Articles tagged with "russia"
This post began as a view on the developments in Cyprus and I am grateful to Gail for the suggestion. It is my fault that it morphed a little from that original simple objective.
One problem in marketing natural gas is that there is so much of it coming onto the market that this makes it difficult to set a price for future production. Even when the fields and reserves are estimated to be large, having some confidence in the price that the gas will bring in turn helps provide confidence with investors that there will be a positive return on the cost of bringing that gas to the market. However, once that initial commitment is made to invest the money, then the need for a return often drives an expeditious program to bring in revenue even if the market is already reasonably well supplied. Prices may then fall and the investment becomes a losing one.
The current cold weather in the United Kingdom and the threat of gas rationing has raised the price some 30% this month and the market appears lucrative. But the UK market, in the short term, can be rescued by 3 tankers of LNG from Qatar with more available if needed (provided it is ordered soon.) And then, though there remains a need to refill storage, the crisis will be over for now and the price will likely fall back, although likely not completely since the UK is in process of shutting down coal-fired power stations to comply with EU edicts and natural gas is the replacement fuel of the moment.
Looking further down the road, Centrica, a major energy supplier in the UK, has agreed to a 20-year agreement with a US supplier to buy LNG from the US (out of the Sabine Pass terminal). This would take a fifth LNG train at a facility where the first train is expected to come on line in 2015, and the second in 2016. Each train has a liquefaction capacity of 4.5 million tons pa or 220 bcf of NG, and customers have already been found for the first four trains – again for a 20-year period. The UK supply is therefore not anticipated to start until 2018.
In the meantime, Qatar has no plans to increase production in the face of the overall growing glut in supply, although it potentially could. And this availability of alternate supply is not good news for the Big Daddy of natural gas exporters, those in Russia. Russia has already seen Turkmenistan sell its natural gas to China directly, rather than through Russian middlemen. To date this has reached 1.7 tcf with further expansion in the works.
To make the situation more volatile, the natural gas discoveries in the eastern end of the Mediterranean over the course of the last five years have been found to be of increasing size, as exploration continues.
With the death of the Venezuelan President Hugo Chavez, the future production and exports of Venezuelan crude are gaining a little new attention. I had noted in the last post that there is a difference of around 400 kbd between the 2.379 mbd that outside observers report to OPEC that the country is producing, and the 2.768 mbd that Venezuela itself reported. The question now becomes one as to whether the new President will be able to resurrect an industry that has overseen a slow decline in overall production, with a more rapid decline in exports.
My short answer to that question is No! It is based on a number of reasons and may be swamped by the voices who note that the country has a vast remaining pool of oil in the Orinoco Basin, one that the USGS has estimated to be more than a trillion barrels in size, of which some 513 billion barrels are technically recoverable. But there have been a number of posts about those numbers and the more critical number, which is that of the rate of oil production.
Posted by Heading Out on February 19, 2013 - 5:54am
Tags: bp, chevron, coal gasification, gas shale, gazprom, nord stream, poland, russia, shell, turkey, turkmenistan, ukraine [list all tags]
You know it is winter when Russia and Ukraine publically row about supplies of natural gas. On Tuesday Ukraine completed the signing of an agreement with Turkmenistan for the supply of natural gas. In the past the purchases have been for up to 36 billion cu m per year, although this was historically through Russian intermediaries. That deal ended in 2006, and Turkmenistan has been able to find a customer in China that now provides an alternate sale that does not leave it dependent on whatever price Russia was willing to provide.
But this does not mean that Ukraine has been able to escape having to pay whatever price Russia wished to impose, since to get from Turkmenistan to Ukraine the natural gas still requires passage through a pipeline that runs through Kazakhstan and Russia. There is no prize for guessing that Gazprom owns those pipelines.
This continues to give Gazprom leverage over Ukraine, and with the North Stream pipeline now approaching its full potential after the second string was commissioned last October, Europe can receive up to 55 billion cu m per year without the gas having to pass through Ukraine.
Posted by Heading Out on December 9, 2012 - 6:15am
Tags: asean, china, egypt, india, iran oil exports, iran sanctions, natural gas, russia, south korea, syria, turkey [list all tags]
There is a lot going on in the Middle East at the moment. The revolution in Syria seems to be entering some form of end game, and there are the riots in Egypt. There are some signs that these events might move into countries such as Jordan. Increasing levels of turmoil in the Middle East do not help stabilize the future flow of oil and natural gas around the world, and there are underlying tensions, brought about in part by the need to sustain sanctions against Iran.
Turkey, for example, is caught up in dealing with Syrian refugees and the adjacent civil war and is also largely dependent on Iranian fuel to get it through the winter. In October, Turkey is reported to have imported 75 kbd of Iranian oil with larger portions of the total 417 kbd import coming from Iraq (105 kbd) and Russia (103 kbd). The volumes that continue to flow are now becoming a source of friction, since US law demands that countries continue to lower their imports every six months. While Turkey continues to work to lower their need for Iranian oil (and may increase imports from Russia), in the interim the U.S. Government is not increasing pressure but instead, is apparently moving to extend the waiver of sanctions not only to Turkey, but also to a total of 21 countries, a list that includes China, India, and South Korea.
Two officials said an announcement of the six-month extensions was expected from the State Department on Friday. The officials spoke on condition of anonymity because they were not authorized to publicly preview the step.
In addition to China, India, and South Korea, the waivers will apply to Malaysia, Singapore, South Africa, Sri Lanka, Turkey and Taiwan. All nine were originally granted six-month renewable exemptions from the sanctions in June.
The exemption means that banks and other financial institutions based in those places will not be hit with penalties under U.S. law enacted as a way of pressuring Iran to come clean about its nuclear program.
A total of 20 countries and Taiwan have been granted the waivers. The others—Belgium, Britain, the Czech Republic, France, Germany, Greece, Italy, the Netherlands, Poland, Spain and Japan—will come up for review in March.
This is the final installment of the tour of global crude + condensate + natural gas liquids (C+C+NGL) production data as published by the International Energy Agency (IEA) and deals with the rest of the world. OPEC and OECD production was described in earlier posts.
After many decades of growth, Chinese oil production appears to have stalled in 2012 at just over 4 million bpd. It remains to be seen if this is a temporary glitch or whether this heralds peak and decline in Chinese oil production.
Russia + Former Soviet Union (FSU) production has been on a plateau for 3 years at just below 14 million bpd. Russian production continues to grow slowly offset by declines in other FSU states.
Oil production in Oman peaked at 960,000 bpd in 2001 and declined steadily to around 700,000 bpd in 2008. An aggressive program of enhanced oil recovery (EOR) has turned things around and production has risen by over 200,000 bpd in the last 4 years and Omani production is challenging the 2001 highs. There are profound lessons to be learned here about the potential impact of EOR on heavy oil fields and future global production.
Columbia has also seen a reversal of fortune with new field developments reversing declines and new production highs just under 1 million bpd have been set in recent months.
Figure 1 Oil production has been largely flat in South and East Asia over the decade, rising slowly from 2002 to 2011 and since then in gentle decline. Production in China and India has been rising offset by declining production in Indonesia and Malaysia. All data published in this interim report are taken from the monthly IEA Oil Market Reports.
From May 2007 to August 2010, Rembrandt Koppelaar published an e-report called Oil Watch Monthly that summarised global and national oil production and consumption data from the International Energy Agency (IEA) of the OECD and Energy Information Agency (EIA) of the USA. This is the fourth in a series of new Oil Watch reports, co-authored with Rembrandt and details crude oil production data for the Rest of The World as reported by the International Energy Agency. Earlier editions:
Uncertainty whether Russia can maintain its high level of oil production continues - 10.7 million b/d in 2012 to date on average. A new more benign tax regime recently put into place and significant industry investments may plausibly enable the Russian Bear to extend its “plateau production” to 2020.
The post below outlines how this impressive achievement has been made possible, given that the decline of existing production is plausibly 6% or more every year for most old giant fields in West Siberia. In other words, the Russian oil industry needs to invest substantially in pushing more oil from existing fields (lowering decline rates) and new field developments to keep production steady.
How long production levels can be maintained beyond 2020 is a difficult question, and one that I have left to answer another day. A view of ongoing developments and things to come up to 2020 is available below the fold.
Posted by patzek on November 19, 2012 - 1:26pm
Tags: condensate, crude oil, demand, destruction, efficiency, energy, gain, independence, lpg, natural gas, petroleum, product, refineries, russia, saudi arabia, security, self-delusions [list all tags]
[Editor's comment: This article is by Dr. Tad Patzek, chairman of the Department of Petroleum & Geosystems Engineering at The University of Texas at Austin. Dr. Patzek's research involves mathematical modeling of earth systems with emphasis on multiphase fluid flow physics and rock mechanics. He is also working on smart, process-based control of very large waterfloods in unconventional, low-permeability formations, and on the mechanics of hydrate-bearing sediments. In a broader context, Patzek works on the thermodynamics and ecology of human survival and energy supply schemes for humanity. He has participated in the global debate on energy supply schemes by giving hundreds of press interviews and appearing on the BBC, PBS, CBS, CNBC, ABC, NPR, etc., and giving invited lectures around the world. This article first appeared on Tad's blog Life Itself.]
Before I discuss the logic behind negating a peak of production of anything, let me sum up where we are in the U.S. in terms of crude oil production. According to the Energy Information Administration (EIA):
The United States consumed 18.8 million barrels per day (MMbd) of petroleum products during 2011, making us the world's largest petroleum consumer. The United States was third in crude oil production at 5.7 MMbd. But crude oil alone does not constitute all U.S. petroleum supplies. Significant gains occur, because crude oil expands in the refining process, liquid fuel is captured in the processing of natural gas, and we have other sources of liquid fuel, including biofuels. These additional supplies totaled 4.6 MMbd in 2011.
Let me parse this quote.
Posted by Heading Out on October 15, 2012 - 12:30pm
Tags: alaska pipeline, armenia, azerbaijan, china, iran, lng, natural gas, npra, russia, south pars, turkey, turkmenistan [list all tags]
There has been much talk in the current presidential debates about possible changes in US energy policy, with Governor Romney suggesting that more federal land be opened for prospecting for oil. Historically, one of the regions included in such lists is the National Petroleum Reserve in Alaska. And, perhaps anticipating the debate, the current administration has already recently moved toward opening those territories up for development.** However, those fields have been determined to contain more natural gas than oil, and so hopes for finding more oil reserves has shifted into moves offshore, where Shell has continued optimism as it begins to sink new wells in the Chukchi sea – although well completions have now moved into next year. However, suggestions in the past should be noted that more of the hydrocarbons under the Arctic are gas deposits than oil, and this argument has been strengthened by the recent discovery in the Barents Sea of more gas, when oil had been anticipated.
The large volumes of natural gas that are currently being developed and marketed, whether in the United States or from Turkmenistan, are making considerable change in the economies of many countries. Russia, who lost the sales battle to supply natural gas to China, can no longer justify the expense of opening the Shtockman field because alternate supplies are coming to the market at lower costs. This in turn, will cascade on to prices in Europe, where the advent of more gas in the UK is making it difficult to justify a switch into a greater reliance on renewable sources such as wind and solar.
This scenario means that it is not a good time to have a huge reserve of natural gas, or to go to the market with this resource to generate income. This is particularly true if the country in question is Iran.
Iranian Oil Minister Rostam Qasemi has announced that Iran’s exploitation of the South Pars gas field will equal Qatar’s exploitation of the gas field by the end of Iranian calendar year 1392 (ends March 20, 2014) if $54 billion is invested in gas projects.
Iran and Qatar share the largest natural gas field in the world, a reserve that is known as South Pars in Iran and as the North Field in Qatar.
On occasion, the British Government goes through an internal shake-up that leads to various pundits trying to explain to us lesser mortals what it all means. Thus, with changes in the Ministers who work in the Department of Energy and Climate Change, there is a suggestion that the UK is pulling back from their commitment to wind energy, and instead beginning to look more seriously at shale gas supplies.
The UK is not unique. The success of the American development of long horizontal well drilling, with follow-on multiple fracture of the shale beds to release gas at economic volumes into the well, has caught the world’s attention, and with it a desire to emulate that success. Though it should be said that the American success comes in part with the volume of the release in supply and the consequent fall induced in the price of natural gas. That, in turn, is providing a less well-recognized boost to the US economy, through lower energy costs.
This has not been lost on the Chinese, who are fully aware of their own need to keep finding resources at as cheap a price as possible to keep their own economy growing. It is, in relative terms, however, still an industry in its infancy. Earlier this year China agreed to buy 65 billon cu m of more conventionally produced natural gas from Turkmenistan – about twice the initial buy - roughly the equivalent of 6.3 billion cu ft/day (bcf/d). In addition, from April 1, China has started to import natural gas from Uzbekistan. That sale has been projected to be at around 10 bcm/year (1 bcf/day) and there has been a move in Uzbekistan to increase coal-fired power generation in the country in order to free up more gas to meet export demands as the sales to China ramp up to perhaps double this level in the next few years.
Further China still has the option of buying more natural gas from Russia, which has the potential to supply an additional 65 bcm/year into China. (6.3 bcf/d)
Gasoline prices remain high, and Reuters recently noted that there are enough countries with civil unrest, technical problems, and bad weather with around a million barrels a day of possible supply that are not getting to the market. Yet with Saudi Arabia continuing to reassure that it is willing to pump more oil if needed, there appears to be, superficially, little cause for supply concerns this year. By the same token, concerns over supply in the longer term also seem to be increasingly discounted. For example, Citigroup has just released a new report on Energy 2020: North America as the new Middle East. The report suggests that there is really no concern with future supplies of oil and gas, perhaps most clearly shown with this plot:
I would argue that the numbers for Saudi Arabia and Russia are difficult to realistically justify. For the Kingdom, which is reported to be producing 9.9 mbd, to increase production by another 2 mbd is optimistic, given the aging of their primary fields and the decline in remaining volumes that I will discuss in future posts in the current series on that country. The projection of an increase in Russian production is a similar concern. With the decline in production from Western Siberia, there is not enough new production coming from Timan-Pechora and Eastern Siberia to sustain existing levels, let alone see an increase in production – a point that has been made by Russian officials in the past. However, the real concern lies with the relatively unrealistic image that is being projected for US production over the next eight years.