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Opec Minister Admits Game Is Up

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Opec 'doing all it can' for oil prices

By Simon English

Published: 03 April 2006

Opec, the oil nations responsible for one-third of the world's most vital energy source, conceded yesterday that it could do little to control prices.

As demand for oil from the developing world, China especially, grows, experts are increasingly concerned about a shortage that would send prices to potentially catastrophic levels.

Prices have come down from the record levels of $70.85 per barrel last year, but remain historically high.

Abdullah al-Attiyah, Qatar's Oil minister, said yesterday that there are no plans to increase levels of production to meet extra demand. "The price as it is now, nothing will happen," he said. "Even if it reaches $70, what can we do? We are doing all that we can."

On Friday, a barrel of London Brent crude cost $65.91 at close of trading. Although there are decades worth of oil left, there comes a point at which it cannot be brought out of the ground fast enough. At that point prices soar, as it becomes clear that demand cannot be met. Some experts think that peak may soon be reached.

Some Opec players are investing heavily to improve production capacity.

Edited by RobertPaulson

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But in today's Guardian apparently Chavez of Venezuela is saying that above $50/barrel their heavy oil reserves are economic which would put Venezuelan reserves above Saudia Arabian ones and hence no Peak Oil just yet. Does this stack up?

Edited by BoredTrainBuilder

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But in today's Guardian apparently Chavez of Venezuela is saying that above $50/barrel their heavy oil reserves are economic which would put Venezuelan reserves above Saudia Arabian ones and hence no Peak Oil just yet. Does this stack up?

Iain

The key is the extraction rate and cost.

The reserves are there, but a only "economic" above $50bbl whereas Saudi Crude can (or could some years ago) be extracted by sticking a straw in the desert and had an extraction cost in the cents range. Venezuela was pumping some 600-700,000bpd under its OPEC limit in February (and nearly 700,000bpd below the figures provided by Chavez, to put in context his reliability on oil production statements), figures which include - slightly controversially - the Orinoco belt (one of the sources of "heavy" oil), I don't have great faith that Venezuela can get these reserves onstream and with a high enough extraction rate to even make up the loss in bpd from the accelerating decline in their mature wells. Additionally the Chavez statement is likely part of an ongoing political spat with the US.

Whilst the Multicyclic Hubbert Model is no magic bullet to tell us when peak oil is, the anecdotal evidence around us - US oil inventories at record level, Iran/Iraq/Syria, Ghawar and Cantrell production data etc suggest that we are very close, but with circa 1million bpd currently going into inventories there is room for a move down in the oil price if geopolitical issues calm down (but then thats a whole other kettle of fish)

Edited by RobertPaulson

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But in today's Guardian apparently Chavez of Venezuela is saying that above $50/barrel their heavy oil reserves are economic which would put Venezuelan reserves above Saudia Arabian ones and hence no Peak Oil just yet. Does this stack up?

Iain

Yes.

I'm sure Mr Chavez' remarks are designed to reassure the western oil-consuming economies that he cares so much about. So where are his heavy oil reserves at the moment? Why havent they come online?

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Why havent they come online?

I'm sure he can just go out in his back garden, stick a hose in the ground and have oil pumping out to the nearest refinery in minutes.

Or maybe it takes months to years to set up the infrastructure to drill and process that oil, and requires a good reason to believe that prices will stay profitable for a long time to justify the cost?

Still, if his claims are true I'd guess Bush already has the CIA writing their 'Venezualan WMD' stories to prepare for the invasion.

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Still, if his claims are true I'd guess Bush already has the CIA writing their 'Venezualan WMD' stories to prepare for the invasion.

Venezuela has WMD

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Abdullah al-Attiyah, Qatar's Oil minister, said yesterday that there are no plans to increase levels of production to meet extra demand. "The price as it is now, nothing will happen," he said. "Even if it reaches $70, what can we do? We are doing all that we can."

OPEC will shrug and make all the appropriate sympathetic noises. That's just good business.

But behind closed doors, they are laughing their knackers off. The oil price is rising, but so far it is not hurting global growth - China and India are still demanding more and more - so why do anything to reduce the price?

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World oil production has stagnated for about 18 months whilst prices have gone up. There has been demand destruction in the Third World. It will come to the advanced countries too, eventually. I think the Saudis would have raised production if they were able too. It would be out of character for them not to, and they have the motivation to do it (very large public expenditure by the government). The US can put a lot of pressure on the Saudis.

All one can do is keep an eye on this issue. If you have at least heard of Peak Oil then you are already ahead of 95%.

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But in today's Guardian apparently Chavez of Venezuela is saying that above $50/barrel their heavy oil reserves are economic which would put Venezuelan reserves above Saudia Arabian ones and hence no Peak Oil just yet. Does this stack up?

sounds like bait to me......just trying to goad dubya into invading venezuela when the little foray into iran goes pear shaped.

the end result will be a neo-socialist world government with the US left a pariah.

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:lol: good find!

"For the next two years the economy of Venezuela should grow 6% annually and unemployment should be 10% by year-end, down from 14.2% last August.

Inflation could fall to 11% by year-end. "

They should borrow someone from the ONS. They would soon realise that unemployment is only 1% and inflation 1.1%

Fortunately decimisation doesn't apply to growth figures which will remain at 6%.

Bigger house anyone?

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Looks like this summer could see some fairly drastic oil prices even without further deterioration in the geopolitical situation. Once Peak Oil is really on the public agenda I would imagine we should see some pretty negative sentiment start to creep into the mainstream on the sustainability of house prices and the likely direction of inflation.

Best convert the car to run on vege oil now..

AFX News Limited

Oil prices up, still supported by US gasoline stock draw-down

04.06.2006, 01:15 PM

LONDON AFX - Oil prices continued higher as yesterday's much larger than forecast drawdown in US gasoline stocks sparked fears supplies may not be able to meet peak summer demand.

At 4.46 pm, May-dated US light crude futures were up 43 cents at 67.50 usd.

'The failure to rebuild gasoline stocks in the month of April could result in drastic regional supply shortages in the coming months, and that concern is certainly being expressed in rising prices,' said Fimat analyst John Kilduff.

Yesterday, the US Energy Information Administration said gasoline stocks lost a much larger 4.4 mln barrels last week, taking them 0.2 pct below year ago levels. Analysts had forecast a loss of some 1.6 mln barrels.

The agency also reported a 2.1 mln barrel gain in already ample crude stock, but Sucden analyst Sam Tilley said the crude stock build notwithstanding, gasoline worries should keep prices above 65 usd near term.

Gasoline is in focus at present as traders worry supplies will not be able to match peak summer demand, especially with the Energy Department's new, cleaner fuels specifications, which come into force in May.

Man Financial analyst Ed Meir said gasoline should remain the primary focal point and main upside influence on the complex for the rest of April, as the weekly decline in stocks will probably continue.

This will worry traders, Meir said, as the market heads into the busy driving season with crude production capacity still not at full capacity and with a fair share of maintenance-related refinery issues.

Separately, the market remains supported by supply risks in key producing countries, most notably Iran and Nigeria, who between them produce some 8 pct of the world's crude oil.

Kilduff warned that although militant attacks against oil installations in Nigeria and tensions over Iran's nuclear programme 'have assumed a temporary quiescence' over the past couple of days, 'they have not gone away'.

Iran today announced it had successfully test-fired a 'top secret' missile as it presses ahead with its week of war games in the Gulf while the UN's 30-day deadline for Tehran to suspend uranium enrichment looms.

Meanwhile in Nigeria, oil giant Shell today cast doubt on government promises it will restart its 115,000 bpd EA oilfield this week, saying shut in production remains at 455,000 bpd including the EA oil field.

Shell has said repeatedly it will not begin repairs to its oil facilities -- damaged by a two month long sabotage campaign by militants -- until it is safe to do so.

'The 70.85 usd high of last Aug 30 seemed like anomaly after last year's storms. Now the confluence of events that constitutes the wall of worries that the market is climbing will shortly make that price a natural progression,' said Kilduff.

He added that it should come as little surprise when the United Arab Emirates oil minister admits there is very little the OPEC cartel can do to control oil prices.

'The logic of his argument consists of pointing out that price collapses over the years was the result of excess supply. What we are in the midst of right now is an extended demand and investment driven rally that is structural in nature and will be with us for some time to come.'

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But in today's Guardian apparently Chavez of Venezuela is saying that above $50/barrel their heavy oil reserves are economic which would put Venezuelan reserves above Saudia Arabian ones and hence no Peak Oil just yet. Does this stack up?

Sure it stacks up - did you miss the thread a couple of days ago: here

$50 oil may well increase Venezuelan reserves to over a trillion barrels, several times that of Saudia Arabia. But large reserves like that do nothing for peak oil. Correlating the two illustrates just how poor understanding of this subject still is. Peak oil is all about flow rates and virtually nothing to do with URR. Chavez could have a trillion barrels of heavy oil and still we could have peaked in 2005.

Edited by clv101

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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