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As Oil Giants Lose Influence, Supply Drops

Jad Mouawad, New York TImes
Oil production has begun falling at all of the major Western oil companies, and they are finding it harder than ever to find new prospects even though they are awash in profits and eager to expand.

Part of the reason is political. From the Caspian Sea to South America, Western oil companies are being squeezed out of resource-rich provinces. They are being forced to renegotiate contracts on less-favorable terms and are fighting losing battles with assertive state-owned oil companies.

And much of their production is in mature regions that are declining, like the North Sea.

The reality, experts say, is that the oil giants that once dominated the global market have lost much of their influence – and with it, their ability to increase supplies.

… Sluggish supplies have prompted a cottage industry of doomsday predictions that the world’s oil production has reached a peak. But many energy experts say these “peak oil” theories are misplaced. They say the world is not running out of oil – rather, the companies that know the most about how to produce oil are running out of places to drill.

“There is still a lot of oil to develop out there, which is why we don’t call this geological peak oil, especially in places like Venezuela, Russia, Iran and Iraq,” said Arjun Murti, an energy analyst at Goldman Sachs. “What we have now is geopolitical peak oil.”

… At a recent conference in Madrid, Christophe de Margerie, the chief executive of the French company Total, said the world would be hard-pressed to raise supplies beyond 95 million barrels a day by 2020. Only a few years ago, forecasters expected 120 million barrels a day by 2030, a level many analysts now view as unrealistic.
(18 August 2008)
Comment by James Pethokoukis at US News and World Report: Pelosi Democrats and Political Peak Oil.

A Few Speculators Dominate Vast Market for Oil Trading

David Cho, Washington Post
Regulators had long classified a private Swiss energy conglomerate called Vitol as a trader that primarily helped industrial firms that needed oil to run their businesses.

But when the Commodity Futures Trading Commission examined Vitol’s books last month, it found that the firm was in fact more of a speculator, holding oil contracts as a profit-making investment rather than a means of lining up the actual delivery of fuel. Even more surprising to the commodities markets was the massive size of Vitol’s portfolio — at one point in July, the firm held 11 percent of all the oil contracts on the regulated New York Mercantile Exchange.

The discovery revealed how an individual financial player had gained enormous sway over the oil market without the knowledge of regulators. Other CFTC data showed that a significant amount of trading activity was concentrated in the hands of just a few speculators.

The CFTC, which learned about the nature of Vitol’s activities only after making an unusual request for data from the firm, now reports that financial firms speculating for their clients or for themselves account for about 81 percent of the oil contracts on NYMEX, a far bigger share than had previously been stated by the agency.
(21 August 2008)

The future is now; the end of cheap oil

Jim Miles, alJazeera
The Great Resource War is already underway, mainly in the Middle East.

I- Introduction and overview
This is one of the more difficult articles/reviews I have worked on. I have been well aware of Peak Oil for a while, but never did I gather so much information in one sitting that simply spelled out doom and gloom.

I live alternately surrounded by the incredible amazing flexibility and beauty of nature contrasted with the ever-present artefacts and contrived superficialities of humanity crafted on the basis of ample and cheap fossil fuels (as well as its benefits of agricultural wealth and medical advancements).

Since the 1960s environmentalists have been sending out warnings about the future of our environment if we do not care for it. They have been mostly ignored until now, when global warming concerns have proved a direct threat to individual lives as well as possible future lifestyles.

At the same time, the industrial era based on cheap fossil fuels that created the climate change is rapidly drawing to a close – in what form humanity survives that closure is open to debate, but debate is not what is needed.

What is needed is action, not the action of the Washington consensus and the free marketers who have chosen to act through their global war on terror as a pretext to harvest and protect the last remaining years of oil production thereby maintaining their position under the mantra that “the American way of life is not negotiable.”

What is needed is action that moves us towards new energy sources as quickly as possible, away from oil, towards an economy based on renewable energy and – choke on this all you industrialists and corporatists – an economy that does not grow. This world is finite.

The end of cheap oil is happening now. The economy is already suffering for it, and unlike the Great Depression, recovery will not be a simple matter of putting people back to work. The Great Resource War is already underway, mainly in the Middle East, but also in smaller skirmishes scattered areas around the world, disguised to many as the Global War on Terror (or drugs as in the case of Colombia).

Depressing? Yes. Optimism? There is some room for it, but only if we recognize that the paradigm shift is already underway and that action to a more positive, minimalist lifestyle needs to start, before nature demands it of us in more dramatic fashion.
(18 August 2008)

Russia sees oil output stalling

Upstream online
Russian oil output growth is unlikely to exceed 2.2% next year and will slow to under 1% by 2011, the government said today, confirming earlier forecasts of a slowdown in production growth.

Falling oil production in Russia has become a major concern for the government, which relies heavily on export revenues.
(21 August 2008)

Raymond James Says State of Russian Oil ‘Much Worse than We Would Have Imagined 6 Months Ago’
(Pt. 1 of 2)
Energy Tech Stocks
Russian oil production will decline over 1%, or approximately120,000 barrels a day, through 2010, a situation that is “much worse than we would have imagined as recently as six months ago,” Raymond James & Associates, the investment banking firm, said in a new report.

Raymond James blamed the expected decline on factors including “the creeping nationalization of energy assets and the fact that much of the ‘low-hanging fruit’ has been picked.” The firm’s Houston-based energy analysts concluded, “The deteriorating investment climate in the Russian energy sector has clearly deterred foreign investment, and it goes without saying that fighting wars with neighbors is not going to make the Kremlin look warm and fuzzy,” the latter a reference to Russia’s ongoing conflict with Georgia.

Asked to comment, independent Texas-based petroleum geologist Jeffrey Brown said he expects that the decline in Russian oil production “will be pretty steep,” noting, “The Russians are highly dependent on old oil fields, with rising water cuts.” (The older a well, the more likely water is being pumped in so as to force the remaining crude to the surface.)
(21 August 2008)