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Net Oil Exports From Top 16 Net Oil Exporters:
http://bp2.blogger.com/_kdcZbozWthI/RnbjgrSk5YI/AAAAAAAAAOU/NwFg57zOqd0/...
OECD Days of Supply Commercial Oil Stocks:
http://www.eia.doe.gov/emeu/steo/pub/gifs/Slide25.gif
I think that "Mr. 5%" did the top 16 monthly graph (87% of net oil exports in 2006), showing about a 5% (coincidence?) decline in net exports since the monthly peak in 2005.
Philhart posted the OECD graph yesterday. Note that the vertical dashed line is the dividing line between actual and projected data. Apparently, OECD data cover about 58% of world oil consumption.
Questions:
(1) Are non-OECD countries poorer or richer than OECD countries?
(2) Wouldn't poorer consumers be more likely to be forced to reduce consumption as oil prices increase?
(3) As poorer consumers are forced out of the oil markets, and as net oil exports continue to decline, does the bidding for declining net oil exports move up "the foodchain?"
Jeffrey,
Maybe the Kuwaitis would like to come clean, or at least some of them. After all, they have diversified their investments much more than for instance KSA.
But if they do admit to bungled reserve numbers, there'll be a media and industry frenzy clamoring for the rest of OPEC, too, to explain why their numbers shot up so much in the 80's, and to explain and prove the numbers.
It doesn't seem like there's much reason to doubt that last year's leaked report was real, but the consequences of admitting all this are stupendous, and dangerous for many in power in the region. What would happen internally in some of the countires is impossible to foresee, but it likely won't be a celebration of national unity.
The Saudis must be following this very closely, and be involved too. Somehow they've managed to hush the fall-out for about a whole year by now. While the Kuwaiti parliament has been discussing it behind closed doors. For a year?! The veracity of the report was established within a week, I bet.
Deserts are full of rocks and hard places.
In Jerome's new piece on a Claude Mandil (IEA) interview with Le Monde, Mandil accuses OPEC of, well, lying...
They've had enough excitement for one week, I think. The walls are crumbling, and power may be more of an issue than money at this point.
Kuwait's consumption increased by 17% from 2005 to 2006, and in 2006, their consumption was 20% of production.
I applied my "what if" 5%/5% model: 5% decline rate in production and 5% rate of increase in consumption. Kuwait's exports would be down by 60% in 10 years.
What if Kuwait and most other OPEC countries implement rationing just like Iran?
Kuwait's consumption increased by 17% from 2005 to 2006
Them ungrateful bastards, who do they think they are using our oil after we liberated them.
I agree, Power trumps money issues at present.
Yesterday the dollar jumped from descending 80.4 to a whooping 111.45 in a few min. Then back down to mid 80's.
I still can not find out what happened.
Just a glitch?
Sending a message?
Anywhoooo, I think the political situation is tougher to make disappear.
I know I need to get a tinfoil fedora. Will aluminum foil work?
Brillo pads spun and crocheted into a toque?
I had a WTF moment yesterday as I checked the US$ index also. I also got all tinfoil hattish too.
I'd guess that someone influential was able to sell their dollars when they were high.
I am not sure what "Mr. 5%" refers to. Concerning the exports graph, what is the source (or sources) of this data?
I know that overwhelming simplicity is highly valued by some commenting here at TOD, but how does the export data (assuming it is any good) correlate with the OPEC cuts? — disregarding for the moment the issue of whether these cuts have been voluntary.
He is using EIA (Total Liquids), except for BP, where noted:
http://netoilexports.blogspot.com/2007/06/net-oil-exports.html
In any case, Rembrandt showed the same pattern, for total net world exports, using annual data.
Actually, I think that the combination of numerous exporting countries at advanced stages of depletion and frequently rapid increases in domestic consumption in exporting countries does result in an overwhelmingly simple conclusion: rapidly declining net exports. The math regarding the net export outlook has been very clear to me since early 2006.
Eyeballing the spreadsheet, it appears that my view regarding OPEC is in part correct. I'll have to do a more thorough analysis, but the data only goes back to November, 2006.
Russia -- slightly up in that period.
Nigeria -- accounts for a lot of the loss
UAE down -- this must be due to OPEC cuts
Etc...
Re: The math regarding the net export outlook has been very clear to me since early 2006
Well, it's certainly good to know that you're entirely on top of things. What would that math be? Is it this?
Exports = Oil Production - Internal Consumption
You are aware that there are refined product imports and exports all over the world, right?
What did you do, get up on the wrong side of the bed today?
I agree that the HL method combined with the Export Land Model are both simple, and I never claimed to be doing completely original work. As I have said several times, I was building on work by Simmons & Deffeyes, and of course indirectly, on work by Hubbert (using Khebab's graphs).
Having said all of that, I recall lots and lots of vigorous disagreement last year with my conclusions, and I don't recall a whole lot of people joining me in predicting an imminent problem with net oil exports.
You might want to check out Khebab's comparison of Mexico's production, consumption and exports to the ELM, on the Mexico thread.
I think that most of us understand the definition of "net exports."
You might want to go back and read some of your comments regarding my original post on the subject in January, 2006: http://www.theoildrum.com/story/2006/1/27/14471/5832
One of my final comments on the January, 2006 thread:
http://www.theoildrum.com/story/2006/1/27/14471/5832#210
January 30, 2006
If anyone missed it:
If anyone missed it:
This emphasis is supported by the rest of the article:
The article you quoted suggests that Russia's oil industry will start having problems due to high taxes preventing development of new fields, not due to lack of oil.
I know what the bank's opinion was, but I think the key point of the article was their observation that production was declining because of rising water cuts. Note that the situation has materially worsened in four months.
And I disagree - the article talks roughly equally about heavy taxes and increasing water cuts, and uses phrasing like "Combining these observations" to make it clear that their conclusions are based on both of those factors.
Your link has gone behind a paywall since yesterday; the full text of the article is available here.
Well, yes. As the article quotes an analyst, "taxes in the oil universe [are] high, but [it is] unrealistic to expect the government to lower them in the run up to State Duma elections in December". Similarly, "[t]he increasing proportion of water in total output [is] a major source of concern".
i.e., they see closing windows of opportunity on both fronts, and do not appear to tag one as "the key point".
Overall, it's sort of silly to say that production declines are "because of" only one factor or the other. Mature oil fields decline in production - that's always been true, even in regions with growing production. The key is to add new fields faster than the old ones decline, and any decline or growth in overall production is due to the difference between those two factors, not just one or the other.
Now, it might be worth focussing on only one if the other one was artificially constrained, such as new fields would be in the case of serious geological constraints. The article, however, doesn't even hint at such a situation; it lays the blame for insufficient new supply at the feet of the tax structure (and, to a lesser extent, inflation and cost increases).
So the article suggests that Russia's oil production is likely to stop growing or even decline soon, but does not support the contention that Russia's oil production has reached any kind of geological peak. In that way, it's in perfect accord with the IEA's recent analysis suggesting a near-term Russian peak (3-5 years), a shallow decline, and renewed growth thereafter.
It's possible you're right that Russia is geologically peaking, but that article doesn't support you one bit.
Interesting to note that Russian C+C production was down 104,000 barrels per day, March to April. March was the all time peak so far, (since the collapse of the Soviet Union). I am betting Russia has peaked, or at least very, very near her peak.
I have always supported your position WT, but you were just so good in explaining your position that I felt there was nothing constructive I could add.
Ron Patterson
If memory serves, I don't think that you and I have ever varied our positions on Russia and Saudi Arabia to any significant degree.
In the interest of full disclosure, I should add I did slightly amend my Russian position to be a predicted decline probably in 2007, no later than 2008. In truth, predicting a Russian decline was not nearly as controversial as predicting a Saudi decline. And I did concede the point that areas in Russia that are highly depleted are the mature basins in Russia.
What was controversial about the Russian prediction was not so much a near term secondary peak; it was the implied decline rate, which the HL model suggests will be horrific.
If you look at the totality of the HL predictions versus production data so far, inclusive of the Mexican prediction that Khebab made, it makes a pretty compelling case for the HL method, which in turn suggests that the export predictions based on HL are probably going to be reasonably accurate, i.e., we are in deep do-do.
No, I did not get up on the wrong side of the bed this morning. I have had a problem with your simple exports model for a long time now, and I am just now saying so.
It is way too simplified view of how things work so as to depict reality accurately. What is needed is a sophisticated model of oil/products exports over time to capture what is really happening.
You have not countered the objections I have brought up because you can't. Take a country that devotes some part of their produced oil to internal refineries, and then exports the refined products (gasoline). Does that count in your world-view? Take Russia. Suppose they took away their small subsidy on internal gasoline consumption. That would affect their usage. Suppose, as an example, that they decided to tax gasoline over the "world" price just as the European OECD nations do. That would certainly cut their consumption. They might do this for that very purpose, to increase exports and state revenues. Where in your model does such a thing occur?
I have no problem with the hypothesis that exports will decrease as oil production decreases — that seems right. I would like to see a serious study that I could believe that demonstrates it. I don't have the time or inclination to do it myself, but since you apparently do, why don't you make a serious effort?
Do you actually think that peak oil outsiders versed in economics would believe the Export Land model? I don't.
To be fair, I think the model is meant to be qualitatively illustrative, rather than quantitative in any way. It's a good way of making the point that internal consumption can make the rock to declining production's hard place, with exports squeezed in the middle.
It's too simple to use for calculating anything meaningful, but it's valuable as an explanatory tool.
Dave,
As Pitt pointed out, the ELM basically asks a hypothetical question for a hypothetical country (consuming 50% of production at peak production): What happens to net oil exports if production declines at 5% and consumption increases at 2.5%?
The answer is that net exports go to zero in 9 years, and only about 10% of remaining production would be exported. In any case, I suggest that you check out the ELM versus real data in Mexico post that Kkebab did. Also, the UK went from peak exports to zero exports in about six years.
In regard to statistics, the EIA tracks production and consumption in terms of total liquids, which generates the net exports numbers. I fail to see why this is such a hard concept.
In regard to economics, my premise is, and was, that once net exports started declining, oil prices would rise, generating increasing income for the exporters, even as their net exports fall. This would tend to have the effect, in short term at least, of increasing domestic demand in exporting countries. This is precisely what we saw in 2006. For example, the top five showed a 1.3% decline in production, a 5.5% increase in consumption and a 3.3% reduction in net exports (EIA, Total Liquids from 2005 to 2006).
In regard to your Peak Oilers comment, I think that you are basically right. Almost everyone (Matt Simmons being a notable exception) in the Peak Oil community has been focused on the wrong thing--total production--when what counts is net exports.
In early 2006, when I looked at the HL plots of the top exporters, combined with my expectation for increased consumption in exporting countries, I was convinced that we were quickly headed for a net oil export crisis.