of cheaper and light crudes. Refineries are largely
now modified to handle the more expensive-to-process heavy and
'sour' crudes. As long as heavy crudes are significantly cheaper than
light crudes, refineries that can
handle them will earn a bigger profit from this grade than from light.
As always, reduction in demand
due to recession in USA (primarily) is the key to moderate or lower oil
prices. Whether a collapse in the USA house bubble happens this year is
unknown. If it does, oil consumption will drop, and as the USA dollar
continues to weaken even further, the price of gasoline in USA will
rise. Increased gasoline prices due to an unfavorable exchange rate may
further ratchet any USA recession.
Oil
prices are likely to move in periodic bands, with occasional
geopolitical-event or weather-related 'spikes'.
Crude will likely increase to a higher band (say US$70-$US78) at times
of 'bad news' in the Middle East or Nigeria (and maybe Venuezula and
Mexico) and if hurricanes threaten Mexican or USA rigs in the Gulf of
Mexico.
Crude will perhaps hover between
US$65 - US$75, a little higher than last year; the change primarily
reflecting a weaker USA dollar.
Crude may fall to a lower band (US$50 - US$60) if the vast USA
borrowing boom slows down and
recession-induced unemployment
in USA and China goes up.
Increasing use of bilateral supply and purchase agreements (rather than
via speculators on the international oil bourses) is likely to dampen
event-driven price spikes somewhat. Country-to-country agreements for
supply are likely to be the 'name of the game' as time goes by. Some
will be relatively simple and direct, for example between Iran and
China. Others will be complex and continue to evolve and consolidate
this year. The best example (although not yet obvious to the main
stream media as yet) is between 'Iraq' and USA, where long-term
guarantee of Iraqi oil supply to USA is slowly being built via complex
arrangements with middle-men, factional agents, third-party out
sourcing, oil-swapping, and a USA military guarentee (and control) of
export pipelines and ports.
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 (mostly) crude oil each, with a total of nearly 16 million
barrels a day being exported. The three countries together are
responsible for half the oil exported by the worlds ten highest-volume
oil exporting countries.
Russias daily production increases have been
dramatic over the recent past years. 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 -
for
the moment. Even so, its massive old fields are in decline. When Russia
commences production
decline is uncertain. The
commencement is possible this year (or may have begun is reduced end of
year exports are significant), but more
importantly, it is likely to consume uncreasing amounts domestically,
reducing the amount available for export.
Iraqi production will doubtless hold; but
development will not be possible until the country has completed the
process of splitting into the three stable local war-lord controlled
fiefdoms, with USA controlling export ports and pipelines. In the end,
the fighting parties cannot reap the enrichment of oil concessions
until the regions are secure and stable enough to attract USA and
European oil companies.
Saudi Arabia once more claims it will be able to reduce oil
supply
in 2007 in order to underpin prices. It is possible that Saudi
production may also have peaked. It is uncertain whether OPEC
cuts are masking an inherent reduction from the super giant Ghawar
field. If not, then so long as pressurisation of
their massive fields holds, Saudis are likely to at least maintain
volume this
year.
Summary
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, war in the Straits of Hormuz, 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 similar to of 2006 unless
recession in USA sets in.
Once again, 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
- oil prices - global production rate of crude oil plus
condensate is roughly 325 million barrels less than that produced
mid-year 2005. The amount of oil traded on the spot market is also
less, but the spot market drives short term volatility, as it is driven
by 'desperate traders' betting on margins. The spot price for Brent
crude averaged over this period to date is about 60% higher than for
the average spot price in the same period prior to mid 2005. The
average life of a NYMEX spot contract is now only 1 day before it is
re-traded. Last year it was about 2 days. Spot price crude will remain
volatile, but the broad trend for all oil contracts has been a rise to
a new undulating plateau whose base appears to be $US50 (increasing in
tandem with any declining worth of the USA dollar over this year).
January - Costs of
major oil and gas production projects are now 53% higher than in the
last two years, according to Cambridge Energy Associates. These huge
capital costs make investment in politically unstable areas very risky,
adding a new dimension to the problem of oil reserve depeletion.
January - Mexico - Canterell - Permex's
"official" production estimate for Cantarell this year is "an average"
of 1.526
million barrels per day - 15% less than the 2006
full year average of 1.788 million barrels per day, as distinct from end
2006 production.
January - Mexico -
State oil company Permex says the company needs a
budget of at least $US15 billion a year for exploration and production
if it is to have any chance of keeping Mexican total crude oil
production steady between 3.0 million and 3.1 million bpd .
January 1 - Angola - Angola joins OPEC as its 12th member. Angola
is widely expected to get a quota as soon as it reaches production of 2
million
barrels of crude a day, probably about 2008.
January 1 - USA - gasoline demand remains steady. Regular is about
$US2.33 a gallon.
January 4 - USA - the “Coal-To-Liquid Fuel Promotion Act of 2007”
is introduced to congress. It aims to heavily tax-payer subsidise the
large-scale industrial production of liquid transport fuels derived
from US coal fields ('coal-to-liquids') for USA industry and the USA
military.
January 5 - oil price - crude oil drops to $US55 a barrel due to
a very mild
winter in USA dropping demand for fuel oil, resulting in ample stocks
left on hand in eastern USA. Demand for natural gas is also lower than
normal, and prices slip accordingly.
"Jan. 9, 2007 — The 2006 average annual
temperature for the contiguous U.S. was the warmest on record and
nearly identical to the record set in 1998, according to scientists at
the NOAA National Climatic Data Center in Asheville, N.C.....After a
cold start to December, the persistence of spring-like temperatures in
the eastern two-thirds of the country during the final two to three
weeks of 2006 made this the fourth warmest December on record in the
U.S., and helped bring the annual average to record high levels...It is
unclear how much of the recent anomalous warmth was due to
greenhouse-gas-induced warming and how much was due to the El
Niño-related circulation pattern. "
In 1977,
also a El Niño year, a mild beginning to winter ended in severe
cold.
January 8 - USA - China - US marine industry reports hazard sensors on
LNG tankers are being triggered, not by natural gas leaks from their
cargo, but by venting of methane on continental slopes, particularly
the Hudson submarine canyon. Methane in the deep ocean is held by the
high pressure and cold temperatures prevalent at those depths. Methane
- natural gas - is a potent 'global warming' gas, with responsible for
a higher climate 'forcing' effect than carbon dioxide.
China is to spend $US100 million to see if the huge frozen methane
concentration in the northern slopes of the South China Sea are able to
be 'mined'. This 430 square kilometre area has the largest frozen
methane concentration in the world. While 1 cubic meter of frozen
methane gas-hydrates ( methane clathrate ) expands to nearly 180 cubic
metres of natural gas when thawed, exploitation is not yet commercially
viable. Extraction costs about $US1 per cubic meter of gas ($US200 per
cubic meter of methane-ice), whereas China's current cost for
conventional natural gas production is about 12 cents US per cubic
meter.
January 9
- Russia - Europe - Belarus - Russia, having stopped
selling gas at
prices far below world market prices to Belarus and having imposed an export
tax on its exports of oil to Belarus, finds Belarus
retaliates by imposing a 'transit duty' of $US45 a tonne on Russian oil
transitting Belarus via the
4,000 kilometre long high-volume Druzhba
('friendship') pipeline from Russia to Europe. Russia refuses to pay
the tax, Belorus
supposedly 'steals' 79,000 tonnes of oil for Europe from the Druzhba,
and so Russia cuts off the
export oil flow in the pipeline. Belarus, until recently a strong
Russian ally, has enjoyed heavily subsidised gas and oil for its
support of Russia, however Belarus support has been erratic recently
under the hand of the authoritarian dictator.
January
9 - Russia - Europe - Belarus - With the Druzhba pipeline closed,
substantial amounts of oil for Europe are shut out. As the pipeline
supplies Poland with
70% of its
18 million barrel a year oil needs, Poland is left only with whatever
is in its storage tanks.
Luckily, following last winters supply disruption, that amounts to
around 80 days of supply. Germany also has its Russian supply cut, but
it, too has large amounts of oil in storage. Hungary obtains nearly 90%
of its oil from the Druzhba. Overall, about 20% of Russia's oil
exports go through this particular pipeline.
January - Russia - Azerbaijan - Russia's Gazprom offers a gas supply
contract for 2007 of $US235 per thousand cubic meters - up from
the subsidised price of $US110 tcm last year. Unsuprisingly,
Azerbaijan refuses the offer, as some gas is available from other
fields.
January - China - natural gas continues to be sold within China at
artificially low (state subsidised) prices. The government is slowly
moving to price natural gas at its real-world cost. Chinese households
will have an increase of about 8%, to US26 cents per cubic meter.
Natural gas in Canada costs in the region of US34 cents per cubic
meter. Canada has plentiful natural gas reserves and a relatively high
price to the consumer. China has relatively scarce reserves and a
relatively low price to the consumer.
January - China - Australia - China's very first LNG project, completed
last year, now receives cheap gas - significantly below market prices -
from Australia's Northwest shelf project. Under the bilateral contract,
China will receive 3.7 million tonnes a year at a fixed low price for
the next 25 years.
January 9 - Azerbaijan - Georgia - Turkey - natural gas supply to
Georgia
from Azerbaijan via the Gadzhigabul-Gazakh pipeline commences. The
price is a very favorable $US120 per 1,000 cubic metres (tcm), but is
only for 90 days, until the Shah Deniz gas field comes more fully on
stream. Then Georgia will buy 250 million cubic meters of Azari gas
per year at $US64 per 1,000 cubic meters. Turkey, which has a 3 billion
annual quota for the Shah Deniz gas, has signed an agreement to
on-sell 800 million cubic meters of its allotment to Georgia
January 11 - Russia - Europe - Russia resumes pumping
oil to Europe via Belarus. Belarus is compensating Russia for the crude
oil it has illegally siphoned off.
January 11 - EU - Germany - Russia - German foreign minister suggests
the EU "opens a dialogue" with Russia to establish a long-term,
reliable oil and gas supply. Most of Europe (except UK) has long had a
long-term and stable relationship with Russia for stable and long-term
gas supply, at least. The move by Belarus to exploit the export
pipeline crossing its territory will almost certainly result in deals
to create more secure supply routes.
January 10 - EU - Russia - Ukraine - Ukraine offers to replace Belarus
as a host nation for oil and gas transitting from Russia to Europe.
Ukraine transit pipelines take both oil and gas to Europe from Russia.
Last year the natural gas pipeline moved 136 billion cubic meters to
Europe, and still has about 30% spare capacity. There are 19 major oil
pipelines taking Russian oil through Ukraine, but only the contentious
Druzhba pipeline exits to Europe. Extensions, up-grading and re-routing
of Ukrainian pipelines could allow significant amounts of Russian oil
to by-pass Belarus. This would require considerable capital.
January 11 - EU - An EU 'white paper' is released proposing that the 27
EU member nations should have to meet a series of binding energy
targets by 2020. Among them are that 10% of vehicles to be powered by
bio-fuel; 20% of all energy for all purposes (personal transport,
public transport, home and office heating, lighting etc) be from
'carbon-neutral' sources (solar, wind, and nuclear
energy); and reducing carbon dioxide emissions from fossil-fuel burning
power stations by sequestering it by some means (such as re-injection
underground into emptied gas fields). About 30% of EU energy comes from
nuclear power. This would have to be increased substantially to meet
the very modest 20%-from-carbon-neutral target.
January - EU - France generates about 80% of its electricty needs
from nuclear power, Belgium and Sweden roughly 50%.
January -
India - shortages of coal mean that Indian power
stattions are running at only half their capacity. About 70% of India's
electricity is generated in coal-fueled power stations. India is the
world's third largest coal producer, after USA and China. Indian coal
production fell in 2006, while demand increased. The Indian government
plan further deregulation of the industry in the hope that the
depletion of the resource can be accelerated.
January 10 - USA - Speaking before a senate committee on global oil
supplies, the vice chairman of Goldman Sachs says that
Bushes idea energy independence "offers a false promise to the American
people", and said the USA congress should legislate to make USA
automobiles more fuel-efficient.
January - oil prices - as large refineries invest in
facilities to handle heavy
and sour crude, many also install 'coking' equipment to further refine
the relatively high volumes of heavy oil, tars and asphalt into oil
products such as diesel and gasoline. Daily production of refinery
residual oil has dropped by about 40% relative to a year ago.
As a result, less asphalt is available on the market, driving the price
higher. Road building and maintenance costs increase as a result.
A side effect may be that diesel is used for fuel for ships and large
stationary engines for peak-load power generation, instead of heavy oil
(bunker oil, aka residual oil). This may increase diesel prices in USA,
where most refineries are configured to produce gasoline for the large
gasoline car fleet, and where winter
heating oil for home central heating also competes with diesel.
January 15 - Iraq - Russia - USA - In an unexpected twist, the draft
hydrocarbon law imposed
by the USA via the IMF (in order to give control of Iraqi oil
fields to USA and European private oil companies) contains a clause
validating "any contract made under existing law concerning exploration
and production of petroleum in the territory of Iraq". Russia's Lukoil
immediately resurrects the US$4 billion project signed under the regime
of Hussein to develop the west Qurna-2 oil field. This field supposedly
holds reserves of up to 16 billion barrels of oil. The US firm
Conoco-Phillips is also apparently a partner in the shelved joint
venture. If the Iraqi oil ministry (controlled by USA) agrees,
exploration could commence within 3 months, if the area is 'secure'
enough.
January - Iran -
domestic petroleum use rises at 6%, the highest rate
in the world. Petroleum prices are subsidised so that Iranians can buy
petrol at 'giveaway' prices - 9 US cents a litre. Iran continues to
import petroleum. Its refining capacity is only 1.6 million barrels a
day.
January - Iran -
Exportable oil production, which provides almost
all of Iran's government revenue, continues
to decline. A John Hopkins University analysis sees "...exports
declining to zero by 2014–2015. Energy subsidies, hostility to
foreign investment, and inefficiencies of its state-planned economy
underlie Iran’s problem...." The decline in oil produced due to lack of
investment in fields (8%) plus increasing domestic
(2%) use is about 10% a year. Iran's giant fields (which produce
well over half Irans oil) are over half a century old, and are
declining at about 8% a year onshore, and about 13% a year in the
offshore fields, dropping off around require 350 thousand barrels of
oil a day. Estimates by oil industry experts suggest Iran may lose
500,000 barrels of daily production by 2010. These declining fields
urgently need enhanced oil recovery techniques employed, such as gas or
water injection to rebuild pressure. Iran's Energy Committee says 30
fields need gas re-injection to halt declining production. These fields
would need 12-14 billion cubic feet of gas a day to be injected.
Currently 3 billion feet of gas a day is re-injected into Iranian
fields.
January - Iran - The debate
on Iran's gas exports continues.
The Energy
Committee of the Majlis (parliament) re-affirms 20 billion cubic feet
of gas a day will be needed by 2010 for pressurising oil fields if a
massive decline in production is to be averted. This amount exceeds the
amount that is estimated will be required by 2010 to meet domestic
demand alone. Critics say the giant South Pars field could supply the
needed gas. But the rate of production of South Pars gas is likely to
simply match increasing domestic demand.
January - Iran -
USA - While Iran continues to focus on developing
bilateral deals on its vast natural gas supplies, USA actively forces
International banks with US links ( a very large number) to refuse to
participate in the financing of the highly capital intensive gas and
oil development in Iran where foreign firms wish to invest in joint
ventures. This will inevitably push Iran further in the direction of
partnering with Asia
and West
Eurasia, particularly cash-rich China,
as well as perhaps Russia and India.
January - Iran - USA - Bush's state department officials warns European
oil and gas company executives not to invest in Iran. One executive
reports the officials said 'the situation' in Iran
was "hot and is going to get hotter". America has recently been
'upping' its anti-Iranian propoganda, for what reason is uncertain, as
yet.
Iran - Russia - Iran continues to try to move its domestic power supply
away from its huge dependency on natural gas and oil. About 75% of
Iran's electricity generation capacity come from natural gas fired
generators. Another 18% is from very expensive oil-fired generators.
Hydroelectric pwer provides only 7% of Iranian needs. Iran is planning
to develop nuclear, coal, thermal, solar, and increased hydro power for
a future of less hydro-carbon dependance.
January - USA - Natural gas reserve capacity is estimated at 3.6
trillion cubic feet. Most of the 394 reserves around the country
utilise depleted underground natural gas formations.
January - USA - Around 62 million US homes use natural gas for
heating. Natural gas inventories have recently been at historic
highs.
January 17 - USA - A storm in the midwest moves up into the
northeast, increasing demand for power. Missouri is hardest hit, with some
counties declared federal disaster areas due to power outages.
Arctic air expected to move over the Great Lakes over the next
week may bring heavy snow dumps in the northeast. Demand for natural
gas for electricity generation in the Northeast has been increasing
over the last few years. Existing pipelines can no longer meet peak
demand in the northest, due to newly built extra generation capacity
demand, but no new investment in pipelines. While there is currently a
natural gas surplus due to the mild start to winter, gas reserves can
be quickly depleted if severe weather sets in. Lack of pipeline
capacity may mean gas prices will increase, due to inability to
physically move all requested supply, even although stored stocks are
large.
January 17 - USA -
Congressman Roscoe
Bartlett continues his exemplary effort to inform the ill-informed
congress of the reality of fading oil economy and the options to act (
Congressional Record House of Representatives, January 17, 2007:
The problems with fosssil fuels: peak oil production and global
warming. He spoke
(pdf) to a largely empty house. Required reading for all American
citizens.
January - fuel efficient cars - VW will stop producing 1.6 litre
naturally aspirated petrol engines for its Golf hatchbacks by mid year.
It will replace them with its new 1.4 litre 'twin' turbo-charged
engine, which has better
fuel efficiency - although inferior to VW's world-beating
deisel engine efficiency.
January - taxing inefficient vehicles - a local authority in London
institutes a greatly increased parking tax for large, fuel inefficient
vehicles. Vehicles parked on the kerb outside their owners home will
pay no tax if they are electric cars, and up to about $US625 a year if
they are one of the biggest sports utilities, such as BMW X5, or
Mercedes-Benz M-class. Cars with large engines, such as X-type jaguars,
will also pay the highest tax.
January 18 - oil price - crude
briefly falls below $US50 a barrel.
January - Pakistan - Although Pakistan
has previously been
self-sufficient in gas, increased demand from industrialisation,
population growth, and a move to natural-gas powered cars has aligned
with declining gas supplies and insufficient pipeline capacities to
create absolute shortages. Demand for natural gas is growing at about
12% a year - which is a requirement for an additional about 200 million
cubic feet of gas per day.
Winter has caused a sharp rise in demand for power, causing peak demand
from gas-fired power generation, and peak demand for bottled natural
gas for heating. Hydro lakes are usually at their low point in winter,
and cannot help meet peak demand. Pakistan's Sui Northern Gas Pipeline
Limited (SNGPL) cannot supply an estimated 700
million cubic feet of gas demand per day. It cuts gas to industry units
in Punjab and NWFP in order to supply domestic households. Gas is cut
to fertiliser manufacturing plants, which predict a 'massive' shortage
just as demand for the coming 'spring' planting peaks.
Pakistan - four natural gas powered electricity generators - Safire,
Saif, Orient and Savari - are in construction. When complete in 2008,
they will need 220 mmcfd gas. Pakistan hopes to buy gas from Iran when
the 2,600-kilometer Iran-Pakistan-India gas
pipeline project is set up, but there has been no action as yet. It is
unlikely the new plants will be able to operate in winter, and in
summer may not be able to operate at full capacity.
January - USA - Ethanol - Huge
taxpayer corporate welfare checks to pay
for ethanol planting and processing leads to a boom in plans for new
ethanol plants. Subsidised money for building ethanol production was
$US278 million in 2004, but sky-rocketed to $US2 billion in 2006.
But only 1% of gas stations in USA carry E85, the 85% gasoline 15%
ethanol blend used by 'flexi cars'. There are currently 6 million
'flexi cars' in USA It is uncertain how many of the over 16
million new cars expected to be sold in USA this year will be able to
use E85. Most existing vehicles can use a gasoline blended with up to
10% ethanol without any technical problems. As ethanol yeilds less
energy than gasoline, the blend, while slightly cheaper, is actually
more expensive when calculated on a cents per mile travelled basis.
5.4 billion gallons of ethanol was blended into gasoline in 2006.
Blending of gasoline with up to 10% ethanol will have to become
compulsory if the large supply of subsidised ethanol is to be used up.
January - USA - Bush makes a 'state of the nation address' espousing a
'goal' of
producing an additional 35 billion gallons of 'alternative' fuels -
mainly
'corn politics' ethanol and synthetic fuels cooked out of fossil
coal - by 2016. As the USA 2005 total corn harvest was roughly 12
billion bushels, which can be converted very roughly into only 28
billion gallons of ethanol, then at least 7 billion gallons of
'alternative fuel' will have to come from commercial scale plants
converting coal to synthetic fuel. This don't exist in USA as yet.
Hydrogen is a joke, cellulosic ethanol production consumes as much fuel
as it creates, and canola oil as diesel needs a great deal of land and
a domestic fleet of primarly deisel engines.
"Tonight, I ask Congress to join me in
pursuing a great goal. Let us
build on the work we have done and reduce gasoline usage in the United
States by 20 percent in the next ten years - thereby cutting our total
imports by the equivalent of three-quarters of all the oil we now
import from the Middle East." - USA's President Bush
Bush clearly tries to gull listeners with sly juxstapositions into
'hearing' that three-quarters of all the oil the USA
imports now comes from the Middle East. Of course, it doesn't.
Most USA oil comes from a combination of domestic reserves, Canadian,
Mexican, and Venezuelan reserves. Using this phrasing, he is hoping to
leave the impression that 'the noble' goal of reducing the profligate
use of crude oil by US citizens will 'strike a blow' against a (false)
dependency on the Middle East.
January - USA - Bush makes a 'state of the nation address' espousing a
'goal' of a 20%
reduction in gasoline use in USA by 2016! Even if this was achieved in
10 years time, at that point, in a decade from now, with a 20%
'saving' achieved, the average person in USA would still use more gasoline than a
European
person does TODAY...
Worse, the "20% reduction" is not 20% less than TODAYS gasoline use -
the detail in the report shows that Bush means a 20% reduction in a projected increased gasoline usage
by 2017! USA gasoline consumption by decade has shown consistant
increases by anything from 14% to 25% - even in the oil shock
decades...Is this a smokescreen?
Bush also espouses a
'goal' of improving 'fuel
efficiency' of USA cars to save 8.5 billion gallons - by 2016.
No mention is made of the only immediate and easily implemented tool to
pressure consumers into reducing gasoline use - a tax on fuel -
with the tax then returned to as a subsidy to those of modest means
buying small cars and
diesel cars.
The conclusion is that Bush is
demonstrably not serious about reducing Americas unsustainable
gasoline consumption.
January 23 - USA - The Energy Secretary announces the US will buy
100,000 barrels per day of crude oil, starting about march, to add
another 11 million barrels to the
US Strategic
Petroleum Reserve. The president wants to double the capacity of
the reserve. There is not enough global production capacity to meet
this goal without outbidding other buyers and driving up the price of
oil. As oil prices jumped immediately on this news, this may be 'cheap
talk' to drive crude prices up slightly, perhaps on behalf of USA's oil
ally, the
house of Saud.
January - USA - Power generated from the wind increased by 27% in 2006
(2,454 megawatts of new generating capacity), according to the American
Wind Energy
Association, and is expected to increase by a further 27% this year.
January - USA - Plans for an LNG
terminal at Long Beach California are finally abandoned in the face
of safety concerns.
January - USA - Mexico - as Cantarell mega oil field continues its slow-motion
topple, A contract is let to Halliburton
to establish "...temporary detention and processing capabilities to
augment existing I.C.E. 'Detention and Removal Operations' (DRO)
program
facilities, in the event of an emergency influx of immigrants into the
U.S.; or to support the rapid development of new programs...the
contract may also provide migrant detention support to other
U.S. Government organizations in the event of an immigration
emergency".
The concentration camps in the south, especially Texas, (and beefed up
USA national guard contingents already earmarked for the border) are
clearly being prepared in the expectation of a mass migration into USA
as people flee from projected social breakdown and starvation in Mexico
within the next 5 years.
Mexico is dependant on USA for its gasoline supply. USA
is dependant on Mexico for roughly 20% of its imported
crude oil
supply (USA's indigenous oil production is roughly 40% of its total
needs). Subsidised
corn production in USA is driving up the cost corn
in Mexico (the price of Mexican corn is indexed to the
international price, which has now hit the highest prices in ten
years), the staple food of the huge number of
impoverished Mexicans. The new prices mean that Mexican poor earning
around $US4.60 will have to spend $1.50 of that daily income just to
buy corn tortillas.
Mexico's economy is hugely dependant on oil. The fuse on the social
timebomb is shortening.
January - USA -
there are now 110 ethanol plants in the United States and an additional
63 refineries due to be brought into action over the next 18 months. If
oil prices rise, ethanol demand will strengthen and more corn for
ethanol planted. If oil prices fall, the economics of ethanol
substitution are not as good, and less corn for ethanol is likely to be
planted. Oil prices typically swing up and down two or three times in a
year. But the decision to plant more corn or less corn is made only
once in a year. The USA is likely to mandate a 'price guarantee' scheme
for farmers to ensure ethanol plants are fully utilised, no matter if
oil is in a relatively low price band.
January - USA - World -
Urea - Urea (a nitrogen fertiliser) is now US$275 a tonne - a record
high. This price is only indicative - South American fertiliser
companies are scrambling for additional supply, bidding some spot
market contracts to US$310 a tonne. Suppliers most distant from the
market have the lowest price (Russia, at US$275 a tonne), while more
centrally placed manufacturers command a premium (Middle East at $US300
a tonne). Production problems in several countries has made the problem
worse, with 'tight' natural gas supply forcing some reduction in
manufacture.
Demand is said to be driven partly by USA domestic politics, and partly
by increased demand in China and India.
Analysts claim that the USA will plant an additional 9.5 million
hectares of corn this year, mostly to cash in on the government-created
'subsidised ethanol production market'.
Demand in India and China is up, also partly to supply additional grain
crops as industrial feedstocks.
Increasing demand for additional production for ethanol has seen demand
for potash increase by 25% over the last three years, with accompanying
year on year price rises. The USA is now actively competing with China
and South America for additional supply. Increased volume demand has
also led to a shortage of bulk frieghter capacity. In some cases, the
'spot prices' to charter a bulk carrier to a more distant port has
doubled over the last year (a bulk carrier out of southeast Asia has
gone from US$30,000 a day a year ago to $US74,000 a day).
January - China - Urea - China heavily subsidises the cost of
indigenously produced urea. It imposes a heavy export tax on any
nitrogenous fertiliser sent out of the country, forcing manufacturers
to sell in the domestic market. If the tax were removed, the extra
Chinese supply would drive down world prices.
January - China - World - Urea - China now produces (and uses
domestically) 50 million tonnes of urea a year - about 37% of
world production.
January - New Zealand - fertiliser costs now make up 20% of farm
expenditure for dairy production (the cost of diesel fuel is another
significant cost). The New Zealand dairy farming system is the most
efficient converter of solar energy captured by grass into solid form
(milk fat, i.e. butter and cheese) in the world. Its industry is
totally unsubsidised, and the animals are normally totally grass-fed.
Clover (legumes) plants capture nitrogen naturally (from nitrgen in the
air) and are integrated into the pasture of high-performing grasses.
This reduces the amount of artificial nitrogen fertiliser that has to
be bought. Production is kept at a high plateau by applying additional
artificial nitrogen, much of which is made from natural gas from the
indigenous Kapuni gas field, discovered 30 years ago. The balance of
the urea used in the dairy industry is imported. As natural gas
producion declines, it is likely that a greater proportion of urea will
have to be imported over the coming years. As international urea prices
increase, New Zealand farmers are likely to reduce the amount of urea
they use, and rely even more heavily on the 'free' nitrogen fixed by
clover in the pasture. In turn, lower grass growth provides less
'metabolisable energy' available in a given area of pasture, and so
fewer cows can be fed. In the long run, production per unit area is
likely to be reduced.
January - Norway - Production for the month has been about 2.42 million
barrels a day, down
about 1.2% on last month.
January - Iraq - production for the month has been down by 400,000
barrels per day, mainly due to the ongoing conflict.
January - OECD -
according to IEA figures, record crude inventories built over (Northern
Hemisphere) late-summer
autumn for winter emergencies initially met less than anticipated
demand, but december demand was ultimately high, drawing down stored
crude very heavily by end of december 2006. January orders for
replenishment are consequently high, firming oil price.
February -
Saudi Arabia - The Saudis report they are now
producing 8.5 million barrels a day (crude plus condensate). This is
slightly lower than last december, and is closer to their prefered safe
production levels, and more likely to conserve reserves while retaining
some spare capacity. There is some suggestion that the 'cuts' reflect
the mid and south Ghawar
megafield reaching accelerated production decline due to depletion, and
north Ghawar production rate slowing for engineering regions.
February - Brazil - new deepwater floating production storage and
off-loading facility ships deployed in Brazils larger fields now enable
Brazil to increase production by about 141,000 barrels a day. These
deepwater wells are too far from land to allow well production to be be
transported by undersea pipelines. These 'FPSO' ships are used instead.
They remain permanantly stationed over the wells, acting as floating
bulk oil storage tanks. Oil tankers visit them regularly to empty them.
February - Brazil - the state owned petroleum company, Petrobas,
estimates it will produce an average of 1.919 million barrels of oil a
day in 2007. Most is from deepwater wells.
February - Angola - Although an OPEC member, and supposedly making cuts
in production, in fact Angola pumped a record amount of crude - 1.8
million barrels a day.
February - demand over the last month appears particularly high, with
one commentator estimating demand at over 86 million barrels a day.
February - OPEC - in spite of Saudi 'cuts', OPEC has probably produced
around 2 million barrels per day more exported
crude. This may be
non-Saudi members cheating on their quota, or it may be reduction of
domestic fuel oil use in the unexpectedly mild winter allowing more for
export, or it may be increased bilateral oil imports for strategic
reserves at a time of relatively low oil prices. Or it may be a
combination of all these factors.
February - Norway
- oil production is
now
2.45 million barrels per day.
February - world -
OPEC - The IEA warns that although demand for oil imports in the 30
largest OECD countries has been relatively muted over Northern
Hemisphere winter, the february OPEC production cut (really the Saudi
Arabian production cut) will theoretically
reduce OPEC's production to
25.8 million barrels a day from this month. This reduced rate of
supply
would see OPEC crude production not meeting demand by sometime in
the
second quarter of this year. On the other hand, other OPEC
members may
cheat on their quota.
February - world - OPEC - The IEA now predicts demand for OPEC
oil in 2007 will be 30.6 million barrels a day.
February - world - IEA now predict that increases in non-OPEC
oil production will be around 50% less
than its prediction for 2007 -
made only last july.
It is now currently predicting an increase of 1.1
million barrels a day for non-OPEC regions.
February - The EIA warns that OECD oil stocks will have an increased
demand draw on an additional
1 million barrels a day over this quarter, tripling the five-year
average decline rate. The first quarter of the year usually sees a rebuild in OECD
stocks of more than 800,000 barrels a day, rather than a nett draw
down. Stock levels on hand by the end of the first quarter are
predicted by the EIA to be around 2.58 billion barrels, enough
for about 51 days of demand cover.
February - the latest estimate by ASPO
is published, suggesting, as far as can be told, peak of production of
regular (cheap) oil was 2005. They estimate peak of all oil (including
tarsand, shale, polar, deepwater, natural gas liquids, conventional
crude, condensates - but excluding synthetic crude made from coal and
biofuel, and excluding refinery processing gains) might be 2010.
February - crude
oil rises to $60
February - Qatar - ExxonMobil cancels its $US 7 billion gas-to-liquids
project supposedly because of costs. The project was based on the vast
'North field' gas resource, but the area has been more closely examined
and the field found to be complex and non-homogenous. Far more wells
would be required than first thought, and each sub-reservoir is likely
to have a relatively short life.
February - USA - Canada - a fire at Imperial Oil's 118,000 barrel-a-day
Nanticoke refinery in Southern Ontario - one of Canada's biggest
- causes gasoline shortages at many Ontario gas stations. Imperial oil
is owned by USA's ExxonMobil. Cold weather has slowed tanker deliveries
on the Great Lakes, and other refineries are running almost at full
capacity. The resulting tight supplies drive up local gasoline prices.
February - Turkey - A conference on Turkey's
energy future concludes an energy shortage is looming. If the economy
keeps growing at the present six
percent, Turkey’s electricity demand will reach 300 billion
kilowatthours by 2015. Demand will exceed present plant capacity by
2009, and electricity shortages will be inevitable. By 2012, at present growth rates (which are
unlikely to be sustained) Turkey will need an additional 40
billion kilowatthours of electricity above present maximum capacity. Turkey relies heavily on natural gas for
generation, mostly from Russia (via the Blue
Stream pipeline) and, increasingly, Azerbaijan (via the South
Caucasas Pipeline).
March - Venezuela - Venezuela will pay a non-cash equivalent of
$US250 million to BP and Total for last years nationalisation of the
30,000 barrel a day Jusepin oil field.
In march 2006, Total had refused to alter their contract from majority
holder to a joint venture, with Venezuela holding a majority share -
resulting in seizure of the field. Now that settlement has been
reached, Total says it will now "work toward the future...undoubtedly,
for Total and the rest of the partners, the Orinoco represents a high
priority".
BP, formerly a minority partner with Total, will now enter a
partnership with Petróleos de Venezuela.
March - Venezuela - Exxon
Mobil agrees to cede the
Cerro Negro heavy oil project to majority Venezuelan governmental
partnership by May 1. The oil Minister says the oil
majors with projects in the Orinoco reserve will be compensated with
crude oil, rather than cash.
All oil companies involved in projects in the Orinoco - Total, BP,
Chevron, ConocoPhillips, and Statoil - have until May 1 to renegotiate
contracts to allow the Venezuelan government majority control of their
resource. If terms can't be agreed within 4 months, the projects would
be nationalised.
March - Brent crude is $US60.80
March - Iran - World - Iran moves to accept
only non-dollar payments for its oil (primarily euros). Japan waits
until it is 'officially' asked by Iran to pay in other currencies.
Japan buys about 550,000 barrels of oil a day
from Iran. Less
than half Iran's income is now paid in USA dollars. USA itself does not
buy any oil from Iran.
April - Saudi Arabia - the Saudi
total oil reserve resource is interpreted to
have been about 175 Gigabarrels. Of this total, about 110 Gigabarrels
have been used. About 65 Gigabarrels remain. If production rates that
minimise damage to the fields are used, Saudi production is in future
likely to be not more than 8 million barrels a day by next year.
Projecting total Saudi decline rates of under 5.5% a year forward in
time shows production falling to about 4.5 million barrels a day by the
end of 2020.
April - Japan - Iraq - Japan loans Iraq $US850 million for 40 years.
The loan is part of a $US6 billion loan 'package' to build refineries,
pipelines, and 'assit' with repairing the USA damaged electricty
facilities. Reading between the lines, it seems likely this is a de facto long term contract for
'payment-in-kind' of Iraqi oil (or indirect 'swap oil' from another
country).
April - Pakistan - Supply of electricity no
longer meets demand. Demand is 16,000 MW, and supply is 1,000 MW
less than demand. The government decrees that for the next 4 months
commercial firms will not be allowed to operate after sunset, and will
have to have staggered weekends from friday through sundays when they
must not operate. Street lighting will be cut by 50%, which is
estimated to save 25MW.
The power shortfall is expected to worsen, peaking at an unmet demand
of 2,500MW in the june-july period.
April - Serbia - Bulgaria - In line with the G7 decision of 1992,
Bulgaria closes two units at its Kozloduy nuclear power plant, reducing
the power available to export to Serbia. Serbia has benefitted by very
cheap electricity from 'load shedding' by the Bulgarian power plant.
Serbia's own power infrastructure has been neglected as a result.
April - Albania - Montenegro- Bosnia -
Herzegovina - Croatia - Serbia -
Hydro storage in southeast europe is low due to reduced flow in the
Danube, Morava and Drina rivers, and the price of electricity to Balkan
states is likely to increase. With a hotter than normal summer
predicted, Balkan states are unlikley to be able to meet peak summer
demand (mainly due to power used for air-conditioning).
April - Australia - the severe drought in southern Australia has meant
that the 16 water reservoirs for the Snowy River Hydro complex's 7
power stations are much lower than usual. If heavy rain does not fall
between may and july, hydro power to major Australian cities will have
to be cut. It is hoped additional coal powered generation may be able
to take up the potential shortfall. The Snowy River complex provides
around 3.5% of Australia's power, and nearly three-quarters of
Australia very minimal renewable energy sources.
April 23 - Crude oil prices - Brent crude hits $US68 as the Nigerian
presidential results are disputed due to widespread fraud.
April 25 - USA - As part of Bush's $US405-million "Global Nuclear
Energy Partnership" to build new nuclear plants in the coming decades,
a 'joint nuclear action plan' is announced between USA and Japan.
Critics argue the GNEP plan to dispose of large amounts of highly
radioactive cesium 135 in a single "near surface" site means there will
be the potential for soil, water, or dust-borne wind contamination for
many thousands of years. Cesium 135 has a half life of 2.3 million
years. The other major concern is that 95% of the weight of spent
nuclear fuels is made up of uranium, and while uranium can be re-used,
it is very expensive to re-process it into fuel rods, so only a small
part of the waste is likely to be recycled. The US Department of Energy
plans to dispose of "tens of thousands of tons" of waste uranium in
so-called 'spent' fuel rods in the landfill.
April - uranium - "yellowcake" spot prices now
hits $US120 a pound. Inflation adjusted, this is close to the all-time
record high price.
April 30 - Crude oil prices - Brent crude falls back to $US67.30
April - USA - gasoline inventories fall to below the average at a time
of year when US refineries are usually building supply ahead of the USA
'driving season'. Markedly strong demand and a series of outages at USA
refineries in the first part of the year are the primary cause. USA
crude oil stocks are high, in part due to the refinery bottleneck.
May - UK - Britain faces a lack of gas storage facilities due to North
Sea gas no longer being as readily 'on tap' . Industry warns government
that its inaction may lead to gas shortages this (UK) winter.
May - Norway - crude oil production is now about 2.2
million barrels a day.
May - China - A large new
oil and gas field is discovered in Bohai Bay, off
China's coast. The Nanpu block of the Jindong oil field has estimated
reserves
of crude and natural gas 'equivalent to' 7.5 billion barrels of crude,
increasing China's remaining reserves
by 20% (so long as Nanpu's gas is counted as 'oil equivalent').
Production will start late 2008 or 2009. It is expected the oil
will be produced at about 180,000 - 200,000 barrels of crude a day.
China's very large oil fields have almost certainly begun their
decline, so this find will help make up for slowly dwindling supply.
One commentator notes that the estimated daily production rate is
slightly less than last years increase in foreign oil imports into
China.
May 2 - USA - once
again, refinery bottlenecks cause a shortage of gasoline,
resulting in record high pump prices. Recent accidents and malfunctions
at various US refineries mean they are operating at
only 88.3% of capacity - close to the 20-year low experienced last
month. As a result, USA gasoline inventories drop for the 12th week in
a
row, if the face of ample crude ready for refining. Current gasoline
refining capacity is 17 million barrels a day. Demand,
coming into the driving season, is 22 million barrels a day.
May - Japan - Indonesia - as supply contracts come up for renewal,
Japan manouevours to sign a bilateral contract with Indonesia to lock
in supplies of Indonesian LNG to Japan. Japan, desperate for Indonesian
gas, offers a bilateral free trade agreement between Japan and
Indonesia which would eliminate import taxes on trade between the two.
Nippon Oil Exploration owns extensive gas field rights throughout South
East Asia, Australia, and Mexico.
May - China - Iran - A deal for China to invest in the construction of
up to 10 dams and associated hydro power stations is signed with Iran.
The deal is worth about $US10 billion dollars. Iran's oil and gas
reserves supply 98% of its primary industrial and domestic energy
consumption. Natural
gas supplies 60% of domestic energy consumption.
May - China - Iran -
The Chibese state-owned Zhuhai Zhenrong Trading Company confirms it
will now pay for its 240,000 barrels of oil per day crude oil imports
from Iran with euros. rather than the US dollar. Iran is likely to be a
major oil supplier to China in future decades, due in part to the joint
Iranian-Chinese Yadvaran oilfield venture
May - Iran - bourse - Around 60%
of Iran’s oil income is now in
non-dollar denominated currencies. The idea of an Iranian regional oil
bourse to compete with the New York and London oil bourses seems to
have been shelved
in favour in direct bilateral selling in nominated
non-US currencies.
May - Middle East - Asia - Middle East oil ministers from Iran, Kuwait,
United Arab
Emirates, Qatar, Oman, Iraq and Bahrain are hosted by Saudi Arabia at a
conference to discuss oil and gas markets, energy security, and
security of supply to their major makets in adjacent Southeast and East
Asia. These markets take 66% of Middle East oil and gas, but the
suppliers are increasingly concerned about the regions ability to
maintain a stable demand. Energy officials of their East Asian
customers - Japan, China, Korea, India, Indonesia, Pakistan,
Thailand, Philippines, Brunei - were concerned about security of supply
given the USA threats against Iran and its poor control of Iraqi oil
development, and, unsuprisingly, price.
May 1 - Saudi Arabia - Philipines - the Saudi oil minister promises the
Philipine government it will "make up the shortfall" if the Phillipines
cannot import enough oil from "other sources" to meet its needs. The
Philipines import 56% of their oil from Saudi Arabia, and 39% from
other countries in the Middle East.
May 1 - China - Saudi Arabia - a further bilateral contract for
oil supply between Saudi and Arabia and a Chinese customer is signed at
the Asian Ministerial Energy Round Table Conference. The contract is
for supply of 1 million barrels of oil a day "for the next few years".
May - China - China completes filling its first strategic oil reserve,
with a capacity of 33 million barrels. In spite of relatively high
prices, it takes delivery of 2 million barrels of 'Middle Eastern'
crude for its next part of the reserve, the Aoshan oil storage
facility. China aims to have a strategic oil reserve of 100 million
barrels by the end of 2008.
May - fuel efficiency - Korean car maker Hyundi continues its record of
fuel efficient cars based on diesel as well as hybrid technologies. An
Australian owner of a Hyundai Santa Fe SUV, powered by a turbo-diesel
engine, found he could get over 50 mpg on the open road by reducing his
speed to 55 mph. Hyundai are increasingly moving to the efficient
modern turbo-diesel engines as they are less expensive than hybrid
drive trains, much less complex, and give similar fuel efficiencies.
May - USA - The Toyota Prius now ranks sixth best selling passenger car
in the USA.
Toyota has now sold one million hybrid cars globally since their
introduction.
May - India - India now imports
about 11% more crude oil than it did a year ago. Due to the increase in
the price of crude, it now pays 24% more for the crude than a year ago.
May - India - India now imports nearly 111 million tonnes of crude a
year, and exports almost 33 million tonnes of oil products from its
domestic fields (mainly diesel and naptha, and smaller amounts of
petroleum and avaition fuel).
May - India - India now imports almost 2 million tonnes a year of LPG,
mainly for its domestic market.
May - India - The government has prevented oil companies from raising
diesel, petroleum, LPG and kerosene prices for the past year. Kerosene
sells at 22 US cents a litre. Oil companies continue to make losses.
Both LPG and kerosene are regarded as the "poor man's fuel" and the
government knows the vast numbers of poor people have no ability to pay
the real cost of fuel.
May - India - Reliance Industries negotiates long term contracts to
sell its natural gas to nitrogen fertiliser manufacturing companies for
$4.50 per million British thermal unit (mBtu). The gas, from the
Krishna-Godavari Basin, would be the benchmark price for India's
domestically produced natural gas.
May - India - State owned NTPC Ltd, India’s largest power generation
company, refuses to pay $4.50 per mBtu for gas for electricity
generation, even although, at this price, gas is a cheaper fuel for
power generation than naptha, an oil-based liquid fuel.
NTPC has a current generation capacity of 27,404MW (all sources), and
aims to expand its generation capacity to 50,000MW by 2012. Over 15,000
MW of new generation will come from burning coal. India is the world's
third largest coal burner, after USA
and China.
About 4,500MW of new generation was intended to come from natural gas.
The company says it will put its expansion plans at gas-based power
stations at Kayamkulam, Anta, Auraiya and Faridabad on hold. In the
meantime, NTPC is exploring offshore blocks to meet its own natural gas
needs.
May - India - power is currently sold at just over 4 cents (US) a unit.
One estimate is that India will need $120-$150 billion over
the next five years to pay for the its increasing coal,
oil, gas and nuclear power needs.
May - Nepal - The Nepalese government
continues to sell gasoline and
LPG to its poverty-stricken people at prices below cost. The government
controlled oil import and distribution company takes a loss of
$3.70
for each cylinder of LPG it fills, loss of 7.5 cents for every litre of
petrol it sells, and a loss of 6 cents for each litre of diesel it
sells. The company is bleeding money at the rate of $US6 million
dollars a
month $4.8 million of which goes on liquid fuels. It can only continue
to operate by taking on massive debt. The Nepal Oil Corporation has to
pay nearly $US4 million a month to settle outstanding past debts owed
to Indian oil refineries.
May - Iran - Iran announces
plans to introduce petrol
rationing in
two weeks. A 'smart card' for each vehicle is supposed be introduced on
may 21 to limit purchases, but may have to be delayed until later in
the year. So far, 2,300 petrol stations have the technology installed,
but the software for re-charging the cards has yet to be rolled out.
Private motorists will be allowed no more than three litres a day of
the state subsidised petrol. The price of petrol will be increased to
38 US cents a gallon. The cost of the state subsidies is estimated to
be billions of dollars per year. Motorists currently pays only about
25% of the true cost price of the petrol.
May - Brazil - continuing growth increases the demand for electricity.
Brazil's current generation capacity of over 98 terrawatts is not not
enough to meet demand growth of about 3 megawatts a year. Most of
Brazils electricity comes from hydro dams, but if enough cannot
be built, Brazils 2 nuclear power plants (Angara 1 and 2) will be
joined by a third (currently on 'hold' due to lack of funds). The first
two power plants have had a poor safety record, and have been hugely
expensive to build. There is widespread opposition to completing the
third unit.
May - Russia - now the worlds largest oil producer, at 9.79 million
barrels a day, Russias domestic demand is increasing at the same time
as the giant west Siberian oil fields are slowly fading. On the back of
record profits, Russias oil companies look to the very difficult
terrain of frozen East Siberia to find new supplies. It won't be cheap.
May - Russia - Khazakstan - Kazakhi and Russian oil exports thru
the
CPC
pipeline are down by about 9% since the all time peak of over
800,000 barrels a day in february.
May 17 - USA - In an unfortunate coincidence, Valero's Houston refinery
closes for a week due to problems with part of the plant. Around 64,000
barrels a day of gasoline is shut out. ConocoPhillips Sweeny refinery
also shuts down temporarily due to plant problems.
May 17 - USA - Petroleum prices reach record levels (but still low by
European standards) of around $US3.10 per gallon. Midwest areas, far
from refineries, reached prices as high as $US3.85, prompting 'internal
exports' from Texas to cash in on the high prices - causing temporary
petroleum shortages in some parts of Texas. Driver behaviour is not
much affected, with surveys indicating more Americans will travel over
the Memorial Day holiday than usual, albeit the planned trip distances
are lower than usual.
May - gasoline prices - USA, with
substantial oil reserves remaining,
is both a producer and importer of crude oil. While it is true that in
the USA gasoline ('petrol') has a low level of hidden subsidy to the
domestic producer oil companies, it is sold free of federal taxes. As a
result, the USA pump price is something of a benchmark for the 'true'
cost of gasoline. According to USA's AA Motoring Trust, the price of a
US 'short' gallon of gasoline around the world is as follows:
USA
gasoline is $US 3.10/gallon.
In one major oil producing country, gasoline is not subsidised at all,
and has
such a large additional government tax on the pump price that it is the
most expensive gasoline in the developed world:
Norway
gasoline is $US 7.76/gallon.
In one oil producing country where oil production is in steep decline,
gasoline is not subsidised at all, and has
such a large additional government tax on the pump price that it is one
of the
most expensive gasoline in the developed world:
U
K
gasoline is $US 7.15/gallon.
In some major oil producing countries, gasoline is extremely heavily subsidised:
Venuezuela gasoline is
19 US cents/gallon.
Iran
gasoline is 33 US cents/gallon.
Saudi Arabia
gasoline is 19 US
cents/gallon.
Kuwait
gasoline is 78 US cents/gallon.
In some major oil producing countries with more mixed internal and
external economies, gasoline has a small subsidy:
Russia
gasoline is $US 2.69/gallon.
China
gasoline is $US 2.44/gallon.
Mexico
gasoline is $US 2.38/gallon.
In some countries with useful domestic oil resources, gasoline is
unsubsidised, and in addition has a government tax put on top of the
pump price:
Australia
gasoline is $US 4.05/gallon.
Canada
gasoline is $US 4.10/gallon.
In most developed mixed economies with little or no oil resources,
gasoline is unsubsidised and carries an additional government tax at
the pump, encouraging motorists to chose small cars and diesel powered
cars:
Germany
gasoline is $US 6.98/gallon.
Denmark
gasoline is $US 6.95/gallon.
France
gasoline is $US 6.50/gallon.
Sweden
gasoline is $US 6.50/gallon.
Other developed mixed economies with little or no oil resources elect
to have a lower government tax at the pump:
Japan
gasoline is $US 4.16/gallon.
Italy
gasoline is $US 4.80/gallon.
New Zealand gasoline is $US
4.17/gallon.
Switzerland
gasoline is $US 5.17/gallon.
Greece
gasoline is $US 4.91/gallon.
Austria
gasoline is $US 5.40/gallon.
Israel
gasoline is $US 5.52/gallon.
A countries currency exchange rate for the US dollar can have a huge
effect on the pump price. As oil is traded in US dollars, when a
countries currency weakens against the US dollar, the price at the pump
must go up, even when the oil price on international markets remains
unchanged.
May - UK - The UK government admits it will not reach its target of 20%
renewable power by 2020. In addition, all but one of the UK's nuclear
power plants will have reached the end of their operational life soon
after this date - as will some fossil fuel powered plants - creating an
estimated power shortfall of about 30 gigawatts.
May - USA - ethanol - a study by Iowa State University finds USA
retail food prices
could increase if crude oil prices reach $65 to $70
per barrel and USA corn prices reach $4.42 per bushel. Corn (maize) was
$2
per bushel in August 2006. Both oil prices and corn prices are now
within the range discussed by the study. These prices, in theory,
underpin an expansion of USA ethanol production to the point where
crops might provide 30 billion gallons by 2012. This would use half the
crop of corn, wheat and other grains currently grown for cattle, pig
and poultry feed and for export. The result would be an increase in US
dodmestic food prices of about $US20 billion a year. For this reason ,
subsidised ethanol production in the USA is almost certain to be
limited by legislation.
May - USA - BP plans to totally rebuild its damaged
Thunder Horse sub-sea oil pipe distibution network in the Gulf of
Mexico. The estimated cost of repairs is $US250 million - which is more
than the original cost of construction. BP's oil concesssion in Prudhoe
Bay is in decline, and the Thunder Horse platform is what may be one of
the largest oil fields in the American sector of the Gulf of Mexico,
with potential to produce around 250,000 gallons of crude a day.
Like all private oil companies, BP is now facing declining major
reserves, fewer opportunities as governments nationalise their
strategic oil and gas, and rexamining opportunities predominantly in
hurricane ridden or severely cold environments where operating costs
and risks are very high.
May - Mexico - At 3,110,000 barrels a day, crude oil production is now about 70,000 barrels a day less than
in april.
May - Kuwait - swamped in devaluing USA
dollars, Kuwait finds it has imported the USA's inflation along with
its inflated currency. For the first time, Kuwait stops pegging its
currency to the USA dollar.
June 2 - Brent crude is now
over $US68 a barrel.
June - weather - Oman - Iran - Cyclone Gonu coming off the Arabian Sea
brings flooding to some southern Middle East Gulf countries. Damage is
limited, but is enough to temporarily spike Brent crude oil prices to
over $US71.
June 10 - Iran - USA - Qatar - Bahrain - Gulf oil states -Iran warns
USA it would retaliate with a massive ballistic
missile attack against multiple targets within an hour of USA
bombing Irans nuclear energy research facilities. Admiral Ali
Shamkhani, a senior defence adviser, said to the USA journal 'Defense
News' that Gulf states that aid and co-operate with the US would be key
targets. In a direct copy of the USA strategy in attacking Iraq, Iran
said it would target strategic' infrastructure facilities such as
electric power plants, oil facilities, and presumably (if it follows
the US example) other civilian domestic infrastructure, such as
government offices. US bases in Gulf countries would also be targetted.
The USA has huge bases in Iraq and Qatar,
and smaller bases in Bahrain and Oman. Iran says it would also
simultaneously launch 'airstrikes' against Israel.
An un-named Iranian foreign ministry official has reportedly said: “The
objective would be to overwhelm US missile defence systems with dozens
and maybe hundreds of missiles fired simultaneously at specific
targets.”
June - Saudi Arabia - Japan - South Korea - Saudi Arabia tells Japan
and South Korea it will continue
to supply around
9.5% - 10% less crude oil than it is contractually obliged to, into
July, at least.
June 11 - Venezuela - China - A new joint venture oil exploration and
development company is set up by the Venezuelan government owned PDVSA
oil company, and the Chinese government controlled CNPC oil company.
The new company, Petrozumano, has a licence to explore and develop oil
and gas in Anzoategui state. The company is majority owned by Venezuela. China
currently imports 300,000 barrels of crude oil a day from Venezuela.
China hopes to be able to source 1 million barrels a day of Venezuelan
oil by 2012.
June - Venezuela - USA - ConocoPhillips and Exxon Mobil abandon their
Orinoco oil projects as they do not want to agree to Venezuelan
governmental terms for re-nationalisation. The two USA companies plan
to sue the Venezuelan government.
June 11 - Quote of the month -
"For US crude oil imports to stay flat,
our consumption has to fall
at the same volumetric rate that our domestic production declines.
For a post-peak exporting country's crude oil exports to stay flat,
their
consumption has to fall at the same volumetric rate that their
domestic production declines.
Worldwide, in my opinion, we are facing an epic collision between the
expectation of an exponential
increase in exported
crude oil and
petroleum products versus the quickly developing reality of an
exponential decline in
exported
crude oil and
petroleum products."
- Jeffrey Brown, petroleum geologist and oil production commentator,
writing in the 'Oil Drum'
Blog. Emphases added.
According to Rembrandt Koppelaar, Oilwatch Monthly
June 2007, while worldwide 'all liquids' production (all fuel
liquids, that is, conventional plus unconventional crude oil,
natural gas liquids, lease condensates, gas-to-liquids, coal-to-liquids
and biofuels) was 85 million barrels a day in 2006, worldwide oil
exports (conventional and unconventional), at 47 million barrels, were
down slightly over the previous year.
Russia,
(sharing the title of the worlds highest oil producer with Saudi
Arabia) exports about 6.6 million barrels of oil a day. Russia has
remained on this plateau for several years. As Russias internal
consumption increases and its production remains static and begins to
decline, there will be less available for export.
The same is true for
Saudi Arabia and Mexico,
the other high volume oil producers.
Norway, an important exporter, is
also beginning a production decline, but internal demand is relatively
static and unlike these other countries, the population is relatively
small.
In addition, production declines in Iran, Venezuela, and Iraq have
contributed to an overall stasis in the availability of oil for export.
OPEC countries as a whole have had declining export production since mid
2006.
The previous year-on-year growth in demand appears to be shifting away
from exports of crude to meeting internal demand in oil producing
countries as their populations and economies grow;
internal demand in OPEC countries is, for the moment, showing
year-on-year growth. Jeffrey
Brown estimates the
top ten net oil exporters had an aggregate increase in internal oil
consumption of 3.3% from 2000 to 2006. He notes that this increased
internal consumption for that period equates to about the whole of
Nigeria's annual oil production for 2006.
June - Saudi
Arabia - a combination of higher oil receipts, trade liberalisation and
massive petro-chemical 'megaprojects' accelerates the growth of the
Saudi economy by almost 8% p.a. The fastest growing sectors in the
Saudi 'economic boom' are manufacturing, finance, communication, and
construction. The riyal is pegged to the US dollar, and, according to
one bank's estimate, every 10% drop in the value of the US dollar leads
to an erosion of the purchasing power in Saudi hands of 5%. On the plus
side, Saudi interest rates also follow the US artificially low interest
rates, providing abundant cheap capital; but this is in a country that,
like China, also huge dollar reserves. Saudi therefore has a vested
interest in slowing the downward drift of the US dollar, least its
currency reserves becomes less and less valuable over time.
June - Saudi Arabia -
Like other Gulf oil states, Saudi Arabia is quietly converting as much
of its dollar reserves into productive assets in other countries as is
safe to do without spooking the currency markets. 'Officially recorded'
foreign assets were $US73 billion in 2002. They increased to $US273
billion in 2006.
June - Saudi Arabia
- Bahrain - Qatar - Kuwait - Abu Dhabi - UAE -
expanding populations and consumer demand for air conditioning see the
possibilities of power shortages in Gulf states.
Kuwait has already said there will be power cuts this summer. It is
considering building a LNG import terminal to import natural gas.
Abu Dhabi will divert natural gas used to pressurise oilfields to run
its power stations and desalination plants.
The UAE largest gas-fired power station has insufficient natural gas to
meet this summers demand and will run part of the plant on gasoil, to
the tune of 50 tanker trucks a day.
In Qatar, shortages of gasoil for power plants see trucks queuing for
hours to take on a load. Qatar, with massive
gas reserves, is building huge gas
export facilities, but cannot divert enough gas for its power
plants, and is reportedly considering building coal-fired plants.
Bahrain has approached Saudi Arabia to buy electricity.
The Gulf states have some of the highest
sunshine hours in the world.
June - BP statistical review of world energy - The 2007 version of this
now prestigous report is published.
As usual, the Middle East countries report no decline in their oil
reserves. Saudi Arabia, the world's largest oil exporter, revised
their oil reserves upward by a massive 53% in the period 1987 to 1989.
There were no massive new discoveries made that could justify this
increase, and while new technologies being deployed at that time would
justify some increase, but not of that size. Prices
at that time certainly could not justify 'uneconomic' reservoirs in
difficult rock strata becoming viable to produce. Current oil prices
might now make some difficult-to-produce oil fields economically
viable; but again, not to the level the inflated reserve figures
suggest.
In addition since the late eighties, Saudi Arabia has not subtracted
the oil it has produced and sold from its remaining reserve figures. In
effect, the Saudis - and other Middle East producers - are stating the
newly revised estimate of the amount of economically recoverable
oil that was in a reserve when it was first discovered, taking no
account of the amount already pumped out and sold.
So the BP analysts must take the Saudi reports at their face value, as
Saudi Arabia regards scientific data on the true state of its oil
reserves as a state secret.
The situation is very similar for the Middle East Gulf state producers
Iran, Iraq, Kuwait, UAE, Qatar, and Syria. Their stated reserves are
also likely to be false.
Peter Davies, Chief Economist with BP reportedly said that BP doesn't
believe there is "an absolute resource
constraint", and that when peak oil comes, it is as likely to be from
"consumption peak" as from production peaking. He is technically
correct. For practical purposes, the world will always produce 'some'
oil. "Consumption Peaking" is code for worldwide depressionary
conditions: that is, high unemployment equals an inability to buy
gasoline which means consumption falls and falls. The reason he
tentatively gives for the sudden unaffordability of petroleum is
"climate change policies". This is code for a carbon tax added to the
price of gasoline and diesel. He is unlikely to be correct that
politicians will be able to impose further taxes on petroleum products.
He is likely to be wrong when he suggests consumption will decline
before declining global export-available crude oil forces a
crunch.
June - Saudi Arabia - Saudi Aramco
releases its report
“Facts and Figures 2006” updating their oil expansion projects. Two
major expansion projects (an additional 500 thousand barrels a day
(kbd) from Khursaniyah,
and 250 kbd from Shaybah) are delayed by about 6 months, and one, an
additional 100 kbd from Nuayyim is on target. The additional 200 kbd
expansion at Shaybah is no longer mentioned, and neither is an
expansion of 300 kbd in the Neutral Zone. As Saudi production plateaus, these expansions will do
nothing but hold present levels. A greater part of Saudi production is
likely to be consumed within Saudi Arabia in future.
June - OPEC - The increase in internal consumption by OPEC member
countries is estimated to be 5% a year.
June 27 -
Iran - gasoline rationing commences.
Introduced without warning at 2 hours before a midnight implementation
so as to prevent hoarding, motorists are
limited to 100 litres/26 US gallons a month, and taxis to 211 gallons a
month. People
queue outside gas stations for hours when they hear the announcement..
Some gas stations close the pumps at midnight to re-calibrate the
pumps, sparking rioting by motorists.
Around 17 gasoline stations are damaged.
June 27 - Iraq - The Iraqi oil minister says contracts signed with the
previous government (since deposed by USA) to develop oil fields in
Iraq will be honoured, but will be amended under the new laws due in
two months. China, the Vietnam and Indonesia have contracts for oil
field devleopment in Iraq. Russia's OAO Lukoil Holdings contract
has been cancelled.
June - Iraq - Iraq's oil mininster admits the civil war in Iraq could
double or even treble the cost of expanding Iraqi oil production. Iraq
hopes to 'eventually' reach 6 million barrels of oil a day. The cost of
reaching this target had previously been estimated at about $US25
billion. The continuing cost of the USA invasion force is estimated at
about $US130 billion a year.
Iraq currently produces about 2 nillion barrels of oil a day. Prior to
the US invasion it produced about 2.2 million barrels a day. The
chances of Iraq significantly increasing its oil production within the
next five or so years are very low.
June - Iraq - the export of oil through the southern port
of Basra can now only continue so long as 'taxes' are paid to various local
'insurgent groups'. The new power brokers no longer try to control
the streets - just the oil security. The British forces are mired on
the streets and can do nothing to stop the 'protection' racketeering
behind the scenes.
June - Thailand - China - Thailand signs an "initial" agreement
with China to buy 3,000 Megawatts of electricity from hydro stations in
southern China by 2017. Thailand claims it needs an additional 30,000
MW of capacity by 2021. Currently Thailand uses 26,000 MW. About
70% of Thailands electricity is generated in natural gas powered
stations.
June 28 - International
Energy Agency - the chief economist of the
International Energy Agency,
Fatih Birol, says in an interview in Le Monde, that "If Iraqi
production does not rise exponentially
by 2015, we have a very
big problem, even if Saudi Arabia fulfills all its promises. The
numbers are very simple, there's no need to be an expert...Within 5 to
10 years, non-OPEP production will reach a peak and begin
to decline, as reserves run out. There are new proofs of that fact
every day. At the same we'll see the peak of China's economic growth.
The two events will coincide: the explosion of Chinese growth, and the
fall in non-OPEP oil production. Will the oil world be able to manage
this shortfall, that is the question...I understand the Saudi
government claims 230 billion
barrels of
reserves, and I have no official
reason not to believe these numbers.
Nevertheless, Saudi Arabia - as well as other producing countries and
oil companies - should be more transparent in their numbers. Oil is a
crucial good for all of us and we have the right to know how much oil,
as per international standards, is left.."
(emphases added).
July - International Energy Agency - the July 2007 'Medium-Term Oil
Market Report' states that OPEC will have only "minimal" spare capacity
by 2012. If the current global average GDP growth of 4.5% continues,
the report says, "uncomfortably low" capacity will commence 2009. In
addition, much fuel oil has been replaced with natural gas. By 2012,
natural gas supplies will also be "tight", meaning that there may have
to be a return
to fuel oil for essential power generation, no matter the cost. The
cost for fuel oil in this scenario will be very high.
The IEA sees OPEC as a whole having 2.5 million barrels a day spare
capacity. As non-OPEC producers no longer have sufficient spare
capacity to meet buyers expanded needs, OPEC is now the 'swing
producer'. OPEC now has
the luxury of not producing more (at current prices), even when there
is an unmet need for more. In this way it
both keeps a floor under high prices, and acts as a monopoly
price-setter. The high prices retain the income
stream to OPEC (and non-OPEC) while conserving the remaining OPEC
resource and playing it out in the most long-term efficient manner. The
high price can
no longer be driven down by non-OPEC producers increasing their
production.
Expect traders to take positions around this projection, and for prices
to remain volatile on the high side from now on.
Up until now,
only poorer, 'less developed countries'
have been price-forced to drop the amount of crude products they buy.
In these countries, the number of poor people is huge, relative to the
number of well-off who can afford oil products at 'any' price. While
the poor in these countries use relatively small amounts of oil
products, much is for cooking and heat, and thus essential. Government
must pick up the price difference.
Consumers across all 'developed countries'
(with more disposable cash and better credit rating) will be bidding
against each
other for supply. The relatively large number of middle class
oil-product consuming people across
all developed countries will absorb the price increase. Lower incomes across all developed countries will
be price-forced to drop the amount of crude product they buy. As the
consequence of unaffordibility of oil is not usually life-or-death,
government in these countries will not
pick up the price difference.
The IEA report notes that if there is a drop in
forecast global GDP growth of just over 1% (i.e. a recession), then, by 2012,
2
million barrels a day of OPEC oil will no longer be required. Oil will
be cheaper, debt will be higher,
jobs will be fewer. Not much of a 'cure'.
July - Yemen - Yemeni Marib light
crude oil sells for $US79.24, an
all-time high. The
price increase is attributed to reduction in Nigerian output due to the
on-going discord (Shell oil currently has shut-in production of about
465,000 barrels a day), lower than expected OPEC production, and warnings that there may
be shortages in supply.
July - Canada - China - The plan for a joint Canadian-Chinese pipeline
to take crude oil from Canada's oil sands to a Pacific port for export
is cancelled by PetroChina. The 'Gateway' project pipeline was to have
taken 400,000 barrels a day of crude, with 200,000 barrels a day of
that being bought by PetroChina. Delays due to lack of support from
Canadian firms, Native land title claims, lack of committment of supply
to China, and unwillingness to assist PetroChina to access Canadian
domestic markets were the main factors on the decision.
July - Argentina - Argentina has had almost the
lowest electricity prices in the world for the past four or so
years, and an 8% annual growth rate - but no new energy infrastructure
to meet burgeoning demand.
July 13 - Argentina - Shortfalls in natural gas supply causes the
government to ban the sale of compressed natural gas for motorists. The
natural gas crisis was precipitated by dramatically colder temperatures
causing a sudden surge in demand for natural gas for home heating,
coupled with lack of investment in new power generation capacity. Sale
of natural gas to Chile has also been cut, and Argentina has asked
Brazil to share some natural gas it imports from Bolivia. Argentina
asks Brazil to sell it additional electricity, as Argentine hydrodams
have insufficient capacity to meet the additional electricity need.
The
government subsidises gasoline to bring it down to the same price
as the cheap (but unavailable) natural gas widely used for commercial
vehicles. Gasoline in Argentina is about seven times more expensive
than natural gas. The government extends the same subsidy to fuel oil
to make private power generation at factories affordable. The
consequent 400 Megawatt drop in demand for electricity allows natural
gas to be made available for fertiliser production and for
combined-cycle power plants currently running on the less efficient
fuel oil...
July - Argentina - The budgetted government subsidy for the year of ARS500
million for
subsidising the price of fuel oil for combined-cycle generators is now
spent. In light of the natural gas shortage and consequent increase in
fuel oil consumption, the cost of the subsidy is expected treble to ARS2
billion by
the end of the year.
July - Russia - France - France's
Total Oil company provisionally signs a $US15
billion deal with Russia's Gazprom gas company to take up a quarter
share in the giant Shtokman field in the Barent Sea in the Arctic
circle. The agreement sees both companies designing, building and
operating the new field, due to come on line in 2013. However, Total
has been given no specific allocation of reserves, which are owned by a
100% owned Russian company. Under the deal, Total will relinquish its
25% stake when phase 1 of the 4 phase project is complete.
July - Iran - USA - Japan - USA
continues to apply sanctions against
banks that do business with Iran. As a result Iran finds it
increasingly difficult to process dollar payments for its oil. Iran
now formally asks Japan to pay
for all its oil in yen, not dollars - thereby strengthening
the yen and weakening the dollar. Japan is Iran's biggest customer for
oil. Japan has essentially no oil reserves.
July - Japan - crude oil imports are now about 4.32 million barrels a
day. This is an increase of 3% over last year. Oil imports have
increase month-on-month for the last three months. Japan imports nearly
88% of its oil from the Middle East. Saudi Arabia is still Japan's
biggest supplier, at over 1 million barrels a day, but Japan now
imports 18% less Saudi crude than last year. The difference has been
made up by Iran, now supplying about 546,300 barrels a day, 33% more
crude than previously.
Japan - around 80% of Japan's oil supply is now bought in direct
bilateral supply agreements with the producers. The price is based on
the spot price for Dubai crude, the
benchmark for the Asian region.
July - OPEC - USA - The US
dollar weakens to an all-time low against
the Euro. Major banks sell more than 18 tonnes of gold to try to drive
down the price of gold and bolster confidence in the dollar as a
currency of international settlement (and said by the World Gold
Council to be poised to sell the same tonnage every week for the next
few months). OPEC, in the meantime, says the weakening dollar means the
returns for its oil - sold in US dollars - have been eroded. An article
in the Financial Times notes “The adjusted ‘OPEC basket price’
averaged only $43.60 a barrel in June compared with $44.30 a barrel in
the same month last year, according to the organisation’s latest
monthly report...”. While OPECs import trade with Europe is in Euro's
and pounds, a very large part of the oil export trade is in the US
dollar. The lower purchasing power of the dollar is now affecting the
amount of profit available to spend within OPEC countries. Conditions
are nearly ripe for
Saudi Arabia to also abandon
pricing oil solely in the US dollar.
July 25 - Iraq - USA - Iraq passes a law allowing foreigners to build
and run refineries in Iraq. All refineries are presently government
owned. The private refineries will be offered Iraqi crude at a discount
of 1% over what it sells for on the open market. They will be sold land
at heavily discounted prices. They will receive government subsidised
electricity. The refiners will be allowed to sell the refined product
overseas, or locally, at their discretion. When foreign companies have
built sufficient refineries, the government will then begin selling all
the government owned refineries to foreign companies, or foreign
controlled companies.
July - Iraq - Government subsidised fuel prices are increased.
Unemployment remains at 60%-70%. Fuel supplies, from petrol to cooking
kerosene, remain short. The supply is only at 50% of the governments
target. Theft and sabotage of fuel are costing around $US700 million a
month.
July - Albania - Drought in the Balkans has resulted in lower than
normal hydro dam reservoir levels, and reduced power generation.
Albania's burgeoning demand for electricity, made worse by the heatwave, cannot be met. It's electricity
grid needs major work. Power cuts in some areas last 16 hours a day. To
save power, beginning July 30, the Albanian Government will cut working
hours of government employees to 5 hours a day.
July 26 - Russia - oil production from the Russian privately owned
joint venture company Slavneft is down by about 11% for the half year,
compared to the same period in 2006. This reduction is about10.5
million tonnes, a drop of roughly 47,000 barrels a day. This in spite
of a total of 99 new wells put in place since the beginning
of the year.
July - Norway - crude
production now averages 22.277 million barrels a
day.
July 27 - oil price - Light, sweet crude for September delivery is $77.02 a barrel on the NYMEX (New York
Mercantile Exchange). This is almost equal to the
previous all time high.
July - Mexico - PERMEX, the Mexican state owned oil company, informs
stock markets that its reserves of "economically exploitable"
oil may run out within seven years.
July - Saudi Arabia - Saudi Arabia opens bids for companies to
contract for work assisting in the development of Manifa
offshore field, which Saudis hope to have in production by about 2011.
The contracts are for costs of about $US3 billion.
July - electric cars - Toyota announces it will introduce a cheaper
'plain'
version of its hybrid Prius in 2008. The base price will be $US20,950,
plus shipping. This version will be 5.5% ($US1,225) cheaper than
the current lowest cost version.
July - China - faced with diminishing production and continued high
costs of extensive new drilling, China two major oil firms apply for
permission to increase their prices for gasoline and diesel.
August - USA - a fire at Chevron Corp's 330,000 barrel per day refinery
in Pascagoula, Missouri reduces production. Full production capacity is
not expected to be back until early 2008.
August 1 - oil price - crude reaches
it a new all-time high of US$78.21.
August - Norway - crude production averages 2.111 million barrels a
day, down 7.3% from last
month.
August - Canada - oil companies finally agree to the lease conditions
for the Hebron Ben
Nevis offshore heavy oil field set out by the Newfoundland and Labrador
state government. The major 'International' oil companies now have
fewer and fewer oil plays that are not controlled by the countries
under which the oil is found. Their company reseves are depleting, and
they are now desperate to 'play ball'.
August - China - Petrol supply is
short in more than 40 Chinese
cities, particularly on the East coast. Very tight supply, diminishing
production from the mature and fading oil fields such as Daqing
and refinery outages mean that production cannot meet demand. The
situation is made worse by reports that the two Chinese oil producers,
PetroChina and China Petroleum &
Chemical Corp (Sinopec), have cut supplies to private distributors.
While conceding it is reasonable, the
Government has refused their request to raise oil gasoline and diesel
prices because it will affect "economic stability". The firms can best
maintain their profit margin by supplying
their own outlets. The Government calls on them to "work hard to boost
their oil-refining output."
August - China - Gasoline retails at about US 59 cents per liter.
August - China - China has a tiger by the tail. A
large part of its economic boom comes from selling to USA,
resulting in a large dollar holding. The USA dollar is sliding in
value. It would be prudent to offload dollars. Offloading dollars makes
Chinese exports to USA more expensive, and helps devalue the USA
dollar, making Chinese exports more expensive, and so on. The wisest
thing for the Chinese to to would be to buy oil now, at any price, on
the open market for their strategic reserves, while the dollar is still
relatively high. In turn, exchanging USA dollars for oil helps 'back'
the dollar with black gold..
"China has accumulated a large sum of US dollars. Such
a big sum, of which a considerable portion is in US treasury bonds,
contributes a great deal to maintaining the position of the dollar as a
reserve currency. Russia, Switzerland, and several other countries have
reduced the their dollar holdings. China is
unlikely to follow suit as long as the yuan's exchange rate is stable
against the dollar. The Chinese central bank will be forced to sell
dollars once the yuan appreciated dramatically, which might lead to a
mass depreciation of the dollar" - He Fan, a Chinese Communist Party
official at the Chinese Academy of Social Sciences, reported in the
China Daily.
August 21 - Mexico - Hurricane Dean, a category 5 hurricane
initially (the third-most intense Atlantic hurricane to reach land on
record), hits the Gulf of Mexico, causing the precautionary evacuation
of 14,000 workers from Mexico's 140 offshore oil rigs, including the
Cantarell oil field. After crossing the Yucatan Peninsular, the
hurricane loses impetus, and decays to a category 1 tropical storm by
the time it hits
the oil fields in the southern Bay of Campeche. Pemex, the Mexican
state oil company, produces about 66% of its oil from this region.
August 21 - Mexico - About 2.6 million barrels a day of oil
from all the Mexican offshore fields may be 'shut in' for up to a week
or so until platforms are re-staffed. About 2.6 billion cubic feet a
day of natural gas is also shut in.
August, late - Mexico - offshore fields are back in operation, a
total of about 10 million barrels a day of oil production was
lost due to the shut in.
September 10 - Mexico - political extremists set off 6 explosive
charges on gas and oil pipelines in the state of Veracruz Mexico,
affecting the supply of gas to10 states. Thousands of factories have to
close. Mexico produces 6 billion cubic feet of gas a day. Mexico also
imports gas from USA. Crude oil exports are not affected.
September 11 - Venezuela - The Venezuelan oil minister announces
China
and Venezuela will undertake a $US10 billion joint venture to build six
refineries and a shipping company to supply
increased amounts of oil and oil products to China.
September 11 - OPEC - OPEC
agrees to increase production by 522,000
barrels a day, supposedly starting november 1. Saudi Arabia will supply
53% of this "extra production". This works out to the Saudis increasing
their production by 327,000 barrels a day. This volume is
close to the expected exportable production from the re-worked oil and
gas fields at Abu Hadriya, Fadhili and
the oil fields at Khursaniyah. Expanded supplies of natural
gas liquids from the Hawiyah plant are also expected before november.
September - USA - The power supply to the 325,000 barrel a day
Valero Energy Corp refinery at Port Arthur, Texas is damaged by
hurricane Humberto and briefly shuts down. Total SA, which produces
180,000 barrels a day and Motiva Enterprises 285,000 barrels of oil a
day LLC's refinery are also affected by the power outage and shut down
briefly.
September 13 - Oil prices -
Oil briefly hits a new record high
of $US80.36 cents a barrel on the NYMEX.
The increase follows news of the Texan refinery outages and tight
inventory and crude supplies in USA. There is some suggestion that
investment funds are buying oil futures in the expectation of further
price increase. For the first time, longer term forward contracts for
oil supply are on an upward trend.
September 14 - USA - Iran - In contravention to all (elaborate and
'fail-safed') military procedures, a USA B-52 bomber carrying multiple
small-yield nuclear warheads goes from North Dakota to the 'Middle East
staging post' at Barkdales, Louisiana, USA. They were supposed to be
transported on special 'high safety' aircraft and taken to Kirtland for
decommissioning. USA military personnel 'spring' the news of this
astonishing apparent 'failure' in security. Knowledgeable commentators
observe it could only have
happened if vice President Cheny had taken direct charge and overridden
military command. Cheney has delegated Presidential powers to take
charge of federal programs dealing with weapons of mass
destruction within the Departments of Defense and 'other' federal
agencies. Speculation is that the nuclear weapon was to be used on the
Iranian uranium-enrichment plant at Natanz, while conventional
armaments were to be used in a pre-emptive strike to destroy Iran's
capacity to close
the Gulf of Hormuz. Rather, USA may, in line with the true
meaning of the USA's 'Carter doctrine', be bent on preventing Iran
from controlling Iraq, a fellow Sunni muslim country. Or it may be an
elaborate
and risky USA Presidential/military propoganda ploy aimed at strongarming Iran.
September 16 - Iraq - USA - Alan Greenspan, 81 year old retired
senior cog in the USA financial/banking system admits the truth in his
memoir -
"I am saddened that it is politically inconvenient to acknowledge
what everyone knows: the
Iraq war is largely about oil..."
September - Iraq - Iraq continues to burn the equivalent of 100,000
barrels of crude oil per day to generate electricity. At the same time,
it 'burns off' natural gas from its oil wells. Natural gas could be
used for power generation, but the concurrent warlord power struggles
and the resistance to US occupation prevents the construction of
pipelines.
September - Iraq - the oil pipeline shifting around 250,000 barrels
of oil a day from the southern oilfields north through Syria to the
Mediterranean prior to the USA invasion remains out of action.
September 17 - Venezuela - USA - Petroleos de Venezuela SA, the
Venezuelan state oil company, converts its oil-income investment
accounts from US dollars to euros.
September - Around 70% of the oil traded in the world is traded in US
dollars. The USA dollar remains, for the moment, backed by gold -
'black gold'. As Chris Cook, former director of the International
Petroleum Exchange, observes, in reality, oil is not priced in dollars,
dollars are priced in oil.
September 17 - Iran - USA - The Iranian Oil Bourse, brainchild of Chris
Cook and the Wimpole Consortium, has made little progress. The object
of the bourse was to cut out middlemen and speculators and dampen price
volatility. Today, Cook admits that Iranian oil officials have been blocking the government sanctioned
project. Cooks protests to the Iranian President are believed to have
been partly responsible for the sacking of the oil minister, and
removal of some of the so-called Iranian 'oil mafia'. The Iranian Oil
Bourse, when
it eventuates, will trade initially in bitumen - according to Cook
"You can’t
run before you can walk, and there is huge resistance in Iran to
transparency in the existing market in crude oil. That’s why [ ..] we
got nowhere with crude oil". The internet-based bourse would not trade
in US dollars.
September 20 - USA - Saudi Arabia - Inflation in Saudi Arabia has
risen to 4%. Saudi Arabia refuses to cut its interest rates when the
USA does, suggesting it is moving to also
de-couple the US dollar from its own currency, the Riyal. As the
USA dollar continues to weaken, tying a currency to the dollar
effectively 'imports' the USA's inflation. (USA hides its true
inflation rate by not taking energy and food inflation into account in
the 'official' statistic.).
The euro and many other currencies remain
strong, meaning that oil priced in USA dollars does not increase much
in local currency terms when oil prices rise (the dollar is now at an
historic low against the euro). A component of oil price 'rises' is
actually the USA dollar becoming worth
less, requiring more dollars
to reflect the steady-state value of a
barrel of oil.
In addition, overseas investors have now largely switched from
buying long term USA treasury bonds to buying only short term bonds.
This change suggests financial markets expect the dollar will decline
in value rapidly (foreigners hold over $US2 trillion in US denominated
debt, a debt whose real value is now eroding with the weakening
dollar).
Worse, global central banks, whose reserves have been increasingly
'top heavy' with dollars (now around 68% in US dollars versus about 25%
in euros), find themselves having to 're-weight' to other currencies,
such as the euro, the yen, the rupee and ruble.
These foreign exchange
transactions will ultimately return many billions of dollars to the
USA. This will inflate the huge USA internal money supply even further
(the USA prints its own money at will, via 'bond' sales). This is
likely to make USA inflation even worse, and make USA debt notes even
less attractive - unless the USA Fed puts up interest rates. The US
needs $US70 billion a month of foreign capital to cover its
current account deficit, so bonds must have an attractive interest
rate.
But raising
domestic interest rates is politically almost impossible in the heavily
debt burdened USA domestic economy. The USA will therefore end up
living with an ever-increasing domestic inflationary spiral.
(Paradoxically, as inflation takes hold, USA banks will be forced to
put up interest rates anyway to try to recover the value of their money
deposits.)
Recessionary conditions for USA are now well in place, but not yet
apparent.
August - US Treasury data showed outflows of $US163 billion from all
types of US investment. Asian investors sold $US52 billion of Treasury
bonds. This is the first time in the last 8 years that more bonds were sold
by Asian investors than bought them.
September - Qatar - inflation in
Qatar, home to the USA's command
base in the Middle East, hits 13%. The Qatari currency is pegged to the
USA dollar.
September 20 - USA - a tropical storm bearing down on the USA Gulf
of
Mexico causes 27% of the crude oil productive capacity (total Gulf
productive capacity is about 1.3 million barrels a day) to be shut down
as a precautionary measure.
September 20 - oil prices - USA oil briefly hits a new record high
of $US84.10 on the NYMEX before settling at $US83.32. Brent crude
hits a new record of $US79.09. Gold
hits $US739 an ounce - its highest since January 1980.
September 21 - USA - as the US tropical storm gets closer, around
62.% of the oil production in the US Gulf of Mexico is shut down
(roughly 800,000 barrels per day). About a third of the Gulf's natural
gas production is also shut down.
September - Qatar - The Qatari government seeks $US2.5 billion
to build a 2600 Megawatt gas burning power plant. Qatar has the third
largest gas reserves in the world. Qatar uses 3500 MW of power a year,
and population growth is putting increased demands on electricty
consumption. The new power plant will also be used to desalinate 55
million gallons of water a day. The population of Qatar is slightly
over 900,000 people.
September - Syria - production of crude oil has now
fallen to 385,000 barrels a day. Natural gas production has increased
to about 20 million cubic metres a day. Syria has signs a 20 year
contract with a Canadian company to explore for oil in the provinces of
the provinces of Latakia, Hamah, Hims and Idlib. The population of
Syria is exploding, with the population increasing by about 3 million
in the last 7 years.
September - USA - According to John Hofmeister, a top Shell
executive, the USA now consumes 10,000 barrels of oil per second. And
as USA now imports 60% of its oil and gas needs, current tightly
matched global supply and demand for crude means USA is "one hurricane
away from energy scarcity and volatile, high prices".
September - quote of the month from James Schlesinger, former
Director of
the Central Intelligence Agency, Secretary of
Defense, and first Secretary of Energy:
"... I was recently at a conference in
New Mexico, sitting next to one
of the recent CEOs of a major oil company. In response to a question
from the audience, he said: "Of course I'm a peakist. It's just a
matter of when it is coming." ... Once one is retired as a CEO, one is
freer ... to say 'I am a peakist'. And what you hear privately from
almost all people is - 'we're coming to it'.
...the American public has been coached into believing that we can have
energy independence - which is not obtainable as long as we have the
internal combustion engine - and at the same time as we get energy
independence, we can lower the price of energy. These are simply
unattainable - but they are regularly promised.
...There is not going to be a [policy] turnaround until
you have public support; and the public has got to be frightened by a
serious crisis which persuades them that indeed the wolf is at the door.
... I think that many of these politicians will ultimately find that
the public blames them for failure to warn them. Of course, in a
sense, the public is
responsible because it's the present public
attitudes to which politicans play up - tell them what they want to
hear. But when the view of the world changes, what the public wanted to
hear some time ago is no longer what they want to hear in the future.
... We are going to face a great difficulty in the near future. Whether
or not it is defined as a crisis depends on how you define crisis. But
there is difficulty, great difficulty ahead."
- from an interview with David
Strahan, author of the book 'The Last Oil Shock'.
September - USA - Iraq - The USA senate votes to split Iraq into 3
autonomous provinces. The criteria for the proposed 'carve up' is
seperate religous sect and seperate ethnic background. The reason for
the split is supposedly to keep the groups in conflict apart in their
own fragmented 'homelands', where they can 'develop seperately'. The real
reason is to facilitate USA control of Iraqi oil.
September 30 - UK - unleaded 95 octane petrol (gasoline) is UK95.2
pence.
September - all liquids - according to
the International Energy Agency (IEA) total world liquids production is
85.10 million barrels a day. This is 450,000 barrels a day more than
August. Increases in liquids associated with increasing natural gas
production is the important factor in 'holding the line'. This is 1.03
million barrels a day lower than the historic maximum all liquids
production.
September - world oil and 'liquid oil equivalents' (including
ethanol) production - according to
the International Energy Agency world 'liquids' production over the
year to date is 85.03 million barrels of oil/oil equivalent a day. This
is almost identical to 2006 production. The world is on a 'all liquids
fuel' plateau, and supply and demand appear about matched, with the
only unused capacity being heavy oil for which there is no refinery
space at present.
September -
according
to the International Energy Agency crude oil stocks fell from July to September by 33
million barrels (360,000 barrels a
day). Oil stocks usually increase
by about an additional 25 million barrels in the third quarter of the
year, ahead of the Northern hemisphere winter.
September - USA - consumers buying fuel oil for winter
find
prices high even as summer petroleum blends sell low as refineries
switch to winter production. Fuel oil supply has tightened as
refineries shut for maintenance and as USA and Europe compete on price
for supply. If the winter is cold, there could be a repeat of the year 2000
in USA.
September - Norway - production is now 2.179 million barrels per day. 
Norway
is the world's fifth largest exporter of crude oil.
October 1 - UK - the duty
on a litre of petrol and diesel is increased by by two pence. Total
government duty is now 50.35
pence per litre. Duty is planned to be increased by a further 2 pence
per litre on the 1st
of april 2008 and increased again 2009. At 97.2 pence, fuel prices in
UK are now very near £1 per litre ($US2 per litre, or about
$US7.57 per US gallon).
October - UK - oil consumption is now 1.7 million barrels per day.
Consumption is increasing at the same time that imports are now
increasing as North
Sea oil fields fade.
October - Dubai - Iran -
Dubai crude jumps by $US2.05 a barrel,
(2.8%), to $US74.60 a barrel mainly due to Iranian cuts to marine fuel
oil exports to Dubai's bunkering port of Fujairah. Fujairah is the
Middle East's largest supplier of ships bunkering oil, normally selling
about 700,000 metric
tonnes a month, sold mainly to the Asian
region. The cut in Iranian supplies meant only 180,000 tonnes were
sold in August. Supplies from Europe and Asia have been substituted for
the reduction in Dubai refined fuel oil. This has somewhat shorted the
world market for fuel oil.
October - Japan - Iran - Two Japanese oil import companies now
commence paying for oil in yen. This may elicit the 'Saddam
effect'.
October - Qatar - Qatar's $US50 billion 'sovereign wealth fund'
reduces its dollar based holdings from 99% to
40%. Other countries, such as Vietnam, are making similar moves. The
global dollar index is now at a record low. US is deeply indebted, with
external debt now about 35% of gross domestic product. USA is now a
nett debtor nation.
October - USA - Refinery maintenance and repair, coupled with
relatively low inventories and fuel company service station pull-outs
from outlaying areas causes diesel shortages in isolated rural areas at
the
end of extended supply lines. In rural North Dakota, farmers needing
diesel to harvest autumn crops have to wait up to several weeks to
receive their full diesel needs.
October 2007 - USA - the Atlantis
deepwater field in the Gulf of Mexico commences production. Initial
production is about 10,000 barrels a day. When all 11 wells are
eventually producing, expected production is around 200,000 barrels a
day. Production was due to commence in 2006, but the 2005 Gulf of
Mexico hurricanes led to delays and cost over-runs.
October 15 - oil prices
briefly hit a new record high
of $US86.22 on the NYMEX. Brent is trading at $US82.75. Oil has reached
a new record high for 3
months in a row. Prices are high because supply is tight due to flat
production, increased demand, and the continuing
refinery bottleneck as the world's supply of 'sweet' crude drops as
'heavy' crude increases. Over 50% of world trade is now in heavy and/or
sour crudes. As heavy crudes require specialised refineries, increasing
amounts are sold under bilateral arrangements, reducing the
amount available on the spot market, which in turn means speculators
are better able to 'corner' large volumes of 'spot' oil, thus
shorting the market and
influencing overall price (bilateral oil price is largely tied to spot
price). Speculators are also stepping in to bet on
future rises in the reducing volume available for the spot market.
This sort of 'spiking' of prices is expected when there is more demand
for a commodity than supply. The demand is in the USA,
ahead of the winter fuel-oil
season. Additional of 2 million barrels a day of crude refining
capacity and a further
1.5
million barrels a day in cracking capacity in Asia to bring heavier
grade products up into lighter gasoline and diesel are due some time in
2008.
This, plus four new refineries in the Middle East due 2010 will
ultimately ease the pressure, as will on-going modernisation and
upgrades at existing Middle East refineries.
October - USA - gasoline stocks are at near historic
lows of about 193
million barrels.
October 16 - oil prices
- Tapis crude, a 'sweet' crude, is now trading at an historic high of
$US89.39 a barrel. Brent crude is now trading at $US85.09.
October 17 - oil prices Tapis crude, a 'sweet' crude, is now trading
at a new historic high of
$US89.44 a barrel. Speculators have been partly responsible for driving
up the price, and refineries are reluctant to buy speculative oil, so
let their inventories fall. Falling inventories give an impression of
shortfall in oil (there isn't), driving further speculation...
October - Saudi Arabia
- Saudi Aramco shuts down its Red Sea Rabigh oil
refinery for routine maintenance. Rabigh has a nominal crude
distillation capacity of about 400,000 barrels per day. Almost all of
the products of the refinery are consumed locally, except for naptha.
Most of Saudi Arabia's fuel oil comes from Rabigh. The fuel oil is
used for power generation. Power generation demand peaks from June to
August. As the refinery is shutting down, Saudi Arabia is buying fuel oil for november
delivery.
The refinery will also be altered to allow it to link to a
joint-venture petrochemical complex constructed in conjunction with
Sumitomo Chemical Company of Japan. This project guarentees Sumitomo a
reliable supply of polyolefin feedstock for further processing. The aim
is to produce 2.4 million tonnes a year of refinery products, gasoline,
and petrochemicals, both solid products and liquids. Production will
include 1.3 million tons of ethylene, 900,000 tonnes of propylene, and
60,000 barrels of gasoline a year. The joint-venture complex extends
Saudi Arabia on-going plan to 'add value' to its refined product stream
within Saudi Arabia and provide jobs. Production of petrochemicals and
gasoline is expected 2008.
The shut-down will be at least a month.
October - United Arab Emirates - Abu Dhabi announces it will begin a
major maintenance programme at its three major offshore
oilfields of Upper Zakum, Lower Zakum and Umm
Shaif to commence in november. About 600,000 barrels of crude
production per day will be removed from production for an undefined
period, but probably not more than 3 weeks. Three Japanese and one
Southeast Asian refinery will be most affected.
October - .United Arab Emirates - The emirate of Abu Dhabi produces
roughly 2.6 million barrels of oil per day.
October - United Arab Emirates - The Abu Dhabi National Oil Company
announces scheduled maintainance at its Ruwais refinery will commence
end of december and run until end january. Over 83,000 barrels of crude
production per day will be temporarily removed from production.
October - Japan - Japan relies on United Arab Emirates for around a
quarter of its oil supplies. The peak demand in Japan is in the
Japanese winter.
October - biofuels - India - India imports over 5 million tonnes of
its domestic dietary vegetable oil requirements of 12.5 million tonnes.
But vegetable oil diverted to subsidised biofuel use has driven up the
price. Argentine soya bean oil was $US542 a tonne at this time last
year, but is now $US863 a tonne. Rape seed oil ('canola') has gone from
$US784 a year ago to $US1,177, while palm oil has increased from $US436
to $US795 over this period. India's import bill for edible oils will be
over 1 billion US dollars. Next year it is expected to be over 3
billion US dollars. India's Solvent Extractor’s
Association complains that 'even if the entire quantity of vegetable
oil available in the
world is converted into biofuel it will address only 2-3% of fossil
fuel oil
requirement', but shifting even of 5%-10% of existing edible vegetable
oils to biofuel use will
have a serious impact on the price to the consumer - generally the
poorest segment of India's population. The diversion of food oils to
fuel will
also impact availability, as Indian edible oilseed production is static
at the same time as demand is increasing as the population size blows
out, meaning the ration of imports to local supply must increase every
year.
October - biofuels - Global oilseed production (all purposes)
is
expected to fall to 391 million tonnes this year. Last year production
was 404 million tonnes. While an increasing amount of the seed is
expected to be used for oil extraction in the year 2007-2008 (global
vegetable oil supply is expected to be 159 million tonnes, up 7 million
tonnes on the previous year) availability is still expected to drop, as
8 to 9 million tonnes will be diverted to biofuel use. Installed
capacity to convert edible oils into biofuel has now reached around 23
million tonnes, so the trend of decreasing availability and higher
price for edible oils is likely to continue.
October - USA - In an historic move, the USA Energy
Department switches from talking about the future availability of 'oil'
to the future availability of 'liquids'. This politcally motivated
deceit is a risible attempt to smokescreen the peak of conventional oil
production.
From now on, the US department will talk about liquids - 'Liquids'
includes 'conventional' crude oil (petroleum) plus 'unconventional'
liquids. Unconventional liquids include tar sands (bitumen), oil shale,
biofuels, coal-to-liquids and gas-to-liquids.
The US Energy Department projects an increase in
unconventional liquids production from 2.4 million barrels of oil
equivalent per day in 2005 to 10.5 million barrels of oil equivalent
per day in 2030. Most of these 'unconventional' sources are very
expensive to produce, and many cause extensive environmental damage.
Most also require large sources of heat and hydrogen to form fuel from
the tars and bitumens. Natural gas adjacent these deposits is
declining.
In any event, even if all these sources were eventually produced to the
rosy 'projected' levels of the US Energy Department, they would still
not make up for the inexorable decline in conventional oil.
October - Europe - in an historic move, the International Energy Agency
(IEA) says the basis of all previous IEA forecasts has been faulty.The
Chief Economist, Fatih Birol, says the change in the rate of growth in
demand for oil is much less important than decline rate in major oil
fields. In other words, geological reality trumps 'demand'. The IEA
will in future base its forecasts on a 'bottom-up' analysis of the
production of the 200 largest oil fields in the world. In other words,
world demand for preferred oils exceeds the fading oil fields ability
to supply. He also admits non-OPEC oil is past peak, and that the
reserves OPEC claims are no more than that - claims.
Fatih Birol admits that even if all OPEC investments in enhanced and
new production are made and come in on time, by 2015 the projected
demand will not be able to be supplied. There will be a demand for 12.5
million barrels a day that cannot be supplied.
October 19 - oil prices -
Louisiana sweet crude, is now trading
at a new historic high of
$US90.29 a barrel.
October - Europe - Russia - The coming
shortfall in diesel supply for europe is discussed at the Platts
European Refining Markets conference. Wood
McKenzie agency estimate the shortage in
Europe in 2006 was relatively small at 17 million tons, but that this
shortfall will increase to around 55 million tons by 2015, and to 60
million tons by 2020. Russia and former Soviet Union states are major
suppliers of diesel to Europe. The current Russian supply of of around
25 million tons of diesel is 'expected' to increase to 50 million tons
by 2030. This is extremely unlikely.
October 25 - Mexico - Hurricane Noel causes
huge seas in the Gulf of Mexico, forcing Mexico's main oil exporting
ports (Dos Bocas, Cayo Arcas and Pajarito) to close. Only the minor oil exporting port of
Tampico remains open. About 1.1 million barrels a day (roughly 40%) of
Mexico's oil production is shut in. Off shore oil production platforms
and drilling rigs are hit by waves 8 metres high and winds gusting to
128 kilometres an hour, driving a mobile oil drilling rig into the Kab
101 light production platform, killing at least 18 workers, breaking a
valve assemby, and spilling oil and gas into the Gulf of Mexico. In a
perfect co-incidence of speculation and Mexican vunerability to high
energy storms, USA is
temporarily shorted for cheaper
crude. Ample supplies of European gasoline artificially hold down
USA gasoline prices.
October 26 - oil prices -
Tapis sweet crude is now trading
at a new historic high of
$US93.41 a barrel.
October 29 - oil prices
- Oil futures hit $93.80 on the NYMEX,
the level since futures trading began in 1983. Brent oil hits $90.49,
the highest price in nearly 20 years.
October 31 - Mexico - weeks of heavy rain causes rivers to overflow
and cause massive flooding in low-lying Tabasco state, putting 70% of
the state under water, including the city of Villahermosa. Like New
Orleans, the water has to be pumped out. Villahermosa is the
'epicentre' of almost all of Mexico’s oil and gas. Most of Mexico's oil
and about 90% percent of its natural gas is produced within a 22
kilometer radius. There are 1,013 producing oil wells on the plains of
Tabasco.
October - Russia - production
this month is 9.9 million barrels a day, the highest monthly production
Russia has ever achieved. Growth in monthly production has, however,
been slowing as Russias mature oil fields begin to plateau. Tax breaks
for the rejuvenation of old fields have meant private oil companies
have been applying every oil production 'enhancemnet' methods available
to these fields, but gains are now slowing. Private companies are taxed
to almot 90% of profits on developement of new fields, so there is
almost no private investment in replacement. In addition, new prospects
are generally in difficult terrain, and very expensive to develop. This
may be the beginning of the decline of the worlds largest oil producer.
November 1 - China - the
government is finally forced to raise
unrealistically low domestic fuel prices, raising them by 10%. Prices
had been frozen for 17 months.
November 1 - France - France releases 285,000 metric tons of crude
oil from its
strategic petroleum reserve. Planned Maintainance at two major
refineries - Total SA's Feyzin and Gonfreville refineries - has caused
a short term fall in diesel and oil products.
November 2 - oil prices -
Tapis sweet crude is now trading
at a new historic high of
$US96.67 a barrel.
November 3 - oil prices -
Tapis sweet crude is now trading
at a new historic high of
$US97.13 a barrel. Brent oil hits $93.24. The US dollar hits a record
low against the euro.
November 6 - oil prices -
Tapis sweet crude is now trading
at a new historic high of
$US97.45 a barrel.
November - Indonesia - The cost of subsidising fuel is now expected
to hit 90
trillion rupiah this year (roughly $US9.8 billion) due to high oil
prices. The
projected figure for the year was originally 55 trillion rupiah ($US6
billion). The government is considering limiting sales of subsidised
oil to private motorists if oil is over US$100 in 2008.
November 6 - UK - workers are evacuated from ConocoPhilips Ekofisk
A, B and C, and Eldfisk A and B North Sea oil platforms in the face of
a looming storm, shutting in its 140,000 barrel a day production. BP
evacuates workers from the Valhall field, shutting
in its 80,000 barrel a day production temporarily. Nexen closes its
Buzzard field, which produces around 170,000 barrels a day. Total
shut in
production is about 390,000 barrels of oil a day.
November 7 - oil prices -
Tapis sweet crude is now trading
at a new historic high of
$US100.57 a barrel.
November 7 - UK - The average price of unleaded petrol passes
£1 per litre for the first time. Over half the price is made up
of government taxes.
November 8 - oil companies - BP's new Chief Executive Tony
Hayward semi-admits oil has peaked, but fudges the truth,
saying only that "For the medium term, it's very clear the
era of cheap energy is behind us," and adding
that it isn't clear just how long "the medium term" will be. He admits
"about half" the worlds oil has been produced (i.e. oil has peaked) but
then goes on to say that he doesn't believe oil has peaked! This is the
first public admission by an oil major that world oil supply has
reached the peak of production - even if he rebuts his own statement
with the next breath.
ConocoPhillips (COP) Chief Executive
James Mulva publicly re-states oil supply is limited by geology
" "Demand will be going up, but it will be constrained by
supply,
I don't think we are going to see the supply going over 100 million
barrels a
day and the reason is: Where is all that going to come from?".
The world uses all available cheap oil, which right now is around 85
million barrels a day. The chances of an additional 15 million barrels a
day of crude oil supply on top of that is precisely zero.
November 9 -USA - the Mars crude blend produced by Royal Dutch Shell
from several platforms in the Gulf of Mexico is shut in due to damage
to a valve. Production of around 150,000 barrels a day is shut in.
November 18 - OPEC -
Iranian President Mahmoud Ahmadinejad reports
that OPEC’s members discussed moving their cash reserves out of the
steadily depreciating US dollar, observing “They get our oil and give
us a worthless piece of paper”. The sentiment of some OPEC members was
to "designate a single hard currency" to use for oil trade.The euro was
suggested. In the end, OPEC members decided to form a committee to
investigate the possibility of pricing oil using a basket of different
currencies, rather than relying soley on the dollar or the euro. Oil
has 'always' been priced in US dollars on the world market, although
payment is not necessarily in dollars.
November 21 - oil prices -
sweet crude is now trading
at $US99.29 a barrel.
November - China - imports of crude have now reached 13.61
million tonnes a month (equivalent to 3.31
million barrels a day). The domestic fuel shortage continues throughout
the country, with fills rationed to 200 yuan per stop. Cities are
hardest hit, and army and police are stationed at many filling stations
to ensure order.
November - China -
Chinese refineries export over 1.8 million barrels of finished gasoline.
November - Mexico - PERMEX state oil company reports that this
months production is down 8% on november 2006. Average exports across
the year so far are down 5% on last year.
December 31 -
Mexico - Cantarell oil field has produced 1.47 million barrels of oil a
day, down on initial expectations.
Cantarells production is 18% lower than last year.
November - Saudi Arabia -
Full contract volumes to Asia are restored, dropping the about 130,000
barrels a day cut to the Asian region.
December - China - December new car sales grew
nearly 12.5% (to 635,400) relative to last year, according to the
China Association of Automobile Manufacturers.
December - Iraq - oil production climbs to 2.475 million
barrels per day this month - almost reaching the level of oil
production in place before the
USA invaded Iraq. Of this amount, 1.8 million barrels a day is
exported. The repairs to the northern
pipeline have been responsible for most of this increase.
December - Nepal - Fuel shortages continue as India has sharply reduced fuel supply to try
to force the Nepali Oil company - owned by the Nepali government - to
pay its $US50 million debt. Even although prices have been increased to
$US4.25 a gallon, the Nepal Oil company has no prospect of repaying its
existing banks loans of $US25 million, let alone any further loans to
pay down its debts. All credit lines have been cut. Winter is
approaching, and gas stations rapidly sell out when the infrequent
tanker arrives with fuel. Consumers sleep in their vehicles in the long
queues at the pumps in the ope of supply.
December 10 - Pakistan - oil reserves have dropped to the lowest
level ever recorded. Only 6 days of Kerosene and
diesel stocks are on hand. Gvernment policy is to maintain a 21 day
supply in store at all times. Pakistan uses around 22,000 tons of
transport diesel and 920 tons of kerosene per day. The draw down in
stocks is said to be due to oil company 'cash problems' /competition
for Middle East diesel supply, and refineries producing more jet fuel
at the expense of kerosene. Kerosene must be sold at a fixed price,
where jet fuel is sold to American and NATO forces for use in
Afghanistan. Oil imports are now
expected to cost over $US10 billion for the year.
December 13 - oil prices -
Tapis sweet crude is now trading
at $US100.50 a barrel, a record high.
December - Iran - Around 70% of the payment for Iran's crude oil
exports is now denominated in euros, and 20% is denominated in Japan's
yen. The remaining 10% is denominated in US dollars. Iran plans to stop
taking any US dollar currency as payment for oil in 2008. Other oil
producers are likely to follow the same trend. This will
continue to weaken the dollar, andthe unfavorable exchange rate for
imports will automatically raise the price of petroleum products in
USA. On the other side of the coin, USA exporting manufacturers
will benefit by the weakening dollar.
December 28 - oil prices -
Tapis sweet crude is now trading
at $US102.30 a barrel, a record high.
December 31 - oil prices -
Tapis sweet crude ends the year
at $US102.13 a barrel. Excluding China, Asian sweet crude production
from mature fields dropped by around 60,000 barrels a day.
December - crude oil production (including lease condensates) is
an estimated 74.2 million barrels a day (International Energy Agency,
02/08).This is an increase of 450,000 barrels a day from november, but
still 96,000 barrels a day lower than the 'peak amount of crude oil
ever produced in history', reached in may 2005 - 74.3 million barrels a
day.
Year End
World liquids - average production of conventional and unconventional
crude oil, plus condensate, plus ethanol, plus biodiesel, plus
synthetic fuel from coal etc over the year 2007 was 85.41 million
barrels a day, according to the International Energy Agency's 'looking
back' from february 2008 report.
Saudi Arabia - internal crude oil consumption is now 1.56 million
barrels a day. This is an increase of over 15% on 2006. Saudi gasoline
consumption increased by nearly 10% over 2006, to 347,000 barrels a
day. Refined gasoline exports are down by 40% as a result.
China - imported just over 163 million tonnes of oil - a new
record. China now imports about half its crude oil needs.
Saudi Arabia is China's largest supplier, Angola its second
largest supplier, and supplies from
Iran
jumped by over 22% to 410,000 barrels a day, making Iran China's third
largest supplier.
China - now
exports just 2 million tonnes of coal a year.
USA - 5,244 megawatts (MW) of wind-derived energy was installed
over 2007 - record amount. While electricity generated from wind is
small (about 1% of all electricity generated in USA), this amount
increases the USA wind power capacity by about 45%. New wind
projects accounted for around 30% of the new power generating
capacity for the USA in 2007. and will power the equivalent of
1.5
million American households annually while strengthening U.S. energy
supply with clean, homegrown electric power. This new capacity is
sufficient to power the equivalent of 1.5 million domestic homes,
according to the American Wind Energy Association.
USA - Saudi Arabia now supplies about 1.4 millions barrels of
crude a day to USA, edging up over 14% of USA imports. Mexico's exports
to USA continue to decline, from about 15.8% down to about 14% -
a drop of over 180,000 barrels a day over last year. Cantarell's slow
collapse is the reason.
USA - domestic crude oil production rose 1.1%, to 5.16 million barrels
of oil per day, according to the American Petroleum Institute (API).
The number of oil wells operating in the USA is now the highest it has
been for twenty years. USA oil production continues its trend of
around 2% less produced year on year.
USA - domestic natural gas liquids was 2.427 million barrels per day.
USA - according to the API, USA imported 13.7 million barrels of oil
(including oil products) per day. This is about 65% of America's oil
use. Although this is nearly 2% less than last year, it is still the
third highest amount ever imported.
USA- ethanol production is now roughly 420,000 barrels per day. Ethanol
used to blend into the crude-oil derived gasoline. The ethanol
component is counted as part of domestic oil production...
USA - according to the USA Department of Energy (EIA), in november 2007
74% of USA crude oil imports
came from 5 countries only -
Canada - 1.919
million barrels per day
Saudi Arabia - 1.530 million barrels per day
Mexico - 1.484 million barrels per day
Venezuela - 1.227 million
barrels per day
Nigeria - 1.215 million barrels per day
The next five countries accounted for an additional 15% (the top 10
supply 89% of USA crude oil)
Iraq - 0.508 million barrels per
day
Angola - 0.408 million barrels per day
Colombia - 0.197 million
barrels per day
Algeria - 0.184 million barrels per day
Ecuador - 0.154 million barrels per day
The top ten changes when total crude oil and petroleum product imports such
as refined gasoline, diesel etc are added in:
Canada - 2.428 million barrels
per day
Mexico - 1.581 million barrels
per day
Saudi Arabia - 1.609 million
barrels per day
Venezuela - 1.375 million
barrels per day
Nigeria - 1.276 million barrels
per day
Iraq - 0.508 million barrels per
day
Russia - 466 million barrels per
day
Algeria - 0.477 million barrels per day
Virgin Islands - 0.414 million barrels per day
Angola - 0.408 million barrels per day
Iraq's half million barrels of crude oil a day is worth around
$US80 per barrel x 500,000 x 365 = 14,600 000,000 = $US14.6 billion
dollars a year. How much of this goes to the Iraqi 'government', and
how much goes to USA to pay for 'administration
costs' and repayment of
're-construction'
debts isn't known...
Iran remains the world's 4th largest oil exporter, with an increasing
focus on exports to Asia. Iran has signed a contract to send an additional 100,000 barrels a day to
China's Sinopec oil refineries in 2008.
South Korea - imports of Iranian crude rose 15% this year.
Oil companies - Exxon
Mobil makes a net profit of $US11.66
billion for the last quarter. This is the highest
quarterly profit in history
for a USA company. Exxon Mobil is the world's largest publicly traded
oil company.
World grain supply - Global
stockpiles are now down to about 53 days of
supply. This is the lowest level since 1960 - when records began.
Go to 2008
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Copyright
2007 Naturalhub.com
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