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Days Of Cheap And Easy Oil Are Over
Azlan Othman, Borneo Bulletin via Brunei Direct
Bandar Seri Begawan – Brunei’s Minister of Energy at the Prime Minister’s Office yesterday called oil the lifeblood of Brunei Darussalam and hence it matters very much how well the country manages these valuable resources.
“It isn’t a question about choice or option, rather it is a question of survival,” said Pehin Dato Seri Setia Awg Haji Yahya as he delivered his presentation on “Managing Energy Resources in an Energy Scarce World” at the Institute of Southeast Asian Studies (ISEAS) in Singapore during the second day of the Brunei Forum.
Also present was Princess Mansurah Izzul Bolkiah.
“It is not easy to bring out oil from the ground. The days of cheap and easy oil are not here anymore,” said Pehin Dato Hj Yahya.
“Many reservoirs are no longer using the primary drive to move the oil to the surface. Many arc now using secondary or tertiary recovery methods to extract the extra molecule of hydrocarbon (oil and gas) from the formation.
“The secondary and tertiary recovery methods are obviously expensive, risky and have a much longer gestation period. Many oil companies have also gone into high-pressure and high-temperature areas again at a cost and risk very much steeper than before,” he said.
Pehin Hato Hj Yahya added that oil and gas are not just the energy source for Brunei, they are the main source of almost everything- from a source of export earning, income, employment, government revenue and investment opportunities.
…”Firstly, every hydrocarbon molecule matters. We have to obtain maximum value for these resources. We cannot allow utilisation of these resources that doesn’t bring maximum return or benefits. And wasteful consumption of these resources must not be permitted at all.
“The second principle is change matters. A lot of things need to be changed, particularly the high-energy consumption lifestyle and wastage. The third one is more of a vision and mission statement, `sustainable future beyond oil and gas’,” he said.
(no date)
Adapt to dearer oil
Commentary, China Daily
Triple-digit oil prices will surely complicate the Chinese government’s efforts to fight domestic inflation. Yet, policymakers should face it with a greater sense of urgency to reform the country’s energy pricing system.
International oil prices closed above $100 a barrel on Tuesday, shrugging off increasing evidence of a US recession.
When it briefly touched the once unfathomable price for the first time early last month, it seemed fairly reasonable to expect that the ongoing US slowdown would ease demand and lead to a sharp fall in oil prices.
The recent strong rebound after dropping by nearly 15 percent since then, however, has made it clear that consumers should better prepare themselves for more expensive oil.
For China, a net oil importer with a growing appetite, this is not good news.
The country’s net imports of crude oil climbed to 159.28 million tons last year, up 14.7 percent. Some 46 percent of its crude oil consumption is met by imports.
Higher oil prices means China will have to pay substantially more for imports. This is not so serious a problem at the moment when the country is trying to slow its accumulation of trade surplus.
But the extra cost that the current energy pricing mechanism will incur to keep the lid on domestic oil prices is highly worrisome.
At present, the price of crude oil in China is set by the global market while the refined price is regulated by the government. Instead of raising the refined price, the central government subsidizes refiners for their loss due to higher import costs.
The comparatively lower domestic prices of refined oil products can help prevent consumer inflation from running out of control. But the cost the government and refiners share to support lower domestic oil prices is too dear, which is estimated to reach 170 billion yuan last year, 0.9 percent of the country’s gross domestic product.
The negative impact such oil subsidies have on the country’s efforts to raise energy efficiency is even worse. It is all too clear that low oil prices play right into the hands of inefficient energy-consumers.
A market-oriented reform of the oil pricing system has been long overdue. The country’s high inflation should not be made an excuse to further postpone it.
Procrastination on reform will only add to the inefficiency of the economy and impede the country’s preparation for the coming era of expensive oil.
(21 February 2008)
Supply fears as oil surges
Greg Hoy, Australian Broadcasting Corporation (ABC)
The price of oil has peaked at $US100 a barrel and with production declining both locally and globally, experts warn that unless a major new oil field is found in Australia, there will be serious implications for the economy.
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Transcript
KERRY O’BRIEN: The global dependence on traditional fossil fuels continues and the news this week that crude oil prices peaked at $105 a barrel on international markets sent a shiver through Wall Street and in Australia, meant more bad news for motorists and the transport industry in particular.
At the same time, local oil fields are rapidly declining, prompting both the new Government and oil industry representatives to declare that the search for a major new oil field in this country has now become a national priority.
The insatiable demands of the emerging giants China and India for global oil supplies have now unquestionably peaked have simply added to the urgency. All sides seem to agree the implications of Australia’s trade deficit and international competitiveness are serious.
Greg Hoy reports.
MARTIN FERGUSON, RESOURCES MINISTER: Australia’s got a huge challenge. We’ve got huge problems on the trade front, but also importantly, a real problem in terms of energy security and our economic future by 2015.
GREG HOY: With Australia now consuming around a million barrels of oil a day and rising in production less than half that and falling, the search for oil is on in earnest.
BELINDA ROBINSON, PETROLEUM PRODUCTION & EXPLORATION ASSOCIATION: Oil production in Australia is rapidly declining. We are unlikely to be able to sustain our current production of oil levels unless we find a major new oil province.
MARTIN FERGUSON: We’ve got to find another Bass Strait, because if we don’t by 2015 we will go from importing about 20 per cent of our needs in the 1990s to actually importing 80 per cent of our oil and related product needs, effectively contributing to a $27 billion per year trade deficit.
GREG HOY: Indeed, this graph charts the disconcerting rise in Australia’s total imports in petroleum and associated products since the year 2000. A clear trend that’s triggered the dire forecast for Australia’s trade deficit. Just as the demand for oil imports from emerging nations surges, and global production also begins to wane. All ominous signs for the already high price oil.
(21 February 2008)
Video, images and more at original.
Contributor Michael Lardelli writes:
A a good report on the oil security challenges Australia faces in the medium term.
Contributor Lionel Orford writes:
In his intro, presenter Kerry O’Brien says:
The insatiable demands of the emerging giants China and India for global oil supplies, that have now unquestionably peaked, have simply added to the urgency. All sides seem to agree the implications of Australia’s trade deficit and international competitiveness are serious.
Wow, now that’s something I haven’t heard before on Australian TV current affairs.
A few inaccuracies:
- Global Oil supplies have not now unquestionably peaked
- Australia still produces about 70% of it’s oil – not less than half
- Minister Martin Ferguson says our trade deficit in oil could reach $27Billion p.a. by 2015. How can there be any sensible predictions of the level of deficit when it is likely that there will simply not be sufficient oil on the export market to buy? Alternatively, the world economy could have collapsed and there could be plenty of oil by 2015. We just don’t know.
