Something to send people who believe that higher prices result in
increased production. Note the source.
Jon
==================================================================
The Wall Street Journal
May 29, 2008
Oil Exporters Are Unable To Keep Up With Demand
Domestic Needs, Sluggish Investment Crimp Shipments
By NEIL KING JR. and SPENCER SWARTZ
May 29, 2008; Page A8
The world's top oil producers are proving unable to put more
barrels on thirsty world markets despite sky-high prices, a shift
that defies traditional market logic and looks set to continue.
Fresh data from the U.S. Department of Energy show the amount of
petroleum products shipped by the world's top oil exporters fell
2.5% last year, despite a 57% increase in prices, a trend that
appears to be holding true this year as well.
There are several reasons behind the net-export decline. Soaring
profits from high-price crude have fueled a boom in oil demand in
Saudi Arabia and across the Middle East, leaving less oil for
export. At the same time, aging fields and sluggish investments
have caused exports to drop significantly in Mexico, Norway and,
most recently, Russia. The Organization of Petroleum Exporting
Countries also cut production early last year and didn't move to
boost supplies again until last fall.
In all, according to the Energy Department figures, net exports by
the world's top 15 suppliers, which account for 45% of all
production, fell by nearly a million barrels to 38.7 million
barrels a day last year. The drop would have been steeper if not
for heightened output in less-developed countries such as Angola
and Libya, whose economies have yet to become big energy
consumers.
For all the attention paid to China's increasing energy thirst,
rising energy demand in the Middle East may pose the greater
challenge. Last year, the region's six largest petroleum exporters
-- Saudi Arabia, United Arab Emirates, Iran, Kuwait, Iraq and
Qatar -- curbed their output by 544,000 barrels a day. At the same
time, their domestic demand increased by 318,000 barrels a day,
leading to a loss in net exports of 862,000 barrels a day,
according to the U.S. Energy Information Administration.
Demand in the Middle East is a major factor right now, said Adam
Robinson, an oil analyst at Lehman Brothers in New
York. Mr. Robinson predicts the region will constitute more than
40% of increased demand next year.
Saudi Arabia in particular has become a major energy consumer as
the country pushes to put its oil riches to greater use. The
kingdom is in the middle of a major investment campaign to become
a world player in petrochemicals, aluminum and fertilizers, all of
which will require huge amounts of oil and natural gas.
Since 2004, Saudi oil consumption has increased nearly 23%, to 2.3
million barrels a day last year. Jeffrey Brown, a Dallas-based
petroleum geologist who studies net export numbers, said that at
its current growth rate, Saudi Arabia could be consuming 4.6
million barrels a day by 2020.
That would cut significantly into Saudi exports even as the world
looks to its largest oil supplier to help manage rising
demand. Saudi Arabia has nearly a quarter of the world's proven
reserves and supplies around 12% of the 86 million barrels a day
that the world now consumes.
One reason Middle Eastern nations are using more oil is a shortage
of natural gas, said Bill Farren-Price, director of energy at
Medley Global Advisors. This is particularly troublesome during
the summer, when governments scramble to keep the lights on and
air conditioners cranking.
Some producers, such as the U.A.E., are easing back at times on
the crucial industry practice of injecting natural gas into crude
oil fields, which is done to boost reservoir pressure and increase
crude recovery rates. Halting the injections ends up undercutting
oil production, further reducing exports.
As top exporters hit trouble, historically marginal players such
as Brazil and Kazakhstan are likely to play a greater role. Three
of the four non-OPEC players among the top 15 oil exporters --
Russia, Norway and Mexico -- are reporting declines in production
this year. Kazakhstan is showing slight net export gains.
No big exporter is struggling more than Mexico, where net exports
dropped 15% in 2007. Mexican officials announced Monday that
output from the country's once-mighty offshore Cantarell field had
plunged by a third in less than a year.
Analysts said there are reasons for optimism. Russia's government
is scrambling to alter the tax rates that many say have put a lid
on new oil development. Mr. Robinson said 65 new ultra-deepwater
drilling rigs are expected to arrive over the next three years,
following a five-year stretch in which the industry gained only 10
such rigs.
Those additional rigs will help companies tap some of the most
promising, but now inaccessible, waters off Brazil, Australia,
West Africa and in the Gulf of Mexico.
"The sense in the market is that peak oil is here and that things
will only get worse," says Mr. Robinson. "But the verdict is still
out on that."
_______________________________________________
For more information about sustainability in the Tompkins County area, please
visit: http://www.sustainabletompkins.org/
RSS, archives, subscription & listserv information for:
[email protected]
http://lists.mutualaid.org/mailman/listinfo/sustainabletompkins
free hosting by http://www.mutualaid.org
