There is a mammoth survey coming in Petroleum Economist’s March issue on the future of transport.
Editing it and writing portions has turned me into a petrolhead. I’m very pleased with the shape of the survey. Watch out for it!
Recent events and wariness of foreign investors dent the oil-and-gas economy
TIGHT military control and generous spending on social services, thanks to the high price of oil and gas that Algeria has in abundance, have so far prevented President Abdelaziz Bouteflika and his regime from being shaken by the upheavals in other Arab countries. In 2011 oil exports earned Algeria $55 billion. Foreign-currency reserves are strong. GDP is expected to rise by more than 3% this year, says the IMF. The official unemployment rate of around 10% is lower than elsewhere in the region.
But all is not well. Of the world’s big oil-producing regions only the North Sea’s output has dipped more steeply in the past five years. And many of Algeria’s usual markets are shrinking. North America, where refineries once paid a premium for Algeria’s high-quality crude, takes the largest dollop of the country’s 1.2m barrels a day. Now they are tapping cheaper supplies from North Dakota. Moreover, Algeria has become too reliant on high prices. To break even, its budget banks on oil at around $120 a barrel, above typical forecasts for this year; today’s price is around $116 for Brent. (…)
Read the rest of the piece here.
NB, I was not in Algiers, despite the dateline above. This was an editing error.
The governments of Turkey, Iraq and Iraqi Kurdistan play a dangerous game
Dec 22nd 2012 | ERBIL |From the print edition
SNAKING their way from Kirkuk, a city 240 kilometres (150 miles) north of Baghdad, through Kurdistan and across Turkey’s eastern region of Anatolia to the Mediterranean are pipes that once carried 1.6m barrels a day (b/d) of Iraqi oil to the global market and yielded fat transit fees to Turkey along the way. The infrastructure underpinned the two countries’ mutual dependence. But nowadays the balance of power has shifted. A third party, the Iraqi Kurds, has changed it. It is unclear who will emerge on top. But Iraq’s central government in Baghdad is on the defensive.
Wars, saboteurs and, since the 1990s, economic sanctions have left the Iraqi sections of the pipeline system in a mess. Barely a fraction of its capacity is used. One of the two parallel lines stands empty and the source that once fed them, the giant Kirkuk oilfield, is dilapidated. The oil ministry in Baghdad has vague ideas about revamping the pipeline, perhaps to carry crude extracted near Basra, in the far south, though this would need an expensive new pipeline to link both ends of the country. (…)
Read the rest of the piece here.
Iraqi Kurds and Western oil firms have outfoxed the government in Baghdad
Nov 3rd 2012 | from the print edition
IRAQ is blessed with abundant oil that is cheap to extract and close to newly built export terminals. Production has hit a three-decade high and continues to rise steadily. By 2035, predicts the International Energy Agency (IEA), an advocate for rich-world consumers, Iraqi output could more than double, to 8.3m barrels per day (b/d).
But Western oil firms are increasingly reluctant to play a part in this boom. ExxonMobil appears keen to sell its stake in West Qurna, one of the giant fields in southern Iraq that will provide much of the production growth. Royal Dutch Shell and BP are both still working in the south, but unhappily so. Suffocating bureaucracy and onerous contract terms make life difficult. Heavier-than-expected costs and delays to infrastructure undercut profits. (…)
Read the rest of my piece here.
I’m back from a 10-day whistle-stop tour of the UAE, Bahrain and Saudi Arabia. I’ve already filed some stories, but bigger projects are an Iran update and a piece on Saudi Arabia’s domestic situation.
Writing about the kingdom isn’t easy. I spent an afternoon with a key contact in the oil ministry, who gave me a full download of Saudi Arabia’s marketing strategy. There’s a forthcoming PE piece, in which I explain why another supply pledge from the kingdom doesn’t necessarily mean more oil — or a price reaction from the market. Saudi Arabia doesn’t play the spot market and it doesn’t usually discount its oil. “The word ‘discount’ is never heard in the same room with Ali Naimi,” says one insider, talking of the Saudi oil minister’s stance.
It’s more of a slow-burn strategy: inflate global stocks, build up the kingdom’s gas production (to increase oil-export capacity), and keep assuring the market that there’s enough supply — and then some — to go around.
No one should doubt, though, that Brent above $100 a barrel is annoying Naimi.
The other side to the Saudi story — the risks of internal unrest in the largely Shia Eastern Province — is far more difficult to navigate. That’s part of what I’m working on now. If anyone has any information, please get in touch.
I’m doing lots on Iran (natch), quite a bit on Iraq and turning back to Libya again.
On Iran, I’d like to get some nuts and bolts — sorely missing in much coverage — about actual shipments and cargoes now. I’ve got good information about how Iran’s discounts system is working. In short, it’s keeping Asian buyers sweet at a cost of about $1.20 per barrel per month. The method is a little more complex than that… But I’ve also got contradictory information about the White House’s sanctions strategy. I’m reliably told it wants a 25% drop in volumes, which is hardly earth shattering. (That said, Iran’s at the table to negotiate, or may be soon, so it might be working.)
On Iraq, the piece is done. But all information on Iraq is gratefully received.
On Libya, well, I’d really like to get there again. Failing that, I’m working on a wider story or two. One is an attempt to navigate the politics — and to explain why the country’s oil industry seems to be coping fine while mini political implosions happen all around it. Also: where is the oil money going?
Please get in touch.