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Venezuela’s Chavez may escalate fight with Exxon, oil producers
Peter Wilson and Juan Pablo Spinett, Bloomberg
Venezuelan President Hugo Chavez may rewrite the rules for ventures run by oil companies including Total SA and ConocoPhillips in the Faja, a region that rivals Canada’s oil sands as the Western Hemisphere’s biggest deposit.
“We are adjusting our relationship with the private companies,” Venezuelan Energy Minister Rafael Ramirez said today in an interview in Doha, Qatar. Eulogio del Pino, a vice president at the state oil company, Petroleos de Venezuela SA, said the government may consider taking a controlling 51 percent stake in the ventures that tap heavy oil deposits, according to an April 22 report in the newspaper El Universal.
Restructuring the ventures would escalate the battle between Chavez and the world’s biggest oil companies.
(24 April 2006)
As oil prices continue to soar, talk of economic ruin subsides
Kevin G. Hall, Knight Ridder via SJ Mercury News
WASHINGTON – When oil prices briefly touched $70.85 a barrel last August, many experts thought that such high prices, if sustained, would toss the U.S. economy into recession. Oil now hovers around $75, but this time there isn’t much talk of economic ruin.
Economists now expect the high prices to shave the economy’s growth rate some, but most think that the U.S. and global economies are resilient enough to weather the rising energy costs. A national average of $2.91 per gallon of gasoline provokes grimaces at the pump, but it’s not high enough to send the economy into a tailspin.
What price would? Unfortunately, it won’t be clear where such a tipping point is until we reach it.
“We really don’t know the number. We’re probably getting close to a point where we might find out,” said Phil Flynn, a vice president and energy analyst at Alaron Trading Corp. in Chicago. “We haven’t seen any sign that demand is faltering due to these high prices.”
(24 April 2006)
Oil price blame game misses point
Nils Pratley, Guardian
Blame the speculators. Blame the profiteering oil companies. Blame America’s threats towards Iran. The hunt for a culprit for $75-a-barrel oil has begun and, as usual when the price is debated, the single biggest reason for the rise will probably be lost in rhetoric.
The truth is that the iron law of supply and demand operates in oil, just as it always has. Too little supply and too much demand may sound too simplistic by half, but worries such as Iran only gain purchase when the fundamentals are out of line. In this case, as Credit Suisse’s analysts put it yesterday, the market’s focus is on the fact that “there is practically zero spare oil production capacity available to cover large supply outages”.
…If that is so, even higher crude prices are quite possible. A year ago, Goldman Sachs made its well-publicised prediction that a “super spike” of $105 could happen – reasoning that oil prices needed to be high enough for long enough to reduce global energy consumption meaningfully. It is doubtful that even a slowdown to growth of 1% counts as meaningful.
More supply is on the way because there are enough oil prospects in the world, but it takes time. The industry is still scrambling to recover from the under-investment of the 1990s. Rigs, platforms, tankers and every other piece of infrastructure are still in short supply. But they are certain to arrive with $75 oil.
That is the point about oil – it is a commodity, and commodities have always fluctuated between boom and bust and periods of over-investment and under-investment. The bad news is that, as a rule of thumb, a typical commodity cycle lasts a decade and a half. This story could run.
(25 April 2006)
Related: Record Oil Company Profits and High Gas Prices: A Connection? from The Oil Drum.
Insurgents cripple Iraq oil sector – inspector
Michael Georgy, Reuters
BAGHDAD – Insurgents have succeeded in crippling Iraq’s energy industry and the government has ignored calls for help in the battle against corruption and smuggling, the oil ministry’s inspector general said on Tuesday.
“It has been going on for two or three years now without stopping. Actually it (the rebel campaign) has increased. They have always succeeded in attacking very sensitive sites,” Ali al-Alaak told Reuters in an interview.
“Every time we fix the problems because of those attacks, the next day or a few days later they can attack the same site.”
Asked if rebels had crippled Iraq’s energy industry, he said: “Yes”.
(25 April 2006)
Oil fight in Nigeria reaches turning point
Daniel Balint-Kurti, Newsday
LAGOS, Nigeria – A militant group that has been attacking Nigeria’s oil pipelines and helping to drive up world oil prices added a new tactic last week by detonating a car bomb in a major oil city to publicize its standing threat to shut down the country’s entire crude output.
The bomb, which exploded in a Mercedes-Benz parked at a military facility in Port Harcourt, killed two civilians and injured six, said Army spokesman Maj. Sagir Musa. It was the first such attack in an urban area and the first in the eastern Delta section of the country in five months.
(23 April 2006)