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Shura member calls for oil production curbs in Saudi

Nadim Kawach, Business 24/7 (United Arab Emirates)
Saudi Arabia’s Shura council (parliament) will hold a series of meetings over the next two weeks to discuss a controversial proposal by a key member to curb oil production to save reserves for better prices, Saudi media reported. The council will listen to a report by deputy chairman of the Shura water and public utilities committee, Salim bin Rashid Al Marri, who will argue for cutting crude supplies to maintain the Kingdom’s underground reserves.

“Marri will seek to persuade council members that the oil production must be linked to the country’s actual development needs not the needs of foreign consumers,” Alriyadh newspaper said in a report from the capital Riyadh. “He will tell the Council that keeping sufficient oil quantities underground is a good investment for the future as oil prices will then be higher…he will argue that this will be better than producing more oil and generating financial surpluses on the grounds these surpluses are causing inflation.”
(4 June 2008)

Argentina Halts Chile Natural Gas Exports – Chile Energy Min

Patricia San Juan, Dow Jones
With a cold snap driving up local heating demand and labor conflicts interrupting production in Patagonia, Argentina temporarily suspended natural gas exports to Chile Wednesday, Chilean Energy Minister Marcelo Tokman said.

Tokman added, however, that residential customers in Santiago won’t be affected due to a surplus of gas accumulated in the GasAndes pipeline.

“Argentine Planning Minister Julio de Vido has informed me that due to labor conflicts affecting the province of Santa Cruz and others, the production of natural gas in Argentina has fallen and for this reason it was necessary to cut the supply of gas to Chile for a few days this week,” Tokman told reporters.
(28 May 2008)
Submitted by contributor TH who writes:
Your Peak Oil Energy Brief on Argentina cutting off gas exports to Chile was somewhat sensationalism. This is the full story.

Argentina cuts gas supply to Chile for “several days” (MercoPress)
Chile readies for spotty gas supply from Argentina (Reuters)

… Argentina has guaranteed supply of natural gas for domestic and business needs in central Chile, home to the nation’s capital and most of the population.

But analysts say those commitments may be tried by cold winters in both countries, with energy-poor Chile coming out the loser.

… Argentina has limited natural gas supplies to Chile since 2004, but those cuts sharpened in 2007 as its own domestic demand rose and supplies remained flat.

Russia… Energy Priority #1

Byron W. King, Energy and Oil
While US Senators and House Members call in US oil executives to berate them, and shareholder activists pillory the Boards of large oil companies for allowing the CEO to serve as Chairman, Mr. V. Putin of Russia implores his shipbuilders to build new and advanced vessels to develop that nation’s offshore energy deposits.

“The principal direction is the creation of a complete line of ships and equipment to extract and transport oil and gas from offshore deposits,” said Mr. Putin. “This includes drilling platforms, ice-class gas carriers and icebreakers.”

Building new ships to develop Russia’s offshore resources was the FIRST item on the agenda of the FIRST cabinet meeting of the new Medvedev government.

Russia will leverage its long and proud tradition of building exceptional vessels for its navy and commerce fleet. The maritime-industrial decline of the post-Soviet era is coming to an end. “Priorities have been decided,” said Deputy Prime Minister S. Ivanov, “We have enough money.”

Ah, music to one’s ears… “We have enough money.” When was the last time anyone in the US heard a politician make such an affirmative, purposeful declaration?

And to learn of these developments you have to read about them in the Sakhalin Times, not the New York Times or Los Angeles Times. U.S. news media, of course, have other things to cover — like motorists whining about the price of gasoline.

Each nation has its different priorities, I guess. What you see depends on where you stand. So where does the US stand on “energy?” While Russia is developing, the US is ignoring events. The political class, and its media enablers, rush headlong towards the energy-equivalent of the Little Big Horn.

More on the topic here [“Shipyards to Focus on Energy Vessels” at Sakhalin Times].
(2 June 2008)
Byron King is a long-time contributor to Energy Bulletin.

Caspian CPC May oil exports fall 9.5 pct vs April

Kazakh and Russian oil exports via the Caspian Pipeline Consortium to the Black Sea fell to 677,795 barrels per day in May, down by 9.5 percent from 748,947 bpd in April, the consortium said on its website.

It gave no reason for the decrease.
(2 June 2008)

Indonesia says good-bye OPEC, hello peak oil

Casey Research
… Casey Research’s Energy Division attended the recent oil and gas show in Jakarta, and it’s plain to see where the new oil demand is coming from. Greater Jakarta, Indonesia’s capital, hosts 23 million people, and while ten years ago the majority of them rode bicycles, now nearly everyone has a new 2-stroke Honda motorbike. Those who were riding motorbikes are now driving cars.

… The main problem, however, is an extremely common one. Indonesia has exploited its fattest hydrocarbon targets, and the remaining exploration sites cannot make up for the decline from its existing oil fields.
(3 June 2008)
Chart at original.

Global Net Oil Exports Have Declined for Two Years

Jim Kingsdale, Energy Investment Strategies
Much has been written recently about the “Export Land Model” [ELM] of Jeffrey Brown, most of it by Mr. Brown himself. The model hypothesizes a country that has declining oil production and increasing oil consumption. It’s graphic representation is:

The model is one way to analyze global oil flows and is useful to the extent that it dramatizes the very real fact that since oil exporters’ economies are growing rapidly with their new riches, they are using an increasing amount of their own oil internally. If their oil production also happens to be in decline, then their exports will decline even more rapidly. We have discussed this phenomenon extensively in regard to Mexico, which presents a stark challenge to U.S. oil supplies in particular over the next few years.

What the ELM fails to consider is the exports by countries that are increasing their oil production sufficiently so that they are also increasing their exports. Moreover, the model tends to cover up the fact that much of the growth in global oil demand (in fact, about half of it presently) is from oil exporting countries like Russia and the Middle East. Therefore only the demand for oil from countries that do not export oil is required to be supplied from net exports, and that excludes a good deal of global demand.
(3 June 2008)
Also at Seeking Alpha. Jeffrey Brown is a regular contributor to Energy Bulletin.