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| Source: news.antiwar.com |
Dear readers,
Although I do not like posts overly focused on current issues Over the last two weeks there have been two disturbing news in Saudi Arabia I think is worth discussing from a broader perspective. The main source of what we discuss is also available on this the blog post Oilman.
The first of these updates is that, despite the decline of oil production in Libya more than 1.2 million barrels per day (Mb / d) because of the war that plagues that country, Saudi Arabia has experienced a decline in its oil production of 800,000 barrels per day only one month, going from 9.11 Mb / d in February to 8.29 Mb / d in March, as announced by Saudi oil minister, Mr. Ali Al-Naimi. This has caused outrage in many American media, as Wall Street and Financial Times, who complain about the unreliability of the Saudi partner, either of their numbers or their capacity to produce oil.
The second story is about a shift in policy survey of Saudi Arabia. According to Reuters reports , Simmons & Co, the bank founded by the late Matt Simmons, has issued an agreement between the Saudi kingdom and several large utilities such as the notorious Halliburton to increase the number of boreholes in 30 %. Although in principle the news would be positive (and a turnaround compared to announcement last year did King Abdullah that would leave the remaining oil for future generations), two company representatives Saudi national oil, Aramco, confirmed to Reuters that the purpose of these additional wells is only to maintain current production levels , not increase it.
Both news has triggered a barrage of questions about the actual ability and willingness of Saudi Arabia to the oil supplier of last resort in the world. With a nominal idle capacity of about 3 Mb / d, Saudi Arabia may be able to produce more than 12 Mb / d, a figure that the International Energy Agency (IEA) gives the expected production of this country for 2015 and with the view that increase up to 14 Mb / d in 2020. However, something is preventing Saudi Arabia to increase production significantly above about 9 Mb / d to produce today, what he has done that has ceased to be the world's largest producer of oil, ceding the square to Russia more than 10 Mb / d.
There are various hypotheses about what is happening in Saudi Arabia, which pass through an interpretation of the words of Mr. Al-Naimi said when asked about the reason for this decrease in production oil so badly in a situation of high prices. According with the Minister, Saudi Arabia is the oil market well supplied, "flooded" even in his own words, and if the price rises is due to speculators.
Some analysts believe might be right, since the disaster of Japan (earthquake and subsequent tsunami) the country Japan has lost much refining capacity and demand has fallen dramatically. However, global demand continues to grow strongly, thanks mainly to China and India, and to a lesser extent by the economic recovery of Western countries and Japan certainly require additional quantities of oil soon to compensate for lost power generation capacity (about 25%, which is huge). Either way, the president of the United States, Barack Obama, has been paid to this thesis and announced a war (read legal prosecution) against oil speculators . Which is no less surprising in a country that has been built on faith in free markets. I, who am by nature suspicious, rather than believe Mr. Obama is putting the band before the injury and is looking for scapegoats and the expected oil price spike this summer. Time will tell.
Other analysts believe that Saudi Arabia movements respond to a desire to settle accounts with the West, and particularly to the U.S. for its failure to support friendly regimes in the Saudi kingdom have fallen dominoes in recent months. Fearing for their own stability, Saudi leaders have decided to turn down a peg to the West on the basis of closing the tap a little oil, allowing prices to rise, and profits while achieving rapid and low cost and then hand out some crumbs from their own people and stop the unrest.
Finally, some analysts bet that what is happening is that in a practical way Saudi Arabia can increase its production, ie, Saudi Arabia would be drawing to a peak oil. That is critical, since the beginning of the decline of the Saudi oil production means the beginning of the decline of world oil production. There is some evidence to suggest that this may indeed be the case. We have already mentioned here that the Saudi spare capacity is about 1 Mb / d which is more nominal than real Manifa field produces oil so contaminated with vanadium that can be refined in any refinery in the world. Add to why a large part of the rest of the oil spare capacity is high in sulfur, which is not suitable for more than a few refineries in the world, and in particular can not be processed at the refineries that feed crude Libyan. The Saudi idea of \u200b\u200bdoing a special blend of crude oil bad and good to the point of tolerance and refineries and Libyan supply deficit was not well received, as discussed in the Financial Times Javier Blas the mixture did not reach the minimum standard required quality and had no place in the market. On the other hand, Saudi Arabia is a country subjected to water stress very important, with a clear exploitation its aquifer, which could dry up in this decade. That the aquifer is for two main uses: agriculture and for water vapor injection in oil wells to increase production. If the aquifer is about to run this can lead to a drastic drop in oil production of Saudi Arabia, faster than predicted by the Hubbert curve in a new manifestation of the nonlinearity phase transition .
Last November the IEA admitted for the first time the world would Peak Oil exceeded its crude oil, although ontological optimism assumed that its production would remain stable over the next 25 years, and adding to that the supply of natural gas liquids and unconventional oil production could total even increase. But in the IEA estimate for granted that the production of Saudi Arabia would come to 14.6 Mb / d in 2025, even assuming that Saudi Arabia could maintain current production rates from 5.4 Mb / d which would lack virtually eliminated all the planned price increase, any new diversion of forecasts and the world will have already entered the phase of decline production of all petroleum liquids, and not just crude oil. In short, reports last year that we warn of the impending arrival of the decline and supply problems are certainly successful. Would not also optimistic.
Salu2,
AMT
Addendum (April 28, 2011): The commenter JotaEle sends me these reflections, together with some charts that I think worth sharing:
Indeed it is very difficult to know what happens in Saudi Arabia, data and news go in both directions. I personally think they have spare capacity, especially if you keep doing what they ultimately do, cut and maintain. I think there must be some truth in it to "save oil for future generations, ultimately know that their oil is not eternal, there is an Arab saying about oil that says" My father rode a camel. I drive a car. My son piloting a plane. My grandson will mount a camel. "
In 2009, the former production engineer Sadad al Husseini said that Saudi Arabia had no problems of extraction and that their technology permitted. On the other hand had doubts about the increasing output in Iran and Iraq, precisely because of lack of water in Iraq and lack of gas in Iran. However, other sources have been saying for some time that Ghawar, the largest oilfield in the world by far, is taking more water than oil.
If we see the curves of output from Saudi Arabia, do not follow a curve, is full of serrated teeth, almost all are due to political decisions, so it is impossible to know if they are growing or plateau. Almost all OPEC countries have serrated graphics. I have some graphs taken from the BP database comparing the production of some of the biggest producers in the world. They see the Russian curve bell-shaped. Also sees the Russian production decline coincided with the rise in output from Saudi Arabia (Domeneck is right, the final nail the USSR was the increased production from Saudi Arabia, plotted alongside the U.S.). Also seen in the graphs of Saudi Arabia, Iran and Iraq, the date of the oil crises of 1973 (Yom Kippur War), 1979 (Iranian revolution and the Iran-Iraq), 1991 (Operation Desert Storm), 2003 ( Invasion of Iraq).
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| Figure 1: Major global oil producers |
I have another graph that compares the Total oil production with OPEC production and the production of world (non-OPEC). It is seen that non-OPEC production nearly went into plateau in 2004. I think when Non-OPEC production from declining global production will decline also. You can not count on OPEC production, since their decisions are influenced by politics. In addition, once the world into decline, OPEC may mark the price he wants, which is somewhat logical that Saudi Arabia is reserving its oil production.
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| Chart 2: World production, OPEC and non-OPEC production, Russian production and production of Saudi Arabia. |
addition to these graphs I have made the graphics output from Saudi Arabia and Russia. Note that the graph of Saudi production is very similar to that of OPEC and the global production, this seems to indicate how much oil Saudi influence in the world. Also note what looks like the graph of the Russian Federation to the graph of non-OPEC oil. I also believe that when Russia enters into decline, oil will decline from the rest of world (non-OPEC).
PD. The graph of Russia begins in 1985, until then the Russian oil was included in the USSR. Greetings
Addendum 2: The plot thickens by the minute. Majed Al Moneef, Saudi Arabia's OPEC governor, has announced two important facts. One, that the production of oil from Saudi Arabia will remain stuck at 8.2 Mb / d today to 2016, and will not reach the 10.8 Mb / d until 2030, very far, therefore, brand of 14.6 Mb / d which assigns IEA the kingdom for the year 2035. Worse, in a practical recognition of the effect Export Land Model (which we discussed here ) predicts that domestic consumption growth in that country will necessarily lead to a reduction in the volume of oil available for export . Those who know French can see complete coverage of this information in the blog oilman of Le Monde.
And if you think that things can not get worse, know who Sergei Koudriachov, energy minister Russian, has just announced that Russian oil companies suspend their oil exports from the month of May . We're talking about a ban on exports of petrol, diesel and other fuels which Gazprom and Rosneft reportedly being diverted to the international market, which pays better than domestic. This has caused a shortage alarming these products in Russia, which has forced the government of that country to take action on the matter.
The consequences of both news it is difficult that they do take note: expected rise in oil prices right at the beginning of a year of more demand and increasing even more gasoline and diesel. It is also another example of the growing global market inefficiencies oil, which is increasingly less responsive to free market paradigm. The effects of fuel shortages in importing countries is unpredictable, especially in Iran, the third largest producer of oil but gasoline importer. More non-linear effects that can make the steep descent down the right side of the Hubbert curve. Troubled times ...
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