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Petrodollars make Russia giddy, industrial West keeps sober

$martMoney via RIA-Novosti, Russia
This year, Russia has topped the world list of oil producers, with 9.87 million bbl/pd in January-October, 10%-12% more than the second largest producer, Saudi Arabia.
The latter could have easily boosted production and outmatch Russia, but they prefer not to do it for a reason. The United States, also a major oil nation, has been reducing production of late, but augmenting refining capacity instead.

The U.S. currently refines 180% more oil than it produces. Russia, on the contrary, processes less than half of the oil it produces, with the average degree of conversion (the percentage of light products) barely reaching 70% (85%-95% in the West).

The reckless drive to pump more and more oil will soon lead Russia to an uncontrolled fall in production, not because it will start saving its resources like the U.S., but because it will not be able to compensate for depletion in the traditional oil-producing areas. Russian oil majors can no longer boost production, and it is only growing because of the recent Sakhalin projects.

The situation in the oil-processing sector is no better either. Russia is currently using around 80% of its refining capacities. Oil processing is growing by 5%-6% a year, but it has remained static for the past three years, according to a BP statistics review. Which means that by the time Russia is in a position, where it can no longer boost production, it will also be unable to increase processing if it does not start building new refineries now. The old ones will be running at full capacity by then.

It is a shame that the billions of dollars that state oil companies have poured into buying more assets, have not been invested in either production (if they are so determined to export all their crude) or, better still, in building refineries based on cutting-edge western technology.
(26 November 2007)

Caspian Tales: John Deuss, Oil, Spooks & Cohibas

Suzan Mazur, Scoop (New Zealand)
One of my favorite stories about the rush for Caspian oil riches is the one about the man who invested $3,000 there in the 1990s and left months later with $3 million stuffed in his socks. Steve LeVine, The Wall Street Journal’s former Eurasia bureau chief, doesn’t include it in his new book, The Oil and the Glory. That tale comes via a banker I met in Baku talking about a fellow named Karlas. But LeVine does carefully frame some other Caspian treasures, aside from presenting an excellent general history of a still little-known part of the world, and he allows crucial sources to go unnamed.

…Although the unnamed sources are clearly a stumbling block to the book’s credibility, LeVine does get in close enough to give a sense of how business got done in the Caspian of the 1990’s.

He went in a bit too close in Chechnya, was seriously wounded and had to be lifted out for medical treatment. LeVine was also Danny Pearl’s roommate at one point, poignantly portrayed in the film, A Mighty Heart, trying to find Pearl following his abduction and murder. LeVine has described Pearl’s killers to me simply as “criminals”-not Islamist fundamentalists- and claimed Pearl was neither CIA nor Mossad.

Suzan Mazur has traveled widely as a journalist. Her reports have appeared in the Financial Times, Economist, Forbes, Newsday, Philadelphia Inquirer, Archaeology, Connoisseur, CounterPunch and Progressive Review, among others, as well as on PBS, CBC and MBC. She has been a guest on McLaughlin, Charlie Rose and various Fox Television News programs.
(29 November 2007)
Mazur goes into detail about her experiences as a correspondent on the same beat. -BA

John Ghazvinian, author of “Untapped,” on African oil issues

Marc Strassman, Etopia News Channel
John Ghazvinian, author of “Untapped: The Scramble for African Oil,” on how the exploitation of Africa’s sweet light crude oil encourages corruption, prostittution, armed struggkle, and HIV/AIDS, recorded November 23, 2007, between Philadelphia, PA, and Los Angeles, CA
(23 November 2007)

The 10 Oil Producers Most Likely to Shock the World

Energy Tech Stocks
These rankings are solely the opinion of They are based in large part on an extensive briefing by Charles Esser, Brussels-based energy analyst for the International Crisis Group, a non-governmental organization dedicated to preventing and resolving deadly conflict.

10/tie: Angola/Equatorial Guinea

9/tie: Chad and Sudan

8 – Kazakhstan; 7 – Algeria

6 – Nigeria; 5 – Mexico
(November 2007)
More installments in a series that began last week.

Brazil’s oil: new wealth or petro-populism?

Andres Oppenheimer, Miami Herald via Salt Lake Tribune
No wonder that Brazil’s president, Luiz Inacio Lula da Silva, proclaimed “God is Brazilian” after the discovery of massive oil reserves in his country earlier this month: The find could soon turn Brazil into a major oil exporter, and a big player in world affairs.

But before I tell you why the find could also threaten to derail Brazil’s slow but steady march into a successful economy, let’s look at the facts.

On Nov. 8, Brazil’s state-controlled oil firm Petrobras confirmed the finding of huge oil reserves that could hold up to 8 billion barrels of light crude in the Tupi fields, off Brazil’s southeastern coast. Some experts say that Brazil’s oil officials usually downplay the size of the country’s oil findings, and the new reserves could be up to 10 billion barrels.

The discovery is likely to raise Brazil’s oil reserves by 50 percent, and turn it into the country with the eighth-largest oil and gas reserves in the world. Petrobras President Sergio Gabrielli said that the reserves “will lie somewhere between those of Nigeria and Venezuela.”

…what about the danger that oil will go to the heads of Brazil’s leaders, much like happened in Venezuela, Ecuador and many other oil-producing countries? Will the avalanche of petrodollars increase Brazil’s corruption and fuel messianic-populist regimes?

Most experts say that’s not likely to happen, among other reasons because Petrobras is run pretty much like a private company, and because the country’s economy is much more diversified than those of Venezuela, Ecuador, Bolivia and other oil producers.
(27 November 2007)
The analysis seems to be marred by oil addiction: the belief that other nations exist to supply oil, preferably to the U.S. As the wags have it, “What’s our oil doing under their sand?”. It’s one thing to pursue one’s national self interest; but interpreting the world solely in terms of one’s desires, leads to disasterous policy. -BA

Venezuelan sales of oil byproducts to the US down 22 percent

El Universal (Venezuela)
Venezuela’s supply of hydrocarbons to the United States fell in September amid reduced shipments of oil byproducts, said the Energy Information Administration, the statistical arm of the US Department of Energy.

Just like in the rest of this year, Venezuelan sales of oil byproducts to the United States decreased in September, from 192,000 bpd to 179,000 bpd, a 6.7 percent decline. So far this year, Venezuelan shipments of oil byproducts have plunged 22.2 percent, from an average of 296,000 bpd in January-September 2006 to 230,000 bpd in the same period this year.

The environmental standards the US has been implementing have hit the volume of Venezuelan shipments of byproducts. However, high domestic consumption of fuels has eaten up a large part of the barrels formerly earmarked for export.

Unlike the sales of oil byproducts, crude oil shipments soared 0.7 percent, from 1.13 million bpd to 1.14 million bpd in August-September. In this way, Venezuela kept is position as the fourth largest supplier of crude oil to the United States, after Canada, Saudi Arabia, and Mexico.

So far this year, Venezuela’s hydrocarbon (crude oil and byproducts) sales to the United averaged 1.35 million bpd. This represents a 7.2 drop compared to the same period in 2006.

In parallel, Venezuela has expanded hydrocarbons exports to China. Based on the figures disclosed by state-run oil giant Pdvsa, in September crude oil sales to China recorded an unprecedented 359,000 bpd. In 2008, the goal is 500,000 bpd.
(28 November 2007)

National oil firms gain edge on Exxon

Jim Landers, Dallas News
RIYADH, Saudi Arabia – Exxon Mobil Corp. is no longer the biggest oil company (that would be Saudi Aramco). It is no longer the richest oil company (PetroChina). It is not even the leader among the international oil companies in replacing production with new reserves (ConocoPhillips, a U.S. firm, at least).

Dr. Subroto, a former OPEC secretary general from Indonesia, said this month that the future no longer belongs to the Exxon Mobils of the world.

Seventy-eight percent of the world’s proven oil reserves are in OPEC countries, which have their own oil companies develop those often inexpensive-to-produce reserves.

Exxon, BP, Chevron and Shell work in parts of the world with far fewer, more expensive reserves – on the periphery of the Arctic, the distant offshore of Africa and the deepwater of the Gulf of Mexico.

From these costly projects they help squeeze about 60 percent of global oil production, and it is difficult to see how that share will do anything but decline.
(26 November 2007)