Top Three 2005 Net Oil Exporters, Revisited

I wrote my first essay on Net Oil Exports with a guest post on TOD, in January, 2006, where I introduced the Export Land Model (ELM). I focused on the current top three net oil exporters, Saudi Arabia, Russia and Norway. They accounted for about 40% of total world net oil exports in 2005.

Here are the EIA net export numbers for the top three for 2005 and 2007:

2005: 18.7 mbpd
2007: 17.2

Of course, Saudi Arabia is currently showing a year over year increase in production, but I estimate that their 2008 net exports will be at 8.4 mbpd, or less, versus their 2005 rate of 9.1 mbpd. Norway is in terminal decline, and then there is Russia.

In our (Khebab/Brown) top five net oil exporters paper, our middle case shows Russia and Norway approaching zero around 2025, when Saudi Arabia would be exporting about 3 mbpd—which would of course be the combined net exports for the top three.

Note that net exports declines tend to approximate linear declines, i.e., an approximately fixed volumetric decline per year. If we average the initial top three two year decline, it’s 750,000 bpd per year. If we extrapolate this out to 2025, the top three would be exporting about 3.7 mbpd. Note that this is about what Khebab’s middle case shows.

Russian oil exports are declining, IMO, because they have to, if they are going to meet internal demand. While Russia has a lot of potential reserves in frontier areas, my guess is that they are to Russia as Alaska is to the US, i.e., Alaska helped, but it was no panacea.

Dear WT -- I hate to keep asking what may seem to be stupid questions, but our political leadership in this part of the world seem to be attached to a reality I don't share. Do they know something I do not?

The Question: How much Liquid Natural Gas will ever come out of Russia for export to the West Coast of the USA? What is the point of building a couple of billion dollars worth of receiving terminals and pipelines (and totally screwing up the river and the ports in the process) if the product to be received is not even there, and may never be?

And how in the world can importation of LNG be called a move toward "energy independence?"

I know these are rhetorical questions, and it's early Friday morning before a holiday. But do you have any thoughts you would share?

Regarding our political leadership, actions speak louder than words, and Bush/Cheney moved as fast as they could to deploy a large permanent military force to the Middle East.

It would appear that we are seeing the same ELM effects regarding coal and NG that we are seeing regarding oil.

Thanks.

If the ELM model is correct, then the only way the large permanent military force in the Middle East could be helpful would be to discourage or prevent domestic consumption in those places. Hardly to "Bring Democracy to the Middle East."

And therefore Oregon will get NG or LNG if Russia and ME does not-- if the force is successful. Is my logic flawed?

I don't think NG will be the primary focus in the Middle East, given how short it seems to be in the Middle East (e.g., Iran in recent years was a net importer).

The assumption is that the implied use of military force will be used to direct oil cargoes to the US and Western Europe.

I agree, but would add that its seems like part of the plan must be to forcibly decrease domestic consumption, since there isn't otherwise enough to go around.

Also, my immediate focus is on NG, not liquid petroleum. I don't want the Columbia River screwed up, especially if there is little or no chance there will ever be any LNG to put through the pipeline.

If you want to stray into the realm of geopolitical speculation, I would say that they went to Iraq for a variety of reasons. Some rational and valid, some quite purposefully insane.

One of the rational reasons for going into Iraq was to artificially and gradually inflate oil prices. They had to do this to give the US economy a chance to prepare for peak oil. The logic behind this is: Iraq is a country that could be made into the world's largest oil exporter in fairly short order. Think about that from a military / tactical perspective. Iraqi oil is a sure thing. Just wipe out the entire civilian population, and there can be no insurgency. This is assuming that the economic fallout from peak oil got bad enough. I am certain that Americans would support any number of Iraqi civilian casualties to ensure that Iraq continues to expand its oil production, IF faced with a large enough crisis here at home.

By invading Iraq, they created a buffer of easily scalable oil supply that they could tap in an emergency. They drove up prices in the short term, but my guess is they did not care about that. They were thinking about the long term picture. They wanted to ensure that America, or rather the world in general, would not get caught in a situation where we were faced with a catastrophic decline in oil production, ie a production problem that could not be overcome no matter how many resources were thrown at the problem. From a tactical perspective, that is one of the ultimate goals of the US military industrial complex. By having an Iraq on the back burner, they are ensured to have oil available for production IF an extreme emergency arises where that extra oil is needed. A great depression and a downward spiral of decreased oil production combined with global pipeline terror and decreased capital flows could be an apt description of such an emergency. Indeed, such a situation could easily spiral into a total breakdown of society across the globe. From a purely tactical perspective, 5 million barrels a day of cheap Iraqi oil brought online during such a crisis could and would turn it around. What is a few million dead Iraqis compared to that? That is no doubt the philosophical question that guides them through all of this.

This analysis assumes that Bush, Cheney, and their controllers are driven by a vision of a greater good that is "somewhat benign". Back in 2001, I think their advisors had told them things like "dont worry what the people say, you are saving civilization by doing this." I think that is why they don't care so much about how they've wrecked the economy. In their minds, they've saved it. Just like in their minds they've prevented more terror attacks. It's total delusion, but given the information they've been fed, it is understandable. The entire system is corrupt. From the figureheads like Bush and Obama, to the advisors, all the way down to the think tanks and foundations that create their philosophy of war. They dont question the overarching philosophy of imperialism and global governance, so they will end up destroying the engines of wealth that support them.

Iraq is the big wildcard. I could see them exporting more than Norway in the near future. Could also go the other way.