A series of reports by EnergyTechStocks.com suggests that the prospects for Russian oil production going forward are fairly grim.  That sounds about right.  Russian producing fields are old and therefore likely to face increasing decline rates; new fields that could be exploited present difficult technical challenges that apparently require the sophisticated capabilities of western companies; non-state entities have been unfairly exploited by the Russian government over the past few years and therefore western companies are reasonably becoming reluctant to invest in Russia; and the motivations of the Russian government …

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The Chair of BP is quoted by Reuters (below) saying that the recent Russian tax reduction on oil companies will lead to production increases in “a year or two.”  Which often means three or four.  In my view the reality is that Russian production can increase if Mr. Putin wants it to do so.  The new tax reduction still leaves a very high tax rate in place.   It is not clear what Mr. Putin truly wishes, but it seems geologically possible that Russia can increase production if it so desires …

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If there were just end users consuming only the minimum of oil they need and upstream producers operating at maximum capacity and that’s how oil prices were determined - how much simpler our investing lives would be. We could see that old oil fields are declining a la Hubbert and new demand is exploding a la Chindia and prices would rise gradually as a constant stream of oil users become gradually priced out of the market. But alas, real life is so much messier.

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Churchill’s assessment applies to the current oil situation: this is the beginning of the end of OPEC.  That much is obvious; the more interesting question is “why?”

OPEC was founded in 1960 to protect the interest of its members, major oil exporting nations.  That interest is to stabilize world oil prices at levels that balance their competing objectives to maximize both long term oil demand and the short term oil price.   The idea was to keep enough oil off the market during glut periods to elevate the price and insert enough …

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Below is a report from Reuters published in Arab News detailing costs and plans for new Saudi oil capacity and stating that they will not add to capacity beyond the plans in place that will be completed by 2009.   The rationale given is that demand forecasts are coming down (for 2030).  That seems like a fairly lame excuse.  Reality, I suspect, is that either it is no longer possible for the Saudis to add spare capacity or that thet simply prefer keeping the oil in the ground.   Either way, the …

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The following editorial in today’s Financial Times bemoans Russia’s presumed incompetence in cutting off investment capital from oil exploration and development through high oil taxes.  I think the Times misses the point.  Vladimir Putin is arguably the most brilliant geopolitical strategist going.  I doubt very much he has blundered into a no-growth position for Russian oil.  The obvious alternative is that he is pursuing a clever peak oil strategy of keeping all the oil he can in the ground for exploitation at some future time when the true value of …

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Included in a recent announcement that the Saudi’s have reduced oil production from 9.2 mbpd to 9.0 mbpd to reflect lower seasonal demand was a more general and strategic announcement.  The King himself said he has ordered various new oil discoveries to be left untouched for the benefit of future generations.  That is precisely the strategy of oil hoarding that I have pointed to for some time.  The difference is that now it makes enough obvious sense to every observer in the world that the King can publicly admit to …

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The keeper of "magaprojects" data spoke in Africa recently in his typical no-nonsense and undramatic style.  Among other aspects of his peak oil predictions are that exports will peak before production does and that "resource nationalism" (which I call "hoarding") an important factor in global oil supplies.  He also added a subtle feature to the peak oil concept: that oil may peak on a seasonal basis before it peaks completely.  We may be witnessing that phenomenon very shortly, if it has not already occurred.  Here is the full …

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DB’s 2/27/08 report, “100mb/d peak oil market” was both a landmark and a disappointment.  A landmark because important people pay attention to DB and because they became the first to question the conventional wisdom of range-bound oil prices.  A disappointment because they pulled their punches on where they really think oil prices may go.

Yesterday DB had a conference call to discuss the report.  The first two questioners were an Exxon Mobil executive and a Treasury Department official.  In other words, The Powers That Be were paying attention.  Why the fuss?  …

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Below is a Financial Times report and analysis of the much discussed opinion of Jeff Currie, their head of commodities research, saying that food inflation is becoming the world’s greatest economic risk.   Obviously, the problem is exacerbated by the U.S. policy of converting food stocks into fuel stocks.  But another - and less noted - contributor to the problem is the phenomenon of "Resource Nationalism" that I usually call "hoarding."  The author suggests that U.S. unwillingness to sell farms to foreign interests is analogous to the Saudi unwillingness …

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A recent Economist piece describing the views of the president of the French oil major, Total, in regard to the global oil outlook is worth reading on numerous levels.  One is his statement that the global decline rate of existing fields is 5 - 6 mb/d per year, much higher than the 3.3 mb/d estimated by Chris Skrebowski at in October at ASPO.  Another is his reported opinion that global production has probably peaked in terms of the practical maximum flow of oil given political realities.   Related to …

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Standard Wisdom: Declining Oil Prices….

    The New Energy Bill’s Impact….

         New Data Point for the Decline Rate……

            What the Fundamentals Say about Future Oil Prices…

                My Prediction for Oil Prices for the Next Five Years

A lot of observers are looking for lower oil prices in the short term. They cite:

   - a looming recession,

   - 2003 - 2007 higher prices resulting in demand reductions and supply  increases,

   - the end of dollar weakness,

   - the end of Chinese preparations for the 2008 Olympics, and

   - reduced geopolitical tensions, especially …

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RIO DE JANEIRO, Dec 20 (Reuters) - Brazil’s state oil company, Petrobras, expects domestic oil and gas production to rise more than 14 percent next year from the average so far this year as platforms that had come on stream with delays in 2006 reach capacity and others kick in. Petrobras (PETR4.SA: Quote, Profile, Research)(PBR.N: Quote, Profile, Research) said in a statement output should rise to 2.36 million barrels per day of oil equivalent. It did not provide separate figures for expected …

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Nov. 18 (Bloomberg) — Andres Manuel Lopez Obrador, a losing candidate in Mexico’s presidential elections last year, called on thousands of supporters packing the capital’s central square today to organize street protests against a potential opening of the country’s energy industry to private investment. click here.

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"The IEA’s key concern in terms of sustainability is that Russia’s oil productivity growth is mainly based on brownfield  development and there is too little focus on greenfield development. In many respects, for direct foreign investment the conditions are worsening."   click here.

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