Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion Analysis Centre, the UK registered charity dedicated to raising awareness of peak oil.
This week saw the oil price reach new heights, going to $126.98 on Tuesday, dropping back and then rallying. Key drivers this week came from around the world. Brazilís President da Silva told Der Spiegel that his country was considering joining OPEC. Whether or not they would be welcome in the cartel, such a move would be opposed by the US and Europe. Iran announced that it was undertaking a review of oil output, leading to fears that output would be cut. This worry appears so far to be unfounded, but fear of supply shortages had its effect. In China the devastating and tragic earthquake in Szechuan Province inevitably affected the energy industry there with coal mines, oil and gas wells needing to be shut for safety reasons.
A new delay of several years was announced this week in production at the major Kashagan oil field in Kazakhstan as the Eni-led consortium and the Kazakh government continue to wrangle. Meanwhile the IEA reported that the high oil price and economic downturn is causing them to reduce their demand figures for 2008. The forecast for reduction in demand is for the ëdeveloped economiesí while demand in China and India in particular continues to rise, thus echoing the Goldman Sachs report of last week. As a sign of the times, the IEA also reported that if we were to replace the current level of biofuels in the economy, which have been blamed for rising food prices, we would now need to extract an additional 1m b/d of crude oil. That figure is expected to rise to 1.5m b/d in 2008.
The role of the rising cost of oil production, as a result of both equipment and labour costs was highlighted this week by CERA. This will be strongly exacerbated as Petrobras has hired 80% of the available deepwater drilling rigs as part of its gearing up to exploit Tupi.
Rising oil costs in the US precipitated an interesting week on Capitol Hill this week. On Thursday Congress approved a bill, in defiance of President Bush, to halt oil stockpiling (in the Strategic Petroleum Reserve) while record prices persist. Earlier in the week, as President Bush began a tour of the Middle East, which will include Saudi Arabia, a group of Democratic Senators threatened to block an arms deal with the Kingdom unless it increased its oil output. The Saudi position, that oil supply is not the issue in recent high prices, was underlined by Saudi Oil Minister Naimi in a speech in S. Korea, which doesn’t leave much room for optimism for Mr Bush.
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Brazil Opec plan lifts oil to $126 per barrel
Iran may cut output amid surging oil prices
Eni-led consortium wants to defer Kashagan to 2012-13
IEA Cuts 2008 Oil Demand Forecast for Fourth Month
DJ IEA: Replacing World Biofuels Would Require 1M B/D More Oil
Naimi Blames Oil Price on Financial Market Turmoil
Saudi arms deal threatened over oil prices
Bill OK’d to pause adding oil reserves
Oil companies struggle with spiralling costs
Petrobras Hires 80% of Deepwater Drilling Rigs, Drives Up Costs
BP Russian venture faces legal action
Europe needs a single market for natural gas
British Gas to raise prices as profits slump
U.S. Natural Gas Futures Advance on Enterprise Pipeline Delay
China Shuts Coalmines in Areas Affected by Earthquake
Lack of capacity fuels global battles over power suppliers
Turbine Shortage, Rising Costs Stall $120 Billion of Wind Farms
Royal Dutch Shell pulls out of $10bn Iran project
Gaza blackout as fuel runs out