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214 comments on DrumBeat: September 16, 2008

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westexas on September 16, 2008 - 9:47am Permalink | Subthread | Comments top

From the "Lower Oil Production" story linked uptop:

While Exxon Mobil boosted production from fields in West Africa and the North Sea, the gains weren't enough to offset declines from aging oil fields, the company said.

Also, an interesting story about oil exports from Angola, one of the very few oil exporters showing a long term multiyear increase in oil exports. Since 2005, nine of the top 10 net oil exporters in 2005 have shown one or more annual net export declines, or they are currently declining. For example, Saudi Arabia was down for two years, but up in 2008, while Russia was up for two years, but is currently down in 2008.

The EIA shows worldwide annual total net export declines of -1.1%/year and -2.2%/year for 2006 and 2007 respectively, so by definition the demand for exported oil has fallen for two straight years as the low bidders had to reduce their consumption.

We will have to see what the 2008 annual data look like, but price, IMO, is primarily a horserace between declining demand and declining net oil exports. It's entirely possible that in the short term declining demand can outpace the long term decline in net oil exports--especially if we have a short term pause in the net export decline.

However, I think that the long term net export outlook is essentially a one way trend--downward, with a long term accelerating decline rate.

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hinson on September 16, 2008 - 9:53am Permalink | Subthread | Parent | Comments top

Westexas,
Reading the Angola story, it wasn't clear why the production / export is declining. Presumably it is voluntary ? I thought Angolan production was due to continue increasing slightly for a few years ?
Thanks

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westexas on September 16, 2008 - 10:36am Permalink | Subthread | Parent | Comments top

The story was pretty cryptic, but it was interesting, It's possible that they are hitting a production/export plateau. The EIA shows their crude oil production rate, through June, to be basically flat at about 2 mbpd since December, 2007.

BTW, it's a pretty good bet that the three year decline in Mexcio's net oil exports (through 2008) will completely, or almost completely, offset the three year increase in net oil exports from Angola.

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Darwinian on September 16, 2008 - 11:19am Permalink | Subthread | Parent | Comments top

There is a huge discrepancy between what the EIA says Angola is producing and what the OPEC Monthly Oil Market Report says Angola is producing. Of course this is the case with all other OPEC producers as well. The following is what each report for Angola, in thousands of barrels per day.

	EIA	OPEC 
Jan	1,992	1,857
Feb	1,997	1,881
Mar	2,003	1,869
Apr	2,009	1,882
May	2,015	1,905
Jun	2,013	1,901
Jul		1,903
Aug		1,892

But no matter which one you use, Angola is clearly on a plateau and appears to be going nowhere fast.

Ron Patterson

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jonathan.s.callahan on September 16, 2008 - 12:20pm Permalink | Subthread | Parent | Comments top

It's important to look at trends longer than just a few months. The monthly data is often significantly revised and saying that

Angola is clearly on a plateau and appears to be going nowhere fast.

is only true on the micro scale.

Westexas assessment is a more accurate description of the recent history of Angolan production:

Angola, one of the very few oil exporters showing a long term multiyear increase in oil exports.

Angola has had temporary plateaus multiple times in the past, each of which was followed by increased production. To claim that Angola is on the kind of plateau that would be followed by production declines you would have to provide much more information about recent discoveries, # of rigs, etc.

I don't have that information available and cannot make an assessment of future Angolan production. But guessing where they are on their production curve based on 7 months of data doesn't seem like kind of approach we should be fostering here at TOD. We really need to encourage folks to take a closer look at longer term trends and try to understand where we are in the overall production curve for each nation and the world as a whole.

And I'll join in and sound Westexas' alarm that, for importing nations, it is global export numbers that are much more important than global production.

From the Energy Export Databrowser:

Happy Exploring,

-- Jon

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ace on September 17, 2008 - 3:40am Permalink | Subthread | Parent | Comments top

Hi Ron,

Those OPEC numbers are crude oil only. Your EIA numbers are crude oil and lease condensate.

The EIA crude only numbers are at this link and are about the same as OPEC's numbers:
http://www.eia.doe.gov/emeu/ipsr/t12.xls

May 1,925
Jun 1,923

Nonetheless, my guess for Angola crude/condensate production is that it will stay on a 2 mbd plateau until 2011, then decrease. In March 2008, Abilio of Sonangol stated that a 2 mbd plateau would last until 2014.
http://www.reuters.com/article/rbssEnergyNews/idUSL1883291720080318

Colin Campbell also assumes URR of 20 Gb and discusses Angola in his Dec 2003 newsletter.
http://www.energiekrise.de/e/aspo_news/aspo/Newsletter036.pdf

Campbell's peak production was forecast to be 1.8 mbd in 2019 but instead Angola ramped up deep water production faster than Campbell originally assumed in his deep water Profile "B".

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NeverLNG on September 16, 2008 - 10:02am Permalink | Subthread | Parent | Comments top

WT - what do you make of this story, also linked above? Saudi Talk and Production Bring Down Oil Price

What seems clear, however, is that whatever the reason, the King of Saudi Arabia has wanted oil prices to go back down for a number of months, so much so that he called an unprecedented global meeting of oil ministers to foster lower oil prices. Until the Khursaniyah field came on stream recently, the King had limited ammunition to get prices down. It seems like his decision to reduce production in 2007 to about 7.5 mb/d, down from the prior 8.4 mb/d may have been designed to reflate the pressure of certain fields so that he could later increase output from those fields when the new Khursaniyah capacity came on stream during the summer/fall of 2008 in order to assure low oil prices prior to the U.S. election. Now that the Saudi’s are pumping out 9.5 mb/d, lower prices are the result.

So after all this, the Saudis still have the power to control the whole oil system?

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westexas on September 16, 2008 - 10:14am Permalink | Subthread | Parent | Comments top

See my comment down the thread. In addition to the political angle, one could argue that there is an economic incentive to increase price uncertainties.

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Daxtatter on September 16, 2008 - 1:32pm Permalink | Subthread | Parent | Comments top

While I'm quite scared about the net export situation (and the production situation in general), I do believe it's possible that Iraqi production and Brazilian production may be able to fill the gap in the 2012-2020 timeframe so we could make an orderly (well, relatively orderly) transition into a post-peak world. Even with that, we need to get our shit together to get through all this, and all the positive progress we seem to make is paralleled by horrible disappointment.

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westexas on September 16, 2008 - 1:53pm Permalink | Subthread | Parent | Comments top

As of 2007, Brazil was still--although just barely--a net oil importer. At their current rate of increase in consumption, they will be consuming another one mbpd by 2020. Also, they have to offset the declines from their existing production. Brazil's consumption:

http://tonto.eia.doe.gov/country/img/charts/BR_cons_large.png

Regarding Iraq, your guess is as good as mine.

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jonathan.s.callahan on September 16, 2008 - 2:09pm Permalink | Subthread | Parent | Comments top

From the Energy Export Databrowser

  1. Brazil's production and consumption
  2. the Outreach 5 nations

If Brazil could pro-actively destroy their economy perhaps their exports would increase but I don't think that's going to happen. Brazil's economy is widely considered least likely to be affected by the current global financial turmoil.

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Daxtatter on September 16, 2008 - 2:27pm Permalink | Subthread | Parent | Comments top

Well considering that Brazil's economy is highly exposed to commodity prices, and the fact that commodity prices have fallen pretty dramatically over the past few months (and will continue to fall if the world economy heads in the direction it looks like it's going in), Brazil might not be spared from the global slowdown.

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214 comments on DrumBeat: September 16, 2008

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