Outlook for 2009
12 - Oil prices remain low, Tapis light sweet $US46.94, Louisiana Sweet
$US45.19, Dubai 1M $44.54, Brent Blend $42.68. Prices are low due to
the global recession and dampened global demand. In addition, a major
oil speculator may be selling at any price as their bet on future
prices of oil turns to custard. The price is likely to increase as the
collapsing bets on oil prices (using borrowed money) unwind through the
January - USA - Recession leads to reduced petroleum use. There are 40
million barrels more in storage in tank farms in USA than the same time
last year. Consumption fell under the level of domsestic production
plus imports. Cushing Oklahoma storage hit close to its 35 million
barrel capacity on january 2, a new record.
January - USA - Toyota delays completing a production plant for the
fuel-efficient Prius hybrid due to weakening demand as gasoline prices
January - USA - as oil prices fall, refiners profit margins on gasoline
are squeezed. Refiners reduce output, put crude in storage, or in-sell
it to traders to avoid further losses. Some adjust plant configuration
to produce less gasoline and more diesel and heating oil.
January - oil companies are now storing about 80 million barrels of
crude on supertankers the highest amount in 25 years( the 'very large
crude carrier' class of supertanker can store 2 million barrels per
vessel, the 'Suexmax' class can store 1 million barrels).
January - significant oil finds continue to diminish. The best
prospects are in deep water, in spite of the expense of operating in
that environment. Rigs able to drill in over 4,500 feet of water are
now 92% utilised, in spite of increased numbers of such rigs available.
The cost per day in 2002 was $US122,000 per day. That cost has now
risen to $US376,000 per day.
quote of the month:
"In the last few months, virtually
every speech on this subject
started with criticism of the United States. But I will do nothing of
I just want to remind you that, just a year ago, American delegates
speaking from this rostrum emphasised the US economy's fundamental
stability and its cloudless prospects. Today, investment banks, the
pride of Wall Street, have virtually ceased to exist. In just 12
months, they have posted losses exceeding the profits they made in the
last 25 years. This example alone reflects the real situation
than any criticism.
In the 20th century, the Soviet Union made the state's role
absolute. In the long run, this made the Soviet economy totally
uncompetitive. This lesson cost us dearly. I am sure nobody wants to
see it repeated.
Nor should we turn a blind eye to the fact that the spirit of free
enterprise, including the principle of personal responsibility of
businesspeople, investors and shareholders for their decisions, is
being eroded in the last few months. There is no reason to believe that
we can achieve better results by shifting responsibility onto the state.
And one more point: anti-crisis measures should not escalate into
financial populism and a refusal to implement responsible macroeconomic
policies. The unjustified swelling
of the budgetary deficit and the
accumulation of public debts are just as destructive as adventurous
......unfortunately, we have so far failed to comprehend the true
scale of the ongoing crisis...we must assess the real situation and
write off all hopeless debts and "bad" assets.
True, this will be an extremely painful and unpleasant process. Far
from everyone can accept such measures, fearing for their
capitalisation, bonuses or reputation. However, we would "conserve" and
prolong the crisis, unless we clean up our balance sheets. I believe
financial authorities must work out the required mechanism for writing
off debts that corresponds to today's needs.
Second. Apart from cleaning up our balance sheets, it is high time
we got rid of virtual money, exaggerated reports and dubious ratings.
We must not harbour any illusions while assessing the state of the
global economy and the real corporate standing, even if such
assessments are made by major auditors and analysts.
In effect, our proposal implies that the audit, accounting and
ratings system reform must be based on a reversion to the fundamental
asset value concept. In other words, assessments of each individual
business must be based on its ability to generate added value,
than on subjective concepts. In our opinion, the economy of the future
must become an economy of real values
I propose we start laying down a new international legal framework
for energy security. Implementation of our initiative could play a
political role comparable to the treaty establishing the European Coal
and Steel Community. That is to say, consumers and producers would
finally be bound into a real single energy partnership based on
clear-cut legal foundations.
Every one of us realises that sharp and
of energy prices are a colossal destabilising factor in the global
economy. Today's landslide fall of
prices will lead to a growth in the
consumption of resources.
On the one hand, investments in energy saving and
sources of energy will be curtailed. On the other, less money will be
invested in oil production, which will result in its inevitable
downturn. Which, in
the final analysis, will escalate into another fit
of uncontrolled price growth and a new crisis.
It is necessary to return to a balanced
price based on an
equilibrium between supply and demand, to strip pricing of a
speculative element generated by many derivative financial instruments."
- Russian Prime Minister Vladimir Putin speaking at
the World Economic Forum in Davos, Switzerland. Emphases added.
Jan - Mexico - Output from the massive
Cantarell field has now
dropped to 772,000 barrels a day, down 39,000 barrels a day in just one
month. Its decline rate over the last year is now a massive 38%.
Jan - Mexico - Output from Ku Maloob Zaap is 787,000 barrels a day.
Jan - Mexico - Pemex hopes to maintain
oil production at 2.75
million bpd over 2009 by increasing
production from Ku Maloob Zaap and
the onshore Chicontepec project. Cantarell production is expected to
have fallen to 700,000 bpd by the end of 2009.
Jan - Mexico - Oil exports are now
1.366 million bpd.
The fall in oil output dragged down oil exports to 1.366
million bpd in January, compared with 1.434 million bpd a year
Gasoline imports averaged 329,700 bpd in January, up from
303,870 bpd in January 2008. (Reporting by Robert Campbell; editing by
Feb 4 - Saudi Arabia raises the price for all of crude oil grades
available for export purchase in March. Price of Heavy crude to the USA
increased most, adding $US4.70 to the price per barrel. Saudi Arab
light is now $US1 a barrel more expensive than West Texas Intermediate.
It is suggested that Saudi Arabia is reducing their exported oil
quantity by raising prices slightly over competing crudes, including
Feb - USA - final reports from oil operaters show that about 9.2 % of
the oil production in the Gulf of Mexico remains shut-in as the
aftermath of hurricanes
Gustav and Ike. This amounts to 119,792 barrels of oil a day.
About 12.8 % of the Gulfs natural gas production remains shut-in. Just
prior to the hurricanes, the Gulf produced 7.0 billion cubic feet of
gas per day. Gas production has increased since then, and in spite of
the capacity shut-in, about 7.4 billion cubic feet of gas per day is
Feb 18 - oil prices - West Texas Intermediate Light Sweet $US34.93,
Louisiana Sweet $US41.20, Brent Blend $US39.78, Tapis Light Sweet
$44.39, Dubai1M light sour $38.92.
Feb 18 - Oil prices (futures) are now at a 5 year low due to reduced
demand following the economic crisis. Heavy demand in excess of supply
at this time last year saw oil
prices at an historic high. The International Energy Agency (IEA)
predicts that this year oil consumption will decline to its lowest
levels since 1982. The IEA estimates consumption will decline by
570,000 barrels a day, to 84.7 million barrels a day.
Feb - China - investment in coal-fired power
plants is being reduced as the economic crisis results in less power
demand, and the possibility of excess supply later in the year. China's
coal exports are also down by 36% last month.
Resources are being diverted to build more nuclear reactors and
wind farms according to the head
of the National Energy Administration (NEA). The government $US583
billion stimulus package will see almost $US44 billion go to increased
power generation, with a re-focussing on nuclear power and renewables,
and a slightly larger sum going on grid upgrades. Large, more modern
coal plants will be built. Small, polluting plants will be
progressively closed down. About 80% of China's electricity is
generated by burning coal. Nuclear currently supplies 1% of China's
February - world liquid fuels - production of total liquids decreased
million barrels per day from January, according to the International
Energy Agency (IEA) march report. So far, total world liquids
production is 83.93 million barrels a day.
Feb - Iran - the National Iranian Oil Company claims it has cut
550,000 barrels per day in recent
months, in compliance with OPEC country quota, in order to stop falling
March 2 - Russia - The St. Petersburg Commodity Exchange which
opened september 2008 is due to expand trade this month. The Russian
minister proposes that Iran "consider the
possibility of selling a part of Iran's oil at the St. Petersburg
Commodity Exchange". The St. Petersburg Commodity Exchange
March - UK - UK gas storage levels are low and declining. Storage
for the time of year continues to decline at a rate of about 100
than 2008. The low level of storage in the UK was raised in parliament.
Opposition MP Greg Clark said:
5th March Parliamentary Debate Gas Storage
March - the deep recession continues to cause deflation, job losses and
reduced production. Oil prices remain low (~ $US50is a barrel). OPEC
pumped an average of only 27.98
million barrels per day in March to prevent oil prices sliding further.
This is 90,000 b/d less than
"For the second time in only four winters, we almost ran out of gas,
and almost did not have sufficient gas to meet demand. According to a
written answer that the Minister gave me only this morning, only the depressed state of the
economy, due to the recession, saved us from running out.
Even the official regulator thinks that we do not have enough storage.
In the Energy and Climate Change Committee, my Hon. Friend the Member
for Bromsgrove (Miss Kirkbride) asked the regulator whether he thought
that enough storage was being planned, and he said:“I am not
happy to talk about this...we were hoping that storage would have
doubled in the past five years— “and we have barely moved.”
March - Global oil demand is down about 3.5% relative the same time
March - USA - Consumption of crude oil in USA is
currently about 20,000,000 barrels per day. Total US
crude oil inventories in (excluding the Strategic Petroleum Reserve )
are 359,427,000 barrels (EIA). This is roughly 20 days supply.
April - The International Energy Agency (IEA) figures show total world liquids
production for the first three months of 2009
was 83.9 million barrels a day. In 2008 the averages was 86.59 million
barrels a day, and in 2007 85.41 million barrels a day. Demand
continues to fall as the recession bites deeper.
May to July - oil prices bounce around low levels of $50 to $70
due to the 'recession' dropping demand. Demand has fallen by about 2.5
million barrels a day.
July - Saudi Arabia - now has its stated ultimate capacity of 12
million barrels perday in place as the Khurais, Nuayyim, and Shaybah
projects come on line. July production was 8.04 million bpd, presumably
due to reduced demand.
July - Saudi Arabia - summer time fuel-oil imports for
electricity gneration is cancelled. Instead, the nearly
750,000 barrels per day of fuel required is supplied by Saudis
commercial crude. The price of some grades of exportable crude is now
lower than the landed cost of fuel oil. In addition, new spare capacity
is not being sold, at a time when Saudi government income from oil
export sales has dropped sharply.
July 30 - Petroleos Mexicanos cuts
its production forecast to 2.65 million barrels a day for 2009, down
from its previous estimate of 2.8
million barrels a day.
Pemex production estimate for 2010 is 2.5 million barrels a day.
Cantarells production has dropped at twice the
August - the IEA estimates global oil demand will contract relative to
2008 by 2.3 million barrels a day averaged over 2009. This assumption
is based on IMF economic assumptions (World Economic Outlook, April
2009) that global economic growth will be up by 1.8% in 2010, as
against the 1.4% contraction in 2009. This assumption is almost
certainly wildy wrong, as the USA financial crisis is likely to be
re-invigorated by about april 2010 when more toxic loans come due.
Oil prices - after staying in a band of around $US50-$US70, prices rise
to just under $US80 for light crude. This probably reflects the falling
USA dollar and a certain amount of speculation on 'commodities', rather
than a fundemental increase in demand. 125 million barrels sit in
floating storage. The USA makes ineffectual noises about 'curbing'
speculation in oil.
November - 'All liquids' fuel production is 85.95 mbd according to the
december IEA account. This is about 200,000 barrels a day higher than
october. All liquids include heavy an d conventional oil, tar sands,
condensate from gas and oil fields, natural gas processing plant
liquids, synthetic gas and coal-to-liquids fuels, and biofuels.
december - Iraq - production has has risen over 2.5 million barrels a
december - Iraq - European, Russian and Chinese oil companies (Shell,
CNPC, and others) win auctions to develop big
Iraqi oil ields.
Shell and Petronas win the contract to develop Majnoon field (7 billion
barrels of reserves), Lukoil and Statoil won West Qurna 2 field
(9.75 billion barrels of reserves), and Total and Petronas win the
Halfaya field (0.5 billion barrels of reserves). ExxonMobil win
development of West Qurna 1. ExonMobil is the only USA company to win a
contraact with the Iraqi government.
Development costs fro these fields are estimated to be low - around
$US20 per barrel
December 4 - Mexico - The Mexican government announces it intends to
reduce funding for the development of the
Chicontepec oil field by 63% (from US$4.4 billion to US$1.61 billion)
for 2010, and by alesseer amount in 2011 and 2012. So far, the
project has consistantly underperformed. The Chicontepec 'Tertiary
Gulf Oil Project' spans 3 states and 29 fields. The production rate in
these fields is very low - only a few hundred barrels a day overall,
and as little as 50 barrels a day per well. The aim is to increase
per-well production tenfold through a variety of enhanced techniques.
The programme called for 975 additional wells, repairs to over 500
wells, and extension of pipelines. Production was expected to bring
2009 production to 72,000 barrels a day, but it remains at just under
30,000 barrels a day. It is hoped to achieve 43,000 barrels a day in
2010, and over 500,000 barrels a day by 2015.
December - the 4,350-mile Turkmenistan-China gas pipeline project is
officially opened by Hu Jintao, the Chinese president,. The pipeline
originates in the
Samandepe gas field in Turkmenistan, crosses Uzbekistan and Kazakhstan
and terminates in north-west China. Gas supplies from stage one of the
project are due to come on stream in January 2010. The pipeline
provides an alternative market for Turmkani (and ultimately Uzbeki)
gas. Previously Turkmanistan supplied its gas to Russia at less than
prevaling European prices. Sino-Russian plans for a Siberian pipeline
to China have yet to leave the discussion and planning phase.
2009 - USA - Oil refineries - 5 refineries closed this year, including
Valero Energies Delaware City refinery, capable of processing 210,000
barrels of crude a day. The total gasoline capacity idled or completely
closed is 700,000 barrels a day. Gasoline demand continues
to be down, and refiners margins continue to be squeezed. Exxon Mobil’s
USA refineries lost $US203 million in the third quarter alone. Exxon
Mobil’s global refining business dropped by $US2.7 billion,
to a meagre $US325 million. Average refinery capacity utilisation has
fallen to around 75%. The USA has refining capacity of about 18 million
barrels a day, around 5% -8% higher than actual demand. USA now has
refining capacity significantly in excess of its domestic crude
production. Oil imports are increasingly 'pre-refined' as USA
refineries are older and less efficient.
consumption peaked in 2007 at 9.7 million barrels a day, but it is not
expected to reach that level again, in spite of rising
population. Highly subsidised ethanol continues to displace gasoline.
The USA population at december 26th 2009 is estimated by the US Census
bureau to be 308,231,553 (in 2000 - 9 years ago - the Census Bureau
projected the july 2009 population of the USA would be 297,436,000, or
around 10 million less than the actual population). The Census Bureau
(2008 estimate) estimates that, in the middle case, the population of
USA will be 321,085,000 in 2015 - an addition of around 13 million more
people relative to 2009.
2009 - global refinery capacity - Asian refinery capacity continues to
expand, especially in China and India. Large projects in China, India
Arabia have added roughly two million barrels a day of
refining capacity in 2009.
2009 - Global oil demand over 2009 is down by roughly
1.7 million barrels a day (~2 %).
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